Exhibit 10.17
CREDIT AGREEMENT
Dated as of December 21, 2001
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANK OF AMERICA, N.A.
as the Agent
and
COORSTEK, INC.
as the Borrower
TABLE OF CONTENTS
Section Page
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ARTICLE 1 LOANS AND LETTERS OF CREDIT................................................ 1
1.1 Total Facility.............................................................. 1
1.2 Revolving Loans............................................................. 1
1.3 Letters of Credit........................................................... 4
1.4 Bank Products............................................................... 7
ARTICLE 2 INTEREST AND FEES.......................................................... 8
2.1 Interest.................................................................... 8
2.2 Continuation and Conversion Elections....................................... 8
2.3 Maximum Interest Rate....................................................... 9
2.4 Closing Fees................................................................ 10
2.5 Unused Line Fee............................................................. 10
2.6 Letter of Credit Fee........................................................ 10
2.7 Collection Fees............................................................. 10
ARTICLE 3 PAYMENTS AND PREPAYMENTS................................................... 11
3.1 Revolving Loans............................................................. 11
3.2 Termination of Facility..................................................... 11
3.3 Prepayments of the Loans................................................... 11
3.4 LIBOR Rate Loan Prepayments................................................. 11
3.5 Payments by the Borrower.................................................... 12
3.6 Payments as Revolving Loans................................................. 12
3.7 Apportionment, Application, and Reversal of Payments........................ 12
3.8 Indemnity for Returned Payments............................................. 13
3.9 Agent's and Lenders' Books and Records; Monthly Statements.................. 13
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY..................................... 14
4.1 Taxes....................................................................... 14
4.2 Illegality.................................................................. 15
4.3 Increased Costs and Reduction of Return..................................... 15
4.4 Funding Losses.............................................................. 16
4.5 Inability to Determine Rates................................................ 16
4.6 Certificates of the Agent................................................... 16
4.7 Survival.................................................................... 16
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.......................... 17
5.1 Books and Records........................................................... 17
5.2 Financial and Other Information............................................. 17
5.3 Notices to the Lenders...................................................... 19
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ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS..................................... 22
6.1 Authorization, Validity, and Enforceability of this Agreement and the
Loan Documents.............................................................. 22
6.2 Validity and Priority of Security Interest.................................. 22
6.3 Organization and Qualification.............................................. 22
6.4 Corporate Name; Prior Transactions.......................................... 22
6.5 Subsidiaries and Affiliates................................................. 23
6.6 Financial Statements and Projections........................................ 23
6.7 Solvency.................................................................... 23
6.8 Debt........................................................................ 23
6.9 Distributions............................................................... 23
6.10 Real Estate; Leases......................................................... 23
6.11 Proprietary Rights.......................................................... 24
6.12 Trade Names................................................................. 24
6.13 Litigation.................................................................. 24
6.14 Labor Disputes.............................................................. 24
6.15 Environmental Matters....................................................... 24
6.16 No Violation of Law......................................................... 25
6.17 No Default.................................................................. 25
6.18 ERISA Compliance............................................................ 25
6.19 Taxes....................................................................... 26
6.20 Regulated Entities.......................................................... 26
6.21 Use of Proceeds; Margin Regulations......................................... 26
6.22 Copyrights, Patents, Trademarks and Licenses, etc........................... 26
6.23 No Material Adverse Change.................................................. 26
6.24 Full Disclosure............................................................. 26
6.25 Material Agreements......................................................... 26
6.26 Bank Accounts............................................................... 27
6.27 Governmental Authorization.................................................. 27
6.28 Existing Agreement.......................................................... 27
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS......................................... 27
7.1 Taxes and Other Obligations................................................. 27
7.2 Legal Existence and Good Standing........................................... 27
7.3 Compliance with Law and Agreements; Maintenance of Licenses; Amendment
to Documents and Subordinated Debt.......................................... 27
7.4 Maintenance of Property; Inspection of Property............................. 28
7.5 Insurance................................................................... 28
7.6 Insurance and Condemnation Proceeds......................................... 29
7.7 Environmental Laws.......................................................... 29
7.8 Compliance with ERISA....................................................... 30
7.9 Mergers, Consolidations, or Sales........................................... 30
7.10 Distributions; Capital Change; Restricted Investments....................... 30
7.11 Transactions Affecting Collateral or Obligations............................ 30
7.12 Guaranties.................................................................. 31
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7.13 Debt........................................................................ 31
7.14 Payment/Prepayment of Debt.................................................. 31
7.15 Transactions with Affiliates................................................ 32
7.16 Investment Banking and Finder's Fees........................................ 32
7.17 Business Conducted.......................................................... 32
7.18 Liens and Negative Pledge................................................... 32
7.19 Sale and Leaseback Transactions............................................. 33
7.20 New Subsidiaries............................................................ 33
7.21 Fiscal Year................................................................. 33
7.22 Capital Expenditures........................................................ 33
7.23 Minimum Tangible Net Worth.................................................. 33
7.24 Minimum Availability........................................................ 33
7.25 Debt Service Coverage Ratio................................................. 33
7.26 Use of Proceeds............................................................. 33
7.27 Further Assurances.......................................................... 34
7.28 Blocked Accounts............................................................ 34
ARTICLE 8 CONDITIONS OF LENDING...................................................... 34
8.1 Conditions Precedent to Making of Loans on the Closing Date................. 34
8.2 Conditions Precedent to Each Loan........................................... 36
ARTICLE 9 DEFAULT; REMEDIES.......................................................... 37
9.1 Events of Default........................................................... 37
9.2 Remedies.................................................................... 40
ARTICLE 10 TERM AND TERMINATION...................................................... 41
10.1 Term and Termination........................................................ 41
ARTICLE 11 AMENDMENTS; WAIVERs; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS.............. 42
11.1 Amendments and Waivers...................................................... 42
11.2 Assignments; Participations................................................. 43
ARTICLE 12 THE AGENT................................................................. 45
12.1 Appointment and Authorization............................................... 45
12.2 Delegation of Duties........................................................ 46
12.3 Liability of Agent.......................................................... 46
12.4 Reliance by Agent........................................................... 46
12.5 Notice of Default........................................................... 47
12.6 Credit Decision............................................................. 47
12.7 Indemnification............................................................. 47
12.8 Agent in Individual Capacity................................................ 48
12.9 Successor Agent............................................................. 48
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12.10 Withholding Tax............................................................. 48
12.11 Collateral Matters.......................................................... 50
12.12 Restrictions on Actions by Lenders; Sharing of Payments..................... 51
12.13 Agency for Perfection....................................................... 51
12.14 Payments by Agent to Lenders................................................ 51
12.15 Settlement.................................................................. 52
12.16 Letters of Credit; Intra-Lender Issues...................................... 55
12.17 Concerning the Collateral and the Related Loan Documents.................... 57
12.18 Field Audit and Examination Reports; Disclaimer by Lenders.................. 57
12.19 Relation Among Lenders...................................................... 58
ARTICLE 13 MISCELLANEOUS............................................................. 58
13.1 No Waivers; Cumulative Remedies............................................. 58
13.2 Severability................................................................ 58
13.3 Governing Law; Choice of Forum; Service of Process.......................... 58
13.4 WAIVER OF JURY TRIAL........................................................ 59
13.5 Survival of Representations and Warranties.................................. 59
13.6 Other Security and Guaranties............................................... 60
13.7 Fees and Expenses........................................................... 60
13.8 Notices..................................................................... 60
13.9 Waiver of Notices........................................................... 61
13.10 Binding Effect.............................................................. 62
13.11 Indemnity of the Agent and the Lenders by the Borrower...................... 62
13.12 Limitation of Liability..................................................... 63
13.13 Final Agreement............................................................. 63
13.14 Counterparts................................................................ 63
13.15 Captions.................................................................... 63
13.16 Right of Setoff............................................................. 63
13.17 Confidentiality............................................................. 64
13.18 Conflicts with Other Loan Documents......................................... 65
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ANNEXES, EXHIBITS, AND SCHEDULES
--------------------------------
ANNEX A - DEFINED TERMS
EXHIBIT A - FORM OF NOTE
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1.2 - LENDERS' COMMITMENTS
SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES AND AFFILIATES
SCHEDULE 6.4 - CORPORATE NAME; PRIOR TRANSACTIONS
SCHEDULE 6.8 - DEBT; LIENS
SCHEDULE 6.10 - REAL ESTATE; LEASES
SCHEDULE 6.11 - PROPRIETARY RIGHTS
SCHEDULE 6.12 - TRADE NAMES
SCHEDULE 6.25 - MATERIAL AGREEMENTS
SCHEDULE 6.26 - BANK ACCOUNTS
SCHEDULE 7.10 - EXISTING INVESTMENTS
SCHEDULE 8.1 - POST-CLOSING REQUIREMENTS
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CREDIT AGREEMENT
This Credit Agreement dated as of December 21, 2001, (this
"Agreement") among the financial institutions from time to time parties hereto
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), Bank of America, N.A., with an office at 000
Xxxx Xxxxxx, 0/xx/ Xxxxx, Xxxxxx, Xxxxx 00000 as agent for the Lenders (in its
capacity as agent, the "Agent"), and CoorsTek, Inc., a Delaware corporation,
with offices at 00000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxxx, Xxxxxxxx 00000 (the
"Borrower").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower has requested the Lenders to make available to the
Borrower a revolving line of credit and letters of credit in an amount not to
exceed $60,000,000, which extensions of credit the Borrower will use for the
purposes permitted hereunder, including for the benefit of the other Loan
Parties;
WHEREAS, capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A which is attached
hereto and incorporated herein; the rules of construction contained therein
shall govern the interpretation of this Agreement, and all Annexes, Exhibits,
and Schedules attached hereto are incorporated herein by reference; and
WHEREAS, the Lenders have agreed to make available to the Borrower such
revolving credit facility upon the terms and conditions set forth in this
Agreement; and
NOW, THEREFORE, in consideration of the foregoing and the mutual conditions
set forth in this Agreement, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
LOANS AND LETTERS OF CREDIT
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1.1 Total Facility. Subject to all of the terms and conditions of this
--------------
Agreement, the Lenders agree to make available a total credit facility of up to
$60,000,000 (the "Total Facility") to the Borrower from time to time during the
term of this Agreement. The Total Facility shall be composed of a revolving line
of credit consisting of Revolving Loans and Letters of Credit described herein.
1.2 Revolving Loans.
---------------
(a) (i) Amounts. Subject to the satisfaction of the conditions
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precedent set forth in Article 8, each Lender severally, but not jointly,
agrees, upon the Borrower's request from time to time on any Business Day during
the period from the Closing Date to the Termination Date, to make revolving
loans (the "Revolving Loans") to the Borrower in amounts not to exceed such
Lender's Pro Rata Share of Availability, except as set forth herein with
respect to Agent Advances. The Lenders, however, in their unanimous discretion,
may elect to make Revolving Loans or issue or arrange to have issued Letters of
Credit in excess of the Borrowing Base but not in excess of the Maximum Revolver
Amount on one or more occasions, but if they do so, neither the Agent nor the
Lenders shall be deemed thereby to have changed the limits of the Borrowing Base
or to be obligated to exceed such limits on any other occasion. If any Borrowing
would exceed Availability, the Lenders may refuse to make or may otherwise
restrict the making of Revolving Loans as the Lenders determine until such
excess has been eliminated, subject to the Agent's authority, in its sole
discretion, to make Agent Advances pursuant to the terms of Section 1.2(g).
(ii) The Borrower shall execute and deliver to each Lender
requesting a note, a note to evidence the Revolving Loan of that Lender. Each
note shall be in the principal amount of the requesting Lender's Pro Rata Share
of the Maximum Revolver Amount, dated the date hereof and substantially in the
form of Exhibit A (each a "Note" and, collectively, the "Notes"). Each Note
shall represent the obligation of Borrower to pay the amount of the requesting
Lender's Pro Rata Share of the Maximum Revolver Amount, or, if less, such
Lender's Pro Rata Share of the aggregate unpaid principal amount of all
Revolving Loans to Borrower together with interest thereon as prescribed in
Section 2.1. The entire unpaid balance of the Revolving Loan shall be
immediately due and payable in full in immediately available funds on the
Termination Date.
(b) Procedure for Borrowing.
-----------------------
(1) Each Borrowing shall be made upon the Borrower's
irrevocable written notice delivered to the Agent in the form of a notice of
borrowing in substantially the form of Exhibit D ("Notice of Borrowing"), which
must be received by the Agent prior to (i) 12:00 noon (Dallas, Texas time) three
Business Days prior to the requested Funding Date, in the case of LIBOR Rate
Loans and (ii) 11:00 a.m. (Dallas, Texas time) on the requested Funding Date, in
the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which in the case of a
LIBOR Rate Loan must equal or exceed $1,000,000 (and integral increments of
$500,000 in excess of such amount);
(B) the requested Funding Date, which must be a Business
Day;
(C) whether the Revolving Loans requested are to be Base
Rate Loans or LIBOR Rate Loans (and if not specified, it shall be
deemed a request for a Base Rate Loan); and
(D) the duration of the Interest Period for LIBOR Rate
Loans (and if not specified, it shall be deemed a request for an Interest Period
of one month);
provided, however, that with respect to the Borrowing to be made on the Closing
Date, such Borrowings will consist of Base Rate Loans only.
2
(2) The Borrower shall have no right to request a LIBOR
Rate Loan while a Default or Event of Default has occurred and is continuing.
(c) Reliance upon Authority. Prior to the Closing Date, the
-----------------------
Borrower shall deliver to the Agent, written notice setting forth the account of
the Borrower located at the Bank ("Designated Account") to which the Agent is
authorized to transfer the proceeds of the Revolving Loans requested hereunder.
The Borrower may designate a replacement account from time to time by written
notice. All such Designated Accounts must be reasonably satisfactory to the
Agent.
(d) No Liability. The Agent shall not incur any liability to the
------------
Borrower as a result of acting upon any notice referred to in Sections 1.2(b)
and (c), which the Agent believes in good faith to have been given by an officer
or other person duly authorized by the Borrower to request Revolving Loans on
its behalf. The crediting of Revolving Loans to the Designated Account
conclusively establishes the obligation of the Borrower to repay such Revolving
Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing made pursuant to
------------------
Section 1.2(b) shall be irrevocable. The Borrower shall be bound to borrow the
funds requested therein in accordance therewith.
(f) Making of Revolving Loans. If Agent elects to have the terms
-------------------------
of this Section 1.2(f) apply to a requested Borrowing, then promptly after
receipt of a Notice of Borrowing, the Agent shall notify the Lenders by
telecopy, telephone, or e-mail of the requested Borrowing. Each Lender shall
transfer its Pro Rata Share of the requested Borrowing available to the Agent in
immediately available funds, to the account from time to time designated by
Agent, not later than 12:00 noon (Dallas, Texas time) on the applicable Funding
Date. After the Agent's receipt of all proceeds of such Revolving Loans, the
Agent shall make the proceeds of such Revolving Loans available to the Borrower
on the applicable Funding Date by transferring same day funds to the Designated
Account; provided, however, that, unless Lenders agree otherwise in their
unanimous discretion as provided in Section 1.2(a)(i), the amount of Revolving
Loans so made on any date shall not exceed the Availability on such date.
(g) Agent Advances.
--------------
(A) Subject to the limitations set forth below, the Agent
is authorized by the Borrower and the Lenders, from time to time in the Agent's
sole discretion, (A) after the occurrence of a Default or an Event of Default,
or (B) at any time that any of the other conditions precedent set forth in
Article 8 have not been satisfied, to make Base Rate Loans to the Borrower on
behalf of the Lenders in an aggregate amount outstanding at any time not to
exceed 10% of the Borrowing Base but not in excess of the Maximum Revolver
Amount which the Agent, in its reasonable business judgment, deems necessary or
desirable (1) to preserve or protect the Collateral, or any portion thereof, (2)
to enhance the likelihood of, or maximize the amount of, repayment of the Loans
and other Obligations, or (3) to pay any other amount chargeable to the Borrower
pursuant to the terms of this Agreement, including costs, fees and expenses as
described in Section 13.7 (any of such advances are herein referred to as "Agent
Advances"); provided, that the Majority Lenders may at any time revoke the
Agent's authorization to make
3
Agent Advances. Any such revocation must be in writing and shall become
effective prospectively upon the Agent's receipt thereof.
(B) The Agent Advances shall be secured by the Agent's
Liens in and to the Collateral and shall constitute Base Rate Loans and
Obligations hereunder.
1.3 Letters of Credit.
-----------------
(a) Agreement to Issue or Cause To Issue. Subject to the terms and
------------------------------------
conditions of this Agreement, the Agent agrees (i) to cause the Letter of
Credit Issuer to issue, and to amend or renew Letters of Credit previously
issued by it in accordance with this Section, for the account of the
Borrower one or more commercial/documentary and standby letters of credit
(each, a "Letter of Credit" and collectively, the "Letters of Credit")
and/or (ii) to provide, on behalf of the Lenders, credit support or other
enhancement to a Letter of Credit Issuer acceptable to the Agent, which
issues a Letter of Credit for the account of the Borrower (any such credit
support or enhancement being herein referred to as a "Credit Support") from
time to time during the term of this Agreement. The Existing Letters of
Credit shall be deemed to have been issued pursuant hereto, and from and
after the Closing Date shall be subject to and governed by the terms and
conditions hereof.
(b) Amounts; Outside Expiration Date. The Agent shall not have any
--------------------------------
obligation to issue or cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit at any time if: (i) the
maximum face amount of the requested Letter of Credit is greater than the
Unused Letter of Credit Subfacility at such time; (ii) the maximum undrawn
amount of the requested Letter of Credit and all commissions, fees, and
charges due from the Borrower in connection with the opening thereof would
exceed Availability at such time; or (iii) such Letter of Credit has an
expiration date less than 30 days prior to the Stated Termination Date or
more than 12 months from the date of issuance for standby letters of credit
and 180 days from the date of issuance for documentary letters of credit.
With respect to any Letter of Credit which contains any "evergreen" or
automatic renewal provision, each Lender shall be deemed to have consented
to any such extension or renewal unless any such Lender shall have provided
to the Agent, written notice that it declines to consent to any such
extension or renewal at least thirty (30) days prior to the date on which
the Letter of Credit Issuer is entitled to decline to extend or renew the
Letter of Credit. If all of the requirements of this Section 1.3 are met
and no Default or Event of Default has occurred and is continuing, no
Lender shall decline to consent to any such extension or renewal.
(c) Other Conditions. In addition to conditions precedent contained
----------------
in Article 8, the obligation of the Agent to issue or to cause to be issued
any Letter of Credit or to provide Credit Support for any Letter of Credit
is subject to the following conditions precedent having been satisfied in a
manner reasonably satisfactory to the Agent:
(1) The Borrower shall have delivered to the Letter of
Credit Issuer, at such times and in such manner as such Letter of Credit Issuer
may prescribe, an application in form and substance satisfactory to such Letter
of Credit Issuer and reasonably
4
satisfactory to the Agent for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms thereof, and the form,
terms, and purpose of the proposed Letter of Credit shall be reasonably
satisfactory to the Agent and the Letter of Credit Issuer; and
(2) As of the date of issuance, no order of any court,
arbitrator, or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the type
and in the amount of the proposed Letter of Credit, and no law, rule, or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
-----------------------------
(1) Request for Issuance. Borrower must notify the Agent
--------------------
of a requested Letter of Credit at least three (3) Business Days prior to the
proposed issuance date. Such notice shall be irrevocable and must specify the
original face amount of the Letter of Credit requested, the Business Day of
issuance of such requested Letter of Credit, whether such Letter of Credit is
standby, commercial, or documentary, whether such Letter of Credit may be drawn
in a single or in partial draws, the Business Day on which the requested Letter
of Credit is to expire, the purpose for which such Letter of Credit is to be
issued, and the beneficiary of the requested Letter of Credit. The Borrower
shall attach to such notice the proposed form of the Letter of Credit.
(2) Responsibilities of the Agent; Issuance. As of the
---------------------------------------
Business Day immediately preceding the requested issuance date of the Letter of
Credit, the Agent shall determine the amount of the applicable Unused Letter of
Credit Subfacility and Availability. If (i) the face amount of the requested
Letter of Credit is less than the Unused Letter of Credit Subfacility and (ii)
the amount of such requested Letter of Credit and all commissions, fees, and
charges due from the Borrower in connection with the opening thereof would not
exceed Availability, the Agent shall cause the Letter of Credit Issuer to issue
the requested Letter of Credit on the requested issuance date so long as the
other conditions hereof are met.
(3) No Extensions or Amendment. The Agent shall not be
--------------------------
obligated to cause the Letter of Credit Issuer to extend or amend any Letter of
Credit issued pursuant hereto unless the requirements of this Section 1.3 are
met as though a new Letter of Credit were being requested and issued.
(e) Payments Pursuant to Letters of Credit. The Borrower agrees
--------------------------------------
to reimburse immediately the Letter of Credit Issuer for any draw under any
Letter of Credit and the Agent for the account of the Lenders upon any payment
pursuant to any Credit Support, and to pay the Letter of Credit Issuer the
amount of all other charges and fees payable to the Letter of Credit Issuer in
connection with any Letter of Credit immediately when due, irrespective of any
claim, setoff, defense, or other right which the Borrower may have at any time
against the Letter of Credit Issuer or any other Person. Each drawing under any
Letter of Credit shall constitute a
5
request by the Borrower to the Agent for a Borrowing of a Base Rate Loan in the
amount of such drawing. The Funding Date with respect to such Borrowing shall be
the date of such drawing.
(f) Indemnification; Exoneration; Power of Attorney.
-----------------------------------------------
(1) Indemnification. In addition to amounts payable as
---------------
elsewhere provided in this Section 1.3, the Borrower agrees to protect,
indemnify, pay, and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges, and
expenses (including reasonable attorneys' fees) which any Lender or the Agent
(other than a Lender in its capacity as a Letter of Credit Issuer) may incur or
be subject to as a consequence, direct or indirect, of the issuance of any
Letter of Credit or the provision of any Credit Support or enhancement in
connection therewith. The Borrower's obligations under this Section shall
survive payment of all other Obligations.
(2) Assumption of Risk by the Borrower. As among the
----------------------------------
Borrower, the Lenders, and the Agent, the Borrower assumes all risks of the acts
and omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent shall not be responsible for and the
Borrower shall not be relieved of any of its obligations hereunder on account
of: (A) the form, validity, sufficiency, accuracy, genuineness, or legal effect
of any document submitted by any Person in connection with the application for
and issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Letter of Credit to comply
duly with conditions required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, or otherwise, whether or not they be
in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; (H) any consequences arising from causes
beyond the control of the Lenders or the Agent, including any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
Governmental Authority or (I) the Letter of Credit Issuer's honor of a draw for
which the draw or any certificate fails to comply in any respect with the terms
of the Letter of Credit. None of the foregoing shall affect, impair or prevent
the vesting of any rights or powers of the Agent or any Lender under this
Section 1.3(f).
(3) Exoneration. Without limiting the foregoing, no action
-----------
or omission whatsoever by the Agent or any Lender (excluding any Lender in its
capacity as a Letter of Credit Issuer) shall result in any liability of the
Agent or any Lender to the Borrower, or relieve the Borrower of any of its
obligations hereunder to any such Person.
(4) Rights Against Letter of Credit Issuer. Nothing
--------------------------------------
contained in this Agreement is intended to limit the Borrower's rights, if any,
with respect to the Letter of
6
Credit Issuer which arise as a result of the letter of credit application and
related documents executed by and between the Borrower and the Letter of Credit
Issuer.
(5) Account Party. The Borrower hereby authorizes and
-------------
directs any Letter of Credit Issuer to name the Borrower (or any Subsidiary of
the Borrower, as the Borrower may direct) as the "Account Party" therein and to
deliver to the Agent all instruments, documents, and other writings and property
received by the Letter of Credit Issuer pursuant to the Letter of Credit, and to
accept and rely upon the Agent's instructions and agreements with respect to all
matters arising in connection with the Letter of Credit or the application
therefor.
(g) Supporting Letter of Credit; Cash Collateral. If,
--------------------------------------------
notwithstanding the provisions of Section 1.3(b) and Section 10.1, any Letter of
Credit or Credit Support is outstanding upon the termination of this Agreement,
then upon such termination the Borrower shall deposit with the Agent, for the
ratable benefit of the Agent and the Lenders, with respect to each Letter of
Credit or Credit Support then outstanding, a standby letter of credit (a
"Supporting Letter of Credit") in form and substance satisfactory to the Agent,
issued by an issuer satisfactory to the Agent in an amount equal to the greatest
amount for which such Letter of Credit or such Credit Support may be drawn plus
any fees and expenses associated with such Letter of Credit or such Credit
Support, under which Supporting Letter of Credit the Agent is entitled to draw
amounts necessary to reimburse the Agent and the Lenders for payments to be made
by the Agent and the Lenders under such Letter of Credit or Credit Support and
any fees and expenses associated with such Letter of Credit or Credit Support.
Such Supporting Letter of Credit shall be held by the Agent, for the ratable
benefit of the Agent and the Lenders, as security for, and to provide for the
payment of, the aggregate undrawn amount of such Letters of Credit or such
Credit Support remaining outstanding.
1.4 Bank Products. The Borrower may request and the Agent may, in its sole
-------------
and absolute discretion, arrange for the Borrower to obtain from the Bank or the
Bank's Affiliates Bank Products although the Borrower is not required to do so.
If Bank Products are provided by an Affiliate of the Bank, the Borrower agrees
to indemnify and hold the Agent, the Bank, and the Lenders harmless from any and
all costs and obligations now or hereafter incurred by the Agent, the Bank, or
any of the Lenders which arise from any indemnity given by the Agent to its
Affiliates related to such Bank Products; provided, however, nothing contained
herein is intended to limit the Borrower's rights, with respect to the Bank or
its Affiliates, if any, which arise as a result of the execution of documents by
and between the Borrower and the Bank or its Affiliates, as the case may be,
which relate to Bank Products or the provision of the Bank Products pursuant
thereto. The agreement contained in this Section shall survive termination of
this Agreement. The Borrower acknowledges and agrees that the obtaining of Bank
Products from the Bank or the Bank's Affiliates (a) is in the sole and absolute
discretion of the Bank or the Bank's Affiliates, and (b) is subject to all rules
and regulations of the Bank or the Bank's Affiliates.
7
ARTICLE 2
INTEREST AND FEES
-----------------
2.1 Interest.
--------
(a) Interest Rates. All outstanding Obligations shall bear interest on
--------------
the unpaid principal amount thereof (including, to the extent permitted by law,
on interest thereon not paid when due) from the date made until paid in full in
cash at a rate determined by reference to the Base Rate or the LIBOR Rate plus
the Applicable Margin as set forth below, but not to exceed the Maximum Rate. If
at any time Loans are outstanding with respect to which the Borrower has not
delivered to the Agent a notice specifying the basis for determining the
interest rate applicable thereto in accordance herewith, those Loans shall bear
interest at a rate determined by reference to the Base Rate (unless the Default
Rate has been effected by the Agent or the Required Lenders pursuant to Section
2.1(b)) until notice to the contrary has been given to the Agent in accordance
with this Agreement and such notice has become effective. Except as otherwise
provided herein, the outstanding Obligations shall bear interest as follows:
(i) For all Base Rate Loans and other Obligations (other
than LIBOR Rate Loans) at a fluctuating per annum rate equal to the
Base Rate plus the Applicable Margin; and
(ii) For all LIBOR Rate Loans at a per annum rate equal to
the LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Loans as of the effective date of such change. All interest charges
shall be computed on the basis of a year of 360 days and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). The Borrower shall pay to the Agent, for the ratable benefit of
Lenders, interest accrued on all Base Rate Loans in arrears on the first day of
each month hereafter and on the Termination Date. The Borrower shall pay to the
Agent, for the ratable benefit of Lenders, interest on all LIBOR Rate Loans in
arrears on each LIBOR Interest Payment Date.
(b) Default Rate. If any Default or Event of Default occurs and
------------
is continuing and the Agent or the Required Lenders in their discretion so
elect, then, while any such Default or Event of Default is continuing, all of
the Obligations shall bear interest at the Default Rate applicable thereto.
2.2 Continuation and Conversion Elections.
-------------------------------------
(a) The Borrower may:
(i) elect, as of any Business Day, in the case of Base
Rate Loans to convert any Base Rate Loans (or any part thereof in an
amount not less than $1,000,000, or that is in an integral multiple of
$500,000 in excess thereof) into LIBOR Rate Loans; or
8
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Rate Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than
$1,000,000, or that is in an integral multiple of $500,000 in excess
thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans; provided further that if the notice
shall fail to specify the duration of the Interest Period, such Interest Period
shall be one month.
(b) The Borrower shall deliver a notice of continuation/conversion
("Notice of Continuation/Conversion") to the Agent not later than 12:00
noon (Dallas, Texas time) at least three (3) Business Days in advance of
the Continuation/Conversion Date, if the Loans are to be converted into or
continued as LIBOR Rate Loans and specifying:
(i) the proposed Continuation/Conversion Date;
(ii) the aggregate amount of Loans to be converted or
renewed; and
(iii) the duration of the requested Interest Period,
provided, however, the Borrower may not select an Interest Period
that ends after the Stated Termination Date.
(c) If upon the expiration of any Interest Period applicable to LIBOR
Rate Loans, the Borrower has failed to select timely a new Interest Period
to be applicable to LIBOR Rate Loans or if any Default or Event of Default
then exists, the Borrower shall be deemed to have elected to convert such
LIBOR Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt of a
Notice of Continuation/Conversion. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts
of the Loans with respect to which the notice was given held by each
Lender.
(e) There may not be more than three (3) different LIBOR Rate Loans in
effect hereunder at any time.
2.3 Maximum Interest Rate. In no event shall any interest rate provided
---------------------
for hereunder (including any fees or other compensation which are deemed or
determined to be interest) exceed the maximum rate legally chargeable by any
Lender under applicable law for such Lender with respect to loans of the type
provided for hereunder (the "Maximum Rate"). If, for any period, any interest,
absent such limitation, would have exceeded the Maximum Rate, then the interest
rate for that period shall be the Maximum Rate, and, if in future periods, that
interest rate would otherwise be less than the Maximum Rate, then that interest
rate shall remain at the Maximum Rate until such time as the amount of interest
paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate.
9
In the event that, upon payment in full of the Obligations, the total amount of
interest paid or accrued under the terms of this Agreement is less than the
total amount of interest which would, but for this Section 2.3, have been paid
or accrued if the interest rate otherwise set forth in this Agreement had at all
times been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Agent, for the account of the Lenders, an amount equal
to the excess of (a) the lesser of (i) the amount of interest which would have
been charged if the Maximum Rate had, at all times, been in effect or (ii) the
amount of interest which would have accrued had the interest rate otherwise set
forth in this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement. If a court of competent
jurisdiction determines that the Agent and/or any Lender has received interest
and other charges hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce, the
Obligations other than interest, in the inverse order of maturity, and if there
are no Obligations outstanding, the Agent and/or such Lender shall refund to the
Borrower such excess.
2.4 Closing Fees. The Borrower shall pay to the Agent and the Bank, as the
------------
case may be, solely for their respective accounts, the fees described in the Fee
Letter (collectively, the "Closing Fees").
2.5 Unused Line Fee. On the first day of each month hereafter and on the
---------------
Termination Date the Borrower agrees to pay to the Agent, for the account of the
Lenders, in accordance with their respective Pro Rata Shares, an unused line fee
(the "Unused Line Fee") equal to the Applicable Margin for the Unused Line Fee
times the amount by which the Maximum Revolver Amount exceeded the sum of the
average daily outstanding principal amount of Revolving Loans and the average
daily undrawn face amount of outstanding Letters of Credit, during the
immediately preceding month or shorter period if calculated for the first month
hereafter or on the Termination Date. The Unused Line Fee shall be computed on
the basis of a 360-day year for the actual number of days elapsed. All principal
payments received by the Agent shall be deemed to be credited to the Borrower's
Loan Account immediately upon receipt for purposes of calculating the Unused
Line Fee pursuant to this Section 2.5.
2.6 Letter of Credit Fee. The Borrower agrees to pay (a) to the Agent, for
--------------------
the account of the Lenders, in accordance with their respective Pro Rata Shares,
for each Letter of Credit, a per annum fee (the "Letter of Credit Fee") equal to
(i) the Applicable Margin for LIBOR Rate Loans multiplied by (ii) the stated
amount of each Letter of Credit, (b) on the date of issuance of any Letter of
Credit, to the Agent for the benefit of the Letter of Credit Issuer, a fronting
fee equal to the greater of (i) $1,500, and (ii) one-quarter of one percent
(0.25%) per annum of the undrawn face amount of each Letter of Credit, and (c)
on the date of issuance of any Letter of Credit, to the Letter of Credit Issuer,
all out-of-pocket costs, fees, and expenses incurred by the Letter of Credit
Issuer in connection with the application for, processing of, issuance of, or
amendment to any Letter of Credit. The Letter of Credit Fee shall be payable
monthly in arrears on the first day of each month following any month in which a
Letter of Credit is outstanding and on the Termination Date. The Letter of
Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed.
2.7 Collection Fees. The Borrower shall pay to the Agent, for its own
---------------
account, a Collection Fee in the amount and at the times set out in the Fee
Letter.
10
ARTICLE 3
PAYMENTS AND PREPAYMENTS
------------------------
3.1 Revolving Loans. The Borrower shall repay the outstanding principal
---------------
balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on
the Termination Date. The Borrower may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement. In addition, and without
limiting the generality of the foregoing, upon demand the Borrower shall pay to
the Agent, for account of the Lenders, the amount, without duplication, by which
the Aggregate Revolver Outstandings exceeds the lesser of the Borrowing Base or
the Maximum Revolver Amount.
3.2 Termination of Facility. The Borrower may terminate this Agreement
-----------------------
upon at least ten (10) Business Days' notice to the Agent and the Lenders, upon
(a) the payment in full of all outstanding Revolving Loans, together with
accrued interest thereon, and the cancellation and return of all outstanding
Letters of Credit, (b) the payment in full in cash of all reimbursable expenses
and other Obligations, and (c) with respect to any LIBOR Rate Loans prepaid,
payment of the amounts due under Section 4.4, if any. If this Agreement is
terminated at any time on or prior to the first Anniversary Date, whether
pursuant to this Section or pursuant to Section 9.2, the Borrower shall pay to
the Agent, for the account of the Lenders, an early termination fee equal to
..500% of the Maximum Revolver Amount, provided, however, payment of the early
termination fee shall not be required in the event that the Borrower refinances
the Total Facility with a credit facility arranged or syndicated by the Bank.
3.3 Prepayments of the Loans.
-------------------------
(a) Immediately upon receipt by any Company of proceeds of any
asset disposition (excluding proceeds of asset dispositions permitted by Section
7.9(A)), Borrower shall prepay the Loans in an amount equal to all such
proceeds, net of (A) commissions and other reasonable and customary transaction
costs, fees, and expenses properly attributable to such transaction and payable
by the Borrower in connection therewith (in each case, paid to non-Affiliates),
(B) transfer taxes, (C) amounts payable to holders of senior Liens (to the
extent such Liens constitute Permitted Liens hereunder), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in connection
therewith ("Net Proceeds"). Any such prepayment shall be applied in accordance
with Section 3.3(b).
(b) Prepayments from the proceeds of all asset dispositions in
accordance with Section 3.3(a) shall be applied as follows: first, to accrued
interest with respect to the Revolving Loans, second, to pay the principal of
the Revolving Loans, and third to cash collateralize outstanding Letters of
Credit.
(c) No provision contained in the Section 3.3 shall constitute a
consent to an asset disposition that is otherwise not permitted by the terms of
this Agreement.
3.4 LIBOR Rate Loan Prepayments. In connection with any prepayment, if any
---------------------------
LIBOR Rate Loans are prepaid prior to the expiration date of the Interest Period
applicable thereto, the Borrower shall pay to the Lenders the amounts described
in Section 4.4.
11
3.5 Payments by the Borrower.
------------------------
(a) All payments to be made by the Borrower shall be made
without set-off, recoupment, or counterclaim. Except as otherwise expressly
provided herein, all payments by the Borrower shall be made to the Agent for the
account of the Lenders, at the account designated by the Agent and shall be made
in Dollars and in immediately available funds, no later than 12:00 noon (Dallas,
Texas time) on the date specified herein. Any payment received by the Agent
after such time shall be deemed (for purposes of calculating interest only) to
have been received on the following Business Day and any applicable interest
shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period", whenever any payment is due on a day other than a Business
Day, such payment shall be due on the following Business Day, and such extension
of time shall in such case be included in the computation of interest or fees,
as the case may be.
3.6 Payments as Revolving Loans. At the election of Agent, all payments of
---------------------------
principal, interest, reimbursement obligations in connection with Letters of
Credit and Credit Support, fees, premiums, reimbursable expenses, and other sums
payable hereunder may be paid from the proceeds of Revolving Loans made
hereunder. The Borrower hereby irrevocably authorizes the Agent to charge the
Loan Account for the purpose of paying all amounts from time to time due
hereunder and agrees that all such amounts charged shall constitute Revolving
Loans (including Agent Advances).
3.7 Apportionment, Application, and Reversal of Payments. Principal and
----------------------------------------------------
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Loans to which such payments relate held by
each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders, except for fees payable solely to Agent and the
Letter of Credit Issuer and except as provided in Section 11.1(b). All payments
shall be remitted to the Agent and all such payments not relating to principal
or interest of specific Loans, or not constituting payment of specific fees, and
all proceeds of Accounts or other Collateral received by the Agent, shall be
applied, ratably, subject to the provisions of this Agreement as follows: first,
to pay any fees, indemnities, or expense reimbursements including any amounts
relating to Bank Products then due to the Agent from the Borrower; second, to
pay any fees or expense reimbursements then due to the Lenders from the
Borrower; third, to pay interest due in respect of all Loans, including Agent
Advances; fourth, to pay or prepay principal of the Agent Advances; fifth, to
pay or prepay principal of the Revolving Loans (other than Agent Advances) and
unpaid reimbursement obligations in respect of Letters of Credit; sixth, to pay
an amount to the Agent equal to all outstanding Letter of Credit Obligations to
be held as cash collateral for such Obligations; and seventh, to the payment of
any other Obligation due to the Agent or any Lender by the Borrower.
Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by the Borrower, or unless an Event of Default has occurred and is
continuing, neither the Agent nor any Lender shall apply any payments which it
receives to any LIBOR Rate Loan, except (a) on the expiration date of the
Interest Period applicable to any such LIBOR Rate Loan, or (b) in the event, and
only to the extent, that there are no outstanding Base Rate Loans and, in any
event, the Borrower shall pay LIBOR breakage losses in accordance with Section
4.4. The Agent and the Lenders shall have the continuing and
12
exclusive right to apply and reverse and reapply any and all such proceeds and
payments to any portion of the Obligations.
3.8 Indemnity for Returned Payments. If after receipt of any payment which
-------------------------------
is applied to the payment of all or any part of the Obligations, the Agent, any
Lender, the Bank, or any Affiliate of the Bank is for any reason compelled to
surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the Obligations or part
thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent or such Lender and the Borrower shall be liable to
pay to the Agent and the Lenders, and hereby does indemnify the Agent and the
Lenders and hold the Agent and the Lenders harmless for the amount of such
payment or proceeds surrendered. The provisions of this Section 3.8 shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Agent's and the Lenders' rights under this Agreement and shall be deemed to
have been conditioned upon such payment or application of proceeds having become
final and irrevocable. The provisions of this Section 3.8 shall survive the
termination of this Agreement.
3.9 Agent's and Lenders' Books and Records; Monthly Statements. The Agent
----------------------------------------------------------
shall record the principal amount of the Loans owing to each Lender, the undrawn
face amount of all outstanding Letters of Credit, and the aggregate amount of
unpaid reimbursement obligations outstanding with respect to the Letters of
Credit from time to time on its books. In addition, each Lender may note the
date and amount of each payment or prepayment of principal of such Lender's
Loans in its books and records. Failure by the Agent or any Lender to make such
notation shall not affect the obligations of the Borrower with respect to the
Loans or the Letters of Credit. The Borrower agrees that the Agent's and each
Lender's books and records showing the Obligations and the transactions pursuant
to this Agreement and the other Loan Documents shall be admissible in any action
or proceeding arising therefrom, and shall constitute rebuttably presumptive
proof thereof, irrespective of whether any Obligation is also evidenced by a
promissory note or other instrument. The Agent will provide to the Borrower a
monthly statement of Loans, payments, and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on the
Borrower and an account stated (except for reversals and reapplications of
payments made as provided in Section 3.6 and corrections of errors discovered by
the Agent), unless the Borrower notifies the Agent in writing to the contrary
within thirty (30) days after such statement is received. In the event a timely
written notice of objections is given by the Borrower, only the items to which
exception is expressly made will be considered to be disputed by the Borrower.
13
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.1 Taxes.
-----
(a) Any and all payments by the Borrower to each Lender or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding, for any Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by any Lender or the Agent and any liability (including penalties,
interest, additions to tax, and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days after
the date such Lender or the Agent makes written demand therefor.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable
under this Section) such Lender or the Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to each Lender or the
Agent for the account of such Lender, at the time interest is paid,
all additional amounts which the respective Lender specifies as
necessary to preserve the after-tax yield such Lender would have
received if such Taxes or Other Taxes had not been imposed.
(d) At the Agent's request, within 30 days after the date of any
payment by the Borrower of Taxes or Other Taxes, the Borrower shall furnish the
Agent the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any
Lender or the Agent pursuant to subsection (c) of this Section, then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its lending office so as to eliminate any such
additional payment by the Borrower which may
14
thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender.
4.2 Illegality.
----------
(a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable lending office to make
LIBOR Rate Loans, then, on notice thereof by that Lender to the Borrower through
the Agent, any obligation of that Lender to make LIBOR Rate Loans shall be
suspended until that Lender notifies the Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain
any LIBOR Rate Loan, the Borrower shall, upon its receipt of notice of such fact
and demand from such Lender (with a copy to the Agent), prepay in full such
LIBOR Rate Loans of that Lender then outstanding, together with interest accrued
thereon and amounts required under Section 4.4, either on the last day of the
Interest Period thereof, if that Lender may lawfully continue to maintain such
LIBOR Rate Loans to such day, or immediately, if that Lender may not lawfully
continue to maintain such LIBOR Rate Loans. If the Borrower is required to so
prepay any LIBOR Rate Loans, then concurrently with such prepayment, the
Borrower shall borrow from the affected Lender, in the amount of such
prepayment, a Base Rate Loan.
4.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) If any Lender determines that due to either (i) the
introduction of or any change in the interpretation of any law or regulation or
(ii) the compliance by that Lender with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Lender of agreeing to make
or making, funding, or maintaining any LIBOR Rate Loans, then the Borrower shall
be liable for, and shall from time to time, upon demand (with a copy of such
demand to be sent to the Agent), pay to the Agent for the account of such
Lender, additional amounts as are sufficient to compensate such Lender for such
increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by such Lender or any corporation or other entity controlling such
Lender with any Capital Adequacy Regulation, affects or would affect the rate of
return on the capital of such Lender or any corporation or other entity
controlling such Lender and (taking into consideration such Lender's or such
corporation's or other entity's policies with respect to capital adequacy and
such Lender's desired return on capital) determines that the rate of return on
the capital is decreased as a consequence of its Commitments, loans, credits, or
obligations under this Agreement, then, upon demand of such Lender to the
Borrower through the Agent, the
15
Borrower shall pay to such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender for such
reduction.
4.4 Funding Losses. The Borrower shall reimburse each Lender and hold each
--------------
Lender harmless from any loss or expense which such Lender may sustain or incur
as a consequence of:
(a) the failure of the Borrower to make on a timely basis any payment
of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue, or convert a
Loan after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after acceleration
thereof) of any LIBOR Rate Loans on a day that is not the last day of the
relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans or from fees payable to terminate the deposits from which such
funds were obtained. Borrower shall also pay any customary administrative fees
charged by any Lender in connection with the foregoing.
4.5 Inability to Determine Rates. If the Agent determines that for any
----------------------------
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will promptly so notify the Borrower and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, the Borrower may revoke any Notice of
Borrowing or Notice of Continuation/Conversion then submitted by it. If the
Borrower does not revoke such Notice, the Lenders shall make, convert, or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted, or continued as Base Rate Loans instead of LIBOR Rate Loans.
4.6 Certificates of the Agent. If any Lender claims reimbursement or
-------------------------
compensation under this Article 4, Agent shall determine the amount thereof and
shall deliver to the Borrower (with a copy to the affected Lender) a certificate
setting forth in reasonable detail the amount payable to the affected Lender,
and such certificate shall be conclusive and binding on the Borrower in the
absence of manifest error.
4.7 Survival. The agreements and obligations of the Borrower in this
--------
Article 4 shall survive the payment of all other Obligations.
16
ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
-------------------------------------------------
5.1 Books and Records. The Companies shall maintain, at all times, correct
-----------------
and complete books, records, and accounts in which complete, correct, and timely
entries are made of their respective transactions in accordance with GAAP
applied consistently with the audited Financial Statements required to be
delivered prior to the Closing Date and attached hereto as Exhibit C pursuant to
Section 6.6, except for mandatory changes in GAAP or other changes approved by
the Agent. The Companies shall, by means of appropriate entries, reflect in such
accounts and in all Financial Statements proper liabilities and reserves for all
taxes and proper provision for depreciation and amortization of property and bad
debts, all in accordance with GAAP. The Loan Parties shall maintain at all times
books and records pertaining to the Collateral in such detail, form, and scope
as the Agent or any Lender shall reasonably require, including, but not limited
to, records of (a) all payments received and all credits and extensions granted
with respect to the Accounts; (b) the return, rejection, repossession, stoppage
in transit, loss, damage, or destruction of any Inventory; and (c) all other
dealings affecting the Collateral.
5.2 Financial and Other Information. The Borrower shall promptly furnish
-------------------------------
to the Agent, all such financial information regarding the Companies as the
Agent shall reasonably request. Without limiting the foregoing, the Borrower
will furnish to the Agent, in sufficient copies for distribution by the Agent to
each Lender, in such detail as the Agent or the Lenders shall request, the
following:
(a) As soon as available, but in any event not later than ninety
(90) days after the close of each Fiscal Year, consolidated audited and
consolidating unaudited balance sheets and income statements, and consolidated
audited cash flow statements and changes in stockholders' equity, for the
Companies for such Fiscal Year, and the accompanying notes thereto, setting
forth in each case in comparative form figures for the previous Fiscal Year, all
in reasonable detail, fairly presenting the financial position and the results
of operations of the Companies as at the date thereof and for the Fiscal Year
then ended, and prepared in accordance with GAAP. Such statements shall be
examined in accordance with generally accepted auditing standards by and, in the
case of such statements performed on a consolidated basis, accompanied by an
unqualified report thereon of independent certified public accountants selected
by the Borrower and reasonably satisfactory to the Agent. The Borrower hereby
authorizes the Agent, after notice to the Borrower, to communicate directly with
its certified public accountants and, by this provision, authorizes those
accountants to disclose to the Agent any and all financial statements and other
supporting financial documents and schedules relating to the Borrower and to
discuss directly with the Agent the finances and affairs of the Companies.
(b) As soon as available, but in any event not later than forty-
five (45) days after the last day of the first three fiscal quarters of each
Fiscal Year, consolidated and consolidating unaudited balance sheets and income
statements, and consolidated cash flow statements and changes in stockholders'
equity, for the Companies for such fiscal quarter and for the period from the
beginning of the then-current fiscal year to, such last day.
(c) As soon as available, but in any event not later than thirty
(30) days after the end of each month, consolidated unaudited balance sheets of
the Companies as at
17
the end of such month, and consolidated unaudited income statements and cash
flow statements for the Companies for such month and for the period from the
beginning of the Fiscal Year to the end of such month, all in reasonable detail,
fairly presenting the financial position and results of operations of the
Companies as at the date thereof and for such periods, and prepared in
accordance with GAAP applied consistently with the audited Financial Statements
required to be delivered pursuant to Section 5.2(a). The Borrower shall certify
by a certificate signed by a Responsible Officer that all such statements have
been prepared in accordance with GAAP and present fairly the Borrower's
financial position as at the dates thereof and its results of operations for the
periods then ended, subject to normal year-end adjustments.
(d) With each of the annual audited Financial Statements
delivered pursuant to Section 5.2(a), each quarterly Financial Statements
delivered pursuant to Section 5.2(b), and within thirty (30) days after the end
of each month, a certificate of a Responsible Officer setting forth in
reasonable detail the calculations required to establish that the Borrower was
in compliance with the covenants set forth in Sections 7.22 through 7.25 during
the period covered in such Financial Statements and at the end of such period.
Within thirty (30) days after the end of each month, a certificate of a
Responsible Officer stating that, except as explained in reasonable detail in
such certificate, (A) all of the representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents are correct and
complete in all material respects as at the date of such certificate as if made
at such time, except for those that speak as of a particular date, (B) the
Borrower is, at the date of such certificate, in compliance in all material
respects with all of its respective covenants and agreements in this Agreement
and the other Loan Documents, (C) no Default or Event of Default then exists or
existed during the period covered by the Financial Statements and at the end of
such period, (D) describing and analyzing in reasonable detail all material
trends, changes, and developments in each and all Financial Statements; and (E)
explaining the variances of the figures in the corresponding budgets and prior
Fiscal Year financial statements. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant has
not been complied with, or that a Default or Event of Default existed or exists,
such certificate shall set forth what action the Borrower has taken or proposes
to take with respect thereto.
(e) No sooner than sixty (60) days and not less than thirty (30)
days prior to the beginning of each Fiscal Year, annual forecasts (to include
forecasted consolidated balance sheets, income statements and cash flow
statements) for the Companies as at the end of and for each fiscal quarter of
such Fiscal Year.
(f) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other filing filed with respect to each Plan of the
Borrower.
(g) Promptly upon the filing thereof, copies of all reports, if
any, to or other documents filed by any Company with the Securities and Exchange
Commission under the Exchange Act, and all reports, notices, or statements sent
or received by any Company to or from the holders of the Subordinated Debt or
any other Debt of any Company registered under the Securities Act of 1933 or to
or from the trustee under any indenture under which the same is issued.
18
(h) As soon as available, but in any event not later than thirty
(30) days after the Borrower's receipt thereof, a copy of all management reports
and management letters prepared for the Borrower by any independent certified
public accountants of the Borrower in connection with the audited Financial
Statements of the Borrower for any Fiscal Year.
(i) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the Borrower makes
available to its shareholders.
(j) If requested by the Agent, promptly after filing with the
IRS, a copy of each tax return filed by any Company.
(k) As soon as available, but in any event within fifteen (15)
days after the end of each month or more frequently if requested by the Agent to
determine Availability or otherwise, in form and substance reasonably
satisfactory to the Agent: (i) a schedule of each Loan Party's Accounts created,
credits given, cash collected, and other adjustments to Accounts since the last
such schedule and a Borrowing Base Certificate; (ii) an aging of each Loan
Party's Accounts together with a reconciliation to the previous calendar month
end's accounts receivable balance of such Loan Party's Accounts and to its
general ledger; (iii) an aging of each Loan Party's accounts payable; (iv) a
detailed calculation of Eligible Accounts and Eligible Inventory; (v) upon the
Agent's reasonable request, copies of invoices in connection with each Loan
Party's Accounts, customer statements, credit memos, remittance advices and
reports, deposit slips, and shipping and delivery documents in connection with
each Loan Party's Accounts and for Inventory acquired by each Loan Party; (vi)
an Inventory report in a form reasonably acceptable to the Agent; (vii) such
other reports as to the Collateral as the Agent shall reasonably request from
time to time; and (viii) with the delivery of each of the foregoing, a
certificate executed by a Responsible Officer of the Borrower on behalf of all
of the Loan Parties certifying as to the accuracy and completeness of the
foregoing. If any of the Loan Parties' records or reports of the Collateral are
prepared by an accounting service or other agent, each Loan Party hereby
authorizes, and shall cause each Loan Party to authorize, such service or agent
to deliver such records, reports, and related documents to the Agent for
distribution to the Lenders. Notwithstanding the foregoing, at any time after
the occurrence of the Triggering Date unless waived by Required Lenders, the
items required by this clause (k) shall be required to be prepared and delivered
weekly.
(l) Such additional information as the Agent and/or any Lender
may from time to time reasonably request regarding the financial and business
affairs of any Company.
(m) With respect to the post-closing requirements set forth on
Schedule 8.1, deliver, or cause to be delivered, to the Agent, all agreements,
documents, instruments, or other items listed on Schedule 8.1 on or prior to the
date specified for delivery thereof on Schedule 8.1 or such later date as agreed
to by the Agent.
5.3 Notices to the Lenders. The Borrower shall notify the Agent and the
----------------------
Lenders in writing of the following matters at the following times:
19
(a) Immediately after becoming aware of any Default or Event of Default;
(b) Immediately after becoming aware of the assertion by the holder of any
capital stock of any Company or the holder of any Debt of any Company in a face
amount in excess of $500,000 that a default exists with respect thereto or that
such Company is not in compliance with the terms thereof, or the threat or
commencement by such holder of any enforcement action because of such asserted
default or non-compliance;
(c) Immediately after becoming aware of any event or circumstance which
could reasonably be expected to have a Material Adverse Effect;
(d) Immediately after becoming aware of any pending or threatened action,
suit, or proceeding, by any Person, or any pending or threatened investigation
by a Governmental Authority, which could reasonably be expected to have a
Material Adverse Effect;
(e) Immediately after becoming aware of any pending or threatened strike,
work stoppage, unfair labor practice claim, or other labor dispute affecting any
Company in a manner which could reasonably be expected to have a Material
Adverse Effect;
(f) Immediately after becoming aware of any violation of any law, statute,
regulation, or ordinance of a Governmental Authority affecting any Company which
could reasonably be expected to have a Material Adverse Effect;
(g) Immediately after receipt of any notice of any violation by any
Company of any Environmental Law which could reasonably be expected to have a
Material Adverse Effect or that any Governmental Authority has asserted in
writing that any Company is not in compliance with any Environmental Law;
(h) Immediately after receipt of any written notice that any Company is or
may be liable to any Person as a result of the Release or threatened Release of
any Hazardous Materials or that any Company is subject to investigation by any
Governmental Authority evaluating whether any remedial action is needed to
respond to the Release or threatened Release of any Hazardous Materials which,
in either case, is reasonably likely to give rise to liability in excess of
$500,000.
(i) Immediately after receipt of any written notice of the imposition of
any Environmental Lien against any property of any Company;
(j) Any change in any Loan Party's name as it appears in the state of its
incorporation or other organization, state of incorporation or organization,
type of entity, organizational identification number, locations of Collateral,
or form of organization, trade names under which any Loan Party will sell
Inventory or create Accounts, or to which instruments in payment of Accounts may
be made payable, in each case at least thirty (30) days prior thereto;
20
(k) Within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of
the Code) which is reasonably expected to have a Material Adverse
Effect has occurred, and, when known, any action taken or threatened by
the IRS, the DOL, or the PBGC with respect thereto;
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within
three (3) Business Days after the filing thereof with the PBGC, the
DOL, or the IRS, as applicable, copies of the following: (i) each
annual report (form 5500 series), including Schedule B thereto, filed
with the PBGC, the DOL, or the IRS with respect to each Plan, (ii) a
copy of each funding waiver request filed with the PBGC, the DOL, or
the IRS with respect to any Plan and all communications received by
the Borrower or any ERISA Affiliate from the PBGC, the DOL, or the IRS
with respect to such request, and (iii) a copy of each other filing or
notice filed with the PBGC, the DOL, or the IRS, with respect to each
Plan by either the Borrower or any ERISA Affiliate;
(m) Upon request, copies of each actuarial report for any Plan
or Multi-employer Plan and annual report for any Multi-employer Plan;
and within three (3) Business Days after receipt thereof by the
Borrower or any ERISA Affiliate, copies of the following: (i) any
notices of the PBGC's intention to terminate a Plan or to have a
trustee appointed to administer such Plan; (ii) any favorable or
unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code; or (iii) any
notice from a Multi-employer Plan regarding the imposition of
withdrawal liability;
(n) Within three (3) Business Days after the occurrence thereof:
(i) any changes in the benefits of any existing Plan which increase
the Borrower's annual costs with respect thereto by an amount in
excess of $500,000, or the establishment of any new Plan or the
commencement of contributions to any Plan to which the Borrower or any
ERISA Affiliate was not previously contributing; or (ii) any failure
by the Borrower or any ERISA Affiliate to make a required installment
or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment; or
(o) Within three (3) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know that any of the following
events has or will occur: (i) a Multi-employer Plan has been or will
be terminated; (ii) the administrator or plan sponsor of a Multi-
employer Plan intends to terminate a Multi-employer Plan; or (iii) the
PBGC has instituted or will institute proceedings under Section 4042
of ERISA to terminate a Multi-employer Plan.
Each notice given under this Section shall describe the subject
matter thereof in reasonable detail, and shall set forth the action that
the Borrower, its Subsidiary, or any ERISA Affiliate, as applicable, has
taken or proposes to take with respect thereto.
21
ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
--------------------------------------
The Borrower (and each other Loan Party by executing an Obligation
Guaranty, with respect to such Loan Party) warrants and represents to the Agent
and the Lenders that except as hereafter disclosed to and accepted by the Agent
and the Required Lenders in writing:
6.1 Authorization, Validity, and Enforceability of this Agreement and the
---------------------------------------------------------------------
Loan Documents. Each Loan Party has the power and authority to execute, deliver,
--------------
and perform this Agreement and the other Loan Documents to which it is a party,
to incur the Obligations, and to grant to the Agent Liens upon and security
interests in the Collateral. Each Loan Party has taken all necessary action
(including obtaining approval of its stockholders if necessary) to authorize its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents to
which it is a party have been duly executed and delivered by each Loan Party,
and constitute the legal, valid, and binding obligations of each Loan Party,
enforceable against each such Loan Party in accordance with their respective
terms except as enforceability may be limited by the Federal Bankruptcy Code or
by any other state or federal bankruptcy or insolvency act or law and general
principles of equity. Each Loan Party's execution, delivery, and performance of
this Agreement and the other Loan Documents to which it is a party do not and
will not conflict with, or constitute a violation or breach of, or result in the
imposition of any Lien (other than in favor of the Agent) upon the property of
such Loan Party, by reason of the terms of (a) any contract, mortgage, lease,
agreement, indenture, or instrument to which such Loan Party is a party or which
is binding upon it, (b) any Requirement of Law applicable to such Loan Party, or
(c) the certificate or articles of incorporation or by-laws or the limited
liability company or limited partnership agreement of such Loan Party.
6.2 Validity and Priority of Security Interest. The provisions of this
------------------------------------------
Agreement, the Security Agreements, and the other Loan Documents create legal
and valid Liens on all the Collateral in favor of the Agent, for the ratable
benefit of the Agent and the Lenders, and, upon the filing of all applicable
financing statements against the Loan Parties, such Liens shall constitute
perfected Liens on all the Collateral, having priority over all other Liens on
the Collateral, except for those Liens identified in clauses (c), (d), and (e)
of the definition of Permitted Liens securing all the Obligations, and
enforceable against each Loan Party and all third parties.
6.3 Organization and Qualification. Each Loan Party (a) is duly organized
------------------------------
or incorporated and validly existing in good standing under the laws of the
state of its organization or incorporation, (b) except where the failure to do
so could not reasonably be expected to have a Material Adverse Effect is
qualified to do business and is in good standing in the jurisdictions set forth
on Schedule 6.3 which are the only jurisdictions in which qualification is
necessary in order for it to own or lease its property and conduct its business,
and (c) has all requisite power and authority to conduct its business and to own
its property except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect.
6.4 Corporate Name; Prior Transactions. Except as set forth on Schedule
----------------------------------
6.4, no Loan Party has, during the past five (5) years, been known by or used
any other corporate or
22
fictitious name, or been a party to any merger or consolidation, or acquired all
or substantially all of the assets of any Person, or acquired any of its
property outside of the ordinary course of business.
6.5 Subsidiaries and Affiliates. Schedule 6.3 is a correct and complete
---------------------------
list of the name and relationship to each Company of each and all Subsidiaries
and other Affiliates.
6.6 Financial Statements and Projections.
------------------------------------
(a) The Borrower has delivered to the Agent and the Lenders the
audited balance sheet and related statements of income, retained earnings, cash
flows, and changes in stockholders equity for the Companies as of December 31,
2000, and for the Fiscal Year then ended, accompanied by the report thereon of
the Borrower's independent certified public accountants, PricewaterhouseCoopers
LLC. The Borrower has also delivered to the Agent and the Lenders the unaudited
balance sheet and related statements of income and cash flows for the Companies
as of September 30, 2001. Such Financial Statements are attached hereto as
Exhibit C. All such Financial Statements have been prepared in accordance with
GAAP and present accurately and fairly in all material respects the financial
position of the Companies as at the dates thereof and their results of
operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as
required herein, represent the Borrower's best estimate of the future financial
performance of the Companies for the periods set forth therein. The Latest
Projections have been prepared on the basis of the assumptions set forth
therein, which the Borrower believes are fair and reasonable in light of current
and reasonably foreseeable business conditions at the time submitted to the
Lenders.
6.7 Solvency. At the time of each Borrowing hereunder, and on the dates of
--------
the issuance of any Letters of Credit to be issued hereunder and each Permitted
Acquisition, each Company is (and after giving effect to the transactions
contemplated by the Loan Documents, any Permitted Acquisition, and any
incurrence of additional Debt, will be) Solvent.
6.8 Debt. After giving effect to the making of the Revolving Loans to be
----
made on the Closing Date, the Companies have no Debt, except (a) the
Obligations, (b) Debt described on Schedule 6.8, and (c) other Debt permitted by
Section 7.13.
6.9 Distributions. Since December 31, 2000, no Distribution has been
-------------
declared, paid, or made upon or in respect of any capital stock or other
securities of the Borrower or any of its Subsidiaries, except Distributions
permitted by Section 7.10.
6.10 Real Estate; Leases. Schedule 6.10 sets forth, as of the Closing Date,
-------------------
a correct and complete list of all Real Estate owned by any Loan Party, all
leases and subleases of real or personal property held by any Loan Party as
lessee or sublessee (other than leases of personal property as to which any Loan
Party is lessee or sublessee for which the value of such personal property in
the aggregate is less than $1,000,000), and all leases and subleases of real or
personal property held by any Loan Party as lessor, or sublessor. To the best of
the Borrower's knowledge, each of such leases and subleases is valid and
enforceable in accordance with its terms against the Loan Party which is a party
thereto and is in full force and effect, and no
23
default by any party to any such lease or sublease exists. Each Loan Party has
good, indefeasible, and merchantable title in fee simple to the Real Estate
identified on Schedule 6.10 as owned by such Loan Party, or valid leasehold
interests in all Real Estate designated therein as "leased" by such Loan Party
and each Loan Party has good, indefeasible, and merchantable title to all of its
other property reflected on the October 31, 2001, Financial Statements delivered
to the Agent and the Lenders, except as disposed of in the ordinary course of
business since the date thereof, free of all Liens except Permitted Liens.
6.11 Proprietary Rights. Within 60 days of the Closing Date (as such date
------------------
may be extended by the Agent in its sole discretion), Schedule 6.11 shall set
forth a correct and complete list of all of the federally registered or
otherwise material patents, trademarks, service marks, trade names, and
copyrights of each of the Loan Parties. To the best of the Borrower's knowledge,
none of the Proprietary Rights infringes on or conflicts with any other Person's
property, and no other Person's property infringes on or conflicts with the
Proprietary Rights. The federally registered or otherwise material patents,
trademarks, service marks, trade names, and copyrights described on Schedule
6.11 (as supplemented as provided herein) and other Proprietary Rights of the
Loan Parties constitute all of the property of such type necessary to the
current and anticipated future conduct of the business of the Loan Parties.
6.12 Trade Names. All trade names or styles under which any Loan Party will
-----------
sell Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, are listed on Schedule 6.12.
6.13 Litigation. There is no pending, or to the best of the Borrower's
----------
knowledge threatened, action, suit, proceeding, or counterclaim by any Person
against any Company, or to the best of the Borrower's knowledge, investigation
by any Governmental Authority, or any basis for any of the foregoing, which
could reasonably be expected to have a Material Adverse Effect.
6.14 Labor Disputes. As of the Closing Date (a) there is no collective
--------------
bargaining agreement or other labor contract covering employees of any Company,
(b) no such collective bargaining agreement or other labor contract is scheduled
to expire during the term of this Agreement, (c) no union or other labor
organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of any Company or for any similar purpose, and (d)
there is no pending or (to the best of the Borrower's knowledge) threatened,
strike, work stoppage, material unfair labor practice claim, or other material
labor dispute against or affecting any Company or their employees.
6.15 Environmental Matters. The Companies conduct and have conducted
---------------------
reviews to determine that their properties and operations are in material
compliance with the Environmental Laws and to identify and evaluate associated
material costs and liabilities under Environmental Laws (including, without
limitation, (i) any capital or operating expenditures required for clean-up or
closure of properties presently owned or operated, (ii) any capital or operating
expenditure required to achieve or maintain compliance with Environmental Laws
and all Environmental Permits held by any Company; (iii) any related constraints
on operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of, or change in the nature of operation of,
any facility; (iv) any costs or liabilities in connection
24
with off-site disposal of wastes or Hazardous Materials; and (v) any actual or
potential liability to third parties, including employees, and any related costs
and expenses). There is (a) no environmental condition or circumstance, such as
the presence or Release of any Hazardous Materials, on any property presently or
previously owned, operated, or used by any Company that could reasonably be
expected to have a Material Adverse Effect, (b) no Environmental Liability or
violation of or by any Company of any Environmental Law, except for such
liabilities or violations that could not reasonably be expected to have a
Material Adverse Effect, and (c) no obligation by any Company to address any
Environmental Liability or remedy any violation of any Environmental Law, except
for such obligations that could not have a Material Adverse Effect. Except as
could not reasonably be expected to have a Material Adverse Effect, the
Companies possess all necessary Environmental Permits and approvals required to
conduct their respective operations and are operating in substantial compliance
thereunder. No Environmental Lien has attached to the Real Estate.
6.16 No Violation of Law. No Company is in violation of any Requirement of
-------------------
Law applicable to it which violation could reasonably be expected to have a
Material Adverse Effect.
6.17 No Default. No Company is in default with respect to any note,
----------
indenture, loan agreement, mortgage, lease, deed, or other agreement to which
such Company is a party or by which it is bound, which default could reasonably
be expected to have a Material Adverse Effect.
6.18 ERISA Compliance. Each Plan is in compliance in all material respects
----------------
with the applicable provisions of ERISA, the Code, and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the Borrower, nothing has occurred which would cause the loss of such
qualification. The Borrower and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and (v)
neither the Borrower nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
25
6.19 Taxes. The Companies have filed all federal and other tax returns and
-----
reports required to be filed, and have paid all federal and other taxes,
assessments, fees, and other governmental charges levied or imposed upon them or
their properties, income, or assets otherwise due and payable unless such unpaid
taxes and assessments would constitute a Permitted Lien.
6.20 Regulated Entities. No Loan Party is an "Investment Company" within
------------------
the meaning of the Investment Company Act of 1940. No Loan Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code or law,
or any other federal or state statute or regulation limiting its ability to
incur Debt.
6.21 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
-----------------------------------
be used solely (a) to refinance existing Debt, (b) to pay the costs and expenses
related to this Agreement, (c) for working capital purposes of the Companies,
(d) so long as the Triggering Date has not occurred (unless consented to by
Required Lenders), to finance Permitted Acquisitions, (e) to finance Capital
Expenditures, and (f) for general corporate purposes. No Company is engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.22 Copyrights, Patents, Trademarks and Licenses, etc. Each Loan Party
-------------------------------------------------
owns or is licensed or otherwise has the right to use all of the Proprietary
Rights, contractual franchises, licenses, permits, rights of way,
authorizations, and other rights that are reasonably necessary for the operation
of its businesses, without conflict with the rights of any other Person. To the
best knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance, part, or other material now employed, or now
contemplated to be employed, by any Company infringes upon any rights held by
any other Person. No claim or litigation regarding any of the foregoing is
pending or, to the knowledge of the Borrower, threatened, which, in either case,
could reasonably be expected to have a Material Adverse Effect.
6.23 No Material Adverse Change. No Material Adverse Effect has occurred
--------------------------
since the latest date of the Financial Statements delivered to the Lenders.
6.24 Full Disclosure. None of the representations or warranties made by any
---------------
Loan Party in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement, or certificate furnished by or on behalf of any Loan
Party in connection with the Loan Documents (including the offering and
disclosure materials delivered by or on behalf of the Borrower to the Lenders
prior to the Closing Date), contains any untrue statement of a material fact or
omits any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
6.25 Material Agreements. Schedule 6.25 hereto sets forth as of the Closing
-------------------
Date all Material Agreements to which any Loan Party is a party or is bound as
of the date hereof.
26
6.26 Bank Accounts. Schedule 6.26 contains as of the Closing Date a
-------------
complete and accurate list of all bank accounts maintained by the Loan Parties
with any bank or other financial institution.
6.27 Governmental Authorization. No approval, consent, exemption,
--------------------------
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, any Loan
Party of this Agreement or any other Loan Document.
6.28 Existing Agreement. The Obligations refinance all of the indebtedness
------------------
arising under the Existing Agreement and constitute "Senior Debt" for all
purposes under the documents evidencing and related to the Subordinated Debt.
ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Borrower (and each other Loan Party by execution of an Obligation
Guaranty, with respect to covenants applicable to such Loan Party) covenants to
the Agent and each Lender that so long as any of the Obligations remain
outstanding or this Agreement is in effect:
7.1 Taxes and Other Obligations. Each Company shall (a) file when due all
---------------------------
tax returns and other reports which it is required to file; (b) pay, or provide
for the payment, when due, of all taxes, fees, assessments, and other
governmental charges against it or upon its property, income, and franchises,
make all required withholding and other tax deposits, establish adequate
reserves for the payment of all such items, and provide to the Agent and the
Lenders, upon request, satisfactory evidence of its timely compliance with the
foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords, processors, and other
like Persons, and all other indebtedness owed by it and perform and discharge in
a timely manner all other obligations undertaken by it; provided, however,
neither the Borrower nor any of its Subsidiaries need pay any tax, fee,
assessment, or governmental charge (i) it is contesting in good faith by
appropriate proceedings diligently pursued, (ii) as to which the Borrower or its
Subsidiary, as the case may be, has established proper reserves as required
under GAAP, (iii) the nonpayment of which does not result in the imposition of a
Lien (other than a Permitted Lien), and (iv) with respect to such taxes, fees,
assessments, or governmental charges at any time exceeding $500,000 in the
aggregate, the Borrower has notified the Agent in writing.
7.2 Legal Existence and Good Standing. Except as permitted under Section
---------------------------------
7.9, each Company shall maintain its legal existence and its qualification and
good standing in all jurisdictions in which the failure to maintain such
existence and qualification or good standing could reasonably be expected to
have a Material Adverse Effect.
7.3 Compliance with Law and Agreements; Maintenance of Licenses; Amendment
----------------------------------------------------------------------
to Documents and Subordinated Debt. Each Company shall comply, in all respects,
----------------------------------
with all Requirements of Law of any Governmental Authority having jurisdiction
over it or its business (including the Federal Fair Labor Standards Act and all
Environmental Laws), except to the extent that the failure to do so could not
reasonably be expected to have a Material
27
Adverse Effect. No Company shall violate the provisions of any Material
Agreement, except to the extent such violation could not reasonably be expected
to have a Material Adverse Effect. Each Company shall obtain and maintain all
licenses, permits, franchises, and governmental authorizations necessary to own
its property and to conduct its business as conducted on the Closing Date,
except to the extent that the failure to do so could not reasonably be expected
to have a Material Adverse Effect. No Company shall modify, amend, or alter its
certificate or articles of incorporation, or its limited liability company
operating agreement, or limited partnership agreement, as applicable, other than
in a manner which does not adversely affect the rights of the Lenders or the
Agent. The Borrower shall not amend or modify any material (determined in the
reasonable discretion of the Agent) provision of, or waive any material
(determined in the reasonable discretion of the Agent) condition under, any
document or instrument evidencing or relating to the Subordinated Debt, without
obtaining prior written consent of the Agent with respect thereto.
7.4 Maintenance of Property; Inspection of Property.
-----------------------------------------------
(a) Each Company shall maintain all of its property necessary
and useful in the conduct of its business, in good operating condition and
repair, ordinary wear and tear excepted.
(b) Each Company shall permit representatives and independent
contractors of the Agent (at the expense of the Borrower not to exceed four (4)
times per year unless a Default or an Event of Default has occurred and is
continuing) to visit and inspect any of its properties, to examine its
corporate, financial, and operating records, and make copies thereof or
abstracts therefrom and to discuss its affairs, finances, and accounts with its
directors, officers, and independent public accountants, at such reasonable
times during normal business hours and as soon as may be reasonably desired,
upon reasonable advance notice to the Borrower; provided, however, when a
Default or an Event of Default exists, the Agent or any Lender may do any of the
foregoing at any time during normal business hours without advance notice.
7.5 Insurance.
---------
(a) Each Company shall maintain with financially sound,
responsible, and reputable insurers, insurance against loss or damage by fire
with extended coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement, or other
criminal liability; business interruption; public liability and third party
property damage; and such other hazards or of such other types as is customary
for Persons engaged in the same or similar business, as the Agent, in its
discretion, or acting at the direction of the Required Lenders, shall specify,
in amounts, and under policies, acceptable to the Agent and the Required
Lenders. The Borrower shall also maintain flood insurance for its Inventory
which is, at any time, located within an area that has been identified by the
Director of the Federal Emergency Management Agency as a "Special Flood Hazard
Area." The amount of said flood insurance will be reasonably determined by the
Agent, and shall, at a minimum, comply with applicable federal regulations as
required by the Flood Disaster Protection Act of 1973, as amended.
28
(b) Each Loan Party shall cause the Agent, for the ratable
benefit of the Agent and the Lenders, to be named as secured party and sole loss
payee or additional insured, in a manner acceptable to the Agent. Each policy of
insurance shall contain a clause or endorsement requiring the insurer to give
not less than thirty (30) days' prior written notice to the Agent in the event
of cancellation of the policy for any reason whatsoever and a clause or
endorsement stating that the status of the Agent as loss payee or additional
insured shall not be impaired or invalidated by any act or neglect of any
Company or the owner of any Real Estate not covered by the applicable policy.
All premiums for such insurance shall be paid by the Borrower when due, and
certificates of insurance and, if requested by the Agent or any Lender,
photocopies of the policies, shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the Lenders. If any
Company fails to procure such insurance or to pay the premiums therefor when
due, the Agent may, and at the direction of the Required Lenders shall, do so
from the proceeds of Revolving Loans.
7.6 Insurance and Condemnation Proceeds. The Borrower shall promptly
-----------------------------------
notify the Agent and the Lenders of any loss, damage, or destruction to the
Collateral or any other asset with a fair market value greater than $1,000,000,
whether or not covered by insurance. The Agent is hereby authorized to collect
all insurance and condemnation proceeds in respect of any asset with a fair
market value greater than $1,000,000 and all Collateral directly and to apply or
remit them, after deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, ratably, to the
reduction of the Obligations in the order provided for in Section 3.8. Upon the
payment by the insurer of the proceeds of any such policy of insurance related
to assets of any Loan Party other than the Collateral and if no Default has
occurred and is continuing, the Company so insured may retain such insurance if
such proceeds are used to repair or replace the property the damage or
destruction of which gave rise to the payment of such insurance proceeds;
provided, however, that any insurance proceeds not used for repair or
replacement in accordance herewith, unless paid as reimbursement of expenses
incurred and business losses suffered in connection with the loss or damage to
the Collateral or any other asset, shall be paid to or retained by the Agent for
application as a mandatory prepayment on the Obligations.
7.7 Environmental Laws.
------------------
(a) Each Company shall conduct its business in compliance with
all Environmental Laws applicable to it. Each Company shall take prompt and
appropriate action to respond to any non-compliance with Environmental Laws.
(b) Without limiting the generality of the foregoing, the
Borrower shall submit to the Agent and the Lenders annually, commencing on the
first Anniversary Date, and on each Anniversary Date thereafter, a report on the
status of any material Environmental Liabilities and any third party claims
under Environmental Laws pending or resolved during the preceding 12 months. The
Agent or any Lender may request copies of non-privileged technical reports
prepared by the Borrower and its communications with any Governmental Authority
to determine whether the Borrower or any of its Subsidiaries is proceeding
reasonably to correct, cure, or contest in good faith any alleged non-compliance
under Environmental Laws. The Borrower shall, at the Agent's or the Required
Lenders' reasonable request and at the Borrower's expense, (i) retain an
independent environmental consultant reasonably acceptable to the Agent
29
to evaluate (including by conducting tests if appropriate and, in the case of
leased property, permissible under the lease) if any material non-compliance or
alleged non-compliance with Environmental Laws; and prepare and deliver to the
Agent, in sufficient quantity for distribution by the Agent to the Lenders, a
report setting forth the results of such evaluation, the Borrower's proposed
plan for responding to any environmental problems described therein, and an
estimate of the costs thereof, and (ii) provide to the Agent and the Lenders a
supplemental report of such consultant whenever the magnitude of the
Environmental Liability or non-compliance under Environmental Laws, or the
response thereto or the estimated costs thereof, shall increase in any material
respect.
7.8 Compliance with ERISA. The Borrower shall, and shall cause each of its
---------------------
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code, and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; and (e) not engage in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
7.9 Mergers, Consolidations, or Sales. No Company shall enter into any
---------------------------------
transaction of merger, reorganization, or consolidation, or agree to do any of
the foregoing, except for (a) mergers, reorganizations, or consolidations by any
Loan Party to or with another Loan Party (provided that the Borrower shall be
the survivor of any such merger, reorganization, or consolidation if it is a
party thereto) and (b) mergers, reorganizations, or consolidations which are
Permitted Acquisitions or are permitted by this Section 7.9. No Company shall
transfer, sell, assign, lease, or otherwise dispose of all or any part of its
property, or wind up, liquidate, or dissolve, or agree to do any of the
foregoing, except (A) for sales of Inventory in the ordinary course of its
business, (B) for sales or other dispositions of Equipment in the ordinary
course of business that are obsolete or no longer useable by Borrower in its
business with an Orderly Liquidation Value not to exceed $15,000,000 in any
Fiscal Year, (C) for sales, leases, or other dispositions among Loan Parties,
(D) for the sale, discount, or transfer of delinquent Accounts in the ordinary
course of business for purposes of collection, and (E) so long as (i) no Default
or Event of Default then exists or arises as a result thereof and (ii) the
Availability is not less than $25,000,000 before and after giving effect to
completion of such disposition, sales of assets, other than those in clauses (A)
through (D), for fair value for cash, so long as the aggregate value of all
assets sold pursuant to clause (E) during any fiscal year shall not exceed
$10,000,000. All assets purchased with such proceeds shall be free and clear of
all Liens, except the Agent's Liens.
7.10 Distributions; Capital Change; Restricted Investments. No Company
-----------------------------------------------------
shall (a) directly or indirectly declare or make, or incur any liability to
make, any Distribution, except Distributions to any Loan Party by its
Subsidiaries, (b) make any change in its capital structure which could have a
Material Adverse Effect, or (iii) make any Restricted Investment.
7.11 Transactions Affecting Collateral or Obligations. No Company shall
------------------------------------------------
enter into any transaction which would be reasonably expected to have a Material
Adverse Effect.
30
7.12 Guaranties. No Company shall make, issue, or become liable on any
----------
Guaranty, except Obligation Guaranties in favor of the Agent.
7.13 Debt. No Company shall incur or maintain any Debt, other than: (a) the
----
Obligations; (b) Debt existing on the Closing Date and described on Schedule
6.8; (c) Capital Leases of Equipment and purchase money secured Debt incurred to
purchase Equipment; provided that (i) Liens securing the same attach only to the
Equipment acquired by the incurrence of such Debt, (ii) the aggregate amount of
such Debt (including Capital Leases) outstanding does not exceed $10,000,000 at
any time, and (iii) no Default or Event of Default then exists or arises as a
result of such Debt incurrence; (d) Debt evidencing a refunding, renewal, or
extension of the Debt described on Schedule 6.8 (other than the Subordinated
Debt); provided that (i) the principal amount thereof is not increased, (ii) the
Liens, if any, securing such refunded, renewed, or extended Debt do not attach
to any assets in addition to those assets, if any, securing the Debt to be
refunded, renewed, or extended, (iii) no Person that is not an obligor or
guarantor of such Debt as of the Closing Date shall become an obligor or
guarantor thereof, (iv) no Default or Event of Default exists or arises as a
result of any such refund, renewal, or extension, and (v) the terms of such
refunding, renewal or extension are no less favorable to the Borrower, the Agent
or the Lenders than the original Debt; (e) Debt evidencing a refunding, renewal,
or extension of the Subordinated Debt; provided that such refund, renewal, or
extension satisfies the requirements of Section 7.14; and (f) Debt of any
Company not otherwise permitted by this Section 7.13, so long as such Debt does
not exceed in the aggregate $5,000,000.
7.14 Payment/Prepayment of Debt. The Borrower shall pay the Obligations in
--------------------------
accordance with the terms and provisions of the Loan Documents. Each Company (a)
shall promptly pay (or renew and extend) all of its material obligations as the
same become due (unless such obligations -- other than the Obligations -- are
being contested in good faith by appropriate proceedings), (b) shall not (i)
voluntarily prepay any principal of, or interest on, any other Debt (except the
Obligations in accordance with the terms of this Agreement), whether subordinate
to the Obligations or not, or (ii) use proceeds from the Loans to make any
payment or prepayment of principal of, or interest on, or sinking fund payment
in respect of any other Debt of any Company, and (c) shall not, directly or
indirectly, pay, prepay, redeem or purchase, or deposit funds or property for
the payment (including, without limitation, a payment in respect of any sinking
fund, defeasance of any Subordinated Debt), prepayment, redemption, or purchase
of, Subordinated Debt other than regularly scheduled interest payments on the
Subordinated Debt made in compliance with the subordination provisions thereof.
Notwithstanding the foregoing, so long as no Default or Event of Default then
exists or arises as a result therefrom, any Subordinated Debt may be refinanced
with the proceeds of, or otherwise converted into (x) Debt securities that are
subordinated to the Obligations to substantially the same or greater extent than
the Subordinated Debt being refinanced, which do not increase the principal
amount of the Subordinated Debt from the amount of Subordinated Debt outstanding
immediately prior to such refinancing, and which otherwise satisfy the criteria
for Subordinated Debt; (y) common equity of the Borrower; and (z) other equity
interests of the Borrower or its Subsidiaries (other than Redeemable Preferred
Stock) that are subordinated in right of payment to the Obligations to
substantially the same or greater extent than the Subordinated Debt being
converted, are unsecured and unguaranteed, and are otherwise in form and terms
satisfactory to the Agent (in its
31
reasonable discretion). In addition, no Company shall make any payment on any
Subordinated Debt, when such payment violates the subordination provisions
thereof or results in a Default or Event of Default hereunder.
7.15 Transactions with Affiliates. Except as set forth below, no Company
----------------------------
shall, sell, transfer, distribute, or pay any money or property, including, but
not limited to, any fees or expenses of any nature (including, but not limited
to, any fees or expenses for management services), to any Affiliate, or lend or
advance money or property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any property, of any Affiliate, or become liable on any Guaranty of the
indebtedness (other than the Obligation Guaranties), dividends, or other
obligations of any Affiliate. Notwithstanding the foregoing, while no Event of
Default has occurred and is continuing, the Companies may engage in transactions
with Affiliates in the ordinary course of business consistent with past
practices, in amounts and upon terms fully disclosed to the Agent and the
Lenders, and no less favorable to the Companies than would be obtained in a
comparable arm's-length transaction with a third party who is not an Affiliate.
For purposes of this Section 7.15, the term "Affiliate" shall not include
another Loan Party.
7.16 Investment Banking and Finder's Fees. No Company shall pay or agree
------------------------------------
to pay, or reimburse any other party with respect to, any investment banking or
similar or related fee, underwriter's fee, finder's fee, or broker's fee to any
Person in connection with this Agreement. The Borrower shall defend and
indemnify the Agent and the Lenders against and hold them harmless from all
claims of any Person that the Borrower is obligated to pay for any such fees,
and all costs and expenses (including attorneys' fees) incurred by the Agent
and/or any Lender in connection therewith.
7.17 Business Conducted. No Company will, directly or indirectly, permit
------------------
or suffer to exist any material change in the type of businesses in which it is
engaged from the businesses of the Companies as conducted on the Closing Date
and in similar or related businesses that are reasonable extensions or additions
to the Companies' business on the Closing Date.
7.18 Liens and Negative Pledge. (a) No Company shall create, incur,
-------------------------
assume, or permit to exist any Lien on any property now owned or hereafter
acquired by any of them, except Permitted Liens, and Liens, if any, in effect as
of the Closing Date described in Schedule 6.8 securing Debt described in
Schedule 6.8 and Liens securing Capital Leases and purchase money Debt permitted
in Section 7.13.
(b) To the extent the Agent agrees to delay the perfection or
attachment of any Lien on any Collateral or any other assets of the Loan
Parties, including, without limitation, equipment, real estate, stock or equity
interests owned by such Company, rolling stock, foreign assets, and the stock
and assets of foreign Subsidiaries, for whatever reason, each Loan Party hereby
covenants and agrees not to directly create, incur, grant, suffer, or permit to
be created or incurred any Lien on any such assets, other than Permitted Liens.
Furthermore, within thirty (30) days of the request of the Agent, Borrower shall
(or shall cause each other Loan Party to) execute and deliver to the Agent all
instruments and documents (including, without limitation, certificates and
instruments and documents representing shares of stock or evidencing Debt) and
shall take all further action that may be necessary or desirable, or
32
that the Agent may reasonably request, to grant, perfect, and protect Agent's
Liens, in such assets, as security for the Obligations; it being expressly
understood that the provisions of this negative pledge are a material inducement
to the execution and delivery of this Agreement by each Lender.
7.19 Sale and Leaseback Transactions. No Company shall, directly or
-------------------------------
indirectly, enter into any arrangement with any Person providing for such
Company to lease or rent property that such Company has sold or will sell or
otherwise transfer to such Person.
7.20 New Subsidiaries. The Borrower shall not, directly or indirectly,
----------------
organize, create, acquire, or permit to exist any Subsidiary other than those
listed on Schedule 6.3.
7.21 Fiscal Year. No Company shall change its Fiscal Year.
-----------
7.22 Capital Expenditures. The Companies shall not make or incur any
--------------------
Capital Expenditure if, after giving effect thereto, the aggregate amount of all
Capital Expenditures by the Companies on a consolidated basis would exceed
$25,000,000 during any Fiscal Year; provided that the Capital Expenditures for
any Fiscal Year may be increased by an amount equal to the Capital Expenditures
approved by the Agent in its sole discretion after receipt from the Borrower of
a budget detailing proposed Capital Expenditures and other financial information
that the Agent may request, but in no event shall the Capital Expenditures in
any Fiscal Year exceed $40,000,000.
7.23 Minimum Tangible Net Worth. During the period from Closing Date,
--------------------------
through December 31, 2001, Borrower shall never permit its Tangible Net Worth to
be less than $120,000,000. On and after January 1, 2002, Borrower shall never
permit its Tangible Net Worth to be less than the sum of (a) $120,000,000, plus
(b) 75% of the positive consolidated net income of the Companies determined from
January 1, 2002, to any date of determination, plus (c) 100% of the aggregate
increases in Shareholders' Equity of the Companies after the Closing Date by
reason of the issuance and sale of capital stock of the any Company (including
upon any conversion of debt securities of the Companies into such capital stock,
but excluding any increases from the issuance or sale of capital stock by a
Company to another Company).
7.24 Minimum Availability. The Borrower shall maintain, at all times,
--------------------
Availability (without regard to the Maximum Revolver Amount) of not less than
$10,000,000.
7.25 Debt Service Coverage Ratio. Commencing with the last day of the
---------------------------
first full fiscal quarter following the Triggering Date, the Borrower will
maintain (unless waived by the Required Lenders), a Debt Service Coverage Ratio
for each period of two consecutive fiscal quarters of not less than 1.0 to 1.0.
7.26 Use of Proceeds. No Company shall use any portion of the Loan
---------------
proceeds, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Borrower or others incurred to
purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act, or (v) for
a purpose that is not permitted by this Agreement.
33
7.27 Further Assurances. The Loan Parties shall execute and deliver, or
------------------
cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time, request to carry out the terms
and conditions of this Agreement and the other Loan Documents.
7.28 Blocked Accounts. Within 1 year of the Closing Date (the "Blocked
----------------
Account Deadline"), each Loan Party shall have established all of its Deposit
Accounts at the Bank; provided that without limiting the foregoing, within 45
days of the occurrence of the Triggering Date (unless waived by Required
Lenders), each Loan Party shall have established all of its Deposit Accounts at
the Bank or shall have entered into Blocked Account Agreements (on terms
acceptable to the Agent) with respect to all Deposit Accounts not established at
the Bank.
ARTICLE 8
CONDITIONS OF LENDING
---------------------
8.1 Conditions Precedent to Making of Loans on the Closing Date. The
-----------------------------------------------------------
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to cause the Letter of Credit Issuer to
issue any Letter of Credit on the Closing Date, are subject to the following
conditions precedent having been satisfied in a manner satisfactory to the Agent
and each Lender (other than each item, if any, listed on Schedule 8.1, which
items are hereby permitted to be delivered after the Closing Date but not later
than the respective date for delivery of each such item specified on Schedule
8.1 or such later date as agreed to by the Agent).
(a) This Agreement and the other Loan Documents shall have been
executed by each party thereto and the Borrower shall have performed and
complied with all covenants, agreements, and conditions contained herein and the
other Loan Documents which are required to be performed or complied with by the
Borrower before or on such Closing Date.
(b) Upon making the Revolving Loans (including such Revolving
Loans made to finance the Closing Fees or otherwise as reimbursement for fees,
costs and expenses then payable under this Agreement) and with all its
obligations current, the Borrower shall have Availability of at least
$30,000,000.
(c) All representations and warranties made hereunder and in the
other Loan Documents shall be true and correct.
(d) No Default or Event of Default shall have occurred and be
continuing after giving effect to the Loans to be made and the Letters of Credit
to be issued on the Closing Date.
(e) The Agent and the Lenders shall have received such opinions
of counsel for the Loan Parties as the Agent or any Lender shall request, each
such opinion to be in a form, scope, and substance satisfactory to the Agent and
its counsel.
(f) The Agent shall have received:
34
(i) financing statements in proper form for filing under
the UCC in all jurisdictions that the Agent may deem necessary or
desirable in order to perfect the Agent's Liens; and
(ii) duly executed UCC-3 Termination Statements and such
other instruments, in form and substance satisfactory to the Agent, as
shall be necessary to terminate and satisfy all Liens on the Property
of the Companies except Permitted Liens.
(g) The Borrower shall have paid all fees, including the amounts
owing of the Closing Date under the Fee Letter, and expenses of the Agent and
all Attorney Costs to the extent invoiced (which invoice may be an estimate)
prior to or on the Closing Date, plus such additional amounts of Attorney Costs
as shall constitute its reasonable estimate of Attorney Costs incurred or to be
incurred by it through the closing proceedings (provided that such estimates
shall not thereafter preclude a final settling of accounts between the Borrower
and the Agent).
(h) The Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage as
required by this Agreement.
(i) The Agent and the Lenders shall have had an opportunity, if
they so choose, to examine the books of account and other records and files of
the Companies and to make copies thereof, and to conduct a pre-closing audit
which shall include, without limitation, verification of Inventory, Accounts,
and the Borrowing Base, and the results of such examination and audit shall have
been satisfactory to the Agent and the Lenders in all respects.
(j) All proceedings taken in connection with the execution of
this Agreement, the Notes, all other Loan Documents, and all documents and
papers relating thereto shall be satisfactory in form, scope, and substance to
the Agent and the Lenders.
(k) Without limiting the generality of the items described
above, each Loan Party shall have delivered or caused to be delivered to the
Agent (in form and substance reasonably satisfactory to the Agent), the
financial statements, instruments, resolutions, documents, agreements,
certificates, opinions and other items set forth on the "Closing Checklist"
delivered by the Agent to the Borrower prior to the Closing Date.
(l) No material adverse change, in the opinion of the Agent,
shall have occurred in the assets, liabilities, business, financial condition,
business prospects, or results of operations of the Companies.
(m) Evidence that the Existing Agreement has been or
concurrently with the Closing Date is being terminated and all Liens securing
obligations under the Existing Agreement have been or concurrently with the
Closing Date are being released.
(n) Confirmation from the holders of the Subordinated Debt that
the Obligations constitute "Senior Debt" under the documents evidencing the
Subordinated Debt.
35
The acceptance by the Borrower of any Loans made or Letters of
Credit issued on the Closing Date shall be deemed to be a representation and
warranty made by the Borrower to the effect that all of the conditions precedent
to the making of such Loans or the issuance of such Letters of Credit have been
satisfied or waived, with the same effect as delivery to the Agent and the
Lenders of a certificate signed by a Responsible Officer of the Borrower, dated
the Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this Section 8.1 have been fulfilled to the satisfaction
of such Lender, (ii) the decision of such Lender to execute and deliver to the
Agent an executed counterpart of this Agreement was made by such Lender
independently and without reliance on the Agent or any other Lender as to the
satisfaction of any condition precedent set forth in this Section 8.1, and (iii)
all documents sent to such Lender for approval consent, or satisfaction were
acceptable to such Lender.
8.2 Conditions Precedent to Each Loan. The obligation of the Lenders to
---------------------------------
make each Loan, including the initial Revolving Loans on the Closing Date, and
the obligation of the Agent to cause the Letter of Credit Issuer to issue any
Letter of Credit shall be subject to the further conditions precedent that on
and as of the date of any such extension of credit:
(a) The following statements shall be true, and the acceptance
by the Borrower of any extension of credit shall be deemed to be a statement to
the effect set forth in clauses (i), (ii) and (iii) with the same effect as the
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer, dated the date of such extension of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are correct on and as of the
date of such extension of credit as though made on and as of such
date, other than any such representation or warranty which relates to
a specified prior date and except to the extent the Agent and the
Lenders have been notified in writing by the Borrower that any
representation or warranty is not correct and the Required Lenders
have explicitly waived in writing compliance with such representation
or warranty; and
(ii) No event has occurred and is continuing, or would
result from such extension of credit, which constitutes a Default or
an Event of Default; and
(iii) No event has occurred and is continuing, or would
result from such extension of credit, which has had or would have a
Material Adverse Effect.
(b) No such Borrowing shall exceed Availability
; provided, however, that the foregoing conditions precedent set forth in this
Section 8.2 are not conditions to each Lender participating in or reimbursing
the Bank or the Agent for such
36
Lenders' Pro Rata Share of any Agent Advance made in accordance with the
provisions of Section 1.2(g).
ARTICLE 9
DEFAULT; REMEDIES
-----------------
9.1 Events of Default. It shall constitute an event of default ("Event
-----------------
of Default") if any one or more of the following shall occur for any reason:
(a) any failure by the Borrower to pay the principal of or
interest or premium on any of the Obligations or any fee or other amount
owing hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by any Loan
Party in this Agreement or in any of the other Loan Documents, any
Financial Statement, or any certificate furnished by any Loan Party at any
time to the Agent or any Lender shall prove to be untrue in any material
respect as of the date on which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance or performance
of any of the covenants and agreements contained in Sections 7.2, 7.5, 7.9
through 7.28, or Section 12 of the Security Agreements, (ii) any default
shall occur in the observance or performance of any of the covenants and
agreements contained in Sections 5.2 or 5.3 and such default shall continue
for three (3) days or more; or (iii) any default shall occur in the
observance or performance of any of the other covenants or agreements
contained in any other Section of this Agreement or any other Loan
Document, any other Loan Documents, or any other agreement entered into at
any time to which any Loan Party and the Agent or any Lender are party
(including in respect of any Bank Products) and such default shall continue
for fifteen (15) days or more;
(d) (i) any default shall occur with respect to any Debt (other
than the Obligations) of any Company in an outstanding principal amount
which exceeds $1,000,000 (in the aggregate), or under any agreement or
instrument under or pursuant to which any such Debt may have been issued,
created, assumed, or guaranteed by any Company, if the effect thereof (with
or without the giving of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt to accelerate, the
maturity of any such Debt; or any such Debt shall be declared due and
payable or be required to be prepaid prior to the stated maturity thereof
or (ii) any default exists under any agreement or contract to which a
Company is party, which default could reasonably be expected to have a
Material Adverse Effect;
(e) the Borrower or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer
or otherwise commence any action or proceeding seeking reorganization,
arrangement, or readjustment of its debts or for any other relief under the
federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing, or
consent to, approve of, or acquiesce in, any such petition, action, or
proceeding; (ii) apply for or
37
acquiesce in the appointment of a receiver, assignee, liquidator,
sequestrator, custodian, monitor, trustee or similar officer for it or for
all or any part of its property; (iii) make an assignment for the benefit
of creditors; (iv) be unable generally to pay its debts as they become due;
or (v) not be Solvent;
(f) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation, or readjustment of the debts of any Company or for any other
relief under the federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter
existing and such petition or proceeding shall not be dismissed within
thirty (30) days after the filing or commencement thereof or an order of
relief shall be entered with respect thereto;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee, or similar officer for any Company or for all or any part
of their respective property shall be appointed or a warrant of attachment,
execution, or similar process shall be issued against any part of the
property of any Company;
(h) except as otherwise permitted by Section 7.9, any Company
shall file a certificate of dissolution under applicable state law or shall
be liquidated, dissolved, or wound-up or shall commence or have commenced
against it any action or proceeding for dissolution, winding-up or
liquidation, or shall take any corporate action in furtherance thereof;
(i) all or any material part of the property of any Company shall
be nationalized, expropriated or condemned, seized, or otherwise
appropriated, or custody or control of such property or of such Company
shall be assumed by any Governmental Authority or any court of competent
jurisdiction at the instance of any Governmental Authority, except where
contested in good faith by proper proceedings diligently pursued where a
stay of enforcement is in effect;
(j) any Loan Document shall be terminated, revoked or declared
void or invalid or unenforceable or challenged by any Loan Party;
(k) one or more judgments, orders, decrees or arbitration awards
is entered against any Company involving in the aggregate liability (to the
extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related or unrelated
series of transactions, incidents or conditions, of $1,000,000 or more, and
the same shall remain unsatisfied, unvacated and unstayed pending appeal
for a period of thirty (30) days after the entry thereof;
(l) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Company occurs which could reasonably
be expected to cause a Material Adverse Effect and is not adequately
covered by insurance;
(m) there is filed against any Company any action, suit or
proceeding under any federal or state racketeering statute (including the
Racketeer Influenced and Corrupt Organization Act of 1970), which action,
suit or proceeding (i) is not dismissed within
38
one hundred twenty (120) days, and (ii) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(n) for any reason other than the failure of the Agent to take any
action available to it to maintain perfection of the Agent's Liens,
pursuant to the Loan Documents, any Loan Document ceases to be in full
force and effect or any Lien with respect to any material portion of the
Collateral intended to be secured thereby ceases to be, or is not, valid,
perfected and prior to all other Liens (other than Permitted Liens) or is
terminated, revoked or declared void;
(o) an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to
result in liability of the Borrower under Title IV of ERISA to the Pension
Plan, Multi-employer Plan or the PBGC in an aggregate amount in excess of
$1,000,000; (ii) the aggregate amount of Unfunded Pension Liability among
all Pension Plans at any time exceeds $1,000,000; or (iii) the Borrower or
any ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multi-employer
Plan in an aggregate amount in excess of $1,000,000;
(p) there occurs a Change of Control;
(q) there occurs an event having a Material Adverse Effect;
(r) any event or condition shall occur or exist with respect to
any Environmental Law, Environmental Permit, or Hazardous Materials, and as
a result of such event or condition, any Company shall have incurred or in
the opinion of the Agent or Required Lenders be reasonably likely to incur
an Environmental Liability in excess of $1,000,000 during any consecutive
twelve (12) month period;
(s) the payment directly or indirectly (including, without
limitation, any payment in respect of any sinking fund, defeasance,
redemption, or payment of any dividend or distribution) by any Loan Party
or any Subsidiary thereof of any amount of any Subordinated Debt or any
equity interests of any Loan Party in a manner or at a time during which
such payment is not permitted under the terms of the Loan Documents or
under any instrument or document evidencing or creating such Subordinated
Debt or equity interests, including, without limitation, any subordination
provisions set forth therein;
(t) (i) the occurrence of any "default" or "event of default" or
other breach which remains uncured on any date of determination under or
with respect to the any agreement creating or evidencing any Subordinated
Debt or any equity interests of any Loan Party; (ii) the trustee with
respect to, or any holder of, any Subordinated Debt or any equity interests
of any Loan Party shall effectively declare all or any portion of that Debt
or obligations thereunder due and payable prior to the stated maturity
thereof; or (iii) any Subordinated Debt or obligations under any equity
interests of any Loan Party
39
becomes due before its stated maturity or redemption date (as applicable)
by acceleration of the maturity thereof; or
(u) an event shall occur, including, without limitation, a "change
in control" or "change of control" as defined in any documents or
agreements evidencing or creating any Subordinated Debt or any equity
interests of any Loan Party, and (i) the trustee or the holders of any such
Debt or obligation shall initiate notice to request or require (or any Loan
Party shall automatically be so required) to redeem or repurchase such Debt
or obligation, or (ii) any Loan Party shall initiate notice to holders of
any Subordinated Debt or any equity interests of any Loan Party, in
connection with a redemption of any Debt or any obligation arising under
such agreements or instruments.
9.2 Remedies.
--------
(a) If a Default or an Event of Default exists, the Agent may,
in its discretion, and shall, at the direction of the Required Lenders, do one
or more of the following at any time or times and in any order, without notice
to or demand on the Borrower: (i) reduce the Maximum Revolver Amount, or the
advance rates against Eligible Accounts and/or Eligible Inventory used in
computing the Borrowing Base, or reduce one or more of the other elements used
in computing the Borrowing Base; (ii) restrict the amount of or refuse to make
Revolving Loans; and (iii) restrict or refuse to provide Letters of Credit or
Credit Support. If an Event of Default exists, the Agent shall, at the direction
of the Required Lenders, do one or more of the following, in addition to the
actions described in the preceding sentence, at any time or times and in any
order, and to the extent permitted by law, without notice to or demand on the
Borrower: (A) terminate the Commitments and this Agreement; (B) declare any or
all Obligations to be immediately due and payable; provided, however, that upon
the occurrence of any Event of Default described in Sections 9.1(e), 9.1(f),
9.1(g), or 9.1(h), the Commitments shall automatically and immediately expire
and all Obligations shall automatically become immediately due and payable
without notice or demand of any kind; (C) require the Borrower to cash
collateralize all outstanding Letter of Credit Obligations; and (D) pursue its
other rights and remedies under the Loan Documents and applicable law.
(b) If an Event of Default has occurred and is continuing: (i)
the Agent shall have for the benefit of the Lenders, in addition to all other
rights of the Agent and the Lenders, the rights and remedies of a secured party
under the Loan Documents and the UCC; (ii) the Agent may, at any time, take
possession of the Collateral and keep it on the Borrower's premises, at no cost
to the Agent or any Lender, or remove any part of it to such other place or
places as the Agent may desire, or the Borrower shall, upon the Agent's demand,
at the Borrower's cost, assemble the Collateral and make it available to the
Agent at a place reasonably convenient to the Agent; and (iii) the Agent may
sell and deliver any Collateral at public or private sales, for cash, upon
credit or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, and may, if the Agent deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale. Without in any way requiring notice to be given in the following
manner, the Borrower agrees that any notice by the Agent of sale, disposition,
or other intended action hereunder or in connection herewith, whether required
by the UCC or otherwise, shall constitute reasonable notice to the Borrower if
such notice is
40
mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least five (5) Business
Days prior to such action to the Borrower's address specified in or pursuant to
Section 13.8. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to the Borrower. In the
event the Agent seeks to take possession of all or any portion of the Collateral
by judicial process, the Borrower irrevocably waives: (A) the posting of any
bond, surety, or security with respect thereto which might otherwise be
required; (B) any demand for possession prior to the commencement of any suit or
action to recover the Collateral; and (C) any requirement that the Agent retain
possession and not dispose of any Collateral until after trial or final
judgment. The Borrower agrees that the Agent has no obligation to preserve
rights to the Collateral or marshal any Collateral for the benefit of any
Person. The Agent is hereby granted a license or other right to use, without
charge, the Borrower's labels, licenses, franchises, permits, Proprietary
Rights, name, trade secrets, and advertising matter, or any similar property, in
completing production of, advertising or selling any Collateral, and the
Borrower's rights under all licenses and all franchise agreements shall inure to
the Agent's benefit for such purpose. The proceeds of sale shall be applied
first to all expenses of sale, including attorneys' fees, and then to the
Obligations in the order and manner contemplated in Section 3.7. The Agent will
return any excess to the Borrower and the Borrower shall remain liable for any
deficiency.
(c) If an Event of Default occurs, the Borrower hereby waives
all rights to notice and hearing prior to the exercise by the Agent of the
Agent's rights to repossess the Collateral without judicial process or to reply,
attach, or levy upon the Collateral without notice or hearing.
ARTICLE 10
TERM AND TERMINATION
--------------------
10.1 Term and Termination. The term of this Agreement shall end on the
--------------------
Stated Termination Date unless sooner terminated in accordance with the terms
hereof. The Agent upon direction from the Required Lenders may terminate this
Agreement without notice upon the occurrence of an Event of Default. Upon the
effective date of termination of this Agreement for any reason whatsoever, all
Obligations (including all unpaid principal, accrued and unpaid interest, and
any early termination or prepayment fees or penalties) shall become immediately
due and payable, and the Borrower shall immediately arrange for the cancellation
and return of Letters of Credit then outstanding. Notwithstanding the
termination of this Agreement, until all Obligations are indefeasibly paid and
performed in full in cash, the Borrower shall remain bound by the terms of this
Agreement and shall not be relieved of any of its Obligations hereunder or under
any other Loan Document, and the Agent and the Lenders shall retain all their
rights and remedies hereunder (including the Agent's Liens in and all rights and
remedies with respect to all then existing and after-arising Collateral).
41
ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
------------------------------------------------------------
11.1 Amendments and Waivers.
----------------------
(a) No amendment or waiver of any provision of this Agreement or
any other Loan Document, and no consent with respect to any departure by the
Loan Parties therefrom, shall be effective unless the same shall be in writing
and signed by the Required Lenders (or by the Agent at the written request of
the Required Lenders) and the Borrower, and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by each Lender affected thereby and the
Borrower and acknowledged by the Agent, do any of the following:
(i) extend the Commitment of any Lender;
(ii) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest,
fees, or other amounts due to the Lenders (or any of them) hereunder
or under any other Loan Document;
(iii) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable
hereunder or under any other Loan Document;
(iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for
the Lenders or any of them to take any action hereunder;
(v) except as set forth therein, increase any of the
percentages set forth in the definition of the Borrowing Base;
(vi) amend this Section or any provision of this Agreement
providing for consent or other action by all Lenders;
(vii) release all or substantially all of the Obligation
Guaranties or release Collateral other than as permitted by Section
12.11;
(viii) change the definitions of "Majority Lenders" or
"Required Lenders"; or
(ix) increase the Maximum Revolver Amount, the Maximum
Inventory Loan Amount, or Letter of Credit Subfacility;
provided, however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clauses (v) and (ix) above and any other terms of this
Agreement, make Agent Advances in accordance with Section 1.2(g) and, provided
further, that (A) no amendment, waiver, or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of
42
the Agent under this Agreement or any other Loan Document; (B) no amendment
shall increase the Commitment of any Lender unless consented to by such Lender;
and (C) Schedule 1.2 hereto (Commitments) may be amended from time to time by
Agent alone to reflect assignments of Commitments in accordance herewith.
(b) If any fees are paid to the Lenders as consideration for
amendments, waivers, or consents with respect to this Agreement, at Agent's
election, such fees may be paid only to those Lenders that agree to such
amendments, waivers, or consents within the time specified for submission
thereof.
(c) If, in connection with any proposed amendment, waiver, or
consent (a "Proposed Change"):
(i) requiring the consent of all Lenders, the consent of
Required Lenders is obtained, but the consent of other Lenders is not
obtained (any such Lender whose consent is not obtained as described
in this clause (i) and in clause (ii) below being referred to as a
"Non-Consenting Lender"), or
(ii) requiring the consent of Required Lenders, the consent
of Majority Lenders is obtained,
then, so long as the Agent is not a Non-Consenting Lender, at the Borrower's
request, the Agent or an Eligible Assignee shall have the right (but not the
obligation) with the Agent's approval, to purchase from the Non-Consenting
Lenders, and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders' Commitments for an amount equal to the principal
balances thereof and all accrued interest and fees with respect thereto through
the date of sale pursuant to Assignment and Acceptance Agreement(s), without
premium or discount.
11.2 Assignments; Participations.
---------------------------
(a) Any Lender may, with the written consent of the Agent (which
consent shall not be unreasonably withheld), assign and delegate to one or more
Eligible Assignees (provided that no consent of the Agent shall be required in
connection with any assignment and delegation by a Lender to an Affiliate of
such Lender) (each an "Assignee") all, or any ratable part of all, of the Loans,
the Commitment, and the other rights and obligations of such Lender hereunder,
in a minimum amount of $5,000,000 (provided that, unless an assignor Lender has
assigned and delegated all of its Loans and Commitment, no such assignment
and/or delegation shall be permitted unless, after giving effect thereto, such
assignor Lender retains a Commitment in a minimum amount of $1,000,000;
provided, however, that the Borrower and the Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
shall have been given to the Borrower and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered to the Borrower
and the Agent an Assignment and Acceptance in the form of Exhibit F ("Assignment
and Acceptance"), together with any note or notes, if any, subject to such
assignment and (iii) the assignor Lender or Assignee has paid to the Agent a
processing fee in the amount of $3,500. The Borrower agrees to promptly execute
and deliver
43
new promissory notes and replacement promissory notes if requested by an
Assignee or assignor Lender to evidence assignments of the Loans and Commitments
in accordance herewith.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance (and consent
of the Agent thereto, if required) and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations, including, but not limited to, the
obligation to participate in Letters of Credit and Credit Support have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties, or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien granted
by the Borrower to the Agent or any Lender in the Collateral; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (iii) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such Assignee will, independently (without reliance upon the Agent, such
assigning Lender, or any other Lender, and based on such documents and
information as it shall deem appropriate at the time), continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
Assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers, including the
discretionary rights and incidental power, as are reasonably incidental thereto;
and (vi) such Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements of Section
11.2(a), this Agreement shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitment of the assigning Lender pro tanto.
44
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of the Borrower
(a "Participant") participating interests in any Loans, the Commitment of that
Lender, and the other interests of that Lender (the "Originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
Originating Lender's obligations under this Agreement shall remain unchanged;
(ii) the Originating Lender shall remain solely responsible for the performance
of such obligations; (iii) the Borrower and the Agent shall continue to deal
solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents; and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except the matters set forth in Section 11.1(a)(i), (ii), and (iii),
and all amounts payable by the Borrower hereunder shall be determined as if such
Lender had not sold such participation; except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent and subject to the same limitation
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
ARTICLE 12
THE AGENT
---------
12.1 Appointment and Authorization. Each Lender hereby designates and
-----------------------------
appoints the Bank as its Agent under this Agreement and the other Loan Documents
and each Lender hereby irrevocably authorizes the Agent to take such action on
its behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. The Agent agrees to act as
such on the express conditions contained in this Article 12. The provisions of
this Article 12 are solely for the benefit of the Agent and the Lenders and no
Loan Party shall have any rights as a third party beneficiary of any of the
provisions contained herein. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have 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 the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only
45
an administrative relationship between independent contracting parties. Except
as expressly otherwise provided in this Agreement, the Agent shall have and may
use its sole discretion with respect to exercising or refraining from exercising
any discretionary rights or taking or refraining from taking any actions which
the Agent is expressly entitled to take or assert under this Agreement and the
other Loan Documents, including (a) the determination of the applicability of
ineligibility criteria with respect to the calculation of the Borrowing Base,
(b) the making of Agent Advances pursuant to Section 1.2(g), and (c) the
exercise of remedies pursuant to Section 9.2, and any action so taken or not
taken shall be deemed consented to by the Lenders.
12.2 Delegation of Duties. The Agent may execute any of its duties under
--------------------
this Agreement or any other Loan Document by or through agents, employees, or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
12.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation, or warranty made by any Loan Party, any Affiliate of
any Loan Party, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement, or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or the 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. No Agent-Related Person shall 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 or any Affiliates of any Loan Party.
12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
-----------------
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement 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 counsel to any Loan
Party), independent accountants, and other experts selected by the Agent. The
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 as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Lenders (or all Lenders if so required by Section 11.1) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
46
12.5 Notice of Default. The Agent shall not be deemed to have knowledge
-----------------
or notice of the occurrence of any Default or Event of Default, unless the Agent
shall have received written notice from a Lender or the Borrower referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, however, that unless and until the Agent
has received any such request, the 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.
12.6 Credit Decision. Each Lender acknowledges that none of the Agent-
---------------
Related Persons has made any representation or warranty to it, and that no act
by the Agent hereinafter taken, including any review of the affairs of the
Borrower and its Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently (without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed
appropriate), made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition, and
creditworthiness of the Loan Parties and their Affiliates, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the
Borrower. Each Lender also represents that it will, independently (without
reliance upon any Agent-Related Person 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 investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition, and creditworthiness of the Loan
Parties. Except for notices, reports, and other documents expressly herein
required to be furnished to the Lenders by the Agent, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition, or creditworthiness of the Loan Parties which may come into
the possession of any of the Agent-Related Persons.
12.7 Indemnification. Whether or not the transactions contemplated hereby
---------------
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrower and
without limiting the obligation of the Borrower to do so), in accordance with
their Pro Rata Shares, from and against any and all Indemnified Liabilities as
such term is defined in Section 13.11; provided, however, that no Lender shall
be liable for the payment to the Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender shall
reimburse the Agent upon demand for its Pro Rata Share of any costs or out-of-
pocket expenses (including Attorney Costs) incurred by the Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment, or enforcement (whether through negotiations, legal proceedings, or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Agent is not reimbursed for such
expenses by or on behalf of the Borrower. The undertaking
47
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
12.8 Agent in Individual Capacity. The Bank and its Affiliates may make
----------------------------
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with the Companies and their
Affiliates as though the Bank were not the Agent hereunder and without notice to
or consent of the Lenders. The Bank or its Affiliates may receive information
regarding the Companies, their Affiliates, and Account Debtors (including
information that may be subject to confidentiality obligations in favor of the
Companies, such Affiliates, or Account Debtors) and acknowledge that the Agent
and the Bank shall be under no obligation to provide such information to them.
With respect to its Loans, the Bank shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it were
not the Agent, and the terms "Lender" and "Lenders" include the Bank in its
individual capacity.
12.9 Successor Agent. The Agent may resign as Agent upon at least 30
---------------
days' prior notice to the Lenders and the Borrower, such resignation to be
effective upon the acceptance of a successor agent to its appointment as Agent.
In the event the Bank sells all of its Commitment and Revolving Loans as part of
a sale, transfer, or other disposition by the Bank of substantially all of its
loan portfolio, the Bank shall resign as Agent, and such purchaser or transferee
shall become the successor Agent hereunder. Subject to the foregoing, if the
Agent resigns under this Agreement, the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Lenders and the Borrower, a successor
agent from among the Lenders. Upon the acceptance of its appointment as
successor agent hereunder, (i) such successor agent shall succeed to all the
rights, powers, and duties of the retiring Agent; (ii) the term "Agent" shall
mean such successor agent; and (iii) the retiring Agent's appointment, powers,
and duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article 12 shall continue to inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
12.10 Withholding Tax.
---------------
(a) If any Lender is a "foreign corporation, partnership, or
trust" within the meaning of the Code and such Lender claims exemption from, or
a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Lender agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States of America tax treaty,
properly completed IRS Forms W-8BEN and W-8ECI before the payment of
any interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
48
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States of America withholding tax because
it is effectively connected with a United States of America trade or
business of such Lender, two properly completed and executed copies of IRS
Form W-8ECI before the payment of any interest is due in the first taxable
year of such Lender and in each succeeding taxable year of such Lender
during which interest may be paid under this Agreement, and IRS Form W-9;
and
(iii) such other form or forms as may be required under the
Code or other laws of the United States of America as a condition to
exemption from, or reduction of, United States of America withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States of America tax treaty by providing IRS Form W-8BEN,
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations owing to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrower to such Lender. To the extent of
such percentage amount, the Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender claiming exemption from United States of America
withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations owing
to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States of America or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason), such Lender shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
49
12.11 Collateral Matters.
------------------
(a) The Lenders hereby irrevocably authorize the Agent, at
its option and in its sole discretion, to release any Agent's Liens upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Aggregate Revolver Outstandings, and the
termination of all outstanding Letters of Credit (whether or not any of such
obligations are due) and all other Obligations; (ii) constituting property being
sold or disposed of if the Borrower certifies to the Agent that the sale or
disposition is made in compliance with Section 7.9 (and the Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which the Borrower owned no interest at the time the
Lien was granted or at any time thereafter; or (iv) constituting property leased
to the Borrower under a lease which has expired or been terminated in a
transaction permitted under this Agreement. Except as provided above, the Agent
will not release any of the Agent's Liens without the prior written
authorization of the Lenders; provided that the Agent may, in its discretion,
release the Agent's Liens on Collateral valued in the aggregate not in excess of
$2,500,000 during each Fiscal Year without the prior written authorization of
the Lenders, and the Agent may release the Agent's Liens on Collateral valued in
the aggregate not in excess of $5,000,000 during each Fiscal Year with the prior
written authorization of Required Lenders. Upon request by the Agent or the
Borrower at any time, the Lenders will confirm in writing the Agent's authority
to release any Agent's Liens upon particular types or items of Collateral
pursuant to this Section 12.11.
(b) Upon receipt by the Agent of any authorization required
pursuant to Section 12.11(a) from the Lenders of the Agent's authority to
release Agent's Liens upon particular types or items of Collateral, and upon at
least five (5) Business Days prior written request by the Borrower, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Agent's Liens upon
such Collateral; provided, however, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect, or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
any Loan Party in respect of) all interests retained by any Loan Party,
including the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by any Loan Party
or is cared for, protected, or insured or has been encumbered, or that the
Agent's Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure, or fidelity, or to continue exercising, any of the rights,
authorities, and powers granted or available to the Agent pursuant to any of the
Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion given the Agent's own
interest in the Collateral in its capacity as one of the Lenders and that the
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing.
50
12.12 Restrictions on Actions by Lenders; Sharing of Payments.
-------------------------------------------------------
(a) Each of the Lenders agrees that it shall not, without
the express consent of all Lenders, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all Lenders, set off against the
Obligations, any amounts owing by such Lender to any Loan Party or any accounts
of any Loan Party now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
by the Agent, take or cause to be taken any action to enforce its rights under
this Agreement or against any Loan Party, including the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of any Loan Party to such Lender
arising under, or relating to, this Agreement or the other Loan Documents,
except for any such proceeds or payments received by such Lender from the Agent
pursuant to the terms of this Agreement, or (ii) payments from the Agent in
excess of such Lender's ratable portion of all such distributions by the Agent,
such Lender shall promptly (1) turn the same over to the Agent, in kind, and
with such endorsements as may be required to negotiate the same to the Agent, or
in same day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
12.13 Agency for Perfection. Each Lender hereby appoints each other Lender
---------------------
as agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession or control. Should any Lender (other than the Agent) obtain
possession or control of any such Collateral, such Lender shall notify the Agent
thereof, and, promptly upon the Agent's request therefor shall deliver such
Collateral or control thereof to the Agent or in accordance with the Agent's
instructions.
12.14 Payments by Agent to Lenders. All payments to be made by the Agent
----------------------------
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, or interest on the Revolving Loans or otherwise.
Unless the Agent receives notice from the Borrower prior to the date on which
any payment is due to the Lenders that the Borrower will not make such payment
in full as and when required, the Agent may assume that the Borrower has made
such payment in full to the Agent on such date in immediately available funds
and the Agent may (but
51
shall not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Borrower has not made such payment in full to the Agent,
each Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.
12.15 Settlement.
----------
(a) (i) Each Lender's funded portion of the Revolving Loans is
intended by the Lenders to be equal at all times to such Lender's Pro Rata Share
of the outstanding Revolving Loans. Notwithstanding such agreement, the Agent,
the Bank, and the other Lenders agree (which agreement shall not be for the
benefit of or enforceable by any Loan Party) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Revolving Loans and the Agent Advances shall take place on a
periodic basis in accordance with the following provisions:
(ii) The Agent shall request settlement ("Settlement") with
the Lenders on at least a weekly basis, or on a more frequent basis at Agent's
election, (A) for itself, with respect to each Agent Advance and (B) with
respect to collections received, in each case, by notifying the Lenders of such
requested Settlement by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 12:00 noon (Dallas,
Texas time) on the date of such requested Settlement (the "Settlement Date").
Each Lender (other than the Agent in the case of Agent Advances) shall transfer
the amount of such Lender's Pro Rata Share of the outstanding principal amount
of the Agent Advances with respect to each Settlement to the Agent, to Agent's
account, not later than 2:00 p.m. (Dallas, Texas time), on the Settlement Date
applicable thereto. Settlements may occur during the continuation of a Default
or an Event of Default and whether or not the applicable conditions precedent
set forth in Article 8 have then been satisfied. Such amounts made available to
the Agent shall be applied against the amounts of the applicable Agent Advance
and, together with the portion of such Agent Advance representing the Bank's Pro
Rata Share thereof, shall constitute Revolving Loans of such Lenders. If any
such amount is not transferred to the Agent by any Lender on the Settlement Date
applicable thereto, the Agent shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the Federal Funds Rate for
the first three (3) days from and after the Settlement Date and thereafter at
the Interest Rate then applicable to the Revolving Loans for itself, with
respect to each Agent Advance.
(iii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to an Agent Advance), each other
Lender (A) shall irrevocably and unconditionally purchase and receive from the
Bank or the Agent, as applicable, without recourse or warranty, an undivided
interest and participation in such Agent Advance equal to such Lender's Pro Rata
Share of such Agent Advance and (B) if Settlement has not previously occurred
with respect to such Agent Advances, upon demand by Bank or Agent, as
applicable, shall pay to Bank or Agent, as applicable, as the purchase price of
such participation an amount equal to one-hundred percent (100%) of such
Lender's Pro Rata Share of such Agent Advances. If such amount is not in fact
made available to the Agent by any Lender, the Agent shall be entitled to
recover such
52
amount on demand from such Lender together with interest thereon at
the Federal Funds Rate for the first three (3) days from and after such demand
and thereafter at the Interest Rate then applicable to Base Rate Loans.
(iv) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Agent Advance pursuant
to clause (iii) above, the Agent shall promptly distribute to such Lender, such
Lender's Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such Agent Advance.
(v) Between Settlement Dates, the Agent, to the extent no
Agent Advances are outstanding, may pay over to the Bank any payments received
by the Agent, which in accordance with the terms of this Agreement would be
applied to the reduction of the Revolving Loans, for application to the Bank's
Revolving Loans. If, as of any Settlement Date, collections received since the
then immediately preceding Settlement Date have been applied to the Bank's
Revolving Loans (other than to Agent Advances in which such Lender has not yet
funded its purchase of a participation pursuant to clause (iii) above), as
provided for in the previous sentence, the Bank shall pay to the Agent for the
accounts of the Lenders, to be applied to the outstanding Revolving Loans of
such Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving
Loans. During the period between Settlement Dates, the Agent with respect to
Agent Advances, and each Lender with respect to the Revolving Loans other than
Agent Advances, shall be entitled to interest at the applicable rate or rates
payable under this Agreement on the actual average daily amount of funds
employed by the Bank, the Agent, and the other Lenders, respectively.
(vi) Unless the Agent has received written notice from a
Lender to the contrary, the Agent may assume that the applicable conditions
precedent set forth in Article 8 have been satisfied and the requested Borrowing
will not exceed Availability on any Funding Date for a Revolving Loan.
(b) Lenders' Failure to Perform. All Revolving Loans (other than
---------------------------
Agent Advances) shall be made by the Lenders simultaneously and in accordance
with their Pro Rata Shares. It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its obligation to
make any Revolving Loans hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to perform
its obligation to make any Revolving Loans hereunder, (ii) no failure by any
Lender to perform its obligation to make any Revolving Loans hereunder shall
excuse any other Lender from its obligation to make any Revolving Loans
hereunder, and (iii) the obligations of each Lender hereunder shall be several,
not joint and several.
(c) Defaulting Lenders. Unless the Agent receives notice from a
------------------
Lender on or prior to the Closing Date or, with respect to any Borrowing after
the Closing Date, at least one Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required hereunder to the
Agent that Lender's Pro Rata Share of a Borrowing, the Agent may assume that
each Lender has made such amount available to the Agent in immediately available
funds on the Funding Date. Furthermore, the Agent may, in
53
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If any Lender has not transferred its full Pro Rata Share
to the Agent in immediately available funds and the Agent has transferred the
corresponding amount to the Borrower on the Business Day following such Funding
Date, that Lender shall make such amount available to the Agent, together with
interest at the Federal Funds Rate for that day. A notice by the Agent submitted
to any Lender with respect to amounts owing shall be conclusive, absent manifest
error. If each Lender's full Pro Rata Share is transferred to the Agent as
required, the amount transferred to the Agent shall constitute that Lender's
Revolving Loan for all purposes of this Agreement. If that amount is not
transferred to the Agent on the Business Day following the Funding Date, the
Agent will notify the Borrower of such failure to fund and, upon demand by the
Agent, the Borrower shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the Interest Rate applicable at the time
to the Revolving Loans comprising that particular Borrowing. The failure of any
Lender to make any Revolving Loan on any Funding Date (any such Lender, prior to
the cure of such failure, being hereinafter referred to as a "Defaulting
Lender") shall not relieve any other Lender of its obligation hereunder to make
a Revolving Loan on that Funding Date. No Lender shall be responsible for any
other Lender's failure to advance such other Lenders' Pro Rata Share of any
Borrowing.
(d) Retention of Defaulting Lender's Payments. The Agent shall
-----------------------------------------
not be obligated to transfer to a Defaulting Lender any payments made by any
Loan Party to the Agent for the Defaulting Lender's benefit; nor shall a
Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts
payable to a Defaulting Lender shall instead be paid to or retained by the
Agent. In its discretion, the Agent may loan Borrower the amount of all such
payments received or retained by it for the account of such Defaulting Lender.
Any amounts so loaned to the Borrower shall bear interest at the rate applicable
to Base Rate Loans and for all other purposes of this Agreement shall be treated
as if they were Revolving Loans, provided, however, that for purposes of voting
or consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender". Until
a Defaulting Lender cures its failure to fund its Pro Rata Share of any
Borrowing (A) such Defaulting Lender shall not be entitled to any portion of the
Unused Line Fee and (B) the Unused Line Fee shall accrue in favor of the Lenders
which have funded their respective Pro Rata Shares of such requested Borrowing
and shall be allocated among such performing Lenders ratably based upon their
relative Commitments. This Section shall remain effective with respect to such
Lender until such time as the Defaulting Lender shall no longer be in default of
any of its obligations under this Agreement. The terms of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by the Borrower of its duties and obligations
hereunder.
(e) Removal of Defaulting Lender. At the Borrower's request, the
----------------------------
Agent or an Eligible Assignee reasonably acceptable to the Agent and the
Borrower shall have the right (but not the obligation) to purchase from any
Defaulting Lender, and each Defaulting Lender shall, upon such request, sell and
assign to the Agent or such Eligible Assignee, all of the Defaulting Lender's
outstanding Commitment hereunder. Such sale shall be consummated promptly after
Agent has arranged for a purchase by Agent or an Eligible Assignee pursuant to
an Assignment and Acceptance, and at a price equal to the outstanding principal
balance of the Defaulting Lender's Loans, plus accrued interest and fees,
without premium or discount.
54
12.16 Letters of Credit; Intra-Lender Issues.
--------------------------------------
(a) Notice of Letter of Credit Balance. On each Settlement
----------------------------------
Date the Agent shall notify each Lender of the issuance of all Letters of Credit
since the prior Settlement Date.
(b) Participations in Letters of Credit.
-----------------------------------
(i) Purchase of Participations. Immediately upon
--------------------------
issuance of any Letter of Credit in accordance with Section 1.3(d), each Lender
shall be deemed to have irrevocably and unconditionally purchased and received
without recourse or warranty, an undivided interest and participation equal to
such Lender's Pro Rata Share of the face amount of such Letter of Credit or the
Credit Support provided through the Agent to the Letter of Credit Issuer, if not
the Bank, in connection with the issuance of such Letter of Credit (including
all obligations of the Borrower with respect thereto, and any security therefor
or guaranty pertaining thereto).
(ii) Sharing of Reimbursement Obligation Payments.
--------------------------------------------
Whenever the Agent receives a payment from the Borrower or other Loan Party on
account of reimbursement obligations in respect of a Letter of Credit or Credit
Support as to which the Agent has previously received for the account of the
Letter of Credit Issuer thereof payment from a Lender, the Agent shall promptly
pay to such Lender such Lender's Pro Rata Share of such payment from the
Borrower or other Loan Party. Each such payment shall be made by the Agent on
the next Settlement Date.
(iii) Documentation. Upon the request of any Lender,
-------------
the Agent shall furnish to such Lender copies of any Letter of Credit, Credit
Support for any Letter of Credit, reimbursement agreements executed in
connection therewith, applications for any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.
(iv) Obligations Irrevocable. The obligations of each
-----------------------
Lender to make payments to the Agent with respect to any Letter of Credit or
with respect to their participation therein or with respect to any Credit
Support for any Letter of Credit or with respect to the Revolving Loans made as
a result of a drawing under a Letter of Credit and the obligations of the
Borrower for whose account the Letter of Credit or Credit Support was issued to
make payments to the Agent, for the account of the Lenders, shall be irrevocable
and shall not be subject to any qualification or exception whatsoever, including
any of the following circumstances:
(1) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(2) the existence of any claim, setoff, defense, or
other right which the Borrower may have at any time against a beneficiary named
in a Letter of Credit or any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), any Lender, the Agent, the issuer
of such Letter of Credit, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein, or
55
any unrelated transactions (including any underlying transactions between the
Borrower or any other Person and the beneficiary named in any Letter of Credit);
(3) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid, or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(4) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
(5) the occurrence of any Default or Event of Default; or
(6) the failure of the Borrower to satisfy the applicable
conditions precedent set forth in Article 8.
(c) Recovery or Avoidance of Payments; Refund of Payments In
--------------------------------------------------------
Error. In the event any payment by or on behalf of any Loan Party received by
-----
the Agent with respect to any Letter of Credit or Credit Support provided for
any Letter of Credit and distributed by the Agent to the Lenders on account of
their respective participations therein is thereafter set aside, avoided, or
recovered from the Agent in connection with any receivership, liquidation, or
bankruptcy proceeding, the Lenders shall, upon demand by the Agent, pay to the
Agent their respective Pro Rata Shares of such amount set aside, avoided, or
recovered, together with interest at the rate required to be paid by the Agent
upon the amount required to be repaid by it. Unless the Agent receives notice
from the Borrower prior to the date on which any payment is due to the Lenders
that the Borrower will not make such payment in full as and when required, the
Agent may assume that the Borrower has made such payment in full to the Agent on
such date in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower has not made such payment in full to the Agent, each Lender
shall repay to the Agent on demand such amount distributed to such Lender,
together with interest thereon at the Federal Funds Rate for each day from the
date such amount is distributed to such Lender until the date repaid.
(d) Indemnification by Lenders. To the extent not reimbursed by
--------------------------
the Borrower and without limiting the obligations of the Loan Parties hereunder,
the Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance
with their respective Pro Rata Shares, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys' fees), or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by, or asserted against the Letter of Credit
Issuer in any way relating to or arising out of any Letter of Credit or the
transactions contemplated thereby or any action taken or omitted by the Letter
of Credit Issuer under any Letter of Credit or any Loan Document in connection
therewith; provided that no Lender shall be liable for any of the foregoing to
the extent it arises from the gross negligence or willful misconduct of the
Person to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Letter of Credit Issuer promptly upon demand for its Pro
Rata Share of any costs or expenses payable by the Borrower to the Letter of
Credit Issuer, to the extent that the Letter of Credit Issuer is not
56
promptly reimbursed for such costs and expenses by a Loan Party. The agreement
contained in this Section shall survive payment in full of all other
Obligations.
12.17 Concerning the Collateral and the Related Loan Documents. Each
--------------------------------------------------------
Lender authorizes and directs the Agent to enter into the other Loan Documents,
for the ratable benefit and obligation of the Agent and the Lenders. Each Lender
agrees that any action taken by the Agent, Majority Lenders, or Required
Lenders, as applicable, in accordance with the terms of this Agreement or the
other Loan Documents, and the exercise by the Agent, the Majority Lenders, or
the Required Lenders, as applicable, of their respective powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders. The Lenders
acknowledge that the Revolving Loans, Agent Advances, Hedge Agreements, Bank
Products, and all interest, fees, and expenses hereunder constitute one Debt,
secured pari passu by all of the Collateral.
12.18 Field Audit and Examination Reports; Disclaimer by Lenders. By
----------------------------------------------------------
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared
by or on behalf of the Agent;
(b) expressly agrees and acknowledges that neither the Bank nor
the Agent (i) makes any representation or warranty as to the accuracy of
any Report, or (ii) shall be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank or other
party performing any audit or examination will inspect only specific
information regarding the Loan Parties and will rely significantly upon the
Loan Parties' books and records, as well as on representations of the
Borrower's personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and
any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may
reach or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to the
Borrower, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of the Borrower; and
(ii) to pay and protect, and indemnify, defend and hold the Agent and any
such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses, and other amounts
(including Attorney Costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
57
12.19 Relation Among Lenders. The Lenders are not partners or co-
----------------------
venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
ARTICLE 13
MISCELLANEOUS
-------------
13.1 No Waivers; Cumulative Remedies. No failure by the Agent or any
-------------------------------
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
any Loan Party and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. No waiver by
the Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrower of any provision of
this Agreement. The Agent and the Lenders may proceed directly to collect the
Obligations without any prior recourse to the Collateral. The Agent's and each
Lender's rights under this Agreement will be cumulative and not exclusive of any
other right or remedy which the Agent or any Lender may have.
13.2 Severability. The illegality or unenforceability of any provision
------------
of this Agreement or any Loan Document or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.
13.3 Governing Law; Choice of Forum; Service of Process.
--------------------------------------------------
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE
OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF
TEXAS; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF TEXAS OR OF THE UNITED STATES OF AMERICA LOCATED IN DALLAS COUNTY, TEXAS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, THE
BORROWER AND EACH OTHER LOAN PARTY (BY EXECUTION OF AN OBLIGATION GUARANTY), THE
AGENT, AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER AND EACH OTHER LOAN
PARTY (BY EXECUTION OF AN OBLIGATION GUARANTY), THE AGENT AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
58
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE
FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN
ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2)
EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS
DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) THE BORROWER AND EACH OTHER LOAN PARTY (BY EXECUTION OF AN
OBLIGATION GUARANTY) HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL
(RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT ITS ADDRESS SET FORTH IN
SECTION 13.8, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS
AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID.
NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE
LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
13.4 WAIVER OF JURY TRIAL. THE BORROWER AND EACH OTHER LOAN PARTY (BY
--------------------
EXECUTION OF AN OBLIGATION GUARANTY), THE LENDERS, AND THE AGENT EACH
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT, OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE BORROWER, THE OTHER LOAN PARTIES, THE LENDERS, AND THE AGENT EACH AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
13.5 Survival of Representations and Warranties. All of the Borrower's
------------------------------------------
representations and warranties contained in this Agreement shall survive the
execution, delivery,
59
and acceptance thereof by the parties, notwithstanding any investigation by the
Agent or the Lenders or their respective agents.
13.6 Other Security and Guaranties. The Agent, may, without notice or
-----------------------------
demand and without affecting any Loan Party's obligations hereunder, from time
to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
13.7 Fees and Expenses. The Borrower agrees to pay to the Agent, for its
-----------------
benefit, on demand, all costs and expenses that Agent pays or incurs in
connection with the negotiation, preparation, syndication, consummation,
administration, enforcement, and termination of this Agreement or any of the
other Loan Documents, including: (a) Attorney Costs; (b) costs and expenses
(including attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien and title searches and title insurance; (d) taxes, fees, and other charges
for filing financing statements and continuations, and other actions to perfect,
protect, and continue the Agent's Liens (including costs and expenses paid or
incurred by the Agent in connection with the consummation of Agreement); (e)
sums paid or incurred to pay any amount or take any action required of any Loan
Party under the Loan Documents that the Loan Parties fail to pay or take; (f)
costs of appraisals, inspections, and verifications of the Collateral, including
travel, lodging, and meals for inspections of the Collateral and the operations
of the Companies by the Agent plus the Agent's then customary charge for field
examinations and audits and the preparation of reports thereof (such charge is
currently $800 per day (or portion thereof) for each Person retained or employed
by the Agent with respect to each field examination or audit); and (g) costs and
expenses of forwarding loan proceeds, collecting checks, and other items of
payment, and establishing and maintaining Payment Accounts and lock boxes, and
costs and expenses of preserving and protecting the Collateral. In addition, the
Borrower agrees to pay costs and expenses incurred by the Agent (including
Attorneys' Costs) to the Agent, for its benefit, on demand, and to the other
Lenders for their benefit, on demand, and all reasonable fees, expenses and
disbursements incurred by such other Lenders for one law firm retained by such
other Lenders, in each case, paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Agent or any Lender arising out
of the transactions contemplated hereby (including preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by the Borrower. All of the foregoing costs and expenses may be (in
the sole discretion of the Agent) charged to the Borrower's Loan Account as
Revolving Loans as described in Section 3.6 up to the Maximum Revolver Amount.
13.8 Notices. Except as otherwise provided herein, all notices, demands
-------
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall
60
become effective (a) upon personal delivery thereof, including, but not limited
to, delivery by overnight mail and courier service, (b) four (4) days after it
shall have been mailed by United States mail, first class, certified or
registered, with postage prepaid, or (c) in the case of notice by such a
telecommunications device, when properly transmitted, in each case addressed to
the party to be notified as follows:
Bank of America, N.A.
000 Xxxx, 0/xx/ Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: 000-000-0000
with copies to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: 000-000-0000
If to the Borrower:
00000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy No.: 000-000-0000
with copies to:
Xxxxx & Xxxxxxx, LLP
One Xxxxx Center, Suite 1500
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Telecopy No.: 000-000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
13.9 Waiver of Notices. Unless otherwise expressly provided herein,
-----------------
the Borrower waives presentment, and notice of demand or dishonor and protest as
to any instrument, notice of
61
intent to accelerate the Obligations and notice of acceleration of the
Obligations, as well as any and all other notices to which it might otherwise be
entitled. No notice to or demand on the Borrower which the Agent or any Lender
may elect to give shall entitle the Borrower to any or further notice or demand
in the same, similar or other circumstances.
13.10 Binding Effect. The provisions of this Agreement shall be binding
--------------
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by the Borrower without prior written consent of the Agent and each
Lender. The rights and benefits of the Agent and the Lenders hereunder shall, if
such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.
13.11 Indemnity of the Agent and the Lenders by the Borrower.
------------------------------------------------------
(a) The Borrower agrees to defend, indemnify and hold the Agent-
Related Persons, and each Lender and each of its respective officers, directors,
employees, counsel, representatives, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any insolvency proceeding or
appellate proceeding) related to or arising out of this Agreement, any other
Loan Document, or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities to
the extent resulting from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations.
(b) The Borrower agrees to indemnify, defend, and hold harmless
the Agent and the Lenders from any Environmental Liability, including without
limitation, any loss or liability directly or indirectly arising out of the use,
generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence of a Hazardous Material relating to the
Borrower's operations, business, or property. This indemnity will apply whether
the Hazardous Material is on, under, or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes, but is
not limited to, Attorneys Costs. The indemnity extends to the Agent and the
Lenders, their parents, affiliates, subsidiaries, and all of their directors,
officers, employees, agents, successors, attorneys and assigns. This indemnity
will survive repayment of all other Obligations. Notwithstanding the foregoing,
the Borrower shall have no obligation hereunder with respect to Environmental
Liabilities to the extent resulting from the gross negligence or willful
misconduct of the Agent and the Lenders, their parents, affiliates,
subsidiaries, and all of their directors, officers, employees, agents,
successors, attorneys and assigns.
62
13.12 Limitation of Liability. NO CLAIM MAY BE MADE BY THE BORROWER, ANY
-----------------------
LENDER, OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS, OR ATTORNEYS-
IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF
LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH, AND THE BORROWER AND EACH LENDER HEREBY WAIVE, RELEASE,
AND AGREE NOT TO XXX UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
13.13 Final Agreement. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
---------------
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. No
modification, rescission, waiver, release, or amendment of any provision of this
Agreement or any other Loan Document shall be made, except by a written
agreement signed by the Borrower and a duly authorized officer of each of the
Agent and the requisite Lenders.
13.14 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by the Agent, each Lender, and the Borrower in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.
13.15 Captions. The captions contained in this Agreement are for
--------
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
13.16 Right of Setoff. In addition to any rights and remedies of the
---------------
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Loan Party, any such notice being waived by each
Loan Party to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of any Loan Party
against any and all Obligations (for the benefit of all Lenders as provided
herein), now or hereafter existing, irrespective of whether or not the Agent or
such Lender shall have made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Borrower and the Agent after any such set-off and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.
NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF,
BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY LOAN
Party HELD OR
63
MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE
LENDERS. If any Lender shall obtain any payment or prepayment with respect to
the Obligation as a result of exercising its Right under this Section 13.16
which is in excess of its share of any such payment in accordance with the
relevant rights of the Lenders under the Loan Documents, then such Lender shall
purchase from the other Lenders such participations as shall be necessary to
cause such purchasing Lender to share the excess payment with each other Lender
in accordance with the relevant rights under the Loan Documents. If all or any
portion of such excess payment is subsequently recovered from such purchasing
Lender, then the purchase shall be rescinded and the purchase price restored to
the extent of such recovery. Each Loan Party agrees that any Lender purchasing a
participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all of its rights of payment (including the
right of offset) with respect to such participation as fully as if such Lender
were the direct creditor of such Loan Party in the amount of such participation.
13.17 Confidentiality.
---------------
(a) The Borrower hereby consents that the Agent and each Lender
may issue and disseminate to the public general information describing the
credit accommodation entered into pursuant to this Agreement, including the name
and address of the Companies and a general description of the business of the
Companies and may use the Companies' names in advertising and other promotional
material.
(b) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the Borrower and
provided to the Agent or such Lender by or on behalf of the Borrower, under this
Agreement, or any other Loan Document, except to the extent that such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality agreement with the
Borrower known to the Agent or such Lender; provided, however, that the Agent
and any Lender may disclose such information (1) at the request or pursuant to
any requirement of any Governmental Authority to which the Agent or such Lender
is subject or in connection with an examination of the Agent or such Lender by
any such Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions of any
applicable Requirement of Law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Agent, any Lender or their respective
Affiliates may be party; (5) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (6)
to the Agent's or such Lender's independent auditors, accountants, attorneys,
and other professional advisors; (7) to any prospective Participant or Assignee
under any Assignment and Acceptance, actual or potential, provided that such
prospective Participant or Assignee agrees to keep such information confidential
to the same extent required of the Agent and the Lenders hereunder; (8) as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which the Borrower is party or is deemed party with the Agent
or such Lender, and (9) to its Affiliates.
64
13.18 Conflicts with Other Loan Documents. Unless otherwise expressly
-----------------------------------
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this Agreement conflicts with any provision of any other Loan
Document, the provision contained in this Agreement shall govern and control.
[Signature Pages Follow]
65
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
"BORROWER"
COORSTEK, INC., as the Borrower
By: /s/ Xxxx X. Xxxxx
-----------------------------
Xxxx X. Xxxxx
President
Signature Page to Credit Agreement
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
"AGENT"
BANK OF AMERICA, N.A., as the Agent
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
Vice President
"LENDERS"
BANK OF AMERICA, N.A., as a Lender
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
Vice President
Signature Page to Credit Agreement
ANNEX A
to
Credit Agreement
----------------
Definitions
-----------
Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the
Agreement:
"Accounts" means all of the Loan Parties' accounts (as defined in the
UCC), and all receivables, accounts receivable, and book debts whether they
exist now or arise in the future from the Loan Parties' sale or lease of goods
or the Loan Parties' rendition of services, including all amounts due to any
Loan Party from a factor, all returned, reclaimed, refused, or repossessed
goods, all books and records pertaining to the foregoing, the cash and non-cash
proceeds resulting therefrom and all security and Guaranties therefor.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account or Related General Intangibles (including a payment
intangible).
"ACH Transactions" means any cash management or related services
including the automatic clearing house transfer of funds by the Bank for the
account of the Loan Parties pursuant to agreement or overdrafts.
"Adjusted Net Earnings from Operations" means, with respect to any
fiscal period of the Companies, the Companies' net income after provision for
income taxes for such fiscal period, as determined on a consolidated basis in
accordance with GAAP and reported on the Financial Statements for such period,
excluding any and all of the following included in such net income: (a) gain or
loss arising from the sale of any capital assets; (b) gain arising from any
write-up in the book value of any asset; (c) earnings of any Person,
substantially all the assets of which have been acquired by any Company in any
manner, to the extent realized by such other Person prior to the date of
acquisition; (d) earnings of any Person in which a Company has an ownership
interest unless (and only to the extent) such earnings shall actually have been
received by such Company in the form of cash distributions; (e) earnings of any
Person to which assets of any Company shall have been sold, transferred, or
disposed of, or into which the Borrower shall have been merged, or which has
been a party with any Company to any consolidation or other form of
reorganization, prior to the date of such transaction; (f) gain arising from the
acquisition of debt or equity securities of any Company or from cancellation or
forgiveness of Debt; and (g) gain arising from extraordinary items, as
determined in accordance with GAAP, or from any other non-recurring transaction.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, five percent (5%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
1
"Agent" means the Bank, solely in its capacity as agent for the
Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section 1.2(g).
"Agent's Liens" means the Liens in the Collateral granted to the
Agent, for the benefit of the Lenders, Bank, and Agent pursuant to this
Agreement and the other Loan Documents.
"Agent-Related Persons" means the Agent, together with its Affiliates,
and the officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact of the Agent and such Affiliates.
"Aggregate Revolver Outstandings" means, at any date of determination:
the sum of (a) the unpaid balance of Revolving Loans, (b) the aggregate amount
of Pending Revolving Loans, (c) one hundred percent (100%) of the aggregate
undrawn face amount of all outstanding Letters of Credit, and (d) the aggregate
amount of any unpaid reimbursement obligations in respect of Letters of Credit
and Credit Support.
"Agreement" means the Credit Agreement dated as of December 21, 2001,
by and among the Borrower, the Agent, and the other Lenders party thereto, as
from time to time amended, modified or restated.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means
(i) with respect to Base Rate Loans and all other Obligations (other
than LIBOR Rate Loans and the Unused Line Fee), .25%;
(ii) with respect to LIBOR Rate Loans, 2.75%; and
(iii) with respect to the Unused Line Fee, .375%.
Commencing on July 1, 2002, the Applicable Margins shall be adjusted
(up or down) prospectively on a quarterly basis, as determined by the average
Availability during the last thirty (30) days of the preceding fiscal quarter.
Adjustments in Applicable Margins shall be determined by reference to the
following grids:
---------------------------------------------------------------
If Average Availability is: Level of
--------------------------
Applicable Margins:
------------------
---------------------------------------------------------------
Less than 25,000,000 Level I
---------------------------------------------------------------
Greater than 25,000,000, but less than Level II
35,000,000
---------------------------------------------------------------
Greater than 35,000,000, but less than Level III
45,000,000
---------------------------------------------------------------
Greater than 45,000,000 Level IV
---------------------------------------------------------------
2
High to Low
--------------------------------------------------------------------------------
Level I Level II Level III Level IV
------- --------- --------- --------
--------------------------------------------------------------------------------
Base Rate Loans .750% .500% .250% 0%
--------------------------------------------------------------------------------
LIBOR Rate Loans 3.25% 3.00% 2.75% 2.25%
--------------------------------------------------------------------------------
Unused Line Fee .500% .375% .375% .250%
--------------------------------------------------------------------------------
If a Default or Event of Default has occurred and is continuing, in
addition to any other remedy provided for in this Agreement, the Applicable
Margins shall to the highest level set forth in the foregoing grid until the
first day of the first calendar month following the date on which such Default
or Event of Default is waived or cured.
"Assignee" has the meaning specified in Section 11.2(a).
"Assignment and Acceptance" has the meaning specified in Section
11.2(a).
"Attorney Costs" means and includes all reasonable fees, expenses, and
disbursements of any law firm or other counsel engaged by the Agent, and the
reasonably allocated costs and expenses of internal legal services of the Agent.
"Availability" means, at any time (a) the lesser of (i) the Maximum
Revolver Amount or (ii) the Borrowing Base, minus (b) Reserves other than
Reserves deducted in the calculation of the Borrowing Base, minus (c) in each
case, the Aggregate Revolver Outstandings.
"Bank" means Bank of America, N.A., a national banking association, or
any successor entity thereto.
"Bank Products" means any one or more of the following types of
services or facilities extended to any Loan Party by the Bank or any Affiliate
of the Bank in reliance on the Bank's agreement to indemnify such Affiliate: (i)
credit cards and (ii) Hedge Agreements.
"Bank Product Reserves" means all reserves which the Agent from time
to time establishes in its reasonable discretion for the Bank Products then
provided or outstanding.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. (S) 101 et seq.).
-- ---
"Base Rate" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by the Bank in Charlotte, North
Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"Base Rate Loan" means a Revolving Loan during any period in which it
bears interest based on the Base Rate.
3
"Blocked Account Agreement" means an agreement among a Loan
Party, the Agent, and a Clearing Bank, in form and substance reasonably
satisfactory to the Agent, concerning the collection of payments which represent
the proceeds of Accounts or of any other Collateral of such Loan Party.
"Borrower" means CoorsTek, Inc., a Delaware corporation,
together with any successor or assign of Borrower permitted by the Loan
Documents.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans made on the same day by the Lenders to the Borrower or by Bank
in the case of a Borrowing funded by the Agent in the case of a Borrowing
consisting of an Agent Advance, or the issuance of Letters of Credit hereunder.
"Borrowing Base" means, at any time, an amount equal to (a)
the sum of (A) up to eighty-five percent (85%) of the Net Amount of Eligible
Accounts; plus (B) (i) if prior to the Triggering Date, fifty percent (50%) of
the value of Eligible Inventory or (ii) if on and after the Triggering Date, the
lesser of (y) seventy-five percent (75%) of the Orderly Liquidation Value of all
Eligible Inventory or (z) fifty percent (50%) of the value of Eligible
Inventory; minus (b) Reserves from time to time established by the Agent in its
reasonable credit judgment; provided that the aggregate Revolving Loans advanced
against Eligible Inventory shall not exceed the Maximum Inventory Loan Amount.
"Borrowing Base Certificate" means a certificate by a
Responsible Officer of the Borrower, substantially in the form of Exhibit B (or
another form acceptable to the Agent) setting forth the calculation of the
Borrowing Base, including a calculation of each component thereof, all in such
detail as shall be reasonably satisfactory to the Agent. All calculations of the
Borrowing Base in connection with the preparation of any Borrowing Base
Certificate shall originally be made by the Borrower and certified to the Agent;
provided, that the Agent shall have the right to review and adjust, in the
exercise of its reasonable credit judgment, any such calculation (1) to reflect
its reasonable estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is not in accordance with
this Agreement.
"Business Day" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in Denver, Colorado, Dallas, Texas, or
Charlotte, North Carolina are required or permitted to be closed, and (b) with
respect to all notices, determinations, fundings, and payments in connection
with the LIBOR Rate or LIBOR Rate Loans, any day that is a Business Day pursuant
to clause (a) above and that is also a day on which trading in Dollars is
carried on by and between banks in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request, or
directive of any central bank or other Governmental Authority, or any other law,
rule, or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not
paid during any fiscal period) in respect of the cost of any fixed asset or
improvement, or replacement,
4
substitution, or addition thereto (other than in connection with Permitted
Acquisitions), which has a useful life of more than one year, including, without
limitation, those costs arising in connection with the direct or indirect
acquisition of such asset by way of increased product or service charges or in
connection with a Capital Lease.
"Capital Lease" means any lease of property by a Person which,
in accordance with GAAP, should be reflected as a capital lease on the balance
sheet of such Person.
"Change of Control" means the occurrence of any of the
following: (a) any Person or group of Persons (within the meaning of Section 13
or 14 of the Exchange Act other than any Special Shareholders, shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities Exchange Commission pursuant to the Exchange Act) of 50% or more
of the outstanding shares of common stock of the Borrower; (ii) during any 12
consecutive calendar months, individuals who were directors of the Borrower on
the first day of such period shall cease to constitute a majority of the
Borrower's board of directors; (iii) the Special Shareholders cease to own at
least 20% of the outstanding shares of common stock of the Borrower; or (iv)
except as otherwise permitted pursuant to this Agreement, the Borrower ceases to
own the percentage of the issued and outstanding equity interests issued by its
Subsidiaries as determined on the Closing Date or, if thereafter acquired, on
the date of the acquisition of such Subsidiary. As used herein, "Special
Shareholders" shall mean any trust, the primary beneficiaries of which are
descendants of Xxxxxx Xxxxx, Xx. or spouses of such descendants, or the trustees
of any such trusts.
"Chattel Paper" means all of any Loan Party's now owned or
hereafter acquired chattel paper, as defined in the UCC, including electronic
chattel paper.
"Clearing Bank" means the Bank or any other banking
institution with whom a Payment Account has been established pursuant to a
Blocked Account Agreement.
"Closing Date" means the date of this Agreement.
"Closing Fee" has the meaning specified in Section 2.4.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means all of each Loan Party's Inventory,
Accounts, Related General Intangibles, and Deposit Accounts, and all other
assets of any Person from time to time subject to Agent's Liens securing payment
or performance of the Obligations.
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on Schedule 1.2 attached to the Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 11.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
11.2; and "Commitments" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
5
"Companies" means, at any date of determination thereof, the
Borrower and each of its Subsidiaries; and "Company" means, on any date of
determination, the Borrower or any of its Subsidiaries.
"Continuation/Conversion Date" means the date on which a Loan
is converted into or continued as a LIBOR Rate Loan.
"Credit Support" has the meaning specified in Section 1.3(a).
"Debt" means, without duplication, all liabilities,
obligations, and indebtedness of any Company to any Person, of any kind or
nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired, or owing, whether primary, secondary, direct,
contingent, fixed, or otherwise, consisting of indebtedness for borrowed money
or the deferred purchase price of property, excluding trade payables, but
including (a) all Obligations; (b) all obligations and liabilities of any Person
secured by any Lien on any Company's property, even though such Company shall
not have assumed or become liable for the payment thereof; provided, however,
that all such obligations and liabilities which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of such Company prepared in
accordance with GAAP; (c) all obligations or liabilities created or arising
under any Capital Lease or conditional sale or other title retention agreement
with respect to property used or acquired by any Company, even if the rights and
remedies of the lessor, seller or lender thereunder are limited to repossession
of such property; provided, however, that all such obligations and liabilities
which are limited in recourse to such property shall be included in Debt only to
the extent of the book value of such property as would be shown on a balance
sheet of the Company prepared in accordance with GAAP; (d) all obligations and
liabilities under Guaranties and (e) the present value (discounted at the Base
Rate) of lease payments due under synthetic leases.
"Debt Service" means, calculated for the Companies on a
consolidated basis for any period of determination, the sum of (a) interest
expense during such period, plus (b) the aggregate amount of all scheduled
principal payments made on the Debt of the Companies during the period of
determination.
"Debt Service Coverage Ratio" means, with respect to the
Companies on a consolidated basis for any period of determination, the ratio of
(a) EBITDA during such period, less Capital Expenditures of the Companies during
such period, less Distributions paid by the Companies during such period, less
taxes actually paid in cash by the Companies during such period to (b) Debt
Service.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured, waived, or
otherwise remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) two percent (2%) per annum. Each Default Rate shall be adjusted
simultaneously with any change in the applicable Interest Rate. In
6
addition, the Default Rate shall result in an increase in the Letter of Credit
Fee by 2 percentage points per annum.
"Defaulting Lender" has the meaning specified in Section
12.15(c).
"Deposit Accounts" means all "deposit accounts" as such term
is defined in the UCC, now or hereafter held in the name of any Loan Party,
including, without limitation, the Payment Accounts.
"Designated Account" has the meaning specified in Section
1.2(c).
"Distribution" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in respect
of capital stock (or any options or warrants for, or other rights with respect
to, such stock) of such corporation, other than distributions in capital stock
(or any options or warrants for such stock) of the same class; or (b) the
redemption or other acquisition by such corporation of any capital stock (or any
options or warrants for such stock) of such corporation.
"Documents" means all documents as such term is defined in the
UCC, including bills of lading, warehouse receipts or other documents of title,
now owned or hereafter acquired by any Loan Party.
"DOL" means the United States Department of Labor or any
successor department or agency.
"Dollar" and "$" means dollars in the lawful currency of the
-
United States. Unless otherwise specified, all payments under this Agreement
shall be made in Dollars.
"EBITDA" means, with respect to any fiscal period of the
Companies, Adjusted Net Earnings from Operations, plus, to the extent deducted
in the determination of Adjusted Net Earnings from Operations for that fiscal
period, interest expenses, Federal, state, local and foreign income taxes,
depreciation and amortization.
"Eligible Accounts" means the Accounts which the Agent in the
exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Agent to establish other
criteria of ineligibility, Eligible Accounts shall not, unless the Agent in its
sole discretion elects, include any Account:
(a) with respect to which more than 90 days have elapsed since
the date of the original invoice therefor or which is more than 60 days past
due;
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in the Security Agreement are
incorrect or have been breached;
(c) with respect to which Account (or any other Account due
from such Account Debtor), in whole or in part, a check, promissory note, draft,
trade acceptance or other instrument for the payment of money has been received,
presented for payment and returned uncollected for any reason;
7
(d) which represents a progress billing (as hereinafter
defined) or as to which any Loan Party has extended the time for payment without
the consent of the Agent; for the purposes hereof, "progress billing" means any
invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation to pay such invoice
is conditioned upon a Loan Party's completion of any further performance under
the contract or agreement;
(e) with respect to which any one or more of the following
events has occurred to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets of
the Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor as a
going concern;
(f) if fifty percent (50%) or more of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor thereon
is classified as ineligible under clause (a) above;
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States of America; or (ii) is not organized
under the laws of the United States of America or any state thereof; or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof; except
to the extent that such Account is secured or payable by a letter of credit
satisfactory to the Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or
employee of any Loan Party;
(i) except as provided in clause (k) below, with respect to
which either the perfection, enforceability, or validity of the Agent's Liens in
such Account, or the Agent's right or ability to obtain direct payment to the
Agent of the proceeds of such Account, is governed by any federal, state, or
local statutory requirements other than those of the UCC;
(j) owed by an Account Debtor to which any Loan Party is
indebted in any way, or which is subject to any right of setoff or recoupment by
the Account Debtor, unless the Account Debtor has entered into an agreement
acceptable to the Agent to waive setoff rights; or
8
if the Account Debtor thereon has disputed liability or made any claim with
respect to any other Account due from such Account Debtor; but in each such case
only to the extent of such indebtedness, setoff, recoupment, dispute, or claim;
(k) owed by the government of the United States of America, or any
department, agency, public corporation, or other instrumentality thereof, unless
the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. (S) 3727 et
--
seq.), and any other steps necessary to perfect the Agent's Liens therein, have
---
been complied with to the Agent's satisfaction with respect to such Account;
(l) owed by any state, municipality, or other political subdivision of the
United States of America, or any department, agency, public corporation, or
other instrumentality thereof and as to which the Agent determines that its Lien
therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed sale, sale and
return, sale on approval, consignment, or other repurchase or return basis;
(n) which is evidenced by a promissory note or other instrument or by
chattel paper;
(o) if the Agent believes, in the exercise of its reasonable judgment,
that the prospect of collection of such Account is impaired or that the Account
may not be paid by reason of the Account Debtor's financial inability to pay;
(p) with respect to which the Account Debtor is located in any state
requiring the filing of a Notice of Business Activities Report or similar report
in order to permit a Loan Party to seek judicial enforcement in such State of
payment of such Account, unless such Loan Party has qualified to do business in
such state or has filed a Notice of Business Activities Report or equivalent
report for the then current year;
(q) which arises out of a sale not made in the ordinary course of a Loan
Party's business;
(r) with respect to which the goods giving rise to such Account have not
been shipped and delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by a Loan Party, and, if
applicable, accepted by the Account Debtor, or the Account Debtor revokes its
acceptance of such goods or services;
(s) owed by an Account Debtor or a group of affiliated Account Debtors
which is obligated to a Loan Party respecting Accounts the aggregate unpaid
balance of which exceeds twenty-five percent (25%) of the aggregate unpaid
balance of all Eligible Accounts owed to the Loan Parties at such time by all of
the Loan Parties' Account Debtors, but only to the extent of such excess;
(t) which is not subject to a first priority and perfected security
interest in favor of the Agent for the benefit of the Lenders; or
9
(u) on and after a Default, Event of Default, the Blocked Account
Deadline, or the Triggering Date, with respect to which the Agent does not have
control of the Payment Accounts.
If any Account at any time ceases to be an Eligible Account, then such
Account shall promptly be excluded from the calculation of Eligible Accounts.
"Eligible Assignee" means (a) a commercial bank, commercial finance
company, or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; and (d) if an Event of Default has occurred and
is continuing, any Person reasonably acceptable to the Agent.
"Eligible Inventory" means Inventory, valued at the lower of cost (on a
first-in, first-out basis) or market, which the Agent, in its reasonable
discretion, determines to be Eligible Inventory. Without limiting the discretion
of the Agent to establish other criteria of ineligibility, Eligible Inventory
shall not, unless the Agent in its sole discretion elects, include any
Inventory:
(a) that is not owned by a Loan Party;
(b) that is not subject to the Agent's Liens, which are perfected as to
such Inventory, or that are subject to any other Lien whatsoever (other than the
Liens described in clauses (a), (c), (d), and (e) of the definition of Permitted
Liens; provided that such Permitted Liens (i) are junior in priority to the
Agent's Liens or subject to Reserves and (ii) do not impair directly or
indirectly the ability of the Agent to realize on or obtain the full benefit of
the Collateral);
(c) that does not consist of finished goods or raw materials;
(d) that consists of work-in-process, chemicals, samples, prototypes,
supplies, or packing and shipping materials;
(e) that is not in good condition, is unmerchantable, or does not meet all
standards imposed by any Governmental Authority, having regulatory authority
over such goods, their use or sale;
(f) that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of a Loan Party's business, or
that is slow moving or stale;
(g) that is obsolete or returned or repossessed or used goods taken in
trade;
(h) that is located outside the United States of America (or that is in-
transit from vendors or suppliers);
(i) that is located in a public warehouse or in possession of a bailee or
in a facility leased by a Loan Party, if the warehouseman, or the bailee, or the
lessor has not delivered to the Agent, a subordination agreement or lien waiver
in form and substance satisfactory to the Agent or if a Reserve for rents or
storage charges has not been established for Inventory at that location;
10
(j) that contains or bears any Proprietary Rights licensed to a Loan
Party by any Person, if the Agent is not satisfied that it may sell or otherwise
dispose of such Inventory in accordance with the terms of the Security Agreement
and Section 9.2 without infringing the rights of the licensor of such
Proprietary Rights or violating any contract with such licensor (and without
payment of any royalties other than any royalties due with respect to the sale
or disposition of such Inventory pursuant to the existing license agreement),
and, as to which a Loan Party has not delivered to the Agent a consent or
sublicense agreement from such licensor in form and substance acceptable to the
Agent if requested; or
(k) that is Inventory placed on consignment.
If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible Inventory.
"Environmental Laws" means all applicable federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties in accordance with law,
licenses, authorizations, and permits of, and agreements with, any Governmental
Authority, in each case relating to protection of public health and welfare,
safety, and the environment, including without limitation, laws relating to: the
generation, processing, treatment, storage, transport, disposal, investigation,
and remediation or other management of wastes of any kind, including Hazardous
Materials; the storage, handling, use, and transport of chemicals and Hazardous
Materials; and protection of areas of particular environmental concern,
including, for example, wetlands, areas inhabited by endangered species, and
areas above protected aquifers.
"Environmental Liability" means any obligation, liability (including,
without limitation, any strict liability), loss, fine, penalty, charge, Lien,
damage, cost, reasonable attorneys' and expert fees, or any other expense
arising under, or resulting from a violation of any Environmental Law, the
presence, Release, or threatened Release of any Hazardous Materials, or actual
or threatened damages to natural resources.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of any Hazardous Materials into the environment.
"Environmental Permit" means any permit, license, or other
authorization from any Governmental Authority that is required under any
Environmental Law for the lawful conduct of any business, process, or other
activity.
"Equipment" means all of any Loan Party's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including embedded software,
motor vehicles with respect to which a certificate of title has been issued,
aircraft, dies, tools, jigs, molds and office equipment, as well as all of such
types of property leased by any Loan Party and all of any Loan Party's rights
and interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future additions
and accessions thereto, replacements
11
therefor, component and auxiliary parts and supplies used or to be used in
connection therewith, and all substitutes for any of the foregoing, and all
manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan, (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA, (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan
is in reorganization, (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan, (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan, or (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing Agreement" means the First Amended and Restated Revolving
Credit and Term Loan Agreement (as renewed, extended, or amended to date, the
"Existing Agreement") dated as of January 11, 2001, among the Borrower, the
Bank, as Administrative Agent, and the lenders party thereto.
"Existing Letters of Credit" means, collectively, (i) the letter of
credit issued to Travelers Insurance Company under the terms of the Existing
Agreement in the amount of $336,000, and (ii) the letter of credit issued to
Offshore International Corp. under the terms of the Existing Agreement in the
amount of $50,000.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal
12
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided that (a) if such day is
not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to the Bank on such day on such transactions as determined
by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fee Letter" means that certain letter agreement relating to certain
fees dated as of December 21, 2001, between the Borrower, the Bank, and the
Agent.
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Sections 5.2 and 6.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.
"Fiscal Year" means the Companies' fiscal year for financial
accounting purposes. The current Fiscal Year of the Companies will end on
December 31, 2001.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and practices
set forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
Closing Date.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantor" means any Person, including, but not limited to, any
Subsidiary of the Borrower that is organized or incorporated under the Laws of a
jurisdiction of the United States, who undertakes to be liable for all or any
part of the Obligations by execution of an Obligation Guaranty or otherwise.
"Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend, or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the
13
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity securities
or other property or services.
"Hazardous Materials" means any material that poses a threat to, or is
regulated to protect, human health, safety, public welfare or the environment,
including without limitation, "hazardous substance," "pollutant or contaminant,"
"petroleum" and "natural gas liquids," as those terms are defined or used in
section 101 of the Comprehensive Environmental Response Compensation and
Liability Act, polychlorinated biphenyls, lead, asbestos, urea formaldehyde,
radioactive materials, putrescible materials, infectious materials, and toxic
microorganisms (including mold).
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into, which provides for an interest
rate, credit, commodity, or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging the Borrower's exposure to fluctuations in interest
or exchange rates, loan, credit exchange, security or currency valuations, or
commodity prices.
"Instruments" means all instruments as such term is defined in the
UCC, now owned or hereafter acquired by any Loan Party.
"Intangible Assets" means assets that are considered to be intangible
assets under GAAP, including customer lists, goodwill, computer software,
copyrights, trade names, trade marks, patents, unamortized deferred charges,
unamortized debt discount, and capitalized research and development costs.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Continuation/Conversion
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one or three months thereafter as selected by the Borrower in
its Notice of Borrowing, in the form attached hereto as Exhibit D, or Notice of
Continuation/Conversion, in the form attached hereto as Exhibit E, provided
that:
(a) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(b) any Interest Period pertaining to a LIBOR Rate Loan that begins
on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Stated Termination
Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 2.1.
14
"Inventory" means all of a Loan Party's inventory (as defined in the
UCC), including without limitation any and all goods held for sale or lease or
being processed for sale or lease in any Loan Party's business as now or in the
future conducted, whether now owned or acquired in the future, including all
materials, goods and work-in-process, finished goods, and other tangible
property held for sale or lease or furnished or to be furnished under contracts
of service or used or consumed in any Loan Party's business, along with all
Documents (including documents of title) covering inventory, all cash and non-
cash proceeds from the sale of inventory including proceeds from insurance and
including such property the sale or other disposition of which has given rise to
Accounts and which has not been returned to or repossessed or stopped in transit
by any Loan Party.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to Section 5.2(e), the
projections of the Borrower's financial condition, results of operations, and
cash flows, for the period commencing on October 31, 2001, and ending on
December 31, 2002, and delivered to the Agent prior to the Closing Date; and (b)
thereafter, the projections most recently received by the Agent pursuant to
Section 5.2(e).
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding; provided that no such Agent Advance shall be taken into account in
determining any Lender's Pro Rata Share.
"Letter of Credit" has the meaning specified in Section 1.3(a).
"Letter of Credit Fee" has the meaning specified in Section 2.6.
"Letter of Credit Issuer" means the Bank, any affiliate of the Bank,
or any other financial institution that issues any Letter of Credit pursuant to
this Agreement.
"Letter of Credit Subfacility" means $5,000,000.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate
Loan, the Termination Date and the last day of each Interest Period applicable
to such Loan.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR
Rate Loans, the rate of interest per annum determined pursuant to the following
formula:
LIBOR Rate = Offshore Base Rate
--------------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means the rate per annum appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first
15
day of such Interest Period for a term comparable to such Interest Period.
If for any reason such rate is not available, the Offshore Base Rate shall
be, for any Interest Period, the rate per annum appearing on Reuters Screen
LIBOR Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such
rates. If for any reason none of the foregoing rates is available, the
Offshore Base Rate shall be, for any Interest Period, the rate per annum
determined by Agent as the rate of interest at which dollar deposits in the
approximate amount of the LIBOR Rate Loan comprising part of such Borrowing
would be offered by the Bank's London Branch to major banks in the offshore
dollar market at their request at or about 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal, rounded
upward to the next 1/100/th/ of 1%) in effect on such day applicable to
member banks under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental, or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"). The Offshore Rate for each outstanding LIBOR Rate Loan shall
be adjusted automatically as of the effective date of any change in the
Eurodollar Reserve Percentage.
"LIBOR Rate Loan" means a Revolving Loan during any period in which it
bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt, or a lease,
consignment, or bailment for security purposes; (b) to the extent not included
under clause (a), any reservation, exception, encroachment, easement, right-of-
way, covenant, condition, restriction, lease, or other title exception or
encumbrance affecting property; and (c) any contingent or other agreement to
provide any of the foregoing.
"Loan Account" means the loan account of the Borrower, which account
shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Notes, the Security
Agreement, the Letters of Credit, any applications for Letters of Credit, and
any other agreements, instruments, and documents heretofore, now or hereafter
evidencing, securing, guaranteeing or otherwise relating to the Obligations, the
Collateral, or any other aspect of the transactions contemplated by this
Agreement.
16
"Loan Parties" means, on any date of determination, Borrower and all
Guarantors, and "Loan Party" means the Borrower or any Guarantor.
"Loans" means, collectively, all loans and advances provided for in
Article 1.
"Majority Lenders" means at any date of determination Lenders whose
Pro Rata Shares aggregate more than 50%.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower, the Companies taken as a
whole, the Collateral taken as a whole, or any Material Guarantor, (b) a
material impairment of the ability of any Loan Party to perform under any Loan
Document to which it is a party; (c) a material adverse effect upon the
legality, validity, binding effect, or enforceability against any Loan Party of
any Loan Document to which it is a party; or (d) the occurrence of a Default or
Event of Default. As used herein, a "Material Guarantor" means, on any date of
determination, based on the most-recently delivered consolidated Financial
Statements of the Companies for the four-fiscal quarter period then-ended, any
Guarantor with revenues greater than or equal to 5% of the total revenues of the
Companies.
"Material Agreement" means any material written or oral agreement,
contract, commitment, or understanding to which any Company is a party, by which
such Company is directly or indirectly bound, or to which any assets of such
Company may be subject (excluding purchase orders for material and inventory in
the ordinary course of business), which involves revenue payable to any Company
in excess of $10,000,000 in the aggregate during any 12-month period, or
financial obligations of any Company in excess of $5,000,000 in the aggregate
during any 12-month period, and which is not cancellable by such Company upon 30
days or less notice without liability for further payment (other than nominal
penalties).
"Maximum Inventory Loan Amount" means, at any time, an amount equal to
the lesser of (a) $ 30,000,000 or (b) fifty percent (50%) of the Borrowing Base.
"Maximum Revolver Amount" means $60,000,000.
"Multi-employer Plan" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by the Borrower or any
ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the gross amount
of Eligible Accounts less sales, excise, or similar taxes, and less returns,
discounts, claims, credits, allowances, accrued rebates, offsets, deductions,
counterclaims, disputes, and other defenses of any nature at any time issued,
owing, granted, outstanding, available, or claimed.
"Net Proceeds" has the meaning specified in Section 3.3(a).
17
"Non-Consenting Lender" has the meaning specified in Section
11.1(c)(i).
"Note" and "Notes" have the meaning specified in Section 1.2(a)(ii).
"Notice of Borrowing" has the meaning specified in Section 1.2(b).
"Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(b).
"Obligation Guaranties" means the Guaranties of the Obligations now or
hereafter, executed by the Guarantors.
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by any Loan Party
to the Agent and/or any Lender, arising under or pursuant to this Agreement or
any of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect, absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, and including all principal,
interest, charges, expenses, fees, attorneys' fees, filing fees and any other
sums chargeable to any Loan Party hereunder or under any of the other Loan
Documents. "Obligations" includes, without limitation, (a) all debts,
liabilities, and obligations now or hereafter arising from or in connection with
the Letters of Credit and (b) all debts, liabilities and obligations now or
hereafter arising from or in connection with Bank Products.
"Orderly Liquidation Value" of shall mean (a) with respect to
Equipment, the value customarily attributed to Equipment in the appraisal
industry at the time of the valuation, less the estimated marshalling,
reconditioning, carrying, and sales expenses designed to maximize the resale
value of such Equipment and (b) with respect to Eligible Inventory, (i) the
"orderly liquidation value" determined by a valuation company acceptable to the
Agent after performance of an Inventory valuation to be done at the Agent's
request and the Borrower's expense or (ii) if no such Inventory valuation has
been requested by the Agent, the value customarily attributed to Inventory in
the appraisal industry at the time of the valuation, less the estimated
marshalling, recondition, carrying, and sales expenses designed to maximize the
resale value of such Inventory.
"Other Taxes" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" means any Person who shall have been granted the right
by any Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"Payment Account" means each bank account established pursuant to the
Security Agreement, to which the proceeds of Accounts and other Collateral are
deposited or
18
credited, and which is maintained in the name of the Agent or any Loan Party, as
the Agent may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice of Borrowing received by
the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Borrower or any of its Affiliates
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions at
any time during the immediately preceding five (5) plan years.
"Permitted Acquisition" means any acquisition of the capital stock or
other equity interests of a Person engaged in the same or similar business as
the acquiring entity as a result of which such Person becomes a Subsidiary of a
Loan Party or any acquisition of property which constitutes a significant or
material portion of an existing business of a Person, in each case, in a
transaction that satisfies each of the following requirements:
(a) both before and after giving effect to such acquisition and
the Revolving Loans (if any) requested to be made in connection therewith, no
Default or Event of Default exists or will exist or would result therefrom on an
actual or pro forma basis;
(b) as soon as available, but not less than thirty (30) days
prior to such acquisition, the Borrower has provided to the Agent and the
Lenders a copy of the information provided to the board of directors of the
Borrower or other Loan Party making such acquisition and a copy of the
acquisition agreement for such acquisition;
(d) if such acquisition is an acquisition of the capital stock
or other equity interests of a Person, the board of directors or other governing
body shall have approved such acquisition, and the acquisition is structured so
that the acquired Person is added as a Loan Party (if such acquired Person is to
be organized under the laws of a state of the United States following the
acquisition) by executing an Obligation Guaranty and granting liens to the Agent
on its assets constituting Inventory, Accounts, Related General Intangibles, and
Deposit Accounts, and if such acquisition is an acquisition of assets, the
acquisition is structured so that a Loan Party shall acquire such assets;
(e) the Purchase Price of all Permitted Acquisitions consummated
in any calendar year may not exceed $20,000,000 in the aggregate;
(f) no Loan Party shall, as a result of or in connection with
any such acquisition, assume or incur any direct or contingent liabilities
(whether relating to environment, tax, litigation, or other matters) that could
reasonably be expected, as of the date of such acquisition, to result in the
existence or occurrence of a Material Adverse Effect;
19
(g) the Loan Party making such acquisition shall certify (and
provide the Agent with a pro forma calculation in form and substance reasonably
satisfactory to the Agent) to the Agent and the Lenders that, (i) immediately
prior to the acquisition the Availability is greater than $25,000,000 and (ii)
after giving effect to completion of such acquisition, the Availability is
greater than $25,000,000 on a pro forma basis for a period to be determined by
the Agent; and
(h) the terms and conditions of such acquisition are acceptable
to the Agent in its reasonable discretion.
"Permitted Liens" means:
(a) Liens for taxes not delinquent or statutory Liens for taxes in an
amount not to exceed $1,000,000; provided that the payment of such taxes which
are due and payable is being contested in good faith and by appropriate
proceedings diligently pursued and as to which adequate financial reserves have
been established on the applicable Loan Party's books and records and a stay of
enforcement of any such Lien is in effect;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the ordinary course of
business in connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance, social security, and other similar laws,
or to secure the performance of bids, tenders, or contracts (other than for the
repayment of Debt), or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt), or to secure statutory obligations (other than liens arising under
ERISA or Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;
(d) Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, provided that if any
such Lien arises from the nonpayment of such claims or demand when due, such
claims or demands do not exceed $100,000 in the aggregate;
(e) Liens constituting encumbrances in the nature of reservations,
exceptions, encroachments, easements, rights of way, covenants running with the
land, and other similar title exceptions or encumbrances affecting any Real
Estate; provided that they do not in the aggregate materially detract from the
value of the Real Estate or materially interfere with its use in the ordinary
conduct of the applicable Loan Party's business;
(f) Liens arising from judgments and attachments in connection with
court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves have been
set aside, no material Property is subject to a material risk of loss or
forfeiture, and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles), and a stay of
execution pending appeal or proceeding for review is in effect; and
20
(g) Financing statements filed by the owner of Equipment leased to a
Company and filed solely for the purpose of putting third parties on notice of
such owner's interest (as a lessor under an operating lease) in such Equipment,
so long as such operating lease remains a true operating lease under GAAP and
under applicable law.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower or any of its Affiliates sponsors or maintains or to
which the Borrower or any of its Affiliates makes, is making, or is obligated to
make contributions and includes any Pension Plan.
"Proprietary Rights" means all of a Loan Party's now owned and
hereafter arising or acquired: patents, patent rights, copyrights, works which
are the subject matter of copyrights, trademarks, service marks, trade names,
trade styles, patent, trademark, and service xxxx applications, and all licenses
and rights related to any of the foregoing, including those federally registered
or otherwise material patents, trademarks, service marks, trade names, and
copyrights set forth on Schedule 6.11 hereto, and all other rights under any of
the foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present, and future infringement of any of the foregoing.
"Proposed Change" has the meaning specified in Section 11.1(c).
"Purchase Price" means, with respect to any Permitted Acquisition, all
direct, indirect, and deferred cash payments made to or for the benefit of the
Person being acquired (or whose assets are being acquired), its shareholders,
officers, directors, employees, or Affiliates in connection with such
Acquisition, including, without limitation, the amount of any Debt being assumed
in connection with such Permitted Acquisition (subject to the limitations on
Debt hereunder), seller financing, and payments under non-competition or
consulting agreements entered into in connection with such Permitted Acquisition
and similar agreements (but expressly excluding the value of any stock, options,
warrants, or other rights to acquire stock of any Company issued as part of the
consideration in such transaction); provided that, for the purposes hereof, non-
competition agreements and consulting agreements shall be valued at their
present value discounted over the term of such agreement at the Bate Rate in
effect at the time of the Permitted Acquisition.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders, in each case giving effect to a
Lender's participation in Agent Advances.
21
"Real Estate" means all of a Loan Party's now or hereafter owned or
leased estates in real property, including, without limitation, all fees,
leaseholds and future interests, together with all of such Loan Party's now or
hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto, and the easements appurtenant thereto.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the payment in full of the
Obligations is (i) mandatorily redeemable (by sinking fund or similar payments
or otherwise), (ii) redeemable at the option of the holder thereof, or (iii)
convertible into Debt.
"Related General Intangibles" means all of the Loan Parties'
intangible personal property related to Accounts and Inventory, including all
Chattel Paper, Instruments, money, general intangibles (including payment
intangibles and software), and Documents, together with all additions,
amendments, and modifications thereto, extensions, renewals, enlargements, and
proceeds thereof, substitutions therefor, and income and profits therefrom. To
the extent obtained in connection with or otherwise related to Accounts and
Inventory, the following are included, without limitation, in the definition of
"Related General Intangibles": loan commitments, financing arrangements, bonds,
leases, permits, sales contracts, insurance policies, and the proceeds
therefrom, books and records, funds, bank deposits; all Proprietary Rights used
in connection therewith; any award, remuneration, settlement, or compensation
heretofore made or hereafter to be made by any Governmental Authority to any
Loan Party, all deposits, funds, accounts, contract rights or documents, arising
from or by virtue of any transactions; all permits, licenses, franchises,
certificates, and other rights and privileges; all proceeds arising from or by
virtue of the sale, lease, or other disposal of all or any part of the
foregoing; and all proceeds (including premium refunds) payable or to be payable
under each policy of insurance relating to the foregoing.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration of
any Hazardous Materials into the indoor or outdoor environment or into or out of
any Real Estate or other property, including the movement of Hazardous Materials
through or in the air, soil, surface water, groundwater or Real Estate or other
property.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Required Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 66-2/3%.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Reserves" means reserves that limit the availability of credit
hereunder, consisting of reserves against Availability, Eligible Accounts, or
Eligible Inventory, established
22
by Agent from time to time in Agent's reasonable credit judgment. Without
limiting the generality of the foregoing, the following reserves shall be deemed
to be a reasonable exercise of Agent's credit judgment: (a) Bank Product
Reserves, (b) a reserve for accrued, unpaid interest on the Obligations, (c)
reserves for rent at leased locations subject to statutory or contractual
landlord liens, (d) Inventory shrinkage, (e) customs charges, (f) dilution, and
(g) warehousemen's or bailees' charges.
"Responsible Officer" means the chief executive officer or the
president of the Borrower, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants and the preparation of the Borrowing Base Certificate, the chief
financial officer or the treasurer of the Borrower, or any other officer having
substantially the same authority and responsibility.
"Restricted Investment" means, as to any Company, any acquisition of
property by such Company in exchange for cash or other property, whether in the
form of an acquisition of stock, debt, or other indebtedness or obligation, or
the purchase or acquisition of any other property, or a loan, advance, extension
of credit, capital contribution, or subscription, except the following: (a)
acquisitions of Equipment to be used in the business of such Company so long as
the acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) acquisitions of Inventory in the ordinary course of business of
such Company; (c) acquisitions of current assets acquired in the ordinary course
of business of such Company; (d) direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the United States
of America, provided that such obligations mature within one year from the date
of acquisition thereof; (e) acquisitions of certificates of deposit maturing
within one year from the date of acquisition, bankers' acceptances, Eurodollar
bank deposits, or overnight bank deposits, in each case issued by, created by,
or with a bank or trust company organized under the laws of the United States of
America or any state thereof having capital and surplus aggregating at least
$100,000,000; (f) acquisitions of commercial paper given a rating of "A2" or
better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x Investors
Service, Inc. and maturing not more than 90 days from the date of creation
thereof; (g) Hedge Agreements, (h) investments existing on the Closing Date as
described on Schedule 7.10, (i) investments of any Loan Party in respect of any
other Loan Party, (j) Permitted Acquisitions, and (k) for loans or advances to
any Companies' directors, officers, and employees not to exceed $3,000,000 in
the aggregate for all Companies at any time outstanding.
"Revolving Loans" has the meaning specified in Section 1.2 and
includes each Agent Advance.
"Security Agreements" means the Security Agreements of even date
herewith executed by the Loan Parties in favor of Agent for the benefit of Agent
and other Lenders.
"Settlement" and "Settlement Date" have the meanings specified in
Section 12.15(a)(ii).
"Shareholders' Equity" means, as of any date of determination, for the
Companies on a consolidated basis, shareholders' equity as of that date
determined in accordance with GAAP.
23
"Solvent" means, when used with respect to any Person, that at the
time of determination:
(a) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including contingent liabilities); and
(b) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of
any contingent liability shall be computed as the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability of such
Person.
"Special Flood Hazard Area" has the meaning specified in Section
7.5(a).
"Stated Termination Date" means December 21, 2004.
"Subordinated Debt" means (a) Debt of any Company which is
subordinated in right of payment to the Obligations and which is permitted under
Sections 7.13(b) and (e), so long as (i) the maturity date of all Subordinated
Debt is no earlier than six months after the Stated Termination Date, (ii) such
Subordinated Debt is unsecured, unguaranteed, and does not (in the absence of
default and acceleration to the extent permitted by the subordination terms
thereof) require any principal payments prior to the termination of the
Commitments, payment in full of the Revolving Loans and of all interest, fees,
and other amounts of the Obligations, and the expiration of all Letters of
Credit (other than permitted refinancings or conversions made in accordance with
Section 7.14), and (iii) all terms and conditions of such Subordinated Debt and
the documents and agreements evidencing and establishing such Subordinated Debt
(including, without limitation, the subordination provisions) are acceptable to
Administrative Agent (in its sole discretion), (b) refinancings of Subordinated
Debt permitted under Section 7.14, and (c) conversions of Subordinated Debt into
forms of equity permitted under Section 7.14. For avoidance of doubt,
Subordinated Debt shall include, without limitation, Debt payable under the
Borrower's 7.25% Senior Subordinated Notes due July 25, 2011.
"Subsidiary" of a Person means (a) any entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof or (b) any partnership (limited or general) of which such
Person shall at any time be the general partner or of which more than fifty
percent (50%) of the issued and outstanding partnership interests, is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination
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thereof. Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Borrower.
"Supporting Letter of Credit" has the meaning specified in Section
1.3(g).
"Tangible Net Worth" means, as of any date of determination, for the
Companies on a consolidated basis, Shareholders' Equity of the Companies on such
date minus the Intangible Assets of the Companies on such date.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by the Agent's or
each Lender's net income in any the jurisdiction (whether federal, state or
local and including any political subdivision thereof) under the laws of which
such Lender or the Agent, as the case may be, is organized or maintains a
lending office.
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrower pursuant to Section 3.2 or by the Required Lenders pursuant to Section
9.2, and (iii) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
"Total Facility" has the meaning specified in Section 1.1.
"Triggering Date" means the first date upon which the Availability has
been less than $25,000,000 for the immediately-preceding three consecutive
Business Days.
"UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of Texas or of any other state the laws of which are required
as a result thereof to be applied in connection with the issue of perfection of
security interests; provided, that to the extent that the UCC is used to define
any term herein or in any other documents and such term is defined differently
in different Articles or Divisions of the UCC, the definition of such term
contained in Article or Division 9 shall govern.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with any assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"Unused Letter of Credit Subfacility" means an amount equal to
$5,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit plus, without duplication, (b) the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 2.5.
Accounting Terms. Any accounting term used in the Agreement shall
----------------
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations in the Agreement
shall be computed, unless otherwise
25
specifically provided therein, in accordance with GAAP as consistently applied
and using the same method for inventory valuation as used in the preparation of
the Financial Statements.
Interpretive Provisions. (a) The meanings of defined terms are equally
-----------------------
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer
to the Agreement as a whole and not to any particular provision of the
Agreement; and Subsection, Section, Schedule and Exhibit references are to the
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including," the
words "to" and "until" each mean "to but excluding" and the word "through"
means "to and including."
(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including the Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of the Agreement and other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of the Agreement.
(f) The Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) For purposes of Section 9.1, a breach of a financial covenant
contained in Sections 7.23 through 7.25 shall be deemed to have occurred as of
any date of determination thereof by the Agent or as of the last day of any
specified measuring period, regardless of when the Financial Statements
reflecting such breach are delivered to the Agent.
(h) The Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
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