Exhibit 4.2
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LOAN AND SECURITY AGREEMENT
by and among
NUMATICS, INCORPORATED
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO,
as Lenders,
and
FOOTHILL CAPITAL CORPORATION,
as Arranger and Administrative Agent
Dated as of January 6, 2003
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TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION ................................................... 1
1.1 Definitions .................................................................... 1
1.2 Accounting Terms ............................................................... 37
1.3 Code ........................................................................... 37
1.4 Construction ................................................................... 37
1.5 Schedules and Exhibits ......................................................... 38
1.6 Currency ....................................................................... 38
2. LOAN AND TERMS OF PAYMENT ...................................................... 38
2.1 Revolver Advances .............................................................. 38
2.2 Term Loans ..................................................................... 41
2.3 Borrowing Procedures and Settlements ........................................... 42
2.4 Payments ....................................................................... 49
2.5 Overadvances ................................................................... 55
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations ..... 55
2.7 Cash Management ................................................................ 58
2.8 Crediting Payments; Float Charge ............................................... 59
2.9 Designated Account ............................................................. 60
2.10 Maintenance of Loan Account; Statements of Obligations ......................... 60
2.11 Fees ........................................................................... 60
2.12 Letters of Credit .............................................................. 61
2.13 LIBOR Option ................................................................... 65
2.14 Capital Requirements ........................................................... 67
2.15 Joint and Several Liability of U.S. Borrowers .................................. 67
2.16 Registered Notes ............................................................... 70
2.17 Interest Act (Canada); Criminal Rate of Interest; Nominal Rate of Interest ..... 71
2.18 Currency; Judgment ............................................................. 71
3. CONDITIONS; TERM OF AGREEMENT .................................................. 72
3.1 Conditions Precedent to the Initial Extension of Credit ........................ 72
3.2 Conditions Subsequent to the Initial Extension of Credit ....................... 76
3.3 Conditions Precedent to all Extensions of Credit ............................... 77
3.4 Term ........................................................................... 78
3.5 Effect of Termination .......................................................... 78
3.6 Early Termination by Borrowers ................................................. 79
4. CREATION OF SECURITY INTEREST .................................................. 79
4.1 Grant of Security Interest ..................................................... 79
4.2 Negotiable Collateral .......................................................... 79
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral ......... 80
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4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of
Additional Documentation Required .......................................... 80
4.5 Power of Attorney .............................................................. 81
4.6 Right to Inspect ............................................................... 81
4.7 Control Agreements ............................................................. 81
5. REPRESENTATIONS AND WARRANTIES ................................................. 82
5.1 No Encumbrances ................................................................ 82
5.2 Eligible Accounts .............................................................. 82
5.3 Eligible Inventory ............................................................. 82
5.4 Eligible Equipment ............................................................. 82
5.5 Location of Inventory and Equipment ............................................ 82
5.6 Inventory Records .............................................................. 82
5.7 State of Incorporation; Location of Chief Executive Office; FEIN;
Organizational ID Number; Commercial Tort Claims ........................... 83
5.8 Due Organization and Qualification; Subsidiaries ............................... 83
5.9 Due Authorization; No Conflict ................................................. 84
5.10 Litigation ..................................................................... 85
5.11 No Material Adverse Change ..................................................... 85
5.12 Fraudulent Transfer ............................................................ 85
5.13 Employee Benefits .............................................................. 85
5.14 Environmental Condition ........................................................ 86
5.15 Brokerage Fees ................................................................. 86
5.16 Intellectual Property .......................................................... 86
5.17 Leases ......................................................................... 86
5.18 DDAs ........................................................................... 86
5.19 Complete Disclosure ............................................................ 86
5.20 Indebtedness ................................................................... 87
5.21 Regulation U ................................................................... 87
5.22 Permits, Etc ................................................................... 87
5.23 Material Contracts ............................................................. 87
5.24 Employee and Labor Matters ..................................................... 87
5.25 Customers and Suppliers ........................................................ 88
5.26 Properties ..................................................................... 88
5.27 Indenture Documents ............................................................ 88
5.28 Obligations as Senior Indebtedness ............................................. 88
5.29 Filing of Statutory Payment Obligations ........................................ 88
5.30 Nature of Business ............................................................. 88
6. AFFIRMATIVE COVENANTS. ......................................................... 89
6.1 Accounting System .............................................................. 89
6.2 Collateral Reporting ........................................................... 89
6.3 Financial Statements, Reports, Certificates .................................... 90
6.4 Guarantor Reports .............................................................. 94
6.5 Return ......................................................................... 94
6.6 Maintenance of Properties ...................................................... 94
6.7 Taxes .......................................................................... 94
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6.8 Insurance............................................................. 94
6.9 Location of Inventory and Equipment................................... 95
6.10 Compliance with Laws.................................................. 96
6.11 Leases................................................................ 96
6.12 Customs Brokers....................................................... 96
6.13 Brokerage Commissions................................................. 96
6.14 Existence............................................................. 96
6.15 Environmental......................................................... 96
6.16 Commercial Tort Claims; Organizational ID Number...................... 97
6.17 Other Disclosure Updates.............................................. 97
6.18 Formation of Subsidiaries............................................. 97
7. NEGATIVE COVENANTS.................................................... 97
7.1 Indebtedness.......................................................... 97
7.2 Liens................................................................. 98
7.3 Restrictions on Fundamental Changes................................... 98
7.4 Disposal of Assets.................................................... 99
7.5 Change Name........................................................... 99
7.6 Guarantee............................................................. 99
7.7 Nature of Business.................................................... 99
7.8 Payments, Prepayments and Amendments.................................. 99
7.9 Change of Control..................................................... 100
7.10 Consignments.......................................................... 100
7.11 Distributions......................................................... 100
7.12 Accounting Methods.................................................... 101
7.13 Investments........................................................... 101
7.14 Transactions with Affiliates.......................................... 101
7.15 Suspension............................................................ 101
7.16 Compensation.......................................................... 101
7.17 Use of Proceeds....................................................... 102
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees....................................................... 102
7.19 Securities Accounts................................................... 102
7.20 Financial Covenants................................................... 102
8. EVENTS OF DEFAULT..................................................... 105
9. THE LENDER GROUP'S RIGHTS AND REMEDIES................................ 107
9.1 Rights and Remedies................................................... 107
9.2 Remedies Cumulative................................................... 110
10. TAXES AND EXPENSES.................................................... 110
11. WAIVERS; INDEMNIFICATION.............................................. 110
11.1 Demand; Protest; etc.................................................. 110
11.2 The Lender Group's Liability for Collateral........................... 110
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11.3 Indemnification....................................................... 111
12. NOTICES............................................................... 112
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................ 113
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS............................ 114
14.1 Assignments and Participations........................................ 114
14.2 Successors............................................................ 117
15. AMENDMENTS; WAIVERS................................................... 117
15.1 Amendments and Waivers................................................ 117
15.2 Replacement of Holdout Lender......................................... 118
15.3 No Waivers; Cumulative Remedies....................................... 119
16. AGENT; THE LENDER GROUP............................................... 119
16.1 Appointment and Authorization of Agent................................ 119
16.2 Delegation of Duties.................................................. 120
16.3 Liability of Agent.................................................... 120
16.4 Reliance by Agent..................................................... 121
16.5 Notice of Default or Event of Default................................. 121
16.6 Credit Decision....................................................... 122
16.7 Costs and Expenses; Indemnification................................... 122
16.8 Agent in Individual Capacity.......................................... 123
16.9 Successor Agent....................................................... 123
16.10 Lender in Individual Capacity......................................... 123
16.11 Withholding Taxes..................................................... 124
16.12 Collateral Matters.................................................... 126
16.13 Restrictions on Actions by Lenders; Sharing of Payments............... 126
16.14 Agency for Perfection................................................. 127
16.15 Payments by Agent to the Lenders ..................................... 127
16.16 Concerning the Collateral and Related Loan Documents.................. 127
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information......................... 128
16.18 Several Obligations; No Liability..................................... 129
17. GENERAL PROVISIONS.................................................... 129
17.1 Effectiveness......................................................... 129
17.2 Section Headings...................................................... 129
17.3 Interpretation........................................................ 129
17.4 Severability of Provisions............................................ 130
17.5 Amendments in Writing................................................. 130
17.6 Counterparts; Telefacsimile Execution................................. 130
17.7 Revival and Reinstatement of Obligations.............................. 130
17.8 Integration........................................................... 130
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17.9 Parent as Agent for Borrowers ..................................... 130
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Equipment Locations
Schedule E-2 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 3.1(s) Appraised Real Property
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) Jurisdiction of Incorporation
Schedule 5.7(b) Chief Executive Office
Schedule 5.7(c) FEIN; Organizational ID Number
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Loan Parties
Schedule 5.8(c) Capitalization of Loan Parties' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.13 Benefit Plans
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.23 Material Contracts
Schedule 5.24 Employee Matters
Schedule 5.26 Real Property
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered
into as of January 6, 2003, by and among, on the one hand, the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION,
a California corporation, as the arranger and administrative agent for the
Lenders ("Agent"), and, on the other hand, NUMATICS, INCORPORATED, a Michigan
corporation ("Parent"), each of Parent's domestic Subsidiaries identified on the
signature pages hereof (such Subsidiaries, together with Parent, are referred to
hereinafter each individually as a "U.S. Borrower", and individually and
collectively, jointly and severally, as "U.S. Borrowers"), NUMATICS LTD., a
corporation organized under the laws of Canada ("Canadian Borrower"), and
NUMATICS GMBH, a corporation organized under the laws of Germany ("German
Borrower" and together with the U.S. Borrowers and the Canadian Borrower, each a
"Borrower" and collectively, "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means, as to any Person, all of such Person's now owned
or hereafter acquired right, title, and interest with respect to "accounts" (as
that term is defined in the Code), and any and all supporting obligations in
respect thereof.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by Xxxxx Fargo or
its Affiliates for the account of Administrative Borrower or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section
4.4(c).
"Administrative Borrower" has the meaning set forth in Section
17.9.
"Advances" means, collectively, Revolver A Advances and Revolver B
Advances.
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person; (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person; and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent's Account" means the account identified on Schedule A-1.
"Agent's Liens" means the Liens granted by the Loan Parties to
Agent for the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its Affiliates,
officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Annualized" means, for any amount to be calculated as at the end
of any fiscal quarter during the period from January 1, 2003 through December
31, 2003, the product of (a) the aggregate amount for the period from January 1,
2003 through the end of such fiscal quarter divided by the number of fiscal
quarters elapsed during the period from January 1, 2003 through the end of such
fiscal quarter times (b) 4.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the Closing Date up to the date that is the first anniversary of the Closing
Date, 3% times the Total Commitment, (b) during the period of time from and
including the date that is the first anniversary of the Closing Date up to the
date that is the second anniversary of the Closing Date, 2% times the Total
Commitment, and (c) during the period of time from and including the date that
is the second anniversary of the Closing Date up to the date that is 90 days
prior to the Maturity Date, 1% times the Total Commitment.
"Appraised Real Property" has the meaning set forth in Section
3.1(s).
"Appraised Value" means the net orderly liquidation value (net of
liquidation expenses) of any Equipment or the net market value (net of
liquidation expenses) of any Real Property Collateral, in each case, determined
by the most recent appraisal performed by a qualified independent appraiser, in
form and substance satisfactory to Agent and Lenders.
"Assignee" has the meaning set forth in Section 14.1.
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"Assignment and Acceptance" means an Assignment and Acceptance in
the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of
Administrative Borrower.
"Availability" means, collectively, Revolver A Availability and
Revolver B Availability.
"Bank Product" means any service or facility extended to Parent or
its Subsidiaries by Xxxxx Fargo or any Affiliate of Xxxxx Fargo including: (a)
credit cards, (b) credit card processing services, (c) debit cards, (d) purchase
cards, (e) ACH Transactions, (f) cash management, including controlled
disbursement, accounts or services, or (g) Hedge Agreements.
"Bank Product Agreements" means those certain agreements entered
into from time to time by Parent or its Subsidiaries in connection with any of
the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Parent or its
Subsidiaries to Xxxxx Fargo or its Affiliates pursuant to or evidenced by the
Bank Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that a Borrower is
obligated to reimburse to Agent or any member of the Lender Group as a result of
Agent or such member of the Lender Group purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to Administrative Borrower or its Subsidiaries pursuant to the Bank
Product Agreements.
"Bank Product Reserves" means, as of any date of determination,
the amount of reserves that Agent has established (based upon Xxxxx Fargo's or
its Affiliate's determination of the credit exposure in respect of then extant
Bank Products) for Bank Products then provided or outstanding, provided that in
order to qualify as Bank Product Reserves, such reserves must be established at
the time Xxxxx Fargo or its Affiliate provides that applicable Bank Product.
"Bankruptcy Code" means (i) the United States Bankruptcy Code,
(ii) the Bankruptcy and Insolvency Act (Canada), (iii) the Companies' Creditors
Arrangement Act (Canada), or (iv) the Insolvency Code (Germany), as applicable,
or any similar legislation in a relevant jurisdiction, in each case as in effect
from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/16%), on the basis of the rates at which Dollar deposits are offered
to major banks in the London interbank market on or about 11:00 a.m. (California
time) 2 Business Days prior to the commencement of the applicable Interest
Period, for a term and in amounts comparable to the Interest Period and amount
of the LIBOR Rate Loan requested by Administrative Borrower in accordance with
this Agreement, which determination shall be conclusive in the absence of
manifest error.
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"Base Rate" means, the rate of interest announced from time to
time within Xxxxx Fargo at its principal office in San Francisco as its "prime
rate", with the understanding that the "prime rate" is one of Xxxxx Fargo's base
rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Xxxxx Fargo may
designate.
"Base Rate Loan" means each portion of an Advance or the Term
Loans that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Revolver A Margin" means 1.00 percentage point.
"Base Rate Revolver B Margin" means 1.25 percentage points.
"Base Rate Term Loan A Margin" means 4.00 percentage points.
"Base Rate Term Loan B Margin" means 6.00 percentage points.
"Base Rate Term Loan C Margin" means 7.00 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) or a benefit plan under Canadian Employee Benefit Laws
or German Employee Benefit Laws for which any Loan Party or any Subsidiary or
ERISA Affiliate of any Loan Party has been an "employer" (as defined in Section
3(5) of ERISA) or has held equivalent status under Canadian Employee Benefit
Laws or German Employee Benefit Laws within the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf
thereof.
"Books" means, as to any Person, all of such Person's now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of such Person's Records relating to its or their business operations or
financial condition, and all of its or their goods or General Intangibles
related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth
in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances (or
term loans, in the case of the Term Loans) made on the same day by the Lenders
(or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or
by Agent in the case of an Agent Advance.
"Borrowing Base" means, collectively, the Revolver A Borrowing
Base and the Revolver B Borrowing Base.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close in the
State of New York, except that, if
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a determination of a Business Day shall relate to a LIBOR Rate Loan, the term
"Business Day" also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.
"Canadian Advances" means the Revolver A Advances made by the
Lenders with a Revolver A Commitment to the Canadian Borrower from time to time
pursuant to Section 2.1(a)(i)(B).
"Canadian Borrower" has the meaning set forth in the preamble to
this Agreement.
"Canadian Commitment" means $3,500,000.
"Canadian Employee Benefits Laws" means the Canadian Pension Plan
Act (Canada), the Pension Benefit Act (Ontario), the Health Insurance Act
(Ontario), the Employment Standard Act (Ontario), and any federal, provincial or
local counterparts or equivalents, in each case, as amended from time to time.
"Canadian Income Tax Act" means the Income Tax Act (Canada),
R.S.C. 1985 C.1 (5th Supp), as amended.
"Canadian Obligations" means all Revolver A Advances, debts,
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), premiums, liabilities (including all
amounts charged to the Canadian Borrower's sub account established under the
Loan Account pursuant hereto), obligations, fees (excluding the fees provided
for in the Fee Letter), charges, costs, Lender Group Expenses (including any
fees or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and
description, in each case, owing by Canadian Borrower to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Canadian Borrower is required
to pay or reimburse by the Loan Documents, by law, or otherwise. Any reference
in this Agreement or in the Loan Documents to the Canadian Obligations shall
include all amendments, changes, extensions, modifications, renewals
replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
"Canadian Security Documents" means, collectively, (i) the General
Security Agreement made by Canadian Borrower in favor of Agent, for the benefit
of the Lender Group, (ii) the Deed of Hypothec and Issue of Bonds made by
Canadian Borrower in favor of Agent, for the benefit of the Lender Group, (iii)
the Delivery Order made by Canadian Borrower in favor of Agent, for the benefit
of the Lender Group, (iv) the 25% Demand Bond made by Canadian Borrower in favor
of Agent, for the benefit of the Lender Group, and (v) the Pledge Agreement made
by Canadian Borrower in favor of Agent, for the benefit of the Lender Group, in
each case, in form and substance satisfactory to Agent.
"Canadian Withholding Taxes" means withholding taxes payable by
the Canadian Borrower to the CCRA pursuant to Section 212(1) of the Canadian
Income Tax Act.
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"Capital Expenditures" means, with respect to Parent and its
Subsidiaries for any period, the aggregate of all expenditures by Parent and its
Subsidiaries during such period that in accordance with GAAP are or should be
included in "property, plant and equipment" or in a similar fixed asset account
on its balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized Lease Obligations paid or payable during such period.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Collateral Account" means an account maintained by one or more
Borrowers with a bank reasonably acceptable to Agent pursuant to the terms of a
Control Agreement, the form and substance of which is reasonably satisfactory to
Agent.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the government of Canada, Germany or the United
States, or issued by any agency thereof and backed by the full faith and credit
of Canada, Germany or the United States, as the case may be, in each case,
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any province of Canada or any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof maturing within 1 year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either S&P or Xxxxx'x, (c) commercial paper maturing no more than 270 days
from the date of acquisition thereof and, at the time of acquisition, having a
rating of A-1 or P-1, or better, from S&P or Xxxxx'x, and (d) certificates of
deposit or bankers' acceptances maturing within 1 year from the date of
acquisition thereof either (i) issued by any bank organized under the laws of
Canada or any province thereof, Germany, or the United States or any state
thereof, which bank has a rating of A or A2, or better, from S&P or Xxxxx'x, or
(ii) certificates of deposit less than or equal to $100,000 in the aggregate
issued by any other bank insured by the Federal Deposit Insurance Corporation.
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash management
service agreements, in form and substance satisfactory to Agent, each of which
is among a Loan Party, Agent, and one of the Cash Management Banks.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"CCRA" means the Canada Customs and Revenue Agency.
"Change of Control" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Xxxx X.
Xxxxxx (or any of his Family Members or Family Trusts), becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 30%, or more, of the Stock of Parent having the right to vote for the
election of members of the Board of Directors, or (b) Xxxx X. Xxxxxx (or any of
his
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Family Members or Family Trusts) ceases to be the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act) of at least 51% of the Stock of Parent
having the right to vote for the election of members of the Board of Directors,
or (c) a majority of the members of the Board of Directors do not constitute
Continuing Directors, or (d) Parent ceases to own and control, directly or
indirectly, at least 80% of the outstanding capital Stock of each of its
Subsidiaries or (e) any "person" or "group" (within the meaning of Sections
13(d) and 14(d) of the Exchange Act), other than a Permitted Holder, becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of any of the outstanding capital Stock of a Subsidiary of the
Parent, or (f) a "Change of Control" under any Indenture Document or (g) Xxxx X.
Xxxxxx shall cease to be involved in the day to day operations and management of
the business of Parent, and a successor reasonably acceptable to Agent and
Lenders is not appointed on terms reasonably acceptable to Agent and Lenders
within 90 days of such cessation of involvement.
"Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of Parent
and its Subsidiaries for the 3 year period following the Closing Date (on an
annual basis, and for the 1 year period following the Closing Date, on a month
by month basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Collateral" means all assets and property of each Loan Party,
including all of each Loan Party's now owned or hereafter acquired right, title,
and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles and DDAs,
(e) Inventory,
(f) Investment Property, provided that only 65% of the shares of
capital Stock of each Loan Party's Subsidiaries organized outside of the United
States shall be included in the Collateral,
(g) Negotiable Collateral,
(h) Real Property Collateral,
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(i) money or other assets of each such Loan Party that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(j) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of any Loan Party.
"Commercial Tort Claim Assignment" has the meaning set forth in
Section 4.4(b).
"Commitment" means, with respect to each Lender, its Revolver A
Commitment, its Revolver B Commitment, its Term Loan A Commitment, its Term Loan
B Commitment, its Term Loan C Commitment, or its Total Commitment, as the
context requires, and, with respect to all Lenders, their Revolver A
Commitments, their Revolver B Commitments, their Term Loan A Commitments, their
Term Loan B Commitments, their Term Loan C Commitments, or their Total
Commitments, as the context requires, in each case as such Dollar amounts are
set forth beside such Lender's name under the applicable heading on Schedule C-1
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
14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
"Consolidated Net Income" means, for any period, without
duplication, net income (or loss) for the applicable period of measurement of
Parent and its Subsidiaries on a consolidated basis determined in accordance
with GAAP, but excluding: (a) non-cash gains and losses from the sale, exchange,
transfer or other disposition of property or assets not in the ordinary course
of business of Parent and its Subsidiaries, and related tax effects in
accordance with GAAP; and (b) any other extraordinary or non-recurring non-cash
gains and losses of Parent or its Subsidiaries, and related tax effects in
accordance with GAAP.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest
-8-
relating to the election of the directors (or comparable managers) of Parent (as
such terms are used in Rule 14a-11 under the Exchange Act) and whose initial
assumption of office resulted from such contest or the settlement thereof.
"Contribution Agreement" means a contribution agreement executed and
delivered by each U.S. Borrower, the form and substance of which is satisfactory
to Agent.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by a Loan Party, Agent, and the
applicable securities intermediary with respect to a Securities Account or a
bank with respect to a DDA or a Cash Collateral Account.
"Copyright Security Agreement" means a copyright security agreement
executed and delivered by each U.S. Borrower and Agent, the form and substance
of which is satisfactory to Agent.
"Daily Balance" means, for any Obligation, with respect to each day
during the term of this Agreement, the amount of such Obligation owed at the end
of such day.
"DDA" means any deposit account maintained by any Loan Party.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3
days from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Revolver A Advances that are Base Rate
Loans (inclusive of the Base Rate Revolver A Margin applicable thereto).
"Designated Account" means that certain DDA of Administrative
Borrower identified on Schedule D-1.
"Designated Account Bank" has the meaning set forth on Schedule D-1.
"Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior 12 months, that is the result
of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits for returned goods, or other dilutive items with
respect to the U.S. Borrowers' and Canadian Borrower's Accounts during such
period, by (b) the U.S. Borrowers' and Canadian Borrower's collections with
respect to Accounts during such period (excluding extraordinary items) plus the
Dollar amount of clause (a).
-9-
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which is satisfactory
to Agent.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, without
duplication, Parent's and its Subsidiaries' consolidated net earnings (or loss),
minus other income, plus other non-cash minority interest expenses, plus, with
respect to the Fiscal Year ending December 31, 2003, the early termination fees
payable to the Existing Lenders pursuant to the existing credit facilities with
the Borrowers, to the extent that such amount was deducted in arriving at
consolidated net income (or loss) for such Fiscal Year, and, in any case, in an
aggregate amount not to exceed $640,000, minus extraordinary gains, plus
extraordinary non-cash losses, plus unrealized foreign exchange losses, minus
unrealized foreign exchange gains, plus interest expense, income and single
business taxes and depreciation and amortization for such period, as determined
in accordance with GAAP.
"Eligible Accounts" means those Accounts created by any U.S.
Borrower or Canadian Borrower in the ordinary course of its business, that arise
out of its sale of goods or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be fixed
and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit performed by Agent from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall
be calculated net of customer deposits and unapplied cash remitted to U.S.
Borrowers and Canadian Borrower. Eligible Accounts shall not include the
following:
(a) Accounts (i) that the Account Debtor has failed to pay within 90
days of original invoice date or (ii) with selling terms of more than 90 days,
(b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of Parent or any of its Subsidiaries,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx
-10-
and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional,
(e) Accounts that are not payable in Dollars or Canadian Dollars,
(f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States or Canada, or
(ii) is not organized under the laws of the United States or any state thereof,
Canada or any province thereof, or (iii) is the government of any foreign
country or foreign sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Agent (as to form,
substance, and issuer or domestic confirming bank) that has been delivered to
Agent and is directly drawable by Agent, or (z) the Account is covered by credit
insurance in form, substance, and amount, and by an insurer, satisfactory to
Agent,
(g) Accounts with respect to which the Account Debtor is either (i)
the United States, Canada or any department, agency, or instrumentality of the
United States or Canada (exclusive, however, of Accounts with respect to which
the applicable Loan Party has complied, to the reasonable satisfaction of Agent,
with the Assignment of Claims Act, 31 USC ss. 3727 or the Financial
Administration Act (Canada)), or (ii) any state of the United States or any
province of Canada (exclusive, however, of (A) Accounts owed by any state that
does not have a statutory counterpart to the Assignment of Claims Act or the
Financial Administration Act (Canada) or (B) Accounts owed by any state that
does have a statutory counterpart to the Assignment of Claims Act or the
Financial Administration Act (Canada) as to which the applicable Loan Party has
complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a creditor
of Parent or any of its Subsidiaries, has or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to its obligation to
pay the Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to U.S. Borrowers and Canadian Borrower exceed 10% (such
percentage as applied to a particular Account Debtor being subject to reduction
by Agent in its Permitted Discretion if the creditworthiness of such Account
Debtor deteriorates) of all Eligible Accounts, to the extent of the obligations
owing by such Account Debtor in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is not Solvent, has gone out of business, or as to
which a Loan Party has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota, or West Virginia (or any other state that
requires a creditor to file a business activity report or similar document in
order to bring suit or otherwise enforce its remedies against such Account
Debtor in the courts or through any judicial process of such
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state), unless the applicable Loan Party has qualified to do business in New
Jersey, Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other state offices, as appropriate, for the then-current
year, or is exempt from such filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or
(o) Accounts that represent the right to receive progress payments
or other advance xxxxxxxx that are due prior to the completion of performance by
the applicable Borrower of the subject contract for goods or services.
"Eligible Equipment" means Equipment of each U.S. Borrower located
at one of the business locations of such Persons set forth on Schedule E-1, that
complies with each of the representations and warranties respecting Eligible
Equipment made by such Persons in the Loan Documents, and that is not excluded
as ineligible by virtue of the one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised from time to time
by Agent in Agent's Permitted Discretion to address the results of any audit or
appraisal performed by Agent from time to time after the Closing Date. In
determining the amount to be included, Equipment shall be valued based upon the
Net Liquidation Percentage times the most recent Appraised Value of such
Equipment. An item of Equipment shall not be included in Eligible Equipment if:
(a) a U.S. Borrower does not have good, valid, and marketable title
thereto,
(b) it is not located at one of the locations in the United States
set forth on Schedule E-1,
(c) it is located on real property leased by a U.S. Borrower,
unless (i) (A) it is subject to a Collateral Access Agreement executed by the
lessor, or other third party, as the case may be, or (B) during the 30 day
period following the Closing Date, Agent has instituted a reserve equal to the
rental costs under the applicable lease with respect to such location for a 3
month period, and (ii) it is segregated or otherwise separately identifiable
from goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first priority
Agent's Lien,
(e) it is substantially worn, damaged, defective or obsolete, or it
constitutes furnishings, parts, fixtures or is affixed to real property, unless
such Equipment is affixed to Real Property that comprises Real Property
Collateral,
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(f) the Agent has not received evidence of the property insurance
required by this Agreement with respect to such Equipment, or
(g) it is subject to a lease with any Person.
"Eligible Inventory" means Inventory of the U.S. Borrowers and
Canadian Borrower consisting of first quality Inventory located at one of the
business locations of such Person set forth on Schedule E-2 (or in-transit
between any such locations), that complies with each of the representations and
warranties respecting Eligible Inventory made under the Loan Documents, and that
is not excluded as ineligible by virtue of the one or more of the criteria set
forth below; provided, however, that such criteria may be fixed and revised from
time to time by Agent in Agent's Permitted Discretion to address the results of
any audit or appraisal performed by Agent from time to time after the Closing
Date. In determining the amount to be so included, Inventory shall be valued at
the lower of cost or market on a basis consistent with U.S. Borrowers' and
Canadian Borrower's historical accounting practices. An item of Inventory shall
not be included in Eligible Inventory if:
(a) a U.S. Borrower or Canadian Borrower does not have good, valid,
and marketable title thereto,
(b) it is not located at one of the locations set forth on Schedule
E-2, or in-transit from one such location to another such location,
(c) it is located on real property leased by a U.S. Borrower or
Canadian Borrower or in a contract warehouse, in each case, unless (i) (A) it is
subject to a Collateral Access Agreement executed by the lessor, warehouseman,
or other third party, as the case may be, or (B) during the 30 day period
following the Closing Date, Agent has instituted a reserve equal to the rental
costs under the applicable lease with respect to such location for a 3 month
period, and (ii) it is segregated or otherwise separately identifiable from
goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first priority
Agent's Lien,
(e) it consists of goods returned or rejected by a U.S. Borrower's
or Canadian Borrower's customers, or
(f) it consists of goods that are obsolete or slow moving,
restrictive or custom items, or goods that constitute spare parts, packaging and
shipping materials, supplies used or consumed in a U.S. Borrower's or Canadian
Borrower's business, xxxx and hold goods, defective goods, "seconds," or
Inventory acquired on consignment.
"Eligible Real Property Collateral" means the Appraised Real
Property.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting
-13-
through a branch or agency located in the United States, (c) a finance company,
insurance company, or other financial institution or fund that is engaged in
making, purchasing, or otherwise investing in commercial loans in the ordinary
course of its business and having (together with its Affiliates) total assets in
excess of $250,000,000, (d) any Affiliate (other than individuals) of a Lender
that was party hereto as of the Closing Date, including a fund or account
managed by such Lender or an Affiliate of such Lender or its investment manager
(a "Related Fund"), (e) so long as no Event of Default has occurred and is
continuing, any other Person approved by Agent and Administrative Borrower
(which approval by Administrative Borrower shall not be unreasonably withheld,
delayed or conditioned), and (f) during the continuation of an Event of Default,
any other Person approved by Agent.
"Enterprise Value" means the "enterprise value" of Parent and its
Subsidiaries, as determined by Lender Group pursuant to an enterprise valuation
satisfactory to the Lender Group, using a methodology similar to the methodology
used in the enterprise valuation delivered by Borrowers to Agent pursuant to
Section 3.1(n)(v), and performed by a third party auditor satisfactory to Lender
Group.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials (a) from any assets, properties, or
businesses of any Loan Party or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Loan Party or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on any
Loan Party, relating to the environment, employee health and safety, or
Hazardous Materials, including CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 USC (S) 1251 et seq; the Toxic Substances Control Act, 15 USC, (S) 2601
et seq; the Clean Air Act, 42 USC (S) 7401 et seq.; the Safe Drinking Water Act,
42 USC. (S) 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. (S) 2701 et
seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42
USC. (S) 11001 et seq.; the Hazardous Material Transportation Act, 49 USC (S)
1801 et seq.; and the Occupational Safety and Health Act, 29 USC. (S)651 et seq.
(to the extent it regulates occupational exposure to Hazardous Materials); the
Canadian Environmental Protection Act (Canada); the Fisheries Act (Canada); the
Environmental Protection Act (Ontario); the Water Resource Act (Ontario); the
Waste Management Act (British Columbia); the Environmental Quality Act (Quebec);
any federal, state, provincial, local or foreign counterparts or equivalents, in
each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
-14-
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means, with respect to any Person, all of such Person's
now owned or hereafter acquired right, title, and interest with respect to
equipment, machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), tools, parts, goods (other than consumer
goods, farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Loan Party under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Loan Party under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Loan Party is a member under
IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Loan Party and whose employees are aggregated with the
employees of a Loan Party under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan, (b) the withdrawal of a Loan Party, any of
its Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in
which it was a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in a
distress termination (as described in Section 4041(c) of ERISA), (d) the
institution by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan, (e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of a Loan Party, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, (g) providing any
security to any Plan under Section 401(a)(29) of the IRC by a Loan Party or its
Subsidiaries or any of their ERISA Affiliates or (h) any equivalent event,
action, condition, proceeding or otherwise under Canadian Employee Benefit Laws
or German Employee Benefit Laws.
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Revolver A Availability minus the
aggregate amount, if any, of all trade
-15-
payables of Parent and its Subsidiaries aged in excess of their historical
levels with respect thereto and all book overdrafts in excess of their
historical practices with respect thereto, in each case as determined by Agent
in its Permitted Discretion.
"Excess Cash Flow" means, for any fiscal period of Parent, without
duplication (i) Consolidated Net Income for such period, plus (ii) depreciation,
amortization, unrealized foreign exchange losses and deferred tax charges of
Parent and its Subsidiaries deducted in arriving at such Consolidated Net Income
for such period, less (iii) all unrealized foreign exchange gains and deferred
tax credits of Parent and its Subsidiaries included in arriving at such
Consolidated Net Income for such period, less (iv) all scheduled and mandatory
cash principal payments on the Advances and Term Loans made during such period
(but, in the case of the Advances, only to the extent that the applicable
Revolver Commitment is permanently reduced by the amount of such payments), and
all scheduled cash principal payments on other Indebtedness of Parent or any of
its Subsidiaries during such period to the extent such other Indebtedness is
permitted to be incurred, and such payments are permitted to be made, under this
Agreement, less (v) the cash portion of net Capital Expenditures made by Parent
and its Subsidiaries during such period to the extent permitted to be made under
this Agreement, less (vi) cash taxes paid in connection with Parent's repurchase
of its Subordinated Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Canadian Lender" means ABN AMRO Bank Canada.
"Existing Lenders" means the Existing Canadian Lender, the Existing
Note Purchase Lender and the Existing U.S. Lender.
"Existing Note Purchase Lender" means American Capital Strategies,
Ltd., as agent for certain purchasers.
"Existing U.S. Lender" means LaSalle Business Credit, Inc., as
agent for certain lenders.
"Extraordinary Receipts" means any cash received by the Parent or
any of its Subsidiaries not in the ordinary course of business (and not
consisting of proceeds described in Section 2.4(c)(viii) hereof), including, (i)
foreign, United States, state or local tax refunds, (ii) pension plan
reversions, (iii) proceeds of insurance (including key man life insurance), (iv)
judgments, proceeds of settlements or other consideration of any kind in
connection with any cause of action, (v) condemnation awards (and payments in
lieu thereof), (vi) indemnity payments and (vii) any purchase price adjustment
received in connection with any purchase agreement.
"Family Member" means, with respect to any individual, any other
individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
-16-
"Family Trusts" means, with respect to any individual, trusts or
other estate planning vehicles established for the benefit of Family Members of
such individual and in respect of which such individual serves as trustee or in
a similar capacity.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, among U.S. Borrowers and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"Fiscal Year" means the fiscal year of Parent and its Subsidiaries
ending on December 31 of each calendar year.
"Fixed Charge Coverage Ratio" means, as at the end of any fiscal
quarter for the period of 4 consecutive fiscal quarters then ended, the ratio of
(a) EBITDA for the period of 4 consecutive fiscal quarters then ended less the
sum of (i) Capital Expenditures of Parent and its Subsidiaries during such
period and (ii) income and single business taxes of Parent and its Subsidiaries
that have been paid in cash during such period to (b) the sum of (i) Interest
Expense of Parent and its Subsidiaries for such period and (ii) regularly
scheduled principal payments and prepayments of Funded Debt of Parent and its
Subsidiaries required to be made during such period; provided, that for any
fiscal quarter ending during the period from January 1, 2003 through December
31, 2003, EBITDA, Capital Expenditures, income and single business taxes,
Interest Expense and principal payments and prepayments shall be calculated on
an Annualized basis.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Foreign Currency Equivalent" means, on any date, the amount in a
specified currency which would result from the conversion of a specified amount
in another currency at the Spot Rate.
"Funded Debt" of any Person means Indebtedness of such Person that
by its terms matures more than one year after the date of creation or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year after such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year after such date, including
all amounts of Funded Debt of such Person required to be paid or prepaid within
one year after the date of determination.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles in effect
from time to time in the United States, consistently applied, provided that for
the purpose of Section 7.20 and the definitions used therein, "GAAP" shall mean
generally accepted accounting principles in effect on the date hereof and
consistent with those used in the preparation of the financial statements
delivered by Borrowers pursuant to Section 6.3, provided, further, that if there
occurs after the date of this Agreement any change in GAAP that affects in any
respect the calculation
-17-
of any covenant contained in Section 7.20, Agent and Parent shall negotiate in
good faith amendments to the provisions of this Agreement that relate to the
calculation of such covenant with the intent of having the respective positions
of Lenders and Borrowers after such change in GAAP conform as nearly as possible
to their respective positions as of the date of this Agreement and, until any
such amendments have been agreed upon, the covenants in Section 7.20 shall be
calculated as if no such change in GAAP has occurred.
"General Intangibles" means, with respect to any Person, all of
such Person's now owned or hereafter acquired right, title, and interest with
respect to general intangibles (including Intellectual Property, payment
intangibles, contract rights, rights to payment, judgments, rights arising under
common law, statutes, or regulations, choses or things in action, goodwill,
designs, inventions, trade secrets, d/b/a's, Internet domain names, logos,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, computer programs, information contained on
computer disks or tapes, software, literature, reports, catalogs, money, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), and
any and all supporting obligations in respect thereof, and any other personal
property other than goods, Accounts, Investment Property, and Negotiable
Collateral.
"German Advances" means the Revolver A Advances made by the Lenders
with a Revolver A Commitment to the German Borrower from time to time pursuant
to Section 2.1(a)(i)(C).
"German Borrower" has the meaning set forth in the preamble to this
Agreement.
"German Commitment" means $5,000,000.
"German Employee Benefit Laws" means the Social Security Code
(Germany).
"German Obligations" means all Revolver A Advances, debts,
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), premiums, liabilities (including all
amounts charged to the German Borrower's sub account established under the Loan
Account pursuant hereto), obligations, fees (excluding the fees provided for in
the Fee Letter), charges, costs, Lender Group Expenses (including any fees or
expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and
description, in each case, owing by German Borrower to the Lender Group pursuant
to or evidenced by the Loan Documents and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that German Borrower is required to
pay or reimburse by the Loan Documents, by law, or otherwise. Any reference in
this Agreement or in the Loan Documents to the German Obligations shall include
all amendments, changes, extensions, modifications, renewals replacements,
substitutions, and supplements, thereto and thereof, as applicable, both prior
and subsequent to any Insolvency Proceeding.
"German Parent" means NAC Beteiligungsgesellschaft mbH, a
corporation organized under the laws of Germany.
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"German Security Documents" means, collectively, (i) the Security
Agreement made by German Borrower in favor of Agent, for the benefit of the
Lender Group, (ii) the Security Transfer Agreement made by German Borrower in
favor of Agent, for the benefit of the Lender Group, and (iii) the Pledge and
Security Agreement made by the Parent in favor of Agent, for the benefit of the
Lender Group, with respect to the pledge by the Parent of 65% of the outstanding
shares of the common Stock of the German Parent, in each case, in form and
substance satisfactory to Agent.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal (including the federal
governments of Canada and Germany), state, local, provincial or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantor" means each Person that guarantees, pursuant to Section
6.18 or otherwise, all or any part of the Obligations.
"Guaranty" means a general continuing guaranty executed and
delivered by a Guarantor in favor of Agent, for the benefit of the Lender Group,
in form and substance satisfactory to Agent.
"Harvard Put" means the right of Harvard Private Capital
Holdings, Inc. to put to the Parent its shares of Stock of Parent pursuant to
that certain Securities Purchase Agreement, dated as of January 3, 1996, as
amended by that certain Agreement, dated as of March 23, 1998, between Parent
and Harvard Private Capital Holdings, Inc.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into between Parent or its
Subsidiaries and Xxxxx Fargo or its Affiliates, which provide 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 Administrative Borrower's or its Subsidiaries'
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security or currency valuations or commodity prices.
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"Indebtedness" means, without duplication, (a) all indebtedness for
borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations in respect
of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations under Capital Leases, (d) all
obligations or liabilities of others secured by a Lien on any asset of a Person
or its Subsidiaries, irrespective of whether such obligation or liability is
assumed, (e) all obligations to pay the deferred purchase price of assets (other
than trade payables incurred in the ordinary course of business and repayable in
accordance with customary trade practices), and (f) any obligation guaranteeing
or intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Indenture" means the Indenture, dated as of March 23, 1998, among
Parent, the Guarantors identified therein and the Indenture Trustee.
"Indenture Deficit" has the meaning set forth in Section 2.1(c).
"Indenture Documents" means the Indenture, the Subordinated Notes,
and all agreements, instruments and other documents delivered in connection with
the foregoing.
"Indenture Trustee" means First Trust National Association, as
trustee under the Indenture, or any successor thereof.
"Initial Term Loan Lenders" means, collectively, Ableco Finance LLC
and Highbridge/Xxxxx Special Opportunities Fund, L.P.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law (including the Bankruptcy and Insolvency Act
(Canada) and the Companies Creditors Arrangement Act (Canada) and the Insolvency
Code (Germany)), assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
"Intellectual Property" means all foreign and domestic (i)
trademarks, service marks, brand names, certification marks, collective marks,
d/b/a's, Internet domain names, logos, symbols, trade dress, assumed names,
fictitious names, trade names, and other indicia of origin, all applications and
registrations for all of the foregoing, and all goodwill associated therewith
and symbolized thereby, including all extensions, modifications and renewals of
same; (ii) inventions, discoveries and ideas, whether patentable or not, and all
patents, registrations, and applications therefor, including divisions,
continuations, continuations-in-part and renewal applications, and including
renewals, extensions and reissues; (iii) confidential and proprietary
information, trade secrets and know-how, including processes, schematics,
databases, formulae, drawings, prototypes, models, designs and customer lists;
(iv) published and unpublished works of authorship, whether copyrightable or
not, copyrights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions thereof; and
(v) all
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other intellectual property or proprietary rights and claims or causes of action
arising out of or related to any infringement, misappropriation or other
violation of any of the foregoing, including rights to recover for past, present
and future violations thereof.
"Intercompany Subordination Agreement" means a subordination agreement
executed and delivered by the Loan Parties and Agent, the form and substance of
which is satisfactory to Agent.
"Interest Expense" means, with respect to any Person for any period, gross
interest expense of such Person and its Subsidiaries for such period determined
in conformity with GAAP (including interest expense paid to Affiliates of such
Person other than a Subsidiary of Parent), less the sum of interest income and
non-cash interest expense for such period, each determined on a consolidated
basis and in accordance with GAAP for such Person and its Subsidiaries.
"Interest Period" means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan and ending 1, 2 or
3 months thereafter; provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue at the applicable rate based upon the LIBOR Rate from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires, (c) any Interest Period that would end on a
day that is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (d) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the calendar month that is 1, 2 or 3 months after the date
on which the Interest Period began, as applicable, and (e) Borrowers (or
Administrative Borrower on behalf thereof) may not elect an Interest Period
which will end after the Maturity Date.
"Inventory" means, with respect to any Person, such Person's now owned or
hereafter acquired right, title, and interest with respect to inventory,
including goods held for sale or lease or to be furnished under a contract of
service, goods that are leased by such Person as lessor, goods that are
furnished by such Person under a contract of service, and raw materials, work in
process, or materials used or consumed in such Person's business.
"Inventory Reserves" means reserves (determined from time to time by Agent
in its Permitted Discretion) for (a) the estimated reclamation claims of unpaid
sellers of Inventory sold to U.S. Borrowers and Canadian Borrower, plus (b) the
estimated rental costs for Inventory locations for which Collateral Access
Agreements are required, but have not been received, by Agent.
"Investment" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
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ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means, with respect to any Person, all of such
Person's now owned or hereafter acquired right, title, and interest with respect
to "investment property" as that term is defined in the Code, and any and all
supporting obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from time to
time.
"Issuing Lender" means Foothill or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent, agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
L/C Undertakings pursuant to Section 2.12.
"Leased Real Property" means any leasehold interests in real property now
held or hereafter acquired by a Loan Party and the improvements thereto.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender pursuant to a
Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the Lenders
(including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by a Borrower under any of the Loan
Documents that are paid or incurred by any one or more members of the Lender
Group, (b) fees or charges paid or incurred by any one or more members of the
Lender Group in connection with the Lender Group's transactions with Borrowers,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
judgment, UCC and PPSA searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Collateral
appraisals or business valuations to the extent of the fees and charges (and up
to the amount of any limitation) contained in this Agreement), real estate
surveys, real estate title policies and endorsements, and environmental audits,
(c) costs and expenses incurred by any one or more members of the Lender Group
in the disbursement of funds to or for the account of Borrowers (by wire
transfer or otherwise), (d) charges paid or incurred by any one or more members
of the Lender Group resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
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maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
any one or more members of the Lender Group related to audit examinations of the
Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by any one or more members
of the Lender Group in enforcing or defending the Loan Documents or in
connection with the transactions contemplated by the Loan Documents or any one
or more members of the Lender Group's relationship with any Borrower or any
guarantor of the Obligations, (h) Agent's and each Lender's reasonable costs and
expenses (including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent's and
each Lender's reasonable costs and expenses (including attorneys fees) incurred
in terminating, enforcing (including attorneys' fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such Lender,
together with such Lender's Affiliates, and the officers, directors, employees,
and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the context
requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount outstanding time drafts accepted by an Underlying Issuer as a result of
drawings under Underlying Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan, the
rate per annum determined by Agent (rounded upwards, if necessary, to the next
1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100%
minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of a Revolver A Advance or a Revolver
B Advance that bears interest at a rate determined by reference to the LIBOR
Rate.
"LIBOR Rate Revolver A Margin" means 3.75 percentage points.
"LIBOR Rate Revolver B Margin" means 4.00 percentage points.
"Lien" means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and
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whether such interest shall be contingent upon the occurrence of some future
event or events or the existence of some future circumstance or circumstances,
including the lien or security interest arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, security
agreement, conditional sale or trust receipt, or from a lease, consignment, or
bailment for security purposes and also including reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product Agreements, the
Canadian Security Documents, the Cash Management Agreements, the Contribution
Agreement, the Control Agreements, the Copyright Security Agreement, the
Disbursement Letter, the Due Diligence Letter, the Fee Letter, the German
Security Documents, the Intercompany Subordination Agreement, the Letters of
Credit, the Mortgages, the Officers' Certificate, the Patent Security Agreement,
the Pledge Agreement, the Shareholder Subordination Agreements, the Trademark
Security Agreement, any note or notes executed by a Borrower in connection with
this Agreement and payable to a member of the Lender Group, and any other
agreement entered into, now or in the future, by a Loan Party and the Lender
Group in connection with this Agreement.
"Loan Party" means any Borrower and any Guarantor.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of a Loan Party individually, or the Loan
Parties taken as a whole, (b) a material impairment of a Loan Party's ability to
perform its obligations under the Loan Documents to which it is a party or of
the Lender Group's ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Agent's Liens with respect to the Collateral as a result of an action or
failure to act on the part of a Loan Party.
"Material Contract" means any agreement or contract of any Loan Party or
any Subsidiary of a Loan Party (other than any agreement that by its terms may
be terminated by such Person upon 60 days' notice or less) which (a) involves
consideration to such Person of $250,000 or more in any year, (b) involves
consideration by such Person of $250,000 or more in any year, (c) imposes
financial obligations on such Person of $250,000 or more in any year or (d) is
otherwise material (or together with related agreements and contracts, is
material) to the business, prospects, operations, financial condition,
performance or properties of Parent and its Subsidiaries, taken as a whole.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver A Amount" means $25,000,000.
"Maximum Revolver B Amount" means $7,500,000; provided, that the Maximum
Revolver B Amount shall automatically be reduced on April 1, 2003, and on the
first day of each month thereafter, by an amount equal to the sum of (a) the
result of, for each such day, the following, determined prior to giving effect
to the reduction scheduled to occur on such day:
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(i) the Maximum Revolver B Amount on such day less (ii) the Revolver B Usage on
such day plus (b) $125,000.
"Mortgages" means, individually and collectively, one or more mortgages,
deeds of trust, or deeds to secure debt, executed and delivered by a Loan Party
in favor of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent, that encumber the Real Property Collateral and the
related improvements thereto.
"Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or such equivalent plan under Canadian Employee Benefit
Laws or German Employee Benefit Laws to which a Loan Party, any of its
Subsidiaries, or any ERISA Affiliate has contributed, or was obligated to
contribute, within the past six years.
"Negotiable Collateral" means, with respect to any Person, all of such
Person's now owned and hereafter acquired right, title, and interest with
respect to letters of credit, letter of credit rights, instruments, promissory
notes, drafts, documents, and chattel paper (including electronic chattel paper
and tangible chattel paper), and any and all supporting obligations in respect
thereof.
"Net Cash Proceeds" means, with respect to any sale or disposition by any
Person or any Subsidiary thereof of property or assets, the amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment of deferred consideration) by or on behalf
of such Person or such Subsidiary, in connection therewith after deducting
therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien
on any asset (other than (A) Indebtedness owing to Agent or any Lender under
this Agreement or the other Loan Documents and (B) Indebtedness assumed by the
purchaser of such asset) which is required to be, and is, repaid in connection
with such disposition, (ii) reasonable expenses related thereto incurred by such
Person or such Subsidiary in connection therewith, and (iii) taxes paid or
payable to any taxing authorities by such Person or such Subsidiary in
connection therewith, in each case to the extent, but only to the extent, that
the amounts so deducted are, at the time of receipt of such cash, actually paid
or payable to a Person that is not an Affiliate and are properly attributable to
such transaction.
"Net Liquidation Percentage" means the percentage of the book value of a
Loan Party's Inventory or the Appraised Value of a Loan Party's Equipment, as
the case may be, that is estimated to be recoverable in an orderly liquidation
of such Inventory or such Equipment, as the case may be, each such percentage to
be as determined from time to time by a qualified appraisal company selected by
Agent.
"Non-Loan Party" means any Subsidiary of Parent that is not a Loan Party.
"Obligations" means, collectively, the U.S. Obligations, the Canadian
Obligations and the German Obligations.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to Parent, together with Parent's completed
responses to the inquiries set forth therein, the form and substance of such
responses to be satisfactory to Agent.
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"Operating Lease" means, with respect to any Person, any lease (including
leases which may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) which is not a Capital Lease other than any
such lease in which that Person is the lessor or sublessor.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Owned Real Property" means any fee interests in real property now owned or
hereafter acquired by any Loan Party and the improvements thereto.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Participant Register" has the meaning set forth in Section 14.1(i).
"Patent Security Agreement" means a patent security agreement executed and
delivered by each of the U.S. Borrowers and Agent, the form and substance of
which is satisfactory to Agent.
"Pay-Off Letter" means a letter, in form and substance satisfactory to
Agent, from each Existing Lender to Agent respecting the amount necessary to
repay in full all of the obligations of the Loan Parties owing to such Existing
Lender and obtain a release of all of the Liens existing in favor of such
Existing Lender in and to the assets of the Loan Parties.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in Title
IV of ERISA, or any successor thereto or equivalent entity under Canadian
Employee Benefit Laws or German Employee Benefit Laws.
"Permitted Discretion" means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by a Loan
Party or its Subsidiaries of Equipment that is substantially worn, damaged,
obsolete or no longer used or useful in the ordinary course of such Person's
business, (b) sales by a Loan Party or its Subsidiaries of Inventory to buyers
in the ordinary course of business, (c) the use or transfer of money or Cash
Equivalents by a Loan Party or its Subsidiaries in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, and (d)
the licensing by a Loan Party or its Subsidiaries, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of such Person's business.
"Permitted Holder" means (a) Parent or any of its Subsidiaries or (b) any
executive officer of a Subsidiary of Parent that receives shares of the capital
Stock of such Subsidiary pursuant to a stockholders agreement with Parent that
contains stock buyback rights in favor of Parent and is otherwise in form and
substance satisfactory to Agent.
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"Permitted Investments" means (a) Investments in Cash Equivalents, (b)
Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Investments by any Borrower in any U.S. Borrower, provided that if
any such Investment is in the form of Indebtedness, such Indebtedness shall be
subject to the terms and conditions of the Intercompany Subordination Agreement,
(e) the advance made by Parent to Xxxx X. Xxxxxx evidenced by that certain
promissory note executed by Xxxx X. Xxxxxx and payable to Parent in the
aggregate principal amount of $585,000 and (f) Investments by Parent in its
Subordinated Notes to the extent permitted by Section 7.8(a).
"Permitted Liens" means (a) Liens held by Agent for the benefit of Agent
and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under Operating Leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business and not in connection with the borrowing of money, which Liens
described in this clause (f) either (i) are for sums not yet delinquent, or (ii)
are the subject of Permitted Protests, (g) Liens arising from deposits made in
connection with obtaining worker's compensation or other unemployment insurance,
(h) Liens or deposits to secure performance of bids, tenders, or leases incurred
in the ordinary course of business and not in connection with the borrowing of
money, (i) Liens granted as security for surety or appeal bonds in connection
with obtaining such bonds in the ordinary course of business, (j) Liens
resulting from any judgment or award that is not an Event of Default hereunder
so long as (i) the enforcement of such judgment or award has been stayed by
reason of a pending appeal or otherwise and (ii) the aggregate amount of the
claims payable in accordance with such judgments and awards shall not exceed
$250,000, (k) with respect to the Real Property Collateral, Liens, easements,
rights of way, and zoning restrictions that are exceptions to the commitments
for title insurance issued in connection with the Mortgages, as accepted by
Agent, and (l) with respect to any Real Property that is not part of the Real
Property Collateral, title defects, title exceptions, easements, rights of way,
and zoning restrictions that do not materially interfere with or impair the use
or operation thereof.
"Permitted Protest" means the right of Parent or any of its Subsidiaries,
as applicable, to protest any Lien (other than any such Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in an amount no less
than the amount required under GAAP to be so reserved, (b) any such protest is
instituted promptly and prosecuted diligently by Parent or any of its
Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred from and after the Closing
Date in an aggregate amount outstanding at any one time not in excess of
$1,000,000.
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"Person" means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
Property.
"Plan" means any employee benefit plan, program, or arrangement maintained
or contributed to by a Loan Party or with respect to which it may incur
liability subject to ERISA.
"Pledge Agreement" means a pledge and security agreement, in form and
substance satisfactory to Agent, executed and delivered by each Borrower that
owns Stock of a Subsidiary of Parent or that is the holder of any promissory
notes to be delivered to Agent pursuant to Section 4.2.
"Preferred Stock" means the shares of the Series A Preferred Stock of
Parent, par value $0.01 per share, issued and sold pursuant to the terms of the
Certificate of Designations (as defined in the Preferred Stock Purchase
Agreement).
"Preferred Stock Purchase Agreement" means the Preferred Stock and Warrant
Purchase Agreement, dated December 26, 2002, by and among Parent and the
Purchasers named on the signature pages thereof, as such agreement is in effect
on the Closing Date, with such changes thereto as shall be approved in writing
by the Lender Group.
"Projections" means Parent's forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a consistent
basis with Parent's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Revolver A Advances
and receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (x) prior to the Revolver A Commitment being reduced to zero,
the percentage obtained by dividing (i) such Lender's Revolver A Commitment, by
(ii) the aggregate Revolver A Commitments of all Lenders, and (y) from and after
the time that the Revolver A Commitment has been terminated or reduced to zero,
the percentage obtained by dividing (i) the aggregate principal amount of such
Lender's Revolver A Advances by (ii) the aggregate principal amount of all
Revolver A Advances,
(b) with respect to a Lender's obligation to make Revolver B Advances
and receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (x) prior to the Revolver B Commitment being reduced to zero,
the percentage obtained by dividing (i) such Lender's Revolver B Commitment, by
(ii) the aggregate Revolver B Commitments of all Lenders, and (y) from and after
the time that the Revolver B Commitment has been terminated or reduced to zero,
the percentage obtained by dividing (i) the aggregate principal amount of such
Lender's Revolver B Advances by (ii) the aggregate principal amount of all
Revolver B Advances,
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(c) with respect to a Lender's obligation to participate in Letters of
Credit, to reimburse the Issuing Lender, and to receive payments of fees with
respect thereto, (x) prior to the Revolver A Commitment being reduced to zero,
the percentage obtained by dividing (i) such Lender's Revolver A Commitment, by
(ii) the aggregate Revolver A Commitments of all Lenders, and (y) from and after
the time that the Revolver A Commitment has been terminated or reduced to zero,
the percentage obtained by dividing (i) the aggregate principal amount of such
Lender's Revolver A Advances by (ii) the aggregate principal amount of all
Revolver A Advances,
(d) with respect to a Lender's obligation to make the Term Loan A and
receive payments of interest, fees, and principal with respect thereto, (x)
prior to the making of the Term Loan A, the percentage obtained by dividing (i)
such Lender's Term Loan A Commitment, by (ii) the aggregate amount of all
Lenders' Term Loan A Commitments, and (y) from and after the making of the Term
Loan A, the percentage obtained by dividing (i) the principal amount of such
Lender's Term Loan A by (ii) the principal amount of the Term Loan A,
(e) with respect to a Lender's obligation to make the Term Loan B and
receive payments of interest, fees, and principal with respect thereto, (x)
prior to the making of the Term Loan B, the percentage obtained by dividing (i)
such Lender's Term Loan B Commitment, by (ii) the aggregate amount of all
Lenders' Term Loan B Commitments, and (y) from and after the making of the Term
Loan B, the percentage obtained by dividing (i) the principal amount of such
Lender's Term Loan B by (ii) the principal amount of the Term Loan B,
(f) with respect to a Lender's obligation to make the Term Loan C and
receive payments of interest, fees, and principal with respect thereto, (x)
prior to the making of the Term Loan C, the percentage obtained by dividing (i)
such Lender's Term Loan C Commitment, by (ii) the aggregate amount of all
Lenders' Term Loan C Commitments, and (y) from and after the making of the Term
Loan C, the percentage obtained by dividing (i) the principal amount of such
Lender's Term Loan C by (ii) the principal amount of the Term Loan C, and
(g) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) such Lender's Revolver A Commitment plus
such Lender's Revolver B Commitment plus the unpaid principal amount of such
Lender's portion of the Term Loan A plus the unpaid principal amount of such
Lender's portion of the Term Loan B plus (x) prior to the making of the Term
Loan C, such Lender's Term Loan C Commitment, and (y) from and after the making
of the Term Loan C, the unpaid principal amount of such Lender's portion of the
Term Loan C, by (ii) the aggregate amount of Revolver Commitments of all Lenders
plus the unpaid principal amount of the Term Loan A plus the unpaid principal
amount of the Term Loan B plus (x) prior to the making of the Term Loan C, the
aggregate amount of all Lenders' Term Loan C Commitments, and (y) from and after
the making of the Term Loan C, the unpaid principal amount of the Term Loan C;
provided, however, that, if such Lender's Revolver A Commitment or Revolver B
Commitment shall have been terminated or reduced to zero or the Obligations have
been accelerated, such Lender's Revolver A Commitment or Revolver B Commitment,
as the case may be, shall be deemed to be the aggregate unpaid principal amount
of such Lender's
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Revolver A Advances or Revolver B Advances, as the case may be, and if all
Revolver A Commitments or Revolver B Commitments, as the case may be, shall have
been reduced to zero, the aggregate Revolver A Commitments or Revolver B
Commitments, as the case may be, shall be deemed to be the principal amount of
all outstanding Revolver A Advances or Revolver B Advances, as the case may be.
"Purchase Money Indebtedness" means purchase money Indebtedness (excluding
the Obligations) and Capitalized Lease Obligations incurred at the time of, or
within 20 days after, the acquisition of any fixed assets for the purpose of
financing all or any part of the acquisition cost thereof.
"Real Property" means Owned Real Property and Leased Real Property.
"Real Property Collateral" means the parcel or parcels of Owned Real
Property identified on Schedule R-1 and any Owned Real Property hereafter
acquired by a Loan Party.
"Record" means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.
"Register" has the meaning set forth in Section 14.1(h).
"Registered Loan" has the meaning set forth in Section 2.16.
"Registered Note" has the meaning set forth in Section 2.16.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Report" has the meaning set forth in Section 16.17.
"Reportable Event" means any of the events described in Section 4043(c) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of 30 days' notice to the PBGC is waived under applicable
regulations.
"Required Availability" means Excess Availability and unrestricted cash and
Cash Equivalents in an amount of not less than $3,000,000.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate 51% or more as determined pursuant to clause (g) of the definition of
"Pro Rata Share"; provided, that, (a) so long as Foothill and its Affiliates
hold not less than 30% of the aggregate principal amount of the sum of (x) the
Revolver A Commitment, or, if the Revolver A Commitment has been terminated or
reduced to zero or the Obligations have been accelerated,
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the Revolver A Advances then outstanding, (y) the Revolver B Commitment, or, if
the Revolver B Commitment has been terminated or reduced to zero or the
Obligations have been accelerated, the Revolver B Advances then outstanding, and
(z) the Term Loan A, "Required Lenders" shall include Foothill, and (b) so long
as both (i) the Lenders with a Term Loan C Commitment are committed to make the
Term Loan C or the Term Loan C has been made and (ii) the Initial Term Loan
Lenders and their Affiliates or funds, money market accounts, investment
accounts, or other account managed by the Initial Term Loan Lenders or their
Affiliates hold not less than 30% of the aggregate principal amount of the sum
of (x) the Term Loan B and (y) the Term Loan C Commitment, or, if the Term Loan
C has been made, the Term Loan C, "Required Lenders" shall include the Required
Term Loan Lenders.
"Required Term Loan Lenders" means Lenders representing 51% of the
aggregate principal amount of the Term Loan B then outstanding and the Term Loan
C Commitment or, if the Term Loan C has been made, the Term Loan C.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver A Advances" means, collectively, the U.S. Advances, the
Canadian Advances and the German Advances.
"Revolver A Availability" means, as of any date of determination, if
such date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrowers are entitled to borrow as Revolver A
Advances under Section 2.1(a) (after giving effect to all then outstanding
Obligations (other than Bank Product Obligations) and all sublimits and reserves
applicable hereunder).
"Revolver A Borrowing Base" means, as of any date of determination,
the result of:
(i) an amount equal to the lesser of:
(y) 85% of the amount of Eligible Accounts, less the
amount, if any, of the Dilution Reserve, and
(z) an amount equal to U.S. Borrowers' and Canadian
Borrower's Collections with respect to their Accounts
for the immediately preceding 90-day period,
plus
(ii) an amount equal to the least of:
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(w) $7,500,000,
(x) 35% of the value of Eligible Inventory,
(y) 95% times the Net Liquidation Percentage times the
book value of U.S. Borrowers' and Canadian Borrower's
Inventory, and
(z) 100% of the amount of credit availability created by
clause (i) above,
minus
(iii) the sum of (x) the Bank Product Reserves and (y) the
aggregate amount of reserves (other than the Inventory
Reserves), if any, established by Agent under Section
2.1(a)(ii) and Section 2.1(a)(iii).
"Revolver A Commitment" means, with respect to each Lender, its
Revolver A Commitment, and, with respect to all Lenders, their Revolver A
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 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 14.1.
"Revolver A Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Revolver A Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Revolver B Advances" has the meaning set forth in Section 2.1(b).
"Revolver B Availability" means, as of any date of determination, if
such date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that U.S. Borrowers are entitled to borrow as Revolver
B Advances under Section 2.1(b) (after giving effect to all then outstanding
Obligations (other than Bank Product Obligations) and all sublimits and reserves
applicable hereunder).
"Revolver B Borrowing Base" means sum of (i) 80% times the Net
Liquidation Percentage times the Appraised Value of Eligible Equipment and (ii)
55% of the Appraised Value of Eligible Real Property Collateral.
"Revolver B Commitment" means, with respect to each Lender, its
Revolver B Commitment, and, with respect to all Lenders, their Revolver B
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 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 14.1.
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"Revolver B Usage" means, as of any date of determination, the then
extant amount of outstanding Revolver B Advances.
"Revolver Commitment" means a Revolver A Commitment or a Revolver B
Commitment, as applicable.
"Revolver Usage" means, collectively, the Revolver A Usage and the
Revolver B Usage.
"Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrowers to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers,
whether by the making of a Revolver A Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Senior Debt" shall mean the total principal amount of Indebtedness of
Parent and its Subsidiaries, determined on a consolidated basis, excluding (a)
the Indebtedness under the Indenture Documents, (b) the Indebtedness under the
Tennessee IRB, (c) the Indebtedness under the promissory notes referred to in
Section 7.1(i), (d) all Bank Product Obligations, and (e) all Indebtedness to
the extent of any cash collateral deposited to secure such Indebtedness.
"Senior Debt Ratio" shall mean, at any date, the ratio of (i) the
outstanding principal amount of Senior Debt at such date to (ii) EBITDA for the
trailing 4 fiscal quarter period most recently ended on or prior to such date.
"Senior Interest Coverage Ratio" means as at the end of any fiscal
quarter for the period of 4 consecutive fiscal quarters then ended, the ratio of
(a) EBITDA for the period of 4 consecutive fiscal quarters then ended to (b)
Interest Expense of Parent and its Subsidiaries in respect of Senior Debt for
such period; provided, that for any fiscal quarter ending during the period from
January 1, 2003 through December 31, 2003, EBITDA and Interest Expense shall be
calculated on an Annualized basis.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Shareholder Subordination Agreement" means a subordination agreement,
in form and substance satisfactory to Lender Group, executed and delivered by
each shareholder of Parent that is the holder of any promissory note referred to
in Section 7.1(i).
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"Solvent" means, with respect to any Person on a particular date, that
such Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act, the Uniform Fraudulent Conveyance Act and the Bankruptcy Code) or
an insolvent person (as such term is defined in the Bankruptcy and Insolvency
Act (Canada)), the Limited Liability Company Act (Germany) or the Insolvency
Code (Germany), as applicable.
"Spot Rate" means, as at any date with respect to the conversion of an
amount in one currency (the "original currency") to another currency (the "other
currency"), the rate of exchange of Xxxxx Fargo as of 10:00 a.m. (California
time) on such date for the purchase of the original currency with the other
currency.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subordinated Notes" means the 9-5/8% Senior Subordinated Notes due
2008 issued by Parent pursuant to the Indenture.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Swing Lender" means Foothill or any other Lender that, at the request
of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Tennessee IRB" means the $2,500,000 Variable Rate Demand Industrial
Development Revenue Bonds (Numatics, Incorporated Project), Series 1996.
"Term Loan A" has the meaning set forth in Section 2.2(a).
"Term Loan A Amount" means $5,500,000.
"Term Loan A Commitment" means, with respect to each Lender, its Term
Loan A Commitment, and, with respect to all Lenders, their Term Loan A
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to
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which such Lender became a Lender hereunder in accordance with the provisions of
Section 14.1.
"Term Loan B" has the meaning set forth in Section 2.2(b).
"Term Loan B Amount" means $18,000,000.
"Term Loan B Commitment" means, with respect to each Lender, its Term
Loan B Commitment, and, with respect to all Lenders, their Term Loan B
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 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 14.1.
"Term Loan B Deficit" has the meaning set forth in Section 2.1(d).
"Term Loan B PIK Amount" means, as of any date of determination, the
amount of all interest accrued with respect to the Term Loan B that has been
paid in kind by being added to the balance thereof in accordance with Section
2.6(a).
"Term Loan C" has the meaning set forth in Section 2.2(c).
"Term Loan C Amount" means $10,000,000.
"Term Loan C Commitment" means, with respect to each Lender, its Term
Loan C Commitment, and, with respect to all Lenders, their Term Loan C
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 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 14.1.
"Term Loan C Deficit" has the meaning set forth in Section 2.1(e).
"Term Loans" means, collectively, the Term Loan A, the Term Loan B and
the Term Loan C.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan, (ii) any event that causes any Loan Party or any of its ERISA
Affiliates to incur liability under Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the
IRC, (iii) the filing of a notice of intent to terminate a Benefit Plan or the
treatment of a Benefit Plan amendment as a termination under Section 4041 of
ERISA, (iv) the institution of proceedings by the PBGC to terminate a Benefit
Plan, (v) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan, or (vi) any equivalent event, action, condition,
proceeding or otherwise under Canadian Employee Benefit Laws or German Employee
Benefit Laws.
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"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto 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 14.1.
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by each of the U.S. Borrowers and Agent, the form and
substance of which is satisfactory to Agent.
"UCC/PPSA Filing Authorization Letter" means a letter executed by each
Loan Party authorizing Agent to file appropriate financing statements on Form
UCC-1 and PPSA registration statements in such office or offices as may be
necessary or, in the opinion of Agent, desirable to perfect the Liens to be
created by each applicable Loan Document.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"U.S. Advance Deficit" has the meaning set forth in Section 2.1(f).
"U.S. Advances" means the Revolver A Advances made by the Lenders with
a Revolver A Commitment to the U.S. Borrowers from time to time pursuant to
Section 2.1(a)(i)(A).
"U.S. Borrower" and "U.S. Borrowers" have the respective meanings set
forth in the preamble to this Agreement.
"U.S. EBITDA" means, with respect to any fiscal period, without
duplication, U.S. Borrowers' consolidated net earnings (or loss) , minus other
income, plus other non-cash minority interest expenses, plus, with respect to
the Fiscal Year ending December 31, 2003, the early termination fees payable to
the Existing Lenders pursuant to the existing credit facilities with the
Borrowers, to the extent that such amount was deducted in arriving at
consolidated net income (or loss) for such Fiscal Year, and, in any case, in an
aggregate amount not to exceed $640,000, minus extraordinary gains, plus
extraordinary non-cash losses, plus unrealized foreign exchange losses, minus
unrealized foreign exchange gains, plus interest expense, income and single
business taxes and depreciation and amortization for such period, as determined
in accordance with GAAP.
"U.S. Obligations" means (a) all loans (including the Term Loans),
Advances, debts, principal, interest (including the Term Loan B PIK Amount)
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to the Loan Account pursuant hereto), obligations, fees (including the
fees provided for in the Fee Letter), charges, costs, Lender Group Expenses
(including any fees or
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expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and
description, in each case, owing by U.S. Borrowers to the Lender Group pursuant
to or evidenced by the Loan Documents and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that U.S. Borrowers are required to
pay or reimburse by the Loan Documents, by law, or otherwise, and (b) all Bank
Product Obligations. Any reference in this Agreement or in the Loan Documents to
the U.S. Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"U.S. Senior Debt Ratio" means, at any date, the ratio of (i) the
outstanding principal amount of Senior Debt (other than the Revolver A Advances
made to the Canadian Borrower and the German Borrower) at such date to (ii) U.S.
EBITDA for the trailing 4 fiscal quarter period most recently ended on or prior
to such date.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Xxxxxx Employment Agreement" means the Employment Agreement, dated as
of January 3, 1996, by and between the Parent and Xxxx. X. Xxxxxx.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a national
banking association.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Parent" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Parent and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein.
1.4 Construction. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders,
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and supplements set forth herein). Any reference herein to any Person shall be
construed to include such Person's successors and assigns. Any requirement of a
writing contained herein or in the other Loan Documents shall be satisfied by
the transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
1.6 Currency. Unless otherwise expressly provided herein, all amounts
denominated in "Dollars" shall be deemed to include the Foreign Currency
Equivalent in Canadian Dollars of such amount.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Revolver A Advances.
(i) Subject to the terms and conditions of this Agreement,
and during the term of this Agreement, each Lender with a Revolver A
Commitment agrees (severally, not jointly or jointly and severally) to make
advances ("Revolver A Advances") to:
(A) U.S. Borrowers in an aggregate principal amount at
any one time outstanding not to exceed such Lender's Pro Rata Share of an
amount equal to the lesser of (1) the Maximum Revolver A Amount less the
sum of (x) the Letter of Credit Usage, plus (y) the aggregate principal
amount of Canadian Advances outstanding at such time plus (z) the aggregate
principal amount of German Advances outstanding at such time and (2) the
Revolver A Borrowing Base less the sum of (w) the Letter of Credit Usage
plus (x) the aggregate principal amount of Canadian Advances outstanding at
such time plus (y) the aggregate principal amount of German Advances
outstanding at such time plus (z) the aggregate amount of the Inventory
Reserves,
(B) Canadian Borrower in an aggregate principal amount
at any one time outstanding not to exceed such Lender's Pro Rata Share of
an amount equal to the lesser of (1) the Canadian Commitment and (2) the
Revolver A Borrowing Base less the sum of (w) the Letter of Credit Usage
plus (x) the aggregate principal amount of U.S. Advances outstanding at
such time plus (y) the aggregate principal amount of German Advances
outstanding at such time plus (z) the aggregate amount of the Inventory
Reserves (it being understood that the Lenders with Revolver A Commitments
shall make Revolver A Advances to the Canadian Borrower in the aggregate
amount of $1,599,092.45 on the Closing Date and $1,900,907.55 within 1 day
of the Closing Date in accordance with Section 3.2(h)), and
(C) German Borrower in an aggregate principal amount at
any one time outstanding not to exceed such Lender's Pro Rata Share of an
amount equal to the lesser of (1) the German Commitment and (2) the
Revolver A Borrowing Base less
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the sum of (w) the Letter of Credit Usage plus (x) the aggregate principal
amount of U.S. Advances outstanding at such time plus (y) the aggregate
principal amount of Canadian Advances outstanding at such time plus (z) the
aggregate amount of the Inventory Reserves (it being understood that the
Lenders with Revolver A Commitments shall make Revolver A Advances to the
German Borrower in the aggregate amount of $1,503,239 on the Closing Date
and $3,496,761 within 7 days of the Closing Date in accordance with Section
3.2(i)).
(ii) Anything to the contrary in this Section 2.1(a)
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, against the Revolver A
Borrowing Base, including reserves with respect to (i) sums that Loan
Parties are required to pay (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable
under such leases) and has failed to pay under any Section of this
Agreement or any other Loan Document, and (ii) amounts owing by Loan
Parties to any Person to the extent secured by a Lien on, or trust over,
any of the Collateral (other than any existing Permitted Lien set forth on
Schedule P-1 which is specifically identified thereon as entitled to have
priority over the Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent, likely would have a priority superior to the Agent's
Liens (such as Liens or trusts in favor of landlords, warehousemen,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens or
trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral. In addition to
the foregoing, Agent shall have the right to have the Inventory reappraised
by a qualified appraisal company selected by Agent from time to time after
the Closing Date for the purpose of redetermining the Net Liquidation
Percentage of the Eligible Inventory portion of the Collateral and, as a
result, redetermining the Revolver A Borrowing Base, provided, that, so
long as no Default or Event of Default has occurred and is continuing,
Borrowers shall only be obligated to pay for fees and charges incurred for
appraisals conducted no more frequently than 2 times per calendar year.
(iii) Amounts borrowed pursuant to this Section 2.1(a) may
be repaid and, subject to the terms and conditions of this Agreement,
reborrowed at any time during the term of this Agreement; provided, that
the Agent shall establish and maintain a reserve against both the Maximum
Revolver A Amount and the Revolver A Borrowing Base in an amount equal to:
(A) the difference between (1) the Canadian Commitment
and (2) the aggregate principal amount of Canadian Advances outstanding,
plus
(B) the difference between (1) the German Commitment
and (2) the aggregate principal amount of German Advances outstanding.
(b) Revolver B Advances.
(i) Subject to the terms and conditions of this Agreement,
and during the term of this Agreement, each Lender with a Revolver B
Commitment agrees
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(severally, not jointly or jointly and severally) to make advances
("Revolver B Advances") to U.S. Borrowers in an aggregate principal amount
at any one time outstanding not to exceed such Lender's Pro Rata Share of
an amount equal to the lesser of (A) the Maximum Revolver B Amount and (B)
the Revolver B Borrowing Base.
(ii) Anything to the contrary in this Section 2.1(b)
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, against the Revolver B
Borrowing Base, including reserves with respect to potential environmental
remediation costs relating to Eligible Real Property Collateral. In
addition to the foregoing, Agent shall have the right to have the Eligible
Equipment and Eligible Real Property Collateral reappraised by a qualified
appraisal company selected by Agent in its Permitted Discretion from time
to time after the Closing Date for the purposes of redetermining the
Revolver B Borrowing Base; provided, that so long as no Default or Event of
Default has occurred and is continuing, Borrowers shall only be obligated
to pay for fees and charges incurred for such appraisals of the Eligible
Equipment conducted no more frequently than 1 time per year and such
appraisals of the Eligible Real Property Collateral conducted no more
frequently than 1 time per year.
(iii) Amounts borrowed pursuant to this Section 2.1(b) may
be repaid and, subject to the terms and conditions of this Agreement, upon
5 days prior written notice to Agent, reborrowed in a minimum amount of not
less than $1,000,000 at any time, provided that amounts repaid under this
Section 2.1(b)(iii) may only be reborrowed if, in connection with such
reborrowing, U.S. Borrowers pay to the Lenders with a Revolver B Commitment
a fee in an amount equal to 3% of the amount reborrowed.
(c) Indenture Deficit. Notwithstanding the foregoing, the
Lenders with Revolver Commitments shall have no obligation to make additional
Advances if, either immediately before or after giving effect to such Advances,
the Revolver Usage exceeds the greater of (i) $35,000,000 and (ii) the sum of
(A) 85% of the Accounts of the Parent and its Restricted Subsidiaries (as
defined in the Indenture) that are not more than 120 days past due and (B) 65%
of the book value of all Inventory of the Parent and its Restricted Subsidiaries
(as defined in the Indenture), in each case calculated on a consolidated basis
and in accordance with GAAP (the amount of such excess is hereafter referred to
as the "Indenture Deficit").
(d) Term Loan B Deficit. Notwithstanding the foregoing, the
Lenders with Revolver Commitments shall have no obligation to make additional
Advances if, either immediately before or after giving effect to such Advances,
the sum of the Revolver Usage plus the aggregate principal amount of the Term
Loans other than the Term Loan C (including the Term Loan B PIK Amount) then
outstanding exceeds the lesser of (i) 50% of the Enterprise Value of Parent and
its Subsidiaries and (ii) 2.50 times the trailing 12 months EBITDA of Parent and
its Subsidiaries for the immediately preceding 12 month period (the amount of
such excess is hereafter referred to as the "Term Loan B Deficit").
(e) Term Loan C Deficit. Notwithstanding the foregoing, the
Lenders with Revolver Commitments shall have no obligation to make additional
Advances if, either
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immediately before or after giving effect to such Advances, the sum of the
Revolver Usage plus the aggregate principal amount of the Term Loans (including
the Term Loan B PIK Amount) then outstanding exceeds the lesser of (i) 60% of
the Enterprise Value of Parent and its Subsidiaries and (ii) 3.00 times the
trailing 12 months EBITDA of Parent and its Subsidiaries for the immediately
preceding 12 month period (the amount of such excess is hereafter referred to as
the "Term Loan C Deficit").
(f) U.S. Advance Deficit. Notwithstanding the foregoing, the
Lenders with Revolver Commitments shall have no obligation to make additional
Advances if, either immediately before or after giving effect to such Advances,
the sum of (i) the then extant amount of U.S. Advances plus (ii) the then extant
amount of Revolver B Advances plus (iii) the then extant amount of the Letter of
Credit Usage plus (iv) the aggregate principal amount of the Term Loans
(including the Term Loan B PIK Amount) then outstanding exceeds (A) prior to the
making of the Term Loan C, 2.75 times the trailing 12 months U.S. EBITDA for the
immediately preceding 12 month period and (B) after the making of the Term Loan
C, 3.25 times the trailing 12 months U.S. EBITDA for the immediately preceding
12 month period (the amount of such excess is hereafter referred to as the "U.S.
Advance Deficit").
(g) Maximum Revolver A Amount. Notwithstanding the foregoing,
the Lenders with Revolver A Commitments shall have no obligation to make
additional Revolver A Advances hereunder to the extent such additional Revolver
A Advances would cause the Revolver A Usage to exceed the Maximum Revolver A
Amount.
(h) Maximum Revolver B Amount. Notwithstanding the foregoing,
the Lenders with Revolver B Commitments shall have no obligation to make
additional Revolver B Advances hereunder to the extent such additional Revolver
B Advances would cause the Revolver B Usage to exceed the Maximum Revolver B
Amount.
2.2 Term Loans. (a) Subject to the terms and conditions of this
Agreement, on the Closing Date, each Lender with a Term Loan A Commitment agrees
(severally, not jointly or jointly and severally) to make term loans
(collectively, the "Term Loan A") to U.S. Borrowers in an amount equal to such
Lender's Pro Rata Share of the Term Loan A Amount. The Term Loan A shall be
repaid in consecutive monthly installments each in a principal amount equal to
$114,583, on the first day of each month, commencing April 1, 2003. Subject to
Section 3.6, U.S. Borrowers may at any time prepay all or a portion of the Term
Loan A. The outstanding unpaid principal balance and all accrued and unpaid
interest under the Term Loan A shall be due and payable on the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan A shall constitute
Obligations. Any principal amount of the Term Loan A repaid or prepaid may not
be reborrowed.
(b) Subject to the terms and conditions of this Agreement, on
the Closing Date, each Lender with a Term Loan B Commitment agrees (severally,
not jointly or jointly and severally) to make term loans (collectively, the
"Term Loan B") to U.S. Borrowers in an amount equal to such Lender's Pro Rata
Share of the Term Loan B Amount. Subject to Section 3.6, U.S. Borrowers may at
any time prepay all or a portion of the Term Loan B, provided that (i) no Event
of Default shall have occurred and be continuing or would result from such
prepayment, (ii) the outstanding principal amount of the Term Loan A has been
paid in full, and
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(iii) immediately after giving effect to such prepayment, Borrowers have Excess
Availability of not less than $5,000,000. The outstanding unpaid principal
balance (including the outstanding Term Loan B PIK Amount) and all accrued and
unpaid interest under the Term Loan B (including the Term Loan B PIK Amount)
shall be due and payable on the date of termination of this Agreement, whether
by its terms, by prepayment, or by acceleration. All amounts outstanding under
the Term Loan B (including the Term Loan B PIK Amount) shall constitute
Obligations. Any principal amount of the Term Loan B repaid or prepaid may not
be reborrowed.
(c) Subject to the terms and conditions of this Agreement, each
Lender with a Term Loan C Commitment agrees (severally, not jointly or jointly
and severally) to make term loans (collectively, the "Term Loan C") to U.S.
Borrowers in an amount equal to such Lender's Pro Rata Share of the Term Loan C
Amount. The aggregate principal amount of the Term Loan C must be drawn in a
single Borrowing within 6 months of the Closing Date, on a Business Day upon not
less than 5 Business Days' notice, and shall not exceed the Term Loan C
Commitment. Subject to Section 3.6, U.S. Borrowers may at any time prepay all or
a portion of the Term Loan C, provided that (i) no Event of Default shall have
occurred and be continuing or would result from such prepayment, (ii) the
outstanding principal amount of the Term Loan A has been paid in full, and (iii)
immediately after giving effect to such prepayment, Borrowers have Excess
Availability of not less than $5,000,000. The outstanding unpaid principal
balance and all accrued and unpaid interest under the Term Loan C shall be due
and payable on the date of termination of this Agreement, whether by its terms,
by prepayment, or by acceleration. All amounts outstanding under the Term Loan C
shall constitute Obligations. Any principal amount of the Term Loan C repaid or
prepaid may not be reborrowed.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing of an Advance shall
be made by an irrevocable written request by an Authorized Person delivered to
Agent (which notice must be received by Agent no later than 10:00 a.m.
(California time) on the Business Day prior to the date that is the requested
Funding Date, specifying (i) the amount of such Borrowing, (ii) whether such
Advance is to be a Revolver A Advance or a Revolver B Advance, and, in the case
of Revolver A Advances, whether such Revolver A Advance is to be for the benefit
of the U.S. Borrowers, the Canadian Borrower or the German Borrower, and (iii)
the requested Funding Date, which shall be a Business Day; provided, however,
that in the case of a request for Swing Loan in an amount of $2,500,000, or
less, such notice will be timely received if it is received by Agent no later
than 10:00 a.m. (California time) on the Business Day that is the requested
Funding Date). At Agent's election, in lieu of delivering the above-described
written request, any Authorized Person may give Agent telephonic notice of such
request by the required time, with such telephonic notice to be confirmed in
writing within 24 hours of the giving of such notice.
(b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
if the Borrowing is for a Revolver A Advance, to request Swing Lender to make a
Swing Loan pursuant to the terms of Section 2.3(d) in the amount of the
requested Borrowing; provided, however, that if Swing Lender declines in its
sole
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discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) Making of Advances.
(i) In the event that Agent shall elect to have the terms
of this Section 2.3(c) apply to a requested Borrowing as described in
Section 2.3(b), then promptly after receipt of a request for a Borrowing
pursuant to Section 2.3(a), Agent shall notify the Lenders, not later than
1:00 p.m. (California time) on the Business Day immediately preceding the
Funding Date applicable thereto, by telecopy, telephone, or other similar
form of transmission, of the requested Borrowing. Each Lender shall make
the amount of such Lender's Pro Rata Share of the requested Borrowing
available to Agent in immediately available funds, to Agent's Account, not
later than 10:00 a.m. (California time) on the Funding Date applicable
thereto. After Agent's receipt of the proceeds of such Advances, upon
satisfaction of the applicable conditions precedent set forth in Section 3
hereof, Agent shall make the proceeds thereof available to Administrative
Borrower on the applicable Funding Date by transferring immediately
available funds equal to such proceeds received by Agent to Administrative
Borrower's Designated Account; provided, however, that, subject to the
provisions of Section 2.3(i), Agent shall not request any Lender to make,
and no Lender shall make, any Advance if Agent shall have actual knowledge
that (1) one or more of the applicable conditions precedent set forth in
Section 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (2) the
requested Borrowing would exceed the applicable Availability on such
Funding Date.
(ii) Unless 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 1 Business Day prior to the date of such Borrowing, that
such Lender will not make available as and when required hereunder to Agent
for the account of Borrowers the amount of that Lender's Pro Rata Share of
the Borrowing, Agent may assume that each Lender has made or will make such
amount available to Agent in immediately available funds on the Funding
Date and Agent may (but shall not be so required), in reliance upon such
assumption, make available to Borrowers on such date a corresponding
amount. If and to the extent any Lender shall not have made its full amount
available to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that Lender
shall on the Business Day following such Funding Date make such amount
available to Agent, together with interest at the Defaulting Lender Rate
for each day during such period. A notice submitted by Agent to any Lender
with respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such payment to
Agent shall constitute such Lender's Advance on the date of Borrowing for
all purposes of this Agreement. If such amount is not made available to
Agent on the Business Day following the Funding Date, Agent will notify
Administrative Borrower of such failure to fund and, upon demand by Agent,
Borrowers shall pay such amount to Agent for 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
Advances composing such Borrowing. The failure of any Lender to make any
Advance on any Funding Date shall
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not relieve any other Lender of any obligation hereunder to make an Advance
on such Funding Date, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on any
Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance with
their Commitments (but only to the extent that such Defaulting Lender's
Advance was funded by the other members of the Lender Group) or, if so
directed by Administrative Borrower and if no Default or Event of Default
had occurred and is continuing (and to the extent such Defaulting Lender's
Advance was not funded by the Lender Group), retain same to be re-advanced
to Borrowers as if such Defaulting Lender had made Advances to Borrowers.
Subject to the foregoing, Agent may hold and, in its Permitted Discretion,
re-lend to Borrowers for the account of such Defaulting Lender the amount
of all such payments received and retained by it for the account of such
Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender shall be
deemed not to be a "Lender" and such Lender's Commitment shall be deemed to
be zero. This Section shall remain effective with respect to such Lender
until (x) the Obligations under this Agreement shall have been declared or
shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such
Defaulting Lender's default in writing, or (z) the Defaulting Lender makes
its Pro Rata Share of the applicable Advance and pays to Agent all amounts
owing by Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by such
Defaulting Lender or any other Lender of its duties and obligations
hereunder, or to relieve or excuse the performance by Borrowers of their
duties and obligations hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting Lender shall
constitute a material breach by such Defaulting Lender of this Agreement
and shall entitle Administrative Borrower at its option, upon written
notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to refuse to
be replaced hereunder, and agrees to execute and deliver a completed form
of Assignment and Acceptance Agreement in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and delivered such
document if it fails to do so) subject only to being repaid its share of
the outstanding Obligations (other than Bank Product Obligations)
(including an assumption of its Pro Rata Share of the Risk Participation
Liability) without any premium or penalty of any kind whatsoever; provided
further, however, that any such assumption of the Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups' or Borrowers' rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.
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(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent of
Swing Lender, as a Lender, to have the terms of this Section 2.3(d) apply
to a requested Borrowing as described in Section 2.3(b), Swing Lender as a
Lender shall make such Revolver A Advance in the amount of such Borrowing
(any such Revolver A Advance made solely by Swing Lender as a Lender
pursuant to this Section 2.3(d) being referred to as a "Swing Loan" and
such Revolver A Advances being referred to collectively as "Swing Loans")
available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Administrative Borrower's
Designated Account. Each Swing Loan is a Revolver A Advance hereunder and
shall be subject to all the terms and conditions applicable to other
Revolver A Advances, except that no such Swing Loan shall be eligible for
the LIBOR Option and all payments on any Swing Loan shall be payable to
Swing Lender as a Lender solely for its own account (and for the account of
the holder of any participation interest with respect to such Swing Loan).
Subject to the provisions of Section 2.3(i), Agent shall not request Swing
Lender as a Lender to make, and Swing Lender as a Lender shall not make,
any Swing Loan if Agent has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (ii) the requested Borrowing would
exceed the Revolver A Availability on such Funding Date. Swing Lender as a
Lender shall not otherwise be required to determine whether the applicable
conditions precedent set forth in Section 3 have been satisfied on the
Funding Date applicable thereto prior to making, in its sole discretion,
any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens,
shall constitute Revolver A Advances and Obligations hereunder, and shall
bear interest at the rate applicable from time to time to Revolver A
Advances.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrowers and the
Lenders, from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of Default,
or (2) at any time that any of the other applicable conditions precedent
set forth in Section 3 have not been satisfied, to make Revolver A Advances
to Borrowers on behalf of the Lenders that Agent, in its Permitted
Discretion deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of
repayment of the Obligations (other than the Bank Product Obligations), or
(C) to pay any other amount chargeable to Borrowers pursuant to the terms
of this Agreement, including Lender Group Expenses and the costs, fees, and
expenses described in Section 10 (any of the Revolver A Advances described
in this Section 2.3(e) shall be referred to as "Agent Advances"); provided,
that notwithstanding anything to the contrary contained in this Section
2.3(e), the aggregate principal amount of Revolver A Advances outstanding
at any time, when taken together with the aggregate principal amount of
Overadvances made in accordance with Section 2.3(i) hereof outstanding at
any time, shall not exceed an amount equal to the lesser of (x) 10% of the
Revolver A Borrowing Base then in effect and (y) $2,500,000. Each
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Agent Advance is a Revolver A Advance hereunder and shall be subject to all
the terms and conditions applicable to other Revolver A Advances, except
that no such Agent Advance shall be eligible for the LIBOR Option and all
payments thereon shall be payable to Agent solely for its own account (and
for the account of the holder of any participation interest with respect to
such Agent Advance).
(ii) The Agent Advances shall be repayable by Borrowers on
demand and secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Revolver A Advances and Obligations hereunder,
and shall bear interest at the rate applicable from time to time to
Revolver A Advances that are Base Rate Loans.
(f) Settlement. It is agreed that each Lender's funded portion
of the Revolver A Advances is intended by the Lenders to equal, at all times,
such Lender's Pro Rata Share of the outstanding Revolver A Advances. Such
agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree
(which agreement shall not be for the benefit of or enforceable by Borrowers)
that in order to facilitate the administration of this Agreement and the other
Loan Documents, settlement among them as to the Revolver A Advances, the Swing
Loans, and the Agent Advances shall take place on a periodic basis in accordance
with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by
Agent, (1) on behalf of Swing Lender, with respect to each outstanding
Swing Loan, (2) for itself, with respect to each Agent Advance, and (3)
with respect to Collections of the U.S. Borrowers received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m.
(California time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being the
"Settlement Date"). Such notice of a Settlement Date shall include a
summary statement of the amount of outstanding Revolver A Advances, Swing
Loans, and Agent Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein (including Section
2.3(c)(iii)): (y) if a Lender's balance of the Revolver A Advances, Swing
Loans, and Agent Advances exceeds such Lender's Pro Rata Share of the
Revolver A Advances, Swing Loans, and Agent Advances as of a Settlement
Date, then Agent shall, by no later than 12:00 p.m. (California time) on
the Settlement Date, transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such that each such
Lender shall, upon receipt of such amount, have as of the Settlement Date,
its Pro Rata Share of the Revolver A Advances, Swing Loans, and Agent
Advances, and (z) if a Lender's balance of the Revolver A Advances, Swing
Loans, and Agent Advances is less than such Lender's Pro Rata Share of the
Revolver A Advances, Swing Loans, and Agent Advances as of a Settlement
Date, such Lender shall no later than 12:00 p.m. (California time) on the
Settlement Date transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon transfer of such
amount, have as of the Settlement Date, its Pro Rata Share of the Revolver
A Advances, Swing Loans, and Agent Advances. Such amounts made available to
Agent under clause (z) of the immediately preceding sentence shall be
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applied against the amounts of the applicable Swing Loan or Agent Advance
and, together with the portion of such Swing Loan or Agent Advance
representing Swing Lender's Pro Rata Share thereof, shall constitute
Revolver A Advances of such Lenders. If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable thereto
to the extent required by the terms hereof, Agent shall be entitled to
recover for its account such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Revolver A Advances, Swing Loans, and Agent Advances is less than, equal
to, or greater than such Lender's Pro Rata Share of the Revolver A
Advances, Swing Loans, and Agent Advances as of a Settlement Date, Agent
shall, as part of the relevant Settlement, apply to such balance the
portion of payments actually received in good funds by Agent with respect
to principal, interest and fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net
amount is owed to any such Lender after such application, such net amount
shall be distributed by Agent to that Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent no
Agent Advances or Swing Loans are outstanding, may pay over to Swing Lender
any payments received by Agent, that in accordance with the terms of this
Agreement would be applied to the reduction of the Revolver A Advances, for
application to Swing Lender's Pro Rata Share of the Revolver A Advances.
If, as of any Settlement Date, Collections of the U.S. Borrowers received
since the then immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Revolver A Advances other than to
Swing Loans, as provided for in the previous sentence, Swing Lender shall
pay to Agent for the accounts of the Lenders, and Agent shall pay to the
Lenders, to be applied to the outstanding Revolver A Advances 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
Revolver A Advances. During the period between Settlement Dates, Swing
Lender with respect to Swing Loans, Agent with respect to Agent Advances,
and each Lender (subject to the effect of letter agreements between Agent
and individual Lenders) with respect to the Revolver A Advances other than
Swing Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the daily amount
of funds employed by Swing Lender, Agent, or the Lenders, as applicable.
(iv) All payments received by Agent from U.S. Borrowers in
respect of Revolver B Advances shall be applied in accordance with Section
2.4(b).
(g) Notation. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
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(h) Lenders' Failure to Perform. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously
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 Advance (or other extension of credit) 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 obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(i) Optional Overadvances. (i) Any contrary provision of
this Agreement notwithstanding, the Lenders hereby authorize Agent or Swing
Lender, as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Revolver A Advances
(including Swing Loans) to Borrowers notwithstanding that an Overadvance exists
or thereby would be created, so long as (A) after giving effect to such Revolver
A Advances (including a Swing Loan), the Revolver A Usage does not exceed the
Revolver A Borrowing Base less the aggregate amount of the Inventory Reserves by
more than an amount equal to the lesser of (x) 10% of the Borrowing Base then in
effect and (y) $2,500,000, (B) after giving effect to such Revolver A Advances
(including a Swing Loan), the outstanding Revolver A Usage (except for and
excluding amounts charged to the Loan Account (including any sub-account
thereof) for interest, fees, or Lender Group Expenses) does not exceed the
Maximum Revolver A Amount, (C) the aggregate principal amount of Overadvances
made pursuant to this Section 2.3(i) when taken together with the aggregate
principal amount of Agent Advances made pursuant to Section 2.3(e) does not
exceed at any time an amount equal to the lesser of (x) 10% of the Revolver A
Borrowing Base then in effect and (y) $2,500,000, (D) at the time of the making
of any such Revolver A Advance (including a Swing Loan), Agent does not believe,
in good faith, that the Overadvance created by such Revolver A Advance will be
outstanding for more than 90 days and (E) after giving effect to such Revolver A
Advances (including a Swing Loan), no Indenture Deficit would exist. The
foregoing provisions are for the exclusive benefit of Agent, Swing Lender, and
the Lenders and are not intended to benefit Borrowers in any way. The Revolver A
Advances and Swing Loans, as applicable, that are made pursuant to this Section
2.3(i) shall be subject to the same terms and conditions as any other Revolver A
Advance or Swing Loan, as applicable, except that they shall not be eligible for
the LIBOR Option and the rate of interest applicable thereto shall be the rate
applicable to Revolver A Advances that are Base Rate Loans under Section 2.6(c)
hereof without regard to the presence or absence of a Default or Event of
Default.
(ii) In the event Agent obtains actual knowledge that
the Revolver A Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess, Agent
shall notify Lenders as soon as practicable (and prior to making any (or
any additional) intentional Overadvances (except for and excluding amounts
charged to the Loan Account (including any sub-account thereof) for
interest, fees, or Lender Group Expenses) unless Agent determines that
prior notice would result in imminent harm to the Collateral or its value),
and the Lenders with Revolver A Commitments thereupon shall, together with
Agent, jointly determine the terms of arrangements that shall be
implemented with Borrowers intended to reduce, within a reasonable time,
the outstanding principal amount of the Revolver A Advances to Borrowers to
an amount permitted by the preceding paragraph. In the event Agent or
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any Lender disagrees over the terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall be
implemented according to the determination of the Required Lenders.
(iii) Each Lender with a Revolver A Commitment shall be
obligated to settle with Agent as provided in Section 2.3(f) for the amount
of such Lender's Pro Rata Share of any unintentional Overadvances by Agent
reported to such Lender, any intentional Overadvances made as permitted
under this Section 2.3(i), and any Overadvances resulting from the charging
to the Loan Account (including any sub-account thereof) of interest, fees,
or Lender Group Expenses.
2.4 Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the account of
the Lender Group and shall be made in immediately available funds, no later
than 11:00 a.m. (California time) on the date specified herein. Any payment
received by Agent later than 11:00 a.m. (California time), shall be deemed
to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the Lenders that
Borrowers will not make such payment in full as and when required, Agent
may assume that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and 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 Borrowers do not make such payment in full to Agent on
the date when due, each Lender severally shall repay to Agent on demand
such amount distributed to such Lender, together with interest thereon at
the Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan Documents
(including in letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned ratably
among the Lenders (according to the unpaid principal balance of the
Obligations to which such payments relate held by each Lender) and payments
of fees and expenses (other than fees or expenses that are for Agent's
separate account, after giving effect to any letter agreements between
Agent and individual Lenders) shall be apportioned ratably among the
Lenders having a Pro Rata Share of the type of Commitment or Obligation to
which a particular fee relates. Except (x) as otherwise specifically
provided in Section 2.4(c) below, (y) if an Event of Default
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shall have occurred and be continuing or would result after giving effect
to any such payment (in which case, such payments shall be applied in the
manner set forth in an agreement among Agent and Lenders), or (z) with
respect to payments of principal or interest of specific Obligations or
which relate to the payment of specific fees or other amounts, all payments
shall be remitted to Agent and all such payments, and all proceeds of
Accounts or other Collateral received by Agent, shall be applied as
follows:
(A) first, to pay the principal of all Agent Advances until
paid in full,
(B) second, ratably to pay all principal amounts then due
and payable with respect to the Term Loans until paid in full,
(C) third, to pay the principal of all Swing Loans until
paid in full,
(D) fourth, at Agent's election (which election Agent
agrees will not be made if an Overadvance would be created thereby), to pay
amounts then due and owing by Administrative Borrower or its Subsidiaries
in respect of Bank Products until paid in full,
(E) fifth, to pay the principal of all Revolver A Advances
until paid in full,
(F) sixth, to pay any other Obligations then due and
payable (including Bank Product Obligations) until paid in full, and
(G) seventh, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each Lender in
writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided in Section 2.3(h).
(c) Mandatory Prepayments.
(i) If on any day an Indenture Deficit exists, U.S.
Borrowers shall immediately pay to Agent an amount equal to such Indenture
Deficit to be applied to the outstanding principal of the Revolver A
Advances.
(ii) If on any day the Revolver B Usage exceeds the Maximum
Revolver B Amount, U.S. Borrowers shall immediately pay to Agent an amount
equal to such excess to be applied to the outstanding principal of the
Revolver B Advances.
(iii) If on any day the aggregate outstanding principal amount
of the Term Loans (including the Term Loan B PIK Amount) exceeds
$35,000,000, U.S. Borrowers shall immediately pay to Agent an amount equal
to such excess, to be applied to the outstanding principal of the Term
Loans in accordance with clause (d) below.
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(iv) If on any day a Term Loan B Deficit exists (based upon the
most recent appraisal or financial statements, as applicable), U.S.
Borrowers shall immediately pay to Agent an amount equal to such Term Loan
B Deficit to be applied to the outstanding principal of the Term Loans and
the Advances in accordance with clause (d) below. The Lender Group shall
have the right to have an enterprise valuation performed by a qualified
third party auditor selected by the Lender Group in its Permitted
Discretion from time to time after the Closing Date for the purposes of the
definition of "Term Loan B Deficit" and this Section 2.4(c)(iv); provided,
that so long as no Event of Default has occurred and is continuing,
Borrowers shall only be obligated to pay for fees and charges incurred for
such enterprise valuations (together with the enterprise valuations
referred to in clause (v) below) conducted no more frequently than 1 time
per calendar year.
(v) If on any day a Term Loan C Deficit exists (based upon the
most recent appraisal or financial statements, as applicable), U.S.
Borrowers shall immediately pay to Agent an amount equal to such Term Loan
C Deficit to be applied to the outstanding principal of the Term Loans and
the Advances in accordance with clause (d) below. The Lender Group shall
have the right to have an enterprise valuation performed by a qualified
third party auditor selected by the Lender Group in its Permitted
Discretion from time to time after the Closing Date for the purposes of the
definition of "Term Loan C Deficit" and this Section 2.4(c)(v); provided,
that so long as no Event of Default has occurred and is continuing,
Borrowers shall only be obligated to pay for fees and charges incurred for
such enterprise valuations (together with the enterprise valuations
referred to in clause (iv) above) conducted no more frequently than 1 time
per calendar year.
(vi) If on any day a U.S. Advance Deficit exists (based upon
the most recent financial statements), U.S. Borrowers shall immediately pay
to Agent an amount equal to such U.S. Advance Deficit to be applied to the
outstanding principal of the Term Loans and the Advances in accordance with
clause (d) below.
(vii) Within 10 days of delivery to Agent and Lenders of audited
annual financial statements pursuant to Section 6.3(b), commencing with the
delivery to Agent and Lenders of the financial statements for the Fiscal
Year ended December 31, 2003, or, if such financial statements are not
delivered to Agent and Lenders on the date such statements are required to
be delivered pursuant to Section 6.3(b), 10 days after the date such
statements are required to be delivered to Agent and Lenders pursuant to
Section 6.3(b), U.S. Borrowers shall prepay the outstanding principal
amount of the Term Loans and the Advances in accordance with clause (d)
below in an amount equal to 75% of the Excess Cash Flow of Parent and its
Subsidiaries for such Fiscal Year.
(viii) Immediately upon any sale or disposition by any Loan Party
or its Subsidiaries of property or assets, U.S. Borrowers shall prepay the
outstanding principal amount of the Term Loans and the Advances in
accordance with clause (d) below in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such sales or
dispositions to the extent that the aggregate amount of Net Cash Proceeds
received by all Loan Parties and their Subsidiaries (and not
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paid to Agent as a prepayment of the Term Loans and the Advances) for all
such sales or dispositions shall exceed $100,000 since the Closing Date
(other than sales or dispositions of Accounts or Inventory or insurance
policy or condemnation awards with respect to Inventory). Nothing contained
in this subclause (viii) shall permit any Loan Party or any of its
Subsidiaries to sell or otherwise dispose of any property or assets other
than in accordance with Section 7.4.
(ix) Upon the receipt by any Loan Party or any of its
Subsidiaries of any Extraordinary Receipts, U.S. Borrowers shall prepay the
outstanding principal of the Term Loans and the Advances in accordance with
clause (d) below in an amount equal to 100% of such Extraordinary Receipts,
net of any reasonable expenses incurred in collecting such Extraordinary
Receipts.
(d) Application of Payments.
(i) Each prepayment pursuant to subclauses (c)(iii), (c)(iv),
(c)(v), (c)(vi) and (c)(ix) above shall, (A) so long as no Event of Default
shall have occurred and be continuing, be applied, first, to the
outstanding principal amount of the Term Loan A, until paid in full,
second, to the outstanding principal amount of the Revolver B Advances
(together with a corresponding permanent reduction in the Revolver B
Commitment), until paid in full, third to the outstanding principal amount
of the Term Loan B, until paid in full, fourth, to the outstanding
principal amount of the Term Loan C, until paid in full, and fifth, to the
outstanding principal amount of the Revolver A Advances and (B) if an Event
of Default shall have occurred and be continuing, be applied in the manner
set forth in an agreement among Agent and Lenders. Each such prepayment of
the Term Loans shall be applied against the remaining installments of
principal of the applicable Term Loan (if any) in the inverse order of
maturity.
(ii) Each prepayment pursuant to subclause (c)(vii) above
shall, (A) so long as no Event of Default shall have occurred and be
continuing, be applied, first, to the outstanding principal amount of the
Term Loan A, until paid in full, second, 50% to the outstanding principal
amount of the Revolver B Advances (together with a corresponding permanent
reduction in the Revolver B Commitment) and 50% to the outstanding
principal amount of the Term Loan B, until such Loans are paid in full,
third, to the outstanding principal amount of the Term Loan C, until paid
in full, and fourth, to the outstanding principal amount of the Revolver A
Advances and (B) if an Event of Default shall have occurred and be
continuing, be applied in the manner set forth in an agreement among Agent
and Lenders. Each such prepayment of the Term Loans shall be applied
against the remaining installments of principal of the applicable Term Loan
(if any) in the inverse order of maturity.
(iii) Each prepayment pursuant to subclause (c)(viii) above
shall, (A) so long as no Event of Default shall have occurred and be
continuing, be applied as follows:
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(1) if the proceeds are from any sale or disposition of
any Accounts or Inventory or any insurance policy or condemnation award
with respect to Inventory, such proceeds shall be applied, first, to the
outstanding principal amount of the Revolver A Advances, until paid in
full, second, to the outstanding principal amount of the Term Loan A, until
paid in full, third, to the outstanding principal amount of the Revolver B
Advances (together with a corresponding permanent reduction in the Revolver
B Commitment), until paid in full, fourth, to the outstanding principal
amount of the Term Loan B, until paid in full, and fifth, to the
outstanding principal amount of the Term Loan C, until paid in full;
(2) subject to clause (3) below, if the proceeds are from
the sale or disposition of any other assets or any insurance policy or
condemnation award not described in clause (1) above, such proceeds shall
be applied, first, to the outstanding principal amount of the Term Loan A,
until paid in full, second, to the outstanding principal amount of the
Revolver B Advances (together with a corresponding permanent reduction in
the Revolver B Commitment), until paid in full, third to the outstanding
principal amount of the Term Loan B, until paid in full, fourth, to the
outstanding principal amount of the Term Loan C, until paid in full, and
fifth, to the outstanding principal amount of the Revolver A Advances. Each
such prepayment of the Term Loans shall be applied against the remaining
installments of principal of the applicable Term Loan (if any) in the
inverse order of maturity, provided, that, except during the continuance of
a Default or an Event of Default, such proceeds shall not be required to be
so applied to the extent that such proceeds are used to replace, repair or
restore the properties or assets in respect of which such proceeds were
paid if (i) the amount of proceeds received in respect of such sale,
disposition or insurance policy or condemnation award is less than
$100,000, (ii) Administrative Borrower delivers a certificate to Agent
within 10 days after such sale or 30 days after the date of such loss,
destruction or taking, as the case may be, stating that such proceeds shall
be used to replace, repair or restore such properties or assets within a
period specified in such certificate not to exceed 90 days after the
receipt of such proceeds (which certificate shall set forth estimates of
the proceeds to be so expended) and (iii) such proceeds are deposited in a
DDA subject to a Control Agreement. If all or any portion of such proceeds
not so applied to the prepayment of the Term Loans and Advances in
accordance with this clause (2) are not used in accordance with the
preceding sentence within the period specified in the relevant certificate
furnished pursuant hereto, such remaining portion shall be applied to the
Term Loans and Advances in accordance with this clause (2) on the last day
of such specified period; and
(3) if the proceeds are from a sale or disposition of all
or substantially all of the assets or Stock of any Person or any insurance,
which sale, disposition or proceeds of insurance includes both Accounts or
Inventory and other assets, such proceeds shall be applied as follows: (x)
an amount equal to the net book value of such Accounts and Inventory, or if
greater, an amount equal to the Advances supported by such assets
determined using the effective advance rate under the Revolver A Borrowing
Base against such Accounts and Inventory (determined at the time of such
sale or disposition or event resulting in such insurance proceeds), shall
be applied to the outstanding principal amount of the Revolver A Advances
and (y) the remaining
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proceeds shall be applied, first, to the outstanding principal amount of
the Term Loan A, until paid in full, second, to the outstanding principal
amount of the Revolver B Advances (together with a corresponding permanent
reduction in the Revolver B Commitment), until paid in full, third to the
outstanding principal amount of the Term Loan B, until paid in full,
fourth, to the outstanding principal amount of the Term Loan C, until paid
in full, and fifth, to the outstanding principal amount of the Revolver A
Advances. Each such prepayment of the Term Loans shall be applied against
the remaining installments of principal of the applicable Term Loan (if
any) in the inverse order of maturity; and
(B) if an Event of Default shall have occurred and be continuing, be
applied in the manner set forth in an agreement among Agent and Lenders;
(iv) Notwithstanding anything to the contrary contained herein,
if Excess Availability is less than or equal to $2,000,000 either before or
after giving effect to any prepayment of the Term Loan B or the Term Loan C
pursuant to any of clauses (c)(iii) through (c)(ix) above, no such
prepayment of the Term Loan B or the Term Loan C shall be made and:
(A) in the case of clauses (c)(iii) through (c)(vii) above
at a time when the Revolver B Advances and the Term Loan A have been paid
in full, Borrowers shall make such payment on a deferred basis (in whole or
in part from time to time) to the extent that Excess Availability is
greater than $2,000,000 both before and after giving effect to such
prepayment of the Term Loan B or the Term Loan C, as the case may be; and
(B) in the case of clauses (c)(viii) and (c)(ix), (1)
Agent shall apply such amounts to the payment of the Revolver A Advances
and, concurrently with such payment of the Revolver A Advances, establish
and maintain a corresponding reserve against the Revolver A Borrowing Base
in an amount equal to the amount that would have otherwise been applied by
Borrowers to the prepayment of the Term Loan B or the Term Loan C, as the
case may be, and (2) the amount that is applied to the Revolver A Advances
pursuant to this subclause (A) shall be applied to the prepayment of the
Term Loan B or the Term Loan C, as the case may be, and the corresponding
reserve against the Revolver A Borrowing Base shall be released, at such
time as Excess Availability is greater than $2,000,000 both before and
after giving effect to such prepayment of the Term Loan B or the Term Loan
C, as the case may be.
(e) Interest and Fees. Any prepayment made pursuant to Section 2.4(c)
in respect of the Term Loans shall be accompanied by accrued interest on the
principal amount being prepaid to the date of prepayment.
(f) Cumulative Prepayments. Except as otherwise expressly provided in
Section 2.4(c), payments with respect to any subclause of Section 2.4(c) are in
addition to payments made or required to be made under any other subclause of
Section 2.4(c).
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2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Sections 2.1 and 2.12 is greater than either the Dollar
or percentage limitations set forth in Sections 2.1 or 2.12, (an "Overadvance"),
Borrowers immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance with
the priorities set forth in Section 2.4(b). In addition, Borrowers hereby
promise to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to the Lender Group as and when due and payable
under the terms of this Agreement and the other Loan Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and Bank Product Obligations)
whether or not charged to the Loan Account (or any sub-account thereof) pursuant
to the terms hereof shall bear interest on the Daily Balance thereof as follows:
(i) if the relevant Obligation is a Revolver A Advance
that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate from
time to time in effect plus the LIBOR Rate Revolver A Margin;
(ii) if the relevant Obligation is a Revolver B Advance
that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate from
time to time in effect plus the LIBOR Rate Revolver B Margin;
(iii) if the relevant Obligation is a Revolver B Advance
that is a Base Rate Loan, at a per annum rate equal to the Base Rate from
time to time in effect plus the Base Rate Revolver B Margin;
(iv) if the relevant Obligation is the Term Loan A, at a
per annum rate equal to the greater of (A) the Base Rate from time to time
in effect plus the Base Rate Term Loan A Margin and (B) 9.00% per annum;
(v) if the relevant Obligation is the Term Loan B
(inclusive of any Term Loan B PIK Amount), at a per annum rate equal to the
sum of (A) the greater of (1) the Base Rate from time to time in effect
plus the Base Rate Term Loan B Margin and (2) 11.00% per annum and (B)
2.00% per annum; provided, however, that, in the case of this subclause
(v), so long as no Event of Default has occurred and is continuing and no
mandatory prepayment pursuant to Section 2.4(c)(iii) would be required as a
result thereof, that portion of such interest equal to 2.00% per annum
shall, in the absence of an election by U.S. Borrowers to pay such interest
in cash, be paid-in-kind by being added to the outstanding principal
balance of the Term Loan B (inclusive of any Term Loan B PIK Amount
theretofore so added) on the first day of each month;
(vi) if the relevant Obligation is the Term Loan C, at a
per annum rate equal to the greater of (A) the Base Rate from time to time
in effect plus the Base Rate Term Loan C Margin and (B) 13.00% per annum;
and
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(vii) otherwise, at a per annum rate equal to the Base
Rate from time to time in effect plus the Base Rate Revolver A Margin;
provided, that, so long as no Default or Event of Default shall have occurred
and be continuing, for each period commencing on the date of the delivery to
Agent and Lenders of the audited annual financial statements for the preceding
Fiscal Year pursuant to Section 6.3(b) and ending on the date of the delivery to
Agent and Lenders of the audited annual financial statements for the then
current Fiscal Year pursuant to Section 6.3(b) (each such period, an "Adjusted
Interest Period"), commencing with the delivery to Agent and Lenders of the
audited annual financial statements for the Fiscal Year ending December 31,
2003, if the EBITDA of Parent and its Subsidiaries for such preceding Fiscal
Year is greater than the amount set forth below, the per annum interest rate
otherwise applicable to Obligations that are Revolver A Advances and Revolver B
Advances pursuant to clauses (a)(i), (a)(ii), (a)(iii) and (a)(vii) above shall
be reduced for the Adjusted Interest Period by the number of percentage points
set forth below opposite such amount:
EBITDA Percentage Point Reduction
$27,000,000 0.25 percentage points
$32,000,000 0.50 percentage points
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver A Commitment, subject to any
letter agreement between Agent and individual Lenders), a Letter of Credit fee
(in addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a per annum rate equal to 2.00% times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Agent, the Required Lenders, or
with respect to the Term Loan B or the Term Loan C, Agent and Lenders in
accordance with an agreement among Agent and Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and Bank Product Obligations) shall bear interest on the Daily
Balance thereof at a per annum rate equal to 3 percentage points above the
per annum rate otherwise applicable to such Obligations hereunder, provided
that, if after an Event of Default payments are made in respect of the Term
Loan B or the Term Loan C prior to the repayment in full of the Canadian
Advances and the German Advances, the default rate on the Canadian Advances
and the German Advances shall be increased to the lesser of (A) the maximum
rate permitted by applicable law and (B) the default rate applicable to the
Term Loan B or the Term Loan C, as the case may be, so repaid, and
(ii) the Letter of Credit fee provided for above shall be
increased to 3 percentage points above the per annum rate otherwise
applicable hereunder.
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(d) Payment. Interest (other than the Term Loan B PIK Amount),
Letter of Credit fees, and all other fees payable hereunder shall be due and
payable, in arrears, on the first day of each month at any time that Obligations
or Commitments are outstanding. Borrowers hereby authorize Agent, from time to
time, without prior notice to Borrowers, to charge such interest and fees, all
Lender Group Expenses (as and when incurred), the charges, commissions, fees,
and costs provided for in Section 2.12(e) (as and when accrued or incurred), the
fees and costs provided for in Section 2.11 (as and when accrued or incurred),
and all other payments as and when due and payable under any Loan Document
(including the installments due and payable with respect to the Term Loans and
including any amounts due and payable to Xxxxx Fargo or its Affiliates in
respect of Bank Products up to the amount of the then extant Bank Product
Reserves) to Borrowers' Loan Account, which amounts thereafter shall constitute
Revolver A Advances hereunder and shall accrue interest at the rate then
applicable to Revolver A Advances hereunder; provided, however, that (x) the
interest, fees, Lender Group Expenses, charges, commissions, fees, costs and
other payments owing by Canadian Borrower and German Borrower to the Lender
Group shall be charged to the sub-account of such Person established under the
Loan Account pursuant to Section 2.10 and (y) if, at the time that any amounts
due in respect of interest on the Term Loan B or the Term Loan C are charged to
Borrowers' Loan Account an Event of Default or Overadvance exists or would
result from such charge to the Loan Account, such amounts shall not constitute
Revolver A Advances but instead shall continue to remain outstanding as amounts
due in respect of the Term Loan B or the Term Loan C and such amounts shall be
compounded and added to the outstanding principal balance of the applicable Term
Loan, provided that the failure to make any such payment and the compounding of
such interest shall nonetheless constitute an Event of Default under Section
8.1. Any interest not paid when due shall be compounded by being charged to
Borrowers' Loan Account and shall thereafter constitute Revolver A Advances
hereunder and shall accrue interest at the rate then applicable to Revolver A
Advances that are Base Rate Loans hereunder; provided, however, that (x) any
interest not paid when due by Canadian Borrower or German Borrower shall be
charged to the sub-account of such Person established under the Loan Account
pursuant to Section 2.10 and (y) if, at the time that any amounts due in respect
of interest on the Term Loan B or the Term Loan C are charged to Borrowers' Loan
Account an Event of Default or Overadvance exists or would result from such
charge to the Loan Account, such amounts shall not constitute Revolver A
Advances but instead shall continue to remain outstanding as amounts due in
respect of the Term Loan B or the Term Loan C and such amounts shall be
compounded and added to the outstanding principal balance of the applicable Term
Loan, provided that the failure to make any such payment and the compounding of
such interest shall nonetheless constitute an Event of Default under Section
8.1.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed (subject, in the case of Canadian Borrower, to the Interest Act
(Canada)). In the event the Base Rate is changed from time to time hereafter,
the rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent
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jurisdiction shall, in a final determination, deem applicable. Borrowers and the
Lender Group, in executing and delivering this Agreement, intend legally to
agree upon the rate or rates of interest and manner of payment stated within it;
provided, however, that, anything contained herein to the contrary
notwithstanding, if said rate or rates of interest or manner of payment exceeds
the maximum allowable under applicable law, then, ipso facto, as of the date of
this Agreement, Borrowers are and shall be liable only for the payment of such
maximum as allowed by law, and payment received from Borrowers in excess of such
legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
2.7 Cash Management.
(a) U.S. Borrowers shall (i) establish and maintain cash
management services of a type and on terms satisfactory to Agent at one or more
of the banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure that
all of its Account Debtors forward payment of the amounts owed by them directly
to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all Collections of the U.S. Borrowers (including those sent
directly by Account Debtors to a Cash Management Bank) into a bank account in
Agent's name (a "Cash Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Agent and U.S. Borrowers, in form and substance
acceptable to Agent. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account.
(c) So long as no Default or Event of Default has occurred and
is continuing, Administrative Borrower may amend Schedule 2.7(a) or (b) to add
or replace a Cash Management Bank or Cash Management Account; provided, however,
that (i) such prospective Cash Management Bank shall be satisfactory to Agent
and Agent shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash Management Account, U.S. Borrowers and such
prospective Cash Management Bank shall have executed and delivered to Agent a
Cash Management Agreement. U.S. Borrowers shall close any of their Cash
Management Accounts (and establish replacement cash management accounts in
accordance with the foregoing sentence) promptly and in any event within 30 days
of notice from Agent that the creditworthiness of any Cash Management Bank is no
longer acceptable in Agent's reasonable judgment, or as promptly as practicable
and in any event within 60 days of notice from Agent that the operating
performance, funds transfer, or availability procedures or performance of the
Cash Management Bank with respect to Cash Management Accounts or
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Agent's liability under any Cash Management Agreement with such Cash Management
Bank is no longer acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be Cash Collateral
Accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which U.S. Borrowers are hereby
deemed to have granted a Lien to Agent.
(e) Within 30 days of the Closing Date, each of Canadian
Borrower and German Borrower shall (i) establish and maintain one or more
depository accounts, under the dominion and control of Agent pursuant to a
Control Agreement among Agent, Canadian Borrower or German Borrower, as
applicable, and the applicable Canadian or German financial institution, in form
and substance satisfactory to Agent, in respect of its Collections and (ii)
instruct all of its Account Debtors to remit all such Collections to such
depository accounts. Canadian Borrower and German Borrower shall at all times
deposit all Collections into such accounts that are received by it from any
source promptly, and in any event no later than the first Business Day, after
the date of receipt thereof.
(f) So long as no Event of Default shall have occurred and be
continuing, Canadian Borrower and German Borrower may use the funds on deposit
in its foreign bank accounts for its working capital purposes. During the
continuance of an Event of Default, Agent shall have the right to convert all
non-Dollar denominated balances in Canadian Borrower's and German Borrower's
foreign bank accounts into Dollars (at Borrowers' sole expense) and cause all
amounts in such accounts to be wired into a DDA or other account subject to a
Control Agreement and then wired from such DDA to a Cash Management Account. The
arrangements contemplated in Section 2.7(e) and this Section 2.7(f) shall not be
modified by Parent or any of its Subsidiaries without the prior written consent
of Agent.
2.8 Crediting Payments; Float Charge. The receipt of any payment item
by Agent (whether from transfers to Agent by the Cash Management Banks pursuant
to the Cash Management Agreements or otherwise) shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day. From and
after the Closing Date, Agent shall be entitled to charge Borrowers for 2
Business Days of `clearance' or `float' at the rate applicable to Base Rate
Loans under Section 2.6 on all Collections (regardless of whether forwarded by
the Cash Management Banks to Agent). This across-the-board 2 Business Days
clearance or float charge on all Collections is acknowledged by the parties to
constitute an integral aspect of the pricing of the financing of Borrowers and
shall apply irrespective of whether or not there are any outstanding monetary
Obligations; the effect of such clearance or float charge being the equivalent
of charging 2 Business Days of
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interest on such Collections. The parties acknowledge and agree that the
economic benefit of the foregoing provisions of this Section 2.8 shall be for
the exclusive benefit of Agent.
2.9 Designated Account. Agent is authorized to make the Advances and
the Term Loans, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Agent or the Lenders hereunder. So long as no Default or Event of Default has
occurred and is continuing, Administrative Borrower may add or replace, the
Designated Account Bank or the Designated Account on 30 days' prior written
notice to Agent; provided, however, that (i) such prospective Designated Account
Bank shall be satisfactory to Agent and Agent shall have consented in writing in
advance to the opening of such Designated Account with the prospective
Designated Account Bank, and (ii) prior to the time of the opening of such
Designated Account, Borrowers and such prospective Designated Account Bank shall
have executed and delivered to Agent a Control Agreement. Unless otherwise
agreed by Lender and Administrative Borrower, any Advance requested by Borrowers
and made by Lender hereunder shall be made to the Designated Account. Unless
otherwise agreed by Agent and Administrative Borrower, any Advance, Agent
Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders
hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with the Term Loans, all Advances
(including Agent Advances and Swing Loans) made by Agent, Swing Lender, or the
Lenders to Borrowers or for Borrowers' account, the Letters of Credit issued by
Issuing Lender for Borrowers' account, and with all other payment Obligations
hereunder or under the other Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender Group
Expenses; provided that, Agent shall maintain a separate sub-account under the
Loan Account in the name of each of the Canadian Borrower and the German
Borrower on which each such Person will be charged with all Advances (including
Agent Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
such Person or for such Person's account, and with all other payment Obligations
of such Person hereunder or under the other Loan Documents, including, accrued
interest, fees and expenses, and Lender Group Expenses. In accordance with
Section 2.8, the Loan Account will be credited with all payments received by
Agent from Borrowers or for Borrowers' account, including all amounts received
in the Agent's Account from any Cash Management Bank. Agent shall render
statements regarding the Loan Account to Administrative Borrower, including
principal, interest, fees, and including an itemization of all charges and
expenses constituting Lender Group Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 30 days after
receipt thereof by Administrative Borrower, Administrative Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.
2.11 Fees. Borrowers shall pay to Agent the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is
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terminated thereafter) and shall be apportioned among the Lenders in accordance
with the terms of letter agreements between Agent and individual Lenders:
(a) Unused Line Fee. On the first day of each month during the
term of this Agreement, an unused line fee in the amount equal to 0.50% per
annum times the result of (A) the Maximum Revolver A Amount, less (B) the sum of
(1) the average Daily Balance of Revolver A Advances that were outstanding
during the immediately preceding month, plus (2) the average Daily Balance of
the Letter of Credit Usage during the immediately preceding month,
(b) Unused Term Loan C Fee. On the first day of each month, an
unused Term Loan C fee in an amount equal to 1% per annum times the Term Loan C
Commitment, provided that such fee shall cease to accrue upon the earlier of (i)
the funding of the Term Loan C and (ii) the six month anniversary of the Closing
Date.
(c) Fee Letter Fees. As and when due and payable under the terms
of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the Fee
Letter, and
(d) Audit, Appraisal, and Valuation Charges. For the separate
account of Agent or the applicable Lender, audit, appraisal, and valuation fees
and charges as follows: (i) a fee of $850 per day, per auditor, plus
out-of-pocket expenses for each financial audit of a Loan Party performed by
personnel employed by Agent or any Lender; (ii) if implemented, a one time
charge of $5,000 plus out-of-pocket expenses for expenses for the establishment
of electronic collateral reporting systems; (iii) a fee of $1,500 per day per
appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral
performed by personnel employed by Agent or any Lender; and (iv) subject to the
limitations set forth in Section 2.1(a)(ii), Section 2.1(b)(ii), Section
2.4(c)(iv) and Section 2.4(c)(v), the actual charges paid or incurred by Agent
or any Lender if it elects to employ the services of one or more third Persons
to perform financial audits of the Loan Parties, to appraise the Collateral, or
any portion thereof, or to assess a Loan Party's Enterprise Valuation.
2.12 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or
L/C Undertaking to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary thereof (or of the
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Underlying Letter of Credit, as applicable), and such other information as shall
be necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If
requested by the Issuing Lender, Borrowers also shall be an applicant under the
application with respect to any Underlying Letter of Credit that is to be the
subject of an L/C Undertaking. The Issuing Lender shall have no obligation to
issue a Letter of Credit if any of the following would result after giving
effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Revolver A
Borrowing Base less the then extant amount of outstanding Revolver A
Advances and the aggregate amount of the Inventory Reserves, or
(ii) the Letter of Credit Usage would exceed $4,000,000,
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver A Amount less the then extant amount of outstanding Revolver A
Advances, or
(iv) an Indenture Deficit would exist.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, or (ii) if such notice
is received after 10:00 a.m., California time, the Business Day immediately
succeeding the date Administrative Borrower receives such notice, and, in the
absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Revolver A Advance hereunder and,
thereafter, shall bear interest at the rate then applicable to Revolver A
Advances that are Base Rate Loans under Section 2.6. To the extent an L/C
Disbursement is deemed to be a Revolver A Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Revolver A Advance. Promptly following receipt by Agent of any
payment from Borrowers pursuant to this paragraph, Agent shall distribute such
payment to the Issuing Lender or, to the extent that Lenders have made payments
pursuant to Section 2.12(c) to reimburse the Issuing Lender, then to such
Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver A Commitment agrees to
fund its Pro Rata Share of any Revolver A Advance deemed made pursuant to the
foregoing subsection on the same terms and conditions as if Borrowers had
requested such Revolver A Advance and Agent
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shall promptly pay to Issuing Lender the amounts so received by it from the
Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the part
of the Issuing Lender or the Lenders with Revolver Commitment, the Issuing
Lender shall be deemed to have granted to each Lender with a Revolver
Commitment, and each Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of any payments made by the Issuing Lender under
such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender with a Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrowers on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrowers
for any reason. Each Lender with a Revolver Commitment acknowledges and agrees
that its obligation to deliver to Agent, for the account of the Issuing Lender,
an amount equal to its respective Pro Rata Share pursuant to this Section
2.12(b) shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by the Issuing Lender in respect of such Letter
of Credit as provided in this Section, Agent (for the account of the Issuing
Lender) shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer's regulations and reasonable interpretations of any
Underlying Letter of Credit or by Issuing Lender's reasonable interpretations of
any L/C issued by Issuing Lender to or for such Borrower's account, even though
this interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
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(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by
the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii) compliance by the Underlying Issuer or
the Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority, including Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued hereunder,
or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of Credit
or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
(g) Each Borrower acknowledges and agrees that certain of the
Letters of Credit may provide for the presentation of time drafts to the
Underlying Issuer. If an Underlying Issuer accepts such a time draft that is
presented under an Underlying Letter of Credit, it is acknowledged and agreed
that (i) the Letter of Credit will require the Issuing Lender to reimburse the
Underlying Issuer for amounts paid on account of such time draft on or after the
maturity date thereof, (ii)the pricing provisions hereof (including Sections
2.6(b) and 2.12(e))
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shall continue to apply, until payment of such time draft on or after the
maturity date thereof, as if the Underlying Letter of Credit were still
outstanding, and (iii) on the date on which Issuing Lender makes payment to the
Underlying Issuer of the amounts paid on account of such time draft, Borrowers
immediately shall reimburse such amount to Issuing Lender and such amount shall
constitute an L/C Disbursement hereunder.
2.13 LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having
interest charged at the rate based upon the Base Rate, Borrowers shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof elect to
accelerate the maturity of all or any portion of the Obligations, or (iii)
termination of this Agreement pursuant to the terms hereof. On the last day of
each applicable Interest Period, unless Administrative Borrower properly has
exercised or continued the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that Advances bear interest at the LIBOR
Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR Election.
(i) Administrative Borrower may, at any time and from time
to time, so long as no Event of Default has occurred and is continuing,
elect to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m.
(California time) at least 3 Business Days prior to the commencement of the
proposed Interest Period (the "LIBOR Deadline"). Notice of Administrative
Borrower's election of the LIBOR Option for a permitted portion of the
Advances and an Interest Period pursuant to this Section shall be made by
delivery to Agent of a LIBOR Notice received by Agent before the LIBOR
Deadline, or by telephonic notice received by Agent before the LIBOR
Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received
by Agent prior to 5:00 p.m. (California time) on the same day). Promptly
upon its receipt of each such LIBOR Notice, Agent shall provide a copy
thereof to each of the Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any
loss, cost, or expense incurred by Agent or any Lender as a result of (a)
the payment of any principal of any LIBOR Rate Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an
Event of Default), (b) the conversion of any LIBOR Rate Loan other than on
the last day of the Interest Period applicable thereto, or (c) the failure
to borrow, convert, continue or prepay any LIBOR Rate Loan on the date
specified in any
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LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect to
Agent or any Lender, be deemed to equal the amount determined by Agent or
such Lender to be the excess, if any, of (i) the amount of interest that
would have accrued on the principal amount of such LIBOR Rate Loan had such
event not occurred, at the LIBOR Rate that would have been applicable
thereto, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to
borrow, convert or continue, for the period that would have been the
Interest Period therefor), minus (ii) the amount of interest that would
accrue on such principal amount for such period at the interest rate which
Agent or such Lender would be offered were it to be offered, at the
commencement of such period, Dollar deposits of a comparable amount and
period in the London interbank market. A certificate of Agent or a Lender
delivered to Administrative Borrower setting forth any amount or amounts
that Agent or such Lender is entitled to receive pursuant to this Section
shall be conclusive absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans
in effect at any given time. Borrowers only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $1,000,000 and integral multiples of
$500,000 in excess thereof.
(c) Prepayments. Borrowers may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with clause (b) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any additional or
increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs due to changes in applicable law occurring
subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed
by the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the LIBOR Rate. In
any such event, the affected Lender shall give Administrative Borrower and
Agent notice of such a determination and adjustment and Agent promptly
shall transmit the notice to each other Lender and, upon its receipt of the
notice from the affected Lender, Administrative Borrower may, by notice to
such affected Lender (y) require such Lender to furnish to Administrative
Borrower a statement setting forth the basis for adjusting such LIBOR Rate
and the method for determining the amount of such adjustment, or (z) repay
the LIBOR Rate Loans with respect to which such adjustment is made
(together with any amounts due under clause (b)(ii) above).
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(ii) In the event that any change in market conditions or
any law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date
hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Advances or to
continue such funding or maintaining, or to determine or charge interest
rates at the LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Administrative Borrower and Agent promptly shall
transmit the notice to each other Lender and (y) in the case of any LIBOR
Rate Loans of such Lender that are outstanding, the date specified in such
Lender's notice shall be deemed to be the last day of the Interest Period
of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such
Lender thereafter shall accrue interest at the rate then applicable to Base
Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR
Option from such Lender until such Lender determines that it would no
longer be unlawful or impractical to do so.
(e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), will have the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.15 Joint and Several Liability of U.S. Borrowers.
(a) Each U.S. Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be
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provided by the Agent and the Lenders under this Agreement, for the mutual
benefit, directly and indirectly, of each U.S. Borrower and in consideration of
the undertakings of the other U.S. Borrowers to accept joint and several
liability for the U.S. Obligations, the Canadian Obligations and the German
Obligations.
(b) Each U.S. Borrower, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other U.S. Borrowers, with respect to the
payment and performance of all of the U.S. Obligations, the Canadian Obligations
and the German Obligations (including any U.S. Obligations, the Canadian
Obligations and the German Obligations arising under this Section 2.15), it
being the intention of the parties hereto that all the U.S. Obligations, the
Canadian Obligations and the German Obligations shall be the joint and several
obligations of each Person composing U.S. Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of U.S. Borrowers shall fail to
make any payment with respect to any of the U.S. Obligations, the Canadian
Obligations or the German Obligations as and when due or to perform any of the
U.S. Obligations, the Canadian Obligations or the German Obligations in
accordance with the terms thereof, then in each such event the other Persons
composing U.S. Borrowers will make such payment with respect to, or perform,
such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Person composing U.S. Borrowers enforceable against
each such U.S. Borrower to the full extent of its properties and assets,
irrespective of the validity, regularity or enforceability of this Agreement or
any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Person composing U.S. Borrowers hereby waives notice of acceptance of its
joint and several liability, notice of any Advances or Letters of Credit issued
under or pursuant to this Agreement, notice of the occurrence of any Default,
Event of Default, or of any demand for any payment under this Agreement, notice
of any action at any time taken or omitted by Agent or Lenders under or in
respect of any of the U.S. Obligations, the Canadian Obligations or the German
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Person composing U.S. Borrowers hereby assents
to, and waives notice of, any extension or postponement of the time for the
payment of any of the U.S. Obligations, the Canadian Obligations or the German
Obligations, the acceptance of any payment of any of the U.S. Obligations, the
Canadian Obligations or the German Obligations, the acceptance of any partial
payment thereon, any waiver, consent or other action or acquiescence by Agent or
Lenders at any time or times in respect of any default by any other Person
composing Borrowers in the performance or satisfaction of any term, covenant,
condition or provision of this Agreement, any and all other indulgences
whatsoever by Agent or Lenders in respect of any of the U.S. Obligations, the
Canadian Obligations or the German Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of the U.S. Obligations, the Canadian Obligations or the German
Obligations or the addition,
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substitution or release, in whole or in part, of any Person composing Borrowers.
Without limiting the generality of the foregoing, each U.S. Borrower assents to
any other action or delay in acting or failure to act on the part of any Agent
or Lender with respect to the failure by any Person composing Borrowers to
comply with any of its respective U.S. Obligations, Canadian Obligations or
German Obligations, including any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder, which might, but for the provisions of this Section 2.15
afford grounds for terminating, discharging or relieving any Person composing
Borrowers, in whole or in part, from any of its Obligations under this Section
2.15, it being the intention of each Person composing Borrowers that, so long as
any of the U.S. Obligations, the Canadian Obligations or the German Obligations
hereunder remain unsatisfied, the Obligations of such Person composing U.S.
Borrowers under this Section 2.15 shall not be discharged except by performance
and then only to the extent of such performance. The Obligations of each Person
composing U.S. Borrowers under this Section 2.15 shall not be diminished or
rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Person
composing Borrowers or any Agent or Lender. The joint and several liability of
the Persons composing U.S. Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or any Agent or Lender.
(f) Each Person composing U.S. Borrowers represents and warrants
to Agent and Lenders that such Borrower is currently informed of the financial
condition of Borrowers and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the U.S. Obligations,
the Canadian Obligations or the German Obligations. Each Person composing U.S.
Borrowers further represents and warrants to Agent and Lenders that such
Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing U.S. Borrowers hereby covenants that such
Borrower will continue to keep informed of Borrowers' financial condition, the
financial condition of other guarantors, if any, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the U.S.
Obligations, the Canadian Obligations or the German Obligations.
(g) The provisions of this Section 2.15 are made for the benefit
of the Agent, the Lenders and their respective successors and assigns, and may
be enforced by it or them from time to time against any or all of the Persons
composing U.S. Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the U.S.
Obligations, the Canadian Obligations or the German Obligations hereunder or to
elect any other remedy. The provisions of this Section 2.15 shall remain in
effect until all of the U.S. Obligations, the Canadian Obligations and the
German Obligations shall have been paid in full or otherwise fully satisfied. If
at any time, any payment, or any part thereof, made in respect of any of the
U.S. Obligations, the Canadian Obligations or the German Obligations, is
rescinded or must otherwise be restored or returned by any Agent or Lender upon
the insolvency, bankruptcy or reorganization of any of
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the Persons composing Borrowers, or otherwise, the provisions of this Section
2.15 will forthwith be reinstated in effect, as though such payment had not been
made.
(h) Each of the Persons composing U.S. Borrowers hereby agrees
that it will not enforce any of its rights of contribution or subrogation
against the other Persons composing Borrowers with respect to any liability
incurred by it hereunder or under any of the other Loan Documents, any payments
made by it to the Agent or the Lenders with respect to any of the U.S.
Obligations, the Canadian Obligations or the German Obligations or any
collateral security therefor until such time as all of the U.S. Obligations, the
Canadian Obligations and the German Obligations have been paid in full in cash.
Any claim which any U.S. Borrower may have against any other Borrower with
respect to any payments to any Agent or Lender hereunder or under any other Loan
Documents are hereby expressly made subordinate and junior in right of payment,
without limitation as to any increases in the U.S. Obligations, the Canadian
Obligations or the German Obligations arising hereunder or thereunder, to the
prior payment in full in cash of the U.S. Obligations, the Canadian Obligations
and the German Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Borrower, its debts or its assets,
whether voluntary or involuntary, all such U.S. Obligations, Canadian
Obligations and German Obligations shall be paid in full in cash before any
payment or distribution of any character, whether in cash, securities or other
property, shall be made to any other Borrower therefor.
(i) Each of the Persons composing Borrowers hereby agrees that,
after the occurrence and during the continuance of any Event of Default, the
payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Event of Default, such Borrower
will not demand, xxx for or otherwise attempt to collect any indebtedness of any
other Borrower owing to such Borrower until the Obligations shall have been paid
in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for the Lender Group, and such Borrower shall deliver any such amounts to Agent
for application to the Obligations in accordance with Section 2.4(b).
(j) For the avoidance of doubt, (i) the Canadian Borrower shall
be obligated for the Canadian Obligations and not for any other Obligations and
(ii) the German Borrower shall be obligated for the German Obligations and not
for any other Obligations.
2.16 Registered Notes. Administrative Borrower agrees to record each
Term Loan B and Term Loan C on the Register referred to in Section 14.1(h). Each
Term Loan B and Term Loan C recorded on the Register (the "Registered Loan") may
not be evidenced by promissory notes other than Registered Notes (as defined
below). Upon the registration of any Term Loan B or Term Loan C, each U.S.
Borrower agrees, at the request of any Lender, to execute and deliver to such
Lender a promissory note, in conformity with the terms of this Agreement, in
registered form to evidence such Registered Loan, in form and substance
satisfactory to such Lender, and registered as provided in Section 14.1(h) (a
"Registered Note"), payable to the order of such Lender and otherwise duly
completed. Once recorded on the Register, a Registered Loan may not be removed
from the Register so long as it remains
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outstanding, and a Registered Note may not be exchanged for a promissory note
that is not a Registered Note.
2.17 Interest Act (Canada); Criminal Rate of Interest; Nominal Rate of
Interest. Notwithstanding anything to the contrary contained in this Agreement
or in any other Loan Document, solely to the extent that a court of competent
jurisdiction finally determines that the calculation or determination of
interest payable by Canadian Borrower in respect of the Canadian Obligations
pursuant to this Agreement and the other Loan Documents shall be governed by the
laws of the province of Ontario or the federal laws of Canada:
(a) whenever interest payable by Canadian Borrower is calculated
on the basis of a period which is less than the actual number of days in a
calendar year, each rate of interest determined pursuant to such calculation is,
for the purposes of the Interest Act (Canada), equivalent to such rate
multiplied by the actual number of days in the calendar year in which such rate
is to be ascertained and divided by the number of days used as the basis of such
calculation.
(b) in no event shall the aggregate "interest" (as defined in
Section 347 of the Criminal Code, R.S.C. 1985, c. C-46, as the same shall be
amended, replaced or re-enacted from time to time) payable by Canadian Borrower
to Agent or any Lender under this Agreement or any other Loan Document exceed
the effective annual rate of interest on the "credit advances" (as defined in
that section) under this Agreement or such other Loan Document lawfully
permitted under that section and, if any payment, collection or demand pursuant
to this Agreement or any other Loan Document in respect of "interest" (as
defined in that section) is determined to be contrary to the provisions of that
section, such payment, collection or demand shall be deemed to have been made by
mutual mistake of Agent, Lenders and Canadian Borrower and the amount of such
payment or collection shall be refunded by Agent and Lenders to Canadian
Borrower. For the purposes of this Agreement and each other Loan Document to
which Canadian Borrower is a party, the effective annual rate of interest
payable by Canadian Borrower shall be determined in accordance with generally
accepted actuarial practices and principles over the term of the loans on the
basis of annual compounding for the lawfully permitted rate of interest and, in
the event of dispute, a certificate of a Fellow of the Canadian Institute of
Actuaries appointed by Agent for the account of Canadian Borrower will be
conclusive for the purpose of such determination in the absence of evidence to
the contrary.
(c) all calculations of interest payable by Canadian Borrower
under this Agreement or any other Loan Document are to be made on the basis of
the nominal interest rate described herein and therein and not on the basis of
effective yearly rates or on any other basis which gives effect to the principle
of deemed reinvestment of interest. The parties acknowledge that there is a
material difference between the stated nominal interest rates and the effective
yearly rates of interest and that they are capable of making the calculations
required to determine such effective yearly rates of interest.
2.18 Currency; Judgment. This is an international financial
transaction in which the specification of a currency and payment in New York
City is of the essence. Dollars shall be the currency of account in the case of
all payments pursuant to or arising under this Agreement or under any other Loan
Document, and all such payments shall be made to the
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Agent's Account in New York City in immediately available funds. To the fullest
extent permitted by applicable law, the obligations of each Loan Party to the
Lender Group under this Agreement and under the other Loan Documents shall not
be discharged by any amount paid in any other currency or in a place other than
to the Agent's Account in New York City to the extent that the amount so paid
after conversion under this Agreement and transfer to New York City does not
yield the amount of Dollars in New York City due under this Agreement and under
the other Loan Documents. If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder in Dollars into another
currency (the "Other Currency"), to the fullest extent permitted by applicable
law, the rate of exchange used shall be that at which Agent could, in accordance
with normal banking procedures, purchase Dollars with the Other Currency on the
business day preceding that on which final judgment is given. The obligation of
each Loan Party in respect of any such sum due from it to the Lender Group
hereunder shall, notwithstanding any judgment in such Other Currency, be
discharged only to the extent that, on the business day immediately following
the date on which Agent receives any sum adjudged to be so due in the Other
Currency, Agent may, in accordance with normal banking procedures, purchase
Dollars with the Other Currency. If the Dollars so purchased are less than the
sum originally due to the Lender Group in Dollars, each Loan Party agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Lender Group against such loss, and if the Dollars so purchased exceed the sum
originally due to the Lender Group in Dollars, the Lender Group agrees to remit
to the Loan Parties such excess.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any initial credit provided for hereunder), is
subject to the fulfillment, to the satisfaction of Agent and each Lender, of
each of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before January 8, 2003;
(b) Agent shall have received the UCC/PPSA Filing Authorization
Letter duly executed by each Loan Party and Agent shall have received
satisfactory evidence of the filing of all financing statements on Form UCC-1
and all PPSA registration statements in such office or offices as may be
necessary or, in the opinion of Agent, desirable to perfect the security
interests purported to be created by each applicable Loan Document;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent and Lenders, duly executed, and each
such document shall be in full force and effect:
(i) the Canadian Security Documents,
(ii) the Cash Management Agreements,
(iii) the Contribution Agreement,
(iv) the Control Agreements,
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(v) the Copyright Security Agreement,
(vi) the Disbursement Letter,
(vii) the Due Diligence Letter,
(viii) the Fee Letter,
(ix) the German Security Documents,
(x) the Intercompany Subordination Agreement;
(xi) the Mortgages (other than the Mortgage to be
delivered pursuant to Section 3.2(f)),
(xii) the Officers' Certificate,
(xiii) a Pay-Off Letter from each Existing Lender, together
with UCC termination statements and other documentation evidencing the
termination by such Existing Lender of its Liens in and to the assets of
the Loan Parties,
(xiv) the Patent Security Agreement,
(xv) the Pledge Agreement, together with (A) all
certificates representing the shares of Stock pledged thereunder, as well
as Stock powers with respect thereto endorsed in blank, and (B) all
promissory notes pledged thereunder, as well as allonges thereto or other
appropriate transfer certificates endorsed in blank,
(xvi) a pledge and security agreement, in form and
substance satisfactory to Agent, duly executed by Parent, with respect to
the pledge of 65% of the common stock of German Parent, and
(xvii) the Trademark Security Agreement;
(d) Agent shall have received a certificate from the Secretary of
each Borrower (i) attesting to the resolutions of such Borrower's board of
directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Borrower is a party and authorizing
specific officers of such Borrower to execute the same and (ii) certifying the
names and true signatures of the officers of such Borrower authorized to sign
each Loan Document to which such Borrower is a party;
(e) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower and, as of a recent date, by an appropriate
official of the jurisdiction of organization of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the
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appropriate officer of the jurisdiction of organization of such Borrower, which
certificate shall indicate that such Borrower is in good standing in such
jurisdiction;
(g) Agent shall have received certificates of status with respect
to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be satisfactory to Agent;
(i) Agent shall have received a certificate from the chief
financial officer of Parent certifying as to (i) the optional and mandatory
payments and prepayments made by the Loan Parties, and the reductions of the
commitments, under the loan documents between the Loan Parties and the Existing
Lenders and (ii) such other matters regarding the Indenture Documents as Agent
may reasonably request;
(j) Agent shall have received opinions of the following counsel
to the Loan Parties in form and substance satisfactory to Agent and Lenders:
(i) Miller, Canfield, Paddock and Stone, P.L.C.;
(ii) Xxxxxxxx Xxxxx LLP (Canada);
(iii) Xxxxxxxxxxx Xxxxxxxxxxx Xxxxxx (Quebec);
(iv) CMS Xxxxxx Xxxxx (Germany);
(v) Baker, Donelson, Bearman & Xxxxxxxx, P.C. (Tennessee);
(vi) Xxxxxxx & Xxxxx Xxxxxxx Xxxx LLP (Arizona);
(k) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of each Loan Party) that all tax
returns required to be filed by Parent and its Subsidiaries have been timely
filed and all taxes upon Parent and its Subsidiaries or their properties,
assets, income, and franchises (including Real Property taxes and payroll taxes)
have been paid prior to delinquency, except such taxes that are the subject of
Permitted Protests;
(l) Agent shall have received a certificate from the chief
financial officer of each Loan Party certifying (i) in the case of each
Borrower, as to (A) the truth and accuracy of the representations and warranties
of Borrowers contained in Article 5, (B) the absence of any Defaults or Events
of Default and (C) that the Senior Debt Ratio does not exceed 2.20 to 1.00 after
giving effect to the incurrence of Indebtedness under this Agreement and (ii) in
the case of each Loan Party, that after giving effect to the incurrence of
Indebtedness under this Agreement, each Loan Party is Solvent;
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(m) Borrowers shall have the Required Availability after giving
effect to the initial extensions of credit hereunder and the payment of all fees
and expenses required to be paid by Borrowers on the Closing Date under this
Agreement and the other Loan Documents;
(n) Lenders shall have completed their business, legal, and
collateral due diligence, including (i) a collateral audit and review of the
Loan Parties' books and records and verification of the Loan Parties'
representations and warranties to the Lender Group, (ii) a review of the
Borrowers' business model and industry, (iii) a review of Parent's unaudited
financial statements for the 12 month period ended September 30, 2002, including
verification of total revenue of the Parent and its Subsidiaries of $107,000,000
and EBITDA of the Parent and its Subsidiaries of $20,100,000, in each case for
the 12 month period ended on such date, (iv) a review of the Parent's
projections for the Fiscal Year ending December 31, 2003, including verification
of projected total revenue of the Parent and its Subsidiaries of $120,000,000
and EBITDA of the Parent and its Subsidiaries of $24,000,000, in each case for
the 12 month period ended on such date, and (v) receipt and review of an
"enterprise valuation" of the Parent and its Subsidiaries by a valuation firm
selected by the Lenders, in each case of clauses (i) through (v), the results of
which shall be satisfactory to Lenders;
(o) Agent shall have received completed reference checks with
respect to the Loan Parties' senior management, the results of which are
satisfactory to Agent and Lenders in their sole discretion;
(p) Agent shall have received an appraisal of the Net Liquidation
Percentage applicable to the Loan Parties' Inventory and Equipment, the results
of which shall be satisfactory to Agent and Lenders;
(q) Agent shall have received the Closing Date Business Plan;
(r) Borrowers shall have paid all Lender Group Expenses then due
and payable in connection with the transactions evidenced by this Agreement;
(s) Agent shall have received mortgagee title insurance policies
(or marked commitments to issue the same) for the Real Property Collateral
listed on Schedule 3.1(s) (the "Appraised Real Property") issued by a title
insurance company satisfactory to Agent (each a "Mortgage Policy" and,
collectively, the "Mortgage Policies") in amounts satisfactory to Agent assuring
Agent for the benefit of Lenders that the Mortgages on such Appraised Real
Property are valid and enforceable first priority mortgage Liens on such
Appraised Real Property free and clear of all defects and encumbrances except
Permitted Liens, and the Mortgage Policies otherwise shall be in form and
substance satisfactory to Agent;
(t) Agent shall have received a phase-I environmental report and
a real estate survey with respect to each parcel composing the Appraised Real
Property; the environmental consultants and surveyors retained for such reports
or surveys, the scope of the reports or surveys, the consultant's or surveyor's
certification with respect to such reports or surveys and the substantive
information reflected in such reports or surveys shall be acceptable to Agent;
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(u) Agent shall have received fully executed copies of each of the
Material Contracts and the Indenture Documents, together with a certificate of
the Secretary of Parent certifying each such document as being a true, correct,
and complete copy thereof and that such agreements remain in full force and
effect and that none of the Loan Parties has breached or defaulted in any of its
obligations under such agreements;
(v) The Loan Parties shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by the Loan Parties of this Agreement or any
other Loan Document or with the consummation of the transactions contemplated
hereby and thereby; and
(w) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, Borrowers shall deliver to
Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel;
(b) on or before September 30, 2003, Parent shall extend the Xxxxxx
Employment Agreement or otherwise enter into a replacement employment agreement
with Xxxx X. Xxxxxx, in each case, the form and substance of which shall be
reasonably satisfactory to Agent and its counsel;
(c) within 60 days of the Closing Date, Borrowers shall deliver to
Agent a pledge and security agreement, in form and substance satisfactory to
Agent, duly executed by Parent, with respect to the pledge of 65% of the common
stock of each of the following Subsidiaries of Parent, together with an opinion
of counsel to Parent with respect thereto:
(i) Numatics S.A.R.L. (France);
(ii) Numatics S.R.L. (Italy);
(iii) Numatics S.A. de C.V. (Mexico);
(iv) Numatics B.V. (Netherlands);
(v) Numatics Spain S.L. (Spain);
(vi) Numatics Ltd. (Taiwan); and
(vii) Numatics Ltd. (United Kingdom);
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(d) within 30 days of the Closing Date, Parent shall deliver to Agent
Shareholder Subordination Agreements duly executed by each of Xxxxx Xxxxxxxxx
and Xxxxxx X. XxXxxxxx;
(e) within 30 days of the Closing Date, deliver to Agent a Collateral
Access Agreement with respect to each of its Leased Real Properties (it being
understood that until such Collateral Access Agreements are delivered to Agent,
Agent shall establish a reserve equal to the rental costs under the applicable
lease with respect to each such location for a 3 month period);
(f) within 15 days of the Closing Date, deliver to Agent a Mortgage
with respect to the Owned Real Property of German Borrower;
(g) within 5 days of the Closing Date, deliver to Agent PPSA
Acknowledgment Letters regarding limitation of security registrations in
Ontario, Canada for (A) Citicapital Technology Finance Ltd. (as successor in
interest to Teletech Financial Corp.), (B) TD Asset Finance Corp., and (C) BML
Leasing Limited;
(h) within 1 day of the Closing Date, the Canadian Borrower shall
request a Borrowing of not less than $1,900,907.55 (it being understood that if
the Canadian Borrower does not make such request, the Agent shall establish and
maintain a reserve against both the Maximum Revolver A Amount and the Revolver A
Borrowing Base in an amount equal to $1,900,907.55 until the date of such
Borrowing); and
(i) within (i) 2 days of the Closing Date, the German Borrower shall
request a Borrowing of not less than $1,748,380.50 (it being understood that if
the German Borrower does not make such request, the Agent shall establish and
maintain a reserve against both the Maximum Revolver A Amount and the Revolver A
Borrowing Base in an amount equal to $1,748,380.50 until the date of such
Borrowing) and (ii) 7 days of the Closing Date, the German Borrower shall
request an additional Borrowing of not less than $1,748,380.50 (it being
understood that if the German Borrower does not make such request, the Agent
shall establish and maintain a reserve against both the Maximum Revolver A
Amount and the Revolver A Borrowing Base in an amount equal to $1,748,380.50
until the date of such Borrowing).
3.3 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Advances or fund any portion of
the Term Loan C (or to extend any other credit hereunder) shall be subject to
the following conditions precedent:
(a) the representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the date of such extension of credit, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
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(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Loan Party, Agent or any Lender, or any of their Affiliates;
(d) no Material Adverse Change shall have occurred; and
(e) in the case of the Term Loan C, (i) Borrowers shall (A) have
Excess Availability of not less than $5,000,000 and (B) be in compliance with
the financial covenants set forth in Section 7.20 on a pro forma basis, in each
case, after giving effect to the funding of the Term Loan C and all other
extensions of credit hereunder and the payment of all fees and expenses required
to be paid by Borrowers under this Agreement and the other Loan Documents, (ii)
Borrowers shall have paid any fees then payable pursuant to the Fee Letter and
any Lender Group Expenses then due and payable, (iii) no Term Loan C Deficit or
U.S. Advance Deficit exists, after giving pro forma effect to the funding of the
Term Loan C, and (iv) Lenders with a Term Loan C Commitment shall be satisfied
that the Borrowers will use the proceeds of the Term Loan C for the repurchase
of Parent's Subordinated Notes.
3.4 Term. This Agreement shall become effective upon the execution and
delivery hereof by Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on January 6, 2006 (the "Maturity Date"). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to any outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held by Agent for the benefit of Xxxxx Fargo or its Affiliates
with respect to the then extant Bank Product Obligations). No termination of
this Agreement, however, shall relieve or discharge Borrowers of their duties,
Obligations, or covenants hereunder and the Agent's Liens in the Collateral
shall remain in effect until all Obligations have been fully and finally
discharged and the Lender Group's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
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3.6 Early Termination by Borrowers. Borrowers have the option, at any
time upon 30 days' prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including (a) either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender, and (b) providing cash collateral to be held by Agent for the benefit of
Xxxxx Fargo or its Affiliates with respect to the then extant Bank Product
Obligations), in full, together with the Applicable Prepayment Premium (to be
allocated based upon letter agreements between Agent and individual Lenders). If
Administrative Borrower has sent a notice of termination pursuant to the
provisions of this Section, then the Commitments shall terminate and Borrowers
shall be obligated to repay the Obligations (including (a) either (i) providing
cash collateral to be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the then extant Letter of
Credit Usage, or (ii) causing the original Letters of Credit to be returned to
the Issuing Lender, and (b) providing cash collateral to be held by Agent for
the benefit of Xxxxx Fargo or its Affiliates with respect to the then extant
Bank Product Obligations), in full, together with the Applicable Prepayment
Premium, on the date set forth as the date of termination of this Agreement in
such notice. In the event of the termination of this Agreement and repayment of
the Obligations at any time prior to the Maturity Date, for any other reason,
including (a) termination upon the election of the Required Lenders to terminate
after the occurrence of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (d)
restructure, reorganization or compromise of the Obligations by the confirmation
of a plan of reorganization, or any other plan of compromise, restructure, or
arrangement in any Insolvency Proceeding, then, in view of the impracticability
and extreme difficulty of ascertaining the actual amount of damages to the
Lender Group or profits lost by the Lender Group as a result of such early
termination, and by mutual agreement of the parties as to a reasonable
estimation and calculation of the lost profits or damages of the Lender Group,
Borrowers shall pay the Applicable Prepayment Premium to Agent (to be allocated
based upon letter agreements between Agent and individual Lenders), measured as
of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each U.S. Borrower hereby grants to
Agent, for the benefit of the Lender Group, a continuing security interest in
all of its right, title, and interest in all of its currently existing and
hereafter acquired or arising Personal Property Collateral in order to secure
prompt repayment of any and all of the Obligations in accordance with the terms
and conditions of the Loan Documents and in order to secure prompt performance
by Borrowers of each of their covenants and duties under the Loan Documents. The
Agent's Liens in and to the U.S. Borrowers' Personal Property Collateral shall
attach to all such Personal Property Collateral without further act on the part
of Agent or U.S. Borrowers. Anything contained in this Agreement or any other
Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrowers have no authority, express or implied, to dispose of any
item or portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or
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priority of Agent's security interest is dependent on or enhanced by possession,
the applicable Borrower, immediately upon (but in any event within 1 Business
Day after) the request of Agent, shall endorse and deliver physical possession
of such Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account (or a sub-account thereof, as
applicable). Each Borrower agrees that it will hold in trust for the Lender
Group, as the Lender Group's trustee, any Collections that it receives and
immediately will deliver said Collections to Agent or a Cash Management Bank in
their original form as received by the applicable Loan Party.
4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery
of Additional Documentation Required.
(a) Each Borrower authorizes Agent to file any financing
statement required hereunder, and any continuation statement or amendment with
respect thereto, in any appropriate filing office without the signature of such
Person where permitted by applicable law. Each Borrower hereby ratifies the
filing of any financing statement, and any continuation statement or amendment
with respect thereto, filed without the signature of such Person prior to the
date hereof.
(b) If any Borrower acquires any commercial tort claims after
the date hereof, such Person shall immediately (but in any event within 5
Business Days after such acquisition) deliver to Agent a written description of
such commercial tort claim and shall deliver a written agreement, in form and
substance satisfactory to Agent, pursuant to which such Person shall pledge and
collaterally assign all of its right, title and interest in and to such
commercial tort claim to Agent, for the benefit of the Lender Group, as security
for the Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the request of Agent, Borrowers shall
execute and deliver to Agent, and cause their Subsidiaries to execute and
deliver to Agent, any and all financing statements, original financing
statements in lieu of continuation statements, amendments to financing
statements, fixture filings, security agreements, pledges, assignments,
Commercial Tort Claim Assignments, endorsements of certificates of title, and
all other documents (collectively, the "Additional Documents") that Agent may
request in its Permitted Discretion, in form and substance satisfactory to
Agent, to create and perfect and continue perfected or better perfect the
Agent's Liens in the Collateral (whether now owned or hereafter arising or
acquired, tangible or intangible, real or personal), to create and perfect Liens
in favor of Agent in any Owned Real Property acquired after the Closing Date,
and in order to fully consummate all of the transactions contemplated hereby and
under the other Loan Documents, including any Mortgages. To the maximum extent
permitted by applicable law, each Borrower authorizes Agent to execute any such
Additional Documents in the applicable Person's name and authorize Agent to file
such executed Additional Documents in any appropriate filing office. To the
maximum extent permitted by applicable law, each Borrower authorizes the filing
of any
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such Additional Documents without the signature of such Person in any
appropriate filing office. In addition, on such periodic basis as Agent shall
require, Borrowers shall (i) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by such Persons
during the prior period, (ii) cause all patents, copyrights, and trademarks
acquired or generated by such Persons that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrowers' ownership thereof,
and (iii) cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Person's true and lawful attorney, with
power to (a) if such Person refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Person on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Person's name on any invoice
or xxxx of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse such Person's name on any Collection item that may come into the Lender
Group's possession, (e) subject to Section 6.8, at any time that an Event of
Default has occurred and is continuing, make, settle, and adjust all claims
under such Person's policies of insurance and make all determinations and
decisions with respect to such policies of insurance, and (f) at any time that
an Event of Default has occurred and is continuing, settle and adjust disputes
and claims respecting the Accounts, chattel paper, or General Intangibles
directly with Account Debtors, for amounts and upon terms that Agent determines
to be reasonable, and Agent may cause to be executed and delivered any documents
and releases that Agent determines to be necessary. The appointment of Agent as
each such Person's attorney, and each and every one of its rights and powers,
being coupled with an interest, is irrevocable until all of the Obligations have
been fully and finally repaid and performed and the Lender Group's obligations
to extend credit hereunder are terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter but, absent a continuing Event of Default, during normal business
hours, to inspect the Books and to check, test, and appraise the Collateral in
order to verify the financial condition of the Parent and its Subsidiaries or
the amount, quality, value, condition of, or any other matter relating to, the
Collateral.
4.7 Control Agreements. Except as otherwise permitted under Sections
7.13 and 7.19 or in the applicable Control Agreement, each Borrower agrees that
it will not transfer any Collateral or any other assets out of any Securities
Accounts or deposit accounts and, if to another securities intermediary or
depository, unless each of the applicable Persons, Agent, and the substitute
securities intermediary or depository have entered into a Control Agreement.
Upon the occurrence and during the continuance of a Default or an Event of
Default, Agent may notify any securities intermediary or depository to liquidate
the applicable Securities Account or depository account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Agent's Account. Each Borrower hereby agrees to take any or all action
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that Agent requests in order for Agent to obtain control in accordance with
Sections 9-104, 9-105, 9-106 and 9-107 of the Code with respect to any
Collateral constituting Securities Accounts, deposit accounts, electronic
chattel paper, Investment Property and letter-of-credit rights. No arrangement
contemplated hereby or by an Control Agreement in respect of any Securities
Accounts or other Investment Property, or any deposit accounts, electronic paper
or letter-of-credit rights, shall be modified by the Parent or any of its
Subsidiaries without the prior written consent of Agent.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, each Borrower makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the Closing Date, and at and as of the date of the making of
each Advance (or other extension of credit) made thereafter, as though made on
and as of the date of such Advance (or other extension of credit) (except to the
extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:
5.1 No Encumbrances. Each Loan Party has good and indefeasible
title to its Collateral and its Owned Real Property, free and clear of Liens
except for Permitted Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide
existing payment obligations of Account Debtors created by the sale and delivery
of Inventory or the rendition of services to such Account Debtors in the
ordinary course of Borrowers' business, owed to such Persons without defenses,
disputes, offsets, counterclaims, or rights of return or cancellation. As to
each Account that is identified by Administrative Borrower as an Eligible
Account, in a borrowing base report submitted to Agent, such Account is not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth in the definition of Eligible Accounts.
5.3 Eligible Inventory. All Eligible Inventory is of good and
merchantable quality, free from defects. As to each item of Inventory that is
identified by Administrative Borrower as Eligible Inventory in the borrowing
base report most recently submitted to Agent, such Inventory is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Inventory.
5.4 Eligible Equipment. All of the Eligible Equipment is used
or held for use in Loan Parties' business and is fit for such purposes. As to
each item of Equipment that is identified from time to time by Administrative
Borrower as Eligible Equipment, such equipment is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Equipment.
5.5 Location of Inventory and Equipment. Except as set forth
on Schedule 5.5, the Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party and are located only at, or are in-transit from
or to, the locations identified on Schedule 5.5.
5.6 Inventory Records. Each Loan Party keeps correct and
accurate records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
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5.7 State of Incorporation; Location of Chief Executive Office; FEIN;
Organizational ID Number; Commercial Tort Claims.
(a) The jurisdiction of incorporation of each Loan Party is set
forth in Schedule 5.7(a).
(b) The chief executive office of each Loan Party is located at
the address indicated in Schedule 5.7(b).
(c) Each Loan Party's FEIN and organizational identification
number, if any, are identified in Schedule 5.7(c).
(d) None of the Loan Parties holds any commercial tort claims,
except as set forth in Schedule 5.7(d).
5.8 Due Organization and Qualification; Subsidiaries.
(a) Each Loan Party is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Loan Party (except for
changes resulting from the issuance of the Preferred Stock), by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each such Person's capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Loan Party is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock, other than pursuant to the
terms of the Preferred Stock Purchase Agreement.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of each Loan Party's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization; (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by the applicable Loan Party. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any Loan
Party's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Loan Party or
any of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any Loan
Party's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock, other than pursuant to the terms of the
Preferred Stock Purchase Agreement.
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5.9 Due Authorization; No Conflict.
(a) As to each Borrower, the execution, delivery, and
performance by such Person of this Agreement and the Loan Documents to which it
is a party have been duly authorized by all necessary action on the part of such
Person.
(b) As to each Borrower, the execution, delivery, and
performance by such Person of this Agreement and the Loan Documents to which it
is a party do not and will not (i) violate any provision of federal, state, or
local law or regulation applicable to such Person, the Governing Documents of
such Person, or any order, judgment, or decree of any court or other
Governmental Authority binding on such Person, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any Material Contract of such Person, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of such Person, other than Permitted Liens, or (iv) require any
approval of any such Person's interestholders or any approval or consent of any
Person under any Material Contract of such Person.
(c) Other than the filing of financing statements, fixture
filings, and Mortgages, the execution, delivery, and performance by each
Borrower of this Agreement and the Loan Documents to which such Person is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority or
other Person.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Person is a party, and all other documents contemplated
hereby and thereby, when executed and delivered by such Person will be the
legally valid and binding obligations of such Person, enforceable against such
Person in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, duly perfected, and
first priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract of such Guarantor,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Guarantor, other than Permitted
Liens, or (iv) require any approval of such Guarantor's interestholders or any
approval or consent of any Person under any Material Contract of such Guarantor.
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(h) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which such Guarantor is a party do not and will not
require any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority or other Person.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against any Loan Party, or any of its Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to such Loan Party, or any of its Subsidiaries, as
applicable, reasonably could not be expected to result in a Material Adverse
Change.
5.11 No Material Adverse Change. All financial statements relating to
the Loan Parties that have been delivered by any Loan Party to the Lender Group
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Loan Parties'
financial condition as of the date thereof and results of operations for the
period then ended. There has not been a Material Adverse Change with respect to
the Loan Parties since the date of the latest financial statements submitted to
the Lender Group on or before the Closing Date.
5.12 Fraudulent Transfer.
(a) Each Loan Party is Solvent.
(b) No transfer of property is being made by any Loan Party and
no obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of any
Loan Party.
5.13 Employee Benefits. None of the Loan Parties, or any of their
ERISA Affiliates maintains or contributes to any Benefit Plan, other than those
listed on Schedule 5.13. Each Loan Party and each ERISA Affiliate has satisfied
the minimum funding standards of ERISA, the IRC, the Canadian Employee Benefit
Laws and the German Employee Benefit Laws with respect to each Benefit Plan to
which it is obligated to contribute. No ERISA Event has occurred nor has any
other event occurred that may result in an ERISA Event that reasonably could be
expected to result in a Material Adverse Change. No Loan Party or any ERISA
Affiliate is required to provide security to any Benefit Plan under Section
401(a)(29) of the IRC or under Canadian Employee Benefit Laws or German Employee
Benefit Laws.
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5.14 Environmental Condition. Except as set forth on Schedule 5.14,
(a) to Borrowers' knowledge, none of the Loan Parties' properties or assets has
ever been used by the Loan Parties' or by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Borrowers' knowledge, none of the Loan Parties'
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) none of the Loan Parties have received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by the Loan Parties, and (d) none of the Loan Parties
have received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal or state governmental agency concerning
any action or omission by any Loan Party resulting in the releasing or disposing
of Hazardous Materials into the environment.
5.15 Brokerage Fees. Borrowers have not utilized the services of any
broker or finder other than Triboro Capital, Inc. in connection with Borrowers'
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by Borrowers other than to Triboro Capital,
Inc. in connection herewith.
5.16 Intellectual Property. Each Loan Party owns, or holds valid
licenses in, all Intellectual Property that is necessary to the conduct of its
business as currently conducted. Attached hereto as Schedule 5.16 is a true,
correct, and complete listing of all registered or otherwise material patents,
trademarks, and copyrights as to which each Loan Party is the owner or is an
exclusive licensee.
5.17 Leases. The Loan Parties enjoy peaceful and undisturbed
possession under all leases material to the business of the Loan Parties and to
which the Loan Parties are a party or under which the Loan Parties are
operating. All of such leases are valid and subsisting and no material default
by the Loan Parties exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of each Loan
Party, including, with respect to each depository (i) the name and address of
that depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of the Loan Parties in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of any Loan Party in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrowers' good faith best estimate of the future
performance of Parent and its Subsidiaries for the periods covered thereby.
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5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of each Loan Party outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 Regulation U. None of the Loan Parties is nor will be engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T, U or X of the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance or Term
Loan will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock.
5.22 Permits, Etc. Each Loan Party has, and is in compliance with, all
permits, licenses, authorizations, approvals, entitlements and accreditations
required for such Person lawfully to own, lease, manage or operate, or to
acquire, each business and the Real Property currently owned, leased, managed or
operated, or to be acquired, by such Person except for such permits, licenses,
authorizations, approvals, entitlements and accreditations the absence of which
could not reasonably be expected to result in a Material Adverse Change. No
condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license,
authorization, approval, entitlement or accreditation, and to Borrowers'
knowledge, there is no claim that any thereof is not in full force and effect.
5.23 Material Contracts. Set forth on Schedule 5.23 is a complete and
accurate list as of the Closing Date of all Material Contracts of the Loan
Parties, showing the parties and subject matter thereof and amendments and
modifications thereto. Except as set forth on Schedule 5.23, each such Material
Contract (i) is in full force and effect and is binding upon and enforceable
against each Loan Party that is a party thereto and, to Borrowers' knowledge,
all other parties thereto in accordance with its terms, (ii) has not been
otherwise amended or modified, and (iii) is not in default due to the action of
any Loan Party or, to Borrowers' knowledge, any other party thereto, except for
such defaults that could not reasonably be expected to result in a Material
Adverse Change.
5.24 Employee and Labor Matters. Except as set forth on Schedule 5.24,
there is (a) no unfair labor practice complaint pending or, to Borrowers'
knowledge, threatened against any Loan Party before any Governmental Authority
and no grievance or arbitration proceeding pending or threatened against any
Loan Party which arises out of or under any collective bargaining agreement, (b)
no strike, labor dispute, slowdown, stoppage or similar action or grievance
pending or, to the best knowledge of Borrowers, threatened against any Loan
Party and (c) no union representation question existing with respect to the
employees of any Loan Party and no union organizing activity taking place with
respect to any of the employees of any of them. Neither any Loan Party nor any
ERISA Affiliate of any Loan Party has incurred any liability or obligation under
the Worker Adjustment and Retraining Notification Act ("WARN") or similar state
or provincial law, which remains unpaid or unsatisfied. The hours worked and
payments made to employees of each Loan Party have not been in violation of the
Fair Labor Standards Act or any other applicable legal requirements. All
material payments due from any Loan Party on account of workers compensation,
wages and employee health and welfare
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insurance and other benefits have been paid or accrued as a liability on the
books of such Loan Party.
5.25 Customers and Suppliers. There exists no actual or, to Borrowers'
knowledge, threatened termination, cancellation or limitation of, or
modification to or change in, the business relationship between (a) any Loan
Party, on the one hand, and any municipality, customer or any group thereof, on
the other hand or (b) any Loan Party, on the one hand, and any supplier thereof
or distributor therefor, on the other hand, which termination, cancellation,
limitation, modification or change in any such case could, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Change.
5.26 Properties. (a) Each Loan Party has good and marketable title to,
or valid leasehold interests in, all property and assets material to its
business (collectively, the "Properties"), free and clear of all Liens except
Permitted Liens. The Properties are in good working order and condition,
ordinary wear and tear excepted.
(b) Schedule 5.26 sets forth a complete and accurate list of the
location, by state and street address, of all Real Property.
5.27 Indenture Documents. The Borrowers incurring Indebtedness from
(i) the Advances and Term Loans made by the Lenders to the Borrowers on and
after the Closing Date and (ii) the issuance of Letters of Credit, in each case,
subject to the limitations set forth in this Agreement, does not conflict with
or result in a default under any Indenture Document.
5.28 Obligations as Senior Indebtedness. The Obligations constitute
Senior Indebtedness (as defined in the Indenture) and Designated Senior
Indebtedness (as defined in the Indenture). As such, all of the Obligations (and
Agent and Lenders) are entitled to the benefits of each of the subordination and
other provisions contained in the Indenture which are available in respect of
Senior Indebtedness and Designated Senior Indebtedness (and to the holders
thereof), and each of such subordination and other provisions is in full force
and effect and enforceable in accordance with its terms.
5.29 Filing of Statutory Payment Obligations. All tax returns and
reports, assessments for worker's compensation, pension plan payments,
unemployment insurance payments, employment standards payments (including claims
by employees for unpaid wages, vacation pay and overtime pay), excise taxes and
any other statutory payments required to be made by a Loan Party pursuant to
applicable law (including all federal, state, provincial and local tax returns)
have been properly filed on a timely basis and are true, complete and correct.
5.30 Nature of Business.
(a) German Parent does not (i) have any operations or conduct any
business, (ii) own any assets, or (iii) have any liabilities, in each case,
other than in the ordinary course of its business as the holding company of the
shares of Stock of German Borrower and Numatics K.F.T. (Hungary).
(b) I.A.E. Incorporated does not (i) have any operations or
conduct any business, (ii) own any assets, or (iii) have any liabilities.
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6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the Obligations
and the termination of this Agreement, Borrowers shall and shall cause each of
their respective Subsidiaries to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables
Parent and its Subsidiaries to produce financial statements in accordance with
GAAP and maintain records pertaining to the Collateral that contain information
as from time to time reasonably may be requested by Agent. Parent and its
Subsidiaries also shall keep an inventory reporting system that shows all
additions, sales, claims, returns, and allowances with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent (with copies for each Lender)
with the following documents at the following times in form satisfactory to
Agent:
================================================================================
Daily (a) a sales journal, collection journal, and credit
register since the last such schedule, and
(b) notice of all returns, disputes, or claims.
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Weekly (c) Inventory reports specifying each Loan Party's cost of
its Inventory, by category and location, and
(d) a schedule of Investments (including any Investments
in the form of Indebtedness) by any Loan Party in any
other Loan Party or any Non-Loan Party.
--------------------------------------------------------------------------------
Monthly (not later (e) a detailed calculation of the Borrowing Base
than the 10th day of (including detail regarding those Accounts that are
each month) not Eligible Accounts),
(f) a detailed aging, by total, of the Accounts, together
with a reconciliation to the detailed calculation of
the Borrowing Base previously provided to Agent,
(g) a summary aging, by vendor, of each Loan Party's
accounts payable and any book overdraft, and
(h) a calculation of Dilution for the prior month.
--------------------------------------------------------------------------------
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Upon request by Agent (i) a calculation of any tax liabilities arising under
or any Lender: Section 956 of the IRC,
(j) proof of payment of all applicable taxes,
(k) a physical inventory of the Loan Parties' Inventory
and Equipment, conducted by a third party service
acceptable to Agent, the results of which shall be
satisfactory to Agent and be reflected by appropriate
adjustments to the Revolver A Borrowing Base and the
Revolver B Borrowing Base,
(l) an "enterprise valuation" of Parent and its
Subsidiaries, conducted by a third party auditor
acceptable to Agent and Lenders, the results of which
shall be satisfactory to Agent and Lenders and be
reflected by appropriate recalculations of the Term
Loan B Deficit and the Term Loan C Deficit,
(m) a detailed list of each Loan Party's customers,
(n) a report regarding each Loan Party's accrued, but
unpaid, ad valorem taxes,
(o) copies of invoices in connection with the Accounts,
credit memos, remittance advices, deposit slips,
shipping and delivery documents in connection with the
Accounts and, for Inventory and Equipment acquired by
any Loan Party, purchase orders and invoices, and
(p) such other reports as to the Collateral, or the
financial condition of any Loan Party, as Agent or any
Lender may reasonably request.
--------------------------------------------------------------------------------
In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent,
with copies to each Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of a fiscal quarter) after the end
of each month during each Fiscal Year,
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(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer
of Parent to the effect that:
(A) the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of footnotes and
being subject to year-end audit adjustments) and fairly present in all
material respects the financial condition of Parent and its Subsidiaries,
(B) the representations and warranties of the Loan
Parties contained in this Agreement and the other Loan Documents are true
and correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date),
and
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of any
non-compliance, describing such non-compliance as to which he or she may
have knowledge and what action Borrowers have taken, are taking, or propose
to take with respect thereto), and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such period
with the applicable financial covenants contained in Section 7.20, and
(b) as soon as available, but in any event within 90 days after
the end of each Fiscal Year,
(i) consolidated financial statements of Parent and its
Subsidiaries for each such Fiscal Year, audited by independent certified
public accountants reasonably acceptable to Agent and certified, without
any qualifications (including any "going concern" exception or
qualification), by such accountants to have been prepared in accordance
with GAAP (such audited financial statements to include a consolidated
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent
and the Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.20,
(c) as soon as available, but in any event within 30 days prior
to the start of each Fiscal Year, copies of Parent's Projections, in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent, in its sole discretion, for the forthcoming 3 Fiscal Years, year by year,
and for the forthcoming Fiscal Year, month by month, certified by the
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chief financial officer of Parent as being such officer's good faith best
estimate of the financial performance of Parent and its Subsidiaries during the
period covered thereby,
(d) as soon as available, but in any event on or before July
31/st/ of each Fiscal Year, Projections supplementing and superseding Parent's
Projections referred to in clause (c) above, in form and substance (including as
to scope and underlying assumptions) satisfactory to Agent, in its sole
discretion, for the forthcoming 2 Fiscal Years, year by year, and for the
remainder of the current Fiscal Year, month by month, certified by the chief
financial officer of Parent as being such officer's good faith best estimate of
the financial performance of Parent and its Subsidiaries during the period
covered thereby;
(e) if and when filed by any Loan Party,
(i) 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by such Loan Party with the
SEC,
(iii) upon Agent's or any Lender's request, copies of such
Loan Party's federal income tax returns, and any amendments thereto, filed
with the Internal Revenue Service, and
(iv) upon Agent's or any Lender's request, any other
information that is provided by such Loan Party to its shareholders
generally,
(f) if and when filed by any Loan Party and as requested by
Agent, satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) any Loan Party conducts business or is required to
pay any such excise tax, (ii) where any Loan Party's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Loan Party, or (iii) where any Loan Party's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(g) promptly after the commencement thereof, but in any event
within 5 days after the service of process with respect thereto on any Loan
Party, notice of all actions, suits or proceedings brought by or against any
Loan Party before any Governmental Authority which, if determined adversely to
such Loan Party, could reasonably be expected to result in a Material Adverse
Change,
(h) (i) promptly after receipt or delivery thereof, copies of any
material notices that any Loan Party receives from or sends to any Person in
connection with the Indenture Documents, and (ii) within 2 days of the effective
date thereof, any amendments, modifications, waivers or other changes to any of
the Indenture Documents,
(i) as soon as any Loan Party has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that the Loan Parties propose to take with
respect thereto,
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(j) (i) promptly and in any event (A) within 10 days after any
Loan Party or any ERISA Affiliate thereof knows or has reason to know that any
Termination Event with respect to any Benefit Plan has occurred, or (B) within
10 days after any Loan Party or any ERISA Affiliate thereof knows or has reason
to know that an accumulated funding deficiency has been incurred or an
application has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including installment payments) or
an extension of any amortization period under Section 412 of the IRC or the
equivalent provision under Canadian Employee Benefit Laws or German Employee
Benefit Laws with respect to a Benefit Plan, a statement of an Authorized Person
setting forth the details of such occurrence and the action, if any, which such
Loan Party or such ERISA Affiliate propose to take with respect thereto, (ii)
promptly and in any event within 3 days after receipt thereof by any Loan Party
or any ERISA Affiliate thereof from the PBGC, copies of each notice received by
any Loan Party or any ERISA Affiliate thereof of the PBGC's intention to
terminate any Plan or to have a trustee appointed to administer any Plan, (iii)
promptly and in any event within 10 days after the filing thereof with the
Internal Revenue Service if requested by Agent, copies of each Schedule B
(Actuarial Information) or the Canadian or German equivalent thereof to the
annual report (Form 5500 Series) or the Canadian or German equivalent thereof
with respect to each Benefit Plan and Multiemployer Plan, (iv) promptly and in
any event within 10 days after any Loan Party or any ERISA Affiliate thereof
knows or has reason to know that a required installment within the meaning of
Section 412 of the IRC or the equivalent provision under Canadian Employee
Benefit Laws or German Employee Benefit Laws has not been made when due with
respect to a Benefit Plan, (v) promptly and in any event within 3 days after
receipt thereof by any Loan Party or any ERISA Affiliate thereof from a sponsor
of a Multiemployer Plan or from the PBGC, a copy of each notice received by any
Loan Party or any ERISA Affiliate thereof concerning the imposition or amount of
withdrawal liability under Section 4202 of ERISA or the equivalent provision
under Canadian Employee Benefit Laws or German Employee Benefit Laws or
indicating that such Multiemployer Plan may enter reorganization status under
Section 4241 of ERISA or the equivalent provision under Canadian Employee
Benefit Laws or German Employee Benefit Laws, and (vi) promptly and in any event
within 10 days after any Loan Party or any ERISA Affiliate thereof send notice
of a plant closing or mass layoff (as defined in the Worker Adjustment and
Retraining Notification Act) to employees, copies of each such notice sent by
any Loan Party or any ERISA Affiliate thereof,
(k) upon the request of Agent or any Lender, any other report
reasonably requested relating to the financial condition of Parent and its
Subsidiaries.
In addition to the financial statements referred to above, Borrowers agree to
deliver financial statements prepared on both a consolidated and consolidating
basis and agree that no Subsidiary of the Parent, will have a fiscal year
different from that of Parent. Borrowers agree that their independent certified
public accountants are authorized to communicate with Agent and to release to
Agent whatever financial information concerning the Parent and its Subsidiaries
that Agent reasonably may request. Each Borrower waives the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by Agent pursuant to
or in accordance with this Agreement, and agree that Agent may contact directly
any such accounting firm or service bureau in order to obtain such information.
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6.4 Guarantor Reports. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Parent's financial statements, and copies
of all federal income tax returns as soon as the same are available and in any
event no later than 30 days after the same are required to be filed by law.
6.5 Return. Cause returns and allowances as between Loan Parties and
their Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the Loan Parties, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to any
Loan Party, the applicable Loan Party promptly shall determine the reason for
such return and, if the applicable Loan Party accepts such return, issue a
credit memorandum (with a copy of each credit memorandum in an amount in excess
of $20,000 to be sent to Agent) in the appropriate amount to such Account
Debtor. If, at a time when an Event of Default has occurred and is continuing,
any Account Debtor returns any Inventory to any Loan Party, the applicable Loan
Party promptly shall determine the reason for such return and, if Agent consents
(which consent shall not be unreasonably withheld), issue a credit memorandum
(with a copy to be sent to Agent) in the appropriate amount to such Account
Debtor.
6.6 Maintenance of Properties. Subject to Section 7.4, maintain and
preserve all of their properties which are necessary or useful in the proper
conduct of their business in good working order and condition, ordinary wear and
tear excepted, and comply at all times with the provisions of all leases to
which it is a party as lessee, so as to prevent any loss or forfeiture thereof
or thereunder.
6.7 Taxes. Cause all assessments, remittances, source deductions,
insurance premiums and taxes, whether real, personal, or otherwise (including
Canadian Withholding Taxes), due or payable by, or imposed, levied, or assessed
(collectively, "Tax Payments") against the Loan Parties or any of their assets
to be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that the validity of such Tax Payment be the
subject of a Permitted Protest. Loan Parties will make timely payment or deposit
of all Tax Payments required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, provincial
and federal income taxes, and will, upon request, furnish Agent with proof
satisfactory to Agent indicating that they have made such Tax Payments or
deposits. Borrowers shall deliver satisfactory evidence of payment of applicable
excise taxes in each jurisdictions in which any Loan Party is required to pay
any such excise tax.
6.8 Insurance.
(a) At Borrowers' expense, maintain insurance respecting the Loan
Parties' property and assets wherever located, covering loss or damage by fire,
theft, explosion, and all other hazards and risks as ordinarily are insured
against by other Persons engaged in the same or similar businesses. The Loan
Parties also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as
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sole loss payee or additional insured, as appropriate. Each policy of insurance
or endorsement shall contain a clause requiring the insurer to give not less
than 30 days' prior written notice to Agent in the event of cancellation of the
policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of any
loss covered by such insurance. Agent shall have the exclusive right to adjust
any losses payable under any such insurance policies in excess of $100,000 (or
in any amount after the occurrence and during the continuance of an Event of
Default), without any liability to the Loan Parties whatsoever in respect of
such adjustments. Except as provided in the proviso at the end of this sentence,
any monies in excess of $100,000 received as payment for any loss under any
insurance policy mentioned above (other than liability insurance policies) or as
payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to Agent to be applied at the option of the Required
Lenders either to the prepayment of the Obligations or shall be disbursed to
Administrative Borrower under staged payment terms reasonably satisfactory to
the Required Lenders for application to the cost of repairs, replacements, or
restorations; provided that, so long as no Default or Event of Default shall
have occurred and be continuing, monies received as payment for any such loss
under any insurance policy or any such condemnation or taking in an amount not
exceeding $100,000 for any such occurrence may be used to replace, repair or
restore Collateral if such payments are deposited in a DDA subject to a Control
Agreement and used in accordance with Section 2.4(d)(iii)(B). Any such repairs,
replacements, or restorations shall be effected with reasonable promptness and
shall be of a value at least equal to the value of the items or property
destroyed prior to such damage or destruction.
(c) The Loan Parties shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 6.8, unless Agent is included thereon as named
insured with the loss payable to Agent under a lender's loss payable endorsement
or its equivalent. Administrative Borrower immediately shall notify Agent
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Agent.
(d) At Borrowers' expense, maintain a key man life insurance
policy with respect to Xxxx X. Xxxxxx in the amount of $20,000,000. Within 30
days of the Closing Date, Borrowers shall furnish Agent with an "Absolute
Assignment" of such key man life insurance policy, shall record such "Absolute
Assignment" with the issuer of such policy, and shall furnish proof of such
issuer's acceptance of such assignment. All proceeds payable under such key man
life insurance policy shall be payable to Agent to be applied on account of the
Obligations in accordance with Section 2.4(c)(ix).
6.9 Location of Inventory and Equipment. Keep the Inventory and
Equipment only at, or in-transit from or to, the locations identified on
Schedule 5.5; provided, however, that Administrative Borrower may amend Schedule
5.5 so long as such amendment occurs by written notice to Agent not less than 30
days prior to the date on which the Inventory or Equipment is moved to such new
location, so long as such new location is within the continental United States,
and so long as, at the time of such written notification, the applicable Loan
Party provides any
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financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets and also provides to Agent a
Collateral Access Agreement.
6.10 Compliance with Laws. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable
under any leases to which any Loan Party is a party or by which any Loan Party's
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.
6.12 Customs Brokers. Pay when due all amounts payable to customs
brokers, unless such payments are the subject of a Permitted Protest.
6.13 Brokerage Commissions. Pay any and all brokerage commission
or finders fees incurred in connection with or as a result of Borrowers'
obtaining financing from the Lender Group under this Agreement. Borrowers agree
and acknowledge that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrowers, and each Borrower agrees to
indemnify, defend, and hold Agent and the Lender Group harmless from and against
any claim of any broker or finder arising out of Borrowers' obtaining financing
from the Lender Group under this Agreement.
6.14 Existence. Subject to Section 7.3, at all times preserve and
keep in full force and effect each Loan Party's valid existence and good
standing and any rights and franchises material to any Loan Party's business.
6.15 Environmental.
(a) Keep any property either owned or operated by any Loan
Party free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity, from or onto property owned or operated by
any Loan Party and take any Remedial Actions required to xxxxx said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly, but in any event within 5 days of receipt thereof, provide Agent with
written notice of the following: (i) notice that an Environmental Lien has been
filed against any of the real or personal property of any Loan Party, (ii)
notice of commencement of any Environmental Action or that an Environmental
Action will be filed against any Loan Party, and (iii) notice of a violation,
citation, or other administrative order with respect to an Environmental Action
which reasonably could be expected to result in a Material Adverse Change.
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6.16 Commercial Tort Claims; Organizational ID Number.
Immediately, but in any event within 5 days, upon obtaining any commercial tort
claim, deliver an updated Schedule 5.7(d) and the other documents required under
Section 4.4. Immediately, but in any event within 5 days, upon obtaining an
organizational identification number (to the extent that any Loan Party has not
been issued such number on or prior to the Closing Date), notify Agent in
writing and deliver an updated Schedule 5.7(c).
6.17 Other Disclosure Updates. Promptly and in no event later
than 5 Business Days after obtaining knowledge thereof, (a) notify Agent if any
written information, exhibit, or report furnished to the Lender Group contained
any untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.18 Formation of Subsidiaries. At the time that any Loan Party
forms any direct or indirect Subsidiary organized under the laws of the United
States or any state thereof or acquires any direct or indirect Subsidiary
organized under the laws of the United States or any state thereof after the
Closing Date, such Loan Party shall (a) cause such new Subsidiary to provide to
Agent a subsidiary guaranty, subsidiary security agreement, and such other
security documents (including Mortgages with respect to any Real Property of
such new Subsidiary), together with appropriate UCC-1 financing statements (and
with respect to all property subject to a Mortgage, fixture filings), all in
form and substance satisfactory to Agent, (b) provide to Agent a pledge
agreement and appropriate certificates and powers or UCC-1 financing statements,
pledging all (or in the case of a Subsidiary organized outside of the United
States, 65%) of the direct or beneficial ownership interest in such new
Subsidiary, in form and substance satisfactory to Agent, and (c) provide to
Agent all other documentation, including one or more opinions of counsel
satisfactory to Agent, which in its opinion is appropriate with respect to such
formation and the execution and delivery of the applicable documentation
referred to above (including policies of title insurance or other documentation
with respect to all property subject to a Mortgage). Any document, agreement or
instrument executed or issued pursuant to this Section 6.18 shall be a "Loan
Document" for purposes of this Agreement.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the Obligations
and the termination of this Agreement, Borrowers will not and will not permit
any of their respective Subsidiaries to do any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
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(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) Indebtedness under the Indenture Documents;
(e) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b), (c) and (d) of this Section 7.1 (and continuance or renewal
of any Permitted Liens associated therewith) so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not, in Agent's
reasonable judgment, materially impair the prospects of repayment of the
Obligations by the Loan Parties or materially impair the Loan Parties'
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended or add one or more of the Loan
Parties as liable with respect thereto, if such additional Loan Parties were not
liable with respect to the original Indebtedness, (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are materially more burdensome or
restrictive to the applicable Loan Party, and (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness;
(f) Indebtedness under Hedge Agreements incurred in the ordinary
course of business of Parent and its Subsidiaries consistent with prudent
business practice and not for speculative purposes;
(g) Indebtedness permitted under Section 7.6;
(h) Indebtedness composing Permitted Investments;
(i) Indebtedness under the promissory notes referred to in Section
7.11, provided that such Indebtedness is fully subordinated to the Obligations
pursuant to a Shareholder Subordination Agreement.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(e) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
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(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
Clauses (a), (b) and (c) of this Section 7.3 shall not apply to the merger,
liquidation or consolidation of (i) a U.S. Borrower with and into another U.S.
Borrower or the Parent (so long as the Parent is the surviving entity), (ii) a
Guarantor with and into another Guarantor or a U.S. Borrower, or (iii) a
Non-Loan Party with and into another Non-Loan Party, each of which shall be
permitted hereunder.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of
any Loan Party.
7.5 Change Name. Change any Loan Party's name, FEIN, organizational
identification number, state of incorporation, corporate structure or identity,
or add any new fictitious name; provided, however, that a Loan Party may change
its name upon at least 30 days prior written notice by Administrative Borrower
to Agent of such change and so long as, at the time of such written
notification, such Person provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except (i) by endorsement of
instruments or items of payment for deposit to the account of the Loan Parties
or which are transmitted or turned over to Agent, (ii) for guarantees of
Indebtedness permitted under Section 7.1 and guarantees set forth on Schedule
5.20, and (iii) any guarantee of Indebtedness or any other obligation permitted
by the terms of this Agreement.
7.7 Nature of Business.
(a) Make any change in the principal nature of any Loan Party's
business.
(b) Permit German Parent to (i) have any operations or conduct any
business, (ii) own any assets, or (iii) incur any liabilities, in each case,
other than in the ordinary course of its business as the holding company of the
shares of Stock of German Borrower and Numatics K.F.T. (Hungary).
(c) Permit I.A.E. Incorporated to (i) have any operations or
conduct any business, (ii) own any assets, or (iii) incur any liabilities.
7.8 Payments, Prepayments and Amendments.
(a) Except in connection with (i) a refinancing permitted by
Section 7.1(e) or (ii) a prepayment of Purchase Money Indebtedness in connection
with the sale of the fixed assets acquired with the proceeds thereof, prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of any Loan
Party, other than the Obligations in accordance with this Agreement; provided,
however, that notwithstanding the provisions of this clause (a), Parent
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shall be permitted to repurchase its Subordinated Notes with the proceeds of the
Term Loan C and/or the issuance and sale of the Preferred Stock so long as (A)
both before and after giving effect to such repurchase, no Default or Event of
Default has occurred and is continuing, (B) in the case of a repurchase of
Subordinated Notes with the proceeds of the Term Loan C, both before and after
giving effect to such repurchase, the Senior Debt Ratio does not exceed 3.00 to
1.00, (C) in the case of a repurchase of Subordinated Notes with the proceeds of
the Term Loan C, both before and after giving effect to such repurchase, Excess
Availability is not less than $5,000,000, (D) in the case of a repurchase of
Subordinated Notes with the proceeds of the issuance and sale of the Preferred
Stock, such repurchase is made in accordance with the terms of the Preferred
Stock Purchase Agreement, (E) contemporaneously therewith, Administrative
Borrower delivers to Agent a certificate of the chief executive officer or chief
financial officer of Administrative Borrower certifying that such conditions
have been satisfied, and (F) all Subordinated Notes so repurchased shall be
endorsed and delivered to Agent in accordance with Section 4.2 (it being
understood that, so long as no Default or Event of Default shall have occurred
and be continuing, Parent may receive and retain any and all interest payments
paid in respect of the Subordinated Notes so repurchased).
(b) Except in connection with a refinancing permitted by Section
7.1(e), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Sections
7.1(b), (c), (d) or (i) if such amendment, modification, alteration, increase or
change would shorten the final maturity or average life to maturity of, or
require any payment to be made earlier than the date originally scheduled on,
such Indebtedness, would increase the interest rate applicable to such
Indebtedness, would change the subordination provision, if any, of such
Indebtedness, or would otherwise be adverse to the Agent and the Lenders or the
issuer of such Indebtedness in any respect.
(c) (i) Amend, modify or otherwise change its Governing Documents,
including by the filing or modification of any certificate of designation, or
any agreement or arrangement entered into by it with respect to any of its Stock
(including any shareholders' agreement), or enter into any new agreement with
respect to any of its Stock, in each case, other than to the extent necessary to
authorize and issue the Preferred Stock or (ii) amend, modify or otherwise
change the Preferred Stock Purchase Agreement or any other Material Contract,
except any such amendments, modifications or changes or any such new agreements
or arrangements pursuant to this paragraph (c) that, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Change.
7.9 Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 Consignments. Consign any Inventory or sell any Inventory on xxxx
and hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 Distributions. Make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock) on, or purchase,
acquire, redeem, or retire any of any Loan Party's Stock, of any class, whether
now or hereafter outstanding, other than (a) distributions or declaration and
payment of dividends by any Subsidiary of a Borrower to a
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Borrower, (b) so long as no Default or Event of Default shall have occurred and
be continuing either before or after giving effect to such redemption,
redemptions by Parent of shares of its Stock pursuant to Section 2.6(a) of the
Preferred Stock Purchase Agreement in an aggregate amount not to exceed $25,000,
and (c) so long as no Default or Event of Default shall have occurred and be
continuing either before or after giving effect to such redemption, redemptions
by Parent of shares of its Stock pursuant to (i) Parent's shareholders
agreements (other than the Preferred Stock Purchase Agreement) and stock option
plans (in each case, as in effect on the Closing Date) and (ii) the Harvard Put,
in the case of each of clauses (i) and (ii), either (A) in cash in an aggregate
amount for all such redemptions not to exceed $250,000 in any Fiscal Year,
provided that Borrowers have Excess Availability of not less than $3,000,000
both before and after giving effect to any such redemption or (B) in exchange
for the issuance of promissory notes that are subordinated to the Obligations
pursuant to a Shareholder Subordination Agreement (or in the case of the Harvard
Put, pursuant to the terms thereof).
7.12 Accounting Methods. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of the Loan Parties' accounting records without said accounting firm
or service bureau agreeing to provide Agent information regarding the Collateral
or the Loan Parties' financial condition.
7.13 Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that the Loan Parties shall not have Permitted Investments (other than
in the Cash Management Accounts) in deposit accounts or Securities Accounts in
excess of $250,000 outstanding at any one time unless the applicable Loan Party,
and the applicable securities intermediary or bank have entered into Control
Agreements or similar arrangements governing such Permitted Investments, as
Agent shall determine in its Permitted Discretion, to perfect (and further
establish) the Agent's Liens in such Permitted Investments.
7.14 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any transaction with any Affiliate of any Loan Party
except for transactions that are in the ordinary course of the Loan Parties'
business, upon fair and reasonable terms, that are fully disclosed to Agent, and
that are no less favorable to the Loan Parties than would be obtained in an
arm's length transaction with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 Compensation. Increase the annual fee or per-meeting fees
paid to the members of its Board of Directors during any Fiscal Year by more
than 15% over the prior Fiscal Year; or pay or accrue cash compensation, during
any Fiscal Year, to its officers and senior management employees in an aggregate
amount in excess of 115% of that paid or accrued in the prior Fiscal Year,
provided that (i) the permitted increase in the annual fee and per-meeting fees
payable to the members of Parent's Board of Directors and the cash compensation
payable to Parent's officers and senior management employees for the Fiscal Year
ending December 31, 2003, shall be based on the annual fee or per-meeting fees
paid to the members of
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Parent's Board of Directors and the cash compensation paid to Parent's officers
and senior management during the Fiscal Year ended December 31, 2000 and (ii)
such limitations shall not apply to (x) any increase in the compensation payable
to Xxxx X. Xxxxxx pursuant to the terms of the Xxxxxx Employment Agreement as in
effect on the Closing Date and (y) any increase in the incentive or bonus
compensation payable to Parent's officers and senior management employees
pursuant to an incentive or bonus compensation plan in effect on the Closing
Date that has been authorized in writing by the Board of Directors (or the
applicable compensation committee appointed by such Board of Directors) of
Parent.
7.17 Use of Proceeds. Use the proceeds of the Advances and the
Term Loans for any purpose other than (a) on the Closing Date, (i) to repay in
full the outstanding principal, accrued interest, and accrued fees and expenses
owing to Existing Lenders, and (ii) to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (b) thereafter,
consistent with the terms and conditions hereof, for its lawful and permitted
purposes, including to repurchase Parent's Subordinated Notes, provided that (i)
such repurchase may be made solely with the proceeds of the Term Loan C and/or
the issuance and sale of the Preferred Stock in accordance with Section 7.8(a)
and (ii) the proceeds of the Term Loan C may be used solely to repurchase
Parent's Subordinated Notes.
7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees. Relocate its chief executive office to a new location
without Administrative Borrower providing 30 days' prior written notification
thereof to Agent and so long as, at the time of such written notification, the
applicable Loan Party provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens and, if such new
location is leased by such Loan Party, provides to Agent a Collateral Access
Agreement with respect to such new location. The Inventory and Equipment shall
not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Agent's prior written consent unless such bailee,
warehouseman or similar party has executed a Collateral Access Agreement.
7.19 Securities Accounts. Subject to Section 7.13, establish or
maintain any Securities Account unless Agent shall have received a Control
Agreement in respect of such Securities Account. Borrowers agree to not transfer
assets out of any Securities Account; provided, however, that, so long as no
Event of Default has occurred and is continuing or would result therefrom,
Borrowers may use such assets (and the proceeds thereof) to the extent not
prohibited by this Agreement.
7.20 Financial Covenants.
(a) Minimum EBITDA. Fail to maintain EBITDA, measured on a
quarter-end basis, of not less than the required amount set forth in the
following table for the applicable period set forth opposite thereto;
----------------------------------------------------------------------------------
Applicable Amount Applicable Period
----------------------------------------------------------------------------------
$4,537,000 For the 1 fiscal quarter period ending March 31, 2003
----------------------------------------------------------------------------------
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-------------------------------------------------------------------------------------
$ 9,715,000 For the 2 fiscal quarter period ending June 30, 2003
-------------------------------------------------------------------------------------
$15,686,000 For the 3 fiscal quarter period ending September 30, 2003
-------------------------------------------------------------------------------------
$20,977,000 For the 4 fiscal quarter period ending December 31, 2003
-------------------------------------------------------------------------------------
$21,704,000 For the 4 fiscal quarter period ending March 31, 2004
-------------------------------------------------------------------------------------
$22,395,000 For the 4 fiscal quarter period ending June 30, 2004
-------------------------------------------------------------------------------------
$22,904,000 For the 4 fiscal quarter period ending September 30, 2004
-------------------------------------------------------------------------------------
$23,486,000 For the 4 fiscal quarter period ending December 31, 2004
-------------------------------------------------------------------------------------
$24,343,000 For the 4 fiscal quarter period ending March 31, 2005
-------------------------------------------------------------------------------------
$25,203,000 For the 4 fiscal quarter period ending June 30, 2005
-------------------------------------------------------------------------------------
$26,061,000 For the 4 fiscal quarter period ending September 30, 2005
-------------------------------------------------------------------------------------
$26,919,000 For the 4 fiscal quarter period ending December 31, 2005
----------------------------- -------------------------------------------------------
(b) Fixed Charge Coverage Ratio. Fail to maintain a Fixed Charge
Coverage Ratio at the end of each fiscal quarter set forth below of not less
than the applicable ratio set forth below:
---------------------------------------------------------------------------------
Fiscal Quarter Ended Ratio
---------------------------------------------------------------------------------
For each fiscal quarter ending during the period from January 0.80 to 1.00
1, 2003 through June 30, 2003
---------------------------------------------------------------------------------
For each fiscal quarter ending during the period from July 1, 0.85 to 1.00
2003 through December 31, 2003
---------------------------------------------------------------------------------
For each fiscal quarter ending during the period from January 0.90 to 1.00
1, 2004 through June 30, 2004
---------------------------------------------------------------------------------
For each fiscal quarter ending during the period from July 1, 0.95 to 1.00
2004 through December 31, 2004
---------------------------------------------------------------------------------
For each fiscal quarter ending during the period from January 1.00 to 1.00
1, 2005 through December 31, 2005
---------------------------------------------------------------------------------
(c) Senior Interest Coverage Ratio. Fail to maintain a Senior
Interest Coverage Ratio at the end of each fiscal quarter set forth below of not
less than the applicable ratio set forth below:
-----------------------------------------------------------------------------------------------
Fiscal Quarter Ended Ratio Ratio
(prior to making (subsequent to making
of Term Loan C) of Term Loan C)
-----------------------------------------------------------------------------------------------
For the fiscal quarter ending March 31, 2003 4.50 to 1.00 4.50 to 1.00
-----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period 5.50 to 1.00 4.00 to 1.00
from April 1, 2003 through September 30, 2003
-----------------------------------------------------------------------------------------------
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----------------------------------------------------------------------------------------------
Fiscal Quarter Ended Ratio Ratio
(prior to making (subsequent to making
of Term Loan (C) of Term Loan (C)
----------------------------------------------------------------------------------------------
For the fiscal quarter ending March 31, 2003 4.50 to 1.00 4.50 to 1.00
----------------------------------------------------------------------------------------------
For the fiscal quarter ending December 31, 2003 5.75 to 1.00 4.50 to 1.00
----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period 6.25 to 1.00 4.50 to 1.00
from January 1, 2004 through December 31, 2004
----------------------------------------------------------------------------------------------
For the fiscal quarter ending March 31, 2005 6.75 to 1.00 4.75 to 1.00
----------------------------------------------------------------------------------------------
For the fiscal quarter ending June 30, 2005 7.00 to 1.00 5.00 to 1.00
----------------------------------------------------------------------------------------------
For the fiscal quarter ending September 30, 2005 7.50 to 1.00 5.25 to 1.00
----------------------------------------------------------------------------------------------
For the fiscal quarter ending December 31, 2005 8.00 to 1.00 5.50 to 1.00
----------------------------------------------------------------------------------------------
(d) Senior Debt Ratio. Fail to maintain a Senior Debt Ratio at the
end of each fiscal quarter set forth below of not more than the applicable ratio
set forth below:
----------------------------------------------------------------------------------------------
Fiscal Quarter Ended Ratio Ratio
(prior to making (subsequent to making
of Term Loan C) of Term Loan C)
----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period 2.50 to 1.00 3.00 to 1.00
from January 1, 2003 through September 30, 2003
----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period 2.25 to 1.00 2.75 to 1.00
from October 1, 2003 through September 30, 2004
----------------------------------------------------------------------------------------------
For the fiscal quarter ending December 31, 2004 2.00 to 1.00 2.50 to 1.00
----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period 1.75 to 1.00 2.25 to 1.00
from January 1, 2005 through September 30, 2005
----------------------------------------------------------------------------------------------
For the fiscal quarter ending December 31, 2005 1.50 to 1.00 2.00 to 1.00
----------------------------------------------------------------------------------------------
(e) U.S. Senior Debt Ratio. Fail to maintain a U.S. Senior Debt
Ratio at the end of each fiscal quarter set forth below of not more than the
applicable ratio set forth below:
----------------------------------------------------------------------------------------------
Fiscal Quarter Ended Ratio Ratio
(prior to making (subsequent to making
of Term Loan C) of Term Loan C)
----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period 2.75 to 1.00 3.25 to 1.00
from January 1, 2003 through September 30, 2003
----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period 2.50 to 1.00 3.00 to 1.00
from October 1, 2003 through September 30, 2004
---------------------------------------------------------------------------------- -----------
For the fiscal quarter ending December 31, 2004 2.25 to 1.00 2.75 to 1.00
----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period
from January 1, 2005 through September 30, 2005 2.00 to 1.00 2.50 to 1.00
----------------------------------------------------------------------------------------------
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-----------------------------------------------------------------------------------------------
Fiscal Quarter Ended Ratio Ratio
(prior to making (subsequent to making
of Term Loan C) of Term Loan C)
-----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period 2.75 to 1.00 3.25 to 1.00
from January 1, 2003 through September 30, 2003
-----------------------------------------------------------------------------------------------
For each fiscal quarter ending during the period 2.00 to 1.00 2.50 to 1.00
from January 1, 2005 through September 30, 2005
-----------------------------------------------------------------------------------------------
For the fiscal quarter ending December 31, 2005 1.75 to 1.00 2.25 to 1.00
-----------------------------------------------------------------------------------------------
(f) Capital Expenditures. Make Capital Expenditures in any Fiscal
Year in excess of the amount set forth in the following table for the applicable
period:
--------------------------------------------------------------
Amount Fiscal Year
--------------------------------------------------------------
$3,000,000 Fiscal Year 2003
--------------------------------------------------------------
$3,700,000 Fiscal Year 2004
--------------------------------------------------------------
$4,400,000 Fiscal Year 2005
--------------------------------------------------------------
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event
of default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or when declared
due and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees, expenses and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations) and, in the case of any Obligation constituting
interest, fees, expenses, charges or reimbursements only, such failure shall
continue for 3 days;
8.2 (i) If any Loan Party fails to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in Sections 6.1,
6.4, 6.5, 6.7 and 6.15 of this Agreement, or comparable provisions of the other
Loan Documents, and such failure continues for 15 days, (ii) if any Loan Party
fails to perform, keep, or observe any term, provision, condition, covenant or
agreement contained in Sections 6.2 (but only up to three times during any
12-month period), 6.3, 6.9 and 6.11 of this Agreement, or comparable provisions
of the other Loan Documents, and such failure continues for 5 days, or (iii) if
any Loan Party otherwise fails to perform, keep, or observe any other term,
provision, condition, covenant, or agreement contained in this Agreement or in
any of the other Loan Documents;
8.3 If any material portion of any Loan Party's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
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8.4 If an Insolvency Proceeding is commenced by any Loan Party or any
of its Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against any Loan Party, or
any of its Subsidiaries, and any of the following events occur: (a) the
applicable Loan Party or the Subsidiary consents to the institution of the
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
Agent (including any successor agent) and each other member of the Lender Group
shall be relieved of their obligation to extend credit hereunder, (d) an interim
trustee is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, any Loan Party or any of its Subsidiaries, or (e) an order for
relief shall have been entered therein;
8.6 If any Loan Party or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any Loan Party's or any of its Subsidiaries' assets by the United
States, Canada or Germany or any department, agency, or instrumentality thereof,
or by any state, county, municipal, or governmental agency, or if any taxes or
debts owing at any time hereafter to any one or more of such entities becomes a
Lien, whether xxxxxx or otherwise, upon any Loan Party's or any of its
Subsidiaries' assets to secure an aggregate amount in excess of $25,000 and the
same is not paid before the payment date thereof;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of any Loan Party's or any of its Subsidiaries' properties or
assets;
8.9 If there is a default under any Indenture Document or any Material
Contract to which any Loan Party or any of its Subsidiaries is a party and such
default (a) occurs at the final maturity of the obligations thereunder, or (b)
results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of the applicable Loan Party's or its
Subsidiaries' obligations thereunder, to terminate such agreement, or to refuse
to renew such agreement pursuant to an automatic renewal right therein;
8.10 If any Loan Party or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or material misrepresentation exists
now or hereafter in any warranty, representation, statement, or Record made to
the Lender Group by any Loan Party, its Subsidiaries, or any officer, employee,
agent, or director of any Loan Party or any of its Subsidiaries;
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8.12 If the obligation of any Guarantor under its Guaranty is limited or
terminated by operation of law or by such Guarantor thereunder;
8.13 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby;
8.14 If any Loan Party or any of its Subsidiaries or any of their ERISA
Affiliates shall have made a complete or partial withdrawal from a Multiemployer
Plan, and, as a result of such complete or partial withdrawal, such Loan Party
or any of its Subsidiaries or such ERISA Affiliate incurs a withdrawal liability
in an annual amount exceeding $100,000; or a Multiemployer Plan enters
reorganization status under Section 4241 of ERISA, and, as a result thereof, a
Loan Party's or such Subsidiary's, or such ERISA Affiliate's annual contribution
requirement with respect to such Multiemployer Plan increases in an annual
amount exceeding $100,000;
8.15 Any Termination Event with respect to any Benefit Plan shall have
occurred, and, 30 days thereafter, (i) such Termination Event (if correctable)
shall not have been corrected, and (ii) the then current value of such Benefit
Plan's vested benefits exceeds the then current value of assets allocable to
such benefits in such Benefit Plan by more than $100,000 (or, in the case of a
Termination Event involving liability under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of
the Code, the liability is in excess of such amount); or
8.16 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Loan Party, or a proceeding shall be commenced by any Loan
Party, or by any Governmental Authority having jurisdiction over any Loan Party,
seeking to establish the invalidity or unenforceability thereof, or any Loan
Party shall deny that any Loan Party has any liability or obligation purported
to be created under any Loan Document; or
8.17 If either Canadian Borrower or German Borrower shall default or
deny liability under the terms and conditions of any Canadian Security Document
or German Security Document, as the case may be, beyond the expiration of any
grace period, if any, contained in such Canadian Security Document or German
Security Document, as the case may be, or any Canadian Security Document or
German Security Document is amended, modified, canceled, extended or revoked
without the prior written consent of Agent.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
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(a) Declare all or any portion of the Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group, but without
affecting any of the Agent's Liens in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit the Loan Account (or a sub-account thereof, as
applicable) with only the net amounts received by Agent in payment of such
disputed Accounts after deducting all Lender Group Expenses incurred or expended
in connection therewith;
(e) Cause the Loan Parties to hold all returned Inventory in trust
for the Lender Group, segregate all such returned Inventory from all other
assets of the Loan Parties or in the Loan Parties' possession and conspicuously
label said returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Loan Party, make such
payments and do such acts as Agent considers necessary or reasonable to protect
its security interests in the Collateral. Each Borrower agrees to assemble the
Personal Property Collateral if Agent so requires, and to make the Personal
Property Collateral available to Agent at a place that Agent may designate which
is reasonably convenient to both parties. Each Borrower authorizes Agent to
enter the premises where the Personal Property Collateral is located, to take
and maintain possession of the Personal Property Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Agent's
determination appears to conflict with the Agent's Liens and to pay all expenses
incurred in connection therewith and to charge the Loan Account (or a
sub-account thereof, as applicable) therefor. With respect to any of Borrowers'
owned or leased premises, each Borrower hereby grants Agent a license to enter
into possession of such premises and to occupy the same, without charge, in
order to exercise any of the Lender Group's rights or remedies provided herein,
at law, in equity, or otherwise;
(g) Without notice to any Loan Party (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Loan Party held by the
Lender Group (including any amounts received in the Cash Management Accounts),
or (ii) Indebtedness at any time owing to or for the credit or the account of
any Loan Party held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of
any Loan Party held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
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(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Agent is hereby granted a license or
other right to use, without charge, for the benefit of the Lender Group, each
Borrower's labels, patents, copyrights, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Personal Property Collateral, in completing production of,
advertising for sale, and selling any Personal Property Collateral and each
Borrower's rights under all licenses and all franchise agreements shall inure to
the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including any Loan Party's
premises) as Agent determines is commercially reasonable. It is not necessary
that the Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Agent shall give Administrative Borrower (for the benefit
of the Loan Parties) a notice in writing of the time and place of
public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the Personal
Property Collateral, the time on or after which the private sale or
other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in Section 12,
at least 10 days before the earliest time of disposition set forth in
the notice; no notice needs to be given prior to the disposition of
any portion of the Personal Property Collateral that is perishable or
threatens to decline speedily in value or that is of a type
customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit bid and
purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing;
(n) Agent, on behalf of the Lender Group, may foreclose any or all
of the Mortgages and sell the Real Property or cause the Real Property to be
sold in accordance with the provisions of the Mortgages and applicable law, and
exercise any and all other rights or remedies available to Agent, on behalf of
the Lender Group, under the Mortgages, any of the other Loan Documents, at law
or in equity with respect to the Collateral encumbered by the Mortgages;
(o) The Lender Group shall have all other rights and remedies
available to it at law or in equity or pursuant to any other Loan Document; and
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(p) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by the Loan
Parties. Any excess will be returned, without interest and subject to the rights
of third Persons, by Agent to Administrative Borrower (for the benefit of the
Loan Parties).
9.2 Remedies Cumulative. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Loan Party fails to pay any monies (whether taxes, assessments,
remittances, source deductions, insurance premiums, or, in the case of leased
properties or assets, rents or other amounts payable under such leases) due to
third Persons, or fails to make any deposits or furnish any required proof of
payment or deposit, all as required under the terms of this Agreement, then,
Agent, in its sole discretion and without prior notice to any Loan Party, may do
any or all of the following: (a) make payment of the same or any part thereof,
(b) set up such reserves in the Loan Account (or a sub-account thereof, as
applicable) as Agent deems necessary to protect the Lender Group from the
exposure created by such failure, or (c) in the case of the failure to comply
with Section 6.8 hereof, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which each such Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Borrower hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, Agent shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.
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11.3 Indemnification.
(a) General Indemnity. Each Borrower shall pay, indemnify,
defend, and hold the Agent-Related Persons, the Lender-Related Persons with
respect to each Lender, each Participant, and each of their respective officers,
directors, employees, agents, and attorneys-in-fact (each, an "Indemnified
Person") harmless (to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations, proceedings, and
damages, and all reasonable attorneys fees and disbursements and other costs and
expenses actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby, and (b) with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto.
(b) Environmental Indemnity. Without limiting Section 11.3(a)
hereof, each Borrower shall pay, indemnify, defend, and hold harmless each
Indemnified Person against any and all Environmental Liabilities and Costs and
all other claims, demands, penalties, fines, liability (including strict
liability), losses, damages, costs and expenses (including reasonable legal fees
and expenses, consultant fees and laboratory fees), arising out of (i) any
releases or threatened releases of any Hazardous Materials (x) at any property
presently or formerly owned or operated by such Borrower or any Subsidiary of
such Borrower, or any predecessor in interest, or (y) generated and disposed of
by such Borrower or any Subsidiary of such Borrower, or any predecessor in
interest; (ii) any violations of Environmental Laws; (iii) any Environmental
Action relating to such Borrower or any Subsidiary of such Borrower, or any
predecessor in interest; (iv) any personal injury (including wrongful death) or
property damage (real or personal) arising out of exposure to Hazardous
Materials used, handled, generated, transported or disposed by such Borrower or
any Subsidiary of such Borrower, or any predecessor in interest; and (v) any
breach of any warranty or representation regarding environmental matters made by
the Loan Parties in Section 5.14 or the breach of any covenant made by the Loan
Parties in Section 6.15.
(c) The foregoing to the contrary notwithstanding, Borrowers
shall have no obligation to any Indemnified Person under this Section 11.3 with
respect to any of the foregoing claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses (collectively, the "Indemnified Liabilities") that
a court of competent jurisdiction finally determines to have resulted from the
gross negligence or willful misconduct of such Indemnified Person (or any of its
officers, directors, employees, agents, or attorneys-in-fact). This provision
shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT
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TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER
PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as the Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative NUMATICS, INCORPORATED
Borrower: 0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: President
Fax No. 000-000-0000
with copies to: MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Fax No. 000-000-0000
If to Agent: FOOTHILL CAPITAL CORPORATION
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. 000-000-0000
with copies to: XXXXXXX XXXX & XXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Fax No. 000-000-0000
Agent and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed
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received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Each Borrower acknowledges and agrees that
notices sent by the Lender Group in connection with the exercise of enforcement
rights against Collateral under the provisions of the Code shall be deemed sent
when deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO (INCLUDING ALL MATTERS RELATING TO INTEREST, LOAN CHARGES, COMMITMENT
FEES AND BROKERAGE COMMISSIONS) SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND EFFECT OF
PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAW OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS
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FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Any Lender may, with the written consent of Agent (provided
that no written consent of Agent shall be required in connection with any
assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each an "Assignee") all, or any ratable part
of all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum amount
of $5,000,000 (except such minimum amount shall not apply to an Eligible
Transferee that is a Related Fund of a Lender or an Affiliate of a Lender);
provided, however, that Borrowers and 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,
have been given to Administrative Borrower and Agent by such Lender and the
Assignee, (ii) such Lender and its Assignee have delivered to Administrative
Borrower and Agent an Assignment and Acceptance in form and substance
satisfactory to Agent and (iii) the assignor Lender or Assignee has paid to
Agent for Agent's separate account a processing fee in the amount of $5,000.
Anything contained herein to the contrary notwithstanding, the consent of Agent
shall not be required (and payment of any fees shall not be required) if (x)
such assignment is in connection with any merger, consolidation, sale, transfer,
or other disposition of all or any substantial portion of the business or loan
portfolio of such Lender or (y) the assignee is an Eligible Transferee that is a
Related Fund of a Lender or an Affiliate of a Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment (if applicable) of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and 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 (except with respect to Section 11.3 hereof) 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 and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrowers and the Assignee.
(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: (1) 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
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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, (2) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrowers or the performance or observance by Borrowers
of any of their obligations under this Agreement or any other Loan Document
furnished pursuant hereto, (3) 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, (4) such Assignee will, independently and
without reliance upon 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, (5) such Assignee appoints and authorizes Agent to take
such actions and to exercise such powers under this Agreement as are delegated
to Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, 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
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of such Lender (a
"Participant") participating interests in its Obligations, the Commitment, and
the other rights and interests of that Lender (the "Originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
Originating Lender shall remain a "Lender" for all purposes of this Agreement
and the other Loan Documents and the Participant receiving the participating
interest in the Obligations, the Commitments, and the other rights and interests
of the Originating Lender hereunder shall not constitute a "Lender" hereunder or
under the other Loan Documents and 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) Borrowers,
Agent, and the Lenders 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, (iv) no
Originating Lender shall transfer or grant any participating interest under
which the Participant has the right to approve any amendment to, or any consent
or waiver with respect to, this Agreement or any other Loan Document, except to
the extent such amendment to, or consent or waiver with respect to this
Agreement or of any other Loan Document would (A) extend the final maturity date
of the Obligations hereunder in which such Participant is participating, (B)
reduce the interest rate applicable to the Obligations hereunder in which such
Participant is participating, (C) release all or a material portion of the
Collateral or guaranties (except to the extent expressly provided herein or in
any of the Loan Documents) supporting the Obligations hereunder in which such
Participant is participating, (D) postpone the payment of, or reduce the amount
of, the interest or fees payable to such Participant, or (E) change the amount
or due dates of scheduled principal repayments or
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prepayments or premiums; and (v) all amounts payable by Borrowers 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 been declared 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 as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement. The rights of any
Participant only shall be derivative through the Originating Lender with whom
such Participant participates and no Participant shall have any rights under
this Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Borrowers, the Collections, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by the Lenders among themselves. The
provisions of this Section 14.1(e) (other than clause (v) of this Section) are
solely for the benefit of the Lender Group, and none of the Borrowers shall have
any rights as a third party beneficiary of such provisions.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrowers or
Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, 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 Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(h) Administrative Borrower shall maintain, or cause to be
maintained, a register (the "Register") on which it enters the name of a Lender
as the registered owner of each Term Loan B and Term Loan C, as the case may be,
held by such Lender. A Registered Loan (and the Registered Note, if any,
evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register,
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new Registered Notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the Registered Note, if any evidencing the same),
Borrowers shall treat the Person in whose name such Term Loan (and the
Registered Note, if any, evidencing the same) is registered as the owner thereof
for the purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary. In the case of an assignment or
delegation covered by Section 14.1(a)(y), the assigning Lender shall maintain a
comparable Register on behalf of Administrative Borrower.
(i) In the event that a Lender sells participations in the
Registered Loan, such Lender shall maintain a register on which it enters the
name of all participants in the
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Registered Loans held by it (the "Participant Register"). A Registered Loan (and
the Registered Note, if any, evidencing the same) may be participated in whole
or in part only by registration of such participation on the Participant
Register (and each Registered Note shall expressly so provide). Any
participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
14.2 Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) 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 all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) 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 hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan
or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to
take any action hereunder,
(e) amend, modify or waive this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
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(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or Guarantor from any obligation for the
payment of money,
(j) change the definitions of Dilution, Dilution Reserve,
Eligible Accounts, Eligible Inventory, Maximum Revolver A Amount, Net
Liquidation Percentage or Revolver A Borrowing Base, in a manner that would
result in an increase in the Revolver A Borrowing Base (or in any definition
contained in this Agreement used in connection with the definition of the
foregoing terms that would result in an increase in the Revolver A Borrowing
Base),
(k) change the definitions of Eligible Equipment, Eligible Real
Property Collateral, Maximum Revolver B Amount, Term Loan A Amount, Term Loan B
Amount, or Term Loan C Amount, in a manner that would result in an increase in
the Revolver B Borrowing Base, Term Loan A Amount, the Term Loan B Amount, or
the Term Loan C Amount (or in any definition contained in this Agreement used in
connection with the definition of the foregoing terms that would result in an
increase in the Revolver B Borrowing Base, the Term Loan A Amount, the Term Loan
B Amount, or Term Loan C Amount), or
(l) amend, modify or waive any of the provisions of Section 16 or
Section 2.1(a), Section 2.1(b), Section 2.2, Section 2.3(e), Section 2.3(i),
Section 2.4(b) or Section 2.4(c) (or change any definition of a term used in any
such Section in a manner adverse to any Lender);
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 Replacement of Holdout Lender. If any action to be taken by the
Lender Group or Agent hereunder requires the unanimous consent, authorization,
or agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "Replacement
Lender"), and the Holdout Lender shall have no right to refuse to be replaced
hereunder. Such notice to replace the Holdout Lender shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any
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premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or
fail to execute and deliver any such Assignment and Acceptance Agreement prior
to the effective date of such replacement, the Holdout Lender shall be deemed to
have executed and delivered such Assignment and Acceptance Agreement. The
replacement of any Holdout Lender shall be made in accordance with the terms of
Section 14.1. Until such time as the Replacement Lenders shall have acquired all
of the Obligations, the Commitments, and the other rights and obligations of the
Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender
shall remain obligated to make the Holdout Lender's Pro Rata Share of Revolver A
Advances and to purchase a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement or, any
other Loan Document, or delay by Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent's and each Lender's rights thereafter to require strict
performance by Borrowers of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent.
(a) Each Lender hereby designates and appoints Foothill as its
representative under this Agreement and the other Loan Documents and each Lender
hereby irrevocably authorizes 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 Agent by the terms
of this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Agent agrees to act as such on the express
conditions contained in this Section 16. The provisions of this Section 16 are
solely for the benefit of Agent, and the Lenders, and the Loan Parties shall
have no rights as a third party beneficiary of any of the provisions contained
herein. Any provision to the contrary contained elsewhere in this Agreement or
in any other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall 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 Agent; it being expressly understood and agreed that the use of the word
"Agent" is for convenience only, that Foothill is merely the representative of
the Lenders, and only has the contractual duties set forth herein. Except as
expressly otherwise provided in this Agreement, 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 that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
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powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management accounts as Agent deems necessary and appropriate in accordance
with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to the Loan Parties,
the Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.
(b) Each Lender (for itself and on behalf of any of its
Affiliates that enter into this Agreement or any Loan Document with any Loan
Party) and each of the Loan Parties hereby irrevocable constitutes, designates
and appoints, to the extent necessary, the Agent as the holder of an irrevocable
power of attorney (fonde de pouvoir) (within the meaning of Article 2692 of the
Civil Code of Quebec) in order to hold security granted by the Loan Parties in
the Province of Quebec to secure the obligations of the Loan Parties under any
bond or other title of Indebtedness that may be issued by the Loan Parties under
any deed of hypothec that may be granted to the fonde de pouvoir from time to
time. Each Person accepting an assignment of, a participation in or an
arrangement in respect of, all or any part of a Lender's interest in the
Obligations or this Agreement shall be deemed to have confirmed and ratified the
constitution, designation and appointment of the Agent as the holder of such
irrevocable power of attorney (fonde de pouvoir) by execution of an assignment
(including an Assignment and Acceptance) or other agreement pursuant to which it
becomes such assignee. Each Affiliate of a Lender that enters into a Loan
Document shall be deemed to have confirmed and ratified the constitution,
designation and appointment of the Agent as the holder of such irrevocable power
of attorney (fonde de pouvoir) by the execution of such Loan Document and by the
delivery of any notice thereof required pursuant to this Agreement or otherwise.
Each Lender, on behalf of its Affiliates, hereby confirms that it has full
authority to confirm and ratify such constitution, designation and appointment
of the Agent as fonde de pouvoir by its Affiliate. Notwithstanding the
provisions of Section 32 of An Act respecting the special powers of legal
persons (Quebec), the Agent may acquire and be the holder of any such bonds or
titles of Indebtedness.
16.2 Delegation of Duties. 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. 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.
16.3 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
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Lenders for any recital, statement, representation or warranty made by any Loan
Party or any Subsidiary or Affiliate of any Loan Party, or any officer or
director 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 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 or any other party to any Loan Document 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 Books or properties of
any Loan Party or the books or records or properties of any Loan Party's
Subsidiaries or Affiliates.
16.4 Reliance by Agent. 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 the Loan
Parties or counsel to any Lender), independent accountants and other experts
selected by Agent. Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless Agent shall
first receive such advice or concurrence of the Lenders as it deems appropriate
and until such instructions are received, Agent shall act, or refrain from
acting, as it deems advisable. If Agent so requests, it shall first be
indemnified to its reasonable satisfaction by Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. 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 Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Defaults and Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Administrative Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of default." Agent
promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual knowledge. If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the
other Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, 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 Agent has received any such
request, 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.
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16.6 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 Agent hereinafter taken, including any review of the affairs of the Loan
Parties and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and 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 any other Person (other than the Lender
Group) party to a Loan Document, 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 Loan Parties. Each Lender
also represents that it will, independently and 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 and any other
Person (other than the Lender Group) party to a Loan Document. Except for
notices, reports, and other documents expressly herein required to be furnished
to the Lenders by Agent, 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 and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. 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 Borrowers and without limiting the obligation of Borrowers to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement
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(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 Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 Agent in Individual Capacity. Foothill 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,
lending, trust, financial advisory, underwriting, or other business with the
Loan Parties and their Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though Foothill were not Agent hereunder, and, in each
case, without notice to or consent of the other members of the Lender Group. The
other members of the Lender Group acknowledge that, pursuant to such activities,
Agent or its Affiliates may receive information regarding the Loan Parties or
their Affiliates and any other Person (other than the Lender Group) party to any
Loan Documents that is subject to confidentiality obligations in favor of the
Loan Parties or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days' notice
to the Lenders. If Agent resigns under this Agreement, the Required Lenders
shall appoint a successor Agent for the Lenders. If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders, a successor Agent. If Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers, and duties of the
retiring Agent and the term "Agent" shall mean such successor Agent and the
retiring Agent's appointment, powers, and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 16 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor Agent
has accepted appointment as Agent by the date which is 45 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its respective
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 Loan
Parties and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender
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and its respective Affiliates may receive information regarding the Loan Parties
or their Affiliates and any other Person (other than the Lender Group) party to
any Loan Documents that is subject to confidentiality obligations in favor of
the Loan Parties or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender 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 sub-agent of the
Agent.
16.11 Withholding Taxes.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Administrative Borrower:
(i) if such Lender claims an exemption from withholding
tax pursuant to its portfolio interest exception, (A) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank" as
described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder
(within the meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section 881(c)(3)(C) of the
IRC, and (B) a properly completed IRS Form W-8BEN, before the first payment
of any interest under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower;
(ii) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, properly
completed IRS Form W-8BEN before the first payment of any interest under
this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement and at
any other time reasonably requested by Agent or Administrative Borrower;
(iv) such other form or forms as may be required under
the IRC or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative
Borrower 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 tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns,
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grants a participation in, or otherwise transfers all or part of the Obligations
of Borrowers to such Lender, such Lender agrees to notify Agent of the
percentage amount in which it is no longer the beneficial owner of Obligations
of Borrowers to such Lender. To the extent of such percentage amount, Agent will
treat such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, 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 Agent, then 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.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that 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 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 and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of the Lender,
including a change in the residence, place of organization, or principal place
of business of the Lender, or a change in the branch or lending office of the
Lender participating in the transactions set forth herein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
each Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any note, including any amount paid pursuant to this Section
16.11(e) after withholding or deduction for or on account of any Taxes, will not
be less than the amount provided for herein; provided, however, that Borrowers
shall not be required to increase any such amounts payable to Agent or any
Lender (i) that is not organized under the laws of the United States, if such
Person fails to comply with the other requirements of this Section 16.11, or
(ii) if the increase in such amount payable results from Agent's or such
Lender's own willful misconduct or gross negligence. Administrative Borrower
will furnish to
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Agent as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrowers.
16.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Loan Party owned any interest at the
time the security interest was granted or at any time thereafter, or (iv)
constituting property leased to a Loan Party under a lease that has expired or
is terminated in a transaction permitted under this Agreement. Except as
provided above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or any substantial portion of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 16.12; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) 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 a Loan Party in respect of)
all interests retained by a Loan Party, including, the proceeds of any sale, all
of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by a 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 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, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, absent
Agent's gross negligence or willful misconduct in its sole discretion given
Agent's own interest in the Collateral in its capacity as one of the Lenders and
that Agent shall have no other duty or liability whatsoever to any Lender as to
any of the foregoing, except as otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to the Loan Parties or any deposit accounts of
the Loan Parties now or hereafter maintained with such Lender. Each
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of the Lenders further agrees that it shall not, unless specifically requested
to do so by Agent, take or cause to be taken any action, 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 the purpose of
which is, or could be, to give such Lender any preference or priority against
the other Lenders with respect to 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 arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available 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.
16.14 Agency for Perfection. Agent hereby appoints each other Lender
as its agent (and each Lender hereby accepts such appointment) for the purpose
of perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
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16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by or at the
request of Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding the Loan
Parties and will rely significantly upon the Books, as well as on
representations of the Loan Parties' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding the Loan Parties and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrowers that in any
event such Lender may make disclosures (a) to counsel for and other advisors,
accountants, and auditors to such Lender, (b) reasonably required by any bona
fide potential or actual Assignee or Participant in connection with any
contemplated or actual assignment or transfer by such Lender of an interest
herein or any participation interest in such Lender's rights hereunder, (c) of
information that has become public by disclosures made by Persons other than
such Lender, its Affiliates, assignees, transferees, or Participants, or (d) as
required or requested by any court, governmental or administrative agency,
pursuant to any subpoena or other legal process, or by any law, statute,
regulation, or court order; provided, however, that, unless prohibited by
applicable law, statute, regulation, or court order, such Lender shall notify
Administrative Borrower of any request by any court, governmental or
administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold 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 Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by 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.
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In addition to the foregoing: (x) any Lender may from time to time
request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by a Loan Party to Agent that has not been
contemporaneously provided by such Loan Party to such Lender, and, upon receipt
of such request, Agent shall provide a copy of same to such Lender, (y) to the
extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from a Loan Party, any Lender may,
from time to time, reasonably request Agent to exercise such right as specified
in such Lender's notice to Agent, whereupon Agent promptly shall request of such
Loan Party the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from such Loan Party, Agent promptly shall
provide a copy of same to such Lender, and (z) any time that Agent renders to a
Loan Party a statement regarding the Loan Account (or a sub-account thereof),
Agent shall send a copy of such statement to each Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Lenders to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender Group. No Lender shall
be responsible to any Loan Party or any other Person for any failure by any
other Lender to fulfill its obligations to make credit available hereunder, nor
to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
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17.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6 Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by any Loan Party or the transfer to the Lender Group
of any property should for any reason subsequently be declared to be void or
voidable under any state, provincial or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of each Loan Party automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been made.
17.8 Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 Parent as Agent for Borrowers. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that
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the handling of the Loan Account and Collateral of Borrowers in a combined
fashion, as more fully set forth herein, is done solely as an accommodation to
Borrowers in order to utilize the collective borrowing powers of Borrowers in
the most efficient and economical manner and at their request, and that Lender
Group shall not incur liability to any Borrower as a result hereof. Each
Borrower expects to derive benefit, directly or indirectly, from the handling of
the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance
of the integrated group. To induce the Lender Group to do so, and in
consideration thereof, each Borrower hereby jointly and severally agrees to
indemnify each member of the Lender Group and hold each member of the Lender
Group harmless against any and all liability, expense, loss or claim of damage
or injury, made against the Lender Group by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral of Borrowers as herein provided, (b) the Lender Group's
relying on any instructions of the Administrative Borrower, or (c) any other
action taken by the Lender Group hereunder or under the other Loan Documents,
except that Borrowers will have no liability to the relevant Agent-Related
Person or Lender-Related Person under this Section 17.9 with respect to any
liability that has been finally determined by a court of competent jurisdiction
to have resulted solely from the gross negligence or willful misconduct of such
Agent-Related Person or Lender-Related Person, as the case may be.
[Signature pages to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
BORROWERS:
NUMATICS, INCORPORATED
a Michigan corporation
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman, Chief Executive
Officer, and President
MICRO-FILTRATION, INC.
a Michigan corporation
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer
NUMATION, INC.
a Michigan corporation
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer
NUMATECH, INC.
a Michigan corporation
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer
ULTRA AIR PRODUCTS, INC.
a Michigan corporation
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer
MICROSMITH, INC.
an Arizona corporation
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer
EMPIRE AUTOMATION SYSTEMS, INC.
a New York corporation
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Authorized Signatory
NUMATICS LTD.
a Canadian corporation
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
NUMATICS GMBH
a German corporation
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Managing Director
AGENT AND LENDER:
FOOTHILL CAPITAL CORPORATION
a California corporation, as Agent and as
Lender
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
LENDERS:
ABLECO FINANCE LLC
a Delaware limited liability company, as
a Lender
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Senior Vice President
HIGHBRIDGE/XXXXX SPECIAL OPPORTUNITIES
FUND, L.P.
a Delaware limited partnership, as a
Lender
By: Highbridge/Xxxxx Capital Management,
LLC, its General Partner
By: /s/ Xxxxxx Bzwirn
Name: Xxxxxx Bzwirn
Title:
