EXHIBIT 00-0
XXXX XXX XXXXXXXX XXXXXXXXX
XXXXX
XXXXXXXXX PRECISION CORPORATION
AND
LEXINGTON RUBBER GROUP, INC.
AS BORROWERS
AND
CSE MORTGAGE LLC
AS A LENDER AND AS AGENT
AND
ANY OTHER LENDERS
FROM TIME TO TIME PARTY HERETO,
AS ADDITIONAL LENDERS
SIGNING DATE: MAY 31, 2006
TABLE OF CONTENTS
PAGE
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I. DEFINITIONS........................................................... 1
1.1. ACCOUNTING TERMS............................................... 1
1.2. GENERAL TERMS.................................................. 2
1.3. UNIFORM COMMERCIAL CODE TERMS.................................. 2
1.4. CERTAIN MATTERS OF CONSTRUCTION................................ 2
II. TERM LOAN; PAYMENTS.................................................. 2
2.1. TERM LOAN...................................................... 2
2.2. VOLUNTARY PREPAYMENTS.......................................... 3
2.3. MANDATORY PREPAYMENTS.......................................... 3
2.4. STATEMENT OF ACCOUNT........................................... 5
III. INTEREST AND FEES................................................... 7
3.1. INTEREST....................................................... 7
3.2. FEE LETTERS.................................................... 7
3.3. COMPUTATION OF INTEREST........................................ 7
3.4. MAXIMUM CHARGES................................................ 7
3.5. LIBOR INDEMNITY................................................ 7
3.6. INCREASED COSTS................................................ 8
3.7. CAPITAL ADEQUACY............................................... 8
3.8. PREPAYMENT PREMIUM............................................. 9
IV. COLLATERAL; GENERAL TERMS............................................ 9
4.1. SECURITY INTEREST IN THE COLLATERAL............................ 9
4.2. PERFECTION OF SECURITY INTEREST................................ 10
4.3. DISPOSITION OF COLLATERAL...................................... 11
4.4. PRESERVATION OF COLLATERAL..................................... 11
4.5. OWNERSHIP OF COLLATERAL........................................ 12
4.6. DEFENSE OF AGENT'S AND LENDERS' INTERESTS...................... 12
4.7. BOOKS AND RECORDS.............................................. 13
4.8. FINANCIAL AND OTHER DISCLOSURE................................. 13
4.9. COMPLIANCE WITH LAWS........................................... 13
4.10. INSPECTION OF PREMISES......................................... 13
4.11. INSURANCE...................................................... 14
4.12. PAYMENT OF TAXES............................................... 15
4.13. PAYMENT OF LEASEHOLD OBLIGATIONS............................... 15
4.14. RECEIVABLES.................................................... 16
4.15. INVENTORY...................................................... 20
4.16. EQUIPMENT AND REAL PROPERTY COVENANTS.......................... 20
4.17. EXCULPATION.................................................... 20
4.18. ENVIRONMENTAL MATTERS.......................................... 21
4.19. NO OTHER FINANCING STATEMENTS.................................. 23
4.20. ADDITIONAL MORTGAGES........................................... 23
4.21. INTELLECTUAL PROPERTY.......................................... 23
4.22. COMMERCIAL TORT CLAIMS......................................... 23
4.23. OFAC........................................................... 23
4.24. APPRAISALS..................................................... 23
V. REPRESENTATIONS AND WARRANTIES........................................ 24
5.1. AUTHORITY...................................................... 24
5.2. FORMATION AND QUALIFICATION.................................... 24
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5.3. TAX RETURNS.................................................... 25
5.4. FINANCIAL STATEMENTS........................................... 25
5.5. NAME........................................................... 25
5.6. OSHA AND ENVIRONMENTAL COMPLIANCE.............................. 25
5.7. SOLVENCY....................................................... 26
5.8. LITIGATION..................................................... 27
5.9. NO INDEBTEDNESS................................................ 27
5.10. VIOLATIONS..................................................... 27
5.11. PLANS.......................................................... 27
5.12. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES................... 28
5.13. LICENSES AND PERMITS........................................... 28
5.14. NO DEFAULT OF INDEBTEDNESS..................................... 28
5.15. NO OTHER DEFAULTS.............................................. 28
5.16. NO BURDENSOME RESTRICTIONS..................................... 28
5.17. NO LABOR DISPUTES.............................................. 29
5.18. MARGIN REGULATIONS............................................. 29
5.19. INVESTMENT COMPANY ACT......................................... 29
5.20. DISCLOSURE..................................................... 29
5.21. NO CONFLICTING AGREEMENTS OR ORDERS............................ 29
5.22. APPLICATION OF CERTAIN LAWS AND REGULATIONS.................... 29
5.23. HEDGE CONTRACTS................................................ 29
5.24. REAL PROPERTY.................................................. 29
5.25. DEPOSIT ACCOUNTS............................................... 29
5.26. BROKERS........................................................ 29
5.27. OFAC........................................................... 30
5.28. SENIOR DEBT.................................................... 30
VI. AFFIRMATIVE COVENANTS................................................ 30
6.1. PAYMENT OF FEES................................................ 30
6.2. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS.... 30
6.3. VIOLATIONS..................................................... 30
6.4. GOVERNMENT RECEIVABLES......................................... 30
6.5. EXECUTION OF SUPPLEMENTAL INSTRUMENTS.......................... 31
6.6. PAYMENT OF MATERIAL AGREEMENTS................................. 31
6.7. STANDARDS OF FINANCIAL STATEMENTS.............................. 31
6.8. FURTHER ASSURANCES, POST CLOSING............................... 31
VII. NEGATIVE COVENANTS.................................................. 31
7.1. SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC........ 31
7.2. ENCUMBRANCES................................................... 33
7.3. INDEBTEDNESS................................................... 35
7.4. LOANS, INVESTMENTS, ETC........................................ 38
7.5. DIVIDENDS AND REDEMPTIONS...................................... 40
7.6. NATURE OF BUSINESS............................................. 41
7.7. TRANSACTIONS WITH AFFILIATES................................... 41
7.8. SUBSIDIARIES................................................... 42
7.9. FISCAL YEAR AND ACCOUNTING CHANGES............................. 42
7.10. PLEDGE OF CREDIT............................................... 42
7.11. AMENDMENT OF MATERIAL AGREEMENTS............................... 42
7.12. COMPLIANCE WITH ERISA.......................................... 42
7.13. PREPAYMENT OF INDEBTEDNESS..................................... 43
7.14. PAYMENT OF SUBORDINATED DEBT................................... 43
VIII. FINANCIAL COVENANTS................................................ 43
8.1. CONTROLLING DEFINITIONS........................................ 44
8.2. FIXED CHARGE COVERAGE RATIO.................................... 46
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8.3. CAPITAL EXPENDITURES........................................... 46
8.4. LEVERAGE RATIO................................................. 46
IX. CONDITIONS PRECEDENT................................................. 46
9.1. CONDITIONS TO THE TERM LOAN.................................... 46
X. INFORMATION AS TO BORROWERS........................................... 51
10.1. DISCLOSURE OF MATERIAL MATTERS................................. 51
10.2. ENVIRONMENTAL COMPLIANCE CERTIFICATE........................... 51
10.3. LITIGATION..................................................... 51
10.4. MATERIAL OCCURRENCES........................................... 51
10.5. GOVERNMENT RECEIVABLES......................................... 51
10.6. ANNUAL FINANCIAL STATEMENTS.................................... 52
10.7. MONTHLY FINANCIAL STATEMENTS................................... 52
10.8. PROJECTIONS.................................................... 52
10.9. VARIANCES FROM OPERATING BUDGET................................ 53
10.10. NOTICE OF ADVERSE EVENTS....................................... 53
10.11. ERISA NOTICES AND REQUESTS..................................... 53
10.12. MATERIAL INTELLECTUAL PROPERTY................................. 53
10.13. PUBLIC REPORTS................................................. 54
10.14. MATERIAL AGREEMENTS............................................ 54
10.15. ADDITIONAL INFORMATION......................................... 54
10.16. ADDITIONAL DOCUMENTS........................................... 54
XI. EVENTS OF DEFAULT.................................................... 54
11.1. OBLIGATIONS.................................................... 54
11.2. MISREPRESENTATIONS............................................. 55
11.3. FINANCIAL INFORMATION.......................................... 55
11.4. LIENS.......................................................... 55
11.5. COVENANTS...................................................... 55
11.6. JUDGMENTS...................................................... 55
11.7. VOLUNTARY BANKRUPTCY........................................... 55
11.8. CESSATION OF BUSINESS.......................................... 55
11.9. INVOLUNTARY BANKRUPTCY......................................... 56
11.10. MATERIAL ADVERSE CHANGE........................................ 56
11.11. AGENT'S LIENS.................................................. 56
11.12. SUBORDINATED DEBT.............................................. 56
11.13. CROSS DEFAULT.................................................. 56
11.14. GUARANTY....................................................... 56
11.15. CHANGE OF CONTROL.............................................. 56
11.16. CHANGE OF MANAGEMENT........................................... 56
11.17. INVALIDITY..................................................... 56
11.18. TAKINGS........................................................ 56
11.19. SEIZURES....................................................... 57
11.20. CESSATION OF OPERATIONS........................................ 57
11.21. PLANS.......................................................... 57
11.22. CRIMINAL CHARGES............................................... 57
XII. AGENT'S LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.................. 57
12.1. RIGHTS AND REMEDIES............................................ 57
12.2. APPLICATION OF PROCEEDS........................................ 59
12.3. AGENT'S DISCRETION............................................. 59
12.4. SETOFF......................................................... 59
12.5. RIGHTS AND REMEDIES NOT EXCLUSIVE.............................. 60
XIII. WAIVERS AND JUDICIAL PROCEEDINGS................................... 60
iii
13.1. WAIVER OF NOTICE............................................... 60
13.2. DELAY.......................................................... 60
13.3. JURY WAIVER.................................................... 61
XIV. EFFECTIVE DATE AND TERMINATION...................................... 61
14.1. TERM........................................................... 61
14.2. TERMINATION.................................................... 61
XV. REGARDING AGENT...................................................... 62
15.1. APPOINTMENT.................................................... 62
15.2. NATURE OF DUTIES............................................... 62
15.3. LACK OF RELIANCE ON AGENT AND RESIGNATION...................... 63
15.4. CERTAIN RIGHTS OF AGENT........................................ 63
15.5. RELIANCE....................................................... 63
15.6. NOTICE OF DEFAULT.............................................. 64
15.7. INDEMNIFICATION................................................ 64
15.8. AGENT IN ITS INDIVIDUAL CAPACITY............................... 64
15.9. DELIVERY OF DOCUMENTS.......................................... 64
15.10. BORROWERS' UNDERTAKING TO AGENT................................ 64
15.11. DOCUMENTATION AGENT, ETC....................................... 65
15.12. TERM B LENDERS PURCHASE OPTION................................. 65
15.13. COLLATERAL MATTERS............................................. 66
XVI. BORROWING REPRESENTATIVE............................................ 67
16.1. BORROWING REPRESENTATIVE PROVISIONS............................ 67
16.2. WAIVER OF SUBROGATION.......................................... 68
XVII. MISCELLANEOUS...................................................... 68
17.1. GOVERNING LAW.................................................. 68
17.2. ENTIRE UNDERSTANDING; AMENDMENTS; WAIVERS; CONSENTS............ 69
17.3. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS............ 71
17.4. APPLICATION OF PAYMENTS........................................ 74
17.5. INDEMNITY...................................................... 74
17.6. NOTICE......................................................... 74
17.7. SURVIVAL....................................................... 76
17.8. SEVERABILITY................................................... 76
17.9. EXPENSES....................................................... 76
17.10. INJUNCTIVE RELIEF.............................................. 76
17.11. CONSEQUENTIAL DAMAGES.......................................... 77
17.12. CAPTIONS....................................................... 77
17.13. COUNTERPARTS; TELECOPIED SIGNATURES............................ 77
17.14. CONSTRUCTION................................................... 77
17.15. CONFIDENTIALITY................................................ 77
17.16. PUBLICITY...................................................... 78
17.17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES..................... 78
17.18. DESTRUCTION OF INVOICES........................................ 78
17.19. TIME........................................................... 78
17.20. RELEASE........................................................ 78
17.21. PATRIOT ACT.................................................... 78
iv
LOAN AND SECURITY AGREEMENT
PREAMBLE. This Loan and Security Agreement (herein, together with all
schedules and exhibits hereto, and as it may be amended or modified from time to
time, called this "Agreement"), dated as of May 31, 2006 (the "Signing Date"),
is made among: (i) LEXINGTON PRECISION CORPORATION, a Delaware corporation
("LPC" or "Parent Company"), and LEXINGTON RUBBER GROUP, INC., a Delaware
corporation ("LRG"; LRG and LPC herein sometimes called individually, "Initial
Borrower" and, collectively, if more than one, the "Initial Borrowers"; and
together with each other Person which, on or subsequent to the Closing Date,
agrees in writing to become a borrower hereunder, herein called, individually, a
"Borrower" and, collectively, the "Borrowers," and pending the inclusion by
written agreement of any other such Person, besides each Initial Borrower, as a
"Borrower" hereunder, all references herein to "Borrowers," "each Borrower," the
"applicable Borrower," "such Borrower" or any other, similar variations thereof
(whether singular or plural) shall all mean and refer to each Initial Borrower,
collectively); (ii) CSE MORTGAGE LLC, a Delaware limited liability company
("CSE"), together with any and all other Persons that are now, or that hereafter
become, party hereto, as lenders hereunder (collectively, the "Lenders" and,
individually, a "Lender"); and (iii) CSE, as collateral agent and administrative
agent for itself, each other such Lender and each other "Lender Party" (as
hereinafter defined) (CSE, when acting in such agency capacity, is herein called
the "Agent").
STATEMENT OF THE TRANSACTION. Capitalized terms used in this statement of
the transaction shall have the meanings ascribed to such terms in Section 1.2.
The Parent Company, acting on behalf of Borrowers, has applied to Agent and
Lenders for financing in the form of term loans to refinance the Existing Term
Lender Loans, the Cohanzick Debt and to pay closing costs associated herewith,
with any remainder to be used to supplement Borrowers' working capital needs, in
connection with the purchase or generation of receivables and inventory and for
other lawful purposes authorized by this Agreement. Agent and Lenders agreed to
provide this financing, subject, however, to the terms, covenants and conditions
hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and undertakings
herein contained, each Initial Borrower, each Lender and Agent, and each other
Lender party hereto from time to time, each intending to be legally bound
hereby, hereby covenant and agree as follows:
I. DEFINITIONS.
1.1. Accounting Terms. As used in this Agreement or any Other Document,
accounting terms not defined or partly defined (to the extent not fully defined)
in Section 1.2 or elsewhere in this Agreement shall have the respective meanings
given to them under GAAP; provided, however, whenever such accounting terms are
used for the purposes of determining compliance with the Financial Covenants,
such accounting terms shall be defined in accordance with GAAP as applied in
preparation of the Historical Financial Statements. Certain other definitions,
used in the determination of the Financial Covenants, are set forth in Section
8.1.
When applied to Borrowers and their Subsidiaries or Borrowers on a consolidated
basis, accounting terms shall mean Borrowers and their Subsidiaries on a
consolidated basis determined in accordance with GAAP.
1.2. General Terms. For purposes of this Agreement the following terms
shall have the following meanings: See Annex One attached hereto and by this
reference incorporated herein.
1.3. Uniform Commercial Code Terms. All terms used herein and defined in
the Uniform Commercial Code shall have the meaning given therein unless
otherwise defined herein. Without limitation of the foregoing, the terms
"accounts," "chattel paper," "instruments," "general intangibles," "payment
intangibles," "support obligations," "securities," "investment property,"
"documents," "commercial tort claims," "deposit accounts," "payment
intangibles," "software," "letter-of-credit rights," "inventory," "farm
products," "equipment" and "fixtures," as and when used in the description of
Collateral, shall have the meanings given to such terms in Articles 8 or 9 (as
applicable) of the Uniform Commercial Code.
1.4. Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any documents, instruments or agreements to which Agent, any
Lender or any Borrower is a party, including, without limitation, references to
any of the Other Documents, shall mean and include each of such documents,
instruments or agreements as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced in a manner
consistent with the terms of this Agreement and the Intercreditor Agreement.
References herein or in any Other Documents to any actions being taken (or
omitted to be taken) by any Lender Party after a Default or Event of Default has
occurred shall mean that such action may be taken (or omitted to be taken) only
during the continuation of such Default or Event of Default. The words "to
Borrowers' knowledge" (or words to similar effect), shall mean the knowledge of
Borrowers' officers or employees charged with responsibility for the matter in
question, obtained (or which should reasonably have been expected to have been
obtained) after due inquiry. Unless otherwise expressly provided herein or in
any Other Documents, all references to time herein and in any Other Documents
shall mean and refer to New York time.
II. TERM LOANS; PAYMENTS
2.1. Term Loans.
(a) Term Loan A. Subject to the terms and conditions of this
Agreement, each Term A Lender, severally and not jointly, will make available to
Borrowers a portion of the Term Loan A in a sum equal to such Lender's Term Loan
A Commitment. The Term Loan A shall be advanced, in a single disbursement, in
the entire amount thereof, on the Closing Date. The principal amount of the Term
Loan A shall be repaid in monthly installments equal in
2
amount to Sixty-One Thousand One Hundred Eleven Dollars and 11/100 ($61,111.11)
each, beginning on September 1, 2006, and continuing on the same day of each
succeeding calendar month, with the entire remaining principal balance thereof
being due and payable, in full, upon the expiration of the Term; subject,
however, to acceleration upon (or following) the occurrence of an Event of
Default and during its continuation as provided herein. A portion of the Term
Loan A proceeds are being paid to the Existing Term Lenders to enable the Term A
Lenders to purchase the Existing Term Lender Loans by assignment and the
remainder of the Term Loan A proceeds (the "New Loans") are being advanced to
the Borrowers for the purposes set forth in this Agreement. This Agreement
modifies, amends and restates, in their entirety, the terms, covenants and
provisions of the Existing Term Lender Note and combines and consolidates the
Existing Term Lender Loans with the New Loans, all on the terms and conditions
set forth in this Agreement.
(b) Term Loan B. Subject to the terms and conditions of this
Agreement, each Term B Lender, severally and not jointly, will make available to
Borrowers a portion of the Term Loan B in a sum equal to such Lender's Term Loan
B Commitment. The Term Loan B shall be advanced, in a single disbursement, in
the entire amount thereof, on the Closing Date. The entire principal balance of
the Term Loan B shall be due and payable, in full, upon the expiration of the
Term; subject, however, to acceleration upon (or following) the occurrence of an
Event of Default and during its continuation as provided herein.
2.2. Voluntary Prepayments. The Term Loans may be voluntarily prepaid, in
whole or in part, at any time or from time to time, provided, however, that: (i)
Agent receives at least five (5) Business Days advance written notice of any
intended prepayment; (ii) unless otherwise permitted by Agent, any partial
prepayments shall be made (A) only on a date prescribed above for the payment of
principal installments of the Term Loan being prepaid, and (B) only in an amount
equal to Two Hundred Thousand Dollars ($200,000) or any larger integral multiple
of One Hundred Thousand Dollars ($100,000); (iii) any partial prepayments of the
Term Loan A shall be applied to the principal installments of the Term Loan A
then remaining to be repaid in the reverse order of their respective maturities
(beginning with the final payment); (iv) any full prepayment of the principal
balance of any Term Loan shall be accompanied by the payment of accrued interest
thereon through the date of prepayment and (v) the Borrowers may not voluntarily
prepay the Term Loan B, unless (A) the Term Loan A and Equipment Term Loan (as
defined in the Revolver Loan Agreement) have been repaid in full in cash or (B)
(x) the Borrowers comply with the Restricted Payment Conditions with respect to
any such prepayment and (y) prior to making any such prepayment, the Borrowers
have made voluntary prepayments under this Section 2.2 and/or mandatory
prepayments under Section 2.3, in each case, in respect of Term Loan A, in an
aggregate amount equal to at least $3,000,000.
2.3. Mandatory Prepayments. Notwithstanding the provisions of Section 2.1
hereof:
(a) Subject to subsection (c) below, upon the receipt by any Borrower
or any of its Subsidiaries of any Extraordinary Receipts (excepting therefrom
any proceeds of Non-Real Property Collateral, to the extent payable and paid to
the Revolver Agent for application to the Revolver Loan Debt in accordance with
the terms of the Intercreditor Agreement and subject thereto), Borrowers shall
pay to Agent an amount equal to one hundred percent (100%) of such Extraordinary
Receipts, net of any reasonable expenses incurred in collecting such
Extraordinary
3
Receipts, which payments shall be applied to the Obligations in the manner
specified in subsection (f) below;
(b) Upon the sale or disposition of any Collateral by any Borrower or
any of its Subsidiaries as permitted in clauses (ii) and (vi) of Section 7.1(b)
hereof (excepting therefrom any proceeds of Non-Real Property Collateral, to the
extent payable and paid to the Revolver Agent for application to the Revolver
Loan Debt in accordance with the terms of the Revolver Loan Agreement and
subject to the provisions of the Intercreditor Agreement in regard thereto),
Borrowers shall pay to Agent an amount equal to one hundred percent (100%) of
the Net Cash Proceeds received by any such Borrower or Subsidiary in connection
therewith, which payments shall be applied to the Obligations in the manner
specified in subsection (f) below;
(c) Notwithstanding subsection (a) above, if any of the Equipment or
Real Property is damaged or physically destroyed or otherwise suffers a
casualty, upon the written request of Borrowing Representative, which shall be
made not less than five (5) Business Days after such casualty occurs, Agent
shall release to Borrowing Representative Extraordinary Receipts consisting of
proceeds from insurance policies covering such damage, destruction or casualty
that are received by Agent pursuant to Section 4.11 hereof or otherwise, to the
extent a Borrower elects to apply such Extraordinary Receipts to the repair,
refurbishment or replacement of the Equipment or Real Property that has been
damaged, destroyed or otherwise suffered a casualty, provided, however, that,
all of the following conditions are satisfied: (i) no Default or Event of
Default shall have occurred and be continuing, (ii) the amount of the insurance
proceeds (together with any deductible to be satisfied by a Borrower) are
sufficient, in Agent's good faith determination, to permit such repair,
refurbishment or replacement to be made in a satisfactory manner, (iii) such
proceeds shall be used solely to repair, refurbish or replace the Equipment or
Real Property that has been damaged, destroyed or suffered casualty (free and
clear of any security interests, Liens, claims or encumbrances), (iv) such
repair, refurbishment or replacement shall be commenced by Borrowers as soon as
is reasonably practicable after such damage, destruction or casualty has
occurred and shall be diligently pursued by Borrowers to satisfactory
completion, and (v) the repair, refurbishment or replacement to which such
proceeds are applied shall cause the value of the Equipment or Real Property
that is being repaired, refurbished or replaced to be not less than the value
thereof prior to such damage, destruction or other casualty occurring; provided,
further, however, that the amount of such Extraordinary Receipts that may be
released to Borrowers in respect of any such damage, destruction or other
casualty loss for the repair, refurbishment or replacement of Equipment or Real
Property shall not exceed the Materiality Threshold. Pending any release of such
Extraordinary Receipts to Borrowing Representative pursuant to this subsection
(c), Agent shall hold such Extraordinary Receipts as cash Collateral. Any
Extraordinary Receipts applied to repair, refurbish or replace Equipment or Real
Property pursuant to and in accordance with this subsection (c) shall not be
deemed Capital Expenditures for purposes of this Agreement.
(d) Notwithstanding subsection (b) above, upon the written request of
the Borrowing Representative, which shall be made not less than ten (10)
Business Days after any sale or other disposition of Collateral permitted by
clauses (ii) and (vi) of Section 7.1(b) has occurred, Borrowers shall be
entitled to use, and Agent shall release to Borrowers, such Net Cash Proceeds in
an amount not to exceed, the Materiality Threshold, to purchase Equipment or
Real Property used or useful in Borrowers' business, provided, however, that all
of the following
4
conditions are satisfied: (i) no Default or Event of Default shall have occurred
and be continuing, (ii) any such Net Cash Proceeds not so used within one
hundred eighty (180) days after release shall be immediately remitted to Agent
for application to the Obligations as provided in Section 2.3(f) below
(excepting therefrom any proceeds of Non-Real Property Collateral, to the extent
payable and paid to the Revolver Agent for application to the Revolver Loan Debt
in accordance with the terms of the Intercreditor Agreement and subject
thereto), and (iii) Agent, for itself and the benefit of Lenders, shall have a
valid and perfected first priority Lien on and security interest in such
replacement or new Equipment or Real Property. Pending any release of such Net
Cash Proceeds to Borrowing Representative pursuant to this subsection (d), such
proceeds received by Agent shall continue to be held as cash Collateral. Any Net
Cash Proceeds reinvested by a Borrower pursuant to and in accordance with this
subsection (d) shall not be deemed to be Capital Expenditures for purposes of
this Agreement.
(e) Upon delivery to Agent of the financial statements referred to in
and required by Section 10.6 for each Fiscal Year of the Borrowers (commencing
with the first Fiscal Year ending subsequent to the Closing Date) but in any
event not later than one hundred (100) days after the end of each such Fiscal
Year, Borrowers shall pay to Agent fifty percent (50%) of Excess Cash Flow for
such Fiscal Year, which payments shall be applied to the Obligations in the
manner specified in subsection (f) below. In the event that the aforesaid
financial statement is not so delivered, then a calculation based upon estimated
amounts shall be made by Agent upon which calculation Borrowers shall make the
prepayment required by this Section, subject to adjustment when the financial
statement is delivered to Agent as required hereby. The calculation made by
Agent shall not be deemed a waiver of any rights of Agent or any Lender or may
have as a result of the failure by Borrowers to deliver such financial
statement.
(f) Proceeds of mandatory prepayments made pursuant to subsections
(a), (b), (d) and (e) above shall be applied by Agent, when received: first, to
pay any Obligations then due and owing in respect of the Term Loan A (other than
principal); second, to repay the principal amount of the Term Loan A, with such
prepayment to be applied to the then remaining installments of the Term Loan A
in the reverse order of their respective maturities (beginning with the final
payment); third, to the Revolver Loan Agent for application to the Revolver Loan
Debt to the extent required pursuant to the Revolver Loan Agreement and in the
manner set forth therein; fourth, to pay any Obligations then due and owing in
respect of the Term Loan B (other than principal); fifth, to repay the principal
amount of the Term Loan B, and, last, any remainder thereof shall be paid to
Borrowers or as Borrowing Representative directs.
(g) Nothing contained in this Section 2.3 shall be deemed to be a
consent by Agent and Lenders to the sale or disposition of any Collateral except
as expressly permitted in this Agreement.
(h) If an Event of Default has occurred and is continuing, at the
option of Agent, or at the direction of the Required Lenders, any Extraordinary
Receipts or Net Cash Proceeds from any sale or other disposition of any
Equipment or Real Property shall be applied, instead, as provided in Section
12.2.
2.4. Statement of Account; Evidence of Loans.
5
(a) Agent shall maintain on its books, in accordance with its
customary procedures, a loan account in the name of Borrowers ("Borrowers'
Account") in which shall be recorded each Lender's pro rata share of the Term
Loans once made, the date and amount of each payment in respect of the Term
Loans (whether of principal or accrued interest), any charges that may be made
to Borrowers' Account pursuant hereto, and the payment of such charges;
provided, however, the failure by Agent to record the date and amount of such
sums shall not adversely affect the rights of Agent or any Lender, or Borrowers'
obligations in regard thereto. Promptly after the end of each calendar month,
Agent shall send to Borrowing Representative a statement showing the accounting
for the Term Loans, any charges to Borrowers' Account made pursuant hereto, any
payments made or credited in respect thereof and any other transactions
occurring between or among Agent, Lenders and Borrowers pursuant to this
Agreement or any Other Document during such month. Any charges made to
Borrowers' Account and reflected on such statement shall be due and payable by
Borrowers within ten (10) days after Borrowers' receipt of such statement and
shall bear interest at the Applicable Rate until paid in full. The monthly
statements shall be deemed correct and binding upon Borrowers in the absence of
manifest error and shall constitute an account stated between Lenders and
Borrowers unless Agent receives a written statement of Borrowers' specific
exceptions thereto within sixty (60) days after such statement is received by
Borrowing Representative. The records of Agent with respect to Borrowers'
Account shall be conclusive evidence of the amounts of the Term Loans, any
charges made to Borrowers' Account, any interest thereon, and any payments
thereon, absent manifest error.
(b) Each Borrower agrees that:
(i) upon written notice by any Lender to the Borrowing
Representative that a promissory note or other evidence of indebtedness is
requested by such Lender to evidence any Term Loan and other Obligations owing
or payable to, or to be made by, such Lender, the Borrowers shall promptly (and
in any event within three (3) Business Days following the later of (x) any such
request and (y) delivery by Agent of the form of promissory note pursuant to
this Section 2.4(b)) execute and deliver to such Lender an appropriate
promissory note or notes in form and substance reasonably acceptable to such
Lender and Borrowers, payable to the order of such Lender in a principal amount
equal to the portion of the applicable Term Loan owing or payable to Lender;
(ii) all references to Notes in this Agreement and the Other
Documents shall mean the Notes, if any, to the extent issued (and not returned
to the Borrowers for cancellation) hereunder, as the same may be amended,
modified, divided, supplemented and/or restated from time to time; and
(iii) upon any Lender's written request, and in any event within
three (3) Business Days of any such request, Borrowers shall execute and deliver
to such Lender new Notes and/or divide the Notes in exchange for then existing
notes in such smaller amounts or denominations as such Lender shall specify in
its sole and absolute discretion; provided, that the aggregate principal amount
of such new Notes shall not exceed the aggregate principal amount of the Notes
outstanding at the time such request is made; and provided, further, that such
Notes that are to be replaced shall then be deemed no longer outstanding
hereunder and replaced by
6
such new Notes and shall be returned to the Borrowers promptly upon such
Lender's receipt of the replacement notes.
III. INTEREST AND FEES.
3.1. Interest.
(a) Interest on the Term Loan A shall be payable to Agent for the
benefit of Term A Lenders monthly in arrears on the first day of each month,
commencing on July 1, 2006. Interest charges shall be computed on the actual
principal amount of the Term Loan A outstanding during each interest assessment
period described above at the Applicable Term Loan A Rate; provided, however,
that after the occurrence of an Event of Default and during the continuation
thereof, at the option of Agent or at the direction of the Required Term A
Lenders, the Term Loan A shall bear interest, instead, at the Default Rate.
(b) Interest on the Term Loan B shall be payable to Agent for the
benefit of Term B Lenders monthly in arrears on the first day of each calendar
month, commencing on July 1, 2006. Interest charges shall be computed on the
actual principal amount of the Term Loan B outstanding during each interest
assessment period described above at the Applicable Term Loan B Rate; provided,
however, that after the occurrence of an Event of Default and during the
continuation thereof, at the option of Agent or at the direction of the Required
Term B Lenders, the Term Loan B shall bear interest, instead, at the Default
Rate.
3.2. Fee Letters. Borrowers shall pay to (x) Agent, for its account, the
amounts required to be paid in the CSE Fee Letter in the manner and at the times
required by the CSE Fee Letter and (y) DMD, for its account, the amounts
required to be paid in the DMD Fee Letter in the manner and at the times
required by the DMD Fee Letter.
3.3. Computation of Interest. Interest payable hereunder shall be computed
on the basis of a year of 360 days and for the actual number of days elapsed. If
any payment to be made hereunder becomes due and payable on a day other than a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and interest thereon shall continue to be payable at the Applicable
Rate during such extension; provided, however, that the foregoing extension
shall not be considered when determining Borrowers' ongoing compliance with
Financial Covenants that concern or include scheduled principal payments within
specified dates.
3.4. Maximum Charges. In no event shall interest and any other charges
hereunder exceed the highest rate permissible under applicable law. In the event
interest or any other charges hereunder would otherwise exceed the highest rate
permitted under applicable law the provisions hereof shall be deemed amended to
provide for interest or such other charges to be charged at the highest
permissible rate; any excess amount shall be applied to the principal balance of
the applicable Term Loan, unless and until it is paid in full; and, if there is
any excess remaining, Agent shall promptly refund such excess to Borrowers.
3.5. Intentionally Omitted.
7
3.6. Increased Costs. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.6, the term "Lender" shall include any corporation or bank controlling any
Lender) and the office or branch where any Lender (as so defined) makes or
maintains its pro rata share of the Term Loans with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other authority, shall:
(a) subject any Lender to any tax of any kind whatsoever with respect
to this Agreement or any Other Document or change the basis of taxation of
payments to any Lender of principal, fees, interest or any other amount payable
hereunder or under any Other Documents (except for changes in the rate of tax on
the overall net income of any Lender);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
any Lender, including (without limitation) pursuant to Regulation D of the Board
of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank Eurodollar
market any other condition with respect to this Agreement or any Other Document;
and the result of any of the foregoing is to increase the cost to any Lender of
making, renewing or maintaining its pro rata share of any Term Loan by an amount
that such Lender deems to be material or to reduce the amount of any payment
(whether of principal, interest or otherwise) in respect of its pro rata share
of any Term Loan by an amount that such Lender deems to be material, then, each
and any such case, Borrowers shall promptly pay such Lender, upon its demand
(but not more than ten (10) days after Borrowers' receipt of such demand and the
certificate of such Lender in regard thereto described below), such additional
amount as will compensate such Lender for such additional cost or such
reduction, as the case may be, provided that the foregoing shall not apply to
increased costs that are already reflected in the calculation of the Applicable
Rate. Such Lender shall certify the amount of such additional cost or reduced
amount, and the basis for such calculations, to Borrowers, and such
certification shall be conclusive absent manifest error.
3.7. Capital Adequacy. In the event that any Lender shall have determined
that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (for purposes of this Section, the term "Lender" shall include any
corporation or bank controlling any Lender) and the office or branch where any
Lender (as so defined) makes or maintains its pro rate share of any Term Loan
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on any Lender's capital
as a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender to be material, then, from time to time,
Borrowers shall promptly pay such Lender
8
upon its demand (but not more than ten (10) days after Borrowers' receipt of
such demand and the certificate of such Lender in regard thereto described
below) such additional amount or amounts as will compensate such Lender for such
reduction. In determining such amount or amounts, such Lender may use any
reasonable averaging or attribution method. The protection of this Section shall
be available to each Lender regardless of any possible contention that the
applicable law, regulation or condition is invalid or inapplicable. Such Lender
shall certify the amount necessary to compensate such Lender with respect to
this Section, and the basis for such calculations, to Borrowers, and such
certification shall be conclusive absent manifest error.
3.8. Prepayment Premium.
(a) If, on or prior to the second anniversary of the Closing Date, the
Term Loan A (i) is voluntarily prepaid, in whole or in part; or (ii) is subject
to mandatory prepayment (except for prepayments related to any Permitted PP&E
Dispositions or, to the extent provided in Section 2.3(c), 2.3(d) or 2.3(e)),
whether pursuant to Section 2.3 or Section 12.1(a) (by virtue of acceleration),
then, there shall be due and payable to Agent, for the benefit of Term A
Lenders, a prepayment premium equal in amount to the following percentage of the
principal amount of the Term Loan A that is voluntarily prepaid or becomes
subject to mandatory prepayment: (i) two percent (2%), if such prepayment is
made or becomes due and payable after the Closing Date but on or prior to the
first anniversary of the Closing Date and (ii) one percent (1%), if such
prepayment is made or becomes due and payable after the first anniversary of the
Closing Date but on or prior to the second anniversary of the Closing Date.
(b) If, on or prior to the second anniversary of the Closing Date, the
Term Loan B (i) is, subject to the limitations set forth in Section 2.2,
voluntarily prepaid, in whole or in part; or (ii) is subject to mandatory
prepayment (except for prepayments related to any Permitted PP&E Dispositions
or, to the extent provided in Section 2.3(c), 2.3(d) or 2.3(e)), whether
pursuant to Section 2.3 or Section 12.1(a) (by virtue of acceleration), then,
there shall be due and payable to Agent, for the benefit of Term B Lenders, a
prepayment premium equal in amount to the following percentage of the principal
amount of the Term Loan B that is voluntarily prepaid or becomes subject to
mandatory prepayment: (i) two percent (2%), if such prepayment is made or
becomes due and payable after the Closing Date but on or prior to the first
anniversary of the Closing Date and (ii) one percent (1%), if such prepayment is
made or becomes due and payable after the first anniversary of the Closing Date
but on or prior to the second anniversary of the Closing Date.
IV. COLLATERAL; GENERAL TERMS.
4.1. Security Interest in the Collateral. To secure the prompt payment and
performance to each Lender Party of the Obligations, each Borrower hereby
assigns, pledges and grants to Agent for the ratable benefit of the Lender
Parties, a continuing security interest in and to all of the Collateral, whether
now owned or existing or hereafter acquired or arising and wheresoever located.
Notwithstanding the foregoing, the Mortgages on the Real Property Collateral
located in New York State shall be subject to the limitations set forth in such
Mortgages. Each Borrower shall xxxx its books and records as may be necessary or
appropriate
9
to evidence, protect and perfect Agent's security interest in the Collateral and
shall cause its financial statements to reflect the existence of such security
interest.
4.2. Perfection of Security Interest.
(a) Borrowers shall take all action that Agent may request from time
to time so as at all times to maintain the validity, perfection, enforceability
and priority of Agent's security interest in the Collateral or to enable Agent
to protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to, (i) immediately discharging all Liens thereon
other than Permitted Encumbrances, (ii) using reasonable efforts to obtain
landlords', warehouse operators', bailees' or mortgagees' lien waivers or
related agreements in respect of premises where any Equipment or Inventory is
located, (iii) delivering to Agent, endorsed or accompanied by such instruments
of assignment as Agent may specify, and stamping or marking, in such manner as
Agent may specify, any and all Securities, chattel paper, instruments, letters
of credit and advices thereof and documents evidencing or forming a part of the
Collateral, (iv) entering into warehousing, lockbox and other custodial
arrangements reasonably satisfactory to Agent, (v) executing (as appropriate)
and delivering authorizations for the recording of financing statements,
instruments of pledge, mortgages, notices and assignments, in each case in form
and substance satisfactory to Agent, relating to the creation, validity,
perfection, maintenance or continuation of Agent's security interest under the
Uniform Commercial Code or other applicable law; (vi) using reasonable efforts
to obtain acknowledgments, in form and substance satisfactory to Agent, from any
bailee having possession of any Collateral at any time, stating that the bailee
holds such Collateral on behalf of Agent, (vii) obtaining "control" of any
investment property, deposit account, letter-of-credit right or electronic
chattel paper (the term "control" as used in respect of the foregoing types of
Collateral having the meaning set forth in Articles 8 and 9 of the UCC), with
any agreements establishing such "control" to be in form and substance
satisfactory to Agent, and (viii) if a Borrower at any time has or acquires a
Commercial Tort Claim, such Borrower shall promptly notify Agent thereof, in
writing, and grant a specific collateral assignment of such claim to Agent as
additional Collateral. Notwithstanding the foregoing provisions of this
subsection (a), Borrowers shall not be required to obtain or to use their
reasonable efforts to obtain warehouse operators,' bailees' or landlords'
agreements or acknowledgments or related agreements in respect of premises where
(i) Inventory is located to the extent that any Inventory in the possession of a
warehouse operator or bailee or located, on leased premises is not included as
Eligible Inventory or (ii) where Equipment is located, to the extent that the
Equipment in the possession of a warehouse operator or bailee or located on
leased premises has a fair market value that is less than the Materiality
Threshold; unless, in either case, Borrowers are requested by Agent to do so
after any Event of Default has occurred and during its continuation.
(b) Without limiting the generality of the foregoing, in the specific
case of Inventory in-transit to a Borrower from outside the continental United
States of America, if Borrowers desire to include such Inventory as Eligible
Inventory or otherwise promptly after, but in any event within five (5) Business
Days after, Agent's request, which may be made at any time after the occurrence
of an Event of Default and during its continuation, each Borrower shall (i)
deliver (or cause to be delivered) to Agent copies of all invoices, manifests
and documents of title pertaining to such Inventory promptly upon such
Borrower's receipt thereof, but in any event not later than five (5) Business
Days after receipt, (ii) cause all such documents of title to
10
be issued in the Agent's name, or to its order (or, if negotiable in form,
Borrower may, instead, cause such documents of title to be endorsed to Agent, or
in "blank") except to the extent issued to Revolver Loan Agent; (iii) provide
Agent with evidence of appropriate marine or like insurance in respect of the
transit of such Inventory to Borrower, and (iv) as necessary, provide Agent with
access or custodianship agreements from warehouse operators, consolidators,
customs house operators, customs brokers and other third parties to facilitate
Agent's control over, access to and/or repossession of, such in-transit
Inventory, including, without limitation, if requested by Agent, a customs agent
agreement in form and substance satisfactory to Agent.
(c) In addition thereto, but without limiting the generality of the
foregoing, in the specific case of Inventory of a Borrower that is consigned to
any Person, if Borrowers desire to include such Inventory as Eligible Inventory
or otherwise promptly after, but in any event within five (5) Business Days
after, Agent's request, which may be made at any time after an Event of Default
has occurred and during its continuation, such Borrower shall (i) file a UCC
financing statement in respect of such inventory naming itself as "consignor"
and such Person as "consignee" thereon, in the jurisdiction of such consignee's
incorporation (or organization), and assign such financing statement to Agent,
except to the extent assigned to Revolver Loan Agent, and (ii) cause such
consignee (and, if requested by Agent, any secured lender to, or landlord (or
mortgagee) of, such consignee to execute and deliver to Agent a bailee's letter
in form and content satisfactory to Agent in respect of such inventory.
(d) Agent is hereby authorized to file financing statements in
accordance with the applicable provisions of the UCC, including, without
limitation financing statements that describe the Collateral covered thereby as
"all personal property", "all assets" or words of similar effect, at any time or
from time to time hereafter, in any jurisdiction; and Borrowers hereby ratify,
approve and affirm the filing of any such financing statements heretofore filed
by Agent in respect of any Borrower (including any predecessor-in-interest
thereof). All charges, expenses and fees Agent may incur in doing any of the
foregoing, and any local taxes relating thereto, shall be charged to Borrowers'
Account.
(e) Borrowers acknowledge that from time to time Agent may act as
bailee (under the UCC) for the Revolver Loan Agent in respect of certain
Collateral, and hereby authorize Agent to do so and to turn over to Revolver
Loan Agent any such Collateral at its request subject to the provisions of the
Intercreditor Agreement.
4.3. Disposition of Collateral. Each Borrower will safeguard and protect
all Collateral for Agent's account and make no disposition thereof whether by
sale, lease or otherwise except as expressly provided in clauses (i), (ii) and
(vi) of Section 7.1(b) and, then, subject to Section 2.3 in respect of any Net
Cash Proceeds derived therefrom.
4.4. Preservation of Collateral. Following any demand by Agent for payment
of all Obligations due and owing pursuant to Section 12.1(a) hereof, subject to
the provisions of the Intercreditor Agreement, Agent: (a) may at any time take
such steps as Agent deems necessary to protect Agent's interest in and to
preserve the Collateral, including the hiring of such security guards or the
placing of other security protection measures as Agent may deem appropriate; (b)
may employ and maintain at any Borrower's premises a custodian who shall have
full authority to do all acts necessary to protect Agent's interests in the
Collateral; (c) may lease
11
warehouse facilities to which Agent may move all or part of the Collateral; (d)
may use any Borrower's owned or leased lifts, hoists, trucks and other
facilities or equipment for handling or removing the Collateral; and (e) shall
have, and is hereby granted, a right of ingress and egress to the places where
the Collateral is located, and may proceed over and through any Borrower's owned
or leased property (subject to the terms of any leases) to obtain such
Collateral. Each Borrower shall cooperate fully with all of Agent's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Agent may reasonably require. All of Agent's expenses of preserving the
Collateral, including any expenses relating to the bonding of a custodian, shall
be charged to Borrowers' Account.
4.5. Ownership of Collateral. With respect to the Collateral, at the time
the Collateral becomes subject to Agent's security interest: (a) each Borrower
shall be the sole owner, lessee or licensee (as applicable) of and fully
authorized and able to sell, transfer, pledge and/or grant a first priority
security interest in each and every item of its respective Collateral to Agent
(subject to Permitted Encumbrances); (b) except for Permitted Encumbrances, the
Collateral shall be free and clear of all Liens; (c) each document and agreement
constituting Collateral executed by each Borrower or delivered to any Lender
Party in connection with this Agreement shall be true and correct in all
material respects; (d) all signatures and endorsements of each Borrower that
appear on any such documents or agreements constituting Collateral shall be
genuine and each Borrower party thereto shall have full capacity to execute
same; and (e) each Borrower's Equipment and Inventory shall be located as set
forth on Schedule 4.5 or at such other locations within the United States of
America as Agent may receive notice of, and approve, from time to time pursuant
to Section 10.15 (all such locations herein called, collectively, the
"Collateral Locations" and, individually, a "Collateral Location"); and shall
not be removed from such Collateral Locations without the prior written consent
of Agent except in the case of (i) the sale of Inventory in the ordinary course
of business, (ii) the sale of Equipment to the extent permitted in Section 4.3
hereof, (iii) the movement of Equipment from one Collateral Location to another
Collateral Location, (iv) the movement of Equipment to the extent necessary for
its repair or maintenance; and (v) the movement of motor vehicles in the
ordinary course of Borrowers' business.
4.6. Defense of Agent's and Lenders' Interests. Unless and until (a)
payment and performance in full of all of the Obligations and (b) termination of
this Agreement, Agent's security interests in the Collateral shall continue in
full force and effect without interruption. During such periods no Borrower
shall pledge, sell, assign, transfer, create or suffer to exist a Lien upon or
encumber or allow or suffer to be encumbered any part of the Collateral in any
way, except for Permitted Encumbrances or as otherwise expressly permitted in
this Agreement. Each Borrower shall defend Agent's security interest in the
Collateral against any and all Persons (subject to Permitted Encumbrances). At
any time after an Event of Default has occurred and during its continuation,
Agent shall have the right to take possession of the indicia of the Collateral
and the Collateral in whatever physical form contained, including without
limitation, labels, stationery, documents, instruments and advertising
materials. If Agent exercises this right to take possession of the Collateral,
Borrowers shall, upon demand, assemble it and make it available to Agent at one
or more of the Collateral Locations, as Agent shall elect. In addition, with
respect to all Collateral, Agent and Lenders shall be entitled to all of the
rights and remedies provided herein and in the Other Documents, or under the
Uniform Commercial Code or other applicable law. In addition to the foregoing,
Agent may, at its option, instruct all suppliers,
12
carriers, forwarders, warehouses or others receiving or holding cash, checks,
Inventory, documents or instruments in which Agent holds a security interest to
deliver same to Agent and/or subject to Agent's order and if they shall come
into a Borrower's possession, they, and each of them, shall be held by such
Borrower in trust as Agent's trustee, and such Borrower will immediately deliver
them to Agent in their original form together with any necessary endorsement.
Taking any of the foregoing actions provided in this Section 4.6 shall be
subject, however, to the provisions of the Intercreditor Agreement.
4.7. Books and Records. Each Borrower shall (a) keep proper books of record
and account in which full, true and correct entries will be made of all dealings
or transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied.
4.8. Financial and Other Disclosure. Each Borrower hereby irrevocably
authorizes and directs the Accountants and all other accountants and auditors
employed by such Borrower at any time during the Term to exhibit and deliver to
Agent copies of any of the Borrower's financial statements, trial balances or
other accounting records of any sort in the possession of such Person and to
disclose to Agent any information such Person may have concerning such
Borrower's financial status and business operations. In respect of the
foregoing, Borrowing Representative shall execute and deliver to the Accountants
on the Closing Date (and, if such Accountants are changed by Borrowers
subsequent to the Closing Date, then, to Borrowers' new Accountants), a letter
directing them to act in the manner provided hereinabove when requested by
Agent, such letter to be in form and substance reasonably satisfactory to Agent.
4.9. Compliance with Laws. Each Borrower shall comply in all material
respects with all acts, rules, regulations and orders of any Governmental
Authority applicable to the Collateral or any part thereof or to the operation
of such Borrower's business the non-compliance with which, in each instance,
could reasonably be expected to have a Material Adverse Effect. Each Borrower
may, however, contest or dispute any acts, rules, regulations, orders and
directions of any Governmental Authority in any reasonable manner, provided that
any related Lien is inchoate or stayed and sufficient reserves are established
to the reasonable satisfaction of Agent to protect Agent's Lien on the
Collateral.
4.10. Inspection of Premises. During normal business hours and upon at
least one (1) Business Day's prior notice (unless a Default or an Event of
Default has occurred and is then continuing), Agent and each Lender Party and
their agents shall have full access to and the right to audit, check, inspect
and make abstracts and copies from each Borrower's books, records, audits,
correspondence and all other papers relating to the Collateral and the operation
of each Borrower's business. During normal business hours and upon at least one
(1) Business Day's prior notice (unless a Default or Event of Default has
occurred and is then continuing) Agent, each Lender Party and their agents may
enter upon any Borrower's business premises from time
13
to time for the purpose of inspecting the Collateral and any and all records
pertaining thereto and the operation of such Borrower's business. Borrowers
shall reimburse Agent and each Lender Party for all reasonable costs incurred by
them in respect of the foregoing. All of such costs shall be charged to
Borrowers' Account.
4.11. Insurance. Each Borrower shall bear the full risk of any loss of any
nature whatsoever with respect to the Collateral. Each Borrower shall, at its
own cost and expense, in amounts and with carriers acceptable to Agent (a) keep
all its insurable properties and properties in which each Borrower has an
interest insured against the hazards of fire, flood (under the circumstances
described below), sprinkler leakage, those hazards covered by extended coverage
insurance and such other hazards, and for such amounts, as is customary in the
case of companies engaged in businesses similar to such Borrower's including,
without limitation, products liability insurance, insurance against theft,
larceny, embezzlement and misappropriation of funds, and business interruption
insurance; (b) maintain a bond or other surety in such amounts as is customary
in the case of companies engaged in businesses similar to such Borrower insuring
against larceny, embezzlement or other criminal misappropriation of insured's
officers and employees who may either singly or jointly with others at any time
have access to the assets or funds of such Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; and (d) maintain
all such worker's compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which Borrower is engaged in business.
Without limitation of the foregoing, if as of the Closing Date or at any time
thereafter Agent determines that all or a portion of the improvements situated
on any Real Property Collateral are located within a "Special Flood Hazard Area"
(as designated by the applicable Governmental Authority), Borrowers shall ensure
that flood insurance is obtained and maintained with respect to such Real
Property Collateral for the Term at Borrowers' expense in a form, amount and
from an issuing company reasonably acceptable to Agent. Each Borrower shall
furnish Agent with (i) copies of all policies and evidence of the maintenance of
such policies by the renewal thereof at least thirty (30) days before any
expiration date, and (ii) appropriate loss payable endorsements in form and
substance satisfactory to Agent, naming Agent as a co-insured in regard to
liability insurance and loss payee as its interests may appear in regard to
casualty or property coverage, to the extent affecting or relating to
Collateral, and providing (A) that, subject to any overriding provisions of the
Intercreditor Agreement, all proceeds thereunder shall be payable to Agent, (B)
no such insurance shall be affected by any act or neglect of the insured or
owner of the property described in such policy, and (C) that such policy and
loss payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days' prior written notice is given to Agent. In the event of any
loss thereunder, subject to the provisions of the Intercreditor Agreement, the
carriers named therein are hereby directed by Agent and the applicable Borrower
to make payment for such loss to Agent and not to such Borrower and Agent
jointly. If any insurance losses are paid by check, draft or other instrument
payable to any Borrower and Agent jointly, Agent may endorse such Borrower's
name thereon and do such other things as Agent may deem advisable to reduce the
same to cash. During the continuation of an Event of Default, Agent is hereby
authorized, subject to the provisions of the Intercreditor Agreement, to adjust
and compromise claims under insurance coverage referred to above. All loss
recoveries received by Agent upon any such insurance shall, except as otherwise
provided in the Intercreditor Agreement, either be paid over to Borrowers or
applied by the Agent as follows: (i) if no Event
14
of Default or Default has occurred and is then continuing, and the loss recovery
so received by Agent is less than or equal to the Materiality Threshold, then,
Agent shall remit such loss recovery to the Borrowers for use in the restoration
of the loss in accordance with Section 2.3(c); (ii) if no Event of Default or
Default has occurred and is then continuing, and the loss recovery received by
Agent is more than the Materiality Threshold, then, Agent shall apply such loss
recovery to the Obligations in accordance with Section 2.3(a), and (iii) if any
Event of Default or Default has occurred and is then continuing, then, Agent
shall receive and apply such loss recovery to the Obligations in such order as
Agent, in its sole discretion, shall determine consistent with the terms of
Section 12.2 of this Agreement. Any surplus of such proceeds remaining after
such application, shall, subject to the provisions of the Intercreditor
Agreement, be paid by Agent to Borrowers or applied as may be otherwise required
by law. Anything hereinabove to the contrary notwithstanding, Agent shall not be
obligated to remit any insurance proceeds to Borrowers unless Borrowers shall
have provided Agent with evidence reasonably satisfactory to Agent that the
insurance proceeds will be used by Borrowers to repair, replace or restore the
insured property which was the subject of the insurable loss in accordance with
Section 2.3(c). The Collateral shall at all times be maintained in accordance
with the requirements of all insurance carriers that provide insurance with
respect to the Collateral so that such insurance shall remain in full force and
effect. If any Borrower fails to obtain insurance as hereinabove provided, or to
keep the same in force, Agent, if Agent so elects, may obtain such insurance,
pay the premium therefor and charge Borrowers' Account for the amount thereof.
4.12. Payment of Taxes. Each Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Borrower or
any of the Collateral, including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between any
Borrower and Agent or any Lender which Agent or any Lender may be required to
withhold or pay or if any taxes, assessments, or other Charges remain unpaid
after the date fixed for their payment, or if any claim shall be made that, in
Agent's or any Lender's opinion, may possibly create a valid Lien on the
Collateral, Agent may, unless the Borrowers have done so within five (5)
Business Days after the Borrowing Representative receives written demand from
the Agent that they do so, pay the taxes, assessments or other Charges and each
Borrower hereby indemnifies and holds Agent and each Lender harmless in respect
thereof. Agent will not pay any taxes, assessments or Charges to the extent that
any Borrower has contested or disputed those taxes, assessments or Charges in
good faith, by expeditious protest, administrative or judicial appeal or similar
proceeding provided that any related tax lien is stayed and sufficient reserves
are established to the reasonable satisfaction of Agent to protect Agent's
security interest in or Lien on the Collateral. The amount of any payment by
Agent under this Section shall be charged to Borrowers' Account. Until Borrowers
shall furnish Agent with an indemnity therefor (or supply Agent with evidence
satisfactory to Agent that due provision for the payment thereof has been made),
Agent may hold any balance standing to Borrowers' credit and Agent shall retain
its security interest in any and all Collateral held by Agent.
4.13. Payment of Leasehold Obligations. Each Borrower shall at all times
pay, when and as due (or within any applicable grace periods) its rental
obligations under all leases material to its business operations under which it
is a tenant, and shall otherwise comply, in all material respects, with all
other material terms of such leases and keep them in full force and effect
15
(unless terminated in accordance with the terms thereof) and, at Agent's request
will provide evidence of having done so.
4.14. Receivables.
(a) Each of the Receivables shall be a bona fide and valid account
representing a bona fide indebtedness incurred by the Customer therein named,
for a fixed sum as set forth in the invoice relating thereto (provided
immaterial or unintentional invoice errors shall not be deemed to be a breach
hereof) with respect to an absolute sale or lease and delivery of goods upon
stated terms of a Borrower, or work, labor or services theretofore rendered by a
Borrower as of the date each Receivable is created. Same shall be due and owing
in accordance with the applicable Borrower's standard terms of sale without
dispute, setoff or counterclaim except as may be reported to Agent from time to
time pursuant to Section 10.1.
(b) Each Customer, to the best of each Borrower's knowledge, as of the
date each Receivable is created, is and will be solvent and able to pay all
Receivables on which the Customer is obligated in full when due except to the
extent that such Borrower has set up on its books and in its financial records
bad debt reserves adequate to cover its Receivables from any Customer which is
not solvent.
(c) Each Borrower's chief executive office is located at the address
identified as such set forth on Schedule 4.14(c) hereto. Until written notice is
given to Agent by Borrowing Representative of any other office at which any
Borrower keeps its records pertaining to Receivables, all such records shall be
kept at such executive office.
(d) Borrowers shall maintain one or more lockbox accounts
(individually and collectively, the "Lock-Box Account") with one or more banks
acceptable to Agent (each, a "Lock-Box Bank"), and shall execute with each
Lock-Box Bank one or more agreements acceptable to Agent (individually and
collectively, the "Lock-Box Agreement"), and such other agreements related
thereto as Agent may require. Subject to the second succeeding sentence, each
Borrower shall ensure that all collections of such Borrowers' Receivables and
all other cash payments received by any Borrower are paid and delivered directly
from Customers and other Persons into the appropriate Lock-Box Account. The
Lock-Box Agreements shall provide that the Lock-Box Banks will immediately
transfer all funds paid into the Lockbox Accounts into a depository account or
accounts maintained by Revolver Agent or an Affiliate of Revolver Agent at such
bank as Revolver Agent may communicate to Borrowing Representative from time to
time (the "Concentration Account"), provided that, upon the repayment in full in
cash of the Revolver Loan Debt and the termination of the Revolving Loan Lender
Agreements, the Concentration Account shall mean a depository account or
accounts maintained by Agent or an Affiliate of Agent at such bank as Agent may
communicate to Borrowing Representative from time to time. To the extent that
any Receivables are collected by any Borrower or any other cash payments
received by any Borrower are not sent directly to the appropriate Lock-Box
Account but are received by any Borrower or any Borrower's Affiliates, such
collections and proceeds shall be held in trust for the benefit of Agent and
immediately upon receipt or collection remitted (and in any event within two (2)
Business Days after receipt or collection), in the form received, to the
appropriate Lockbox Account for immediate transfer to the Concentration Account.
Each Borrower acknowledges and agrees that compliance with the terms of this
Section 4.14(d) is an
16
essential term of this Agreement, and that, in addition to and notwithstanding
any other rights Agent may have hereunder, under any Other Document, under
applicable law or at equity, upon any Borrower's failure to so remit any funds
received directly by Borrowers to the Lock-Box Account, Agent shall be entitled
to increase the Applicable Rate by two percent per annum during any period of
non-compliance, whether or not a Default or an Event of Default occurs or is
declared, provided that nothing shall prevent Agent from considering any failure
to comply with the terms of this Section 4.14(d) to be a Default or an Event of
Default. Except as provided in or permitted by this subsection (d), Borrowers
shall not, without the prior written consent of the Agent, establish any Deposit
Account, other than the Lock-Box Account, pursuant to which remittances on
account of Receivables or other proceeds of Collateral are made to or for the
account of any of the Borrowers. In addition, the Borrowers shall not, without
the prior written consent of the Agent, close the Lock-Box Account or modify the
Lock-Box Agreement. Subject to the Intercreditor Agreement, Borrowers and Agent
may, from time to time, by mutual agreement, change the Lock-Box Bank and the
Lock-Box Account; and, during the continuation of any Event of Default, Agent
shall have the right to change the Lock-Box Bank and the Lock-Box Account.
Unless otherwise expressly provided in the Lock-Box Agreement, Agent shall have
no responsibility for the maintenance of the Lock-Box Account, including the
payment of any fees thereunder..
(e) Not later than the Closing Date, Borrowers shall have caused all
other Deposit Accounts existing on the Closing Date, except for Excluded Deposit
Accounts, to be made the subject of a Blocked Account Agreement. Subsequent to
the Closing Date, no Borrower shall open any Deposit Account, except for an
Excluded Deposit Account, unless such Deposit Account is made the subject of a
Blocked Account Agreement. All amounts on deposit in each Blocked Account (other
than a Controlled Disbursement Account) shall be transferred on a daily basis to
the Concentration Account by wire transfer of immediately available funds in a
manner satisfactory to Agent except as otherwise expressly provided in the
corresponding Blocked Account Agreement. Each Borrower agrees that all payments,
whether by cash, check, wire transfer or any other instrument on deposit in a
Blocked Account shall be under the sole dominion and exclusive control of the
Revolver Loan Agent or the Agent, as the case may be, in accordance with the
provisions of the Intercreditor Agreement, and the Borrowers shall not have any
right, title or interest therein or in the Blocked Account (other than a
Controlled Disbursement Account) except as otherwise provided in the Blocked
Account Agreement prior to (i) the termination of the Revolver Loan Agreement
and full payment of all Revolver Loan Debt and (ii) the termination of this
Agreement and full payment of all Obligations. No Lender Party shall have or
assume any responsibility for any such Blocked Account unless such Person shall
also be the applicable Blocked Account Bank and in such event only as set forth
in the applicable Blocked Account Agreement. Borrowers shall not, without
obtaining the prior written consent of Agent, close any Blocked Account or
modify any Blocked Account Agreement. Unless otherwise expressly provided in a
Blocked Account Agreement, Agent shall have no responsibility for the
maintenance of any Blocked Account, including the payment of any fees
thereunder.
(f) If and to the extent that (i) Customers remit any payments on
account of the Receivables of the Borrowers directly to any of them or (ii) any
Customer is prohibited by law to remit payments to a given Lock-Box Account (due
to such Lock-Box Account's location outside the state where such Customer is
located or otherwise), or (iii) any Customer pays cash
17
to Borrower for any Inventory or other Collateral, then, such payments shall be
held by the Borrowers in trust for the Agent or the Revolver Loan Agent, as the
case may be, and shall, promptly upon receipt thereof, be sent via overnight
delivery service for deposit in the same form received in a Lock-Box Account,
subject, however, to the provisions of the Intercreditor Agreement.
(g) Unless and except to the extent that, pursuant to the Revolver
Loan Lender Agreements, any amounts then deposited in the Concentration Account
are required to be applied, and are then applied, to payment of the Revolver
Loan Debt in accordance with the provisions of the Revolver Loan Agreement,
subject to the provisions of the Intercreditor Agreement in regard thereto, all
such amounts deposited in the Concentration Account from time to time shall be
applied to the Obligations upon final collection thereof, effective on the
Business Day that each such payment is received (such date being called herein
the "Application Date"). For purposes of the preceding sentence, the Agent shall
be deemed to have received a payment in the Concentration Account on a
particular Business Day only if it receives the same by wire transfer prior to
1:00 p.m. on such Business Day or, if received after such time, on the next
following Business Day. Agent is not, however, required to credit Borrowers'
Account for the amount of any item of payment that is unsatisfactory to Agent
and Agent may charge Borrowers' Account for the amount of any item of payment
that is returned to Agent unpaid. Unless and except to the extent that, pursuant
to the Revolver Loan Lender Agreements, any amounts deposited in the
Concentration Account are required to be applied, and are then applied, to
payment of the Revolver Loan Debt, subject to the provisions of the
Intercreditor Agreement in regard thereto, the Agent shall apply all amounts
deposited in the Concentration Account as provided in Section 2.3, Section 12.2
or Section 17.4, as the case may be. If sufficient funds are not available to
fund all payments to be made in respect of any Obligations, the available funds
being applied with respect to such Obligations shall be allocated to the payment
of such Obligations ratably, based on the proportion that each Lender Party's
interest in the aggregate outstanding Obligations bears to the aggregate
outstanding Obligations. Notwithstanding anything in this Agreement to the
contrary, unless an Event of Default has occurred and is continuing, Agent
agrees that the Borrowers shall be entitled to withdraw or direct the
disposition of funds from, and give instructions with respect to, any Controlled
Disbursement Accounts.
(h) If at any time the Agent determines that any funds deposited in
the Concentration Account are or may be subject to a prior Lien in favor of any
other Person (except the Revolver Loan Agent as is provided in the Revolver Loan
Lender Agreements), Agent may, at its option, to the extent permitted under
applicable law, apply such funds to the Obligations as described in subsection
(g) above on a conditional basis (subject to later reversal) or return such
funds directly to the holder of such prior Lien if thereafter required to do so.
(i) At any time after an Event of Default has occurred and during its
continuation, subject to the provisions of the Intercreditor Agreement, Agent
shall have the right to send notice of the assignment of, and Agent's security
interest in, the Receivables to any and all Customers or any third party holding
or otherwise concerned with any of the Collateral. Thereafter, subject to the
provisions of the Intercreditor Agreement and the prior rights of the Revolver
Loan Agent, so long as any such Event of Default is continuing, Agent shall have
the sole right to collect the Receivables, take possession of the Collateral, or
both. Agent's actual
18
collection expenses, including, but not limited to, stationery and postage,
telephone and telecopy, secretarial and clerical expenses and the salaries of
any collection personnel used for collection, shall be paid by Borrowers on
demand, and may be charged to Borrowers' Account.
(j) Agent shall have the continuing right, subject to the provisions
of the Intercreditor Agreement and the prior rights of the Revolver Loan Agent,
to receive, endorse, assign and/or deliver in the name of Agent or any Borrower
any and all checks, drafts and other instruments for the payment of money
relating to the Receivables or any other Collateral received by Agent for
application to the Obligations in accordance herewith and each Borrower hereby
waives notice of presentment, protest and non-payment of any instrument so
endorsed. Each Borrower hereby constitutes Agent or Agent's designee as such
Borrower's attorney with power at any time hereafter, subject to the provisions
of the Intercreditor Agreement, (i) to endorse such Borrower's name upon any
notes, acceptances, checks, drafts, money orders or other evidences of payment
or Collateral; (ii) to sign such Borrower's name on any invoice or xxxx of
lading relating to any of the Receivables, drafts against Customers, assignments
and verifications of Receivables; (iii) to send verifications of Receivables to
any Customer; and (iv) to sign such Borrower's name on any documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent's interest in the Collateral and to file same, subject to the
provisions of the Intercreditor Agreement. Following the occurrence of an Event
of Default and during its continuation, each Borrower shall hereby constitute
Agent or Agent's designee as such Borrower's attorney with additional power,
subject to the provisions of the Intercreditor Agreement and the rights of the
Revolver Loan Agent pursuant to the Revolver Loan Agreement, (i) to demand
payment of the Receivables; (ii) to enforce payment of the Receivables by legal
proceedings or otherwise; (iii) to exercise all of Borrowers' rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (iv) to settle, adjust, compromise, extend or renew the Receivables;
and (v) to settle, adjust or compromise any legal proceedings brought to collect
Receivables. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence; this power
being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time after the occurrence of an
Event of Default and during its continuation, subject to the provisions of the
Intercreditor Agreement and the rights of the Revolver Loan Agent pursuant to
the Revolver Loan Agreement, to change the address for delivery of mail
addressed to any Borrower to such address as Agent may designate and to receive,
open and dispose of all mail addressed to any Borrower to the extent pertaining
to Receivables or other Collateral.
(k) No Lender Party shall, under any circumstances or in any event
whatsoever, have any liability for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the Receivables or
any instrument received in payment thereof, or for any damage resulting
therefrom, except for any such errors or omissions or delays of any kind
determined by a court of competent jurisdiction in a final proceeding to have
resulted from its gross (not mere) negligence or willful misconduct. After an
Event of Default has occurred and during its continuation, subject to the
provisions of the Intercreditor Agreement and the rights of the Revolver Loan
Agent pursuant to the Revolver Loan Agreement, Agent may, without notice or
consent from any Borrower, xxx upon or otherwise collect, extend the time of
payment of, compromise or settle for cash, credit or upon any terms any of the
19
Receivables or any other securities, instruments or insurance applicable thereto
and/or release any obligor thereof. Agent is further authorized and empowered at
any time after an Event of Default has occurred and during its continuation,
subject to the provisions of the Intercreditor Agreement and the rights of the
Revolver Loan Agent pursuant to the Revolver Loan Agreement, to accept the
return of the goods represented by any of the Receivables, without notice to or
consent by any Borrower, all without discharging or in any way affecting any
Borrower's liability hereunder.
(l) No Borrower will, without Agent's consent, unless and except to
the extent that Revolver Loan Agent otherwise has consented thereto, compromise
or adjust any material amount of the Receivables, or extend the time for payment
thereof by more than sixty (60) days) or accept any material returns of
merchandise or grant any additional discounts, allowances or credits thereon
except for those compromises, adjustments, returns, discounts, credits and
allowances as heretofore have been customary in the business of such Borrower.
4.15. Inventory. To the extent Inventory held for sale or lease has been
produced by any Borrower, it has been and will be produced by such Borrower in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.
4.16. Equipment and Real Property Covenants. With respect to the Equipment
and Real Property: (a) Borrowers shall keep the Equipment in good order, repair,
running and marketable condition (ordinary wear and tear excepted); (b)
Borrowers shall use the Equipment and Real Property with all reasonable care and
caution and in accordance with applicable standards of their insurance and in
material conformity with all applicable laws; (c) the Equipment is and shall be
used in the business operations of Borrowers and not for personal, family,
household or farming use; (d) Borrowers shall not remove any Equipment from the
locations set forth or permitted herein, except to the extent necessary to have
any Equipment repaired or maintained in the ordinary course of its business or
to move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or
for the benefit of Borrowers in the ordinary course of business; (e) the
Equipment is now and shall remain personal property and Borrowers shall not
permit any of the Equipment to be or become a part of or affixed to real
property; (f) each Borrower assumes all responsibility and liability arising
from its use of the Equipment and Real Property; (g) except as disclosed on
Schedule 4.16, as of the Signing Date no Equipment is Excluded Equipment, and no
Excluded Equipment is included in the Appraisal of Equipment described in
Section 9.1(aa) hereof; and (h) hereafter Borrowers will notify Agent promptly,
but in any event within ten (10) Business Days after, Borrowers acquire any
Equipment that is Excluded Collateral subsequent to the Closing Date.
4.17. Exculpation. Nothing herein contained shall be construed to
constitute any Lender Party as any Borrower's agent for any purpose whatsoever;
nor shall any Lender Party be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral wherever
the same may be located and regardless of the cause thereof. No Lender Party,
whether by anything herein or in any assignment or otherwise, assumes any
Borrower's obligations under any contract or agreement assigned to such Lender
Party, and no Lender Party shall be responsible in any way for the performance
by any Borrower of any of the terms and conditions thereof.
20
4.18. Environmental Matters.
(a) Borrowers shall ensure that the Real Property remains at all times
in material compliance with all Environmental Laws and they shall not place or
permit to be placed any Hazardous Substances on any Real Property except in
compliance with applicable law or the appropriate Environmental Authority.
(b) Borrowers shall establish and maintain a system to assure and
monitor continued compliance with all applicable Environmental Laws, which
system shall include periodic reviews of such compliance.
(c) Borrowers shall (i) employ in connection with the use of the Real
Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
If the failure to do so could reasonably be expected to have a Material Adverse
Effect, Borrowers shall use their best efforts. to obtain to the extent required
by applicable Environment Laws or the appropriate Environmental Authority,
certificates of disposal, such as hazardous waste manifest receipts, from all
treatment, transport, storage or disposal facilities or operators employed by
Borrowers in connection with the transport or disposal of any Hazardous Waste
generated at the Real Property.
(d) In the event any Borrower obtains, gives or receives notice of any
Release or threat of Release of a reportable quantity under any Environment Laws
of any Hazardous Substances at any Real Property (any such event being
hereinafter referred to as a "Hazardous Discharge") or receives any notice of
violation, request for information or notification that it is potentially
responsible for investigation or cleanup of environmental conditions at the Real
Property, any demand letter or complaint, order, citation, or other written
notice with regard to any Hazardous Discharge or violation of Environmental Laws
affecting the Real Property or any Borrower's interest therein (any of the
foregoing is referred to herein as an "Environmental Complaint") from any
Person, including any Governmental Authority responsible in whole or in part for
environmental matters in the state in which the Real Property is located or the
United States Environmental Protection Agency (any of the foregoing Persons
referred to herein as an "Environmental Authority"), then, Borrowing
Representative shall, within five (5) Business Days thereafter, give written
notice of same to Agent detailing facts and circumstances of which any Borrower
is aware with respect to the Hazardous Discharge or Environmental Complaint.
Such information is to be provided to allow Agent to protect its security
interest in the Collateral and is not intended to create nor shall it create any
obligation upon Agent or any Lender with respect thereto.
(e) Borrowers shall promptly forward to Agent copies of any request
from any Environmental Authority for information, any notification by any
Environmental Authority of potential liability or any demand letter from any
Environmental Authority relating to potential responsibility with respect to the
investigation or cleanup of Hazardous Substances at any other site owned,
operated or used by any Borrower to dispose of Hazardous Substances and shall
continue to forward to Agent copies of correspondence between any Borrower and
any Environmental Authority regarding such claims until all claims are settled.
Borrowers shall
21
promptly forward to Agent copies of all material documents and reports
concerning any Hazardous Discharge at the Real Property that any Borrower is
required to file under any Environmental Laws. Such information is to be
provided solely to allow Agent to protect Agent's security interest in the
Collateral.
(f) Borrowers shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all action required by applicable Environmental
Laws to safeguard the health of any Person and to avoid subjecting the
Collateral to any Lien. If any Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or comply with any of the
requirements of any Environmental Laws within thirty (30) days after the
Borrowing Representative receives written demand from the Agent that it do so,
Agent may, but without the obligation to do so, for the sole purpose of
protecting Agent's interest in the Collateral: (A) give such notices or (B)
enter onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by
Agent) deems reasonably necessary under applicable Environmental Laws to clean
up, remove, mitigate or otherwise deal with any such Hazardous Discharge or
Environmental Complaint. All reasonable costs and expenses incurred by Agent (or
such third parties) in the exercise of any such rights, including any sums paid
in connection with any judicial or administrative investigation or proceedings,
fines and penalties, shall be paid by Borrowers on demand, and may be charged to
Borrowers' Account.
(g) Promptly upon the written request of Agent, but in any event
within five (5) Business Days after Borrowers' receipt of such request, which
may be made following the discovery of any Hazardous Discharge until such
Hazardous Discharge is remedied to the extent required by applicable
Environmental Laws or the appropriate Environmental Authority or following the
filing of any Environmental Complaint until such Environmental Complaint is
resolved, Borrowers shall provide Agent, at Borrowers' expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm reasonably acceptable to Agent with respect to
such Hazardous Discharge or Environmental Complaint, and the potential costs of
abatement, cleanup and removal of any Hazardous Substances found on, under, at
or within the Real Property. Any report or investigation of such Hazardous
Discharge acceptable to the appropriate Environmental Authority that is charged
to oversee the clean-up of such Hazardous Discharge shall be acceptable to
Agent. If such estimates, individually or in the aggregate, exceed the
Materiality Threshold, Agent shall have the right to require Borrowers to post a
bond, letter of credit or other security reasonably satisfactory to Agent to
secure payment of these costs and expenses.
(h) Borrowers shall defend and indemnify each Lender Party and hold
each Lender Party and their respective employees, agents, directors and officers
harmless from and against all losses, liabilities, damages and expenses, claims,
costs, fines and penalties, including reasonable attorney's fees, suffered or
incurred by such Lender Party under or on account of any Environmental Laws,
including, without limitation, the assertion of any Lien thereunder, with
respect to any Hazardous Discharge, or the presence of any Hazardous Substances
affecting the Real Property, whether or not the same originates or emerges from
the Real Property or any contiguous real estate, including any loss of value of
the Real Property as a result of the foregoing except to the extent such loss,
liability, damage or expense, claim, cost, fine or penalty is attributable to
any Hazardous Discharge resulting from actions on the part of such Lender
22
Party. Borrowers' obligations under this subsection (h) shall arise upon the
discovery of the presence of any Hazardous Substances at the Real Property,
whether or not any federal, state, or local environmental agency has taken or
threatened to take any action in connection with the presence of any Hazardous
Substances. Borrowers' obligation and the indemnifications hereunder shall
survive the termination of this Agreement. Borrowers' obligations of indemnity
hereunder shall not extend to, or include, any loss, damage, cost or expense
incurred by any Lender Party in respect of the foregoing caused by, or resulting
form, its gross negligence or willful misconduct.
4.19. No Other Financing Statements. Except for the financing statements
filed by Agent and financing statements giving notice of Permitted Encumbrances
or Liens being released on the Closing Date, no financing statement covering any
of the Collateral or any proceeds thereof is on file in any public office.
4.20. Additional Mortgages. Borrowers shall execute and deliver to Agent
immediately upon the acquisition in fee simple by any Borrower of any Real
Property subsequent to the Closing Date a Mortgage with respect to such
additional Real Property (subject to any Permitted Encumbrances), together with
such title insurance policies (mortgagee's form), certified surveys, appraisals,
and local counsel opinions with respect thereto and such other agreements,
documents and instruments as Agent deems reasonably necessary or desirable, in
form and substance satisfactory to Agent.
4.21. Intellectual Property. Borrowers shall execute and deliver to Agent
security agreements in form suitable for registration and otherwise reasonably
acceptable to Agent (i) on the Closing Date, with respect to any Material
Intellectual Property registered or for which an application for registration is
pending with the U.S. Patent and Trademark Office or the U.S. Copyright Office
as of the Closing Date, or (ii) immediately upon the creation or acquisition by
Borrower of any Material Intellectual Property registered, or for which an
application for registration is pending, with either such office subsequent to
the Closing Date.
4.22. Commercial Tort Claims. Promptly upon the discovery of any Commercial
Tort Claim in favor of a Borrower, Borrowers will notify Agent of the same and
execute such documents as are requested by Agent in order to grant to Agent a
security interest in such Commercial Tort Claim under the UCC.
4.23. OFAC. Agent may, at its option, reject, refuse to accept or return
any Collateral that any Lender Party determines is, or may be, owed by, or due
from, or belongs to, a Sanctioned Person.
4.24. Appraisals. With respect to Real Property Collateral, upon the
occurrence and during the continuance of an Event of Default, Borrowers shall,
at their expense, deliver or cause to be delivered to Agent, Appraisals (or
updates to Appraisals) as to the Real Property Collateral addressed to Agent and
upon which Agent is expressly permitted to rely.
23
V. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1. Authority. Each Borrower has full power, authority and legal right to
enter into this Agreement and the Other Documents to which it is party and to
perform all of its respective duties and obligations hereunder and thereunder.
The execution, delivery and performance of this Agreement and of any Other
Documents to which such Borrower is party (a) are within such Borrower's
corporate powers, have been duly authorized, are not in contravention of law or
any material terms of such Borrower's Organic Documents or of any Material
Agreement or undertaking to which such Borrower is a party or by which such
Borrower or any of its property is bound, and (b) will not conflict with nor
result in any breach of any material provisions of or constitute a default under
or result in the creation of any Lien (except Permitted Encumbrances) upon any
asset of such Borrower under the provisions of any Organic Document or other
instrument to which such Borrower is a party or by which it or any of its
property may be bound.
5.2. Formation and Qualification.
(a) Each Borrower is duly organized and in good standing under the
laws of the State(s) or other jurisdiction(s) listed on Schedule 5.2 and is
qualified to do business and is in good standing in the State(s) or other
jurisdiction(s) listed on Schedule 5.2, which State(s) or other jurisdiction(s)
constitute all State(s) or other jurisdiction(s) in which qualification and good
standing are necessary for such Borrower to conduct its business and own its
property and where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect. Each Borrower has delivered to Agent true and
complete copies of its Organic Documents and will promptly notify Agent of any
amendment or change thereto.
(b) Each Borrower's identification number (if any) assigned to it by
the appropriate Governing Authority of the state of its organization, if any, is
set forth on Schedule 5.2.
(c) The Subsidiaries (if any) of each Borrower as of the Signing Date
are as set forth in Schedule 5.2.
(d) The Equity Interests of each Borrower which are authorized, issued
and outstanding on the Signing Date are set forth and described in Schedule 5.2.
(e) This Agreement is, and each Other Document executed by a Borrower
constitutes, the legal, valid and binding obligation of such Borrower,
enforceable against it in accordance with its terms, except as such enforcement
is subject to the effect of (i) any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally, and (ii)
general principles of equity (regardless of whether considered in a proceeding
in equity or at law).
(f) The signatures of each officer of each Borrower that appear on
this Agreement and each Other Document are genuine, and each such officer of
such Borrower executing same on behalf of such Borrower has full capacity to
execute same.
24
5.3. Tax Returns. Each Borrower's federal tax identification number is set
forth on Schedule 5.3. Each Borrower has filed all federal, state and local tax
returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and
payable, other than, any such charges as are being contested by Borrowers in
good faith by appropriate proceedings provided that Borrowers have established
reserves on their books for any unpaid taxes in accordance with GAAP. The
provision for taxes on the books of each Borrower is adequate for all years not
closed by applicable statutes, and for its current Fiscal Year, and no Borrower
has any knowledge of any deficiency or additional assessment in connection
therewith not provided for on its books or any ongoing audit of any of its tax
returns, except as otherwise may be disclosed in Schedule 5.3.
5.4. Financial Statements.
(a) The audited financial statements of Borrowers and their
Subsidiaries on a consolidated basis for their most recently completed Fiscal
Year, and the related statements of income, changes in stockholder's equity and
cash flow for the annual fiscal period ended on such date, all accompanied by
reports thereon containing opinions by the Accountants, and the unaudited
financial statements of Borrowers and their Subsidiaries on a consolidated basis
for that portion of their current Fiscal Year ended with their most recently
completed Fiscal Quarter and Fiscal Month for which financial statements have
been reported and the related statements of income, changes in stockholder's
equity and cash flow for the fiscal periods ended on such date, (collectively,
the "Historical Financial Statements"), copies of which have been delivered to
Agent, have been prepared in accordance with GAAP, consistently applied (except
for changes in application with which the Accountants have concurred) and
present in all material respects the financial position of the Borrowers and
their Subsidiaries on a consolidated basis at such dates and the results of
their operations for such periods. Since the last day of the Borrowers' most
recently completed Fiscal Year, there has been no material adverse change in the
financial condition of the Borrowers on a consolidated basis from that shown on
the consolidated balance sheet of Borrowers as of such date or in the aggregate
value of the Equipment and Real Property owned by them.
(b) The projected financial statements of the Borrowers and their
Subsidiaries on a consolidated basis furnished to Agent on or prior to the
Signing Date (the "Initial Projections"), were prepared by Borrowers in good
faith based on assumptions believed by Borrowers to be reasonable at the time
being made, it being understood that such projections are not to be viewed as
facts and that actual results may differ from such projections.
5.5. Name. Neither of the Borrowers has been known by any other name in the
five (5) years immediately preceding the Signing Date, and neither of the
Borrowers sells Inventory under any other name except as set forth on Schedule
5.5; nor has either Borrower been the surviving organization of a merger or
consolidation or acquired all or substantially all of the assets of any Person
during the five (5) years immediately preceding the Signing Date.
5.6. OSHA and Environmental Compliance. Except as may be set forth on
Schedule 5.6:
25
(a) Each Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance with, the
provisions of the Federal Occupational Safety and Health Act, the Environmental
Protection Act, RCRA and all other Environmental Laws, except where the failure
to comply with any of the foregoing could not reasonably be expected to have a
Material Adverse Effect; there have been no outstanding citations, notices or
orders of non-compliance issued to any Borrower or relating to its business,
assets, property, leaseholds, Real Property or Equipment under any such laws,
rules or regulations.
(b) Each Borrower has been issued all required federal, state and
local licenses, certificates or permits relating to all applicable Environmental
Laws, except where the failure to obtain any of the foregoing could not
reasonably be expected to have a Material Adverse Effect.
(c) (i) There are no visible signs, in any material amounts of
releases, spills, discharges, leaks or disposals (collectively referred to as
"Releases") of Hazardous Substances at, upon, under or within any Real Property
owned by any Borrower or leased by any Borrower and used for manufacturing or
the storage of Hazardous Substances which do not comply in all material respects
with all applicable Environmental Laws in respect thereof; (ii) there are no
underground storage tanks or polychlorinated biphenyls on any such Real
Property; except in compliance with Environmental Laws; (iii) none of any such
Real Property has ever been used as a treatment, storage or disposal facility
for Hazardous Waste; and (iv) no material amounts of any Hazardous Substances
are present on any such Real Property in violation of any applicable
Environmental Law.
5.7. Solvency.
(a) The Initial Projections demonstrate that the Borrowers on a
consolidated basis will have sufficient cash flow to enable them to pay their
debts as they mature, subsequent to the Closing Date.
(b) Immediately following the execution of this Agreement and the
consummation of the transactions contemplated hereby on the Closing Date,
including the disbursement of the Term Loans and the initial disbursement of the
Revolver Loans, (i) the assets of the Borrowers, on a consolidated basis, at a
fair valuation and at their present fair saleable value will be in excess of the
total amount of liabilities of the Borrowers (including contingent and unmatured
liabilities) on a consolidated basis, (ii) the Borrowers will be able to pay
their Indebtedness as it becomes due, and (iii) the Borrowers on a consolidated
basis will not have unreasonably small capital to carry on their respective
businesses.
(c) As of the Closing Date, there is no undisputed Indebtedness in
excess of the Materiality Threshold owing by the Borrowers to any third parties
that is past due (after giving effect to any applicable grace period for
payment) except for trade accounts payable not in excess of Two Million Dollars
($2,000,000) in aggregate amount, which will be paid by the Borrowers within
thirty (30) days following the Closing Date.
26
(d) This Agreement is, and all Other Documents will be, executed and
delivered by the Borrowers in good faith and in exchange for reasonably
equivalent value and fair consideration.
5.8. Litigation. Except as may be disclosed in Schedule 5.8, as of the
Signing Date no Borrower has (i) any pending or threatened litigation,
arbitration, actions or proceedings that, if determined adversely to it, could
be reasonably expected to have a Material Adverse Effect, or (ii) any Commercial
Tort Claims.
5.9. No Indebtedness. Except as may be disclosed on Schedule 5.9, no
Borrower has any Indebtedness on the Signing Date; and none of such Indebtedness
is secured by any Lien, except for Permitted Encumbrances.
5.10. Violations. No Borrower is in violation of any applicable statute,
regulation or ordinance or any order of any court, Governmental Authority or
arbitration board or tribunal that could reasonably be expected to have a
Material Adverse Effect.
5.11. Plans. No Borrower nor any member of the Controlled Group maintains
or contributes to any Plan (or has assumed any liability in respect of any Plan)
other than those (if any) listed on Schedule 5.11 hereto. Except as set forth in
Schedule 5.11, (i) no Plan has incurred any "accumulated funding deficiency," as
defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or
not waived, and each Borrower and each member of the Controlled Group has met
all applicable minimum funding requirements under Section 302 of ERISA in
respect of each Plan, (ii) each Plan which is intended to be a qualified plan
under Section 401(a) of the Code as currently in effect has been determined by
the Internal Revenue Service to be qualified under Section 401(a) of the Code
and the trust related thereto is exempt from federal income tax under Section
501(a) of the Code, (iii) no Borrower nor any member of the Controlled Group has
incurred any liability to the PBGC other than for the payment of premiums, and
there are no premium payments which have become due which are unpaid, (iv) no
Plan has been terminated by the plan administrator thereof nor by the PBGC, and
there is no occurrence that would cause the PBGC to institute proceedings under
Title IV of ERISA to terminate any Plan, (v) at this time, the current value of
the assets of each Plan exceeds the present value of the accrued benefits and
other liabilities of such Plan and no Borrower nor any member of the Controlled
Group knows of any facts or circumstances that would materially change the value
of such assets and accrued benefits and other liabilities, (vi) no Borrower or
any member of the Controlled Group has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to any Plan, (vii) no
Borrower nor any member of a Controlled Group has incurred any liability for any
excise tax arising under Section 4972 or 4980B of the Code, and no fact exists
that could give rise to any such liability, (viii) no Borrower, nor any member
of the Controlled Group, nor any fiduciary of, nor any trustee for, any Plan,
has engaged in a "prohibited transaction" described in Section 406 of the ERISA
or Section 4975 of the Code nor taken any action that would constitute or result
in a ERISA Event with respect to any such Plan that is subject to ERISA, (ix)
each Borrower and each member of the Controlled Group has made all contributions
due and payable with respect to each Plan, (x) there exists no event described
in Section 4043(b) of ERISA, for which the thirty (30) day notice period
contained in 29 CFR Section 2615.3 has not been waived, (xi) no Borrower nor any
member of the Controlled Group has any fiduciary responsibility for investments
with respect to any plan
27
existing for the benefit of persons other than employees or former employees of
any Borrower and any member of the Controlled Group, and (xii) no Borrower nor
any member of the Controlled Group has withdrawn, completely or partially, from
any Multiemployer Plan so as to incur liability under the Multiemployer Pension
Plan Amendments Act of 1980.
5.12. Patents, Trademarks, Copyrights and Licenses. All patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, copyrights, copyright applications, design rights, trade names,
assumed names, trade secrets and licenses owned or utilized by Borrowers as of
the Signing Date that are material to the conduct of Borrowers' business
operations (herein, "Material Intellectual Property") are set forth on Schedule
5.12. All such Material Intellectual Property is valid and, except as set forth
on Schedule 5.12, has been duly registered or filed with the appropriate
Governmental Authority; there is no objection to or pending challenge to the
validity thereof, and neither Borrower is aware of any grounds for any
challenge, except as may be set forth in Schedule 5.12. To each Borrower's
knowledge, its Material Intellectual Property consists of original material or
property developed by such Borrower or which was lawfully acquired by such
Borrower from the proper and lawful owner thereof. Each Borrower has maintained
its Material Intellectual Property as to preserve the value thereof from the
date of creation or acquisition thereof. With respect to all proprietary
software developed and used by any Borrower, constituting Material Intellectual
Property, such Borrower is in possession of all source and object codes related
to each piece of software or is the beneficiary of a source code escrow
agreement.
5.13. Licenses and Permits. Each Borrower (a) is in material compliance
with and (b) has procured and is now in possession of, all material licenses or
permits required by any applicable federal, state, provincial or local law or
regulation for the operation of its business in each jurisdiction in which it is
now conducting business if the failure to procure such licenses or permits
and/or be in material compliance therewith could reasonably be expected to have
a Material Adverse Effect.
5.14. No Default of Indebtedness. Except as set forth in Schedule 5.14, as
of the Signing Date, no Borrower is in default (after giving effect to any
applicable grace period for payment) in the payment of the principal of or
interest on any Indebtedness and no event has occurred under the provisions of
any instrument or agreement under which any Indebtedness has been issued that
without the lapse of time or the giving of notice, or both, constitutes or would
constitute an event of default thereunder.
5.15. No Other Defaults. As of the Signing Date, no Borrower is in default
in any material respect in the payment or performance of any of its material
contractual obligations in respect of any Material Agreement.
5.16. No Burdensome Restrictions. No Borrower is party to any contract or
agreement the performance of which could reasonably be expected to have a
Material Adverse Effect. No Borrower has agreed or consented to cause or permit
in the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien that
is not a Permitted Encumbrance.
28
5.17. No Labor Disputes. No Borrower is involved in any material labor
dispute; and, to Borrowers' knowledge, there are no strikes or walkouts or union
organization of any Borrower's employees threatened or in existence. Except as
set forth in Schedule 5.17, no labor contract in existence on the Signing Date
is scheduled to expire during the Term.
5.18. Margin Regulations. No Borrower is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of the Term Loans will be used for
"purchasing" or "carrying" "margin stock," as those terms are defined in
Regulation U of such Board of Governors.
5.19. Investment Company Act. No Borrower is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.20. Disclosure. No representation or warranty made by any Borrower in
this Agreement, or in any financial statement, report, certificate or any Other
Document furnished in connection herewith, including without limitation the
Perfection Certificate, contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements herein or
therein not materially misleading. There is no fact known to Borrowers that
Borrowers have not disclosed to Agent in writing with respect to the
transactions contemplated by this Agreement that could reasonably be expected to
have a Material Adverse Effect.
5.21. No Conflicting Agreements or Orders. Except as disclosed on Schedule
5.21, no provision of any Material Agreement nor any judgment, decree or order
binding on any Borrower or affecting any Collateral conflicts with, or requires
any consent that has not already been obtained to, or would in any way prevent
the execution, delivery or performance of, the terms of this Agreement or the
Other Documents.
5.22. Application of Certain Laws and Regulations. No Borrower is subject
to any statute, rule or regulation that regulates the incurrence of any
Indebtedness, including without limitation, statutes or regulations relative to
common or interstate carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.
5.23. Hedge Contracts. As of the Signing Date, no Borrower is party to any
Hedge Contract, except a Permitted Hedge Contract.
5.24. Real Property. As of the Signing Date, Borrowers have no interest as
owner or tenant in any Real Property, except as disclosed on Schedule 5.24.
5.25. Deposit Accounts. As of the Signing Date, no Borrower has any Deposit
Accounts, except as listed on Schedule 5.25, and except for the Concentration
Account.
5.26. Brokers. No Borrower has retained the services of any broker to
assist such Borrower in obtaining the benefits of this Agreement.
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5.27. OFAC. No Permitted Holder, no Borrower and no Subsidiary is a
Sanctioned Person. No Portion of the Term Loans will be used to facilitate the
operation of, to finance any investments in or any activities of, or to make any
payments to, any Sanctioned Person or Sanctioned Country.
5.28. Senior Debt. The principal amount of the Term Loans constitute (a)
"Senior Debt" as such term is defined in the Senior Subordinated Note Indenture
and the holders of such Indebtedness are entitled to the rights and benefits of
a holder of "Senior Debt" under Article 11 of the Senior Subordinated Note
Indenture and (ii) "Senior Debt" as such term is defined in the Junior
Subordinated Note and the holders of such Indebtedness are entitled to the
rights and benefits of a holder of "Senior Debt" under Section 3 of the Junior
Subordinated Note.
VI. AFFIRMATIVE COVENANTS.
Each Borrower shall, and shall cause its Subsidiaries to, do the following
until payment in full of the Obligations and termination of this Agreement:
6.1. Payment of Fees. Pay to Agent on demand all usual and customary fees
and expenses that Agent incurs in connection with (a) the forwarding of the
proceeds of the Term Loans and (b) the establishment and maintenance of any
Lockbox Account, Blocked Account, or Concentration Account. Agent may, without
making demand, charge Borrowers' Account for all such fees and expenses.
6.2. Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear
excepted), including, without limitation, all Material Intellectual Property,
and take all actions necessary to enforce and protect the validity of Material
Intellectual Property or other material rights included in the Collateral; (b)
keep in full force and effect its existence and Material Agreements (in
accordance with their terms); (c) comply in all material respects with the laws
and regulations governing the conduct of its business where the failure to do so
could reasonably be expected to have a Material Adverse Effect; and (d) make all
such reports and pay all such franchise and other taxes and license fees and do
all such other acts and things as may be lawfully required to maintain its
rights, licenses, leases, powers and franchises under the laws of the United
States or any political subdivision thereof where the failure to do so could
reasonably be expected to have a Material Adverse Effect.
6.3. Violations. Promptly notify Agent in writing of any violation of any
law, statute, regulation or ordinance of any Governmental Authority, or of any
agency thereof, applicable to any Borrower that could reasonably be expected to
have a Material Adverse Effect.
6.4. Government Receivables. If requested by Agent to do so in respect of
any Receivable, take all steps necessary to protect Agent's interest in the
Collateral under the Federal Assignment of Claims Act or other applicable state
or local statutes or ordinances and deliver to Agent appropriately endorsed, any
instrument or chattel paper connected with any Receivable arising out of
contracts between any Borrower and the United States, any state or any
30
department, agency or instrumentality of any of them, subject to the provisions
of the Intercreditor Agreement.
6.5. Execution of Supplemental Instruments. Execute and deliver to Agent
from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may reasonably request, in order
that the full intent of this Agreement and the Other Documents may be carried
into effect.
6.6. Payment of Material Agreements. Pay, discharge or otherwise satisfy at
or before maturity (subject, where applicable, to specified grace periods and,
in the case of the trade payables, to normal payment practices) all its
obligations and liabilities of whatever nature, including any in respect of its
Material Agreements, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect or where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings;
provided that Borrowers have established reserves on their books in accordance
with GAAP in respect thereof; and subject at all times to any applicable
Subordination Agreement.
6.7. Standards of Financial Statements. Cause all financial statements
referred to herein to be complete and correct in all material respects (subject,
in the case of interim financial statements, to normal year-end audit
adjustments and the absence of footnotes) and to be prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the periods
reflected therein (except as concurred in by the Accountants or the reporting
officer of a Borrower, as the case may be, and disclosed therein).
6.8. Further Assurances; Post Closing. At Borrowers' cost and expense, each
Borrower shall (i) take such further actions, obtain such consents and approvals
and duly execute and deliver such further agreements, assignments, instructions
or documents as Agent may reasonably request with respect to the purposes, terms
and conditions of this Agreement and the Other Documents and the consummation of
the transactions contemplated thereby, and (ii) without limiting and
notwithstanding any other provision of this Agreement or any Other Document,
execute and deliver, or cause to be executed and delivered, such agreements and
documents, and take or cause to be taken such actions, and otherwise perform,
observe and comply with such obligations, as are set forth on Schedule 6.8.
VII. NEGATIVE COVENANTS.
Each Borrower shall, and shall cause its Subsidiaries to, comply as follows
until payment in full of all Obligations and termination of this Agreement:
7.1. Sale of Assets, Consolidation, Merger, Dissolution, Etc. No Borrower
shall, or shall permit any Subsidiary to, directly or indirectly:
(a) merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it except that any
wholly-owned Subsidiary of a Borrower may merge with and into or consolidate
with a Borrower any other wholly-owned Subsidiary of a Borrower, and any
Borrower may merge with or into, or
31
consolidate with any other Borrower; provided, however, that each of the
following conditions is satisfied: (i) Agent shall have received not less than
ten (10) Business Days' prior written notice of such intended merger or
consolidation, which notice shall set forth in detail reasonably satisfactory to
Agent the Persons that are merging or consolidating, which Person will be the
surviving entity, the locations of the assets of the Persons that are merging or
consolidating, and any Material Agreements and documents relating to such merger
or consolidation, (ii) Agent shall have received such other information with
respect to such merger or consolidation as Agent may reasonably request, (iii)
as of the effective date of the merger or consolidation and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing,
(iv) Agent shall have received, true, correct and complete copies of all
agreements, documents and instruments relating to such merger or consolidation,
including, but not limited to, the certificate or certificates of merger to be
filed with each appropriate Governmental Authority (with a copy as filed
promptly after such filing), and (v) the surviving Person (if not already a
Borrower) shall expressly confirm, ratify and assume the Obligations, this
Agreement and all Other Documents to which the Borrowers are then party in
writing, in a form and substance satisfactory to Agent, shall execute and
deliver such other agreements, documents and instruments as Agent may reasonably
request in connection therewith;
(b) sell, issue, assign, lease, license, transfer, abandon or
otherwise dispose of any Equity Interests or any of its other assets to any
other Person, except for
(i) sales of Inventory in the ordinary course of business;
(ii) Permitted PP&E Dispositions;
(iii) the issuance and sale by Parent Company of Equity Interests
after the Closing Date; provided, however, that, (a) the terms of such Equity
Interests, and the terms and conditions of the purchase and sale thereof, shall
not include any terms that contravene, or include any limitation on the right of
any Borrower to amend or modify, any of the terms and conditions of this
Agreement or any of the Other Documents, (b) after giving effect to such
issuance and sale, no Change of Control shall have occurred and (c) the Net Cash
Proceeds derived therefrom shall be paid to Revolver Agent for application to
the Revolver Loan Debt in accordance with the Revolver Loan Agreement;
(iv) the issuance of Equity Interests of Parent Company pursuant
to an employee stock option or grant or similar equity plan or 401(k) plan
established for Borrowers' employees; provided, however, that no Change of
Control shall result therefrom;
(v) the issuance of Equity Interests of Parent Company
(including, without limitation, in connection with the exercise of warrants to
purchase such Equity Interests) pursuant to and in accordance with the Warrant
Agent Agreement and the Exchange Agreement, each as in effect on the Signing
Date;
(vi) the sale or other disposition of Collateral not otherwise
permitted in clauses (i) and (ii) above, if: (a) such sales or other
dispositions do not involve Collateral having an aggregate fair market value in
excess of the Materiality Threshold for all such Collateral disposed of in any
Fiscal Year of Borrowers; (b) as of the date of any such sale or
32
other disposition, and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing; and (c) all of the Net Cash
Proceeds of the sale of such Collateral shall be paid to Agent for application
to the Obligations in accordance with Section 2.3(b) of this Agreement;
(vii) intercompany loans and dividend payments, among or between
Borrowers, to the extent permitted by Sections 7.3(d), 7.4(h), 7.5(c) and
7.7(b);
(c) wind up, liquidate or dissolve, except pursuant to any merger or
consolidation made in accordance with Section 7.1(a); or
(d) agree to do any of the foregoing, except if such agreement is
conditioned on approval by the Agent.
7.2. Encumbrances. No Borrower shall, or shall permit any Subsidiary to,
create, incur, assume or suffer to exist any security interest, mortgage,
pledge, Lien, charge or other encumbrance of any nature whatsoever on any of its
assets or properties, including the Collateral, or file or permit the filing of,
or permit to remain in effect, any financing statement or other similar notice
of any security interest or Lien with respect to any such assets or properties,
except the following (herein called, collectively, "Permitted Encumbrances"):
(a) the security interests and Liens in the Collateral in favor of
Agent for the benefit of the Lender Parties granted pursuant to this Agreement
and the Other Documents;
(b) Liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower or Subsidiary, as the case may be, and with
respect to which reserves have been set aside on its books in accordance with
GAAP;
(c) non-consensual statutory Liens (other than Liens securing the
payment of taxes) arising in the ordinary course of such Borrower's or
Subsidiary's business to the extent: (1) such Liens secure Indebtedness that is
not overdue or (2) such Liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower or
such Subsidiary, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which reserves have been set aside on
its books as required by GAAP;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property that do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of such Borrower or such Subsidiary as presently conducted thereon or
materially impair the value of the Real Property owned by any Borrower (or, to
Borrowers' knowledge, in the case of Leasehold Interests that are material to
the operation of the Borrowers' business and involve annual payments in excess
of the Materiality Threshold, the value of the Borrowers' interest in such
Leasehold Interests) that is subject thereto;
33
(e) purchase money security interests in Equipment and the proceeds
thereof (including Capitalized Leases) acquired after the Signing Date and
purchase money mortgages on Real Property acquired after the Signing Date to
secure Indebtedness permitted under Section 7.3(b) hereof;
(f) pledges and deposits of cash or issuances of letters of credit by
any Borrower after the Signing Date in the ordinary course of its business in
connection with workers' compensation, unemployment insurance and other types of
social security benefits consistent with the current practices of such Borrower
as of the date hereof;
(g) pledges and deposits of cash by any Borrower after the Signing
Date to secure the performance of tenders, bids, leases, trade contracts (other
than for the repayment of Indebtedness), statutory obligations and other similar
obligations in each case in the ordinary course of business consistent with the
current practices of such Borrower as of the date hereof;
(h) Liens arising from (1) operating leases and the precautionary UCC
financing statement filings in respect thereof and (2) equipment or other
materials that are not owned by any Borrower, but are located on the premises of
such Borrower (but not in connection with, or as part of, the financing thereof)
from time to time in the ordinary course of business and consistent with current
practices of such Borrower and the precautionary UCC financing statement filings
in respect thereof;
(i) the security interests in and Liens upon the Collateral and
mortgages and Liens upon the Real Property in favor of the Revolver Loan Agent
to secure the Revolver Loan Debt, provided, however, that, the security
interests in and Liens upon the Collateral in favor of Revolver Loan Agent are
and shall at all times be subject to the terms of the Intercreditor Agreement;
(j) judgment Liens and other similar Liens arising in connection with
court proceedings that do not constitute an Event of Default, provided, that,
(i) such Liens are being contested in good faith and by appropriate proceedings
diligently pursued by Borrowers, (ii) adequate reserves have been made for the
amounts thereof on the books of Borrowers in accordance with GAAP and (iii) a
stay of enforcement of any such Liens is in effect;
(k) any security interests and Liens of an Insurance Premium Finance
Party on the Insurance Premium Collateral to secure the Indebtedness described
in and to the extent permitted in Section 7.3(h) hereof;
(l) security interests and Liens granted to the "Issuer" under any
"Letter of Credit Documents" (as each such term is defined in the Revolver Loan
Agreement);
(m) those other security interests and Liens (if any) existing on the
Signing Date and set forth on Schedule 7.2 hereof;
(n) the Existing Lender Liens, pending full payment of the Existing
Lender Loans on the Closing Date; and
34
(o) Liens on any cash collateral provided to the Existing Revolver
Agent and the Existing Revolver Lenders in respect of letters of credit issued
by any Existing Revolver Lenders that will remain outstanding after the Closing
Date.
7.3. Indebtedness. No Borrower shall, nor shall permit any Subsidiary to,
incur, create, assume, become or be liable in any manner with respect to, or
permit to exist, any Indebtedness, or guarantee, assume, endorse, or otherwise
become responsible for (directly or indirectly), the Indebtedness, performance,
obligations or dividends of any other Person, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capitalized Leases)
existing on or arising after the Closing Date, to the extent secured by purchase
money security interests in Equipment and the proceeds thereof (including
Capitalized Leases) and purchase money Mortgages or Liens on Real Property;
provided, however, that:
(i) the aggregate principal amount of such Indebtedness incurred
during any Fiscal Year shall not exceed Two Million Five Hundred Thousand
Dollars ($2,500,000);
(ii) such security interests, Mortgages or Liens do not apply to
any property of such Borrower or Subsidiary other than the Equipment or Real
Property so acquired (and the proceeds thereof), unless such Indebtedness is
owed to the Lenders or the Revolving Loan Lenders;
(iii) the Indebtedness secured thereby does not exceed the cost
of the Equipment or Real Property so acquired, as the case may be;
(iv) the security interests, Mortgages or Liens are released
promptly upon such Indebtedness being fully paid and satisfied;
(v) Agent shall have received at least five (5) Business Days'
prior written notice of the intention of Borrowers to incur such Indebtedness,
if incurred subsequent to the Closing Date; and
(vi) as of the date of incurring such Indebtedness and after
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing;
(c) guarantees by any Borrower of the Obligations of any other
Borrower in favor of Agent for the benefit of Lenders;
(d) the Indebtedness of any Borrower to any other Borrower arising
after the Signing Date pursuant to loans made by any Borrower permitted under
Section 7.4(h) hereof;
(e) Indebtedness of Borrowers to the Revolver Loan Lenders evidenced
by or arising under the Revolver Loan Agreement and the other Revolver Loan
Lender Agreements, provided, however, that the principal amount of such
Indebtedness shall not exceed Thirty Four Million Five Hundred Thousand Dollars
($34,500,000) less the aggregate amount of all
35
repayments, whether optional or mandatory, in respect thereof that, in the case
of any revolving facility result in a permanent reduction in the principal
amount of the Revolver Loans available for borrowing thereunder;
(f) Indebtedness of Parent Company evidenced by the Senior
Subordinated Notes as in effect on the Closing Date or as amended in compliance
herewith; provided, however, that:
(i) the aggregate principal amount of such Indebtedness shall not
exceed the amount thereof outstanding on the Closing Date less the aggregate
amount of all principal repayments, repurchases or redemptions, whether optional
or mandatory, made after the Closing Date in respect thereof; and
(ii) the principal amount of the Term Loans are and shall at all
times constitute "Senior Debt," as such term is defined in the Senior
Subordinated Note Indenture; and the holders of the Term Loans shall be entitled
to the rights and benefits of a holder of "Senior Debt" under Article 11 of the
Senior Subordinated Note Indenture;
(g) Indebtedness of Parent Company evidenced by the Junior
Subordinated Note as in effect on the Closing Date or as amended in compliance
herewith, provided, however, that:
(i) the aggregate principal amount of such Indebtedness shall not
exceed the amount thereof outstanding on the Closing Date, less the aggregate
amount of all principal repayments, repurchases or redemptions, whether optional
or mandatory, made after the Closing Date in respect thereof;
(ii) the principal amount of the Term Loans are and shall at all
times constitute "Senior Debt," as such term is defined in the Junior
Subordinated Note; and the holders of the Term Loans shall be entitled to all
the rights and benefits of a holder of "Senior Debt" under Section 3 of the
Junior Subordinated Note;
(h) Indebtedness of Borrowers to an Insurance Premium Finance Party in
connection with insurance policies maintained by Borrowers arising as a result
of such Insurance Premium Finance Party entering into arrangements to allow
Borrowers to pay all or a portion of the applicable insurance premiums on such
insurance policies in installments rather than in one lump sum annual payment;
provided, however, that, such Indebtedness shall be unsecured except to the
extent permitted under Section 7.2(k) hereof, and shall not exceed, in aggregate
principal amount outstanding at any one time, Three Hundred Thousand Dollars
($300,000);
(i) [Intentionally Omitted];
(j) other Indebtedness outstanding on the Closing Date that is listed
on Schedule 7.3;
(k) Indebtedness of Borrowers owed to the Existing Revolver Lenders in
respect of any letters of credit issued by any Existing Revolver Lenders that
remain outstanding after the Closing Date and the obligations of the Borrowers
under the Termination Agreement,
36
dated as of May 31, 2006 among the Borrowers, the Existing Revolver Agent and
the Existing Revolver Lenders; and
(l) Indebtedness of Borrowers arising after the Closing Date issued in
exchange for, or the proceeds of which are used to extend, refinance, replace or
substitute for, any Indebtedness expressly permitted under this Section 7.3 (the
"Refinancing Indebtedness"); provided, however, that, as to any such Refinancing
Indebtedness, each of the following conditions is satisfied:
(i) Agent shall have received not less than five (5) Business
Days' prior written notice of the intention to incur the Refinancing
Indebtedness, which notice shall set forth in detail reasonably satisfactory to
Agent, the amount of such Indebtedness, the schedule of repayments and maturity
date with respect thereto and such other information with respect thereto as
Agent may reasonably request,
(ii) the Refinancing Indebtedness shall have a weighted average
life to maturity and a final maturity equal to or greater than the weighted
average life to maturity and the final maturity, respectively, of the
Indebtedness being extended, refinanced, replaced, or substituted for,
(iii) the Refinancing Indebtedness shall rank in right of payment
no more senior relative to the Obligations than the Indebtedness being extended,
refinanced, replaced, or substituted for,
(iv) the Refinancing Indebtedness shall not include terms and
conditions with respect to Borrowers that are more burdensome or restrictive in
any material respect than those included in the Indebtedness so extended,
refinanced, replaced or substituted for,
(v) the debt service (i.e., the aggregate amount of interest,
principal, charges and fees) payable with respect to the Refinancing
Indebtedness during the Term shall be no greater than the debt service payable
during the Term for the Indebtedness so extended, refinanced, replaced or
substituted for,
(vi) as of the date of incurring the Refinancing Indebtedness and
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing,
(vii) the principal amount of the Refinancing Indebtedness shall
not exceed the principal amount of the Indebtedness so extended, refinanced,
replaced or substituted for (plus the amount of reasonable refinancing fees and
expenses incurred in connection therewith),
(viii) if applicable, the Refinancing Indebtedness shall be
secured by substantially the same assets that secure the Indebtedness so
extended, refinanced, replaced or substituted for, provided, however, that (A)
such security interests with respect to the Refinancing Indebtedness shall have
a priority no more senior than, and be at least as subordinated (on terms and
conditions acceptable to Agent) as the security interest with respect to the
Indebtedness so extended, refinanced, replaced or substituted for, and (B) no
Refinancing
37
Indebtedness shall be secured unless the Indebtedness so extended, refinanced,
replaced or substituted for was secured;
(ix) if the Refinancing Indebtedness is extending, refinancing,
replacing or being substituted for the Indebtedness described in Section 7.3(e),
the holder(s) of the Refinancing Indebtedness shall have entered into an
intercreditor agreement with Agent in substantially the same form and content as
the Intercreditor Agreement.
(m) Indebtedness of Borrowers to any "Issuer" arising under any
"Letter of Credit Documents" (as each such term is defined in the Revolver Loan
Agreement).
(n) Up to Five Million Dollars ($5,000,000) of unsecured Indebtedness
of Borrowers ("New Unsecured Indebtedness"), the Net Cash Proceeds of which are
used, within three (3) Business Days following the incurrence thereof, to
repurchase, redeem, or retire other Indebtedness of Borrowers expressly
permitted under this Section 7.3 for less than the outstanding principal amount
thereof, provided that each of the following conditions is satisfied:
(i) Agent shall have received not less than five (5) Business
Days' prior written notice of the intention to incur such Indebtedness, which
notice shall set forth, in detail reasonably satisfactory to Agent, the amount
of such New Unsecured Indebtedness, the schedule of payments and maturity date
with respect thereto and such other information with respect thereto as Agent
may reasonably request,
(ii) there shall be no principal payments required with respect
to such New Unsecured Indebtedness prior to June 30, 2009,
(iii) the debt service (i.e., the aggregate amount of interest,
principal, charges and fees) payable during the Term with respect to the New
Unsecured Indebtedness shall be no greater than the debt service payable during
the Term for the Indebtedness being repurchased, redeemed, or retired with the
proceeds of the New Unsecured Indebtedness, and
(iv) as of the date of incurring the New Unsecured Indebtedness
and after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing.
7.4. Loans, Investments, Etc. No Borrower shall, or shall permit any
Subsidiary to, directly or indirectly, make any loans or advance money or
property to any Person, or invest in (by capital contribution, dividend or
otherwise) or purchase or repurchase any Equity Interests or Indebtedness or all
or a substantial part of the assets or property of any Person, or form or
acquire any Subsidiaries, or agree to do any of the foregoing (unless
conditioned upon the consent of the Required Lenders), except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided that at any time
such investments in the aggregate exceed Ten Thousand Dollars ($10,000) (1) no
Revolver Loan Debt is then outstanding and (2) the terms and conditions of
Section 5.2 hereof shall have been
38
satisfied with respect to the deposit account, investment account or other
account in which such cash or Cash Equivalents are held;
(c) the existing equity investments of each Borrower as of the Signing
Date in its Subsidiaries, as listed on Schedule 7.4; provided, however, that, no
Borrower shall have any further obligations or liabilities to make any capital
contributions or other additional investments or other payments to or in or for
the benefit of any of such Subsidiaries, except that a Borrower may make capital
contributions to another Borrower in the form of dividend payments as permitted
pursuant to Sections 7.5 and 7.7 hereof;
(d) equity investments of a Borrower in another Borrower;
(e) loans and advances by any Borrower to employees of such Borrower
after the Signing Date in an aggregate principal amount not to exceed the
Materiality Threshold at any time;
(f) Equity Interests or debt securities issued to any Borrower by any
Person (or the representative of such Person) in respect of Indebtedness of such
Person owing to such Borrower in connection with the insolvency, bankruptcy,
receivership or reorganization of such Person or a composition or readjustment
of the Indebtedness of such Person; provided, however, that, the original of any
stock certificate or other instrument evidencing such obligations shall, at
Agent's request, be promptly delivered to Agent, but in any event within five
(5) Business Days after Borrowers receive such request, together with such stock
power, assignment or endorsement by such Borrower as Agent may request, subject
to the provisions of the Intercreditor Agreement;
(g) obligations of any Customer to any Borrower arising from Accounts
that are past due and may be evidenced by a promissory note of such Customer
payable to such Borrower; provided, however, that, promptly upon the receipt by
such Borrower of the original of any such promissory note, but in any event
within five (5) Business Days thereafter, such promissory note shall be endorsed
to the order of Agent by such Borrower and promptly delivered to Agent as so
endorsed, subject to the provisions of the Intercreditor Agreement;
(h) loans by a Borrower to another Borrower after the Closing Date,
provided, however, that, (i) upon Agent's request, Borrowers shall provide to
Agent a report in form and substance satisfactory to Agent of the outstanding
amount of such loans as of the last day of the immediately preceding month and
indicating any loans made and payments received during the immediately preceding
month; and (ii) upon Agent's request, any such loan shall be evidenced by a
promissory note or other instrument, the single original of which shall be
promptly, but not later than five (5) Business Days after Agent's request,
delivered to Agent to hold as part of the Collateral, with such endorsement
and/or assignment by the payee of such note or other instrument as Agent may
require, subject to the provisions of the Intercreditor Agreement;
(i) those loans and advances (if any) existing on the Signing Date and
set forth on Schedule 7.4; provided, however, that, as to such loans and
advances, Borrowers shall not, directly or indirectly, amend, modify, alter or
change the terms of such loans and advances or any agreement, document or
instrument related thereto and Borrowers shall furnish to Agent
39
all default notices or demands for payment in connection with such loans and
advances received by any Borrower or on its behalf, promptly after the receipt
thereof, or sent by any Borrower or on its behalf, concurrently with the sending
thereof, as the case may be;
(j) the payment of dividends by Borrowers, and the redemption,
retirement, defeasance, purchase or other acquisition of Equity Interests, to
the extent permitted by Sections 7.5 and 7.7 hereof; and
(k) the repurchase, redemption or retirement of Indebtedness of the
Borrowers with the proceeds of New Unsecured Indebtedness to the extent
permitted by Section 7.3(n) hereof.
7.5. Dividends and Redemptions. No Borrower shall, or shall permit any
Subsidiary to, directly or indirectly, declare or pay any dividends on account
of any shares of class of any Equity Interests of such Borrower now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of Equity Interests (or set aside or otherwise deposit or invest any
sums for such purpose) for any consideration or apply or set apart any sum, or
make any other distribution (by reduction of capital or otherwise) in respect of
any such shares or agree to do any of the foregoing, except that:
(a) any Borrower may declare and pay such dividends or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Equity
Interests for consideration in the form of additional Equity Interests so long
as after giving effect thereto no Change of Control or other Default or Event of
Default shall have occurred and be continuing;
(b) Borrowers may pay dividends to the extent permitted in Section 7.7
below;
(c) any Subsidiary of a Borrower may pay dividends to a Borrower; and
(d) Borrowers may repurchase Equity Interests consisting of and
limited to Equity Interests held by employees of a Borrower pursuant to any
employee stock ownership plan thereof upon the termination, retirement or death
of any such employee in accordance with the provisions of such plan, provided
that, as to any such repurchase, each of the following conditions is satisfied:
(i) as of the date of the payment for such repurchase and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing,
(ii) such repurchase shall be paid with funds legally available therefor, (iii)
such repurchase shall not violate any law or regulation or the material terms of
any indenture, agreement or undertaking to which such Borrower is a party or by
which such Borrower or its property are bound, and (iv) the aggregate amount of
all cash payments for such repurchases in any Fiscal Year shall not exceed the
Materiality Threshold.
(e) Parent Company may declare and pay cash dividends in respect of
the Series B Preferred Stock in accordance with the terms of the Restated
Certificate of Incorporation of LPC as of the Closing Date so long as the
aggregate amount thereof does not exceed Thirty Thousand Dollars ($30,000) in
any twelve (12) month period;
40
(f) Parent Company may redeem, cancel or retire the Series B Preferred
Stock in accordance with the terms of its Restated Certificate of Incorporation
as in effect on the Closing Date so long as (i) the amount of all such payments
in respect of such redemptions, cancellations or retirements shall not exceed
Two Hundred Dollars ($200) per share or, in aggregate amount, Six Hundred Sixty
Thousand Dollars ($660,000) (which amount includes past due payments of up to
Five Hundred Forty Thousand Dollars ($540,000)); and (ii) Borrowers comply with
all Restricted Payment Conditions in regard to each such payment; and
(g) Parent Company may purchase, retire or otherwise acquire shares of
its Equity Interests in connection with odd lot tender offers or purchase,
retire or otherwise acquire shares of its Equity Interests in connection with
reverse stock splits or "Rule 13e-2 transactions" within the meaning of
Securities and Exchange Commission Rule 13e-3; provided, however, that (i) the
aggregate amount of all such payments in respect of all such transactions shall
not exceed One Million Dollars ($1,000,000); and (ii) Borrowers comply with all
Restricted Payment Conditions in regard to each such payment described in this
subsection (g).
7.6. Nature of Business. No Borrower shall, or shall permit any Subsidiary
to, substantially change the nature of the business in which it is engaged or,
except as otherwise specifically permitted by this Agreement, purchase or
invest, directly or indirectly, in any assets or property other than purchases
of assets or property in the ordinary course of business that are to be used in
its business as presently conducted.
7.7. Transactions with Affiliates. No Borrower shall, or shall permit any
Subsidiary to, directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any officer, director or other Affiliate of such Borrower
(other than a Borrower or a Subsidiary thereof), except in the ordinary course
of and pursuant to the reasonable requirements of such Borrower's business (as
the case may be) and upon fair and reasonable terms no less favorable to such
Borrower than such Borrower would obtain in a comparable arm's length
transaction with an unaffiliated person; or
(b) make any payments (whether by dividend, loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower, except (i) reasonable compensation to, and
reimbursement of reasonable expenses incurred by, officers, employees and
directors for services rendered to such Borrower in the ordinary course of
business, (ii) payments by any Borrower to any other Borrower for actual and
necessary reasonable out-of-pocket legal and accounting, insurance, marketing,
payroll and similar types of services paid for by any Borrower on behalf of such
other Borrower, in the ordinary course of their respective businesses or as the
same may be directly attributable to such Borrower and for the payment of taxes
by or on behalf of such Borrower, (iii) the grant of stock options, restricted
stock awards, stock appreciation rights or similar rights to employees, officers
or directors pursuant to a plan approved by the Board of Directors of the
applicable Borrower (so long as after giving effect thereto no Change of Control
shall occur and no Default or Event of Default shall have occurred and be
continuing), (iv) loans or advances to employees permitted by Section 7.4(c) of
this Agreement, (v) the payment of reasonable fees to the directors of any
41
Borrower, and (vi) regularly scheduled payments in respect of the Senior
Subordinated Notes and the Junior Subordinated Notes to officers, directors or
employees of LPC in their capacity as holders thereof to the extent permitted by
Section 7.14, hereof.
7.8. Subsidiaries. No Borrower shall, or shall permit any Subsidiary to,
either: (a) create or acquire any Subsidiary; (b) enter into any partnership,
joint venture or similar arrangement; or (c) dispose of any Equity Interests in
any Subsidiary, except in a transaction expressly permitted under Section 7.1.
Without limitation of the foregoing, if and to the extent any Subsidiary is
created or acquired hereafter with the prior written consent of the Agent, then,
as a condition to such consent becoming effective, (i) each such Subsidiary must
be joined as a Borrower hereunder, or must become a Guarantor hereof, (ii) each
Subsidiary must xxxxx x Xxxx on its assets to Agent as security for its
obligations hereunder or under its Guaranty, and (iii) the Equity Interests of
such Subsidiary must be pledged to Agent by amendment to the Subsidiary Pledge
Agreement; each on terms satisfactory to Agent.
7.9. Fiscal Year and Accounting Changes. No Borrower shall, or shall permit
any Subsidiary to, change its Fiscal Year from that in use on the Closing Date
or make any significant change (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by applicable law.
7.10. Pledge of Credit. No Borrower shall, or shall permit any Subsidiary
to, pledge (or purport to pledge) Agent's or any Lender's credit on any
purchases or for any purpose whatsoever or use any portion of the Term Loans in
or for any business other than such Borrower's business as conducted on the
Closing Date.
7.11. Amendment of Material Agreements. No Borrower shall, or shall permit
any Subsidiary to, amend, modify, alter or otherwise change in any material
respect any term or provision of any of its Material Agreements, unless such
amendment, modification or waiver does not cause any contravention of, or
conflict with, any material term or condition of this Agreement and would not
otherwise reasonably be expected to have a Material Adverse Effect; provided,
however, that, for avoidance of doubt, Borrowers may, after giving prior written
notice to Agent, amend, modify, alter or change the terms or provisions of any
Material Agreement respecting Funded Indebtedness so as to extend the maturity
thereof or defer the timing of any payments in respect thereof, or to forgive or
cancel such Indebtedness (or a portion thereof) or to reduce the interest rate
on or any fees associated therewith; and, provided, further, that Borrowers
shall not amend, modify, alter or change any material terms or provisions of any
of the Revolver Loan Lender Agreements (except as permitted in the first proviso
hereof), except after giving Agent prior written notice thereof and, if
requested by Agent, a corresponding amendment, modification, alteration or
change is made hereto or to the Other Documents on the same, or substantially
the same, terms simultaneously therewith.
7.12. Compliance with ERISA. No Borrower shall, or shall permit any
Subsidiary to, either: (i) maintain, or permit any member of the Controlled
Group to maintain, or (y) become obligated to contribute, or permit any member
of the Controlled Group to become obligated to contribute, to any Plan, other
than those Plans disclosed on Schedule 5.11(d), (ii) engage, or permit any
member of the Controlled Group to engage, in any non-exempt "prohibited
transaction", as that term is defined in Section 406 of ERISA and Section 4975
of the Code,
42
(iii) incur, or permit any member of the Controlled Group to incur, any
"accumulated funding deficiency", as that term is defined in Section 302 of
ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the
Controlled Group to terminate, any Plan where such event could result in any
liability of any Borrower or any member of the Controlled Group or the
imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.11(d), (vi) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any
ERISA Event, (viii) fail to comply, or permit a member of the Controlled Group
to fail to comply, with the requirements of ERISA or the Code or other
applicable laws in respect of any Plan, (ix) fail to meet, or permit any member
of the Controlled Group to fail to meet, all minimum funding requirements under
ERISA or the Code or postpone or delay or allow any member of the Controlled
Group to postpone or delay any funding requirement with respect of any Plan.
7.13. Prepayment of Indebtedness. No Borrower shall, or shall permit any
Subsidiary to, at any time, directly or indirectly, either: (a) prepay any
Indebtedness, or (b) repurchase, redeem, retire, defease or otherwise acquire
any Indebtedness of any Borrower, or set aside or otherwise deposit or invest
any sums for such purpose; provided, however, that Borrowers may, from time to
time, prepay, repurchase, redeem or retire, in whole or in part, (i) the
Obligations, subject to the terms hereof, including, without limitation, with
respect to any voluntary prepayments of the Term Loan B, the satisfaction of the
conditions set forth in Section 2.2(v) hereof, (ii) the Revolver Loans, subject
to the terms of the Revolver Loan Agreement, (iii) the Series B Preferred Stock,
to the extent expressly permitted by Section 7.5(f) and (iv) the Senior
Subordinated Notes to the extent expressly permitted by Sections 7.3(l) and (n);
and provided, further, that the Borrowers shall prepay in full the Cohanzick
Debt, including any accrued interest thereon, on the Closing Date.
7.14. Payment of Subordinated Debt. No Borrower shall, or shall permit any
Subsidiary to at any time, directly or indirectly pay the principal of, interest
on or any other charge or fee in respect of any Subordinated Debt, except in
accordance with the terms thereof as in effect on the Closing Date and as
expressly permitted in Sections 7.3(l), 7.3(n) or 7.13 or by the Subordination
Agreement applicable thereto, the subordination provisions of the Junior
Subordinated Note or the subordination provisions contained in the Senior
Subordinated Note Indenture. Notwithstanding the foregoing, the Borrowers shall
not make any payments of interest due after the Closing Date and on or prior to
August 1, 2007 with respect to the Senior Subordinated Notes, unless the
Borrowers will have the Target Amount of Undrawn Availability (determined
without deducting the Borrowing Reserve (as defined Revolver Loan Agreement as
in effect on the date hereof)) both before and after giving effect to such
interest payment.
VIII. FINANCIAL COVENANTS.
Borrowers shall, until payment in full of the Obligations and termination
of this Agreement, comply with the Financial Covenants set forth below.
43
8.1. Controlling Definitions. As used in this Article VIII:
"Capital Expenditures" shall mean, as applied to any Person, all
expenditures for any fixed or capital assets (including, but not limited to,
tooling) or improvements, or for replacements, substitutions or additions
thereto, that have a useful life of more than one (1) year, including, but not
limited to, the direct or indirect acquisition of such assets by way of offset
items or otherwise and shall include the amount recorded on the balance sheet of
such Person at the time of the acquisition of any such asset pursuant to a
Capitalized Lease.
"Capitalized Lease" shall mean, as applied to any Person, any lease of (or
any agreement conveying the right to use) any property (whether real, personal
or mixed) by such Person as lessee which, in accordance with GAAP, is required
to be reflected as a liability on the balance sheet of such Person.
"Cash Income Taxes" shall mean, as to any Person, for any period, the
Provision for Taxes less any portion thereof that represents deferred income
taxes unless they become due and payable in the period, all determined in
accordance with GAAP.
"Cash Interest Expense" shall mean, as to any Person, for any period,
Interest Expense less (a) Interest Expense that represents the amortization of
fees and expenses that were paid during prior periods and (b) Interest Expense
on Subordinated Debt that was accrued during such period but is not paid in cash
within thirty (30) days following the due date thereof ("Deferred Interest"),
plus any Deferred Interest paid in cash during such period.
"Consolidated Net Income" shall mean, with respect to any Person for any
period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding any
extraordinary or non-recurring gains or losses), all as determined in accordance
with GAAP; provided, however, that, without duplication, (a) the net income of
any Person that is not a wholly-owned Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid or payable to such Person or a wholly-owned
Subsidiary of such Person; (b) the net income of any Person accrued prior to the
date it becomes a wholly-owned Subsidiary of such Person or is merged into or
consolidated with such Person or any of its wholly-owned Subsidiaries or the
date that Person's assets are acquired by such Person or by any of its
wholly-owned Subsidiaries shall be excluded; (c) the net income of any Person
shall exclude interest accrued, but not paid, on indebtedness owing to a
Subsidiary or parent corporation of such Person that is subordinated in right of
payment to the payment in full of the Obligations, on terms and conditions
acceptable to Agent; (e) the net income (if positive) of any wholly-owned
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such wholly-owned Subsidiary to such Person or to any other
wholly-owned Subsidiary of such Person is not at the time permitted by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such wholly-owned
Subsidiary shall be excluded; (f) the net income of any Person shall exclude any
write-down or write-off of assets resulting from the application of Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
or Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets"; (g) the net income of any Person
shall exclude any items of income (or expense) that are required by GAAP to be
44
classified as non-operating amounts in such Person's statement of income
definition; and (h) the net income of any Person shall exclude any gain or loss
(together with any related Provisions for Taxes) realized upon the sale or other
disposition of any assets that are not sold in the ordinary course of business
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or of any Equity Interest of such Person or a Subsidiary of such
Person and any net income or loss realized as a result of changes in GAAP or the
application thereof to such Person.
"EBITDA" shall mean, as to any Person, with respect to any period, the
Consolidated Net Income of such Person for such period plus the following items,
to the extent deducted in computing Consolidated Net Income for such period: (a)
depreciation and amortization expenses; (b) Interest Expense for such period,
plus (c) the Provision for Taxes for such period.
"Fixed Charge Coverage Ratio" shall mean for any Test Period, the ratio of
(a) EBITDA, less Unfinanced Capital Expenditures to (b) Fixed Charges, for such
Test Period determined for the Borrowers and their Subsidiaries on a
consolidated basis in accordance with GAAP.
"Fixed Charges" shall mean, as to any Person, for any period, the sum,
without duplication, of (a) Cash Interest Expense, plus (b) all regularly
scheduled (as determined at the beginning of such period) principal payments on
Indebtedness (including the portion of any payments under Capitalized Leases
that is classified as principal), other than principal payments for the period
commencing January 1, 2006, to and including the Closing Date on Indebtedness
being repaid from the proceeds of the Revolver Loans and the Term Loans, plus
(c) Cash Income Taxes, plus (d) all cash dividends and distributions on Equity
Interests, together with all repurchases, redemptions and retirements of
preferred stock or similar Equity Interests, to the extent not included in
clauses (a) or (b) of this definition.
"Interest Expense" shall mean, for any period, as to any Person, as
determined in accordance with GAAP, the total interest expense of such Person,
whether paid or accrued during such period (including the interest component of
Capitalized Leases for such period), including, without limitation, discounts in
connection with the sale of any Accounts, but excluding interest paid in
property other than cash and any other interest expense not payable in cash.
"Leverage Ratio" shall mean the ratio for the Borrowers and their
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of any Fiscal Quarter of (a) Senior Debt to (b) EBITDA for the
twelve-month period then ended except that, as of the end of the second and
third Fiscal Quarters of 2006, the Leverage Ratio shall mean the ratio of (a)
Senior Debt to (b) the quotient of (i) EBITDA for the period from January 1,
2006, through the end of such Fiscal Quarter divided by (ii) the Annualization
Ratio. "Annualization Ratio" shall mean (x) .50 as of June 30, 2006, and (y) .75
as of September 30, 2006.
"Senior Debt" shall mean all Indebtedness other than (x) Subordinated Debt
and (y) the Term Loan B.
"Test Period" shall mean the most recent period of twelve consecutive
calendar months ended on or prior to any date of determination (taken as one
accounting period), except that for
45
each calendar month ending on or prior to December 31, 2006, "Test Period" shall
mean the period commencing on January 1, 2006 and ending on such date.
"Unfinanced Capital Expenditures" shall mean any Capital Expenditures not
financed with Indebtedness (it being understood that, notwithstanding the
foregoing, Capital Expenditures paid with the proceeds of revolving loans
pursuant to the Revolver Loan Agreement shall be considered Unfinanced Capital
Expenditures).
8.2. Fixed Charge Coverage Ratio. Borrowers shall maintain a Fixed Charge
Coverage Ratio as of the last day of each calendar month ending after the
Closing Date of not less than: (i) 1.10:1 for each calendar month ending after
the Closing Date and on or prior to November 30, 2007, and (ii) 1.20:1 for each
calendar month ending thereafter.
8.3. Capital Expenditures. Borrowers and their Subsidiaries shall not make
Capital Expenditures in any Fiscal Year in an aggregate amount in excess of: (i)
$5,000,000, for Borrowers' 2006 Fiscal Year; (ii) $5,500,000, for Borrowers'
2007 Fiscal Year; and (iii) $6,000,000, for Borrowers' 2008 Fiscal Year and each
succeeding Fiscal Year.
8.4. Leverage Ratio. Borrowers shall maintain a Leverage Ratio at the end
of each Fiscal Quarter, of not more than: (x) 3.0:1 for each Fiscal Quarter
ending after the Closing Date and prior to June 30, 2007 and (y) 2.50:1 for the
Fiscal Quarter ending June 30, 2007 and each Fiscal Quarter ending thereafter.
IX. CONDITIONS PRECEDENT.
9.1. Conditions to the Term Loans. The agreement of Lenders to make the
Term Loans on the Closing Date is subject to the satisfaction, in the sole
judgment of the Agent and Lenders, or waiver by Lenders, immediately prior to or
concurrently with the making of the Term Loans, of the following conditions
precedent:
(a) Notes. To the extent Notes have been requested by any Lender,
Agent shall have received such Notes duly executed and delivered by a Designated
Officer of each Borrower;
(b) Filings, Registrations, Recordings and Searches. (i) Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any Other Document, under applicable law or
otherwise as reasonably requested by the Agent to be filed, registered or
recorded in order to create, in favor of Agent, a perfected security interest in
or Lien upon the Collateral shall have been properly executed (if necessary) and
delivered to the Agent or the title company for filing, registration or
recordation in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received
satisfactory evidence of the depositing for payment of any necessary fee, tax or
expense relating thereto; (ii) the Agent shall also have received UCC, tax and
judgment lien searches with respect to each Borrower in such jurisdictions as
Agent shall require, and the results of such searches shall be satisfactory to
Agent; and (iii) Agent shall have received from Borrowing Representative, for
each Borrower, the Perfection Certificate;
46
(c) Secretary's Certificates. Agent shall have received a certificate
of the Secretary (or an acceptable substitute officer having similar duties and
powers), of each Borrower, dated the Closing Date, in substantially the form of
Exhibit 9.1(c), unless otherwise acceptable to or required by Agent, certifying
as to (i) the incumbency and signature of the officers of each Borrower
executing this Agreement and any Other Documents, and (ii) the resolutions of
the board of directors of such Borrower authorizing such officers to enter into
and carry out such transactions as are contemplated pursuant to this Agreement
and the Other Documents; and including therewith copies of the Organic Documents
of such Borrower as in effect on the Signing Date;
(d) Good Standing Certificates. Agent shall have received good
standing certificates for each Borrower dated not more than thirty (30) days
prior to the Signing Date, issued by the secretary of state or other appropriate
official of each Borrower's jurisdiction of organization and each jurisdiction
where the conduct of each Borrower's business activities or the ownership of its
properties necessitates qualification;
(e) Legal Opinion. Agent shall have received an opinion of legal
counsel to the Borrowers, in form and content satisfactory to Agent, which shall
cover such matters incidental to the transactions contemplated by this
Agreement, the Notes and all Other Documents as Agent may reasonably require;
(f) No Litigation. (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Authority shall be continuing or
threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with this Agreement or the Other Documents or any of
the transactions contemplated hereby and thereby and which, in the reasonable
opinion of Agent, is deemed material or (B) which could, in the opinion of
Agent, reasonably be expected to have a Material Adverse Effect; and (ii) no
injunction, writ, restraining order or other order of any nature materially
adverse to any Borrower or the conduct of its business or inconsistent with the
due consummation of the transactions contemplated hereby shall have been issued
by any Governmental Authority;
(g) Material Agreements. Agent shall have received and reviewed all
Material Agreements existing on the Signing Date and be satisfied therewith;
(h) Collateral Examination. Agent shall have completed examinations of
its primary Collateral, and be satisfied therewith;
(i) Fees. Agent shall have received all fees and expenses payable to
Agent and Lenders on or prior to the Closing Date pursuant hereto, the Fee
Letters or under any Other Document;
(j) Financial Statements. Agent shall have received copies of the
Initial Projections and copies of the Historical Financial Statements, and be
satisfied therewith;
(k) Insurance. Agent shall have received, in form and content
satisfactory to Agent, certified copies of Borrowers' casualty insurance
policies, together with loss payable endorsements naming Agent as loss payee,
and certified copies of Borrowers' liability insurance policies, together with
endorsements naming Agent as a co-insured;
47
(l) Environmental Reports. If and to the extent that Borrowers own any
Real Property in fee simple on the Closing Date, Agent shall have received
environmental studies and reports prepared by independent environmental
engineering firms experienced in such matters reasonably acceptable to Agent,
with respect to such Real Property reflecting Borrowers' compliance with Section
5.6 hereof;
(m) Control Agreements. Agent shall have received all Lock-Box
Agreements and Blocked Account Agreements required to be delivered as of the
Signing Date pursuant to Section 4.14;
(n) Consents. Agent shall have received any and all Consents necessary
to permit the effectuation of the transactions contemplated by this Agreement
and the Other Documents; and, Agent shall have received such Consents and
waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;
(o) No Adverse Material Effect. Since the end of Borrowers' most
recently completed Fiscal Year for which audited financial statements have been
reported, there shall not have occurred any event, condition or state of facts
which could reasonably be expected to have a Material Adverse Effect;
(p) Landlord's Agreements. Unless Agent otherwise has agreed to waive
such requirement in one or more instances Agent shall have received landlord
agreements in form and content reasonably satisfactory to Agent with respect to
all premises leased by any Borrowers at which Equipment having a fair market
value in excess of the Materiality Threshold is located;
(q) Pledge Agreements. Agent shall have received a pledge agreement
from each Borrower in respect of the Equity Interests of each Subsidiary owned
by it (limited, in the case of Foreign Subsidiaries, to sixty-five percent (65%)
of such Equity Interests), in form and content satisfactory to Agent (the
"Subsidiary Pledge Agreement");
(r) Intellectual Property. To the extent that any Material
Intellectual Property (or applications therefor) is registered with the United
States Patent and Trademark Office or, as appropriate, the United States
Copyright Office as of the Signing Date, the Borrower owning such Material
Intellectual Property shall have executed, as appropriate, a patent security
agreement, a trademark security agreement, and/or a copyright security agreement
in favor of Agent, each to be in form and content satisfactory to Agent;
(s) Closing Certificate. If the Signing Date precedes the Closing
Date, Agent shall have received a closing certificate signed by a Designated
Officer of each Borrower dated the Closing Date, in substantially the form of
Exhibit 9.1(s), stating that (i) all representations and warranties set forth in
this Agreement and the Other Documents are true and correct on and as of such
date, (ii) Borrowers are on such date in compliance with all the terms and
provisions set forth in this Agreement and the Other Documents and (iii) on such
date, no Default or Event of Default has occurred or is continuing;
(t) Undrawn Availability at Closing. Agent shall have received
evidence satisfactory to it that after giving effect to the making of the
initial Revolver Loans being made
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and/or issued under the Revolver Loan Agreement and the payment of all closing
costs associated therewith (regardless whether required to be paid on the
Closing Date), Borrowers shall have Undrawn Availability of at least Six Million
Dollars ($6,000,000) on the Closing Date;
(u) Existing Revolver Lender Loans. The Existing Revolver Lenders
shall have issued pay-off letters in respect of the Existing Revolver Lender
Loans, in a form and substance reasonably satisfactory to Agent, pursuant to
which the Existing Revolver Lenders shall have agreed to release all Existing
Revolver Lender Liens upon receipt of full payment of the Existing Revolver
Lender Loans on the Closing Date other than the Existing Revolver Lenders' and
Existing Revolver Agent's Lien on cash collateral provided in respect of letters
of credit issued by an Existing Revolver Lender that will remain outstanding
after the Closing Date;
(v) Existing Term Lender Loans. The Existing Term Lenders shall have
assigned the Existing Term Lender Loans and the Existing Term Lender Liens on
real property located in the State of New York to the Lenders pursuant to
assignments in form and substance reasonably satisfactory to Agent.
(w) Mortgages. Agent shall have received from each Borrower Mortgages
with respect to all Real Property Collateral owned by such Borrower in fee
simple as of the Closing Date, together with the following, each to be in form
and substance satisfactory to Agent: (i) a mortgagee's title insurance policy
(each a "Title Insurance Policy"), dated the Closing Date together with evidence
that all premiums in respect of such Title Insurance Policy have been paid,
which Title Insurance Policy shall (A) be in an amount reasonably satisfactory
to Agent; (B) insure that the Mortgage insured thereunder creates a valid first
Lien on the Real Property covered by such Mortgage free and clear of all Liens,
defects and encumbrances (except those set forth in the Title Insurance Policy
or otherwise reasonably acceptable to Lender); (C) name Agent as the insured
party thereunder; (D) be in the form of ALTA Loan Policy 1970 (as amended) or
other form approved by Agent, and (E) contain such endorsements and effective
coverage as Agent may reasonably request; (ii) a physical survey containing maps
or plats of the perimeter or boundaries of the Real Property covered by the
Mortgage, certified to Agent and the title insurance company insuring such
Mortgage, in a manner acceptable to each of them, dated a date satisfactory to
Agent and such title insurance company (a "R.L.S."), by an independent
professionally licensed land surveyor reasonably satisfactory to Agent and such
title insurance company which survey shall indicate the following: (A) the
locations on such site of all the buildings, structures and other improvements
and the established building setback lines insofar as the foregoing affect the
perimeter or boundary of such property; (B) the lines of streets abutting the
site and width thereof; (C) all access and other easements appurtenant to the
site or necessary or desirable to use the site; (D) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the site or otherwise known to the surveyor, (E) any encroachments
on any adjoining property by any building structures and improvements on the
site, and (F) if the site is described as being on a filed map, a legend
relating the survey to said map, all in form reasonably satisfactory to Agent;
together with certification from the R.L.S., reasonably satisfactory to Agent,
as to the location of the Real Property covered by the Mortgage in any "special
flood hazard" area within the meaning of the Federal Flood Disaster Protection
Act of 1973; and (iii) opinions of local legal counsel to Borrowers in each
State or
49
other jurisdiction where the Mortgage is to be recorded, as to such Mortgage and
such related matters as Agent may reasonably request.
(x) Revolver Loans. Borrowers shall have consummated all transactions
contemplated with the Revolver Loan Agent and the Revolver Loan Lenders
substantially in accordance with the terms of the Revolver Loan Agreement as in
effect on the Closing Date, and received the proceeds of the initial Revolver
Loan.
(y) Intercreditor Agreement. Agent and Revolver Loan Agent shall have
executed and delivered the Intercreditor Agreement.
(z) Intentionally Omitted.
(aa) Appraised Values. Agent shall have received current Appraisals,
satisfactory to it, indicating that seventy-five percent (75%) the appraised
fair market value of Borrowers owned Real Properties, equals at least the sum of
the original principal amount of the Term Loan A.
(bb) Minimum EBITDA. Agent shall have received evidence satisfactory
to it that the Borrowers had EBITDA of at least (x) Twelve Million Dollars
($12,000,000) for the twelve month period ended as of April 30, 2006 and (y)
Four Million Dollars ($4,000,000) for the four month period ended as of April
30, 2006.
(cc) IRS Form 8821. Each Borrower shall have executed and filed IRS
Form 8821 with the appropriate office of the Internal Revenue Service.
(dd) Other Documents. Agent shall have received all Other Documents
which Agent determines to be necessary to consummate the transactions
contemplated to occur on or after the Closing Date pursuant to this Agreement,
and all corporate and other proceedings, and all documents, instruments and
other legal matters in connection with the transactions contemplated herein
shall be satisfactory in form and substance to each Lender Party and its legal
counsel.
(ee) Representations and Warranties. Each of the representations and
warranties made by any Borrower in or pursuant to this Agreement and any Other
Document to which it is a party, and each of the representations and warranties
of any Borrower contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any Other Document shall be true and correct in all material respects on and as
of the Closing Date as if made on and as of such date, except to the extent that
any of such representations or warranties specifically relate to an earlier date
or became untrue by reason of events or conditions otherwise permitted to occur
hereunder; and
(ff) No Default. No Event of Default or Default shall have occurred
and be continuing on the Closing Date, or would occur and be continuing after
giving effect to the consummation of the transactions contemplated hereby.
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X. INFORMATION AS TO BORROWERS.
Each Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
10.1. Disclosure of Material Matters. Promptly upon learning thereof, but
in any event within five (5) Business Days thereafter, report to Agent all
matters materially and adversely affecting the value, or collectibility of any
portion of the Collateral in excess of the Materiality Threshold or the
enforceability of Agent's Lien thereon.
10.2. Environmental Compliance Certificate. Furnish Agent, promptly at its
request from time to time, but in any event within five (5) Business Days after
Borrowers' receipt of such request, a certificate signed by a Designated Officer
of Borrowing Representative stating that, to the best of Borrowing
Representative's knowledge, each Borrower is in compliance in all Environmental
Laws and laws relating to occupational safety and health. To the extent any
Borrower is not in compliance with the foregoing laws, the certificate shall set
forth with specificity all areas of non-compliance and the proposed action
Borrower will implement in order to achieve full compliance.
10.3. Litigation. Promptly upon learning thereof, but in any event within
five (5) Business Days thereafter, notify Agent in writing of: (i) any
Commercial Tort Claim arising in a Borrower's favor subsequent to the Closing
Date, or (ii) any litigation, suit or administrative proceeding affecting any
Borrower, including, particularly, any Commercial Tort Claim, whether or not the
claim is covered by insurance, and of any suit or administrative proceeding,
which in any such case could reasonably be expected to have a Material Adverse
Effect.
10.4. Material Occurrences. Promptly upon learning thereof, but in any
event within five (5) Business Days thereafter, notify Agent in writing of: (a)
any Event of Default or Default; (b) any event, development or circumstance
whereby any financial statements or other reports furnished to Agent fail to
present fairly in all material respects, in accordance with GAAP consistently
applied, the consolidated financial condition or operating results of the
Borrowers as of the date of such statements; (c) any accumulated retirement plan
funding deficiency which, if such deficiency continued for two (2) plan years
and was not corrected as provided in Section 4971 of the Code, could subject any
Borrower to a tax imposed by Section 4971 of the Code; (d) default by any
Borrower in respect of any Indebtedness that exceeds the Materiality Threshold
and could reasonably be expected to result in the acceleration of the maturity
of such Indebtedness, other than the Obligations, together with the names and
addresses of the holders of such Indebtedness and the amount of such
Indebtedness; (e) the termination (or receipt of notice of pending termination)
of any Material Agreement; and (f) any other development in the business or
affairs of the Borrowers which could reasonably be expected to have a Material
Adverse Effect; in each case, describing the nature thereof and the action that
Borrowers propose to take with respect thereto.
10.5. Government Receivables. Promptly upon learning thereof, but in any
event within five (5) Business Days thereafter, if the aggregate outstanding
amount of any of its Receivables that arise out of contracts between any
Borrower and the United States, any state, or any department, agency or
instrumentality of any of them, exceeds the Materiality Threshold.
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10.6. Annual Financial Statements. Furnish to Agent within one hundred
(100) days after the end of each Fiscal Year of Borrowers financial statements
of Borrowers on a consolidated basis, including, but not limited to, statements
of income and stockholders' equity and cash flow from the beginning of the
current Fiscal Year to the end of such Fiscal Year and a balance sheet as at the
end of such Fiscal Year, all prepared in accordance with GAAP applied on a basis
consistent with prior practices, and in reasonable detail and reported upon
without qualification by Ernst & Young LLP or any other nationally recognized
independent certified public accounting firm selected by Borrowers, but
reasonably satisfactory to Agent (the "Accountants"). In addition, such
financial statements shall be accompanied by a certificate of a Designated
Officer of the Borrowing Representative, in substantially the form of Exhibit
10.6, that shall state that, based on an examination sufficient to permit
Borrowing Representative to make an informed statement, no Default or Event of
Default has occurred and is continuing, or, if such is not the case, specifying
the nature of such Default or Event of Default, when it occurred, and the steps
being taken by Borrowers with respect to such event, and such certificate shall
have appended thereto calculations that set forth Borrowers' compliance with the
Financial Covenants (herein, a "Compliance Certificate").
10.7. Monthly Financial Statements. Furnish to Agent within fifty (50) days
following the end of the first three (3) Fiscal Quarters of each Fiscal Year and
within thirty (30) days following the end of each other Fiscal Month (except the
last Fiscal Month of each Fiscal Year), an unaudited balance sheet of Borrowers
on a consolidated basis and unaudited statements of income and stockholders'
equity and cash flow of Borrowers on a consolidated basis reflecting results of
operations from the beginning of the Fiscal Year to the end of such Fiscal Month
and for such Fiscal Month, prepared on a basis consistent with prior practices
but in accordance with GAAP (together with comparative reports for the
corresponding period(s) in the prior Fiscal Year and Projections for the current
Fiscal Year required under Section 10.8). The reports shall be accompanied by a
Compliance Certificate of Borrowers signed by a Designated Officer of Borrowing
Representative stating that, based on an examination sufficient to permit
Borrowing Representative to make an informed statement, no Default or Event of
Default has occurred and is continuing, or, if such is not the case, specifying
the nature of such Default or Event of Default, when it occurred, and the steps
being taken by Borrowers with respect to such event, and such certificate shall
have appended thereto calculations that set forth Borrowers' compliance with the
Financial Covenants.
10.8. Projections. Furnish to Agent prior to the first day of each Fiscal
Year, commencing with its first Fiscal Year beginning after the Closing Date,
month-by-month projected financial statements of Borrowers on a consolidated
basis for such Fiscal Year, including balance sheets, income statements,
statements of cash flow, and calculations of projected Financial Covenant
compliance (including projected amounts of all financial components used in
determining compliance) for such month, with such projections to be accompanied
by a certificate of the Borrowers signed by a Designated Officer of the
Borrowing Representative to the effect that such projected financial statements
were prepared by Borrowers in good faith based on assumptions believed by
Borrowers to be reasonable at the time being made, it being understood that such
projections are not to be viewed as facts and that actual results may differ
from projections.
52
10.9. Variances From Operating Budget. Furnish to Agent, concurrently with
the delivery of the financial statements referred to in Section 10.7, a summary
of all material variances from projected financial statements submitted by
Borrowers pursuant to Section 10.8.
10.10. Notice of Adverse Events. Promptly upon learning thereof, but in any
event within five (5) Business Days thereafter, furnish to Agent written notice
of (i) any lapse or other termination of any Consent issued to any Borrower by
any Governmental Authority or any other Person that is material to the operation
of any Borrower's business, (ii) any refusal by any Governmental Authority or
any other Person to renew or extend any such Consent; (iii) copies of any
periodic or special reports filed by any Borrower with any Governmental
Authority, if such reports indicate any material change in the business,
operations, affairs or condition of any Borrower, taken as a whole, or if copies
thereof are requested by any Lender Party.
10.11. ERISA Notices and Requests. Promptly upon learning thereof, but in
any event within five (5) Business Days thereafter, furnish to Agent written
notice in the event that (i) any Borrower or any member of the Controlled Group
knows that an ERISA Event has occurred, together with a written statement
describing such ERISA Event and the action, if any, that such Borrower or member
of the Controlled Group has taken, is taking, or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal Revenue
Service, Department of Labor or PBGC with respect thereto, (ii) any Borrower or
any member of the Controlled Group knows or has reason to know that a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred together with a written statement describing such transaction and the
action that such Borrower or any member of the Controlled Group has taken, is
taking or proposes to take with respect thereto, (iii) a funding waiver request
has been filed with respect to any Plan together with all communications
received by any Borrower or any member of the Controlled Group with respect to
such request, (iv) any increase in the benefits of any existing Plan or the
establishment of any new Plan or the commencement of contributions to any Plan
to which any Borrower or any member of the Controlled Group was not previously
contributing shall occur, (v) any Borrower or any member of the Controlled Group
shall receive from the PBGC a notice of intention to terminate a Plan or to have
a trustee appointed to administer a Plan, together with copies of each such
notice, (vi) any Borrower or any member of the Controlled Group shall receive
any favorable or unfavorable determination letter from the Internal Revenue
Service regarding the qualification of a Plan under Section 401(a) of the Code,
together with a copy of each such letter; (vii) any Borrower or any member of
the Controlled Group shall receive a notice regarding the imposition of
withdrawal liability, together with a copy of each such notice; (viii) any
Borrower or any member of the Controlled Group shall fail to make a required
installment or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment; (ix) any Borrower or any
member of the Controlled Group knows that (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
10.12. Material Intellectual Property. Notify Agent promptly after, but in
any event within five (5) Business Days thereafter, if, subsequent to the
Closing Date, any Borrower applies for, or acquires, any Material Intellectual
Property registered (or registrable) under applicable federal law, and execute
and deliver to Agent, upon request, such security agreements
53
in respect thereof as Agent may request to evidence, confirm or perfect Agent's
Lien on and security interest in such Collateral.
10.13. Public Reports. Furnish to Agent, promptly after, but in any event
within five (5) Business Days after, the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials (if any)
filed by any Borrower with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed to the
owners of Borrowers' Equity Interests generally or to the holders of its
Indebtedness (or any trustee, agent or to other representative therefor), as the
case may be:
10.14. Material Agreements. Furnish to Agent copies of: (i) all Material
Agreements entered into subsequent to the Signing Date, promptly after, but in
any event within five (5) Business Days after, the same become effective (or as
otherwise provided herein); (ii) all material amendments, modifications,
alterations or other changes to any Material Agreements promptly upon, but in
any event within five (5) Business Days after, the same become effective (or as
otherwise provided herein); (iii) any notices of default, termination,
rescission or cancellation, or demands for payment made or received by any
Borrower in respect of any Material Agreement, promptly after, but in any event
within five (5) Business Days after, their receipt or delivery by such Borrower.
10.15. Additional Information. Furnish to Agent such additional information
as Agent shall reasonably request in order to enable Agent to determine whether
the terms, covenants, provisions and conditions of this Agreement and the Notes
have been complied with by Borrowers including, without limitation and without
the necessity of any request by Agent, (a) copies of all environmental audits
and reviews, (b) at least thirty (30) days prior thereto, notice of any
Borrower's opening or establishing of any new Collateral Location or any
Borrower's closing of any existing Collateral Location, and (c) promptly upon
any Borrower's learning thereof, notice of any labor dispute to which any
Borrower may become a party, any strikes or walkouts at any of its plants or
other facilities, or the expiration (other than in accordance with its terms) of
any labor contract to which any Borrower is a party or by which any Borrower is
bound.
10.16. Additional Documents. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
XI. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
11.1. Obligations. (i) Failure by any Borrower to pay the principal amount
of any Obligations when due, or (ii) failure by any Borrower to pay any
Obligations consisting of interest and fees within two (2) Business Days after
the date when due, or (iii) failure by Borrower to pay any other Obligations not
described in clauses (i) or (ii) above within five (5) Business Days after the
date when due; in each such case, whether at maturity or by reason of
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acceleration pursuant to the terms of this Agreement or any Other Document or by
notice of intention to prepay, or by required prepayment;
11.2. Misrepresentations. Any representation or warranty of any material
fact, circumstance or condition made or deemed made by any Borrower in this
Agreement or any Other Document or in any certificate, document or financial or
other written statement furnished by any Borrower at any time in connection
herewith or therewith shall prove to have been misleading in any material
respect on the date when made or deemed to have been made;
11.3. Financial Information. Failure by any Borrower to (i) furnish
financial information when due or when requested pursuant hereto that is
unremedied for a period of five (5) Business Days, or (ii) permit the inspection
of its books or records by any Lender Party, when requested pursuant to Section
4.10;
11.4. Liens. Issuance of a notice of Lien, levy, assessment, injunction or
attachment against any Borrower's property having a collateral value, as
determined by Agent, of more than the Materiality Threshold that is not stayed
or lifted within thirty (30) days (but not later than its being executed,
however);
11.5. Covenants. Either (i) except as otherwise provided in Section 11.3(i)
above or clause (ii) of this Section 11.5, failure of any Borrower to perform,
keep or observe any term, provision, condition, covenant herein contained, or
contained in any Other Document; or (ii) a failure of Borrowers to perform, keep
or observe any term, provision, condition or covenant, contained in Sections
4.6, 4.7, 4.9, 4.11, 6.3 or 6.4 hereof that is not cured within twenty (20) days
from the occurrence of such failure;
11.6. Judgments. Any judgment is rendered or judgment Lien is filed against
any Borrower for an amount in excess of the Materiality Threshold which is not
either satisfied, stayed or discharged of record within thirty (30) days of such
rendering or filing (but not later than its being executed, however);
11.7. Voluntary Bankruptcy. Any Borrower, any Subsidiary of any Borrower or
any Guarantor shall (i) apply for, consent to or suffer the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) apply for, consent
to or suffer the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or of all or a
substantial part of its property, (vi) admit in writing its inability, or be
generally unable, to pay its Indebtedness as it becomes due, (vii) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, or (viii) take any action for the purpose of effecting any of the
foregoing;
11.8. Cessation of Business. Any Borrower shall cease operation of its
business or commence the liquidation of such business; or any Borrower shall
give notice to Agent of its intent to undertake either of the foregoing
measures;
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11.9. Involuntary Bankruptcy. Any Borrower, any Subsidiary of a Borrower or
any Guarantor shall acquiesce in, or fail to have dismissed within forty-five
(45) days, any petition filed against it in any involuntary case under any state
or federal bankruptcy law (as now or hereafter in effect), or take any action
for the purpose of effecting any of the foregoing;
11.10. Material Adverse Change. Any change in any Borrower's condition or
affairs (financial or otherwise) which in Agent's opinion has a Material Adverse
Effect unless such Borrower remedies same to Agent's satisfaction within thirty
(30) days after the Borrowing Representative receives written notice thereof
from Agent;
11.11. Agent's Liens. Any Lien on any Collateral created hereunder or
provided for hereby or under any Other Document ceases to be or is not a valid
and perfected Lien having a first priority interest, except for any Permitted
Encumbrance having Lien priority;
11.12. Subordinated Debt. An event of default shall occur under or in
respect of any Subordinated Debt that causes the acceleration of, or entitles
the holder thereof to cause the acceleration of, any Subordinated Debt, or any
payment is made or received in respect of any Subordinated Debt in violation of
the subordination provisions thereof, the terms hereof or the terms of any
Subordination Agreement made with respect thereto.
11.13. Cross Default. Either: (i) any "Event of Default" (as defined
herein) under the Revolver Loan Agreement shall occur and be continuing (unless
waived in writing by the Revolver Loan Lenders); or (ii) any "Event of Default"
(as defined therein) under the Senior Subordinated Note Indenture shall occur
and be continuing (unless waived in writing by the holders of the Senior
Subordinated Notes); or (iii) any "Event of Default" (as defined therein) shall
occur under the Junior Subordinated Notes shall occur and be continuing (unless
waived in writing by the holders of the Junior Subordinated Notes); or (iv) a
default of the obligations of any Borrower under any other Material Agreement
which involves a monetary obligation in excess of the Materiality Threshold,
whether individually or in the aggregate, shall occur, which default is not
cured (or waived in writing) within any applicable grace period;
11.14. Guaranty. Termination (except by its express terms) or breach of any
Guaranty or similar agreement executed and delivered to Agent in connection with
the Obligations of any Borrower, or if any Guarantor attempts to terminate,
challenges the validity of, or its liability under, any such Guaranty or similar
agreement;
11.15. Change of Control. Any Change of Control shall occur;
11.16. Change of Management. Any Change of Management shall occur;
11.17. Invalidity. Any material provision of this Agreement or any Other
Document shall, for any reason, cease to be valid and binding on any Borrower,
or any Borrower shall so claim in writing to Agent;
11.18. Takings. (i) Any Governmental Authority shall revoke, terminate,
suspend or adversely modify any license, permit, patent trademark or trade name
of any Borrower, the continuation of which is material to the continuation of
any Borrower's business, or (ii) any agreement that is necessary or material to
the operation of any Borrower's business shall be
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suspended, revoked or terminated and not be reinstated or replaced by a
substitute acceptable to Agent within thirty (30) days after the date of
suspension, revocation or termination, and such suspension, revocation or
termination without reinstatement or replacement would reasonably be expected to
have a Material Adverse Effect;
11.19. Seizures. Any portion of the Collateral in excess of the Materiality
Threshold shall be seized or taken by a Governmental Authority, or any Borrower
or the title and rights of any Borrower shall have become the subject matter of
litigation which could reasonably be expected, in the opinion of Agent, upon
final determination, to result in material impairment or loss of such
Collateral;
11.20. Cessation of Operations. Unless and except to the extent occurring
in the ordinary course of Borrowers' business as conducted on the Closing Date,
any material portion of the business operations of the Borrowers (considered as
a whole) are interrupted at any time for more than ten (10) consecutive Business
Days during any period of thirty (30) consecutive days, unless (i) such
cessation of operations occurs in the ordinary course of Borrowers' business;
e.g., an annual plant shut down for re-tooling or maintenance or (ii) the
Borrowers shall (A) be entitled to receive for such period of interruption,
proceeds of business interruption insurance sufficient to enable them to
continue to operate their business in substantially the same manner as operated
prior to such interruption and meet their obligations when due during such
interruption and (B) receive the proceeds described in clause (A) preceding not
later than thirty (30) days following the initial date of any such interruption;
provided, however, that notwithstanding the provisions of clauses (A) and (B) of
this section, an Event of Default shall be deemed to have occurred if such
interruption of operations continues for a period of more than one hundred
eighty (180) consecutive days; or
11.21. Plans. An event or condition specified in Section 7.12 or Section
10.11 hereof shall occur or exist with respect to any Plan and, as a result of
such event or condition, together with all other such events or conditions, any
Borrower or any member of the Controlled Group shall incur, or in the opinion of
Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both)
that, in the judgment of Agent, could reasonably be expected to have a Material
Adverse Effect.
11.22. Criminal Charges. Any Borrower or any Designated Officer shall
become the subject of a criminal indictment or investigation in respect of or
pertaining to, the operation or conduct of a Borrower's business, its reporting
of any financial data, its application for, or receipt of, any credit, its
"laundering" of any funds or its non-payment (or underpayment) of any taxes or
any other Charges, or shall admit its guilt or complicity in respect of any of
the foregoing, or shall pay any fine or suffer any penalty in respect thereof
(including as part of any plea bargain or similar arrangement).
XII. AGENT'S AND LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
12.1. Rights and Remedies.
(a) Upon and after the occurrence of an Event of Default pursuant to
Sections 11.7, 11.8, 11.9 or 11.20, all Obligations shall be immediately due and
payable and this
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Agreement shall be deemed terminated. During the existence of any other Event of
Default not specified in the preceding sentence, at the option of (x) Required
Term A Lenders all Obligations in respect of the Term Loan A shall be
immediately due and payable, or (y) the Required Term B Lenders, subject to
Section 12.1(b), all Obligations in respect of the Term Loan B shall be
immediately due and payable and, in each case, Lenders shall have the right to
terminate this Agreement. Upon the occurrence of any Event of Default and during
its continuation, Agent shall have the right to exercise any and all other
rights and remedies provided for herein, under the Uniform Commercial Code and
at law or in equity generally, including, without limitation, the right to
foreclose the security interests granted herein and to realize upon any
Collateral by any available judicial procedure and/or to take possession of and
sell any or all of the Collateral with or without judicial process. Agent may
enter any Borrower's premises or other premises without legal process and
without incurring liability to any Borrower therefor, and Agent may thereupon,
or at any time thereafter, in its discretion without notice or demand, take the
Collateral and remove the same to such place as Agent may deem advisable and
Agent may require Borrowers to make the Collateral available to Agent at a
convenient place. With or without having the Collateral at the time or place of
sale, Agent may sell the Collateral, or any part thereof, at public or private
sale, at any time or place, in one or more sales, at such price or prices, and
upon such terms, either for cash, credit or future delivery, as Agent may elect.
Except as to that part of the Collateral that is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Agent shall give Borrowers reasonable notification of such sale or
sales, it being agreed that in all events written notice mailed to Borrowers at
least ten (10) days prior to such sale or sales is reasonable notification. At
any public sale Agent or any Lender may bid for and become the purchaser, and
Agent, any Lender or any other purchaser at any such sale thereafter shall hold
the Collateral sold absolutely free from any claim or right of whatsoever kind,
including any equity of redemption and such right and equity are hereby
expressly waived and released by each Borrower. In connection with the exercise
of the foregoing remedies, Agent is granted permission to use all of each
Borrower's trademarks, trade styles, trade names, patents, patent applications,
licenses, franchises and other proprietary rights that are used in connection
with (a) Inventory for the purpose of disposing of such Inventory and (b)
Equipment for the purpose of completing the manufacture of Inventory.
Notwithstanding anything in this Agreement to the contrary, the exercise by any
Lender Party of any rights or remedies in respect of any Collateral, and the
application of any proceeds thereof, shall be subject in all respects to the
provisions of the Intercreditor Agreement.
(b) Upon the occurrence of an Event of Default, the Term B Lenders
shall be permitted to accelerate the Obligations in respect of the Term Loan B
and institute a legal proceeding against the Borrowers solely with respect to
the Borrowers' nonpayment of any Obligations then due and payable to the Term B
Lenders hereunder, provided, however, that in no event shall the Term B Lenders
have any ability to take any Lien Enforcement Action or otherwise exercise (or
cause the Agent to exercise) any remedies against the Collateral or any other
remedies against the Borrowers until the earlier of (x) the payment in full in
cash of all Obligations owed to the Term A Lenders and the Agent in respect of
the Term Loan A or (y) the expiration of the Standstill Period. For purposes of
this Section 12.1, "Standstill Period" means the period of time terminating on
the 180th day after the date written notice is given to the Agent by the
Required Term B Lenders that the Term B Lenders have accelerated the Obligations
in respect of the Term Loan B, provided that the Standstill Period shall be
extended so long as Agent is diligently pursuing in good faith the exercise of
its enforcement rights or remedies
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against all or a material portion of the Collateral (including without
limitation, any of the following: solicitation of bids from third parties to
conduct the liquidation of all or a material portion of the Collateral, the
engagement or retention of sales brokers, marketing agents, investment bankers,
accountants, auctioneers or other third parties for the purpose of valuing,
marketing, promoting or selling a material portion of the Collateral,
notification of account debtors to make payments to Agent or its agents, any
action to take possession of all or any material portion of the Collateral or
commencement of any legal proceedings or actions against or with respect to all
or any material portion of the Collateral) or diligently attempting to vacate
any stay of enforcement of its Liens on all or a material portion of the
Collateral.
12.2. Application of Proceeds. The proceeds realized by Agent from the sale
of any Collateral made pursuant to Section 12.1(a) hereof, shall, subject to the
provisions of the Intercreditor Agreement, be applied as follows: first, to the
costs, expenses and attorneys' fees and expenses actually incurred by Agent for
collection and for acquisition, completion, protection, removal, storage, sale
and delivery of the Collateral; second, to any fees then due to any Lender Party
pursuant hereto or under any Other Document; third, to interest on the Term Loan
A then accrued, but unpaid; fourth, to the principal of amount of the Term Loan
A then outstanding; fifth, to interest on the Term Loan B then accrued, but
unpaid; sixth, to the principal of amount of the Term Loan B then outstanding;
and, lastly, to all other Obligations then outstanding. If any deficiency shall
arise, Borrowers shall remain liable to the Lender Parties therefor. If any
surplus exists, such surplus shall be held by Agent as cash Collateral pending
full payment and satisfaction of all Obligations and termination of this
Agreement, after which any remainder shall be returned to the Borrowing
Representative except as otherwise provided in the Intercreditor Agreement or is
otherwise then required under applicable law. Notwithstanding anything to the
contrary contained herein, the Lien granted to the Agent for the benefit of the
Term A Lenders shall be deemed to be separate and distinct from the Lien granted
to the Agent for the benefit of the Term B Lenders, and to the extent that,
under the foregoing provisions, the Term A Lenders are entitled to be paid from
the proceeds of Collateral prior to the Term B Lenders, each of the parties
hereto agrees that the priority provisions of this Section 12.2 shall be
enforceable under Section 510 of the Bankruptcy Code as effecting a
subordination of the interests of the Term B Lenders to the Term A Lenders.
12.3. Agent's Discretion. After an Event of Default has occurred and while
it is continuing, Agent shall have the right in its sole discretion to determine
which rights, Liens, security interests or remedies Agent may at any time
pursue, relinquish, subordinate, or modify or to take any other action with
respect thereto; provided that such determination will not in any way modify or
affect any Lender Party's rights hereunder, including, without limitation, with
respect to the Term B Lenders after the expiration of the Standstill Period.
12.4. Setoff.
(a) Establishment of Right. In addition to any other rights which any
Lender Party may have under applicable law, upon the occurrence of an Event of
Default and during its continuation, each Lender Party shall have a right of
setoff as to, and may apply, any Borrower's property held by it (actually or
constructively) to reduce the Obligations, subject to the provisions of the
Intercreditor Agreement; provided, however, that no Lender Party shall have any
such right of setoff, appropriation or application against any Payroll Account.
Each Lender
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Party agrees to notify the Borrowing Representative and the Agent after any such
setoff and application is made by such Lender Party, provided that its failure
to give such notice shall not affect the validity of such setoff and
application.
(b) Benefited Lender Parties. If any Lender Party (a "Benefited
Party") shall at any time receive any payment of all or part of any Term Loan
held by such Lender Party, or interest thereon, or other Obligations owing under
this Agreement or the Other Documents or receive any Collateral in respect
thereof (whether voluntarily or involuntarily, by setoff, pursuant to events or
proceedings of the nature referred to in Section 11.7 or Section 11.9 or
otherwise), in a greater proportion than any such payment to or Collateral
received by any other Lender Party, if any, in such Term Loan, or interest
thereon, or other Obligations owing under this Agreement or the Other Documents,
such Benefited Party shall purchase for cash from each affected Lender Party
holding such Term Loan a participating interest in such portion of each such
other Lender Party's Term Loan or other Obligations owing under this Agreement
or Other Documents, or shall provide each such Lender Party with the benefits of
any such Collateral, or the proceeds thereof, as shall be necessary to cause
such Benefited Parties to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lender Parties; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Party, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrowers agree that each Lender Party so
purchasing a portion of another Lender Party's Term Loan or other Obligations
owing under this Agreement or the Other Documents may exercise all rights of
payment (including, without limitation, but subject to the provisions of clause
(c) of this Section 12.4, rights of setoff) with respect to such portion
purchased as fully as if such Lender Party were the direct holder thereof.
12.5. Rights and Remedies not Exclusive. The enumeration of the foregoing
rights and remedies of the Lender Parties is not intended to be exhaustive, and
the exercise of any rights or remedies by the Lender Parties shall not preclude
the exercise of any other right or remedies provided for herein or in any Other
Document or otherwise provided by law from and after the occurrence of any Event
of Default and during its continuation, all of which shall be cumulative and not
alternative.
XIII. WAIVERS AND JUDICIAL PROCEEDINGS.
13.1. Waiver of Notice. Each Borrower hereby waives notice of non-payment
of any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Collateral received or delivered, or any
other action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
13.2. Delay. No delay or omission on any Lender Party's part in exercising
any right, remedy or option hereunder or under Other Documents shall operate as
a waiver of such right, remedy or option or of any Default or Event of Default.
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13.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT, OR (B) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR ANY RELATED
TRANSACTIONS; IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT OR TORT OR OTHERWISE, AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIV. EFFECTIVE DATE AND TERMINATION.
14.1. Term. This Agreement, which shall inure to the benefit of, and shall
be binding upon, the respective successors and permitted assigns of each
Borrower and each Lender Party; shall become effective on the Signing Date, and
shall continue in full force and effect until May 15, 2009 (the "Term") or any
earlier date on which the Term Loans, together with all accrued interest
thereon, and all other Obligations are fully paid and satisfied or this
Agreement is otherwise terminated in accordance with its terms.
14.2. Termination. The termination of this Agreement shall not affect the
rights of any Borrower or any Lender Party, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, all rights or interests created hereby, and all of the Obligations
have been fully disposed of, concluded or liquidated. The security interests,
Liens and rights granted to Agent for the benefit of the Lender Parties
hereunder and the financing statements filed in respect thereof shall continue
in full force and effect, notwithstanding the termination of this Agreement or
the fact that Borrowers' Account may from time to time be temporarily in a zero
or credit position, until all of the Obligations of each Borrower have been paid
or performed in full after the termination of this Agreement or each Borrower
has furnished the Lender Parties with an indemnification satisfactory to such
parties with respect thereto. Accordingly, each Borrower waives any rights that
it may have under the applicable provisions of the Uniform Commercial Code to
demand the filing of termination statements with respect to the Collateral, and
Agent shall not be required to deliver such termination statements to the
Borrowers, or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations paid in full in immediately available funds. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until all Obligations are paid or performed in full.
Notwithstanding any other provision of this Agreement or any Other Document, no
termination of this Agreement shall affect Agent's or any Lender's rights or any
of the Obligations existing as of the effective date of such termination, and
the provisions of this Agreement and the Other Documents shall continue to be
fully operative until the Obligations have been fully performed and indefeasibly
paid in
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cash in full. The Liens granted to Agent hereunder and under the Other Documents
and the financing statements filed pursuant thereto and the rights and powers of
Lender shall continue in full force and effect notwithstanding the fact that
Borrowers' borrowings hereunder may from time to time be in a zero or credit
position until all of the Obligations have been fully performed and indefeasibly
paid in full in cash.
XV. REGARDING AGENT.
15.1. Appointment. Each Lender Party hereby designates CSE to act as Agent
for such Lender Party under this Agreement and the Other Documents. Each Lender
Party hereby irrevocably authorizes Agent to take such action on its behalf
under the provisions of this Agreement and the Other Documents and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of Agent by the terms hereof and thereof
and such other powers as are reasonably incidental thereto and Agent shall hold
all Collateral, payments of principal and interest and all fees, charges and
collections received pursuant to this Agreement, for the ratable benefit of the
Lender Parties, except the fees and other amounts payable to Agent as set forth
in the CSE Fee Letter. Agent may perform any of its duties hereunder by or
through its agents or employees. As to any matters not expressly provided for by
this Agreement (including without limitation, collection of the Obligations),
but may act or refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the requisite Lenders as
provided in this Agreement, which instructions shall be binding; provided,
however, that Agent shall not be required to take any action that exposes Agent
to liability or that is contrary to this Agreement or the Other Documents or
applicable law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto from the Lender Parties.
15.2. Nature of Duties. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent, nor any of its officers, directors, employees or agents, shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Borrower or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by any of them under or in connection with, this Agreement or any of
the Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of any Borrower to perform its obligations hereunder or under
any Other Documents. Agent shall not be under any obligation to any Lender Party
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 of the Other
Documents, or to inspect the properties, books or records of any Borrower. The
duties of Agent with respect to the Term Loans shall be mechanical and
administrative in nature; Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in this Agreement,
express or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Agreement or any Other Document, except
as expressly set forth herein or therein.
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15.3. Lack of Reliance on Agent and Resignation. Independently and without
reliance upon Agent, each other Lender Party has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
each Borrower in connection with the making and carrying of the Term Loans or
any other Obligations and the taking or not taking of any action in connection
herewith, and (ii) its own appraisal of the creditworthiness of each Borrower.
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender Party with any credit or other information with
respect thereto, whether coming into its possession before the making of the
Term Loans or at any time or times thereafter except as shall be provided by any
Borrower pursuant to the terms hereof. Agent shall not be responsible to any
Lender Party for any recitals, statements, information, representations or
warranties herein or in any agreement, document, certificate or statement
delivered in connection with or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
Other Document, or for the financial condition of any Borrower, or be required
to make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement, the Notes, the Other
Documents or the financial condition of any Borrower, or the existence of any
Event of Default or any Default. Agent may resign on thirty (30) days' written
notice to each of the Lenders and, upon such resignation, the Required Lenders
will promptly designate a successor Agent. If no such successor Agent is
appointed at the end of such thirty (30) day period, Agent may designate one of
the existing Lenders as a successor Agent. Any such successor Agent shall
succeed to the rights, powers and duties of Agent, and the term "Agent" shall
mean such successor Agent effective upon its appointment, and the former Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent. After any Agent's
resignation as Agent, the provisions of this Article shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
15.4. Certain Rights of Agent. If Agent shall request instructions from
Lenders with respect to any act or action (including any failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders (or the requisite Lenders as
otherwise provided in this Agreement); and Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, no Lender
Party shall not have any right of action whatsoever against Agent as a result of
its acting or refraining from acting hereunder in accordance with the
instructions of the Required Lenders (or the requisite Lenders as otherwise
provided in this Agreement).
15.5. Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person, and, with respect to all
legal matters pertaining to this Agreement and the Other Documents and its
duties hereunder, upon advice of counsel selected by it. Agent may employ agents
and attorneys-in-fact and shall not be liable for the default or misconduct of
any such agents or attorneys-in-fact selected by Agent with reasonable care.
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15.6. Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence, continuation or cessation of any Default or Event of
Default unless Agent has received notice from a Lender Party or a Borrower
referring to this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a "notice of default" (or a
notice in respect of the continuation or cessation thereof). In the event that
Agent receives such a notice, Agent shall give notice thereof to all other
Lender Parties. Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or the
requisite Lenders as otherwise provided in this Agreement); provided, however,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of Lenders consistent with the terms of this Agreement and the
Other Documents.
15.7. Indemnification. To the extent Agent is not reimbursed and
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Term Loans (or, if the Term Loans
are no longer outstanding, according to its last Commitment Percentage), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
in performing its duties hereunder, or in any way relating to or arising out of
this Agreement or any Other Document; provided, however, that Lenders shall not
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the indemnified party's gross (not mere) negligence or willful misconduct.
15.8. Agent in its Individual Capacity. As to that portion of the Term
Loans made by Agent as a Lender, Agent shall have the same rights and powers
hereunder as any other Lender and as if it were not performing the duties of
Agent specified herein; and the term "Lender" or any similar term shall, unless
the context clearly otherwise indicates, include Agent in its individual
capacity as a Lender. Agent may engage in business with any Borrower as if it
were not performing the duties of Agent specified herein, and may accept fees
and other consideration from any Borrower for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
15.9. Delivery of Documents. To the extent Agent receives documents and
information from any Borrower pursuant to Article X of this Agreement, Agent
will promptly furnish such documents and information to the other Lender
Parties.
15.10. Borrowers' Undertaking to Agent. Without prejudice to their
respective obligations to Lender Parties under the other provisions of this
Agreement, each Borrower hereby undertakes with Agent to pay to Agent from time
to time on demand all amounts from time to time due and payable by it for the
account of Agent or Lenders or any of them pursuant to this Agreement to the
extent not already paid. Any payment made pursuant to any such demand shall pro
tanto satisfy the relevant Borrower's obligations to make payments for the
account of Lenders or the relevant one or more of them pursuant to this
Agreement.
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15.11. Documentation Agent, Etc. Agent shall have the continuing right, for
purposes hereof, at any time from time to time to designate one or more Lender
Parties (and/or its or their Affiliates) as "Co-Agent," "Collateral Agent,"
"Documentation Agent," "Syndication Agent," "Arranger" or otherwise for purposes
hereof, but such designations shall have no substantive effect, and the Lender
Parties (or their Affiliates) so designated shall have no additional powers,
duties or responsibilities as a result hereof. Further, no such Lender Party
need be identified by such designation in any Other Document (including any
amendment hereto or thereto) or execute this Agreement or any Other Document,
using such designation.
15.12. Term B Lenders Purchase Option.
(i) Upon the occurrence and during the continuance of (i) an
acceleration of the Obligations; or (ii) a Lien Enforcement Action on the part
of the Agent on behalf of Term A Lenders, any or all of the Term B Lenders,
acting as a single purchaser group, shall have the option at any time upon five
(5) business days prior written notice (each such notice, a "Term B Purchase
Notice") from the Term B Lenders to the Term A Lenders to purchase all of the
Obligations in respect of the Term Loan A from the Term A Lenders. Such Term B
Purchase Notice to Term A Lenders shall be irrevocable.
(ii) On the date specified by Agent on behalf of Term B Lenders
in such Term B Purchase Notice (which shall not be less than five (5) business
days, nor more than ten (10) business days, after the receipt by Agent on behalf
of Term A Lenders of the Term B Purchase Notice from Agent on behalf of Term B
Lenders of the election by the Term B Lenders to exercise such option), Term A
Lenders shall sell to Term B Lenders, and Term B Lenders shall purchase from
Term A Lenders, the then outstanding principal amount of the Term Loan A plus
accrued and unpaid interest thereon and any fees and expenses due the Agent or
Term A Lenders (the "Term Loan A Obligations"). The Term A Lenders hereby
represent and warrant that, as of the date hereof, no approval of any court or
other regulatory or governmental authority is required for such sale.
(iii) Upon the date of such purchase and sale, Term B Lenders
shall (i) pay to Agent on behalf of Term A Lenders as the purchase price
therefor (the "Purchase Price") the full amount of the Term Loan A Obligations
then outstanding and unpaid (including principal, interest, fees and expenses,
including reasonable attorneys' fees and legal expenses but excluding any early
termination fee or prepayment fee), (ii) agree to pay to Term A Lenders any
early termination fee or prepayment fee payable in connection with Term Loan A
in accordance with this Agreement within three (3) business days of the receipt
of same by the Term B Lenders or Agent on behalf of Term B Lenders, after the
payment in full in cash to Term B Lenders of the Obligations in respect of the
Term Loan B and the Term Loan A Obligations purchased by Term B Lenders pursuant
to this Section 15.12 (excluding any early termination or prepayment fee
(whether owing with respect to Term Loan A or Term Loan B)), provided that (x)
the notice of termination is received by the Term B Lenders or Agent on behalf
of Term B Lenders or (y) the effective date of termination occurs, within one
year after the effective date of the purchase of the Term Loan A Obligations by
the Term B Lenders. Such purchase price shall be remitted by wire transfer in
federal funds to such bank account of Agent on behalf of Term A Lenders, as
Agent may designate in writing to the Term B Lenders or Agent on behalf of Term
B Lenders for such purpose. Interest shall be calculated to but excluding the
business day on which such
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purchase and sale shall occur if the amounts so paid by Term B Lenders to the
bank account designated by Agent on behalf of Term A Lenders are received in
such bank account no later than 1:00 p.m., New York City time and interest shall
be calculated to and including such business day if the amounts so paid to the
bank account designated by Agent on behalf of Term A Lenders are received in
such bank account later than 1:00 p.m., New York City time.
(iv) Such purchase shall be made pursuant to a Commitment
Transfer Supplement and shall be expressly made without representation or
warranty of any kind by Term A Lenders as to the Term Loan A Obligations or
otherwise and without recourse to Term A Lenders, except that Term A Lenders
shall represent and warrant: (i) the amount of the Term Loan A Obligations being
purchased, (ii) that Term A Lenders will transfer the Term Loan A Obligations to
the Term B Lenders free and clear of any Liens or encumbrances, (iii) Term A
Lenders have legal and equitable title to the Term Loan A Obligations and the
related Other Documents being purchased and (iv) Term A Lenders have the right
to assign the Term Loan A Obligations and the assignment is duly authorized.
15.13. Collateral Matters. (a) Agent is authorized on behalf of Lenders,
without the necessity of any notice to or further consent from the Lenders, from
time to time to take any action with respect to any Collateral or this Agreement
or any of the Other Documents that may be necessary or reasonably advisable to
perfect and maintain perfected the security interest in and Liens upon the
Collateral granted pursuant to this Agreement of the Other Documents. Lenders
hereby irrevocably authorize Agent, at its option and in its sole discretion and
without the necessity of any notice to or further consent from the Lenders, to
release any Liens upon any Collateral (a) upon the repayment in full of the
Obligations and termination of this Agreement and the Other Documents or as
otherwise contemplated in this Agreement, including, without limitation, with
respect to any Permitted PP&E Disposition; (b) constituting property in which
Borrowers owned no interest at the time the Lien was granted or at any time
thereafter; or (c) constituting property leased to Borrowers under a lease which
has expired or been terminated in a transaction permitted under this Agreement.
Upon request by Agent or Borrowers at any time, Lenders will confirm in writing
Agent's authority to release any Liens upon particular types or items of
Collateral pursuant to this Section 15.13. Upon receipt by Agent of any
authorization from Lenders of Agent's authority to release any Liens upon
particular types or items of Collateral, and upon at least 5 Business Days'
prior written request by Borrowers, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of its Liens upon such Collateral; provided, however, that (i) Agent
shall not be required to execute any such document on terms which, in Agent's
opinion, would expose Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens (other than those expressly being released) upon all
interests retained by the Agent for the benefit of the Lenders, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(b) Notwithstanding the foregoing sub-clause (a) of this Section
15.13, Section 17.2 or any other provision to the contrary in this Agreement,
after the occurrence of an Event of Default and prior to the expiration of the
Standstill Period, Agent and Term A Lenders shall have the exclusive right to
manage, perform and enforce the terms of this Agreement and the Other Documents
with respect to the Collateral, to exercise and enforce all privileges and
rights
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thereunder according to their discretion and the exercise of its business
judgment, including, without limitation, the exclusive right to take or retake
control or possession of such Collateral, to hold, prepare for sale, process,
sell, lease, dispose of, or liquidate such Collateral and to take all other Lien
Enforcement Actions with respect thereto, in each case so long as the proceeds
thereof are applied in accordance with Section 12.2 hereof.
XVI. BORROWING REPRESENTATIVE.
16.1. Borrowing Representative Provisions. If and to the extent that at any
time or from time to time there are multiple Borrowers, then:
(a) Each Borrower acknowledges that it together with each other
Borrower make up a related organization of various entities constituting a
single economic and business enterprise and sharing a substantial identity of
interests such that, without limitation, Borrowers render services to or for the
benefit of each other, purchase or sell and supply goods to or for the benefit
of each other, make loans or advances and provide other financial accommodations
to or for the benefit of each other (including the payment of creditors and
guarantees of Indebtedness), provide administrative, marketing, payroll and
management services to or for the benefit of each other; have centralized
accounting, common officers and directors. Accordingly, and without limitation,
any credit or other financial accommodation extended to any one Borrower
pursuant hereto will result in direct and substantial economic benefit to each
other Borrower, and each Borrower will likewise benefit from the economic
benefit to each other Borrower, and consequently, the Borrowers, as a group,
applying for credit and other financial accommodations pursuant hereto on a
collective basis.
(b) Each Borrower hereby irrevocably designates Borrowing
Representative to be its attorney and agent and in such capacity to borrow, sign
and endorse notes, and execute and deliver all instruments, documents, writings
and further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all
loan proceeds hereunder in accordance with the request of Borrowing
Representative.
(c) The handling of this credit facility as a co-borrowing facility
with a Borrowing Representative in the manner set forth in this Agreement is
solely an accommodation to Borrowers and at their specific request. No Lender
Party shall incur any liability to Borrowers as a result thereof. To induce each
Lender Party to do so and in consideration thereof, each Borrower hereby
indemnifies each Lender Party and holds each Lender Party harmless from and
against any and all liabilities, expenses, losses, damages and claims of damage
or injury asserted against such Lender Party by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by Agent, any Lender or any other Lender Party on any
request or instruction from Borrowing Representative or any other action taken
by Agent, any Lender or any other Lender Party with respect to this Section
except due to willful misconduct or gross (not mere) negligence by the
indemnified party.
(d) All Obligations shall be joint and several liabilities of
Borrowers. Each Borrower cross-guarantees the full payment and performance
hereunder and under the Other Documents by the other Borrower of its
Obligations, and each Borrower shall make payment upon the maturity of the
Obligations by acceleration or otherwise, and such obligation and
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liability on the part of each Borrower shall in no way be affected by any
extension, renewal or forbearance granted by any Lender Party to any Borrower,
the failure any Lender Party to give any Borrower notice of borrowing or any
other notice, any failure of any Lender Party to pursue or preserve its rights
against any Borrower, the release by any Lender Party of any Borrower or any
Collateral now or thereafter acquired from any Borrower, and such agreement by
each Borrower to pay upon any notice issued pursuant thereto is unconditional
and unaffected by prior recourse by any Lender Party to the other Borrowers or
any Collateral for such Borrower's Obligations or the lack thereof.
16.2. Waiver of Subrogation. Each Borrower expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Borrowers' property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.
XVII. MISCELLANEOUS.
17.1. GOVERNING LAW. THIS AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY
PROVIDED THEREIN, EACH OTHER DOCUMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE
PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK. ANY JUDICIAL PROCEEDING BROUGHT
BY OR AGAINST ANY BORROWER WITH RESPECT TO ANY OF THE OBLIGATIONS, THIS
AGREEMENT OR ANY OTHER DOCUMENT OR ANY RELATED TRANSACTION MAY BE BROUGHT IN ANY
COURT OF COMPETENT JURISDICTION IN XXX XXXX XXX XXXXX XX XXX XXXX, XXXXXX XXXXXX
OF AMERICA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER DOCUMENT. EACH BORROWER HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO
BORROWING REPRESENTATIVE AT ITS ADDRESS SET FORTH IN SECTION 17.6 AND SERVICE SO
MADE SHALL BE DEEMED COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME SHALL HAVE
BEEN SO DEPOSITED IN THE MAILS OF THE UNITED STATES OF AMERICA; PROVIDED,
HOWEVER, IF BORROWING REPRESENTATIVE CEASES TO HAVE AN ADDRESS IN NEW YORK, NEW
YORK AS ITS NOTICE ADDRESS PURSUANT TO SECTION 17.6, THEN, AT ANY LENDER PARTY'S
OPTION, BY SERVICE UPON THE CORPORATION SERVICE COMPANY (OR ANY SUCCESSOR OR
REPLACEMENT AGENT FOR SERVICE WITH AN OFFICE IN NEW YORK, NEW YORK, SELECTED BY
SUCH LENDER PARTY), WHICH EACH BORROWER HEREBY APPOINTS AS ITS AGENT FOR THE
LIMITED PURPOSE OF ACCEPTING SERVICE IN XXX XXXXX XX
00
XXX XXXX UNDER SUCH CIRCUMSTANCE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW OR LIMIT THE RIGHT OF ANY LENDER PARTY TO
BRING PROCEEDINGS AGAINST ANY BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
EACH BORROWER WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
INSTITUTED HEREUNDER AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS. ANY JUDICIAL
PROCEEDING BY ANY BORROWER AGAINST ANY LENDER PARTY INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR
CONNECTED WITH THIS AGREEMENT OR ANY OTHER DOCUMENT, SHALL BE BROUGHT ONLY IN A
FEDERAL OR STATE COURT LOCATED IN XXX XXXX XX XXX XXXX, XXXXX XX XXX XXXX OR IN
THE COURTS OF ANY OTHER JURISDICTION IN WHICH ANY LENDER PARTY HAS BROUGHT A
PROCEEDING AGAINST ANY BORROWER IN RESPECT HEREOF THAT IS THEN PENDING.
17.2. Entire Understanding; Amendments; Waivers; Consents.
(a) This Agreement and the Other Documents executed concurrently
herewith contain the entire understanding between each Borrower, Agent and each
Lender and supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof, including any in respect of the Existing Term
Lender Loans and Existing Term Lender Liens. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have no
force and effect unless in writing, signed by the respective officers of the
party making such promises, representations, warranties, or guarantees. Neither
this Agreement nor any Other Document nor any portion or provisions hereof or
thereof may be changed, modified, amended, waived, supplemented, discharged,
cancelled or terminated orally or by any course of dealing, or in any manner
other than by an agreement in writing, signed by the party to be charged. Each
Borrower acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and the Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement or any Other Document.
(b) The Required Lenders, Agent with the consent in writing of the
Required Lenders, and Borrowers may, subject to the provisions of this
subsection, from time to time enter into written supplemental agreements to this
Agreement or the Other Documents for the purpose of adding or deleting any
provisions or otherwise changing, varying or waiving in any manner the rights of
Lenders, Agent, or Borrowers hereunder or thereunder or the conditions,
provisions or terms hereof or thereof, or waiving any Event of Default, but only
to the extent specified in such written agreements; provided that, until the
repayment in full in cash Obligations in respect of the Term Loan A, only the
consent of the Required Term A Lenders shall be required to waive any Event of
Default (other than any Event of Default under Section 11.1) or forbear from
taking any action with respect to same; provided further, however, that no such
no such modification, amendment, waiver or supplemental agreement shall, without
the consent of
(A) all Term A Lenders: (i) increase the Term Loan A Commitment
or Term Loan A Commitment Percentage of any Term A Lender; (ii) increase
the Term
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Loan A; (iii) extend the maturity of Term Loan A or the due date for any
amount payable with respect thereto, or decrease the rate of interest or
reduce any fee payable by Borrowers to Term A Lenders pursuant to this
Agreement; (iv) alter the definition of the terms "Required Term A Lenders"
or "Required Lenders" or alter, amend or modify this Section 17.2(b); (v)
make any change to the purchase option in Section 15.12 hereof; or (vi)
cause any reduction in the principal, interest or fees payable in respect
of the Term Loan A (except in connection with any waiver of the application
of the Default Rate that applies to all of the Term Loans);
(B) all Term B Lenders: (i) increase the Term Loan B Commitment
or Term Loan B Commitment Percentage of any Term B Lender; (ii) increase
the Term Loan B; (iii) extend the maturity of Term Loan B or the due date
for any amount payable with respect thereto, or decrease the rate of
interest or reduce any fee payable by Borrowers to Term B Lenders pursuant
to this Agreement; (iv) alter the definition of the terms "Required Term B
Lenders" or "Required Lenders" or alter, amend or modify this Section
17.2(b); (v) make any change to the purchase option in Section 15.12
hereof; or (vi) cause any reduction in the principal, interest or fees
payable in respect of the Term Loan B (except in connection with any waiver
of the application of the Default Rate that applies to all of the Term
Loans);
(C) all the Lenders, release during any calendar year any
Collateral (other than in accordance with the provisions of this Agreement)
having an aggregate value in excess of the Materiality Threshold; or
(D) each Lender and Agent, change the rights and duties of Agent.
(c) Any supplemental agreement entered into pursuant to this Section
17.2 shall apply equally to each Lender and shall be binding upon Borrowers,
Lenders, and Agent and all future holders of the Obligations. In the case of any
waiver of any Event of Default, Borrowers, Agent and Lenders shall be restored
to their former positions and rights, and any Event of Default waived shall be
deemed to be cured and not continuing, but no waiver of a specific Event of
Default shall extend to any subsequent Event of Default (whether or not the
subsequent Event of Default is the same as the Event of Default that was
waived), or impair any right or remedy arising therefrom.
(d) In the event that Agent requests the consent of a Lender pursuant
to this Section and such consent is denied, then CSE may, at its option, require
such Lender to assign its interest in the Term Loans to CSE or to another Lender
or to any other Person designated by the Agent (the "Designated Lender"), for a
price equal to the then outstanding principal amount of that portion of the Term
Loans owing to such Lender plus accrued and unpaid interest thereon and any fees
then due such Lender (excluding any fees under Section 3.8), which interest and
fees shall be paid when collected from Borrowers. In the event CSE elects to
require any Lender to assign its interest to CSE or to the Designated Lender,
CSE will so notify such Lender in writing within forty-five (45) days following
such Lender's denial, and such Lender will assign its interest to CSE or the
Designated Lender no later than five (5) Business Days following receipt of such
notice pursuant to a Commitment Transfer Supplement executed by such Lender, CSE
or the Designated Lender, as appropriate, and Agent. Notwithstanding the
foregoing, in the
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event CSE elects to require any Lender to assign its interest to CSE or to a
Designated Lender, CSE or such Designated Lender shall pay to such Lender any
early termination fee or prepayment fee payable in connection with such Lender's
Term Loans in accordance with this Agreement within three (3) business days of
the receipt of same by CSE, such Designated Lender or Agent on behalf of CSE or
such Designated Later, after the payment in full in cash to Agent and Lenders of
all the Obligations, provided that the effective date of the termination occurs
within one (1) year after the effective date of the purchase of such Term Loan
by CSE or a Designated Lender.
17.3. Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the benefit of
Borrowers, each Lender Party, all future holders of the Obligations and their
respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Term Loans to one or more Participants.
In the event of a sale by a Lender of a participating interest to a Participant,
(a) such Lender's obligations hereunder and under the Other Documents shall
remain unchanged for all purposes, (b) the Borrowers and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations hereunder and under the Other Documents, and (c)
all amounts payable by Borrowers hereunder and under the Other Documents shall
be determined as if such Lender had not sold such participation and shall be
paid directly to such Lender. No Participant shall have any direct or indirect
voting rights hereunder except with respect to any event described in Section
17.2(b) expressly requiring the unanimous vote of all Lenders or, as applicable,
all affected Lenders. Each Lender agrees to incorporate the requirements of the
preceding sentence into each participation agreement that such Lender enters
into with any Participant. Borrowers agree that if amounts outstanding under
this Agreement are due and payable (as a result of acceleration or otherwise),
each Participant shall be deemed to have the same right of setoff pursuant to
Section 12.4 hereof in respect to its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement; provided,
however, that such right of setoff shall be subject to the provisions of Section
12.4 hereof and each Participant shall be obligated to share with the Lenders,
and the Lenders agree to share with each Participant as provided in Section 12.4
hereof. Each Participant may exercise all rights of payment (including without
limitation rights of set-off) with respect to the portion of the Term Loans in
which a participation has been purchased by it as fully as if such Participant
were the direct holder thereof, provided that Borrowers shall not be required to
pay to any Participant more than the amount which it would have been required to
pay to Lender which granted an interest in such Term Loan to such Participant
had such Lender retained such interest in such Term Loan, and in no event shall
Borrowers be required to pay any such amount arising from the same circumstances
and with respect to the same portion of the Term Loans to both such Lender and
such Participant.
(c) Any Lender may sell, assign or transfer all or any part of its
rights under this Agreement and the Other Documents to any Lender, any Affiliate
of any Lender or an
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Approved Fund or, subject to subsection (d) below, with the consent (which shall
not be unreasonably withheld, conditioned or delayed) of the Agent and, so long
as no Default or Event of Default has occurred and is continuing, the Borrowers
(reasonable grounds for withholding consent to include an assignee who would
subject the Borrowers to the payment of materially greater costs of the types
described in Sections 3.6 and 3.7 than Borrowers are otherwise then subject to
paying) to one or more additional banks or financial institutions and one or
more additional banks or financial institutions may commit to make or carry all
or a portion of the Term Loans (each a "Purchasing Lender"), in minimum amounts
of not less than Five Hundred Thousand Dollars ($500,000) (or, if such Lender's
interest in the Term Loans is less than Five Hundred Thousand Dollars
($500,000), then such Lender may assign all of its interest), pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Borrowers' consent (if
required) to any such sale, assignment or transfer shall be presumed unless
Borrowers object thereto in writing, with reasonable detail for such objection
included therein, within three (3) Business Days after Borrowing Representative
receives a written request for such consent. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective date determined
pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a notation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Borrowers hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Borrowers shall execute and deliver such further documents and do
such further acts and things in order to effectuate the foregoing, including, if
requested by any Lender, the execution and delivery of one or more promissory
notes in replacement of one or more existing Notes. As used herein, Approved
Fund" shall mean any (i) investment company, hedge fund, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business or (ii) any Person (other than a natural
person) that temporarily warehouses loans for any Lender or any entity described
in the preceding clause (i) and that, with respect to each of the preceding
clauses (i) and (ii), is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender, or (c) a Person (other than a natural person) or an
Affiliate of a Person (other than a natural person) that administers or manages
a Lender. Notwithstanding the foregoing, DMD may assign its interest in the Term
Loan B to an Approved Fund or a Purchasing Lender without the consent of the
Agent or Borrower, so long as DMD otherwise complies with this Section 17.2(c).
(d) Nothing contained herein shall limit in any way the right of any
Lender (without notice to, or consent of, the Agent or any Borrower) to assign
all or a portion of the Term Loans owing to it from time to time to (i) any
Federal Reserve Bank or the United States
72
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System any Operating Circular issued by such
Federal Reserve Bank, or (ii) to any other Person to whom such Lender is
indebted from time to time (including, but not limited to, under any
warehousing, securitization or overnight repurchase facility), as collateral
security in respect thereof (such Persons described in clauses (i) and (ii)
above herein called "Lender Pledgees"), but, no such assignment shall release
the assigning Lender from its obligations hereunder.
(e) Agent shall maintain at its address set forth in Section 17.6
hereof a copy of each Commitment Transfer Supplement delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
owners of the Term Loans from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and Borrowers, Agent and Lenders
may treat each Person whose name is recorded in the Register as the owner of
that portion of the Term Loans recorded therein for the purposes of this
Agreement. The Register shall be available for inspection by Borrowers or any
Lender at any reasonable time and from time to time upon reasonable prior
notice. Agent shall receive a fee in the amount of not less than Three Thousand
Five Hundred Dollars ($3,500) payable by the applicable Purchasing Lender upon
the effective date of each transfer or assignment to such Purchasing Lender,
unless waived in writing by Agent.
(f) Borrowers authorize each Lender to disclose to any Transferee or
Purchasing Lender and any prospective Transferee or Purchasing Lender any and
all financial information in such Lender's possession concerning Borrowers which
has been delivered to such Lender by or on behalf of Borrowers pursuant to this
Agreement or in connection with such Lender's credit evaluation of Borrowers.
(g) If, pursuant to this Section, any interest in this Agreement or
any portion of the Term Loans or any Note is transferred to any transferee that
is organized under the laws of any jurisdiction other than the United States of
America or any State thereof, the transferor Lender shall cause such transferee,
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Lender (for the benefit of the transferor Lender, the Agent and the
Borrowers) that, under applicable law and treaties, no taxes will be required to
be withheld by the Agent, the Borrowers or the transferor Lender with respect to
any payments to be made to such transferee in respect of the Term Loans or Notes
transferred, (ii) to furnish to the transferor Lender (and, in the case of any
Purchasing Lender, the Agent and the Borrowers) two duly completed and signed
copies of either U.S. Internal Revenue Service Form W-8 BEN or U.S. Internal
Revenue Service Form W-8 ECI, or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities (wherein such
transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder), and (iii) to agree (for the
benefit of the transferor Lender, the Agent and the Borrowers) to provide the
transferor Lender (and, in the case of any Purchasing Lender, the Agent and the
Borrower) new forms as contemplated hereby upon the expiration or obsolescence
of any previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
73
17.4. Application of Payments. Subject to Section 2.3 and Section 12.2,
Agent shall have the continuing and exclusive right to apply or reverse and
re-apply any payment and any and all proceeds of Collateral to any portion of
the Obligations. To the extent that any Borrower makes a payment or Agent or any
Lender receives any payment or proceeds of the Collateral for any Borrower's
benefit, that are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other party under any bankruptcy law,
common law or equitable cause of action, then, to such extent, the Obligations
or part thereof intended to be satisfied shall be reinstated and continue as if
such payment or proceeds had not been received by Agent or such Lender.
17.5. Indemnity. Each Borrower jointly and severally shall indemnify Agent,
each Lender, their respective Affiliates and its and their respective managers,
members, officers, employees, Affiliates, agents, representatives, successors,
assigns, accountants and attorneys (collectively, the "Indemnified Persons")
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, reasonable fees and
disbursements of counsel and in-house legal documentation, diligence fees and
expenses) which may be imposed on, incurred by or asserted against any
Indemnified Person with respect to or arising out of, or in any litigation,
proceeding or investigation instituted or conducted by any Person with respect
to any aspect of, or any transaction contemplated by or referred to in, or any
matter related to, this Agreement or any Other Document or any agreement,
document or transaction contemplated thereby, whether or not such Indemnified
Person is a party thereto, except to the extent that any of the foregoing arises
out of the gross negligence or willful misconduct of such Indemnified Person (as
determined by a court of competent jurisdiction in a final and non-appealable
judgment). If any Indemnified Person uses in-house counsel to provide legal
services for which any Borrower is responsible to pay or indemnify, each
Borrower expressly agrees that its indemnification obligations include the
allocable costs of such in-house counsel. Agent and each Lender agrees to give
Borrowing Representative reasonable notice of any event of which Agent or such
Lender becomes aware for which indemnification may be required under this
Section 17.5, and Agent or such Lender may elect (but is not obligated) to
direct the defense thereof, provided that the selection of counsel shall be
subject to Borrowing Representative's consent, which consent shall not be
unreasonably withheld or delayed. Any Indemnified Person may, in its reasonable
discretion, take such actions as it deems necessary and appropriate to
investigate, defend or settle any event or take other remedial or corrective
actions with respect thereto as may be necessary for the protection of such
Indemnified Person or the Collateral. Notwithstanding the foregoing, if any
insurer agrees to undertake the defense of an event (an "Insured Event"), Agent
and each Lender agrees not to exercise its right to select counsel to defend the
event if that would cause any Borrower's insurer to deny coverage; provided,
however, that Agent and each Lender reserves the right to retain counsel to
represent any Indemnified Person with respect to an Insured Event at its sole
cost and expense. To the extent that Agent or any Lender obtains recovery from a
third party other than an Indemnified Person of any of the amounts that any
Borrower has paid to Lender pursuant to the indemnity set forth in this Section
17.5, then Agent or such Lender shall promptly pay to such Borrower the amount
of such recovery.
17.6. Notice. Any notice or request hereunder or under Other Documents may
be given to any Borrower or to Agent or any Lender at their respective addresses
set forth below or at
74
such other address as may hereafter be specified in a notice designated as a
notice of change of address under this Section. Any notice or request hereunder
shall be given by (a) hand delivery, (b) a nationally recognized overnight
courier, (c) registered or certified mail, return receipt requested, or (d)
telecopy to the number set forth below (or such other number as may hereafter be
specified in a notice designated as a notice of change of address) with
electronic confirmation of its receipt. Any notice or other communication
required or permitted pursuant to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to whom it is addressed, (b) on
the earlier of actual receipt thereof or five (5) Business Days following
posting thereof by certified or registered mail, postage prepaid, or (c) upon
actual receipt thereof when sent by a recognized overnight delivery service or
(d) upon actual receipt thereof when sent by telecopier to the number set forth
below (or to such other number as has been furnished by a party to the others by
like notice) or in any Commitment Transfer Supplement; with electronic
confirmation of its receipt, in each case addressed to each party at its address
set forth below (or at such other address as has been furnished in writing by a
party to the others by like notice):
(A) If to Agent or to
CSE as Lender at: CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Portfolio Manager/
Business Credit Services
Telecopier: (000) 000-0000
E-mail: ________________________
with a copy to: Xxxx & Hessen LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
E-mail: xxxxxxxxxx@xxxxxxxxxx.xxx
(B) If to a Lender other than Agent or CSE, as specified on the
signature pages hereof
(C) If to Borrowing
Representative or any
Borrower, at: Lexington Precision Corporation
00 Xxxx 00xx Xxxxxx, XX 00
Xxx Xxxx, XX 00000-0000
Attention: President
Telecopier: (000) 000-0000
E-mail: xxxxxxx@xxxx.xxx
75
with a copy to: Xxxxx Xxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
E-mail: xxxxxxxxxxx@xxxxxxxxxxxx.xxx
17.7. Survival. The obligations of Borrowers under Sections 3.6, 3.7,
4.18(h), 17.5 and 17.9 shall survive any termination of this Agreement and the
Other Documents and payment in full of the Obligations.
17.8. Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
17.9. Expenses. All costs and expenses incurred by Agent and/or its
Affiliates (and each Lender, with respect to expenses incurred pursuant to
clause (b) below or during any period that an Event of Default exists)
including, without limitation, all costs and expenses, documentation and
diligence fees and expenses, all search, audit, appraisal, recording,
professional and filing fees and expenses and all other out-of-pocket charges
and expenses (including, without limitation, UCC and judgment and tax lien
searches and UCC filings and fees for post-closing UCC and judgment and tax lien
searches and wire transfer fees and audit expenses), reasonable attorneys' fees
and disbursements incurred by Agent (or any Lender with respect to expenses
incurred pursuant to clause (b) below or during any period that an Event of
Default exists): (a) in all efforts made to enforce payment of any Obligation or
effect collection of any Collateral, or (b) in connection with entering into,
negotiating, preparing, reviewing and executing the Loan Documents, and/or any
related agreements, documents or instruments, (c) in connection with any
modification, restatement, supplement, amendment, waiver or extension of any
Loan Document, and/or any related agreement, document or instrument; or (d)
arising in any way out of the administration of the Obligations or the Loan
Documents, or the taking or refraining from taking by Agent or any Lender of any
action requested by any Borrower or (d) in instituting, maintaining, preserving,
enforcing and foreclosing on Agent's security interest in or Lien on any of the
Collateral, whether through judicial proceedings or otherwise, or (e) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent's transactions with any Borrower, or (f) in connection with any advice
given to Agent with respect to its rights and obligations under this Agreement
and all related agreements, may be charged to Borrowers' Account and shall be
part of the Obligations. If Agent or any of its Affiliates uses in-house counsel
to provide legal services under this Agreement or any Other Document for which
Borrowers are responsible to pay or indemnify, each Borrower expressly agrees
that its Obligations include the reasonable allocable costs of such in-house
counsel.
17.10. Injunctive Relief. Each Borrower recognizes that, in the event any
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; and, accordingly, Agent, if Agent so requests, shall, to the
extent permitted by applicable law, be entitled to temporary and permanent
76
injunctive relief in any such case without the necessity of proving that actual
damages are not an adequate remedy.
17.11. Consequential Damages. No Lender Party, nor any agent or attorney
for it, shall be liable to any Borrower, nor shall any Borrower, or any agent of
attorney for it, be liable to any Lender Party, for consequential damages
arising from any breach of contract, tort or other wrong relating to the
execution, delivery or performance under this Agreement or any Other Document,
the establishment, administration or collection of the Obligations or any
related transaction.
17.12. Captions. The captions at various places in this Agreement and any
Other Document are intended for convenience only and do not constitute and shall
not be interpreted as part of this Agreement or any Other Document.
17.13. Counterparts; Telecopied Signatures. This Agreement and each Other
Document may be executed in any number of separate counterparts and by different
parties hereto in separate counterparts, each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same agreement. Any signature delivered by a party by facsimile transmission or
by e-mail transmission of an adobe file format document (also known as a PDF
file) or similar file format shall be deemed to be an original signature hereto
and each party agrees that it will be bound by its own facsimile signature or
signature sent by e-mail transmission of an adobe file format document (also
known as a PDF file) or similar file format and that it accepts the facsimile
signature or signature by e-mail transmission of an adobe file format document
(also known as a PDF file) or similar file format of each other party.
17.14. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and each Other Document and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement and each Other Document or any amendments, schedules or exhibits
thereto.
17.15. Confidentiality. Each Lender Party shall hold all non-public
information obtained by it pursuant to the requirements of this Agreement and
each Other Document in accordance with such Lender Party's customary procedures
for handling confidential information of this nature; provided, however, that
each Lender Party may disclose such confidential information (a) to its
examiners, affiliates, outside auditors, counsel, rating agencies, collateral
agents and other professional advisors, (b) to any Lender Party or to any
prospective Lender Party, so long as such Lender Party or prospective Lender
Party shall have been instructed in writing, and by acceptance of the
information be deemed to have agreed, to treat such information as confidential
in accordance with this Section 17.15, (c) to the Revolver Loan Agent and the
Revolver Lenders subject to the terms of the Intercreditor Agreement, and (d) as
required by any Governmental Authority or representative thereof or pursuant to
legal process; provided, further that (i) unless specifically prohibited by
applicable law or court order, each Lender Party shall use its best efforts
prior to disclosure thereof, to notify the Borrowing Representative of the
applicable request for disclosure of such non-public information (A) by a
Governmental Authority or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a
Transferee by such Governmental Authority) or (B) pursuant to legal process and
(ii) in no event shall Agent, any Lender, or any
77
other Lender Party be obligated to return any materials furnished by any
Borrower other than those documents and instruments in possession of any Lender
Party in order to perfect its Lien on the Collateral once the Obligations have
been paid in full and this Agreement has been terminated.
17.16. Publicity. Each Borrower hereby authorizes each Lender Party to make
appropriate announcements of any financial arrangement entered into pursuant
hereto, including, without limitation, announcements that are commonly known as
"tombstones" in such publications and to such selected parties as such Lender
Party shall deem appropriate, after consultation with Borrowing Representative.
Without limiting the foregoing, Borrowers authorize each Lender Party to utilize
any logo or other distinctive symbol associated with the Borrowers in connection
with any such announcement or any other promotion, advertising or marketing
undertaken by it, after consultation with Borrowing Representative. In no event,
however, shall any Borrower use the name of any Lender Party or any logo or
distinctive symbol associated with any of them, unless, as appropriate, such
Lender Party has given its prior written consent thereto.
17.17. Survival of Representations and Warranties. All representations and
warranties of each Borrower contained in this Agreement and the Other Documents
shall survive the execution, delivery and acceptance thereof by the parties
thereto and the closing of the transactions described therein or related
thereto.
17.18. Destruction of Invoices. Borrowing Representative hereby authorizes
and directs Agent, each Lender and each other Lender Party in accordance with
its standard document retention policies in such regard to destroy all invoices,
financial statements and other data provided from time to time by Borrowers
pursuant hereto.
17.19. Time. Time is of the essence in this Agreement and each Other
Document.
17.20. Release. Notwithstanding any other provision of this Agreement or
any Other Document, each Borrower voluntarily, knowingly, unconditionally and
irrevocably, with specific and express intent, for and on behalf of itself, its
managers, members, directors, officers, employees, stockholders, Affiliates,
agents, representatives, accountants, attorneys, successors and assigns and
their respective Affiliates (collectively, the "Releasing Parties"), hereby
fully and completely releases and forever discharges the Indemnified Persons and
any other Person or Insurer which may be responsible or liable for the acts or
omissions of any of the Indemnified Persons, or who may be liable for the injury
or damage resulting therefrom (collectively, with the Indemnified Persons, the
"Released Parties"), of and from any and all actions, causes of action, damages,
claims, obligations, liabilities, costs, expenses and demands of any kind
whatsoever, at law or in equity, matured or unmatured, vested or contingent,
that any of the Releasing Parties has against any of the Released Parties as of
the Closing Date. Each Borrower acknowledges that the foregoing release is a
material inducement to Agent's and each Lender's decision to extend to Borrowers
the financial accommodations hereunder and has been relied upon by Agent and
each Lender in agreeing to make the Term Loans.
17.21. Patriot Act. The USA Patriot Act presently requires each Lender
Party to obtain, verify and record information that identifies each Person that
opens an account or applies for a
78
loan or lease. Borrowers agree to cooperate with each Lender Party in
maintaining compliance with such law on an ongoing basis. In addition to the
foregoing, each Lender Party that is not incorporated under the Laws of the
United States of America or a State thereof (and is not exempted from the
certification requirement contained in Section 313 of the USA Patriot Act and
the applicable regulations because it is both (i) an affiliate of a depository
institution or a foreign bank that maintains a physical presence in the United
States or foreign country, and (ii) subject to supervision by a banking
authority regulating such affiliated depository institution or foreign bank)
shall deliver to Agent the certification, or, if applicable, recertification,
certifying that such Lender is not a "shell" and certifying to other matters as
required by Section 313 of the USA Patriot Act and the applicable regulations:
(1) within ten (10) days after the Closing Date, and (2) at such other times as
are required under the USA Patriot Act.
79
IN WITNESS WHEREOF each of the parties hereto has signed this Agreement as
of the day and year first above written.
"BORROWERS"
LEXINGTON PRECISION CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
LEXINGTON RUBBER GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
80
"LENDER" and "AGENT"
CSE MORTGAGE LLC
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director Business
Credit Group
Term Loan A Commitment: $11,000,000
Term Loan A Commitment
Percentage: 100%
"LENDER"
DMD SPECIAL SITUATIONS, LLC
By: CS Capital Advisors LLC, its manager
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice president
Term Loan B Commitment: $4,000,000
Term Loan B Commitment
Percentage: 100%
[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
81
List of Annexes, Exhibits and Schedules
Annexes
Annex One Definitions
Exhibits
Exhibit 9.1(c) Secretary's Certificate
Exhibit 9.1(s) Closing Certificate
Exhibit 10.6 Compliance Certificate
Exhibit 17.3 Commitment Transfer Supplement
Schedules
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.14(c) Location of Executive Offices
Schedule 4.16 Excluded Equipment
Schedule 5.2 Organizational Data and Numbers; Qualifications
Schedule 5.3 Tax Matters
Schedule 5.5 Prior Names
Schedule 5.6 OSHA and Environmental Compliance
Schedule 5.8 Litigation
Schedule 5.9 Indebtedness
Schedule 5.11 Plans
Schedule 5.12 Material Intellectual Property
Schedule 5.14 Defaulted Indebtedness
Schedule 5.17 Labor Contracts
Schedule 5.21 Conflicting Agreements
Schedule 5.24 Real Property
Schedule 5.25 Deposit Accounts
Schedule 6.8 Post Closing Matters
Schedule 6.9 Remediation Plan
Schedule 7.2 Permitted Encumbrances
Schedule 7.4 Loans and Investments
ANNEX ONE
DEFINITIONS
This Annex One is incorporated by reference into, and constitutes an integral
part of, the Loan and Security Agreement, dated as of May 31, 2006 (the "Loan
Agreement"), made among LEXINGTON PRECISION CORPORATION and LEXINGTON RUBBER
GROUP, INC., as Borrowers; the Lenders identified therein as parties thereto;
and CSE MORTGAGE LLC, as a Lender and as Agent for all Lenders. The following
terms shall have the following meanings as and when used in the Loan Agreement
and the Other Documents. References in such defined terms to "this Agreement,"
"hereof," "hereto" or the like, shall mean and refer to the Loan Agreement.
"Accountants" shall have the meaning set forth in Section 10.6 hereof.
"Affiliate," of any Person, shall mean (a) any Person that, directly
or indirectly, is in Control of, is Controlled by, or is under common Control
with such Person, or (b) any Person who is a shareholder, director or officer
(i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above.
"Agent" shall have the meaning set forth in the preamble to this
Agreement; and shall include the successors and assigns of any such Person.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"Applicable Margin" shall mean, until any change in the Applicable
Margin is required pursuant to this definition, six percent (6.0%) per annum.
Thereafter, effective as of the first Business Day following receipt by Agent of
the financial statements of Borrowers required under Section 10.7, for the
period ending June 30, 2006, and thereafter upon receipt by Agent of the
financial statements of Borrower required under Sections 10.6 and 10.7 for the
months ending March 31st, June 30th, September 30th and December 31st of each
fiscal year of the Borrowers (each day of such delivery, an "Adjustment Date"),
the Applicable Margin shall be adjusted, if necessary, to the applicable percent
per annum set forth in the pricing table set forth below corresponding to the
Leverage Ratio for the trailing twelve month period ending on the last day of
the most recently completed fiscal month prior to the applicable Adjustment Date
(each such period, a "Calculation Period"):
APPLICABLE
LEVERAGE RATIO MARGIN
-------------- ----------
Less than 3.0 to 1.0 6.0%
Less than 3.25 to 1.0 but greater than or equal to 3.0 to 1.0 7.0%
A-1
Less than 3.50 to 1.0 but greater than or equal to 3.25 to 1.0 8.0%
Greater than or equal to 3.50 to 1.0 9.0%
If Borrower shall fail to deliver the financial statements, certificates
and/or other information required under Sections 10.6 or 10.7 by the dates
required pursuant to such Sections, the Applicable Margin shall be conclusively
presumed to equal the highest Applicable Margin specified in the pricing table
set forth above until the date of delivery of such financial statements,
certificates and/or other information, at which time the rate will be adjusted
based upon the Leverage Ratio as required hereunder.
"Applicable Rate" shall mean the Applicable Term Loan A Rate and the
Applicable Term Loan B Rate.
"Applicable Term Loan A Rate" shall mean, the sum of the LIBOR Rate
plus four and one-half of one percent (4.50%) per annum.
"Applicable Term Loan B Rate" shall mean, the sum of the Prime Rate
(which shall not be less than five percent (5.0%) per annum) plus the Applicable
Margin then in effect.
"Application Date" shall have the meaning given to such term in
Section 4.14(g).
"Appraisal" shall mean an appraisal, conducted at Borrowers' expense,
by an independent appraiser selected by, or acceptable to, Agent of the
Borrowers' Real Property using a form, scope and methodology selected by, or
acceptable to, Agent.
"Approved Fund" shall have the meaning given to such term in Section
17.3(c).
"Blocked Account" shall mean any Deposit Account that is the subject
of a Blocked Account Agreement.
"Blocked Account Agreement" shall mean an agreement among Borrowers,
Agent and a Blocked Account Bank, in form and substance reasonably satisfactory
to Agent, in respect of a Deposit Account pursuant to which the Blocked Account
Bank shall acknowledge the existence and priority of the Lien of Agent on such
Deposit Account and all funds on deposit in the Blocked Account, subject to the
provisions of the Intercreditor Agreement, and agree to remit collected funds on
deposit in a Blocked Account to the Concentration Account on a daily basis, or,
in the case of any Controlled Disbursement Account, upon receipt of notice from
Agent, which notice Agent shall not deliver unless a Default or Event of Default
has occurred and is continuing. The First Merit Blocked Account Agreement shall
constitute a Blocked Account Agreement.
"Blocked Account Bank" shall mean a bank at which any Blocked Account
exists.
A-2
"Borrower" and "Borrowers" shall have the meanings set forth in the
preamble to this Agreement; and shall extend to all permitted successors and
assigns of such Persons.
"Borrowers on a consolidated basis" (or words of similar import) shall
mean, as appropriate, the consolidation in accordance with GAAP of the accounts
or other items of Borrowers and their respective Subsidiaries (if any).
"Borrowers' Account" shall have the meaning set forth in Section 2.4.
"Borrowing Representative" shall mean the Parent Company.
"Business Day" shall mean any day other than a day on which commercial
banks in New York are authorized or required by law to close.
"Capital Expenditures" - see Section 8.1.
"Capitalized Leases" - see Section 8.1.
"Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued, or
directly and fully guaranteed or insured, by the United States of America or any
agency or instrumentality thereof; provided, that, the full faith and credit of
the United States of America is pledged in support thereof; (b) certificates of
deposit or bankers' acceptances with a maturity of ninety (90) days or less
issued by any financial institution that is a member of the Federal Reserve
System and has combined capital, surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of any Borrower) organized under the laws of any State of the United
States of America or the District of Columbia and rated at least A-1 by Standard
& Poor's Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc. or at
least P-1 by Xxxxx'x Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial institution having
combined capital, surplus and undivided profits of not less than $250,000,000;
(e) repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or issued by any governmental agency thereof and backed by the
full faith and credit of the United States of America, in each case maturing
within ninety (90) days or less from the date of acquisition if the terms of
such agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985; and (f)
investments in money market funds and mutual funds that invest substantially all
of their assets in securities of the types described in clauses (a) through (e)
above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et
seq.
"Change of Control" shall mean: (i) the transfer (in one transaction
or a series of transactions) of all or substantially all of the assets of any
Borrower to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act), other than as permitted in
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Section 7.1(a) hereof; (ii) the liquidation or dissolution of any Borrower or
the adoption of a plan by the stockholders of any Borrower relating to the
dissolution or liquidation of such Borrower, other than as permitted in Section
7.1(a) hereof; (iii) the acquisition by any Person or group (as such term is
used in Section 13(d)(3) of the Exchange Act), except for one or more Permitted
Holders, of beneficial ownership, directly or indirectly, of a majority of the
voting power of the total outstanding Voting Equity Interests of any Borrower;
(iv) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of any Borrower
(together with any new directors who have been appointed by, or whose nomination
for election by the shareholders of such Borrower, as the case may be, was
approved by, a vote of at least sixty-six and two-thirds (66 2/3%) percent of
the directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of such Borrower; (v) the failure of Parent Company to own directly or
indirectly one hundred (100%) percent of the voting power of the total
outstanding Voting Equity Interests of LRG; or (vi) the failure of Permitted
Holders to own directly or indirectly forty (40%) percent of the voting power of
the total outstanding Voting Equity Interests of Parent Company.
"Change of Management" shall mean that neither of the Principals is
actively involved in the day-to-day executive management of each Borrower,
whether by death, disability, retirement, termination of employment or
otherwise, unless, within sixty (60) days thereafter, Borrowers shall have
retained successor executive management acceptable to the Required Lenders in
their Credit Judgment in terms of qualifications, ability and experience (after
which, their successor(s) in office shall be deemed substituted for the
Principals hereunder).
"Charges" shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, Equity Interests, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property
taxes, custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund), upon any Collateral, any Borrower or
any of its Affiliates.
"Closing Date" shall mean the date on which the Term Loans are made,
which date may be on the Signing Date but, unless otherwise approved by Agent,
shall not be later than five (5) Business Days after the Signing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated thereunder.
"Cohanzick Debt" shall mean all unsecured indebtedness, obligations
and liabilities of every kind, nature and description owing by any Borrower to
Cohanzick High Yield, including principal, interest, charges, fees, premiums,
indemnities, costs and expenses, however
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evidenced, whether as a principal, surety, endorser, guarantor or otherwise,
arising under the Cohanzick Loan Documents.
"Cohanzick High Yield" shall mean Cohanzick High Yield Partners L.P.,
a Delaware limited partnership, and its respective heirs, executors, trustees,
legal representatives, successors and assigns.
"Cohanzick Loan Agreement" shall mean the Loan Agreement, dated as of
September 3, 2004, among Borrowers and Cohanzick High Yield, as amended through
the Closing Date.
"Cohanzick Loan Documents" shall mean, individually and collectively
(as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced), the following: (i) the Cohanzick Loan
Agreement, and (ii) all other agreements, documents and instruments executed and
delivered by the Borrowers in connection therewith.
"Collateral" shall mean and include all assets of each Borrower
(subject only to the limitation on Subsidiary Stock of each Foreign Subsidiary,
if any, set forth in subsection (f) below), including, without limitation, all
of the following assets, but shall exclude any Excluded Equipment as long as it
is Excluded Equipment:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Contract Rights;
(f) all Subsidiary Stock of each Domestic Subsidiary (if any),
and sixty-five percent (65%) of the Subsidiary Stock of each Foreign Subsidiary
(if any);
(g) all Securities;
(h) all Leasehold Interests;
(i) all Commercial Tort Claims;
(j) all of each Borrower's right, title and interest in and to
(i) its respective goods and other property including, but not limited to, all
merchandise returned or rejected by Customers, relating to or securing any of
the Receivables; (ii) all of each Borrower's rights as a consignor, a consignee,
an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in
transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all
additional amounts due to any Borrower from any Customer relating to the
Receivables; (iv) all other property, including warranty claims, relating to any
goods securing this Agreement; (v) all of each Borrower's contract rights,
rights of payment that have been earned under a contract right, instruments,
investment property, documents, chattel paper, warehouse receipts, deposit
accounts, money and securities; (vi) if and when obtained by any Borrower, all
real and personal
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property of third parties in which such Borrower has been granted a lien or
security interest as security for the payment or enforcement of Receivables;
(vii) all supporting obligations that secure payment or performance of any
account, chattel paper, document, general intangible, instrument or investment
property; (viii) all letter-of-credit rights; (ix) Extraordinary Receipts; and
(x) any other goods, personal property or real property now owned or hereafter
acquired in which any Borrower has expressly granted a security interest or may
in the future grant a security interest to Agent hereunder or under the Other
Documents, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Borrower;
(k) all of each Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by any Borrower or in which it has an interest), computer
programs, tapes, disks and documents relating to clauses (a) through (j) of this
definition; and
(l) all proceeds and products of the Collateral described in
clauses (a) through (k) of this definition, in whatever form, including, but not
limited to: cash, Deposit Accounts (whether or not comprised solely of
proceeds), certificates of deposit, insurance proceeds (including hazard, flood
and credit insurance), negotiable instruments and other instruments for the
payment of money, chattel paper, security agreements, documents, eminent domain
proceeds, condemnation proceeds and Commercial Tort Claim proceeds.
The term "Collateral" shall also extend to and include all Real Property
Collateral.
"Collateral Locations" shall have the meaning assigned to such term in
Section 4.5.
"Commercial Tort Claim" shall have the meaning given to such term in
Article 9 of the UCC and shall include, without limitation, any claim of any
Borrower arising in tort and specified on Schedule 5.8.
"Commitment" or "Commitments" shall mean, individually or
collectively, the Term Loan A Commitment(s) and Term Loan B Commitments of each
Lender, or all Lenders, as the case may be.
"Commitment Percentage" of any Lender, shall mean the percentage that
such Lender's Commitment bears to the total Commitments, as the same may be
adjusted upon any assignment by a Lender to a Purchasing Lender pursuant to
Section 17.3(c) hereof.
"Commitment Transfer Supplement" shall mean a document in the form of
Exhibit 17.3 hereto, properly completed and otherwise in form and substance
satisfactory to Agent, pursuant to which, among other things, a Purchasing
Lender shall purchase and assume all or a portion of the obligation of a Lender
to make and carry the Term Loans under this Agreement.
"Concentration Account" shall mean a Deposit Account maintained by the
Agent or the Revolver Agent, as the case may be, into which all collections from
the Lock-Box Account are concentrated.
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"Consents" shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties, domestic or foreign, (i) necessary to carry on any
Borrower's business, including, without limitation, any consents required under
all applicable federal, state or other applicable law, and (ii) required to
effectuate the transactions and agreements contemplated in this Agreement and
the Other Documents.
"Contract Rights" shall mean all rights of each Borrower arising under
or in connection with any contract, to the extent that such Borrower may grant a
security interest in such rights under such contract, either by the terms of
such contract or pursuant to the applicable provisions of Article 9 of the UCC,
notwithstanding the terms of such contract, or otherwise. "Contract Rights"
shall include, without limitation, all rights of each Borrower under all license
agreements to which it is party as licensor or licensee and all letter-of-credit
rights of each Borrower.
"Control" shall mean the power, whether direct or indirect, (i) to
vote ten percent (10%) of more of the Voting Equity Interests of a Person, or
(ii) to direct, or cause the direction of, the management and/or policies of a
Person, whether by contract or otherwise.
"Controlled Disbursement Account" shall mean (i) the Operating
Account, as such term is defined in the First Merit Blocked Account Agreement
and (ii) any other Deposit Account of any Borrower with the Lock-Box Bank or
another financial institution reasonably acceptable to the Agent into which
deposits are made by Revolver Agent and which is subject to a deposit account
control agreement or Blocked Account Agreement in the form of the First Merit
Blocked Account Agreement or in such other form as shall be reasonably
satisfactory to the Borrowers and the Agent.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control that, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"Credit Judgment" shall mean the credit judgment of Agent, Required
Lenders, Required Term A Lenders, Required Term B Lenders or all Lenders, as the
case may be, exercised by it (or them) in good faith and in a commercially
reasonable manner from the perspective of a secured, asset-based lender making
loans of similar type and size to similar borrowers.
"CSE" shall have the meaning given to such term in the initial
recitals to this Agreement.
"CSE Fee Letter" shall mean that certain fee letter dated as of the
Closing Date among the Borrowers, CSE and CapitalSource Finance LLC.
"Customer" shall mean and include the account debtor with respect to
any Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Borrower,
pursuant to which such Borrower is to deliver any personal property or perform
any services.
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"Default" shall mean an event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default.
"Default Rate" shall mean two percent (2%) per annum over the
otherwise Applicable Rate then and from time to time thereafter in effect.
"Deposit Account" shall mean any checking account, savings account,
time deposit account, certificate of deposit, investment account or other
account (howsoever denominated), in which from time to time any cash or
Securities of any Borrower is or may be deposited.
"Designated Officer" shall mean the chairman, president, chief
executive officer, chief financial officer or chief operating officer of a
Borrower (regardless of title), or such other officer, agent or representative
of a Borrower that Agent may, at such Borrower's request, permit to be a
"Designated Officer" from time to time.
"DMD" shall mean DMD Special Situations, LLC, a Delaware limited
liability company.
"DMD Fee Letter" shall mean that certain fee letter dated as of the
Closing Date among the Borrowers and DMD.
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"Domestic Subsidiary" shall mean a Subsidiary organized under the laws
of the United States or any political subdivision thereof.
"EBITDA" - see Section 8.1.
"Eligible Inventory" shall have the meaning given to such term in the
Revolver Loan Agreement.
"Environmental Authority" shall have the meaning set forth in Section
4.18(d) hereof.
"Environmental Complaint" shall have the meaning set forth in Section
4.18(d) hereof.
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Equipment" shall mean and include as to each Borrower all of such
Borrower's goods (other than Inventory) whether now owned or hereafter acquired
and wherever located
A-8
including, without limitation, all equipment, machinery, motor vehicles,
fittings, furniture, furnishings, fixtures, molds, discs, tools, stamps, parts,
accessories and all replacements and substitutions therefor or accessions
thereto, and all software embedded therein.
"Equity Interests" shall mean: (i) in the case of a corporation, all
capital stock, including common and preferred stock and warrants to acquire
capital stock; (ii) in the case of a partnership, all partnership interests
therein, including special, limited and general interests; (iii) in the case of
a limited liability company, all membership interests therein; and (iv) in the
case of any other entity, all interests evidencing equity ownership therein. For
avoidance of doubt, for purposes of this Agreement, Equity Interests shall
include the Class B Preferred Stock.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Plan for which the reporting requirements have not been waived in writing; (b)
the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412 of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the occurrence of a "prohibited transaction" with
respect to which any Borrower or any of its respective Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which any Borrower or any of its Subsidiaries could otherwise be
liable; (f) a complete or partial withdrawal by any Borrower or any member of
the Controlled Group from a Multiemployer Plan or a cessation of operations
which is treated as such a withdrawal or notification that a Multiemployer Plan
is in reorganization; (g) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the Pension Benefit Guaranty
Corporation to terminate a Plan; (h) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; (i) the
imposition of any liability under Title IV of ERISA, other than Pension Benefit
Guaranty Corporation premiums due but not delinquent under Section 4007 of
ERISA, upon any Borrower or any member of the Controlled Group in excess of the
Materiality Threshold; and (j) any other event of condition with respect to a
Plan, including any Plan subject to Title IV of ERISA maintained, or contributed
to, by any ERISA Affiliate, that could reasonably be expected to result in
liability of any Borrower in excess of the Materiality Threshold.
"Event of Default" shall mean the occurrence and continuance of any of
the events set forth in Article XI hereof.
"Excess Cash Flow" shall mean, for any fiscal year, without
duplication, an amount equal to the sum of (i) Consolidated Net Income (or loss)
of Borrowers for such period, plus (ii) an amount equal to the amount of
depreciation expenses, amortization expense (including the amortization of
goodwill), accrued non-cash interest expense and all other non-cash
A-9
charges deducted in arriving at such Consolidated Net Income (or loss), plus
(iii) an amount equal to the aggregate net cash proceeds of the sale, lease,
transfer or other disposition of assets by Borrowers during such period to the
extent not required to be applied to mandatory prepayments or payments on the
Revolver Loans or the Term Loans, plus (iv) an amount equal to the net loss on
the sale, lease, transfer or other disposition of assets by Borrowers during
such period to the extent deducted in arriving at such Consolidated Net Income
(or loss), plus (v) without duplication of other items included in this
definition an amount equal to any tax refunds or credits received by Borrowers
during such period, plus (vi) the decrease, if any, in Working Capital for the
subject period, less (vii) an amount equal to the permitted Capital Expenditures
of Borrowers for such period, less (viii) an amount equal to the sum of all
regularly scheduled payments of principal on Indebtedness for money borrowed of
Borrower (other than with respect to payments of Revolving Credit Advances)
actually made during such period to the extent permitted hereunder, less (ix) an
amount equal to the net gain on the sale, lease, transfer or other disposition
of assets by Borrower during such period to the extent included in arriving at
such consolidated net income or loss, less (x) the increase, if any, in Working
Capital for the subject period.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agreement" shall mean the Exchange Agreement, dated as of
December 18, 2003, by and among LPC, Xxxxxx Xxxxxx and Xxxxxxx X. Xxxxx.
"Excluded Deposit Account" shall mean any Deposit Account of Borrowers
that is (i) a Payroll Account or (ii) a Deposit Account (other than any in which
proceeds of Collateral are at any time deposited) in which collected funds on
deposit, determined on any date on a daily average basis over the immediately
preceding thirty (30) days, is less than Ten Thousand Dollars ($10,000) or, when
aggregated with all other such Deposit Accounts, Twenty-Five Thousand Dollars
($25,000).
"Excluded Equipment" shall mean any Equipment (or proceeds thereof)
that is or becomes subject to a Lien (including pursuant to Capitalized Leases)
permitted under subsections (e) or (m) of Section 7.2, if the valid grant of a
Lien thereon to Agent is prohibited by the terms of the agreement between any
Borrower and the holder of such Lien or under applicable law, and such
prohibition has not been or is not waived, or the consent of the holder such
other Lien has not been or is not otherwise obtained (it being understood that
Borrowers shall have no obligation whatsoever to any Lender Party to obtain such
consent), or under applicable law such prohibition cannot be waived and,
notwithstanding anything to the contrary set forth in the definition of
"Collateral", the types or items of Collateral described in such definition
shall not include the Excluded Collateral, so long as the prohibition set forth
in such agreement or applicable law remains effective. For example, but without
limitation, if pursuant to any Capitalized Lease, the valid grant of a Lien
thereon to Agent in the Equipment leased thereunder is prohibited, the Lien of
Agent thereon shall be reinstated upon termination of such Capitalized Lease,
and such Equipment shall no longer be considered Excluded Equipment.
"Existing Lender Liens" shall mean Existing Revolver Lender Liens and
the Existing Term Lender Liens.
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"Existing Lender Loans" shall mean the Existing Revolver Lender Loans
and the Existing Term Lender Loans.
"Existing Lenders" shall mean the Existing Revolver Lenders and the
Existing Term Lenders.
"Existing Revolver Lenders" shall mean Wachovia Bank, National
Association and the other financial institutions party to the Amended and
Restated Loan Agreement, dated as of December 18, 2003, between Borrowers and
such financial institutions, and Wachovia Bank, National Association, as Agent,
as amended or modified through the Closing Date.
"Existing Revolver Lender Liens" shall mean all Liens on Collateral in
favor of the Existing Revolver Lenders to secure payment of the Existing
Revolver Lender Loans.
"Existing Revolver Lender Loans" shall mean all the Indebtedness owing
by Borrowers to the Existing Revolver Lenders on the Closing Date.
"Existing Term Lenders" shall mean Ableco Finance LLC and the other
financial institutions party to the Loan and Security Agreement, dated as of
December 18, 2003, between Borrowers and such financial institutions, and Ableco
Finance, LLC, as Agent, as amended or modified through the Closing Date.
"Existing Term Lender Liens" shall mean all Liens in favor of the
Existing Term Lenders to secure payment of the Existing Term Lender Loans.
"Existing Term Lender Loans" shall mean all Indebtedness owing by
Borrowers to the Existing Term Lenders on the Closing Date.
"Existing Term Lender Note" shall mean that certain promissory note
dated May 31, 2006, in the principal amount of $4,260,706.61, issued by the
Borrowers to the Existing Term Lenders.
"Extraordinary Receipts" shall mean any cash received by a Borrower or
any of its Subsidiaries not in the ordinary course of business from the
following, (a) proceeds of insurance in respect of the Collateral, (b)
condemnation awards (and payments in lieu thereof) in respect of the Collateral,
(c) indemnity payments, (d) foreign, United States, state or local tax refunds,
(e) pension plan reversions and (f) judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action in respect of
the Collateral.
"Fee Letters" shall mean, collectively, the CSE Fee Letter and the DMD
Fee Letter.
"Financial Covenants" shall mean the financial covenants set forth in
Article VIII.
"First Merit Blocked Account Agreement" shall mean the Deposit Account
Control Agreement, dated the Signing Date, among the Borrowers, First Merit
Bank, N.A., and the Agent, as the same may be amended in accordance with its
terms.
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"Fiscal Year" shall mean Borrowers' fiscal year as in effect on the
Signing Date; and the terms "Fiscal Quarter" and "Fiscal Month" shall have
correlative meanings.
"Fixed Charge Coverage Ratio" - see Section 8.1.
"Fixed Charges" - see Section 8.1.
"Foreign Subsidiary" shall mean any Subsidiary of a Borrower which is
not a Domestic Subsidiary.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of the Financial Covenants, GAAP shall be determined on the basis
of such principles used in the preparation of the most recent audited financial
statements delivered to Agent prior to the Closing Date.
"General Intangibles" shall mean and include as to each Borrower all
of such Borrower's general intangibles, whether now owned or hereafter acquired
including, without limitation, all payment intangibles, choses in action, causes
of action, corporate or other business records, inventions, designs, patents,
patent applications, equipment formulations, manufacturing procedures, quality
control procedures, trademarks, trade names, service marks, trade secrets,
goodwill, copyrights, design rights, registrations, licenses, license fees,
franchises, customer lists, tax refunds, tax refund claims, pension fund
refunds, pension fund refund claims, overpayments, overpayment claims,
reclamation rights, computer programs, software, all claims under guaranties,
security interests or other security held by or granted to such Borrower to
secure payment of any of the Receivables by a Customer, all rights of
indemnification and all other intangible property of every kind and nature
(other than Receivables).
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.
"Guarantor" shall mean any Person (other than a Borrower) who may
hereafter guarantee payment or performance of the whole or any part of the
Obligations. "Guarantors" means, collectively, all such Persons. On the Closing
Date, there are no Guarantors, except for each Borrower as to the other
Borrower.
"Guaranty" shall mean any guaranty of the Obligations of Borrowers, in
whole or in part, executed at any time by a Guarantor in favor of Agent for the
ratable benefit of Lenders and the other Lender Parties, as applicable.
"Hazardous Discharge" shall have the meaning set forth in Section
4.18(d) hereof.
"Hazardous Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated
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biphenyls, petroleum and petroleum products, methane, hazardous materials,
Hazardous Wastes, hazardous or Toxic Substances or related materials as defined
in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Section 1801, et seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable Environmental Law and in
the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws relating to hazardous waste disposal now in force or
hereafter enacted.
"Hedge Contract" shall mean any "hedge," "swap," "collar," "cap" or
similar agreement between a Borrower and any other financial institution,
including, but not limited to, any Lender Party or Affiliate of a Lender Party,
intended to fix the relative amount of such Borrower's risk in respect of
changes in interest rates, foreign currency exchange and commodity values.
"Historical Financial Statements" shall have the meaning set forth in
Section 5.4(a) hereof.
"Indebtedness" shall mean, with respect to any Person (without
duplication), any liability, whether or not contingent, (a) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof) or evidenced by bonds,
notes, debentures or similar instruments, including (for avoidance of doubt)
Subordinated Debt; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases that have been, or should be in accordance with GAAP, recorded as
Capitalized Leases; (d) any contractual obligation, contingent or otherwise, of
such Person to pay or be liable for the payment of any indebtedness described in
this definition of another Person, including, without limitation, any such
indebtedness directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations in respect of any Equity Interests issued by such Person
(including, for avoidance of doubt, the Series B Preferred Stock); (f) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances, drafts or similar documents or instruments issued for such
Person's account; (g) all indebtedness of such Person in respect of indebtedness
of another Person that is secured by any consensual lien, security interest,
collateral assignment, conditional sale, mortgage, deed of trust, or other
encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person; (h) all obligations, liabilities and indebtedness of such Person (marked
to market) arising under any Hedge Contracts; (i) all obligations owed by such
Person under license agreements with respect to non-refundable, advance or
minimum guaranteed royalty payments; and (j) the
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principal and interest portions of all rental obligations of such Person under
any synthetic lease or similar off-balance sheet financing where such
transaction is considered to be borrowed money for tax purposes but is
classified as an operating lease in accordance with GAAP.
"Indemnified Persons" shall have the meaning given to such term in
Section 17.5.
"Initial Borrowers" shall have the meaning set forth in the preamble
to this Agreement.
"Initial Projections" shall have the meaning given to such term in
Section 5.4(b).
"Insurance Premium Collateral" shall mean, collectively, (a) any
insurance policies of Borrowers for which an Insurance Premium Finance Party has
entered into arrangements to allow Borrowers to pay all or a portion of the
applicable insurance premiums on such insurance policies in installments rather
than in a lump sum, and (b) any loss proceeds paid or payable to a Borrower
pursuant to such insurance policies (to the extent of the amount owed to such
Insurance Premium Finance Party), provided, however, that, (i) in no event shall
the Insurance Premium Collateral include any amounts deposited in or received in
any Lockbox or Blocked Account established by Borrowers in connection herewith
or otherwise with respect to Borrowers' financing arrangements with Agent and
Lenders for the handling of collections of Receivables or other assets and (ii)
in no event shall the Insurance Premium Collateral of any Insurance Premium
Finance Party secure any obligation to any other Insurance Premium Finance
Party.
"Insurance Premium Finance Party" shall mean, in connection with
insurance policies maintained by Borrowers, an insurance company or a third
party that enters into arrangements to allow Borrowers to pay all or a portion
of the applicable insurance premiums on such insurance policies in installments
rather than in a lump sum.
"Intercreditor Agreement" shall mean the Intercreditor Agreement,
dated of even date herewith, by and between Agent and Revolver Agent.
"Inventory" shall mean and include, as to each Borrower, all of such
Borrower's now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any contract of service or
held for sale or lease, all raw materials, work in process, finished goods and
materials and supplies of any kind, nature or description that are or might be
used or consumed in such Borrower's business or used in selling or furnishing
such goods, merchandise and other personal property, and all documents of title
or other documents representing them. The term "Inventory," as used herein,
shall further extend to and include, as applicable to any Borrower, any and all
farm products.
"IP Security Agreement Supplement" shall mean a security agreement, to
be in registrable form and otherwise to be in form and substance reasonably
satisfactory to Lender pursuant to which Lender may give notice of record of its
Lien on Material Intellectual Property owned by a Borrower and registered with
the United States government.
"IRS" shall mean the Internal Revenue Service of the United States
Treasury, and any successor thereto.
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"Junior Subordinated Note" shall mean the 13% Junior Subordinated Note
due November 1, 2009 issued by LPC.
"Lakewood/Ellijay Properties" shall mean that portion of the Real
Properties situated in Lakewood, New York and Ellijay, Georgia on the Closing
Date.
"Leasehold Interests" shall mean all of each Borrower's right, title
and interest in and to any Real Property owned by a Person other than Borrower,
whether as tenant, lessee, licensee, operator or otherwise.
"Lender" and "Lenders" shall have the meaning ascribed to such term in
the preamble to this Agreement and shall include each Person that becomes a
transferee, successor or assignee of any Lender pursuant to Section 17.3(c).
"Lender Party" shall mean Agent, each Lender, any Purchasing Lender,
any Participant and any Lender Pledgee, together with each other holder from
time to time of any interest in any of the Obligations.
"Lender Pledgee" shall have the meaning set forth in Section 17.3(d).
"Leverage Ratio" - see Section 8.1.
"LIBOR Rate" shall mean, a fluctuating rate of interest determined on
a daily basis equal to the one-month rate of interest appearing on Telerate Page
3750 (or any successor page) as the one-month London interbank offered rate for
deposits in U.S. Dollars at approximately 11:00 a.m. (London time) on the second
preceding Business Day. If for any reason such rate is not available, "LIBOR
Rate" shall mean the fluctuating rate of interest calculated on a daily basis
equal to the one-month rate of interest appearing on Reuters Screen Page LIBO
Page as the one-month London interbank offered rate for deposits in U.S. Dollars
at approximately 11:00 a.m. (London time) on the second preceding Business Day;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates;
provided, however, if such rate is not available, "LIBOR Rate" shall mean a
fluctuating rate of interest from a comparable rate designated by Agent as a
substitute therefore. "Telerate Page 3750" means the British Bankers Association
Libor Rates (determined as of 11:00 a.m. London time) that are published by
Moneyline Telerate (or any successor thereto). As used in this definition, the
term "Business Day" means a day on which commercial banks are open for
international business (including dealings in U.S. Dollar deposits in London,
England).
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction.
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"Lien Enforcement Action" means (a) the taking of any action to
enforce or realize upon any Lien, (b) the exercise of any right or remedy
provided to a secured creditor on account of a Lien under any of the Loan
Documents or under applicable law, including the election to retain any
Collateral in satisfaction of a Lien, (c) the taking of any action or the
exercise of any right or remedy in respect of the collection on, set off
against, marshaling of, or foreclosure on the Collateral (including, without
limitation, the notification of account debtors), (d) the sale, lease, license
or other disposition of all or any portion of the Collateral by private or
public sale or any other means permissible under applicable law, (e) the
exercise of any other right of a secured creditor under Part 6 of Article 9 of
the UCC, and (f) the commencement of any legal proceedings against any Borrower
or with respect to any Collateral for any relief described in clauses (a)
through (e) above. This definition shall not include (1) the filing of a lawsuit
by any Lender solely to collect its debt (but does include any action or
proceeding to enforce or realize upon a judgment Lien), (2) subject to Sections
12.1(b) and 15.12, the receipt of payments of principal or of interest or other
obligations arising under the Loan Documents made in accordance with the terms
of the Loan Documents, (3) the receipt of any payment or distribution under or
pursuant to a plan of reorganization confirmed in a case under the Bankruptcy
Code in accordance with the provisions of this Agreement, (4) except as
otherwise expressly set forth in this Agreement, the exercise of any right or
remedy available to a creditor or a secured creditor in any proceeding commenced
by or against any person or entity under any provision of the Bankruptcy Code
(including, without limitation, filing proofs of claims and defending any
actions filed against such creditor in any such proceeding), or under any other
bankruptcy or insolvency law, including assignments for the benefit of
creditors, formal or informal moratoria, compositions, or proceedings seeking
reorganization, arrangement, or other relief, or in any other dissolution or
liquidation proceeding, (5) the acceleration of any loan, or (6) the filing or
participation in the filing of an involuntary bankruptcy petition against any
Borrower.
"Loan Documents" shall mean, collectively, this Agreement and the
Other Documents.
"Lock-Box" shall mean a United States Postal Service post office box
under the custody and control of the Lock-Box Bank.
"Lock-Box Account" shall mean a Deposit Account opened by the
Borrowers with the Lock-Box Bank for the exclusive purpose of depositing
remittances on Receivables and other proceeds of Collateral mailed to the
Lock-Box.
"Lock-Box Agreement" shall mean an agreement among Borrowers, Agent
and the Lock-Box Bank, in form and substance reasonably satisfactory to Agent,
in respect of the Lock-Box and the corresponding Lock-Box Account.
"Lock-Box Bank" shall mean (i) First Merit Bank, N.A. or (ii) any
other bank that is selected by or acceptable to the Agent for the purpose of
maintaining a Lock Box and a Lock-Box Account subsequent to the Closing Date in
accordance with Section 4.14(d).
"LPC" shall have the meaning given to such term in the initial
recitals to this Agreement.
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"LRG" shall have the meaning given to such term in the initial
recitals to this Agreement.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the financial condition, business operations, assets or business prospects of
the Borrowers, considered as a whole, (b) Borrowers' ability to pay the
Obligations in accordance with the terms hereof and of the Other Documents, (c)
the value of the Collateral, considered as a whole, or Agent's Liens on the
Collateral, or the priority of any such Lien or (d) the practical realization of
the benefits of Agent's and each Lender's rights and remedies under this
Agreement and the Other Documents, considered as a whole.
"Material Agreements" shall mean and include, in the case of each
Borrower, the following: (i) any lease of Real Property material to the
operation of a Borrower's business that involves annual payments by a Borrower
in excess of the Materiality Threshold, (ii) any lease of personal property by a
Borrower having aggregate annual rentals in excess of the Materiality Threshold,
(iii) any license agreement for the use of any intellectual property material
and necessary for the operation of its business, (iv) the Revolver Loan
Agreement, the Revolver Loan Lender Agreements, the Senior Subordinated Note
Indenture, the Senior Subordinated Notes, the Junior Subordinated Notes, any
Subordination Agreement and any other document, instrument or agreement
evidencing, pertaining to, subordinating or securing the payment of, any
Indebtedness in excess of the Materiality Threshold, (v) any labor or union
contract, (vi) any employment contracts (more than 12 months) with executive
officers of Borrowers, (vii) any long-term purchase or supply contracts (more
than 12 months) involving annual sales or purchases in excess of Two Million
Dollars ($2,000,000), (viii) any Organic Document, and (ix) any other document,
contract or agreement the termination of which (without its substantially
contemporaneous replacement) could reasonably be expected to have a Material
Adverse Effect.
"Material Intellectual Property" shall have the meaning given to such
term in Section 5.12.
"Materiality Threshold" shall mean Two Hundred Fifty Thousand Dollars
($250,000).
"Mortgage" shall mean each mortgage, deed of trust, security deed,
assignment of leasehold interest or rents, or similar document pursuant to which
a Borrower shall grant to or for the benefit of Agent a Lien on the Real
Property Collateral, together with all modifications, supplements, replacements,
restatements, and amendments thereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean, with respect to any sale or other
disposition of any asset or the sale or issuance of any Indebtedness, the
aggregate amount of cash received from time to time (whether as initial
consideration or through payment or disposition of deferred consideration) by or
on behalf of such Person in connection with such transaction after deducting
therefrom only (without duplication) (a) reasonable and customary brokerage
commissions, underwriting fees and discounts, legal fees, accountant's fees,
investment banking fees, finder's
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fees, other similar fees and commissions and reasonable out-of-pocket expenses,
(b) the amount of taxes reasonably estimated by such Person to be actually and
reasonably attributable to such transaction, (c) the amount of any Indebtedness
secured by a security interest, lien or other encumbrance (other than a security
interest or other Lien created hereunder or pursuant hereto) on such asset that,
by the terms of such transaction, is required to be repaid upon such
disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are actually paid to a Person that, except in the case of
reasonable out-of-pocket expenses, is not an Affiliate of such Person or any
Affiliate of any Borrower and, in each case, are properly attributable to such
transaction or to the asset that is the subject thereof.
"Non-Real Property Collateral" shall mean all Collateral, other than
the Real Property Collateral.
"Note" shall mean each promissory note (if any) at any time evidencing
any other portion of the Obligations. "Notes" shall refer, collectively,
thereto.
"Obligations" shall mean and include any and all of each Borrower's
Indebtedness, obligations and/or liabilities to Agent and each Lender Party (or
any corporation that directly or indirectly Controls or is Controlled by or is
under common Control with Agent or any Lender Party) of every kind, nature and
description, whether direct or indirect, secured or unsecured, joint, several,
joint and several, absolute or contingent, due or to become due, now existing or
hereafter arising, contractual or tortious, liquidated or unliquidated,
regardless of how such Indebtedness, obligations or liabilities arise or by what
agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, and including, but not limited to, any and all of any
Borrower's Indebtedness, obligations and/or liabilities under this Agreement,
the Other Documents, or under any other agreement between any Lender Party and
any Borrower, all amounts charged to Borrowers' Account, and all obligations of
any Borrower to each Lender Party to perform acts or refrain from taking any
action. Without limitation of the foregoing, the term "Obligations" extends to
and includes the Term Loan A and the Term Loan B, all accrued (but unpaid)
interest thereon and all fees payable hereunder and under any Other Documents.
"OFAC" shall mean the U.S. Department of the Treasury Office of
Foreign Assets Control, and its successors.
"Organic Documents" shall mean: (i) for a corporation, its articles
(or certificate) of incorporation and bylaws; (ii) for a partnership, its
articles of organization (if any) and partnership agreement; and (ii) for a
limited liability company, its articles (or certificate) of organization and any
operating agreement; together with, for each such entity and any other entity
not described above, such other, similar documents as are integral to its
formation or the conduct of its business operations.
"Other Documents" shall mean the Notes, the Mortgages, the Fee
Letters, any UCC financing statement, and any and all other agreements,
instruments and documents, including, without limitation, guaranties, pledges,
powers of attorney, consents, and all other writings heretofore, now or
hereafter executed by any Borrower and delivered to Agent or any Lender Party in
respect of the transactions contemplated by this Agreement.
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"Parent Company" shall have the meaning given to such term in the
initial recitals to this Agreement.
"Participant" shall mean each Person who shall be granted the right by
any Lender to participate in any Term Loan in accordance with Section 17.3(b).
"Payment Office" shall mean, initially, the office of the Agent
located at 0000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxx Xxxxx, Xxxxxxxx 00000;
thereafter, such other office of Agent, if any, which it may designate by notice
to Borrowing Representative and to each Lender to be the Payment Office.
"Payroll Account" shall mean any one or more deposit, custody or other
accounts maintained by any Borrower with a bank or other institution if such
account is used solely to deposit funds that are to be applied to the payment of
wages and other compensation payable to employees of any Borrower and any
withholding, social security, payroll, unemployment or other taxes relating
thereto, imposed by any federal, state, county or local government or a
subdivision or agency thereof, including any charges, fees, assessments,
interest, penalties or additions payable in connection with any of the foregoing
or which are to be applied, to the extent of amounts withheld or deducted from
compensation payable to any employee of any Borrower, to the payment of health
insurance or other benefits generally provided to employees of any Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, and any
successor thereto.
"Perfection Certificate" shall mean, collectively, the Perfection
Certificate for each Borrower executed by such Borrower and delivered to Agent
on the Signing Date.
"Permitted Encumbrances" - see Section 7.2.
"Permitted Hedge Contracts" shall mean any Hedge Contracts entered
into in the ordinary course of, and pursuant to the reasonable requirements of,
Borrowers' business, and not for speculative purposes.
"Permitted Holders" shall mean the following Persons and their
respective Affiliates: Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx Xxxxxx,
Xxxxxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxx, Xxxxxxxxx X. Xxxx and Xxxxxx X.
Xxxxxxxx.
"Permitted PP&E Dispositions" shall mean: (i) the sale or other
disposition of Equipment (including worn-out or obsolete Equipment or Equipment
no longer used or useful in the business of any Borrower, so long as (A) no
Event of Default then exists, and none otherwise would be caused thereby; (B)
Agent shall have received at least one (1) Business Day advance notice thereof
if the sale or other disposition exceeds Twenty-Five Thousand Dollars ($25,000);
and (C) such sales of other dispositions do not involve Equipment having an
aggregate fair market value in excess of the Materiality Threshold for all such
Equipment which is the subject of sales or other dispositions in any one Fiscal
Year, except as the Required Lenders otherwise may agree; (ii) the sale or other
disposition of the Lakewood/Ellijay Properties, so long as (A) no Default or
Event of Default has occurred and is then continuing, and none otherwise would
be
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caused thereby; (B) Agent shall have received at least one (1) Business Day
advance notice thereof; and (C) the Net Cash Proceeds with respect to each of
such Real Properties, when made the subject of such sale or other disposition,
is not less than seventy-five percent (75%) of the appraised fair market value
thereof (as determined from the initial Appraisals thereof described in Section
9.1(aa)); and (iii) the sale of the property located at 000 Xxxxxxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx, upon the exercise of the purchase option set forth in the
Lease Agreement dated as of December 31, 2005 between LPC, as landlord, and
Premier Lakewood, Inc., as tenant, so long as (A) Agent shall have received at
least one (1) Business Day advance notice thereof; and (B) the Net Cash Proceeds
with respect to each of such Real Property, when made the subject of such sale
or other disposition, are not less than seventy-five percent (75%) of the
appraised fair market value thereof (as determined from the initial Appraisals
thereof described in Section 9.1(aa)).
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, maintained for employees of Borrowers or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Principals" shall mean (i) Xxxxxxx X. Xxxxx and (ii) Xxxxxx Xxxxxx.
"Prime Rate" shall mean a fluctuating per annum rate of interest equal
at all times to the rate of interest announced publicly from time to time by
Citibank, N.A. as its base rate; provided, that such rate is not necessarily the
best rate offered to its customers and, should Agent be unable to determine such
rate, such other indication of the prevailing prime rate of interest as
reasonably may be chosen by Agent; provided, further, that each change in the
fluctuating rate of interest shall take effect simultaneously with the
corresponding change in the Prime Rate.
"Projections" shall mean and include the Initial Projections and the
annual projections delivered pursuant to Section 10.8.
"Provision for Taxes" shall mean with respect to any Person for any
period, the provision of taxes on the net income of such Person, whether
federal, state, provincial, county or local, foreign or domestic, that is
required to be made on the income statement of such Person for such period in
accordance with GAAP.
"Purchasing Lender" shall have the meaning set forth in Section
17.3(c) hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of each Borrower's right, title and
interest in and to its owned and leased premises, including, particularly, any
real property identified on Schedule 5.24 hereto, but shall exclude the real
property located at 000 Xxxxxxxxxx Xxxx,
X-00
Xxxxxxxx, Xxx Xxxx. The term "Real Property" specifically includes Leasehold
Interests that are material to the operation of the Borrowers' business and
involve annual payments in excess of the Materiality Threshold in addition to
Real Property owned by Borrowers, or a Borrower, in fee simple.
"Real Property Collateral" shall mean that portion of Borrowers' Real
Property which at any time is owned by a Borrower in fee simple (if any).
"Receivables" shall mean and include, as to each Borrower, all of such
Borrower's accounts, contract rights, instruments (including those evidencing
indebtedness owed to Borrowers by their respective Affiliates), documents,
chattel paper (including electronic chattel paper), general intangibles relating
to accounts, drafts and acceptances (including payment intangibles), and all
other forms of obligations owing to such Borrower arising out of or in
connection with the sale or lease of Inventory or the rendition of services, all
guarantees and other security therefor, whether secured or unsecured, now
existing or hereafter created, and whether or not specifically sold or assigned
to Agent hereunder.
"Refinancing Indebtedness" - see Section 7.3(l).
"Release" shall have the meaning set forth in Section 5.6(c)(i)
hereof.
"Reportable Event" shall mean a reportable event described in Section
4043(b) of ERISA and/or in the regulations promulgated thereunder.
"Required Lenders" shall mean the Required Term A Lenders and the
Required Term B Lenders, provided that after the repayment in full of either the
Term Loan A or Term Loan B, "Required Lenders" shall mean Lenders holding at
least sixty-six and two-thirds percent (66-2/3%) of the then outstanding Term
Loans.
"Required Term A Lenders" shall mean Lenders holding at least
sixty-six and two-thirds percent (66-2/3%) of the Term Loan A.
"Required Term B Lenders" shall mean Lenders holding at least
sixty-six and two-thirds percent (66-2/3%) of the Term Loan B.
"Restricted Payment" shall mean and include: (i) any payment described
in Section 7.5(f); (ii) any payment described in Section 7.5(g); and (iii) any
payment described in the proviso to Section 7.13.
"Restricted Payment Conditions," with respect to any Restricted
Payment, shall mean the following conditions: (i) no Event of Default shall have
occurred and be continuing as of the payment date, and none would be caused by
or result from such payment being made; (ii) on a pro forma basis, after giving
effect to such payment as if made in the last Fiscal Month for which Borrowers
have reported financial statements pursuant to Section 10.7, Borrowers shall
remain in compliance with all applicable Financial Covenants; (iii) after giving
effect to such payment, Undrawn Availability is no less than Three Million
Dollars ($3,000,000); (iv) after giving effect to such payment, Undrawn Average
Availability is no less than Three Million Dollars ($3,000,000); and (v) Agent
shall have received at least three (3) Business Days'
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advance written notice of Borrowers' intent to make such payment, specifying the
amount thereof, the payee (if known) and the purpose, and at such time a
Designated Officer of the Borrowing Representative shall have certified in
writing to Agent Borrowers' compliance with clauses (i) through (iv) above,
showing appropriate computations.
"Revolver Loan Agent" shall mean CapitalSource Finance LLC and its
successors and assigns.
"Revolver Loan Agreement" shall mean the Credit and Security
Agreement, dated of even date herewith, by and among Revolver Loan Agent,
Revolver Loan Lenders and Borrowers, as amended or modified from time to time
subject to the provisions of the Intercreditor Agreement.
"Revolver Loan Debt" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by any Borrower to
Revolver Loan Agent or any Revolver Loan Lender, including principal, interest,
charges, fees, premiums, indemnities, costs and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, arising under
the Revolver Loan Lender Agreements.
"Revolver Loan Lender Agreements" shall mean, collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Revolver Loan
Agreement; (b) all "Other Documents" (as defined therein) at any time executed
and delivered by any Borrower with, to or in favor of Revolver Loan Agent or any
Revolver Loan Lender pursuant to the Revolver Loan Agreement; sometimes being
referred to herein individually as a "Revolver Loan Lender Agreement".
"Revolver Loan Lenders" shall mean, collectively, CapitalSource
Finance LLC, in its individual capacity and any other lenders who are from time
to time parties to the Revolver Loan Agreement as lenders, and their respective
successors and assigns, and the lenders with respect to any Refinancing
Indebtedness; each sometimes being referred to herein individually as a
"Revolver Loan Lender".
"Revolver Loans" shall mean, collectively, the revolver loans, the
equipment term loan and letter of credit accommodations made to the Borrower by
or on behalf of the Revolver Loan Lenders pursuant to the Revolver Loan
Agreement; sometimes being referred to herein individually as a "Revolver Loan".
"Sanctioned Country" shall mean a country subject to a sanctions
program identified on any list thereof maintained by OFAC, as published from
time to time.
"Sanctioned Person" shall mean any Person (i) named on any list of
"Specifically Designated Nationals," "Blocked Persons," "Specifically Designated
Terrorists," "Specially Designated Narcotics Traffickers" or "Foreign Terrorist
Organizations" maintained by OFAC, as published from time to time; (ii) that is
(A) an agent of the government of a Sanctioned Country, (B) an organization
controlled by a Sanctioned Country, or (C) a Person resident in a Sanctioned
Country, to the extent subject to a sanctions program administered by OFAC.
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"Securities" shall mean and include, as to each Borrower, all
securities (whether certificated or uncertificated) and other investment
property owned by such Borrower, whether now existing or hereafter created,
including any held by any intermediary in any "street" name, pursuant to any
custody arrangement or otherwise. The term "Securities" specifically includes
all securities accounts, security entitlements, commodity contracts and
commodity accounts.
"Senior Subordinated Notes" shall mean, collectively, the 12% Senior
Subordinated Notes due August 1, 2009 issued by LPC pursuant to the Subordinated
Note Indenture.
"Senior Subordinated Note Indenture" shall mean the Indenture, dated
as of December 18, 2003, between LPC, as issuer, and Wilmington Trust Company,
as trustee, with respect to the Senior Subordinated Notes.
"Series B Preferred Stock" shall mean the Parent Company's $8
Cumulative Convertible Preferred Stock, Series B, par value $100 per share.
"Subordinated Debt" shall mean (i) the Senior Subordinated Notes, (ii)
the Junior Subordinated Notes, and (iii) any other Indebtedness which has been
subordinated, in right of payment and claim, to the rights and claims of the
Lender Parties in respect of the Obligations and the Collateral pursuant to a
Subordination Agreement.
"Subordination Agreement" shall mean an agreement, satisfactory in
form and substance to Agent, in its Credit Judgment, among (i) Agent, (ii) a
creditor holding Indebtedness permitted to be incurred hereunder, and (iii) the
Borrowers (whether directly or by consent), setting forth the terms by which
such Indebtedness shall be subordinated, in right of payment and claim, to the
rights and claims of the Lender Parties in respect of the Obligations and the
Collateral.
"Subsidiary" shall mean, as to any Person, a corporation or other
entity, a majority of whose Voting Equity Interests are owned, directly or
indirectly, by such Person. Unless otherwise expressly provided herein,
references herein to a "Subsidiary" or the "Subsidiaries" shall mean and refer
to Subsidiaries of the Borrowers, including any not in existence on the Signing
Date in anticipation of their subsequent creation or acquisition in accordance
with the terms hereof.
"Subsidiary Pledge Agreement" shall have the meaning given to such
term in Section 9.1(r)(i).
"Target Amount" shall mean Three Million Dollars ($3,000,000) less any
voluntary prepayments made under Section 2.2 of this Agreement or mandatory
prepayments made under Section 2.3 of this Agreement, in each case with respect
to the Term Loan A.
"Term" shall have the meaning set forth in Section 14.1 hereof.
"Term A Lender" shall mean each Lender with a Term Loan A Commitment
or which holds a portion of the Term Loan A.
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"Term B Lender" shall mean each Lender with a Term Loan B Commitment
or which holds a portion of the Term Loan B.
"Term Loan A" shall mean the term loan, in the original principal
amount of Eleven Million Dollars ($11,000,000) made to Borrowers by the Lenders
on the Closing Date pursuant to Section 2.1(a).
"Term Loan A Commitment," for each Lender, shall mean the dollar
amount set forth below each Lender's name on the signature page to this
Agreement as its "Term Loan A Commitment" representing the commitment of such
Lender to make its Term Loan A Commitment Percentage of the Term Loan A
available to Borrower on the Closing Date.
"Term Loan A Commitment Percentage" of any Lender, shall mean the
percentage that such Lender's Term Loan A Commitment bears to the total Term
Loan A Commitments, as the same may be adjusted upon any assignment by a Lender
to a Purchasing Lender pursuant to Section 17.3(c) hereof.
"Term Loan A Commitments" shall mean the aggregate amount of each
Lender's individual Term Loan A Commitment, which aggregate amount shall equal
Eleven Million Dollars ($11,000,000).
"Term Loan B" shall mean the term loan, in the original principal
amount of Four Million Dollars ($4,000,000) made to Borrowers by the Lenders on
the Closing Date pursuant to Section 2.1(b).
"Term Loan B Commitment," for each Lender, shall mean the dollar
amount set forth below each Lender's name on the signature page to this
Agreement as its "Term Loan B Commitment" representing the commitment of such
Lender to make its Term Loan B Commitment Percentage of the Term Loan B
available to Borrower on the Closing Date.
"Term Loan B Commitment Percentage" of any Lender, shall mean the
percentage that such Lender's Term Loan B Commitment bears to the total Term
Loan B Commitments, as the same may be adjusted upon any assignment by a Lender
to a Purchasing Lender pursuant to Section 17.3(c) hereof.
"Term Loan B Commitments" shall mean the aggregate amount of each
Lender's individual Term Loan B Commitment, which aggregate amount shall equal
Four Million Dollars ($4,000,000).
"Term Loans" shall mean, collectively, the Term Loan A and the Term
Loan B.
"Toxic Substance" shall mean and include any material present on the
Real Property that has been shown to have significant adverse effect on human
health or that is subject to regulation under the Toxic Substances Control Act
(TSCA), 15 U.S.C. Sections 2601 et seq., applicable state law, or any other
applicable Federal or state laws now in force or hereafter enacted relating to
toxic substances. The term "Toxic Substance" includes but is not limited to
asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
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"Transferee" shall have the meaning given to such term in Section
17.3(b) hereof.
"Undrawn Availability" shall have the meaning given to such term in
the Revolver Loan Agreement.
"Undrawn Average Availability" shall have the meaning given to such
term in the Revolver Loan Agreement.
"Unfinanced Capital Expenditures" -- see Section 8.1.
"Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial
Code, as adopted in the State of New York, in effect from time to time.
"Voting Equity Interests" shall mean Equity Interests having ordinary
voting power to elect members of the board of directors, partners, managers or
comparable governing authority of a Person
"Warrant Agent Agreement" shall mean the Warrant Agent Agreement,
dated as of December 18, 2003, by and between LPC and Wilmington Trust Company,
in its capacity as warrant agent.
"Working Capital" shall mean current assets less current liabilities
calculated in accordance with GAAP, excluding (i) interest, tax, and dividend
current assets/current liabilities, (ii) the current portion of long-term debt,
and (iii) the current portion of Capital Leases.
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ACKNOWLEDGED AND AGREED:
LEXINGTON PRECISION CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
LEXINGTON RUBBER GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
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