EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
Dated as of October 31, 2002
among
EACH OF THE FINANCIAL INSTITUTIONS PARTY HERETO,
as the Lenders,
BANK OF AMERICA, NATIONAL ASSOCIATION,
as the Administrative Agent,
and
METALS USA, INC.
and
CERTAIN OF ITS SUBSIDIARIES PARTY HERETO,
as the Borrowers
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ARTICLE 1 INTERPRETATION OF THIS AGREEMENT.........................................1
Section 1.1 Definitions..............................................................1
Section 1.2 Accounting Terms........................................................32
Section 1.3 Interpretive Provisions.................................................32
ARTICLE 2 LOANS AND LETTERS OF CREDIT.............................................33
Section 2.1 Total Facility..........................................................33
Section 2.2 Revolving Loans.........................................................33
Section 2.3 Letters of Credit and Credit Support....................................41
Section 2.4 Bank Products...........................................................48
ARTICLE 3 INTEREST AND FEES.......................................................49
Section 3.1 Interest................................................................49
Section 3.2 Conversion and Continuation Elections...................................50
Section 3.3 Maximum Interest Rate...................................................51
Section 3.4 Unused Line Fee.........................................................52
Section 3.5 Letter of Credit Fee....................................................52
Section 3.6 Renewal Fee.............................................................53
Section 3.7 Other Fees..............................................................53
ARTICLE 4 PAYMENTS AND PREPAYMENTS................................................53
Section 4.1 Revolving Loans.........................................................53
Section 4.2 Reduction of Commitments; Termination of Facility.......................53
Section 4.3 Prepayments from Asset Dispositions.....................................54
Section 4.4 Payments by the Borrowers...............................................55
Section 4.5 Payments as Revolving Loans.............................................55
Section 4.6 Apportionment, Application, and Reversal of Payments....................56
Section 4.7 Indemnity for Returned Payments.........................................56
Section 4.8 The Agent's and the Lenders' Books and Records; Monthly Statements......57
ARTICLE 5 TAXES, YIELD PROTECTION, AND ILLEGALITY.................................57
Section 5.1 Taxes...................................................................57
Section 5.2 Illegality..............................................................58
Section 5.3 Increased Costs and Reduction of Return.................................58
Section 5.4 Funding Losses..........................................................59
Section 5.5 Inability to Determine Rates............................................60
Section 5.6 Certificates of Lenders.................................................60
Section 5.7 Survival................................................................60
Section 5.8 Claims Under Section 5.1 and Section 5.3................................60
Section 5.9 Replacement of Affected Lender..........................................60
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ARTICLE 6 COLLATERAL..............................................................61
Section 6.1 Grant of Security Interest..............................................61
Section 6.2 Perfection and Protection of Security Interest..........................63
Section 6.3 Location of Collateral..................................................64
Section 6.4 Title to, Liens on, and Sale and Use of Collateral......................65
Section 6.5 Appraisals..............................................................65
Section 6.6 Access and Examination; Confidentiality.................................65
Section 6.7 Collateral Reporting....................................................66
Section 6.8 Accounts................................................................67
Section 6.9 Collection of Accounts; Payments........................................68
Section 6.10 Inventory; Perpetual Inventory..........................................69
Section 6.11 Documents, Instruments, and Chattel Paper...............................70
Section 6.12 Right to Cure...........................................................70
Section 6.13 Power of Attorney.......................................................71
Section 6.14 The Agent's and the Lenders' Rights, Duties, and Liabilities............71
Section 6.15 Guaranties; Third Party Joinder.........................................72
Section 6.16 Voting Rights, Distributions, Etc. in Respect of Investment Property....72
Section 6.17 Revised UCC Article 9...................................................73
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.......................74
Section 7.1 Books and Records.......................................................74
Section 7.2 Financial Information...................................................74
Section 7.3 Notices to the Lenders..................................................77
Section 7.4 Revisions or Updates to Schedules.......................................79
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS..................................79
Section 8.1 Authorization, Validity, and Enforceability of this Agreement and the
Loan Documents; No Conflicts............................................79
Section 8.2 Validity and Priority of Security Interest..............................80
Section 8.3 Organization and Qualification..........................................80
Section 8.4 Corporate Name; Prior Transactions......................................80
Section 8.5 Subsidiaries............................................................80
Section 8.6 Financial Statements and Projections....................................81
Section 8.7 Solvency................................................................81
Section 8.8 Debt....................................................................81
Section 8.9 Distributions...........................................................81
Section 8.10 Title to Property.......................................................81
Section 8.11 Real Estate; Leases.....................................................82
Section 8.12 Proprietary Rights......................................................82
Section 8.13 Trade Names.............................................................82
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Section 8.14 Litigation..............................................................82
Section 8.15 Restrictive Agreements..................................................82
Section 8.16 Labor Matters...........................................................82
Section 8.17 Environmental Matters...................................................83
Section 8.18 No Violation of Law.....................................................84
Section 8.19 No Default..............................................................84
Section 8.20 ERISA Compliance........................................................84
Section 8.21 Taxes...................................................................85
Section 8.22 Regulated Entities......................................................85
Section 8.23 Use of Proceeds; Margin Regulations.....................................85
Section 8.24 No Material Adverse Change..............................................85
Section 8.25 Full Disclosure.........................................................85
Section 8.26 Material Agreements.....................................................85
Section 8.27 Bank Accounts...........................................................86
Section 8.28 Governmental Authorization..............................................86
Section 8.29 Investment Property.....................................................86
Section 8.30 Common Enterprise.......................................................86
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS......................................87
Section 9.1 Taxes and Other Obligations.............................................87
Section 9.2 Existence and Good Standing.............................................87
Section 9.3 Compliance with Law and Agreements; Maintenance of Licenses.............87
Section 9.4 Maintenance of Property.................................................87
Section 9.5 Insurance...............................................................87
Section 9.6 Condemnation............................................................88
Section 9.7 Environmental Laws......................................................88
Section 9.8 Compliance with ERISA...................................................89
Section 9.9 Mergers, Consolidations, Sales, Acquisitions............................89
Section 9.10 Distributions; Capital Change; Restricted Investments...................90
Section 9.11 Transactions Affecting Collateral or Obligations........................90
Section 9.12 Guaranties..............................................................90
Section 9.13 Debt....................................................................90
Section 9.14 Prepayment of Debt......................................................90
Section 9.15 Transactions with Affiliates............................................91
Section 9.16 Investment Banking and Finder's Fees....................................91
Section 9.17 Business Conducted......................................................91
Section 9.18 Liens...................................................................91
Section 9.19 Sale and Leaseback Transactions.........................................91
Section 9.20 New Subsidiaries........................................................91
Section 9.21 Fiscal Year.............................................................92
Section 9.22 Capital Expenditures....................................................92
Section 9.23 Operating Lease Obligations.............................................92
Section 9.24 Minimum Availability....................................................92
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Section 9.25 [Reserved]..............................................................92
Section 9.26 Use of Proceeds.........................................................92
Section 9.27 Further Assurances......................................................92
Section 9.28 Bank as Depository......................................................93
Section 9.29 Inventory Valuation.....................................................93
Section 9.30 Plan of Reorganization..................................................93
ARTICLE 10 CONDITIONS OF LENDING...................................................93
Section 10.1 Conditions Precedent to Making of Revolving Loans on the Closing Date...93
Section 10.2 Conditions Precedent to Each Revolving Loan.............................97
ARTICLE 11 DEFAULT REMEDIES........................................................98
Section 11.1 Events of Default.......................................................98
Section 11.2 Remedies...............................................................101
ARTICLE 12 TERM AND TERMINATION...................................................103
Section 12.1 Term and Termination...................................................103
ARTICLE 13 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS...........104
Section 13.1 No Waivers; Cumulative Remedies........................................104
Section 13.2 Amendments and Waivers.................................................104
Section 13.3 Assignments; Participations............................................106
ARTICLE 14 THE AGENT..............................................................108
Section 14.1 Appointment and Authorization..........................................108
Section 14.2 Delegation of Duties...................................................108
Section 14.3 Liability of the Agent.................................................109
Section 14.4 Reliance by the Agent..................................................109
Section 14.5 Notice of Default......................................................109
Section 14.6 Credit Decision........................................................110
Section 14.7 Indemnification........................................................110
Section 14.8 The Agent in Individual Capacity.......................................111
Section 14.9 Successor Agent........................................................111
Section 14.10 Withholding Tax........................................................111
Section 14.11 Collateral Matters.....................................................113
Section 14.12 Restrictions on Actions by Lenders; Sharing of Payments................114
Section 14.13 Agency for Perfection..................................................114
Section 14.14 Payments by the Agent to the Lenders...................................115
Section 14.15 Concerning the Collateral and the Related Loan Documents...............115
Section 14.16 Field Audit and Examination Reports; Disclaimer by Lenders.............115
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Section 14.17 Relation Among Lenders.................................................116
ARTICLE 15 MISCELLANEOUS..........................................................116
Section 15.1 Cumulative Remedies; No Prior Recourse to Collateral...................116
Section 15.2 Severability...........................................................116
Section 15.3 Governing Law; Choice of Forum.........................................116
Section 15.4 Waiver of Jury Trial...................................................117
Section 15.5 Survival of Representations and Warranties.............................118
Section 15.6 Other Security and Guaranties..........................................118
Section 15.7 Fees and Expenses......................................................118
Section 15.8 Notices................................................................118
Section 15.9 Waiver of Notices......................................................120
Section 15.10 Binding Effect.........................................................120
Section 15.11 Indemnity of the Agent and the Lenders by the Borrowers................120
Section 15.12 Limitation of Liability................................................121
Section 15.13 Final Agreement........................................................122
Section 15.14 Counterparts...........................................................122
Section 15.15 Captions...............................................................122
Section 15.16 Right of Set-off.......................................................122
Section 15.17 Joint and Several Liability............................................122
Section 15.18 Contribution and Indemnification among the Borrowers...................124
Section 15.19 Agency of the Parent for Each Other Borrower...........................124
Section 15.20 Additional Borrowers...................................................125
Section 15.21 Express Waivers By Borrowers In Respect of Cross Guaranties
and Cross Collateralization............................................125
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SCHEDULES:
Schedule 1.1(A) - Permitted Liens
Schedule 1.1(B) - Permitted Investments
Schedule 6.1 - Commercial Tort Claims
Schedule 6.3 - Location of Collateral
Schedule 6.7 - Information Contained in Monthly Reports
Schedule 8.3 - Organization and Qualification
Schedule 8.4 - Corporate Names
Schedule 8.5 - Subsidiaries
Schedule 8.8 - Debt
Schedule 8.11 - Real Estate; Leases
Schedule 8.12 - Proprietary Rights
Schedule 8.13 - Trade Names
Schedule 8.14 - Litigation
Schedule 8.16 - Labor Matters
Schedule 8.17 - Environmental Matters
Schedule 8.20 - ERISA Matters
Schedule 8.26 - Material Agreements
Schedule 8.27 - Bank Accounts
Schedule 8.29 - Investment Property
EXHIBITS:
Exhibit A - Form of Revolving Note
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Notice of Conversion/Continuation
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Compliance Certificate
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LOAN AND SECURITY AGREEMENT
This
Loan and Security Agreement, dated as of October 31, 2002, among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "LENDER" and collectively as the
"LENDERS"), Bank of America, National Association with an office located at 000
Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, as administrative agent for the
Lenders (in its capacity as administrative agent, the "AGENT"), and Metals USA,
Inc., a Delaware corporation, and each of its Subsidiaries party hereto.
W I T N E S S E T H
A. On November 14, 2001 (the "FILING DATE"), the Borrowers filed with the
Bankruptcy Court a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code.
B. In connection with the Chapter 11 Cases $350,000,000 of the
Pre-Petition Lenders' claims secured under the Pre-Petition Loan Agreements were
repaid and re-advanced (or deemed repaid and re-advanced) on a Post-Petition
basis and designated as post-petition administrative claims (the "DESIGNATED
POST-PETITION CLAIMS").
C. In connection with the Chapter 11 Cases, the Borrowers filed the Plan
of Reorganization under which it is proposed that, among other things, the
Designated Post-Petition Claims be satisfied, in full.
D. The Borrowers have requested the Lenders to make available to the
Borrowers a revolving line of credit for loans and letters of credit in an
aggregate amount of $200,000,000 which extensions of credit the Borrowers will
use for the purposes set forth in SECTION 9.26.
E. The Lenders have agreed to make available to the Borrowers such credit
facility upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Borrowers hereby agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
Section 1.1 DEFINITIONS. As used herein:
"ACCOUNT" means, with respect to a Person, any of such Person's now owned
and hereafter acquired or arising accounts, as defined in the UCC, including any
rights to payment for the sale or lease of goods or rendition of services,
whether or not they have been earned by performance, and "ACCOUNTS" means, with
respect to any such Person, all of the foregoing in each case, other than any
Excluded Assets.
"ACCOUNT DEBTOR" means each Person obligated on an Account.
LOAN AND SECURITY AGREEMENT - PAGE 1
"ACH TRANSACTIONS" means any cash management or related services including
the automated clearing house transfer of funds by the Bank for the account of
any Borrower pursuant to agreement or overdrafts.
"ADJUSTED NET INCOME" means, as applied to any Person (the "subject
Person"), the Net Income of the subject Person for the period in question,
PROVIDED that there shall be excluded:
(a) the net income (or net loss) of any Person accrued prior to
the date it becomes a Subsidiary of, or is merged into or consolidated
with, the subject Person or a consolidated Subsidiary of the subject
Person;
(b) any net gains or losses on the sale or other disposition,
not in the ordinary course of business, of investments and other capital
assets, PROVIDED that there shall also be excluded any related charges for
taxes thereon;
(c) any net gain arising from the collection of the proceeds of
any insurance policy;
(d) any write-up or write-down of any asset; and
(e) any other extraordinary item, as determined according to
GAAP.
"AFFILIATE" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, ten percent (10.0%) or more
of the outstanding equity interest of such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"AGENT" means the Bank, solely in its capacity as the administrative agent
for the Lenders, and any successor administrative agent.
"AGENT ADVANCES" has the meaning specified in SECTION 2.2(i).
"AGENT'S LIENS" means the Liens in the Collateral granted to the Agent, for
the benefit of the Lenders, the Bank, and the Agent, pursuant to this Agreement
and the other Loan Documents.
"AGENT-RELATED PERSONS" means the Agent, together with its Affiliates, and
the officers, directors, employees, agents, and attorneys-in-fact of the Agent
and its Affiliates.
"AGGREGATE REVOLVER OUTSTANDINGS" means, at any time: the sum of (a) the
unpaid balance of Revolving Loans, (b) the aggregate amount of Pending Revolving
Loans, (c) one hundred percent (100%) of the aggregate undrawn amount of all
outstanding Letters of Credit and Credit Support, and (d) the aggregate amount
of any unpaid reimbursement obligations in respect of Letters of Credit and
Credit Support.
LOAN AND SECURITY AGREEMENT - PAGE 2
"AGREEMENT" means this
Loan and Security Agreement as it may be amended,
restated or otherwise modified from time to time.
"ANNIVERSARY DATE" means a yearly (twelve-month) anniversary of the Closing
Date.
"ANNUAL AGENT FEE" means $100,000.
"APPLICABLE MARGIN" means, (a) during the period commencing on the Closing
Date and ending on but not including the first adjustment date set forth
hereinbelow, 0.50% with respect to Base Rate Revolving Loans and 2.50% with
respect to LIBOR Rate Revolving Loans, and (b) on the first adjustment date set
forth hereinbelow and thereafter, in each case subject to adjustment from time
to time thereafter to the applicable percentage specified corresponding to the
Fixed Charge Coverage Ratio, as set forth below, respectively:
Base Rate LIBOR Rate
Fixed Charge Coverage Ratio Revolving Loans Revolving Loans
-------------------------------------------------------------- --------------- ---------------
Less than 0.80 to 1.00 .50% 3.00%
Greater than or equal to 0.80 to 1.00, but less than or equal .50% 2.75%
to 0.95 to 1.00
Greater than 0.95 to 1.00, but less than or equal to 1.10 to .375% 2.50%
1.00
Greater than 1.10 to 1.00, but less than or equal to 1.50 to .250% 2.25%
1.00
Greater than 1.50 to 1.00 0.00% 2.00%
For the purpose of determining any such adjustments to the Applicable Margin,
the Fixed Charge Coverage Ratio shall be determined as of the last day of each
Fiscal Period of the Parent based upon the Parent's Financial Statements for the
three immediately preceding Fiscal Periods, beginning with the Fiscal Period
ending March 31, 2003, delivered to the Agent as required by SECTION 7.2(a)
(with respect to the Financial Statements for the last Fiscal Period of the
Parent of each Fiscal Year) or SECTION 7.2(b) (with respect to the financial
statements for each Fiscal Period of the Parent which is not a Fiscal Year end),
and any such adjustment, if any, shall become effective (A) with respect to the
Base Rate Revolving Loans and all other Obligations on and after the first day
of the Fiscal Period following the Fiscal Period in which such Financial
Statements are delivered to the Agent and (B) with respect to LIBOR Rate
Revolving Loans as of the date on or after the first day of the Fiscal Period
following the Fiscal Period in which such Financial Statements are delivered to
the Agent when any LIBOR Rate Revolving Loan is made, continued, or converted,
as the case may be.
"ASSIGNEE" has the meaning specified in SECTION 13.3(a).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in SECTION 13.3(a).
"ATTORNEY COSTS" means and includes all reasonable and customary fees,
expenses, and disbursements of any law firm or other counsel engaged by the
Agent.
"AVAILABLE CREDIT" means, at any time, (a) the Borrowing Base MINUS (b) the
Aggregate
LOAN AND SECURITY AGREEMENT - PAGE 3
Revolver Outstandings.
"AVAILABILITY" means, at any time, (a) the Borrowing Base, calculated
pursuant to CLAUSE (b) of the definition of Borrowing Base, MINUS (b) the
Aggregate Revolver Outstandings.
"BANK" means Bank of America, National Association, a national banking
association, or any successor entity thereto.
"BANK PRODUCTS" means any one or more of the following types of services or
facilities extended to any Borrower by the Bank, or any Affiliate of the Bank in
reliance on the Bank's agreement to indemnify such Affiliate: (a) credit cards;
(b) ACH Transactions; (c) Hedge Agreements; (d) treasury management services,
and (e) foreign exchange contracts.
"BANK PRODUCT RESERVES" means all reserves which the Agent from time to
time establishes in its sole discretion for the Bank Products then provided or
outstanding.
"BANKRUPTCY CASES" means, the Chapter 11 Cases or any conversion of the
same to any other case under the Bankruptcy Code, each of which being a
"BANKRUPTCY CASE" as to any Borrower.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.
Section 101 ET SEQ.).
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
Southern District of
Texas, Houston,
Texas, or such other court as shall have
jurisdiction over the Chapter 11 Cases.
"BASE RATE" means, for any day, the rate of interest in effect for such day
as publicly announced from time to time by the Bank in Charlotte, North Carolina
as its "prime rate" (the "prime rate" being a rate set by the Bank based upon
various factors including the Bank's costs and desired return, general economic
conditions, and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate). Any change
in the prime rate announced by the Bank shall take effect at the opening of
business on the day specified in the public announcement of such change. Each
Interest Rate based upon the Base Rate shall be adjusted simultaneously with any
change in the Base Rate.
"BASE RATE REVOLVING LOAN" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.
"BLOCKED ACCOUNT" means any deposit/collection account established pursuant
to a Blocked Account Agreement; collectively, such accounts are referred to as
the "BLOCKED ACCOUNTS."
"BLOCKED ACCOUNT AGREEMENT" means an agreement among one or more of the
Borrowers, the Agent, and a Clearing Bank, in form and substance satisfactory to
the Agent, concerning the collection of payments which represent the proceeds of
Accounts and other Collateral of a Borrower.
"BORROWER" means, separately and individually, any of the Parent, Allmet
Building
LOAN AND SECURITY AGREEMENT - PAGE 4
Products, L.P., Allmet GP, Inc., Allmet LP, Inc., Cornerstone Building Products,
Inc., Cornerstone Metals Corporation, Cornerstone Patio Concepts, L.L.C.,
Interstate Steel Supply Co. of Maryland, Inc., Intsel GP, Inc., Intsel LP, Inc.,
i-Solutions Direct, Inc., Xxxxxxxx Real Estate Corporation, Xxxxxxxx Steel GP,
Inc., Xxxxxxxx Steel LP, Inc., Metals Receivables Corporation, Metals USA
Building Products Southeast, Inc., Metals USA Carbon Flat Rolled, Inc., Metals
USA Finance Corp., Metals USA Flat Rolled Central, Inc., Metals USA Management
Co., L.P., Metals USA Plates and Shapes Northeast, L.P., Metals USA Plates and
Shapes Southcentral, Inc., Metals USA Plates and Shapes Southeast, Inc., Metals
USA Plates and Shapes Southwest, Limited Partnership, Metals USA Realty Company,
Metals USA Specialty Metals Northcentral, Inc., MUSA GP, Inc., MUSA LP, Inc.,
National Manufacturing, Inc., Queensboro, L.L.C.,
Texas Aluminum Industries,
Inc., Valley Aluminum Co., Valley Aluminum of Nevada, Inc., Western Awning
Company, and any other Person who becomes a party to this Agreement as a
"Borrower" pursuant to the terms hereof, jointly, severally, and collectively,
and "BORROWERS" means more than one or all of the foregoing Persons, jointly,
severally, and collectively, as the context requires.
"BORROWING" means a borrowing hereunder consisting of Revolving Loans made
on the same day by the Lenders, by the Bank (in the case of a Borrowing funded
by a Non-Ratable Loan), or by the Agent (in the case of a Borrowing consisting
of an Agent Advance) to a Borrower, or the issuance of Letters of Credit or
Credit Support hereunder.
"BORROWING BASE" means, at any time, an amount equal to the lesser of
(a) the Maximum Revolver Amount, or
(b) the sum of
(i) eighty-five percent (85.0%) of the Net Amount of
Eligible Accounts, PLUS
(ii) the lesser of
(A) sixty percent (60.0%) of the lesser of the
original cost or market value of Eligible Inventory, or
(B) the sum of
(1) ninety percent (90%) of the Orderly
Liquidation Value of the Borrowers' flat rolled
Inventory, plus
(2) eighty-five percent (85%) of the Orderly
Liquidation Value of all other Inventory of the
Borrowers (i.e., exclusive of the Borrowers' flat
rolled Inventory), MINUS
(c) all reserves which the Agent deems necessary in the exercise of
its reasonable credit judgment to maintain with respect to any Borrower,
including, without limitation, reserves for any amounts which the Agent or
any Lender may be obligated to pay in the future for the account of any
Borrower.
LOAN AND SECURITY AGREEMENT - PAGE 5
Notwithstanding the foregoing CLAUSE (c), as long as (i) Availability exceeds
$20,000,000 and (ii) xxxx to market adjustments or reserves to re-value
Inventory on a replacement cost basis versus book value would not cause
Availability against the Borrowers' Inventory (regardless of whether such
Inventory is flat rolled or otherwise) to exceed ninety percent (90.0%) of the
Orderly Liquidation Value, as computed on the most recent Inventory appraisal,
the Agent will not take reserves against Inventory as a result of such
re-valuation adjustment.
Any determination by the Agent in respect of the Borrowing Base shall be
based on the Agent's reasonable credit judgment.
"BORROWING BASE CERTIFICATE" means a certificate by a Responsible Officer
of the Parent, substantially in the form of EXHIBIT B (or another form
acceptable to the Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof (including, to the extent a
Borrower has received notice of any such reserve from the Agent, any of the
reserves included in such calculation pursuant to CLAUSE (c) of the definition
of Borrowing Base), all in such detail as shall be reasonably satisfactory to
the Agent. All calculations of the Borrowing Base in connection with the
preparation of any Borrowing Base Certificate shall originally be made by the
Parent and certified to the Agent; PROVIDED that the Agent shall have the right
to review and adjust, in the exercise of its reasonable credit judgment, any
such calculation (a) to reflect its reasonable estimate of declines in value of
any of the Collateral described therein, and (b) to the extent that such
calculation is not in accordance with this Agreement.
"BUSINESS DAY" means (a) any day that is not a Saturday, Sunday, or a day
on which banks in New York, New York, or Charlotte, North Carolina are required
or permitted to be closed, and (b) with respect to all notices, determinations,
fundings, and payments in connection with the LIBOR Rate or LIBOR Rate Revolving
Loans, any day that is a Business Day pursuant to CLAUSE (a) preceding and that
is also a day on which trading in Dollars is carried on by and between banks in
the London interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request, or directive of
any central bank or other Governmental Authority, or any other law, rule, or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"CAPITAL EXPENDITURES" means expenditures (whether paid in cash or by
entering into any Debt, including any Capital Leases) required to be included in
or reflected by the property, plant, equipment, or similar fixed asset accounts
reflected in the consolidated balance sheet of the Parent and its Subsidiaries,
excluding expenditures incurred (a) in connection with Permitted Acquisitions,
by the Parent and its Subsidiaries that, in accordance with GAAP that are
required to be included in or reflected by the property, plant, equipment, or
similar fixed asset accounts reflected in the consolidated balance sheet of the
Parent, and (b) to replace, repair, restore, or rebuild any Fixed Assets which
are the subject of any loss, damage, or destruction to the extent such
expenditures are paid from, or have been reimbursed by proceeds of, a policy of
insurance.
"CAPITAL LEASE" means, with respect to any Person, any lease of property
which, in accordance with GAAP, should be reflected as a capital lease on a
balance sheet of such Person.
LOAN AND SECURITY AGREEMENT - PAGE 6
"CAPITAL STOCK" means any and all corporate stock, units, shares,
partnership interests, membership interests, equity interests, rights,
securities, or other equivalent evidences of ownership (however designated)
issued by any Person.
"CASH PURCHASE CONSIDERATION" means, as of any date of determination and
with respect to any acquisition by a Borrower, the purchase price to be paid for
the Capital Stock issued by the Person being acquired or the assets being
acquired, including all cash consideration paid (whether classified as purchase
price, present value of noncompete payments, present value of consulting
payments (other than for services actually rendered), or otherwise and without
regard to whether such amount is paid at closing or paid over time; PROVIDED
that payments made over time shall be redeemed to their present value at the
closing of the applicable transaction) and the Dollar value of all other assets,
other than Capital Stock of the Parent, to be transferred by the purchaser in
connection with such acquisition to the seller or sellers, all valued in
accordance with the applicable agreement entered into between the Person being
acquired or selling such assets and/or the seller or sellers and the Borrower
making such acquisition, and including (without duplication) the amount of any
Debt incurred, assumed, or acquired by such Borrower in connection with such
acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following except, in
each case, pursuant to the Plan of Reorganization: (a) except as allowed by
SECTION 9.9, the adoption of a plan relating to the liquidation or dissolution
of the Parent or any other Borrower; (b) the acquisition after the Closing Date
by any Person or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of a direct or indirect majority in
interest (more than fifty percent (50.0%)) of the voting power of the voting
stock of the Parent by way of merger or consolidation or otherwise; or (c)
during any period commencing after the Closing Date of twelve (12) consecutive
calendar months, individuals (i) who were members of the Management Group of the
Parent on the first day of such period, or (ii) whose election or nomination for
election to the Management Group of the Parent was recommended or approved by at
least a majority of the Management Group then still in office who were members
of the Management Group of the Parent on the first day of such period, or whose
election or nomination for election was so approved, shall cease to constitute a
majority of the Management Group of the Borrower; or (d) except as allowed by
SECTION 9.9, any Borrower (other than the Parent) shall cease to be a
wholly-owned Subsidiary of the Parent.
"CHAPTER 11 CASES" means the voluntary bankruptcy cases of the Parent and
the other Borrowers under Case Nos. 01-425300-H4-11 through 01-42573-H4-11 in
the Bankruptcy Court.
"CHATTEL PAPER" means any "chattel paper", as such term is defined in the
UCC, now owned or hereafter acquired by any Person and, in any event, shall
include, without limitation, all Electronic Chattel Paper, and Tangible Chattel
Paper, in each case, other than any Excluded Assets.
"CLEARING BANK" means the Bank or any other banking institution with whom a
Payment Account has been established pursuant to a Blocked Account Agreement.
"CLOSING DATE" means the date of this Agreement.
LOAN AND SECURITY AGREEMENT - PAGE 7
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute, and the regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in SECTION 6.1.
"COMMERCIAL TORT CLAIMS" means, with respect to a Person, all of such
Person's now owned or hereafter acquired commercial tort claims, as defined by
the UCC, including those commercial tort claims identified on SCHEDULE 6.1 and
in any event, shall include, without limitation, any claim now owned or
hereafter acquired by any Person, arising in tort with respect to which: (a) the
claimant is an organization; or (b) the claimant is an individual and the claim
(i) arose in the course of the claimant's business or profession and (ii) does
not include damages arising out of personal injury to or the death of an
individual, in each case, other than any Excluded Assets.
"COMMITMENT" means, at any time with respect to a Lender, the principal
amount set forth beside such Lender's name under the heading "COMMITMENT" on the
signature pages of this Agreement or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder, or the most
recent Assignment and Acceptance such Lender is a party to, in accordance with
the provisions of SECTION 13.3, and "COMMITMENTS" means, collectively, the
aggregate amount of the Commitments of all of the Lenders.
"COMPLIANCE CERTIFICATE" has the meaning specified in SECTION 7.2(c).
"CONSUMMATION DATE" with respect to the Plan of Reorganization for one or
more of the Borrowers proposed pursuant to Section 1121 ET SEQ. of the
Bankruptcy Code, as the case may be, the earlier of the date on which (i) the
effective date of such Plan of Reorganization occurs, or (ii) "substantial
consummation" (as defined in Section 1101(2) of the Bankruptcy Code) of the Plan
of Reorganization occurs.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"CONVERSION/CONTINUATION DATE" means the effective date of (a) any
conversion of LIBOR Rate Revolving Loans to Base Rate Revolving Loans or of Base
Rate Revolving Loans to LIBOR Rate Revolving Loans or (b) any continuation of
LIBOR Rate Revolving Loans as LIBOR Rate Revolving Loans.
"COPYRIGHT, PATENT, AND TRADEMARK AGREEMENTS" means each Copyright Security
Agreement, Patent Security Agreement, and Trademark Security Agreement executed
and delivered by a Borrower to the Agent to evidence and perfect the Agent's
security interest in such Borrower's present and future copyrights, patents,
trademarks, and related licenses and rights, in each case, other than any
Excluded Assets, for the benefit of the Agent and the Lenders.
"CREDIT SUPPORT" has the meaning specified in SECTION 2.3(a).
"DEBT" means, without duplication, with respect to any Person (the "subject
Person"), all
LOAN AND SECURITY AGREEMENT - PAGE 8
indebtedness, liabilities, and obligations of the subject Person of any kind or
nature, now or hereafter owing, arising, due, or payable, howsoever evidenced,
created, incurred, acquired, or owing, whether primary, secondary, direct,
contingent, fixed, or otherwise, and including, without in any way limiting the
generality of the foregoing: (a) indebtedness, liabilities, and obligations to
trade creditors; (b) in the case of a Borrower, all Obligations; (c) all
indebtedness, liabilities, and obligations of any other Person, whether or not
owed by the subject Person, secured by any Lien on the subject Person's
property, even though the subject Person shall not have assumed or become liable
for the payment thereof; PROVIDED, HOWEVER, that all such indebtedness,
liabilities, and obligations which are limited in recourse to such property
shall be included in Debt only to the extent of the book value of such property
as would be shown on a balance sheet of the subject Person prepared in
accordance with GAAP; (d) all indebtedness, liabilities, and obligations created
or arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by the subject Person, even
if the rights and remedies of the lessor, seller, or lender thereunder are
limited to repossession of such property; PROVIDED, HOWEVER, that all such
indebtedness, liabilities, and obligations which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the subject Person prepared in
accordance with GAAP; and (e) all indebtedness, liabilities, and obligations
under Guaranties.
"DEFAULT" means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured, waived, or otherwise remedied
during such time) constitute an Event of Default.
"DEFAULT RATE" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate PLUS (b) two
percent (2.0%). Each Default Rate shall be adjusted simultaneously with any
change in the applicable Interest Rate. In addition, with respect to Letters of
Credit and Credit Support, the Default Rate shall mean the Letter of Credit Fee
Percentage, PLUS two percent (2.0%).
"DEFAULTING LENDER" has the meaning specified in SECTION 2.2(g)(ii).
"DISTRIBUTION" means, with respect to any Person: (a) the payment or making
of any dividend or other distribution of property in respect of such Person's
Capital Stock (or any options or warrants for, or other rights with respect to,
such Capital Stock), other than distributions solely in such Person's Capital
Stock (or any options or warrants for, or other rights with respect to, such
Capital Stock) of the same class; or (b) the redemption or other acquisition by
such Person of any Capital Stock (or any options or warrants for, or other
rights with respect to, such Capital Stock).
"DOL" means the United States Department of Labor or any successor
department or agency.
"DOLLAR" and "$" means dollars in the lawful currency of the United States.
"EBITDA" means, for any period, the sum of Adjusted Net Income, PLUS, the
sum of the following to the extent deducted in the determination of Adjusted Net
Income, without duplication: (a) the amount, if any, by which Interest Expense
exceeds interest income; PLUS
LOAN AND SECURITY AGREEMENT - PAGE 9
(b) income and franchise taxes; PLUS (c) depreciation and amortization expense.
"ELECTRONIC CHATTEL PAPER" means any "electronic chattel paper", as such
term is defined in the UCC, now owned or hereafter acquired by any Person.
"ELIGIBLE ACCOUNTS" means the Accounts of a Borrower which the Agent in the
exercise of its reasonable discretion determines to be Eligible Accounts.
Without limiting the discretion of the Agent to establish other criteria of
ineligibility, Eligible Accounts shall not, unless the Agent in its sole
discretion elects, include any Account:
(a) with respect to which more than one hundred twenty (120)
days have elapsed since the date of the original invoice therefor or which
is more than sixty (60) days past due;
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in SECTION 6.8 are not or
have ceased to be complete and correct or have been breached;
(c) with respect to which Account (or any other Account due from
such Account Debtor), in whole or in part, a check, promissory note, draft,
trade acceptance, or other instrument for the payment of money has been
received, presented for payment, and returned uncollected for any reason;
(d) which represents a progress billing; PROVIDED that for the
purposes hereof, "progress billing" means any invoice for goods sold or
leased or services rendered under a contract or agreement pursuant to which
the Account Debtor's obligation to pay such invoice is conditioned upon
such Borrower's completion of any further performance under the contract or
agreement;
(e) with respect to which any one or more of the following
events has occurred to the Account Debtor on such Account: (i) death or
judicial declaration of incompetency of an Account Debtor who is an
individual; (ii) the filing by or against the Account Debtor of a request
or petition for liquidation, reorganization, arrangement, adjustment of
debts, adjudication as a bankrupt, winding-up, or other relief under the
bankruptcy, insolvency, or similar laws of the United States, any state or
territory thereof, or any foreign jurisdiction, now or hereafter in effect;
(iii) the making of any general assignment by the Account Debtor for the
benefit of creditors; (iv) the appointment of a receiver or trustee for the
Account Debtor or for any of the assets of the Account Debtor, including,
without limitation, the appointment of or taking possession by a
"custodian", as defined in the Bankruptcy Code; (v) the institution by or
against the Account Debtor of any other type of insolvency proceeding
(under the Bankruptcy Code or otherwise) or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims
against, or winding up of affairs of, the Account Debtor; (vi) the sale,
assignment, or transfer of all or any material part of the assets of the
Account Debtor; (vii) the nonpayment generally by the Account Debtor of its
debts as they become due; or (viii) the cessation of the business of the
Account Debtor as a going concern;
LOAN AND SECURITY AGREEMENT - PAGE 10
(f) if fifty percent (50.0%) or more of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor
thereon is classified as ineligible under CLAUSE (a) preceding;
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States or Canada; or (ii) is not
organized under the laws of the United States or Canada or any political
subdivision, state, or province thereof; or (iii) is the government of any
foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof; except to the
extent that such Account is insured by the Export-Import Bank of the United
States or secured or payable by a letter of credit satisfactory to the
Agent in its discretion;
(h) Intercompany Accounts or other Accounts owed by an Account
Debtor which is an Affiliate or employee of such Borrower;
(i) except as agreed by the Agent as provided in CLAUSE (g)
preceding or CLAUSE (l) following, with respect to which either the
perfection, enforceability, or validity of the Agent's Lien in such
Account, or the Agent's right or ability to obtain direct payment to the
Agent of the proceeds of such Account, is governed by any federal, state,
or local statutory requirements other than those of the UCC;
(j) owed by an Account Debtor to which a Borrower or any of
their respective Subsidiaries is indebted in any way, or which is subject
to any right of set-off or recoupment by the Account Debtor, unless the
Account Debtor has entered into an agreement acceptable to the Agent to
waive set-off rights; or if the Account Debtor thereon has disputed
liability or made any claim with respect to any other Account due from such
Account Debtor; but in each such case only to the extent of such
indebtedness, set-off, recoupment, dispute, or claim;
(k) with respect to which such Borrower has deemed such Account
as uncollectible or has any reason to believe that such Account is
uncollectible;
(l) owed by the government of the United States, or any
department, agency, public corporation, or other instrumentality thereof,
unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C.
Section 3727 ET SEQ.), and any other steps necessary to perfect the Agent's
Lien therein, have been complied with to the Agent's satisfaction with
respect to such Account;
(m) owed by any state of the United States or any municipality,
or other political subdivision, department, agency, public corporation, or
other instrumentality thereof, and as to which the Agent determines that
its Lien therein is not or cannot be perfected;
(n) which represents a sale on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or
return basis;
LOAN AND SECURITY AGREEMENT - PAGE 11
(o) which is evidenced by a promissory note or other instrument
or by chattel paper;
(p) with respect to which the Agent believes, in the exercise of
its reasonable credit judgment, that the prospect of collection of such
Account is impaired or that the Account may not be paid by reason of the
Account Debtor's financial inability to pay;
(q) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or
similar report in order to permit such Borrower to seek judicial
enforcement in such state of payment of such Account, unless such Borrower
has qualified to do business in such state or has filed a Notice of
Business Activities Report or equivalent report for the then current year;
(r) which arises out of a sale not made in the ordinary course
of such Borrower's business;
(s) with respect to which the goods giving rise to such Account
have not been shipped and delivered to, or have been rejected or objected
to, by the Account Debtor or the services giving rise to such Account have
not been performed by such Borrower, and, if applicable, accepted by the
Account Debtor, or the Account Debtor revokes its acceptance of such goods
or services;
(t) owed by an Account Debtor or its Affiliates which is
obligated to such Borrower respecting Accounts the aggregate unpaid balance
of which exceeds twenty percent (20.0%) of the aggregate unpaid balance of
all Eligible Accounts owed to such Borrower at such time by all of such
Borrower's Account Debtors, but only to the extent of such excess;
(u) which arises out of an enforceable contract or order which,
by its terms, forbids, restricts, or makes void or unenforceable the
granting of a Lien by such Borrower to the Agent with respect to such
Account;
(v) which is not subject to a first priority and perfected
security interest in favor of the Agent, for the benefit of the Agent and
the Lenders, or which is subject to any other Lien;
(w) which is an Account owed to a Newly Obligated Party acquired
in the preceding fifteen (15) day period as a Permitted Acquisition under
this Agreement for which the Agent has not completed such due diligence as
it deems necessary or desirable in its discretion, and
(x) which the Agent determines, in the exercise of its
reasonable discretion (consistent with practices of the Agent in its loans
to other borrowers in the same industry as the Borrowers), is ineligible
for any other reason.
If any Account at any time ceases to be an Eligible Account, then such Account
shall promptly be excluded from the calculation of the Borrowing Base.
LOAN AND SECURITY AGREEMENT - PAGE 12
"ELIGIBLE ASSIGNEE" means (a) a commercial bank, commercial finance
company, or other asset based lender having total assets in excess of
$1,000,000,000; (b) any Lender; (c) any Affiliate of any Lender; (d) any other
asset based lender which is regularly engaged in making, purchasing, or
investing in loans which are similar to the loans provided for in this Agreement
and which are in excess of $150,000,000; (e) any mutual fund, insurance company
or investment fund that is an "accredited investor" (as defined in Regulation D
of the Securities Act of 1933, as amended) and is regularly engaged in making,
purchasing or investing in loans of the type to be assigned to it; and (f) any
other Person reasonably acceptable to the Agent, and in each case (other than
CLAUSES (b) and (c) preceding), so long as no Event of Default exists hereunder,
which assignee is reasonably acceptable to the Parent.
"ELIGIBLE INVENTORY" means Inventory of a Borrower which the Agent, in its
reasonable discretion (consistent with practices of Agent in its loans to other
borrowers in the same industry as the Borrowers), determines to be Eligible
Inventory. Without limiting the discretion of the Agent to establish other
criteria of eligibility, Eligible Inventory shall meet all of the following
requirements:
(a) such Inventory is owned such Borrower;
(b) such Inventory is subject to the Agent's Liens, which are
perfected as to such Inventory, and is subject to no other Lien whatsoever
(other than the Liens described in CLAUSE (c) and CLAUSE (e) of the
definition of Permitted Liens; PROVIDED that (i) such Permitted Liens (A)
are junior in priority to the Agent's Liens (other than statutory
landlord's Liens to the extent provided otherwise by a Requirement of Law)
and (B) do not impair directly or indirectly the ability of the Agent to
realize on or obtain the full benefit of the Collateral) or (ii) if
CLAUSE (i) preceding does not apply, the Agent may in its discretion
establish a reserve against Availability with respect to any Inventory
subject to such Permitted Liens in an amount not to exceed (on an aggregate
basis for all Inventory from time to time subject to such Liens) (A) in the
case of Inventory subject to a Lien described in CLAUSE (e) of the
definition of Permitted Liens, the greater of (x) an amount equal to the
amount which would have to be paid to such Lien claimant in order to obtain
a release of such Lien, or (y) an amount equal to sixty (60) days' rent for
each property or facility on or at which the applicable Inventory is
located and (B) in the case of Inventory subject to a Lien described in
CLAUSE (c) of the definition of Permitted Liens, the amount of such
assessment taxes, fees, assessments or other charges;
(c) such Inventory consists of finished goods or raw materials;
(d) such Inventory does not consist of work-in-process,
chemicals, supplies, packing and shipping materials, or advertising or
marketing materials (including samples);
(e) such Inventory is in good condition, not unmerchantable, and
meets all standards imposed by any Governmental Authority having regulatory
authority over such goods, its use, or sale;
LOAN AND SECURITY AGREEMENT - PAGE 13
(f) such Inventory is currently either usable or salable, at
prices approximating at least cost, in the normal course of such Borrower's
business and is not slow moving or stale;
(g) such Inventory is not slow-moving (i.e., held by a Borrower
for greater than twelve (12) months), obsolete, defective, or returned or
repossessed or used goods taken in trade;
(h) such Inventory is located within the United States (and not
in-transit from vendors or suppliers, except that Inventory in-transit will
not be deemed ineligible if it has been paid for in advance of shipment and
legal ownership thereof has passed to the Borrowers as evidenced by
customary documents of title );
(i) if such Inventory is located in a public warehouse or in
possession of a bailee or in a facility leased by such Borrower (i) the
warehouseman, the bailee, or the lessor has delivered to the Agent, if
requested by the Agent, a subordination agreement in form and substance
reasonably satisfactory to the Agent or (ii) if the Borrower is unable to
obtain any such subordination, the Agent may in its discretion establish a
reserve with respect to any Inventory so located or possessed in an amount
not to exceed (on an aggregate basis for all Inventory from time to time so
located or possessed) (A) in the case of Inventory located in a public
warehouse or leased facility, the greater of (x) an amount equal to the
amount which would have to be paid to such claimant in order to obtain a
release of such Lien, or (y) an amount equal to 60 days' rent or storage
fee for each warehouse or facility on or at which the applicable Inventory
is located and (B) in the case of Inventory otherwise in the possession of
a bailee, the amount necessary to complete any work being performed on such
Inventory and/or to obtain a surrender of the Inventory to the possession
of the Borrower or the Agent;
(j) if such Inventory contains or bears any Proprietary Rights
licensed to a Borrower by any Person, the Agent shall be satisfied that it
may sell or otherwise dispose of such Inventory in accordance with
ARTICLE 11 without infringing the rights of the licensor of such
Proprietary Rights or violating any contract with such licensor (and
without payment of any royalties other than any royalties due with respect
to the sale or disposition of such Inventory pursuant to the existing
license agreement), and, if the Agent deems it necessary, such Borrower
shall deliver to the Agent a consent or sublicense agreement from such
licensor in form and substance acceptable to the Agent;
(k) Inventory owned by a Newly Obligated Party acquired in the
preceding fifteen (15) day period as a Permitted Acquisition under this
Agreement, for which the Agent has not completed such due diligence as it
deems necessary or desirable in its discretion; and
(l) such Inventory is not determined by the Agent in the
exercise of its reasonable discretion (consistent with practices of the
Agent in its loans to other borrowers in the same industry as the
Borrowers), to be ineligible for any other reason.
LOAN AND SECURITY AGREEMENT - PAGE 14
If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of the Borrowing Base; PROVIDED,
HOWEVER, that if any Inventory ceases to be Eligible Inventory pursuant to
CLAUSE (l), the Agent will not require exclusion of such Inventory from the
Borrowing Base until ten (10) days following the date on which the Agent gives
notice to the Parent of such ineligibility.
"ENVIRONMENTAL COMPLIANCE RESERVE" means any reserve which the Agent, after
the Closing Date, establishes in its reasonable discretion from time to time for
amounts that are reasonably likely to be expended by a Borrower in order for
such Borrower and its operations and property (a) to comply with any notice from
a Governmental Authority asserting material non-compliance with Environmental
Laws, or (b) to correct any such material non-compliance identified in a report
delivered to the Agent and the Lenders pursuant to SECTION 9.7.
"ENVIRONMENTAL LAWS" means all federal, state, or local laws, statutes,
common law duties, rules, regulations, ordinances, and codes, together with all
administrative orders, directed duties, licenses, authorizations, and permits
of, and agreements with, any Governmental Authority, in each case relating to
environmental, health, safety, and land use matters.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental Authority
for (a) any liability under Environmental Laws or (b) damages arising from, or
costs incurred by such Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.
"EQUIPMENT" means, with respect to a Person, all of such Person's now owned
and hereafter acquired machinery, equipment as defined by the UCC, furniture,
furnishings, fixtures, and other tangible personal property (except Inventory),
including motor vehicles and other rolling stock with respect to which a
certificate of title has been issued, aircraft, dies, tools, jigs, and office
equipment, as well as all of such types of property leased by such Person and
all of such Person's rights and interests with respect thereto under such leases
(including, without limitation, options to purchase); together with all present
and future additions and accessions thereto, replacements therefor, component
and auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties, and rights with respect thereto, wherever any of the
foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
under common control with a Borrower within the meaning of Section 414(b) or (c)
of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a Pension Plan,
(b) a withdrawal by a Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA, (c) a complete or partial withdrawal by a Borrower or any
LOAN AND SECURITY AGREEMENT - PAGE 15
ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer
Plan is in reorganization, (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan, (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan, or (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon a Borrower or any ERISA Affiliate.
"EVENT OF DEFAULT" has the meaning specified in SECTION 11.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and regulations
promulgated thereunder.
"EXCLUDED ASSETS" shall mean:
(a) any Real Estate or Equipment, or any proceeds thereof; and
(b) Special Assets other than the following:
(i) the right to receive any payment of money (including,
without limitation, general intangibles for money due or to become
due); and
(ii) any proceeds, products, offspring, accessions, rents,
profits, income, benefits, substitutions or replacements of any
Special Assets (unless such proceeds, products, offspring, accessions,
rents, profits, income, benefits, substitutions or replacements itself
would constitute Special Assets).
"EXISTING OBLIGATIONS" means, with respect to a Newly Obligated Party, any
Obligations which are outstanding and unpaid as of the time such Newly Obligated
Party becomes a Borrower.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1.0%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; PROVIDED that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Bank on such day on such transactions as determined by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"FINANCIAL ASSETS" means any "financial asset", as such term is defined in
the UCC, now
LOAN AND SECURITY AGREEMENT - PAGE 16
owned or hereafter acquired by any Person, in each case, other than any Excluded
Assets.
"FINANCIAL STATEMENTS" means, according to the context in which it is used,
the financial statements referred to in SECTION 8.6 or any other financial
statements required to be given to the Agent or the Lenders pursuant to this
Agreement.
"FISCAL PERIOD" means a calendar month.
"FISCAL QUARTER" means one of the four three (3) calendar month fiscal
measurement periods in each Fiscal Year.
"FISCAL YEAR" means the Parent's fiscal year for financial accounting
purposes. The Fiscal Year of the Parent ends on December 31 of each year.
"FIXED ASSETS" means, with respect to a Person, the Equipment and Real
Estate of such Person.
"FIXED CHARGE COVERAGE RATIO" means, as of the end of any Fiscal Period,
determined for the Parent and its Subsidiaries for the preceding three (3)
Fiscal Periods on a consolidated basis in accordance with GAAP (other than the
exclusion from such determination of any of the following items used in such
determination to the extent that it arises with respect to a Subsidiary of a
Borrower prior to the date such Subsidiary becomes a Subsidiary of, or is
consolidated with, a Borrower), the ratio of (a) EBITDA for such period to (b)
the sum of (i) the aggregate amount of the scheduled and required payments of
principal on all Funded Debt during such period (excluding repayments on the
Revolving Loans prior to the Stated Termination Date), PLUS (ii) the cash amount
of Interest Expense paid during such period, PLUS (iii) the amount of Net
Capital Expenditures during such period, PLUS (iv) Taxes paid, PLUS (v)
Distributions by the Parent, to the extent paid in cash.
"FUNDED DEBT" means with respect to a Person, without duplication, (a) all
Debt of such Person for borrowed money, (b) all Debt of such Person evidenced by
bonds, notes, debentures, or other similar instruments, (c) the amount of all
Debt of such Person under Capital Leases, (d) the amount of all Debt of such
Person secured by a Lien existing on property owned by such Person whether or
not the Debt secured thereby has been assumed by such Person or is non-recourse
to such Person, (e) all Debt of such Person to redeem or retire any Capital
Stock of such Person; PROVIDED that the holder(s) of such Capital Stock shall on
the date of determination hold the right to redeem or retire such Capital Stock
for cash, (f) all Debt of such Person in respect of unfunded vested benefits
under any Plan, (g) all obligations of such Person to pay the deferred purchase
price of property or services (excluding trade accounts payable of such Person
arising in the ordinary course of business that are not past due by more than
ninety (90) days or that are being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves have been
established in accordance with GAAP), (h) all reimbursement obligations of such
Person (whether contingent or otherwise) in respect of letters of credit,
bankers' acceptances, surety or other bonds, and similar instruments, and (i)
the imputed principal balance outstanding under any synthetic lease, tax
retention operating lease, off balance sheet loan, or similar off balance sheet
financing product to which such Person is a party, where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as
LOAN AND SECURITY AGREEMENT - PAGE 17
an operating lease in accordance with GAAP.
"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and practices set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
United States accounting profession) PROVIDED, HOWEVER, that with respect to the
calculation of financial ratios and other financial tests required by this
Agreement, "GAAP" means generally accepted accounting principles as in effect as
of the Closing Date.
"GAAP VALUE" means the value of Inventory carried on the books of the
Borrowers in accordance with GAAP requirements for market value adjustments to
the book value of Inventory.
"GENERAL INTANGIBLES" means, with respect to a Person, all of such Person's
now owned or hereafter acquired general intangibles, as defined in the UCC,
including payment intangibles, choses in action and causes of action and all
other intangible personal property of such Person of every kind and nature
(other than Accounts), including, without limitation, all contract rights,
Proprietary Rights, corporate or other business records, inventions, designs,
blueprints, plans, specifications, patents, patent applications, trademarks,
service marks, trade names, trade secrets, goodwill, copyrights, computer
software, customer lists, registrations, licenses, franchises, tax refund
claims, any funds which may become due to such Person in connection with the
termination of any Plan or other employee benefit plan or any rights thereto and
any other amounts payable to such Person from any Plan or other employee benefit
plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, property,
casualty or any similar type of insurance and any proceeds thereof, proceeds of
insurance covering the lives of key employees on which such Person is
beneficiary, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged equity interests or
Investment Property, and any letter of credit, guarantee, claim, security
interest, or other security held by or granted to such Person, in each case,
other than any Excluded Assets.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"GUARANTY" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend, or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the
LOAN AND SECURITY AGREEMENT - PAGE 18
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity securities
or other property or services.
"HEDGE AGREEMENT" means any and all transactions, agreements, or documents
now existing or hereafter entered into, which provide for an interest rate,
credit, commodity, or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging a Person's exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security, or currency valuations, or
commodity prices.
"IDRB LETTER OF CREDIT" means any standby Letter of Credit issued under or
pursuant to this Agreement as security for the Borrowers' existing industrial
development revenue bonds as described on SCHEDULE 8.8, in an aggregate undrawn
amount not to exceed at any time $20,000,000.
"INTERCOMPANY ACCOUNTS" means all assets and liabilities, however arising,
which are due to any Borrower from, which are due from any Borrower to, or which
otherwise arise from any transaction by any Borrower with, any Affiliate of such
Borrower.
"INTERCOMPANY OBLIGATIONS" shall mean, collectively, all indebtedness,
obligations and other amounts at any time owing to any Borrower from any of such
Borrower's subsidiaries or affiliates and all interest, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such indebtedness, obligations or
other amounts in each case other than any Excluded Assets not in the possession
of or under the control of the Agent, any Lender, or any Affiliate of the Agent.
"INTEREST EXPENSE" means, with respect to any Person for any period, the
interest expense of such Person for such period, determined in accordance with
GAAP.
"INTEREST PERIOD" means, with respect to any LIBOR Rate Revolving Loan, the
period commencing on the Funding Date of such Revolving Loan or on the
Conversion/Continuation Date on which such Revolving Loan is converted into or
continued as a LIBOR Rate Revolving Loan, and ending on the date one, two, or
three months thereafter as selected by a Borrower in a Notice of Borrowing or a
Notice of Conversion/Continuation; PROVIDED that:
(a) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended
to the following Business Day unless the result of such
extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period
shall end on the preceding Business Day;
(b) any Interest Period pertaining to a LIBOR Rate Revolving
Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Stated
Termination Date.
LOAN AND SECURITY AGREEMENT - PAGE 19
"INTEREST RATE" means each or any of the interest rates, including the
Default Rate, set forth in SECTION 3.1.
"INVENTORY" means, with respect to a Person, all of such Person's now owned
and hereafter acquired inventory, as defined in the UCC, goods, and merchandise,
wherever located, in each case to be furnished under any contract of service or
held for sale or lease, all returned goods, raw materials, work-in-process,
finished goods (including embedded software), other materials, and supplies of
any kind, nature, or description which are used or consumed in such Person's
business or used in connection with the packing, shipping, advertising, selling,
or finishing of such goods, merchandise, and other property, and all documents
of title or other documents representing them.
"INVESTMENT PROPERTY" means, with respect to a Person, all of such Person's
right, title, and interest in and to any and all investment property, as defined
in the UCC, including, without limitation, all (a) securities whether
certificated or uncertificated, (b) securities entitlements, (c) securities
accounts, (d) commodity contracts and (e) commodity accounts; together with all
other units, shares, partnership interests, membership interests, equity
interests, rights, or other equivalent evidences of ownership (howsoever
designated) issued by any Person, in each case, other than any Excluded Assets.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"ISSUER" has the meaning specified in SECTION 6.2(d).
"LATEST PROJECTIONS" means: (a) on the Closing Date and thereafter until
the Agent receives new projections pursuant to SECTION 7.2(d), the projections
of the financial condition, results of operations, and cash flows, in each case
for the Parent and each business group of the Parent for the period commencing
on November 1, 2002 and ending on December 31, 2003, and delivered to the Agent
prior to the Closing Date; and (b) thereafter, the projections most recently
received by the Agent pursuant to SECTION 7.2(d).
"LENDER" and "LENDERS" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Bank to the extent of any Non-Ratable Loan outstanding.
"LETTER OF CREDIT" has the meaning specified in SECTION 2.3, and shall
include any IDRB Letters of Credit.
"LETTER OF CREDIT FEE" has the meaning specified in SECTION 3.5.
"LETTER OF CREDIT FEE PERCENTAGE" means with respect to any Letter of
Credit issued by the Letter of Credit Issuer pursuant to the terms of this
Agreement or any Credit Support issued hereunder, on any date of determination,
a per annum percentage equal to the lesser of (a) one and one-half percent
(1.50%), or (b) the Maximum Rate.
"LETTER OF CREDIT ISSUER" means the Bank, any Affiliate of the Bank, or any
other financial institution that issues any Letter of Credit pursuant to this
Agreement.
LOAN AND SECURITY AGREEMENT - PAGE 20
"LIBOR RATE" means, for any Interest Period, with respect to LIBOR Rate
Revolving Loans, the rate of interest per annum determined pursuant to the
following formula:
LIBOR Rate = Offshore Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1.0%) in effect on such day
applicable to member banks under regulations issued from time to time
by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental, or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The LIBOR Rate for each
outstanding LIBOR Rate Revolving Loan shall be adjusted automatically
as of the effective date of any change in the Eurodollar Reserve
Percentage.
"OFFSHORE BASE RATE" means the rate per annum appearing on
Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the Offshore Base Rate shall
be, for any Interest Period, the rate per annum appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable
to such Interest Period; PROVIDED, HOWEVER, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates. If for any reason none of the
foregoing rates is available, the Offshore Base Rate shall be, for any
Interest Period, the rate per annum determined by the Agent as the
rate of interest at which Dollar deposits in the approximate amount of
the LIBOR Rate Revolving Loan comprising part of such Borrowing would
be offered by the Bank's London Branch to major banks in the offshore
Dollar market at their request at or about 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period.
"LIBOR RATE REVOLVING LOAN" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"LIEN" means (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
LOAN AND SECURITY AGREEMENT - PAGE 21
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment, or bailment for security purposes, (b) to the extent not included
under CLAUSE (a) preceding, any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease, or other title exception
or encumbrance affecting property, and (c) any contingent or other agreement to
provide any of the foregoing.
"LOAN ACCOUNT" means the loan account of the Borrowers, which account shall
be maintained by the Agent.
"LOAN DOCUMENTS" means collectively this Agreement, the Revolving Notes,
the Copyright, Patent, and Trademark Agreements, the Guaranty Agreements, and
each other agreement, certificate, document, or instrument executed or delivered
by any Borrower to the Agent or any Lender in connection with this Agreement,
the Obligations, or the Collateral whether prior to, on, or after the Closing
Date, and any and all renewals, extensions, amendments, modifications, or
restatements of any of the foregoing.
"MAJORITY LENDERS" means, as of any date of determination, the Lenders
whose Pro Rata Shares aggregate more than fifty percent (50.0%) as such
percentage is determined according to the definition of Pro Rata Share.
"MANAGEMENT GROUP" means, as of any date of determination, the board of
directors, board of managers, or similar constituency having management
authority in respect of an entity under any Requirement of Law.
"MARGIN STOCK" means "margin stock" as such term is defined in Regulation
T, U, or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise), or prospects of the Borrowers, taken as a whole, or of
a material portion of the Collateral, (b) a material impairment of the ability
of the Borrowers, taken as a whole, to perform under any Loan Document to which
they are a party and to avoid any Event of Default, or (c) a material adverse
effect upon the legality, validity, binding effect, or enforceability against
any Borrower of any Loan Document to which it is a party.
"MAXIMUM RATE" means, at any time, the maximum rate of interest the Lenders
may lawfully contract for, charge, or receive in respect of the Obligations as
allowed by any Requirement of Law. For purposes of determining the Maximum Rate
under the Requirements of Law of the State of
Texas, the applicable rate ceiling
shall be (a) the "weekly ceiling" described in and computed in accordance with
the provisions of Section 303.003 of the
Texas Finance Code, as amended or (b)
if the parties subsequently contract as allowed by any Requirement of Law, the
"quarterly ceiling" or the "annualized ceiling" computed pursuant to Section
303.008 of the
Texas Finance Code, as amended; PROVIDED, HOWEVER, that at any
time the "weekly ceiling," the "quarterly ceiling," or the "annualized ceiling"
shall be less than eighteen percent (18.0%) per annum or more than twenty-four
percent (24.0%) per annum, the provisions of Section 303.009(a) and Section
303.009(b) of the
Texas Finance Code, as amended, shall control for purposes of
such determination, as applicable.
LOAN AND SECURITY AGREEMENT - PAGE 22
"MAXIMUM REVOLVER AMOUNT" means $200,000,000.
"MRC" means Metals Receivables Corporation, a Delaware corporation and
Wholly-Owned Subsidiary of the Parent, and its successors and assigns.
"MULTI-EMPLOYER PLAN" means a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by a Borrower or any ERISA
Affiliate.
"NEGATIVE PLEDGE" means any agreement, contract, or other arrangement
whereby any Borrower is prohibited from, or would otherwise be in default as a
result of, creating, assuming, incurring, or suffering to exist, directly or
indirectly, any Lien on any of its assets in favor of the Agent under the Loan
Documents.
"NET AMOUNT OF ELIGIBLE ACCOUNTS" means, at any time, the gross amount of
Eligible Accounts less sales, excise, or similar taxes, and less returns,
discounts, claims, credits, and allowances of any nature at any time issued,
owing, granted, outstanding, available, or claimed.
"NET CAPITAL EXPENDITURES" means, for any period, the aggregate amount of
Capital Expenditures during such period less the aggregate amount of such
Capital Expenditures which were financed during such period with Funded Debt
other than the Revolving Loans.
"NET INCOME" means, as applied to any Person (the "subject Person"), the
net income (or net loss) of the subject Person for the period in question after
giving effect to deduction of or provision for all operating expenses, all taxes
and reserves (including, without limitation, reserves for deferred taxes), and
all other proper deductions, all determined in accordance with GAAP.
"NEWLY OBLIGATED PARTY" means each Person, if any, who becomes party to
this Agreement as a Borrower effective as of any date after the Closing Date.
"NON-RATABLE LOAN" and "NON-RATABLE LOANS" have the respective meanings
specified in SECTION 2.2(h).
"NOTICE OF BORROWING" has the meaning specified in SECTION 2.2(b).
"NOTICE OF CONVERSION/CONTINUATION" has the meaning specified in
SECTION 3.2(b).
"OBLIGATIONS" means all present and future loans, advances, liabilities,
obligations, covenants, duties, and debts owing by the Borrowers, or any of
them, to the Agent and/or any Lender, arising under or pursuant to this
Agreement or any of the other Loan Documents, whether or not evidenced by any
note, or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification, or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees, and any other sums chargeable to any Borrower
hereunder or under any of the other Loan Documents. "Obligations" includes,
without limitation, (a) all debts, liabilities, and obligations now or hereafter
arising from or in connection with the Letters of
LOAN AND SECURITY AGREEMENT - PAGE 23
Credit and Credit Support and (b) all debts, liabilities, and obligations now or
hereafter arising from or in connection with Bank Products; PROVIDED, HOWEVER,
that notwithstanding the foregoing, in the case of and with regard to or in
connection with any Newly Obligated Party, the term "Obligations," wherever in
any manner used in the Loan Documents, excludes Existing Obligations.
"ORDERLY LIQUIDATION VALUE" means, with respect to Inventory of any
Borrower, the net orderly liquidation value thereof as determined in a manner
acceptable to the Agent by an experienced and reputable appraiser acceptable to
the Agent.
"OTHER TAXES" means any present or future stamp or documentary taxes or any
other excise or property taxes, charges, or similar levies (excluding, in the
case of each Lender and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by each Lender's or the Agent's
net income) which arise from any payment made hereunder or from the execution,
delivery, or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents.
"PARENT" means Metals USA, Inc., a Delaware corporation.
"PARTICIPANT" means any commercial bank, financial institution, or other
Person not an Affiliate of the Borrower who shall have been granted the right by
any Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"PAYMENT ACCOUNT" means each bank account established pursuant to SECTION
6.9, to which the funds of the Borrowers (including proceeds of Accounts and
other Collateral) are deposited or credited, and which is maintained in the name
of the Agent or any Borrower, or any of them, as the Agent may determine, on
terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to the functions thereof.
"PENDING REVOLVING LOANS" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice of Borrowing received by
the Agent which have not yet been advanced.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which any Borrower or any ERISA Affiliate sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions at
any time during the immediately preceding five (5) calendar years.
"PERMITTED ACQUISITION" means any acquisition of the Capital Stock of a
Person or any acquisition of property which constitutes a significant or
material portion of an existing business of a Person, in each case, in a
transaction that satisfies each of the following requirements:
LOAN AND SECURITY AGREEMENT - PAGE 24
(a) both before and after giving effect to such acquisition and
the Revolving Loans (if any) requested to be made in connection therewith,
no Default or Event of Default exists or will exist or would result
therefrom;
(b) as soon as available, but not less than fifteen (15)
Business Days prior to such acquisition, the Parent has provided to the
Lenders a copy of the information provided to the board of directors of the
Parent or other Borrower making such acquisition;
(c) the Cash Purchase Consideration paid in connection with such
acquisition does not exceed for each consecutive twelve-month period
commencing with the date of this Agreement, (i) $25,000,000 in any
three-month period, and (ii) $60,000,000 for each such consecutive
twelve-month period.
(d) if such acquisition is an acquisition of the Capital Stock
of a Person, the acquisition is structured so that the acquired Person
shall become a Subsidiary of the Parent (and a Borrower pursuant to the
terms of this Agreement); PROVIDED, HOWEVER, that such acquisition is not
hostile, and if such acquisition is an acquisition of assets, the
acquisition is structured so that a Borrower shall acquire such assets;
(e) no Borrower shall, as a result of or in connection with any
such acquisition, assume or incur any direct or contingent liabilities
(whether relating to environmental, tax, litigation, or other matters) that
could reasonably be expected, as of the date of such acquisition, to result
in the existence or occurrence of a Material Adverse Effect;
(f) the Fixed Charge Coverage Ratio, without giving effect to
such acquisition, shall be greater than or equal to 1.0 to 1.0 for the most
recently completed period of four (4) Fiscal Quarters;
(g) the Pro Forma Fixed Charge Coverage Ratio, after giving
effect to such acquisition, for the following period of four (4) Fiscal
Quarters shall be greater than or equal to 1.00 to 1.00;
(h) the Borrower making such acquisition shall certify (and
provide the Agent with a pro forma calculation in form and substance
reasonably satisfactory to the Agent) to the Agent and the Lenders that,
after giving effect to completion of such acquisition, the Availability
(calculated for purposes hereof utilizing 100% of the total Borrowing Base,
without applying the Maximum Revolver Amount limit) is not less than
$35,000,000 on a pro forma basis which includes all consideration given in
connection with such acquisition, other than Capital Stock of the Parent
delivered to the seller(s) in such acquisition, as having been paid in cash
at the time of making such acquisition; and
(i) such acquisition is of assets to be used in the Borrowers'
business, or is of Capital Stock of a Person engaged in business
substantially the same as that of the Borrowers, in each case compared to
the business of the Borrowers as conducted on the date of this Agreement.
LOAN AND SECURITY AGREEMENT - PAGE 25
"PERMITTED LIENS" means:
(a) the Agent's Liens;
(b) Liens, if any, which are described on SCHEDULE 1.1A
("Permitted Liens") on the Closing Date and Liens resulting from the
refinancing of the related Debt, PROVIDED that such refinancing is on the
same or substantially similar terms, the Debt secured thereby shall not be
increased, and the Liens shall not cover any additional property;
(c) Liens for taxes, fees, assessments, or other charges of a
Governmental Authority which are (i) not delinquent (including statutory
Liens for taxes not delinquent) or (ii) due and payable in an aggregate
amount not in excess of $3,000,000; PROVIDED that the payment of such
taxes, fees, assessments, or other charges described in this CLAUSE (ii) is
being contested in good faith and by appropriate proceedings diligently
pursued and adequate financial reserves have been established in accordance
with GAAP on the appropriate Borrower's books and records and a stay of
enforcement of any such Lien is in effect;
(d) Liens consisting of deposits made in the ordinary course of
business in connection with, or to secure payment of, obligations under
worker's compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders, or contracts
(other than for the repayment of Funded Debt) or to secure indemnity,
performance, or other similar bonds for the performance of bids, tenders,
or contracts (other than for the repayment of Funded Debt) or to secure
statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance, or other similar bonds;
(e) Liens securing the claims or demands of materialmen,
mechanics, repairmen, carriers, warehousemen, landlords, and other like
Persons (i) for amounts not due or (ii) (A) if as to all such claims, they
do not exceed $2,500,000 in the aggregate, and (B) as to each such claim it
is being contested in good faith, and reserves have been established for
such claim in accordance with GAAP;
(f) Liens constituting encumbrances in the nature of
reservations, exceptions, encroachments, easements, rights of way,
covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate; PROVIDED such Liens do not in the
aggregate materially detract from the value of such Real Estate or
materially interfere with its use in the ordinary conduct of a Borrower's
business;
(g) Liens arising from judgments and attachments in connection
with court proceedings; PROVIDED that the attachment or enforcement of such
Liens would not result in an Event of Default hereunder and such Liens are
being contested in good faith by appropriate proceedings, adequate reserves
have been set aside and no material Property is subject to a material risk
of loss or forfeiture, and the claims in respect of such Liens are fully
covered by insurance (subject to ordinary and customary deductibles) and a
stay of execution pending appeal or proceeding for review is in effect;
LOAN AND SECURITY AGREEMENT - PAGE 26
(h) Purchase money Liens (other than Liens on Inventory) and
Capital Leases, if on the date of incurrence thereof, after giving effect
to the transaction pursuant to which such Liens or Capital Leases arise the
Borrowers are in compliance with Fixed Charge Coverage Ratio on a pro forma
basis as if such transaction occurred at the beginning of the third
preceding Fiscal Period; and
(i) Liens on Real Estate, Equipment, and/or proceeds thereof
securing Debt permitted pursuant to SECTION 9.13(f);
(j) Liens securing Debt permitted pursuant to SECTION 9.13(h)
provided that no such Lien is spread to cover any property not covered by
such Lien at the time of the assumption or acquisition of the Debt secured
thereby;
PROVIDED that (i) none of such Liens listed in CLAUSE (b) through CLAUSE (i)
preceding may attach to any Accounts, and (ii) none of such Liens listed in
CLAUSE (b) through CLAUSE (h) preceding, other than such Liens of a type and to
the extent provided by CLAUSE (e) preceding, may attach to any Inventory owned
by a Borrower.
"PERMITTED SUBORDINATED DEBT" means (a) unsecured Debt owing by a Borrower
to a Borrower, PROVIDED that such Debt is subordinated to payment of the
Obligations on terms substantially the same as are provided by the Subsidiary
Guaranty or, if otherwise, is approved in writing by the Agent and the Majority
Lenders, (b) other Debt of a Borrower which has maturities and terms, and which
is subordinated to payment of the Obligations in a manner approved in writing by
the Majority Lenders, and in each such case described in CLAUSE (a) and
CLAUSE (b) preceding, any renewals, modifications, or amendments thereof which
are approved in writing by the Majority Lenders.
"PERSON" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which any Borrower sponsors or maintains or to which any Borrower makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"PLAN OF REORGANIZATION" means the Plan of Reorganization and Disclosure
Statement as confirmed by the Bankruptcy Court on October 18, 2002.
"POST-PETITION" means, in the context of time, any date that is after the
Filing Date. When used in connection with items or events, Post-Petition means
such items or events existing or arising after the Filing Date.
"PRE-PETITION" means in the context of time, any date that is on or before
the Filing Date. When used in connection with items or events, Pre-Petition
means such items or events existing or arising on or before the Filing Date.
"PRE-PETITION LENDERS" means the financial institutions party to the
Pre-Petition Loan Agreement in their capacities as such.
LOAN AND SECURITY AGREEMENT - PAGE 27
"PRE-PETITION LOAN AGREEMENT" means, collectively, and as the context
requires, the Metals Pre-Petition Loan Agreement and the MRC Pre-Petition Loan
Agreement.
"PRO FORMA FIXED CHARGE COVERAGE RATIO" means the ratio, for any period,
determined according to the definition of Fixed Charge Coverage Ratio, PROVIDED,
that each item thereof shall be calculated as of the end of such period on a pro
forma basis for the next succeeding (rather than the immediately preceding) four
(4) Fiscal Quarters.
"PROJECTIONS" shall mean those certain projections of the Companies
provided to the Agent in mid-September 2002.
"PRO RATA SHARE" means, with respect to a Lender, a fraction (expressed as
a percentage), the numerator of which is the amount of such Lender's Commitment
and the denominator of which is the sum of the amounts of all of the Lenders'
Commitments, or if no Commitments are outstanding, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations owed to such
Lender and the denominator of which is the aggregate amount of the Obligations
owed to the Lenders, in each case giving effect to a Lender's participation in
Non-Ratable Loans and Agent Advances.
"PROPRIETARY RIGHTS" means, with respect to a Person, all of such Person's
now owned and hereafter arising or acquired licenses, franchises, permits,
patents, patent rights, copyrights, works which are the subject matter of
copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service xxxx applications, and all licenses and rights related to
any of the foregoing, including those registered patents and trademarks set
forth on SCHEDULE 8.12, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present, and future infringement of any of the foregoing.
"REAL ESTATE" means, with respect to any Person, all of such Person's now
or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds, and future interests, together with all of
such Person's now and hereafter owned or leased interests in the improvements
thereon, the fixtures attached thereto, and the easements appurtenant thereto.
"RELEASE" means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater, or Real Estate or other property.
"RENTALS" has the meaning specified in SECTION 9.23.
"REPLACEMENT COST" means, as to Eligible Inventory, at any date of
determination, the cost of the Borrowers' Eligible Inventory based upon current
quoted prices received from the Borrowers' customary vendors, without trade
discounts.
"REPORTABLE EVENT" means, any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
LOAN AND SECURITY AGREEMENT - PAGE 28
"REQUIRED LENDERS" means, as of any date of determination, the Lenders
whose Pro Rata Shares aggregate more than sixty-six and two-thirds percent
(66-2/3%).
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule, or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject. In
respect of contracts relating to interest or finance charges that are made or
performed in the State of
Texas, "Requirement of Law" includes the laws of the
United States, including, without limitation, 12 U.S.C. Sections 85 and 86(a),
as amended from time to time, and any other statute of the United States now or
at any time hereafter prescribing the maximum rates of interest on loans and
extensions of credit, and the laws of the State of
Texas, including, without
limitation, Chapter 306 of the
Texas Finance Code, if applicable, and if Chapter
306 of the Texas Finance Code is not applicable, Chapter 303 of the Texas
Finance Code, and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit; PROVIDED that the parties hereto agree pursuant to Texas Finance Code
Section 346.004 that the provisions of Chapter 346 of the Texas Finance Code
shall not apply to the Revolving Loans, this Agreement, or any other Loan
Documents.
"RESPONSIBLE OFFICER" means, with respect to any Borrower, the chief
executive officer, president, chief financial officer, chief accounting officer,
treasurer, or controller and, in each case preceding, any other officer having
substantially the same authority and responsibility.
"RESTRICTED INVESTMENT" means, with respect to any Borrower, any
acquisition of any Funded Debt, equity interests, or securities by such Borrower
in exchange for cash or other property, whether in the form of an acquisition of
stock, debt, or other indebtedness or obligation, or a loan, advance, capital
contribution, or subscription, except the following: (a) current assets acquired
in the ordinary course of business of such Borrower; (b) direct obligations of
the United States, or any agency thereof, or obligations guaranteed by the
United States; PROVIDED that such obligations mature within one (1) year from
the date of acquisition thereof; (c) acquisitions of certificates of deposit
maturing within one (1) year from the date of acquisition, bankers' acceptances,
Eurodollar bank deposits, or overnight bank deposits, in each case issued by,
created by, or with a bank or trust company organized under the laws of the
United States or any state thereof having capital and surplus aggregating at
least $100,000,000; (d) acquisitions of commercial paper given a rating of "A2"
or better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x
Investors Service, Inc. and maturing not more than ninety (90) days from the
date of creation thereof; (e) Hedge Agreements entered into for the purpose of
hedging interest payable under this Agreement; (f) investments in mutual funds
substantially all of the assets of which are comprised of securities of the
types described in CLAUSES (b), (c), and (d) preceding; (g) Permitted
Acquisitions; (h) investments consisting of intercompany loans between any
Borrower and another Borrower; (i) existing investments listed on the attached
SCHEDULE 1.1(B); and (j) other investments not listed in CLAUSE (a) through
CLAUSE (i) preceding in an aggregate amount at any time not exceeding
$10,000,000.
"REVOLVING LOANS" has the meaning specified in SECTION 2.2 and includes
each Agent Advance and Non-Ratable Loan.
"REVOLVING NOTE" means a promissory note made by the Borrowers payable to
the order
LOAN AND SECURITY AGREEMENT - PAGE 29
of a Lender evidencing the obligation of the Borrowers to pay the aggregate
unpaid principal amount of the Revolving Loans made to each of the Borrowers by
such Lender (and any promissory note or notes that may be issued from time to
time in substitution, renewal, extension, replacement, or exchange thereof
whether payable to such Lender or to a different Lender in connection with a
Person becoming a Lender after the Closing Date or otherwise) substantially in
the form of EXHIBIT A, with all of the blanks properly completed, either as
originally executed or as such promissory note may be renewed, extended,
modified, amended, supplemented, or restated from time to time.
"SETTLEMENT" and "SETTLEMENT DATE" have the meanings specified in SECTION
2.2(j)(i).
"SPECIAL ASSETS" means:
(a) any permit, lease or license held by any Borrower that
validly prohibits the creation by the Borrowers of a security interest
therein; and
(b) any permit, lease or license held by any Borrower to the
extent that any requirement of law applicable thereto prohibits the
creation of a security interest therein,
in each case only to the extent, and for so long as, such permit, lease or
license, or requirement of law applicable thereto, validly prohibits the
creation of a lien in such property in favor of the Agent (and upon the
termination of such prohibition (howsoever occurring)) such permit, lease or
license shall cease to be "Special Assets".
"SOLVENT" means, with respect to any Person, as of any date, that on and as
of such date (both before and after effecting the transactions contemplated by
this Agreement and making any Revolving Loans or issuing any Letter of Credit or
taking any other actions permitted by this Agreement proposed to be taken as of
such date) (a) the sum of such Person's debts is not greater than all of such
Person's property, at a fair valuation, (b) the sum of such Person's debts is
not greater than all of such Person's assets, at a fair valuation, (c) such
Person is generally paying its debts as they become due, (d) such Person is not
engaged or about to engage in any business or any transaction for which (i) its
property is an unreasonably small capital or (ii) the remaining assets of such
Person are unreasonably small in relation to any such business or transaction,
(e) such Person does not intend to incur, and does not believe that it will
incur, debts that are or would be beyond its ability to pay as such debts mature
or become due, and (f) such Person does not intend to hinder, delay, or defraud
any creditor of such Person. For this purpose "debts" includes anything included
within the definition of "debt" as used in Section 548 of the United States
Bankruptcy Code or as defined or used by Section 24.002 or Section 24.003 of the
Texas Uniform Fraudulent Transfer Act, and "assets" has the meaning defined or
used by Section 24.002 of the Texas Uniform Fraudulent Transfer Act. Contingent,
unliquidated, or disputed obligations or liabilities (if any) are valued at the
amount which, in light of all relevant facts and circumstances, is reasonably
expected to become absolute, liquidated, or mature.
"STATED TERMINATION DATE" means October 31, 2005.
"SUBORDINATED NOTES" means those certain 8% Senior Subordinated Notes due
2008 issued pursuant to the Indenture.
LOAN AND SECURITY AGREEMENT - PAGE 30
"SUBSIDIARY" means, with respect to any Person (the "subject Person"), any
corporation, association, partnership, limited liability company, joint venture,
or other business entity of which more than fifty percent (50.0%) of the voting
stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the subject
Person, or one or more of the Subsidiaries of the subject Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of a Borrower.
"TANGIBLE CHATTEL PAPER" means any "tangible chattel paper", as such term
is defined in the UCC, now owned or hereafter acquired by any Person.
"TAXES" means any and all present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Agent and each Lender, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by the Agent's or
such Lender's net income in any jurisdiction (whether federal, state, or local
and including any political subdivision thereof) under the laws of which the
Agent or such Lender, as the case may be, is organized or maintains a lending
office.
"TERMINATION DATE" means the earliest to occur of (a) the Stated
Termination Date, (b) the date the Total Facility is terminated either by the
Borrowers pursuant to SECTION 4.2 or by the Majority Lenders pursuant to
SECTION 11.2, and (c) the date this Agreement is otherwise terminated for any
reason whatsoever pursuant to the terms of this Agreement.
"TOTAL FACILITY" has the meaning specified in SECTION 2.1.
"UCC" means the Uniform Commercial Code (or any successor statute), as in
effect from time to time, of the State of Texas or of any other state the laws
of which are required as a result thereof to be applied in connection with the
issue of perfection of security interests.
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"UNITED STATES" means the United States of America.
"UNUSED LETTER OF CREDIT SUBFACILITY" means an amount equal to $50,000,000,
MINUS the sum of (a) the aggregate undrawn amount of all outstanding Letters of
Credit and Credit Support, PLUS (b) the aggregate unpaid reimbursement
obligations with respect to all Letters of Credit and Credit Support.
"UNUSED LINE FEE" has the meaning specified in SECTION 3.4.
"UNUSED LINE FEE PERCENTAGE" means, (a) during the period commencing on the
Closing Date and ending on but not including the first adjustment date set forth
herein below, 0.250%, and (b) on the first adjustment date set forth herein
below and thereafter, in each case subject to adjustment from time to time
thereafter to the applicable percentage specified corresponding to the Fixed
Charge Coverage Ratio, as set forth below, respectively:
LOAN AND SECURITY AGREEMENT - PAGE 31
Fixed Charge Coverage Ratio Unused Line Fee Percentage
--------------------------------- --------------------------
Less than 0.80 to 1.00 .375%
Greater than or equal to 0.80 .250%
For the purpose of determining any such adjustments to the Unused Line Fee
Percentage, the Fixed Charge Coverage Ratio shall be determined as of the last
day of each Fiscal Period of the Parent based upon the Parent's Financial
Statements for the three immediately preceding respective Fiscal Periods,
beginning with the Fiscal Period ending March 31, 2003, delivered to the Agent
as required by SECTION 7.2(a) (with respect to the Financial Statements for the
last Fiscal Period of the Parent of each Fiscal Year) or SECTION 7.2(b) (with
respect to the financial statements for each Fiscal Quarter of the Parent which
is not a Fiscal Year end), and any such adjustment, if any, shall become
effective on and after the first day of the calendar month following the
calendar month in which such Financial Statements are delivered to the Agent.
"WHOLLY-OWNED SUBSIDIARY" when used to determine the relationship of a
Subsidiary to a Person, means a Subsidiary all of the issued and outstanding
Capital Stock (other than directors' qualifying shares) of which shall at the
time be owned by such Person or one or more of such Person's Wholly-Owned
Subsidiaries or by such Person and one or more of such Person's Wholly-Owned
Subsidiaries.
Section 1.2 ACCOUNTING TERMS. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given to such term in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise specifically provided
herein, in accordance with GAAP as consistently applied and using the same
method for inventory valuation as used in the preparation of the Financial
Statements.
Section 1.3 INTERPRETIVE PROVISIONS.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms. Terms used herein that are
defined in the UCC and are not otherwise defined herein, shall have the
meaning specified therefor in the UCC.
(b) The words "hereof," "herein," "hereunder," and similar words
refer to this Agreement as a whole and not to any particular provision of
this Agreement. Section, Schedule, and Exhibit references are to this
Agreement unless otherwise specified. The term "documents" includes any and
all instruments, documents, agreements, certificates, indentures, notices,
and other writings, however evidenced. The term "including" is not limiting
and means "including, without limitation." In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including," the words "to" and "until" each mean "to but
excluding" and the word "through" means "to and including."
(c) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such
LOAN AND SECURITY AGREEMENT - PAGE 32
amendments and other modifications are not prohibited by the terms of any
Loan Document, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing, or interpreting the
statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of
this Agreement.
(e) This Agreement and the other Loan Documents may use several
different limitations, tests, or measurements to regulate the same or
similar matters. All such limitations, tests, and measurements are
cumulative and shall each be performed in accordance with their terms.
(f) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Lenders, and the Borrowers and are the products of all parties.
Accordingly, they shall not be construed against the Agent, the Lenders, or
the Borrowers merely because of the Agent's, the Lenders', or the
Borrowers' involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
Section 2.1 TOTAL FACILITY. Subject to all of the terms and
conditions of this Agreement, the Lenders severally agree to make available a
total credit facility of $200,000,000 (the "TOTAL FACILITY") for use by any one
or more of the Borrowers from time to time during the term of this Agreement.
The Total Facility shall be composed of a revolving line of credit consisting of
Revolving Loans and Letters of Credit and Credit Support, as described in
SECTION 2.2 and SECTION 2.3.
Section 2.2 REVOLVING LOANS.
(a) AMOUNTS. Subject to the satisfaction of the conditions
precedent set forth in ARTICLE 10, each Lender severally, but not jointly,
agrees, upon a Borrower's request from time to time on any Business Day
during the period from the Closing Date to the Termination Date, to make
revolving loans (the "REVOLVING LOANS") to the Borrowers in amounts not to
exceed (except for the Bank with respect to Non-Ratable Loans and except
for the Agent with respect to Agent Advances) such Lender's Pro Rata Share
of the Borrowing Base. The Lenders, however, in their unanimous discretion,
may elect to make Revolving Loans or issue or arrange to have issued
Letters of Credit and Credit Support in excess of the Available Credit on
one or more occasions, but if they do so, neither the Agent nor the Lenders
shall be deemed thereby to have changed the limits of the Borrowing Base or
to be obligated to exceed such limits on any other occasion. If the
Aggregate Revolver Outstandings exceed the Borrowing Base, the Lenders may
refuse to make or otherwise restrict the making of Revolving Loans and the
issuance of Letters of Credit and Credit Support as the Lenders determine
until such excess has been
LOAN AND SECURITY AGREEMENT - PAGE 33
eliminated, subject to the Agent's authority, in its sole discretion, to
make Agent Advances pursuant to the terms of SECTION 2.2(i).
(b) PROCEDURE FOR BORROWING.
(i) Each Borrowing shall be made upon a Borrower's
irrevocable written notice delivered to the Agent in the form of a
notice of borrowing in the form attached hereto as EXHIBIT C (a
"NOTICE OF BORROWING"), which must be received by the Agent prior to
12:00 noon (New York, New York time) (y) three (3) Business Days prior
to the requested Funding Date in the case of a LIBOR Rate Revolving
Loan and (z) on the requested Funding Date, in the case of a Base Rate
Revolving Loan, specifying:
(A) the amount of the Borrowing, which, if a LIBOR
Rate Revolving Loan, shall be in an amount that is not less
than $5,000,000 or an integral multiple of $1,000,000 in
excess thereof and if a Base Rate Revolving Loan, shall be
in an amount that is not less than $100,000 or an integral
multiple of $100,000 in excess thereof;
(B) the requested Funding Date, which shall be a
Business Day;
(C) whether the Revolving Loan requested is to be a
Base Rate Revolving Loan or a LIBOR Rate Revolving Loan;
PROVIDED that if such Borrower fails to specify whether any
Revolving Loan is to be a Base Rate Revolving Loan or a
LIBOR Rate Revolving Loan, such request shall be deemed a
request for a Base Rate Revolving Loan;
(D) the duration of the Interest Period if the
requested Revolving Loan is to be a LIBOR Rate Revolving
Loan; PROVIDED that if the Borrower fails to select the
duration of the Interest Period with respect to any
requested LIBOR Rate Revolving Loan, the Borrower shall be
deemed to have requested such Revolving Loan be made as a
LIBOR Rate Revolving Loan with an Interest Period of one
month in duration; and
(E) the account (as acceptable to the Agent pursuant
to SECTION 2.2(c)) to which the proceeds of such Borrowing
are to be deposited, or wire transfer instructions
satisfactory to the Agent with respect to any Borrowing
which is permitted to be funded directly to any Person other
than a Borrower;
PROVIDED that if any Default or Event of Default exists at the time of
any request by a Borrower for a LIBOR Rate Revolving Loan, such
Borrower shall be deemed to have requested such Revolving Loan be made
as a Base Rate Revolving Loan. With respect to any Borrowing to be
made on the Closing Date, unless otherwise agreed by the Agent and the
Lenders such Borrowing will consist of Base Rate Revolving Loans.
LOAN AND SECURITY AGREEMENT - PAGE 34
(ii) With respect to any request for Base Rate Revolving
Loans, in lieu of delivering the above-described Notice of Borrowing,
a Borrower may give the Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing
no later than the Business Day following the giving of such telephonic
notice but the Agent at all times shall be entitled to rely on such
telephonic notice in making such Revolving Loans, regardless of
whether any such confirmation is received by the Agent.
(c) DISBURSEMENT; RELIANCE UPON AUTHORITY. The Borrowers shall
deliver to the Agent, prior to the Closing Date, a writing setting forth
the deposit account to which the Agent is authorized by the Borrowers to
transfer the proceeds of the Revolving Loans requested pursuant to this
SECTION 2.2, which deposit account shall be reasonably acceptable to the
Agent. The Agent shall be entitled to rely conclusively on any individual's
request for Revolving Loans on behalf of a Borrower, the proceeds of which
are to be transferred to the deposit account specified by the Borrowers
pursuant to the immediately preceding sentence, until the Agent receives
written notice from the Borrowers that the proceeds of the Revolving Loans
are to be sent to a different deposit account. The Agent shall have no duty
to verify the identity of any individual representing himself or herself as
a person authorized by any Borrower to make such requests on its behalf.
(d) NO LIABILITY. The Agent shall not incur any liability to the
Borrowers as a result of acting upon any notice referred to in
SECTION 2.2(b) and SECTION 2.2(c), which notice the Agent believes in good
faith to have been given by an officer or other person duly authorized by a
Borrower to request Revolving Loans on its behalf or for otherwise acting
in good faith under this SECTION 2.2, and the crediting of Revolving Loans
to a Borrower's deposit account, or wire transfer to such Person as a
Borrower shall direct, shall conclusively establish the obligation of the
Borrowers to repay such Revolving Loans as provided herein.
(e) NOTICE IRREVOCABLE. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to SECTION 2.2(b) shall be
irrevocable and such Borrower shall be bound to borrow the funds requested
therein in accordance therewith.
(f) THE AGENT'S ELECTION. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to
SECTION 2.2(b), the Agent shall elect, in its discretion, (i) to have the
terms of SECTION 2.2(g) apply to such requested Borrowing, or (ii) if the
requested Revolving Loan is a Base Rate Revolving Loan to request the Bank
to make a Non-Ratable Loan pursuant to the terms of SECTION 2.2(h) in the
amount of the requested Borrowing; PROVIDED, HOWEVER, that if the Bank
declines in its sole discretion to make a Non-Ratable Loan pursuant to
SECTION 2.2(h), the Agent shall elect to have the terms of SECTION 2.2(g)
apply to such requested Borrowing.
(g) MAKING OF REVOLVING LOANS.
(i) In the event that the Agent shall elect to have the
terms of this SECTION 2.2(g) apply to a requested Borrowing as
described in SECTION 2.2(f) or
LOAN AND SECURITY AGREEMENT - PAGE 35
otherwise, then promptly after receipt of a Notice of Borrowing or
telephonic notice pursuant to SECTION 2.2(b), the Agent shall notify
the Lenders by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the
amount of such Lender's Pro Rata Share of the requested Borrowing
available to the Agent in immediately available funds, to such account
of the Agent as the Agent may designate, not later than 1:00 p.m. (New
York, New York time) on the Funding Date applicable thereto. After the
Agent's receipt of the proceeds of such requested Borrowing, the Agent
shall make the proceeds of such requested Borrowing available to the
applicable Borrower on the applicable Funding Date by transferring
same day funds equal to the proceeds of such Revolving Loans received
by the Agent to the deposit account designated pursuant to
SECTION 2.2(c) or disbursing such funds in such other manner as the
Borrower requesting such Borrowing may direct to the Agent.
(ii) Unless the Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least one Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when
required hereunder to the Agent for the account of the Borrowers the
amount of that Lender's Pro Rata Share of such Borrowing, the Agent
may assume that each Lender has made such amount available to the
Agent in immediately available funds on the Funding Date and the Agent
may (but shall not be so required), in reliance upon such assumption,
make available to the Borrowers on such date a corresponding amount.
If and to the extent any Lender shall not have made its full amount
available to the Agent in immediately available funds and the Agent in
such circumstances has made available to the applicable Borrower such
amount, that Lender shall on the Business Day following such Funding
Date make such amount available to the Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice by
the Agent submitted to any Lender with respect to amounts owing under
this CLAUSE (ii) shall be conclusive, absent manifest error. If such
amount is so made available, such payment to the Agent shall
constitute such Lender's Revolving Loan for all purposes of this
Agreement. If such amount is not made available to the Agent on the
Business Day following the Funding Date, the Agent will notify the
Borrowers of such failure to fund and, upon demand by the Agent, the
Borrowers shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the Interest Rate
applicable at the time to the Revolving Loans comprising such
Borrowing. The failure of any Lender to make any Revolving Loan on any
Funding Date (any such Lender, prior to the cure of such failure,
being hereinafter referred to as a "DEFAULTING LENDER") shall not
relieve any other Lender of any obligation hereunder to make a
Revolving Loan on such Funding Date, but no Lender shall be
responsible for the failure of any other Lender to make the Revolving
Loan to be made by such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by any Borrower to the Agent for
the Defaulting Lender's
LOAN AND SECURITY AGREEMENT - PAGE 36
benefit, nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. The Agent may hold and,
in its discretion, re-lend to any Borrower the amount of all such
payments received or retained by it for the account of such Defaulting
Lender. Any amounts so re-lent to a Borrower shall bear interest at
the rate applicable to Base Rate Revolving Loans and for all other
purposes of this Agreement shall be treated as if they were Revolving
Loans, PROVIDED, HOWEVER, that for purposes of voting or consenting to
matters with respect to the Loan Documents and determining Pro Rata
Shares, such Defaulting Lender shall be deemed not to be a "Lender".
Until a Defaulting Lender cures its failure to fund its Pro Rata Share
of any Borrowing (A) such Defaulting Lender shall not be entitled to
any portion of the Unused Line Fee and (B) the Unused Line Fee shall
accrue in favor of the Lenders which have funded their respective Pro
Rata Shares of such requested Borrowing and shall be allocated among
such performing Lenders ratably based upon their relative Commitments.
This Section shall remain effective with respect to such Lender until
such time as the Defaulting Lender shall no longer be in default of
any of its obligations under this Agreement. The terms of this Section
shall not be construed to increase or otherwise affect the Commitment
of any Lender, or relieve or excuse the performance by any Borrower of
its duties and obligations hereunder.
(iv) At the Borrowers' request, the Agent or an Eligible
Assignee reasonably acceptable to the Agent and the Borrowers shall
have the right (but not the obligation) to purchase from any
Defaulting Lender, and each Defaulting Lender shall, upon such
request, sell and assign to the Agent or such Eligible Assignee, all
of the Defaulting Lender's outstanding Commitments hereunder. Such
sale shall be consummated promptly after Agent has arranged for a
purchase by Agent or an Eligible Assignee pursuant to an Assignment
and Acceptance, and at a price equal to the outstanding principal
balance of the Defaulting Lender's Revolving Loans, plus accrued
interest and fees, without premium or discount.
(h) MAKING OF NON-RATABLE LOANS.
(i) Except in the case of LIBOR Rate Revolving Loans
requested by a Borrower, in the event the Agent shall elect, with the
consent of the Bank, to have the terms of this SECTION 2.2(h) apply to
a requested Borrowing as described in SECTION 2.2(f), the Bank shall
make a Revolving Loan in the amount of such Borrowing (any such
Revolving Loan made solely by the Bank pursuant to this SECTION 2.2(h)
being referred to as a "NON-RATABLE LOAN" and such Revolving Loans
being referred to collectively as "NON-RATABLE LOANS") available to
the Borrowers on the Funding Date applicable thereto by transferring
same day funds to the deposit account of the Borrowers, designated
pursuant to SECTION 2.2(c). Each Non-Ratable Loan shall be subject to
all the terms and conditions applicable to other Revolving Loans
except that all payments thereon shall be payable to the Bank solely
for its own account (and for the account of the holder of any
participation interest with respect to such Revolving Loan). The Agent
shall not request the Bank to make any Non-Ratable Loan if (A) the
Agent shall have
LOAN AND SECURITY AGREEMENT - PAGE 37
received written notice from any Lender that one or more of the
applicable conditions precedent set forth in ARTICLE 10 will not be
satisfied on the requested Funding Date for the applicable Borrowing,
or (B) the Agent has received notice that a Default exists under
SECTION 9.26. The Agent shall not otherwise be required to determine
whether the applicable conditions precedent set forth in ARTICLE 10
have been satisfied prior to making, in its sole discretion, any
Non-Ratable Loan.
(ii) The Non-Ratable Loans shall be secured by the Agent's
Liens in and to the Collateral, shall constitute Revolving Loans and
Obligations hereunder, and shall bear interest at the rate applicable
to the Revolving Loans from time to time.
(i) AGENT ADVANCES.
(i) Subject to the limitations set forth in the provisos
contained in this SECTION 2.2(i) and SECTION 13.2, the Agent is hereby
authorized by the Borrowers and the Lenders, from time to time in the
Agent's sole discretion, (A) after the occurrence of a Default or an
Event of Default, or (B) at any time that any of the other applicable
conditions precedent set forth in ARTICLE 10 have not been satisfied,
to make Base Rate Revolving Loans to any Borrower on behalf of the
Lenders which the Agent, in its reasonable business judgment, deems
necessary or desirable (1) to preserve or protect the Collateral, or
any portion thereof, (2) to enhance the likelihood of, or maximize the
amount of, repayment of the Revolving Loans and other Obligations, or
(3) to pay any other amount chargeable to the Borrowers pursuant to
the terms of this Agreement, including costs, fees, and expenses as
described in SECTION 15.7 (any of the advances described in this
SECTION 2.2(i) being hereinafter referred to as "AGENT ADVANCES");
PROVIDED that the Required Lenders may at any time revoke the Agent's
authorization contained in this SECTION 2.2(i) to make Agent Advances,
any such revocation to be in writing and to become effective
prospectively upon the Agent's receipt thereof;
(ii) The Agent Advances shall be repayable on demand and
secured by the Agent's Liens in and to the Collateral, shall
constitute Revolving Loans and Obligations hereunder, and shall bear
interest at the rate applicable to Base Rate Revolving Loans from time
to time. The Agent shall notify each Lender in writing of each Agent
Advance; PROVIDED that any delay or failure of the Agent in providing
any such notice to any Lender shall not result in any liability or
constitute the breach of any duty or obligation of the Agent
hereunder.
(j) SETTLEMENT. Except as may be specifically provided otherwise
by this SECTION 2.2, it is agreed that each Lender's funded portion of the
Revolving Loans is intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding
such agreement, the Agent, the Bank, and the Lenders agree (which agreement
shall not be for the benefit of or enforceable by the Borrowers) that in
order to facilitate the administration of this Agreement and the
LOAN AND SECURITY AGREEMENT - PAGE 38
other Loan Documents, settlement among them as to the Revolving Loans,
including the Non-Ratable Loans and the Agent Advances, shall take place on
a periodic basis in accordance with the following provisions:
(i) The Agent shall request settlement (a "SETTLEMENT")
with the Lenders on at least a weekly basis, or on a more frequent
basis if so determined by the Agent, (A) on behalf of the Bank, with
respect to each outstanding Non-Ratable Loan, (B) for itself, with
respect to each Agent Advance, and (C) with respect to collections
received, in each case, by notifying the Lenders of such requested
Settlement by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 12:00 noon
(New York, New York time) on the date of such requested Settlement
(the "SETTLEMENT DATE"). Each Lender (other than the Bank, in the case
of Non-Ratable Loans, and the Agent, in the case of Agent Advances)
shall make the amount of such Lender's Pro Rata Share of the
outstanding principal amount of the Non-Ratable Loans and Agent
Advances with respect to which Settlement is requested available to
the Agent, to such account of the Agent as the Agent may designate,
not later than 3:00 p.m. (New York, New York time), on the Settlement
Date applicable thereto, which may occur before or after the
occurrence or during the continuation of a Default or an Event of
Default and whether or not the applicable conditions precedent set
forth in ARTICLE 10 have then been satisfied. Such amounts made
available to the Agent shall be applied against the amounts of the
applicable Non-Ratable Loan or Agent Advance and, together with the
portion of such Non-Ratable Loan or Agent Advance representing the
Bank's Pro Rata Share thereof, shall constitute Revolving Loans of the
Lenders, respectively. If any such amount is not made available to the
Agent by any Lender on the Settlement Date applicable thereto, the
Agent shall, on behalf of the Bank with respect to each outstanding
Non-Ratable Loan and for itself with respect to each Agent Advance, be
entitled to recover such amount on demand from such Lender together
with interest thereon at the Federal Funds Rate for the first three
(3) days from and after the Settlement Date and thereafter at the
Interest Rate then applicable to Base Rate Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or
after the occurrence of a Default or an Event of Default and
regardless of whether the Agent has requested a Settlement with
respect to a Non-Ratable Loan or Agent Advance), each Lender (A) shall
irrevocably and unconditionally purchase and receive from the Bank or
the Agent, as applicable, without recourse or warranty, an undivided
interest and participation in such Non-Ratable Loan or Agent Advance
equal to such Lender's Pro Rata Share of such Non-Ratable Loan or
Agent Advance and (B) if Settlement has not previously occurred with
respect to such Non-Ratable Loans or Agent Advances, upon demand by
the Bank or the Agent, as applicable, shall pay to the Bank or the
Agent, as applicable, as the purchase price of such participation an
amount equal to one-hundred percent (100%) of such Lender's Pro Rata
Share of such Non-Ratable Loans or Agent Advances. If such amount is
not in fact made available to the Agent by any Lender, the Agent shall
be entitled
LOAN AND SECURITY AGREEMENT - PAGE 39
to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three (3)
days from and after such demand and thereafter at the Interest Rate
then applicable to Base Rate Revolving Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Non-Ratable
Loan or Agent Advance pursuant to CLAUSE (ii) preceding, the Agent
shall promptly distribute to such Lender such Lender's Pro Rata Share
of all payments of principal and interest and all proceeds of
Collateral received by the Agent in respect of such Non-Ratable Loan
or Agent Advance.
(iv) Between Settlement Dates, to the extent no Agent
Advances are outstanding, the Agent may pay over to the Bank any
payments received by the Agent, which in accordance with the terms of
this Agreement would be applied to the reduction of the Revolving
Loans, for application to the Bank's Revolving Loans including
Non-Ratable Loans. If, as of any Settlement Date, collections received
since the then immediately preceding Settlement Date have been applied
to the Bank's Revolving Loans (other than to Non-Ratable Loans or
Agent Advances in which a Lender has not yet funded its purchase of a
participation pursuant to SECTION 2.2(j)(ii), as provided for in the
previous sentence, the Bank shall pay to the Agent for the accounts of
the Lenders, to be applied to the outstanding Revolving Loans of such
Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the
Revolving Loans. During the period between Settlement Dates, the Bank
with respect to Non-Ratable Loans, the Agent with respect to Agent
Advances, and each Lender with respect to the Revolving Loans other
than Non-Ratable Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement
on the actual average daily amount of funds employed by the Bank, the
Agent, and the Lenders.
(v) Unless the Agent has received written notice from a
Lender to the contrary, the Agent may assume that the applicable
conditions precedent set forth in ARTICLE 10 have been satisfied and
the requested Borrowing will not exceed Availability on any Funding
Date for a Revolving Loan or Non-Ratable Loan.
(k) NOTATION. The Agent shall record on its books the principal
amount of the Revolving Loans owing to each Lender, including the
Non-Ratable Loans owing to the Bank and the Agent Advances owing to the
Agent, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment
of principal of such Lender's Revolving Loans in its books and records,
including computer records, such books and records constituting presumptive
evidence, absent manifest error, of the accuracy of the information
contained therein.
(l) LENDERS' FAILURE TO PERFORM. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is
understood that (i) no Lender shall be
LOAN AND SECURITY AGREEMENT - PAGE 40
responsible for any failure by any other Lender to perform its obligation
to make any Revolving Loans hereunder, nor shall any Commitment of any
Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Revolving Loans hereunder,
(ii) no failure by any Lender to perform its obligation to make any
Revolving Loans hereunder shall excuse any other Lender from its obligation
to make any Revolving Loans hereunder, and (iii) the obligations of each
Lender hereunder shall be several, not joint and several.
(m) REVOLVING NOTES. The Borrowers shall execute and deliver to
the Agent, on behalf of each Lender, effective as of the Closing Date and
on the date of the assignment of any portion of any Lender's Revolving
Loans, a Revolving Note, to evidence such Lender's Revolving Loans, in the
principal amount equal to the amount of such Lender's Commitment with
respect to the Revolving Loans.
Section 2.3 LETTERS OF CREDIT AND CREDIT SUPPORT.
(a) AGREEMENT TO ISSUE OR CAUSE TO ISSUE. Subject to the terms
and conditions of this Agreement, and in reliance upon the representations
and warranties of the Borrowers herein set forth, the Agent agrees (i) to
cause the Letter of Credit Issuer to issue for the account of any of the
Borrowers (whether one or more) one or more commercial/documentary and
standby letters of credit (each a "LETTER OF CREDIT" and collectively, the
"LETTERS OF CREDIT") and/or (ii) to provide credit support or other
enhancement to a Letter of Credit Issuer acceptable to the Agent, which
issues a Letter of Credit for the account of a Borrower (any such credit
support or enhancement being herein referred to as a "CREDIT SUPPORT") in
accordance with this SECTION 2.3 from time to time during the term of this
Agreement.
(b) AMOUNTS; OUTSIDE EXPIRATION DATE. The Agent shall not have
any obligation to take steps to issue or cause to be issued any Letter of
Credit or to provide Credit Support at any time if: (i) the maximum face
amount of the requested Letter of Credit or Credit Support is greater than
the Unused Letter of Credit Subfacility at such time or, with respect to
any IDRB Letter of Credit, issuance thereof would cause the aggregate
undrawn amount of all outstanding IDRB Letters of Credit to exceed
$20,000,000; (ii) after taking into account the maximum undrawn amount of
the requested Letter of Credit or Credit Support (PROVIDED that the
requesting Borrower shall, to the Agent's satisfaction, have made provision
for all commissions, fees, and charges due from such Borrower in connection
with the opening of the requested Letter of Credit or Credit Support), the
Availability at such time would be less than the minimum amount prescribed
by SECTION 9.24; or (iii) such Letter of Credit or Credit Support has an
expiration date later than thirty (30) days prior to the Stated Termination
Date or more than twelve (12) calendar months from the date of issuance for
standby letters of credit and six (6) calendar months from the date of
issuance for commercial or documentary letters of credit.
(c) OTHER CONDITIONS. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in
ARTICLE 10, the obligation of the Agent to issue or to cause to be issued
any Letter of Credit or to provide Credit Support is subject
LOAN AND SECURITY AGREEMENT - PAGE 41
to the following conditions precedent having been satisfied in a manner
satisfactory to the Agent:
(i) The Borrowers shall have delivered to the Letter of
Credit Issuer, at such times and in such manner as the Letter of
Credit Issuer may prescribe, an application in form and substance
satisfactory to the Letter of Credit Issuer and satisfactory to the
Agent for the issuance of the Letter of Credit and such other
documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit shall be satisfactory
to the Agent and the Letter of Credit Issuer (PROVIDED that in the
event any term of such application or any other document is
inconsistent with the terms of this Agreement and the Letter of Credit
Issuer and the Agent are the same Person, then the terms of this
Agreement shall be controlling); and
(ii) As of the date of issuance, no order of any court,
arbitrator, or Governmental Authority shall purport by its terms to
enjoin or restrain banks generally from issuing letters of credit of
the type and in the amount of the proposed Letter of Credit, and no
law, rule, or regulation applicable to banks generally and no request
or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over banks generally shall
prohibit, or request that the Letter of Credit Issuer refrain from,
the issuance of letters of credit generally or the issuance of such
proposed Letter of Credit.
(d) ISSUANCE OF LETTERS OF CREDIT.
(i) REQUEST FOR ISSUANCE. Any Borrower that wishes to
cause the issuance of a Letter of Credit or any Credit Support shall
give the Agent three (3) Business Days prior written notice of such
Borrower's request for the issuance of such Letter of Credit or Credit
Support. Such notice shall be irrevocable and shall specify the
original amount of the Letter of Credit or Credit Support requested,
the effective date (which date shall be a Business Day) of issuance of
such requested Letter of Credit or Credit Support, whether such Letter
of Credit or Credit Support may be drawn in a single or in partial
draws, the date on which such requested Letter of Credit or Credit
Support is to expire (which date shall be a Business Day), the purpose
for which such Letter of Credit or Credit Support is to be issued, and
the beneficiary of the requested Letter of Credit or Credit Support,
and in addition shall include as an attachment the proposed form of
any requested Letter of Credit.
(ii) RESPONSIBILITIES OF THE AGENT; ISSUANCE. The Agent
shall determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit or Credit
Support set forth in the notice from a Borrower pursuant to
SECTION 2.3(d)(i), (A) the amount of the Unused Letter of Credit
Subfacility and (b) the Availability as of such date. If the amount of
the requested Letter of Credit or Credit Support is not greater than
the Unused Letter of Credit Subfacility the Agent shall, so long as
the other conditions required by this Agreement are met, cause the
Letter of Credit Issuer to issue the
LOAN AND SECURITY AGREEMENT - PAGE 42
requested Letter of Credit or Credit Support on such requested
effective date of issuance.
(iii) NOTICE OF ISSUANCE. On each Settlement Date, the
Agent shall give notice to each Lender of the issuance of all Letters
of Credit and Credit Support issued since the last Settlement Date.
(iv) EXTENSIONS AND AMENDMENTS. The Agent shall not be
obligated to cause the Letter of Credit Issuer to extend or amend any
Letter of Credit or Credit Support issued pursuant hereto unless the
requirements of this SECTION 2.3 are met as though a new Letter of
Credit or Credit Support were being requested and issued. With respect
to any Letter of Credit or Credit Support which contains any
"evergreen" or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless any
such Lender shall have provided to the Agent, not less than thirty
(30) days prior to the last date on which the Letter of Credit Issuer
can in accordance with the terms of the applicable Letter of Credit or
Credit Support decline to extend or renew such Letter of Credit or
Credit Support, written notice that it declines to consent to any such
extension or renewal; PROVIDED, that if all of the requirements of
this SECTION 2.3 are met and no Default or Event of Default exists, no
Lender shall decline to consent to any such extension or renewal.
(e) PAYMENTS PURSUANT TO LETTERS OF CREDIT.
(i) PAYMENT OF LETTER OF CREDIT AND CREDIT SUPPORT
OBLIGATIONS. The Borrower for whose account any Letter of Credit or
Credit Support is issued agrees immediately upon demand to reimburse
the Letter of Credit Issuer for any draw under any such Letter of
Credit and the Agent for the account of the Lenders upon any payment
pursuant to any Credit Support, and to pay the Letter of Credit Issuer
and the Agent the amount of all other obligations and other amounts
payable to the Letter of Credit Issuer under or in connection with any
Letter of Credit immediately when due, irrespective of any claim,
set-off, defense, or other right which such Borrower may have at any
time against the Letter of Credit Issuer or any other Person. If any
IDRB Letter of Credit is fully drawn, the applicable Borrowers (within
thirty (30) days following the date on which such drawing occurs to
make any IDRB Letter of Credit fully drawn) will grant to the Agent,
as additional security for the Obligations, a first and prior Lien on
all of the real and personal property which secure the industrial
development revenue bond for which such IDRB Letter of Credit was
issued.
(ii) REVOLVING LOANS TO SATISFY REIMBURSEMENT OBLIGATIONS.
Each drawing under any Letter of Credit or Credit Support shall
constitute a request by the applicable Borrower to the Agent for a
Borrowing of a Base Rate Revolving Loan in the amount of such drawing.
The Funding Date with respect to such Borrowing shall be the date of
such drawing. In the event that the Letter of Credit Issuer of any
Letter of Credit honors a draw under such Letter of Credit or the
Agent shall have made any payment pursuant to any Credit Support and
the
LOAN AND SECURITY AGREEMENT - PAGE 43
Borrower for whose account such Letter of Credit or Credit Support was
issued shall not have repaid such amount to the Letter of Credit
Issuer of such Letter of Credit or the Agent, as applicable, pursuant
to SECTION 2.3(e)(i), the Agent shall, upon receiving notice of such
failure, notify each Lender of such failure, and each Lender shall
unconditionally pay to the Agent, for the account of the Letter of
Credit Issuer or the Agent, as applicable, as and when provided herein
below, an amount equal to such Lender's Pro Rata Share of the amount
of such payment in Dollars and in same day funds. If the Agent so
notifies the Lenders prior to 11:00 a.m. (New York, New York time) on
any Business Day, each Lender shall make available to the Agent the
amount of such payment, as provided in the immediately preceding
sentence, on such Business Day. Such amounts paid by the Lenders to
the Agent shall constitute Revolving Loans which shall be deemed to
have been requested by such Borrower pursuant to SECTION 2.2 and made
as provided by SECTION 4.6.
(f) PARTICIPATIONS.
(i) PURCHASE OF PARTICIPATIONS. Immediately upon issuance
of any Letter of Credit or Credit Support in accordance with
SECTION 2.3(d), each Lender shall be deemed to have irrevocably and
unconditionally purchased and received without recourse or warranty,
an undivided interest and participation equal to such Lender's Pro
Rata Share of the face amount of such Letter of Credit or Credit
Support provided through the Agent to the Letter of Credit Issuer, if
not the Agent, in connection with the issuance of such Letter of
Credit or Credit Support (including all obligations of the Borrower
for whose account such Letter of Credit or Credit Support was issued
and any security therefor or guaranty pertaining thereto).
(ii) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS.
Whenever the Agent receives a payment from a Borrower on account of
reimbursement obligations in respect of a Letter of Credit or Credit
Support as to which the Agent has previously received for the account
of the Agent or the Letter of Credit Issuer thereof payment from a
Lender pursuant to SECTION 2.3(e)(ii), the Agent shall promptly pay to
such Lender such Lender's Pro Rata Share of such payment from such
Borrower in Dollars. Each such payment shall be made by the Agent on
the Business Day on which the Agent receives immediately available
funds paid to such Person pursuant to the immediately preceding
sentence, if received prior to 3:00 p.m. (New York, New York time) on
such Business Day and otherwise on the next succeeding Business Day.
(iii) DOCUMENTATION. Upon the request of any Lender, the
Agent shall furnish to such Lender copies of any Letter of Credit,
Credit Support, reimbursement agreement executed in connection
therewith, application for any Letter of Credit or Credit Support, and
such other documentation as may reasonably be requested by such
Lender.
LOAN AND SECURITY AGREEMENT - PAGE 44
(iv) OBLIGATIONS IRREVOCABLE. The obligation of each
Lender to make payments to the Agent, for the account of the Lenders,
with respect to any Letter of Credit or Credit Support and the
obligation of the Borrowers to make payments to the Agent, for the
account of the Lenders, with respect to any Letter of Credit or Credit
Support shall be irrevocable, not subject to any qualification or
exception whatsoever, including any of the following circumstances:
(A) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(B) the existence of any claim, set-off, defense, or
other right which such Borrower may have at any time against
a beneficiary named in a Letter of Credit or any transferee
of any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, the Agent, the Letter
of Credit Issuer, or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions
contemplated herein, or any unrelated transactions
(including any underlying transactions between such Borrower
or any other Person and the beneficiary named in any Letter
of Credit);
(C) any draft, certificate, or any other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Loan Documents; or
(E) the occurrence of any Default or Event of
Default.
(g) RECOVERY OR AVOIDANCE OF PAYMENTS. In the event any payment
by or on behalf of any Borrower received by the Agent with respect to any
Letter of Credit or Credit Support and distributed by the Agent to the
Lenders on account of their respective participations therein is thereafter
set aside, avoided, or recovered from the Agent in connection with any
receivership, liquidation, or bankruptcy proceeding, the Lenders shall,
upon demand by the Agent, pay to the Agent their respective Pro Rata Shares
of such amount set aside, avoided, or recovered, together with interest at
the rate required to be paid by the Agent upon the amount required to be
repaid by it.
(h) INDEMNIFICATION; EXONERATION; POWER OF ATTORNEY.
(i) INDEMNIFICATION. IN ADDITION TO AMOUNTS PAYABLE AS
ELSEWHERE PROVIDED IN THIS SECTION 2.3, EACH BORROWER HEREBY AGREES TO
PROTECT, INDEMNIFY, PAY, AND SAVE THE LENDERS AND THE AGENT HARMLESS
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES,
LOSSES, COSTS, CHARGES, AND EXPENSES (INCLUDING ATTORNEYS COSTS)
LOAN AND SECURITY AGREEMENT - PAGE 45
WHICH ANY LENDER OR THE AGENT (OTHER THAN THE BANK IN ITS CAPACITY AS
THE LETTER OF CREDIT ISSUER) MAY INCUR OR BE SUBJECT TO AS A
CONSEQUENCE, DIRECT OR INDIRECT, OF THE ISSUANCE OF ANY LETTER OF
CREDIT OR THE PROVISION OF ANY CREDIT SUPPORT OR ENHANCEMENT IN
CONNECTION THEREWITH (OTHER THAN ANY SUCH CLAIMS, DEMANDS,
LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES, AND EXPENSES RESULTING
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH LENDER OR THE
AGENT). THE AGREEMENT IN THIS SECTION 2.3(h)(i) SHALL SURVIVE PAYMENT
OF ALL OBLIGATIONS. NOTHING CONTAINED IN THIS AGREEMENT IS INTENDED TO
LIMIT ANY BORROWER'S RIGHTS, IF ANY, WITH RESPECT TO THE LETTER OF
CREDIT ISSUER WHICH ARISE AS A RESULT OF THE LETTER OF CREDIT
APPLICATION AND RELATED DOCUMENTS EXECUTED BY AND BETWEEN ANY BORROWER
AND THE LETTER OF CREDIT ISSUER.
(ii) ASSUMPTION OF RISK BY THE BORROWERS. As among the
Borrowers, the Lenders, and the Agent, the Borrowers assume all risks
of the acts and omissions of, or misuse of any of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Lenders and
the Agent shall not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness, or legal effect of any document
submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the
Letters of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent, or forged; (B)
the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C)
the failure of the beneficiary of any Letter of Credit to comply duly
with conditions required in order to draw upon such Letter of Credit;
(D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, or
otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the Lenders or
the Agent, including any act or omission, whether rightful or
wrongful, of any present or future DE JURE or DE FACTO Governmental
Authority; PROVIDED that, subject to any application for a Letter of
Credit between the applicable Borrower and the Letter of Credit
Issuer, the applicable Borrower shall retain any claim it may have, if
any, against the Letter of Credit Issuer with respect to any actual
damages, but excluding any consequential damages, suffered by such
Borrower which were directly caused by (1) the Letter of Credit
Issuer's willful misconduct or gross negligence in determining whether
documents presented under a Letter of Credit
LOAN AND SECURITY AGREEMENT - PAGE 46
complied with such Letter of Credit or (2) the Letter of Credit
Issuer's willful failure to make lawful payment under any Letter of
Credit after the presentation to it of a draft and all documents
required under such Letter of Credit strictly complying with the terms
and conditions of such Letter of Credit. None of the foregoing shall
affect, impair, or prevent the vesting of any rights or powers of the
Agent or any Lender under this SECTION 2.3(h).
(iii) EXONERATION. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action
taken or omitted by the Agent or any Lender under or in connection
with any of the Letters of Credit or any related certificates, in the
absence of gross negligence or willful misconduct, shall not put the
Agent or any Lender under any resulting liability to any Borrower or
relieve any Borrower of any of its obligations hereunder to any such
Person.
(iv) INDEMNIFICATION BY LENDERS. The Lenders agree to
indemnify the Letter of Credit Issuer (to the extent not reimbursed by
the Borrowers and without limiting the obligations of the Borrowers
hereunder) ratably in accordance with their respective Pro Rata
Shares, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including
Attorney Costs), or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by, or asserted against the Letter of
Credit Issuer in any way relating to or arising out of any Letter of
Credit or the transactions contemplated thereby or any action taken or
omitted by the Letter of Credit Issuer under any Letter of Credit or
any Loan Document in connection therewith; PROVIDED that no Lender
shall be liable for any of the foregoing to the extent it arises from
the gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Lender agrees
to reimburse the Letter of Credit Issuer promptly upon demand for its
Pro Rata Share of any costs or expenses payable by any Borrower to the
Letter of Credit Issuer, to the extent that the Letter of Credit
Issuer is not promptly reimbursed for such costs and expenses by a
Borrower. The agreement contained in this Section shall survive
payment in full of all Obligations.
(v) POWER OF ATTORNEY. In connection with all Inventory
financed by Letters of Credit, each Borrower hereby appoints the
Agent, or the Agent's designee, as its attorney, with full power and
authority: (A) to sign and/or endorse such Borrower's name upon any
warehouse or other receipts; (B) to sign such Borrower's name on bills
of lading and other negotiable and non-negotiable documents; (C) to
clear Inventory through customs in the Agent's or such Borrower's
name, and to sign and deliver to customs officials powers of attorney
in such Borrower's name for such purpose; (D) to complete in such
Borrower's or the Agent's name, any order, sale, or transaction,
obtain the necessary documents in connection therewith, and collect
the proceeds thereof; and (E) to do such other acts and things as are
necessary in order to enable the Agent to obtain possession or control
of such Inventory and to obtain payment of the Obligations. Neither
the Agent nor its designee, as such Borrower's attorney, will be
liable for any acts
LOAN AND SECURITY AGREEMENT - PAGE 47
or omissions, nor for any error of judgment or mistakes of fact or law
other than for gross negligence or willful misconduct. This power,
being coupled with an interest, is irrevocable until all Obligations
have been paid and satisfied.
(vi) ACCOUNT PARTY. Each Borrower hereby authorizes and
directs the Letter of Credit Issuer to name any Borrower as the
"Account Party" in each Letter of Credit issued pursuant to this
Agreement and to deliver to the Agent all instruments, documents, and
other writings and property received by the Letter of Credit Issuer
pursuant to each such Letter of Credit, and to accept and rely upon
the Agent's instructions and agreements with respect to all matters
arising in connection with each such Letter of Credit or the
application therefor.
(vii) CONTROL OF INVENTORY. In connection with all
Inventory financed by Letters of Credit, each Borrower for whose
account such Letter of Credit was issued will, at the Agent's request,
instruct all suppliers, carriers, forwarders, customs brokers,
warehouses, or others receiving or holding cash, checks, Inventory,
documents, or instruments in which the Agent holds a security interest
to deliver them to the Agent and/or subject to the Agent's order, and
if they shall come into such Borrower's possession, to deliver them,
upon request, to the Agent in their original form. Each such Borrower
shall also, at the Agent's request, designate the Agent as the
consignee on all bills of lading and other negotiable and
non-negotiable documents.
(i) SUPPORTING LETTER OF CREDIT; CASH COLLATERAL. If,
notwithstanding the provisions of SECTION 2.3(b) and SECTION 12.1 any
Letter of Credit or Credit Support is outstanding upon the termination of
this Agreement, then upon such termination the Borrower for whose account
such Letter of Credit or such Credit Support was issued shall deposit with
the Agent, for the ratable benefit of the Agent and the Lenders, with
respect to each such Letter of Credit or such Credit Support then
outstanding, as the Majority Lenders in their discretion shall specify,
either (i) a standby letter of credit (a "SUPPORTING LETTER OF CREDIT") in
form and substance satisfactory to the Agent, issued by an issuer
satisfactory to the Agent in an amount equal to the greatest amount for
which such Letter of Credit or such Credit Support may be drawn plus any
fees and expenses associated with such Letter of Credit or such Credit
Support, under which Supporting Letter of Credit the Agent is entitled to
draw amounts necessary to reimburse the Agent and the Lenders for payments
to be made by the Agent and the Lenders under such Letter of Credit or such
Credit Support and any fees and expenses associated with such Letter of
Credit or such Credit Support, or (ii) cash in amounts necessary to
reimburse the Agent and the Lenders for payments made by the Agent or the
Lenders under such Letter of Credit or such Credit Support and any fees and
expenses associated with such Letter of Credit or such Credit Support. Such
Supporting Letter of Credit or deposit of cash shall be held by the Agent,
for the ratable benefit of the Agent and the Lenders, as security for, and
to provide for the payment of, the aggregate undrawn amount of such Letters
of Credit or such Credit Support remaining outstanding.
Section 2.4 BANK PRODUCTS. Any Borrower may request and the Bank may,
in its sole and absolute discretion, arrange for such Borrower to obtain from
the Bank or the Bank's
LOAN AND SECURITY AGREEMENT - PAGE 48
Affiliates, Bank Products, although no Borrower is required to do so. To the
extent Bank Products are provided by an Affiliate of the Bank, each Borrower
agrees to indemnify and hold the Bank and the Lenders harmless from any and all
costs and obligations now or hereafter incurred by the Bank, or any of the
Lenders which arise from the indemnity given by the Bank to its Affiliates
related to such Bank Products. The agreement contained in this Section shall
survive termination of this Agreement. Each Borrower acknowledges and agrees
that the obtaining of Bank Products from the Bank or the Bank's Affiliates (a)
is in the sole and absolute discretion of the Bank, or their applicable
Affiliates, and (b) is subject to all rules and regulations of the Bank, or
their applicable Affiliates.
ARTICLE 3
INTEREST AND FEES
Section 3.1 INTEREST.
(a) INTEREST RATES. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on accrued interest thereon not paid when due) from the
date made until paid in full in cash at a rate determined by reference to
the Base Rate or the LIBOR Rate, as applicable, and this SECTION 3.1(a),
but not to exceed the Maximum Rate. Any of the Revolving Loans may be
converted into, or continued as, Base Rate Revolving Loans or LIBOR Rate
Revolving Loans, subject to, and in the manner provided in, SECTION 3.2. If
at any time Revolving Loans are outstanding with respect to which notice
has not been delivered to the Agent in accordance with the terms of this
Agreement specifying the basis for determining the interest rate applicable
thereto, then those Revolving Loans shall be Base Rate Revolving Loans and
shall bear interest at a rate determined by reference to the Base Rate
until notice to the contrary has been given to the Agent in accordance with
this Agreement and such notice has become effective. Except as otherwise
provided herein, the outstanding Obligations shall bear interest as
follows:
(i) for all Base Rate Revolving Loans and other
Obligations (other than LIBOR Rate Revolving Loans) at a fluctuating
per annum rate equal to the lesser of (A) the Base Rate PLUS the
Applicable Margin or (B) the Maximum Rate; and
(ii) for all LIBOR Rate Revolving Loans at a per annum rate
equal to the lesser of (A) the LIBOR Rate PLUS the Applicable Margin
or (B) the Maximum Rate.
Each change in the Base Rate shall be reflected in the interest rate
described in CLAUSE (i) preceding as of the effective date of such change.
Subject to SECTION 3.3, all interest charges shall be computed on the basis
of a year of 360 days and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year).
LOAN AND SECURITY AGREEMENT - PAGE 49
(b) DEFAULT RATE. During the existence of any Default or Event
of Default if the Agent or the Majority Lenders in their discretion so
elect, then, while such Default or Event of Default exists, the Obligations
shall bear interest at a rate per annum equal to the lesser of (i) the
Default Rate applicable thereto or (ii) the Maximum Rate.
(c) INTEREST PERIODS. After giving effect to any Borrowing,
conversion, or continuation of any LIBOR Rate Revolving Loan, there may not
be more than eight (8) different Interest Periods in effect hereunder;
PROVIDED that in its discretion the Agent may agree to permit the Borrowers
to maintain more than eight (8) different Interest Periods in effect
hereunder.
Section 3.2 CONVERSION AND CONTINUATION ELECTIONS.
(a) A Borrower may, upon irrevocable written notice to the Agent
in accordance with SECTION 3.2(b):
(i) elect, as of any Business Day, in the case of Base
Rate Revolving Loans to convert any such Revolving Loans (or any part
thereof in an amount not less than $5,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof) into LIBOR Rate
Revolving Loans; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Rate Revolving Loans having Interest
Periods expiring on such day (or any part thereof in an amount not
less than $5,000,000, or that is in an integral multiple of $1,000,000
in excess thereof) as LIBOR Rate Revolving Loans;
PROVIDED that if at any time the aggregate amount of LIBOR Rate Revolving
Loans in respect of any Borrowing is reduced, by payment, prepayment, or
conversion of part thereof to be less than $5,000,000, such LIBOR Rate
Revolving Loans shall, effective as of the expiration date of the
applicable Interest Period, automatically convert into Base Rate Revolving
Loans.
(b) The Borrowers shall deliver a notice of conversion/
continuation in the form of EXHIBIT D (a "NOTICE OF
CONVERSION/CONTINUATION") to be received by the Agent not later than 12:00
noon (New York, New York time) at least three (3) Business Days in advance
of the Conversion/Continuation Date, if the Revolving Loans are to be
converted into or continued as LIBOR Rate Revolving Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the Revolving Loans and the aggregate amount of such
Revolving Loans to be converted or renewed;
(iii) the type of Revolving Loans resulting from the
proposed conversion or continuation; and
(iv) the duration of the requested Interest Period.
LOAN AND SECURITY AGREEMENT - PAGE 50
(c) If upon the expiration of any Interest Period applicable to
LIBOR Rate Revolving Loans, the Borrowers have failed to timely select a
new Interest Period to be applicable to such LIBOR Rate Revolving Loans or
if any Default or Event of Default then exists, the Borrowers shall be
deemed to have elected to convert such LIBOR Rate Revolving Loans into Base
Rate Revolving Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Lender of its receipt of
a Notice of Conversion/Continuation. All conversions and continuations
shall be made ratably according to the respective outstanding principal
amounts of the Revolving Loans with respect to which the Notice of
Conversion/Continuation was given held by each Lender.
(e) During the existence of a Default or Event of Default, the
Borrowers may not elect to have a Revolving Loan converted into or
continued as a LIBOR Rate Revolving Loan.
Section 3.3 MAXIMUM INTEREST RATE. If the Interest Rate, absent the
limitation set forth in this SECTION 3.3, would have exceeded the Maximum Rate,
then the Interest Rate shall be the Maximum Rate, and, if in the future, the
Interest Rate would otherwise be less than the Maximum Rate, then the Interest
Rate shall remain at the Maximum Rate until such time as the amount of interest
paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. In the event that, upon payment
in full of the Obligations, the total amount of interest paid or accrued under
the terms of this Agreement is less than the total amount of interest which
would, but for this SECTION 3.3, have been paid or accrued if the Interest Rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been paid or accrued if the Maximum
Rate had, at all times, been in effect or (ii) the amount of interest which
would have been paid or accrued had the interest rate otherwise set forth in
this Agreement, at all times, been in effect over (b) the amount of interest
actually paid or accrued under this Agreement. The Agent, each Lender, and each
Borrower acknowledges, agrees, and declares that it is its intention to
expressly comply with all Requirements of Law in respect of limitations on the
amount or rate of interest that can legally be contracted for, charged, or
received under or in connection with the Loan Documents. Notwithstanding
anything to the contrary contained in any Loan Document (even if any such
provision expressly declares that it controls all other provisions of the Loan
Documents), in no contingency or event whatsoever shall the amount of interest
(including the aggregate of all charges, fees, benefits, or other compensation
which constitutes interest under any Requirement of Law) under the Loan
Documents paid by any Borrower, received by the Agent, the Letter of Credit
Issuer, or any Lender, agreed to be paid by any Borrower, or requested or
demanded to be paid by the Agent, the Letter of Credit Issuer, or any Lender,
exceed the Maximum Rate, and all provisions of the Loan Documents in respect of
the contracting for, charging, or receiving compensation for the use,
forbearance, or detention of money shall be limited as provided by this SECTION
3.3. In the event any such interest is paid to the Agent, the Letter of Credit
Issuer, or any Lender by the Borrowers, or any of them, in an amount or at a
rate which would exceed the Maximum Rate, the Agent, the Letter of Credit
Issuer, or such Lender, as the case may be, shall automatically apply such
excess to any unpaid amount of the Obligations other than interest, in
LOAN AND SECURITY AGREEMENT - PAGE 51
inverse order of maturity, or if the amount of such excess exceeds said unpaid
amount, such excess shall be paid to the paying Borrowers or Borrower, as
applicable. All interest paid, or agreed to be paid, by any Borrower, or taken,
reserved, or received by the Agent, the Letter of Credit Issuer, or any Lender,
shall be amortized, prorated, spread, and allocated in respect of the
Obligations throughout the full term of this Agreement. Notwithstanding any
provision contained in any of the Loan Documents, or in any other related
documents executed pursuant hereto, neither the Agent, the Letter of Credit
Issuer, nor any Lender shall ever be entitled to charge, receive, take, reserve,
collect, or apply as interest any amount which, together with all other interest
under the Loan Documents would result in a rate of interest under the Loan
Documents in excess of the Maximum Rate and, in the event the Agent, the Letter
of Credit Issuer, or any Lender ever charges, receives, takes, reserves,
collects, or applies any amount in respect of the Borrowers, or any of them,
that otherwise would, together with all other interest under the Loan Documents,
be in excess of the Maximum Rate, such amount shall automatically be deemed to
be applied in reduction of the unpaid principal balance of the Obligations and,
if such principal balance is paid in full, any remaining excess shall forthwith
be paid to the applicable Borrowers or Borrower. The Borrowers, the Agent, the
Letter of Credit Issuer, and the Lenders shall, to the maximum extent permitted
under any Requirement of Law, (A) characterize any non-principal payment as a
standby fee, commitment fee, prepayment charge, delinquency charge, expense, or
reimbursement for a third-party expense rather than as interest and (B) exclude
prepayments, acceleration, and the effects thereof. Nothing in any Loan Document
shall be construed or so operate as to require or obligate the Borrowers, or any
of them, to pay any interest, fees, costs, or charges greater than is permitted
by any Requirement of Law. Subject to the foregoing, the Borrowers hereby agree
that the actual effective rate of interest from time to time existing under the
Loan Documents, including all amounts agreed to by the Borrowers or charged or
received by the Agent, the Letter of Credit Issuer, or the Lenders pursuant to
and in accordance with the Loan Documents, which may be deemed to be interest
under any Requirement of Law, shall be deemed to be a rate which is agreed to
and stipulated by the Borrowers and the Lenders in accordance with Requirements
of Law.
Section 3.4 UNUSED LINE FEE. Until the Revolving Loans have been paid
in full and this Agreement terminated, the Borrowers agree to pay, on the first
day of each calendar month and on the Termination Date, to the Agent, for the
account of the Lenders, in accordance with their respective Pro Rata Shares, an
unused line fee (the "UNUSED LINE FEE") equal to the Unused Line Fee Percentage
multiplied by the amount by which the Maximum Revolver Amount exceeded the sum
of the average daily outstanding amount of the Revolving Loans and the average
daily undrawn face amount of all outstanding Letters of Credit and Credit
Support during the immediately preceding Fiscal Period or shorter period if
calculated on the Termination Date. Subject to SECTION 3.3, the Unused Line Fee
shall be computed on the basis of a 360-day year for the actual number of days
elapsed. For purposes of calculating the Unused Line Fee pursuant to this
SECTION 3.4, any payment received by the Agent (if received prior to 3:00 p.m.
New York, New York time) shall be deemed to be credited to the Borrowers' Loan
Account on the date such payment is received by the Agent.
Section 3.5 LETTER OF CREDIT FEE. The Borrowers agree to pay to the
Agent, for the account of the Lenders, in accordance with their respective Pro
Rata Shares, for each Letter of Credit or Credit Support, a fee (the "LETTER OF
CREDIT FEE") equal to the Letter of Credit Fee Percentage, or during the
existence of any Default or Event of Default the Default Rate with
LOAN AND SECURITY AGREEMENT - PAGE 52
respect to Letters of Credit, multiplied by the undrawn face amount of each
Letter of Credit or Credit Support, PLUS all out-of-pocket costs, fees, and
expenses incurred by the Agent and the Letter of Credit Issuer in connection
with the application for, processing of, issuance of, or amendment to any Letter
of Credit or Credit Support, which costs, fees, and expenses shall include a
"fronting fee" of one-quarter percent (0.25%) payable to the Letter of Credit
Issuer on the date of issuance of each Letter of Credit or Credit Support. The
Letter of Credit Fee shall be payable monthly in arrears on the first day of
each calendar month following any calendar month in which a Letter of Credit or
Credit Support was issued and/or in which a Letter of Credit or Credit Support
remains outstanding and on the Termination Date. Subject to SECTION 3.3, the
Letter of Credit Fee shall be computed on the basis of a 360-day year for the
actual number of days elapsed.
Section 3.6 RENEWAL FEE. Upon each one-year renewal of the term of
this Agreement as provided in SECTION 12.1 hereof, the Borrowers will pay to the
Agent, for the ratable benefit of the Lenders, a renewal fee equal to one
quarter of one percent (0.25%) multiplied by the Commitment as the Commitment
exists on the first day of each respective one-year renewal term, and each such
renewal fee will be due and payable on the first day of each respective one-year
renewal term.
Section 3.7. OTHER FEES. The Borrowers agree to pay timely when due all
other fees and expenses of the Agent as provided for in this Agreement,
including, without limitation, the Annual Agent Fee (for the benefit of the
Agent), which is due initially on the Closing Date and on each Anniversary Date.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
Section 4.1 REVOLVING LOANS. The Borrowers shall repay the
outstanding principal balance of the Revolving Loans together with all other
Obligations, including all accrued but unpaid interest thereon, on the
Termination Date. The Borrowers may prepay the Revolving Loans at any time, and
reborrow subject to the terms of this Agreement; PROVIDED, HOWEVER, that with
respect to any LIBOR Rate Revolving Loans prepaid prior to the expiration date
of the Interest Period applicable thereto, the Borrowers shall pay to the Agent,
for the account of the Lenders, the amounts described in SECTION 5.4. In
addition, and without limiting the generality of the foregoing, upon demand the
Borrowers shall pay to the Agent, for the account of the Lenders, the amount, if
any and without duplication, by which the Aggregate Revolver Outstandings LESS
the aggregate amount of Pending Revolving Loans exceeds the Borrowing Base.
Accrued interest on the Revolving Loans shall be due and payable in arrears (a)
in the case of Base Rate Revolving Loans, on the first day of each calendar
month and on the Termination Date and (b) in the case of LIBOR Rate Revolving
Loans and with respect to each such Revolving Loan (i) on the last day of the
Interest Period with respect thereto and (ii) on the Termination Date.
Section 4.2 REDUCTION OF COMMITMENTS; TERMINATION OF FACILITY.
LOAN AND SECURITY AGREEMENT - PAGE 53
(a) The Borrowers may reduce the Maximum Revolver Amount to an
amount, not less than $100,000,000, as may be designated by the Borrowers
at any time effective upon five (5) Business Days prior written notice
thereof to the Agent and the Lenders, PROVIDED, that any such reduction (i)
shall be in an amount of at least $5,000,000 or any integral multiple of
$1,000,000 in excess thereof and (ii) shall be permanent. The Lenders shall
have no obligation at any time to increase the Maximum Revolver Amount
following any such reduction.
(b) The Borrowers may terminate this Agreement upon at least
thirty (30) days prior written notice thereof to the Agent and the Lenders,
upon (i) the payment in full of all outstanding Revolving Loans, together
with accrued and unpaid interest thereon, and the cancellation and return
of all outstanding Letters of Credit and Credit Support (or, alternatively,
with respect to each such Letter of Credit or Credit Support, the
furnishing to the Agent, for the benefit of the Lenders, of a Supporting
Letter of Credit or cash deposit, in each case in amounts and in the manner
required by SECTION 2.3(i), (ii) the payment of the early termination fee
set forth in the following sentence, (iii) with respect to any LIBOR Rate
Revolving Loans prepaid in connection with such termination prior to the
expiration date of the Interest Period applicable thereto, the payment of
the amounts described in SECTION 5.4, and (iv) the payment in full in cash
of all other Obligations together with accrued and unpaid interest thereon.
Subject to SECTION 3.3, if this Agreement is terminated at any time on or
prior to the second Anniversary Date following the Closing Date, whether
pursuant to this Section or pursuant to SECTION 11.2, the Borrowers shall
pay to the Agent, for the account of the Lenders, an early termination fee
in an amount equal to (i) one percent (1.00%) of the then existing Maximum
Revolver Amount if the termination occurs on or before the first
Anniversary Date, and (ii) one-half of one percent (0.50%) if the then
existing Maximum Revolver Amount if the termination occurs on or before (a)
the second Anniversary Date, or (b) in the case of any automatic renewal of
the term of this Agreement as provided in SECTION 12.1, on or before the
Anniversary date which is twelve months prior to the last day of any
respective extended term as established by reason of such automatic
renewal. Notwithstanding the foregoing, no such early termination fee shall
be payable in the event this Agreement is terminated in connection with
refinancing of the Obligations in a transaction in which the Bank, or any
of its Affiliates, provides or arranges replacement financing or acts as
underwriter or arranger of any public offering of debt or equity securities
of the Parent.
Section 4.3 PREPAYMENTS FROM ASSET DISPOSITIONS.
(a) All proceeds or other cash payments in excess of $1,000,000
received by any Borrower pursuant to any transaction of merger,
reorganization, consolidation, transfer, sale, assignment, lease, or other
disposition of Collateral (other than the sale of Inventory in the ordinary
course of business) and SECTION 9.19 with respect to a sale of Collateral,
net of related actual transaction costs and expenses, shall be paid to the
Agent, promptly upon such receipt, for application to the outstanding
principal balance of the Revolving Loans, without a corresponding reduction
in the aggregate amount of the Commitments. At the Parent's option, the
Parent may elect to permanently reduce the
LOAN AND SECURITY AGREEMENT - PAGE 54
Commitments in connection with any such application by an amount not to
exceed the amount so prepaid.
(b) All proceeds or other cash payments received by any Borrower
pursuant to any disposition of Real Estate, Equipment, or proceeds thereof
may, at the Parent's option, be paid to the Agent for application to the
outstanding principal balance of the Revolving Loans. If the Parent elects
to so apply such amounts, the Parent may elect, at the Parent's option, to
permanently reduce the Maximum Revolver Amount in connection with any such
application by an amount not to exceed the amount so prepaid.
Section 4.4 PAYMENTS BY THE BORROWERS.
(a) All payments to be made by the Borrowers shall be made
without set-off, recoupment, or counterclaim. Except as otherwise expressly
provided herein, all payments by the Borrowers shall be made to the Agent
for the account of the Lenders at the Agent's address set forth in SECTION
15.8, and shall be made in Dollars and in immediately available funds, no
later than 3:00 p.m. (New York time) on the date specified herein. Any
payment received by the Agent later than 3:00 p.m. (New York, New York
time) shall be deemed to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
Interest Period, whenever any payment is due on a day other than a Business
Day, such payment shall be due on the following Business Day, and such
extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrowers prior to
the date on which any payment is due to the Lenders that the Borrowers will
not make such payment in full as and when required, the Agent may assume
that the Borrowers have made such payment in full to the Agent on such date
in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender. If and to
the extent the Borrowers have not made such payment in full to the Agent,
each Lender shall repay to the Agent on demand such amount distributed to
such Lender, together with interest thereon at the Federal Funds Rate for
each day from the date such amount is distributed to such Lender until the
date repaid.
Section 4.5 PAYMENTS AS REVOLVING LOANS. All payments of principal,
interest, reimbursement obligations in connection with Letters of Credit and
Credit Support, fees, premiums, and other sums payable hereunder, including,
without limitation, all reimbursement for expenses pursuant to SECTION 15.7,
may, at the option of the Agent, in its sole discretion, subject only to the
terms of this SECTION 4.5, be paid from the proceeds of Revolving Loans made
hereunder, whether made following a request by the Borrowers, or any of them,
pursuant to SECTION 2.2 or a deemed request as provided in this SECTION 4.5. The
Borrowers hereby irrevocably authorize the Agent to charge the Loan Account for
the purpose of paying principal, interest, reimbursement obligations in
connection with Letters of Credit and Credit Support, fees, premiums, and other
sums payable hereunder, including, without limitation, reimbursing
LOAN AND SECURITY AGREEMENT - PAGE 55
expenses pursuant to SECTION 15.7, and agree that all such amounts charged shall
constitute Revolving Loans (including Non-Ratable Loans and Agent Advances) and
that all such Revolving Loans so made shall be deemed to have been requested
pursuant to SECTION 2.2.
Section 4.6 APPORTIONMENT, APPLICATION, AND REVERSAL OF PAYMENTS.
Except as otherwise expressly provided by this Agreement, aggregate principal
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Revolving Loans to which such payments
relate held by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be remitted to the
Agent and all such payments not relating to principal or interest of specific
Revolving Loans, or not constituting payment of specific fees, and all proceeds
of any Borrower's Accounts or any other Collateral received by the Agent, shall
be applied, ratably, subject to the provisions of this Agreement, FIRST, to pay
any fees, indemnities, or expense reimbursements, then due to the Agent from the
Borrowers; SECOND, to pay any fees or expense reimbursements then due to the
Lenders from the Borrowers; THIRD, to pay interest due in respect of the
Revolving Loans; FOURTH, to pay or prepay principal of the Non-Ratable Loans and
the Agent Advances; FIFTH, to pay or prepay principal of the Revolving Loans
(other than the Non-Ratable Loans and the Agent Advances), unpaid reimbursement
obligations in respect of Letters of Credit and Credit Support, and any amounts
relating to Bank Products; and SIXTH, to the payment of any other Obligation due
to the Agent or any Lender by the Borrowers. Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by a Borrower, or
unless an Event of Default is in existence, neither the Agent nor any Lender
shall apply any payment which it receives to any LIBOR Rate Revolving Loan
except (a) on the expiration date of the Interest Period applicable to any such
LIBOR Rate Revolving Loan, or (b) in the event, and only to the extent, that
there are no outstanding Base Rate Revolving Loans. The Agent shall promptly
distribute to each Lender, pursuant to the applicable wire transfer instructions
received from each Lender in writing, such funds as it may be entitled to
receive, subject to a Settlement delay as provided for in SECTION 2.2(j). The
Agent and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the
Obligations.
Section 4.7 INDEMNITY FOR RETURNED PAYMENTS. If after receipt of any
payment which is applied to the payment of all or any part of the Obligations,
the Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible set-off, or a diversion of trust funds, or for
any other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Agent or such Lender
and the Borrowers shall be liable to pay to the Agent and the Lenders, and each
Borrower hereby indemnifies the Agent and the Lenders and holds the Agent and
the Lenders harmless for the amount of such payment or proceeds surrendered. The
provisions of this SECTION 4.7 shall be and remain effective notwithstanding any
contrary action which may have been taken by the Agent or any Lender in reliance
upon such payment or application of proceeds, and any such contrary action so
taken shall be without prejudice to the Agent's and the Lenders' rights under
this Agreement and shall be deemed to have been conditioned upon such payment or
application of proceeds having become final and irrevocable. The provisions of
this SECTION 4.7 shall survive the termination of this Agreement.
LOAN AND SECURITY AGREEMENT - PAGE 56
Section 4.8 THE AGENT'S AND THE LENDERS' BOOKS AND RECORDS; MONTHLY
STATEMENTS. The Borrowers agree that the Agent's and each Lender's books and
records showing the Obligations and the transactions pursuant to this Agreement
and the other Loan Documents shall be admissible in any action or proceeding
arising therefrom, and shall constitute presumptive proof thereof, irrespective
of whether any Obligation is also evidenced by a promissory note or other
instrument. The Agent will provide to the Borrowers a monthly statement of
Revolving Loans, payments, and other transactions pursuant to this Agreement.
Such statement shall be deemed correct, accurate, and binding on the Borrowers
and an account stated (except for reversals and reapplications of payments made
as provided in SECTION 4.6 and corrections of errors discovered by the Agent),
unless a Borrower notifies the Agent in writing to the contrary within thirty
(30) days after such statement is rendered. In the event a timely written notice
of objections is given by a Borrower, only the items to which exception is
expressly made will be considered to be disputed.
ARTICLE 5
TAXES, YIELD PROTECTION, AND ILLEGALITY
Section 5.1 TAXES.
(a) Any and all payments by or on behalf of the Borrowers, or
any of them, to the Agent or any Lender under this Agreement and any other
Loan Document shall be made free and clear of, and without deduction or
withholding for any Taxes. In addition, the Borrowers shall pay all Other
Taxes.
(b) The Borrowers agree to indemnify and hold harmless the Agent
and each Lender for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by the Agent or any Lender and any liability (including
penalties, interest, additions to tax, and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification shall be
made within thirty (30) days after the date the Agent or any Lender makes
written demand therefor.
(c) If the Borrowers shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to the Agent or any Lender, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings (including,
without limitation, deductions and withholdings applicable to
additional sums payable under this Section) the Agent or such Lender,
as the case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made;
(ii) the Borrowers shall make such deductions and
withholdings;
LOAN AND SECURITY AGREEMENT - PAGE 57
(iii) the Borrowers shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with any Requirement of Law; and
(iv) the Borrowers shall also pay to the Agent, for the
account of each Lender, or each Lender at the time interest is paid,
all additional amounts which the respective Lender specifies as
necessary to preserve the after-tax yield such Lender would have
received if such Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after the date of any payment by the
Borrowers of Taxes or Other Taxes, the Borrowers shall furnish the Agent
the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Agent.
(e) If the Borrowers are required to pay additional amounts to
the Agent or any Lender pursuant to SECTION 5.1(c), then the applicable
Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by the Borrowers which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
Section 5.2 ILLEGALITY.
(a) If any Lender determines that the introduction after the
Consummation Date of any Requirement of Law, or any change after the
Consummation Date in any Requirement of Law, or after the Consummation Date
any change in the interpretation or administration of any Requirement of
Law, has made it unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for such Lender or its
applicable lending office to make LIBOR Rate Revolving Loans, then, on
notice thereof by such Lender to the Borrowers through the Agent, any
obligation of such Lender to make LIBOR Rate Revolving Loans shall be
suspended until such Lender notifies the Agent and the Borrowers that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Revolving Loan, the Borrowers shall, upon receipt of notice of
such fact and demand from such Lender (with a copy to the Agent), prepay in
full such LIBOR Rate Revolving Loans of such Lender then outstanding,
together with accrued and unpaid interest thereon and amounts required
under SECTION 5.4, either on the last day of the Interest Period thereof,
if such Lender may lawfully continue to maintain such LIBOR Rate Revolving
Loans to such day, or immediately, if such Lender may not lawfully continue
to maintain such LIBOR Rate Revolving Loans. If the Borrowers are required
to so prepay any LIBOR Rate Revolving Loans, then concurrently with such
prepayment, the Borrowers shall borrow from the affected Lender, in the
amount of such prepayment, a Base Rate Revolving Loan.
Section 5.3 INCREASED COSTS AND REDUCTION OF RETURN.
LOAN AND SECURITY AGREEMENT - PAGE 58
(a) If any Lender determines that due to either (i) the
introduction after the Consummation Date of or any change after the
Consummation Date in the interpretation of any law or regulation or (ii)
the compliance by that Lender with any new guideline or request after the
Consummation Date from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in
the cost to such Lender of agreeing to make or making, funding, or
maintaining any LIBOR Rate Revolving Loans, then the Borrowers shall be
liable for, and shall from time to time, upon demand (with a copy of such
demand to be sent to the Agent), pay to the Agent, for the account of such
Lender, additional amounts as are sufficient to compensate such Lender for
such increased costs.
(b) If any Lender shall have determined that (i) the
introduction after the Consummation Date of any Capital Adequacy
Regulation, (ii) any change after the Consummation Date in any Capital
Adequacy Regulation, (iii) any change after the Consummation Date in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Lender
or any corporation or other entity controlling such Lender with any new
Capital Adequacy Regulation after the Consummation Date, affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any corporation or other entity controlling such Lender and
(taking into consideration such Lender's or such corporation's or other
entity's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitments, loans, credits, or
obligations under this Agreement, then, upon demand of such Lender to the
Borrowers through the Agent, the Borrowers shall pay to such Lender, from
time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender for such increase.
Section 5.4 FUNDING LOSSES. The Borrowers shall reimburse each
Lender and hold each Lender harmless from any loss or expense which such Lender
may sustain or incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis any
payment of principal of any LIBOR Rate Revolving Loan;
(b) the failure of the Borrowers to borrow, continue, or convert
a Revolving Loan after any Borrower has given (or is deemed to have given)
a Notice of Borrowing or a Notice of Conversion/Continuation (except as
permitted by SECTION 5.5);
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Revolving Loan on a day that is not
the last day of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by such Lender to
maintain its LIBOR Rate Revolving Loans or from fees payable to terminate the
deposits from which such funds were obtained. The
LOAN AND SECURITY AGREEMENT - PAGE 59
Borrowers shall also pay any customary administrative fees charged by any Lender
in connection with the foregoing.
Section 5.5 INABILITY TO DETERMINE RATES. If the Agent determines
that for any reason adequate and reasonable means do not exist for determining
the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Revolving Loan, or that the LIBOR Rate for any requested Interest
Period with respect to a proposed LIBOR Rate Revolving Loan does not adequately
and fairly reflect the cost to the Lenders of funding such Revolving Loan, the
Agent will promptly so notify the Borrowers and each Lender. Thereafter, the
obligation of the Lenders to make or maintain LIBOR Rate Revolving Loans
hereunder shall be suspended until the Agent revokes such notice in writing.
Upon receipt of a notice pursuant to the first sentence of this Section, the
Borrowers may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by any of them. If the Borrowers do not
revoke any such Notice of Borrowing or Notice of Conversion/Continuation, the
Lenders shall make, convert, or continue the Revolving Loans, as proposed by the
Borrowers, in the amount specified in the applicable Notice of Borrowing or
Notice of Conversion/Continuation submitted by the Borrowers, but such Revolving
Loans shall be made, converted, or continued as Base Rate Revolving Loans
instead of LIBOR Rate Revolving Loans.
Section 5.6 CERTIFICATES OF LENDERS. Any Lender claiming
reimbursement or compensation under this ARTICLE 5 shall deliver to the
Borrowers (with a copy to the Agent) a certificate setting forth in reasonable
detail the amount payable to such Lender hereunder and such certificate shall be
conclusive and binding on the Borrowers in the absence of manifest error.
Section 5.7 SURVIVAL. The agreements and obligations of the
orrowers in this ARTICLE 5 shall survive the payment of all other Obligations.
Section 5.8 CLAIMS UNDER SECTION 5.1 AND SECTION 5.3. Each Lender
shall notify the Borrowers and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender to payment of
any amount under SECTION 5.1 or SECTION 5.3 and will designate a different
lending office if such designation will avoid the need for, or reduce the amount
of, such payment and will not, in the judgment of such Lender be otherwise
disadvantageous to it.
Section 5.9 REPLACEMENT OF AFFECTED LENDER. Within thirty (30) days
after receipt by the Borrowers of written notice and demand from any Lender for
any payment under the terms of SECTION 5.1 or SECTION 5.3 then, subject to this
SECTION 5.9, the Borrowers may, at their option, notify the Agent and such
Lender (the "AFFECTED LENDER") of their intention to obtain, at the Borrowers'
sole expense, a replacement Lender ("REPLACEMENT LENDER") to purchase the
Affected Lender's Loans and its obligations under the Loan Documents. Subject to
this SECTION 5.9, the Borrowers shall, within thirty (30) days following the
delivery of such notice from the Borrowers, cause the Replacement Lender to
purchase (and the Affected Lender hereby agrees to sell and convey to such
Replacement Lender) the Loans and other obligations of the Affected Lender and
assume the Affected Lender's Commitment and obligations hereunder in accordance
with the terms of an Assignment and Acceptance for cash in an aggregate amount
equal to the aggregate unpaid principal of the Loans and other Obligations held
by such Affected Lender, all
LOAN AND SECURITY AGREEMENT - PAGE 60
unpaid interest and fees accrued thereon or with respect thereto, and all other
Obligations owed to such Affected Lender, including amounts owed under SECTION
5.1 or SECTION 5.3 (but excluding any amount pursuant to SECTION 4.2).
Notwithstanding the foregoing, (a) the Borrowers shall continue to be obligated
to pay to the Affected Lender in full all amounts then demanded and due under
SECTION 5.1 or SECTION 5.3 in accordance with the terms of this Agreement, (b)
neither the Agent nor any Lender shall have any obligation to find a Replacement
Lender, (c) the Replacement Lender must be acceptable to the Agent in its
reasonable discretion, and (d) the Bank may not be replaced under this SECTION
5.9 without its consent. If the Borrowers elect to replace any Affected Lender,
the Borrowers must replace all Affected Lenders as set forth in this Section,
each such replacement to occur within a reasonable period of time not to exceed
sixty (60) days from the date such Affected Lender requested any payment under
SECTION 5.1 or SECTION 5.3.
ARTICLE 6
COLLATERAL
Section 6.1 GRANT OF SECURITY INTEREST.
(a) As security for the Obligations (excluding Existing
Obligations in the case of property owned by a Newly Obligated Party),
subject to the proviso in SECTION 6.1(b) below, each Borrower hereby
collaterally assigns and grants to the Agent, for the benefit of the Agent
and the Lenders, a continuing security interest in, lien on, collateral
assignment of, and right of set-off against, all of the following property
and assets of such Borrower, whether now owned or existing or hereafter
acquired or arising, regardless of where located:
(i) all Accounts (including any credit enhancement
therefor) and Intercompany Obligations;
(ii) all Chattel Paper;
(iii) all Commercial Tort Claims;
(iv) all contract rights, leases, letters of credit,
letter-of-credit rights, instruments, promissory notes, documents, and
documents of title, in each case, other than any Excluded Assets not
in the possession of, or under the control of, the Agent, any Lender,
or any Affiliate of the Agent;
(v) all Financial Assets;
(vi) all General Intangibles;
(vii) all Investment Property;
(viii) all Inventory;
LOAN AND SECURITY AGREEMENT - PAGE 61
(ix) all money, cash, cash equivalents, securities, and
other property of any kind of such Borrower, in each case, other than
any Excluded Assets, not in the possession of, or under the control
of, the Agent, any Lender, or any Affiliate of the Agent;
(x) all of such Borrower's deposit accounts, credits, and
balances with and other claims against the Agent, any Lender, or any
Affiliate of the Agent, or any other financial institution with which
such Borrower maintains deposits, including any Payment Accounts, in
each case, other than (i) any such amounts held as security for any
IDRB Letter of Credit by any financial institution other than the
Agent, any Lender, or any Affiliate of the Agent, and (ii) any
Excluded Assets comprised of proceeds of Real Estate, Equipment or any
other Excluded Asset as a balance in any deposit account(s) maintained
with a Person who is not the Agent, any Lender, or any Affiliate of
the Agent;
(xi) all books, records, and other property related to or
referring to any of the foregoing, including books, records, account
ledgers, data processing records, computer software and other
property, and General Intangibles at any time evidencing or relating
to any of the foregoing, in each case, other than any Excluded Assets;
(xii) all supporting obligations in respect of any
Collateral; and
(xiii) all accessions to, substitutions for, and
replacements, products, and proceeds of any of the foregoing,
including, but not limited to, proceeds of any insurance policies,
claims against third parties, and condemnation or requisition payments
with respect to all or any of the foregoing, in each case, other than
any Excluded Assets.
All of the foregoing, and all other property of the Borrower's in which the
Agent or any Lender may at any time be granted a Lien to secure the
Obligations, is herein collectively referred to as the "COLLATERAL."
Notwithstanding the foregoing, Collateral shall not include, and the lien
granted under this Section 6.1 shall not extend to, Excluded Assets except
to the extent proceeds of Real Estate, Equipment or any other Excluded
Asset are in the possession of, delivered to, or existing as a balance in
any deposit or collection account maintained with the Agent, any Lender, or
any Affiliate of the Agent.
(b) The Obligations (excluding Existing Obligations in the case
of property owned by a Newly Obligated Party) shall be secured by all of
the Collateral; provided that notwithstanding the foregoing or anything in
this Agreement to the contrary, IDRB Letters of Credit shall not be secured
by any General Intangibles or Investment Property in the form of Subsidiary
stock or other securities, and the Agent and the Lenders shall have no
right hereunder to foreclose upon any such General Intangibles or
Investment Property or otherwise exercise any remedies with respect thereto
with respect to any Obligations arising from or in connection with IDRB
Letters of Credit. Each Borrower acknowledges and expressly agrees with the
Agent and each Lender that the grant by such Borrower of the Agent's Lien
in the Collateral of such Borrower as security for the
LOAN AND SECURITY AGREEMENT - PAGE 62
Obligations of the other Borrowers is required solely as a condition to,
and is given solely as inducement for and in consideration of, credit or
accommodations extended or to be extended under the Loan Documents to any
or all of the other Borrowers and is not required or given as a condition
of extensions of credit to such Borrower.
Section 6.2 PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) Each Borrower shall, at its expense, perform all steps
requested by the Agent at any time to perfect, maintain, protect, and
enforce the Agent's Liens, including: (i) executing, delivering, and/or
filing and recording of the Copyright, Patent, and Trademark Agreements,
and executing and filing financing or continuation statements, and
amendments thereof, in form and substance satisfactory to the Agent; (ii)
delivering to the Agent the originals of all instruments, documents, and
Chattel Paper, and all other Collateral of which the Agent determines it
should have physical possession in order to perfect and protect the Agent's
security interest therein, duly pledged, endorsed, or assigned to the Agent
without restriction; (iii) delivering to the Agent (A) warehouse receipts
covering any portion of the Collateral located in warehouses and for which
warehouse receipts are issued and (B) if requested by the Agent,
certificates of title reflecting the Agent's Liens covering any portion of
the Collateral for which certificates of title have been issued; (iv) when
an Event of Default exists, transferring Inventory to warehouses or other
locations designated by the Agent; (v) delivering to the Agent all letters
of credit constituting Collateral on which such Borrower is named
beneficiary; and (vi) taking such other steps as are reasonably deemed
necessary or desirable by the Agent to maintain and protect the Agent's
Liens. To the extent permitted by any Requirement of Law, the Agent may
file, without any Borrower's signature, one or more financing statements
disclosing the Agent's Liens. Each Borrower agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement executed and delivered by such Borrower is sufficient
as a financing statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee, or any of such Borrower's agents or
processors, then such Borrower shall notify the Agent thereof and shall, at
the request of the Agent, notify such Person of the Agent's security
interest in such Collateral and instruct such Person to hold all such
Collateral for the Agent's account subject to the Agent's instructions. If
at any time any Collateral is located at any operating facility of a
Borrower which is not owned by such Borrower, such Borrower shall use
commercially reasonable efforts to obtain written landlord lien waivers or
subordinations, in form and substance reasonably satisfactory to the Agent,
of all present and future Liens to which the owner or lessor of such
premises may be entitled to assert against the Collateral; PROVIDED that in
the event any Borrower is unable to obtain any such written waiver or
subordination, the Agent may, in its discretion establish a reserve with
respect to any such Collateral in an amount not to exceed the amount
permitted under clause (b) or (i) of the definition of Eligible Inventory.
(c) From time to time, each Borrower shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to
the Agent, for the benefit of the Agent and the Lenders, the Collateral
with respect to such Borrower, but the failure to do
LOAN AND SECURITY AGREEMENT - PAGE 63
so shall not affect or limit any security interest or any other rights of
the Agent or any Lender in and to the Collateral with respect to such
Borrower. So long as this Agreement is in effect and until all Obligations
have been fully satisfied, the Agent's Liens shall continue in full force
and effect in all Collateral (whether or not deemed eligible for the
purpose of calculating the Available Credit or the Availability or as the
basis for any advance, loan, extension of credit, or other financial
accommodation).
(d) To the extent any Borrower is the owner of or becomes the
issuer of any Investment Property that is Collateral (each such Person
which issues any such Investment Property being referred to herein as an
"ISSUER"), each such Borrower which is an Issuer agrees, and each Borrower
which is the owner of any such Investment Property agrees to cause any the
Issuer thereof to agree, as follows with respect to such Investment
Property:
(i) All such Investment Property issued by such Issuer,
all warrants, and all non-cash dividends and other non-cash
distributions in respect thereof at any time registered in the name
of, or otherwise deliverable to, any Borrower, shall be delivered
directly to the Agent, for the account of such Borrower, at the
Agent's address for notices set forth in SECTION 15.8.
(ii) During the existence of any Event of Default, all
cash dividends, cash distributions, and other cash or cash equivalents
in respect of such Investment Property at any time payable or
deliverable to any Borrower shall be delivered directly to the Agent,
for the account of the Agent and the Lenders, at the Agent's address
for notices set forth in SECTION 15.8.
(iii) Such Issuer will not acknowledge any transfer or
encumbrance in respect of such Investment Property to or in favor of
any Person other than the Agent or a Person designated by the Agent in
writing.
(iv) With respect to any of such Investment Property at
any time constituting an uncertificated security as defined by the
UCC, such Issuer will comply with instructions originated by the Agent
without further consent by the registered owner thereof.
Section 6.3 LOCATION OF COLLATERAL. Each Borrower represents and
warrants to the Agent and the Lenders that: (a) SCHEDULE 6.3 is a correct and
complete list of such Borrower's chief executive office, jurisdiction of
organization, the location of its books and records, the locations of the
Collateral (other than Inventory in transit, rolling stock, and Collateral in
the Agent's possession), and the locations of all of its other places of
business; and (b) SCHEDULE 6.3 correctly identifies any of such facilities and
locations that are not owned by such Borrower and sets forth the names of the
owners and lessors or sublessors of such facilities and locations. Each Borrower
covenants and agrees that it will not (x) maintain any Collateral (other than
Inventory in transit, rolling stock, and Collateral in the Agent's possession)
at any location other than those locations listed for such Borrower on SCHEDULE
6.3, (y) otherwise change or add to any of such locations, or (z) change the
location of its chief executive office and jurisdiction of organization from the
location identified in SCHEDULE 6.3, unless it gives the Agent at least thirty
(30) days
LOAN AND SECURITY AGREEMENT - PAGE 64
prior written notice thereof and executes any and all financing statements and
other documents that the Agent reasonably requests in connection therewith. In
the event any Borrower requests to change or add any location of Collateral and
has provided the Agent with all financing statements and other documents
requested by the Agent in connection therewith, the Borrower shall prepare and
deliver to the Agent a revised SCHEDULE 6.3 which shall automatically be adopted
as SCHEDULE 6.3 for all purposes. Without limiting the foregoing, each Borrower
represents that all of its Inventory (other than Inventory in transit) is, and
covenants that all of its Inventory will be, located either (A) on premises
owned by such Borrower, or (B) on premises leased by such Borrower and included
on SCHEDULE 6.3.
Section 6.4 TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each
Borrower represents and warrants to the Agent and the Lenders and agrees with
the Agent and the Lenders that: (a) all of its Collateral is and will continue
to be owned by such Borrower free and clear of all Liens whatsoever, except for
Permitted Liens; (b) the Agent's Liens in the Collateral will not be subject to
any prior Lien except for those Liens identified, and to the limited extent
provided, in CLAUSES (d), (e), and (h) of the definition of Permitted Liens; (c)
such Borrower will use, store, and maintain the Collateral with all reasonable
care and will use such Collateral for lawful purposes only; and (d) such
Borrower will not, without the Agent's prior written approval, sell or dispose
of, or permit the sale or disposition of, any of the Collateral except for sales
of Inventory in the ordinary course of business.
Section 6.5 APPRAISALS. Whenever an Event of Default exists, and at such
other times not more frequently than once per year as the Agent requests, the
Borrowers shall, at their expense and upon the Agent's request, provide the
Agent with appraisals or updates thereof of any or all of the Collateral from
credentialed appraisers, and prepared in a form and on a basis, reasonably
satisfactory to the Agent, such appraisals and updates to include, without
limitation, information required by Requirements of Law and by the internal
policies of the Lenders.
Section 6.6 ACCESS AND EXAMINATION; CONFIDENTIALITY.
(a) The Agent, accompanied by any Lender which so elects, may at
all reasonable times during regular business hours, and at any time when a
Default or Event of Default exists, have access to, examine, audit, make
extracts from or copies of, and inspect any or all of the Borrowers'
records, files, and books of account and the Collateral, and discuss the
Borrowers' affairs with the Borrowers' officers and senior management. The
Borrowers will deliver to the Agent any instrument necessary for the Agent
to obtain records from any service bureau maintaining records for the
Borrowers. The Agent may, and at the direction of the Majority Lenders
shall, at any time when a Default or Event of Default exists, and at the
Borrowers' expense, make copies of all of the Borrowers' books and records,
or require the Borrowers to deliver such copies to the Agent. The Agent
may, without expense to the Agent, use such of the Borrowers' respective
personnel, supplies, and premises as may be reasonably necessary for
maintaining or enforcing the Agent's Liens. The Agent shall have the right,
at any time, in the Agent's name or in the name of a nominee of the Agent,
to verify the validity, amount, or any other matter relating to the
Accounts, Inventory, or other Collateral, by mail, telephone, or otherwise;
PROVIDED, however, in the absence of an Event of Default,
LOAN AND SECURITY AGREEMENT - PAGE 65
the Agent agrees that it will not attempt to verify more than ten (10)
Accounts each month.
(b) Each of the Borrowers hereby consents that the Agent and
each Lender may issue and disseminate to the public general information
describing the credit accommodation entered into pursuant to this
Agreement, including the names and addresses of the Borrowers and a general
description of the Borrowers' business and may use the Borrowers' names in
advertising and other promotional material.
(c) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by any Borrower and
provided to the Agent or such Lender by or on behalf of such Borrower,
under this Agreement or any other Loan Document, except to the extent that
such information (i) was or becomes generally available to the public other
than as a result of disclosure by the Agent or such Lender, or (ii) was or
becomes available on a nonconfidential basis from a source other than the
Borrowers; PROVIDED that such source is not bound by a confidentiality
agreement with the Borrowers known to the Agent or such Lender.
Notwithstanding the foregoing, the Agent and any Lender may disclose any
such information (1) at the request or pursuant to any requirement of any
Governmental Authority to which the Agent or such Lender is subject or in
connection with an examination of the Agent or such Lender by any such
Governmental Authority, (2) pursuant to subpoena or other court process,
(3) when required to do so in accordance with the provisions of any
applicable Requirement of Law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including, but not limited
to, any bankruptcy proceeding) to which the Agent, any Lender, or their
respective Affiliates may be party, (5) to the extent required in
connection with the exercise of any remedy or enforcement of any rights
hereunder or under any other Loan Document, (6) to the Agent's or such
Lender's independent auditors, accountants, attorneys, and other
professional advisors, (7) to any prospective Participant or Assignee,
actual or potential, PROVIDED that such prospective Participant or Assignee
agrees to keep such information confidential to the same extent required of
the Agent and the Lenders hereunder, (8) as expressly permitted under the
terms of any other document or agreement regarding confidentiality to which
any Borrower is a party or is deemed a party with the Agent or such Lender,
and (9) to its Affiliates.
Section 6.7 COLLATERAL REPORTING. The Parent shall provide, or cause to
be provided, to the Agent (a) on each Business Day, a Borrowing Base Certificate
for the immediately preceding Business Day, and (b) on or before the twentieth
(20th) day of each Fiscal Period (unless specifically indicated otherwise), or
more frequently if requested by the Agent, for the preceding Fiscal Period end,
in form reasonably satisfactory to the Agent the information identified in
SCHEDULE 6.7. If any of the Borrowers' records or reports of the Collateral are
prepared by an accounting service or other agent, each Borrower hereby
authorizes such service or agent to deliver such records, reports, and related
documents to the Agent, for distribution to the Lenders. Notwithstanding the
foregoing, during such periods when the Borrowers maintain Availability of at
least $30,000,000, the Borrowers may elect to provide to the Agent a Borrowing
Base Certificate on each Monday for the immediately preceding week. For purposes
of this
LOAN AND SECURITY AGREEMENT - PAGE 66
SECTION 6.7, the Borrowers may count 100% of the total Borrowing Base in
computing Availability, without applying the Maximum Revolver Amount limit.
Section 6.8 ACCOUNTS. Each Borrower covenants, agrees, represents, and
warrants, as to itself, as follows:
(a) With respect to such Borrower's Accounts: (i) each existing
Account represents, and each future Account will represent, a BONA FIDE
sale or lease and delivery of goods by such Borrower, or rendition of
services by such Borrower, in the ordinary course of such Borrower's
business; (ii) each existing Account is, and each future Account will be,
for a liquidated amount payable by the Account Debtor thereon on the terms
then in effect or in the schedule thereof delivered to the Agent, without
any offset, deduction, defense, or counterclaim except those known to such
Borrower and disclosed to the Agent and the Lenders as required by this
Agreement; (iii) no payment will be received with respect to any Account,
and no credit, discount, or extension, or agreement therefor will be
granted on any Account except as reported to the Agent and the Lenders in
accordance with this Agreement; (iv) each copy of an invoice delivered to
the Agent by such Borrower will be a genuine copy of the original invoice
sent to the Account Debtor named therein; and (v) all goods described in
any invoice representing a sale of goods will have been delivered to the
Account Debtor and all services of such Borrower described in each invoice
will have been performed.
(b) Such Borrower shall not re-date any invoice or sale or make
sales on extended dating beyond that customary in such Borrower's business
or extend or modify any Account outside the ordinary course of business. If
such Borrower becomes aware of any matter adversely affecting the
collectibility of any Account or the Account Debtor therefor involving an
amount greater than $1,000,000, including information regarding the Account
Debtor's creditworthiness, such Borrower will promptly so advise the Agent.
(c) Such Borrower shall not, without the Agent's prior written
consent, accept any note or other instrument (except a check or other
instrument for the immediate payment of money) with respect to any Account
other than Accounts which (i) do not exceed $1,000,000 individually and
(ii) at the time of accepting such note or other instrument are not less
than ninety (90) days past due from the date of the original invoice
therefor. If the Agent consents to the acceptance of any such instrument,
it shall be considered as evidence of the Account and not payment thereof
and such Borrower will promptly deliver such instrument to the Agent,
endorsed by such Borrower to the Agent in a manner satisfactory in form and
substance to the Agent. Regardless of the form of presentment, demand, or
notice of protest with respect thereto, such Borrower shall remain liable
thereon until such instrument is paid in full.
(d) Such Borrower shall notify the Agent promptly of all
offsets, deductions, defenses, or counterclaims in excess of $1,000,000
with any Account Debtor, and agrees to settle, contest, or adjust such
dispute or claim at no expense to the Agent or any Lender. No discount,
credit, or allowance shall be granted to any such Account Debtor without
the Agent's prior written consent, except for discounts, credits, and
allowances made or given in the ordinary course of such Borrower's business
when no Event of
LOAN AND SECURITY AGREEMENT - PAGE 67
Default exists hereunder. The Borrower shall promptly send the Agent a copy
of each credit memorandum in excess of $1,000,000. The Agent may at all
times when an Event of Default exists, settle or adjust disputes and claims
directly with Account Debtors of any Borrower for amounts and upon terms
which the Agent or the Majority Lenders, as applicable, shall consider
advisable and, in all cases, the Agent will credit the Loan Account with
the net amounts received by the Agent in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to a Borrower
when no Event of Default exists, then such Borrower shall promptly
determine the reason for such return and shall issue a credit memorandum to
the Account Debtor in the appropriate amount. The Borrowers shall
immediately report to the Agent any return involving an amount in excess of
$1,000,000. Each such report shall indicate the reasons for the returns and
the locations and condition of the returned Inventory. In the event any
Account Debtor returns Inventory to a Borrower when an Event of Default
exists, such Borrower, upon the request of the Agent, shall: (i) hold the
returned Inventory in trust for the Agent; (ii) segregate all returned
Inventory from all of its other property; (iii) dispose of the returned
Inventory solely according to the Agent's written instructions; and (iv)
not issue any credits or allowances with respect thereto without the
Agent's prior written consent. All returned Inventory of any Borrower shall
be subject to the Agent's Liens thereon. Whenever any Inventory is
returned, the related Account shall be deemed ineligible to the extent of
the amount owing by the Account Debtor with respect to such returned
Inventory.
Section 6.9 COLLECTION OF ACCOUNTS; PAYMENTS.
(a) Effective on the Closing Date the Borrowers shall establish
a Payment Account (the "PRIMARY PAYMENT ACCOUNT") with the Agent into which
all Account collections will be deposited, and the Borrowers hereby agree
that the Agent will have exclusive control. The Borrowers shall not be
entitled to present items drawn on or otherwise to withdraw or direct the
dispositions of funds from the Primary Payment Account or close the Primary
Payment Account until all obligations under this Agreement are paid and
performed in full. Notwithstanding any other agreements the Borrowers may
have with any Lender or the Agent, Agent shall be entitled, for purposes of
this Agreement, at any time to give instructions as to the withdrawal or
disposition of funds from time to time credited to any deposit account with
the Agent, any Payment Account, or the Primary Payment Account, or as to
any other matters relating to any of the forgoing without further consent
of the Borrowers. The Agent's power under this Agreement to give
instructions as to the withdrawal or disposition of any funds from time to
time credited to the Primary Payment Account, any other Payment Account or
deposit account with the Agent or as to any other matters relating to the
foregoing includes, without limitation, the power to give stop payment
orders for any items being presented to such accounts for payment.
(b) No later than ninety (90) days from the Closing Date, the
Borrowers shall establish a lock-box service for collections of Accounts at
Clearing Banks acceptable to the Agent and subject to Blocked Account
Agreements and other documentation acceptable to the Agent. The Borrowers
shall instruct all Account Debtors with respect
LOAN AND SECURITY AGREEMENT - PAGE 68
to Collateral to make all payments directly to the address established for
each such lock-box service. If, notwithstanding such instructions, any
Borrower receives any proceeds of Accounts, it shall receive such payments
as the Agent's trustee, and shall immediately deliver such payments to the
Agent in their original form duly endorsed in blank or deposit them into a
Payment Account, as the Agent may direct. All collections received in any
lock-box or Payment Account or directly by any Borrower or the Agent, and
all funds in any Payment Account or other account to which such collections
are deposited shall be subject to the Agent's sole control and withdrawals
by any Borrower shall not be permitted. The Agent or the Agent's designee
may, at any time after the occurrence of an Event of Default, notify
Account Debtors that the Accounts have been assigned to the Agent and of
the Agent's security interest therein, and may collect them directly and
charge the collection costs and expenses to the Loan Account as a Revolving
Loan. So long as an Event of Default exists, the Borrowers at the Agent's
request, shall execute and deliver to the Agent such documents as the Agent
shall require to grant the Agent access to any post office box in which
collections of Accounts are received.
(c) If sales of Inventory are made or services are rendered by
any Borrower for cash, such Borrower shall immediately deliver, or cause to
be delivered to the Agent or deposit into a Payment Account, the cash which
such Borrower receives.
(d) All payments received by the Agent in a bank account
designated by the Borrowers and the Agent will be the Agent's sole property
for its benefit and the benefit of the Lenders and will be credited to the
Loan Account (conditional upon final collection) on the same day received
(if received prior to 3:00 p.m. (New York, New York time); PROVIDED that
the Borrowers shall compensate the Bank for the cost of collection and
clearance of remittances applied to the Loan Account, including interest
for one (1) day, on all uncollected funds credited to the Loan Account as
provided by this SECTION 6.9(d).
(e) In the event all of the Obligations are repaid upon the
termination of this Agreement or upon acceleration of the Obligations,
other than through the Agent's receipt of payments on account of the
Accounts or proceeds of the other Collateral, such payment will be credited
(conditional upon final collection) to the Loan Account (i) on the date of
the Agent's receipt of such funds if such funds are collected funds or
other immediately available funds if received by 3:00 p.m. (New York, New
York time) or (ii) one (1) Business Day after the Agent's receipt of such
funds if such funds are uncollected funds.
Section 6.10 INVENTORY; PERPETUAL INVENTORY.
(a) Each Borrower represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that all of the Inventory
(other than returned or obsolete Inventory) owned by such Borrower is and
will be held for sale or lease, or to be furnished in connection with the
rendition of services, in the ordinary course of such Borrower's business,
and is and will be fit for such purposes. Each Borrower will keep its
Inventory (other than returned or obsolete Inventory) in good and
marketable condition, except for damaged or defective goods arising in the
ordinary course of such
LOAN AND SECURITY AGREEMENT - PAGE 69
Borrower's business. No Borrower will, without the prior written consent of
the Agent, acquire or maintain any Inventory in excess of $1,000,000 at any
time on consignment or approval unless such Inventory is disclosed to the
Agent pursuant to SECTION 6.7 and the applicable Borrower takes appropriate
steps to insure that all of such Inventory is excluded from any
determination of Eligible Inventory. Each Borrower agrees that all
Inventory produced in the United States will be produced in accordance with
the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. Each Borrower will conduct a physical
count of its Inventory at least once per Fiscal Year, and during the
existence of an Event of Default, at such other times as the Agent may
reasonably request. Each Borrower will maintain a perpetual Inventory
reporting system at all times. Without the Agent's written consent, no
Borrower will sell, through a single transaction or a series of related
transactions, Inventory on a xxxx-and-hold, guaranteed sale, sale and
return, sale on approval, consignment, or other repurchase or return basis
in excess of $1,000,000.
(b) In connection with all Inventory financed by letters of
credit, the Borrowers will, at the Agent's request, instruct all suppliers,
carriers, forwarders, customs brokers, warehouses or other Persons
receiving or holding cash, checks, Inventory, documents or instruments in
which the Agent holds a security interest to deliver them to the Agent
and/or subject to the Agent's order, and if they shall come into such
Borrower's possession, to deliver them, upon request, to the Agent in their
original form. The Borrowers shall also, at the Agent's request, designate
the Agent as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
Section 6.11 DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Borrower
represents and warrants to the Agent and the Lenders that (a) all documents,
instruments, and Chattel Paper of such Borrower describing, evidencing, or
constituting Collateral, and all signatures and endorsements thereon, are and
will be complete, valid, and genuine, and (b) all goods evidenced by such
documents, instruments, and Chattel Paper are and will be owned by such Borrower
free and clear of all Liens other than Permitted Liens. If any Borrower retains
possession of any Chattel Paper or instruments, at Agent's request, such Chattel
Paper and instruments shall be marked with the following legend: "This writing
and the obligations evidenced or served hereby are subject to the security
interest of Bank of America, N.A., as Agent, for the benefit of Agent and
certain Lenders."
Section 6.12 RIGHT TO CURE. The Agent may, in its discretion, and shall,
at the direction of the Majority Lenders, pay any amount or do any act required
of any Borrower hereunder or under any other Loan Document in order to preserve,
protect, maintain, or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which any Borrower fails to timely pay or do, including
payment of any judgment against any Borrower, any insurance premium, any
warehouse charge, any finishing or processing charge, any landlord's or bailee's
claim, and any other Lien upon or with respect to the Collateral. All payments
that the Agent makes under this SECTION 6.12 and all out-of-pocket costs and
expenses that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Loan Account as a Revolving Loan. Any payment
made or other action taken by the Agent under this SECTION 6.12 shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.
LOAN AND SECURITY AGREEMENT - PAGE 70
Section 6.13 POWER OF ATTORNEY. Each Borrower, as to itself, hereby
appoints the Agent and the Agent's designee as such Borrower's attorney, with
power: (a) to endorse such Borrower's name on any checks, notes, acceptances,
money orders, or other forms of payment or security that come into the Agent's
or any Lender's possession; (b) to sign such Borrower's name on any invoice,
xxxx of lading, warehouse receipt, or other document of title relating to any
Collateral, on drafts against customers, on assignments of Accounts, on notices
of assignment, financing statements, and other public records and to file any
such financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure; (c) so long as any
Event of Default exists, to notify the post office authorities to change the
address for delivery of such Borrower's mail to an address designated by the
Agent and to receive, open, and dispose of all mail addressed to such Borrower;
(d) to send requests for verification of Accounts to customers or Account
Debtors; provided, however, in the absence of an Event of Default, the Agent
agrees that it will not attempt to verify more than ten (10) Accounts each
month; (e) to clear Inventory through customs in such Borrower's name, the
Agent's name, or the name of the Agent's designee, and to sign and deliver to
customs officials powers of attorney in such Borrower's name for such purpose;
and (f) to do all things the Agent determines are necessary to carry out this
Agreement. Each Borrower ratifies and approves all acts of such attorney. None
of the Lenders, the Agent, nor their attorneys will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law other than any
such liability arising from any such Person's gross negligence or willful
misconduct. This power, being coupled with an interest, is irrevocable until
this Agreement has been terminated and all outstanding Obligations have been
fully satisfied.
Section 6.14 THE AGENT'S AND THE LENDERS' RIGHTS, DUTIES, AND
LIABILITIES.
(a) The Borrowers assume all responsibility and liability
arising from or relating to the use, sale, or other disposition of the
Collateral. The Obligations shall not be affected by any failure of the
Agent or any Lender to take any steps to perfect the Agent's Liens or to
collect or realize upon the Collateral, nor shall loss of or damage to the
Collateral release any Borrower from any of the Obligations. Following the
occurrence and during the continuation of an Event of Default, the Agent
may (but shall not be required to), and at the direction of the Required
Lenders shall, without notice to or consent from any Borrower xxx upon or
otherwise collect, extend the time for payment of, modify or amend the
terms of, compromise or settle for cash, credit, or otherwise upon any
terms, grant other indulgences, extensions, renewals, compositions, or
releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any
insurance applicable thereto, or any Person liable directly or indirectly
in connection with any of the foregoing, without discharging or otherwise
affecting the liability of any Borrower for the Obligations or under this
Agreement or any other agreement now or hereafter existing between the
Agent and/or any Lender and any Borrower.
(b) It is expressly agreed by the Borrowers that, anything
herein to the contrary notwithstanding, each of the Borrowers shall remain
liable under each of its contracts and each of its licenses to observe and
perform all the conditions and obligations to be observed and performed by
it thereunder. Neither the Agent nor any Lender shall have any obligation
or liability under any contract or license by reason of or
LOAN AND SECURITY AGREEMENT - PAGE 71
arising out of this Agreement or the granting herein of a Lien thereon or
the receipt by the Agent or any Lender of any payment relating to any
contract or license pursuant hereto. Neither the Agent nor any Lender shall
be required or obligated in any manner to perform or fulfill any of the
obligations of any Borrower under or pursuant to any contract or license,
or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any
performance by any party under any contract or license, or to present or
file any claims, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time or times.
Section 6.15 GUARANTIES; THIRD PARTY JOINDER. Subject to the provisions
of and pursuant to SECTION 15.20, promptly upon creation or acquisition of any
Subsidiary of a Borrower, such Borrower shall, to the extent required pursuant
to SECTION 9.20, cause such new Subsidiary to become a Borrower by executing and
delivering to the Agent such Loan Documents and other instruments, certificates,
and agreements as the Agent may request. Upon execution and delivery of such
Loan Documents and other instruments, certificates, and agreements, such newly
created or acquired Subsidiary shall automatically become a Borrower and
thereupon shall have all of the rights, benefits, duties, and obligations of a
Borrower under the Loan Documents.
Section 6.16 VOTING RIGHTS, DISTRIBUTIONS, ETC. IN RESPECT OF INVESTMENT
PROPERTY.
(a) So long as no Event of Default exists (i) each Borrower
shall be entitled to exercise any and all voting and other consensual
rights (including, without limitation, the right to give consents, waivers,
and notifications in respect of any securities) pertaining to its
Investment Property or any part thereof; PROVIDED, HOWEVER, that without
the prior written consent of the Agent and the Majority Lenders, no vote
shall be cast or consent, waiver, or ratification given or action taken
which would (A) be inconsistent with or violate any provision of this
Agreement or any other Loan Document or (B) amend, modify, or waive any
material term, provision, or condition of the certificate of incorporation,
bylaws, certificate of formation, or other charter document or other
agreement relating to, evidencing, providing for the issuance of, or
securing any such Investment Property, in any manner that would impair such
Investment Property, the transferability thereof, or the Agent's Liens
therein, and (ii) each Borrower shall be entitled to receive and retain any
and all dividends and interest paid in respect of any of such Investment
Property (unless otherwise required by this Agreement).
(b) During the existence of an Event of Default, (i) the Agent
may, without notice to any Borrower or any other Person obligated for
payment of all or any part of the Obligations, transfer or register in the
name of the Agent or any of its nominees, for the benefit of the Agent and
the Lenders, any or all of the Collateral consisting of Investment
Property, the proceeds thereof (in cash or otherwise), and all liens,
security, rights, remedies, and claims of any Borrower with respect thereto
(as used in this SECTION 6.16 collectively, the "PLEDGED COLLATERAL") held
by the Agent hereunder, and the Agent or its nominee may thereafter, after
delivery of notice to the applicable Borrower, exercise all voting and
corporate rights at any meeting of any corporation, partnership, or other
business entity issuing any of the Pledged Collateral and any and all
rights of conversion, exchange, subscription, or any other rights,
privileges, or options pertaining to any of the
LOAN AND SECURITY AGREEMENT - PAGE 72
Pledged Collateral as if it were the absolute owner thereof, including,
without limitation, the right to exchange at its discretion any and all of
the Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization, or other readjustment of any corporation, partnership, or
other business entity issuing any of such Pledged Collateral or upon the
exercise by any such issuer or the Agent of any right, privilege, or option
pertaining to any of the Pledged Collateral, and in connection therewith,
to deposit and deliver any and all of the Pledged Collateral with any
committee, depositary, transfer agent, registrar, or other designated
agency upon such terms and conditions as it may determine, all without
liability except to account for property actually received by it, but the
Agent shall have no duty to exercise any of the aforesaid rights,
privileges, or options, and the Agent shall not be responsible for any
failure to do so or delay in so doing, (ii) after the Agent's giving of the
notice specified in CLAUSE (i) of this SECTION 6.16(b), all rights of any
Borrower to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to CLAUSE (i) of SECTION 6.16(a)
and to receive the dividends, interest, and other distributions which it
would otherwise be authorized to receive and retain thereunder shall be
suspended until such Event of Default shall no longer exist, and all such
rights shall, until such Event of Default shall no longer exist, thereupon
become vested in the Agent which shall thereupon have the sole right to
exercise such voting and other consensual rights and to receive and hold as
Pledged Collateral such dividends, interest, and other distributions, (iii)
all dividends, interest, and other distributions which are received by any
Borrower contrary to the provisions of this SECTION 6.16(b) shall be
received in trust for the benefit of the Agent, shall be segregated from
other funds of such Borrower and shall be forthwith paid over to the Agent
as Collateral in the same form as so received (with any necessary
endorsement), and (iv) each Borrower shall execute and deliver (or cause to
be executed and delivered) to the Agent all such proxies and other
instruments as the Agent may reasonably request for the purpose of enabling
the Agent to exercise the voting and other rights which it is entitled to
exercise pursuant to this SECTION 6.16(b) and to receive the dividends,
interest, and other distributions which it is entitled to receive and
retain pursuant to this SECTION 6.16(b). The foregoing shall not in any way
limit the Agent's power and authority granted pursuant to SECTION 6.13.
Section 6.17 REVISED UCC ARTICLE 9. The Agent, the Lenders, and the
Borrowers hereby agree as follows:
(a) PERFECTION BY FILING. The Agent may, at any time and from
time to time, file financing statements, continuation statements, and
amendments thereto that describe the Collateral and which contain any other
information required pursuant to Article 9 of the UCC for the sufficiency
of filing office acceptance of any financing statement, continuation
statement, or amendment, and each Borrower agrees to furnish any such
information to the Agent promptly upon request. Any such financing
statement, continuation statement, or amendment may be signed by the Agent
on behalf of a Borrower and may be filed at any time in any jurisdiction
whether or not Revised Article 9 of the UCC is then in effect in that
jurisdiction. The Borrowers acknowledge that they are not authorized to
file any financing statement covering the Collateral or amendment or
termination statement with respect to any financing statement covering the
Collateral without the prior written consent of Agent and agree that they
will not do so
LOAN AND SECURITY AGREEMENT - PAGE 73
without the prior written consent of Agent, subject to the Borrowers'
rights under Section 9-509(d)(2) of Revised Article 9 of the UCC.
(b) OTHER PERFECTION, ETC. Each Borrower shall, at any time and
from time to time, take such steps as the Agent may reasonably request for
the Agent (i) to obtain an acknowledgment, in form and substance reasonably
satisfactory to the Agent, of any bailee having possession of any of the
Collateral, stating that the bailee holds such Collateral for the Agent,
(ii) to obtain "control" of any Investment Property, deposit accounts,
letter-of-credit rights, or Electronic Chattel Paper constituting
Collateral (as such terms are defined by Article 9 of the UCC with
corresponding provisions thereof defining what constitutes "control" for
such items of Collateral), with any agreements establishing control to be
in form and substance reasonably satisfactory to the Agent, and (iii)
otherwise to insure the continued perfection and priority of the Agent's
security interest in any of the Collateral and of the preservation of its
rights therein. If any Borrower shall at any time, acquire a Commercial
Tort Claim in excess of $1,000,000, such Borrower shall promptly notify the
Agent thereof in a writing, therein providing a reasonable description and
summary thereof, and upon delivery thereof to the Agent, such Borrower
shall be deemed to thereby grant to the Agent (and such Borrower hereby
grants to the Agent) a security interest and Lien in and to such Commercial
Tort Claim and all proceeds thereof, all upon the terms of and governed by
this Agreement.
(c) SAVINGS CLAUSE. Nothing contained in this SECTION 6.17 shall
be construed to narrow the scope of the Agent's Liens or the perfection or
priority thereof or to impair or otherwise limit any of the rights, powers,
privileges, or remedies of the Agent or any Lender under the Loan
Documents.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
Section 7.1 BOOKS AND RECORDS. The Borrowers shall maintain, at all
times, correct and complete books, records, and accounts in which complete,
correct, and timely entries are made of their respective transactions in
accordance with GAAP applied consistently with the audited Financial Statements
required to be delivered pursuant to SECTION 7.2(a). The Borrowers shall, by
means of appropriate entries, reflect in such accounts and in all Financial
Statements proper liabilities and reserves for all taxes and proper provision
for depreciation and amortization of property and bad debts, all in accordance
with GAAP. The Borrowers shall maintain at all times books and records
pertaining to the Collateral in such detail, form, and scope as the Agent shall
reasonably require, including, but not limited to, records of (a) all payments
received and all credits and extensions granted with respect to the Accounts,
(b) the return, rejection, repossession, stoppage in transit, loss, damage, or
destruction of any Inventory, and (c) all other dealings affecting the
Collateral.
Section 7.2 FINANCIAL INFORMATION. The Borrowers shall promptly furnish
to the Agent, all such information regarding each Borrower's financial and
business affairs as the Agent or any Lender (through the Agent) shall reasonably
request. Without limiting the foregoing, the Borrowers will furnish, or cause to
be furnished, to the Agent the following in sufficient copies
LOAN AND SECURITY AGREEMENT - PAGE 74
for distribution by the Agent to each Lender and in such detail as the Agent or
the Lenders shall request.
(a) The Borrowers will furnish, or cause to be furnished, as
soon as available, but in any event not later than ninety (90) days after
the close of each Fiscal Year, consolidated audited, and consolidating
(with respect to each business product group of the Parent) unaudited,
balance sheets, statements of income, cash flow, and stockholders' equity
for the Parent and its Subsidiaries for such Fiscal Year, the accompanying
notes thereto, and setting forth in comparative form figures for the
previous Fiscal Year, all in reasonable detail, fairly presenting the
financial position and the results of operations of the Parent and its
Subsidiaries as at the date thereof and for the Fiscal Year then ended, and
prepared in accordance with GAAP or, in the case of consolidating financial
statements, the Borrowers' standard internal practices. Such Financial
Statements shall be examined in accordance with generally accepted auditing
standards by and, in the case of such Financial Statements performed on a
consolidated basis, accompanied by a report thereon, unqualified in any
respect, of independent certified public accountants of national standing
selected by the Parent. Each Borrower hereby authorizes the Agent to
communicate directly with its certified public accountants and, by this
provision, authorizes those accountants to disclose to the Agent any and
all financial statements and other supporting financial documents and
schedules relating to such Borrower and to discuss directly with the Agent
such Borrower's finances and affairs.
(b) The Borrowers will furnish, or cause to be furnished, as
soon as available, but in any event not later than thirty (30) days after
the end of each Fiscal Period, other than any Fiscal Period which is a
Fiscal Quarter end and with respect to any such Fiscal Quarter end within
forty-five (45) days after the end of such Fiscal Quarter, a Compliance
Certificate, consolidated and consolidating (with respect to each business
product group of the Parent) unaudited balance sheets of the Parent and its
Subsidiaries as at the end of such Fiscal Period or Fiscal Quarter, as
applicable, and consolidated and consolidating (with respect to each
business product group of the Parent) unaudited statements of income and
cash flow for the Parent and its Subsidiaries for such Fiscal Period or
Fiscal Quarter, as applicable, and for the period from the beginning of the
Fiscal Year to the end of such Fiscal Period or Fiscal Quarter, as
applicable, all in reasonable detail, fairly presenting the financial
position and results of operations of the Parent and its Subsidiaries as at
the date thereof and for such periods, and prepared in accordance with GAAP
(other than presentation of footnotes and subject to normal year-end audit
adjustments) applied consistently with the audited Financial Statements
required to be delivered pursuant to SECTION 7.2(a) or, in the case of
consolidating financial statements, the Borrowers' standard internal
practices. The Parent shall certify by a certificate signed by its chief
financial officer or chief accounting officer that all such Financial
Statements have been prepared in accordance with GAAP or, in the case of
consolidating financial statements, the Borrowers' standard internal
practices and present fairly, subject to normal year-end adjustments, the
financial position of the Parent and its Subsidiaries as at the dates
thereof and its results of operations for the periods then ended.
LOAN AND SECURITY AGREEMENT - PAGE 75
(c) The Borrowers will furnish, or cause to be furnished, within
forty-five days (45) of the last day of each Fiscal Quarter, a certificate
of the chief financial officer or chief accounting officer of the Parent in
the form of EXHIBIT F (a "COMPLIANCE CERTIFICATE") (i) setting forth in
reasonable detail the calculations required to establish compliance with
the covenants set forth in SECTION 9.22 through SECTION 9.24 during the
period covered by such Financial Statements and as at the end thereof, (ii)
setting forth for the Fiscal Quarter and Fiscal Year to date period then
ended the aggregate amount of all dispositions of property covered under
SECTION 4.3 and the aggregate amount of the cost of any replacements of
such property, and (iii) stating that, except as explained in reasonable
detail in such certificate, (A) all of the representations and warranties
of the Borrowers contained in this Agreement and the other Loan Documents
are correct and complete in all material respects as at the date of such
certificate as if made at such time, except for those that speak as of a
particular date, (B) the Borrowers are, at the date of such certificate, in
compliance in all material respects with all of their respective covenants
and agreements in this Agreement and the other Loan Documents, and (C) no
Default or Event of Default then exists or existed during the period
covered by such Financial Statements. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant
has not been complied with, or that a Default or Event of Default existed
or exists, such certificate shall set forth what action the Borrowers have
taken or propose to take with respect thereto.
(d) The Borrowers will furnish, or cause to be furnished, no
sooner than sixty (60) days and not less than thirty (30) days prior to the
beginning of each Fiscal Year, and periodically thereafter during such
Fiscal Year as determined necessary by the Borrowers as an update thereto,
annual forecasts prepared by the Parent during such time period (to include
forecasted consolidated and consolidating (with respect to each business
product group of the Parent) balance sheets and statements of income and
cash flow) for the Parent and its Subsidiaries as at the end of and for
each Fiscal Period of such Fiscal Year.
(e) Upon the Agent's request, the Borrowers will furnish, or
cause to be furnished, promptly after filing with the PBGC and the IRS, a
copy of each annual report or other filing filed with respect to each Plan
of any Borrower.
(f) The Borrowers will furnish, or cause to be furnished,
promptly upon the filing thereof, copies of all reports, if any, to or
other documents filed by any Borrower with the Securities and Exchange
Commission under the Exchange Act, and all reports, notices, or statements
sent or received by any Borrower to or from the holders of any equity
interests of any Borrower (other than routine non-material correspondence
sent by shareholders of any Borrower to such Borrower) or of any Funded
Debt of any Borrower registered under the Securities Act of 1933 or to or
from the trustee under any indenture under which the same is issued.
(g) The Borrowers will furnish, or cause to be furnished, as
soon as available, but in any event not later than fifteen (15) days after
any Borrower's receipt thereof, a copy of all management reports and
management letters prepared by any independent certified public accountants
of the Parent or any other Borrower.
LOAN AND SECURITY AGREEMENT - PAGE 76
(h) The Borrowers will furnish, or cause to be furnished,
promptly after their preparation, copies of any and all proxy statements,
financial statements, and reports which the Parent makes available to its
shareholders or any holder of any Funded Debt.
(i) Upon the Agent's request, the Borrowers will furnish, or
cause to be furnished, promptly after filing with the IRS, a copy of each
tax return filed by any Borrower.
(j) The Borrowers will furnish, or cause to be furnished, such
additional information as the Agent and/or any Lender may from time to time
reasonably request regarding the financial and business affairs of any
Borrower.
Section 7.3 NOTICES TO THE LENDERS. The Borrowers shall notify the Agent
and the Lenders in writing of the following matters at the following times:
(a) promptly after becoming aware of any Default or Event of
Default;
(b) promptly after becoming aware of the assertion by the holder
of any Capital Stock of any Borrower or of any Funded Debt in excess of
$5,000,000 that a default exists with respect thereto or that any Borrower
is not in compliance with the terms thereof, or the written threat or
commencement by such holder of any enforcement action because of such
asserted default or non-compliance;
(c) promptly after becoming aware of any event or circumstance
which could have, or has resulted in, a Material Adverse Effect;
(d) promptly after becoming aware of any pending or threatened
(in writing) action, suit, proceeding, or counterclaim by any Person, or
any pending or threatened investigation by a Governmental Authority, in
each case, that could reasonably be expected to materially and adversely
affect any Borrower;
(e) promptly after becoming aware of any pending or threatened
(in writing) strike, work stoppage, unfair labor practice claim, or other
labor dispute affecting any Borrower, in each case, that could reasonably
be expected to materially and adversely affect any Borrower;
(f) promptly after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Governmental Authority affecting any
Borrower, in each case, that could reasonably be expected to materially and
adversely affect any Borrower;
(g) promptly after receipt of any written notice of any
violation by any Borrower of any Environmental Law which could have a
Material Adverse Effect or that any Governmental Authority has asserted in
writing that any Borrower is not in compliance with any Environmental Law
or is investigating any Borrower's compliance therewith;
(h) promptly after receipt of any written notice that any
Borrower is or may be liable to any Person as a result of the Release or
threatened Release of any Contaminant
LOAN AND SECURITY AGREEMENT - PAGE 77
or that any Borrower is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to
the Release or threatened Release of any Contaminant which, in either case,
is reasonably likely to give rise to liability in excess of $5,000,000;
(i) promptly after receipt of any written notice of the
imposition of any Environmental Lien with respect to liability in excess of
$5,000,000 against any property of any Borrower;
(j) any change in any Borrower's name, state of organization, or
form of organization, trade names under which any Borrower will sell
Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, in each case at least thirty (30) days prior
thereto;
(k) within ten (10) Business Days after any Borrower or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the
Code) has occurred, and, when known, any action taken or threatened by the
IRS, the DOL, or the PBGC with respect thereto;
(l) upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within
three (3) Business Days after the filing thereof with the PBGC, the DOL, or
the IRS, as applicable, copies of the following: (i) each annual report
(form 5500 series), including Schedule B thereto, filed with the PBGC, the
DOL, or the IRS with respect to each Plan, (ii) a copy of each funding
waiver request filed with the PBGC, the DOL or the IRS with respect to any
Plan and all communications received by any Borrower or any ERISA Affiliate
from the PBGC, the DOL, or the IRS with respect to such request, and (iii)
a copy of each other filing or notice filed with the PBGC, the DOL, or the
IRS, with respect to each Plan of any Borrower or any ERISA Affiliate;
(m) upon request, copies of each actuarial report for any Plan
or Multi-employer Plan and annual report for any Multi-employer Plan, and
within three (3) Business Days after receipt thereof by any Borrower or any
ERISA Affiliate, copies of the following: (i) any notices of the PBGC's
intention to terminate a Plan or to have a trustee appointed to administer
such Plan; (ii) any favorable or unfavorable determination letter from the
IRS regarding the qualification of a Plan under Section 401(a) of the Code;
or (iii) any notice from a Multi-employer Plan regarding the imposition of
withdrawal liability;
(n) within three (3) Business Days after the occurrence thereof:
(i) any changes in the benefits of any existing Plan which increase any
Borrower's annual costs with respect thereto by an amount in excess of
$1,000,000, or the establishment of any new Plan or the commencement of
contributions in excess of $1,000,000 to any Plan to which any Borrower or
any ERISA Affiliate was not previously contributing or (ii) any failure by
any Borrower or any ERISA Affiliate to make a required installment or any
other required payment in excess of $1,000,000 under Section 412 of the
Code on or before the due date for such installment or payment;
LOAN AND SECURITY AGREEMENT - PAGE 78
(o) within three (3) Business Days after any Borrower or any
ERISA Affiliate knows or has reason to know that any of the following
events has or will occur: (i) a Multi-employer Plan has been or will be
terminated; (ii) the administrator or plan sponsor of a Multi-employer Plan
intends to terminate a Multi-employer Plan; or (iii) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multi-employer Plan;
(p) promptly upon commencement of any proceedings contesting any
tax, fee, assessment, or other governmental charge in excess of $250,000;
and
(q) promptly after commencement of any Commercial Tort Claim,
such notice to include the details thereof.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that any Borrower or any
ERISA Affiliate, as applicable, has taken or proposes to take with respect
thereto.
Section 7.4 REVISIONS OR UPDATES TO SCHEDULES. Should any of the
information or disclosures provided on any of the schedules originally attached
hereto become outdated or incorrect in any material respect, the Borrowers from
time to time shall deliver to the Agent and the Lenders, together with an
officer's certificate of the type required pursuant to SECTION 7.2(c), such
revisions or updates to such schedule(s) whereupon such schedules shall be
deemed to be amended by such revisions or updates, as may be necessary or
appropriate to update or correct such schedule(s), PROVIDED that,
notwithstanding the foregoing, no such revisions or updates to SCHEDULES 8.5,
8.11, 8.12, 8.14, 8.16, 8.17, or 8.20 shall be deemed to have amended, modified,
or superseded any such schedules as originally attached hereto, or to have cured
any breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such schedules, unless and until the Agent and the
Majority Lenders shall have accepted in writing such revisions or updates to any
such schedules.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Borrower warrants and represents to the Agent and the Lenders that
except as set forth in the Schedules to this Agreement as they may be modified
from time to time pursuant to SECTION 7.4, and except as hereafter disclosed to
and accepted by the Majority Lenders in writing:
Section 8.1 AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS
AGREEMENT AND THE LOAN DOCUMENTS; NO CONFLICTS. Each Borrower has the power and
authority to execute, deliver, and perform this Agreement and the other Loan
Documents to which it is a party, to incur the Obligations, and to grant to the
Agent Liens upon the Collateral. Each Borrower has taken all necessary action
(including obtaining approval of its stockholders, partners, general partner(s),
members, or other applicable equity owners, if necessary) to authorize its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents
have been duly executed and delivered by each
LOAN AND SECURITY AGREEMENT - PAGE 79
Borrower, and constitute the legal, valid, and binding obligations of each
Borrower, enforceable against it in accordance with their respective terms
without defense, set-off, or counterclaim, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time
in effect affecting the rights of creditors generally and to the effect of
general principles of equity whether applied by a court of law or equity. Each
Borrower's execution, delivery, and performance of this Agreement and the other
Loan Documents to which it is a party do not and will not conflict with, or
constitute a violation or breach of, or constitute a default under, or result in
or require the creation or imposition of any Lien upon the property of any
Borrower by reason of the terms of (a) any contract, mortgage, Lien, lease,
agreement, indenture, document, or agreement related to any Permitted
Subordinated Debt and any other agreements entered into in connection
therewith), or instrument to which such Borrower is a party or which is binding
upon it, (b) any Requirement of Law applicable to such Borrower, or (c) the
certificate or articles of incorporation, by-laws, or other organizational or
constituent documents, as the case may be, of such Borrower.
Section 8.2 VALIDITY AND PRIORITY OF SECURITY INTEREST. The provisions
of this Agreement and the other Loan Documents create legal and valid Liens on
all the Collateral in favor of the Agent, for the benefit of the Agent and the
Lenders, and, to the extent any such Liens may be perfected under the UCC, such
Liens constitute perfected and continuing Liens on the Collateral, securing all
the Obligations, and enforceable against the Borrowers and all third parties,
and having priority over all other Liens on the Collateral (a) except in the
case of Liens described in CLAUSES (d), (e), and (f) of the definition of
Permitted Liens to the extent permitted by such definition and (b) except for
Liens the perfection of which is outside the scope of the UCC, and Liens
perfected only by possession to the extent the Agent has not obtained or does
not maintain possession of such Collateral.
Section 8.3 ORGANIZATION AND QUALIFICATION. Each Borrower (a) is duly
formed or organized and validly existing in good standing, except as otherwise
indicated on SCHEDULE 8.3, under the laws of the jurisdiction of its formation
or organization, (b) is qualified to do business as a foreign business entity
and is in good standing in the jurisdictions set forth on SCHEDULE 8.3, which
are the only jurisdictions in which qualification is necessary in order for it
to own or lease its property and conduct its business except for any
jurisdiction for which the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect, and (c) has all requisite power and
authority to conduct its business and to own its property as presently conducted
or owned.
Section 8.4 CORPORATE NAME; PRIOR TRANSACTIONS. Except as set forth on
SCHEDULE 8.4, since the date of its organization or acquisition as a Subsidiary
of the Parent, whichever time period is shorter, no Borrower has been known by
or used any other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property outside of the ordinary course of business.
Section 8.5 SUBSIDIARIES. SCHEDULE 8.5 is a correct and complete list,
as of the Closing Date, of the name and relationship to the Parent of each and
all of the Parent's Subsidiaries. SCHEDULE 8.5 sets forth, as of the Closing
Date, a true and complete listing of each class of each Borrower's authorized
Capital Stock, of which all of such issued shares are validly issued,
outstanding, fully paid and non-assessable, and owned beneficially and of record
by the Persons identified on SCHEDULE 8.5. All Borrowers (other than the Parent)
are Wholly-Owned
LOAN AND SECURITY AGREEMENT - PAGE 80
Subsidiaries of the Parent. As of the Closing Date the Borrowers (other than the
Parent) constitute all of the Subsidiaries of the Parent, except as set forth in
SCHEDULE 8.5.
Section 8.6 FINANCIAL STATEMENTS AND PROJECTIONS.
(a) The Parent has delivered to the Agent and the Lenders the
audited balance sheet and related statements of income, retained earnings,
cash flow, and changes in stockholders equity for the Parent and its
Subsidiaries as of December 31, 2001, and the Fiscal Year then ended,
accompanied by the report thereon of the Parent's independent certified
public accountants, Xxxxxx Xxxxxxxx LLP. The Parent has also delivered to
the Agent and the Lenders the unaudited balance sheet and related
statements of income and cash flow for the Parent and its Subsidiaries as
of June 30, 2002. All such financial statements have been prepared in
accordance with GAAP and fairly present the financial position of the
Parent and its Subsidiaries as at the dates thereof and their results of
operations for the periods then ended (except with respect to the financial
statements dated December 31, 2001, for the absence of applicable footnotes
and subject to normal year-end adjustments).
(b) The Latest Projections when submitted to the Agent and the
Lenders as required herein represent the Borrowers' good faith estimate of
the future financial performance of the Borrowers for the periods set forth
therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which the Borrowers believe are fair and
reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Lender.
Section 8.7 SOLVENCY. After giving effect to the consummation of the
Plan of Reorganization, the Borrowers, considered as one business enterprise,
are Solvent prior to and after giving effect to the making of the Revolving
Loans to be made on the Closing Date and the issuance of the Letters of Credit
and Credit Support to be issued on the Closing Date (if any), and shall remain
Solvent during the term of this Agreement.
Section 8.8 DEBT. After giving effect to the Plan of Reorganization and
to the making of the Revolving Loans to be made on the Closing Date, the
Borrowers have no Debt, except (a) the Obligations, (b) Debt described on
SCHEDULE 8.8, (c) trade payables and other obligations arising in the ordinary
course of business, (d) Permitted Subordinated Debt (e) other Debt existing on
the Closing Date and reflected in the Financial Statements described in SECTION
8.6, and (f) other Debt entered into after the Closing Date as permitted by
SECTION 9.13 and reflected in the Financial Statements delivered pursuant to
SECTION 7.2.
Section 8.9 DISTRIBUTIONS. As of the Closing Date, since September 30,
2001, no Distribution has been declared, paid, or made upon or in respect of any
Capital Stock or other equity securities of the Parent other than pursuant to
the Plan of Reorganization.
Section 8.10 TITLE TO PROPERTY. Each Borrower has good and indefeasible
title in fee simple to the Real Estate identified on SCHEDULE 8.11 as owned by
such Borrower, and each Borrower has good, indefeasible, and merchantable title
to all of its other property (including the assets reflected on the June 30,
2002 Financial Statements delivered to the Agent and the
LOAN AND SECURITY AGREEMENT - PAGE 81
Lenders, other than assets subject to capital leases except as sold,
transferred, or otherwise disposed of pursuant to the Plan of Reorganization or
in the ordinary course of business since the date thereof or as permitted by
this Agreement), free of all Liens except Permitted Liens.
Section 8.11 REAL ESTATE; LEASES. SCHEDULE 8.11 sets forth, as of the
Closing Date, a correct and complete list of all Real Estate owned by each
Borrower, all leases and subleases of real or personal property by each Borrower
as lessee or sublessee (other than leases of personal property as to which it is
lessee or sublessee for which the value of such personal property is less than
$500,000), and all leases and subleases of real or personal property by each
Borrower as lessor or sublessor. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, and,
to the Borrowers' knowledge, no default by any party to any such lease or
sublease exists.
Section 8.12 PROPRIETARY RIGHTS. SCHEDULE 8.12 sets forth a correct and
complete list of all of each Borrower's registered patents and trademarks
material to its business. None of the patents and trademarks listed in SCHEDULE
8.12 is subject to any licensing agreement or similar arrangement except as set
forth on SCHEDULE 8.12. The patents and trademarks described on SCHEDULE 8.12
constitute all of the property of such type necessary to the current and
anticipated future conduct of the Borrowers' business. To the best of each
Borrower's knowledge, no slogan or other advertising device, product, process,
method, substance, part, or other material now employed, or now contemplated to
be employed, by any Borrower infringes in any material respect upon any rights
held by any other Person. No claim or litigation regarding any of the foregoing
is pending or threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard, or code is pending
or, to the knowledge of any Borrower, proposed, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
Section 8.13 TRADE NAMES. All trade names or styles under which any
Borrower will sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, are listed on SCHEDULE 8.13.
Section 8.14 LITIGATION. Except as set forth on SCHEDULE 8.14, there is
no pending, or to the best of any Borrower's knowledge threatened, action, suit,
proceeding, or counterclaim by any Person, or investigation by any Governmental
Authority, or any basis for any of the foregoing, which could reasonably be
expected to have a Material Adverse Effect.
Section 8.15 RESTRICTIVE AGREEMENTS. No Borrower is a party to any
contract or agreement, or subject to any charter or other corporate restriction,
which affects its ability to execute, deliver, and perform the Loan Documents to
which it is a party and repay the Obligations or which could have a Material
Adverse Effect.
Section 8.16 LABOR MATTERS. Except as set forth on SCHEDULE 8.16, as of
the Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of any Borrower, (b) no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of this
Agreement, (c) no union or other labor organization is seeking to organize, or
to be recognized as, a collective bargaining unit of employees of any Borrower
or for any similar purpose, and (d) there is no pending or threatened, strike,
work
LOAN AND SECURITY AGREEMENT - PAGE 82
stoppage, material unfair labor practice claim, or other material labor dispute
against or affecting any Borrower or its employees.
Section 8.17 ENVIRONMENTAL MATTERS. Except as otherwise disclosed on
SCHEDULE 8.17:
(a) Each Borrower has complied in all material respects with all
Environmental Laws and no Borrower nor any of its presently owned Real
Estate or presently conducted operations, nor its previously owned Real
Estate or prior operations, is subject to any enforcement order from or
liability agreement with any Governmental Authority or private Person
respecting (i) compliance with any Environmental Law or (ii) any potential
liabilities and costs or remedial action (involving a liability or
potential liability in excess of $1,000,000) arising from the Release or
threatened Release of a Contaminant.
(b) Each Borrower has obtained all permits necessary for its
current operations under Environmental Laws other than permits which the
failure to obtain could not reasonably be expected to have a Material
Adverse Effect, and all such permits are in good standing and each Borrower
is in compliance with all material terms and conditions of such permits
other than permits which the failure to comply with could not reasonably be
expected to have a Material Adverse Effect.
(c) No Borrower, nor to the best of any Borrower's knowledge any
of its predecessors in interest, has in violation of any Environmental Law
stored, treated, or disposed of any hazardous waste (as defined pursuant to
40 CFR Part 261 or any equivalent Environmental Law) other than violations
that could not reasonably be expected to have a Material Adverse Effect.
(d) No Borrower has received any summons, complaint, order, or
similar written notice indicating that it is not currently in compliance
with, or that any Governmental Authority is investigating its compliance
with, any Environmental Laws or that it is or may be liable to any other
Person as a result of a Release or threatened Release of a Contaminant.
(e) None of the present or past operations of any Borrower is
the subject of any investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to a Release or threatened
Release of a Contaminant in each such case other than a Release or
threatened Release that could not reasonably be expected to have a Material
Adverse Effect.
(f) There is not now, nor to the best of any Borrower's
knowledge has there ever been on or in the Real Estate of any Borrower in
violation of Environmental Laws other than violations that could not
reasonably be expected to have a Material Adverse Effect:
(i) any underground storage tanks or surface
impoundments,
(ii) any asbestos-containing material, or
LOAN AND SECURITY AGREEMENT - PAGE 83
(iii) any polychlorinated biphenyls (PCBs) used in
hydraulic oils, electrical transformers, or other equipment.
(g) Since December 31, 2001 or as otherwise disclosed to the
Agent pursuant to SECTION 7.3(g), SECTION 7.3(h), or SECTION 7.3(i), no
Borrower has filed any notice under any requirement of Environmental Law
reporting a spill or accidental and unpermitted Release or discharge of a
Contaminant into the environment.
(h) No Borrower has entered into any negotiations or settlement
agreements with any Person (including the prior owner of its property)
imposing material obligations or liabilities on any Borrower with respect
to any remedial action in response to the Release of a Contaminant or
environmentally related claim.
(i) None of the products manufactured, distributed, or sold by
any Borrower contains asbestos containing material.
(j) No Environmental Lien has attached to the Real Estate of any
Borrower.
Section 8.18 NO VIOLATION OF LAW. No Borrower is in violation of any law,
statute, regulation, ordinance, judgment, order, or decree applicable to it
which violation could reasonably be expected to have a Material Adverse Effect.
Section 8.19 NO DEFAULT. No Borrower is in default in any material
respect under the provisions of the Plan of Reorganization, any note, indenture,
loan agreement, mortgage, deed, or material lease or other material agreement to
which such Borrower is a party or by which it is bound.
Section 8.20 ERISA COMPLIANCE. Except as specifically disclosed in
SCHEDULE 8.20:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and nothing has
occurred which would cause the loss of such qualification. Each Borrower
and each ERISA Affiliate has made all required contributions to any Plan
subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the
Code has been made with respect to any Plan which has resulted or could be
expected to result in a Material Adverse Effect.
(b) There are no pending or threatened claims, actions, or
lawsuits, or action by any Governmental Authority, with respect to any
Plans which has resulted or could be expected to result in a Material
Adverse Effect. There has been no prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan.
(c) Except for instances, if any, which together do not give
rise to liability in excess of $1,000,000 in the aggregate, (i) no ERISA
Event has occurred or is reasonably expected to occur; (ii) no Pension Plan
has any Unfunded Pension Liability; (iii) no Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any
LOAN AND SECURITY AGREEMENT - PAGE 84
liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) no
Borrower nor any ERISA Affiliate has incurred, or expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201
or 4243 of ERISA with respect to a Multi-employer Plan; and (v) no Borrower
nor any ERISA Affiliate has engaged in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
Section 8.21 TAXES. Each Borrower has filed all federal and other tax
returns and reports required to be filed (or appropriate extensions have been
timely filed), and has paid all federal and other taxes, assessments, fees, and
other governmental charges levied or imposed upon them or their properties,
income, or assets otherwise due and payable unless such unpaid taxes and
assessments would constitute a Permitted Lien.
Section 8.22 REGULATED ENTITIES. No Borrower nor any Person controlling a
Borrower is an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940. No Borrower
is a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, or a regulated entity under the
Federal Power Act, the Interstate Commerce Act, any state public utilities code
or law, or any other federal or state statute or regulation limiting its ability
to incur indebtedness.
Section 8.23 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the
Revolving Loans are to be used solely for the purposes specified in SECTION
9.26. No Borrower is engaged in the business of buying or selling Margin Stock
or extending credit for the purpose of buying or carrying Margin Stock.
Section 8.24 NO MATERIAL ADVERSE CHANGE. No material adverse change has
occurred in the property, business, operations, or conditions (financial or
otherwise), profits, or prospects of the Borrowers, taken as a whole, since the
date of the Financial Statements delivered to the Lenders pursuant to SECTION
8.6.
Section 8.25 FULL DISCLOSURE. None of the representations or warranties
made by any Borrower in the Loan Documents as of the date such representations
and warranties are made or deemed made, and none of the statements contained in
any exhibit, report, statement, or certificate furnished by or on behalf of any
Borrower in connection with the Loan Documents (including the offering and
disclosure materials delivered by or on behalf of any Borrower to the Lenders
prior to the Closing Date), contain any untrue statement of a material fact or
omit any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
Section 8.26 MATERIAL AGREEMENTS. As of the Closing Date, SCHEDULE 8.26
sets forth all material agreements and contracts (other than this Agreement and
those agreements regarding the effectiveness of the Plan of Reorganization) of
any Borrower which are required to be
LOAN AND SECURITY AGREEMENT - PAGE 85
publicly disclosed pursuant to any Requirement of Law since the date of the
Parent's quarterly report for the Fiscal Quarter ended June 30, 2002.
Section 8.27 BANK ACCOUNTS. As of the Closing Date, SCHEDULE 8.27
contains a complete and accurate list of all bank accounts maintained by each
Borrower with any bank or other financial institution.
Section 8.28 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery, or performance by, or enforcement against, any
Borrower of this Agreement or any other Loan Document except for those which
have been duly obtained by the Borrowers, copies of which have been provided to
the Agent and the Lenders, and for filing of financing statements and mortgages.
Section 8.29 INVESTMENT PROPERTY.
(a) SCHEDULE 8.29 sets forth a correct and complete list of all
Investment Property owned by each Borrower. Each Borrower is the legal and
beneficial owner of such Investment Property, as so reflected, free and
clear of any Lien (other than Permitted Liens), and has not sold, granted
any option with respect to, assigned or transferred, or otherwise disposed
of any of its rights or interest therein.
(b) To the extent any Borrower is an Issuer (as defined in
SECTION 6.2(d)): (i) the Issuer's shareholders that are Borrowers and the
ownership interest of each such shareholder are as set forth on SCHEDULE
8.5, and each such shareholder is the registered owner thereof on the books
of the Issuer; (ii) the Issuer acknowledges the Agent's Lien; (iii) to the
extent required to perfect the Agent's Liens, such security interest,
collateral assignment, lien, and pledge in favor of the Agent has been
registered on the books of the Issuer for such purpose as of the date
hereof; and (iv) the Issuer is not aware of any liens, restrictions, or
adverse claims which exist on any such Investment Property other than the
continuing security interest, collateral assignment, lien, and pledge in
favor of the Agent granted pursuant to the terms of SECTION 6.1.
Section 8.30 COMMON ENTERPRISE. The successful operation and condition of
each of the Borrowers is dependent on the continued successful performance of
the functions of the group of Borrowers as a whole and the successful operation
of each Borrower is dependent on the successful performance and operation of
each other Borrower. Each of the Borrowers expects to derive benefit (and its
board of directors or other governing body has determined that it may reasonably
be expected to derive benefit), directly and indirectly, from successful
operations of the Parent and each of the other Borrowers. Each Borrower expects
to derive benefit (and the boards of directors or other governing body of each
such Borrower have determined that it may reasonably be expected to derive
benefit), directly and indirectly, from the credit extended by the Lenders to
the Borrowers hereunder, both in their separate capacities and as members of the
group of companies. Each Borrower has determined that execution, delivery, and
performance of this Agreement and any other Loan Documents to be executed by
such Borrower is within its corporate purpose, will be of direct and indirect
benefit to such Borrower, and is in its best interest.
LOAN AND SECURITY AGREEMENT - PAGE 86
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower covenants to the Agent and each Lender that so long as any of
the Obligations remain outstanding or this Agreement is in effect unless waived
pursuant to SECTION 13.2 each Borrower will keep and perform each of the
following covenants:
Section 9.1 TAXES AND OTHER OBLIGATIONS. Except as otherwise permitted
by the terms of this Agreement, each Borrower shall (a) file when due all tax
returns and other reports which it is required to file, (b) pay, or provide for
the payment, when due, of all taxes, fees, assessments, and other governmental
charges against it or upon its property, income, and franchises, make all
required withholding and other tax deposits, and establish adequate reserves for
the payment of all such items, and provide to the Agent and the Lenders, upon
request, satisfactory evidence of its timely compliance with the foregoing, and
(c) pay when due all Funded Debt owed by it and all claims of materialmen,
mechanics, carriers, warehousemen, landlords, processors, and other like
Persons, and all other indebtedness owed by it and perform and discharge in a
timely manner all other obligations undertaken by it; PROVIDED, HOWEVER, such
Borrower need not pay any tax, fee, assessment, or governmental charge, that (w)
it is contesting in good faith by appropriate proceedings diligently pursued,
(x) such Borrower has established proper reserves for as provided in accordance
with GAAP, (y) no Lien (other than a Permitted Lien) results from such
non-payment, and (z) with respect to any such tax, fee, assessment, or
governmental charge in excess of $250,000, such Borrower has notified the Agent
in writing of any contest described in CLAUSE (w) preceding.
Section 9.2 EXISTENCE AND GOOD STANDING. Except with respect to any
Borrower that merges into or consolidates with another Borrower as allowed by
SECTION 9.9, each Borrower shall maintain its existence and its qualification
and good standing in all jurisdictions in which the failure to maintain such
existence and qualification or good standing could reasonably be expected to
have a Material Adverse Effect.
Section 9.3 COMPLIANCE WITH LAW AND AGREEMENTS; MAINTENANCE OF LICENSES.
Each Borrower shall comply with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act and all Environmental Laws) except for any
noncompliance which could not reasonably be expected to have a Material Adverse
Effect. Each Borrower shall obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property and,
except as could not reasonably be expected to have a Material Adverse Effect, to
conduct its business as conducted on the Closing Date. No Borrower shall modify,
amend, or alter its certificate or articles of incorporation (or other similar
constituent documents) other than in a manner which does not adversely affect
the rights of the Lenders or the Agent.
Section 9.4 MAINTENANCE OF PROPERTY. Each Borrower shall maintain all of
its property necessary and useful in the conduct of its business, in good
operating condition and repair, ordinary wear and tear excepted.
Section 9.5 INSURANCE.
LOAN AND SECURITY AGREEMENT - PAGE 87
(a) Each Borrower shall maintain with financially sound and
reputable insurers insurance that is reasonably consistent with prudent
industry practice and acceptable to the Agent in its reasonable discretion.
Without limiting the foregoing, each Borrower shall maintain flood
insurance, in the event of a designation of the area in which any of its
Real Estate is located as "flood prone" or a "flood risk area,"
(hereinafter "SFHA") as defined by the Flood Disaster Protection Act of
1973, in an amount to be reasonably determined by the Agent, and shall
comply with the additional requirements of the National Flood Insurance
Program as set forth in said Act.
(b) For each of the insurance policies issued as required by
this SECTION 9.5 with respect to Collateral, each Borrower shall cause the
Agent, for the benefit of the Agent and the Lenders, to be named as secured
party or mortgagee and loss payee or additional insured, in a manner
acceptable to the Agent. Each policy of insurance shall contain a clause or
endorsement requiring the insurer to give not less than thirty (30) days
prior written notice to the Agent in the event of cancellation of such
policy for any reason whatsoever and a clause or endorsement stating that
the interest of the Agent shall not be impaired or invalidated by any act
or neglect of the insured Person or the owner of any premises for purposes
more hazardous than are permitted by such policy. All premiums for such
insurance shall be paid by the Borrowers when due, and certificates of
insurance and, if requested by the Agent, photocopies of the policies shall
be delivered to the Agent, in each case, in sufficient quantity for
distribution by the Agent to each of the Lenders. If any Borrower fails to
procure such insurance or to pay the premiums therefor when due, the Agent
may, and at the direction of the Majority Lenders shall, do so from the
proceeds of Revolving Loans.
(c) Each Borrower shall promptly notify the Agent and the
Lenders of any loss, damage, or destruction to the Collateral in excess of
(A) $5,000,000 if covered by insurance or (B) $1,000,000 if not covered by
insurance. The Agent is hereby authorized to directly collect all insurance
proceeds in respect of Collateral and to apply or remit such proceeds as
follows:
After deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the Agent
shall apply such proceeds to the reduction of the Obligations in the manner
provided for in, and such proceeds shall be subject to the provisions of,
SECTION 4.3.
Section 9.6 CONDEMNATION. Each Borrower shall, promptly upon learning of
the institution of any proceeding for the condemnation or other taking of any of
its property, notify the Agent of the pendency of such proceeding.
Section 9.7 ENVIRONMENTAL LAWS.
(a) Each Borrower shall conduct its business in material
compliance with all Environmental Laws applicable to it, including those
relating to the generation, handling, use, storage, and disposal of any
Contaminant. Each Borrower shall take prompt and appropriate action to
respond to any non-compliance with Environmental Laws and shall regularly
report to the Agent on such response.
LOAN AND SECURITY AGREEMENT - PAGE 88
(b) Without limiting the generality of the foregoing, the
Borrowers shall, upon the Agent's request, submit to the Agent and the
Lenders an update of the status of each environmental compliance or
liability issue concerning any Borrower or any of their respective
properties or operations (whether past or present). The Agent or any Lender
may request copies of technical reports prepared by any Borrower and its
communications with any Governmental Authority to determine whether such
Borrower is proceeding reasonably to correct, cure, or contest in good
faith any alleged non-compliance or environmental liability.
Section 9.8 COMPLIANCE WITH ERISA. Each Borrower shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code, and other
federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) not engage in
a prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan; and (e) not engage in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
Section 9.9 MERGERS, CONSOLIDATIONS, SALES, ACQUISITIONS. Except as
provided in the Plan of Reorganization or the Projections, no Borrower shall
enter into any transaction of merger, reorganization, or consolidation, or
transfer, sell, assign, lease, or otherwise dispose of all or any part of its
property, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except for sales of Inventory in the ordinary course of its business
and sales or other dispositions of Real Estate and Equipment or other Excluded
Assets; PROVIDED that, notwithstanding the foregoing or any other provision of
this Agreement, as long as no Default or Event of Default exists or would result
therefrom and provided the Parent gives the Agent and the Lenders prior written
notice:
(a) a Borrower, other than the Parent, may wind-up, dissolve, or
liquidate or sell or otherwise dispose of any of its Property if (i) its
property is transferred to the Parent or another Borrower and (ii) the
Person acquiring such property complies with its obligations under SECTION
6.2 and SECTION 9.27 simultaneously with such acquisition;
(b) a Borrower, other than the Parent, may merge or consolidate
with the Parent or another Borrower (PROVIDED the Parent is the survivor of
any such merger or consolidation to which it is a party);
(c) a Borrower may make Permitted Acquisitions; and
(d) a Borrower may enter into sales or other dispositions of its
property consisting of:
(i) Inventory sold or disposed of in the ordinary course
of business;
(ii) sales or other dispositions allowed under SECTION
9.19; and
(iii) sales or other dispositions of Collateral in an
aggregate amount not to exceed $1,000,000 in any calendar year.
LOAN AND SECURITY AGREEMENT - PAGE 89
The inclusion of proceeds in the definition of Collateral shall not be deemed to
constitute the Agent's or any Lender's consent to any sale or other disposition
of the Collateral except as expressly permitted herein.
Section 9.10 DISTRIBUTIONS; CAPITAL CHANGE; RESTRICTED INVESTMENTS. No
Borrower shall (a) directly or indirectly declare or make, or incur any
liability to make, any Distribution, except, (i) Distributions by a Borrower to
another Borrower, and (ii) provided that both before and after giving effect to
the proposed Distribution the Fixed Coverage Charge Ratio is at least 1.0 to
1.0, Distributions by the Parent with respect to its Capital Stock in the form
of cash dividends, such dividends not to exceed $1,100,000 in any Fiscal Quarter
and PROVIDED that before and after giving effect to such dividend the
Availability (calculated for purposes hereof utilizing 100% of the total
Borrowing Base, without applying the Maximum Revolver Amount limit) is greater
than or equal to $40,000,000 and no Default or Event of Default exists or will
occur, (b) make any change in its capital structure which could have a Material
Adverse Effect, (c) make any Restricted Investment or (d) make any loan, advance
or extension of credit (except for loans, advances or extensions of credit from
one Borrower to another Borrower and extensions of trade credit in the ordinary
course of business).
Section 9.11 TRANSACTIONS AFFECTING COLLATERAL OR OBLIGATIONS. No
Borrower shall enter into any transaction which could reasonably be expected to
result in a Material Adverse Effect.
Section 9.12 GUARANTIES. No Borrower shall make, issue, or become liable
on any Guaranty, except Guaranties of the Obligations and Guaranties of Debt
allowed under SECTION 9.13.
Section 9.13 DEBT. No Borrower shall incur or maintain any Debt, other
than: (a) the Obligations; (b) trade payables and obligations arising in the
ordinary course of business; and (c) other Debt existing on the Closing Date and
reflected in the Financial Statements described in SECTION 8.6; (d) Debt
constituting purchase money Debt for Equipment (including, without limitation,
obligations under Capital Leases), incurred after the Closing Date in an
aggregate amount at any time outstanding of not more than $20,000,000; (e) Debt
incurred under sale and leaseback transactions permitted under SECTION 9.19; (f)
Debt secured by Real Estate and Equipment and/or proceeds thereof; (g) Permitted
Subordinated Debt; and (h) Debt in an aggregate outstanding amount not to exceed
$25,000,000 at any time incurred or acquired by the Borrowers as consideration
for Permitted Acquisitions.
Section 9.14 PREPAYMENT OF DEBT. No Borrower shall voluntarily prepay any
Funded Debt, except the Obligations in accordance with the terms of this
Agreement, PROVIDED that for so long as no Default is in existence or would
result therefrom, (a) a Borrower may voluntarily prepay Debt owing by such
Borrower to another Borrower, (b) if the Fixed Charge Coverage Ratio is greater
than or equal to 1.0 to 1.0, a Borrower may voluntarily prepay Capital Leases
and other purchase money Funded Debt, (c) a Borrower may voluntarily prepay
Capital Leases and other purchase money Funded Debt in connection with any
refinancing of such Capital Leases and other purchase money Funded Debt or
replacement of the Fixed Assets subject to such prepaid financing with new Fixed
Assets usable in such Borrower's business and subject to additional Capital
Leases or other purchase money Funded Debt; and (d) a Borrower may voluntarily
prepay Debt secured by assets sold.
LOAN AND SECURITY AGREEMENT - PAGE 90
Section 9.15 TRANSACTIONS WITH AFFILIATES. Except as set forth below, no
Borrower shall sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature (including,
but not limited to, any fees or expenses for management services), to any
Affiliate that is not a Borrower, or lend or advance money or property to any
Affiliate that is not a Borrower, or invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness, or any property,
of any Affiliate that is not a Borrower, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate that is not a
Borrower. Notwithstanding the foregoing, if no Default or Event of Default is in
existence or would result therefrom, any Borrower may engage in transactions
with an Affiliate in the ordinary course of such Borrower's business consistent
with past practices and upon terms no less favorable to such Borrower than would
be obtained in a comparable arm's-length transaction with a third party who is
not an Affiliate.
Section 9.16 INVESTMENT BANKING AND FINDER'S FEES. No Borrower shall pay
or agree to pay, or reimburse any other party with respect to, any investment
banking or similar or related fee, underwriter's fee, finder's fee, or broker's
fee to any Person in connection with this Agreement other than pursuant to the
Agents' Letter. The Borrowers shall defend and indemnify the Agent and the
Lenders against and hold them harmless from (a) all claims of any Person that
any Borrower is obligated to pay any such fees and (b) all costs and expenses
(including reasonable attorneys' fees) incurred by the Agent and/or any Lender
in connection therewith.
Section 9.17 BUSINESS CONDUCTED. The Borrowers shall not engage directly
or indirectly, in any line of business other than the businesses in which the
Borrowers are engaged on the Closing Date and any business activities that are
substantially similar, related, or incidental thereto.
Section 9.18 LIENS. No Borrower shall create, incur, assume, or permit to
exist any Lien on any property other than Excluded Assets now owned or hereafter
acquired by it, except Permitted Liens. Other than as set forth in this
Agreement or in connection with the creation or incurrence of any Debt under
SECTION 9.13(d) or SECTION 9.13(f) no Borrower will enter into or become subject
to any Negative Pledge; PROVIDED, that any Negative Pledge entered into in
connection with the creation or incurrence of Debt under SECTION 9.13(d) or
SECTION 9.13(f) shall be limited to the property subject to the purchase money
Lien or Lien, as applicable, securing such Debt.
Section 9.19 SALE AND LEASEBACK TRANSACTIONS. No Borrower shall, directly
or indirectly, enter into any arrangement with any Person (other than any
Borrower) providing for such Borrower to lease or rent property that such
Borrower has sold or will sell or otherwise transfer to such other Person;
PROVIDED that, subject to SECTION 4.3, any Borrower may at any time enter into
any such arrangement so long as the aggregate net book value of all property
sold by the Borrowers in connection with all such arrangements does not exceed
$25,000,000 and the aggregate amount of all obligations incurred by the
Borrowers in connection with all such arrangements does not exceed $25,000,000
in the aggregate at any time outstanding.
Section 9.20 NEW SUBSIDIARIES. Any Borrower which intends to create or
acquire a Subsidiary will give the Agent at least ten (10) days prior written
notice before creating or acquiring such Subsidiary. Promptly upon creation or
acquisition of any Subsidiary of a
LOAN AND SECURITY AGREEMENT - PAGE 91
Borrower (including any Subsidiary acquired pursuant to SECTION 9.9), such
Borrower shall cause such Subsidiary to become a Borrower and a Guarantor
hereunder.
Section 9.21 FISCAL YEAR. The Parent shall not change the last day of its
Fiscal Year without prior notice to the Agent given concurrently with any
required notice to the Securities and Exchange Commission.
Section 9.22 CAPITAL EXPENDITURES. No Borrower shall make or incur any
Capital Expenditure if, after giving effect thereto, the aggregate amount of all
Capital Expenditures by the Borrowers on a consolidated basis during any Fiscal
Year would exceed $25,000,000:
Section 9.23 OPERATING LEASE OBLIGATIONS. No Borrower shall enter into,
or suffer to exist, any lease of real or personal property as lessee or
sublessee (excluding Capital Leases), if, after giving effect thereto, the
aggregate amount of Rentals payable by the Borrowers on a consolidated basis in
any Fiscal Year in respect of such lease and all other such leases would exceed
$50,000,000. The term "RENTALS" means all payments due from the lessee or
sublessee under a lease, including, without limitation, basic rent, percentage
rent, property taxes, utility or maintenance costs, and insurance premiums.
Section 9.24 MINIMUM AVAILABILITY. If at the close of business on any day
the Borrower's Availability is less than $20,000,000, the Borrower must maintain
a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0 until such time as the
Borrower's Availability as of the close of business on a subsequent day is equal
to or greater than $20,000,000. For purposes of this testing, (i) the Fixed
Charge Coverage Ratio will be computed based upon the information available as
of the last day of the Fiscal Period ending immediately prior to the month in
which Availability becomes less than $20,000,000, and (ii) the Availability
measurement will be continually tested as of the close of business each day so
that the Fixed Charge Coverage Ratio may apply (or not apply) multiple times
within any particular Fiscal Period. Additionally, for purposes of this SECTION
9.24, when calculating the Availability, Availability for a non-Business Day
shall be Availability as of the immediately preceding Business Day, and the
Borrowers may count 100% of the total Borrowing Base, without applying the
Maximum Revolver Amount limit.
Section 9.25 [RESERVED]
Section 9.26 USE OF PROCEEDS. The Borrowers shall use the proceeds of the
Loans (a) to provide funds in connection with the Plan of Reorganization, (b)
for general corporate and working capital purposes (not otherwise prohibited by
this Agreement), and shall not use any portion of Revolving Loan proceeds,
directly or indirectly, (i) to buy or carry any Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Borrowers or others incurred to buy or
carry any Margin Stock, (iii) to extend credit for the purpose of buying or
carrying any Margin Stock, or (iv) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Exchange Act.
Section 9.27 FURTHER ASSURANCES. The Borrowers shall execute and deliver,
or cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time,
LOAN AND SECURITY AGREEMENT - PAGE 92
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents.
Section 9.28 BANK AS DEPOSITORY. Each Borrower shall maintain its master
collection and operating accounts with the Bank, and shall utilize the Bank as
its principal depository bank, including for the maintenance of administrative,
cash management, collection activity, and other deposit accounts for the conduct
of its business.
Section 9.29 INVENTORY VALUATION. Upon any request by the Agent whenever
the Agent has a reasonable basis for believing that a material change has
occurred in the value of the Borrowers' Eligible Inventory, the Borrowers will
act promptly to determine the Replacement Cost of Eligible Inventory and to
prepare and provide to the Agent a written comparison of Replacement Cost of
Eligible Inventory to GAAP Value of Eligible Inventory.
Section 9.30 PLAN OF REORGANIZATION. The Borrowers will comply with the
Plan of Reorganization in all material respects.
ARTICLE 10
CONDITIONS OF LENDING
Section 10.1 CONDITIONS PRECEDENT TO MAKING OF REVOLVING LOANS ON THE
CLOSING DATE. The obligation of the Lenders to make the initial Revolving Loans
on the Closing Date, and the obligation of the Agent to cause the Letter of
Credit Issuer to issue any Letter of Credit or Credit Support on the Closing
Date, are subject to the following conditions precedent having been satisfied in
a manner satisfactory to the Agent and each Lender:
(a) The Agent shall have received each of the following
documents, all of which shall be satisfactory in form and substance to the
Agent and the Lenders:
(i) certified copies of the certificate of incorporation,
certificate of limited partnership, or comparable organizational
document of each of the Borrowers, with all amendments, if any,
certified by the appropriate Governmental Authority (PROVIDED that
upon request by any Borrower and with the consent of the Agent, any
such certified certificate of incorporation, certificate of limited
partnership, or comparable organizational document for such Borrower
to the extent not provided on the Closing Date, may be provided within
thirty (30) days of the Closing Date, PROVIDED that an uncertified
copy thereof has been delivered to the Agent together with a written
statement by a Responsible Officer confirming that such copy is true,
correct, and complete), and the bylaws, regulations, operating
agreement, or similar governing document of each Borrower, in each
case certified by the corporate secretary, general partner, or
comparable authorized representative of such Borrower, as being true
and correct and in effect on the Closing Date;
(ii) certificates of incumbency and specimen signatures
with respect to each Person authorized to execute and deliver this
Agreement and the other Loan Documents on behalf of each Borrower and
each other Person executing any
LOAN AND SECURITY AGREEMENT - PAGE 93
document, certificate, or instrument to be delivered in connection
with this Agreement and the other Loan Documents and, in the case of
each Borrower, to request Borrowings and the issuance of Letters of
Credit or Credit Support for any Letter of Credit;
(iii) a certificate evidencing the existence of each
Borrower, and certificates evidencing the good standing of each
Borrower in the jurisdiction of its organization and in each other
jurisdiction in which it is required to be qualified as a foreign
business entity to transact its business as presently conducted,
PROVIDED that upon request by any Borrower and with the consent of the
Agent, certificates of good standing for such Borrower in any state
other than the state(s) of its organization and chief executive
office, to the extent not provided on the Closing Date, may be
provided within thirty (30) days of the Closing Date;
(iv) certified copies of all action taken by each Borrower
to authorize the execution, delivery, and performance of this
Agreement, the other Loan Documents, and the Borrowings and the
issuance of Letters of Credit and/or Credit Support;
(v) a certificate of each Borrower signed by a
Responsible Officer:
(A) stating that all of the representations and
warranties made or deemed to be made under this Agreement
are true and correct as of the Closing Date, after giving
effect to the Revolving Loans to be made at such time and
the application of the proceeds thereof and the issuance of
any Letter(s) of Credit and/or Credit Support at such time,
(B) stating that no Default or Event of Default
exists,
(C) specifying the account of the Borrowers to which
the Agent is authorized to transfer the proceeds of the
Revolving Loans, as required by SECTION 2.2(c), and
(D) certifying as to such other factual matters as
may be reasonably requested by the Agent;
(vi) with respect to any Letter of Credit or Credit
Support to be issued, all documentation required by SECTION 2.3, duly
executed;
(vii) a Revolving Note payable to the order of each Lender
in the amount of its Commitment, duly executed and delivered by each
Borrower, complying with the requirements of SECTION 2.2;
(viii) UCC financing statements and/or amendments to
existing UCC financing statements with respect to all Collateral as
may be requested by the Agent, duly executed by the respective
Borrowers, in all jurisdictions that the
LOAN AND SECURITY AGREEMENT - PAGE 94
Agent may deem necessary or desirable in order to perfect the Agent's
Lien therein;
(ix) duly executed UCC-3 termination statements or
assignments and such other instruments, in form and substance
satisfactory to the Agent, as shall be necessary to terminate and
satisfy all Liens on the property of the Borrowers except Permitted
Liens;
(x) a Copyright, Patent, and Trademark Agreement with
respect to all Proprietary Rights, if any, owned by any Borrower which
must be registered with any Governmental Authority to perfect the
Agent's Liens in such Proprietary Rights, duly executed by each
Borrower, as applicable;
(xi) (A) stock certificates and stock powers (duly
executed in blank) for all Capital Stock (to the extent certificated)
in each Borrower other than Parent, together with acknowledgments
executed by the respective issuers thereof, in form and substance
satisfactory to the Agent and (B) "control" agreements (pursuant to
the UCC), each duly executed, as the Agent may request with respect to
any other Investment Property listed in SCHEDULE 8.29;
(xii) a Borrowing Base Certificate effective as of the
Business Day preceding the day such initial Revolving Loans are to be
funded or any such Letter of Credit or Credit Support is to be issued;
(xiii) to the extent the Borrowers are able, using
commercially reasonable efforts, to obtain such agreements and
waivers, a landlord's or mortgagee's waiver and consent agreement, in
form and substance reasonably acceptable to the Agent, duly executed
on behalf of each landlord or mortgagee, as the case may be, of Real
Estate on which any Collateral is located (PROVIDED, that the
Borrowers may defer delivery of any such agreements for a period not
to exceed ninety (90) days from the Closing Date; PROVIDED, FURTHER,
that thereafter the Agent may establish a reserve with respect to any
Collateral located on any Real Estate for which the Agent has not
received an acceptable waiver and consent agreement) in an amount not
to exceed the amount permitted under clause (b) or (i) of the
definition of Eligible Inventory;
(xiv) within ninety (90) days of the Closing Date, each
Blocked Account Agreement duly executed as requested by the Agent;
(xv) signed opinions of counsel for the Borrowers, opining
as to such matters in connection with the transactions contemplated by
this Agreement as the Agent may reasonably request, each such opinion
to be in a form, scope, and substance satisfactory to the Agent, the
Lenders, and their respective counsel;
(xvi) the Agent shall have received evidence, in form,
scope, and substance, reasonably satisfactory to the Agent, of all
insurance coverage as required by this Agreement;
LOAN AND SECURITY AGREEMENT - PAGE 95
(xvii) such other documents and instruments as the Agent or
any Lender may reasonably request.
(b) This Agreement and the other Loan Documents shall have been
executed by each party thereto and the Borrowers shall have performed and
complied with all covenants, agreements, and conditions contained herein
and in the other Loan Documents which are required to be performed or
complied with by the Borrowers before or on the Closing Date.
(c) Upon making the initial Revolving Loans (including such
Revolving Loans made to finance the fees, costs, and expenses then payable
under this Agreement) and issuing any Letters of Credit or Credit Support
on the date of making the initial Revolving Loans, and with all their
obligations current, and after deducting (a) the amount that would have
been payable on the effective date of the Plan of Reorganization to the
holders of disputed claims based on the Borrowers' good faith estimates and
in accordance with the terms of the Plan of Reorganization, and (b) any
deferred or unpaid administrative expenses or cure payments, the Borrowers
shall have remaining Availability in an amount not less than $40,000,000.
(d) All representations and warranties made hereunder and in the
other Loan Documents shall be true and correct on the Closing Date.
(e) No Default or Event of Default shall exist on the Closing
Date, or would exist after giving effect to the Revolving Loans to be made,
the Letters of Credit to be issued, and the Credit Support to be in place
on such date.
(f) The Plan of Reorganization reasonably acceptable to the
Agent and the Lenders shall have been confirmed pursuant to an order of the
Bankruptcy Court reasonably satisfactory to the Agent and the Lenders, and
all conditions to consummation, as set forth in the Plan of Reorganization,
shall have been satisfied, other than those conditions that require cash
payments.
(g) The Borrowers shall have paid all fees and expenses of the
Agent and the Attorney Costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby to the extent invoiced.
(h) The Agent and the Lenders shall have had an opportunity, if
they so choose, to examine the books of account and other records and files
of the Borrowers and to make copies thereof, and to conduct a pre-closing
audit which shall include, without limitation, verification of Inventory,
Accounts, and the Borrowing Base, and the results of such examination and
audit shall have been satisfactory to the Agent and the Lenders in all
respects.
(i) All proceedings taken in connection with the execution of
this Agreement, all other Loan Documents and all documents and papers
relating thereto shall be satisfactory in form, scope, and substance to the
Agent and the Lenders.
LOAN AND SECURITY AGREEMENT - PAGE 96
(j) No action, proceeding, investigation, regulation, or
legislation shall have been instituted, threatened, or proposed by or
before any Governmental Authority to enjoin, restrain, or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated by this
Agreement or which, in the Agent's or the Lenders' reasonable discretion,
would make it inadvisable to consummate the transactions contemplated by
this Agreement.
(k) The consummation by the Borrowers of the transactions
contemplated hereby or entered into in contemplation hereof, shall not
contravene, violate or conflict with any Requirement of Law.
(l) All consents, authorizations and filings, if any, required
in connection with the execution, delivery and performance by the
Borrowers, and the validity and enforceability against the Borrowers, of
the Loan Documents to which they are a party, shall have been obtained or
made, and such consents, authorizations and filings shall be in full force
and effect, except such consents, authorizations and filings, the failure
to obtain which would not have a Material Adverse Effect.
The acceptance by the Borrowers of any Revolving Loans made or Letters of Credit
or Credit Support issued on the Closing Date shall be deemed to be a
representation and warranty made by the Borrowers to the effect that all of the
conditions precedent to the making of such Revolving Loans or the issuance of
such Letters of Credit or Credit Support have been satisfied, with the same
effect as delivery to the Agent and the Lenders of a certificate signed by a
Responsible Officer of the Borrowers, dated the Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this SECTION 10.1 have been fulfilled to the satisfaction of such
Lender, (ii) the decision of such Lender to execute and deliver to the Agent an
executed counterpart of this Agreement was made by such Lender independently and
without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this SECTION 10.1, and (iii) all documents sent
to such Lender for approval, consent, or satisfaction were acceptable to such
Lender.
Section 10.2 CONDITIONS PRECEDENT TO EACH REVOLVING LOAN. The obligation
of the Lenders to make each Revolving Loan, including the initial Revolving
Loans on the Closing Date, and the obligation of the Agent to cause the Letter
of Credit Issuer to issue any Letter of Credit or provide any Credit Support
shall be subject to the further conditions precedent that on and as of the date
of any such extension of credit:
(a) the following statements shall be true, and the acceptance
by the Borrowers of any extension of credit shall be deemed to be a
statement to the effect set forth in CLAUSE (i) and CLAUSE (ii) following
with the same effect as the delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of each Borrower, dated the
date of such extension of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such extension of credit as though
made on and as of such date, other than
LOAN AND SECURITY AGREEMENT - PAGE 97
any such representation or warranty which relates to a specified prior
date and except to the extent the Agent and the Lenders have been
notified by the Borrowers that any representation or warranty is not
correct and the Majority Lenders have explicitly waived in writing
compliance with such representation or warranty; and
(ii) No event has occurred and is continuing, or would
result from such extension of credit, which constitutes a Default or
an Event of Default;
(b) The Agent shall have received satisfactory evidence that the
Agent has a valid, exclusive (other than Permitted Liens), and perfected
first priority (other than Permitted Liens to the extent permitted
hereunder) security interest, lien, collateral assignment, and pledge as of
such date in all Collateral, to the extent any such Liens may be perfected
under the UCC (but excluding any Liens perfected solely by possession, but
only to the extent the Agent has not requested possession of such
Collateral); PROVIDED that upon the Agent's request, the Borrowers shall
provide any additional agreement, document, instrument, certificate, or
other item relating to any other Collateral as may be required for
perfection under any Requirement of Law;
(c) As of the Closing Date and as of the date of funding such
Revolving Loan or issuing such Letter of Credit or Credit Support, there
shall not have occurred or exist any event or condition which constitutes a
Material Adverse Effect.
The foregoing conditions precedent are not conditions to each Lender
participating in or reimbursing the Bank or the Agent for such Lenders' Pro Rata
Share of any Non-Ratable Loan or Agent Advance made in accordance with the
provisions of SECTION 2.2(h) and SECTION 2.2(i).
ARTICLE 11
DEFAULT REMEDIES
Section 11.1 EVENTS OF DEFAULT. It shall constitute an event of default
("EVENT OF DEFAULT") if any one or more of the following shall occur for any
reason:
(a) any failure by the Borrowers to pay the principal of or
interest or premium on any of the Obligations or any fee or other amount
owing hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by the
Borrowers in this Agreement or in any of the other Loan Documents, any
Financial Statement, or any certificate furnished by the Borrowers at any
time to the Agent or any Lender shall prove to be untrue in any material
respect as of the date on which made, deemed made, or furnished;
(c) any default shall occur in
LOAN AND SECURITY AGREEMENT - PAGE 98
(i) the observance or performance of any of the covenants
and agreements contained in SECTION 9.2 (insofar as it requires the
preservation of the existence of the Borrowers) or SECTION 9.9 through
SECTION 9.30, or
(ii) the observance or performance of any of the covenants
and agreements contained in ARTICLE 6 or ARTICLE 7, and such default
shall continue for a period of three (3) Business Days after written
notice thereof has been given to the Parent by the Agent,
(iii) the observance or performance of any of the covenants
and agreements contained in this Agreement, other than as referenced
in SECTION 11.1(a), SECTION 11.1(b), SECTION 11.1(c)(i), and SECTION
11.1(c)(ii) or any other Loan Documents, or any other agreement
entered into at any time to which the Borrowers and the Agent or any
Lender are party (including in respect of any Bank Products) and such
default shall continue for a period of twenty (20) days after written
notice thereof has been given to the Parent by the Agent, or if any
such agreement or document shall terminate (other than in accordance
with its terms or the terms hereof or with the written consent of the
Agent and the Majority Lenders) or become void or unenforceable,
without the written consent of the Agent and the Majority Lenders;
(d) default shall occur with respect to any Funded Debt (other
than the Obligations) of any Borrower in an outstanding principal amount
which exceeds $10,000,000, or under any agreement or instrument under or
pursuant to which any such Funded Debt may have been issued, created,
assumed, or guaranteed by any Borrower, and such default shall continue for
more than the period of grace, if any, therein specified, if the effect
thereof (with or without the giving of notice or further lapse of time or
both) is to accelerate, or to permit the holders of any such Funded Debt to
accelerate, the maturity of any such Funded Debt, or any such Funded Debt
shall be declared due and payable or be required to be prepaid (other than
by a regularly scheduled required prepayment) prior to the stated maturity
thereof;
(e) except for the Chapter 11 Cases, any Borrower shall (i) file
a voluntary petition in bankruptcy or file a voluntary petition or an
answer or otherwise commence any action or proceeding seeking
reorganization, arrangement, or readjustment of its debts or for any other
relief under the Bankruptcy Code, as amended, or under any other bankruptcy
or insolvency act or law, state or federal, now or hereafter existing, or
consent to, approve of, or acquiesce in, any such petition, action, or
proceeding; (ii) apply for or acquiesce in the appointment of a receiver,
assignee, liquidator, sequestrator, custodian, monitor, trustee, or similar
officer for it or for all or any part of its property; (iii) make an
assignment for the benefit of creditors; or (iv) be unable generally to pay
its debts as they become due;
(f) an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced (other than as referenced in
SECTION 11.1(e)) seeking reorganization, arrangement, consolidation, or
readjustment of the debts of any Borrower or for any other relief under the
Bankruptcy Code, as amended, or under any other
LOAN AND SECURITY AGREEMENT - PAGE 99
bankruptcy or insolvency act or law, state or federal, now or hereafter
existing and either (i) such petition, proposal, action, or proceeding
shall not have been dismissed within a period of sixty (60) days after its
commencement or (ii) an order for relief against any Borrower shall have
been entered in such proceeding;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee, or similar officer for any Borrower or for all or any
part of its property shall be appointed or a warrant of attachment,
execution, or similar process shall be issued against any part of the
property of any Borrower;
(h) any Borrower shall file a certificate of dissolution under
applicable state law or shall be liquidated, dissolved, or wound-up (except
in a transaction allowed under SECTION 9.9) or shall commence or have
commenced against it any action or proceeding for dissolution, winding-up,
or liquidation, or shall take any corporate action in furtherance thereof;
(i) all or any material part of the property of any Borrower
shall be nationalized, expropriated, or condemned, seized, or otherwise
appropriated, or custody or control of such property or of any Borrower
shall be assumed by any Governmental Authority or any court of competent
jurisdiction at the instance of any Governmental Authority, except where
contested in good faith by proper proceedings diligently pursued where a
stay of enforcement is in effect;
(j) any Guaranty of the Obligations shall be terminated,
revoked, or declared void or invalid;
(k) one or more judgments, orders, decrees, or arbitration
awards is entered against any Borrower involving liability in the aggregate
(to the extent not covered by independent third-party insurance as to which
the insurer does not dispute coverage) as to any single or related or
unrelated series of transactions, incidents or conditions, of $5,000,000 or
more, and the same shall remain unsatisfied, unvacated, and unstayed
pending appeal for a period of thirty (30) days after the entry thereof;
(l) any loss, theft, damage, or destruction of any item or items
of Collateral or other property of any Borrower occurs which reasonably
could be expected to cause a Material Adverse Effect and is not adequately
covered by insurance;
(m) there is filed against any Borrower any action, suit, or
proceeding under any federal or state racketeering statute (including the
Racketeer Influenced and Corrupt Organization Act of 1970), which action,
suit or proceeding (i) is not dismissed within one hundred twenty (120)
days, and (ii) could reasonably be expected to result in the confiscation
or forfeiture of any material portion of the Collateral;
(n) for any reason other than the failure of the Agent to take
any action available to it to maintain perfection of the Agent's Liens,
pursuant to the Loan Documents, any Loan Document ceases to be in full
force and effect or any Lien with respect to any material portion of the
Collateral intended to be secured thereby ceases to be, or is not, valid,
perfected, and prior to all other Liens (other than Permitted Liens
LOAN AND SECURITY AGREEMENT - PAGE 100
which are expressly permitted to have priority over the Agent's Liens) or
is terminated, revoked, or declared void;
(o) (i) an ERISA Event shall occur with respect to a Pension
Plan or Multi-employer Plan which has resulted or could reasonably be
expected to result in liability of any Borrower under Title IV of ERISA to
the Pension Plan, Multi-employer Plan, or the PBGC in an aggregate amount
in excess of $1,000,000; (ii) the aggregate amount of Unfunded Pension
Liability among all Pension Plans at any time exceeds $1,000,000; or (iii)
any Borrower or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multi-employer Plan in an aggregate amount in excess of $1,000,000; or
(p) there occurs a Change of Control.
Section 11.2 REMEDIES.
(a) If a Default or an Event of Default exists, the Agent may,
in its discretion, and shall, at the direction of the Majority Lenders, do
one or more of the following at any time or times and in any order, without
notice to or demand on any Borrower: (i) reduce the Maximum Revolver
Amount, or the advance rates against Eligible Accounts and/or Eligible
Inventory used in computing the Borrowing Base, or reduce or increase one
or more of the other elements used in computing the Borrowing Base; (ii)
restrict the amount of or refuse to make Revolving Loans; and (iii)
restrict or refuse to provide Letters of Credit or Credit Support. If an
Event of Default exists, the Agent shall, at the direction of the Majority
Lenders, do one or more of the following, in addition to the actions
described in the preceding sentence, at any time or times and in any order,
without notice to or demand on any Borrower: (A) terminate the Commitments
and this Agreement; (B) declare any or all Obligations to be immediately
due and payable; PROVIDED, HOWEVER, that upon the occurrence of any Event
of Default described in SECTION 11.1(e), SECTION 11.1(f), SECTION 11.1(g),
or SECTION 11.1(h), the Commitments shall automatically and immediately
expire and all Obligations shall automatically become immediately due and
payable without notice or demand of any kind; and (C) pursue its other
rights and remedies under the Loan Documents and applicable law.
(b) If an Event of Default has occurred and is continuing: (i)
the Agent shall have for the benefit of the Lenders, in addition to all
other rights of the Agent and the Lenders, the rights and remedies of a
secured party under the UCC; (ii) the Agent may, at any time, take
possession of the Collateral and keep it on any Borrower's premises, at no
cost to the Agent or any Lender, or remove any part of it to such other
place or places as the Agent may desire, or any Borrower shall, upon the
Agent's demand, at such Borrower's cost, assemble the Collateral and make
it available to the Agent at a place reasonably convenient to the Agent;
and (iii) the Agent may sell and deliver any Collateral at public or
private sales, for cash, upon credit, or otherwise, at such prices and upon
such terms as the Agent deems advisable, in its sole discretion, and may,
if the Agent deems it reasonable, postpone or adjourn any sale of the
Collateral by an announcement at the time and place of sale or of such
postponed or adjourned sale
LOAN AND SECURITY AGREEMENT - PAGE 101
without giving a new notice of sale. Without in any way requiring notice to
be given in the following manner, each Borrower agrees that any notice by
the Agent of sale, disposition, or other intended action hereunder or in
connection herewith, whether required by the UCC or otherwise, shall
constitute reasonable notice to the Borrowers if such notice is mailed by
registered or certified mail, return receipt requested, postage prepaid, or
is delivered personally against receipt, at least five (5) days prior to
such action to the Borrowers' address specified in or pursuant to SECTION
15.8. If any Collateral is sold on terms other than payment in full at the
time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment,
the Agent may resell the Collateral without further notice to any Borrower.
In the event the Agent seeks to take possession of all or any portion of
the Collateral by judicial process, each Borrower irrevocably waives: (A)
the posting of any bond, surety, or security with respect thereto which
might otherwise be required; (B) any demand for possession prior to the
commencement of any suit or action to recover the Collateral; and (C) any
requirement that the Agent retain possession and not dispose of any
Collateral until after trial or final judgment. Each Borrower agrees that
the Agent has no obligation to preserve rights to the Collateral or marshal
any Collateral for the benefit of any Person. The Agent is hereby granted a
license or other right to use, without charge, each Borrower's labels,
patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, to the extent constituting
Collateral in completing production of, advertising or selling any
Collateral, and each Borrower's rights under all licenses and all franchise
agreements shall inure to the Agent's benefit for such purpose. The
proceeds of sale shall be applied first to all expenses of sale, including
Attorneys' Costs, and then to the Obligations. The Agent will return any
excess to the Borrowers, and the Borrowers shall remain liable for any
deficiency.
(c) If an Event of Default occurs and is continuing, each
Borrower hereby waives all rights to notice and hearing prior to the
exercise by the Agent of the Agent's rights to repossess the Collateral
without judicial process or to replevy, attach, or levy upon the Collateral
without notice or hearing.
(d) Each Borrower recognizes that the Agent may be unable to
effect a public sale of any or all of the Collateral or other property to
be sold by reason of certain prohibitions contained in the laws of any
jurisdiction outside the United States or in applicable federal or state
securities laws but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obliged to agree,
among other things, to acquire such Collateral or other property to be sold
for their own account for investment and not with a view to the
distribution or resale thereof. Each Borrower acknowledges and agrees that
any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale and, notwithstanding
such circumstances, agrees that any such private sale shall, to the extent
permitted by law, be deemed to have been made in a commercially reasonable
manner. Unless required by a Requirement of Law, the Agent shall not be
under any obligation to delay a sale of any of the Collateral or other
property to be sold for the period of time necessary to permit the issuer
of such securities to register such securities under the laws of any
jurisdiction outside the United States under any applicable federal or
state securities laws, even if such issuer would agree to do so. Each
Borrower further agrees to
LOAN AND SECURITY AGREEMENT - PAGE 102
do or cause to be done, to the extent that such Borrower may do so under
Requirements of Law, all such other acts and things as may be necessary to
make such sales or resales of any portion or all of the Collateral or other
property to be sold valid and binding and in compliance with any and all
Requirements of Law at the Borrowers' expense. Each Borrower further agrees
that a breach of any of the covenants contained in this SECTION 11.2(d)
will cause irreparable injury to the Agent and the Lenders for which there
is no adequate remedy at law and, as a consequence, agrees that each
covenant contained in this SECTION 11.2(d) shall be specifically
enforceable against such Borrower and such Borrower hereby waives and
agrees, to the fullest extent permitted by law, not to assert as a defense
against an action for specific performance of such covenants that (i) such
Borrower's failure to perform such covenants will not cause irreparable
injury to the Agent and the Lenders or (ii) the Agent or the Lenders have
an adequate remedy at law in respect of such breach. Each Borrower further
acknowledges the impossibility of ascertaining the amount of damages which
would be suffered by the Agent and the Lenders by reason of a breach of any
of the covenants contained in this SECTION 11.2(d) and, consequently,
agrees that, if such Borrower shall breach any of such covenants and the
Agent or the Lenders shall xxx for damages for such breach, such Borrower
shall pay to the Agent, for the benefit of the Agent and the Lenders, as
liquidated damages and not as a penalty, an aggregate amount equal to the
value of the Collateral or other property to be sold on the date the Agent
shall demand compliance with this SECTION 11.2(d).
ARTICLE 12
TERM AND TERMINATION
Section 12.1 TERM AND TERMINATION. The term of this Agreement shall end
on the Stated Termination Date unless terminated or automatically renewed and
extended in accordance with the provisions of this Article. This Agreement will
be extended automatically on each date (the "Extension Determination Date")
which is twelve (12) months prior to the Stated Termination Date (or twelve (12)
months prior to the expiration of any one-year extension, as applicable) up to a
maximum of two one-year extensions beyond October 31, 2005. Each extension will
be for a renewal term of one-year (unless otherwise terminated as provided in
this Agreement). Each extension is subject to the requirements that on the
applicable Extension Determination Date, no Default or Event of Default may
exist, and on each applicable Extension Determination Date the Borrower shall
deliver to the Agent a certificate stating that, giving effect to such
extension, all representations and warranties contained herein are true and
correct (and in such case, the representation contained in SECTION 8.24 will be
deemed to relate to the most recent available audited Financial Statements as of
the date of such certificate).
The Borrowers, the Agent, and each Lender shall have the right to terminate
this Agreement, on the Stated Termination Date or at the end of any such renewal
term by giving the other parties hereto written notice not less than thirty (30)
days prior to the Stated Termination Date by registered or certified mail. All
terminations of this Agreement by the Borrowers are subject to the application
of SECTION 4.2 hereof. The Borrowers may also terminate this Agreement at any
time if they: (a) give the Agent and the Lenders thirty (30) days prior written
notice of termination by registered or certified mail; and (b) pay and perform
all Obligations, including, without limitation, all fees (if any) required by
SECTION 4.2 and any other fees payable
LOAN AND SECURITY AGREEMENT - PAGE 103
under the Loan Documents on or prior to the effective date of termination. The
Agent upon direction from the Majority Lenders may terminate this Agreement
without notice to the Borrowers during the existence of an Event of Default.
Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including all unpaid principal, accrued and unpaid
interest, and any early termination or prepayment fees but excluding
indemnification obligations to the extent no claim with respect thereto has been
asserted and remains unsatisfied) shall become immediately due and payable and
the Borrowers shall immediately arrange for the cancellation and return of all
Letters of Credit and Credit Support then outstanding. Notwithstanding the
termination of this Agreement, until all Obligations (other than such
indemnification obligations relating to unasserted claims) are indefeasibly paid
and performed in full in cash, the Borrowers shall remain bound by the terms of
this Agreement and shall not be relieved of any of their Obligations hereunder
or under any other Loan Document, and the Agent and the Lenders shall retain all
their rights and remedies hereunder (including, without limitation, the Agent's
Liens in and all rights and remedies with respect to all then existing and
after-arising Collateral).
ARTICLE 13
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
Section 13.1 NO WAIVERS; CUMULATIVE REMEDIES. No failure by the Agent or
any Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement hereto, or in any other agreement between or among
any Borrower and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. Subject to
SECTION 13.2, no waiver by the Agent or any Lender will be effective unless it
is in writing, and then only to the extent specifically stated. No waiver by the
Agent or the Lenders on any occasion shall affect or diminish the Agent's and
each Lender's rights thereafter to require strict performance by the Borrowers
of any provision of this Agreement. The Agent's and each Lender's rights under
this Agreement will be cumulative and not exclusive of any other right or remedy
which the Agent or any Lender may have.
Section 13.2 AMENDMENTS AND WAIVERS. (a) No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by any Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Lenders (or by the Agent
at the written request of the Majority Lenders) and the Borrowers and then any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; PROVIDED, HOWEVER, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Lenders and
the Borrowers and acknowledged by the Agent, do any of the following:
(i) increase or extend the Commitment of any Lender;
(ii) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees,
or other amounts due to the Lenders (or any of them) hereunder or
under any other Loan Document;
LOAN AND SECURITY AGREEMENT - PAGE 104
(iii) reduce the principal of, or the rate of interest
specified herein on any Revolving Loan, or any fees or other amounts
payable hereunder or under any other Loan Document;
(iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Revolving Loans which is
required for the Lenders or any of them to take any action hereunder;
(v) increase any of the percentages set forth in the
definition of the Borrowing Base;
(vi) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(vii) release any guaranties of the Obligations or release
Collateral other than as permitted by SECTION 14.11;
(viii) change the definition of "Majority Lenders" or
"Required Lenders"; or
(ix) increase the Maximum Revolver Amount or the Unused
Letter of Credit Subfacility;
PROVIDED, HOWEVER, the Agent may, in its sole discretion and notwithstanding the
limitations contained in CLAUSE (v) and CLAUSE (ix) preceding and any other
terms of this Agreement, make Revolving Loans (including Agent Advances) in an
amount not to exceed five percent (5.0%) of the Maximum Revolver Amount and,
PROVIDED FURTHER, that no amendment, waiver, or consent shall, unless in writing
and signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document.
(b) If any fees are paid to the Lenders as consideration for
amendments, waivers or consents with respect to this Agreement, at Agent's
election, such fees may be paid only to those Lenders that agree to such
amendments, waivers or consents within the time specified for submission
thereof.
(c) If, in connection with any proposed amendment, waiver or
consent (a "PROPOSED CHANGE"):
(i) requiring the consent of all Lenders, the consent of the
Required Lenders is obtained, but the consent of other Lenders is not
obtained (any such Lender whose consent is not obtained as described
in this clause (i) and in clause (ii) below being referred to as a
"NON-CONSENTING LENDER"), or
(ii) requiring the consent of the Required Lenders, the consent
of the Majority Lenders is obtained,
then, so long as the Agent is not a Non-Consenting Lender, at the Borrower's
request, the Agent or an Eligible Assignee shall have the right (but not the
obligation) with the Agent's approval, to
LOAN AND SECURITY AGREEMENT - PAGE 105
purchase from the Non-Consenting Lenders, and the Non-Consenting Lenders agree
that they shall sell, all the Non-Consenting Lenders' Commitments for an amount
equal to the principal balances thereof and all accrued interest and fees with
respect thereto through the date of sale pursuant to Assignment and Acceptance
Agreement(s), without premium or discount.
Section 13.3 ASSIGNMENTS; PARTICIPATIONS.
(a) Any Lender may, with the written consent of the Agent (when
consent shall not be unreasonably withheld) assign and delegate to one or
more Eligible Assignees (provided that no consent of the Agent shall be
required in connection with any assignment and delegate by a Lender to an
Affiliate of such Lender) (each an "ASSIGNEE") all, or any ratable part of
all, of the Revolving Loans, the Commitments, and the other rights and
obligations of such Lender hereunder (any such assignment and delegation
being referred to herein as an "ASSIGNMENT"), in a minimum amount of
$7,777,777.78 (PROVIDED that, unless an assignor Lender has assigned and
delegated all of its Revolving Loans and Commitments, no such assignment
and/or delegation shall be permitted unless, after giving effect thereto,
such assignor Lender retains a Commitment in a minimum amount of
$7,777,777.78); PROVIDED, HOWEVER, that the Borrowers and the Agent may
continue to deal solely and directly with such Lender in connection with
the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, shall have been given to the
Borrowers and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Borrowers and the Agent an
Assignment and Acceptance in the form of EXHIBIT E ("ASSIGNMENT AND
ACCEPTANCE") together with any Note or Notes subject to such assignment,
and (iii) the assignor Lender or Assignee has paid to the Agent a
processing fee in the amount of $5,000. The Borrowers agree to promptly
execute and deliver, upon or concurrently with the surrender of the
existing Notes, new Notes and replacement Notes as reasonably requested by
the Agent to evidence assignments of the Revolving Loans and Commitments in
accordance herewith.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations,
including, but not limited to, the obligation to participate in Letters of
Credit and Credit Support have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under this Agreement (and in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and
LOAN AND SECURITY AGREEMENT - PAGE 106
Acceptance, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties, or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency, or
value of this Agreement or any other Loan Document furnished pursuant
hereto or the attachment, perfection, or priority of any Lien granted by
the Borrowers to the Agent or any Lender in the Collateral; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or
the performance or observance by any Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto;
(iii) such Assignee confirms that it has received a copy of this Agreement,
together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such Assignee will, independently and
without reliance upon the Agent, such assigning Lender, or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such Assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers, including the
discretionary rights and incidental power, as are reasonably incidental
thereto; and (vi) such Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements of SECTION
13.3(a), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and
the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender PRO TANTO.
(e) Any Lender may at any time sell to one or more Participants
participating interests in any Revolving Loans, the Commitment of that
Lender, and the other interests of that Lender (the "ORIGINATING LENDER")
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i)
the originating Lender's obligations under this Agreement shall remain
unchanged, (ii) the originating Lender shall remain solely responsible for
the performance of such obligations, (iii) the Borrowers and the Agent
shall continue to deal solely and directly with the originating Lender in
connection with the originating Lender's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Lender shall transfer
or grant any participating interest under which the Participant has rights
to approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document except the matters set forth in
SECTION 13.2(a)(i), (ii), and (iii), and (v) all amounts payable by the
Borrowers hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall
be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent and
LOAN AND SECURITY AGREEMENT - PAGE 107
subject to the same limitation as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve
Board or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
ARTICLE 14
THE AGENT
Section 14.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby designates
and appoints the Bank (acting in its capacity as the Agent) as its agent under
this Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. The Agent agrees to act as such on the express
conditions contained in this ARTICLE 14. The provisions of this ARTICLE 14 are
solely for the benefit of the Agent and the Lenders and the Borrowers shall have
no rights as a third party beneficiary of any of the provisions contained herein
other than as expressly provided in SECTION 14.10 and SECTION 14.11.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
SECTION 2.2(i), and (c) the exercise of remedies pursuant to SECTION 11.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.
Section 14.2 DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees, or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent, employee, or
LOAN AND SECURITY AGREEMENT - PAGE 108
attorney-in-fact that it selects as long as such selection was made without
gross negligence or willful misconduct.
Section 14.3 LIABILITY OF THE AGENT. None of the Agent-Related Persons
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation, or warranty made by any Borrower or
Affiliate of any Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement, or
other document referred to or provided for in, or received by the Agent under or
in connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability, or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books, or records of any Borrower or any Borrower's
Affiliates.
Section 14.4 RELIANCE BY THE AGENT.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex, or telephone
message, statement, or other document or conversation believed by it to be
genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel
(including, without limitation, counsel to any Borrower), independent
accountants and other experts selected by the Agent. The Agent shall be
fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Lenders as it deems appropriate and,
if it so requests, it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Majority Lenders (or all Lenders if so required
by SECTION 13.2) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in SECTION 10.1, each Lender that has executed this Agreement
shall be deemed to have consented to, approved, or accepted or to be
satisfied with, each document or other matter either sent by the Agent to
such Lender for consent, approval, acceptance, or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory
to the Lender.
Section 14.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, unless
the Agent shall have received
LOAN AND SECURITY AGREEMENT - PAGE 109
written notice from a Lender or a Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." The Agent will notify the Lenders of its receipt of any
such notice. The Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Lenders in accordance with
ARTICLE 11; PROVIDED, HOWEVER, that unless and until the Agent has received any
such request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable.
Section 14.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrowers and their Affiliates, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition, and creditworthiness of the
Borrowers and their Affiliates, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Borrowers. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals, and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition, and creditworthiness of the Borrowers. Except for
notices, reports, and other documents expressly herein required to be furnished
to the Lenders by the Agent, the Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition, or
creditworthiness of any Borrower which may come into the possession of any of
the Agent-Related Persons.
Section 14.7 INDEMNIFICATION. WHETHER OR NOT THE TRANSACTIONS
CONTEMPLATED HEREBY ARE CONSUMMATED, THE LENDERS SHALL INDEMNIFY UPON DEMAND THE
AGENT-RELATED PERSONS (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF THE
BORROWERS AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWERS TO DO SO), PRO
RATA, FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES AS SUCH TERM IS
DEFINED IN SECTION 15.11; PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR
THE PAYMENT TO THE AGENT-RELATED PERSONS OF ANY PORTION OF SUCH INDEMNIFIED
LIABILITIES RESULTING SOLELY FROM SUCH PERSON'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings, or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such
LOAN AND SECURITY AGREEMENT - PAGE 110
expenses by or on behalf of the Borrowers. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of the Agent.
Section 14.8 THE AGENT IN INDIVIDUAL CAPACITY. The Bank and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with any
Borrower and its Affiliates as though the Bank were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, the Bank or its Affiliates may receive information
regarding any Borrower or its Affiliates (including information that may be
subject to confidentiality obligations in favor of any such Borrower or such
Affiliate) and acknowledge that the Agent and the Bank shall be under no
obligation to provide such information to the Lenders. With respect to its
Revolving Loans, the Bank shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent, and the terms "Lender" and "Lenders" include the Bank in its
individual capacity.
Section 14.9 SUCCESSOR AGENT. The Agent may resign as Agent upon thirty
(30) days notice to the Lenders and the Borrowers, such resignation to be
effective upon the acceptance of a successor agent to its appointment as Agent.
In the event the Bank sells all of its Commitment and Revolving Loans as part of
a sale, transfer, or other disposition by the Bank of substantially all of its
loan portfolio, the Bank shall resign as Agent and such purchaser or transferee
shall become the successor Agent hereunder. If the Agent resigns under this
Agreement, subject to the proviso in the preceding sentence, the Majority
Lenders shall appoint from among the Lenders a successor agent for the Lenders.
If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrowers, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor agent, and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this ARTICLE 14 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
Section 14.10 WITHHOLDING TAX.
(a) If any Lender is a "foreign corporation, partnership, or
trust" within the meaning of the Code and such Lender claims exemption
from, or a reduction of, United States withholding tax under Sections 1441
or 1442 of the Code, such Lender agrees with and in favor of the Agent, to
deliver to the Agent and the Parent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms W-8BEN and W-8ECI before the payment of
any interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
LOAN AND SECURITY AGREEMENT - PAGE 111
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the payment of any interest is due in the first taxable year of
such Lender and in each succeeding taxable year of such Lender during
which interest may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent and the Parent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
W-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations owing to such Lender,
such Lender agrees to notify the Agent and the Parent of the percentage
amount in which it is no longer the beneficial owner of Obligations owing
to such Lender. To the extent of such percentage amount, the Agent and the
Parent will treat such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations owing to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed
by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent or any Borrower may withhold from any interest
payment to such Lender an amount equivalent to the applicable withholding
tax after taking into account such reduction. If the forms or other
documentation required by CLAUSE (a) of this Section are not delivered to
the Agent and the Parent, then the Agent or any Borrower may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent or any Borrower
did not properly withhold tax from amounts paid to or for the account of
any Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify the Agent or any
Borrower of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify the Agent and the Borrowers fully for all amounts
paid, directly or indirectly, by the Agent or any Borrower as tax or
otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the
LOAN AND SECURITY AGREEMENT - PAGE 112
amounts payable to the Agent under this SECTION 14.10, together with all
costs and expenses (including Attorney Costs). The obligation of the
Lenders under this SECTION 14.10(e) shall survive the payment of all
Obligations and the resignation or replacement of the Agent.
Section 14.11 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Lien upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full of all Revolving Loans and reimbursement obligations
in respect of Letters of Credit and Credit Support, and the termination of
all outstanding Letters of Credit and Credit Support (whether or not any of
such obligations are due) and all other Obligations; (ii) constituting
property being sold or disposed of if the Borrower disposing of such
property certifies to the Agent that the sale or disposition is made in
compliance with SECTION 9.9 or SECTION 9.19 (and the Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which no Borrower owned any interest at the time
the Lien was granted or at any time thereafter; or (iv) constituting
property leased to a Borrower under a lease which has expired or been
terminated in a transaction permitted under this Agreement. Except as
provided above, the Agent will not release any of the Agent's Liens without
the prior written authorization of the Lenders; PROVIDED that the Agent
may, in its discretion, release the Agent's Liens on Collateral valued in
the aggregate not in excess of $1,000,000 during each Fiscal Year without
the prior written authorization of any Lender. Upon request by the Agent or
the Borrowers at any time, the Lenders will confirm in writing the Agent's
authority to release any Agent's Liens upon particular types or items of
Collateral pursuant to this SECTION 14.11.
(b) Upon receipt by the Agent of any authorization required
pursuant to SECTION 14.11(a) from the Lenders of the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral, and
upon at least five (5) Business Days prior written request by the
Borrowers, the Agent shall (and is hereby irrevocably authorized by the
Lenders to) execute such documents as may be necessary to evidence the
release of the Agent's Liens upon such Collateral; PROVIDED, HOWEVER, that
(i) the Agent shall not be required to execute any such document on terms
which, in the Agent's opinion, would expose the Agent to liability or
create any obligation or entail any consequence other than the release of
such Liens without recourse or warranty, and (ii) such release shall not in
any manner discharge, affect, or impair the Obligations or any Liens (other
than those expressly being released) upon (or obligations of the Borrowers
in respect of) all interests retained by the Borrowers, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by any Borrower or
is cared for, protected, or insured or has been encumbered, or that the
Agent's Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under any
duty of care, disclosure, or fidelity, or to continue exercising, any of
the rights, authorities, and
LOAN AND SECURITY AGREEMENT - PAGE 113
powers granted or available to the Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, the Agent may
act in any manner it may deem appropriate, in its sole discretion given the
Agent's own interest in the Collateral in its capacity as one of the
Lenders and that the Agent shall have no other duty or liability whatsoever
to any Lender as to any of the foregoing.
Section 14.12 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of the Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all other Lenders, set-off
against the Obligations, any amounts owing by such Lender to any Borrower
or any accounts of any Borrower now or hereafter maintained with such
Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so by the Agent, take or cause to be taken any
action to enforce its rights under this Agreement or against any Borrower,
including the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any
of the Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, set-off, or otherwise, any proceeds of Collateral or
any payments with respect to the Obligations owing to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except
for any such proceeds or payments received by such Lender from the Agent
pursuant to the terms of this Agreement, or (ii) payments from the Agent in
excess of such Lender's ratable portion of all such distributions by the
Agent, such Lender shall promptly (A) turn the same over to the Agent, in
kind, and with such endorsements as may be required to negotiate the same
to the Agent, or in same day funds, as applicable, for the account of all
of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without
recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received
shall be applied ratably as among the Lenders in accordance with their Pro
Rata Shares; PROVIDED, HOWEVER, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor
shall be returned to such purchasing party, but without interest except to
the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
Section 14.13 AGENCY FOR PERFECTION. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting the Lenders' security
interest in assets which, in accordance with Article 9 of the UCC can be
perfected only by possession. Should any Lender (other than the Agent) obtain
possession of any such Collateral, such Lender shall notify the Agent thereof,
and, promptly upon the Agent's request therefor shall deliver such Collateral to
the Agent or otherwise deal with such Collateral in accordance with the Agent's
instructions.
LOAN AND SECURITY AGREEMENT - PAGE 114
Section 14.14 PAYMENTS BY THE AGENT TO THE LENDERS. All payments to be
made by the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, in the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, or interest on the Revolving Loans or otherwise.
Unless the Agent receives notice from the Borrowers prior to the date on which
any payment is due to the Lenders that the Borrowers will not make such payment
in full as and when required, the Agent may assume that the Borrowers have made
such payment in full to the Agent on such date in immediately available funds
and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrowers have not made
such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.
Section 14.15 CONCERNING THE COLLATERAL AND THE RELATED LOAN DOCUMENTS.
Each Lender authorizes and directs the Agent to enter into this Agreement and
the other Loan Documents for the benefit and obligation of the Agent and the
Lenders. Each Lender agrees that any action taken by the Agent, the Required
Lenders or the Majority Lenders, as applicable, in accordance with the terms of
this Agreement or the other Loan Documents, and the exercise by the Agent, the
Required Lenders or the Majority Lenders, as applicable, of their respective
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders. The
Lenders acknowledge that the Revolving Loans, Agent Advances, Non-Ratable Loans,
Hedge Agreements, Bank Products and all interest, fees and expenses hereunder
constitute one Debt, secured PARI PASSU by all of the Collateral.
Section 14.16 FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS.
By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "REPORT" and collectively, "REPORTS") prepared
by or on behalf of the Agent;
(b) expressly agrees and acknowledges that neither the Bank nor
the Agent (i) makes any representation or warranty as to the accuracy of
any Report, or (ii) shall be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent, the Bank, or other
party performing any audit or examination will inspect only specific
information regarding the Borrowers and will rely significantly upon the
Borrowers' books and records, as well as on representations of the
Borrowers' personnel;
LOAN AND SECURITY AGREEMENT - PAGE 115
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and
any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may
reach or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to the
Borrowers, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of the Borrowers; and
(ii) to pay and protect, and indemnify, defend, and hold the Agent and any
such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses, and other amounts
(including Attorney Costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
Section 14.17 RELATION AMONG LENDERS. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
ARTICLE 15
MISCELLANEOUS
Section 15.1 CUMULATIVE REMEDIES; NO PRIOR RECOURSE TO COLLATERAL. The
enumeration herein of the Agent's and each Lender's rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies that the Agent and the
Lenders may have under the UCC or other applicable law. The Agent and the
Lenders shall have the right, in their sole discretion, to determine which
rights and remedies are to be exercised and in which order. The exercise of one
right or remedy shall not preclude the exercise of any others, all of which
shall be cumulative. The Agent and the Lenders may, without limitation, proceed
directly against any Person liable therefor to collect the Obligations without
any prior recourse to the Collateral. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power, or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power, or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power, or privilege.
Section 15.2 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement, any Loan Document, or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any instrument
or agreement required hereunder.
Section 15.3 GOVERNING LAW; CHOICE OF FORUM.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
LOAN AND SECURITY AGREEMENT - PAGE 116
WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS
PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY
GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN
ARTICLE 9 OF THE UCC) OF THE STATE OF TEXAS; PROVIDED THAT THE AGENT AND
THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
XXXXX XX XXXXX XX XX XXX XXXXXX XXXXXX FOR THE NORTHERN DISTRICT OF TEXAS,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE
AGENT, AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS,
THE AGENT, AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING (i) THE AGENT
AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST ANY BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN
ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS
AND (ii) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE
COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
Section 15.4 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE LENDERS,
AND THE AGENT IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. EACH OF THE BORROWERS, THE LENDERS, AND THE AGENT AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS,
LOAN AND SECURITY AGREEMENT - PAGE 117
RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
Section 15.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of each Borrower contained in this Agreement
shall survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
Section 15.6 OTHER SECURITY AND GUARANTIES. The Agent, may, without
notice or demand and without affecting the Borrowers' obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce, or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
Section 15.7 FEES AND EXPENSES. Each Borrower agrees to pay to the Agent,
for its benefit, on demand, all costs and expenses that the Agent pays or incurs
in connection with the negotiation, preparation, syndication, consummation,
administration, enforcement, and termination of this Agreement or any of the
other Loan Documents, including: (a) Attorney Costs; (b) costs and expenses
(including attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien searches; (d) taxes, fees, and other charges for filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Agent's Liens (including costs and expenses paid or incurred by the
Agent in connection with the consummation of this Agreement); (e) sums paid or
incurred to pay any amount or take any action required of any Borrower under the
Loan Documents that such Borrower fails to pay or take; (f) costs of appraisals,
inspections, and verifications of the Collateral, including travel, lodging, and
meals for inspections of the Collateral and the Borrowers' operations by the
Agent plus the Agent's then customary charge for field examinations and audits
and the preparation of reports thereof (such charge is currently $750 per day
(or portion thereof) for each agent or employee of the Agent with respect to
each field examination or audit); (g) costs and expenses of forwarding loan
proceeds, collecting checks, and other items of payment, and establishing and
maintaining Payment Accounts and lock boxes; (h) costs and expenses of
preserving and protecting the Collateral; and (i) costs and expenses (including
Attorney Costs) paid or incurred to obtain payment of the Obligations, enforce
the Agent's Liens, sell or otherwise realize upon the Collateral, and otherwise
enforce the provisions of the Loan Documents, or to defend any claims made or
threatened against the Agent or any Lender arising out of the transactions
contemplated hereby (including preparations for and consultations concerning any
such matters). The foregoing shall not be construed to limit any other
provisions of the Loan Documents regarding costs and expenses to be paid by the
Borrowers. All of the foregoing costs and expenses shall be charged to the Loan
Account as Revolving Loans as described in SECTION 4.5.
Section 15.8 NOTICES. Except as otherwise provided herein, all notices,
demands, and requests that any party is required or elects to give to any other
shall be in writing, or by a
LOAN AND SECURITY AGREEMENT - PAGE 118
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including, but
not limited to, delivery by overnight mail and courier service, (b) four (4)
days after it shall have been mailed by United States mail, first class,
certified or registered, with postage prepaid, or (c) in the case of notice by
such a telecommunications device, when properly transmitted, in each case
addressed to the party to be notified as follows:
IF TO THE AGENT OR TO THE BANK:
Bank of America, National Association
000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Commercial Finance Business Credit/Manager: URGENT
Telecopy No.: 000-000-0000
WITH A COPY TO:
Bank of America, National Association
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Commercial Finance Business Credit/Regional Manager: URGENT
Telecopy No.: 000-000-0000
WITH A COPY TO:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
0000 Xxx Xxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: R. Xxxxxxx Xxxxxxxx, Esq.
Telecopy No.: 000-000-0000
IF TO THE BORROWERS:
c/o Metals USA, Inc.
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Telecopy No.: 000-000-0000
LOAN AND SECURITY AGREEMENT - PAGE 119
WITH A COPY TO:
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopy No.: 000-000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration, or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration, or other communication.
Section 15.9 WAIVER OF NOTICES. Unless otherwise expressly provided
herein, each Borrower waives presentment, notice of demand or dishonor, and
protest as to any instrument, notice of intent to accelerate the Obligations,
and notice of acceleration of the Obligations, as well as any and all other
notices to which it might otherwise be entitled. No notice to or demand on any
Borrower which the Agent or any Lender may elect to give shall entitle any
Borrower to any or further notice or demand in the same, similar, or other
circumstances.
Section 15.10 BINDING EFFECT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; PROVIDED, HOWEVER, that no
interest herein may be assigned by any Borrower without the prior written
consent of the Agent and each Lender. The rights and benefits of the Agent and
the Lenders hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.
Section 15.11 INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWERS.
(a) EACH BORROWER AGREES TO DEFEND, INDEMNIFY, AND HOLD THE
AGENT-RELATED PERSONS AND EACH LENDER AND EACH OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL, AGENTS, AND ATTORNEYS-IN-FACT
(EACH, AN "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, CHARGES, EXPENSES, AND DISBURSEMENTS (INCLUDING ATTORNEY
COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME (INCLUDING AT
ANY TIME FOLLOWING REPAYMENT OF THE REVOLVING LOANS AND THE TERMINATION,
RESIGNATION, OR REPLACEMENT OF THE AGENT OR REPLACEMENT OF ANY LENDER) BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY SUCH PERSON IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED
BY OR REFERRED TO HEREIN, OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY
ACTION TAKEN OR OMITTED BY ANY SUCH PERSON UNDER OR IN CONNECTION WITH ANY
OF THE FOREGOING, INCLUDING WITH RESPECT TO ANY INVESTIGATION,
LOAN AND SECURITY AGREEMENT - PAGE 120
LITIGATION, OR PROCEEDING (INCLUDING ANY INSOLVENCY PROCEEDING OR APPELLATE
PROCEEDING) RELATED TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR THE REVOLVING LOANS OR THE USE OF THE PROCEEDS THEREOF,
WHETHER OR NOT ANY INDEMNIFIED PERSON IS A PARTY THERETO (ALL THE
FOREGOING, COLLECTIVELY, THE "INDEMNIFIED LIABILITIES"); PROVIDED THAT THE
BORROWERS SHALL HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES RESULTING SOLELY FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON OR ITS
RESPECTIVE AFFILIATES. THE AGREEMENTS IN THIS SECTION 15.11 SHALL SURVIVE
PAYMENT OF ALL OTHER OBLIGATIONS.
(b) EACH BORROWER AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS
THE AGENT AND THE LENDERS FROM ANY LOSS OR LIABILITY DIRECTLY OR INDIRECTLY
ARISING OUT OF THE USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE,
RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE OF A
HAZARDOUS SUBSTANCE RELATING TO ANY BORROWER'S OPERATIONS, BUSINESS, OR
PROPERTY. THIS INDEMNITY WILL APPLY WHETHER THE HAZARDOUS SUBSTANCE IS ON,
UNDER, OR ABOUT ANY BORROWER'S PROPERTY OR OPERATIONS OR PROPERTY LEASED TO
ANY BORROWER. THE INDEMNITY INCLUDES BUT IS NOT LIMITED TO ATTORNEY COSTS.
THE INDEMNITY EXTENDS TO THE AGENT AND THE LENDERS, THEIR PARENTS,
AFFILIATES, SUBSIDIARIES, AND ALL OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, SUCCESSORS, ATTORNEYS, AND ASSIGNS. "HAZARDOUS SUBSTANCES" MEANS
ANY SUBSTANCE, MATERIAL, OR WASTE THAT IS OR BECOMES DESIGNATED OR
REGULATED AS "TOXIC," "HAZARDOUS," "POLLUTANT," OR "CONTAMINANT" OR A
SIMILAR DESIGNATION OR REGULATION UNDER ANY FEDERAL, STATE, OR LOCAL LAW
(WHETHER UNDER COMMON LAW, STATUTE, REGULATION, OR OTHERWISE) OR JUDICIAL
OR ADMINISTRATIVE INTERPRETATION OF SUCH, INCLUDING PETROLEUM OR NATURAL
GAS. THIS INDEMNITY WILL SURVIVE REPAYMENT OF ALL OTHER OBLIGATIONS.
Section 15.12 LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY ANY
BORROWER, ANY LENDER, OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS OF ANY OF THEM FOR ANY
SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM
FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND
EACH BORROWER AND EACH LENDER HEREBY WAIVES, RELEASES, AND AGREES NOT TO XXX
UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN
OR SUSPECTED TO EXIST IN ITS FAVOR.
LOAN AND SECURITY AGREEMENT - PAGE 121
Section 15.13 FINAL AGREEMENT. This Agreement and the other Loan Documents
are intended by the Borrowers, the Agent, and the Lenders to be the final,
complete, and exclusive expression of the agreement between them. This Agreement
and the other Loan Documents supersede any and all prior oral or written
agreements relating to the subject matter hereof and thereof. No modification,
rescission, waiver, release, or amendment of any provision of this Agreement or
any other Loan Document shall be made, except by a written agreement signed by
the Borrowers and a duly authorized officer of each of the Agent and the
requisite Lenders.
THIS WRITTEN LOAN AND SECURITY AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 15.14 COUNTERPARTS. This Agreement and the other Loan Documents
may be executed in any number of counterparts, and by the Agent, each Lender,
and the Borrowers in separate counterparts, each of which shall be an original,
but all of which shall together constitute one and the same agreement. Signature
pages may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically attached to the
same document, and a telecopy of any such executed signature page shall be valid
as an original.
Section 15.15 CAPTIONS. The captions contained in this Agreement and the
other Loan Documents are for convenience of reference only, are without
substantive meaning and should not be construed to modify, enlarge, or restrict
any provision.
Section 15.16 RIGHT OF SET-OFF. In addition to any rights and remedies of
the Lenders provided by law, if an Event of Default exists or the Revolving
Loans have been accelerated, each Lender is authorized at any time and from time
to time, without prior notice to the Borrowers, any such notice being waived by
the Borrowers to the fullest extent permitted by law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by, and other indebtedness at any time owing by, such Lender to or
for the credit or the account of any Borrower against any and all Obligations
owing to such Lender, now or hereafter existing, irrespective of whether or not
the Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrowers and the Agent after any such
set-off and application made by such Lender; PROVIDED, HOWEVER, that the failure
to give such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY
OF ANY BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN
CONSENT OF THE AGENT.
Section 15.17 JOINT AND SEVERAL LIABILITY. All Revolving Loans, upon
funding, shall be deemed to be jointly funded to and received by the Borrowers.
Each Borrower jointly and severally agrees to pay, and shall be jointly and
severally liable under this Agreement for, all Obligations (excluding Existing
Obligations in the case of a Newly Obligated Party), regardless
LOAN AND SECURITY AGREEMENT - PAGE 122
of the manner or amount in which proceeds of Revolving Loans are used,
allocated, shared, or disbursed by or among the Borrowers themselves, or the
manner in which the Agent and/or any Lender accounts for such Revolving Loans or
other extensions of credit on its books and records. Each Borrower shall be
liable for all amounts due to the Agent and/or any Lender under this Agreement,
regardless of which Borrower actually receives Revolving Loans or other
extensions of credit hereunder or the amount of such Revolving Loans and
extensions of credit received or the manner in which the Agent and/or such
Lender accounts for such Revolving Loans or other extensions of credit on its
books and records. Each Borrower's Obligations with respect to Revolving Loans
and other extensions of credit made to it, and such Borrower's Obligations
arising as a result of the joint and several liability of such Borrower
hereunder, with respect to Loans made to the other Borrowers hereunder, shall be
separate and distinct obligations, but all such Obligations shall be primary
obligations of such Borrower. The Borrowers acknowledge and expressly agree with
the Agent and each Lender that the joint and several liability of each Borrower
is required solely as a condition to, and is given solely as inducement for and
in consideration of, credit or accommodations extended or to be extended under
the Loan Documents to any or all of the other Borrowers and is not required or
given as a condition of extensions of credit to such Borrower. Each Borrower's
obligations under this Agreement and as an obligor under a Guaranty Agreement
shall be separate and distinct obligations. Each Borrower's obligations under
this Agreement shall, to the fullest extent permitted by law, be unconditional
irrespective of (i) the validity or enforceability, avoidance, or subordination
of the Obligations of any other Borrower or of any promissory note or other
document evidencing all or any part of the Obligations of any other Borrower,
(ii) the absence of any attempt to collect the Obligations from any other
Borrower, any Guarantor, or any other security therefor, or the absence of any
other action to enforce the same, (iii) the waiver, consent, extension,
forbearance, or granting of any indulgence by the Agent and/or any Lender with
respect to any provision of any instrument evidencing the Obligations of any
other Borrower or Guarantor, or any part thereof, or any other agreement now or
hereafter executed by any other Borrower or Guarantor and delivered to the Agent
and/or any Lender, (iv) the failure by the Agent and/or any Lender to take any
steps to perfect and maintain its security interest in, or to preserve its
rights to, any security or collateral for the Obligations of any other Borrower
or Guarantor, (v) the Agent's and/or any Lender's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by
any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy
Code, (vii) the disallowance of all or any portion of the Agent's and/or any
Lender's claim(s) for the repayment of the Obligations of any other Borrower
under Section 502 of the Bankruptcy Code, or (viii) any other circumstances
which might constitute a legal or equitable discharge or defense of a guarantor
or of any other Borrower. With respect to any Borrower's Obligations arising as
a result of the joint and several liability of the Borrowers hereunder with
respect to Revolving Loans or other extensions of credit made to any of the
other Borrowers hereunder, such Borrower waives, until the Obligations shall
have been paid in full and the Loan Agreement shall have been terminated, any
right to enforce any right of subrogation or any remedy which the Agent and/or
any Lender now has or may hereafter have against any other Borrower, any
endorser or any guarantor of all or any part of the Obligations, and any benefit
of, and any right to participate in, any security or collateral given to the
Agent and/or any Lender to secure payment of the Obligations or any other
liability of any Borrower to the Agent and/or any Lender. Upon any Event of
Default, the Agent may proceed directly and at once, without notice,
LOAN AND SECURITY AGREEMENT - PAGE 123
against any Borrower to collect and recover the full amount, or any portion of
the Obligations, without first proceeding against any other Borrower or any
other Person, or against any security or collateral for the Obligations. Each
Borrower consents and agrees that the Agent shall be under no obligation to
marshal any assets in favor of any Borrower or against or in payment of any or
all of the Obligations.
Section 15.18 CONTRIBUTION AND INDEMNIFICATION AMONG THE BORROWERS. Each
Borrower is obligated to repay the Obligations as joint and several obligors
under this Agreement. To the extent that any Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Obligations
constituting Revolving Loans made to another Borrower hereunder or other
Obligations incurred directly and primarily by any other Borrower (an
"ACCOMMODATION PAYMENT"), then the Borrower making such Accommodation Payment
shall be entitled to contribution and indemnification from, and be reimbursed
by, each of the other Borrowers in an amount, for each of such other Borrowers,
equal to a fraction of such Accommodation Payment, the numerator of which
fraction is such other Borrower's Allocable Amount (as defined below) and the
denominator of which is the sum of the Allocable Amounts of all of the
Borrowers. As of any date of determination, the "ALLOCABLE AMOUNT" of each
Borrower shall be equal to the maximum amount of liability for Accommodation
Payments which could be asserted against such Borrower hereunder without (a)
rendering such Borrower "insolvent" within the meaning of Section 101 (31) of
the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act ("UFTA")
or Section 2 of the Uniform Fraudulent Conveyance Act ("UFCA"), (b) leaving such
Borrower with unreasonably small capital or assets, within the meaning of
Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the
UFCA, or (c) leaving such Borrower unable to pay its debts as they become due
within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the
UFTA, or Section 5 of the UFCA. All rights and claims of contribution,
indemnification, and reimbursement under this Section shall be subordinate in
right of payment to the prior payment in full of the Obligations. The provisions
of this Section shall, to the extent expressly inconsistent with any provision
in any Loan Document, supersede such inconsistent provision.
Section 15.19 AGENCY OF THE PARENT FOR EACH OTHER BORROWER. Each of the
other Borrowers irrevocably appoints the Parent as its agent for all purposes
relevant to this Agreement, including the giving and receipt of notices and
execution and delivery of all documents, instruments, and certificates
contemplated herein (including, without limitation, execution and delivery to
the Agent of Borrowing Base Certificates, Notices of Borrowing, and Notices of
Conversion/Continuation) and all modifications hereto. Any acknowledgment,
consent, direction, certification, or other action which might otherwise be
valid or effective only if given or taken by all or any of the Borrowers or
acting singly, shall be valid and effective if given or taken only by the
Parent, whether or not any of the other Borrowers joins therein, and the Agent
and the Lenders shall have no duty or obligation to make further inquiry with
respect to the authority of the Parent under this SECTION 15.19, PROVIDED that
nothing in this SECTION 15.19 shall limit the effectiveness of, or the right of
the Agent and the Lenders to rely upon, any notice (including without limitation
a Notice of Borrowing or a Notice of Conversion/Continuation), document,
instrument, certificate, acknowledgment, consent, direction, certification, or
other action delivered by any Borrower pursuant to this Agreement.
LOAN AND SECURITY AGREEMENT - PAGE 124
Section 15.20 ADDITIONAL BORROWERS. Addition of any Person as a party to
this Agreement is subject to approval of the Agent and the Majority Lenders, and
may be conditioned upon such requirements as they may determine in their
discretion, including, without limitation, (a) the furnishing of such financial
and other information as the Agent or any such Lender may request; (b) approval
by all appropriate approval authorities of the Agent and each such Lender; (c)
execution and delivery by the Borrowers, such Person, the Agent, and the
Majority Lenders of such agreements and other documentation (including, without
limitation, an amendment to this Agreement or any other Loan Document), and the
furnishing by such Person or any of the Borrowers of such certificates,
opinions, and other documentation, as the Agent and any such Lender may request.
Neither the Agent nor any Lender shall have any obligation to approve any such
Person for addition as a party to this Agreement.
Section 15.21 EXPRESS WAIVERS BY BORROWERS IN RESPECT OF CROSS GUARANTIES
AND CROSS COLLATERALIZATION. Each Borrower agrees as follows:
(a) Each Borrower hereby waives: (i) notice of acceptance of
this Agreement; (ii) notice of the making of any Revolving Loans, the
issuance of any Letter of Credit or any other financial accommodations made
or extended under the Loan Documents or the creation or existence of any
Obligations; (iii) notice of the amount of the Obligations, subject,
however, to such Borrower's right to make inquiry of the Agent to ascertain
the amount of the Obligations at any reasonable time; (iv) notice of any
adverse change in the financial condition of any other Borrower or of any
other fact that might increase such Borrower's risk with respect to such
other Borrower under the Loan Documents; (v) notice of presentment for
payment, demand, protest, and notice thereof as to any promissory notes or
other instruments among the Loan Documents; and (vii) all other notices
(except if such notice is specifically required to be given to such
Borrower hereunder or under any of the other Loan Documents to which such
Borrower is a party) and demands to which such Borrower might otherwise be
entitled;
(b) Each Borrower hereby waives the right by statute or
otherwise to require the Agent or any Lender to institute suit against any
other Borrower or to exhaust any rights and remedies which the Agent or any
Lender has or may have against any other Borrower. Each Borrower further
waives any defense arising by reason of any disability or other defense of
any other Borrower (other than the defense that the Obligations shall have
been fully and finally performed and indefeasibly paid) or by reason of the
cessation from any cause whatsoever of the liability of any such Borrower
in respect thereof.
(c) Each Borrower hereby waives and agrees not to assert against
the Agent, any Lender, or the Letter of Credit Issuer: (i) any defense
(legal or equitable), set-off, counterclaim, or claim which such Borrower
may now or at any time hereafter have against any other Borrower or any
other party liable under the Loan Documents; (ii) any defense, set-off,
counterclaim, or claim of any kind or nature available to any other
Borrower against the Agent, any Lender, or the Letter of Credit Issuer,
arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the Obligations or
any security therefor; (iii) any right or defense arising by reason of any
claim or defense based upon an election of remedies by the Agent, any
LOAN AND SECURITY AGREEMENT - PAGE 125
Lender, or the Letter of Credit Issuer under any applicable law; (iv) the
benefit of any statute of limitations affecting any other Borrower's
liability hereunder;
(d) Each Borrower consents and agrees that, without notice to or
by such Borrower and without affecting or impairing the obligations of such
Borrower hereunder, the Agent may (subject to any requirement for consent
of any of the Lenders to the extent required by this Agreement), by action
or inaction: (i) compromise, settle, extend the duration or the time for
the payment of, or discharge the performance of, or may refuse to or
otherwise not enforce the Loan Documents; (ii) release all or any one or
more parties to any one or more of the Loan Documents or grant other
indulgences to any other Borrower in respect thereof; (iii) amend or modify
in any manner and at any time (or from time to time) any of the Loan
Documents; or (iv) release or substitute any Person liable for payment of
the Obligations, or enforce, exchange, release, or waive any security for
the Obligations or any Guaranty of the Obligations;
Each Borrower represents and warrants to the Agent and the Lenders that such
Borrower is currently informed of the financial condition of all other Borrowers
and all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Borrower agrees that neither the Agent,
any Lender, nor the Letter of Credit Issuer has any responsibility to inform any
Borrower of the financial condition of any other Borrower or of any other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
[Remainder of page intentionally left blank]
LOAN AND SECURITY AGREEMENT - PAGE 126
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
BORROWERS:
METALS USA, INC.
By:
------------------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President, Treasurer, and
Chief Accounting Officer
(Signature Page to Loan and Security Agreement)
BORROWERS:
ALLMET BUILDING PRODUCTS, L.P.
By: Allmet GP, Inc., its General Partner
ALLMET GP, INC.
ALLMET LP, INC.
CORNERSTONE BUILDING PRODUCTS, INC.
CORNERSTONE METALS CORPORATION
CORNERSTONE PATIO CONCEPTS, L.L.C.
By: Metals USA, Inc., its sole Member
INTERSTATE STEEL SUPPLY CO. OF MARYLAND, INC.
INTSEL GP, INC.
INTSEL LP, INC.
i-SOLUTIONS DIRECT, INC.
XXXXXXXX REAL ESTATE CORPORATION
XXXXXXXX STEEL GP, INC.
XXXXXXXX STEEL LP, INC.
METALS RECEIVABLES CORPORATION
METALS USA BUILDING PRODUCTS SOUTHEAST, INC.
METALS USA CARBON FLAT ROLLED, INC.
METALS USA FINANCE CORP.
METALS USA FLAT ROLLED CENTRAL, INC.
METALS USA MANAGEMENT CO., L.P.
By: MUSA GP, Inc., its General Partner
METALS USA PLATES AND SHAPES, NORTHEAST, L.P.
By: Xxxxxxxx Steel GP, Inc., its General Partner
METALS USA PLATES AND SHAPES SOUTHCENTRAL, INC.
METALS USA PLATES AND SHAPES SOUTHEAST, INC.
METALS USA PLATES AND SHAPES SOUTHWEST,
LIMITED PARTNERSHIP
By: Intsel GP, Inc., its General Partner
METALS USA REALTY COMPANY
METALS USA SPECIALTY METALS NORTHCENTRAL, INC.
MUSA GP, INC.
MUSA LP, INC.
NATIONAL MANUFACTURING, INC.
QUEENSBORO, L.L.C.
By: Metals USA Plates and Shapes Southeast, Inc.,
its sole Member
TEXAS ALUMINUM INDUSTRIES, INC.
VALLEY ALUMINUM CO.
VALLEY ALUMINUM OF NEVADA, INC.
WESTERN AWNING COMPANY, INC.
By:
------------------------------------------
Xxxxx X. Xxxxxxx
Vice President of each of the above-listed Borrowers
(Signature Page to Loan and Security Agreement)
AGENT:
BANK OF AMERICA, NATIONAL
ASSOCIATION
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signature Page to Loan and Security Agreement)
LENDERS:
Commitment: $45,000,000.00 BANK OF AMERICA, NATIONAL ASSOCIATION
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signature Page to Loan and Security Agreement)
LENDERS:
Commitment: $35,000,000.00 THE CIT GROUP/BUSINESS CREDIT, INC.
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signature Page to Loan and Security Agreement)
LENDERS:
Commitment: $30,000,000.00 CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signature Page to Loan and Security Agreement)
LENDERS:
Commitment: $25,000,000.00 FLEET CAPITAL CORPORATION
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signature Page to Loan and Security Agreement)
LENDERS:
Commitment: $25,000,000.00 GENERAL ELECTRIC CAPITAL
CORPORATION
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signature Page to Loan and Security Agreement)
LENDERS:
Commitment: $25,000,000.00 PNC BANK, NATIONAL ASSOCIATION
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signature Page to Loan and Security Agreement)
LENDERS:
Commitment: $15,000,000.00 AMSOUTH BANK
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signature Page to Loan and Security Agreement)
SCHEDULE 1.1(A)
TO
LOAN AND SECURITY AGREEMENT
PERMITTED LIENS
SCHEDULE 1.1(A) - Solo Page
SCHEDULE 1.1(B)
TO
LOAN AND SECURITY AGREEMENT
PERMITTED INVESTMENTS
None.
SCHEDULE 1.1(B) - Solo Page
SCHEDULE 6.1
TO
LOAN AND SECURITY AGREEMENT
COMMERCIAL TORT CLAIMS
SCHEDULE 6.1 - Solo Page
SCHEDULE 6.3
TO
LOAN AND SECURITY AGREEMENT
LOCATION OF COLLATERAL
SCHEDULE 6.3 - Solo Page
SCHEDULE 6.7
TO
LOAN AND SECURITY AGREEMENT
INFORMATION CONTAINED IN MONTHLY REPORTS
SCHEDULE 6.7 - Solo Page
SCHEDULE 8.3
TO
LOAN AND SECURITY AGREEMENT
ORGANIZATION AND QUALIFICATION
SCHEDULE 8.3 - Solo Page
SCHEDULE 8.4
TO
LOAN AND SECURITY AGREEMENT
CORPORATE NAMES
SCHEDULE 8.4 - Solo Page
SCHEDULE 8.5
TO
LOAN AND SECURITY AGREEMENT
SUBSIDIARIES
SCHEDULE 8.5 - Solo Page
SCHEDULE 8.8
TO
LOAN AND SECURITY AGREEMENT
DEBT
SCHEDULE 8.8 - Solo Page
SCHEDULE 8.11
TO
LOAN AND SECURITY AGREEMENT
REAL ESTATE; LEASES
SCHEDULE 8.11 - Solo Page
SCHEDULE 8.12
TO
LOAN AND SECURITY AGREEMENT
PROPRIETARY RIGHTS
SCHEDULE 8.12 - Solo Page
SCHEDULE 8.13
TO
LOAN AND SECURITY AGREEMENT
TRADE NAMES
SCHEDULE 8.13 - Solo Page
SCHEDULE 8.14
TO
LOAN AND SECURITY AGREEMENT
LITIGATION
SCHEDULE 8.14 - Solo Page
SCHEDULE 8.16
TO
LOAN AND SECURITY AGREEMENT
LABOR MATTERS
SCHEDULE 8.6 - Solo Page
SCHEDULE 8.17
TO
LOAN AND SECURITY AGREEMENT
ENVIRONMENTAL MATTERS
SCHEDULE 8.17 - Solo Page
SCHEDULE 8.20
TO
LOAN AND SECURITY AGREEMENT
ERISA MATTERS
SCHEDULE 8.20 - Solo Page
SCHEDULE 8.26
TO
LOAN AND SECURITY AGREEMENT
MATERIAL AGREEMENTS
None.
SCHEDULE 8.26 - Solo Page
SCHEDULE 8.27
TO
LOAN AND SECURITY AGREEMENT
BANK ACCOUNTS
SCHEDULE 8.27 - Solo Page
SCHEDULE 8.29
TO
LOAN AND SECURITY AGREEMENT
INVESTMENT PROPERTY
See SCHEDULE 8.5.
SCHEDULE 8.29 - Solo Page
EXHIBIT A
TO
LOAN AND SECURITY AGREEMENT
FORM OF REVOLVING NOTE
EXHIBIT A - Cover Page
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
FORM OF BORROWING BASE CERTIFICATE
EXHIBIT B - Cover Page
EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT
FORM OF NOTICE OF BORROWING
EXHIBIT C - Cover Page
EXHIBIT D
TO
LOAN AND SECURITY AGREEMENT
FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT D - Cover Page
EXHIBIT E
TO
LOAN AND SECURITY AGREEMENT
FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT E - Cover Page
EXHIBIT F
TO
LOAN AND SECURITY AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
EXHIBIT F - Cover Page
