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EXHIBIT 10.51
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
LSB INDUSTRIES, INC.,
AS GUARANTOR,
CLIMACHEM, INC. AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO,
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF APRIL 13, 2001
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of April 13, 2001, between and among, on the one hand, the
lenders identified on the signature pages hereof (such lenders, together with
their respective successors and assigns, are referred to hereinafter each
individually as a "Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL
CORPORATION, a California corporation, as the arranger and administrative agent
for the Lenders ("Agent"), and, on the other hand, LSB INDUSTRIES, INC., an
Delaware corporation ("Parent"), CLIMACHEM, INC., an Oklahoma corporation
("ClimaChem"), and each of the Subsidiaries of ClimaChem identified on the
signature pages hereof (such Subsidiaries, together with ClimaChem, are referred
to hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the
following terms shall have the following definitions:
"Account Debtor" means any Person who is or who may
become obligated under, with respect to, or on account of, an Account, chattel
paper, or a General Intangible.
"Accounts" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to "accounts" (as
that term is defined in the Code), and any and all supporting obligations in
respect thereof.
"ACP" means ACP International, Limited, an Oklahoma
company.
"Additional Documents" has the meaning set forth in
Section 4.4.
"Administrative Borrower" has the meaning set forth
in Section 17.9.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any
other Person who, directly or indirectly, controls, is controlled by, or is
under common control with, such Person. For purposes of this definition,
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person, whether through the ownership of Stock,
by contract, or otherwise; provided, however, that, in any event: (a) any Person
which owns directly or indirectly 15% or more of the securities having ordinary
voting power for the election of directors or other members of the governing
body of a Person or 15% or more of the partnership or other ownership interests
of a Person (other than as a limited partner of such Person) shall be deemed to
control such Person; (b) each director (or comparable manager) of a Person shall
be deemed to be an Affiliate of such Person; and (c) each partnership or joint
venture in which a Person is a general partner or joint venturer shall be deemed
to be an Affiliate of such Person.
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"Agent" means Foothill, solely in its capacity as
agent for the Lenders hereunder, and any successor thereto.
"Agent's Account" means an account at a bank
designated by Agent from time to time as the account into which Borrowers shall
make all payments to Agent for the benefit of the Lender Group and into which
the Lender Group shall make all payments to Agent under this Agreement and the
other Loan Documents; unless and until Agent notifies Administrative Borrower
and the Lender Group to the contrary, Agent's Account shall be that certain
deposit account bearing account number 323-266193 and maintained by Agent with
The Chase Manhattan Bank, 4 New York Plaza, 15th Floor, New York, New York
10004, ABA #▇▇▇▇▇▇▇▇▇.
"Agent Advances" has the meaning set forth in Section
2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrowers
to Agent for the benefit of the Lender Group under this Agreement or the other
Loan Documents.
"Agent-Related Persons" means Agent together with its
Affiliates, officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble
hereto.
"Applicable Prepayment Premium" means, as of any date
of determination, an amount equal to (a) during the period of time from and
after the date of the execution and delivery of this Agreement up to the date
that is the first anniversary of the Closing Date, 4% times the Maximum Revolver
Amount, (b) during the period of time from and including the date that is the
first anniversary of the Closing Date up to the date that is the second
anniversary of the Closing Date, 3% times the Maximum Revolver Amount, (c)
during the period of time from and including the date that is the second
anniversary of the Closing Date up to the date that is the third anniversary of
the Closing Date, 2% times the Maximum Revolver Amount, and (d) during the
period of time from and including the date that is the third anniversary of the
Closing Date and prior to the Maturity Date, 1% times the Maximum Revolver
Amount.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and
Acceptance substantially in the form of Exhibit A-1.
"Authorized Person" means any officer or other
employee of Administrative Borrower.
"Availability" means, as of any date of
determination, if such date is a Business Day, and determined at the close of
business on the immediately preceding Business Day, if such date of
determination is not a Business Day, the amount that Borrowers are entitled to
borrow as Advances under Section 2.1 (after giving effect to all then
outstanding Obligations and all sublimits and reserves applicable hereunder).
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"Bankruptcy Code" means the United States Bankruptcy
Code, as in effect from time to time.
"Base LIBOR Rate" means the rate per annum,
determined by Agent in accordance with its customary procedures, and utilizing
such electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/16%), on the basis of the rates at which
Dollar deposits are offered to major banks in the London interbank market on or
about 11:00 a.m. (California time) 2 Business Days prior to the commencement of
the applicable Interest Period, for a term and in amounts comparable to the
Interest Period and amount of the LIBOR Rate Loan requested by Administrative
Borrower in accordance with this Agreement, which determination shall be
conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced
within ▇▇▇▇▇ Fargo at its principal office in San Francisco as its "prime rate",
with the understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates
(not necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Loan" means each portion of an Advance
that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 2 percentage point.
"Benefit Plan" means a "defined benefit plan" (as
defined in Section 3(35) of ERISA) for which any Borrower or any Subsidiary or
ERISA Affiliate of any Borrower has been an "employer" (as defined in Section
3(5) of ERISA) within the past six years.
"Board of Directors" means the board of directors (or
comparable managers) of Parent or any committee thereof duly authorized to act
on behalf thereof.
"Books" means all of each Borrower's now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective
meanings set forth in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of
Advances made on the same day by the Lenders (or Agent on behalf thereof), or by
Swing Lender in the case of a Swing Loan, or by Agent in the case of an Agent
Advance.
"Borrowing Base" has the meaning set forth in Section
2.1.
"Borrowing Base Certificate" means a certificate in
the form of Exhibit B-1.
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"Business Day" means any day that is not a Saturday,
Sunday, or other day on which national banks are authorized or required to
close, except that, if a determination of a Business Day shall relate to a LIBOR
Rate Loan, the term "Business Day" also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.
"Canadian Sub" means Climate Mate, Inc., a Canadian
corporation.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under Capital Lease.
"Cash Equivalents" means (a) marketable direct
obligations issued or unconditionally guaranteed by the United States or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within 1 year from the date of acquisition
thereof, (b) marketable direct obligations issued by any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof maturing within 1 year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either S&P or ▇▇▇▇▇'▇, (c) commercial paper maturing no more than 1 year
from the date of acquisition thereof and, at the time of acquisition, having a
rating of A-1 or P-1, or better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of
deposit or bankers' acceptances maturing within 1 year from the date of
acquisition thereof either (i) issued by any bank organized under the laws of
the United States or any state thereof which bank has a rating of A or A2, or
better, from S&P or ▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal
to $100,000 in the aggregate issued by any other bank insured by the Federal
Deposit Insurance Corporation.
"Cash Management Bank" has the meaning set forth in
Section 2.7(a).
"Cash Management Account" has the meaning set forth
in Section 2.7(a).
"Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among Administrative Borrower, Agent, and one of the Cash Management
Banks.
"Change of Control" means (a) any "person" or "group"
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of a greater
number of shares of Parent's Stock having the right to vote for the election of
members of the Board of Directors than the number of shares of such Stock held
by the Permitted Holders, or (b) a majority of the members of the Board of
Directors do not constitute Continuing Directors, or (c) the Parent ceases to
directly or indirectly own and control 100% of the outstanding capital Stock of
ClimaChem, or (d) ClimaChem ceases to directly or indirectly own and control
100% of the outstanding capital Stock of each Borrower (other than ClimaChem),
or (e) any Borrower ceases to directly own and control 100% of the outstanding
capital Stock of each of its Subsidiaries extant as of the Closing Date, or (f)
a "Change of Control" as defined in the ClimaChem Indenture shall occur.
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"Cherokee" means Cherokee Nitrogen Company, an
Oklahoma corporation.
"ClimaChem" has the meaning set forth in preamble to
this Agreement.
"ClimaChem Indenture" means the Indenture dated as of
November 26, 1997 among ClimaChem, as issuer, the guarantors named therein, and
Bank One, N.A., as trustee, with respect to ClimaChem's 10 3/4% Senior Notes due
2007.
"ClimaChem Notes" means the Securities (as such term
is defined in the ClimaChem Indenture) issued by ClimaChem under and pursuant to
the ClimaChem Indenture.
"ClimaCool" means ClimaCool Corp., an Oklahoma
corporation.
"ClimateCraft" means ClimateCraft, Inc., an Oklahoma
corporation.
"Climate Control Business" means the business
consisting of the manufacture and sale of hydronic fan coils and water source
heat pumps as well as other products used in commercial and residential heating,
ventilation and air conditioning systems conducted by ACP, CMI, IEC, Koax,
ClimateCraft, EGI and ClimaCool.
"Climate Control Raw Inventory" means Eligible Raw
Inventory that is used or consumed in the Climate Control Business.
"Closing Date" means the date of the making of the
initial Advance (or other extension of credit) hereunder.
"CMI" means Climate Master, Inc., a Delaware
corporation.
"Closing Date Business Plan" means the set of
Projections of Borrowers for the 1 year period following the Closing Date, in
form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as
in effect from time to time.
"Collateral" means all of each Borrower's now owned
or hereafter acquired right, title, and interest in and to each of the
following:
(a) Accounts,
(b) Books,
(c) General Intangibles,
(d) Inventory,
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(e) money or other assets of each such Borrower that
arise from or relate to Accounts, Books, General Intangibles and Inventory and
that now or hereafter come into the possession, custody, or control of any
member of the Lender Group, and
(f) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, General
Intangibles, and Inventory, money, deposit accounts, or other tangible or
intangible property resulting from the sale, exchange, collection, or other
disposition of any of the foregoing, or any portion thereof or interest therein,
and the proceeds thereof.
"Collateral Access Agreement" means a landlord
waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman,
processor, consignee, or other Person in possession of, having a Lien upon, or
having rights or interests in the Inventory, in each case, in form and substance
satisfactory to Agent.
"Collections" means all cash, checks, notes,
instruments, and other items of payment (including insurance proceeds, proceeds
of cash sales, rental proceeds, and tax refunds) of Borrowers.
"Commitment" means, with respect to each Lender, its
Revolver Commitment or its Total Commitment, as the context requires, and, with
respect to all Lenders, their Revolver Commitments or their Total Commitments,
as the context requires, in each case as such Dollar amounts are set forth
beside such Lender's name under the applicable heading on Schedule C-1 or on the
signature page of the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C-1 delivered by the chief financial
officer of Parent to Agent.
"Consolidated Net Interest Expense" means, with
respect to any Person for any period, gross interest expense of such Person and
its Subsidiaries for such period determined in conformity with GAAP (including,
without limitation, interest expense paid to Affiliates of such Person other
than a Subsidiary of Parent), less the sum of interest income and non-cash
accretion expense and non-cash amortization of debt origination cost for such
period, each determined on a consolidated basis and in accordance with GAAP for
such Person and its Subsidiaries.
"Continuing Director" means (a) any member of the
Board of Directors who was a director (or comparable manager) of Parent on the
Closing Date, and (b) any individual who becomes a member of the Board of
Directors after the Closing Date if such individual was appointed or nominated
for election to the Board of Directors by a majority of the Continuing
Directors, but excluding any such individual originally proposed for election in
opposition to the Board of Directors in office at the Closing Date in an actual
or threatened election contest relating to the election of the directors (or
comparable managers) of Parent (as such terms are used in Rule 14a-11 under the
Exchange Act) and whose initial assumption of office resulted from such contest
or the settlement thereof.
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"Contribution Agreement" means that certain
Contribution Agreement, dated as of even date herewith, among the Borrowers and
the Guarantors, in form and substance satisfactory to Agent.
"Crystal City" means Crystal City Nitrogen Company,
an Oklahoma corporation.
"Daily Balance" means, with respect to each day
during the term of this Agreement, the amount of an Obligation owed at the end
of such day.
"DDA" means any checking or other demand deposit
account maintained by any Borrower.
"Default" means an event, condition, or default that,
with the giving of notice, the passage of time, or both, would be an Event of
Default.
"Defaulting Lender" means any Lender that fails to
make any Advance (or other extension of credit) that it is required to make
hereunder on the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for
the first 3 days from and after the date the relevant payment is due, and (b)
thereafter, at the interest rate then applicable to Advances that are Base Rate
Loans (inclusive of the Base Rate Margin applicable thereto).
"Designated Account" means account number 400519526
of Administrative Borrower maintained with the Designated Account Bank or such
other deposit account of Administrative Borrower (located within the United
States) that has been designated as such, in writing, by Administrative Borrower
to Agent.
"Designated Account Bank" means BancFirst of
Oklahoma, whose office is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, and whose ABA number is ▇▇▇▇▇▇▇▇▇.
"Dilution" means, as of any date of determination, a
percentage, based upon the experience of the immediately prior 90 days, that is
the result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts during such period, by (b) Borrowers' Collections with respect to
Accounts during such period (excluding extraordinary items) plus the Dollar
amount of clause (a).
"Dilution Reserve" means, as of any date of
determination, an amount sufficient to reduce the advance rate against Eligible
Accounts by one percentage point for each percentage point by which Dilution is
in excess of 5%.
"Disbursement Letter" means an instructional letter
executed and delivered by Administrative Borrower to Agent regarding the
extensions of credit to be made on the Closing Date, the form and substance of
which is satisfactory to Agent.
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"Dollars" or "$" means United States dollars.
"DSN Corporation" means DSN Corporation, an Oklahoma
corporation.
"Due Diligence Letter" means the due diligence letter
sent by Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period,
the result of (i) ClimaChem's and its Subsidiaries consolidated net earnings (or
loss), minus (ii) the aggregate amount of all extraordinary gains of ClimaChem
and its Subsidiaries for such period, plus (iii) the aggregate amount of all
extraordinary losses, interest expense, income taxes, and depreciation and
amortization of ClimaChem and its Subsidiaries for such period, as determined in
accordance with GAAP.
"EDC" means El Dorado Chemical Company, an Oklahoma
corporation.
"EDN" means El Dorado Nitrogen Company, an Oklahoma
corporation.
"EGI" means The Environmental Group, Inc., an
Oklahoma corporation.
"Eligible Accounts" means those Accounts created by
one of Borrowers in the ordinary course of its business, that arise out of its
sale of goods or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made by Borrowers
under the Loan Documents, and that are not excluded as ineligible by virtue of
one or more of the criteria set forth below; provided, however, that such
criteria may be fixed and revised from time to time by Agent in Agent's
Permitted Discretion to address the results of any audit performed by Agent from
time to time after the Closing Date. In determining the amount to be included,
Eligible Accounts shall be calculated net of customer deposits and unapplied
cash remitted to Borrowers. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to
pay within 90 days (or, in the case of Accounts of Borrowers having an aggregate
invoice amount for all such Borrowers of up to $1,000,000, 120 days) of original
invoice date or Accounts which are more than 60 days past due,
(b) Accounts owed by an Account Debtor (or its
Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or
its Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor
is an employee or Affiliate of any Borrower,
(d) Accounts arising in a transaction wherein goods
are placed on consignment or are sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a ▇▇▇▇ and hold (except Accounts of the Borrowers
having an aggregate invoice amount for all such Borrowers of up to $1,500,000
with respect to goods that are subject to a ▇▇▇▇ and hold letter in
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form and substance satisfactory to Agent), or any other terms by reason of which
the payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor
either (i) does not maintain its chief executive office in the United States or
Canada, or (ii) is not organized under the laws of the United States or Canada
or any 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, unless (y) the Account is supported by an
irrevocable letter of credit satisfactory to Agent in its Permitted Discretion,
or (z) the Account is covered by credit insurance in form, substance, and
amount, and by an insurer, satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor
is either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC Section 3727), or (ii) any state of the
United States (exclusive, however, of (y) Accounts owed by any state that does
not have a statutory counterpart to the Assignment of Claims Act or (z) Accounts
owed by any state that does have a statutory counterpart to the Assignment of
Claims Act as to which the applicable Borrower has complied to Agent's
satisfaction),
(h) Accounts with respect to which the Account Debtor
is a creditor of any Borrower, has or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to its obligation to
pay the Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose
total obligations owing to Borrowers exceed 10% (or, in the case of Carrier
Corporation, 20%) of all Eligible Accounts, to the extent of the obligations
owing by such Account Debtor in excess of such percentage,
(j) Accounts with respect to which the Account Debtor
is subject to an Insolvency Proceeding, is not Solvent, has gone out of
business, or as to which a Borrower has received notice of an imminent
Insolvency Proceeding or a material impairment of the financial condition of
such Account Debtor,
(k) Accounts with respect to which the Account Debtor
is located in the states of New Jersey, Minnesota, or West Virginia (or any
other state that requires a creditor to file a business activity report or
similar document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial process of
such state), unless the applicable Borrower has qualified to do business in New
Jersey, Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other state offices, as appropriate, for the then-current
year, or is exempt from such filing requirement,
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(l) Accounts, the collection of which, Agent, in its
Permitted Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(m) Accounts that are not subject to a valid and
perfected first priority Agent's Lien,
(n) Accounts with respect to which (i) the goods
giving rise to such Account have not been shipped and billed (except Accounts of
the Borrowers having an aggregate invoice amount for all such Borrowers of up to
$1,500,000 with respect to goods that are subject to a ▇▇▇▇ and hold letter in
form and substance satisfactory to Agent) to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or
(o) Accounts that represent the right to receive
progress payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion
of performance by the applicable Borrower of the subject contract for goods or
services.
"Eligible Inventory" means Inventory of Borrowers
consisting of first quality finished goods held for sale in the ordinary course
of Borrowers' business located at one of the business locations of Borrowers set
forth on Schedule E-1 (or in-transit between any such locations), that complies
with each of the representations and warranties respecting Eligible Inventory
made by Borrowers in the Loan Documents, and that is not excluded as ineligible
by virtue of the one or more of the criteria set forth below; provided, however,
that such criteria may be fixed and revised from time to time by Agent in
Agent's Permitted Discretion to address the results of any audit or appraisal
performed by Agent from time to time after the Closing Date. In determining the
amount to be so included, Inventory shall be valued at the lower of cost or
market on a basis consistent with Borrowers' historical accounting practices. An
item of Inventory shall not be included in Eligible Inventory if:
(a) a Borrower does not have good, valid, and
marketable title thereto,
(b) it is not located at one of the locations in the
United States set forth on Schedule E-1 or in transit from one such location to
another such location,
(c) it is located on real property owned or leased by
a Borrower or in a contract warehouse, in each case, unless it is subject to a
Collateral Access Agreement executed by the lessor, warehouseman, or other third
party, as the case may be, and unless it is segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first
priority security Agent's Lien,
(e) it consists of goods returned or rejected by a
Borrower's customers, or
(f) it consists of goods that are obsolete or slow
moving, restrictive or custom items, work-in-process, raw materials or component
parts, or goods that constitute spare
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parts, packaging and shipping materials, supplies used or consumed in a
Borrower's business, ▇▇▇▇ and hold goods, defective goods, "seconds," or
Inventory acquired on consignment.
"Eligible Raw Inventory" means Inventory of Borrowers
that would qualify as Eligible Inventory but for the fact that it consists of
goods that are raw materials or component parts used or consumed in a Borrower's
business.
"Eligible Transferee" means (a) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $250,000,000, (b) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender that was party hereto as of the Closing Date, or any fund, money market
account, investment account or other account managed by a Lender or an Affiliate
of a Lender, (e) so long as no Event of Default has occurred and is continuing,
any other Person approved by Agent and Administrative Borrower, and (f) during
the continuation of an Event of Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal,
state, provincial, foreign or local statute, law, rule, regulation, ordinance,
code, binding and enforceable guideline, binding and enforceable written policy
or rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrowers, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC Section 1251 et seq; the Toxic Substances Control Act, 15 USC, Section 2601
et seq; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water
Act, 42 USC. Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC.
Section 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 USC. Section 11001 et seq.; the Hazardous Material Transportation
Act, 49 USC Section 1801 et seq.; and the Occupational Safety and Health Act, 29
USC. Section 651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all
liabilities, monetary obligations, Remedial Actions, losses, damages, punitive
damages, consequential damages,
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treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand by any Governmental Authority or any third party,
and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to equipment,
machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles
(including motor vehicles), tools, parts, goods (other than consumer goods, farm
products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to
ERISA whose employees are treated as employed by the same employer as the
employees of a Borrower under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of a Borrower under IRC Section 414(c), (c) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any organization subject to
ERISA that is a member of an affiliated service group of which a Borrower is a
member under IRC Section 414(m), or (d) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to
an arrangement with a Borrower and whose employees are aggregated with the
employees of a Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in
Section 8.
"Excess Availability" means the amount, as of the
date any determination thereof is to be made, equal to Availability minus the
aggregate amount, if any, of (i) all trade payables of Borrowers aged in excess
of their historical levels with respect thereto, and (ii) the amount determined
by Agent that is necessary to maintain Borrowers' liabilities reasonably within
terms, in each case as determined by Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of
1934, as in effect from time to time.
"Existing Lender" means Bank of America, N.A. (as
successor in interest to BankAmerica Business Credit, Inc.).
"Facility" means, collectively (i) the real property
owned by Crystal City and located in Crystal City, Missouri and (ii) the real
property owned by Cherokee and located in Cherokee, Alabama, in each case
including, without limitation, the land on which each such facility is located,
all buildings and other improvements thereon, all fixtures located at or used in
connection with each such facility, all whether now or hereafter existing.
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"Fair Market Value" means, with respect to any asset
or property of a Person, the price which could be negotiated in an arm's length
free market transaction, for cash, between a willing seller and a willing and
able buyer, neither of whom is under undue pressure or compulsion to complete
the transaction.
"Family Member" means, with respect to any
individual, any other individual having a relationship by blood (to the second
degree of consanguinity), marriage, or adoption to such individual.
"Family Trusts" means, with respect to any
individual, trusts or other estate planning vehicles established for the benefit
of Family Members of such individual and in respect of which such individual
serves as trustee or in a similar capacity.
"Fee Letter" means that certain fee letter, dated as
of even date herewith, between Borrowers and Agent, in form and substance
satisfactory to Agent.
"FEIN" means Federal Employer Identification Number.
"Fixed Charge Coverage Ratio" means, for any period,
the ratio of (i) EBITDA for such period, to (ii) the sum of (A) all principal of
Indebtedness of ClimaChem and its Subsidiaries scheduled to be paid or prepaid
during such period (not including prepayments of Advances unless such
prepayments are accompanied by a reduction of the Revolver Commitment and not
including the final scheduled payment of the Obligations at the Maturity Date),
plus (B) Consolidated Net Interest Expense of ClimaChem and its Subsidiaries for
such period, plus (C) all amounts paid or payable by ClimaChem and its
Subsidiaries on Capitalized Lease Obligations having a scheduled due date during
such period.
"Foothill" means Foothill Capital Corporation, a
California corporation.
"Funding Date" means the date on which a Borrowing
occurs.
"Funding Losses" has the meaning set forth in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles
as in effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrowers' now
owned or hereafter acquired right, title, and interest with respect to "general
intangibles" as that term is defined in the Code (including payment intangibles,
contract rights, rights to payment, proprietary rights, rights arising under
common law, statutes, or regulations, choses or things in action, goodwill,
patents, trade names, trademarks, servicemarks, copyrights, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty
or licensing agreements, infringement claims, computer programs, information
contained on computer disks or tapes, software, literature, reports, catalogs,
money, deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), and any and all supporting obligations in respect thereof.
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"Governing Documents" means, with respect to any
Person, the certificate or articles of incorporation, by-laws, or other
organizational documents of such Person.
"Governmental Authority" means any federal, state,
local, or other governmental or administrative body, instrumentality,
department, or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or body.
"Guaranties" means, collectively, (i) the guaranty
made by Parent contained in Section 18 hereof and (ii) those certain general
continuing guaranties executed and delivered by Guarantors (other than Parent)
in favor of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent.
"Guarantor Security Agreement" means a security
agreement made by Guarantors in favor of Agent for the benefit of Lenders, the
form and substance of which is satisfactory to Agent.
"Guarantors" means (i) the Parent, (ii) each of
ClimaChem's Subsidiaries extant as of the Closing Date (other than EDN, DSN,
Canadian Sub, UK Sub and their respective Subsidiaries) that are not Borrowers,
(iii) Cherokee, and (iv) Crystal City.
"Hazardous Materials" means (a) substances that are
defined or listed in, or otherwise classified pursuant to, any applicable laws
or regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"IEC" means International Environmental Corporation,
an Oklahoma corporation.
"Indebtedness" means (a) all obligations of a
Borrower for borrowed money, (b) all obligations of a Borrower evidenced by
bonds, debentures, notes, or other similar instruments and all reimbursement or
other obligations of a Borrower in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations of a Borrower under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Borrower, irrespective
of whether such obligation or liability is assumed, (e) all obligations of a
Borrower for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of a Borrower's business and repayable in
accordance with customary trade practices), and (f) any obligation of a Borrower
guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse to a Borrower)
any obligation of any other Person.
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"Indemnified Liabilities" has the meaning set forth
in Section 11.3.
"Indemnified Person" has the meaning set forth in
Section 11.3.
"Insolvency Proceeding" means any proceeding
commenced by or against any Person under any provision of the Bankruptcy Code or
under any other state or federal bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization, arrangement, or
other similar relief.
"Intangible Assets" means, with respect to any
Person, that portion of the book value of all of such Person's assets that would
be treated as intangibles under GAAP.
"Interest Period" means, with respect to each LIBOR
Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan
and ending 1, 2, or 3 months thereafter; provided, however, that (a) if any
Interest Period would end on a day that is not a Business Day, such Interest
Period shall be extended (subject to clauses (c)-(e) below) to the next
succeeding Business Day, (b) interest shall accrue at the applicable rate based
upon the LIBOR Rate from and including the first day of each Interest Period to,
but excluding, the day on which any Interest Period expires, (c) any Interest
Period that would end on a day that is not a Business Day shall be extended to
the next succeeding Business Day unless such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrowers (or Administrative Borrower on behalf
thereof) may not elect an Interest Period which will end after the Maturity
Date.
"Interest Reserve" means, on any date of
determination, a reserve equal to:
(a) during the period from the Closing Date through
and June 30, 2001, the sum of (i) the lesser of (A) the product of (x) $420,000
and (y) the number of weeks or partial weeks during such period, and (B)
$4,200,000, plus (ii) on and after May 28, 2001, $1,900,000, provided that (1)
the portion of the Interest Reserve set forth in subclause (i) above will
increase by $420,000 on the first day of each week commencing after the Closing
Date through and until June 30, 2001 (For purposes of illustration, on May 28,
2001, the Interest Reserve will equal $4,840,000) and (2) once instituted in
connection with a semi-annual interest period on the ClimaChem Notes, the
Interest Reserve shall not be released prior to the payment of interest on the
ClimaChem Notes and shall be released immediately after payment of interest on
the ClimaChem Notes, in each case for the applicable interest period on the
ClimaChem Notes; or
(b) after June 30, 2001, the sum of (i) the lesser of
(A) the product of (x) $123,000 and (y) the number of weeks or partial weeks
following the last date on which interest on the ClimaChem Notes was paid and
(B) $3,200,000, plus (ii) $1,000,000, plus (iii) on and after the first day of
the thirteenth week following the last date on which interest on the
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ClimaChem Notes was paid (except as otherwise provided in clause (c) below),
$1,900,000, provided that (1) the portion of the Interest Reserve set forth in
subclause (i) above will increase by $123,000 on the first day of each week
commencing after such interest payment date on the ClimaChem Notes (For purposes
of illustration, if interest on the ClimaChem Notes is paid on June 29, 2001,
the Interest Reserve will equal $4,499,000 on September 23, 2001) and (2) once
instituted in connection with a semi-annual interest period on the ClimaChem
Notes, the Interest Reserve shall not be released prior to the payment of
interest on the ClimaChem Notes and shall be released immediately after payment
of interest on the ClimaChem Notes, in each case for the applicable interest
period on the ClimaChem Notes.
(c) Notwithstanding the terms of clause (b)(iii)
above, $1,900,000 shall be automatically added to the Interest Reserve at any
time and from time to time in the event (i) Borrowers fail to deliver the
financial statements to Agent on the due dates thereof and otherwise in
accordance with Section 6.3(a) or (ii) Borrowers fail to maintain EBITDA, for
the applicable period set forth below, of not less than the required amount set
forth in the following table for the applicable period set forth opposite
thereto:
Maximum EBITDA Applicable Period
-------------- -----------------
$1,847,000 For the 1 month period ending July 31, 2001
$3,859,000 For the 2 month period ending August 31, 2001
$2,344,000 For the 1 month period ending October 31, 2001
$3,707,000 For the 2 month period ending November 30, 2001
provided, however, that (AA) no more than $3,800,000 shall be added to the
Interest Reserve pursuant to clause (c) above during any six month period that
comprises a single semi-annual interest period under the ClimaChem Indenture and
(BB) following receipt by Agent of Borrowers' Projections pursuant Section
6.3(c), the form and substance of which are satisfactory to Agent, Agent shall
determine the minimum EBITDA amounts for purposes of clause (c) above that are
applicable to the year subject to such Projections by multiplying Borrowers'
projected EBITDA for each applicable period times 75%.
"In-Transit Inventory" means Eligible Inventory that
is in-transit (via rail car or truck) between any of the locations set forth on
Schedule E-1 with respect to which Agent has received reports in form and
substance satisfactory to Agent.
"Inventory" means all Borrowers' now owned or
hereafter acquired right, title, and interest with respect to inventory,
including goods held for sale or lease or to be furnished under a contract of
service, goods that are leased by a Borrower as lessor, goods that are furnished
by a Borrower under a contract of service, and raw materials, work in process,
or materials used or consumed in a Borrower's business.
"Inventory Reserves" means reserves (determined from
time to time by Agent in its Permitted Discretion) for (a) the estimated costs
relating to unpaid freight charges,
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warehousing or storage charges, taxes, duties, and other similar unpaid costs
associated with the acquisition of Eligible Inventory by Borrowers, plus (b) the
estimated reclamation claims of unpaid sellers of Inventory sold to Borrowers.
"Investment" means, with respect to any Person, any
investment by such Person in any other Person (including Affiliates) in the form
of loans, guarantees, advances, or capital contributions (excluding (a)
commission, travel, and similar advances to officers and employees of such
Person made in the ordinary course of business, and (b) bona fide Accounts
arising from the sale of goods or rendition of services in the ordinary course
of business consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"IRC" means the Internal Revenue Code of 1986, as in
effect from time to time.
"Issuing Lender" means Foothill or any other Lender
that, at the request of Administrative Borrower and with the consent of Agent
agrees, in such Lender's sole discretion, to become an Issuing Lender for the
purpose of issuing L/Cs or L/C Undertakings pursuant to Section 2.12.
"Koax" means Koax Corp., an Oklahoma corporation.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the
Issuing Lender pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in
Section 2.12(a).
"Lender" and "Lenders" have the respective meanings
set forth in the preamble to this Agreement, and shall include any other Person
made a party to this Agreement in accordance with the provisions of Section
14.1.
"Lender Group" means, individually and collectively,
each of the Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) out-of-pocket
costs or expenses (including taxes, and insurance premiums) required to be paid
by a Borrower under any of the Loan Documents that are paid or incurred by any
one or more members of the Lender Group, (b) fees or charges paid or incurred by
any one or more members of Lender Group in connection with any one or more
members of the Lender Group's transactions with Borrowers under the Loan
Documents, including, fees or charges for photocopying, notarization, couriers
and messengers, telecommunication, public record searches (including tax lien,
judgment, and UCC searches and including searches with the patent and trademark
office, the copyright office), filing, recording, (including, without
limitation, mortgage recordation taxes and other similar fees or taxes in
connection with the recordation or filing or any mortgage from time to time
together with any penalties, interest or costs arising therefrom or related
thereto) publication,
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appraisal (including periodic Collateral appraisals or business valuations to
the extent of the fees and charges (and up to the amount of any limitation)
contained in this Agreement), and environmental audits, (c) costs and expenses
incurred by any one or more members of Lender Group in the disbursement of funds
to or for the account of Borrowers (by wire transfer or otherwise), (d) charges
paid or incurred by any one or more members of Lender Group resulting from the
dishonor of checks, (e) reasonable costs and expenses paid or incurred by any
one or more members of the Lender Group to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) audit fees and expenses of any one or more
members of Lender Group related to audit examinations of the Books to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, (g) reasonable costs and expenses of third party claims or any
other suit paid or incurred by any one or more members of the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents, (h) any one or more members of Lender
Group's reasonable fees and expenses (including attorneys fees) incurred in
advising, structuring, drafting, reviewing, administering, or amending the Loan
Documents, and (i) any one or more members of Lender Group's reasonable fees and
expenses (including attorneys fees) incurred in terminating, enforcing
(including attorneys fees and expenses incurred in connection with a "workout,"
a "restructuring," or an Insolvency Proceeding concerning any Borrower or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.
"Lender-Related Person" means, with respect to any
Lender, such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C
Undertaking, as the context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of Credit
plus 100% of the amount of outstanding time drafts accepted by an Underlying
Issuer as a result of drawings under Underlying Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section
2.13(b)(i).
"LIBOR Notice" means a written notice in the form of
Exhibit L-1.
"LIBOR Rate" means, for each Interest Period for each
LIBOR Rate Loan, the rate per annum determined by Agent (rounded upwards, if
necessary, to the next 1/16%) by dividing (a) the Base LIBOR Rate for such
Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
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"LIBOR Rate Loan" means each portion of an Advance
that bears interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 4.50 percentage points.
"Lien" means any interest in an asset securing an
obligation owed to, or a claim by, any Person other than the owner of the asset,
whether such interest shall be based on the common law, statute, or contract,
whether such interest shall be recorded or perfected, and whether such interest
shall be contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances, including the lien or
security interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section
2.10.
"Loan Documents" means this Agreement, the Cash
Management Agreements, the Contribution Agreement, the Disbursement Letter, the
Due Diligence Letter, the Fee Letter, the Guaranties, Guarantor Security
Agreement, the Letters of Credit, the Officers' Certificate, the Parent Security
Agreement, the Patent Security Agreement, the Stock Pledge Agreement, the
Mortgages, the Trademark Security Agreement, any note or notes executed by a
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by any
Borrower and the Lender Group in connection with this Agreement.
"LSB Chemical" means LSB Chemical Corp., an Oklahoma
corporation.
"Management Agreement" means the Management Agreement
dated November 21, 1997 between the Parent and ClimaChem, in the form delivered
to Agent on the Closing Date.
"Material Adverse Change" means (a) a material
adverse change in the business, prospects, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of Borrowers taken as
a whole, (b) a material impairment of the ability of Borrowers, taken as a
whole, to perform their obligations under the Loan Documents or of the Lender
Group's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Agent's Liens
with respect to the Collateral as a result of an action or failure to act on the
part of a Borrower.
"Maturity Date" has the meaning set forth in Section
3.4.
"Maximum Revolver Amount" means $50,000,000.
"Mortgage" means each mortgage, deed of trust or deed
to secure debt, in form and substance satisfactory to Agent, made by Cherokee
and Crystal City, as the case may
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be, in favor of Agent for the benefit of the Lenders, securing the Obligations
and delivered to Agent pursuant to Section 3.1(c).
"Net Orderly Liquidation Value" means, with respect
to an item of Eligible Inventory and Eligible Raw Inventory, as of any date of
determination, the orderly liquidation value thereof as determined by Agent in
its Permitted Discretion, which determination may be made by Agent in reliance
on periodic appraisals.
"Obligations" means all loans, Advances, debts,
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), guaranties, covenants, and duties of
any kind and description owing by Borrowers to the Lender Group pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Group Expenses that Borrowers are required to pay or reimburse by
the Loan Documents, by law, or otherwise. Any reference in this Agreement or in
the Loan Documents to the Obligations shall include all amendments, changes,
extensions, modifications, renewals replacements, substitutions, and
supplements, thereto and thereof, as applicable, both prior and subsequent to
any Insolvency Proceeding.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Agent to Administrative Borrower,
together with Borrowers' completed responses to the inquiries set forth therein,
the form and substance of such responses to be satisfactory to Agent.
"Operating Lease Obligations" means all obligations
for the payment of rent for any real or personal property under leases or
agreements to lease, other than Capitalized Lease Obligations.
"Originating Lender" has the meaning set forth in
Section 14.1(e).
"Overadvance" has the meaning set forth in Section
2.5.
"Parent" has the meaning set forth in the preamble to
this Agreement.
"Parent Security Agreement" means a security
agreement made by Parent in favor of Agent for the benefit of Lenders, the form
and substance of which is satisfactory to Agent.
"Participant" has the meaning set forth in Section
14.1(e).
"Patent Security Agreement" means a patent security
agreement executed and delivered by Borrowers and Agent, the form and substance
of which is satisfactory to Agent.
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"Pay-Off Letter" means a letter, in form and
substance satisfactory to Agent, from Existing Lender to Agent respecting the
amount necessary to repay in full all of the obligations of Borrowers owing to
Existing Lender and obtain a release of all of the Liens existing in favor of
Existing Lender in and to the assets of Borrowers.
"Permitted Discretion" means a determination made in
good faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other
dispositions by Borrowers of Equipment that is substantially worn, damaged, or
obsolete in the ordinary course of the applicable Borrower's business, (b) sales
by Borrowers of Inventory to buyers in the ordinary course of business, (c) the
use or transfer of money or Cash Equivalents by Borrowers in a manner that is
not prohibited by the terms of this Agreement or the other Loan Documents, (d)
the licensing by Borrowers, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of the
applicable Borrower's business, and (e) sales or other dispositions by Borrowers
of Accounts which are not Eligible Accounts, provided that (i) the consideration
payable in connection with the sale or disposition of such non-Eligible Accounts
shall be in cash and shall equal no less than 100% of the aggregate original
invoice amount of such Accounts and (ii) the proceeds from such sales or
dispositions shall be deposited in a Cash Management Account and applied to the
Obligations.
"Permitted Holders" means ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, their Family Members, and their respective Family Trusts.
"Permitted Investments" means (a) Investments in Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments by any Borrower or Guarantor in any other
Borrower or any Guarantor (other than Parent), (e) guarantees by a Borrower or
Guarantor of Indebtedness permitted under Section 7.1(e), (f) guarantees
permitted under Section 7.6, (g) other Investments set forth on Schedule 7.13
hereto and (h) Investments made by any Borrower or Guarantor (other than the
Parent) in the Parent, provided the aggregate amount of such Investments do not
exceed $2,000,000 at any time outstanding.
"Permitted Liens" means (a) Liens held by Agent for
the benefit of Agent and the Lenders, (b) Liens for unpaid taxes that either (i)
are not yet delinquent, or (ii) do not constitute an Event of Default hereunder
and are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1,
(d) the interests of lessors under operating leases, (e) purchase money Liens or
the interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of Borrowers' business and not in connection with the borrowing of money, and
which Liens either (i) are for sums not yet delinquent, or (ii) are the subject
of Permitted Protests, (g) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance, social security
and other similar laws (h) Liens
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or deposits to secure performance of bids, tenders, or leases incurred in the
ordinary course of Borrowers' business and not in connection with the borrowing
of money, (i) Liens granted as security for surety, performance or appeal bonds
in connection with obtaining such bonds in the ordinary course of Borrowers'
business, (j) Liens resulting from any judgment or award that is not an Event of
Default hereunder, (k) Liens with respect to each Facility that are exceptions
to the commitments for title insurance issued in connection with the Mortgages,
as accepted by Agent, and (l) with respect to any Real Property, easements,
exceptions, reservations, encroachments, restrictions, rights of way, zoning
restrictions and other similar title policy exceptions or encumbrances that do
not materially interfere with or impair the use or operation thereof by
Borrowers.
"Permitted Protest" means the right of the applicable
Borrower to protest any Lien (other than any such Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by the applicable Borrower in good faith, and (c) Agent is satisfied
in its Permitted Discretion that, while any such protest is pending, there will
be no impairment of the enforceability, validity, or priority of any of the
Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of
any date of determination, Purchase Money Indebtedness incurred after the
Closing Date in an aggregate amount outstanding at any one time not in excess of
$7,500,000.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Projections" means Parent's forecasted (a) balance
sheets, (b) profit and loss statements, and (c) cash flow statements, all
prepared on a consistent basis with Parent's historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make
Advances and receive payments of principal, interest, fees, costs, and expenses
with respect thereto, the percentage obtained by dividing (i) such Lender's
Revolver Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
(b) with respect to a Lender's obligation to
participate in Letters of Credit, to reimburse the Issuing Lender, and to
receive payments of fees with respect thereto, the percentage obtained by
dividing (i) such Lender's Revolver Commitment, by (ii) the aggregate Revolver
Commitments of all Lenders, and
(c) with respect to all other matters (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) such Lender's
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Total Commitment, by (ii) the aggregate amount of Total Commitments of all
Lenders; provided, however, that, in each case, in the event all Commitments
have been terminated, Pro Rata Share shall be determined according to the
Commitments in effect immediately prior to such termination.
"Purchase Money Indebtedness" means Indebtedness
(other than the Obligations, but including Capitalized Lease Obligations),
incurred at the time of, or within 60 days after, the acquisition of any fixed
assets for the purpose of financing all or any part of the acquisition cost
thereof.
"Real Property" means any estates or interests in
real property now owned or hereafter acquired by any Borrower and the
improvements thereto.
"Record" means information that is inscribed on a
tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form.
"Remedial Action" means all actions taken to (a)
clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in
any way address Hazardous Materials in the indoor or outdoor environment, (b)
prevent or minimize a release or threatened release of Hazardous Materials so
they do not migrate or endanger or threaten to endanger public health or welfare
or the indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means Excess Availability and
unrestricted cash and Cash Equivalents in an amount of not less than $4,500,000
(prior to giving effect to the Interest Reserve).
"Required Lenders" means, at any time, Lenders whose
Pro Rata Shares aggregate 51% of the Total Commitments, or if the Commitments
have been terminated irrevocably, 51% of the Obligations then outstanding.
"Reserve Percentage" means, on any day, for any
Lender, the maximum percentage prescribed by the Board of Governors of the
Federal Reserve System (or any successor Governmental Authority) for determining
the reserve requirements (including any basic, supplemental, marginal, or
emergency reserves) that are in effect on such date with respect to eurocurrency
funding (currently referred to as "eurocurrency liabilities") of that Lender,
but so long as such Lender is not required or directed under applicable
regulations to maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each
Lender, its Revolver Commitment, and, with respect to all Lenders, their
Revolver Commitments, in each case as such Dollar amounts are set forth beside
such Lender's name under the applicable heading on Schedule C-1 or on the
signature page of the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of Section 14.1.
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"Revolver Usage" means, as of any date of
determination, the sum of (a) the then extant amount of outstanding Advances,
plus (b) the then extant amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each
Letter of Credit, all reimbursement obligations of Borrowers to the Issuing
Lender with respect to an L/C Undertaking, consisting of (a) the amount
available to be drawn or which may become available to be drawn, (b) all amounts
that have been paid by the Issuing Lender to the Underlying Issuer to the extent
not reimbursed by Borrowers, whether by the making of an Advance or otherwise,
and (c) all accrued and unpaid interest, fees, and expenses payable with respect
thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as
that term is defined in the Code.
"Services Agreement" means the Services Agreement
dated November 21, 1997 between the Parent and ClimaChem, in the form delivered
to Agent on the Closing Date.
"Settlement" has the meaning set forth in Section
2.3(f)(i).
"Settlement Date" has the meaning set forth in
Section 2.3(f)(i).
"Slurry" means Slurry Explosives Corporation, an
Oklahoma corporation.
"Solvent" means, with respect to any Person on a
particular date, that such Person is not insolvent (as such term is defined in
the Uniform Fraudulent Transfer Act).
"Special Term Advance" has the meaning set forth in
Section 2.01(h).
"Stock" means all shares, options, warrants,
interests, participations, or other equivalents (regardless of how designated)
of or in a Person, whether voting or nonvoting, including common stock,
preferred stock, or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the SEC under the
Exchange Act).
"Stock Pledge Agreement" means the stock pledge
agreements made by each of Parent and Prime Financial Corporation in favor of
Agent for the benefit of Lenders, the form and substance of which is
satisfactory to Agent, in respect of the Stock of ClimaChem.
"Subsidiary" of a Person means a corporation,
partnership, limited liability company, or other entity in which that Person
directly or indirectly owns or controls the shares of Stock having ordinary
voting power to elect a majority of the board of directors (or appoint other
comparable managers) of such corporation, partnership, limited liability
company, or other entity, other than EDN, DSN and each of their respective
Subsidiaries.
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"Swing Lender" means Foothill or any other Lender
that, at the request of Administrative Borrower and with the consent of Agent
agrees, in such Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section
2.3(d)(i).
"Tangible Net Worth" means, with respect to any
Person, as of any date of determination, the result of (a) the total
stockholder's equity of such Person and its Subsidiaries, minus (b) the sum of
(i) all Intangible Assets of such Person and its Subsidiaries, (ii) all of such
Person's prepaid expenses, and (iii) all amounts due to such Person and its
Subsidiaries from Affiliates.
"Taxes" has the meaning set forth in Section 2.2.
"Title Insurance Policy" means the mortgagee's loan
policy, together with all endorsements made from time to time thereto, issued by
or on behalf of a title insurance company satisfactory in form and substance to
Agent, insuring the Lien created by the Mortgages in an amount and on terms
satisfactory to Agent, delivered to Agent pursuant to Section 3.1(c).
"Total Commitment" means, with respect to each
Lender, its Total Commitment, and, with respect to all Lenders, their Total
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 attached hereto or on
the signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of Section
14.1.
"Trademark Security Agreement" means a trademark
security agreement executed and delivered by certain Borrowers and Agent, the
form and substance of which is satisfactory to Agent.
"Trison" means Trison Construction, Inc., an Oklahoma
corporation.
"UK Sub" means The Environmental Group International
Limited, a company formed under the laws of the United Kingdom.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of
credit that has been issued by an Underlying Issuer.
"Universal" means Universal Tech Corporation, an
Oklahoma corporation.
"Voidable Transfer" has the meaning set forth in
Section 17.7.
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"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National
Association, a national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. When
used herein, the term "financial statements" shall include the notes and
schedules thereto. Whenever the term "Borrowers" or the term "Parent" is used in
respect of a financial covenant or a related definition, it shall be understood
to mean Parent and its Subsidiaries on a consolidated basis unless the context
clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are
defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein.
1.4 CONSTRUCTION. Unless the context of this
Agreement or any other Loan Document clearly requires otherwise, references to
the plural include the singular, references to the singular include the plural,
the term "including" is not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Agreement or any other Loan Document refer to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular provision of
this Agreement or such other Loan Document, as the case may be. Section,
subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement or in the
other Loan Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and
exhibits attached to this Agreement shall be deemed incorporated herein by
reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 ADVANCES.
(a) Subject to the terms and conditions of this
Agreement, and during the term of this Agreement, each Lender with a Revolver
Commitment agrees (severally, not jointly or jointly and severally) to make
advances ("Advances") to Borrowers in an amount at any one time outstanding not
to exceed such Lender's Pro Rata Share of an amount equal to the lesser of (i)
the Maximum Revolver Amount less the Letter of Credit Usage or (ii) the
Borrowing Base less the Letter of Credit Usage and the aggregate amount of the
Interest Reserve and the Inventory Reserves. For purposes of this Agreement,
"Borrowing Base," as of any date of determination, shall mean the result of the
following for all Borrowers:
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(A) the lesser of
(1) 85% of the amount of
Eligible Accounts of such Borrowers,
less the amount, if any, of the sum
of the Dilution Reserve, and
(2) an amount equal to such
Borrowers' Collections with respect
to Accounts for the immediately
preceding 75 day period, plus
(B) the lowest of
(1) $20,000,000, and
(2) the sum of
(x) the lesser of
(i) 75% of the value of such
Borrowers' Eligible Inventory, and
(ii) 80% of the Net Orderly
Liquidation Value of such Borrowers'
Eligible Inventory, plus
(y) the lesser of
(i) 65% of the value of such
Borrowers' Eligible Raw Inventory,
and (ii) 80% of the Net Orderly
Liquidation Value of such Borrowers'
Eligible Raw Inventory, provided
that the advance rates set forth in
clauses 2(x) and 2(y) above shall
reduce by 5 percentage points on the
earlier of (I) May 31, 2001 or (II)
the date on which Borrowers receive
aggregate proceeds of $1,500,000
from asset dispositions permitted
under Section 7.4, except that the
advance rates for the Climate
Control Raw Inventory shall not be
so reduced, minus
(C) the aggregate amount of reserves, if
any, established by Agent under Section
2.1(b).
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) sums that Borrowers are required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and has failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral (other than any existing Permitted Lien set forth on Schedule
P-1 which is specifically identified thereon as entitled to have priority over
the Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such
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item of the Collateral. In addition to the foregoing, Agent shall have the right
to have the Inventory reappraised by a qualified appraisal company selected by
Agent from time to time after the Closing Date for the purpose of redetermining
the Net Orderly Liquidation Value of the Eligible Inventory and/or the Eligible
Raw Inventory, which appraisals, so long as no Default or Event of Default shall
have occurred and be continuing, shall be conducted at Borrowers' expense no
more frequently than once during any twelve month period, and, after the
occurrence and during the continuance of a Default or an Event of Default, at
Borrowers' expense as frequently as Agent shall determine. Based upon the
results of any such redetermination, and any other information received from the
collateral reporting required under Section 6.2, Agent may, in its Permitted
Discretion, redetermine the Borrowing Base.
(c) Notwithstanding the foregoing, in the event (i)
the Tangible Net Worth of a Borrower involved in the Climate Control Business is
less than zero at any time or (ii) Excess Availability (without giving effect to
the Interest Reserve) is less than $4,000,000 at any time, Agent shall, in
either case, have the right to limit the aggregate principal amount of Advances
outstanding at any time to each Borrower to the difference between (A) the then
current Borrowing Base of such Borrower on an individual basis and (B) the sum
of (x) the Letter of Credit Usage attributable to such Borrower and the
aggregate amount of the Inventory Reserves pertaining to such Borrower's
Inventory and (y) a portion of the Interest Reserve allocated to such Borrower
by the Agent in its Permitted Discretion, all as determined by Agent in its
Permitted Discretion.
(d) Notwithstanding the foregoing, none of the
Eligible Accounts or Eligible Inventory of any of ClimateCraft, ClimaCool,
Trison or LSB Chemical shall be included in the Borrowing Base until Agent shall
have completed its business, legal and collateral due diligence with respect to
such Borrowers, including (i) a collateral audit and review of such Borrowers'
books and records and verification of such Borrowers' representations and
warranties to the Lender Group, the results of which shall be satisfactory to
Agent, (ii) an inspection of each of the locations where such Borrowers'
Inventory is located, the results of which shall be satisfactory to Agent and
(iii) receipt of an appraisal from an appraiser acceptable to Agent of the Net
Orderly Liquidation Value of such Borrowers' Inventory, the results of which
shall be satisfactory to Agent in its sole discretion.
(e) Notwithstanding the foregoing, the aggregate
principal amount of Advances made by the Lenders based upon the aggregate value
of Borrowers' Eligible Inventory included in the Borrowing Base shall not exceed
the aggregate principal amount of Advances made by the Lenders based upon the
aggregate amount of Borrowers' Eligible Accounts included in the Borrowing Base.
(f) Notwithstanding the foregoing, the aggregate
principal amount of Advances made by the Lenders based upon the aggregate value
of Borrowers' In-Transit Inventory shall not exceed $1,000,000. In addition, all
amounts payable to common carriers in respect of Borrowers' In-Transit Inventory
shall be deducted by Agent from the proceeds of Advances made by Lenders in
respect of such In-Transit Inventory.
(g) The Lenders with Revolver Commitments shall have
no obligation to make additional Advances hereunder to the extent such
additional Advances would cause the
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Revolver Usage to exceed (i) the Maximum Revolver Amount or (ii) the maximum
amount of indebtedness permitted to be incurred pursuant to clause (b) of the
definition of "Permitted Indebtedness" under the ClimaChem Indenture.
(h) Amounts borrowed pursuant to this Section may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement.
(i) A portion of the Advances in a principal amount
equal to $2,000,000 (the "Special Term Advance") shall be the first Advance made
to the Borrowers on the Closing Date and shall not be repaid if any other
Advances are outstanding. Once the Special Term Advance is repaid, the Special
Term Advance may not be reborrowed and the Revolver Commitment shall be promptly
reduced by an amount equal to $2,000,000. Notwithstanding anything to the
contrary contained in this Section 2.1(i), if the Facility owned by Cherokee is
sold in accordance with Section 7.4(b), the Borrowers shall, in connection with
such sale, immediately repay the Special Term Advance in full, and the Revolver
Commitment shall not be reduced as a result of such repayment of the Special
Term Advance.
2.2 [INTENTIONALLY OMITTED]
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be
made by an irrevocable written request by an Authorized Person delivered to
Agent, which notice must be received by Agent no later than 10:00 a.m.
(California time) on the Business Day prior to the date that is the requested
Funding Date in the case of a request for an Advance specifying (i) the amount
of such Borrowing, and (ii) the requested Funding Date, which shall be a
Business Day; provided, however, that in the case of a request for Swing Loan in
an amount of $6,000,000, or less, such notice will be timely received if it is
received by Agent no later than 10:00 a.m. (California time) on the Business Day
that is the requested Funding Date. At Agent's election, in lieu of delivering
the above-described written request, any Authorized Person may give Agent
telephonic notice of such request by the required time, with such telephonic
notice to be confirmed in writing within 24 hours of the giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a
request for a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its
discretion, (i) to have the terms of Section 2.3(c) apply to such requested
Borrowing, or (ii) if the Borrowing is for an Advance, to request Swing Lender
to make a Swing Loan pursuant to the terms of Section 2.3(d) in the amount of
the requested Borrowing; provided, however, that if Swing Lender declines in its
sole discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall
elect to have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to
have the terms of this Section 2.3(c) apply to a requested
Borrowing as described in Section 2.3(b), then
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promptly after receipt of a request for a Borrowing pursuant
to Section 2.3(a), Agent shall notify the Lenders, not later
than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of
the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing
available to Agent in immediately available funds, to Agent's
Account, not later than 10:00 a.m. (California time) on the
Funding Date applicable thereto. After Agent's receipt of the
proceeds of such Advances, upon satisfaction of the applicable
conditions precedent set forth in Section 3 hereof, Agent
shall make the proceeds thereof available to Administrative
Borrower on the applicable Funding Date by transferring
immediately available funds equal to such proceeds received by
Agent to Administrative Borrower's Designated Account;
provided, however, that, subject to the provisions of Section
2.3(i), Agent shall not request any Lender to make, and no
Lender shall have the obligation to make, any Advance if Agent
shall have actual knowledge that (1) one or more of the
applicable conditions precedent set forth in Section 3 will
not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or
(2) the requested Borrowing would exceed the Availability on
such Funding Date.
(ii) Unless Agent receives notice from a
Lender on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least 1 Business Day
prior to the date of such Borrowing, that such Lender will not
make available as and when required hereunder to Agent for the
account of Borrowers the amount of that Lender's Pro Rata
Share of the Borrowing, Agent may assume that each Lender has
made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may
(but shall not be so required), in reliance upon such
assumption, make available to Borrowers on such date a
corresponding amount. If and to the extent any Lender shall
not have made its full amount available to Agent in
immediately available funds and Agent in such circumstances
has made available to Borrowers such amount, that Lender shall
on the Business Day following such Funding Date make such
amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A
notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available,
such payment to Agent shall constitute such Lender's Advance
on the date of Borrowing for all purposes of this Agreement.
If such amount is not made available to Agent on the Business
Day following the Funding Date, Agent will notify
Administrative Borrower of such failure to fund and, upon
demand by Agent, Borrowers shall pay such amount to Agent for
Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum
equal to the interest rate applicable at the time to the
Advances composing such Borrowing. The failure of any Lender
to make any Advance on any Funding Date shall not relieve any
other Lender of any obligation hereunder to make an Advance on
such Funding Date, but no Lender shall be responsible for the
failure
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of any other Lender to make the Advance to be made by such
other Lender on any Funding Date.
(iii) Agent shall not be obligated to
transfer to a Defaulting Lender any payments made by Borrowers
to Agent for the Defaulting Lender's benefit, and, in the
absence of such transfer to the Defaulting Lender, Agent shall
transfer any such payments to each other non-Defaulting Lender
member of the Lender Group ratably in accordance with their
Commitments (but only to the extent that such Defaulting
Lender's Advance was funded by the other members of the Lender
Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing
(and to the extent such Defaulting Lender's Advance was not
funded by the Lender Group), retain same to be re-advanced to
Borrowers as if such Defaulting Lender had made Advances to
Borrowers. Subject to the foregoing, Agent may hold and, in
its Permitted Discretion, re-lend to Borrowers for the account
of such Defaulting Lender the amount of all such payments
received and retained by it for the account of such Defaulting
Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting
Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero. This Section shall
remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or
shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Agent, and Administrative Borrower
shall have waived such Defaulting Lender's default in writing,
or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase or otherwise affect
the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of
its duties and obligations hereunder, or to relieve or excuse
the performance by Borrowers of their duties and obligations
hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting
Lender of this Agreement and shall entitle Administrative
Borrower at its option, upon written notice to Agent, to
arrange for a substitute Lender to assume the Commitment of
such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of
such a substitute Lender, the Defaulting Lender shall have no
right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and
Acceptance Agreement in favor of the substitute Lender (and
agrees that it shall be deemed to have executed and delivered
such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (including an
assumption of its Pro Rata Share of the Risk Participation
Liability) without any premium or penalty of any kind
whatsoever; provided further, however, that any such
assumption of the Commitment of such Defaulting Lender shall
not be deemed to constitute a waiver of any of the Lender
Groups' or Borrowers' rights or remedies against any such
Defaulting Lender arising out of or in relation to such
failure to fund.
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(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the
consent of Swing Lender, as a Lender, to have the terms of
this Section 2.3(d) apply to a requested Borrowing as
described in Section 2.3(b), Swing Lender as a Lender shall
make such Advance in the amount of such Borrowing (any such
Advance made solely by Swing Lender as a Lender pursuant to
this Section 2.3(d) being referred to as a "Swing Loan" and
such Advances being referred to collectively as "Swing Loans")
available to Borrowers on the Funding Date applicable thereto
by transferring immediately available funds to Administrative
Borrower's Designated Account. Each Swing Loan is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that no such Swing Loan
shall be eligible for the LIBOR Option and all payments on any
Swing Loan shall be payable to Swing Lender as a Lender solely
for its own account (and for the account of the holder of any
participation interest with respect to such Swing Loan).
Subject to the provisions of Section 2.3(i), Agent shall not
request Swing Lender as a Lender to make, and Swing Lender as
a Lender shall not make, any Swing Loan if Agent has actual
knowledge that (i) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (ii) the requested
Borrowing would exceed the Availability on such Funding Date.
Swing Lender as a Lender shall not otherwise be required to
determine whether the applicable conditions precedent set
forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion,
any Swing Loan.
(ii) The Swing Loans shall be secured by the
Agent's Liens, shall constitute Advances and Obligations
hereunder, and shall bear interest at the rate applicable from
time to time to Advances that are Base Rate Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers
and the Lenders, from time to time in Agent's sole discretion,
(1) after the occurrence and during the continuance of a
Default or an Event of Default, or (2) at any time that any of
the other applicable conditions precedent set forth in Section
3 have not been satisfied, to make Advances to Borrowers on
behalf of the Lenders that Agent, in its Permitted Discretion
deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the
likelihood of repayment of the Obligations, or (C) to pay any
other amount chargeable to Borrowers pursuant to the terms of
this Agreement, including Lender Group Expenses and the costs,
fees, and expenses described in Section 10 (any of the
Advances described in this Section 2.3(e) shall be referred to
as "Agent Advances"). Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that no such Agent
Advance shall be eligible for the LIBOR Option and all
payments thereon shall be payable to
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Agent solely for its own account (and for the account of the
holder of any participation interest with respect to such
Agent Advance).
(ii) The Agent Advances shall be repayable
on demand and secured by the Agent's Liens granted to Agent
under the Loan Documents, shall constitute Advances and
Obligations hereunder, and shall bear interest at the rate
applicable from time to time to Advances that are Base Rate
Loans.
(f) SETTLEMENT. It is agreed that each Lender's
funded portion of the Advances is intended by the Lenders to equal, at all
times, such Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrowers) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement
("Settlement") with the Lenders on a weekly basis, or on a
more frequent basis if so determined by Agent, (1) on behalf
of Swing Lender, with respect to each outstanding Swing Loan,
(2) for itself, with respect to each Agent Advance, and (3)
with respect to Collections received, as to each by notifying
the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00
p.m. (California time) on the Business Day immediately prior
to the date of such requested Settlement (the date of such
requested Settlement being the "Settlement Date"). Such notice
of a Settlement Date shall include a summary statement of the
amount of outstanding Advances, Swing Loans, and Agent
Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein
(including Section 2.3(c)(iii)): (y) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances exceeds such
Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, then Agent shall, by
no later than 12:00 p.m. (California time) on the Settlement
Date, transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such
that each such Lender shall, upon receipt of such amount, have
as of the Settlement Date, its Pro Rata Share of the Advances,
Swing Loans, and Agent Advances, and (z) if a Lender's balance
of the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, such Lender shall no
later than 12:00 p.m. (California time) on the Settlement Date
transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon
transfer of such amount, have as of the Settlement Date, its
Pro Rata Share of the Advances, Swing Loans, and Agent
Advances. Such amounts made available to Agent under clause
(z) of the immediately preceding sentence shall be applied
against the amounts of the applicable Swing Loan or Agent
Advance and, together with the portion of such Swing Loan or
Agent Advance representing Swing Lender's Pro Rata Share
thereof, shall constitute Advances of such Lenders. If any
such amount is not made available to Agent by any Lender on
the Settlement Date
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applicable thereto to the extent required by the terms hereof,
Agent shall be entitled to recover for its account such amount
on demand from such Lender together with interest thereon at
the Defaulting Lender Rate.
(ii) In determining whether a Lender's
balance of the Advances, Swing Loans, and Agent Advances is
less than, equal to, or greater than such Lender's Pro Rata
Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments
actually received in good funds by Agent with respect to
principal, interest, fees payable by Borrowers and allocable
to the Lenders hereunder, and proceeds of Collateral. To the
extent that a net amount is owed to any such Lender after such
application, such net amount shall be distributed by Agent to
that Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to
the extent no Agent Advances or Swing Loans are outstanding,
may pay over to Swing Lender any payments received by Agent,
that in accordance with the terms of this Agreement would be
applied to the reduction of the Advances, for application to
Swing Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence, Swing
Lender shall pay to Agent for the accounts of the Lenders, and
Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During
the period between Settlement Dates, Swing Lender with respect
to Swing Loans, Agent with respect to Agent Advances, and each
Lender (subject to the effect of letter agreements between
Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Agent Advances, shall be entitled
to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing
Lender, Agent, or the Lenders, as applicable.
(g) NOTATION. Agent shall record on its
books the principal amount of the Advances owing to each
Lender, including the Swing Loans owing to Swing Lender, and
Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and
amount of each payment or prepayment of principal of such
Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive
evidence, absent manifest error, of the accuracy of the
information contained therein.
(h) LENDERS' FAILURE TO PERFORM. All
Advances (other than Swing Loans and Agent Advances) shall be
made by the Lenders contemporaneously and in accordance with
their Pro Rata Shares. It is understood that (i) no Lender
shall be responsible for any failure by any other Lender to
perform its obligation to make any Advance (or other extension
of
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credit) hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other
Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder
shall excuse any other Lender from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary
provision of this Agreement notwithstanding, the Lenders
hereby authorize Agent or Swing Lender, as applicable, and
Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make
Advances (including Swing Loans) to Borrowers notwithstanding
that an Overadvance exists or thereby would be created, so
long as (i) after giving effect to such Advances (including a
Swing Loan), the Revolver Usage with respect to the Borrowers
does not exceed the Borrowing Base less the aggregate amount
of the Interest Reserve and the Inventory Reserve by more than
$5,000,000, (ii) after giving effect to such Advances
(including a Swing Loan) the outstanding Revolver Usage
(except for and excluding amounts charged to the Loan Account
for interest, fees, or Lender Group Expenses) does not exceed
the Maximum Revolver Amount, and (iii) at the time of the
making of any such Advance (including a Swing Loan), Agent
does not believe, in good faith, that the Overadvance created
by such Advance will be outstanding for more than 90 days. The
foregoing provisions are for the exclusive benefit of Agent,
Swing Lender, and the Lenders and are not intended to benefit
Borrowers in any way. The Advances and Swing Loans, as
applicable, that are made pursuant to this Section 2.3(i)
shall be subject to the same terms and conditions as any other
Advance or Swing Loan, as applicable, except that they shall
not be eligible for the LIBOR Option and the rate of interest
applicable thereto shall be the rate applicable to Advances
that are Base Rate Loans under Section 2.6(c) hereof without
regard to the presence or absence of a Default or Event of
Default.
(i) In the event Agent obtains actual
knowledge that the Revolver Usage exceeds the amounts
permitted by the preceding paragraph, regardless of the amount
of, or reason for, such excess, Agent shall notify Lenders as
soon as practicable (and prior to making any (or any
additional) intentional Overadvances (except for and excluding
amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its
value), and the Lenders with Revolver Commitments thereupon
shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers and
intended to reduce, within a reasonable time, the outstanding
principal amount of the Advances to Borrowers to an amount
permitted by the preceding paragraph. In the event Agent or
any Lender disagrees over the terms of reduction or repayment
of any Overadvance, the terms of reduction or repayment
thereof shall be implemented according to the determination of
the Required Lenders.
(ii) Each Lender with a Revolver Commitment
shall be obligated to settle with Agent as provided in Section
2.3(f) for the amount of such
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Lender's Pro Rata Share of any unintentional Overadvances by
Agent reported to such Lender, any intentional Overadvances
made as permitted under this Section 2.3(i), and any
Overadvances resulting from the charging to the Loan Account
of interest, fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided
herein, all payments by Borrowers shall be made to Agent's
Account for the account of the Lender Group and shall be made
in immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment
received by Agent later than 11:00 a.m. (California time),
shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue
to accrue until such following Business Day.
(ii) Unless Agent receives notice from
Administrative Borrower prior to the date on which any payment
is due to the Lenders that Borrowers will not make such
payment in full as and when required, Agent may assume that
Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent
may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the
extent Borrowers do not make such payment in full to Agent on
the date when due, each Lender severally shall repay to Agent
on demand such amount distributed to such Lender, together
with interest thereon at the Defaulting Lender Rate for each
day from the date such amount is distributed to such Lender
until the date repaid.
(iii) In the event the aggregate principal
amount of the Advances outstanding on any day exceeds the
maximum amount of indebtedness permitted to be incurred
pursuant to clause (b) of the definition of "Permitted
Indebtedness" under the ClimaChem Indenture, Borrowers will
immediately prepay the outstanding principal amount of the
Advances, to the full extent of any such excess.
(iv) Upon receipt of any disbursements or
dividends described in Section 6.16, the Borrowers shall
immediately prepay the outstanding principal amount of the
Advances in the amount of such distribution or dividend.
(b) APPORTIONMENT AND APPLICATION OF PAYMENTS.
(i) Except as otherwise provided with
respect to Defaulting Lenders and except as otherwise provided
in the Loan Documents (including letter agreements between
Agent and individual Lenders), aggregate principal and
interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the
Obligations to which such payments relate held by each Lender)
and payments of fees and expenses (other than fees or
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expenses that are for Agent's separate account, after giving
effect to any letter agreements between Agent and individual
Lenders) shall be apportioned ratably among the Lenders having
a Pro Rata Share of the type of Commitment or Obligation to
which a particular fee relates. All payments shall be remitted
to Agent and all such payments (other than payments received
while no Default or Event of Default has occurred and is
continuing and which relate to the payment of principal or
interest of specific Obligations or which relate to the
payment of specific fees), and all proceeds of Accounts or
other Collateral received by Agent, shall be applied as
follows:
A. first, to pay any Lender Group Expenses
then due to Agent under the Loan Documents, until
paid in full,
B. second, to pay any Lender Group Expenses
then due to the Lenders under the Loan Documents, on
a ratable basis, until paid in full,
C. third, to pay any fees then due to Agent
(for its separate accounts, after giving effect to
any letter agreements between Agent and the
individual Lenders) under the Loan Documents until
paid in full,
D. fourth, to pay any fees then due to any
or all of the Lenders (after giving effect to any
letter agreements between Agent and individual
Lenders) under the Loan Documents, on a ratable
basis, until paid in full,
E. fifth, to pay interest due in respect of
all Agent Advances, until paid in full,
F. sixth, ratably to pay interest due in
respect of the Advances (other than Agent Advances)
and the Swing Loans until paid in full,
G. seventh, to pay the principal of all
Agent Advances until paid in full,
H. eighth, to pay the principal of all Swing
Loans until paid in full,
I. ninth, to pay the principal of all
Advances until paid in full,
J. tenth, if an Event of Default has
occurred and is continuing, to Agent, to be held by
Agent, for the ratable benefit of Issuing Lender and
those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant
Letter of Credit Usage until paid in full,
K. eleventh, to pay any other Obligations
until paid in full, and
L. twelfth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled
thereto under applicable law.
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(ii) Agent promptly shall distribute to each
Lender, pursuant to the applicable wire instructions received
from each Lender in writing, such funds as it may be entitled
to receive, subject to a Settlement delay as provided in
Section 2.3(h).
(iii) In each instance, so long as no
Default or Event of Default has occurred and is continuing,
Section 2.4(b) shall not be deemed to apply to any payment by
Borrowers specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable)
under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in
full" means payment of all amounts owing under the Loan
Documents according to the terms thereof, including loan fees,
service fees, professional fees, interest (and specifically
including interest accrued after the commencement of any
Insolvency Proceeding), default interest, interest on
interest, and expense reimbursements, whether or not the same
would be or is allowed or disallowed in whole or in part in
any Insolvency Proceeding.
(v) In the event of a direct conflict
between the priority provisions of this Section 2.4 and other
provisions contained in any other Loan Document, it is the
intention of the parties hereto that such priority provisions
in such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
2.5 OVERADVANCES. If, at any time or for any reason,
the amount of Obligations owed by Borrowers to the Lender Group pursuant to
Sections 2.1 and 2.12 is greater than either the Dollar or percentage
limitations set forth in Sections 2.1 or 2.12, (an "Overadvance"), Borrowers
immediately shall pay to Agent, in cash, the amount of such excess, which amount
shall be used by Agent to reduce such Overadvances in accordance with the
priorities set forth in Section 2.4(b). In addition, Borrowers hereby promise to
pay the Obligations (including principal, interest, fees, costs, and expenses)
in Dollars in full to the Lender Group as and when due and payable under the
terms of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES,
PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c)
below, all Obligations (except for undrawn Letters of Credit) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest on
the Daily Balance thereof as follows (i) if the relevant Obligation is an
Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate
plus the LIBOR Rate Margin, (ii) otherwise, at a per annum rate equal to the
Base Rate plus the Base Rate Margin.
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(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent
(for the ratable benefit of the Lenders with a Revolver Commitment, subject to
any letter agreement between Agent and individual Lenders), a Letter of Credit
fee (in addition to the charges, commissions, fees, and costs set forth in
Section 2.12(e)) which shall accrue at a rate equal to 2.75% per annum times the
Daily Balance of the undrawn amount of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn
Letters of Credit ) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 4 percentage
points above the per annum rate otherwise applicable
hereunder, and
(ii) the Letter of Credit fee provided for
above shall be increased to 4 percentage points above the per
annum rate otherwise applicable hereunder.
(d) PAYMENT. Interest, Letter of Credit fees, and all
other fees payable hereunder shall be due and payable, in arrears, on the first
day of each month at any time that Obligations or Commitments are outstanding.
Borrowers hereby authorize Agent, from time to time, without prior notice to
Borrowers, to charge such interest and fees, all Lender Group Expenses (as and
when incurred), the charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), the fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document to Borrowers' Loan Account,
which amounts thereafter constitute Advances hereunder and shall accrue interest
at the rate then applicable to Advances hereunder. Any interest not paid when
due shall be compounded by being charged to Borrowers' Loan Account and shall
thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable
under the Loan Documents shall be computed on the basis of a 360 day year for
the actual number of days elapsed. In the event the Base Rate is changed from
time to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE.
In no event shall the interest rate or rates payable under this Agreement, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Borrowers and the Lender Group, in
executing and delivering this Agreement, intend legally to agree upon the rate
or rates of interest and manner of payment stated within it; provided, however,
that, anything contained herein to the contrary notwithstanding, if said rate or
rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto, as of the date of this Agreement, Borrowers
are and shall be liable only for the payment of such maximum as allowed by law,
and
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payment received from Borrowers in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of the Obligations to
the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrowers shall (i) establish and maintain cash
management services of a type and on terms satisfactory to Agent at one or more
of the banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure that
all of its Account Debtors forward payment of the amounts owed by them directly
to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all Collections (including those sent directly by Account
Debtors to a Cash Management Bank) into a bank account in Agent's name (a "Cash
Management Account") at one of the Cash Management Banks.
(b) On the Closing Date, each Cash Management Bank
shall establish and maintain Cash Management Agreements with Agent and Borrowers
in form and substance acceptable to Agent, provided that such Cash Management
Agreements may not be implemented until 30 days after the Closing Date. Each
such Cash Management Agreement shall provide, among other things, that (i) all
items of payment deposited in such Cash Management Account and proceeds thereof
are held by such Cash Management Bank as agent or bailee-in-possession for
Agent, (ii) the Cash Management Bank has no rights of setoff or recoupment or
any other claim against the applicable Cash Management Account, other than for
payment of its service fees and other charges directly related to the
administration of such Cash Management Account and for returned checks or other
items of payment, and (iii) it immediately will forward by daily sweep all
amounts in the applicable Cash Management Account to the Agent's Account.
(c) So long as no Default or Event of Default has
occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a) or
(b) to add or replace a Cash Management Account Bank or Cash Management Account;
provided, however, that (i) such prospective Cash Management Bank shall be
satisfactory to Agent and Agent shall have consented in writing in advance to
the opening of such Cash Management Account with the prospective Cash Management
Bank, and (ii) prior to the time of the opening of such Cash Management Account,
Borrowers and such prospective Cash Management Bank shall have executed and
delivered to Agent a Cash Management Agreement. Borrowers shall close any of
their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash
collateral accounts, with all cash, checks and similar items of payment in such
accounts securing payment of the Obligations, and in which Borrowers are hereby
deemed to have granted a Lien to Agent.
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2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of
any payment item by Agent (whether from transfers to Agent by the Cash
Management Banks pursuant to the Cash Management Agreements or otherwise) shall
not be considered a payment on account unless such payment item is a wire
transfer of immediately available federal funds made to the Agent's Account or
unless and until such payment item is honored when presented for payment. Should
any payment item not be honored when presented for payment, then Borrowers shall
be deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into the
Agent's Account on a Business Day on or before 11:00 a.m. (California time). If
any payment item is received into the Agent's Account on a non-Business Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been received by Agent as of the opening of business on the immediately
following Business Day. From and after the Closing Date, Agent shall be entitled
to charge Borrowers for 1 Business Day of 'clearance' or 'float' at the rate
applicable to Base Rate Loans under Section 2.6 on all Collections that are
received by Borrowers (regardless of whether forwarded by the Cash Management
Banks to Agent). This across-the-board 1 Business Day clearance or float charge
on all Collections is acknowledged by the parties to constitute an integral
aspect of the pricing of the financing of Borrowers and shall apply irrespective
of whether or not there are any outstanding monetary Obligations; the effect of
such clearance or float charge being the equivalent of charging 1 Business Day
of interest on such Collections. The parties acknowledge and agree that the
economic benefit of the foregoing provisions of this Section 2.8 shall be for
the exclusive benefit of Agent.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make
the Advances, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). Administrative Borrower agrees to establish and
maintain a Designated Account for Borrowers with the Designated Account Bank for
the purpose of receiving the proceeds of the Advances requested by Borrowers and
made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and
Administrative Borrower, any Advance, Agent Advance or Swing Loan requested by
Borrowers and made by Agent or the Lenders hereunder shall be made to the
Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF
OBLIGATIONS. Agent shall maintain an account on its books in the name of
Borrowers and (the "Loan Account") on which Borrowers will be charged with all
Advances (including Agent Advances and Swing Loans) made by Agent, Swing Lender,
or the Lenders to Borrowers or for Borrowers' account, the Letters of Credit
issued by Issuing Lender for Borrowers' account, and with all other payment
Obligations hereunder or under the other Loan Documents, including, accrued
interest, fees and expenses, and Lender Group Expenses. In accordance with
Section 2.8, the Loan Account will be credited with all payments received by
Agent from Borrowers or for Borrowers' account, including all amounts received
in the Agent's Account from any Cash Management Bank. Agent shall render
statements regarding the Loan Account to Administrative Borrower, including
principal, interest, fees, and including an itemization of all charges and
expenses constituting Lender Group Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 45 days after
receipt thereof by Administrative Borrower, Administrative
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Borrower shall deliver to Agent written objection thereto describing the error
or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following
fees and charges, which fees and charges shall be non-refundable when paid
(irrespective of whether this Agreement is terminated thereafter) and shall be
apportioned among the Lenders in accordance with the terms of letter agreements
between Agent and individual Lenders:
(a) Unused Line Fee. On the first day of each month
during the term of this Agreement, an unused line fee in the amount equal to
0.50% per annum times the result of (a) the Maximum Revolver Amount, less (b)
the sum of (i) the average Daily Balance of Advances that were outstanding
during the immediately preceding month, plus (ii) the average Daily Balance of
the Letter of Credit Usage during the immediately preceding month,
(b) Fee Letter Fees. As and when due and payable
under the terms of the Fee Letter, Borrowers shall pay to Agent the fees set
forth in the Fee Letter, and
(c) Audit, Appraisal, and Valuation Charges. For the
separate account of Agent, audit, appraisal, and valuation fees and charges as
follows, (i) a fee of $750 pay day, per auditor, plus out-of-pocket expenses for
each financial audit of a Borrower performed by personnel employed by Agent,
(ii) if implemented, a one time charge of $3,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems, (iii)
a fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for each
appraisal of the Collateral performed by personnel employed by Agent, and (iv)
the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third Persons to perform financial audits of Borrowers, to
appraise the Collateral, or any portion thereof, or to assess a Borrower's
business valuation.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this
Agreement, the Issuing Lender agrees to issue letters of credit (each, an "L/C")
for the account of Borrowers or to purchase participations or execute
indemnities or reimbursement obligations (each such undertaking, an "L/C
Undertaking") with respect to letters of credit issued by an Underlying Issuer
(as of the Closing Date, the prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo)
for the account of Borrowers. To request the issuance of an L/C or an L/C
Undertaking (or the amendment, renewal, or extension of an outstanding L/C or
L/C Undertaking), Administrative Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and Agent (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or of the Underlying Letter of Credit,
as applicable), and such other information as shall be necessary to prepare,
amend, renew, or extend such L/C or L/C Undertaking. If requested by the Issuing
Lender, Borrowers also shall be an applicant under the application with respect
to any
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Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The
Issuing Lender shall have no obligation to issue a Letter of Credit if any of
the following would result after giving effect to the requested Letter of
Credit:
(i) the Letter of Credit Usage would exceed
the Borrowing Base less the amount of outstanding
Advances and the aggregate amount of the Interest
Reserve and the Inventory Reserve, or
(ii) the Letter of Credit Usage would exceed
$8,500,000, or
(iii) the Letter of Credit Usage would
exceed the lesser of (A) Maximum Revolver Amount and
(B) the maximum amount of indebtedness permitted to
be incurred pursuant to clause (b) of the definition
of "Permitted Indebtedness" under the ClimaChem
Indenture less (C) the then extant amount of
outstanding Advances.
Borrowers and the Lender Group acknowledge and agree
that certain Underlying Letters of Credit may be issued to support letters of
credit that already are outstanding as of the Closing Date. Each Letter of
Credit (and corresponding Underlying Letter of Credit) shall have an expiry date
no later than 30 days prior to the Maturity Date and all such Letters of Credit
(and corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C
Disbursement pursuant to Section 2.12(a), each Lender with a Revolver Commitment
agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the
foregoing subsection on the same terms and conditions as if Borrowers had
requested such Advance and Agent shall promptly pay to Issuing Lender the
amounts so received by it from the Lenders. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any
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further action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in clause (a) of
this Section, or of any reimbursement payment required to be refunded to
Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges
and agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share pursuant to
this Section 2.12(b) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in Section
3 hereof. If any such Lender fails to make available to Agent the amount of such
Lender's Pro Rata Share of any payments made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless from any loss, cost, expense, or
liability, and reasonable attorneys fees incurred by the Lender Group arising
out of or in connection with any Letter of Credit; provided, however, that no
Borrower shall be obligated hereunder to indemnify for any loss, cost, expense,
or liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group. Each Borrower agrees to
be bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any
Underlying Issuer to deliver to the Issuing Lender all instruments, documents,
and other writings and property received by such Underlying Issuer pursuant to
such Underlying Letter of Credit and to
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accept and rely upon the Issuing Lender's instructions with respect to all
matters arising in connection with such Underlying Letter of Credit and the
related application.
(e) Any and all charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of Credit shall be
Lender Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar
requirement is or shall be imposed or modified in respect of
any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the
Underlying Issuer or the Lender Group any other condition
regarding any Underlying Letter of Credit or any Letter of
Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of
having interest charged at the rate based upon the Base Rate, Borrowers shall
have the option (the "LIBOR Option") to have interest on all or a portion of the
Advances be charged at the LIBOR Rate. Interest on LIBOR Rate Loans shall be
payable on the earliest of (i) the last day of the Interest Period applicable
thereto, (ii) the occurrence of an Event of Default in consequence of which the
Required Lenders or Agent on behalf thereof elect to accelerate the maturity of
the Obligations, or (iii) termination of this Agreement pursuant to the terms
hereof. On the last day of each
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applicable Interest Period, unless Administrative Borrower properly has
exercised the LIBOR Option with respect thereto, the interest rate applicable to
such LIBOR Rate Loan automatically shall convert to the rate of interest then
applicable to Base Rate Loans of the same type hereunder. At any time that an
Event of Default has occurred and is continuing, Borrowers no longer shall have
the option to request that Advances bear interest at the LIBOR Rate and Agent
shall have the right to convert the interest rate on all outstanding LIBOR Rate
Loans to the rate then applicable to Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Administrative Borrower may, at any time
and from time to time, so long as no Event of Default has
occurred and is continuing, elect to exercise the LIBOR Option
by notifying Agent prior to 11:00 a.m. (California time) at
least 3 Business Days prior to the commencement of the
proposed Interest Period (the "LIBOR Deadline"). Notice of
Administrative Borrower's election of the LIBOR Option for a
permitted portion of the Advances and an Interest Period
pursuant to this Section shall be made by delivery to Agent of
a LIBOR Notice received by Agent before the LIBOR Deadline, or
by telephonic notice received by Agent before the LIBOR
Deadline (to be confirmed by delivery to Agent of a LIBOR
Notice received by Agent prior to 5:00 p.m. (California time)
on the same day. Promptly upon its receipt of each such LIBOR
Notice, Agent shall provide a copy thereof to each of the
Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable
and binding on Borrowers. In connection with each LIBOR Rate
Loan, each Borrower shall indemnify, defend, and hold Agent
and the Lenders harmless against any loss, cost, or expense
incurred by Agent or any Lender as a result of (a) the payment
of any principal of any LIBOR Rate Loan other than on the last
day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any
LIBOR Rate Loan other than on the last day of the Interest
Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date
specified in any LIBOR Notice delivered pursuant hereto (such
losses, costs, and expenses, collectively, "Funding Losses").
Funding Losses shall, with respect to Agent or any Lender, be
deemed to equal the amount determined by Agent or such Lender
to be the excess, if any, of (i) the amount of interest that
would have accrued on the principal amount of such LIBOR Rate
Loan had such event not occurred, at the LIBOR Rate that would
have been applicable thereto, for the period from the date of
such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest
Period therefor), minus (ii) the amount of interest that would
accrue on such principal amount for such period at the
interest rate which Agent or such Lender would be offered were
it to be offered, at the commencement of such period, Dollar
deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered
to Administrative Borrower
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setting forth any amount or amounts that Agent or such Lender
is entitled to receive pursuant to this Section shall be
conclusive absent manifest error.
(iii) Borrowers shall have not more than 5
LIBOR Rate Loans in effect at any given time. Borrowers only
may exercise the LIBOR Option for LIBOR Rate Loans of at least
$1,000,000 and integral multiples of $500,000 in excess
thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate
Loans at any time; provided, however, that in the event that LIBOR Rate Loans
are prepaid on any date that is not the last day of the Interest Period
applicable thereto, including as a result of any automatic prepayment through
the required application by Agent of proceeds of Collections in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of the Obligations pursuant to the terms
hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders
and their Participants harmless against any and all Funding Losses in accordance
with clause (b) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent
with respect to any Lender on a prospective basis to take into
account any additional or increased costs to such Lender of
maintaining or obtaining any eurodollar deposits or increased
costs due to changes in applicable law occurring subsequent to
the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general
applicability in corporate income tax laws) and changes in the
reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the
Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the
LIBOR Rate. In any such event, the affected Lender shall give
Administrative Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit
the notice to each other Lender and, upon its receipt of the
notice from the affected Lender, Administrative Borrower may,
by notice to such affected Lender (y) require such Lender to
furnish to Administrative Borrower a statement setting forth
the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the
LIBOR Rate Loans with respect to which such adjustment is made
(together with any amounts due under clause (b)(ii) above).
(ii) In the event that any change in market
conditions or any law, regulation, treaty, or directive, or
any change therein or in the interpretation of application
thereof, shall at any time after the date hereof, in the
reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Advances
or to continue such funding or maintaining, or to determine or
charge interest rates at the LIBOR Rate, such Lender shall
give notice of such changed circumstances to Agent and
Administrative Borrower and Agent promptly shall transmit the
notice to each other Lender and (y) in the case of any LIBOR
Rate Loans of such Lender that are outstanding, the date
specified
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in such Lender's notice shall be deemed to be the last day of
the Interest Period of such LIBOR Rate Loans, and interest
upon the LIBOR Rate Loans of such Lender thereafter shall
accrue interest at the rate then applicable to Base Rate
Loans, and (z) Borrowers shall not be entitled to elect the
LIBOR Option until such Lender determines that it would no
longer be unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to
the contrary contained herein notwithstanding, neither Agent, nor any Lender,
nor any of their Participants, is required actually to acquire eurodollar
deposits to fund or otherwise match fund any Obligation as to which interest
accrues at the LIBOR Rate. The provisions of this Section shall apply as if each
Lender or its Participants had match funded any Obligation as to which interest
is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any
Lender determines that (i) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank holding
companies, or any change in the interpretation or application thereof by any
Governmental Authority charged with the administration thereof, or (ii)
compliance by such Lender or its parent bank holding company with any guideline,
request or directive of any such entity regarding capital adequacy (whether or
not having the force of law), the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material in the
exercise of its Permitted Discretion, then such Lender may notify Administrative
Borrower and Agent thereof. Following receipt of such notice, Borrowers agree to
pay such Lender on demand the amount of such reduction of return of capital as
and when such reduction is determined, payable within 90 days after presentation
by such Lender of a statement in the amount and setting forth in reasonable
detail such Lender's calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and correct absent
manifest error). In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each of Borrowers is accepting joint and several
liability hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Agent and the Lenders under this
Agreement, for the mutual benefit, directly and indirectly, of each of Borrowers
and in consideration of the undertakings of the other Borrowers to accept joint
and several liability for the Obligations.
(b) Each of Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to
the payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
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intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall
fail to make any payment with respect to any of the Obligations as and when due
or to perform any of the Obligations in accordance with the terms thereof, then
in each such event the other Persons composing Borrowers will make such payment
with respect to, or perform, such Obligation.
(d) The Obligations of each Person composing
Borrowers under the provisions of this Section 2.15 constitute the absolute and
unconditional, full recourse Obligations of each Person composing Borrowers
enforceable against each such Borrower, irrespective of the validity, regularity
or enforceability of this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this
Agreement, each Person composing Borrowers hereby waives notice of acceptance of
its joint and several liability, notice of any Advances or Letters of Credit
issued under or pursuant to this Agreement, notice of the occurrence of any
Default, Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by Agent or Lenders
under or in respect of any of the Obligations, any requirement of diligence or
to mitigate damages and, generally, to the extent permitted by applicable law,
all demands, notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Person
composing Borrowers hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or Lenders at any time or times in respect of any default by any Person
composing Borrowers in the performance or satisfaction of any term, covenant,
condition or provision of this Agreement, any and all other indulgences
whatsoever by Agent or Lenders in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in whole or in part, of any Person composing Borrowers. Without
limiting the generality of the foregoing, each of Borrowers assents to any other
action or delay in acting or failure to act on the part of any Agent or Lender
with respect to the failure by any Person composing Borrowers to comply with any
of its respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder, which might, but for the
provisions of this Section 2.15 afford grounds for terminating, discharging or
relieving any Person composing Borrowers, in whole or in part, from any of its
Obligations under this Section 2.15, it being the intention of each Person
composing Borrowers that, so long as any of the Obligations hereunder remain
unsatisfied, the Obligations of such Person composing Borrowers under this
Section 2.15 shall not be discharged except by performance and then only to the
extent of such performance. The Obligations of each Person composing Borrowers
under this Section 2.15 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Person composing Borrowers or any Agent or
Lender. The joint and several liability of the Persons composing Borrowers
hereunder shall continue in full force and effect notwithstanding
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any absorption, merger, amalgamation or any other change whatsoever in the name,
constitution or place of formation of any of the Persons composing Borrowers or
any Agent or Lender.
(f) Each Person composing Borrowers represents and
warrants to Agent and Lenders that such Borrower is currently informed of the
financial condition of Borrowers and of all other circumstances which a diligent
inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Person composing Borrowers further represents and warrants to
Agent and Lenders that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Person composing Borrowers hereby
covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) The provisions of this Section 2.15 are made for
the benefit of the Agent, the Lenders and their respective successors and
assigns, and may be enforced by it or them from time to time against any or all
of the Persons composing Borrowers as often as occasion therefor may arise and
without requirement on the part of any such Agent, Lender, successor or assign
first to marshal any of its or their claims or to exercise any of its or their
rights against any of the other Persons composing Borrowers or to exhaust any
remedies available to it or them against any of the other Persons composing
Borrowers or to resort to any other source or means of obtaining payment of any
of the Obligations hereunder or to elect any other remedy. The provisions of
this Section 2.15 shall remain in effect until all of the Obligations shall have
been paid in full or otherwise fully satisfied. If at any time, any payment, or
any part thereof, made in respect of any of the Obligations, is rescinded or
must otherwise be restored or returned by any Agent or Lender upon the
insolvency, bankruptcy or reorganization of any of the Persons composing
Borrowers, or otherwise, the provisions of this Section 2.15 will forthwith be
reinstated in effect, as though such payment had not been made.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF
CREDIT. The obligation of the Lender Group (or any member thereof) to make the
initial Advance (or otherwise to extend any credit provided for hereunder), is
subject to the fulfillment, to the satisfaction of Agent, of each of the
conditions precedent set forth below:
(a) the Closing Date shall occur on or before April
16, 2001;
(b) Agent shall have received all financing
statements required by Agent, duly executed by the applicable Borrowers, and
Agent shall have received searches reflecting the filing of all such financing
statements;
(c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) [Intentionally Omitted]
(ii) the Disbursement Letter,
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(iii) the Due Diligence Letter,
(iv) the Fee Letter,
(v) the Guaranties,
(vi) the Cash Management Agreements,
(vii) the Contribution Agreement,
(vii) the Officers' Certificate,
(ix) the Patent Security Agreement,
(x) the Stock Pledge Agreement, together
with all certificates representing the shares of Stock pledged
thereunder, as well as Stock powers with respect thereto
endorsed in blank,
(xi) the Trademark Security Agreement,
(xii) [Intentionally Omitted],
(xiiii) the Guarantor Security Agreement,
(xiv) a Mortgage and fixture filing (A) in
the maximum principal amount of $2,000,000, duly executed by
Cherokee and (B) in the maximum principal amount of
$50,000,000, duly executed by Crystal City, as the case may
be, with respect to the Facility owned by such Person;
(xv) evidence of the recording of each
Mortgage in such office or offices as may be necessary or, in
the opinion of the Agent, desirable to perfect each Lien
purported to be created thereby or to otherwise protect the
rights of the Agent and the Lenders thereunder;
(xvi) a Title Insurance Policy with respect
to each Facility dated as of the Closing Date;
(xvii) a survey of each Facility, in form
and substance satisfactory to the Agent, certified to the
Agent and to the issuer of the Title Insurance Policy; and
(xviii) the Pay-Off Letter, together with
UCC termination statements and other documentation evidencing
the termination by Existing Lender of its Liens in and to the
properties and assets of Borrowers, and
(d) Agent shall have received a certificate from the
Secretary of each Borrower attesting to the resolutions of such Borrower's Board
of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party and
authorizing specific officers of such Borrower to execute the same;
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(e) Agent shall have received copies of each
Borrower's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status
with respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status
with respect to each Borrower, each dated within 30 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of such Borrower) in which its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that such Borrower is in good standing
in such jurisdictions;
(h) Agent shall have received a certificate from the
Secretary of each Guarantor attesting to the resolutions of such Guarantor's
Board of Directors authorizing its execution, delivery, and performance of the
Loan Documents to which such Guarantor is a party and authorizing specific
officers of such Guarantor to execute the same;
(i) Agent shall have received copies of each
Guarantor's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Guarantor;
(j) Agent shall have received a certificate of status
with respect to each Guarantor, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor, which certificate shall indicate that such
Guarantor is in good standing in such jurisdiction;
(k) Agent shall have received certificates of status
with respect to each Guarantor, each dated within 30 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of such Guarantor) in which its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that such Guarantor is in good
standing in such jurisdictions;
(l) Agent shall have received a certificate of
insurance, together with the endorsements thereto, as are required by Section
6.8, the form and substance of which shall be satisfactory to Agent;
(m) Agent shall have received Collateral Access
Agreements with respect to the locations set forth on Schedule 3.1(m) hereto;
(n) Agent shall have received opinions of Borrowers'
counsel in form and substance satisfactory to Agent;
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(o) Agent shall have received satisfactory evidence
(including a certificate of the chief financial officer of Parent) that all tax
returns required to be filed by Borrowers have been timely filed and all taxes
upon Borrowers or their properties, assets, income, and franchises (including
Real Property taxes and payroll taxes) have been paid prior to delinquency,
except such taxes that are the subject of a Permitted Protest;
(p) Borrowers shall have the Required Availability
after giving effect to the initial extensions of credit hereunder;
(q) Agent shall have completed its business, legal,
and collateral due diligence, including (i) a collateral audit and review of
Borrowers' books and records and verification of Borrowers' representations and
warranties to the Lender Group, the results of which shall be satisfactory to
Agent, (ii) an inspection of each of the locations where Inventory is located,
the results of which shall be satisfactory to Agent, and (iii) receipt of an
updated environmental review of Borrowers' Real Property indicating no change
from the initial environmental review provided to Agent on or about May, 2000;
(r) Agent shall have received completed reference
checks with respect to Borrowers' senior management, the results of which are
satisfactory to Agent in its sole discretion;
(s) Agent shall have received an appraisal from
Continental Plant of the Net Orderly Liquidation Value of Borrowers' Inventory,
the results of which shall be satisfactory to Agent;
(t) Agent shall have received (i) Borrowers' Closing
Date Business Plan, and (ii) a draft of the Parent's consolidated audited income
statement for the fiscal year ended December 31, 2000, the results of which
shall be materially consistent with the draft annual financial statements
provided to Agent prior to the Closing Date;
(u) Agent shall have received a schedule from Parent
listing all of the Parent's significant real property indicating the estimated
Fair Market Value of each item.
(v) Borrowers shall pay all Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
(w) Agent shall have received copies of each of
Management Agreement and the Services Agreement together with a certificate of
the Secretary of the applicable Borrower certifying each such document as being
a true, correct, and complete copy thereof;
(x) Borrowers shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrowers of this Agreement or any
other Loan Document or with the consummation of the transactions contemplated
hereby and thereby; and
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(y) all other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Agent.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF
CREDIT. The obligation of the Lender Group (or any member thereof) to continue
to make Advances (or otherwise extend credit hereunder) is subject to the
fulfillment, on or before the date applicable thereto, of each of the conditions
subsequent set forth below (the failure by Borrowers to so perform or cause to
be performed constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to
Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel;
(b) the Borrowers will use their best efforts to
assist Agent with the syndication of no less than 40% and no more than 50% of
the Total Commitment; the Borrowers acknowledge and agree that Agent shall have
the right, after consultation with the Administrative Borrower, to alter certain
terms and conditions of this Agreement, including, without limitation, the
tenor, structure, interest rates and fees, in order to assist in a successful
syndication of such portion of the Total Commitment, provided that no Event of
Default or default under the ClimaChem Indenture would occur immediately after
giving effect to, and as a result of, any such alteration;
(c) within 10 days of the written request of Agent to
the Parent, the Parent shall execute and deliver to Agent (i) the Parent
Security Agreement, in form and substance satisfactory to Agent, pursuant to
which certain material assets of the Parent identified by Agent shall be pledged
to Agent for the benefit of the Lenders to secure the obligations of the Parent
under its Guaranty and (ii) such other agreements, opinions of counsel,
instruments, approvals or other documents as Agent may reasonably request in
connection therewith; and
(d) within 10 days of the Closing Date, Agent shall
receive an opinion of Borrowers' counsel in respect of the shares of ClimaChem
Stock pledged to Agent under the Stock Pledge Agreements, the form and substance
of which shall be acceptable to Agent.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT.
The obligation of the Lender Group (or any member thereof) to make all Advances
(or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred
and be continuing on the date of such extension of credit, nor shall either
result from the making thereof;
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(c) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against any Borrower, Agent, any Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall become effective upon
the execution and delivery hereof by Borrowers, Agent, and the Lenders and shall
continue in full force and effect for a term ending on April 13, 2005 (the
"Maturity Date"). The foregoing notwithstanding, the Lender Group, upon the
election of the Required Lenders, shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination
of this Agreement, all Obligations (including contingent reimbursement
obligations of Borrowers with respect to any outstanding Letters of Credit)
immediately shall become due and payable without notice or demand. No
termination of this Agreement, however, shall relieve or discharge Borrowers of
their duties, Obligations, or covenants hereunder and the Agent's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has been terminated
and all of the Obligations have been fully and finally discharged and the Lender
Group's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the
option, at any time upon 90 days prior written notice by Administrative Borrower
to Agent, to terminate this Agreement by paying to Agent, for the benefit of the
Lender Group, in cash, the Obligations (including either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender), in full, together with the Applicable Prepayment Premium (to be
allocated based upon letter agreements between Agent and individual Lenders). If
Administrative Borrower has sent a notice of termination pursuant to the
provisions of this Section, then the Commitments shall terminate and Borrowers
shall be obligated to repay the Obligations (including either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender), in full, together with the Applicable Prepayment Premium, on the date
set forth as the date of termination of this Agreement in such notice. In the
event of the termination of this Agreement and repayment of the Obligations at
any time prior to the Maturity Date, for any other reason, including (a)
termination upon the election of the Required Lenders to terminate after the
occurrence and during the continuation of
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an Event of Default, (b) foreclosure and sale of Collateral, (c) sale of the
Collateral in any Insolvency Proceeding, or (iv) restructure, reorganization or
compromise of the Obligations by the confirmation of a plan of reorganization,
or any other plan of compromise, restructure, or arrangement in any Insolvency
Proceeding, then, in view of the impracticability and extreme difficulty of
ascertaining the actual amount of damages to the Lender Group or profits lost by
the Lender Group as a result of such early termination, and by mutual agreement
of the parties as to a reasonable estimation and calculation of the lost profits
or damages of the Lender Group, Borrowers shall pay the Applicable Prepayment
Premium to Agent (to be allocated based upon letter agreements between Agent and
individual Lenders), measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Borrower hereby
grants to Agent, for the benefit of the Lender Group, a continuing security
interest in all of its right, title, and interest in all currently existing and
hereafter acquired or arising Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by Borrowers of
each of their covenants and duties under the Loan Documents. The Agent's Liens
in and to the Collateral shall attach to all Collateral without further act on
the part of Agent or Borrowers. Anything contained in this Agreement or any
other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrowers have no authority, express or implied, to dispose of any
item or portion of the Collateral.
4.2 [INTENTIONALLY OMITTED].
4.3 COLLECTION OF ACCOUNTS, AND GENERAL INTANGIBLES .
At any time after the occurrence and during the continuation of an Event of
Default, Agent or Agent's designee may (a) notify Account Debtors of Borrowers
that the Accounts, chattel paper, or General Intangibles have been assigned to
Agent or that Agent has a security interest therein, or (b) collect the
Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At
any time upon the request of Agent, Borrowers shall execute and deliver to
Agent, any and all financing statements, original financing statements in lieu
of continuation statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, and all other documents (the
"Additional Documents") that Agent may request in its Permitted Discretion, in
form and substance satisfactory to Agent, to perfect and continue perfected or
better perfect the Agent's Liens in the Collateral (whether now owned or
hereafter arising or acquired) and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents. To the
maximum extent permitted by applicable law, each Borrower authorizes Agent to
execute any such Additional Documents in the applicable Borrower's name and
authorize Agent to file such executed Additional Documents in any appropriate
filing office. In
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addition, on such periodic basis as Agent shall require in its Permitted
Discretion, Borrowers shall (a) provide Agent with a report of all new
patentable, copyrightable, or trademarkable materials acquired or generated by
Borrowers during the prior period, (b) cause all patents, copyrights, and
trademarks acquired or generated by Borrowers that are not already the subject
of a registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrowers' ownership thereof,
and (c) cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.
4.5 POWER OF ATTORNEY. Each Borrower hereby
irrevocably makes, constitutes, and appoints Agent (and any of Agent's officers,
employees, or agents designated by Agent) as such Borrower's true and lawful
attorney, with power to (a) if such Borrower refuses to, or fails timely to
execute and deliver any of the documents described in Section 4.4, sign the name
of such Borrower on any of the documents described in Section 4.4, (b) at any
time that an Event of Default has occurred and is continuing, sign such
Borrower's name on any invoice or ▇▇▇▇ of lading relating to the Collateral,
drafts against Account Debtors, or notices to Account Debtors, (c) send requests
for verification of Accounts, (d) endorse such Borrower's name on any Collection
item that may come into the Lender Group's possession, (e) at any time that an
Event of Default has occurred and is continuing, make, settle, and adjust all
claims under such Borrower's policies of liability insurance and other insurance
covering any Collateral and make all determinations and decisions with respect
to such policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as each Borrower's
attorney, and each and every one of its rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit
hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through
any of their respective officers, employees, or agents) shall have the right,
from time to time hereafter to inspect the Books and to check, test, and
appraise the Collateral in order to verify Borrowers' financial condition or the
amount, quality, value, condition of, or any other matter relating to, the
Collateral.
4.7 [INTENTIONALLY OMITTED].
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each Borrower
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and at and as of the date of the making of each Advance (or
other extension of credit) made thereafter, as though made on and as of the date
of such Advance (or other extension of credit) (except to the extent that such
representations and
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warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Each Borrower has good and
indefeasible title to its Collateral, free and clear of Liens except for
Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona
fide existing payment obligations of Account Debtors created by the sale and
delivery of Inventory or the rendition of services to such Account Debtors in
the ordinary course of Borrowers' business, owed to Borrowers without defenses,
disputes, offsets, counterclaims, or rights of return or cancellation. As to
each Eligible Account, such Account is not:
(a) owed by an employee, Affiliate, or agent of a
Borrower,
(b) on account of a transaction wherein goods were
placed on consignment or were sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a ▇▇▇▇ and hold, or on any other terms by reason of
which the payment by the Account Debtor may be conditional,
(c) payable in a currency other than Dollars,
(d) owed by an Account Debtor that has or has
asserted a right of setoff, has disputed its liability, or has made any claim
with respect to its obligation to pay the Account,
(e) owed by an Account Debtor that is subject to any
Insolvency Proceeding or is not Solvent or as to which a Borrower has received
notice of an imminent Insolvency Proceeding or a material impairment of the
financial condition of such Account Debtor,
(f) on account of a transaction as to which the goods
giving rise to such Account have not been shipped and billed to the Account
Debtor or the services giving rise to such Account have not been performed and
accepted by the Account Debtor,
(g) a right to receive progress payments or other
advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of performance by the
applicable Borrower of the subject contract for goods or services, and
(h) an Account that has not been billed to the
customer.
5.3 ELIGIBLE INVENTORY AND ELIGIBLE RAW INVENTORY.
All Eligible Inventory is of good and merchantable quality, free from defects.
As to each item of Eligible Inventory and Eligible Raw Inventory, such Inventory
is
(a) owned by a Borrower free and clear of all Liens
other than Liens in favor of Agent,
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(b) either located at one of the locations set forth
on Schedule E-1 or in transit from one such location to another such location,
(c) not located on real property leased by a Borrower
or in a contract warehouse, in each case, unless subject to a Collateral Access
Agreement executed by the lessor, the warehouseman, or other third party, as the
case may be, and unless segregated or otherwise separately identifiable from
goods of others, if any, stored on the premises,
(d) not goods that have been returned or rejected by
Borrowers' customers, and
(e) not goods that are obsolete or slow moving,
restrictive or custom items, work-in-process, or that constitute spare parts,
packaging and shipping materials, supplies used or consumed in Borrowers'
business, ▇▇▇▇ and hold goods, defective goods, "seconds," or Inventory acquired
on consignment, except for Eligible Raw Inventory.
5.4 EQUIPMENT. All of the material Equipment is used
or held for use in Borrowers' business or is useful in Borrowers' business.
5.5 LOCATION OF INVENTORY. The Inventory are not
stored with a bailee, warehouseman, or similar party and are located only at the
locations identified on Schedule 5.5.
5.6 INVENTORY RECORDS. Each Borrower keeps correct
and accurate records itemizing and describing the type, quality, and quantity of
its Inventory and the book value thereof.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The
chief executive office of each Borrower is located at the address indicated in
Schedule 5.7 and each Borrower's FEIN is identified in Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Borrower is duly organized and existing and
in good standing under the laws of the jurisdiction of its organization and
qualified to do business in any state where the failure to be so qualified
reasonably could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and
accurate description of the authorized capital Stock of each Borrower, by class,
and, as of the Closing Date, a description of the number of shares of each such
class that are issued and outstanding. Other than as described on Schedule
5.8(b), there are no subscriptions, options, warrants, or calls relating to any
shares of each Borrower's capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock.
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(c) Set forth on Schedule 5.8(c), is a complete and
accurate list of each Borrower's direct and indirect Subsidiaries, showing: (i)
the jurisdiction of their organization; (ii) the number of shares of each class
of common and preferred Stock authorized for each of such Subsidiaries; and
(iii) the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by the applicable Borrower. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are
no subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
(e) Each of Canadian Sub and UK Sub is an inactive
company, has no operations, conducts no business and owns no assets.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party do not and will not (i) violate any provision of federal, state,
or local law or regulation applicable to any Borrower, the Governing Documents
of any Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on any Borrower, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of any Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of any Borrower's interestholders or any approval or consent of any
Person under any material contractual obligation of any Borrower.
(c) Other than the filing of financing statements,
the execution, delivery, and performance by each Borrower of this Agreement and
the Loan Documents to which such Borrower is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority or other Person.
(d) As to each Borrower, this Agreement and the other
Loan Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
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(e) The Agent's Liens are validly created, perfected,
and first priority Liens, subject only to Permitted Liens and the filing of
financing statements and other recordations with the United States Patent and
Trademark Office.
(f) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which it is a party have been duly authorized
by all necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to such Guarantor, the Governing Documents of such Guarantor, or any order,
judgment, or decree of any court or other Governmental Authority binding on such
Guarantor, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of such Guarantor, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
such Guarantor, other than Permitted Liens, or (iv) require any approval of such
Guarantor's interestholders or any approval or consent of any Person under any
material contractual obligation of Guarantor.
(h) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which such Guarantor is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or other Person.
(i) The Loan Documents to which each Guarantor is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by such Guarantor will be legally valid and binding obligations of
such Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed
on Schedule 5.10, there are no actions, suits, or proceedings pending or, to the
best knowledge of Borrowers, threatened against Borrowers, or any of their
Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), and (b) matters arising after the
Closing Date that, if decided adversely to Borrowers, or any of their
Subsidiaries, as applicable, reasonably could not be expected to result in a
Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial
statements relating to Borrowers that have been delivered by Borrowers to the
Lender Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Borrowers' financial condition as of the date thereof and results of operations
for the period then ended. There has not been a Material Adverse Change with
respect to Borrowers since the date of the latest financial statements submitted
to the Lender Group.
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5.12 FRAUDULENT TRANSFER.
(a) Each Borrower is Solvent.
(b) No transfer of property is being made by any
Borrower and no obligation is being incurred by any Borrower in connection with
the transactions contemplated by this Agreement or the other Loan Documents with
the intent to hinder, delay, or defraud either present or future creditors of
Borrowers.
5.13 EMPLOYEE BENEFITS. None of Borrowers, any of
their Subsidiaries, or any of their ERISA Affiliates maintains or contributes to
any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on
Schedule 5.14, (a) to Borrowers' knowledge, none of Borrowers' properties or
assets has ever been used by Borrowers or by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Borrowers' knowledge, none of Borrowers' properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials disposal site, (c)
none of Borrowers have received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by Borrowers, and (d) none of Borrowers have received a summons,
citation, notice, or directive from the Environmental Protection Agency or any
other federal or state governmental agency concerning any action or omission by
any Borrower resulting in the releasing or disposing of Hazardous Materials into
the environment.
5.15 [INTENTIONALLY OMITTED].
5.16 INTELLECTUAL PROPERTY. Each Borrower owns, or
holds licenses in, all trademarks, trade names, copyrights, patents, patent
rights, and licenses that are necessary to the conduct of its business as
currently conducted.. Attached hereto as Schedule 5.16 is a true, correct, and
complete listing of all material patents, patent applications, trademarks,
trademark applications, copyrights, and copyright registrations as to which each
Borrower is the owner or is an exclusive licensee.
5.17 LEASES. Borrowers enjoy peaceful and undisturbed
possession under all leases material to the business of Borrowers and to which
Borrowers are a party or under which Borrowers are operating. All of such leases
are valid and subsisting and no material default by Borrowers exists under any
of them.
5.18 DDAS. Set forth on Schedule 5.18 are all of the
DDAs of each Borrower, including, with respect to each depository (i) the name
and address of that depository, and (ii) the account numbers of the accounts
maintained with such depository.
5.19 COMPLETE DISCLOSURE. All factual information
(taken as a whole) furnished by or on behalf of Borrowers in writing to Agent or
any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents or any transaction
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contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of Borrowers in writing to the
Agent or any Lender will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
omitting to state any fact necessary to make such information (taken as a whole)
not misleading in any material respect at such time in light of the
circumstances under which such information was provided. On the Closing Date,
the Closing Date Projections represent, and as of the date on which any other
Projections are delivered to Agent, such additional Projections represent
Borrowers' good faith best estimate of its future performance for the periods
covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a
true and complete list of all Indebtedness of each Borrower outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date, other than Indebtedness owing by a Borrower to another Borrower,
and such Schedule accurately reflects the aggregate principal amount of such
Indebtedness, the amortization schedule (if any) in respect of such Indebtedness
and the maturity date of such Indebtedness.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, Borrowers
shall and shall cause each of their respective Subsidiaries to do all of the
following:
6.1 ACCOUNTING SYSTEM. Maintain a system of
accounting that enables Borrowers to produce financial statements in accordance
with GAAP and maintain records pertaining to the Collateral that contain
information as from time to time reasonably may be requested by Agent. Borrowers
also shall keep an inventory reporting system that shows all additions, sales,
claims, returns, and allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Agent (and if so
requested by Agent, with copies for each Lender) with the following documents at
the following times in form satisfactory to Agent:
Daily (a) a sales journal, collection journal, and credit
register since the last such schedule and a calculation of
the Borrowing Base of Borrowers on an individual and a
combined basis, and
(b) notice of all returns, disputes, or claims.
Weekly (c) Inventory reports specifying each Borrower's cost and
the wholesale market value of its Inventory, with
additional detail showing additions to and deletions from
the Inventory.
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Monthly (not later (d) a detailed calculation of the Borrowing Base of
than the 15th day Borrowers, on an individual and a combined basis,
each month) (including, in each case, detail regarding those Accounts
that are not Eligible of Accounts),
(e) a detailed aging, by total, of the Accounts, together
with a reconciliation to the detailed calculation of the
Borrowing Base previously provided to Agent,
(f) a summary aging, by vendor, of Borrowers' accounts
payable and any book overdraft, and
(g) a calculation of Dilution for the prior month.
Quarterly (h) a detailed list of each Borrower's customers with
outstanding account balances,
(i) a report regarding each Borrower's accrued, but
unpaid, ad valorem taxes,
Upon request by (j) copies of invoices in connection with the Accounts,
Agent credit memos, remittance advices, deposit slips, shipping
and delivery documents in connection with the Accounts
and, for Inventory and Equipment acquired by Borrowers,
purchase orders and invoices, and
(k) such other reports as to the Collateral, or the
financial condition of Borrowers as Agent may request.
In addition, each Borrower agrees to cooperate fully with
Agent to facilitate and implement a system of electronic collateral reporting in
order to provide electronic reporting of each of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
Deliver to Agent, with copies to each Lender:
(a) as soon as available, but in any event within 30
days (45 days (or, if such Person has filed a filing extension with the SEC, 50
days) in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Parent's
and ClimaChem's fiscal years,
(i) a company prepared consolidated and
consolidating balance sheet, income statement, and statement
of cash flow covering Parent's and its Subsidiaries' and
ClimaChem's and its Subsidiaries' operations during such
period,
(ii) a certificate signed by the chief
financial officer or vice president/controller of Parent and
of ClimaChem to the effect that:
A. the financial statements delivered
hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and
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being subject to year-end audit adjustments) and
fairly present in all material respects the financial
condition of Parent and its Subsidiaries and
ClimaChem and its Subsidiaries, as the case may be,
B. the representations and warranties of
Borrowers contained in this Agreement and the other
Loan Documents are true and correct in all material
respects on and as of the date of such certificate,
as though made on and as of such date (except to the
extent that such representations and warranties
relate solely to an earlier date), and
C. there does not exist any condition or
event that constitutes a Default or Event of Default
(or, to the extent of any non-compliance, describing
such non-compliance as to which he or she may have
knowledge and what action Borrowers have taken, are
taking, or propose to take with respect thereto), and
(iii) for each month that is the date on
which a financial covenant in Section 7.20 is to be tested, a
Compliance Certificate demonstrating, in reasonable detail,
compliance at the end of such period with the applicable
financial covenants contained in Section 7.20, and
(b) as soon as available, but in any event within 90
days (or, if such Person has filed a filing extension with the SEC, 105 days)
after the end of each of Parent's and ClimaChem's fiscal years,
(i) financial statements of Parent and its
Subsidiaries and of ClimaChem and its Subsidiaries for each
such fiscal year, prepared on a consolidated and consolidating
basis, audited (in the case of the consolidated financial
statements) by independent certified public accountants
reasonably acceptable to Agent and certified, without any
qualifications (or in the case of the Parent, without any
qualification as to scope of audit), by such accountants to
have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such
accountants' letter to management),
(ii) a certificate of such accountants
addressed to Agent and the Lenders stating that such
accountants do not have knowledge of the existence of any
continuing Default or Event of Default under Section 7.20,
(c) as soon as available, but in any event within 30
days prior to the start of each of Parent's and ClimaChem's fiscal years,
(i) copies of Borrowers' Projections, in
form and substance (including as to scope and underlying
assumptions) satisfactory to Agent, in its sole discretion,
for the forthcoming year, month by month, certified by the
chief financial officer or vice president/controller of Parent
and of ClimaChem as being such officer's good faith best
estimate of the financial performance of Parent and
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its Subsidiaries and of ClimaChem and its Subsidiaries, as the
case may be, during the period covered thereby,
(d) if and when filed by any Borrower or by Parent or
ClimaChem,
(i) 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by any Borrower,
Parent or ClimaChem with the SEC,
(iii) copies of Borrowers', Parent's and
ClimaChem's federal income tax returns (if requested by
Agent), and any amendments thereto, filed with the Internal
Revenue Service, and
(iv) any other information that is provided
by Parent to its shareholders generally,
(e) if and when filed by any Borrower and as
requested by Agent, satisfactory evidence of payment of applicable excise taxes
in each jurisdictions in which (i) any Borrower conducts business or is required
to pay any such excise tax, (ii) where any Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event
or condition that constitutes a Default or an Event of Default, notice thereof
and a statement of the curative action that Borrowers propose to take with
respect thereto,
(g) as soon as available, but no later than Wednesday
of each week, a report listing (i) all cash distributions and advances made by
EDN to any Borrower and Guarantor (other than Parent, Cherokee and Crystal City)
during the preceding week and (ii) all cash distributions and advances made by
any Borrower and Guarantor (other than Parent, Cherokee and Crystal City) to EDN
during the preceding week, and
(h) upon the request of Agent, any other report
reasonably requested relating to the financial condition of Borrowers.
In addition to the financial statements referred to above, Borrowers agree to
deliver financial statements prepared on both a consolidated and consolidating
basis and that no Borrower, or any Subsidiary of a Borrower, will have a fiscal
year different from that of ClimaChem. Parent, ClimaChem and Borrowers agree
that their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Parent, ClimaChem or Borrowers that Agent reasonably may request.
Parent, ClimaChem and each Borrower waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Agent pursuant to or in accordance
with this Agreement, and agree that Agent may contact directly any such
accounting firm or service bureau in order to obtain such information.
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Notwithstanding the foregoing, the Agent will use reasonable good faith efforts
to permit a representative of Borrowers to be present or participate in any
communication with such accountants.
6.4 [INTENTIONALLY OMITTED].
6.5 RETURN. Cause returns and allowances as between
Borrowers and their Account Debtors, to be on the same basis and in accordance
with the usual customary practices of the applicable Borrower, as they exist at
the time of the execution and delivery of this Agreement. If, at a time when no
Event of Default has occurred and is continuing, any Account Debtor returns any
Inventory to any Borrower, the applicable Borrower promptly shall determine the
reason for such return and, if the applicable Borrower accepts such return,
issue a credit memorandum (with a copy to be sent to Agent) in the appropriate
amount to such Account Debtor. If, at a time when an Event of Default has
occurred and is continuing, any Account Debtor returns any Inventory to any
Borrower, the applicable Borrower promptly shall determine the reason for such
return and, if Agent consents (which consent shall not be unreasonably
withheld), issue a credit memorandum (with a copy to be sent to Agent) in the
appropriate amount to such Account Debtor.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve
all of its properties which are necessary or useful in the proper conduct to its
business in good working order and condition, ordinary wear and tear excepted,
and comply at all times with the provisions of all leases to which it is a party
as lessee, so as to prevent any loss or forfeiture thereof or thereunder.
6.7 TAXES. Cause all assessments and taxes, whether
real, personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Borrowers or any of their assets to be paid in full, before delinquency
or before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Borrowers will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Borrower has made such payments or
deposits. Borrowers shall deliver satisfactory evidence of payment of applicable
excise taxes in each jurisdictions in which any Borrower is required to pay any
such excise tax.
6.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance
respecting its property and assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Borrowers also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
(with respect to the policies covering any Collateral) or additional insured, as
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appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt
notice of any loss covered by such insurance. Agent may elect to adjust, in its
sole discretion, any losses (so long as no Default or Event of Default shall
occur and be continuing, in excess of $250,000 or in any amount if a Default or
Event of Default shall have occurred and be continuing) payable under any such
insurance policies covering any Collateral, without any liability to Borrowers
whatsoever in respect of such adjustments. Except as provided in the immediately
succeeding sentence, any monies received as payment for any loss under any
insurance policy mentioned above (other than liability insurance policies) or as
payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to Agent to be applied at the option of the Required
Lenders either to the prepayment of the Obligations or shall be disbursed to
Administrative Borrower under staged payment terms reasonably satisfactory to
the Required Lenders for application to the cost of repairs, replacements, or
restorations. Any monies received as payment for any loss under any insurance
policy in respect of assets or properties of a Borrower that do not constitute
Collateral shall be applied, within 60 days of the receipt of such monies, at
the option of such Borrower either to the prepayment of the Advances or to the
cost of repairs, replacements, or restorations. Any such repairs, replacements,
or restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items or property destroyed prior to
such damage or destruction.
(c) Borrowers shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 6.8, unless Agent is included thereon as named
insured with the loss payable to Agent under a lender's loss payable endorsement
or its equivalent. Administrative Borrower immediately shall notify Agent
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Agent.
6.9 LOCATION OF INVENTORY. Keep the Inventory only at
the locations identified on Schedule 5.5; provided, however, that Administrative
Borrower may amend Schedule 5.5 so long as such amendment occurs by written
notice to Agent not less than 30 days prior to the date on which the Inventory
is moved to such new location, so long as such new location is within the
continental United States, and so long as, at the time of such written
notification, the applicable Borrower provides any financing statements
necessary to perfect and continue perfected the Agent's Liens on such assets and
also provides to Agent a Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the
requirements of all applicable laws, rules, regulations, and orders of any
Governmental Authority, including the Fair Labor Standards Act and the Americans
With Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not result in
and reasonably could not be expected to result in a Material Adverse Change.
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6.11 LEASES. Pay when due all rents and other amounts
payable under any leases to which any Borrower is a party or by which any
Borrower's properties and assets are bound, unless such payments are the subject
of a Permitted Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage
commission or finders fees incurred in connection with or as a result of
Borrowers' obtaining financing from the Lender Group under this Agreement.
Borrowers agree and acknowledge that payment of all such brokerage commissions
or finders fees shall be the sole responsibility of Borrowers, and each Borrower
agrees to indemnify, defend, and hold Agent and the Lender Group harmless from
and against any claim of any broker or finder arising out of Borrowers'
obtaining financing from the Lender Group under this Agreement.
6.13 EXISTENCE. At all times preserve and keep in
full force and effect each Borrower's valid existence and good standing and any
rights and franchises material to Borrowers' businesses.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any
Borrower free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity from or onto property owned or operated by
any Borrower and take any Remedial Actions required to ▇▇▇▇▇ said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Agent with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of any Borrower, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against any Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event
later than 5 Business Days after obtaining knowledge thereof, (a) notify Agent
if any written information, exhibit, or report furnished to the Lender Group
contained any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made, and (b) correct any defect or error
that may be discovered therein or in any Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.
6.16 DISTRIBUTIONS. The Borrowers shall:
(a) cause EDN to promptly distribute to ClimaChem
100% of the insurance proceeds received by EDN as a result of a business
interruption at its Bayer production facility, and such insurance proceeds shall
be remitted by ClimaChem to Agent and applied in accordance with Section
2.4(a)(iv);
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(b) cause the Parent to cause its subsidiary, Prime
Financial Corporation, to promptly distribute to Parent, and Parent will
immediately thereafter distribute to ClimaChem, 100% of the net proceeds
received by such Person from the sale of a certain purchase option on a building
located in Oklahoma City, Oklahoma, and such proceeds shall be remitted by
ClimaChem to Agent and applied in accordance with Section 2.4(a)(iv); and
(c) cause DSN to promptly distribute to ClimaChem
100% of the net proceeds received by DSN as a result of the refinancing of DSN's
Indebtedness pertaining to and/or secured by property owned by DSN, and such
proceeds shall be remitted by ClimaChem to Agent and applied in accordance with
Section 2.4(a)(iv).
7. NEGATIVE COVENANTS. Each Borrower covenants and agrees
that, so long as any credit hereunder shall be available and until full and
final payment of the Obligations, Borrowers will not and will not permit any of
their respective Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit,
guarantee, or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, replacements or
extensions of Indebtedness permitted under clauses (b) and (c) of this Section
7.1 (and continuance or renewal of any Permitted Liens associated therewith) so
long as: (i) the terms and conditions of such refinancings, renewals, or
extensions do not, in Agent's judgment, materially impair the prospects of
repayment of the Obligations by Borrowers or materially impair Borrowers'
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended, except for (A) increases in
the principal amount of such Indebtedness not exceeding the principal amount of
such Indebtedness outstanding on the Closing Date and (B) increases in the
principal amount of such Indebtedness owing by DSN to The CIT Group/Business
Credit, Inc., provided that the maximum principal amount of such Indebtedness
shall not exceed $11,000,000, (iii) such refinancings, renewals, or extensions
do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions, that, taken as a whole, are materially more burdensome or
restrictive to the applicable Borrower, and (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must be include subordination terms and conditions that
are at least as favorable to the Lender Group as those that were applicable to
the refinanced, renewed, or extended Indebtedness;
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(e) Indebtedness outstanding under the ClimaChem
Notes in an aggregate principal amount not to exceed $105,000,000 at any one
time outstanding;
(f) Indebtedness owing by (i) any Borrower to any
Guarantor or any other Borrower and (ii) any Guarantor to any other Guarantor
other than the Parent or any Borrower;
(g) subordinated Indebtedness the terms and
conditions of which, including provisions subordinating such Indebtedness to the
Obligations, are satisfactory to the Lenders;
(h) Indebtedness owing by any Borrower to any
Subsidiary of Parent that is not also a Subsidiary of ClimaChem, provided that
the aggregate principal amount of such Indebtedness shall not exceed $200,000 at
any time;
(i) other unsecured Indebtedness in an aggregate
amount not to exceed $500,000 at any time; and
(j) Indebtedness composing Permitted Investments.
7.2 LIENS. Create, incur, assume, or permit to exist,
directly or indirectly, any Lien on or with respect to any of its assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced,
renewed, replaced or extended under Section 7.1(d) and so long as the
replacement Liens only encumber those assets that secured the refinanced,
renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer,
or otherwise dispose of, in one transaction or a series of transactions, all or
any substantial part of its assets.
Clauses (a), (b) and (c) of this Section 7.3 shall not apply to the merger or
consolidation of a Borrower with and into another Borrower other than ClimaChem.
7.4 DISPOSAL OF ASSETS. Other than Permitted
Dispositions and as provided in Section 7.3, convey, sell, lease, license,
assign, transfer, or otherwise dispose of any of the assets of any Borrower,
except that, so long as no Default or Event of Default has occurred and is
continuing or would result therefrom:
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(a) Crystal City may sell its Facility located in
Crystal City, Missouri, provided that (i) the proceeds from such sale are
applied in accordance with Section 2.4(b), except that up to $2,000,000 of such
proceeds may be distributed by Crystal City to the Parent so long as (A) the
proceeds distributed to the Parent are deposited in a cash collateral account
maintained by a Person acceptable to Agent and are pledged to Agent for the
benefit of the Lenders and (B) Agent shall have a perfected, first priority
security interest in such cash collateral account and in all cash, securities,
investment property and other financial assets deposited therein, and, so long
as no Event of Default has occurred and is continuing, such proceeds may be used
by the Parent to repay Indebtedness of the Parent set forth on Schedule 7.4(b),
(ii) such asset is sold for Fair Market Value and (iii) the cash consideration
received by Crystal City from such sale shall not be less than $4,000,000;
(b) Cherokee may sell its Facility located in
Cherokee, Alabama, provided that (i) such sale is a sale-leaseback transaction,
(ii) the proceeds from such sale are applied in accordance with Section 2.4(b),
(iii) such asset is sold for Fair Market Value and (iv) the cash consideration
received by Cherokee from such sale shall not be less than $2,000,000;
(c) ClimaChem may sell its retail blasting business
to Orica USA Inc., provided that (i) the proceeds from such sale are applied in
accordance with Section 2.4(b), (ii) the assets that comprise ClimaChem's retail
blasting business are sold for Fair Market Value and (iii) the cash
consideration received by ClimaChem or any its Subsidiaries from such sale shall
not be less than $3,500,000; and
(d) in addition to clauses (a), (b) and (c) of this
Section 7.4, a Borrower may sell or otherwise dispose of any of its other
assets, provided that (i) the proceeds from such sale or disposition are either
applied to prepay the Obligations in accordance with Section 2.4(b) or
distributed to ClimaChem and are used by ClimaChem solely to repurchase the
ClimaChem Notes, (ii) after giving effect to the repurchase of the ClimaChem
Notes in accordance with clause (i) above, Excess Availability (after giving
effect to up to $4,200,000 of the Interest Reserve) is not less than
$15,000,000, (iii) such assets are sold for Fair Market Value and (iv) the
aggregate Fair Market Value of all such assets sold during each fiscal year
pursuant to this Section 7.4(d) shall not exceed $4,000,000.
7.5 CHANGE NAME. Change any Borrower's name, FEIN,
corporate structure or identity, or add any new fictitious name; provided,
however, that a Borrower may change its name or add any new fictitious name upon
at least 30 days prior written notice by Administrative Borrower to Agent of
such change and so long as, at the time of such written notification, such
Borrower provides any financing statements or fixture filings necessary to
perfect and continue perfected Agent's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any
way liable with respect to the obligations of any third Person except (i) by
endorsement of instruments or items of payment for deposit to the account of
Borrowers or which are transmitted or turned over to Agent, (ii) for guarantees
of Indebtedness permitted under Section 7.1 and guarantees set forth on Schedule
5.20 and (iii) for guarantees of performance, surety or appeal bonds of any
Borrower or Guarantor (other than the Parent).
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7.7 NATURE OF BUSINESS. Make any change in the
principal nature of Borrowers' business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted
by Section 7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower or any Guarantor, other than the Obligations in
accordance with this Agreement,
(b) ClimaChem shall not repurchase any ClimaChem
Notes; provided, that ClimaChem may repurchase its ClimaChem Notes (i) to the
extent permitted in Section 7.4, or (ii) with proceeds from a cash contribution
made by Parent to ClimaChem so long as (A) no Default or Event of Default has
occurred and is continuing or would result therefrom, (B) EBITDA for the fiscal
quarter immediately preceding the date of such repurchase is not less than
$5,000,000 and (C) after giving effect to such repurchase, Excess Availability
(after giving effect to up to $4,200,000 of the Interest Reserve) is not less
than $15,000,000, and
(c) Except in connection with a refinancing permitted
by Section 7.1(d), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Sections 7.1(b), (c), (e) or (g).
7.9 CHANGE OF CONTROL. Cause, permit, or suffer,
directly or indirectly, any Change of Control.
7.10 CONSIGNMENTS. Consign any Inventory or sell any
Inventory on ▇▇▇▇ and hold, sale or return, sale on approval, or other
conditional terms of sale.
7.11 DISTRIBUTIONS. Other than distributions or the
declaration and payment of dividends by a Borrower to another Borrower, make any
distribution or declare or pay any dividends (in cash or other property, other
than common Stock) on, or purchase, acquire, redeem, or retire any of any
Borrower's Stock, of any class, whether now or hereafter outstanding or pay any
management or similar fees; provided, that:
(a) ClimaChem may make distributions and pay
dividends to Parent in repayment of the costs and expenses incurred by Parent
that are directly allocable to the Borrowers for Parent's provision of the
Services (as defined in the Services Agreement) on behalf of the Borrowers
pursuant to the Services Agreement;
(b) each Borrower may make distributions and pay
dividends to any Guarantor (other than Parent, Cherokee and Crystal City), and
each Guarantor may make distributions and pay dividends to any Borrower or
Guarantor (other than Parent, Cherokee and Crystal City);
(c) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom, (i) ClimaChem may make
distributions and pay dividends to Parent in respect of the management fees
payable by ClimaChem to Parent in accordance with the Management Agreement,
provided that (A) the aggregate amount of all such payments made
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by Borrowers pursuant to this clause (c)(i) shall not exceed $1,800,000 during
any fiscal year of ClimaChem or the maximum management fees payable to Parent
each calendar quarter under the Management Agreement and (B) after giving effect
to all management fees paid to the Parent and all management fees that have been
paid to the Parent and thereafter reimbursed by the Parent to the Borrowers, in
each case in any fiscal year of ClimaChem, the difference between (x) EBITDA for
such fiscal year as reflected in ClimaChem's audited financial statements for
such fiscal year and (y) the management fees paid to and retained by the Parent
in such fiscal year shall not be less than $26,000,000, and (ii) ClimaChem may
make distributions and pay dividends to Parent in an aggregate amount not to
exceed, during each fiscal year, the sum of (A) 50% of the actual consolidated
net income of the Borrowers for such fiscal year determined in accordance with
GAAP, plus (B) the amounts paid to Parent during such fiscal year in accordance
with Section 7.11(d);
(d) so long as Agent has not exercised any of its
rights or remedies following an Event of Default, ClimaChem may make
distributions and pay dividends to Parent in an aggregate amount not to exceed,
during each fiscal year, the consolidated income tax liability of the Borrowers
for such fiscal year calculated as if each the Borrower was a separate
consolidated taxpayer;
(e) each Borrower may make distributions and pay
dividends to any Subsidiary of Parent that is not also a Subsidiary of
ClimaChem, provided that the aggregate amount of such distributions and
dividends shall not exceed $100,000 during each fiscal year; and
(f) each Borrower and Guarantor may make advances,
distributions and pay dividends to EDN, provided that (i) no Default or Event of
Default has occurred and is continuing or would result from the making of such
distributions or dividends, (ii) the aggregate amount of such distributions and
dividends does not exceed $1,000,000 during any week unless, after giving effect
to such distributions and dividends, Excess Availability would not be less than
$2,000,000 (without giving effect to the Interest Reserve), and (iii) the
aggregate amount of such distributions and dividends paid to EDN by the
Borrowers and Guarantors (other than the Parent, Crystal City and Cherokee)
shall not exceed the aggregate amount of distributions and dividends paid by EDN
to the Borrowers and Guarantors (other than the Parent, Crystal City and
Cherokee) at any time.
7.12 ACCOUNTING METHODS. Modify or change its method
of accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Borrowers' accounting records without said accounting
firm or service bureau agreeing to provide Agent information regarding the
Collateral or Borrowers' financial condition.
7.13 INVESTMENTS. Except for Permitted Investments,
directly or indirectly, make or acquire any Investment, or incur any liabilities
(including contingent obligations) for or in connection with any Investment;
provided, however, that Borrowers shall not have Investments (other than in the
Cash Management Accounts) in excess of $100,000 outstanding at any one time.
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7.14 TRANSACTIONS WITH AFFILIATES. Except for
agreements set forth on Schedule 7.14 or transactions among the Borrowers and
Guarantors, directly or indirectly enter into or permit to exist any transaction
with any Affiliate of any Borrower except for transactions that are in the
ordinary course of Borrowers' business, upon fair and reasonable terms, that are
fully disclosed to Agent, and that are no less favorable to Borrowers than would
be obtained in an arm's length transaction with a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial
portion of its business.
7.16 COMPENSATION. Pay or accrue total cash
compensation, during any year, to its officers and senior management employees
in an aggregate amount in excess of the amount established by the compensation
committee of Parent.
7.17 USE OF PROCEEDS. Use the proceeds of the
Advances for any purpose other than (a) on the Closing Date, (i) to repay in
full the outstanding principal, accrued interest, and accrued fees and expenses
owing to Existing Lender, and (ii) to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (b) thereafter,
consistent with the terms and conditions hereof, for its lawful and permitted
purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE;
INVENTORY AND EQUIPMENT WITH BAILEES. Relocate its chief executive office to a
new location without Administrative Borrower providing 30 days prior written
notification thereof to Agent and so long as, at the time of such written
notification, the applicable Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected the Agent's Liens
and also provides to Agent a Collateral Access Agreement with respect to such
new location. The Inventory and Equipment shall not at any time now or hereafter
be stored with a bailee, warehouseman, or similar party without Agent's prior
written consent.
7.19 SECURITIES ACCOUNTS. Maintain assets in any
Securities Account at any time that Advances are outstanding.
7.20 FINANCIAL COVENANTS.
(a) Fail to maintain:
(i) MINIMUM EBITDA. EBITDA, measured on a
fiscal quarter-end basis, of not less than the required amount
set forth in the following table for the applicable period set
forth opposite thereto;
Applicable Amount Applicable Period
----------------- -----------------
$2,125,000 For the 3 month period ending March 31, 2001
$10,150,000 For the 6 month period ending June 30, 2001
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Applicable Amount Applicable Period
----------------- -----------------
$16,250,000 For the 9 month period ending September 30, 2001
$21,350,000 For the 12 month period ending December 30, 2001
$21,350,000 For the 12 month period ending each fiscal quarter thereafter
(ii) MINIMUM EBITDA FOR THE CLIMATE CONTROL
BUSINESS. EBITDA of the Borrowers comprising the Climate
Control Business, measured on a fiscal quarter-end basis, of
not less than the required amount set forth in the following
table for the applicable period set forth opposite thereto:
Applicable Amount Applicable Period
----------------- -----------------
$8,000,000 For the 12 month period ending December 31, 2000
$8,500,000 For the 12 month period ending March 31, 2001
$9,000,000 For the 12 month period ending June 30, 2001
$9,500,000 For the 12 month period ending September 30, 2001
$10,000,000 For the 12 month period ending each fiscal quarter
thereafter
(iii) FIXED CHARGE COVERAGE RATIO. A Fixed
Charge Coverage Ratio, measured on a fiscal year-end basis
commencing with the fiscal year ending December 31, 2001, of
not less than 1.00:1.00.
(b) Make:
(i) Capital Expenditures. Capital
expenditures, measured on a fiscal quarter-end basis, in
excess of the amount set forth in the following table for the
applicable period:
Applicable Amount Applicable Period
----------------- -----------------
$3,727,000 For the 3 month period ending March 31, 2001
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Applicable Amount Applicable Period
----------------- -----------------
$7,218,000 For the 6 month period ending June 30, 2001
$9,209,000 For the 9 month period ending September 30, 2001
$11,118,000 For the 12 month period ending December 30, 2001
$11,118,000 For the 12 month period ending each fiscal quarter
thereafter
7.21 MINIMUM AVAILABILITY. Fail to maintain Excess
Availability of at least $3,800,000 immediately after giving effect to each
payment of interest on the ClimaChem Notes.
7.22 INACTIVE SUBSIDIARIES. Permit either Canadian
Sub or UK Sub to become an active company, have operations, conduct business or
own any assets.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or
when declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations);
8.2 If Borrowers fail to perform, keep, or observe
any term, provision, condition, covenant, or agreement contained in Sections
6.1, 6.2 (but only up to three times during any 12-month period, and only in
relation to Defaults caused by the failure of third Persons to provide required
information or reporting, and not in relation to Defaults caused by a Borrower),
6.3, 6.6, 6.9, 6.10, 6.11 and 6.15 of this Agreement, or comparable provisions
of the other Loan Documents, within 10 days of the date when required (or within
5 days of the date when required in the case of Section 6.2 or Section 6.3), or
if a Borrower or Guarantor otherwise fails to perform, keep, or observe any
other term, provision, condition, covenant, or agreement contained in this
Agreement or in any of the other Loan Documents;
8.3 If any material portion of any Borrower's or any
of its Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
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8.4 If an Insolvency Proceeding is commenced by any
Borrower, any Guarantor or any of their Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against
any Borrower, any Guarantor or any of their Subsidiaries, and any of the
following events occur: (a) the applicable Borrower, Guarantor or the Subsidiary
consents to the institution of the Insolvency Proceeding against it, (b) the
petition commencing the Insolvency Proceeding is not timely controverted, (c)
the petition commencing the Insolvency Proceeding is not dismissed within 60
calendar days of the date of the filing thereof; provided, however, that, during
the pendency of such period, Agent (including any successor agent) and each
other member of the Lender Group shall be relieved of their obligation to extend
credit hereunder, (d) an interim trustee is appointed to take possession of all
or any substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, any Borrower, any Guarantor or any
of their Subsidiaries, or (e) an order for relief shall have been entered
therein;
8.6 If any Borrower, any Guarantor or any of their
Subsidiaries is enjoined, restrained, or in any way prevented by court order
from continuing to conduct all or any material part of its business affairs;
8.7 If a notice of Lien (other than (a) a Permitted
Lien, (b) Liens on any property or assets of the Parent and (c) Liens on any
property or assets of Cherokee or Crystal City that are subordinate to the
Agent's Liens), levy, or assessment securing or otherwise with respect to
Indebtedness or an obligation for the payment of money in an aggregate amount in
excess of $100,000 is filed of record with respect to any Borrower's, any
Guarantor's or any of its Subsidiaries' assets by the United States, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien (other than (a) a
Permitted Lien, (b) Liens on any property or assets of the Parent and (c) Liens
on any property or assets of Cherokee or Crystal City that are subordinate to
the Agent's Liens), whether ▇▇▇▇▇▇ or otherwise, upon any Borrower's, any
Guarantor's or any of its Subsidiaries' assets and the same is not paid on the
payment date thereof;
8.8 If a judgment or other claim for an amount in
excess of $100,000 becomes a Lien (other than (a) Liens on any property or
assets of the Parent and (b) Liens on any property or assets of Cherokee or
Crystal City that are subordinate to the Agent's Liens) or encumbrance upon any
material portion of any Borrower's, any Guarantor's or any of its Subsidiaries'
properties or assets;
8.9 If there is a default in any material agreement
to which any Borrower, any Guarantor (other than the Parent, Cherokee and
Crystal City) or any of its Subsidiaries is a party and such default (a)(i)
occurs at the final maturity of the obligations thereunder, or (ii) results in a
right by the other party thereto, irrespective of whether exercised, to
accelerate the maturity of the applicable Borrower's, Guarantor's or its
Subsidiaries' obligations thereunder, to terminate such agreement, or to refuse
to renew such agreement pursuant to an automatic renewal right therein, and (b)
involves Indebtedness or an obligation for the payment of money in an aggregate
amount in excess of $100,000;
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8.10 If any Borrower, any Guarantor (other than the
Parent, Cherokee and Crystal City) or any of its Subsidiaries makes any payment
on account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or
misrepresentation exists now or hereafter in any warranty, representation,
statement, or Record made to the Lender Group by any Borrower, any Guarantor,
their Subsidiaries, or any officer, employee, agent, or director of any
Borrower, any Guarantor or any of their Subsidiaries;
8.12 If the obligation of any Guarantor under its
Guaranty is limited or terminated by operation of law or by such Guarantor
thereunder;
8.13 If this Agreement or any other Loan Document
that purports to create a Lien, shall, for any reason not as a result of any act
or omission of the Agent, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby; or
8.14 Any provision of any Loan Document shall at any
time for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Borrower or Guarantor, or a
proceeding shall be commenced by any Borrower or Guarantor, or by any
Governmental Authority having jurisdiction over any Borrower or Guarantor,
seeking to establish the invalidity or unenforceability thereof, or any Borrower
or Guarantor shall deny that any Borrower or Guarantor has any liability or
obligation purported to be created under any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and
during the continuation, of an Event of Default, the Required Lenders (at their
election but without notice of their election and without demand) may authorize
and instruct Agent to do any one or more of the following on behalf of the
Lender Group (and Agent, acting upon the instructions of the Required Lenders,
shall do the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or
for the benefit of Borrowers under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
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(d) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Agent considers advisable,
and in such cases, Agent will credit the Loan Account with only the net amounts
received by Agent in payment of such disputed Accounts after deducting all
Lender Group Expenses incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in
trust for the Lender Group, segregate all returned Inventory from all other
assets of Borrowers or in Borrowers' possession and conspicuously label said
returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Borrower or
Guarantor, make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interests in the Collateral. Each Borrower
agrees to assemble the Collateral if Agent so requires, and to make the
Collateral available to Agent at a place that Agent may designate which is
reasonably convenient to both parties. Each Borrower authorizes Agent to enter
the premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any Lien that in Agent's determination appears to conflict with the Agent's
Liens and to pay all expenses incurred in connection therewith and to charge
Borrowers' Loan Account therefor. With respect to any of Borrowers' owned or
leased premises, each Borrower hereby grants Agent a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of the Lender Group's rights or remedies provided herein, at law,
in equity, or otherwise;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Borrower
held by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances
and deposits of any Borrower held by the Lender Group, and any amounts received
in the Cash Management Accounts, to secure the full and final repayment of all
of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Agent is hereby granted a license or other right to
use, without charge, for the benefit of the Lender Group, such Borrower's
labels, patents, copyrights, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral and such Borrower's rights under all licenses and all
franchise agreements shall inure to the Lender Group's benefit;
(j) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places
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(including Borrowers' premises) as Agent determines is commercially reasonable.
It is not necessary that the Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the
Collateral as follows:
(i) Agent shall give Administrative Borrower
(for the benefit of the applicable Borrower) a notice in
writing of the time and place of public sale, or, if the sale
is a private sale or some other disposition other than a
public sale is to be made of the Collateral, the time on or
after which the private sale or other disposition is to be
made; and
(ii) The notice shall be personally
delivered or mailed, postage prepaid, to Administrative
Borrower as provided in Section 12, at least 10 days before
the earliest time of disposition set forth in the notice; no
notice needs to be given prior to the disposition of any
portion of the Collateral that is perishable or threatens to
decline speedily in value or that is of a type customarily
sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit
bid and purchase at any public sale;
(m) Agent may seek the appointment of a receiver or
keeper to take possession of all or any portion of the Collateral or to operate
same and, to the maximum extent permitted by law, may seek the appointment of
such a receiver without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents; and
(o) Any deficiency that exists after disposition of
the Collateral as provided above will be paid immediately by Borrowers. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Administrative Borrower (for the benefit of the applicable
Borrower).
9.2 REMEDIES CUMULATIVE. The rights and remedies of
the Lender Group under this Agreement, the other Loan Documents, and all other
agreements shall be cumulative. The Lender Group shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by the Lender Group of one right or remedy shall be deemed
an election, and no waiver by the Lender Group of any Event of Default shall be
deemed a continuing waiver. No delay by the Lender Group shall constitute a
waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether
taxes, assessments, insurance premiums, or, in the case of leased properties or
assets, rents or other amounts payable under such leases) due to third Persons,
or fails to make any deposits or furnish any required
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proof of payment or deposit, all as required under the terms of this Agreement,
then, Agent, in its sole discretion and without prior notice to any Borrower,
may do any or all of the following: (a) make payment of the same or any part
thereof, (b) set up such reserves in Borrowers' Loan Account as Agent deems
necessary to protect the Lender Group from the exposure created by such failure,
or (c) in the case of the failure to comply with Section 6.8 hereof, obtain and
maintain insurance policies of the type described in Section 6.8 and take any
action consistent with the terms of this Agreement. Any such amounts paid by
Agent shall constitute Lender Group Expenses and any such payments shall not
constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Each Borrower waives
demand, protest, notice of protest, notice of default or dishonor, notice of
payment and nonpayment, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of documents, instruments, chattel paper, and guarantees
at any time held by the Lender Group on which each such Borrower may in any way
be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL.
Each Borrower hereby agrees that: (a) so long as the Lender Group complies with
its obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by
Borrowers.
11.3 INDEMNIFICATION. Each Borrower shall pay,
indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons with respect to each Lender, each Participant, and each of their
respective officers, directors, employees, agents, and attorneys-in-fact (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other out-of-pocket costs and expenses actually incurred in connection
therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of them
(a) in connection with or as a result of or related to the execution, delivery,
enforcement, performance, or administration of this Agreement, any of the other
Loan Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Borrowers shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such
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Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability as to which Borrowers were required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Borrowers with respect thereto.
WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED
PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED
BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR
OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all
notices or demands by Borrowers or Agent to the other relating to this Agreement
or any other Loan Document shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by registered or
certified mail (postage prepaid, return receipt requested), overnight courier,
electronic mail (at such email addresses as the Administrative Borrower or
Agent, as applicable, may designate to each other in accordance herewith), or
telefacsimile to Borrowers in care of Administrative Borrower or to Agent, as
the case may be, at its address set forth below:
If to Administrative
Borrower: CLIMACHEM, INC.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.
---------------------------
with copies to: CLIMACHEM, INC.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No. (▇▇▇)▇▇▇-▇▇▇▇
If to Agent: FOOTHILL CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. (▇▇▇)▇▇▇-▇▇▇▇
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with copies to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Agent and Borrowers may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this Section
12, other than notices by Agent in connection with enforcement rights against
the Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND
THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13(b).
BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
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COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee and no
notice to Agent shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of a Lender or a fund or account managed
by a Lender), assign and delegate to one or more assignees (each an "Assignee")
all, or any ratable part of all, of the Obligations, the Commitments and the
other rights and obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount of $5,000,000 (except such minimum amount shall
not apply to any Affiliate of a Lender or to a fund or account managed by a
Lender); provided, however, that Borrowers and Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Administrative Borrower and Agent by such Lender and the
Assignee, (ii) such Lender and its Assignee have delivered to Administrative
Borrower and Agent an Assignment and Acceptance substantially in the form of
Exhibit A-1, and (iii) the assignor Lender or Assignee has paid to Agent for
Agent's separate account a processing fee in the amount of $5,000. Anything
contained herein to the contrary notwithstanding, the consent of Agent shall not
be required (and payment of any fees shall not be required) if such assignment
is in connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan portfolio
of such Lender or the assignee is an Affiliate (other than individuals) of, or a
fund, money market account, investment account or other account managed by a
Lender or an Affiliate of a Lender.
(b) From and after the date that Agent notifies the
assignor Lender (with a copy to Administrative Borrower, if applicable) that it
has received an executed Assignment and Acceptance and payment (if applicable)
of the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 11.3 hereof)
and be released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto), and such
assignment shall affect a novation between Borrowers and the Assignee.
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(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its
processing fee payment (if applicable) under the Assignment and Acceptance and
receipt and acknowledgment by Agent of such fully executed Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(e) Any Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of
such Lender (a "Participant") participating interests in its Obligations, the
Commitment, and the other rights and interests of that Lender (the "Originating
Lender") hereunder and under the other Loan Documents; provided, however, that
(i) the Originating Lender shall remain a "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitments, and the other rights
and interests of the Originating Lender hereunder shall not constitute a
"Lender" hereunder or under the other Loan Documents and the Originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal
solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in
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which such Participant is participating, (C) release all or a material portion
of the Collateral or guaranties (except to the extent expressly provided herein
or in any of the Loan Documents) supporting the Obligations hereunder in which
such Participant is participating, (D) postpone the payment of, or reduce the
amount of, the interest or fees payable to such Participant through such Lender,
or (E) change the amount or due dates of scheduled principal repayments or
prepayments or premiums; and (v) all amounts payable by Borrowers hereunder
shall be determined as if such Lender had not sold such participation; except
that, if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement. The rights of any
Participant only shall be derivative through the Originating Lender with whom
such Participant participates and no Participant shall have any rights under
this Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Borrowers, the Collections, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose all
documents and information which it now or hereafter may have relating to
Borrowers or Borrowers' business.
(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure
to the benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrowers may not assign this Agreement or any rights or
duties hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release any Borrower from its Obligations. A Lender may assign
this Agreement and the other Loan Documents and its rights and duties hereunder
and thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by any Borrower is
required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver
of any provision of this Agreement or any other Loan Document, and no consent
with respect to any departure by Borrowers therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by Agent at
the written request of the Required Lenders) and Administrative Borrower (on
behalf of all Borrowers) and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided,
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however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees, or other amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest
on, any loan or other extension of credit hereunder, or reduce any fees or other
amounts payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is
required to take any action hereunder,
(e) amend this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by
Section 16.12,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's
Liens,
(i) release any Borrower or Guarantor from any
obligation for the payment of money, or
(j) change the definition of Borrowing Base or the
definitions of Eligible Accounts, Eligible Inventory, Eligible Raw Inventory,
Eligible Inventory, Maximum Revolver Amount, or change Section 2.1(b); or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 REPLACEMENT OF HOLDOUT LENDER. If any action to
be taken by the Lender Group or Agent hereunder requires the unanimous consent,
authorization, or agreement of all Lenders, and a Lender ("Holdout Lender")
fails to give its consent, authorization, or agreement, then Agent, upon at
least 5 Business Days prior irrevocable notice to the Holdout
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Lender, may permanently replace the Holdout Lender with one or more substitute
Lenders (each, a "Replacement Lender"), and the Holdout Lender shall have not
right to refuse to be replaced hereunder. Such notice to replace the Holdout
Lender shall specify an effective date for such replacement, which date shall
not be later than 15 Business Days after the date such notice is given.
Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by
Agent or any Lender to exercise any right, remedy, or option under this
Agreement or, any other Loan Document, or delay by Agent or any Lender in
exercising the same, will operate as a waiver thereof. No waiver by Agent or any
Lender will be effective unless it is in writing, and then only to the extent
specifically stated. No waiver by Agent or any Lender on any occasion shall
affect or diminish Agent's and each Lender's rights thereafter to require strict
performance by Borrowers of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each
Lender hereby designates and appoints Foothill as its representative under this
Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to Agent by the terms of this Agreement
or any other Loan Document, together with such powers as are reasonably
incidental thereto. Agent agrees to act as such on the express conditions
contained in this Section 16. The provisions of this Section 16 are solely for
the benefit of Agent, and the Lenders, and Borrowers shall have no rights as a
third party beneficiary of any of the provisions contained herein. Any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document notwithstanding, Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Agent have or be deemed to
have any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against Agent;
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it being expressly understood and agreed that the use of the word "Agent" is for
convenience only, that Foothill is merely the representative of the Lenders, and
only has the contractual duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect: (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Obligations, the Collateral, the Collections, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management accounts as Agent deems necessary and appropriate in accordance
with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects as long as such selection was made without gross negligence or willful
misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related
Persons shall (i) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by any Borrower or
any Subsidiary or Affiliate of any Borrower, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any 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 Books or properties of Borrowers or the
books or records or properties of any of Borrowers' Subsidiaries or Affiliates.
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16.4 RELIANCE BY AGENT. Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to Borrowers or counsel to any Lender), independent accountants and
other experts selected by Agent. Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless Agent shall first receive such advice or concurrence of the Lenders as it
deems appropriate and until such instructions are received, Agent shall act, or
refrain from acting, as it deems advisable. If Agent so requests, it shall first
be indemnified to its reasonable satisfaction by Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default, except with respect to defaults in the payment of
principal, interest, fees, and expenses required to be paid to Agent for the
account of the Lenders, except with respect to Events of Default of which Agent
has actual knowledge, unless Agent shall have received written notice from a
Lender or Administrative Borrower referring to this Agreement, describing such
Default or Event of Default, and stating that such notice is a "notice of
default." Agent promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Agent has actual knowledge. If any
Lender obtains actual knowledge of any Event of Default, such Lender promptly
shall notify the other Lenders and Agent of such Event of Default. Each Lender
shall be solely responsible for giving any notices to its Participants, if any.
Subject to Section 16.4, Agent shall take such action with respect to such
Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, however, that unless and until Agent has
received any such request, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that
none of the Agent-Related Persons has made any representation or warranty to it,
and that no act by Agent hereinafter taken, including any review of the affairs
of Borrowers and their Subsidiaries or Affiliates, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to 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
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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 Borrowers and any other Person
(other than the Lender Group) party to a Loan Document. Except for notices,
reports, and other documents expressly herein required to be furnished to the
Lenders by Agent, Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of
Borrowers and any other Person party to a Loan Document that may come into the
possession of any of the Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may
incur and pay Lender Group Expenses to the extent Agent reasonably deems
necessary or appropriate for the performance and fulfillment of its functions,
powers, and obligations pursuant to the Loan Documents, including court costs,
reasonable attorneys fees and expenses, costs of collection by outside
collection agencies and auctioneer fees and costs of security guards or
insurance premiums paid to maintain the Collateral, whether or not Borrowers are
obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan
Agreement or otherwise. Agent is authorized and directed to deduct and retain
sufficient amounts from Collections received by Agent to reimburse Agent for
such out-of-pocket costs and expenses prior to the distribution of any amounts
to Lenders. In the event Agent is not reimbursed for such costs and expenses
from Collections received by Agent, each Lender hereby agrees that it is and
shall be obligated to pay to or reimburse Agent for the amount of such Lender's
Pro Rata Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of Borrowers and without limiting
the obligation of Borrowers to do so), according to their Pro Rata Shares, from
and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender's ratable share of any costs
or out-of-pocket expenses (including attorneys fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrowers. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Agent 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
Borrowers and their Subsidiaries and Affiliates and any other Person
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(other than the Lender Group) party to any Loan Documents as though Agent were
not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, Agent or its Affiliates may
receive information regarding Borrowers or their Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms "Lender" and "Lenders" include Agent in its
individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon
45 days notice to the Lenders. If Agent resigns under this Agreement, the
Required Lenders shall appoint a successor Agent for the Lenders. If no
successor Agent is appointed prior to the effective date of the resignation of
Agent, Agent may appoint, after consulting with the Lenders, a successor Agent.
If Agent has materially breached or failed to perform any material provision of
this Agreement or of applicable law, the Required Lenders may agree in writing
to remove and replace Agent with a successor Agent from among the Lenders. In
any such event, upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers, and
duties of the retiring Agent and the term "Agent" shall mean such successor
Agent and the retiring Agent's appointment, powers, and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 16 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is 45 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and
its respective Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with Borrowers and their Subsidiaries and Affiliates and any other
Person (other than the Lender Group) party to any Loan Documents as though such
Lender were not a Lender hereunder without notice to or consent of the other
members of the Lender Group. The other members of the Lender Group acknowledge
that, pursuant to such activities, such Lender and its respective Affiliates may
receive information regarding Borrowers or their Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of the Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the IRC and such Lender claims
exemption from, or a reduction of, U.S.
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withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees with
and in favor of Agent and Borrowers, to deliver to Agent and Administrative
Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception,
(a) a statement of the Lender, signed under penalty of
perjury, that it is not a (I) a "bank" as described in Section
881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the
meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form
W-8BEN, before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent
or Administrative Borrower;
(ii) if such Lender claims an exemption
from, or a reduction of, withholding tax under a United States
tax treaty, properly completed IRS Form W-8BEN before the
first payment of any interest under this Agreement and at any
other time reasonably requested by Agent or Administrative
Borrower;
(iii) if such Lender claims that interest
paid under this Agreement is exempt from United States
withholding tax because it is effectively connected with a
United States trade or business of such Lender, two properly
completed and executed copies of IRS Form W-8ECI before the
first payment of any interest is due under this Agreement and
at any other time reasonably requested by Agent or
Administrative Borrower;
(iv) such other form or forms as may be
required under the IRC or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Lender agrees promptly to notify Agent and Administrative
Borrower of any change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing IRS Form
W-8BEN and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
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(d) If the IRS or any other Governmental Authority of
the United States or other jurisdiction asserts a claim that Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Lender shall indemnify and hold Agent harmless for
all amounts paid, directly or indirectly, by Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to Agent under this Section, together with
all costs and expenses (including attorneys fees and expenses). The obligation
of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.
(e) All payments made by Borrowers hereunder or under
any note or other Loan Document will be made without setoff, counterclaim, or
other defense, except as required by applicable law other than for Taxes (as
defined below). All such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction (other than the United States) or by any political
subdivision or taxing authority thereof or therein (other than of the United
States) with respect to such payments (but excluding, any tax imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (i) measured by or based on the net income or net profits of a Lender,
or (ii) to the extent that such tax results from a change in the circumstances
of the Lender, including a change in the residence, place of organization, or
principal place of business of the Lender, or a change in the branch or lending
office of the Lender participating in the transactions set forth herein) and all
interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "Taxes"). If any Taxes are so levied or
imposed, each Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any note, including any amount paid pursuant to
this Section 16.11(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrowers shall not be required to increase any such amounts payable to
Agent or any Lender (i) that is not organized under the laws of the United
States, if such Person fails to comply with the other requirements of this
Section 16.11, or (ii) if the increase in such amount payable results from
Agent's or such Lender's own willful misconduct or gross negligence. Borrowers
will furnish to Agent as promptly as possible after the date the payment of any
Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by Borrowers.
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16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent,
at its option and in its sole discretion, to release any Lien on any Collateral
(i) upon the termination of the Commitments and payment and satisfaction in full
by Borrowers of all Obligations, (ii) constituting property being sold or
disposed of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Borrower owned any interest at the time
the security interest was granted or at any time thereafter, or (iv)
constituting property leased to a Borrower under a lease that has expired or is
terminated in a transaction permitted under this Agreement. Except as provided
above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or any substantial portion of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 16.12; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in respect of) all
interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any
of the Lenders to assure that the Collateral exists or is owned by Borrowers or
is cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF
PAYMENTS.
(a) Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to Borrowers or any deposit
accounts of Borrowers now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
by Agent, take or cause to be taken any action, including, the commencement of
any legal or equitable proceedings, to foreclose any Lien on, or otherwise
enforce any security interest in, any of the
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Collateral the purpose of which is, or could be, to give such Lender any
preference or priority against the other Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive
(i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or
any payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints
each other Lender as its agent (and each Lender hereby accepts such appointment)
for the purpose of perfecting the Agent's Liens in assets which, in accordance
with Article 9 of the UCC can be perfected only by possession. Should any Lender
obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments
to be made by Agent to the Lenders shall be made by bank wire transfer or
internal transfer of immediately available funds pursuant to such wire transfer
instructions as each party may designate for itself by written notice to Agent.
Concurrently with each such payment, Agent shall identify whether such payment
(or any portion thereof) represents principal, premium, or interest of the
Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN
DOCUMENTS. Each member of the Lender Group authorizes and directs Agent to enter
into this Agreement and the other Loan Documents relating to the Collateral, for
the benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS;
CONFIDENTIALITY; DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By
becoming a party to this Agreement, each Lender:
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(a) is deemed to have requested that Agent furnish
such Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does
not (i) make any representation or warranty as to the accuracy of any Report,
and (ii) shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding Borrowers and will rely significantly upon the Books, as well as on
representations of Borrowers' personnel,
(d) agrees to keep all Reports and other material,
non-public information regarding Borrowers and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrowers that in any
event such Lender may make disclosures (a) to counsel for and other advisors,
accountants, and auditors to such Lender, (b) reasonably required by any bona
fide potential or actual Assignee or Participant in connection with any
contemplated or actual assignment or transfer by such Lender of an interest
herein or any participation interest in such Lender's rights hereunder, (c) of
information that has become public by disclosures made by Persons other than
such Lender, its Affiliates, assignees, transferees, or Participants, or (d) as
required or requested by any court, governmental or administrative agency,
pursuant to any subpoena or other legal process, or by any law, statute,
regulation, or court order; provided, however, that, unless prohibited by
applicable law, statute, regulation, or court order, such Lender shall notify
Administrative Borrower of any request by any court, governmental or
administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to
time request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by Borrowers to Agent that has not been
contemporaneously provided by Borrowers to such Lender, and, upon receipt of
such request, Agent shall provide a copy of same to such Lender,
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(y) to the extent that Agent is entitled, under any provision of the Loan
Documents, to request additional reports or information from Borrowers, any
Lender may, from time to time, reasonably request Agent to exercise such right
as specified in such Lender's notice to Agent, whereupon Agent promptly shall
request of Administrative Borrower the additional reports or information
reasonably specified by such Lender, and, upon receipt thereof from
Administrative Borrower, Agent promptly shall provide a copy of same to such
Lender, and (z) any time that Agent renders to Administrative Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY.
Notwithstanding that certain of the Loan Documents now or hereafter may have
been or will be executed only by or in favor of Agent in its capacity as such,
and not by or in favor of the Lenders, any and all obligations on the part of
Agent (if any) to make any credit available hereunder shall constitute the
several (and not joint) obligations of the respective Lenders on a ratable
basis, according to their respective Commitments, to make an amount of such
credit not to exceed, in principal amount, at any one time outstanding, the
amount of their respective Commitments. Nothing contained herein shall confer
upon any Lender any interest in, or subject any Lender to any liability for, or
in respect of, the business, assets, profits, losses, or liabilities of any
other Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as provided in Section
16.7, no member of the Lender Group shall have any liability for the acts or any
other member of the Lender Group. No Lender shall be responsible to any Borrower
or any other Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any other action on its
behalf hereunder or in connection with the financing contemplated herein.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding
and deemed effective when executed by Borrowers, Agent, and each Lender whose
signature is provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been
set forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each Section applies equally to this entire
Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against the
Lender Group or Borrowers, whether under any rule of construction or otherwise.
On the contrary, this Agreement has been reviewed by all parties and shall be
construed and interpreted according to the ordinary meaning of the words used so
as to accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of
this Agreement shall be severable from every other provision of this Agreement
for the purpose of determining the legal enforceability of any specific
provision.
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17.5 AMENDMENTS IN WRITING. This Agreement only can
be amended by a writing in accordance with Section 15.1.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This
Agreement may be executed in any number of counterparts and by different parties
on separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart
of this Agreement by telefacsimile shall be equally as effective as delivery of
an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the
incurrence or payment of the Obligations by any Borrower or Guarantor or the
transfer to the Lender Group of any property should for any reason subsequently
be declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
the Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8 INTEGRATION. This Agreement, together with the
other Loan Documents, reflects the entire understanding of the parties with
respect to the transactions contemplated hereby and shall not be contradicted or
qualified by any other agreement, oral or written, before the date hereof.
17.9 CLIMACHEM AS AGENT FOR BORROWERS. Each Borrower
hereby irrevocably appoints ClimaChem as the borrowing agent and
attorney-in-fact for all Borrowers (the "Administrative Borrower"), which
appointment shall remain in full force and effect unless and until Agent shall
have received prior written notice signed by each Borrower that such appointment
has been revoked and that another Borrower has been appointed Administrative
Borrower. Each Borrower hereby irrevocably appoints and authorizes the
Administrative Borrower (i) to provide Agent with all notices with respect to
Advances and Letters of Credit obtained for the benefit of any Borrower and all
other notices and instructions under this Agreement and (ii) except as provided
in the clause (i) above, to take such action as the Administrative Borrower
deems appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not
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incur liability to any Borrower as a result hereof. Each Borrower expects to
derive benefit, directly or indirectly, from the handling of the Loan Account
and the Collateral in a combined fashion since the successful operation of each
Borrower is dependent on the continued successful performance of the integrated
group. To induce the Lender Group to do so, and in consideration thereof, each
Borrower hereby jointly and severally agrees to indemnify each member of the
Lender Group and hold each member of the Lender Group harmless against any and
all liability, expense, loss or claim of damage or injury, made against the
Lender Group by any Borrower or by any third party whosoever, arising from or
incurred by reason of (a) the handling of the Loan Account and Collateral of
Borrowers as herein provided, (b) the Lender Group's relying on any instructions
of the Administrative Borrower, or (c) any other action taken by the Lender
Group hereunder or under the other Loan Documents, except that Borrowers will
have no liability to the relevant Agent-Related Person or Lender-Related Person
under this Section 17.9 with respect to any liability that has been finally
determined by a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, as the case may be.
18. GUARANTY
18.1 GUARANTY; LIMITATION OF LIABILITY. The Parent
hereby, unconditionally and irrevocably, guarantees the punctual payment when
due, whether at stated maturity, by acceleration or otherwise, of all
Obligations of the Borrowers now or hereafter existing under any Loan Document,
whether for principal, interest (including, without limitation, all interest
that accrues after the commencement of any case, proceeding or other action
relating to bankruptcy, insolvency or reorganization of any Borrower), fees,
expenses or otherwise (such obligations, to the extent not paid by the
Borrowers, being the "Guaranteed Obligations"), and agrees to pay any and all
expenses (including reasonable counsel fees and expenses) incurred by the Agents
and the Lenders in enforcing any rights under the guaranty set forth in this
Section 18. Without limiting the generality of the foregoing, the Parent's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by the Borrowers to the Agents and the Lenders
under any Loan Document but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Borrower.
18.2 GUARANTY ABSOLUTE. The Parent guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Agents or the Lenders with respect thereto. The obligations of the Parent under
this Section 18 are independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against Parent to enforce such
obligations, irrespective of whether any action is brought against the Borrowers
or whether the Borrowers are joined in any such action or actions. The liability
of the Parent under this Section 18 shall be irrevocable, absolute and
unconditional irrespective of, and Parent hereby irrevocably waives any defenses
it may now or hereafter have in any way relating to, any or all of the
following:
(a) any lack of validity or enforceability of any
Loan Document or any agreement or instrument relating thereto;
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(b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed Obligations,
or any other amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to the Borrowers
or otherwise;
(c) any taking, exchange, release or non-perfection
of any Collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any change, restructuring or termination of the
corporate, limited liability company or partnership structure or existence of
any Borrower; or
(e) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by the Agents or the Lenders that might otherwise constitute a
defense available to, or a discharge of, Parent, any Borrower or any other
guarantor or surety.
This Section 18 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by a Lender or
any other Person upon the insolvency, bankruptcy or reorganization of any
Borrower or otherwise, all as though such payment had not been made.
18.3. WAIVER. Parent hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Section 18 and any requirement that the Agents
or the Lenders exhaust any right or take any action against the Borrowers or any
other Person or any collateral. Parent acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated herein and
that the waiver set forth in this Section 18.3 is knowingly made in
contemplation of such benefits. Parent hereby waives any right to revoke this
Section 18, and acknowledges that this Section 18 is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
18.4. CONTINUING GUARANTY; ASSIGNMENTS. This Section
18 is a continuing guaranty and shall (a) remain in full force and effect until
the later of (i) the cash payment in full of the Guaranteed Obligations (other
than indemnification obligations as to which no claim has been made) and all
other amounts payable under this Section 18 and (ii) the Maturity Date, (b) be
binding upon Parent, its successors and assigns and (c) inure to the benefit of
and be enforceable by the Agents and the Lenders and their successors, pledgees,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may pledge, assign or otherwise transfer all or any portion of
its rights and obligations under this Agreement (including, without limitation,
all or any portion of its Commitments and the Advances owing to it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted such Lender herein or otherwise, in each
case as provided in Section 14.1.
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18.5. SUBROGATION. Parent will not exercise any
rights that it may now or hereafter acquire against any Borrower or any other
insider guarantor that arise from the existence, payment, performance or
enforcement of Parent's obligations under this Section 18, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of the
Agents and the Lenders against any Borrower or any other insider guarantor or
any collateral, whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, including, without limitation, the right
to take or receive from any Borrower or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until all of the Guaranteed Obligations and all other amounts payable under this
Section 18 shall have been paid in full in cash and the Maturity Date shall have
occurred. If any amount shall be paid to Parent in violation of the immediately
preceding sentence at any time prior to the later of the payment in full in cash
of the Guaranteed Obligations and all other amounts payable under this Section
18 and the Maturity Date, such amount shall be held in trust for the benefit of
the Agents and the Lenders and shall forthwith be paid to the Agents and the
Lenders to be credited and applied to the Guaranteed Obligations and all other
amounts payable under this Section 18, whether matured or unmatured, in
accordance with the terms of this Agreement, or to be held as collateral for any
Guaranteed Obligations or other amounts payable under this Section 18 thereafter
arising. If (i) Parent shall make payment to the Agents and the Lenders of all
or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Section 18 shall be paid in
full in cash and (iii) the Maturity Date shall have occurred, the Agents and the
Lenders will, at Parent's request and expense, execute and deliver to Parent
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to Parent of an interest in
the Guaranteed Obligations resulting from such payment by Parent.
[Signature page to follow.]
-103-
105
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
Parent:
LSB INDUSTRIES, INC.,
an Delaware corporation
By:
---------------------------------------
Title:
Borrowers:
CLIMACHEM, INC.,
an Oklahoma corporation
By:
---------------------------------------
Title:
CLIMATE MASTER, INC.,
a Delaware corporation
By:
---------------------------------------
Title:
CLIMATECRAFT, INC.,
an Oklahoma corporation
By:
---------------------------------------
Title:
CLIMACOOL, CORP.,
an Oklahoma corporation
By:
---------------------------------------
Title:
106
INTERNATIONAL ENVIRONMENTAL CORPORATION, an
Oklahoma corporation
By:
---------------------------------------
Title:
ACP INTERNATIONAL, LIMITED,
an Oklahoma corporation
By:
---------------------------------------
Title:
KOAX CORP., an Oklahoma corporation
By:
---------------------------------------
Title:
LSB CHEMICAL CORP.,
an Oklahoma corporation
By:
---------------------------------------
Title:
THE ENVIRONMENTAL GROUP, INC., an Oklahoma
corporation
By:
---------------------------------------
Title:
EL DORADO CHEMICAL COMPANY,
an Oklahoma corporation
By:
---------------------------------------
Title:
107
SLURRY EXPLOSIVE CORPORATION, an Oklahoma
corporation
By:
---------------------------------------
Title:
TRISON CONSTRUCTION, INC.,
an Oklahoma corporation
By:
---------------------------------------
Title:
UNIVERSAL TECH CORPORATION,
an Oklahoma corporation
By:
---------------------------------------
Title:
Agent and Lenders:
FOOTHILL CAPITAL CORPORATION, a California
corporation, as Agent and as a Lender
By:
---------------------------------------
Title:
108
TABLE OF CONTENTS
Page
----
1. DEFINITIONS AND CONSTRUCTION..................................................................................1
1.1 Definitions...............................................................................................1
1.2 Accounting Terms.........................................................................................26
1.3 Code.....................................................................................................26
1.4 Construction.............................................................................................26
1.5 Schedules and Exhibits...................................................................................26
2. LOAN AND TERMS OF PAYMENT....................................................................................26
2.1 Advances.................................................................................................26
2.3 Borrowing Procedures and Settlements.....................................................................29
2.4 Payments.................................................................................................36
2.5 Overadvances.............................................................................................38
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations..............................38
2.7 Cash Management..........................................................................................40
2.8 Crediting Payments; Float Charge.........................................................................41
2.9 Designated Account.......................................................................................41
2.10 Maintenance of Loan Account; Statements of Obligations...................................................41
2.11 Fees.....................................................................................................42
2.12 Letters of Credit........................................................................................42
2.13 LIBOR Option.............................................................................................45
2.14 Capital Requirements.....................................................................................48
2.15 Joint and Several Liability of Borrowers.................................................................48
3. CONDITIONS; TERM OF AGREEMENT................................................................................50
3.1 Conditions Precedent to the Initial Extension of Credit..................................................50
3.2 Conditions Subsequent to the Initial Extension of Credit.................................................54
3.3 Conditions Precedent to all Extensions of Credit.........................................................54
3.4 Term.....................................................................................................55
3.5 Effect of Termination....................................................................................55
3.6 Early Termination by Borrowers...........................................................................55
4. CREATION OF SECURITY INTEREST................................................................................56
4.1 Grant of Security Interest...............................................................................56
4.2 Negotiable Collateral....................................................................................56
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral...................................56
4.4 Delivery of Additional Documentation Required............................................................56
4.5 Power of Attorney........................................................................................57
4.6 Right to Inspect.........................................................................................57
4.7 Control Agreements.......................................................................................57
5. REPRESENTATIONS AND WARRANTIES...............................................................................57
5.1 No Encumbrances..........................................................................................58
5.2 Eligible Accounts........................................................................................58
5.3 Eligible Inventory.......................................................................................58
5.4 Equipment................................................................................................59
5.5 Location of Inventory....................................................................................59
-i-
109
Page
----
5.6 Inventory Records........................................................................................59
5.7 Location of Chief Executive Office; FEIN.................................................................59
5.8 Due Organization and Qualification; Subsidiaries.........................................................59
5.9 Due Authorization; No Conflict...........................................................................60
5.10 Litigation...............................................................................................61
5.11 No Material Adverse Change...............................................................................61
5.12 Fraudulent Transfer......................................................................................62
5.13 Employee Benefits........................................................................................62
5.14 Environmental Condition..................................................................................62
5.15 [Intentionally Omitted]..................................................................................62
5.16 Intellectual Property....................................................................................62
5.17 Leases...................................................................................................62
5.18 DDAs.....................................................................................................62
5.19 Complete Disclosure......................................................................................62
5.20 Indebtedness.............................................................................................63
6. AFFIRMATIVE COVENANTS........................................................................................63
6.1 Accounting System........................................................................................63
6.2 Collateral Reporting.....................................................................................63
6.3 Financial Statements, Reports, Certificates..............................................................64
6.5 Return...................................................................................................67
6.6 Maintenance of Properties................................................................................67
6.7 Taxes....................................................................................................67
6.8 Insurance................................................................................................67
6.9 Location of Inventory....................................................................................68
6.10 Compliance with Laws.....................................................................................68
6.11 Leases...................................................................................................69
6.12 Brokerage Commissions....................................................................................69
6.13 Existence................................................................................................69
6.14 Environmental............................................................................................69
6.15 Disclosure Updates.......................................................................................69
6.16 Distributions............................................................................................69
7. NEGATIVE COVENANTS...........................................................................................70
7.1 Indebtedness.............................................................................................70
7.2 Liens....................................................................................................71
7.3 Restrictions on Fundamental Changes......................................................................71
7.4 Disposal of Assets.......................................................................................71
7.5 Change Name..............................................................................................72
7.6 Guarantee................................................................................................72
7.7 Nature of Business.......................................................................................73
7.8 Prepayments and Amendments...............................................................................73
7.9 Change of Control........................................................................................73
7.10 Consignments.............................................................................................73
7.11 Distributions............................................................................................73
7.12 Accounting Methods.......................................................................................74
7.13 Investments..............................................................................................74
7.14 Transactions with Affiliates.............................................................................75
7.15 Suspension...............................................................................................75
-ii-
110
Page
----
7.16 Compensation...........................................................................................75
7.17 Use of Proceeds........................................................................................75
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees.....................75
7.19 Securities Accounts....................................................................................75
7.20 Financial Covenants....................................................................................75
7.21 Minimum Availability...................................................................................77
7.22 Inactive Subsidiaries..................................................................................77
8. EVENTS OF DEFAULT...........................................................................................77
9. THE LENDER GROUP'S RIGHTS AND REMEDIES......................................................................79
9.1 Rights and Remedies....................................................................................79
9.2 Remedies Cumulative....................................................................................81
10. TAXES AND EXPENSES..........................................................................................81
11. WAIVERS; INDEMNIFICATION....................................................................................82
11.1 Demand; Protest; etc. .................................................................................82
11.2 The Lender Group's Liability for Collateral............................................................82
11.3 Indemnification........................................................................................82
12. NOTICES.....................................................................................................83
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..................................................................84
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..................................................................85
14.1 Assignments and Participations.........................................................................85
14.2 Successors.............................................................................................87
15. AMENDMENTS; WAIVERS.........................................................................................87
15.1 Amendments and Waivers.................................................................................87
15.2 Replacement of Holdout Lender..........................................................................88
15.3 No Waivers; Cumulative Remedies........................................................................89
16. AGENT; THE LENDER GROUP.....................................................................................89
16.1 Appointment and Authorization of Agent.................................................................89
16.2 Delegation of Duties...................................................................................90
16.3 Liability of Agent.....................................................................................90
16.4 Reliance by Agent......................................................................................91
16.5 Notice of Default or Event of Default..................................................................91
16.6 Credit Decision........................................................................................91
16.7 Costs and Expenses; Indemnification....................................................................92
16.8 Agent in Individual Capacity...........................................................................92
16.9 Successor Agent........................................................................................93
16.10 Lender in Individual Capacity..........................................................................93
16.11 Withholding Taxes......................................................................................93
16.12 Collateral Matters.....................................................................................96
16.13 Restrictions on Actions by Lenders; Sharing of Payments................................................96
16.14 Agency for Perfection..................................................................................97
16.15 Payments by Agent to the Lenders.......................................................................97
16.16 Concerning the Collateral and Related Loan Documents...................................................97
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
Information............................................................................................97
16.18 Several Obligations; No Liability......................................................................99
-iii-
111
Page
----
17. GENERAL PROVISIONS..........................................................................................99
17.1 Effectiveness..........................................................................................99
17.2 Section Headings.......................................................................................99
17.3 Interpretation.........................................................................................99
17.4 Severability of Provisions.............................................................................99
17.5 Amendments in Writing.................................................................................100
17.6 Counterparts; Telefacsimile Execution.................................................................100
17.7 Revival and Reinstatement of Obligations..............................................................100
17.8 Integration...........................................................................................100
17.9 ClimaChem as Agent for Borrowers......................................................................100
18. GUARANTY...................................................................................................101
18.1. Guaranty; Limitation of Liability.....................................................................101
18.2. Guaranty Absolute.....................................................................................101
18.3. Waiver................................................................................................102
18.4. Continuing Guaranty; Assignments......................................................................102
18.5. Subrogation...........................................................................................103
-iv-
112
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule C-1 Commitments
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule 2.8(a) Cash Management Banks
Schedule 3.1(m) Collateral Access Locations
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 7.4(b) Permitted LSB Indebtedness
Schedule 7.13 Other Permitted Investments
Schedule 7.14 Transactions with Affiliates
113
SCHEDULE C-1
COMMITMENTS
LENDER REVOLVER COMMITMENT TOTAL COMMITMENT
------ ------------------- ----------------
Foothill Capital Corporation $50,000,000 $50,000,000
All Lenders $50,000,000 $50,000,000
114
EXHIBIT A-1
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Assignment
Agreement") is entered into as of ____________ between ______________
("Assignor") and ____________ ("Assignee"). Reference is made to the Agreement
described in Item 2 of Annex I annexed hereto (the "Loan Agreement").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Loan Agreement.
In accordance with the terms and conditions of Section 14 of
the Loan Agreement, the Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, that interest in
and to the Assignor's rights and obligations under the Loan Documents as of the
date hereof with respect to the Obligations owing to the Assignor, and
Assignor's portion of the Total Commitments and the Revolver Commitments, all as
specified in Item 4.b and Item 4.c of Annex I. After giving effect to such sale
and assignments, the Assignee's portion of the Total Commitments and Revolver
Commitments will be as set forth in Item 4.b of Annex I. After giving effect to
such sale and assignment the Assignor's amount and portion of the Total
Commitments and Revolver Commitments will be as set forth in Item 4.d and Item
4.e of Annex I.
The Assignor (a) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or document
furnished pursuant thereto; and (c) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any
Borrower or any of its Subsidiaries or the performance or observance by any
Borrower or any of its Subsidiaries of any of their respective obligations under
the Loan Documents or any other instrument or document furnished pursuant
thereto.
The Assignee (a) confirms that it has received copies of the
Loan Agreement and the other Loan Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement; (b) agrees that it will,
independently and without reliance, as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents; (c) confirms that it is eligible as an assignee under the
terms of the Loan Agreement; (d) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (e) agrees that it will perform in
accordance with their terms all of
115
the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender [and (f) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the Loan
Agreement or such other documents as are necessary to indicate that all such
payments are subject to such rates at a rate reduced by an applicable tax
treaty.]
Following the execution of this Assignment Agreement by the
Assignor and Assignee, it will be delivered by the Assignor to the Agent for
recording by the Agent. The effective date of this Assignment (the "Settlement
Date") shall be the later of (a) the date of the execution hereof by the
Assignor and the Assignee, the payment by Assignor or Assignee to Agent for
Agent's sole and separate account a processing fee in the amount of $5,000, and
the receipt of any required consent of the Agent, and (b) the date specified in
item 5 of Annex I.
Upon recording by the Agent, as of the Settlement Date (a) the
Assignee shall be a party to the Loan Agreement and, to the extent of the
interest assigned pursuant to this Assignment Agreement, have the rights and
obligations of a Lender thereunder and under the other Loan Documents, and (b)
the Assignor shall, to the extent of the interest assigned pursuant to this
Assignment Agreement, relinquish its rights and be released from its obligations
under the Loan Agreement and the other Loan Documents.
Upon recording by the Agent, from and after the Settlement
Date, the Agent shall make all payments under the Loan Agreement and the other
Loan Documents in respect of the interest assigned hereby (including, without
limitation, all payments or principal, interest and commitment fees (if
applicable) with respect thereto) to the Assignee. Upon the Settlement Date, the
Assignee shall pay to the Assignor the Assigned Share (as set forth in Item 4.b
of Annex I) of the principal amount of any outstanding loans under the Loan
Agreement and the other Loan Documents. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Loan Agreement and the other Loan
Documents for periods prior to the Settlement Date directly between themselves
on the Settlement Date.
THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[Remainder of page left intentionally blank.]
116
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment Agreement and Annex I hereto to be executed by their respective
officers thereunto duly authorized, as of the first date above written.
[NAME OF ASSIGNOR]
as Assignor
By
------------------------------------------
Title:
--------------------------------------
[NAME OF ASSIGNEE]
as Assignee
By:
-----------------------------------------
Title:
--------------------------------------
ACCEPTED THIS ____ DAY OF
_______________
FOOTHILL CAPITAL CORPORATION,
AS AGENT
By:
-------------------------
Title:
----------------------
117
ANNEX FOR ASSIGNMENT AND ACCEPTANCE
ANNEX I
1. Borrowers: ClimaChem, Inc., an Oklahoma corporation ("ClimaChem"), and each of the
subsidiaries of ClimaChem and party to the below referenced Loan Agreement.
2. Name and Date of Loan Agreement: Loan and Security Agreement, dated as of April 13, 2001,
among LSB Industries, Inc., an Delaware corporation, as guarantor, the Borrowers, the
lenders signatory thereto as the Lenders, and Foothill Capital Corporation, a California
corporation, as the arranger and administrative agent for the Lenders.
3. Date of Assignment Agreement:
-----------------
4. Amounts:
a. Assignor's Total Commitment $
----------------
i. Assignor's Revolver Commitment $
----------------
b. Assigned Share of Total Commitment %
-----------------
i. Assigned Share of Revolver Commitment %
-----------------
c. Assigned Amount of Total Commitment $
----------------
i. Assigned Amount of Revolver Credit
Commitment $
-----------------
d. Resulting Amount of Assignor's Total Commitment after
giving effect to the sale and Assignment to Assignee $
----------------
i. Resulting Amount of Assignor's Revolver Commitment $
----------------
e. Assignor's Resulting Share of Total Commitment after
giving effect to the Assignment to Assignee %
-----------------
i. Assignor's Resulting Share of Revolving Credit
Commitment %
-----------------
5. Settlement Date:
-----------------
118
6. Notice and Payment Instructions, etc.
Assignee: Assignor:
By: By:
------------------------------- -----------------------------------
Title: Title:
---------------------------- --------------------------------
7. Agreed and Accepted:
[ASSIGNOR] [ASSIGNEE]
By: By:
------------------------------- -----------------------------------
Title: Title:
---------------------------- --------------------------------
Accepted:
FOOTHILL CAPITAL CORPORATION, AS AGENT
By:
---------------------------------------
Title:
------------------------------------
119
EXHIBIT C-1
(Form of Compliance Certificate)
[on Borrowers' letterhead]
To: Foothill Capital Corporation, as Agent
under the below-referenced Loan Agreement
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Re: Compliance Certificate dated
----------------
Ladies and Gentlemen:
Reference is made to that certain Loan and Security Agreement,
dated as of April 13, 2001 (the "Loan Agreement") among LSB Industries, Inc., an
Delaware corporation ("Parent"), ClimaChem, Inc., an Oklahoma corporation
("ClimaChem"), certain of ClimaChem's subsidiaries identified on the signature
pages thereof (such subsidiaries, together with ClimaChem, are collectively,
jointly and severally, the "Borrowers"), the lenders signatory thereto (the
"Lenders"), and Foothill Capital Corporation, a California corporation, as the
arranger and administrative agent for the Lenders ("Agent"). Capitalized terms
used in this Compliance Certificate have the meanings set forth in the Loan
Agreement unless specifically defined herein.
Pursuant to Section 6.3 of the Loan Agreement, the undersigned
officer of ClimaChem hereby certifies that:
1. The financial information of Parent and its Subsidiaries
and of ClimaChem and its Subsidiaries, as the case may be, furnished in Schedule
1 attached hereto, has been prepared in accordance with GAAP (except for
year-end adjustments and the lack of footnotes, in the case of financial
statements delivered under Section 6.3(a) of the Loan Agreement) and fairly
presents the financial condition of Parent and its Subsidiaries and of ClimaChem
and its Subsidiaries, as the case may be.
2. Such officer has reviewed the terms of the Loan Agreement
and has made, or caused to be made under his/her supervision, a review in
reasonable detail of the transactions and condition of the Borrowers during the
accounting period covered by the financial statements delivered pursuant to
Section 6.3 of the Loan Agreement.
3. Such review has not disclosed the existence on and as of
the date hereof, and the undersigned does not have knowledge of the existence as
of the date hereof, of any event or condition that constitutes a Default or
Event of Default, except for such conditions or events
120
listed on Schedule 2 attached hereto, specifying the nature and period of
existence thereof and what action Borrowers have taken, are taking, or propose
to take with respect thereto.
4. Borrowers are in timely compliance with all
representations, warranties, and covenants set forth in the Loan Agreement and
the other Loan Documents, except as set forth on Schedule 2 attached hereto.
Without limiting the generality of the foregoing, Borrowers are in compliance
with the covenants contained in Section 7.20 of the Loan Agreement as
demonstrated on Schedule 3 hereof.
IN WITNESS WHEREOF, this Compliance Certificate is executed by
the undersigned this _____ day of _______________, ________.
CLIMACHEM, INC.,
an Oklahoma corporation,
as Administrative Borrower
By:
---------------------------------
Name:
Title:
121
SCHEDULE 3
1. MINIMUM EBITDA.
(a) ClimaChem's and its Subsidiaries' EBITDA for the _________
ending _________, ________ is $______________, which amount [IS/IS NOT] greater
than or equal to the amount set forth in Section 7.20(a)(i) of the Loan
Agreement for the corresponding period.
(b) EBITDA of the Borrowers comprising the Climate Control
Business for the trailing twelve month period ending [_________], ____ is
$_____________, which amount [IS/IS NOT] greater than or equal to the amount set
forth in Section 7.20(a)(ii) of the Loan Agreement for the corresponding period.
2. FIXED CHARGE COVERAGE RATIO. [If Applicable]
(a) The Fixed Charge Coverage Ratio of ClimaChem and its
Subsidiaries, for the fiscal year ending ______________, is calculated as
follows
(i) EBITDA of ClimaChem and its Subsidiaries
for the 12 month period then ended: $
-----------------------
(ii) Principal Indebtedness of ClimaChem and its
Subsidiaries scheduled to be paid or prepaid
during such period: $
-----------------------
(iii) Gross interest expense of ClimaChem and its
Subsidiaries for such period: $
-----------------------
(iv) Interest income of ClimaChem and its Subsidiaries
for such period: $
-----------------------
(v) Non-cash accretion expense of ClimaChem and its
Subsidiaries for such period: $
-----------------------
(vi) Non-cash amortization of debt origination
cost of ClimaChem and its Subsidiaries
for such period: $
-----------------------
(vii) Capitalized Lease Obligations of ClimaChem and
its Subsidiaries having a scheduled due
date during such period: $
-----------------------
122
Item (i) divided by the sum of
Item (ii) plus Item (vii) plus the result of Item (iii) minus the sum of Item
(iv) plus Item (v) plus Item (vi)
(= Fixed Charge Coverage Ratio) :
---- ----
(b) The Fixed Charge Coverage Ratio set forth above [IS/IS
NOT] greater than or equal to the amount set forth in Section 7.20(a)(iii) of
the Loan Agreement for the corresponding period.
3. MAXIMUM CAPITAL EXPENDITURES.
(a) The aggregate amount of Capital Expenditures made or
committed to be made during the fiscal quarter ending ____________, _________ is
$________________.
(b) The aggregate amount set forth above [IS/IS NOT] less than
or equal to the amount set forth in Section 7.20(b)(i) of the Loan Agreement for
the corresponding period.
123
EXHIBIT L-1
FORM OF LIBOR NOTICE
Foothill Capital Corporation, as Agent
under the below referenced Loan Agreement
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
-----------------------------
Ladies and Gentlemen:
Reference hereby is made to that certain Loan and Security
Agreement, dated as of April 13, 2001 (the "Loan Agreement"), among LSB
Industries, Inc., an Delaware corporation ("Parent"), ClimaChem, Inc., an
Oklahoma corporation ("Administrative Borrower"), certain of Administrative
Borrower's subsidiaries signatory thereto (such subsidiaries, together with
Administrative Borrower, each a "Borrower" and collectively, the "Borrowers"),
the lenders signatory thereto (the "Lenders"), and Foothill Capital Corporation,
a California corporation, as the arranger and administrative agent for the
Lenders ("Agent"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Loan Agreement.
This LIBOR Notice represents the Borrowers' request to elect
the LIBOR Option with respect to outstanding Advances in the amount of
$_________ (the "LIBOR Rate Component")[, and is a written confirmation of the
telephonic notice of such election given to Agent].
Such LIBOR Rate Component will have an Interest Period of [1,
2, or 3] month(s) commencing on ___________________________.
This LIBOR Notice further confirms the Borrowers' acceptance,
for purposes of determining the rate of interest based on the LIBOR Rate under
the Loan Agreement, of the LIBOR Rate as determined pursuant to the Loan
Agreement.
124
Administrative Borrower, on behalf of itself and the other
Borrowers, represents and warrants that (i) as of the date hereof, each
representation or warranty contained in or pursuant to any Loan Document, any
agreement, instrument, certificate, document or other writing furnished at any
time under or in connection with any Loan Document, and as of the effective date
of any advance, continuation or conversion requested above is true and correct
in all material respects (except to the extent any representation or warranty
expressly related to an earlier date), (ii) each of the covenants and agreements
contained in any Loan Document have been performed (to the extent required to be
performed on or before the date hereof or each such effective date), and (iii)
no Default or Event of Default has occurred and is continuing on the date
hereof, nor will any thereof occur after giving effect to the request above.
Dated:
----------------------------------------
CLIMACHEM, INC., an Oklahoma corporation, as
Administrative Borrower
By
--------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Acknowledged by:
FOOTHILL CAPITAL CORPORATION,
as Agent
By:
------------------------------
Name:
----------------------------
Title:
----------------------------
