Exhibit 10.77
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LOAN AGREEMENT
by and between
HEADWATERS INCORPORATED
and
ALLIED CAPITAL CORPORATION
September 19, 2002
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$20,000,000 Senior Subordinated Debentures
due September 16, 2007
TABLE OF CONTENTS
Page
ARTICLE I. - DEFINITIONS.......................................................1
SECTION 1.1 DEFINED TERMS............................................1
SECTION 1.2 TERMS GENERALLY.........................................15
ARTICLE II. - THE INVESTMENT..................................................15
SECTION 2.1 FUNDING.................................................15
SECTION 2.2 SENIOR DEBT.............................................15
SECTION 2.3 REPAYMENT OF DEBENTURES.................................15
SECTION 2.4 INTEREST ON DEBENTURES..................................15
SECTION 2.5 DEFAULT INTEREST........................................15
SECTION 2.6 PREPAYMENT..............................................15
SECTION 2.7 MANDATORY PREPAYMENT OF THE DEBENTURES..................16
SECTION 2.8 PAYMENTS................................................16
SECTION 2.9 TAXES...................................................17
SECTION 2.10 USE OF PROCEEDS.........................................19
ARTICLE III. - CONDITIONS.....................................................19
SECTION 3.1 CONDITIONS TO CLOSING...................................19
ARTICLE IV. - REPRESENTATIONS AND WARRANTIES..................................20
ARTICLE V. - INVESTOR REPRESENTATIONS.........................................21
SECTION 5.1 INVESTMENT..............................................21
SECTION 5.2 AUTHORITY...............................................21
SECTION 5.3 ACCREDITED INVESTOR.....................................21
ARTICLE VI. - AFFIRMATIVE COVENANTS...........................................21
SECTION 6.1 EXISTENCE; BUSINESS AND PROPERTIES......................21
SECTION 6.2 INSURANCE...............................................22
SECTION 6.3 OBLIGATIONS AND TAXES...................................24
SECTION 6.4 FINANCIAL STATEMENTS; REPORTS, ETC......................24
SECTION 6.5 LITIGATION AND OTHER NOTICES............................25
SECTION 6.6 EMPLOYEE BENEFITS.......................................26
SECTION 6.7 MAINTAINING RECORDS; ACCESS TO PROPERTIES
AND INSPECTIONS.......................................26
SECTION 6.8 COMPLIANCE WITH LAWS....................................26
SECTION 6.9 PREPARATION IF ENVIRONMENTAL REPORTS....................26
SECTION 6.10 FURTHER ASSURANCES......................................27
SECTION 6.11 MAINTENANCE OF OFFICE OR AGENCY.........................27
SECTION 6.12 FINANCIAL RATIOS AND COVENANTS..........................27
SECTION 6.14 OBSERVATION RIGHTS......................................28
SECTION 6.17 USE OF PROCEEDS.........................................28
ARTICLE VII. - NEGATIVE COVENANTS.............................................29
SECTION 7.1 INDEBTEDNESS............................................29
SECTION 7.2 LIENS...................................................30
SECTION 7.3 AMENDMENT OF SENIOR CREDIT FACILITY.....................32
SECTION 7.4 INVESTMENTS.............................................32
SECTION 7.5 MERGERS, CONSOLIDATIONS, SALES OF ASSETS,
ACT OF DISSOLUTION....................................33
SECTION 7.6 DIVIDENDS AND DISTRIBUTIONS; RESTRICTIONS ON
ABILITY OF SUBSIDIARIES TO PAY DIVIDENDS..............34
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SECTION 7.7 TRANSACTIONS WITH AFFILIATES............................34
SECTION 7.8 BUSINESS OF CREDIT PARTIES AND SUBSIDIARIES.............34
SECTION 7.9 INVESTMENT COMPANY ACT..................................34
SECTION 7.10 ACQUISITIONS............................................34
SECTION 7.12 PREPAYMENTS.............................................36
SECTION 7.13 ADDITIONAL NEGATIVE PLEDGES.............................36
SECTION 7.14 FISCAL YEARS............................................36
SECTION 7.15 STAY, EXTENSION AND USURY LAWS..........................36
SECTION 7.15 INTENTIONALLY DELETED
SECTION 7.16 INCONSISTENT AGREEMENTS; CHARTER AMENDMENTS.............36
SECTION 7.17 MANDATORY EXCESS CASH FLOW SWEEP........................37
SECTION 7.18 CAPITAL EXPENDITURES....................................37
ARTICLE VIII. - EVENTS OF DEFAULT AND REMEDIES................................37
SECTION 8.1 EVENTS OF DEFAULT.......................................37
SECTION 8.2 WAIVERS.................................................39
SECTION 8.3 ENFORCEMENT ACTIONS.....................................39
SECTION 8.4 COSTS...................................................39
SECTION 8.5 SET-OFF.................................................39
SECTION 8.6 REMEDIES NON-EXCLUSIVE..................................39
ARTICLE IX. - MISCELLANEOUS...................................................40
SECTION 9.1 NOTICES.................................................40
SECTION 9.2 SURVIVAL OF AGREEMENT...................................40
SECTION 9.3 BINDING EFFECT..........................................40
SECTION 9.4 SUCCESSORS AND ASSIGNS..................................40
SECTION 9.5 EXPENSES; INDEMNITY.....................................41
SECTION 9.6 WAIVER OF CONSEQUENTIAL AND PUNITIVE DAMAGES............42
SECTION 9.7 APPLICABLE LAW..........................................42
SECTION 9.8 WAIVERS; AMENDMENTS.....................................42
SECTION 9.9 INTEREST RATE LIMITATION................................43
SECTION 9.10 ENTIRE AGREEMENT........................................43
SECTION 9.11 WAIVER OF JURY TRIAL....................................43
SECTION 9.12 SEVERABILITY............................................43
SECTION 9.13 COUNTERPARTS............................................44
SECTION 9.14 HEADING.................................................44
SECTION 9.15 JURISDICTION; CONSENT TO SERVICE OF PROCESS.............44
SECTION 9.16 CONSENTS AND APPROVALS; DEFAULTS........................45
SECTION 9.17 RELATIONSHIP OF THE PARTIES; ADVICE OF COUNSEL..........45
SECTION 9.18 CONFIDENTIALITY.........................................46
SECTION 9.19 REGISTRATION AND TRANSFER OF DEBENTURES.................46
Exhibits and Schedules
[see attached]
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of September 19, 2002
by and among: (i) Headwaters Incorporated, a Delaware corporation (the
"Borrower") and (ii) Allied Capital Corporation, a Maryland corporation ("Allied
Capital").
RECITALS:
A. Pursuant to a Merger Agreement dated as of July 15, 2002 (and as
from time to time amended, the "Merger Agreement") among the Borrower,
Headwaters Olysub Corporation, a Delaware corporation and wholly-owned
subsidiary of the Borrower (the "Sub"), Industrial Services Group, Inc., a
Delaware corporation (the "Company"), and ISG Resources, Inc., a Utah
corporation and wholly-owned subsidiary of the Company (the "Public Sub"), the
parties to the Merger Agreement agreed that the Company would merge with and
into the Sub, and the Sub would be the surviving corporation (the "Merger").
B. The Borrower has requested that, simultaneously with the
consummation of the Merger, Allied Capital invest in the Borrower the aggregate
sum of Twenty Million Dollars ($20,000,000) in exchange for the Debentures.
Allied Capital is willing to make such investment in the Borrower on the terms
and conditions set forth herein.
C. The parties wish to set forth herein their understandings and
agreements pertaining to this transaction.
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Allied Capital and
its successors and assigns with respect to its interest in all or any part of
any of the Debentures (individually, a "Holder" and collectively, the "Holders")
and the Borrower hereby agree as follows: Article I.
Definitions
SECTION 1.1 Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"Acquisition" means the consummation of the transactions contemplated
by the Acquisition Documents.
"Acquisition Documents" mean, collectively, the Merger Agreement, the
Offer to Purchase and Consent to Solicitation Statement and all other
instruments and documents executed and delivered in connection with the
transactions contemplated thereby.
"Act of Bankruptcy," when used in reference to any Person, means the
occurrence of any of the following with respect to such Person: (i) such Person
shall have made an assignment for the benefit of his or its creditors; (ii) such
Person shall have admitted in writing his or its inability to pay his or its
debts as they become due; (iii) such Person shall have filed a voluntary
petition in bankruptcy; (iv) such Person shall have been adjudicated a bankrupt
or insolvent; (v) such Person shall have filed any petition or answer seeking
for himself or itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future Applicable Law pertinent to such circumstances; (vi) such Person shall
have filed or shall file any answer admitting or not contesting the material
allegations of a bankruptcy, insolvency or similar petition filed against such
Person; (vii) such Person shall have sought or consented to, or acquiesced in,
the appointment of any trustee, receiver, or liquidator of such Person or of all
or any substantial part of the properties of such Person; (viii) 60 days shall
have elapsed after the commencement of an action against such Person seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future Applicable Law without such action
having been dismissed or without all orders or proceedings thereunder affecting
the operations or the business of such Person having been stayed, or if a stay
of any such order or proceedings shall thereafter be set aside and the action
setting it aside shall not be timely appealed; or (ix) 60 days shall have
expired after the appointment, without the consent or acquiescence of such
Person of any trustee, receiver or liquidator of such Person or of all or any
substantial part of the assets and properties of such Person without such
appointment having been vacated.
"Act of Dissolution," when used in reference to any Person (other than
an individual), shall mean the occurrence of any action initiating, or any event
that results in, the dissolution, liquidation, winding-up or termination of such
Person.
"Administrative Agent" has the meaning given it in the Senior Credit
Facility.
"Affiliate" means, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified. "Affiliate" shall also mean any beneficial owner of Capital Stock
representing 10% or more of the total voting power of the voting Capital Stock
(on a fully diluted basis) of the Borrower or any of its Subsidiaries (whether
or not currently exercisable) and any Person who would be an Affiliate of such
beneficial owner pursuant to the first sentence hereof.
"Applicable Law(s)" when used in the singular, shall mean any
applicable Federal, state or local law, ordinance, order, regulation, rule or
requirement of any governmental or quasi-governmental agency, instrumentality,
board, commission, bureau or other authority having jurisdiction, and, when used
in the plural, shall mean all such applicable Federal, state and local laws,
ordinances, orders, regulations, rules and requirements.
"Approval" has the meaning specified in Section 9.16(a).
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Borrower or any of its Restricted Subsidiaries or grant any option or other
right to purchase, lease or otherwise acquire any asset, except: (i) sales of
Inventory in the ordinary course of its business and the granting of any option
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or other right to purchase, lease, or otherwise acquire Inventory in the
ordinary course of its business; (ii) sale or grants of exclusive and
non-exclusive licenses of intellectual property entered into in the ordinary
course of business; (iii) (A) sales, transfers or other dispositions of assets
among the Credit Parties (including, without limitation, sales, transfers or
other dispositions, with or without consideration, of intellectual property
among the Credit Parties and (B) transfer of assets set forth on Schedule
7.05(d) to Flexcrete LLC; (iv) sales, transfers or other dispositions of assets
for cash and for fair value in an aggregate amount not to exceed $76 million
(including, without limitation, equity interests in Subsidiaries but excluding
any original issuances of stock of any Subsidiary) so long as (x) no Event of
Default shall have occurred and be continuing or would result from such sale and
(y) the proceeds of such Transfer are used to replace or upgrade such assets or
to repay Senior Debt or the Obligations; and (v) sale of assets for cash
proceeds in an aggregate amount of $1,200,000 annually so long as no Event of
Default shall have occurred and be continuing or would result from such sale.
"Borrower's Business" means the business engaged in by the Borrower and
its Subsidiaries as of the Closing Date and as currently proposed to be
conducted as more fully described in the Information Memorandum.
"Business Day" means any day other than a Saturday, Sunday or day on
which banks in Washington, D.C. are authorized or required by law to close.
"Capital Expenditures" means for any Person for any period, the sum of,
without duplication, (a) all expenditures made, directly or indirectly, by such
Person or any of its Subsidiaries during such period for equipment, fixed
assets, real property or improvements, or for replacements or substitutions
therefor or additions thereto, that have been or should be, in accordance with
GAAP, reflected as additions to property, plant or equipment on a Consolidated
balance sheet of such Person or have a useful life of more than one year plus
(b) the aggregate principal amount of all Indebtedness (including Capital Lease
Obligations) assumed or incurred in connection with any such expenditures. For
purposes of this definition, the purchase price of equipment that is purchased
simultaneously with the trade in of existing equipment or with insurance
proceeds shall be included in Capital Expenditures only to the extent of the
excess of (i) the gross amount of such purchase price over (ii) the credit
granted by the seller of such equipment for the equipment being traded in at
such time or the amount of such proceeds, as the case may be.
"Capital Lease" means any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on the balance sheet of the lessee.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under all Capital Leases of such Person
under GAAP, and the amount of such obligations is the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of Capital Stock of such
Person (if such Person is a corporation), any and all equivalent ownership
interests in such Person (if such Person is other than a corporation), any
securities convertible into or exchangeable for any of the foregoing and any and
all warrants or options to purchase any of the foregoing.
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"Cash Equivalents" means any of the following, to the extent owned by
the Borrower or any of its Subsidiaries free and clear of all Liens other than
Permitted Liens and having a maturity of not greater than 360 days from the date
of acquisition thereof: (a) readily marketable direct obligations of the
Government of the United States or any agency or instrumentality thereof or
obligations unconditionally guaranteed by the full faith and credit of the
Government of the United States, (b) insured certificates of deposit of or time
deposits with any commercial bank that is a Lender Party (as such term is
defined under the Senior Credit Facility) or a member of the Federal Reserve
System, which issues (or the parent of which issues) commercial paper rated as
described in clause (c) below, is organized under the laws of the United States
or any State thereof and has combined capital and surplus of at least $1 billion
or (c) commercial paper in an aggregate amount of no more than $1,000,000 per
issuer outstanding at any time, issued by any corporation organized under the
laws of any State of the United States and rated at least "Prime-2" (or the then
equivalent grade) by Xxxxx'x Investors Service, Inc. or "A-2" (or the then
equivalent grade) by Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc. or (d) Investments, classified in accordance with GAAP as current assets of
the Borrower or any of its Subsidiaries, in money market investment programs
registered under the Investment Company Act of 1940, as amended, which are
administered by financial institutions that have the highest rating obtainable
from either Moody's or S&P, and the portfolios of which are limited solely to
Investments of the character, quality and maturity described in clauses (a), (b)
and (c) of this definition.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time.
"Change of Control" means one or more transactions resulting in: (a)
any Person or two or more Persons acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934), directly or
indirectly, of Voting Interests of the Borrower (or other securities convertible
into such Voting Interests) representing 35% or more of the combined voting
power of all Voting Interests of the Borrower; (b) during any period of up to 24
consecutive months, commencing after the date of this Agreement, individuals who
at the beginning of such 24-month period were Continuing Directors of the
Borrower shall cease for any reason to constitute a majority of the board of
directors of the Borrower; and (c) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall have entered into
a contract or arrangement that, upon consummation, will result in its or their
acquisition of the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Borrower.
"Charges" has the meaning specified in Section 9.9.
"Closing" means the consummation of the Transaction.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended or otherwise modified from time to time.
"Common Stock" means any and all (as the context may require) of the
shares of the authorized common stock of the Borrower.
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"Consolidated" means the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
"Control" means, without limitation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and the terms "Controlling" and "Controlled" have
meanings correlative thereto.
"Continuing Directors" means (a) members of the board of directors of
the Borrower on the Closing Date and (b) other persons nominated or elected to
the board of directors of the Borrower with the approval of a majority of the
directors who were members of the board of directors at the time of such
election or nomination.
"Credit Parties" means, collectively, the Borrower and the Guarantors;
and "Credit Party" means either the Borrower or a Guarantor.
"Debentures" means the senior subordinated debentures dated September
19, 2002 in the aggregate principal amount of $20,000,000 from the Borrower made
payable severally to the Holders and evidencing the Borrower's repayment
obligation for the investment by the Holders in the Borrower described in
Section 2.1, together with all other debentures accepted from time to time in
substitution, renewal or replacement for all or any part thereof including
pursuant to Section 9.19.
"Default" means any event or condition that upon notice, lapse of time
or both would constitute an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
stated maturity of the Debentures.
"Dollars" or "$" means lawful money of the United States of America.
"Dow Contract" means that certain sales contract, dated January 1,
1998, by and between The Dow Chemical Company and Headwaters Incorporated (f/k/a
Covol Technologies, Inc.), which was assigned to Reichhold Specialty Latex LLC
pursuant to that certain letter agreement, dated December 20, 2001.
"EBITDA" means, at any date of determination, the sum, determined in
accordance with GAAP on a Consolidated basis and without duplication, of (a) net
income (or net loss), (b) interest expense, (c) income tax expense, (d)
depreciation expense and (e) amortization expense, in each case of the Borrower
and its Restricted Subsidiaries, determined in accordance with GAAP for the most
recently completed Measurement Period.
For purposes of calculating EBITDA with respect to any Measurement
Period, (A) acquisitions that have been made by the Borrower or its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the reference period shall be deemed to
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have occurred on the first day of the reference period; provided, however, that
only the actual historical results of operations of the Persons so acquired,
without adjustment for pro forma expense savings or revenue increases, shall be
used for such calculation; and (B) for purposes of calculating Funded Leverage
Ratio only, the EBITDA of the Borrower or its Restricted Subsidiaries
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the end of such reference
period, shall be excluded.
For the purposes of each of the fiscal quarters ended March 2002 and
June 2002, EBITDA of the Borrower shall be as set forth on Schedule III hereto.
"Eligible Assignee" means any commercial bank or financial institution
organized under the laws of the United States, or any State thereof, and having
a combined capital and surplus of at least $250,000,000 (as established in its
most recent report of conditions to its primary regulator) and, so long as no
Event of Default has occurred and is continuing, as approved by the Borrower
(which approval shall not be unreasonably withheld); provided, however, that
neither any Credit Party nor any Subsidiary of a Credit Party shall qualify as
an Eligible Assignee under this definition.
"Environmental Claim" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or
Hazardous Material or arising from alleged injury or threat to health, safety or
the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"Environmental Law" means any Federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, writ, judgment, injunction,
decree or judicial or agency interpretation, policy or guidance relating to
pollution or protection of the environment, health, safety, natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of any Credit Party, or under common
control with any Credit Party, within the meaning of Section 414 of the Internal
Revenue Code.
"ERISA Event" means (a)(i) the occurrence of a reportable event, within
the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC or
(ii) the requirements of Section 4043(b) of ERISA apply with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and
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an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c)
of ERISA is reasonably expected to occur with respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver with respect
to a Plan; (c) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any
Credit Party or any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA; (e) the withdrawal by any Credit Party or any ERISA Affiliate
from a Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for
imposition of a lien under Section 302(f) of ERISA shall have been met with
respect to any Plan; (g) the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the
institution by the PBGC of proceedings to terminate a Plan pursuant to Section
4042 of ERISA, or the occurrence of any event or condition described in Section
4042 of ERISA that constitutes grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
"Events of Default" has the meaning specified in Article VIII.
"Financial Officer" of any corporation or other entity means the chief
financial officer, treasurer or principal accounting officer of such corporation
or entity.
"Foreign Subsidiary" means a Subsidiary that is organized under the
laws of a jurisdiction other than the United States or any State thereof or the
District of Columbia.
"Funded Indebtedness" means, with respect to any Person as of any date
of determination, the sum of the following of such Person and its Subsidiaries
(in each case determined in accordance with GAAP on a Consolidated basis and
without duplication) the total amount of Indebtedness of such Person or its
Subsidiaries which in accordance with GAAP should be classified upon the balance
sheet of such Person or its Subsidiaries as indebtedness.
"Funded Leverage Ratio" means, at any date of determination thereof,
the ratio of (i) Funded Indebtedness of the Borrower and the Restricted
Subsidiaries outstanding as at such date of determination, to (ii) EBITDA of the
Borrower and the Restricted Subsidiaries for the Measurement Period ending on,
or most recently ended prior to, such date of determination.
"GAAP" means generally accepted accounting principles applicable in the
United States of America as of the Closing Date (and without regard to
subsequent changes therein) and consistent with those applied in the preparation
of the financial statements referred to in Article IV.
"Governmental Authority(ies)" means any Federal, state, local,
quasi-governmental instrumentality or foreign court, or governmental agency,
authority, instrumentality, agency, bureau, commission, department or regulatory
body.
"Guarantor" means the each entity that becomes a Guarantor under the
Subsidiary Guaranty Agreement.
"Guarantee Obligation" of or by any Person means any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
7
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or advance or supply funds for the purchase of) any security for the
payment of such Indebtedness, (b) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or any other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness; provided that the
term "Guarantee Obligation" shall not include endorsements for collection or
deposit in the ordinary course of business. The word "Guarantee" when used as a
verb shall have the correlative meaning. It is agreed that Guarantee Obligations
of any Credit Party shall not include any obligation or arrangement of such
Credit Party to guarantee or intended to guarantee any leases, dividends or
other payment obligations of any other Credit Party. The amount of any Guarantee
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee Obligation
is made (or, if less, the maximum amount of such primary obligation for which
such Person may be liable pursuant to the terms of the instrument evidencing
such Guarantee Obligation) or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder), as determined by such Person in good faith.
"Hazardous Materials" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"Holder" and "Holders" have the meaning provided in the Recitals
hereto.
"Indebtedness" of any Person means, without duplication, all
obligations, contingent or otherwise, of such Person which in accordance with
GAAP should be classified upon the balance sheet of such Person as indebtedness,
but in any event including: (a) all obligations of such Person for borrowed
money; (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments; (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person; (d) all obligations of such Person issued or assumed
as the deferred and unpaid purchase price of property or services (excluding
trade accounts payable incurred in the ordinary course of business that are not
past due by more than 120 days); (e) all obligations of others secured by (or
having an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed; (f) all Guarantee Obligations by such Person
of Indebtedness of others; (g) all Capital Lease Obligations of such Person; (h)
all Off-Balance Sheet Liabilities; (i) all obligations of such Person in respect
of interest rate protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements, valued at the Agreement
Value thereof; (j) all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Capital Stock in such
Person or any other Person; and (k) all obligations of such Person, actual or
contingent, as an account party in respect of letters of credit or similar
facilities and bankers' acceptances. "Indebtedness" shall not include (x)
liabilities under deferred compensation plans, (y) liabilities that may arise in
8
connection with indemnification provisions contained in agreements entered into
in the ordinary course of business or contained in agreements entered into in
connection with the acquisition or disposition of assets, stock or other
property, in each case to the extent permitted in the Loan Documents, and (z)
liabilities under operating leases.
"Indemnitee" has the meaning in Section 9.5(b).
"Information Memorandum" means the information memorandum dated July,
2002 used by the Administrative Agent in connection with the syndication of the
Senior Credit Facility.
"Interest" means any ownership or profit sharing interest (however
designated) in any general or limited partnership, trust, limited liability
company, private company or joint venture, and all agreements, instruments and
documents convertible, in whole or in part, into any one or more of the
foregoing.
"Interest Coverage Ratio" means, at any date of determination thereof,
the ratio of (a) EBITDA of the Borrower and the Restricted Subsidiaries for such
Measurement Period ending on, or most recently ended prior to, such date of
determination to (b) cash interest payable on all Funded Indebtedness of the
Borrower and the Restricted Subsidiaries outstanding as at such date of
determination.
"Interest Rate" means a fixed rate of interest of 18% per annum,
payable in accordance with the terms of the Debentures.
"Inventory" means "inventory" as defined in Article 9 of the UCC,
including all raw materials, work in process, parts, components, assemblies,
supplies and materials used or consumed in the Borrower's Business, all goods,
wares and merchandise, finished or unfinished, held for sale or lease or leased
or furnished or to be furnished under contracts of service or hire.
"Investment Documents" means, collectively, the Loan Documents, the
Acquisition Documents and all other instruments and documents executed and
delivered in connection with the Transaction.
"Investments" means, collectively, (a) ownership or purchase of any
Capital Stock or evidence of Indebtedness, Interest in or other security of
another Person; (b) any loan, advance, contribution to capital, extension of
credit (except for current trade and customer accounts receivable for Inventory
sold or services rendered in the ordinary course of business and payable in
accordance with customary trade terms) to another Person; (c) any joint venture;
(d) any interest rate hedge agreement or similar agreement; or (e) any
acquisition after Closing of any business or business unit of another Person
(whether acquired by purchase of assets or Interests), or any commitment or
option to acquire any of the foregoing items (a) through (e).
"ISG" means Industrial Services Group, Inc., a Delaware corporation.
"Licenses" shall mean, collectively, all rights, licenses, permits and
authorizations now or hereafter issued by any Governmental Authority reasonably
necessary in connection with the operation or conduct of the Borrower's
Business.
9
"Lien" means any lien, security interest or other charge or encumbrance
of any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
"Loan Documents" means, collectively, this Agreement, the Debentures,
the Subsidiary Guaranty Agreement and all other instruments and documents
executed and delivered in connection therewith.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance, or
properties of the Borrower and its Subsidiaries taken as a whole, since
September 30, 2001.
"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance or
properties of the Borrower and its Subsidiaries, taken as a whole, (b) the
rights and remedies of the Holders under any Investment Document or Acquisition
Document or (c) the ability of any Credit Party to perform its Obligations under
any Investment Document or Acquisition Document to which it is or is to be a
party.
"Material Contract" means the Dow Contract.
"Maturity Date" means September 16, 2007.
"Maximum Rate" has the meaning specified in Section 9.9(e).
"Measurement Period" means, at any date of determination, the most
recently completed four consecutive fiscal quarters of the Borrower ending on or
prior to such date or, if less than four consecutive fiscal quarters of the
Borrower have been completed since the Closing, those fiscal quarters of the
Borrower that have been completed since the Closing. For purposes of determining
an amount of any item included in the calculation of any financial ratio (other
than EBITDA) or any financial covenant for the fiscal quarter ended December
2002, such amount for the Measurement Period then ended shall equal such item
for such fiscal quarter multiplied by four; for purposes of determining an
amount of any item included in the calculation of any financial ratio (other
than EBITDA) or any financial covenant for the fiscal quarter ended March 2003,
such amount for the Measurement Period then ended shall equal such item for the
two fiscal quarters then ended multiplied by two; and for purposes of
determining an amount of any item included in the calculation of any financial
ratio (other than EBITDA) or any financial covenant for the fiscal quarter ended
June 2003, such amount for the Measurement Period then ended shall equal such
item for the three fiscal quarters then ended multiplied by 4/3.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Credit
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Credit Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.
"New Lending Office" has the meaning specified in Section 2.9(e).
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"Non-U.S. Investor" has the meaning specified in Section 2.9(e).
"Obligations" means all indebtedness, advances pursuant to this
Agreement or otherwise, debts, liabilities and obligations, for the performance
of covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or such amounts are liquidated
or determinable) owing by the Credit Parties to the Holders, and all covenants
and duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument, arising
under this Agreement or any of the other Investment Documents. The term includes
all principal, interest (including all interest that accrues after the
commencement of any case or proceeding in bankruptcy after the insolvency of, or
for the reorganization of any Credit Party, whether or not allowed in such
proceeding), any premiums, penalties or charges imposed in connection with the
prepayment of the Debentures, fees, charges, expenses, attorneys' fees, and any
other sum chargeable to the Credit Parties under this Agreement or any other
Investment Document.
"Off-Balance Sheet Liabilities" means, with respect to any Person, any
Obligation of such Person under a synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing classified
as an operating lease in accordance with GAAP, if such obligations would or will
give rise to a claim against such Person in an Act of Bankruptcy.
"Offer" means the offer of the Public Sub to purchase its outstanding
Subordinated Notes.
"Offer to Purchase and Consent to Solicitation Statement" means the
Offer to Purchase and Consent to Solicitation Statement of the Public Sub in
connection with the Offer.
"Other Taxes" has the meaning specified in Section 2.9(b).
"Permitted Acquisition" has the meaning specified in Section 7.10.
"Permitted Indebtedness" has the meaning specified in Section 7.1.
"Permitted Lien" has the meaning specified in Section 7.2.
"Person" means any natural person, corporation, business trust, limited
liability company, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"PIK Amount" has the meaning set forth in the Debentures.
"PIK Interest" means, with respect to any Indebtedness, accrued
interest on such Indebtedness that is not payable in cash but is added to the
principal balance and due at maturity of such Indebtedness.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
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"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Public Sub" means ISG Resources, Inc., a Utah corporation.
"Real Property" means, collectively, all real property owned by the
Borrower or its Subsidiaries or in which the Borrower or its Subsidiaries has a
leasehold interest and all real property hereafter acquired by the Borrower or
its Subsidiaries in fee or by means of a leasehold interest, including all real
property on which the Borrower's Business is now or hereafter conducted,
together with all goods located on any such real property that are or may become
"fixtures" under the law of the jurisdiction in which such real property is
located.
"Receiver" means any receiver, trustee, custodian, liquidator, or
similar fiduciary.
"Repayment Charge" means the amount payable as a repayment charge if
any collateral in accordance with Section 2.6 of this Agreement.
"Required Holders" means, at any time, Holders owed or holding at least
a majority in interest of the aggregate principal amount under the Debentures.
"Responsible Officer" means the Chief Executive Officer or the Chief
Financial Officer of the Borrower.
"Restricted Payment" means; (i) any dividend or other distribution of
any nature, direct or indirect, on account of any class of equity securities of
the Borrower or any of its Subsidiaries, now or hereafter outstanding; (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any class of equity securities of
the Borrower or any of its Subsidiaries, now or hereafter outstanding; (iii) any
payment made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire any class of equity securities of the
Borrower or any of its Subsidiaries, now or hereafter outstanding; and (iv) any
loan, advance, tax sharing payment or indemnification payment to, or investment
in, any Affiliate of the Borrower (other than Subsidiary Guarantors).
"Restricted Subsidiary" means each direct or indirect Subsidiary of the
Borrower in existence on the date hereof (other than any Foreign Subsidiary and
Flexcrete LLC), or created or acquired after the date hereof (except for any
Foreign Subsidiary and any other Subsidiary which the Borrower designates an
Unrestricted Subsidiary at the time of its creation or acquisition). Any
Subsidiary that is a Restricted Subsidiary (including any Subsidiary that is not
designated an Unrestricted Subsidiary at the time of its creation or
acquisition) shall be a Restricted Subsidiary for the term of this Agreement and
shall be a Subsidiary Guarantor.
"Senior Credit Facility" means the Credit Agreement dated as of the
date hereof, by and among the Credit Parties and the lender parties thereto, as
the same may be amended, supplemented or otherwise modified from time to time
and any agreement refinancing all or any of the debt or commitments thereunder,
but only in each case to the extent the Indebtedness thereunder continues to
constitute Senior Debt as provided in the definition thereof.
"Senior Debt" means all of the following: (a) the aggregate principal
indebtedness advanced from time to time under the Senior Credit Facility up to a
maximum aggregate principal indebtedness that shall not exceed $175,000,000 as
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reduced from time to time by all payments and prepayments of principal
outstanding thereunder (other than payments with respect to the revolving credit
component thereof in aggregate principal amount not to exceed $20,000,000); (b)
all interest accrued and accruing on the aggregate principal outstanding under
the Senior Credit Facility from time to time; (c) all other reasonable fees or
monetary obligations owed under the Senior Credit Facility; and (d) all
reasonable costs incurred by the Senior Lenders under the Senior Credit Facility
in commencing or pursuing any enforcement action(s) with respect to the amounts
described in clauses (a) through (c), including attorneys' fees and
disbursements. Senior Debt shall also include all amendments, modifications and
refinancings of the foregoing that do not cause the aggregate principal amount
to exceed the maximum amount described above.
"Senior Lenders" means the lenders providing the Senior Debt under the
Senior Credit Facility.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Credit
Party or any ERISA Affiliate and no Person other than the Loan Parties and the
ERISA Affiliates or (b) was so maintained and in respect of which any Credit
Party or any ERISA Affiliate could have liability under Section 4069 of ERISA in
the event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Subordination Agreement" means that certain Subordination Agreement,
dated as of the date hereof, by and among the Borrower, Allied Capital and the
Administrative Agent on behalf of the Senior Lenders.
"Sub" means Headwaters Olysub Corporation, a Delaware corporation.
"Subordinated Debt" means any Indebtedness of the Borrower or any
Subsidiary thereof that is expressly subordinated and made junior in right and
time of payment to the Senior Debt and the Debentures, in form and substance
satisfactory to the Holders.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
13
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"Subsidiary Guaranty Agreement" means the Guaranty Agreement of even
date herewith among Subsidiaries of the Borrower which are, or may from time to
time become, parties thereto, in favor of the Holders, as amended, modified or
otherwise supplemented from time to time.
"Subsidiary Guarantor" means a Guarantor that is a Restricted
Subsidiary.
"Surviving Debt" means the Indebtedness of each Credit Party and its
Subsidiaries outstanding immediately before and after giving effect to the
Closing and the transactions contemplated thereby, as set forth on a disclosure
schedule incorporated in Article IV.
"Taxes" has the meaning specified in Section 2.9(a).
"Transaction" means the execution, delivery and performance by the
Credit Parties and each of their respective Subsidiaries of each of the
Investment Documents to which such Credit Party or any of its Subsidiaries is or
is to become a party and the obligations hereunder and thereunder.
"Transfer" means the sale, assignment, lease, transfer, mortgaging,
encumbering or other disposition, whether voluntary or involuntary, and whether
or not consideration is received therefor.
"Unrestricted Subsidiary" means any Subsidiary of the Borrower created
or acquired after the date hereof that Borrower designates as an Unrestricted
Subsidiary in accordance with Section 7.10. Any Subsidiary that is designated an
Unrestricted Subsidiary at the time of its creation or acquisition shall be an
Unrestricted Subsidiary for the term of this Agreement. For purposes of this
Agreement and the other Loan Documents, Flexcrete LLC shall be an Unrestricted
Subsidiary.
"Voting Interests" means shares of capital stock issued by a
corporation, or equivalent Capital Stock in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such Person,
even if the right so to vote has been suspended by the happening of such a
contingency.
"Wholly-Owned Subsidiary" of any Person means a Subsidiary of such
Person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such Person or one or
more wholly owned subsidiaries of such Person or by such Person and one or more
wholly owned subsidiaries of such Person.
14
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part 1 of Subtitle E of Title IV of ERISA. SECTION 1.2
Terms Generally. The definitions in Section 1.1 apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words "include," "includes" and "including" are deemed to be followed
by the phrase "without limitation." All references herein to Articles, Sections,
Exhibits and Schedules are deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, (a) any reference in
this Agreement to any Investment Document means such document as amended,
restated, supplemented or otherwise modified from time to time and (b) all terms
of an accounting or financial nature are construed in accordance with GAAP.
Article II.
The investment
SECTION 2.1 Funding. At the closing under this Agreement (the
"Closing"), the Borrower will borrow, and Allied Capital will lend to the
Borrower, the aggregate sum of $20,000,000. All such indebtedness shall be
evidenced by, and is to be repaid according to the terms of, one or more
Debentures. The entire principal sum will be advanced at Closing.
SECTION 2.2 Senior Debt. The Holders' rights under the Debentures and
this Agreement are subordinate as to right of payment only to the Senior Debt
pursuant to the Subordination Agreement.
SECTION 2.3 Repayment of Debentures. Subject to the terms of Section
2.7 and the Subordination Agreement, all unpaid principal amounts and accrued
and unpaid interest under the Debentures, and all other obligations of the
Borrower to the Holders due and owing hereunder shall be paid upon the earliest
of (i) the date of acceleration of the Debentures pursuant to Article VIII, (ii)
the date of redemption pursuant to Section 2.6 or 2.7 and (iii) the Maturity
Date, in immediately available Dollars, without set-off, defense or
counterclaim.
SECTION 2.4 Interest on the Debentures. Subject to the provisions of
Section 2.5, the Debentures shall bear interest (calculated on the basis of a
360-day year and computed for each payment period on the principal balance
assuming 12 equal 30 day months) at the Interest Rate, payable in accordance
with the Debentures.
SECTION 2.5 Default Interest. If any Event of Default exists, whether
or not such default is declared, the Borrower shall pay interest, to the extent
permitted by law, on amounts due under the Debentures so long as such Event of
Default is continuing (after as well as before judgment) at the Interest Rate
plus 2%.
SECTION 2.6 Prepayment.
(a) The Borrower may at any time and from time to time prepay the
Debentures, in whole or in part, upon at least 10 days but no more than 60 days
prior written or facsimile notice (or telephone notice promptly confirmed by
15
written or facsimile notice) to the Holders before 2:00 p.m, Washington, D.C.
time, subject to the Borrower's obligation to pay a repayment charge (the
"Repayment Charge") of
(i) 5% of any principal prepaid prior to and including the
first anniversary of the Closing Date;
(ii) 4% of any principal prepaid after the first anniversary
of the Closing Date but prior to and including the second anniversary
of the Closing Date;
(iii) 3% of any principal prepaid after the second anniversary
of the Closing Date but prior to and including the third anniversary of
the Closing Date;
(iv) 2% of any principal prepaid after the third anniversary
of the Closing Date but prior to and including the fourth anniversary
of the Closing Date;
(v) 1% of any principal prepaid after the fourth anniversary
of the Closing Date but prior to the fifth anniversary of the Closing
Date.
(b) Any partial prepayments shall be made in increments of $500,000 and
shall be applied pro rata to amounts outstanding under the Debentures.
Notwithstanding any provision to the contrary, the Repayment Charges shall be
due and payable upon any voluntary or mandatory prepayment of the Debentures in
whole or in part. On the date of prepayment, the Borrower shall pay to the
holders of the Debentures being prepaid pursuant to this Section, the price
specified above, by wire transfer of immediately available funds to an account
designated by such Holder. Concurrently therewith, each Holder of Debentures
being prepaid shall deliver to the Borrower the original copy of its Debenture
or an affidavit of loss thereof in a form that is reasonably satisfactory to the
Borrower. Any notice given by the Borrower pursuant to this Section 2.6 shall be
irrevocable so long as the specified conditions are met.
SECTION 2.7 Mandatory Prepayment of the Debentures. The Borrower's
obligations under the Debentures and this Agreement are not assumable; upon a
Change of Control, each Holder shall have the right (but not the obligation) to
require the Borrower to (a) prepay the Debentures held by such Holder for an
amount equal to the then outstanding principal balance, all accrued but unpaid
interest thereon, plus all PIK Amounts (as defined in the Debentures) and all
applicable Repayment Charges due under Section 2.6 above, and (b) pay in full
all of the other Obligations owing to such Holder, which amount shall be
calculated on the date of prepayment and be payable in cash on such date. On the
date of prepayment, the Borrower shall pay to the holders of the Debentures
being prepaid pursuant to this Section, the price specified above, by wire
transfer of immediately available funds to an account designated by such Holder.
Concurrently therewith, each Holder of Debentures being prepaid shall deliver to
the Borrower the original copy of its Debenture or an affidavit of loss thereof
in a form that is reasonably satisfactory to the Borrower.
SECTION 2.8 Payments.
(a) The Borrower shall make each payment (including principal of or
interest on the Debentures or other amounts) hereunder and under any other
Investment Document not later than 2:00 P.M., Washington, D.C. time, on the date
16
when due in immediately available Dollars, without setoff, defense or
counterclaim. Each such payment shall be made to each Holder pursuant to written
instructions from such Holder to the Borrower, including pursuant to wire
transfer instructions. (b) Whenever any payment (including principal of or
interest or Repayment Charge on the Debenture or other amounts) hereunder or
under any other Loan Document shall become due, or otherwise would occur, on a
day that is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest.
SECTION 2.9 Taxes.
(a) Any and all payments by or on behalf of the Borrower hereunder and
under any Investment Document shall be made, in accordance with Section 2.8,
free and clear of and without deduction for any and all current or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding (i) income taxes imposed on the net income of a
Holder and (ii) franchise taxes imposed on the net income of a Holder, in each
case by the jurisdiction under the laws of which such Holder is organized or
qualified to do business or a jurisdiction or any political subdivision thereof
in which the Holder engages in business activity other than activity arising
solely from the Holder having executed this Agreement and having enjoyed its
rights and performed its obligations under this Agreement or any Investment
Document or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities, collectively
or individually, being called "Taxes"). If the Borrower must deduct any Taxes
from or in respect of any sum payable hereunder or under any other Investment
Document to a Holder, (i) the sum payable shall be increased by the amount (an
"additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.9) such Holder shall receive an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrower will pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under any Investment
Document, or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any Investment Document ("Other Taxes").
(c) Subject to Section 2.9(f) below, the Borrower agrees to indemnify
each Holder for the full amount of Taxes and Other Taxes paid by such Holder and
any liability (including penalties, interest and expenses (including reasonable
attorney's fees and expenses)) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability prepared by such Holder absent manifest error, shall be
final conclusive and binding for all purposes. Such indemnification shall be
made within 30 days after the date such Holder makes written demand therefor.
The Borrower shall have the right to receive that portion of any refund of any
Taxes and Other Taxes received by a Holder for which the Borrower has previously
paid any additional amount or indemnified such Holder and which leaves the
17
Holder, after the Borrower's receipt thereof, in no better or worse financial
position than if no such Taxes or Other Taxes had been imposed or additional
amounts or indemnification paid to the Holder. The Holder shall have sole
discretion as to whether (and shall in no event be obligated) to make any such
claim for any refund of any Taxes or Other Taxes.
(d) As soon as practicable (and in any event within 60 days) after the
date of any payment of Taxes or Other Taxes by the Borrower to the relevant
Governmental Authority, the Borrower will deliver to each Holder, the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing payment thereof.
(e) Any transferee of the Holders, with respect to the investment, if
organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a "Non-U.S. Investor") shall deliver,
to the extent legally able to do so, to the Borrower two copies of either United
States Internal Revenue Service Form W-8BEN or Form W-8ECI or other applicable
form, or, in the case of a Non-U.S. Investor claiming exemption from U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Investor delivers a Form
W-8, a certificate representing that such Non-U.S. Investor is not a bank for
purposes of Section 881(c) of the Code, is not a 10% shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation receiving interest from a related person (within
the meaning of Section 864(d)(4) of the Code)), properly completed and duly
executed by such Non-U.S. Investor claiming exemption from U.S. Federal
withholding tax on payments by the Borrower under this Agreement and the
Investment Documents. Such forms shall be delivered by each Non-U.S. Investor on
or before the date it becomes a party to this Agreement and on or before the
date, if any, such Non-U.S. Investor changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
each Non-U.S. Investor shall deliver such forms promptly upon the obsolescence
or invalidity of any form previously delivered by such Non-U.S. Investor.
Notwithstanding the foregoing, no Non-U.S. Investor shall be required to deliver
any form pursuant to this paragraph (e) that such Non-U.S. Investor is not
legally able to deliver.
(f) The Borrower shall not be required to indemnify any Non-U.S.
Investor or to pay any additional amounts to any Non-U.S. Investor, in respect
of United States Federal withholding tax pursuant to paragraph (a) or (c) above
to the extent that (i) the obligation to withhold amounts with respect to United
States Federal withholding tax existed on the date such Non-U.S. Investor became
a party to this Agreement or, with respect to payments to a New Lending Office,
the date such Non-U.S. Investor designated such New Lending Office with respect
to the Debentures; provided, however, that this paragraph (f) shall not apply to
(x) any Non-U.S. Investor as a result of an assignment, participation, transfer
or designation made at the request of the Borrower and (y) to the extent the
indemnity payment or additional amounts any Holder would be entitled to receive
(without regard to this paragraph (f)) do not exceed the indemnity payment or
additional amounts that the Person making the assignment, participation or
transfer to such Holder would have been entitled to receive in the absence of
such assignment, participation, transfer or designation, or (ii) the obligation
to pay such additional amounts would not have arisen but for a failure by such
Non-U.S. Investor to comply with the provisions of paragraph (e) above or (iii)
such Non-U.S. Investor is treated as a "conduit entity" within the meaning of
U.S. Treasury Regulations Section 1.881-3 or any successor provision.
18
(g) Nothing contained in this Section 2.9 shall require a Holder to
make available any of its tax returns (or any other information that it
reasonably deems to be confidential or proprietary).
SECTION 2.10 Use of Proceeds. The proceeds of the loan by Allied
Capital shall be used to consummate the Acquisition, with the remainder
available to pay certain transaction expenses and for working capital purposes
for the Borrower and its Subsidiaries.
Article III.
Conditions
SECTION 3.1 Conditions to Closing. The obligations of Allied Capital to
enter into this Agreement and to perform its obligations hereunder is subject to
the satisfaction of the following conditions on or prior to the Closing Date:
(a) The representations and warranties set forth in Article IV hereof
shall be true and correct on and as of the Closing Date.
(b) The Credit Parties shall be in compliance with all the terms and
provisions set forth herein and in each other Investment Document on their part
to be observed or performed, and at the time of and immediately after the
Transaction, no Event of Default or Default shall have occurred and be
continuing.
(c) Allied Capital shall have received the following items:
(i) favorable written opinions of counsel to the Credit
Parties (A) dated the Closing Date, (B) addressed to Allied Capital and
(C) covering such matters relating to the Investment Documents and the
Transaction as Allied Capital shall reasonably request, and the Credit
Parties hereby request such counsel to deliver such opinion;
(ii) the Debentures, duly executed by the Borrower and each of
the other Investment Documents, executed by each of the parties thereto
(other than Allied Capital);
(iii) for each Credit Party: (A) a copy of the certificate or
articles of incorporation, including all amendments thereto, of such
Credit Party, certified as of a recent date by the Secretary of State
of the jurisdiction of its organization, and a certificate as to the
good standing of such Credit Party as of a recent date, from such
Secretary of State; (B) a certificate of the Secretary or Assistant
Secretary of such Credit Party dated the Closing Date and certifying
(1) that attached thereto is a true and complete copy of the by-laws of
such Credit Party as in effect on the Closing Date and at all times
since a date prior to the date of the resolutions described in clause
(2) below, (2) that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of such Credit Party
authorizing the execution, delivery and performance of the Investment
Documents to which such Person is a party and that such resolutions
have not been modified, rescinded or amended and are in full force and
effect, (3) that the certificate or articles of incorporation of such
19
Credit Party have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (A) above, and (4) as to the incumbency and specimen signature
of each officer executing any Investment Document or any other document
delivered in connection herewith on behalf of such Credit Party; and
(C) a certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary of such Credit Party
executing the certificate pursuant to (B) above;
(iv) all amounts due and payable on or prior to the Closing
Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Investment Document;
(v) the financial statements as described in Article IV; and
(vi) the Subsidiary Guaranty Agreement, in form and substance
satisfactory to Allied Capital, duly executed by each of the Subsidiary
Guarantors.
(d) The Borrower shall have entered into the transaction documents with
respect to the Senior Credit Facility and Allied Capital shall be provided a
copy of the documentation relating thereto;
(e) After giving effect to the transactions
contemplated hereby, the Borrower and their respective Subsidiaries shall not
have outstanding any Indebtedness other than (i) the Senior Debt, (ii) the
extension of credit under this Agreement and (iii) the Surviving Debt.
(f) Allied Capital shall have received fully executed conformed copies
of the Acquisition Documents and each of the other material documents related to
the Acquisition Documents, certified as true and correct copies thereof by a
duly authorized officer of the Borrower, each of which shall be in full force
and effect and in form and substance satisfactory to Allied Capital. On or prior
to the Closing Date, the Acquisition shall have been consummated in all material
respects in accordance with the terms of the Acquisition Documents.
(g) No event that has or reasonably would be expected to have a
Material Adverse Change shall have occurred since December 31, 2001.
(h) Allied Capital shall have received all necessary corporate
approvals of the Transaction, and all regulatory requirements applicable to
Allied Capital shall have been satisfied.
(i) Allied Capital shall have received such other documents,
instruments and information as Allied Capital may reasonably request.
Article IV.
Representations and Warranties
In order to induce Allied Capital to enter into the Transaction, the
Borrower hereby makes to Allied Capital on the Closing Date (which
representations and warranties shall survive the execution and delivery of this
Agreement) the representations and warranties set forth in Senior Credit
20
Facility, and such representations and warranties, together with all definitions
referenced therein and any disclosure schedules related thereto, are
incorporated herein by reference and made a part hereof. For the purposed of
this Article IV only, terms not defined herein shall have the meanings given in
the Senior Credit Facility, provided that each reference in such representations
and warranties to a "Loan Party" shall mean and be a reference to a Credit Party
hereunder; each reference to a "Transaction Document" shall mean and be a
reference to an Investment Document hereunder; each reference to a "Lender
Party" shall mean and be a reference to a Holder hereunder and each reference to
"Equity Interests" shall mean and be a reference to Capital Stock hereunder.
Article V.
INVESTOR REPRESENTATIONS
Allied Capital represents and warrants to the Borrower as follows:
SECTION 5.1 Investment. It is acquiring the Debentures for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same; and it has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof.
SECTION 5.2 Authority. It has full power and authority to enter into
and to perform this Agreement in accordance with its terms. It represents that
it has not been organized, reorganized or recapitalized specifically for the
purpose of investing in the Debentures. SECTION 5.3 Accredited Investor. It is
an "Accredited Investor" within the definition set forth in Rule 501(a) of the
Securities Act.
Article VI.
Affirmative Covenants
Until the Debentures and all expenses or other amounts payable under
the Loan Documents are repaid in full, unless the Holders shall otherwise
consent in writing, the Borrowers jointly and severally covenant and agree with
the Holders to do (and to cause its Subsidiaries to do) all of the following:
SECTION 6.1 Existence; Businesses and Properties.
(a) Each of the Credit Parties will do or cause to be done all things
necessary to preserve and maintain its and its Subsidiaries' legal existence and
to maintain such Credit Party's right to do business in each jurisdiction in
which such Credit Party currently conducts business; provided, however, that the
Borrower may consummate the Acquisition; provided further that neither the
Borrower nor any of its Subsidiaries shall be required to preserve any right,
permit, license, approval, privilege or franchise if the Board of Directors of
the Borrower or such Subsidiary shall determine that the preservation thereof is
no longer desirable in the conduct of the business of the Borrower or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to the Borrower, such Subsidiary or Allied Capital.
21
(b) Each of the Credit Parties will, and will cause each of its
Subsidiaries to, do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its and such Subsidiaries' business; provided,
however, that the Borrower may consummate the Acquisition; provided further that
neither the Borrower nor any of its Subsidiaries shall be required to preserve
any right, permit, license, approval, privilege or franchise if the Board of
Directors of the Borrower or such Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Borrower or such Subsidiary, as the case may be, and that the loss thereof
is not disadvantageous in any material respect to the Borrower, such Subsidiary
or Allied Capital; comply with all applicable laws, rules, regulations and
decrees and orders of any Governmental Authority, whether now in effect or
hereafter enacted, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect; and at all times maintain and preserve all Property material to the
conduct of such business and keep such Property in good repair, working order
and condition (ordinary wear and tear excepted) and from time to time make, or
cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times,
except in those circumstances where in the reasonable business judgment of the
Borrower such properties need not be so maintained or preserved and any failure
to maintain such properties shall not have a material adverse impact on Allied
Capital.
SECTION 6.2 Insurance. (a) Coverage. Without limiting any of the other
obligations or liabilities of the Borrower under this Agreement, the Borrower
shall, during the term of this Agreement, carry and maintain, at its own
expense, at least the minimum insurance coverage set forth in this Section 6.2.
All insurance carried pursuant to this Section 6.2 shall be placed with such
insurers having a minimum A.M. Best rating of A:X, or as may be otherwise
acceptable to the Holders. Such insurance shall be in such form, with terms,
conditions, limits and deductibles as shall be reasonably acceptable to the
Holders.
(i) All Risk Property Insurance. The Borrower shall maintain
all risk property insurance covering against physical loss or damage,
including but not limited to fire and extended coverage, collapse,
flood, earth movement and comprehensive boiler and machinery coverage
(including electrical malfunction and mechanical breakdown). Coverage
shall be written on a replacement cost basis. Such insurance policy
shall contain an agreed amount endorsement waiving any coinsurance
penalty and shall include expediting expense coverage; and
(ii) Commercial General Liability Insurance. The Borrower
shall maintain commercial general liability insurance written on an
occurrence basis with a limit of not less than $1,000,000. Such
coverage shall include, but not be limited to, premises/operations,
explosion, collapse, underground hazards, contractual liability,
independent contractors, products/completed operations, property damage
and personal injury liability. Such insurance shall not contain an
exclusion for punitive or exemplary damages where insurable by law; and
22
(iii) Workers' Compensation/Employer's Liability. The Borrower
shall maintain Workers' Compensation insurance in accordance with
statutory provisions covering accidental injury, illness or death of an
employee of the Borrower while at work or in the scope of his
employment with the Borrower and employer's liability insurance in an
amount not less than $1,000,000. Such coverage shall not contain any
occupational disease exclusions; and
(iv) Automobile Liability. The Borrower shall maintain
automobile liability insurance covering owned, non-owned, leased, hired
or borrowed vehicles against bodily injury or property damage. Such
coverage shall have a limit of not less than $1,000,000;
(v) Excess/Umbrella Liability. The Borrower shall maintain
excess or umbrella liability insurance in an amount not less than
$10,000,000 and shall cause Public Sub to maintain excess or umbrella
liability insurance in an amount not less than $50,000,000 written on
an occurrence basis providing coverage limits excess of the insurance
limits required under paragraphs (a)(ii), (a)(iii) employer's liability
only, and (a)(iv) of this Section. Such insurance shall follow from the
primary insurances and drop down in case of exhaustion of underlying
limits and/or aggregates. Such insurance shall not contain an exclusion
for punitive or exemplary damages where insurable under law.
(b) Certifications. On the Closing Date, and at each policy renewal,
but not less than annually, Borrower shall provide to the Holders approved
certification from each insurer or by an authorized representative of each
insurer. Such certification shall identify the underwriters, the type of
insurance, the limits, deductibles, and term thereof for the insurance required
by this Section 6.2.
(c) Insurance Report. Concurrently with the furnishing of all
certificates referred to in this Section 6.2, Borrower shall furnish the Holders
with an opinion from an independent insurance broker, in form acceptable to the
broker and the Holders, stating that as of the date of the opinion (i) the
insurance policies listed with the broker's opinion are in full force and
effect; (ii) the broker has not received any notice of cancellation or
non-renewal with respect to the listed policies and is not aware of any
circumstances which would make the giving of such a notice by an insurer likely;
(iii) in the broker's view, based upon the broker's understanding of this
Section 6.2, the policies listed with the broker's opinion are consistent with
the minimum requirements of this Section 6.2; and (iv) based upon the broker's
experience, the coverages provided by the policies listed with the opinion are
consistent with those normally provided to companies similarly situated to the
Borrower.
(d) General. The Holders shall be entitled, upon reasonable advance
notice, to review the Borrower's books and records regarding all insurance
policies carried and maintained with respect to the Borrower's obligations under
this Section 6.2. Upon request, the Borrower shall furnish the Holders with
copies of all insurance policies, binders, and cover notes or other evidence of
such insurance. Notwithstanding anything to the contrary herein, no provision of
this Section 6.2 or any provision of this Agreement shall impose on the Holders
any duty or obligation to verify the existence or adequacy of the insurance
coverage maintained by the Borrower, nor shall the Holders be responsible for
any representations or warranties made by or on behalf of the Borrower to any
insurance broker, company or underwriter. The Holders, at its sole option, may
obtain such insurance if not provided by the Borrower and in such event, the
Borrower shall reimburse the Holders upon demand for the cost thereof together
with interest.
23
SECTION 6.3 Obligations and Taxes. Each of the Credit Parties will pay,
and cause its Subsidiaries to pay, its material Indebtedness and other material
obligations promptly and in accordance with their terms and to pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof, provided, however,
that such payment and discharge shall not be required with respect to any such
tax, assessment charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and any Credit
Parties and its Subsidiaries, as applicable, shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP and such contest
operates to suspend collection of the contested obligation, tax, assessment or
charge and enforcement of a Lien.
SECTION 6.4 Financial Statements, Reports, etc. The Borrower will
furnish to the Holders:
(a) within 90 days after the end of each fiscal year, the Consolidated
and consolidating balance sheets and related statements of operations,
stockholders' equity and cash flows, showing the financial condition of the
Borrower and its Subsidiaries, as of the close of such fiscal year and the
results of its operations during such year, such financial statements to be
audited by PriceWaterhouseCoopers or another independent public accountant of
recognized national or regional standing reasonably acceptable to the Holders,
and accompanied by an unqualified opinion of such accountant reasonably
acceptable to the holders, and provided that all financial statements to be
delivered under this Section 6.4(a) shall distinguish between the Restricted
Subsidiaries and Unrestricted Subsidiaries of the Borrower;
(b) within 45 days after the end of each fiscal quarter of each fiscal
year, its Consolidated and consolidating balance sheet and related statements of
operations, stockholders' equity and cash flows showing the financial condition
of the Borrower and its Subsidiaries, as of the close of such fiscal quarter and
the results of its operations during such fiscal quarter and the then elapsed
portion of the fiscal year, all certified by its Financial Officer as fairly
presenting in all material respects the financial condition and results of
operations of the Borrower and its Subsidiaries on a Consolidated basis in
accordance with GAAP (but without footnotes and provided that all financial
statements to be delivered under this Section 6.4(b) shall distinguish between
the Restricted Subsidiaries and Unrestricted Subsidiaries of the Borrower),
subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements under
sub-paragraph (a) or (b) above, a certificate of the accounting firm or
Financial Officer of the Borrower opining on or certifying such statements
(which certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal interpretations)
containing a detailed calculation of the relevant items used to calculate
compliance with the financial covenants set forth in Section 6.12, provided that
in the event of any change in generally accepted accounting principles used in
the preparation of such financial statements, the Borrower shall also provide,
if necessary for the determination of compliance with Section 6.12, a statement
of reconciliation conforming such financial statements to GAAP, and certifying
that no Event of Default or Default has occurred or, if such an Event of Default
or Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto;
24
(d) to the extent that any Credit Party is or becomes subject to such
reporting requirements, promptly after the same become publicly available,
copies of all final periodic and other reports, proxy statements and other
materials filed by such Credit Party with the U.S. Securities and Exchange
Commission (the "SEC"), or any Governmental Authority succeeding to any or all
of the functions of said Commission, or with any national securities exchange,
or distributed to its shareholders (exclusive of proprietary information unless
(i) the Person that is the source of the information or report is a public
company and (ii) such Person would then be required to file such proprietary
information with the SEC), as the case may be;
(e) promptly upon the filing thereof, copies of all material documents
filed by the Borrower or any of its Subsidiaries with any Governmental
Authority, including, without limitation, the U.S. Internal Revenue Service, the
U.S. Environmental Protection Agency (and any state equivalent), the U.S.
Occupational Safety & Health Administration and the SEC.
(f) promptly upon the receipt thereof, copies of all material notices
received by the Borrower or any of its Restricted Subsidiaries under or pursuant
to any Investment Document or Material Contract or instrument, indenture, loan
or similar agreement;
(g) as soon as practicable, and in any event not later than 15 days
prior to commencement of each fiscal year, a copy of the Borrower's annual
budget (detailed on a quarterly basis) for such fiscal year, in a form
consistent with past practices;
(h) promptly after entering into the same, copies of all shareholders
agreements, material employment agreements and other material agreements of the
Borrower or its Subsidiaries; and
(i) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or any of
its Subsidiaries, or compliance with the terms of any Investment Document, as
any Holder may reasonably request.
SECTION 6.5 Litigation and Other Notices. The Borrower will furnish to
the Holders prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken with
respect thereto;
(b) the filing or commencement of or any written threat or notice of
intention of any Person to file or commence, any action, suit or proceeding,
whether at law or in equity or by or before any Governmental Authority, by or
against the Borrower, any of their Subsidiaries or any Affiliate thereof;
(c) at least 15 days and no more than 60 days prior notice of any
Change of Control; and
(d) any development that has resulted in, or would reasonably be
expected to result in, a Material Adverse Effect (including, without limitation,
notice of any Environmental Claim against or of any noncompliance by any Credit
Party with any Environmental Law or Environmental Permit that could reasonably
be expected to result in a Material Adverse Effect).
25
SECTION 6.6 Employee Benefits. Each Credit Party will, and will cause
its Subsidiaries to, (a) comply in all material respects with the applicable
provisions of ERISA and the Code and (b) furnish to the Holders as soon as
possible after, and in any event within 10 days after any Responsible Officer of
such Credit Party or Subsidiary thereof or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred that alone or together with any
other ERISA Event could reasonably be expected to result in liability of such
Credit Party or Subsidiary thereof in an aggregate amount exceeding $500,000, a
statement of a Financial Officer of such Credit Party setting forth details as
to such ERISA Event and the action, if any, that such Credit Party proposes to
take with respect thereto.
SECTION 6.7 Maintaining Records; Access to Properties and Inspections.
Each Credit Party will keep, and will cause its Subsidiaries to keep, proper
books of record and account in which full and correct entries in conformity with
generally accepted accounting principles in effect from time to time are made of
all dealings and transactions in relation to its business and activities. At any
reasonable time during ordinary business hours and from time to time upon
reasonable prior notice, permit any of the Holders, or any agents or
representatives thereof, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
any of its Subsidiaries, and to discuss the affairs, finances and accounts of
the Borrower and any of its Subsidiaries with any of their officers or directors
and with their independent certified public accountants; provided, however,
that, in connection with any such visitation or inspection, the Holders agree to
comply with and adhere to all applicable laws, rules and regulations governing
site visitations and inspections (including, without limitation, applicable
health and safety regulations and visitation and inspection rules mandated by
the owner or operator of applicable property).
SECTION 6.8 Compliance with Laws. Each Credit Party will comply, and
cause its Subsidiaries to comply with all Federal, state, local and foreign laws
and regulations applicable to them, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
SECTION 6.9 Preparation of Environmental Reports. At the request of the
Holders at any time that the Holders, in their reasonable judgment, believe that
the prospect of payment of the Obligations of the Credit Parties under the Loan
Documents in the normal course is impaired (but in no event more than once in
any two year period, unless an Event of Default has occurred and is continuing),
the Borrower will provide to the Holders within 120 days after such request, at
the expense of the Borrower, an environmental site assessment report for any of
its or its Subsidiaries' owned properties described in such request, prepared by
an environmental consulting firm reasonably acceptable to the Holders,
indicating the presence or absence of Hazardous Materials; without limiting the
generality of the foregoing, if the Holders determine at any time that a
material risk exists that any such report will not be provided within the time
referred to above, the Holders may retain an environmental consulting firm to
prepare such report at the expense of the Borrower, and the Borrower hereby
grants and agrees to cause any Subsidiary that owns any property described in
such request to grant at the time of such request to the Holders, such firm and
any agents or representatives thereof an irrevocable non-exclusive license,
subject to the rights of tenants, to enter onto their respective properties to
undertake such an assessment.
26
SECTION 6.10 Further Assurances. Each Credit Party will execute, and
will cause its Subsidiaries to execute, any and all further documents,
agreements and instruments, and take all further action that may be required
under applicable law, or that the Holders may reasonably request, in order to
effectuate the transactions contemplated by the Investment Documents. The Credit
Parties shall deliver or cause to be delivered to the Holders all such
instruments and documents (including legal opinions) as the Holders may
reasonably request to evidence compliance with this Section.
SECTION 6.11 Maintenance of Office or Agency. The Borrower shall
maintain an office or agency (i) where the Debentures may be presented for
payment, or for registration and transfer and for exchange as provided in this
Agreement; and (ii) where notices and demands to or upon the Borrower in respect
of the Debentures may be served. The location of such office or agency initially
shall be the principal office of the Borrower as set forth in Section 9.1
hereof. The Borrower shall give the Holders written notice of any change of
location thereof.
SECTION 6.12 Financial Ratios and Covenants. The Credit Parties, in
each case on a Consolidated basis, shall with respect to each period set forth
below have complied or comply with and maintain each of the following financial
ratios and financial covenants, using the information set forth in the financial
statements provided by the Credit Parties in accordance with Section 6.4 above:
(a) Funded Leverage Ratio. A Funded Leverage Ratio as of the last day
of each fiscal quarter of not more than the ratio set forth below for the
Measurement Period then ended:
Quarter Ending Ratio
-------------- -----
September 30, 2002 3.25 to 1.0
December 31, 2002 3.00 to 1.0
March 31, 2003 3.00 to 1.0
June 30, 2003 2.75 to 1.0
September 30, 2003 2.75 to 1.0
December 31, 2003 2.50 to 1.0
March 31, 2004 2.50 to 1.0
June 30, 2004 and thereafter 2.25 to 1.0
(b) Interest Coverage Ratio. A Interest Coverage Ratio as of the last
day of each fiscal quarter of not less than the ratio set forth below for the
Measurement Period the ended:
Quarter Ending Ratio
-------------- -----
September 30, 2002 3.50 to 1.0
December 31, 2002 3.75 to 1.0
March 31, 2003 3.75 to 1.0
June 30, 2003 3.75 to 1.0
September 30, 2003 3.75 to 1.0
December 31, 2003 and thereafter 4.75 to 1.0
27
SECTION 6.13 Observation Rights.
(a) The board of directors of the Borrower (the "Board") shall hold a
general meeting (which may be held by conference call) or propose adoption of
resolutions by written consent of the board of directors at least quarterly for
the purpose of discussing the business and operations of the Borrower and its
Subsidiaries. The Borrower shall notify Allied Capital or another representative
of the Holders (the "Representative") in writing of the date and time for each
general or special meeting of the Board or any executive committee thereof or of
the adoption of any resolutions by written consent (describing in reasonable
detail the nature and substance of such action) at least one week prior to any
general meeting for which notice is not required to be provided and at the time
notice is provided to the directors of the Borrower of any other general meeting
or any special meeting and concurrently deliver to the Representative any
materials delivered to directors of the Borrower, including a draft of any
resolutions proposed to be adopted by written consent. The Representative shall
be free during such one week period to contact the directors of the Borrower and
discuss the pending actions to be taken.
(b) The Borrower shall permit one authorized representative of Allied
Capital and its successors (the "Board Participant") to attend and participate
in all meetings of the Board and any executive committee thereof, whether in
person, by telephone or otherwise, and shall provide such representative with
such notice and other information with respect to such meetings as are delivered
to the directors of the Borrower, provided, however, that the Borrower's Chief
Executive Officer or President or a majority of the Board shall have the right
to exclude Board Participant from all or portions of meetings of the Board or
omit to provide Board Participant or the Holder with certain information if the
President or Chief Executive or such members of the Board believes in good faith
that such exclusion or omission is necessary in order to (i) preserve the
attorney-client privilege, or (ii) fulfill the Borrower's obligations with
respect to confidential or proprietary information of third parties (provided
however, that the Board Participant shall not be so excluded unless all other
persons whose receipt of such materials or presence at a meeting would result in
a violation of such third party confidentiality are also excluded). In addition,
a majority of the Borrower's directors on the Board shall have the right to
exclude the Board Participant from all or portions of meetings of the Board or
omit to provide Board Participant or any Holder with certain information if such
meeting or information involves information or analysis which would pose a
material conflict of interest for Borrower and such Holder. No more than one
time per year, the Borrower shall pay such representative's reasonable travel
expenses (including, without limitation, the cost of airfare, meals and lodging)
in connection with the attendance of such meetings.
SECTION 6.14 Use of Proceeds. The Borrower will use the proceeds of the
investment only for the purposes specified in Article II.
SECTION 6.15 Performance of Material Contract. The Borrower shall
perform and observe all the terms and provisions of the Material Contract to be
performed or observed by it, maintain the Material Contract in full force and
28
effect, enforce the Material Contract in accordance with its terms and, upon the
reasonable request of the Required Holders, make to each other party to the
Material Contract such demands and requests for information and reports or for
action as any Credit Party or any of its Subsidiaries is entitled to make under
the Material Contract, and cause each of its Subsidiaries to do so, except, in
any case, where the failure to do so, either individually or in the aggregate,
could would not be reasonably likely to have a Material Adverse Effect;
provided, however, that a termination of the Material Contract shall not
constitute a breach of this Section 6.15 unless the Borrower shall not have
entered into a substitute contract with a third party acceptable to the Required
Holders within 60 days of such termination.
Article VII.
Negative Covenants
Until the Debentures and all expenses or other amounts payable under
the Loan Documents are repaid in full, unless the Holders shall otherwise
consent in writing, the Credit Parties jointly and severally covenant and agree
not to do any of the following without the prior written consent of the Holders:
SECTION 7.1 Indebtedness.
(a) No Credit Party shall, nor will it permit any of its Restricted
Subsidiaries to, directly or indirectly incur, create, assume or permit to exist
any Indebtedness other than the following (together, the "Permitted
Indebtedness"):
(i) the Senior Debt;
(ii) Surviving Debt;
(iii) Indebtedness created hereunder and under the other
Investment Documents; (iv) Indebtedness of any Credit Party to another
Credit Party on terms acceptable to the Holders; (v) Indebtedness in
respect of performance bonds, bid bonds, appeal bonds, surety bonds and
similar obligations, in each case provided in the ordinary course of
business;
(vi) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business, provided
that such Indebtedness is extinguished within five Business Days of its
incurrence;
(vii) Indebtedness in respect of taxes, assessments,
governmental charges or levies, claims of customs authorities and
claims for labor, worker's compensation, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of Section 7.2;
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(viii) Indebtedness in respect of judgments or awards that
have been in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in respect of
which the Borrower or the applicable Subsidiary shall at the time in
good faith be prosecuting an appeal or proceedings for review and in
respect of which a stay of execution shall have been obtained pending
such appeal or review;
(ix) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(x) Indebtedness of a Subsidiary acquired pursuant to
Permitted Acquisitions under the terms of Section 7.10 in an aggregate
amount not greater than $26,000,000, provided that such Indebtedness
was in existence at the time of acquisition and was not incurred in
connection with such acquisition;
(xi) Indebtedness under Capital Leases not to exceed in the
aggregate, on a Consolidated basis, $6,000,000 at any time outstanding;
(xii) unsecured Indebtedness incurred in the ordinary course
of business for the deferred purchase price of property or services,
aggregating, on a Consolidated basis, not more than $6,000,000 at any
one time outstanding;
(xiii) Indebtedness secured by Liens permitted by Section
7.2(i) not to exceed in the aggregate, on a Consolidated basis,
$6,000,000 at any time outstanding;
(xiv) any Indebtedness that is expressly subordinate to the
Debentures pursuant to a written subordination agreement in form and
substance reasonably acceptable to the Holders; and
(xv) in the case of the Borrower, any Indebtedness in respect
of interest rate protection agreements entered into in the ordinary
course of business consistent with reasonable business practice; and
(xvi) any Indebtedness in respect of take or pay contracts
entered into by the Borrower and its Restricted Subsidiaries in the
ordinary course of business and consistent with past practices.
(b) Notwithstanding any provision to the contrary, the Credit Parties
shall not, nor permit any of its Restricted Subsidiaries to, incur any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt unless such Indebtedness by its terms is subordinated to the Debentures and
the guarantee of the Borrower or such Subsidiary, as the case may be, in each
case on terms acceptable to the Holders.
SECTION 7.2 Liens. No Credit Party shall, nor will it permit any of its
Restricted Subsidiaries to, create, incur, assume or permit to exist any Lien on
any property or assets (including stock or other securities of any Person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof except the following (the
"Permitted Liens"):
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(a) Liens securing the Senior Debt;
(b) Liens on Property of such Credit Party or its Restricted
Subsidiaries existing on the date hereof and set forth in Schedule 7.2, and any
replacement, extension or renewal of any such Liens; provided that such Liens
shall secure only those obligations that they secure on the date hereof and the
amount of Indebtedness secured thereby shall not be increased;
(c) Liens for taxes, assessments or governmental charges not yet due or
which are being contested in compliance with Section 6.3;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and securing
obligations that are overdue for a period of more than 60 days or which are
being contested in good faith;
(e) pledges and deposits made in the ordinary course of business to
secure obligations under workers' compensation, unemployment insurance and other
social security laws or regulations or to secure public or statutory
obligations;
(f) Liens to secure the performance of bids, trade contracts,
government contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case incurred
in the ordinary course of business (exclusive of obligations for payment of
borrowed money);
(g) zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the ordinary course
of business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or materially
adversely interfere with the use of such property for its present purposes;
(h) Liens arising in connection with Capital Leases permitted under
Section 7.1(a)(xi); provided, however, that no such Lien shall extend to or
cover any property other than the property subject to such Capital Lease;
(i) purchase money Liens upon or in real property or equipment acquired
or held by the Borrower or any of its Restricted Subsidiaries in the ordinary
course of business to secure the purchase price of such property or equipment or
to secure Indebtedness incurred solely for the purpose of financing the
acquisition, construction or improvement of any such property or equipment to be
subject to such Liens, or Liens existing on any such property or equipment at
the time of acquisition (other than any such Liens created in contemplation of
such acquisition that do not secure the purchase price), or extensions, renewals
or replacements of any of the foregoing for the same or a lesser amount;
provided, however, that no such Lien shall extend to or cover any property other
than the property or equipment being acquired, constructed or improved, and no
such extension, renewal or replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed or replaced; and
provided further that the aggregate principal amount of all Indebtedness secured
by Liens permitted by this clause (i) shall not exceed the amount permitted
under Section 7.1(a)(xiii);
(j) Liens arising solely by virtue of any contractual or statutory or
common law provisions relating to banker's liens, rights to set-off or similar
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rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Credit Party or any Subsidiary in excess of those set forth by
regulations promulgated by the Board of Governors of the Federal Reserve System
and (ii) such deposit account is not intended by the Credit Party or such
Subsidiary to provide collateral to the depositary institution;
(k) judgment Liens not giving rise to an Event of Default;
(l) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary of the Credit Party in connection with a Permitted
Acquisition; provided that the Lien (A) shall be less than the fair market value
of the asset secured thereby, (B) shall not have been not created in
contemplation of such event, (C) such Lien does not at any time encumber any
property other than the property financed by such Indebtedness and (D) the
amount of Indebtedness secured thereby is not increased;
(m) any interest or title of a lessor under any lease permitted by this
Agreement;
(n) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(o) licenses of intellectual property granted in the ordinary course of
business.
SECTION 7.3 Amendment of Senior Credit Facility. The Borrower shall not
amend or modify the Senior Credit Facility in any manner which has the effect of
(a) increasing the interest rate payable on any component thereof by more than
2% over the interest rate applicable thereto on the date hereof, (b) changing
the maturity date of any component thereof to an earlier date (c) extending the
final maturity of the Senior Debt beyond the Maturity Date, (d) increasing
principal amortization payments or (e) including additional financial covenants
or amending any of the financial covenants set forth in the Senior Credit
Facility to render such covenants more restrictive.
SECTION 7.4 . Investments. No Credit Party shall, nor will they permit
any of its Restricted Subsidiaries to, make any Investments except:
(a) Investments existing on the date hereof;
(b) Cash Equivalents;
(c) Investments in respect of interest rate protection agreements
permitted under Section 7.1(a)(xv);
(d) the Acquisition;
(e) Investments consisting of extensions of trade credit in the
ordinary course of the Borrowers' Business; and
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(f) loans and advances to employees in the ordinary course of the
business of such Person, as presently conducted, in the aggregate amount of all
such Investments under this clause (f) not to exceed $1,200,000 at any one time
outstanding;
(g) (i) equity Investments by the Borrower and its Restricted
Subsidiaries in their Subsidiaries outstanding on the date hereof, (ii)
additional equity Investments in Credit Parties and (iii) Investments in wholly
owned Subsidiaries that are not Credit Parties in an aggregate amount invested
(together with the aggregate amount invested pursuant to Section 7.10 below)
from the date hereof not to exceed the sum of (x) $10,000,000, (y) the aggregate
amount of cash received (up to the aggregate amount of Investments in
Unrestricted Subsidiaries made by the Credit Parties prior to the date of
receipt of such cash) by the Credit Parties from Unrestricted Subsidiaries from
the repayment or prepayment of any Indebtedness owed by an Unrestricted
Subsidiary or as a dividend or distribution in respect of the Capital Stock of
an Unrestricted Subsidiary and (z) the aggregate amount of Excess Cash Flow (as
defined in the Senior Credit Facility) not required to prepay the Senior Debt
pursuant to the Senior Credit Facility (provided that such $10,000,000 limit
shall not include contributions by the Borrower of its common stock to any
wholly owned Subsidiary that is not a Credit Party);
(h) Investments constituting Capital Expenditures which do not exceed
the limits set forth in Section 7.17;
(i) Permitted Acquisitions;
(j) Investment consisting of Indebtedness permitted under Section
7.1(a)(iv); and
(k) other investment instruments approved in writing by Holders.
SECTION 7.5 Mergers, Consolidations, Sales of Assets, Act of
Dissolution.
(a) No Credit Party shall, nor will it permit any of its Restricted
Subsidiaries to, merge or consolidate or enter into any analogous reorganization
or transaction with any Person; provided that (i) the Credit Parties may
consummate the Merger, (ii) any Credit Party or Subsidiary may be merged with
the Borrower or any Restricted Subsidiary of the Borrower (if the Borrower or
such Restricted Subsidiary is the surviving or successor entity), (iii) in
connection with any acquisition permitted under Section 7.10, any Restricted
Subsidiary of the Borrower may merge into or consolidate with any other Person
or permit any other Person to merge into or consolidate with it; provided that
the person surviving such merger shall be a wholly owned Restricted Subsidiary
of the Borrower, provided further that, in the case of any such merger or
consolidation to which a Guarantor is a party, the Person formed by such merger
or consolidation shall be a Guarantor, and (iv) any Credit Party may merge into
the Borrower; provided that in each case, immediately before and after giving
effect thereto, no Event of Default shall have occurred and be continuing and,
in the case of any such merger to which the Borrower is a party, the Borrower is
the surviving corporation.
(b) No Credit Party shall, nor permit any of its Restricted
Subsidiaries to, consummate any Asset Disposition.
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SECTION 7.6 Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends.
(a) No Credit Party shall, nor permit any of its Restricted
Subsidiaries to, declare or pay any Restricted Payments (other than a dividend
or distribution of any shares of its common stock); provided, however, that any
Subsidiary may declare and pay a Restricted Payment to the Borrower.
(b) The Borrower shall not, nor permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of the
Borrower or any such Subsidiary to (i) pay any dividends or make any other
distributions on its Capital Stock or (ii) make or repay any loans or advances
to the Borrower or the parent of such Subsidiary, except for any agreement or
instrument evidencing the Senior Debt or the Surviving Debt.
SECTION 7.7 Transactions with Affiliates. Except as otherwise expressly
provided herein or as set forth on Schedule 7.7, no Credit Party shall, nor
permit any of its Restricted Subsidiaries to, sell or transfer any Property to,
or purchase or acquire any Property from, or otherwise engage in any other
transactions with, any of its officers, directors, employees or Affiliates other
than another Credit Party, except that the Borrower and its Restricted
Subsidiaries may engage in the foregoing transactions with its officers,
directors, employees or Affiliates on terms that are fair and reasonable and no
less favorable to such Credit Party or such Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person not an officer, director,
employee or Affiliate.
SECTION 7.8 Business of Credit Parties and Subsidiaries.
(a) No Credit Party shall, nor permit any of its Restricted
Subsidiaries to, make any material change in the Borrower's Business. Except as
permitted under Section 7.4(g) or Section 7.10, no Credit Party shall, nor
permit any of its Restricted Subsidiaries to, acquire or create any new
Subsidiary.
(b) No Credit Party shall, nor permit any of its Affiliates to,
directly or indirectly purchase or otherwise acquire, or offer to purchase or
otherwise acquire, any outstanding Debentures except by way of payment or
prepayment in accordance with the provisions hereof.
SECTION 7.9 Investment Company Act. No Credit Party shall, nor will it
permit its Restricted Subsidiaries to, become an investment company subject to
registration under the Investment Company Act of 1940, as amended.
SECTION 7.10 Acquisitions. No Credit Party shall, nor permit its
Restricted Subsidiaries to, acquire all of Capital Stock or all or substantially
all of the assets of any Person or any business or business unit of such Person
other than a purchase or acquisition that complies with the following (each, a
"Permitted Acquisition"):
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(a) the lines of business of the Person to be (or the property and
assets of which are to be) so purchased or otherwise acquired shall be
substantially the same lines of business as one or more of the principal
businesses of the Borrower and its Subsidiaries in the ordinary course or
reasonably related thereto;
(b) such purchase or other acquisition shall not include or result in
any contingent liabilities that could reasonably be expected to be material to
the business, financial condition, operations or prospects of the Borrower and
its Restricted Subsidiaries, taken as a whole (as determined in good faith by
the Board);
(c) the total cash and noncash consideration (including, without
limitation, the fair market value of all Capital Stock issued or transferred to
the sellers thereof (other than consideration consisting of common stock of the
Borrower in connection with an Investment made by an Unrestricted Subsidiary),
all indemnities, earnouts and other contingent payment obligations to, and the
aggregate amounts paid or to be paid under noncompete, consulting and other
affiliated agreements with, the sellers thereof, all write-downs of property and
assets and reserves for liabilities with respect thereto and all assumptions of
debt, liabilities and other obligations in connection therewith) paid by or on
behalf of the Borrower and its Restricted Subsidiaries for any such purchase or
other acquisition, when aggregated with the total cash and noncash consideration
paid by or on behalf of the Borrower and its Restricted Subsidiaries for all
other purchases and other acquisitions made by the Borrower and its Restricted
Subsidiaries pursuant to this Section 7.10 (together with the aggregate amount
invested under Section 7.04(g)(iii)), shall not exceed the sum of (i)
$10,000,000, (ii) the aggregate amount of cash received (up to the aggregate
amount of Investments in Unrestricted Subsidiaries made by the Credit Parties
prior to the date of receipt of such cash) by the Credit Parties from
Unrestricted Subsidiaries from the repayment or prepayment of any Indebtedness
owed by an Unrestricted Subsidiary or as a divided or distribution in respect of
the Capital Stock of an Unrestricted Subsidiary and (iii) the aggregate amount
of Excess Cash Flow (as defined in the Senior Credit Facility) not required to
prepay the Senior Debt (provided that such $10,000,000 limit shall not include
contributions by the Borrower of its common stock to any wholly owned Subsidiary
that is not a Credit Party);
(d) (1) immediately before such purchase or acquisition, the entity
being purchased or acquired shall be EBITDA positive; (2) immediately before and
immediately after giving pro forma effect to any such purchase or other
acquisition, no Event of Default shall have occurred and be continuing, (3)
immediately after giving effect to such purchase or other acquisition, the
Borrower and its Restricted Subsidiaries shall be in pro forma compliance with
all of the covenants set forth in Section 6.12, such compliance to be determined
on the basis of the financial statements most recently delivered pursuant to
Section 6.04 most recently delivered to the Holders as though such purchase or
other acquisition had been consummated as of the first day of the fiscal period
covered thereby, (4) the Funded Leverage Ratio of the Borrower and its
Restricted Subsidiaries, taken as a whole, will be reduced as a result of such
purchase or acquisition; and (5) any Indebtedness assumed in connection with
such purchase or acquisition shall be subordinated to the Debentures and, when
aggregated with the total Indebtedness assumed by the Borrower in connection
with all other purchases and acquisitions made by the Borrower and its
Restricted Subsidiaries pursuant to this Section 7.10, shall not exceed
$25,000,000; and
35
(e) the Borrower shall have delivered to the Holders at least five
Business Days prior to the date on which any such purchase or other acquisition
is to be consummated, a certificate of a Responsible Officer, in form and
substance reasonably satisfactory to the Representative, certifying that all of
the requirements set forth in this Section 7.10 have been satisfied or will be
satisfied on or prior to the consummation of such purchase or other acquisition.
SECTION 7.11 Prepayments. Except for the Senior Debt, the Debentures
or, Indebtedness owed to the Borrower from a Subsidiary or required repayments
or redemptions of Surviving Debt, neither the Credit Parties nor any of its
Restricted Subsidiaries shall prepay any Indebtedness for borrowed money.
SECTION 7.12 Additional Negative Pledges. No Credit Party shall, nor
permit any of its Restricted Subsidiaries to, enter into, assume or become
subject to any agreement prohibiting or otherwise restricting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, or requiring the grant of any security for an obligation if
security is given for some other obligation, except (i) the Senior Credit
Facility or (ii) in connection with (A) any Surviving Debt, (B) any purchase
money Indebtedness permitted by Section 7.1 solely to the extent that the
agreement or instrument governing such Indebtedness prohibits a Lien on the
property acquired with the proceeds of such Indebtedness or (C) any Capital
Lease permitted by Section 7.1 solely to the extent that such Capital Lease
prohibits a Lien on the property subject thereto, or (D) any Indebtedness
outstanding on the date any Restricted Subsidiary of the Borrower becomes such a
Restricted Subsidiary (so long as such agreement was not entered into solely in
contemplation of such Restricted Subsidiary becoming a Restricted Subsidiary of
the Borrower).
SECTION 7.13 Accounting Changes. No Credit Party shall, nor permit any
of its Restricted Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required or permitted by generally
accepted accounting principles as in effect in the United States of America from
time to time, or change its fiscal year from its current fiscal year.
SECTION 7.14 Stay, Extension and Usury Laws. To the extent permitted
under applicable law, each of the Credit Parties covenants and agrees that they
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, and will use their best efforts to resist any
attempts to claim or take the benefit of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of their obligations under this Agreement or the
Debentures. To the extent permitted under applicable law, each of the Credit
Parties hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Holders, but will suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 7.15 Inconsistent Agreements; Charter Amendments. No Credit
Party shall (i) enter into any agreement or arrangement which would restrict in
any material respect the ability of such Credit Party to fulfill its Obligations
under the Investment Documents, or (ii) supplement, amend or otherwise modify
the terms of their articles of incorporation or bylaws or any of the Investment
Documents if the effect thereof would reasonably be expected to have a Material
Adverse Effect.
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SECTION 7.16 Mandatory Excess Cash Flow Sweep. The Borrower shall not
supplement, amend, in any way modify, fail to comply with or request or accept
any waiver of, the terms of Section 2.05(b) of the Senior Credit Facility as in
effect on the date hereof.
SECTION 7.17 Capital Expenditures. The Credit Parties shall not make,
on a Consolidated basis and measured as of the last day of any fiscal quarter of
the Borrower, Capital Expenditures in excess of $15,000,000 for the period of
four consecutive fiscal quarters of the Borrower then ended.
Article VIII.
Events of Default and remedies
SECTION 8.1 Events of Default. If any of the following events ("Events
of Default") occur:
(a) any representation or warranty made or deemed made in or in
connection with any Investment Document hereunder or any representation,
warranty or certification contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant to any
Investment Document, proves to have been materially incorrect when so made,
deemed made or furnished;
(b) default is made in the payment of any principal of or premium on
the Debentures when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default is made in the payment of any interest on the Debentures or
any other amount (other than an amount referred to in (b) above) due under any
Investment Document, when and as the same becomes due and payable, and such
default continues unremedied for a period of five Business Days;
(d) default is made in the due observance or performance by any Credit
Party or any of its Restricted Subsidiaries of any covenant, condition or
agreement contained in Section 6.12 or in Article VII (other than Section 7.7);
(e) default is made in the due observance or performance by any Credit
Party or any of its Restricted Subsidiaries of any covenant, condition or
agreement contained in any Investment Document (other than those specified in
(b), (c) or (d) above) and such default continues unremedied for a period ending
the earlier of (i) a period of 30 days from the date a Responsible Officer knew
of the occurrence of such default and (ii) a period of 30 days after written
notice thereof from the Holders to the Borrower;
(f) any default is declared or otherwise occurs (after giving effect to
any applicable notice or grace periods) under the Senior Debt either (i) which
is in the payment of any amount due thereunder when and as the same becomes due
and payable or (ii) pursuant to which the Senior Lenders have accelerated the
maturity thereof;
37
(g) any default is declared or otherwise occurs (after giving effect to
any applicable notice or grace periods) under any other Indebtedness of the
Credit Parties or any of its Restricted Subsidiaries the principal amount of
which is in excess of $4,000,000 (individually or in the aggregate) either (i)
which is in the payment of any amount due thereunder when and as the same
becomes due and payable or (ii) pursuant to which the holder of such
Indebtedness has accelerated the maturity thereof;
(h) an Act of Bankruptcy or Act of Dissolution shall have occurred with
respect to any Credit Party or any of its Restricted Subsidiaries;
(i) one or more final non-appealable judgments for the payment of money
in excess of $4,000,000 to the extent not fully paid or discharged (excluding
any portion thereof that is covered by a insurance policy issued by an insurance
company of recognized standing and creditworthiness) is rendered against any
Credit Party or any of its Restricted Subsidiaries, and the same shall remain
undischarged for a period of 20 consecutive days during which execution is not
effectively stayed, or any action is legally taken by a judgment creditor to
levy upon assets or properties of any Credit Party or its Restricted
Subsidiaries to enforce any such judgment;
(j) any non-monetary judgment or order shall be rendered against any
Credit Parties or any of its Restricted Subsidiaries that could be reasonably
likely to have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect;
(k) an ERISA Event occurs that in the opinion of the Holders, when
taken together with all other such ERISA Events, could reasonably be expected to
result in liability of any Credit Party and its ERISA Affiliates in an aggregate
amount exceeding $3,000,000; or
(l) any Guarantor shall repudiate or purport to revoke its guaranty, or
any guaranty of the Obligations hereunder for any reason shall cease to be in
full force and effect as to such Guarantor or shall be judicially declared null
and void as to such Guarantor;
then, and in every such event, (other than an Event of Default described in
paragraph (h) above) and at any time thereafter during the continuance of such
event, the Required Holders, acting together, may by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) declare the principal amount then outstanding under the Debentures to be
forthwith due and payable in whole or in part, whereupon the principal amount so
declared to be due and payable, together with the Repayment Charge calculated as
if the Debentures were prepaid on the date of the Default, if any, all PIK
Amounts and accrued interest thereon and all other liabilities of the Borrower
accrued hereunder and under any other Investment Document, shall become
forthwith due and payable, without presentment demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Investment Document to the contrary
notwithstanding; and (ii) in any event with respect to an Event of Default
described in paragraph (h) above, the principal of the Debentures then
outstanding, together with the Repayment Charge calculated as if the Debentures
were prepaid on the date of the Default, if any, all PIK Amounts and accrued
interest thereon and all other liabilities of the Borrower accrued hereunder and
under any other Investment Document, shall automatically become due and payable,
without presentment demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything contained herein or
in any other Investment Document to the contrary notwithstanding.
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SECTION 8.2 Waivers. The Credit Parties waive presentment, demand,
notice of dishonor, and protest, and all demands and notices of any action taken
by the Required Holders under this Agreement, except as otherwise provided
herein.
SECTION 8.3 Enforcement Actions. The Required Holders may, at their
option and acting together, collect all or any portion of the Obligations or
enforce against the Credit Parties any of their respective rights and remedies
with respect to the Obligations including, but not limited to: (i) commencing or
pursuing legal proceedings to collect any amounts owed with respect to or to
otherwise enforce the Obligations or (ii) executing upon, or otherwise
enforcing, any judgment obtained with respect to the payment or performance of
the Obligations.
SECTION 8.4 Costs. The Credit Parties shall pay all reasonable expenses
of any nature, whether incurred in or out of court, and whether incurred before
or after the Debentures shall become due at their maturity date or otherwise
(including, but not limited to, reasonable attorneys' fees and costs) which the
Required Holders, acting together, may reasonably incur in connection with the
collection or enforcement of any of the Obligations. The Required Holders,
acting together, are authorized to pay at any time and from time to time any or
all of such expenses, to add the amount of such payment to the amount of
principal outstanding under the Debentures, and to charge interest thereon at
the rate specified in the Debentures.
SECTION 8.5 Set-off. Upon the occurrence and during the continuance of
any Event of Default, each Holder is hereby authorized at any time and from time
to time without notice to any Credit Party (any such notice being expressly
waived by such Credit Party) and, to the fullest extent permitted by law, to set
off and to apply any and all balances, credits, deposits (general or special,
time or demand, provisional or final), accounts or moneys at any time held and
other indebtedness at any time owing by such Holder to or for the account of
such Credit Party against any and all of the obligations of the Credit Parties
now or hereafter existing under this Agreement or any other agreement or
instrument delivered by such Credit Party to such Holder in connection
therewith, whether or not such Holder shall have made any demand hereunder or
thereunder and although such obligations may be contingent or unmatured. The
rights of the Holders under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which they may
have. A Holder shall give the Credit Party notice of any set-off hereunder after
such set-off has occurred. Any and all rights of set-off that may be exercised
by any Holder pursuant to this Section 8.5 are and will be subject to the
Subordination Agreement.
SECTION 8.6 Remedies Non-Exclusive. None of the rights, remedies,
privileges or powers of the Holders expressly provided for herein are exclusive,
but each of them is cumulative with, and in addition to, every other right,
remedy, privilege and power now or hereafter existing in favor of each of the
Holders, whether pursuant to the other Investment Documents, at law or in
equity, by statute or otherwise.
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Article IX.
Miscellaneous
SECTION 9.1 Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by facsimile, as
follows:
(a) if to the Borrower, at its offices at 00000 Xxxxx Xxxxxxxx Xxxx,
Xxxxx 000, Xxxxxx, Xxxx, 00000, Attention: Chief Financial Officer; with a copy
to (which shall not constitute notice hereunder) Pillsbury Winthrop LLP, X.X.
Xxx 0000, Xxx Xxxxxxxxx, XX 00000-0000, Attention: Xxxxx X. Xxxxxxxx, Esq.
(Facsimile 415-983-1200); and
(b) if to Allied Capital, at its offices at 0000 Xxxxxxxxxxxx Xxxxxx,
X.X., Xxxxxxxxxx, X.X. 00000-0000, Attention: Xxxxxx Xxxxxxxxx (Facsimile No.
202-659-2053); with a copy to (which shall not constitute notice hereunder)
Xxxxx Xxxxxxx LLP, 0000 Xxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000,
Attention Xxxxxxx X. Xxxxxxx, Esq. (Facsimile No. 202-223-2085).
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given (i) two
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery or (iii) on the date on which it is sent by facsimile transmission with
acknowledgement of receipt at the number to which it is required to be sent in
each case to the intended recipient as set forth above.
SECTION 9.2 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Credit Parties herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Investment Document shall be considered
to have been relied upon by the Holders and shall survive the making by the
Holders of the investment, regardless of any investigation made by the Holders
or on their behalf and shall continue in full force and effect as long as the
principal of or any accrued interest on the Debentures is outstanding and
unpaid.
SECTION 9.3 Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower and Allied Capital, and when Allied
Capital shall have received counterparts hereof which, when taken together, bear
the signatures of each of the other parties hereto, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
SECTION 9.4 Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the permitted successors and
assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrower or the Holders that are contained in this Agreement shall
bind and inure to the benefit of their respective successors and assigns.
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(b) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Holders, and any
attempted assignment or delegation without such consent shall be null and void.
Each Holder may assign to another Holder or to one or more Eligible Assignees
all or a portion of its rights and obligations hereunder or under the
Debentures, provided that (i) except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Holder or an assignment of all
of a Holder's rights and obligations under this Agreement, the aggregate amount
of the Debentures being assigned to such Eligible Assignee pursuant to such
assignment shall in no event be less than $1,000,000 and (ii) no such assignment
shall be permitted without the consent of the Borrower (which consent shall not
be unreasonably withheld) so long as no Event of Default has occurred and
continues to remain uncured.
SECTION 9.5 Expenses; Indemnity.
(a) The Borrower will pay to Allied Capital closing points of $100,000
and a structuring fee of $300,000 (net of any deposit received), together with
all reasonable out-of-pocket expenses incurred by the Holders in connection with
the preparation and administration of this Agreement and the other Investment
Documents, in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated), in connection with the enforcement or
protection of its rights in relation to this Agreement and the other Investment
Documents, including any suit, action, claim or other activity of the Holders to
collect or otherwise enforce the Obligations or any portion thereof, or in
connection with the Transaction, including, without limitation, the reasonable
fees, charges and disbursements of Xxxxx Xxxxxxx LLP, counsel for the Holders,
and, in connection with any such enforcement or protection, the reasonable fees,
charges and disbursements of any other counsel for the Holders.
(b) The Borrower agrees to indemnify each Holder, and its respective
directors, officers, employees and agents (each such Person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees, charges and disbursements, incurred by or asserted against any
Indemnitee arising out of in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Investment Document or any
agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transaction and the other transactions contemplated thereby, including any claim
of any broker engaged by the Credit Parties, (ii) the use of the proceeds of the
investment, (iii) any claim, litigation investigation or proceeding relating to
any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv)
any actual or alleged presence or release of Hazardous Materials on any property
owned or operated by the Credit Parties, or any Environmental Claim related in
any way to any Credit Party; provided that such indemnity shall not as to any
Indemnitee be available to the extent it resulted from the gross negligence or
willful misconduct of such Indemnitee.
(c) Notwithstanding any provision to the contrary, the provisions of
this Section 9.5 shall remain operative and in full force and effect regardless
of the expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of the Debentures, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Investment Document, or any investigation made by or on behalf of the
Holders. All amounts due under this Section 9.5 shall be payable on written
demand therefor.
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SECTION 9.6 Waiver of Consequential and Punitive Damages. Each of the
Credit Parties and the Holders hereby waive to the fullest extent permitted by
law all claims to consequential and punitive damages in any lawsuit or other
legal action brought by any of them against any other of them in respect of any
claim among or between any of them arising under this Agreement, the other
Investment Documents, or any other agreement or agreements between or among any
of them at any time, including any such agreements, whether written or oral,
made or alleged to have been made at any time prior to the Closing Date, and all
agreements made hereafter or otherwise, and any and all claims arising under
common law or under any statute of any state or the United States of America,
including any thereof in contract, tort, strict liability or otherwise, whether
any such claims be now existing or hereafter arising, now known or unknown. The
Holders and the Credit Parties acknowledge and agree that this waiver of claims
for consequential damages and punitive damages is a material element of the
consideration for this Agreement.
SECTION 9.7 Applicable Law. THIS AGREEMENT AND THE OTHER INVESTMENT
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER INVESTMENT DOCUMENTS)
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (EXCLUDING CONFLICTS OF LAWS PROVISIONS).
SECTION 9.8 Waivers; Amendment.
(a) No failure or delay of a Holder in exercising any power or right
hereunder or under any other Investment Document shall operate as a waiver
thereof nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holders hereunder and under the
other Investment Documents are cumulative and are not exclusive of any rights or
remedies that it would otherwise have. No waiver of any provision of this
Agreement or any other Investment Document or consent to any departure by the
Credit Parties therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Credit Parties in any case shall entitle the Credit
Parties to any other or further notice or demand in similar or other
circumstances.
(b) No amendment or waiver of any provision hereunder or any other
Investment Document, nor consent to any departure by any Credit Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Holders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that (i) no amendment, waiver or consent shall, unless in writing and
signed by all of the Credit Parties do any of the following at any time: (A)
waive any of the conditions specified in Section 3.1, (B) reduce or limit the
obligations of any Guarantor or release such Guarantor or otherwise limit such
Guarantor's liability with respect to the Obligations owing to the Credit
Parties, or (C) amend this Section 9.8(b); and (ii) no amendment, waiver or
consent shall, unless in writing and signed by all of the Holders: (A) reduce
the principal of, or stated rate of interest on, the Debentures held by such
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Holder or any fees or other amounts stated to be payable hereunder to such
Holder; or (B) postpone the final maturity of the Debentures held by such Holder
or any date fixed for any payment of interest on the Debentures held by such
Holder or the fees hereunder or any Guaranteed Obligations payable under the
Subsidiary Guaranty Agreement.
SECTION 9.9 Interest Rate Limitation. If at any time the interest rate
applicable to the Debentures, together with all fees, charges, and other amounts
which are treated under Applicable Law as interest thereunder (collectively the
"Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may
be contracted for, charged, taken, received or reserved by the Holders holding
the Debentures in accordance with Applicable Law, the rate of interest payable
in respect of the Debentures, together with all Charges payable in respect
thereof shall be limited to the Maximum Rate. If, from any circumstance
whatsoever, the Holder shall ever receive anything of value deemed Charges by
Applicable Law in excess of the maximum lawful amount, an amount equal to any
excessive Charges shall be applied to the reduction of the principal balance
owing under the Debentures in the inverse order of maturity (whether or not then
due) or at the option of the Holder be paid over to the Borrowers, and not to
the payment of Charges. All Charges (including any amounts or payments deemed to
be Charges) paid or agreed to be paid to the Holder shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full period until payment in full of the principal balance of the
Debentures so that the Charges thereof for such full period will not exceed the
maximum amount permitted by Applicable Law.
SECTION 9.10 Entire Agreement. This Agreement and the other Investment
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Investment Documents. Nothing in this Agreement or in the other Investment
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Investment Documents.
SECTION 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER INVESTMENT
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER INVESTMENT DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.
SECTION 9.12 Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Investment Document
should be held invalid, illegal or unenforceable in any way, the validity,
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legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 9.13 Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract and shall become effective as provided in Section
9.3. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14 Heading. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of or to be taken into consideration in interpreting,
this Agreement.
SECTION 9.15 Jurisdiction; Consent to Service of Process.
(a) Each of the Credit Parties hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
the State of New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement or the other
Investment Documents, or for recognition or enforcement of any judgment and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in the State of Maryland or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Holders may otherwise
have to bring any action or proceeding relating to this Agreement or the other
Investment Documents against such Credit Party or their properties in the courts
of any jurisdiction.
(b) Each of the Credit Parties hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit
action or proceeding arising out of or relating to this Agreement or the other
Investment Documents in any New York state or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
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SECTION 9.16 Consents and Approvals; Defaults.
(a) Subject to the terms of Section 9.16(c), to the extent that (i) the
terms of this Agreement or any of the other Investment Documents require the
Borrower to obtain the consent or approval of the Holders, (ii) the Borrower
seek an amendment to or termination of any of the terms of this Agreement or any
of the Investment Documents, or (iii) the Borrower seek a waiver of any right
granted to the Holders under this Agreement or any of the Investment Documents,
such consent, approval, action, termination, amendment or waiver (each, an
"Approval") shall be made by the Required Holders.
(b) Subject to the terms of Section 9.16(c), to the extent that the
terms of this Agreement or any of the other Investment Documents require or
permit the Holders to take any enforcement action, including but not limited to
declaring a payment default or other Event of Default or accelerating amounts
due under any of the Investment Documents, the Required Holders shall be
permitted to make such declaration or acceleration and to exercise all of its
rights and remedies under the Investment Documents, on behalf of all of the
Holders, as to the obligations of the Borrower and its Restricted Subsidiaries
to the Holders.
(c) Notwithstanding anything to the contrary contained in Section
9.16(a) or 9.16(b), the Holders shall not, without the prior written consent and
approval of all of the affected Holders, amend, modify, terminate or obtain a
waiver of any provision of this Agreement or any of the Investment Documents,
which will have the effect of (i) reducing the principal amount of any
Debentures or of any payment required to be made to the Holders hereunder, or
modifying the terms of a payment or prepayment thereof; (ii) reducing the
Interest Rate, or extend the time for payment of interest under any Debentures;
or (iii) releasing the Borrower, any Guarantor or other obligor from any
obligation under this Agreement or any of the other Investment Documents.
(d) Each Holder agrees that, for the benefit of the other Holders, any
proceeds received upon enforcement by such Holder of its rights and remedies
under this Agreement, will be divided, pro rata, among all Holders.
SECTION 9.17 Relationship of the Parties; Advice of Counsel. This
Agreement provides for the making of an investment by the Holders, in its
capacity as an investor, in the Borrower, in its capacity as borrower, and for
the payment of interest and repayment of principal by the Borrower to the
Holders. The provisions herein for compliance with financial covenants, if any,
and delivery of financial statements are intended solely for the benefit of the
Holders to protect their interests as investors in assuring payments of interest
and repayment of principal, and nothing contained in this Agreement shall be
construed as permitting or obligating the Holders to act as a financial or
business advisor or consultant to the Borrower, as permitting or obligating the
Holders to control the Borrower or to conduct the Borrower's operations, as
creating any fiduciary obligation on the part of the Holders to the Borrower, or
as creating any joint venture, agency or other relationship between the parties
other than as explicitly and specifically stated in this Agreement. The Holders
are not (and shall not be construed as) a partner, joint venturer, alter-ego,
manager, controlling person, operator or other business participant of any kind
of the Borrower; the Holders nor the Borrower intend that the Holders assume
such status, and, accordingly, the Holders shall not be deemed responsible for
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(or a participant in) any acts or omissions of the Borrower or any of its
partners. Each of the Holders and the Borrower represent and warrant to the
other that it has had the advice of experienced counsel of its own choosing in
connection with the negotiation and execution of this Agreement and with respect
to all matters contained herein.
SECTION 9.18 Confidentiality Each of the Holders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any permitted transferee of any of its
rights or obligations under this Agreement or (ii) any direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty's or prospective counterparty's professional advisor) to any credit
derivative transaction relating to obligations of the Borrower or its
Subsidiaries, (g) with the consent of the Borrower, (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to any Holder on a nonconfidential basis
from a source other than the Borrower provided that such source is not bound by
a confidentiality agreement. For the purposes of this Section, "Information"
means all information received from the Borrower or its Subsidiaries relating to
the Borrower or its Subsidiaries or their business, other than any such
information that is available to any Holder on a nonconfidential basis prior to
disclosure by the Borrower or its Subsidiaries; provided that, in the case of
information received from the Borrower or any Subsidiary after the date hereof,
such information is clearly identified (in a reasonable manner) at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
SECTION 9.19 Registration and Transfer of Debentures.
(a) The Borrower will keep at its principal office a register in which
the Borrower will provide for the registration of the Debentures and their
transfer. The Borrower may treat any Person in whose name any Debenture is
registered on such register as the owner thereof for the purpose of receiving
payment of the principal of and interest on such Debenture and for all other
purposes, whether or not such Debenture shall be overdue, and the Borrower shall
not be affected by any notice to the contrary from any Person other than the
applicable Holder. All references in this Agreement to a "Holder" of any
Debenture shall mean the Person in whose name such Debenture is at the time
registered on such register.
(b) Upon surrender of any Debenture for registration of transfer or for
exchange to the Borrower at its principal office, the Borrower at its expense
will execute and deliver in exchange therefor a new Debenture or Debentures, as
the case may be, of the same type in denominations of at least $100,000 (except
a Debenture may be issued in a lesser principal amount if the unpaid principal
amount of the surrendered Debenture is not evenly divisible by, or is less than,
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$100,000), as requested by the holder or transferee, which aggregate the unpaid
principal amount of such Debenture, registered as such holder or transferee may
request, dated so that there will be no loss of interest on such surrendered
Debenture and otherwise of like tenor.
(c) Upon receipt of evidence reasonably satisfactory to the Borrower of
the loss, theft, destruction or mutilation of any Debenture and, in the case of
any such loss, theft or destruction of any Debenture, upon delivery of an
indemnity bond in such reasonable amount as the Borrower may determine (or an
unsecured indemnity agreement from the Holder reasonably satisfactory to the
Borrower), or, in the case of any such mutilation, upon the surrender of such
Debenture for cancellation to the Borrower at its principal office, the Borrower
at their expense will execute and deliver, in lieu thereof, a new Debenture of
the same class and of like tenor, dated so that there will be no loss of
interest on (and registered in the name of the holder of) such lost, stolen,
destroyed or mutilated Debenture. Any Debenture in lieu of which any such new
Debenture has been so executed and delivered by the Borrower shall be deemed to
be not outstanding for any purpose of this Agreement.
* * *
{Signatures next page}
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SIGNATURE PAGE TO LOAN AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER:
HEADWATERS INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
Chief Financial Officer
ALLIED CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxxx
Managing Director
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