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THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 19, 2003
among
ROLLER BEARING COMPANY OF AMERICA, INC.
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender,
and
GECC CAPITAL MARKETS GROUP, INC.
as Lead Arranger
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TABLE OF CONTENTS
Page
----
1. AMOUNT AND TERMS OF CREDIT............................................1
1.1 Credit Facilities............................................1
1.2 Letters of Credit............................................6
1.3 Prepayments..................................................6
1.4 Use of Proceeds..............................................9
1.5 Interest and Applicable Margins..............................9
1.6 Eligible Accounts...........................................12
1.7 Eligible Inventory..........................................14
1.8 Cash Management Systems.....................................15
1.9 Fees........................................................16
1.10 Receipt of Payments.........................................17
1.11 Application and Allocation of Payments......................17
1.12 Loan Account and Accounting.................................18
1.13 Indemnity...................................................18
1.14 Access......................................................19
1.15 Taxes.......................................................20
1.16 Capital Adequacy; Increased Costs; Illegality...............20
1.17 Single Loan.................................................22
2. CONDITIONS PRECEDENT.................................................22
Conditions to the Initial Loans......................................22
2.2 Further Conditions to Each Loan.............................23
2.3 Conditions to Revolving Credit Advances Funding
Permitted Acquisitions......................................24
3. REPRESENTATIONS AND WARRANTIES.......................................24
3.1 Corporate Existence; Compliance with Law....................24
3.2 Executive Offices, Collateral Locations, FEIN...............25
3.3 Corporate Power, Authorization, Enforceable Obligations.....25
3.4 Financial Statements and Projections........................25
3.5 Material Adverse Effect.....................................26
3.6 Ownership of Property; Liens................................26
3.7 Labor Matters...............................................27
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness............................................28
3.9 Government Regulation.......................................28
3.10 Margin Regulations..........................................28
3.11 Taxes.......................................................28
3.12 ERISA.......................................................29
3.13 No Litigation...............................................30
3.14 Brokers.....................................................30
3.15 Intellectual Property.......................................30
3.16 Full Disclosure.............................................30
3.17 Common Enterprise...........................................31
3.18 Insurance...................................................31
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3.19 Deposit and Disbursement Accounts...........................31
3.20 Government Contracts........................................31
3.21 Customer and Trade Relations................................31
3.22 Agreements and Other Documents..............................31
3.23 Solvency....................................................32
3.24 Status of Holdings..........................................32
3.25 Subordinated Debt; other Indebtedness.......................32
3.26 Motor Vehicles..............................................32
4. FINANCIAL STATEMENTS AND INFORMATION.................................33
4.1 Reports and Notices.........................................33
4.2 Communication with Accountants..............................33
5. AFFIRMATIVE COVENANTS................................................33
5.1 Maintenance of Existence and Conduct of Business............33
5.2 Payment of Charges..........................................33
5.3 Books and Records...........................................34
5.4 Insurance; Damage to or Destruction of Collateral...........34
5.5 Compliance with Laws........................................36
5.6 Supplemental Disclosure.....................................36
5.7 Intellectual Property.......................................36
5.8 [Intentionally Omitted].....................................36
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters
and Real Estate Purchases...................................36
5.10 Motor Vehicles..............................................37
5.11 Further Assurances..........................................37
6. NEGATIVE COVENANTS...................................................37
6.1 Mergers, Subsidiaries, Etc..................................37
6.2 Investments; Loans and Advances.............................41
6.3 Indebtedness................................................42
6.4 Employee Loans and Affiliate Transactions...................43
6.5 Capital Structure and Business..............................44
6.6 Guaranteed Indebtedness.....................................44
6.7 Liens.......................................................44
6.8 Sale of Stock and Assets....................................45
6.9 ERISA.......................................................45
6.10 Financial Covenants.........................................45
6.11 [RESERVED]..................................................45
6.12 Sale-Leasebacks.............................................45
6.13 Cancellation of Indebtedness................................45
6.14 Restricted Payments.........................................45
6.15 Change of Corporate Name or Location; Change of Fiscal Year.47
6.16 No Impairment of Intercompany Transfers.....................48
6.17 No Speculative Transactions.................................48
6.18 Changes Relating to Subordinated Debt; Material Contracts...48
6.19 Redemptions.................................................48
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7. TERM.................................................................49
7.1 Termination.................................................49
7.2 Survival of Obligations Upon Termination of Financing
Arrangements................................................49
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES...............................49
8.1 Events of Default...........................................49
8.2 Remedies....................................................51
8.3 Waivers by Credit Parties...................................52
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT..................52
9.1 Assignment and Participations...............................52
9.2 Appointment of Agent........................................54
9.3 Agent's Reliance, Etc.......................................55
9.4 GE Capital and Affiliates...................................56
9.5 Lender Credit Decision......................................56
9.6 Indemnification.............................................56
9.7 Successor Agent.............................................57
9.8 Setoff and Sharing of Payments..............................57
9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert..........................................58
10. SUCCESSORS AND ASSIGNS...............................................60
10.1 Successors and Assigns......................................60
11. MISCELLANEOUS........................................................61
11.1 Complete Agreement; Modification of Agreement...............61
11.2 Amendments and Waivers......................................61
11.3 Fees and Expenses...........................................63
11.4 No Waiver...................................................64
11.5 Remedies....................................................65
11.6 Severability................................................65
11.7 Conflict of Terms...........................................65
11.8 Confidentiality.............................................65
11.9 GOVERNING LAW...............................................65
11.10 Notices 66
11.11 Section Titles..............................................67
11.12 Counterparts................................................67
11.13 WAIVER OF JURY TRIAL........................................67
11.14 Press Releases and Related Matters..........................67
11.15 Reinstatement...............................................67
11.16 Advice of Counsel...........................................68
11.17 No Strict Construction......................................68
12. RESTATEMENT OF Prior CREDIT AGREEMENT................................68
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INDEX OF APPENDICES
-------------------
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections --
Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice AddressesAnnex J (from Annex A-
Commitments definition) - Commitments as of Effective Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.1(d) - Form of Term B Loan Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 6.1 Form of Acquisition Compliance Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit B-1 - Application for Standby Letter of Credit
Exhibit B-2 - Application for Documentary Letter of Credit
Exhibit E-1 Form of Compliance Certificate
Schedule 1.1 - Agent's Representatives
Disclosure Schedule 2.1(f) - Capital Structure
Disclosure Schedule 3.1 - Type of Entity; State of Organization
Disclosure Schedule 3.2 - Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(a) - Financial Statements
Disclosure Schedule 3.4(b) - Pro Forma
Disclosure Schedule 3.4(c) - Projections
Disclosure Schedule 3.6 - Real Estate and Leases
Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Disclosure Schedule 3.11 - Tax Matters
Disclosure Schedule 3.12 - ERISA Plans
Disclosure Schedule 3.13 - Litigation
Disclosure Schedule 3.15 - Intellectual Property
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.22 - Material Agreements
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Disclosure Schedule 5.1 - Trade Names
Disclosure Schedule 6.3 - Indebtedness
Disclosure Schedule 6.4(a) - Transactions with Affiliates
Disclosure Schedule 6.4(b) - Transactions with Employees
Disclosure Schedule 6.7 - Existing Liens
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This THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"),
dated as of December 19, 2003, among ROLLER BEARING COMPANY OF AMERICA, INC., a
Delaware corporation ("Borrower"); the other Credit Parties signatory hereto;
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual
capacity, "GE Capital"), for itself, as Lender, and as Agent for Lenders, and
the other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, certain parties hereto are parties to a Second Amended and
Restated Credit Agreement dated as of December 8, 2003 (the "Prior Credit
Agreement"), pursuant to which the Lenders extended revolving and term credit
facilities to Borrower of up to Ninety-Four Million Dollars ($94,000,000) in the
aggregate for the purpose of refinancing certain Indebtedness of Borrower and
the other Credit Parties and to provide (a) working capital financing for
Borrower and the other Credit Parties, (b) funds for other general corporate
purposes of Borrower and the other Credit Parties and (c) funds for other
purposes not prohibited hereunder, including Redemptions and financing of
Permitted Acquisitions; and for these purposes, Lenders are willing to make
certain loans and other extensions of credit to Borrower of up to such amount
upon the terms and conditions set forth herein;
WHEREAS, the parties hereto desire to amend and restate the Prior
Credit Agreement on the terms set forth herein (a) to add a new term loan
facility in a principal amount not to exceed Ten Million Dollars ($10,000,000)
for the purpose of funding a portion of the purchase price and transaction costs
relating to the Timken Acquisition and certain other purposes provided herein
and (b) to increase the aggregate Commitments of the Lenders up to Ninety-Six
Million Nine Hundred Thousand Dollars ($96,900,000); and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof, each Revolving
Lender agrees to make available to Borrower from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each, a "Revolving
Credit Advance"). The Pro Rata Share of the Revolving Loan of any Revolving
Lender shall not at any time exceed its separate Revolving Loan Commitment. The
obligations of each Revolving Lender hereunder shall be several and not joint.
Until the Commitment Termination Date, Borrower may from time to time borrow,
repay (without notice) and reborrow under this Section 1.1(a); provided, that
the amount of any Revolving Credit Advance to be made at any time shall not
exceed Borrowing Availability at such time. Borrowing Availability may be
further reduced by Reserves imposed by Agent in accordance with this Agreement.
Each Revolving Credit Advance shall be made on notice by Borrower to one of the
representatives of Agent identified in Schedule 1.1 at the address specified
therein. Any such notice must be given no later than (1) 11:00 a.m. (Chicago
time) on the Business Day of the proposed Revolving Credit Advance, in the case
of an Index Rate Loan, or (2) 11:00 a.m. (Chicago time) on the date which is
three (3) Business Days prior to the proposed Revolving Credit Advance, in the
case of a LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance")
must be given in writing (by telecopy or overnight courier) substantially in the
form of Exhibit 1.1(a)(i), and shall include the information required in such
Exhibit. If Borrower desires to have the Revolving Credit Advances bear interest
by reference to a LIBOR Rate, it must comply with Section 1.5(e).
(ii) Except as provided in Section 1.12, Borrower shall
execute and deliver to each Revolving Lender a note to evidence the Revolving
Loan Commitment of that Revolving Lender. Each note shall be in the principal
amount of the Revolving Loan Commitment of the applicable Revolving Lender,
dated the Original Closing Date and substantially in the form of Exhibit
1.1(a)(ii) (each a "Revolving Note" and, collectively, the "Revolving Notes").
Each Revolving Note shall represent the obligation of Borrower to pay the amount
of the relevant Revolving Lender's Revolving Loan Commitment or, if less, such
Revolving Lender's Pro Rata Share of the aggregate unpaid principal amount of
all Revolving Credit Advances to Borrower together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the Revolving Loan and
all other non-contingent monetary Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date.
(iii) Any provision of this Agreement to the contrary
notwithstanding, at the request of Borrower, in its discretion Agent may (but
shall have absolutely no obligation to), make Revolving Credit Advances to
Borrower on behalf of Revolving Lenders in amounts that cause Borrowing
Availability to be less than $5,000,000 (any such excess Revolving Credit
Advances are herein referred to collectively as "Overadvances"); provided, that
(A) no such event or occurrence shall cause or constitute a waiver of Agent's,
the Swing Line Lender's or Revolving Lenders' right to refuse to make any
further Overadvances, Swing Line Advances or Revolving Credit Advances, or incur
any Letter of Credit Obligations, as the case may be, at any time that an
Overadvance exists, and (B) no Overadvance shall result in a Default or Event of
Default due to Borrower's failure to comply with Section 1.3(b)(i) for so long
as Agent permits such Overadvance to remain outstanding, but solely with respect
to the amount of such Overadvance. In addition, Overadvances may be made even if
the conditions to lending set forth in Section 2 have not been met. All
Overadvances shall constitute Index Rate Loans, shall bear interest at the
Default Rate and shall be payable within three (3) Business Days after demand.
Except as otherwise provided in Section 1.11(b), the authority of Agent to make
Overadvances is limited to an aggregate amount not to exceed $2,000,000 at any
time and shall not cause the Revolving Loan to exceed the Maximum Amount. No
Overadvance shall be outstanding for more than sixty (60) consecutive days, and
not more than two Overadvances shall be made in any period of one hundred eighty
2
(180) consecutive days, in each case without the consent of Requisite Revolving
Lenders.
(b) Term Loan.
(i) Subject to the terms and conditions hereof, each Term
Lender agrees to make a term loan (collectively, the "Term Loan") on the
Original Closing Date to Borrower in the original principal amount of its Term
Loan Commitment. The obligations of each Term Lender hereunder shall be several
and not joint. The Term Loan shall be evidenced by promissory notes
substantially in the form of Exhibit 1.1(b) (each a "Term Note" and collectively
the "Term Notes"), and, except as provided in Section 1.12, Borrower shall
execute and deliver each Term Note to the applicable Term Lender. Each Term Note
shall represent the obligation of Borrower to pay the amount of the applicable
Term Lender's Term Loan Commitment, together with interest thereon as prescribed
in Section 1.5.
(ii) Borrower shall repay the principal amount of the Term
Loan in nineteen (19) consecutive quarterly installments on the last day of
September, December, March and June of each year, commencing September 30, 2002,
as follows:
Payment Dates Installment Amounts
------------- -------------------
September 30, 2002 through and $1,428,570 each
including March 31, 2007
and by making the final payment, which shall be due on May 30, 2007 and shall be
in the amount of $12,857,170 or, if different, the remaining principal balance
of the Term Loan.
(iii) Notwithstanding Section 1.1(b)(ii), the aggregate
outstanding principal balance of the Term Loan shall be due and payable in full
in immediately available funds on the Commitment Termination Date, if not sooner
paid in full. No payment with respect to the Term Loan may be reborrowed.
(iv) Each payment of principal with respect to the Term Loan
shall be paid to Agent for the ratable benefit of each Term Lender, ratably in
proportion to each such Term Lender's respective Term Loan Commitment.
(c) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon Agent's
receipt of any Notice of Revolving Credit Advance. Subject to the terms and
conditions hereof, the Swing Line Lender may, in its discretion, make available
from time to time until the Commitment Termination Date advances (each, a "Swing
Line Advance") in accordance with any such notice. The provisions of this
Section 1.1(c) shall not relieve Revolving Lenders of their obligations to make
Revolving Credit Advances under Section 1.1(a); provided, that if the Swing Line
Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line
Advance shall be in lieu of any Revolving Credit Advance that otherwise may be
made by Revolving Credit Lenders pursuant to such notice. The aggregate amount
of Swing Line Advances outstanding shall not exceed at any time the lesser of
(A) the Swing Line Commitment and (B) the lesser of the Maximum Amount and
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(except for Overadvances) the Borrowing Base, in each case, less the outstanding
balance of the Revolving Loan at such time ("Swing Line Availability"). Until
the Commitment Termination Date, Borrower may from time to time borrow, repay
and reborrow under this Section 1.1(c). Each Swing Line Advance shall be made
pursuant to a Notice of Revolving Credit Advance delivered by Borrower to Agent
in accordance with Section 1.1(a). Any such notice must be given no later than
11:00 a.m. (Chicago time) on the Business Day of the proposed Swing Line
Advance. Unless the Swing Line Lender has received at least one (1) Business
Day's prior written notice from Requisite Revolving Lenders instructing it not
to make a Swing Line Advance, the Swing Line Lender shall, notwithstanding the
failure of any condition precedent set forth in Sections 2.2, be entitled to
fund that Swing Line Advance, and to have such Revolving Lender make Revolving
Credit Advances in accordance with Section 1.1(c)(iii) or purchase participating
interests in accordance with Section 1.1(c)(iv). Notwithstanding any other
provision of this Agreement or the other Loan Documents, the Swing Line Loan
shall constitute an Index Rate Loan. Borrower shall repay the aggregate
outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent.
(ii) Borrower shall execute and deliver to the Swing Line
Lender a promissory note to evidence the Swing Line Commitment. Such note shall
be in the principal amount of the Swing Line Commitment of the Swing Line
Lender, dated the Original Closing Date and substantially in the form of Exhibit
1.1(c)(ii) (the "Swing Line Note"). The Swing Line Note shall represent the
obligation of Borrower to pay the amount of the Swing Line Commitment or, if
less, the aggregate unpaid principal amount of all Swing Line Advances made to
Borrower together with interest thereon as prescribed in Section 1.5. The entire
unpaid balance of the Swing Line Loan and all other non-contingent Obligations
shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date if not sooner paid in full.
(iii) The Swing Line Lender, at any time and from time to time
in its sole and absolute discretion, but not less frequently than once each
week, shall on behalf of Borrower (and Borrower hereby irrevocably authorizes
the Swing Line Lender to so act on its behalf) request each Revolving Lender
(including the Swing Line Lender) to make a Revolving Credit Advance to Borrower
(which shall be an Index Rate Loan) in an amount equal to that Revolving
Lender's Pro Rata Share of the principal amount of the Swing Line Loan (the
"Refunded Swing Line Loan") outstanding on the date such notice is given. Unless
any of the events described in Sections 8.1(h) or 8.1(i) has occurred (in which
event the procedures of Section 1.1(c)(iv) shall apply) and regardless of
whether the conditions precedent set forth in this Agreement to the making of a
Revolving Credit Advance are then satisfied, each Revolving Lender shall
disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance on
behalf of the Swing Line Lender, prior to 2:00 p.m. (Chicago time), in
immediately available funds on the Business Day next succeeding the date that
notice is given. The proceeds of those Revolving Credit Advances shall be
immediately paid to the Swing Line Lender and applied to repay the Refunded
Swing Line Loan.
(iv) If, prior to refunding a Swing Line Loan with a Revolving
Credit Advance pursuant to Section 1.1(c)(iii), one of the events described in
Sections 8.1(h) or 8.1(i) has occurred, then, subject to the provisions of
Section 1.1(c)(v) below, each Revolving Lender shall, on the date such Revolving
Credit Advance was to have been made for the benefit of Borrower, purchase from
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the Swing Line Lender an undivided participation interest in the Swing Line Loan
in an amount equal to its Pro Rata Share of such Swing Line Loan. Upon request,
each Revolving Lender shall promptly transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation interest.
(v) Each Revolving Lender's obligation to make Revolving
Credit Advances in accordance with Section 1.1(c)(iii) and to purchase
participation interests in accordance with Section 1.1(c)(iv) shall be absolute
and unconditional and shall not be affected by any circumstance, including (A)
any setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender may have against the Swing Line Lender, Borrower or any other Person for
any reason whatsoever; (B) the occurrence or continuance of any Default or Event
of Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
If any Revolving Lender does not make available to Agent or the Swing Line
Lender, as applicable, the amount required pursuant to Sections 1.1(c)(iii) or
1.1(c)(iv), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Revolving Lender, together with interest
thereon for each day from the date of non-payment until such amount is paid in
full at the Federal Funds Rate for the first two (2) Business Days and at the
Index Rate thereafter.
(d) Term B Loan.
(i) Subject to the terms and conditions hereof, each Term B
Loan Lender agrees to make loans (collectively, the "Term B Loan") to Borrower
in the amount of the applicable Term B Loan Lender's Term B Loan Commitment on
the Effective Date for purpose of funding (i) purchase price and related
transaction costs, fees and expenses in connection with the Timken Acquisition
and (ii) the fees and expenses owing to the Agent and/or Term B Loan Lenders
under this Agreement (items (i) and (ii) collectively, the "Transaction Cost").
To the extent the proceeds of the Term B Loan exceed the Transaction Cost, the
Borrower shall use the balance of such proceeds to repay the Revolving Loan
which repayment shall be eligible for reborrowing in accordance with the terms
of Sections 1.1(a) and 2.2 hereof. The obligations of each Term B Loan Lender
hereunder shall be several and not joint. The Term B Loan of each Term B Loan
Lender shall be evidenced by a promissory note substantially in the form of
Exhibit 1.1(d) (each a "Term B Loan Note" and collectively the "Term B Loan
Notes"), and Borrower shall execute and deliver each such Term B Loan Note to
the applicable Term B Loan Lender on or prior to the Effective Date in principal
amount equal to such Term B Loan Lender's Term B Loan Commitment. Each Term B
Loan Note shall represent the obligation of Borrower to pay to the applicable
Term B Loan Lender the Term B Loan provided by such Term B Loan Lender, together
with interest thereon as prescribed in Section 1.5.
(ii) Borrower shall repay the Term B Loan in one installment
on May 30, 2007.
(iii) Notwithstanding the foregoing clause (ii), the aggregate
outstanding principal balance of the Term B Loan, shall be due and payable in
full in immediately available funds on the Commitment Termination Date, if not
sooner paid in full. No payment with respect to the Term B Loan may be
reborrowed.
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(iv) Each payment of principal with respect to the Term B
Loan, shall be paid to Agent for the ratable benefit of each Term B Loan Lender
making a Term B Loan, ratably in proportion to each such Term B Loan Lender's
respective Term B Loan Commitment.
(e) Reliance on Notices. Agent shall be entitled to rely upon, and
shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation or similar notice reasonably believed
by Agent to be genuine. Agent may assume that each Person executing and
delivering any notice in accordance herewith was duly authorized, unless the
responsible individual acting thereon for Agent has actual knowledge to the
contrary.
1.2 Letters of Credit. Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower shall have the right to
request, and Revolving Lenders agree to incur, or purchase participations in,
Letter of Credit Obligations in respect of Borrower or any Secured Guarantor.
1.3 Prepayments.
(a) Voluntary Prepayments; Reductions in Revolving Loan Commitments.
Borrower may at any time on at least three (3) days' prior written notice to
Agent (i) voluntarily prepay all or part of the Term Loan and/or (ii)
permanently reduce (but not terminate) the Revolving Loan Commitment; provided
that (A) any such prepayments or reductions shall be in a minimum amount of
$500,000 and integral multiples of $100,000 in excess of such amount, (B) the
Revolving Loan Commitment shall not be reduced to an amount less than the
greater of the amount of the Revolving Loan outstanding or $30,000,000; and (C)
after giving effect to such reductions, Borrower shall comply with Section
1.3(b)(i). In addition, Borrower may at any time on at least ten (10) days'
prior written notice to Agent terminate the Revolving Loan Commitment, provided,
that upon such termination all Loans and other Obligations shall be immediately
due and payable in full and all Letter of Credit Obligations shall be cash
collateralized or otherwise satisfied in accordance with Annex B hereto. Any
such voluntary prepayment and any reduction or termination of the Revolving Loan
Commitment must be accompanied by the payment of any applicable LIBOR funding
breakage costs in accordance with Section 1.13(b). Upon any such reduction or
termination of the Revolving Loan Commitment, Borrower's right to request
Revolving Credit Advances, or request that Letter of Credit Obligations be
incurred on its behalf, or request Swing Line Advances, shall simultaneously be
permanently reduced or terminated, as the case may be. Each notice of partial
prepayment shall designate the Loan or other Obligations to which such
prepayment is to be applied; provided, that any partial prepayments of the Term
Loan made by Borrower shall be applied to prepay the scheduled installments of
the Term Loan in inverse order of maturity. No voluntary prepayment shall be
made in respect of or applied to the Term B Loan Obligations unless and until
(A) the Borrower has terminated the Revolving Loan Commitment and (B) the
Tranche A Obligations have been paid in full in cash.
(b) Mandatory Prepayments.
(i) If at any time Borrowing Availability is less than
$5,000,000, Borrower shall immediately repay the aggregate outstanding Revolving
Credit Advances to the extent required to eliminate such deficiency. If any such
6
deficiency remains after repayment in full of the aggregate outstanding
Revolving Credit Advances, Borrower shall provide cash collateral for the Letter
of Credit Obligations in the manner set forth in Annex B to the extent required
to eliminate such excess or deficiency. Notwithstanding the foregoing, any
Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid only on demand
in accordance with such Section.
(ii) Immediately upon receipt by Borrower or any Secured
Guarantor of any proceeds of any cash asset disposition (excluding proceeds of
asset dispositions permitted by Section 6.8(a)) to the extent the net proceeds
of such asset dispositions exceed $250,000 in the aggregate in any Fiscal Year,
Borrower shall prepay the Obligations in an amount equal to all such proceeds,
net of (A) commissions and other reasonable and customary transaction costs,
fees and expenses properly attributable to such transaction and payable by
Borrower or any Secured Guarantor in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior
Liens (to the extent such Liens constitute Permitted Encumbrances hereunder), if
any, and (D) an appropriate reserve for income taxes payable in cash in
connection therewith; provided, that if Borrower or the applicable Secured
Guarantor intends to reinvest all or any portion of the net proceeds of any
asset disposition within 270 days thereafter in fixed assets and Borrower
promptly notifies Agent of that intention in writing, and if (x) no Event of
Default shall have occurred and be continuing at the date of such written
notification, and (y) Borrower or such Secured Guarantor, as the case may be,
grants a first security interest to Agent in such replacement assets when
acquired, then the amount of any such mandatory prepayment shall be reduced by
the amount to be reinvested; provided, further that if and to the extent that
Borrower or such Secured Guarantor, as the case may be, does not reinvest such
net proceeds within that 270-day period, Borrower shall then repay the Loans
with net proceeds that have not been reinvested on the last day of such 270-day
period. Any such prepayment shall be applied in accordance with Section 1.3(c).
(iii) If Borrower or any Secured Guarantor shall suffer any
Event of Loss, then such Person shall (A) promptly notify the Agent of such
Event of Loss with anticipated net proceeds in excess of $1,000,000 (including
the amount of the estimated net insurance proceeds net of amounts payable to
holders of senior Liens (to the extent such Liens constitute Permitted
Encumbrances hereunder, if any,) or other awards payable in connection with such
Event of Loss) and (B) promptly upon receipt of such proceeds by such Person,
Borrower shall prepay the Obligations in an amount equal to such proceeds net of
(x) all money actually applied (or held in reserve pending such application) to
repair or reconstruct the damaged property or property affected by condemnation
or taking but subject to the terms of Section 5.4(c) and (y) all out-of-pocket
transaction costs and (z) related cash taxes. Any such prepayment shall be
applied in accordance with Section 1.3(d).
(iv) Proceeds of Keyman Life Insurance pledged to the Agent
shall be immediately used to prepay the Obligations in an amount equal to such
proceeds, which shall be applied in accordance with Section 1.3(c).
(v) If Holdings or Borrower issues Stock, no later than the
Business Day following the date of receipt of any cash proceeds thereof net of
underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith, Borrower shall prepay the Obligations in
7
an amount equal to 50% of such net proceeds. Any such prepayment shall be
applied in accordance with Section 1.3(c). Notwithstanding the foregoing two
sentences, Borrower need not prepay the Obligations in accordance with this
Section 1.3(b)(v) in connection with (A) issuances of Stock of Holdings to the
extent (but only to the extent) the proceeds thereof are used to purchase,
retire, redeem or otherwise acquire for value all or any portion of the Zero
Coupon Debt, (B) issuances of Stock of Holdings to the existing Stockholders of
Holdings or to seller(s) involved in a Permitted Acquisition, in each case to
the extent (but only to the extent) that such Stock or the proceeds thereof are
immediately used as a consideration for all or a portion of the purchase price
of a Permitted Acquisition, so long as no Change of Control results after giving
effect to such issuance or series of related issuances, (C) issuance of
directors' qualifying shares, (D) issuances of Stock of Holdings issued to any
holder of Indebtedness of Holdings or Borrower to the extent (but only to the
extent) issued in connection with an issuance, refinancing or restructuring of
Indebtedness permitted hereunder, so long as no Change of Control results after
giving effect to such issuance or a series of related issuances, and (E) sales
or issuances of common Stock to officers, directors or employees of Holdings,
Borrower or any Subsidiary, as the case may be, pursuant to a management or
employee benefit plan, to the extent the aggregate proceeds of all common Stock
so issued in excess of the redemptions of common Stock of employees shall not
exceed $2,000,000 in any Fiscal Year.
(c) Application of Certain Mandatory Prepayments. Any prepayments made
by Borrower pursuant to Sections 1.3(b)(ii), 1.3(b)(iv) or 1.3(b)(v) above shall
be applied as follows: first, to Fees and reimbursable expenses of Agent then
due and payable pursuant to any of the Loan Documents; second, to interest then
due and payable on the Term Loan; third, to prepay the scheduled principal
installments of the Term Loan in inverse order of maturity, until such Term Loan
shall have been prepaid in full; fourth, to interest then due and payable on the
Swing Line Loan; fifth, to the principal balance of the Swing Line Loan until
the same has been repaid in full; sixth, to interest then due and payable on the
Revolving Credit Advances; seventh, to the outstanding principal balance of
Revolving Credit Advances until the same has been paid in full; and eighth, to
any Letter of Credit Obligations, to provide cash collateral therefor in the
manner set forth in Annex B, until all such Letter of Credit Obligations have
been fully cash collateralized in the manner set forth in Annex B; ninth, to
interest then due and payable on the Term B Loan; tenth, to prepay the principal
of the Term B Loan, until such Term B Loan has been prepaid in full. Neither the
Revolving Loan Commitment nor the Swing Line Commitment shall be permanently
reduced by the amount of any such prepayments.
(d) Application of Prepayments from Insurance Proceeds and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in connection with
an Event of Loss in accordance with Sections 1.3(b)(iii) and 5.4(c) and the
Mortgage(s), respectively, shall be applied as follows: insurance proceeds from
casualties or losses to cash or Inventory shall be applied first, to the Swing
Line Loans and, second, to the Revolving Credit Advances; insurance or
condemnation proceeds from casualties or losses to Equipment, Fixtures and Real
Estate shall be applied to scheduled installments of the Term Loan in inverse
order of maturity and, following repayment of the Term Loan in its entirety, the
Term B Loan. Neither the Revolving Loan Commitment nor the Swing Line Loan
Commitment shall be permanently reduced by the amount of any such prepayments.
If the precise amount of insurance or condemnation proceeds allocable to
Inventory as compared to Equipment, Fixtures and Real Estate are not otherwise
8
determined, the allocation and application of those proceeds shall be jointly
determined by Agent and Borrower.
(e) No Implied Consent. Nothing in this Section 1.3 shall be construed
to constitute Agent's or any Lender's consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan Documents.
1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Term
Loan, the Revolving Loan and the Swing Line Loan for the Refinancing,
Redemptions (including Recapitalization) and any related transaction expenses,
for the financing of Borrower's ordinary working capital and general corporate
needs and for any other purpose not prohibited hereunder, and Borrower may use
the proceeds of the Revolving Loan to finance Permitted Acquisitions, subject to
the terms and conditions set forth herein. In addition, Borrower shall utilize
the proceeds of the Term B Loan for the purposes set forth in Section 1.1(d)
hereof.
1.5 Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable benefit of
Lenders in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following rates:
(i) with respect to the Revolving Credit Advances, the Index
Rate plus the Applicable Revolver Index Margin per annum or, at the election of
Borrower, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin
per annum, based on the aggregate Revolving Credit Advances outstanding from
time to time;
(ii) with respect to the Term Loan, the Index Rate plus the
Applicable Term Loan Index Margin per annum or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Term Loan LIBOR Margin per annum;
(iii) with respect to the Swing Line Loan, the Index Rate plus
the Applicable Revolver Index Margin per annum;
(iv) with respect to the Term B Loan, the Index Rate plus six
percent (6%) per annum; provided, that:
1. On each Interest Payment Date with respect to the Term B
Loan, a portion of the interest accrued on the Term B Loan and payable
on such Interest Payment Date equal to (A) three percent (3%) per annum
multiplied by (B) the highest outstanding principal balance of the Term
B Loan during the period for which interest was accrued, shall be paid
in kind (rather than in cash) by adding such portion to the principal
of the Term B Loan.
2. If by reason of the occurrence and continuation of a
Priority Event or otherwise, any of the interest on the Term B Loan due
on any Interest Payment Date (other than the portion of such interest
that is added to principal pursuant to Section 1.5(a)(iv)(1)) is not
paid when due, then, at the individual option of each Term B Loan
Lender exercisable by written notice given to Agent and Borrower on or
within thirty (30) days after such Interest Payment Date (whether or
9
not such option is exercised by any other Term B Loan Lender), such
Term B Loan Lender shall have the right to require that all or any
portion of the interest payable on such Interest Payment Date for
account of such Term B Loan Lender be paid by Borrower in kind (rather
than in cash) by adding such portion to the principal of the Term B
Loan Note held by such Term B Loan Lender. Upon delivery of such notice
by any Term B Loan Lender, such interest shall, to the extent set forth
in the notice, be added to the principal of the Term B Loan Note held
by such Term B Loan Lender effective as of such Interest Payment Date.
3. Effective as of the Interest Payment Date on which any
interest paid in kind and added to the principal of the Term B Loan as
provided in this Section 1.5(a)(iv) was due, such interest shall
constitute part of the principal of the Term B Loan for all purposes
under the Loan Documents, including the accrual and payment of
additional interest thereon. Borrower's obligation to pay the portion
of the interest so added to the principal, and to pay interest thereon,
shall be evidenced by the Term B Loan Notes without necessity for the
issuance of any additional promissory note or any addendum or
endorsement to the Term B Loan Note. Upon request of Agent or any
Lender at any time or from time to time, Borrower shall confirm in
writing, by an instrument in form reasonably satisfactory to Agent, the
principal amount then outstanding on each of the Term B Loan Notes,
including all interest so added to the principal thereof.
4. Under no circumstances shall Borrower or any other Credit
Party or any other Person have the right to pay interest on the Term B
Loan in kind, except on the conditions and to the extent set forth in
Section 1.5(a)(iv)(1) and, if required by the Term B Loan Lender,
Section 1.5(a)(iv)(2).
The Applicable Margins are as follows:
Applicable Revolver Index Margin 1.25%
Applicable Revolver LIBOR Margin 2.25%
Applicable Term Loan Index Margin 1.25%
Applicable Term Loan LIBOR Margin 2.25%
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a 360-day year, in each case for
the actual number of days occurring in the period for which such interest and
Fees are payable. The Index Rate is a floating rate determined for each day.
Each determination by Agent of an interest rate and Fees hereunder shall be
presumed to be correct.
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(d) So long as an Event of Default has occurred and is continuing under
Section 8.1(a), (h) or (i), or so long as any other Default or Event of Default
has occurred and is continuing and at the election of Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Agent to
Borrower, the interest rates applicable to the Loans and the Letter of Credit
Fees shall be increased by two percentage points (2%) per annum above the rates
of interest or the rate of such Fees otherwise applicable hereunder ("Default
Rate"). Interest and Letter of Credit Fees at the Default Rate shall accrue from
the initial date of such Event of Default if such Event of Default arose under
Section 8.1(a), (h) or (i) or from the date of the delivery of the written
notice from Agent to Borrower for all other Events of Default, until that Event
of Default is cured or waived and shall be payable upon demand.
(e) Subject to the conditions precedent set forth in Section 2.2,
Borrower shall have the option to (i) request that any Revolving Credit Advance
be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding
Loans (other than the Swing Line Loan and the Term B Loan) from Index Rate Loans
to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to
payment of LIBOR breakage costs in accordance with Section 1.13(b) if such
conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan and the Term B Loan) as a LIBOR Loan upon the expiration of the
applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan
shall commence on the first day after the last day of the LIBOR Period of the
Loan to be continued. Any Loan or group of Loans having the same proposed LIBOR
Period to be made or continued as, or converted into, a LIBOR Loan must be in a
minimum amount of $1,000,000 and integral multiples of $250,000 in excess of
such amount. Any such election must be made by 11:00 a.m. (Chicago time) on the
3rd Business Day prior to (1) the date of any proposed Advance which is to bear
interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any
LIBOR Loans to be continued as such, or (3) the date on which Borrower wishes to
convert any Index Rate Loan (other than the Swing Line or the Term B Loan) to a
LIBOR Loan for a LIBOR Period designated by Borrower in such election. If no
election is received with respect to a LIBOR Loan by 11:00 a.m. (Chicago time)
on the 3rd Business Day prior to the end of the LIBOR Period with respect
thereto (or if a Default or an Event of Default has occurred and is continuing
or if the additional conditions precedent set forth in Section 2.2 shall not
have been satisfied), that LIBOR Loan shall be converted to an Index Rate Loan
at the end of its LIBOR Period. Borrower must make such election by notice to
Agent in writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.5(e).
(f) Notwithstanding anything to the contrary set forth in this Section
1.5, if a court of competent jurisdiction determines in a final order that the
rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Original Closing Date as otherwise provided
11
in this Agreement. Thereafter, interest hereunder shall be paid at the rate(s)
of interest and in the manner provided in Sections 1.5(a) through (e), unless
and until the rate of interest again exceeds the Maximum Lawful Rate, and at
that time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
1.6 Eligible Accounts. All of the Accounts owned by Borrower or any
Secured Guarantor and reflected in the most recent Borrowing Base Certificate
delivered by Borrower to Agent shall be "Eligible Accounts" for purposes of this
Agreement, except any Account to which any of the exclusionary criteria set
forth below applies. Agent shall have the right to establish or modify or
eliminate Reserves against Eligible Accounts from time to time in its reasonable
credit judgment to reflect issues with respect to the collectability of Accounts
arising or discovered by Agent after the Original Closing Date. In addition,
Agent reserves the right, at any time and from time to time after the Original
Closing Date, to adjust any of the criteria set forth below or to establish new
criteria in its reasonable credit judgment to reflect changes in the Borrower's
or the applicable Secured Guarantor's business operations or the collectability
of Accounts, subject to the approval of Requisite Revolving Lenders in the case
of adjustments or new criteria which have the effect of making more credit
available. Eligible Accounts shall not include any Account of Borrower or a
Secured Guarantor:
(a) that does not arise from the sale of goods or the performance of
services by Borrower or a Secured Guarantor in the ordinary course of its
business;
(b) (i) upon which Borrower's or the applicable Secured Guarantor's
right to receive payment is not absolute or is contingent upon the fulfillment
of any condition whatsoever or (ii) as to which Borrower or the applicable
Secured Guarantor is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process, or (iii) if the Account
represents a progress billing consisting of an invoice for goods sold or used or
services rendered pursuant to a contract under which the Account Debtor's
obligation to pay that invoice is subject to Borrower's or the applicable
Secured Guarantors' completion of further performance under such contract or is
subject to the equitable lien of a surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff or dispute is
asserted as to such Account;
(d) that is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor;
12
(e) with respect to which an invoice has not been sent to the
applicable Account Debtor;
(f) that (i) is not owned by Borrower or a Secured Guarantor or (ii) is
subject to any right, claim, security interest or other interest of any other
Person, other than Liens described in clauses (a) and (g) of the definition of
Permitted Encumbrances and Liens in favor of Agent, on behalf of itself and
Lenders but only to the extent of such right, claim, security interest or other
interest;
(g) that arises from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer with
any Credit Party;
(h) that is the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof, unless Borrower
or the applicable Secured Guarantor has complied with respect to such obligation
with the Federal Assignment of Claims Act of 1940, or any applicable state,
county or municipal law restricting assignment thereof, provided, that the
Borrowing Availability based on such obligations shall not in any event exceed
$5,000,000 in the aggregate;
(i) that is the obligation of an Account Debtor located in a foreign
country other than (A) Canada (excluding the province of Newfoundland, the
Northwest Territories and the Territory of Nunavut) or (B) the United Kingdom,
unless payment thereof is assured by a letter of credit or credit insurance
assigned and delivered to Agent, satisfactory to Agent as to form, amount and
issuer;
(j) to the extent Borrower or any Secured Guarantor or any Subsidiary
thereof is liable for goods sold or services rendered by the applicable Account
Debtor to Borrower or any Secured Guarantor or any Subsidiary thereof but only
to the extent of the potential offset;
(k) that arises with respect to goods that are delivered on a
xxxx-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, an Account shall be deemed in
default upon the occurrence of any of the following:
(i) the Account is not paid within the earlier of: sixty (60)
days following its due date or one hundred twenty (120) days following its
original invoice date unless payment thereof is secured by a letter of credit
satisfactory to Agent as to form, substance and issuer;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails to
pay its debts generally as they come due; or
13
(iii) a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal, state
or foreign (including any provincial) receivership, insolvency relief or other
law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if 50% or more of the
Dollar amount of all Accounts owing by that Account Debtor are ineligible under
the criteria set forth in clause (l) above;
(n) as to which Agent's Lien thereon, on behalf of itself and Lenders,
is not a first priority perfected Lien;
(o) as to which any of the representations or warranties in the Loan
Documents are untrue in any material respect;
(p) to the extent such Account is evidenced by a judgment, Instrument
or Chattel Paper;
(q) to the extent that such Account, together with all other Accounts
owing by such Account Debtor and its Affiliates (excluding the United States
government as Account Debtor) as of any date of determination exceed 15% of all
Eligible Accounts; or
(r) that is payable in any currency other than Dollars, Canadian
Dollars, Pounds Sterling or Euros.
It is understood and agreed that any Account excluded from eligibility under
clause (l) above shall be excluded in its entirety, meaning that any past due
credits with respect thereto shall also be excluded thereunder.
1.7 Eligible Inventory. All of the Inventory owned by the Borrower or
any Secured Guarantor and reflected in the most recent Borrowing Base
Certificate delivered by Borrower to Agent shall be "Eligible Inventory" for
purposes of this Agreement, except any Inventory to which any of the
exclusionary criteria set forth below applies. Agent shall have the right to
establish, modify, or eliminate Reserves against Eligible Inventory from time to
time in its reasonable credit judgment to reflect issues with respect to the
salability of Inventory arising or discovered by Agent after the Effective Date.
In addition, Agent reserves the right, at any time and from time to time after
the Effective Date, to adjust any of the criteria set forth below or to
establish new criteria in its reasonable credit judgment to reflect changes in
the Borrower's or the applicable Secured Guarantor's business operations or
salability of Inventory, subject to the approval of Requisite Revolving Lenders
in the case of adjustments or new criteria which have the effect of making more
credit available. Eligible Inventory shall not include any Inventory of Borrower
or any Secured Guarantor that:
(a) is not owned by Borrower or any Secured Guarantor free and clear of
all Liens and rights of any other Person (including the rights of a purchaser
that has made progress payments and the rights of a surety that has issued a
bond to assure Borrower's or a Secured Guarantor's performance with respect to
that Inventory), except Liens described in clauses (a), (d), (e) and (g) of the
definition of Permitted Encumbrances and the Liens in favor of Agent, on behalf
of itself and Lenders;
(b) (i) is not located on premises owned, leased or rented by Borrower
or any Secured Guarantor and set forth in Disclosure Schedule (3.2), (ii) is not
located on premises acquired or leased by Borrower or any Secured Guarantor in
connection with any Permitted Acquisition, or (iii) is stored at a leased
location, unless Agent has given its prior consent thereto and unless either (x)
a reasonably satisfactory landlord waiver has been delivered to Agent, or (y)
Reserves reasonably satisfactory to Agent have been established with respect
thereto, or (iii) is stored with a bailee or warehouseman unless a reasonably
satisfactory, acknowledged bailee letter has been received by Agent and Reserves
reasonably satisfactory to Agent have been established with respect thereto, or
(iv) is located at a location owned by Borrower or any Secured Guarantor subject
to a mortgage in favor of a lender other than Agent, unless a reasonably
satisfactory mortgagee waiver has been delivered to Agent, or (v) is located at
any site if the aggregate book value of Inventory at any such location is less
than $50,000;
(c) is placed on consignment or is in transit, except for Inventory in
transit between domestic locations of Credit Parties as to which Agent's Liens
have been perfected at origin and destination;
(d) is covered by a negotiable document of title, unless such document
has been delivered to Agent with all necessary endorsements, free and clear of
all Liens except those in favor of Agent and Lenders;
(e) is excess, obsolete, slow moving (in excess of 2-years' supply),
unsalable, shopworn, seconds, damaged or unfit for sale;
(f) consists of display items or packing or shipping materials,
manufacturing supplies, custom-made Inventory which is not subject to an
outstanding purchase order that is not revocable by its terms or is not sold in
the ordinary course of business, work-in-process Inventory or replacement parts
(excluding Component Parts and Purchased Parts);
(g) is not of a type held for sale in the ordinary course of Borrower's
or the applicable Secured Guarantor's business;
(h) is not subject to a first priority lien in favor of Agent on behalf
of itself and Lenders subject to Permitted Encumbrances;
(i) breaches in any material respect any of the representations or
warranties pertaining to Inventory set forth in the Loan Documents;
(j) consists of any costs associated with "freight-in" charges;
(k) consists of Hazardous Materials or goods that can be transported or
sold only with licenses that are not readily available; or
(l) is not covered by casualty insurance in accordance with Section
5.4.
1.8 Cash Management Systems. On or prior to the Original Closing Date,
Borrower will establish and will maintain until the Termination Date, the cash
management systems described in Annex C (the "Cash Management Systems").
15
1.9 Fees.
(a) Borrower has paid and shall pay to GE Capital, individually, the
Fees specified in the GE Capital Fee Letter and the Term B Loan Fee Letter, at
the times specified for payment therein.
(b) As additional compensation for the Revolving Lenders, Borrower
shall pay to Agent, for the ratable benefit of such Lenders, in arrears, on the
first Business Day of each month prior to the Commitment Termination Date and on
the Commitment Termination Date, a Fee for Borrower's non-use of available funds
in an amount equal to:
(i) one-half of one percent (0.50%) per annum, if the amount
of the Revolving Loan, including the Swing Line Loan, is equal to or greater
than 50% of the Maximum Amount, or
(ii) three-fourths of one percent (0.75%) per annum, if the
amount of the Revolving Loan, including the Swing Line Loan, is less than 50% of
the Maximum Amount,
(in each case, calculated on the basis of a 360 day year for actual days
elapsed) multiplied by the difference between (x) the Maximum Amount (as it may
be reduced from time to time) and (y) the average for the period of the daily
closing balances of the Revolving Loan and the Swing Line Loan outstanding
during the period for which such Fee is due.
(c) Borrower shall pay to Agent, for the ratable benefit of Revolving
Lenders, the Letter of Credit Fee as provided in Annex B.
(d) If Borrower pays after acceleration or prepays all or any portion
of the Term Loan B, whether voluntarily or involuntarily and whether before or
after acceleration of the Obligations or if the Term Loan B Commitments are
otherwise terminated, Borrower shall pay to Agent, for the benefit of Term B
Loan Lenders as liquidated damages and compensation for the costs of being
prepared to make funds available hereunder an amount equal to the Applicable
Percentage (as defined below) multiplied by the sum of (i) the principal amount
of the Term Loan B paid after acceleration or prepaid. As used herein, the term
"Applicable Percentage" shall mean (x) three percent (3%), in the case of a
prepayment on or prior to the first anniversary of the Effective Date, (y) two
percent (2%), in the case of a prepayment after the first anniversary of the
Effective Date but on or prior to the second anniversary thereof, and (z) one
percent (1%), in the case of a prepayment after the second anniversary of the
Effective Date but on or prior to the third anniversary thereof. The Credit
Parties agree that the Applicable Percentages are a reasonable calculation of
Term B Loan Lenders' lost profits in view of the difficulties and impracticality
of determining actual damages resulting from an early termination of the
Commitments. Notwithstanding the foregoing, no prepayment fee shall be payable
by Borrower upon a mandatory prepayment made pursuant to Section 1.3(b);
provided that in the case of prepayments made pursuant to Sections 1.3(b)(ii) or
(b)(iii), the transaction giving rise to the applicable prepayment is expressly
permitted under Section 6. Application of any amounts payable under this Section
1.9(d) to the Term B Loan Lenders shall be subject to the terms of Section 1.11.
16
1.10 Receipt of Payments. Borrower shall make each payment under this
Agreement not later than 1:00 p.m. (Chicago time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability as of any
date, all payments shall be deemed received on the Business Day on which
immediately available funds therefor are received in the Collection Account
prior to 1:00 p.m. (Chicago time). Payments received after 1:00 p.m. (Chicago
time) on any Business Day or on a day that is not a Business Day shall be deemed
to have been received on the following Business Day.
1.11 Application and Allocation of Payments.
(a) So long as no Event of Default has occurred and is continuing and
the Commitment Termination Date has not occurred, (i) payments received in the
ordinary course of business and not subject to clauses (ii), (iii) and (iv)
below shall be applied, first, to the Swing Line Loan and, second, to the
Revolving Loan; (ii) payments matching specific scheduled payments then due
shall be applied to those scheduled payments, (iii) voluntary prepayments shall
be applied as determined by Borrower, subject to the provisions of Section
1.3(a); and (iv) mandatory prepayments shall be applied as set forth in Sections
1.3(c) and 1.3(d). All payments and prepayments applied to a particular Loan
shall be applied ratably to the portion thereof held by each Lender as
determined by its Pro Rata Share. As to any other payment, and as to all
payments made when an Event of Default has occurred and is continuing or
following the Commitment Termination Date, Borrower and each Credit Party hereby
irrevocably waive the right to direct the application of any and all payments
(including monetary proceeds of collections of or realizations upon any
Collateral) received from or on behalf of Borrower or any Credit Party, and
Borrower and each Credit Party hereby irrevocably agree that Agent and the
Requisite Lenders shall have the continuing exclusive right to apply any and all
such payments against the Obligations as Agent and the Requisite Lenders may
deem advisable notwithstanding any previous entry by Agent in the Loan Account
or any other books and records and agrees to be bound by all such payment
applications. Borrower and each Credit Party acknowledge and agree that (i)
Agent and the Lenders may enter into one or more agreements (as the same may be
amended, restated, replaced, modified or supplemented from time to time,
collectively, the "Lender Agreement") to determine the application of all
payments (including monetary proceeds of collections of or realizations upon any
Collateral) received from or on behalf of Borrower and/or any Credit Party with
respect to the Obligations when any Event of Default has occurred and is
continuing or following the Commitment Termination Date and (ii) Borrower and
each Credit Party shall not be a party to nor have any rights under any such
Lender Agreement.
(b) Agent is authorized to, and at its sole election may, charge to the
Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
Charges, reimbursable expenses (including insurance premiums in accordance with
Section 5.4(a)) and interest and principal, other than principal of the
Revolving Loan and the Term B Loan Obligations, owing by Borrower under this
Agreement or any of the other Loan Documents if and to the extent Borrower fails
to pay promptly any such amounts as and when due, even if the amount of such
charges would exceed Borrowing Availability at such time. At Agent's option and
to the extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.
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1.12 Loan Account and Accounting. Agent shall maintain a loan account
(the "Loan Account") on its books to record all Advances, the Term Loan and the
Term B Loan, all payments made by or on behalf of Borrower, and all other debits
and credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower; provided that any failure to so record
or any error in so recording shall not limit or otherwise affect Borrower's duty
to pay the Obligations. Agent shall render to Borrower a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account for the immediately preceding month. Unless Borrower notifies Agent in
writing of any objection to any such accounting (specifically describing the
basis for such objection), within ninety (90) days after the date thereof, each
and every such accounting shall, absent manifest error, be deemed conclusive.
Only those items expressly objected to in such notice shall be deemed to be
disputed by Borrower. Notwithstanding any provision herein contained to the
contrary, any Lender may elect (which election may be revoked) to dispense with
the issuance of Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.
1.13 Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) that may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (other than disputes between and among Agent/or the Lenders
arising when no Event of Default has occurred and is continuing) (collectively,
"Indemnified Liabilities"); provided, that no such Credit Party shall be liable
for any indemnification to an Indemnified Person to the extent that any such
suit, action, proceeding, claim, damage, loss, liability or expense results from
that Indemnified Person's gross negligence or willful misconduct; and, provided
further, that any obligations of the Credit Parties to the Indemnified Persons
with respect to Environmental Liabilities and Hazardous Materials shall be
governed exclusively by the terms and provisions of the Environmental Indemnity
Agreement and not by the terms and provisions of this Section 1.13 or any other
term and provision of this Agreement or any other Loan Document other than the
Environmental Indemnity Agreement. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
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EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing of, or shall
request a termination of any borrowing, conversion into or continuation of LIBOR
Loans after Borrower has given notice requesting the same in accordance
herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan
after Borrower has given a notice thereof in accordance herewith, then Borrower
shall indemnify and hold harmless each Lender from and against all losses, costs
and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.13(b), and such calculation
shall be presumed to be correct unless Borrower shall object in writing within
twenty (20) Business Days of receipt thereof, specifying the basis for such
objection in detail.
1.14 Access. Each Credit Party that is a party hereto shall, during
normal business hours, from time to time upon three (3) Business Days' prior
notice as frequently as Agent determines to be appropriate: (a) provide Agent
and any of its officers, employees and agents access to its properties,
facilities, advisors, officers, employees of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's books and records, and
(c) permit Agent, and its officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Accounts, Inventory and
other Collateral of any Credit Party. If an Event of Default has occurred and is
continuing or if access is necessary to preserve or protect the Collateral as
determined by the Agent, each such Credit Party shall provide such access to
Agent and to each Lender at all times and without advance notice. Furthermore,
so long as any Event of Default has occurred and is continuing, Borrower shall
provide Agent and each Lender with access to its suppliers and customers. Each
Credit Party shall make available to Agent and its counsel, as quickly as is
possible under the circumstances, originals or copies of all books and records
of the Credit Parties that Agent may reasonably request. Each Credit Party shall
deliver any document or instrument necessary for Agent, as it may from time to
time reasonably request, to obtain records from any service bureau or other
Person that maintains records for such Credit Party. Agent and Lenders agree
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that Agent shall conduct three field Collateral audits of Borrower and the
Secured Guarantors (approximately every six months) during the first eighteen
months following the Original Closing Date and, as long as a Trigger Event has
occurred and is continuing thereafter, Agent and Lenders agree that Agent shall
conduct a field Collateral audit of Borrower, the Secured Guarantors and
Schaublin every six months from the date of the last field Collateral audit.
Agent will give Lenders at least five (5) days' prior written notice of
regularly scheduled audits. Representatives of other Lenders may accompany
Agent's representatives on regularly scheduled audits at no charge to Borrower.
1.15 Taxes.
(a) Any and all payments by Borrower hereunder or under the Notes shall
be made, in accordance with this Section 1.15, free and clear of and without
deduction for any and all present or future Taxes. If Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder or
under the Notes, (i) the sum payable shall be increased as much as shall be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 1.15) Agent or Lenders,
as applicable, receive an amount equal to the sum they would have received had
no such deductions been made, (ii) Borrower shall make such deductions, and
(iii) Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within thirty (30) days after
the date of any payment of any such Taxes, Borrower shall furnish to Agent the
original or a certified copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall indemnify and,
within thirty (30) days of demand therefor, pay Agent and each Lender for the
full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts
payable under this Section 1.15) paid by Agent or such Lender, as appropriate,
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes were correctly or legally
asserted.
(c) Each Lender organized under the laws of a jurisdiction outside the
United States (a "Foreign Lender") as to which payments to be made under this
Agreement or under the Notes are exempt from United States withholding tax under
an applicable statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form W-8ECI or Form W-8BEN or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person fails to deliver a Certificate of Exemption in
advance of becoming a Lender.
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Original Closing Date, from
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any central bank or other Governmental Authority increases or would have the
effect of increasing the amount of capital, reserves or other funds required to
be maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such Lender issued within ninety (90)
days after adoption thereof and setting forth a calculation of the reduction
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower and to
Agent shall, absent manifest error, be presumptive evidence of the matters set
forth therein.
(b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Original Closing Date, there shall be any increase in the cost
to any Lender of agreeing to make or making, funding or maintaining any Loan,
then Borrower shall from time to time, upon demand by such Lender issued within
ninety (90) days after the introduction thereof or compliance therewith and
setting forth a calculation of such increased costs (with a copy of such demand
to Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to Borrower and to Agent by such
Lender, shall be presumptive evidence of the matters set forth therein, absent
manifest error. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to above which would result in any
such increased cost, the affected Lender shall, to the extent not inconsistent
with such Lender's internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it and payable to
it by Borrower pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing to such Lender, together with
interest accrued thereon, unless Borrower, within five (5) Business Days after
the delivery of such notice and demand, converts all LIBOR Loans into Index Rate
Loans.
(d) Within fifteen (15) days after receipt by Borrower of written
notice and demand from any Lender (an "Affected Lender") as provided in Sections
1.15(a), 1.15(b), 1.16(a) or 1.16(b), Borrower may, at its option, notify Agent
and such Affected Lender of its intention to replace the Affected Lender. So
long as no Default or Event of Default has occurred and is continuing, Borrower,
with the consent of Agent, may obtain, at Borrower's expense, a replacement
Lender ("Replacement Lender") for the Affected Lender, which Replacement Lender
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must be reasonably satisfactory to Agent. If Borrower obtains a Replacement
Lender within one hundred eighty (180) days following notice of its intention to
do so, the Affected Lender must sell and assign its Loans and Commitments to
such Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale; provided, that Borrower shall have
reimbursed such Affected Lender for the additional amounts or increased costs
that it is entitled to receive under Sections 1.15(a), 1.15(b), 1.16(a) or
1.16(b) through the date of such sale and assignment. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender if
the Affected Lender rescinds its demand for increased costs or additional
amounts within fifteen (15) days following its receipt of Borrower's notice of
intention to replace such Affected Lender. Furthermore, if Borrower gives a
notice of intention to replace and does not so replace such Affected Lender
within one hundred eighty (180) days thereafter, Borrower's rights under this
Section 1.16(d) shall terminate with respect to the increased costs or
additional amounts of such Affected Lender giving rise to such notice to replace
such Affected Lender and Borrower shall promptly pay all increased costs and or
additional amounts demanded by such Affected Lender pursuant to Sections
1.15(a), 1.15(b), 1.16(a) and 1.16(b).
1.17 Single Loan. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of the Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to
make any Loan or incur any Letter of Credit Obligations on the Effective Date,
or to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to
Agent, or waived in writing by Agent and Requisite Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrower, Agent and
Lenders; and Agent shall have received such documents, instruments, agreements
and legal opinions as Agent shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Loan Documents,
including all those listed in the Closing Checklist attached hereto as Annex D,
each in form and substance reasonably satisfactory to Agent.
(b) [Intentionally Omitted].
(c) Approvals. Agent shall have received (i) satisfactory evidence that
the Credit Parties have obtained all required consents and approvals of all
Persons (including all requisite Governmental Authorities) to the execution,
delivery and performance of this Agreement and the other Loan Documents or (ii)
an officer's certificate in form and substance reasonably satisfactory to Agent
affirming that no such consents or approvals are required. In addition, Agent
shall have received an officer's certificate in form and substance reasonably
satisfactory to Agent affirming that execution, delivery and performance of this
Agreement and the other Loan Documents and the funding of the Term B Loan do not
violate any term or provision of any of (i) the Subordinated Debt Documents and
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(ii) the Discount Debentures Documents, including, without limitation, a
representation and warranty that the extension of Loans and the Obligations
(including, without limitation, all Term B Loan Obligations) under and in
accordance with this Agreement and the other Loan Documents are permitted by the
terms and provisions of (x) the Subordinated Debt Documents and (y) the Discount
Debentures Documents.
(d) Payment of Fees. Borrower shall have paid the Fees required to be
paid on the Effective Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter and the Term B Loan
Fee Letter), and shall have reimbursed Agent for all reimbursable fees, costs
and expenses of closing presented as of the Effective Date.
(e) Capital Structure: Other Indebtedness. Except as described on
Disclosure Schedule 2.1(f) the capital structure of each Credit Party has not
materially changed since March 30, 2002 and the terms and conditions of all
Indebtedness of each Credit Party shall be acceptable to Agent in its sole
discretion.
(f) Consummation of Timken Acquisition. The Timken Acquisition shall
have been or shall be consummated concurrent with the Effective Date, and the
Agent shall have received fully executed copies of the Timken Acquisition
Documents, each of which shall be in form and substance reasonably satisfactory
to Agent and its counsel.
(g) Due Diligence. Agent shall have completed its business and legal
due diligence relating to the Timken Acquisition, including an updated
Collateral audit with respect to the Collateral to be acquired in connection
with the Timken Acquisition, with results reasonably satisfactory to Agent.
(h) Transaction Costs and Expenses. The aggregate purchase price for
the Timken Acquisition shall not exceed $10,000,000.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance or incur any
Letter of Credit Obligation, if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained herein
or in any other Loan Document is untrue or incorrect as of such date in any
material respect, except to the extent that such representation or warranty
expressly relates to an earlier date and except for changes therein expressly
permitted or expressly contemplated by this Agreement, and Agent or Requisite
Revolving Lenders have determined not to make such Advance or incur such Letter
of Credit Obligation as a result of the fact that such warranty or
representation is untrue or incorrect;
(b) any event or circumstance (i) having a Material Adverse Effect as
set forth in clauses (c) or (d) of the definition thereof or (ii) which could
reasonably be expected to result in costs, liabilities or damages, individually
or in the aggregate, to any Credit Party or Credit Parties in an amount that
would have caused the Fixed Charge Covenant Ratio Financial Covenant to have
been breached if such event or occurrence had occurred and such costs,
23
liabilities or damages had been paid on the first day of the Fiscal Quarter most
recently ended or (iii) which results in an uninsured loss of tangible assets
with a value in excess of $4,000,000 has occurred since the date hereof as
determined by the Requisite Revolving Lenders, and Agent or Requisite Revolving
Lenders have determined not to make such Advance or incur such Letter of Credit
Obligation as a result of the fact that such event or circumstance has occurred;
(c) any Event of Default has occurred and is continuing or would result
after giving effect to any Advance (or the incurrence of any Letter of Credit
Obligation), and Agent or Requisite Revolving Lenders shall have determined not
to make any Advance or incur any Letter of Credit Obligation as a result of that
Event of Default; or
(d) after giving effect to any Advance (or the incurrence of any Letter
of Credit Obligations (other than the Overadvances)), Borrowing Availability
shall be less than $5,000,000;
The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrower that the conditions
in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrower of
the granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.
2.3 Conditions to Revolving Credit Advances Funding Permitted
Acquisitions. In addition to the conditions set forth in Section 2.2 with
respect to all Advances, no Lender shall be obligated to advance its Pro Rata
Share of any Revolving Credit Advance used for the purpose of funding all or
part of the purchase price of any acquisition of Stock, any purchase of all or
substantially all of the assets of any Person, or any business or division of
any Person or any acquisition of a Person by a merger, consolidation or any
other combination unless the conditions set forth in Section 6.1 hereof have
been satisfied or provided for in a manner satisfactory to Agent or waived in
writing by Agent and Lenders.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is
a corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect; (c) has the requisite power
and authority and the legal right to own, pledge, mortgage or otherwise encumber
and operate its properties, to lease the property it operates under lease and to
conduct its business as now conducted; (d) subject to specific representations
24
regarding Environmental Laws contained in the Environmental Indemnity Agreement,
has all material licenses, permits, consents or approvals from or by, and has
made all material filings with, and has given all material notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct, except as could not reasonably be expected to
have a Material Adverse Effect; (e) is in compliance with its charter and bylaws
or partnership or operating agreement, as applicable; and (f) subject to
specific representations set forth herein regarding ERISA, tax and other laws,
or specific representations regarding Environmental Laws set forth in the
Environmental Indemnity Agreement, is in compliance with all applicable
provisions of law, except where the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices, Collateral Locations, FEIN. As of the Effective
Date, each Credit Party's name as it appears in official filings in its state of
incorporation or organization, state of incorporation or organization,
organization type, organization number, if any, issued by its state
incorporation or organization, and the location of each Credit Party's chief
executive office and the warehouses and premises at which any Collateral is
located on the Effective Date are set forth in Disclosure Schedule (3.2), and
each Credit Party has only one state of incorporation or organization. In
addition, Disclosure Schedule (3.2) lists the federal employer identification
number of each domestic Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's power; (b) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person's charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any applicable law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, or other material
agreement or instrument to which such Person is a party or by which such Person
or any of its property is bound; (f) do not result in the creation or imposition
of any Lien upon any of the property of such Person other than those in favor of
Agent, on behalf of itself and Lenders, pursuant to the Loan Documents; and (g)
do not require the consent or approval of any Governmental Authority or any
other Person, except those referred to in Section 2.1(c), all of which will have
been duly obtained, made or complied with prior to or on the Effective Date. As
of the Effective Date, each of the Loan Documents shall be duly executed and
delivered by each Credit Party that is a party thereto and each such Loan
Document shall constitute a legal, valid and binding obligation of such Credit
Party enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy laws or similar
laws affecting creditors' rights in general.
3.4 Financial Statements and Projections. Except for the Projections,
all Financial Statements concerning Holdings, Borrower and its Subsidiaries that
are referred to in this Section 3.4 have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal year-end audit adjustments) and present fairly in all
25
material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the
periods then ended.
(a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule (3.4(a)) have been delivered to Agent on or before
the Effective Date:
(i) The audited consolidated and consolidating balance sheets
at March 31, 2003 and the related statements of income and cash flows of
Holdings, Borrower and its Subsidiaries for the Fiscal Year then ended,
certified by Xxxxxx Xxxxxxxx LLP.
(ii) The unaudited balance sheet(s) at September 30, 2003 and
the related statement(s) of income and cash flows of Holdings, Borrower and its
Subsidiaries for the four Fiscal Quarters then ended.
(b) Pro Forma. The Pro Forma delivered to Agent on or before the
Original Closing Date and attached hereto as Disclosure Schedule (3.4(b)) was
based on the unaudited consolidated and consolidating balance sheets of Borrower
and its Subsidiaries dated March 30, 2002, and was prepared in accordance with
GAAP, with only such adjustments thereto as would be required in accordance with
GAAP.
(c) Projections. The Projections delivered to Agent on or before the
Original Closing Date and attached hereto as Disclosure Schedule (3.4(c)) have
been prepared by Borrower in light of the past operations of its and its
Subsidiaries' businesses, but including future payments of known contingent
liabilities, and reflect projections for the three year period beginning on
March 30, 2002, on a month-by-month basis for the first year and on a
year-by-year basis thereafter. The Projections are based upon estimates and
assumptions stated therein, all of which Borrower believes to be reasonable and
fair in light of current conditions and current facts known to Borrower and, as
of the Original Closing Date, reflect Borrower's good faith and reasonable
estimates of the future financial performance of Borrower and of the other
information projected therein for the period set forth therein.
3.5 Material Adverse Effect. Between March 31, 2003 and the Effective
Date, (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (b) no contract, lease or other agreement or instrument has been
entered into by any Credit Party or has become binding upon any Credit Party's
assets and no law or regulation applicable to any Credit Party has been adopted,
in each case, that has had or could reasonably be expected to have a Material
Adverse Effect, and (c) no Credit Party is in default and to the best of
Borrower's knowledge no third party is in default under any material contract,
lease or other agreement or instrument, in any case which default alone or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
Between March 31, 2003 and the Effective Date no event has occurred, that alone
or together with other events, could reasonably be expected to have a Material
Adverse Effect.
3.6 Ownership of Property; Liens. As of the Effective Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) includes all of the
real property owned, leased, subleased, or used by any Credit Party. As of the
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Effective Date, each Credit Party owns good and marketable fee simple title to
all of its owned Real Estate, and valid leasehold interests in all of its leased
Real Estate, all as described on Disclosure Schedule (3.6), and copies of all
such leases have been delivered to Agent. Disclosure Schedule (3.6) further
describes any Real Estate with respect to which any Credit Party is a lessor,
sublessor or assignor as of the Effective Date. Each Credit Party also has good
and marketable title to, or valid leasehold interests in, all of its personal
property and assets. As of the Effective Date, none of the properties and assets
of any Credit Party are subject to any Liens other than Permitted Encumbrances,
and no Credit Party has received written notice of any facts, circumstances or
conditions that are likely to result in any Liens (including Liens arising under
Environmental Laws) on any Collateral other than Permitted Encumbrances. As of
the Effective Date, the Liens granted to Agent pursuant to the Loan Documents
are first priority perfected Liens, subject only to Permitted Encumbrances. As
of the Effective Date, each Credit Party has to its knowledge received all
deeds, assignments, waivers, consents, nondisturbance and attornment or similar
agreements, bills of sale and other documents, and has duly effected all
recordings, filings and other actions reasonably necessary to establish, protect
and perfect such Credit Party's right, title and interest in and to all such
Real Estate and other properties and assets. Disclosure Schedule (3.6) also
describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any Real Estate. During the period from March
31, 2003 through the Effective Date, no portion of any Credit Party's Real
Estate has suffered any material damage by fire or other casualty loss that has
not heretofore been repaired and restored in all material respects to its
original condition or otherwise remedied. As of the Effective Date, all material
permits required to have been issued or appropriate to enable the Real Estate to
be lawfully occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force and effect,
except as could not reasonably be expected to have a Material Adverse Effect.
3.7 Labor Matters. As of the Effective Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matters; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
except as set forth in Disclosure Schedule (3.7), no Credit Party is a party to
or bound by any collective bargaining agreement, management agreement,
consulting agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement
or arrangement (and true and complete copies of any agreements described on
Disclosure Schedule (3.7) have been delivered to Agent); (e) to any Credit
Party's knowledge, there is no organizing activity involving any Credit Party
pending or threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule (3.7), there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual; in each case except as could not reasonably be expected
to have a Material Adverse Effect.
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3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Effective Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. As of the Effective Date, all of the issued and outstanding Stock of
each Credit Party is owned by each of the Stockholders and in the amounts set
forth in Disclosure Schedule (3.8). Except as set forth in Disclosure Schedule
(3.8), as of the Effective Date there are no outstanding rights to purchase,
options, warrants or similar rights or agreements pursuant to which any Credit
Party may be required to issue, sell, repurchase or redeem any of its Stock or
other equity securities or any Stock or other equity securities of its
Subsidiaries. All outstanding Indebtedness and Guaranteed Indebtedness of each
Credit Party as of the Effective Date (except for the Obligations) is described
in Section 6.3 (including Disclosure Schedule (6.3)).
3.9 Government Regulation. No Credit Party is an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Loans by Lenders to Borrower, the
incurrence of the Letter of Credit Obligations on behalf of Borrower, the
application of the proceeds thereof and repayment thereof will not violate any
provision of any such statute or any rule, regulation or order issued by the
Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. As of the Effective Date, all tax returns, reports and
statements, including information returns, required by any Governmental
Authority to be filed by any Credit Party have been filed with the appropriate
Governmental Authority and all Charges have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss has been
paid), excluding Charges or other amounts being contested in accordance with the
terms described in Section 5.2(b). As of the Effective Date, proper and accurate
amounts have been withheld by each Credit Party from its respective employees
for all periods in full and complete compliance with all applicable federal,
state, local and foreign laws and such withholdings have been timely paid to the
respective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of
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the Effective Date those taxable years for which any Credit Party's tax returns
are currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with such
audit, or that are otherwise currently outstanding. Except as described in
Disclosure Schedule (3.11), as of the Effective Date, no Credit Party has
executed or filed with the IRS or any other Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for
assessment or collection of any Charges. As of the Effective Date, none of the
Credit Parties and their respective predecessors are liable for any Charges: (a)
under any agreement (including any tax sharing agreements), except as described
in Disclosure Schedule (3.11) or (b) to each Credit Party's knowledge, as a
transferee. As of the Effective Date, no Credit Party has agreed or been
requested to make any adjustment under IRC Section 481(a), by reason of a change
in accounting method or otherwise, which would have a Material Adverse Effect.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists (i) all ERISA Affiliates and (ii)
all Plans and separately identifies all Pension Plans, including Title IV Plans,
Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree Welfare
Plans. Copies of all such listed Plans (other than Multiemployer Plans),
together with a copy of the latest form IRS/DOL 5500-series form for each such
Plan and the most recent actuarial report for any Title IV Plans and Welfare
Plans have been delivered to Agent. Except with respect to Multiemployer Plans,
each Qualified Plan has been determined by the IRS to qualify under Section 401
of the IRC, the trusts created thereunder have been determined to be exempt from
tax under the provisions of Section 501 of the IRC, and nothing has occurred
that would cause the loss of such qualification or tax-exempt status. Except as
could not reasonably be expected to have a Material Adverse Effect, each Plan is
in compliance with the applicable provisions of ERISA and the IRC, including the
timely filing of all reports required under the IRC or ERISA, including the
statement required by 29 CFR Section 2520.104-23. Neither any Credit Party nor
ERISA Affiliate has failed to make any contribution or pay any amount due as
required by either Section 412 of the IRC or Section 302 of ERISA or the terms
of any such Plan. Except as could not be reasonably be expected to have a
Material Adverse Effect, no "prohibited transaction," as defined in Section 406
of ERISA and Section 4975 of the IRC, in connection with any Plan has occurred
that would subject any Credit Party to a material tax on prohibited transactions
imposed by Section 502(l) of ERISA or Section 4975 of the IRC, and no event has
occurred with respect to a Plan which would subject any Credit Party to any
material liability under Section 502(l) of ERISA.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Credit Party, threatened claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five years no Title IV Plan of any Credit Party or ERISA
Affiliate has been terminated, whether or not in a "standard termination" as
that term is used in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of
any Credit Party or ERISA Affiliate (determined at any time within the past five
years) with Unfunded Pension Liabilities been transferred outside of the
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"controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of any
Credit Party or ERISA Affiliate (determined at such time); (vi) except in the
case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes
up, in the aggregate, no more than 10% of fair market value of the assets of any
Plan measured on the basis of fair market value as of the latest valuation date
of any Plan; and (vii) no liability under any Title IV Plan has been satisfied
with the purchase of a contract from an insurance company that is not rated AAA
by the Standard & Poor's Corporation or an equivalent rating by another
nationally recognized rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
in writing against any Credit Party, before any Governmental Authority or before
any arbitrator or panel of arbitrators (collectively, "Litigation"), (a) that
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
is reasonably likely to be determined adversely to any Credit Party and that, if
so determined, would have a Material Adverse Effect. Except as set forth on
Disclosure Schedule (3.13), as of the Effective Date there is no Litigation
pending or, to any Credit Party's knowledge, threatened that seeks damages in
excess of $250,000 or injunctive relief against, or alleges criminal misconduct
of, any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Credit Party
or Affiliate thereof brought about the obtaining, making or closing of the Loans
or the Related Transactions, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.15 Intellectual Property. As of the Effective Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15). To the knowledge of each Credit Party, as of the Effective
Date, each Credit Party conducts its business and affairs without infringement
of or interference with any Intellectual Property of any other Person in any
material respect. Except as set forth in Disclosure Schedule (3.15), as of the
Effective Date, no Credit Party is aware of any infringement claim by any other
Person with respect to any Intellectual Property.
3.16 Full Disclosure. No information contained in this Agreement, any
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other written reports from time to time delivered hereunder or any
written statement furnished by or on behalf of any Credit Party to Agent or any
Lender pursuant to the terms of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which they were made. Projections from time
to time delivered hereunder are or will be based upon the estimates and
assumptions stated therein, all of which Borrower believed at the time of
delivery to be reasonable and fair in light of current conditions and current
facts known to Borrower as of such delivery date, and reflect Borrower's good
faith and reasonable estimates of the future financial performance of Borrower
and of the other information projected therein for the period set forth therein.
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Each Credit Party will use its best efforts to ensure that the Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances.
3.17 Common Enterprise. Borrower is the direct and beneficial owner and
holder of all of the issued and outstanding shares of Stock of each Secured
Guarantor. Borrower and Secured Guarantors make up a related organization of
various entities constituting a single economic and business enterprise so that
Borrower and Secured Guarantors share a substantial identity of interests such
that any benefit received by any one of them benefits the others. Borrower and
certain of the Secured Guarantors render services to or for the benefit of the
Borrower and/or other Secured Guarantors, as the case may be, purchase or sell
and supply goods to or from or for the benefit of the others, make loans,
advances and provide other financial accommodations to or for the benefit of
Borrower and Secured Guarantors (including inter alia, the payment by Borrower
and Guarantors of creditors of the Borrower or Secured Guarantors and guarantees
by Borrower and Secured Guarantors of indebtedness of the Borrower and Secured
Guarantors and provide administrative, marketing, payroll and management
services to or for the benefit of the Borrower and other Secured Guarantors).
Borrower and Secured Guarantors have centralized accounting, common officers and
directors and are in certain circumstances, identified to creditors as a single
economic and business enterprise.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies
of any nature maintained, as of the Effective Date, for current occurrences by
each Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which any Credit Party
maintains deposit or other accounts as of the Effective Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
(3.20), as of the Effective Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any
similar state or local law.
3.21 Customer and Trade Relations. During the twelve months preceding
the Effective Date, there was no termination or cancellation of: the business
relationship of any Credit Party with any customer or group of related customers
whose purchases during the most recent Fiscal Year caused it to be ranked among
the ten largest customers of such Credit Party; or the business relationship of
any Credit Party with any supplier that cannot be easily replaced.
3.22 Agreements and Other Documents. As of the Effective Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
complete copies (or accurate summaries) of all of the following agreements or
documents to which it is subject and each of which is listed in Disclosure
Schedule (3.22) without duplication of the agreements or documents provided as
31
of the Original Closing Date: supply agreements and purchase agreements not
terminable by such Credit Party within sixty (60) days following written notice
issued by such Credit Party and involving transactions in excess of $1,000,000
per annum; leases of Equipment having a remaining term of one year or longer and
requiring aggregate rental and other payments in excess of $500,000 per annum;
licenses and permits held by the Credit Parties, the absence of which could be
reasonably likely to have a Material Adverse Effect; instruments and documents
evidencing any Indebtedness or Guaranteed Indebtedness of such Credit Party in
excess of $500,000 and any Lien granted by such Credit Party with respect
thereto; and instruments and agreements evidencing the issuance of any equity
securities, warrants, rights or options to purchase equity securities of such
Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the Loans and
Letter of Credit Obligations to be made or incurred on or prior to the Effective
Date, if any, or such other date as Loans and Letter of Credit Obligations
requested hereunder are made or incurred, (b) the disbursement of the proceeds
of such Loans pursuant to the instructions of Borrower, the payment and accrual
of all transaction costs in connection with the foregoing, each Credit Party is
and will be Solvent.
3.24 Status of Holdings. As of the Effective Date, Holdings has not
engaged in any trade or business and is not obligated to pay any Indebtedness
other than the Zero Coupon Debt.
3.25 Subordinated Debt; other Indebtedness. As of the Effective Date,
Borrower has delivered to Agent a complete and correct copy of the Subordinated
Documents, the Discount Debentures Documents and any other debt instrument of
any Credit Party evidencing Indebtedness in excess of $500,000 (including, in
each case, all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith and without duplication of the debt instruments delivered as of the
Original Closing Date). As of the relevant dates, Holdings and Borrower had the
corporate power and authority to incur the Indebtedness evidenced by the
Discount Debentures Documents and the Subordinated Debt Documents, respectively.
All principal of and interest on the Notes, all Letter of Credit Obligations,
and all other Obligations (including all Tranche A Obligations and Term B Loan
Obligations) constitute "Senior Indebtedness" under the Senior Subordinated
Indenture entitled to the benefits of the subordination provisions contained in
the Senior Subordinated Notes. The execution, delivery and performance of this
Agreement and the other Loan Documents and the funding of the Term B Loan do not
violate any term or provision of any of (i) Subordinated Debt Documents
(including, without limitation, Section 4.03 of the Senior Subordinated
Indenture) and (ii) the Discount Debentures Documents. Borrower acknowledges
that Agent and each Lender are entering into this Agreement and are extending
the Commitments in reliance upon the subordination provisions of the Senior
Subordinated Notes and this Section 3.25.
3.26 Motor Vehicles. As of the Effective Date, the value of all motor
vehicles owned by Credit Parties does not exceed $100,000 in the aggregate.
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4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) From and after the Effective Date and until the Termination Date,
Borrower shall deliver to Agent or to Agent and Lenders, as required, the
Financial Statements, notices, Projections and other information at the times,
to the Persons and in the manner set forth in Annex E.
(b) From and after the Effective Date and until the Termination Date,
Borrower shall deliver to Agent or to Agent and Lenders, as required, the
various Collateral Reports (including Borrowing Base Certificates in the form of
Exhibit 4.1(b)) at the times, to the Persons and in the manner set forth in
Annex F.
4.2 Communication with Accountants. Each Credit Party executing this
Agreement authorizes (a) Agent and (b) so long as an Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified public accountants, including Ernst & Young, and
authorizes and shall instruct those accountants and advisors to disclose and
make available to Agent and each Lender any reasonably requested information in
its possession or under its control relating to any Credit Party with respect to
the business, results of operations and financial condition of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof and until the
Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Except as
otherwise permitted by the Loan Documents, each Credit Party shall: (i) do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and its rights and franchises; (ii) continue to
conduct its business substantially as now conducted or as otherwise permitted
hereunder; and (iii) at all times maintain, preserve and protect all of its
assets and properties used or useful in the conduct of its business, and keep
the same in good repair, working order and condition in all material respects
(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices, except in each case
where the failure to do so would result in a Material Adverse Effect. Each
Credit Party shall transact business only in such corporate and trade names as
are set forth in Disclosure Schedule (5.1) or such other names as such Credit
Party may provide to Agent on at least thirty (30) days' prior written notice.
5.2 Payment of Charges.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful
claims for labor, materials, supplies and services or otherwise, and (iii) all
33
storage or rental charges payable to warehousemen and bailees, in each case,
before any thereof shall become thirty (30) days past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP; (ii) no Lien shall be imposed to secure payment of such Charges (other
than payments to warehousemen and/or bailees) that is superior to any of the
Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) no tangible asset of any Credit Party becomes
subject to forfeiture or loss during the pendency of such contest, and (iv) such
Credit Party shall promptly pay or discharge such contested Charges, Taxes or
claims and all additional charges, interest, penalties and expenses, if any, and
shall deliver to Agent evidence reasonably acceptable to Agent of such
compliance, payment or discharge, if such contest is terminated or discontinued
adversely to such Credit Party or the conditions set forth in this Section
5.2(b) are no longer met.
5.3 Books and Records. The Credit Parties shall keep adequate books and
records with respect to their business activities in which proper entries,
reflecting all material financial transactions, are made in accordance with GAAP
and on a basis consistent with the Financial Statements attached as Disclosure
Schedule (3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense, maintain
the policies of insurance described on Disclosure Schedule (3.18) as in effect
on the date hereof or otherwise in form and amounts determined by the Credit
Parties and reasonably acceptable to Agent and with insurers selected by the
Credit Parties and reasonably acceptable to Agent. Such policies of insurance
(or the loss payable and additional insured endorsements delivered to Agent)
shall contain provisions pursuant to which the insurer agrees to provide thirty
(30) days' prior written notice to Agent in the event of any non-renewal,
cancellation or amendment of any such insurance policy. If any Credit Party at
any time or times hereafter shall fail to obtain or maintain any of the policies
of insurance required above or to pay all premiums relating thereto, Agent may
at any time or times thereafter obtain and maintain such policies of insurance
and pay such premiums and take any other action with respect thereto that Agent
deems reasonably advisable. Agent shall have no obligation to obtain insurance
for any Credit Party or pay any premiums therefor. By doing so, Agent shall not
be deemed to have waived any Default or Event of Default arising from any Credit
Party's failure to maintain such insurance or pay any premiums therefor. All
sums so disbursed, including reasonable attorneys' fees, court costs and other
charges related thereto, shall be payable on demand by Borrower to Agent and
shall be additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any Credit
Party's risk profile (including any material change in the product mix
maintained by any Credit Party or any laws affecting the potential liability of
such Credit Party) to require additional forms and limits of insurance customary
in the industry for such changed risk profile. If reasonably requested by Agent,
each Credit Party shall deliver to Agent from time to time a report of a
34
reputable insurance broker, reasonably satisfactory to Agent, with respect to
its insurance policies.
(c) Each Credit Party shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
maintained by such Credit Party naming Agent, on behalf of itself and Lenders,
as additional insured. Each Credit Party irrevocably makes, constitutes and
appoints Agent (and all officers, employees or agents designated by Agent), so
long as any Event of Default has occurred and is continuing, as each Credit
Party's true and lawful agent and attorney-in-fact for the purpose of making,
settling and adjusting claims under such "All Risk" policies of insurance,
endorsing the name of each Credit Party on any check or other item of payment
for the proceeds of such "All Risk" policies of insurance and for making all
determinations and decisions with respect to such "All Risk" policies of
insurance. Agent shall have no duty to exercise any rights or powers granted to
it pursuant to the foregoing power-of-attorney. Borrower shall promptly notify
Agent of any Event of Loss and of any loss, damage, or destruction to the
Collateral in the amount of $250,000 or more, whether or not covered by
insurance. After deducting from the insurance proceeds received in connection
with such Event of Loss the expenses, if any, incurred by Agent in the
collection or handling thereof, Agent shall either, at its option, apply such
proceeds to the reduction of the Obligations in accordance with Section 1.3(d)
or permit or require each Credit Party to use such money, or any part thereof,
to replace, repair, restore or rebuild the Collateral in a diligent and
expeditious manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction. Notwithstanding the
foregoing, if an Event of Loss giving rise to insurance proceeds could not
reasonably be expected to have a Material Adverse Effect (after giving effect to
the application of the insurance proceeds to repair and restoration) and such
insurance proceeds do not exceed $2,000,000 in the aggregate, the applicable
Credit Party may elect, in its discretion, to replace, restore, repair or
rebuild the property; provided that if such Credit Party has not completed or
entered into binding agreements to complete such replacement, restoration,
repair or rebuilding within 270 days of such casualty, Agent may apply such
insurance proceeds to the Obligations in accordance with Section 1.3(d). All
insurance proceeds that are to be made available to Borrower to replace, repair,
restore or rebuild the Collateral shall be applied by Agent to reduce the
outstanding principal balance of the Revolving Loan (which application shall not
result in a permanent reduction of the Revolving Loan Commitment) and upon such
application, Agent shall establish a Reserve against the Borrowing Base in an
amount equal to the amount of such proceeds so applied. Thereafter, such funds
shall be made available to such Credit Party to provide funds to replace,
repair, restore or rebuild the Collateral as follows: (i) Borrower shall request
a Revolving Credit Advance be made to such Credit Party in the amount requested
to be released; (ii) so long as the conditions set forth in Section 2.2 have
been met and subject to the provisions of any Mortgage encumbering such
Collateral, Revolving Lenders shall make such Revolving Credit Advance; and
(iii) in the case of insurance proceeds applied against the Revolving Loan, the
Reserve established with respect to such insurance proceeds shall be reduced by
the amount of such Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with Section 1.3(d); provided, that in the case of
insurance proceeds pertaining to any Credit Party other than Borrower, such
insurance proceeds shall be applied to the Loans owing by Borrower in accordance
with Section 1.3(d).
35
5.5 Compliance with Laws. Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to FAA, ERISA and labor matters and Environmental Laws
and Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of an Event of Default), the
Credit Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter
hereafter arising that, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedule or as an exception to such representation or that is necessary to
correct any information in such Disclosure Schedule or representation which has
been rendered inaccurate thereby (and, in the case of any supplements to any
Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to
show the changes made therein); provided that (a) no such supplement to any such
Disclosure Schedule or representation shall amend, supplement or otherwise
modify any Disclosure Schedule or representation, or be or be deemed a waiver of
any Event of Default resulting from the matters disclosed therein, except as
consented to by Agent and Requisite Lenders in writing, and (b) no supplement
shall be required or permitted as to representations and warranties that relate
solely to the Original Closing Date or the Effective Date, as applicable.
5.7 Intellectual Property. Each Credit Party will conduct its business
and affairs without infringement of or interference with any Intellectual
Property of any other Person in any material respect, except as could not
reasonably be expected to have a Material Adverse Effect.
5.8 [Intentionally Omitted]
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases. Unless Agent shall otherwise agree in writing, each
Credit Party shall use commercially reasonable efforts to obtain a landlord's
agreement, mortgagee agreement or bailee letter, as applicable, from the lessor
of each leased property, mortgagee of owned property or bailee with respect to
any warehouse, processor or converter facility or other location where
Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be satisfactory in form and substance to Agent. With respect to such locations
or warehouse space leased or owned as of the Effective Date and thereafter, if
Agent has not received a landlord or mortgagee agreement or bailee letter as of
the Effective Date (or, if later, as of the date such location is acquired or
leased), Borrower's Eligible Inventory at that location shall be subject to such
Reserves as may be established by Agent in its reasonable credit judgment. After
the Effective Date, no real property or warehouse space shall be leased by any
Credit Party, and no material amount of Inventory shall be shipped to a
processor or converter under arrangements established after the Effective Date
without the prior written consent of Agent (which consent, in Agent's
discretion, may be conditioned upon the exclusion from the Borrowing Base of
Eligible Inventory at that location or the establishment of Reserves reasonably
acceptable to Agent) or, unless and until a reasonably satisfactory landlord
36
agreement or bailee letter, as appropriate, shall first or simultaneously have
been obtained with respect to such location. Each Credit Party shall timely and
fully pay and perform its obligations in all material respects under all leases
and other agreements with respect to each leased location or public warehouse
where any Collateral is or may be located. Except to the extent otherwise
permitted hereunder, if any Credit Party proposes to acquire a fee ownership
interest in Real Estate after the Effective Date, it shall first provide to
Agent a mortgage or deed of trust granting Agent a first priority Lien on such
Real Estate, together with environmental audits, mortgage title insurance
commitment, real property survey, local counsel opinion(s), and, if required by
Agent, casualty insurance and flood insurance, and such other documents,
instruments or agreements reasonably requested by Agent, in each case, in form
and substance reasonably satisfactory to Agent.
5.10 Motor Vehicles. In the event the value of all motor vehicles owned
by Credit Parties shall exceed $100,000 in the aggregate, each Credit Party will
grant to Agent perfected Liens on all motor vehicles owned by such Credit Party
and deliver all title certificate for each motor vehicle owned by such Credit
Party noting Agent's security interest therein, signed by the relevant Credit
Party, in a manner satisfactory to Agent.
5.11 Further Assurances.
Each Credit Party shall, at such Credit Party's expense, execute any
and all further documents, financing statements, agreements and instruments, and
take all further action (including filing Code and other financing statements,
mortgages and deeds of trust) as may be required under applicable law, or that
the Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and priority of the security interests created or intended
to be created by the Loan Documents.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the Effective Date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc.
(a) No Credit Party shall directly or indirectly, by operation of law
or otherwise, (i) form or acquire any Subsidiary, or (ii) merge with,
consolidate with, acquire all or substantially all of the assets or Stock of, or
otherwise combine with or acquire, any Person, except (A) any Credit Party may
merge with another Credit Party, provided that Borrower shall be the survivor of
any such merger to which it is a party and (B) Borrower or any Secured Guarantor
may consummate a Permitted Acquisition as defined in and in accordance with
Section 6.1(b) below or form one or more Acquisition Companies for the sole
purpose of completing a Permitted Acquisition.
(b) Any Credit Party or an Acquisition Company (or Holdings, so long as
contemporaneously therewith, all assets so acquired are transferred to Borrower
or any other Credit Party), may (i) acquire all or substantially all of the
assets of a Qualified Target or assets that constitute all or substantially all
of the assets of a division or operating unit of a Qualified Target, (ii)
37
purchase 100% of the outstanding Stock of a Qualified Target, (iii) purchase not
less than 80% of each class of outstanding Stock of a Qualified Target as long
as, without limitation to conditions required for Permitted Acquisition set
forth below, Agent will be granted a first priority perfected Lien (subject to
Permitted Encumbrances and except as contemplated by clauses (A) and (C) of
Section 6.1(b)(iv)) in all in the assets and Stock of the Qualified Target, and
Agent shall have received lien search results (and in the case of a Qualified
Target incorporated in England full search reports from Companies House),
financing statements and supplemental security agreements, a Guaranty,
environmental indemnity agreements, blocked account agreements and other
collateral documents in connection therewith as requested by Agent, or (iv)
participate in a merger of a Qualified Target with and into Borrower or a
Secured Guarantor or the merger of an Acquisition Company into a Qualified
Target (with Borrower as the sole Stockholder of Qualified Target after giving
effect thereto) or the merger of a Qualified Target into an Acquisition Company
(each such acquisition, purchase or merger being an "Acquisition"), subject to
satisfaction of each of the following conditions (and each such Acquisition
shall be a "Permitted Acquisition" only upon satisfaction of each of the
following conditions):
(i) Agent shall receive at least thirty (30) days' prior
written notice of such Acquisition, which notice shall include a reasonably
detailed description of such Acquisition, which may be subject to further
negotiation, and a copy of any executed letter of intent relating thereto;
(ii) such Acquisition shall only involve a Qualified Target
which business would not subject Agent or any Lender to regulatory or third
party approvals in connection with the exercise of its rights and remedies under
this Agreement or any other Loan Documents other than approvals applicable to
the exercise of such rights and remedies with respect to Borrower prior to such
Acquisition;
(iii) such Acquisition shall be consensual and shall have been
approved by the Qualified Target's board of directors or, in the case of a
Qualified Target in bankruptcy, a court of competent jurisdiction;
(iv) no additional Indebtedness, Guaranteed Indebtedness or
other liabilities shall be incurred, assumed or otherwise be reflected on a
consolidated balance sheet of Borrower and Qualified Target after giving effect
to such Acquisition, except (A) Revolving Credit Advances made hereunder that
are made in accordance with the terms of Section 2.3, (B) trade payables and
accrued expenses, each in existence at the time of the Acquisition and not
created in anticipation thereof and each arising in ordinary course, (C)
Industrial Revenue Bond Financing, Capital Leases and purchase money
Indebtedness, not to exceed in the aggregate 25% of total consideration paid for
such Permitted Acquisition (including the book value of assumed liabilities),
each in existence at the time of Acquisition and not created in anticipation
thereof and each arising in the ordinary course of business, and (D) unsecured
Acquisition Subordinated Debt (1) with a maturity date after the maturity of the
Obligations in an amount not to exceed $5,000,000 in the aggregate or (2) with
an earlier maturity but subject to Reserve against the Borrowing Base in an
amount equal to the maximum aggregate payments payable thereunder;
38
(v) the assets acquired in such Acquisition shall be free and
clear of all Liens (other than Permitted Encumbrances and except as contemplated
by clauses (A) and (C) of Section 6.1(b)(iv));
(vi) at the closing of any Acquisition, Agent will be granted
a first priority perfected Lien (subject to Permitted Encumbrances and except as
contemplated by clauses (A) and (C) of Section 6.1(b)(iv)) in all assets
acquired pursuant thereto or, in the case of equity purchase, in the assets and
Stock of the Qualified Target, and Borrower shall have executed such documents
and taken such actions as may be reasonably required by Agent in connection
therewith, and Agent shall have received lien search results (and in the case of
a Qualified Target incorporated in England full search reports from Companies
House), financing statements and supplemental security agreements, a Guaranty,
environmental indemnity agreements, blocked account agreements and other
collateral documents and other documents reasonably requested by Agent;
(vii) at the time of such Acquisition and immediately after
giving effect thereto (including any Revolving Credit Advance in connection
therewith), no Default or Event of Default shall have occurred and be
continuing;
(viii) at least five (5) days before the closing date for the
Permitted Acquisition, Agent shall have received the following financial
statements consisting of balance sheets, statements of income and retained
earnings and cash flows with respect to the Qualified Target to the extent such
financial statements exist or are obtained by such date: (A) annual financial
statements for the most recent 3-year period preceding the Acquisition; (B)
monthly financial statements for the most recent 4-quarter period preceding the
Acquisition; and (C) monthly financial statements for year-to-date preceding the
Acquisition, setting forth in comparative form the figures for the two previous
years;
(ix) at least five (5) days before the closing date for the
Permitted Acquisition, Agent shall have received all pro forma financial
statements consisting of balance sheets, statements of income and retained
earnings and cash flows with respect to the Qualified Target prepared by
Borrower or a Secured Guarantor, as applicable, in connection with such
Acquisition;
(x) Agent shall have not less than seven (7) days to review
(without, however, the right to approve or disapprove), environmental audits
with respect to real estate acquired in connection with a Permitted Acquisition
and with respect to Qualified Targets acquired by merger or Stock purchase or
where contingent liabilities are to be assumed, litigation, actuarial studies
and similar contingent liability analyses with respect to the Qualified Target;
(xi) at least seven (7) days prior to the date of such
Acquisition, Agent shall have received copies of the draft acquisition agreement
(which may be subject to further negotiation) and related agreements,
instruments, and other documents reasonably requested by Agent and, promptly
following the closing date for such Permitted Acquisition, final drafts of the
foregoing;
39
(xii) at least five (5) days prior to the closing of an
Acquisition, Borrower shall have delivered to Agent:
(A) a pro forma consolidated balance sheet, income
statement and cash flow statement of Holdings and its
Subsidiaries (the "Acquisition Pro Forma"), based on recent
financial statements, which shall fairly present in all
material respects the assets, liabilities, financial condition
and results of operations of Holdings and its Subsidiaries in
accordance with GAAP consistently applied, but taking into
account such Permitted Acquisition and the funding of the
Revolving Loan in connection therewith, including detailed
acquisition adjustments acceptable to Agent, and such
Acquisition Pro Forma shall reflect that (x) average daily
Borrowing Availability for the 90-day period preceding the
consummation of such Permitted Acquisition would have exceeded
$5,000,000 on a pro forma basis (after giving effect to such
Permitted Acquisition (including acquired Eligible Accounts
and Eligible Inventory as to which an audit has been
completed) and the Revolving Loan funded in connection
therewith as if made on the first day of such period) and the
Acquisition Projections (as hereinafter defined) shall reflect
that such Borrowing Availability of $5,000,000 shall continue
for at least two (2) years after the consummation of such
Acquisition, and (y) on a pro forma basis, no Event of Default
has occurred and is continuing or would result after giving
effect to such Acquisition and Borrower would have been in
compliance with the Fixed Charge Coverage Ratio Financial
Covenant set forth in Annex G for the four quarter period
reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Annex E prior to the
consummation of such Acquisition (after giving effect to such
Permitted Acquisition and the Revolving Loan funded in
connection therewith as if made on the first day of such
period);
(B) updated versions of the most recently delivered
Projections covering the 1-year period commencing on the date
of such Acquisition and otherwise prepared in accordance with
the Projections (the "Acquisition Projections") and based upon
historical financial data of a recent date reasonably
satisfactory to Agent, taking into account such Permitted
Acquisition;
(C) a certificate of the Chief Financial Officer of
Holdings and Borrower to the effect that: (w) Holdings on a
consolidated basis (after taking into consideration all rights
of contribution and indemnity Borrower has against Holdings
and each other Subsidiary of Holdings) will be Solvent upon
the consummation of the Permitted Acquisition; (x) the
Acquisition Pro Forma fairly presents the financial condition
of Holdings (on a consolidated basis) as of the date thereof
after giving effect to the Acquisition; (y) the Acquisition
Projections are reasonable estimates of the future financial
performance of Holdings (on a consolidated basis) subsequent
to the date thereof based upon the historical performance of
Holdings, Borrower and the Qualified Target and show that
Holdings (on a consolidated basis) shall continue to be in
compliance with the Fixed Charge Coverage Ratio set forth in
Annex G for the 2-year period thereafter; and (z) Holdings and
Borrower have completed their due diligence investigation with
40
respect to the Qualified Target and such Permitted
Acquisition; and
(D) a certificate in the form of Exhibit 6.1 (the
"Acquisition Compliance Certificate") showing compliance with
the terms and provision of clauses (C) and (D) of Section
6.1(b)(iv), and a designation of assets, if any, in accordance
with Section 6.8(d) with respect to such Acquisition.
Notwithstanding the foregoing, the Accounts and Inventory of the Qualified
Target shall not be included in Eligible Accounts and Eligible Inventory until a
field audit of Qualified Target has been satisfactorily completed, including the
establishment of Reserves required in Agent's reasonable credit judgment to
address the incrementally adverse effect of laws applicable to a Qualified
Target located outside of the United States of America.
6.2 Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that: (a) Borrower and Credit Parties may hold
investments comprised of notes payable, or stock or other securities issued by
Account Debtors to Borrower pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of business;
(b) each Credit Party may maintain (but not increase) its existing investments
in its Subsidiaries as of the Effective Date which are not Credit Parties; (c)
so long as no Default or Event of Default has occurred and is continuing, Credit
Parties may make investments, subject to a Control Letter in favor of Agent for
the benefit of Lenders or otherwise subject to a perfected security interest in
favor of Agent for the benefit of Lenders, in (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of America or any
agency thereof maturing within one year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one year from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Ratings Group or Xxxxx'x Investors Service, Inc., (iii) certificates of
deposit maturing no more than one year from the date of creation thereof issued
by commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"), (iv) time deposits
maturing no more than thirty (30) days from the date of creation thereof with A
Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above; (d) Borrower may make
investments in the capital Stock of any of the Secured Guarantors; (e) Borrower
and the Secured Guarantors may make investments in Borrower and Secured
Guarantors consisting of the intercompany loans in accordance with Section 6.3;
(f) Credit Parties may make loans and advances to employees permitted under
Section 6.4(b); (g) each Credit Party may form Acquisition Companies for the
purpose of making Permitted Acquisitions and make Permitted Acquisitions; (h)
each Credit Party may provide cash collateral to Agent in accordance with the
Loan Documents; (i) each Credit Party may enter into hedging arrangements in the
ordinary course of business, (j) Borrower may make additional investments after
the Original Closing Date in RBC de Mexico S De X.X. de CV in an aggregate
amount not to exceed $1,000,000 in the aggregate (which may include transferred
Equipment with an appraised orderly liquidation value not to exceed $500,000 in
41
the aggregate) during the first two years following the Original Closing Date,
which limitations shall be increased to $1,500,000 and $750,000 respectively as
of the second anniversary of the Original Closing Date; and (k) Credit Parties
may make other investments not to exceed $1,000,000 in the aggregate.
6.3 Indebtedness.
(a) No Credit Party shall create, incur, assume or permit to exist any
Indebtedness, except (without duplication) (i) Indebtedness secured by purchase
money security interests and Capital Leases permitted in Section 6.7(c), (ii)
the Loans and the other Obligations, (iii) unfunded pension fund and other
employee benefit plan obligations and liabilities to the extent they are
permitted to remain unfunded under applicable law, (iv) existing Indebtedness
described in Disclosure Schedule (6.3) (including earn-outs payable to sellers
of businesses, if any, constituting Indebtedness) and refinancings thereof or
amendments or modifications thereto that do not have the effect of increasing
the principal amount thereof or changing the amortization thereof (other than to
extend the same) and that are otherwise on terms and conditions no less
favorable to any Credit Party, Agent or any Lender, as reasonably determined by
Agent, than the terms of the Indebtedness being refinanced, amended or modified,
(v) Indebtedness specifically permitted under Section 6.1, (vi) Indebtedness
consisting of intercompany loans and advances made by Borrower to any Secured
Guarantor or by any Secured Guarantor to Borrower or another Secured Guarantor;
provided, that: (A) Borrower shall have executed and delivered to each such
Secured Guarantor, and each such Secured Guarantor shall have executed and
delivered to Borrower or another such Secured Guarantor, as applicable, on the
Original Closing Date, a demand note (collectively, the "Intercompany Notes") to
evidence any such intercompany Indebtedness owing at any time by Borrower to
such Secured Guarantor or by such Secured Guarantor to Borrower or such other
Guarantor, which Intercompany Notes shall be in form and substance reasonably
satisfactory to Agent and shall be pledged and delivered to Agent pursuant to
the applicable Pledge Agreement or Security Agreement as additional collateral
security for the Obligations; (B) Borrower and each Secured Guarantor shall
record all intercompany transactions on its books and records in a manner
reasonably satisfactory to Agent; (C) the obligations of Borrower and each
Secured Guarantor under any such Intercompany Notes shall be subordinated to the
Obligations of Borrower and each Secured Guarantor hereunder in a manner
reasonably satisfactory to Agent; (D) no Event of Default shall be continuing
after giving effect to any such proposed intercompany loan; and (E) the
aggregate balance of all such intercompany loans owing by any Secured Guarantor
incurred during the time that the EBITDA of such Secured Guarantor has been
negative for a trailing twelve month period ending on the last day of any Fiscal
Month shall not be increased by more than $2,000,000 over the amount of such
Secured Guarantor's intercompany loan obligations as of the last day of such
period; provided that a Secured Guarantor shall no longer be subject to that
$2,000,000 limitation if that Secured Guarantor has had positive EBITDA for the
trailing twelve-month periods ending on the last day of six consecutive Fiscal
Months; provided, further, that if a Secured Guarantor has been subject to that
$2,000,000 limitation, then became exempt from it and again has a negative
EBITDA for a trailing twelve-month period, not more than $2,000,000 of
additional intercompany loans may be received by it after the date when it again
has a negative EBITDA; (vii) unsecured Indebtedness of Borrower so long as such
unsecured Indebtedness is subordinated to the Obligations in a manner and form
satisfactory to Agent and Lenders in their sole discretion, as to right and time
of payment and as to any other terms, rights and remedies thereunder and so long
42
as (A) no Event of Default has occurred and is continuing or would result after
giving effect to such unsecured Indebtedness (B) Holdings was, on a pro forma
basis, in compliance with the Fixed Charge Coverage Ratio Financial Covenant set
forth on Annex G as of the last day of the Fiscal Quarter reflected in the
Compliance Certificate most recently delivered prior to the date such unsecured
Indebtedness is incurred (after giving effect to such unsecured Indebtedness and
the use thereof as if incurred on the first day of such period); and (c) the
proceeds of such Indebtedness have been wholly used, promptly upon receipt
thereof, to directly pay (by way of refinancing or exchange) the following
Indebtedness in the following order: first, the Senior Subordinated Debt, until
the same has been repaid in full; second, the Zero Coupon Debt, until the same
has been repaid in full; third, interest then due and payable on the Revolving
Credit Advances; fourth, the outstanding principal balance of the Revolving
Credit Advances until the same has been repaid in full; fifth, interest then due
and payable on the Term Loan; and sixth, the scheduled principal installments of
the Term Loan in inverse order of maturity; (viii) Indebtedness of a Qualified
Target assumed or incurred in a Permitted Acquisition described in Section
6.1(a)(iv) as long as such Indebtedness was not incurred in contemplation of
such Permitted Acquisition; (ix) Indebtedness resulting from endorsement of
negotiable instruments for collection in the ordinary course of business; (x)
Indebtedness arising with respect to customary indemnification and purchase
price adjustment obligations incurred in connection with Permitted Acquisitions;
(xii) Indebtedness incurred in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds and other similar
obligations not exceeding at any time $250,000 in aggregate outstanding
liability; (xiii) Indebtedness incurred in connection with interest swap
agreements or arrangements designed to protect the Borrower or any Subsidiary
against fluctuation in interest rates, and not entered into for speculation,
entered into with any Lender (or any Affiliate thereof) with respect to the
Loans, in each case with the consent of Agent, which shall not be unreasonably
withheld; (xiv) currency hedging arrangements; and (xv) Indebtedness not
permitted by clauses (i) through (xiv) above, so long as much Indebtedness, in
the aggregate at any time outstanding, does not exceed $500,000.
(b) During the first two years following the Original Closing Date, no
Credit Party shall, directly or indirectly, voluntarily purchase, redeem,
defease or prepay: any principal of, premium, if any, interest or other amount
payable in respect of any Indebtedness, other than (i) the Obligations; (ii)
Indebtedness secured by a Permitted Encumbrance if the asset securing such
Indebtedness has been sold or otherwise disposed of in accordance with Sections
6.8(b) or (c); (iii) Indebtedness permitted by Section 6.3(a)(iv) upon any
refinancing thereof in accordance with Section 6.3(a)(iv) or Section
6.3(a)(vii); (iv) intercompany Indebtedness; and (v) as otherwise permitted by
Section 6.14; provided that after the first two years following the Original
Closing Date, if Borrower purchases, prepays or redeems other Indebtedness,
Borrower shall meet the minimum Borrowing Availability set forth in Section
6.14(b) after giving effect thereto.
6.4 Employee Loans and Affiliate Transactions.
(a) No Credit Party shall enter into or be a party to any transaction
with any other Credit Party or any Affiliate thereof except (i) in the ordinary
course of and pursuant to the reasonable requirements of such Credit Party's
business and upon fair and reasonable terms that are no less favorable to such
Credit Party than would be obtained in a comparable arm's length transaction
43
with a Person not an Affiliate of such Credit Party (ii) as and to the extent
permitted in Section 6.13(e) and (iii) as and to the extent permitted by Section
6.3(a)(vi). All such transactions existing as of the date hereof are described
in Disclosure Schedule (6.4(a)).
(b) Excluding loans set forth in Disclosure Schedule (6.4(b)), no
Credit Party shall enter into any lending or borrowing transaction with any
employees of any Credit Party, except loans to its respective employees on an
arm's-length basis in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $250,000 to any employee and up to a maximum of
$1,000,000 in the aggregate at any one time outstanding and except for loans or
advances made in connection with a management or employee stock ownership
program, the proceeds of which are immediately invested in Holdings' Stock and
contributed to the capital of Borrower.
6.5 Capital Structure and Business. No Credit Party shall amend its
charter or bylaws in a manner that could reasonably be expected to adversely
affect Agent or Lenders or such Credit Party's duty or ability to repay the
Obligations. No Credit Party shall engage in any business other than the
~businesses currently engaged in by the Credit Parties or any business
reasonably related thereto. No Credit Party other than Holdings and Borrower
shall issue any additional shares of Stock.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly permitted by this
Agreement, provided that neither Borrower nor any of its Domestic Subsidiaries
shall create, incur, assume or permit to exist any Guaranteed Indebtedness for
the benefit of Holdings or any Foreign Subsidiary.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts. No Credit Party shall create,
incur, assume or permit to exist any Lien on or with respect to any of its other
properties or assets (whether now owned or hereafter acquired) except for (a)
Permitted Encumbrances; (b) Liens in existence on the date hereof (exclusive of
Liens of the Prior Lenders, which will be discharged on the Original Closing
Date or the Effective Date) and summarized on Disclosure Schedule (6.7) securing
the Indebtedness described on Disclosure Schedule (6.3) and permitted
refinancings, extensions and renewals thereof, including extensions or renewals
of any such Liens; provided that the principal amount of the Indebtedness so
secured is not increased and the Lien does not attach to any other property; and
(c) Liens created after the date hereof by conditional sale or other title
retention agreements (including Capital Leases) or in connection with purchase
money Indebtedness with respect to real estate, improvements thereto, or
Equipment and Fixtures acquired by any Credit Party in the ordinary course of
business, involving the incurrence of an aggregate amount of purchase money
Indebtedness and Capital Lease Obligations of not more than $5,000,000
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within thirty (30) days following such purchase and does not exceed
100% of the purchase price of the subject assets), (d) Liens permitted in
accordance with Section 6.1; and (e) Liens securing other obligations not to
exceed $500,000 in the aggregate. In addition, no Credit Party shall become a
party to any agreement, note, indenture or instrument, or take any other action,
44
that would prohibit the creation of a Lien on any of its properties or other
assets in favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations, except operating leases, Capital Leases or
Licenses which prohibit Liens upon the assets that are subject thereto.
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including the Stock of any of its Subsidiaries (whether in a public or a private
offering or otherwise) or any of its Accounts, other than (a) the sale of
Inventory in the ordinary course of business, (b) the sale, transfer, conveyance
or other disposition by a Credit Party of Equipment, Fixtures and Real Estate
that are obsolete or no longer used or useful in such Credit Party's business
and having a book value not exceeding $500,000 in the aggregate in any Fiscal
Year, (c) the sale, transfer, conveyance or other disposition of other Equipment
and Fixtures having a value not exceeding $500,000 in the aggregate in any
Fiscal Year, and (d) assets acquired as part of a Permitted Acquisition and
designated for disposition in a written notice to Agent when acquired. With
respect to any disposition of assets or other properties permitted pursuant to
clauses (b) and (c) above, subject to compliance with Section 1.3(b), Agent
agrees on reasonable prior written notice to release its Lien on such assets or
other properties in order to permit the applicable Credit Party to effect such
disposition and shall execute and promptly deliver to Borrower, at Borrower's
expense, appropriate UCC-3 termination statements and other releases as
reasonably requested by Borrower.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrower shall not breach or fail to comply
with any of the Financial Covenants.
6.11 [RESERVED]
6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments.
(a) No Credit Party shall make any Restricted Payment, except (a)
payments of interest and principal of intercompany loans and advances between
Borrower and Secured Guarantors to the extent permitted by Section 6.3, (b)
dividends and distributions by Subsidiaries of Borrower paid to Borrower or to
an intermediate Subsidiary of Borrower, as applicable, (c) transactions
permitted under Section 6.4(b), (d) payments of interest and principal of
Intercompany Notes as permitted and issued in accordance with Section 6.3, (e)
payments of management fees to Whitney & Co. in equal quarterly installments, as
45
long as such payments of management fees do not exceed $450,000 in the aggregate
during any Fiscal Year, (f) scheduled payments of interest with respect to the
Senior Subordinated Debt or any refinancing thereof permitted under Section
6.3(a)(vii) subject to the subordination provisions set forth in the applicable
note purchase agreement or indenture, (g) dividends or distributions payable to
Holdings solely in common Stock of Holdings, (h) payments to Xx. Xxxxxxx X.
Xxxxxxxx not to exceed those set forth in that certain Employment Agreement,
dated December 18, 2000, by and between Borrower and Xx. Xxxxxxx X. Xxxxxxxx, as
in effect on the Original Closing Date and (i) payments and distributions with
respect to Zero Coupon Debt and Senior Subordinated Notes permitted in
accordance with Section 6.3(a)(vii); and provided that no Event of Default has
occurred and is continuing or would result after giving effect to any Restricted
Payment pursuant to clause (e) above.
(b) Notwithstanding the foregoing Section 6.14(a), Borrower may pay
cash dividends to Holdings ("Dividends") as long as (A) promptly upon receipt
thereof, Holdings immediately uses all of the proceeds of such Dividends solely
for one or more of the following purposes: (i) payment of scheduled interest as
of the Original Closing Date on, and the redemption required as of the Original
Closing Date of, the Zero Coupon Debt, (ii) payment of dividends on the
preferred Stock of Holdings, (iii) payments at such times and in such amounts as
are sufficient to enable Holdings to pay the federal and state income taxes
attributable to the taxable income of Borrower and Subsidiaries pursuant to the
Tax Sharing Agreement, (iv) repurchase of Holdings' Stock from employees or
former employees an aggregate amount not to exceed $500,000 per year, it being
agreed that no more than $100,000 of such aggregate amount may consist of such
repurchases from employees whose employment continues, (v) dividends from
Borrower to Holdings not to exceed $100,000 in the aggregate in any Fiscal Year
to pay the operating expenses of Holdings, and (vi) funding Redemptions as long
as such Dividends paid for Redemptions do not exceed $30,000,000 in the
aggregate after the Original Closing Date; (B) no Default or Event of Default
and no default or an event of default under any Subordinated Debt Document,
Discount Debentures Documents or any other debt instrument of Holdings, Borrower
or any other Credit Party or in respect of charter of Holdings, Borrower or any
other Credit Party has occurred and is continuing or would result after giving
effect to any such Dividend, Redemption, and Revolving Credit Advances used to
fund such Dividend; (C) Borrower and Holdings are in compliance with the Fixed
Charge Coverage Ratio set forth in Annex G for the four quarter period reflected
in the Compliance Certificate most recently delivered pursuant to Annex E prior
to such proposed Dividend and all Revolving Credit Advances used to fund such
Dividend (after giving effect to such proposed Redemption, Dividend and
Revolving Credit Advances as if made on the first day of such period); (D)
Borrower has Borrowing Availability of at least $10,000,000, after giving effect
to the proposed Dividend and Revolving Credit Advances used to fund such
Dividend and without any manipulation of working capital of Borrower, and (E) if
the proceeds of the Revolving Credit Advances used to fund Redemptions exceed
$9,000,000 in the aggregate, then, in addition to satisfying the conditions of
the foregoing clauses (A) through (D) of this Section 6.14(b), the Leverage
Ratio at the end of the following Fiscal Quarters and for the 12-month period
then ended (calculated as if any proposed Redemption, Dividends and all
Revolving Credit Advances used to fund such Dividends had been made on the first
day of such period) shall not be greater than the ratio set forth below for such
Fiscal Quarter:
46
6.100 to 1.0 at the end of each Fiscal Quarter ending on or before
December 31, 2002
5.975 to 1.0 at the end of Fiscal Quarter ending March 31, 2003
5.850 to 1.0 at the end of Fiscal Quarter ending June 30, 2003
5.725 to 1.0 at the end of Fiscal Quarter ending September 30, 2003
5.600 to 1.0 at the end of Fiscal Quarter ending December 31, 2003
5.475 to 1.0 at the end of Fiscal Quarter ending March 31, 2004
5.350 to 1.0 at the end of Fiscal Quarter ending June 30, 2004
5.225 to 1.0 at the end of Fiscal Quarter ending September 30, 2004
5.100 to 1.0 at the end of Fiscal Quarter ending December 31, 2004
4.975 to 1.0 at the end of Fiscal Quarter ending March 31, 2005
4.850 to 1.0 at the end of Fiscal Quarter ending June 30, 2005
4.725 to 1.0 at the end of Fiscal Quarter ending September 30, 2005
4.600 to 1.0 at the end of Fiscal Quarter ending December 31, 2005;
4.475 to 1.0 at the end of Fiscal Quarter ending March 31, 2006;
4.350 to 1.0 at the end of Fiscal Quarter ending June 30, 2006;
4.225 to 1.0 at the end of Fiscal Quarter ending September 30, 2006;
4.100 to 1.0 at the end of Fiscal Quarter ending December 31, 2006.
3.975 to 1.0 at the end of Fiscal Quarter ending March 31, 2007;
3.850 to 1.0 thereafter.
(c) In addition, Borrower may pay Dividends to Holdings for Redemptions
that occur after the total Dividends paid for Redemptions exceed or will exceed,
after giving effect to such Dividend, $30,000,000 in the aggregate, so long as
(x) the Leverage Ratio set forth in Section 6.14(b) above shall be complied
with; (y) no Default or Event of Default or a default or an event of default
under any Subordinated Debt Documents, Discount Debentures Documents or any
other debt instrument of Holdings, Borrower or any other Credit Party or in
respect of charter of Holdings, Borrower or any other Credit Party has occurred
and is continuing or would result after giving effect to any such Dividend,
Redemption or the Revolving Credit Advance used to fund such Dividend; and (z)
Borrower and Holdings are in compliance with the Fixed Charge Coverage Ratio set
forth in Annex G for the four quarter period reflected in the Compliance
Certificate most recently delivered pursuant to Annex E prior to such proposed
Dividends and all Revolving Credit Advances to be used to fund such proposed
Dividend (after giving effect to such proposed Dividend and as if made on the
first day of such period).
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
Credit Party shall (a) change its name as it appears in official filings in the
state of its incorporation or other organization, (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral, (c) change the type of entity that it is, (d) cause
to be changed its organization identification number, if any, issued by its
47
state of incorporation or other organization, or (e) change its state of
incorporation or organization or incorporate or organize in any additional
jurisdictions, in each case without at least thirty (30) days prior written
notice to Agent and after Agent's written acknowledgment that any reasonable
action ~requested by Agent in connection therewith, including to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders, in any
Collateral, has been completed or taken, and provided that any such new location
shall be in the continental United States. Without limiting the foregoing, no
Credit Party shall cause to be changed its name, identity or corporate structure
in any manner that might make any financing or continuation statement filed in
connection herewith seriously misleading as such term is defined in and/or used
in the Code or any other then applicable provision of the Code except upon prior
written notice to Agent and Lenders and after Agent's written acknowledgment
that any reasonable action requested by Agent in connection therewith, including
to continue the perfection of any Liens in favor of Agent, on behalf of Lenders,
in any Collateral, has been completed or taken. No Credit Party shall change its
Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Secured Guarantor to
Borrower.
6.17 No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 Changes Relating to Subordinated Debt; Material Contracts. No
Credit Party shall change or amend the terms of any Subordinated Debt (or any
indenture or agreement in connection therewith) if the effect of such amendment
is to: (a) increase the interest rate on such Subordinated Debt; (b) change the
dates upon which payments of principal or interest are due on such Subordinated
Debt other than to extend such dates; (c) change any default or event of default
other than to delete or make less restrictive any default provision therein, or
add any covenant with respect to such Subordinated Debt; (d) change the
redemption or prepayment provisions of such Subordinated Debt other than to
extend the dates therefor or to reduce the premiums payable in connection
therewith; (e) grant any security or collateral to secure payment of such
Subordinated Debt; or (f) change or amend any other term if such change or
amendment would materially increase the obligations of the Credit Party
thereunder or confer additional material rights on the holder of such
Subordinated Debt in a manner adverse to any Credit Party, Agent or any Lender.
6.19 Redemptions.
(a) Proceeds of Loans used by Borrower to fund the Recapitalization on
the Original Closing Date or at any time prior to December 16, 2002 shall not
exceed $30,000,000 in the aggregate.
48
(b) Prior to any Recapitalization payment, Borrower shall deliver to Agent
evidence demonstrating Borrower's continued compliance with the Financial
Covenants after giving effect to such payment.
6.20 Holdings. Holdings shall not engage in any trade or business or
incur any Indebtedness other than the Zero Coupon Debt or any refinancing
thereof.
7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Loans or any other Obligations, due or not
due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents shall continue in full force and effect until
the Termination Date; provided, that the provisions of Section 11, the payment
obligations under Sections 1.15 and 1.16, and the indemnities contained in the
Loan Documents shall survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Borrower (i) fails to make any payment of principal hereunder when
due; (ii) fails to make any payment of interest on, or Fees owing in respect of,
the Loans or any of the other Obligations within three (3) days after such
payment is due; or (iii) fails to pay or reimburse Agent or Lenders for any
expense reimbursable hereunder or under any other Loan Document within ten (10)
days following Agent's demand for such reimbursement or payment of expenses.
(b) Any Credit Party fails or neglects to perform, keep or observe any
of the provisions of Sections 1.4, 1.8, 5.4(a), 5.12 or 6, any of the provisions
set forth in Annexes C or G, respectively, or any of the provisions of Section
3.2 of the Environmental Indemnity Agreement.
(c) Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for five (5) days or more.
49
(d) Any Credit Party fails or neglects to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents (other
than any provision embodied in or covered by any other clause of this Section
8.1) and the same shall remain unremedied for fifteen (15) days or more after
Agent's notice thereof to Borrower.
(e) A default or breach occurs under any other agreement, document or
instrument to which any Credit Party is a party that is not cured within any
applicable grace period therefor, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness or
Guaranteed Indebtedness (other than the Obligations) of any Credit Party in
excess of $3,000,000 in the aggregate (including (x) undrawn committed or
available amounts and (y) amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of such
Indebtedness or Guaranteed Indebtedness or a trustee to cause, Indebtedness or
Guaranteed Indebtedness or a portion thereof in excess of $3,000,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral to be demanded in respect
thereof, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect resulting in the making of a Revolving Credit
Advance in excess of the actual Borrowing Availability less $5,000,0000 (other
than inadvertent, immaterial errors not exceeding $150,000 in any Borrowing Base
Certificate), or any representation or warranty herein or in any Loan Document
or in any written statement, report, financial statement or certificate (other
than a Borrowing Base Certificate) made or delivered to Agent or any Lender by
any Credit Party is untrue or incorrect in any material respect as of the date
when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $500,000 or
more are attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for thirty (30) days or more.
(h) A case or proceeding is commenced against any Credit Party or
Holdings seeking a decree or order in respect of such Credit Party or Holdings
(i) under the Bankruptcy Code or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for such
Credit Party or Holdings or for any substantial part of any such Credit Party's
assets or of assets of Holdings, or (iii) ordering the winding-up or liquidation
of the affairs of such Credit Party or Holdings, and such case or proceeding
shall remain undismissed or unstayed for sixty (60) days or more or a decree or
order granting the relief sought in such case or proceeding by a court of
competent jurisdiction.
(i) Any Credit Party or Holdings (i) files a petition seeking relief
under the Bankruptcy Code or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consents to or fails to contest in a
timely and appropriate manner to the institution of proceedings thereunder or to
the filing of any such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
50
official) for such Credit Party or Holdings or for any substantial part of any
such Credit Party's assets or of assets of Holdings, (iii) makes an assignment
for the benefit of creditors, or (iv) takes any action in furtherance of any of
the foregoing, or (v) admits in writing its inability to, or is generally unable
to, pay its debts as such debts become due.
(j) An uninsured final judgment or judgments for the payment of money
in excess of $500,000 in the aggregate at any time are outstanding against one
or more of the Credit Parties and the same are not, within thirty (30) days
after the entry thereof, discharged or execution thereof stayed or bonded
pending appeal, or such judgments are not discharged prior to the expiration of
any such stay.
(k) Any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (or any Credit
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document ceases to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby, and remains unremedied for a period
of ten (10) days after Borrower obtains knowledge thereof.
(l) Any Change of Control occurs.
(m) Any event occurs, whether or not insured or insurable, as a result
of which revenue-producing activities cease or are substantially curtailed at
any facility of Borrower or any Secured Guarantor generating more than 5% of
Borrower's consolidated revenues for the Fiscal Year preceding such event and
such cessation or curtailment continues for more than one hundred eighty (180)
days.
(n) Holdings shall fail to pledge all of the Stock of Borrower as
Collateral within ten (10) days after payment in full of the Zero Coupon Debt.
(o) A default or breach under any agreement document or instrument to
which Schaublin Holding or any of its Subsidiaries is a party that evidences the
Schaublin Financing that is not cured within any applicable grace period thereto
and such default or breach (involves the failure to make any payment when due in
respect of any Indebtedness or Guaranteed indebtedness, or (ii) causes, or
permits any holder of such Indebtedness or Guaranteed Indebtedness or a trustee
to cause, Indebtedness or Guaranteed Indebtedness or a portion thereof in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral to be demanded in respect
thereof, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.
8.2 Remedies.
(a) If any Default or Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Revolving Lenders shall),
without notice, suspend the Revolving Loan facility with respect to additional
Advances and/or the incurrence of additional Letter of Credit Obligations,
whereupon any additional Advances and additional Letter of Credit Obligations
51
shall be made or incurred in Agent's sole discretion (or in the sole discretion
of the Requisite Revolving Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Default or Event of Default has occurred and is continuing, Agent may (and at
the written request of Requisite Lenders shall), without notice except as
otherwise expressly provided herein, increase the rate of interest applicable to
the Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default has occurred and is continuing, Agent may
(and at the written request of the Requisite Lenders shall), without notice: (i)
terminate the Revolving Loan facility with respect to further Advances or the
incurrence of further Letter of Credit ~Obligations; (ii) reduce the Revolving
Loan Commitments from time to time upon written notice to Borrower; (iii)
declare all or any portion of the Obligations, including all or any portion of
any Loan to be forthwith due and payable, and require that the Letter of Credit
Obligations be cash collateralized as provided in Annex B, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower and each other Credit Party; and (iv) exercise any
rights and remedies provided to Agent under the Loan Documents or at law or
equity, including all remedies provided under the Code; provided, that upon the
occurrence of an Event of Default specified in Sections 8.1(h) or (i), the
Commitments shall be immediately terminated and all of the Obligations,
including the Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard,
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or to Agent's replevy, attachment or levy upon, the Collateral or
any bond or security that might be required by any court prior to allowing Agent
to exercise any of its remedies, and (c) the benefit of all valuation,
appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender may make an
assignment to a Qualified Assignee of, or sell participations in, at any time or
times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder; provided,
however, that each such assignment must be of a fixed percentage of all of such
Lender's rights and obligations hereunder. Any assignment by a Lender shall: (i)
require the consent of Agent (which consent shall not be unreasonably withheld
or delayed with respect to a Qualified Assignee) and the execution of an
assignment agreement (an "Assignment Agreement" substantially in the form
attached hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably
satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such
52
assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) be
conditioned on such assignee Lender becoming a party to any Lender Agreement
which may then be in effect; (iv) after giving effect to any such partial
assignment, the assignee Lender shall have Commitments in an amount at least
equal to $5,000,000 and the assigning Lender shall have retained Commitments in
an amount at least equal to $5,000,000; (v) include a payment to Agent of an
assignment fee of $3,500; and (vi) so long as no Event of Default shall have
occurred or be continuing, require the consent of Borrower (which consent shall
not be unreasonably withheld or delayed with respect to a Qualified Assignee).
In the case of an assignment by a Lender under this Section 9.1, the assignee
shall have, to the extent of such assignment, the same rights, benefits and
obligations as all other Lenders hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to its Commitments or
assigned portion thereof from and after the date of such assignment. Borrower
hereby acknowledges and agrees that any assignment shall give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". In all instances, each Lender's liability to make Loans
hereunder shall be several and not joint and shall be limited to such Lender's
Pro Rata Share of the applicable Commitment. In the event Agent or any Lender
assigns or otherwise transfers all or any part of the Obligations, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes, if any, being
assigned. Notwithstanding the foregoing provisions of this Section 9.1(a), any
Lender may at any time pledge the Obligations held by it and such Lender's
rights under this Agreement and the other Loan Documents to a Federal Reserve
Bank; provided that no such pledge to a Federal Reserve Bank shall release such
Lender from such Lender's obligations hereunder or under any other Loan
Document.
(b) Any participation by a Lender of all or any part of its Commitments
shall be made with the understanding that all amounts payable by Borrower
hereunder shall be determined as if that Lender had not sold such participation,
and that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest rate or Fees
payable with respect to, any Loan in which such holder participates, (ii) any
extension of the scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date thereof, and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement, the Collateral Documents or the other Loan
Documents). Neither Borrower nor any other Credit Party shall have any
obligation or duty to any participant. Neither Agent nor any Lender (other than
the Lender selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation as if no
such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender shall,
as between Borrower and that Lender, or Agent and that Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer
or negotiation of, or granting of participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
53
assignment or participation, including the preparation of informational
materials for, and the participation of management in meetings with, potential
assignees or participants. Each Credit Party executing this Agreement shall
certify the correctness, completeness and accuracy of all descriptions of the
Credit Parties and their respective affairs contained in any selling materials
provided by it and all other information provided by it and included in such
materials, except that any Projections delivered by Borrower shall only be
certified by Borrower as having been prepared by Borrower in compliance with the
representations contained in Section 3.4(c).
(e) A Lender may furnish any information concerning Credit Parties in
the possession of such Lender from time to time to assignees and participants
(including prospective ~assignees and participants); provided that such Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.
(f) No Lender shall assign or sell participations in any portion of its
Loan or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.16(a),
increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or taxes in accordance with Section 1.15(a) or Section 1.15(b).
(g) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender"), may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing by the Granting Lender to Agent and
Borrower, the option to provide to Borrower all or any part of any Loans that
such Granting Lender would otherwise be obligated to make to Borrower pursuant
to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan; and (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if such Loan were made by such
Granting Lender. No SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). Any SPC may (i) with notice to, but without the prior written
consent of, Borrower and Agent and assign all or a portion of its interests in
any Loans to the Granting Lender or to any financial institutions (consented to
by Borrower and Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guaranty or credit or liquidity enhancement to such SPC. This Section 9.1(g) may
not be amended without the prior written consent of each Granting Lender, all or
any of whose Loans are being funded by an SPC at the time of such amendment. For
the avoidance of doubt, the Granting Lender shall for all purposes, including
without limitation, the approval of any amendment or waiver of any provision of
any Loan Document or the obligation to pay any amount otherwise payable by the
Granting Lender under the Loan Documents, continue to be the Lender of record
hereunder.
9.2 Appointment of Agent. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
54
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Except as expressly set ~forth in this Agreement and the
other Loan Documents, Agent shall not have any duty to disclose, and shall not
be liable for failure to disclose, any information relating to any Credit Party
or any of their respective Subsidiaries or any Account Debtor that is
communicated to or obtained by GE Capital or any of its Affiliates in any
capacity. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders, Requisite
Revolving Lenders or all affected Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, then Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from Requisite
Lenders, Requisite Revolving Lenders or all affected Lenders, as the case may
be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Requisite Revolving Lenders or all affected Lenders, as
applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
55
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or ~writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital or one or more of Affiliates may also
purchase certain equity interests in Holdings, which is a corporation that
currently owns 100% of the outstanding Stock of Borrower. GE Capital and its
Affiliates may accept fees and other consideration from any Credit Party for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders. GE Capital is a Term B Loan Lender and has
funded all or a portion of the Term B Loan. Each Lender acknowledges the
potential conflict of interest between GE Capital as a Lender holding
disproportionate interests in the Loans, GE Capital or its Affiliates as a
Stockholder, GE Capital as Term B Loan Lender holding all or a portion of the
Term B Loan and GE Capital as Agent; provided that any equity investment by GE
Capital shall not exceed 7.5% in the aggregate of the Stock of Holdings
outstanding on a fully diluted basis, and shall not exceed $7,500,000 of
investments in the aggregate.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Credit Parties and without limiting the obligations of
Borrower hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
56
Document or any action taken or omitted to be taken by Agent in connection
therewith; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by giving not less
than thirty (30) days' prior written notice thereof to Lenders and Borrower.
Upon any such resignation, the Requisite Lenders shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within thirty (30)
days after the resigning Agent's giving notice of resignation, then the
resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, within thirty (30) days after the date such notice of resignation was
given by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Agent or Requisite Lenders
hereunder shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided that such approval shall not be
required if a Default or an Event of Default has occurred and is continuing.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Agent. Upon the earlier of the
acceptance of any appointment as Agent hereunder by a successor Agent or the
effective date of the resigning Agent's resignation, the resigning Agent shall
be discharged from its duties and obligations under this Agreement and the other
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Agent shall continue. After any resigning Agent's resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to offset and to appropriate and
to apply any and all balances held by it at any of its offices for the account
of Borrower or any Guarantor (regardless of whether such balances are then due
to Borrower or any Guarantor) and any other properties or assets at any time
held or owing by that Lender or that holder to or for the credit or for the
account of Borrower or any Guarantor against and on account of any of the
57
Obligations that are not paid when due. Any Lender exercising the foregoing
right of setoff or otherwise receiving any payment on account of the Obligations
(other than a Term B Loan Lender in respect of Term B Loan Obligations) in
excess of its Pro Rata Share thereof determined in accordance with Section 1.11
shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares determined in accordance with Section 1.11,
(other than offset rights exercised by any Lender with respect to Sections 1.13,
1.15 or 1.16). Each Credit Party agrees, to the fullest extent permitted by law,
that (a) any Lender may exercise the foregoing right to offset with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such amounts so offset to other Lenders and holders and (b)
any Lender so purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of offset, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of offset, the
purchase of participations by that Lender shall be rescinded and the purchase
price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or participate in the Swing
Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(c). If the
Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00
p.m. (Chicago time) on the date such Notice of Revolving Advance is received, by
telecopy, telephone or other similar form of transmission. Each Revolving Lender
shall make the amount of such Lender's Pro Rata Share of such Revolving Credit
Advance available to Agent in same day funds by wire transfer to Agent's account
as set forth in Annex H not later than 3:00 p.m. (Chicago time) on the requested
funding date, in the case of an Index Rate Loan and not later than 11:00 a.m.
(Chicago time) on the requested funding date in the case of a LIBOR Loan. After
receipt of such wire transfers (or, in the Agent's sole discretion, before
receipt of such wire transfers), subject to the terms hereof, Agent shall make
the requested Revolving Credit Advance to Borrower. All payments by each
Revolving Lender shall be made without setoff, counterclaim or deduction of any
kind.
(ii) On the 2nd Business Day of each calendar week or more
frequently at Agent's election (each, a "Settlement Date"), Agent shall advise
each Lender by telephone, or telecopy of the amount of such Lender's Pro Rata
Share of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that each Lender has funded all
payments and Advances required to be made by it and purchased all participations
required to be purchased by it under this Agreement and the other Loan Documents
as of such Settlement Date, Agent shall pay to each Lender such Lender's Pro
58
Rata Share of principal, interest and Fees paid by Borrower since the previous
Settlement Date for the benefit of such Lender on the Loans held by it. To the
extent that any Lender (a "Non-Funding Lender") has failed to fund all such
payments and Advances or failed to fund the purchase of all such participations,
Agent shall be entitled to set off the funding short-fall against that
Non-Funding Lender's Pro Rata Share of all payments received from Borrower. Such
payments shall be made by wire transfer to such Lender's account (as specified
by such Lender in Annex H or the applicable Assignment Agreement) not later than
1:00 p.m. (Chicago time) on the next Business Day following each Settlement
Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each funding date. If such Pro Rata Share is not, in fact,
paid to Agent by such Revolving Lender when due, Agent will be entitled to
recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower and Borrower shall immediately repay such amount to Agent.
Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Agent to advance funds on behalf of any
Revolving Lender or to relieve any Revolving Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower may
have against any Revolving Lender as a result of any default by such Revolving
Lender hereunder. To the extent that Agent advances funds to Borrower on behalf
of any Revolving Lender and is not reimbursed therefor on the same Business Day
as such Advance is made, Agent shall be entitled to retain for its account all
interest accrued on such Advance until reimbursed by the applicable Revolving
Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be received
by Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender to make
any Revolving Credit Advance or any payment required by it hereunder, or to
purchase any participation in any Swing Line Loan to be made or purchased by it
on the date specified therefor shall not relieve any other Lender (each such
other Revolving Lender, an "Other Lender") of its obligations to make such
Advance or purchase such participation on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance, purchase a participation or make any other payment required
59
hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a "Lender" or a "Revolving Lender"
(or be included in the calculation of "Requisite Lenders" "Requisite Revolving
Lenders" or "Term B Loan Lenders" hereunder) for any voting or consent rights
under or with respect to any Loan Document. At Borrower's request, Agent or a
Person acceptable to Agent shall have the right with Agent's consent and in
Agent's sole discretion (but shall have no obligation) to purchase from any
Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at Agent's
request, sell and assign to Agent or such Person, all of the Commitments of that
Non-Funding Lender for an amount equal to the principal balance of all Loans
held by such Non-Funding Lender and all accrued interest and fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.
(e) Dissemination of Information. Agent shall use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received by Agent
from, or delivered by Agent to, any Credit Party, with notice of any Event of
Default of which Agent has actually become aware and with notice of any action
taken by Agent following any Event of Default; provided that Agent shall not be
liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent's gross negligence or willful misconduct.
Lenders acknowledge that Borrower is required to provide Financial Statements
and Collateral Reports to Lenders in accordance with Annexes E and F hereto and
agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent and Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of Agent or Requisite Lenders. With respect to any action by Agent
to enforce the rights and remedies of Agent and the Lenders under this Agreement
and the other Loan Documents, each Lender hereby consents to the jurisdiction of
the court in which such action is maintained, and agrees to deliver its Notes to
Agent to the extent necessary to enforce the rights and remedies of Agent for
the benefit of the Lenders under the Mortgages in accordance with the provisions
hereof.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and all Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and all Lenders shall be
60
void. The terms and provisions of this Agreement are for the purpose of defining
the relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, or fee letter
(other than the GE Capital Fee Letter, the Term B Loan Fee Letter or any
confidentiality agreement), if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any 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 Agent and Borrower, and by Requisite Lenders, Requisite
Revolving Lenders, Term B Loan Lenders or all affected Lenders, as applicable.
Except as set forth in clauses (b) and (c) below, all such amendments,
modifications, terminations or waivers shall require the written consent of
Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement that increases the percentage
advance rates set forth in the definition of the Borrowing Base, or that makes
less restrictive the nondiscretionary criteria for exclusion from Eligible
Accounts and Eligible Inventory set forth in Sections 1.6 and 1.7, shall be
effective unless the same shall be in writing and signed by Agent, Requisite
Revolving Lenders and Borrower. No amendment, modification, termination or
waiver of or consent with respect to any provision of this Agreement that waives
compliance with the conditions precedent set forth in Section 2.2 to the making
of any Loan or the incurrence of any Letter of Credit Obligations shall be
effective unless the same shall be in writing and signed by Agent, Requisite
Revolving Lenders and Borrower. Notwithstanding anything contained in this
Agreement to the contrary, no waiver or consent with respect to any Default or
any Event of Default shall be effective for purposes of the conditions precedent
to the making of Loans or the incurrence of Letter of Credit Obligations set
forth in Section 2.2 and Section 2.3 unless the same shall be in writing and
signed by Agent, Requisite Revolving Lenders and Borrower.
(c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby: (i)
increase the principal amount of any Lender's Commitment (which action shall be
deemed only to affect those Lenders whose Commitments are increased and must be
approved by Requisite Lenders, including those lenders whose Commitments are
increased); (ii) reduce the principal of, rate of interest on or Fees payable
with respect to any Loan or Letter of Credit Obligations of any affected Lender;
61
(iii) waive or extend any scheduled payment date (other than payment dates of
mandatory prepayments under Section 1.3(b)(ii)-(iv)) or final maturity date of
the principal amount of any Loan of any affected Lender; (iv) waive, forgive,
defer, extend or postpone any payment of interest or Fees as to any affected
Lender; (v) amend the second sentence of Section 10.1 or release any Guaranty or
except as otherwise permitted herein or in the other Loan Documents, release, or
permit any Credit Party to sell or otherwise dispose of, any Collateral with a
value exceeding $3,000,000 in the aggregate (which action shall be deemed to
directly affect all Lenders); (vi) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans that shall be required for
Lenders or any of them to take any action hereunder (which action shall be
deemed to directly affect all Lenders); and (vii) amend or waive this Section
11.2 or the definitions of the terms "Requisite Lenders", "Requisite Revolving
Lenders" or "Term B Loan Lenders" insofar as such definitions affect the
substance of this Section 11.2 (which action shall be deemed to directly affect
all Lenders) ; provided, however, that (A) no consent of any Term B Loan Lender
shall be required to, unless and until all Commitments to make additional Loans
have been terminated and all Tranche A Obligations have been paid in full in
cash, release under circumstances where such Collateral is being sold and the
net proceeds thereof are being received by Agent, any Collateral, or permit any
Credit Party to sell or otherwise dispose of Collateral and, (B) subject to
Section 11.2(a), only the consent of the Term B Loan Lenders shall be required
to increase the amount of the Term B Loan Commitment. Furthermore, no amendment,
modification, termination or waiver affecting the rights or duties of Agent or
L/C Issuer under this Agreement or any other Loan Document shall be effective
unless in writing and signed by Agent or L/C Issuer, as the case may be, in
addition to Lenders required hereinabove to take such action. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the holder of that Note. No notice to or demand on
any Credit Party in any case shall entitle such Credit Party or any other Credit
Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder
of the Notes at the time outstanding and each future holder of the Notes.
Without the prior written consent of the Requisite Term B Loan Lenders, no
amendment, modification, termination or waiver shall be effective which (1)
increases the rate of interest payable on any Tranche A Obligations by more than
100 basis points (excluding the Default Rate of 200 basis points in excess of
the rate otherwise payable), (2) shortens the maturity of any scheduled payment
of principal of any Tranche A Obligation, or (3) changes Section 1.5(a)(iv),
Section 1.11 the definition of "Priority Event", "Term B Loan", "Term B Loan
Commitment", "Term B Loan Fee Letter", "Term B Loan Note", "Term B Loan Lender",
"Term B Loan Obligation", "Requisite Term B Loan Lender" or any other provision
hereof to the extent such provision is specifically applicable and refers to the
Term B Loan Lenders (in their capacities as such), or Term B Loan Obligations.
(d) If, in connection with any proposed amendment, modification, waiver
or termination (a "Proposed Change"):
62
(i) requiring the consent of all affected Lenders, the consent
of Requisite Lenders is obtained, but the consent of other Lenders whose consent
is required is not obtained (any such Lender whose consent is not obtained as
described in this clause (i) and in clauses (ii) and (iii) below being referred
to as a "Non-Consenting Lender"),
(ii) requiring the consent of Requisite Revolving Lenders, the
consent of Revolving Lenders holding 51% or more of the aggregate Revolving Loan
Commitments is obtained, but the consent of Requisite Revolving Lenders is not
obtained, or
(iii) requiring the consent of Requisite Lenders, the consent
of Lenders holding 51% or more of the aggregate Commitments is obtained, but the
consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower's request
Agent, or a Person reasonably acceptable to Agent, shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non-Consenting Lenders for an amount equal to
the principal balance of all Loans held by the Non-Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders, and so long
as no suits, actions proceedings, or claims are pending or threatened against
any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrower termination statements,
mortgage releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
11.3 Fees and Expenses. Borrower shall reimburse (i) Agent for all
reasonable out-of-pocket fees, costs and expenses (including the reasonable fees
and expenses of all of its counsel, advisors, consultants and auditors) and (ii)
Agent (and, with respect to clauses (c) and (d) below, all Lenders) for all
reasonable out-of-pocket fees, costs and expenses, including the reasonable
fees, costs and expenses of counsel or other advisors (including environmental
and management consultants and appraisers) incurred in connection with the
negotiation, preparation and filing and/or recordation of the Loan Documents and
incurred in connection with:
(a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of any Loan (including a wire transfer fee of
$25 per wire transfer);
(b) any amendment, modification or waiver of, or consent with respect
to, or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the syndication and administration of the
Loans made pursuant hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, any Credit Party or any other Person
and whether as a party, witness or otherwise) in any way relating to the
63
Collateral, any of the Loan Documents or any other agreement to be executed or
delivered in connection herewith or therewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
Credit Parties or any other Person that may be obligated to Agent by virtue of
the Loan Documents, including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders; provided,
further, that no Person shall be entitled to reimbursement under this clause (c)
in respect of any litigation, contest, dispute, suit, proceeding or action to
the extent any of the foregoing results from such Person's gross negligence or
willful misconduct;
(d) any attempt to enforce any remedies of Agent or any Lender against
any or all of the Credit Parties or any other Person that may be obligated to
Agent or any Lender by virtue of any of the Loan Documents, including any such
attempt to enforce any such remedies in the course of any work-out or
restructuring of the Loans during the pendency of one or more Events of Default;
provided that in the case of reimbursement of counsel for Lenders other than
Agent, such reimbursement shall be limited to one counsel for all such Lenders;
(e) any workout or restructuring of the Loans during the pendency of
one or more Events of Default; and
(f) efforts to (i) monitor the Loans or any of the other Obligations,
and (ii) verify, protect, evaluate, assess, appraise, collect, sell, liquidate
or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be payable, on demand, by Borrower to Agent. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
fees, costs and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses; photocopying and duplication expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
64
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders and directed to Borrower specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintain the confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by the Credit Parties
and designated as confidential for a period of two (2) years following receipt
thereof, except that Agent and any Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender, including any agents that
have been granted access pursuant to Section 1.14; (b) to any bona fide assignee
or participant or potential assignee or participant that has agreed to comply
with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any Governmental Authority or reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advice of Agent's or
such Lender's counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any
Litigation to which Agent or such Lender is a party; or (f) that ceases to be
confidential through no fault of Agent or any Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY
65
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX
XXXXXX, XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY AND; PROVIDED, FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10); (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated in Annex I or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
66
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated in Annex I
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS
AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases and Related Matters. Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in the future
issue any press releases or other public disclosure using the name of GE Capital
or its affiliates or referring to this Agreement, the other Loan Documents or
the Related Transactions Documents without at least two (2) Business Days' prior
notice to GE Capital and without the prior written consent of GE Capital unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will consult
with GE Capital before issuing any press release. Each Credit Party consents to
the publication by Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement.
Agent or such Lender shall provide a draft of any such tombstone or similar
advertising material to each Credit Party for review and comment prior to the
publication thereof. Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Credit Party for liquidation or reorganization, should any Credit Party
become insolvent or make an assignment for the benefit of any creditor or
67
creditors or should a receiver or trustee be appointed for all or any
significant part of any Credit Party's assets, and shall continue to be
effective or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
12. RESTATEMENT OF Prior CREDIT AGREEMENT.
The parties hereto agree that, on the Effective Date, the following
transactions shall be deemed to occur automatically, without further action by
any party hereto:
(a) the Prior Credit Agreement shall be deemed to be amended and
restated in its entirety in the form of this Agreement;
(b) all Existing Obligations outstanding on the Effective Date shall,
to the extent not paid on the Effective Date, be deemed to be Obligations
outstanding hereunder;
(c) the guaranties and Collateral Documents, including the Liens
created thereunder in favor of Agent for the benefit of Agent and Lenders or in
favor of Agent and Lenders, as applicable, and securing payment of the Existing
Obligations, as amended and restated on the Effective Date, shall remain in full
force and effect with respect to the Obligations and are hereby reaffirmed; and
(d) all references in the other Loan Documents to the Prior Credit
Agreement shall be deemed to refer without further amendment to this Agreement.
The parties acknowledge and agree that this Agreement and the other
Loan Documents do not constitute a novation, payment and reborrowing or
termination of the Existing Obligations and that all such Existing Obligations
are in all respects continued and outstanding as Obligations under this
Agreement and the Notes with only the terms being modified from and after the
Effective Date of this Agreement as provided in this Agreement, the Notes and
the other Loan Documents.
[Signature Page Follows]
68
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
BORROWER:
ROLLER BEARING COMPANY OF AMERICA,
INC., a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By:
--------------------------------
Duly Authorized Signatory
Congress Financial Corporation
(CENTRAL), as Lender
By:
--------------------------------
Duly Authorized Signatory
[Signature Page to the Credit Agreement]
S-1
The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as a Borrower.
CREDIT PARTIES:
INDUSTRIAL TECTONICS BEARINGS
CORPORATION, a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
RBC NICE BEARINGS INC., a Delaware
corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
BREMEN BEARINGS, INC., a Delaware
corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
TYSON BEARING COMPANY, INC., a
Delaware corporation
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
RBC AIRCRAFT PRODUCTS, INC., a
Delaware corporation
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
[Signature Page to the Credit Agreement]
S-2
RBC LINEAR PRECISION PRODUCTS, INC.,
a Delaware corporation
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
XXXXXX BEARING COMPANY, INC., a
Delaware corporation
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
RBC OKLAHOMA, INC., a Delaware
corporation
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
[Signature Page to the Credit Agreement]
S-3
ANNEX A (Recitals)
to
CREDIT AGREEMENT
----------------
DEFINITIONS
-----------
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:
"A Rated Bank" has the meaning ascribed to it in Section 6.2.
"Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
"Accounting Changes" has the meaning ascribed thereto in Annex G.
"Accounts" means all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments), (including
any such obligations that may be characterized as an account or contract right
under the Code), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all rights
to payment due to any Credit Party for property sold, leased, licensed, assigned
or otherwise disposed of, for a policy of insurance issued or to be issued, for
a secondary obligation incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit
Party), (e) all healthcare insurance receivables, and (f) all collateral
security of any kind, now or hereafter in existence, given by any Account Debtor
or other Person with respect to any of the foregoing.
"Acquisition" has the meaning ascribed thereto in Section 6.1.
"Acquisition Company" means a Delaware corporation, limited liability
company or limited partnership that is a direct or indirect wholly-owned
Subsidiary of Borrower formed for the sole purpose of completing a Permitted
Acquisition of a Qualified Target.
"Acquisition Compliance Certificate" has the meaning ascribed to it in
Section 6.1(b)(xii).
"Acquisition Pro Forma" has the meaning ascribed to it in Section
6.1(b)(xiv)(A).
A-1
"Acquisition Projections" has the meaning ascribed to it in Section
6.1(b)(xiv)(B).
"Acquisition Subordinated Debt" means Indebtedness issued to seller(s)
as consideration for a Permitted Acquisition in an amount, on such terms, and
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their reasonable discretion as to right and time of payment and as to
any other terms, rights and remedies thereunder, provided that Borrower may
determine the maturity date thereof and Agent's and Lenders' discretion with
respect to subordination provisions shall not preclude a maturity date otherwise
permitted under Section 6.1 of the Agreement.
"Activation Event" and "Activation Notice" have the meanings ascribed
thereto in Annex C.
"Advance" means any Revolving Credit Advance or Swing Line Advance, as
the context may require.
"Adjusted EBITDA" means for any period with respect to Holdings, on a
consolidated basis, an amount equal to (i) EBITDA of Holdings, on a consolidated
basis, for such period, plus (ii) to the extent that the calculation thereof has
been approved by the Agent (in consultation with Requisite Lenders) and to the
extent not included in such EBITDA, the aggregate EBITDA for such period on pro
forma basis of any Qualified Target of a Permitted Acquisition which closed
within such period (it being understood that any EBITDA of such Qualified Target
shall be included in the EBITDA of Holdings, on a consolidated basis, only for
those Fiscal Quarters in such period occurring prior to the closing of such
Permitted Acquisition, (iii) less the aggregate EBITDA of any Person or assets,
as the case may be, sold by the Holdings or any Subsidiary thereof (if such
EBITDA is positive), the sale of which closed during such period.
"Adjusted Funded Debt" means with respect to Holdings, without
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness that by its terms matures more
than one year from the date of creation thereof, or is directly or indirectly
renewable or extendible at Holdings' option under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of
more than one year from the date of creation thereof, and specifically including
Capital Lease Obligations, current maturities of long-term debt, and also
including Guaranteed Indebtedness consisting of guaranties of Adjusted Funded
Debt of other Person and Letter of Credit Obligations plus outstanding preferred
Stock of Holdings which by its terms (or by the terms of any security which is
convertible into it or exchangeable for it) or upon the happening of an event:
(i) entitled its holder to a dividend payable in cash or (ii) matures or is
mandatorily redeemable in whole or in part pursuant to a sinking funds
obligation or otherwise or is redeemable at the option of its holder, in whole
or in part, on or prior to the Termination Date less any unrestricted cash on
hand of Holdings and its Subsidiaries. For purposes of this definition, the
following Indebtedness shall be excluded: (1) the Indebtedness of any other
Person prior to the date it became a Subsidiary of, or was merged into, Holdings
or any Subsidiary of Holdings; and (2) the Indebtedness of any other Person
(other than a Subsidiary) in which Holdings has an ownership interest.
A-2
"Affected Lender" has the meaning ascribed to it in Section 1.16(d).
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 10% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that with respect to each Credit Party and its
Affiliates, the term "Affiliate" shall specifically exclude (i) Agent and each
Lender and their respective Affiliates and (ii) operating companies in which an
investment fund managed by Whitney & Co. or its Affiliates has an equity or debt
interest.
"Agent" means GE Capital in its capacity as Agent for Lenders or its
successor appointed pursuant to Section 9.7.
"Agreement" means the Credit Agreement by and among Borrower, the other
Credit Parties party thereto, GE Capital, as Agent and Lender and the other
Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Appendices" has the meaning ascribed to it in the recitals to the
Agreement.
"Applicable Margins" means collectively the Applicable Revolver Index
Margin, the Applicable Term Loan Index Margin, the Applicable Revolver LIBOR
Margin and the Applicable Term Loan LIBOR Margin.
"Applicable Revolver Index Margin" means the per annum interest rate
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a).
"Applicable Revolver LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as determined by reference to Section 1.5(a).
"Applicable Term Loan Index Margin" means the per annum interest rate
from time to time in effect and payable in addition to the Index Rate applicable
to the Term Loan, as determined by reference to Section 1.5(a).
"Applicable Term Loan LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan, as determined by reference to Section 1.5(a).
"Assignment Agreement" has the meaning ascribed to it in Section
9.1(a).
A-3
"Bankruptcy Code" means the provisions of Title 11 of the United States
Code, 11 U.S.C. xx.xx. 101 et seq.
"Blocked Accounts" has the meaning ascribed to it in Annex C.
"Borrower" has the meaning ascribed thereto in the preamble to the
Agreement.
"Borrower Pledge Agreement" means the Pledge Agreement of even date
herewith executed by Borrower in favor of Agent, on behalf of itself and
Lenders, pledging (i) all Stock of its Domestic Subsidiaries and 66% of the
outstanding Stock of RBC Schaublin Holdings S.A. and RBC de Mexico S de X.X. de
CV, and (ii) all Intercompany Notes owing to or held by it, as the same may be
amended, restated, modified and/or supplemented from time to time including,
without limitation, by any joinder thereto.
"Borrower Swiss Pledge Agreement" means the Pledge Agreement executed
by Borrower in favor of Agent, on behalf of itself and Lenders, dated as of June
19, 2003, as amended, restated or otherwise modified from time to time
including, without limitation, by any joinder thereto, pledging sixty-six (66%)
percent of the outstanding Stock of Schaublin Holding governed by Swiss law.
"Borrowing Availability" means as of any date of determination the
lesser of (i) the Maximum Amount and (ii) the Borrowing Base, in each case, less
the sum of the Revolving Loan and Swing Line Loan then outstanding; provided
that an Overadvance in accordance with Section 1.1(a)(iii) may cause the
Revolving Loan and Swing Line Loan to exceed the Borrowing Base by the amount of
such permitted Overadvance.
"Borrowing Base" means, as of any date of determination by Agent, from
time to time, an amount equal to the sum at such time of:
(a) 85% of the book value of Eligible Accounts at such time;
(b) 65% of the book value of Eligible Inventory (other than
Component Parts and Purchased Parts) valued at the lower of cost
(determined on a first-in, first-out basis) or market; and
(c) 30% of the book value of Eligible Inventory consisting of
Component Parts and Purchased Parts valued at the lower of cost
(determined on a first-in, first-out basis) or market, provided that
the value of Component Parts and Purchased Parts included in the
Borrowing Base shall not exceed 25% of the total value of all Eligible
Inventory (including the Eligible Inventory consisting of Component
Parts and Purchased Parts);
in each case, less any Reserves established by Agent at such time.
"Borrowing Base Certificate" means a certificate to be executed and
delivered from time to time by Borrower in the form attached to the Agreement as
Exhibit 4.1(b).
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"Business Day" means any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the States of Illinois
and/or New York and in reference to LIBOR Loans shall mean any such day that is
also a LIBOR Business Day.
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP, provided
that expenditures for Permitted Acquisitions and reinvestment in assets in
accordance with the proviso of Section 1.3(b)(ii) shall not constitute Capital
Expenditures.
"Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital Lease of
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Cash Collateral Account" has the meaning ascribed to it Annex B.
"Cash Equivalents" has the meaning ascribed to it in Annex B.
"Cash Management Systems" has the meaning ascribed to it in Section
1.8.
"Certificate of Exemption" has the meaning ascribed to it in Section
1.15.
"Change of Control" shall be deemed to have occurred if (a) (i) Xxxxxxx
X. Xxxxxxxx and his Permitted Transferees shall cease to own directly or
indirectly, beneficially or of record (including indirectly through Xxxxxxxx
Family Investments, L.P.), those shares or rights to acquire those shares of
capital Stock of Holdings which entitle their holder to majority number of votes
(i.e., to that number of votes per share on all matters to be voted upon by
Holdings which entitle such holder, in the aggregate, to 51% of the voting power
of the issued and outstanding common Stock of Holdings), other than as a result
of the death or permanent disability of Xxxxxxx X. Xxxxxxxx or the completion of
a Qualified Public Offering or (ii) such shares of Capital Stock cease to
entitle the holder thereof to such majority number of votes (either because a
Voting Event as defined in the charter of Holdings has occurred or otherwise);
(b) following the completion of a Qualified Public Offering, any person or group
(within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934) other
than Xxxxxxx X. Xxxxxxxx and/or his Permitted Transferees, funds managed by
Affiliates of Whitney & Co. or one or more equity sponsors with funds under
management of at least $500,000,000, shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 30% or more of the
issued and outstanding shares of capital Stock of Holdings under ordinary
circumstances; (c) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of Holdings (together with any new directors whose election by the
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board of directors of Holdings or whose nomination for election by the
Stockholders of Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office; (d) funds managed by Affiliates of
Whitney & Co. and/or one or more equity sponsors with funds under management of
at least $500,000,000 ceases to own directly or indirectly, beneficially or of
record shares representing at least 50.1% of the Stock (on a fully diluted
basis) of Holdings other than as a result of Qualified Public Offering; (e)
Holdings ceases to own and control all of the economic and voting rights
associated with all of the outstanding capital Stock of Borrower; (f) Borrower
ceases to own, directly or indirectly, and control all of the economic and
voting rights associated with all of the outstanding capital Stock of any of its
Subsidiaries other than as a result of a dissolution of a Subsidiary resulting
in the distribution of its assets to Borrower or the merger of any Subsidiary
with Borrower or another Subsidiary of Borrower, or (g) any change of control
(or similar event, however denominated) with respect to Holdings, Borrower or
any Subsidiary shall occur under and as defined in any indenture or agreement to
which Holdings, the Borrower or any Subsidiary is a party in respect of
Indebtedness in an aggregate original principal amount in excess of $3,000,000
which results in a default or an event of default thereunder or an obligation to
prepay or redeem all or any material portion of such Indebtedness unless
irrevocably waived by the holders thereof.
"Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is defined in
the Code, including electronic chattel paper, now owned or hereafter acquired by
any Credit Party, wherever located.
"Closing Checklist" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.
"Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided, further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
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solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"Collateral" means the property covered by the Security Agreement, the
Mortgages and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"Collateral Documents" means the Security Agreement, the Pledge
Agreements, the Guaranties, the Mortgages, the Patent Security Agreement, the
Trademark Security Agreement, the Copyright Security Agreement and all similar
agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations.
"Collateral Reports" means the reports with respect to the Collateral
referred to in Annex F.
"Collection Account" means that certain account of Agent, account
number 000-000-00 in the name of Agent at Bankers Trust Company in New York, New
York ABA No. 021 001 033, or such other account as may be specified in writing
by Agent as the "Collection Account."
"Collection Account (Government Receivables)" means that certain
account of Agent, account number 00-000-000 in the name of Agent at DeutscheBank
Trust Company Americas, ABA No. 021 001 033 or such other account as may be,
specified by Agent as the "Collection Account (Government Receivables)".
"Commitment Termination Date" means the earliest of (a) May 30, 2007,
(b) the date of termination of Lenders' obligations to make Advances and to
incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans and the cancellation and return (or
stand-by guaranty) of all Letters of Credit or the cash collateralization of all
Letter of Credit Obligations pursuant to Annex B, and the permanent reduction of
the Commitments to zero dollars ($0).
"Commitments" means (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment (including without duplication the Swing Line
Lender's Swing Line Commitment as a subset of its Revolving Loan Commitment),
Term Loan Commitment and Term B Loan Commitment as set forth on Annex J to the
Agreement or in the most recent Assignment Agreement executed by such Lender and
(b) as to all Lenders, the aggregate of all Lenders' Revolving Loan Commitments
(including without duplication the Swing Line Lender's Swing Line Commitment as
a subset of its Revolving Loan Commitment), Term Loan Commitments and Term B
Loan Commitments, which aggregate commitment shall be Ninety-Six Million Nine
Hundred Thousand Dollars ($96,900,000) on the Effective Date, as to each of
clauses (a) and (b), as such Commitments may be reduced, amortized or adjusted
from time to time in accordance with the Agreement.
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"Compliance Certificate" has the meaning ascribed to it in Annex E.
"Component Parts" means parts machined at Borrower's or a Secured
Guarantor's facility which are placed in storage for later assembly.
"Concentration Account" has the meaning ascribed to it in Annex C.
"Contracts" means all "contracts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which any Credit Party may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.
"Control Letter" means a letter agreement between Agent and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Credit
Party, whereby, among other things, the issuer, securities intermediary or
futures commission merchant disclaims any security interest in the applicable
financial assets, acknowledges the Lien of Agent, on behalf of itself and
Lenders on such financial assets, and agrees to follow the instructions or
entitlement orders of Agent without further consent by the affected Credit
Party.
"Copyright License" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyright Security Agreements" means the Copyright Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party, as the same may be amended, restated, modified and/or supplemented
from time to time including, without limitation, by any joinder thereto.
"Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Costing Reserve" means a reserve with respect to the variance between
the perpetual cost of Inventory and the invoice cost of Inventory.
"Credit Parties" means Borrower, and its domestic Subsidiaries.
A-8
"Default" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section 1.5(d).
"Deposit Accounts" means all "deposit accounts" as such term in defined
in the Code, now or hereafter held in the name of any Credit Party.
"Disbursement Accounts" has the meaning ascribed to it in Annex C.
"Disclosure Schedules" means the Schedules prepared by Borrower and
denominated as Disclosure Schedules (1.4) through (6.7) in the Index to the
Agreement.
"Discount Debentures" means those certain 13% Senior Discount
Debentures Due 2009 issued by Holdings in an aggregate original principal amount
of $74,882,000 pursuant to that certain Indenture dated as of June 15, 0000
xxxxxxx Xxxxxxxx, xx xxxxxx, xxx Xxxxxx Xxxxxx Trust Company of New York, as
trustee (the "Discount Debentures Indenture").
"Discount Debentures Documents" means the Discount Debentures, the
Discount Debentures Indenture and any other instrument, document or agreement
delivered pursuant thereto or in connection therewith.
"Discount Debentures Indenture" has the meaning ascribed to it in the
definition of the Discount Debentures.
"Dividends" has the meaning ascribed to it in Section 6.14.
"Documents" means any "documents," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of America.
"Domestic" means, as to any Person, a Person which is created or
organized under the laws of the United States of America, any of its states or
the District of Columbia.
"EBITDA" means, with respect to any Person for any fiscal period,
without duplication, an amount equal to (a) consolidated net income of such
Person for such period, determined in accordance with GAAP, minus (b) the sum of
(i) income tax credits, (ii) interest income, (iii) gain from extraordinary
items for such period, (iv) any aggregate net gain during such period arising
from the sale, exchange or other disposition of capital assets of such Person,
and (v) any other non-cash gains that have been added in determining
consolidated net income, in each case to the extent included in the calculation
of consolidated net income of such Person for such period in accordance with
GAAP, but without duplication, plus (c) the sum of (i) any provision for income
taxes, (ii) Interest Expense, (iii) loss from extraordinary items for such
period, (iv) depreciation and amortization for such period, (v) amortized debt
discount for such period, (vi) the amount of any deduction to consolidated net
income as the result of any grant of any Stock or equity rights to any employee
of such Person, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
but without duplication, (vii) any aggregate net loss during such period arising
A-9
from the sale, exchange or other disposition of capital assets of such Person,
(viii) with the consent of Agent, which shall not be unreasonably withheld, any
non-recurring losses or charges that have been deducted from the consolidated
net income of such Person in accordance with GAAP, and (ix) the amount of any
reduction to the consolidated net income of Holdings as the result of the
Restricted Payment described and permitted pursuant to Section 6.14(e). For
purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit) of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person's Subsidiaries;
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(4) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (5) any write-down of assets (other than Accounts or Inventory) and any
write-down of goodwill (to the extent it is a write-down of goodwill only), or
write-up of any asset; (6) any net gain from the collection of the proceeds of
life insurance policies; (7) any net gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness, of such
Person, (8) in the case of a successor to such Person by consolidation or merger
or as a transferee of its assets, any earnings of such successor prior to such
consolidation, merger or transfer of assets, (9) any deferred credit
representing the excess of equity in any Subsidiary of such Person at the date
of acquisition of such Subsidiary over the cost to such Person of the investment
in such Subsidiary, and (10) any other non-cash expenses or deductions in
connection with the issuances or modifications of stock options or rights issued
to employees or directors.
"Effective Date" means the date on which each of the conditions set
forth in Section 2.1 shall have been satisfied except for such conditions, if
any that have been waived in writing by the Agent and the Lenders.
"Eligible Accounts" has the meaning ascribed to it in Section 1.6 of
the Agreement.
"Eligible Inventory" has the meaning ascribed to it in Section 1.7 of
the Agreement.
"Environmental Indemnity Agreement" means that certain Environmental
Indemnity Agreement, dated the date hereof, by the Credit Parties in favor of
Agent on behalf of the Lenders.
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
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water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
xx.xx. 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. xx.xx. 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. xx.xx. 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. xx.xx. 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. xx.xx. 2601 et seq.); the Clean Air Act (42 U.S.C. xx.xx.
7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. xx.xx. 1251 et
seq.); the Occupational Safety and Health Act (29 U.S.C. xx.xx. 651 et seq.);
and the Safe Drinking Water Act (42 U.S.C. xx.xx. 300(f) et seq.), and any and
all regulations promulgated thereunder, and all analogous state, local and
foreign counterparts or equivalents and any transfer of ownership notification
or approval statutes relating to or stemming from environmental matters.
"Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law arising under or related to
any Environmental Laws, Environmental Permits, or in connection with any Release
or threatened Release or presence of a Hazardous Material whether on, at, in,
under, from or about or in the vicinity of any real or personal property.
"Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located and, in
any event, including all such Credit Party's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
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"ERISA Affiliate" means, with respect to any Credit Party, any trade or
business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within thirty (30) days; (g)
any other event or condition that might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt
status; or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section 8.1.
"Event of Loss" means, with respect to any property, any of the
following: (a) any loss, destruction or damage of such property; (b) any
condemnation or seizure of such property or for the exercise of any right of
eminent domain; or (c) any actual condemnation, seizure or taking, by exercise
of the power of eminent domain or otherwise, of such property, or confiscation
of such property or the requisition of the use of such property.
"Existing Credit Agreement" means the Credit Agreement dated as of June
23, 1997 among Borrower, Prior Lenders and Credit Suisse First Boston, as
administrative agent for Prior Lenders, as amended.
"Existing Obligations" shall mean the "Obligations", as defined in the
Prior Credit Agreement.
"Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C. ss.201 et seq.
"Federal Funds Rate" means, for any day, a floating rate equal to the
weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
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"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fees" means any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth in Annex
G.
"Financial Statements" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrower delivered in
accordance with Section 3.4 and Annex E.
"Fiscal Month" means any of the monthly accounting periods of Borrower.
"Fiscal Quarter" means any of the quarterly accounting periods of
Borrower, ending on the last Saturday of June, September, and December and on
the Saturday closest to March 31 of each year.
"Fiscal Year" means any of the annual accounting periods of Borrower
ending on the Saturday closest to March 31 of each year.
"Fixed Charges" means, with respect to Holdings, on a consolidated
basis, for any fiscal period, an amount equal to the sum of (a) the aggregate of
all cash Interest Expense paid or accrued during such period (excluding (i)
original issue discount, (ii) interest paid by the issuance of any
payment-in-kind notes and (iii) interest paid in kind in accordance with Section
1.5(a)(iv)) plus (b) scheduled payments of principal with respect to
Indebtedness during such period other than Acquisition Subordinated Debt as to
which a Reserve has been established, plus (c) payments on earn-outs to sellers
in connection with a Permitted Acquisition, unless such earn-outs are deducted
in the calculation of EBITDA during the relevant period or a Reserve with
respect thereto has been established, including a Reserve with respect to
Acquisition Subordinated Debt, plus (d) the aggregate of all redemptions,
purchases, retirements, defeasances, sinking fund or similar payments or
acquisitions for value with respect to Indebtedness (other than payments made
for Redemptions to the extent such payments for Redemptions after the Original
Closing Date are less than $30,000,000 in the aggregate) plus (d) dividends paid
in cash. For purposes of this definition, the following Fixed Charges shall be
excluded: (1) the Fixed Charges of any other Person prior to the date it became
a Subsidiary of, or was merged or consolidated into, such Person or any of such
Person's Subsidiaries, and (2) the Fixed Charges of any other Person (other than
a Subsidiary) in which such Person has an ownership interest. For purposes of
calculating Fixed Charges for measuring periods ending within 1 year after the
Original Closing Date, scheduled payments of principal shall be deemed to have
been $1,428,570 per Fiscal Quarter prior to September 30, 2002.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
fiscal period, the ratio of (a) EBITDA less Capital Expenditures (other than
that portion of Capital Expenditures financed by third party loans) and income
taxes paid in cash to (b) Fixed Charges.
"Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.
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"Foreign" means, as to any Person, a Person which is not created or
organized under the laws of the United States of America, or any of its states
or the District of Columbia.
"Funded Debt" means, with respect to any Person, without duplication,
all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness that by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrower, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.
"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied, as such term is further defined in
Annex G to the Agreement.
"GE Capital" means General Electric Capital Corporation, a Delaware
corporation.
"GE Capital Fee Letter" means that certain letter, dated as of February
26, 2002, between GE Capital and Borrower with respect to certain Fees to be
paid from time to time by Borrower to GE Capital.
"General Intangibles" means all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Goods" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
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homes, standing timber that is cut and removed for sale and unborn young of
animals.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Granting Lender" has the meaning ascribed to it in Section 9.1(g).
"Guaranteed Indebtedness" means, as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("primary obligation") of any
other Person (the "primary obligor") in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, (d) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guaranties" means, collectively, each Subsidiary Guaranty and any
other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"Guarantors" means each Secured Guarantor and each other Person, if
any, that executes a guaranty or other similar agreement in favor of Agent, for
itself and the ratable benefit of Lenders, in connection with the transactions
contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"Holdings" means Roller Bearing Holding Company, Inc., a Delaware
corporation.
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"Immediate Family" with respect to any individual, shall mean his
brothers, sisters, spouse, children (including adopted children), parents,
parents-in-law, grandchildren, great grandchildren and other lineal descendants
and spouses of any of the foregoing.
"Indebtedness" means, with respect to any Person, without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred 12 months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than 6 months unless being
contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Original Closing Date)
of future rental payments under all synthetic leases, (f) all obligations of
such Person under commodity purchase or option agreements or other commodity
price hedging arrangements, in each case whether contingent or matured, (g) all
obligations of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in Section
1.13.
"Indemnified Person" has the meaning ascribed to it in Section 1.13.
"Index Rate" means, for any day, a floating rate equal to the higher of
(i) the rate publicly quoted from time to time by The Wall Street Journal as the
"base rate on corporate loans posted by at least 75% of the nation's 30 largest
banks" (or, if The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus 50 basis points per annum. Each change in any
interest rate provided for in the Agreement based upon the Index Rate shall take
effect at the time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing interest by
reference to the Index Rate.
"Industrial Revenue Bond Financing" means financing of acquisition of
real estate and improvements thereto, Fixtures and Equipment involved in
industrial or commercial projects from proceeds of tax-exempt or taxable bonds
issues by state or local government agency.
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"Instruments" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Intercompany Notes" has the meaning ascribed to it in Section 6.3.
"Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person less any
interest income of such Person determined in accordance with GAAP for the
relevant period ended on such date, including interest expense with respect to
any Funded Debt of such Person and interest expense for the relevant period that
has been capitalized on the balance sheet of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period and, in addition,
in the case of a LIBOR Period in excess of three months, the last day of the
third month of such LIBOR Period, provided that, in addition to the foregoing,
each of (x) the date upon which all of the Commitments have been terminated and
the Loans have been paid in full and (y) the Commitment Termination Date shall
be deemed to be an "Interest Payment Date" with respect to any interest that has
then accrued under the Agreement.
"Inventory" means all "inventory," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located, and in
any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including other supplies
and embedded software.
"Investment Property" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (a) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (b) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (c) all securities accounts of any Credit Party;
(d) all commodity contracts of any Credit Party; and (e) all commodity accounts
held by any Credit Party.
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"IRB Loan" shall mean Indebtedness evidenced by any of the following:
(a) the Loan Agreement dated as of September 1, 1994, between South Carolina
Jobs-Economic Development Authority (the "Authority") and Borrower relating to
$7,700,000 Variable Rate Demand Industrial Development Revenue Bonds (Roller
Bearing Company of America, Inc. Project) Series 1994A, (b) the Trust Indenture
dated as of September 1, 1994, by and between the Authority and Xxxx Xxxxx Bank,
as trustee, with respect to the bonds described in clause (a) of this
definition, (c) the Loan Agreement dated as of September 1, 1994, between the
Authority and Borrower relating to $3,000,000 Variable Rate Demand Industrial
Development Revenue Bonds (Roller Bearing Company of America, Inc. Project)
Series 1994B, (d) the Trust Indenture dated as of September 1, 1994, by and
between the Authority and Xxxx Xxxxx Bank, as trustee, with respect to the bonds
described in clause (c) of this definition, (e) the Loan Agreement dated as of
September 1, 1998 between the Authority and RBC Linear Precision Products, Inc.
relating to $3,000,000 Tax Exempt Demand/Fixed Rate Industrial Development
Revenue Bonds (RBC Linear Precision Products, Inc. Project) Series 1998, (f) the
Trust Indenture dated as of September 1, 1998 with respect to the bonds
described in clause (e) of this definition, (g) the Loan Agreement dated as of
April 1, 1999 between California Infrastructure and Economic Development Bank
and Borrower relating to $4,800,000 Variable Rate Demand Industrial Revenue
Bonds Series 1999 (Roller Bearing Company of America, Inc. - Santa Xxx Project)
and (h) the Indenture of Trust dated as of April 1, 1999 with respect to the
bonds described in clause (g) of this definition and, in each case, the other
documents executed in connection therewith.
"IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"Keyman Life Insurance" means a keyman life insurance policy on Xxxxxxx
X. Xxxxxxxx from an insurance company and on terms and conditions acceptable to
the Agent, in an amount of at least $10,000,000.
"L/C Issuer" has the meaning ascribed to it in Annex B.
"L/C Sublimit" has the meaning ascribed to in it Annex B.
"Lender Agreement" has the meaning set forth in Section 1.11(a).
"Lenders" means GE Capital and the other Lenders named on the signature
pages of the Agreement, and, if any such Lender shall decide to assign all or
any portion of the Obligations, such term shall include any assignee of such
Lender.
"Letter of Credit Fee" has the meaning ascribed to it in Annex B.
"Letter of Credit Obligations" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of Letters of Credit by Agent or another L/C Issuer or the purchase of
a participation as set forth in Annex B with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount
that may be payable by Agent or Lenders thereupon or pursuant thereto.
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"Letters of Credit" means documentary or standby letters of credit
issued for the account of Borrower by any L/C Issuer, and bankers' acceptances
issued by Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.
"Letter-of Credit Rights" means "letter-of-credit rights" as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.
"Leverage Ratio" means, with respect to Holdings, on a consolidated
basis after giving effect to any and all Redemption(s), the ratio of (i) the
Adjusted Funded Debt as of any date of determination, to (ii) the Adjusted
EBITDA for the twelve months most recently ended on or prior to the date of
determination.
"LIBOR Business Day" means a Business Day on which banks in the City of
London are generally open for interbank or foreign exchange transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two, three or six months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.5(e); provided
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days prior
to such date;
(c) any LIBOR Period that begins on the last LIBOR Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;
and
(d) Borrower shall select LIBOR Periods so that there shall be
no more than 5 separate LIBOR Loans in existence at any one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest determined
by Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period that appears on Telerate Page 3750 as of
11:00 a.m. (London time), on the second full LIBOR Business Day next
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preceding the first day of such LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be
used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of
the Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board
that are required to be maintained by a member bank of the Federal
Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such
financial reporting service or other information as shall be mutually
acceptable to Agent and Borrower.
"License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.13.
"Loan Account" has the meaning ascribed to it in Section 1.12.
"Loan Documents" means the Agreement, the Notes, the Collateral
Documents, the Master Standby Agreement, the Master Documentary Agreement, the
Post Closing Matters Agreement, the Environmental Indemnity Agreement, the GE
Capital Fee Letter, the Term B Loan Fee Letter and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to Agent or any Lender in connection with the Agreement or
the transactions contemplated thereby. Any reference in the Agreement or any
other Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as
the same may be in effect at any and all times such reference becomes operative.
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"Loans" means the Revolving Loan, the Swing Line Loan, the Term Loan
and Term B Loan.
"Lock Boxes" has the meaning ascribed to it in Annex C.
"Margin Stock" has the meaning ascribed to it in Section 3.10.
"Master Documentary Agreement" means the Master Agreement for
Documentary Letters of Credit dated as of the Original Closing Date between
Borrower, as Applicant, and GE Capital, as Issuer.
"Master Standby Agreement" means the Master Agreement for Standby
Letters of Credit dated as of the Original Closing Date between Borrower, as
Applicant, and GE Capital, as Issuer.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of the
Credit Parties considered as a whole, (b) Borrower's ability to pay any of the
Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and Lenders,
on the Collateral or the priority of such Liens, or (d) Agent's or any Lender's
rights and remedies under the Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, any event or occurrence adverse to one
or more Credit Parties which results or could reasonably be expected to result
in costs, liabilities or damages, individually, or in the aggregate, to any
Credit Party or Credit Parties in an amount that would have caused the Fixed
Charge Covenant Ratio Financial Covenant to have been breached if such event or
occurrence had occurred and such costs, liabilities or damages had been paid on
the first day of the Fiscal Quarter most recently ended.
"Maximum Amount" means, as of any date of determination, an amount
equal to the Revolving Loan Commitment of all Lenders as of that date.
"Maximum Lawful Rate" has the meaning ascribed to it in Section 1.5(f).
"Mortgaged Properties" has the meaning assigned to it in Annex D.
"Mortgages" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent on behalf
of itself and Lenders with respect to the Mortgaged Properties, all in form and
substance reasonably satisfactory to Agent, as each may be amended restated,
supplemented or modified from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
3(37) of ERISA, and to which any Credit Party or ERISA Affiliate is making, is
obligated to make or has made or been obligated to make, contributions on behalf
of participants who are or were employed by any of them with the last six years.
"Non-Consenting Lender" has the meaning ascribed to it in Section
11.2(d)(i).
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"Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).
"Notes" means, collectively, the Revolving Notes, the Swing Line Note
and the Term Notes.
"Notice of Conversion/Continuation" has the meaning ascribed to it in
Section 1.5(e).
"Notice of Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities and
obligations, including letter of credit 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 any Credit Party to Agent or any Lender, 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 the Agreement or any of the other Loan Documents. This term
includes all principal, interest (including all interest that accrues after the
commencement of any case or proceeding by or against any Credit Party in
bankruptcy, whether or not allowed in such case or proceeding), Fees, Charges,
expenses, attorneys' fees and any other sum chargeable to any Credit Party under
the Agreement or any of the other Loan Documents.
"Original Closing Date" means May 30, 2002.
"Other Lender" has the meaning ascribed to it in Section 9.9(d).
"Overadvance" has the meaning ascribed to it in Section 1.1(a)(iii).
"Patent License" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patent Security Agreements" means the Patent Security Agreements made
in favor of Agent, on behalf of itself and Lenders, by each applicable Credit
Party, as the same may be amended, restated, modified and/or supplemented from
time to time including, without limitation, by any joinder thereto.
"Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a Plan described in Section 3(2) of ERISA.
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"Permitted Acquisition" has the meaning ascribed to it in Section 6.1.
"Permitted Encumbrances" means the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable
or which are being contested in accordance with Section 5.2(b); (b) pledges or
deposits of money securing statutory obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities not yet due and payable or
which are being contested in accordance with Section 5.2(b), so long as such
Liens attach only to Inventory; (f) deposits securing, or in lieu of, surety,
appeal or customs bonds in proceedings to which any Credit Party is a party; (g)
any attachment or judgment lien not constituting an Event of Default under
Section 8.1(j); (h) zoning restrictions, easements, licenses, or other
restrictions on the use of any Real Estate or other minor irregularities in
title (including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (i) presently
existing or hereafter created Liens in favor of Agent, on behalf of Lenders; (j)
Liens expressly permitted under clauses (b) and (c) of Section 6.7 of the
Agreement, (k) Liens securing the IRB Loans and the Swiss Loans, (l) Liens
securing Industrial Revenue Bond Financing incurred or assumed after the date
hereof permitted under the terms of the Agreement, (m) deposits made in the
ordinary course of business to secure liability to insurance carriers, (n)
leases or subleases granted to others not materially interfering with the
business of the Credit Parties, (o) any interest or title of a landlord or a
sublandlord under any lease, (o) Liens consisting of owner's rights to raw
materials held on consignment at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000
that are segregated and clearly labeled, and (p) Liens arising from
precautionary Code financing statements with respect to assets leased by
Borrower or its Subsidiaries pursuant to operating leases.
"Permitted Transferee" means, with respect to any Person, if such
Person is an individual, (i) a member of the Immediate Family of such Person,
(ii) a trust or other similar legal entity for the primary benefit of such
Person and/or one or more members of his Immediate Family, or (iii) a
partnership, limited partnership, limited liability company, corporation or
other entity in which such Person alone or together with members of his
Immediate Family possess 100% of the outstanding voting securities.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"Plan" means, at any time, an "employee benefit plan," as defined in
Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any Credit Party.
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"Pledge Agreements" means the Borrower Pledge Agreement, Borrower Swiss
Pledge Agreement and any other pledge agreement entered into after the Original
Closing Date by any Credit Party (as required by the Agreement or any other Loan
Document).
"Post Closing Matters Agreement" means the Post Closing Matters
Agreement dated on or about the date hereof between Borrower and Agent.
"Prior Lenders" means Credit Suisse First Boston and various other
financial institutions from time to time party to the Existing Credit Agreement.
"Prior Lender Obligations" means liabilities, obligations and
indebtedness of Borrower under and pursuant to the Existing Credit Agreement.
"Priority Event" means the occurrence of any one or more of the
following: (a) the occurrence and continuance of an Event of Default under
Sections 8.1(a)(i) or (ii) hereof, (b) the occurrence and continuance of an
Event of Default under Sections 8.1(h) or 8.1(i) hereof; (c) the occurrence of
any other Event of Default and the acceleration by Agent of the payment of all
or a material portion of the Tranche A Obligations or (d) the occurrence of the
Commitment Termination Date.
"Proceeds" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of, interference with the use of, defects in,
or infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to payment
or other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral.
"Pro Forma" means the unaudited consolidated and consolidating balance
sheet of Borrower and its Subsidiaries as of March 31, 2002 after giving pro
forma effect to the Related Transactions.
"Projections" means Borrower's forecasted consolidated: (a) balance
sheets; (b) profit and loss statements; (c) cash flow statements; and (d)
capitalization statements, which, in the case of profit and loss statements,
shall be prepared on a Subsidiary by Subsidiary or division-by-division basis,
if applicable, and all consistent with the historical Financial Statements of
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Borrower, together with appropriate supporting details and a statement of
underlying assumptions.
"Pro Rata Share" means with respect to all matters relating to any
Lender (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments of all Lenders, (b) with respect to the Term Loan,
the percentage obtained by dividing (i) the Term Loan Commitment of that Lender
by (ii) the aggregate Term Loan Commitments of all Lenders, as any such
percentages may be adjusted by assignments permitted pursuant to Section 9.1,
(c) with respect to the Term B Loan, the percentage obtained by dividing (i) the
Term B Loan Commitment of that Lender by (ii) the aggregate Term B Loan
Commitments of all Lenders, (d) with respect to all Loans, the percentage
obtained by dividing (i) the aggregate Commitments of that Lender by (ii) the
aggregate Commitments of all Lenders, and (e) with respect to all Loans on and
after the Commitment Termination Date, the percentage obtained by dividing (i)
the aggregate outstanding principal balance of the Loans held by that Lender, by
(ii) the outstanding principal balance of the Loans held by all Lenders.
"Purchased Parts" means parts purchased by Borrower or a Secured
Guarantor from a third-party supplier or a Foreign Subsidiary which are used for
assembly.
"Qualified Assignee" means (a) any Lender, any Affiliate of any Lender
and, with respect to any Lender that is an investment fund that invests in
commercial loans, any other investment fund that invests in commercial loans and
that is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act or 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Xxxxx'x at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrower
without the imposition of any withholding or similar taxes; provided that no
Person determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee and no Person or
Affiliate of such Person (other than a Person that is already a Lender) holding
Subordinated Debt or Stock issued by any Credit Party shall be a Qualified
Assignee.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Qualified Public Offering" means an initial public offering of Stock
of Holdings resulting in proceeds to Holdings of at least $20,000,000 and which
qualifies Holdings for listing on NASDAQ National Markets.
"Qualified Target" means a corporation, limited partnership, limited
liability company or partnership or a similar Person that is incorporated,
formed or organized under the laws of one of the United States of America,
Canada or England, with substantially all of its assets located in the United
States of America, Canada or England and that is engaged in a business engaged
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in by Borrower or any Credit Party or a business substantially similar or
related thereto.
"Ratable Share" has the meaning ascribed to it in Section 1.1(b).
"Real Estate" has the meaning ascribed to it in Section 3.6.
"Recapitalization" means the Redemptions that take place prior to
December 16, 2002.
"Redemption" means any redemption, purchase, retirement, defeasance,
sinking fund or similar payment or acquisition for value with respect to the
Discount Debentures.
"Refinancing" means the repayment in full by Borrower of the Prior
Lender Obligations on the Original Closing Date.
"Refunded Swing Line Loan" has the meaning ascribed to it in Section
1.1(c)(iii).
"Related Transactions" means the initial borrowing under the Revolving
Loan and the Term Loan on the Original Closing Date, the Refinancing, the
payment of all fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Related Transactions Documents.
"Related Transactions Documents" means the Loan Documents and all other
agreements or instruments executed in connection with the Related Transactions.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Replacement Lender" has the meaning ascribed to it in Section 1.16(d).
"Requisite Lenders" means (1) prior to payment in full of all Tranche A
Obligations and the termination of the Commitments, Lenders having (a) more than
66 2/3% of the Commitments (other than the Term B Commitments) of all Lenders
(other than the Term B Lenders), or (b) if the Commitments have been terminated,
more than 66 2/3% of the aggregate outstanding amount of the Loans (other than
the Term B Commitments) and (2) from and after the payment in full of all
Tranche A Obligations and the termination of the Commitments, Lenders having
more than 66 2/3% of the aggregate outstanding amount of the Loans; provided
that if only two Lenders shall exist, "Requisite Lenders" shall mean both such
Lenders.
"Requisite Revolving Lenders" means Lenders having (a) more than 66
2/3% of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving
Loan Commitments have been terminated, more than 66 2/3% of the aggregate
outstanding amount of the Revolving Loan, provided that if there are only two
Lenders, "Requisite Revolving Lenders" shall mean both such Lenders.
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"Requisite Term B Loan Lenders" shall mean Term B Loan Lenders having
(a) more than sixty-six and two-thirds percent (66 2/3%) of the Term B Loan
Commitments of all Term B Loan Lenders, or (b) if the Term B Loan Commitments
have been terminated, more than sixty-six and two-thirds percent (66 2/3%) of
the aggregate outstanding principal amount of the Term B Loan.
"Reserves" means, with respect to the Borrowing Base (a) reserves
established by Agent from time to time against Eligible Inventory pursuant to
Section 5.9, (b) reserves established pursuant to Section 5.4(c), and (c) such
other reserves against Eligible Accounts and Eligible Inventory that Agent may,
in its reasonable credit judgment, establish from time to time in accordance
with Sections 1.6 and 1.7. Without limiting the generality of the foregoing, a
Timing Reserve, an Unapplied Cash Reserve, a Costing Reserve, a reserve for
dilution with respect to Accounts to the extent dilution exceeds five percent
(5%) of Accounts, a reserve established in accordance with Section 6.1(b)(iv)
and any other reserve expressly provided for under the Agreement shall be deemed
to be a reasonable exercise of Agent's credit judgment.
"Restricted Payment" means, with respect to any Credit Party (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement or acquisition for value of such
Credit Party's Stock or any other payment or distribution made in respect
thereof, either directly or indirectly; (c) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment or acquisition for value with respect to, any Subordinated
Debt; (d) any payment made to redeem, purchase, repurchase or retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to
acquire Stock of such Credit Party now or hereafter outstanding; (e) any payment
of a claim for the rescission of the purchase or sale of, or for material
damages arising from the purchase or sale of, any shares of such Credit Party's
Stock or of a claim for reimbursement, indemnification or contribution arising
out of or related to any such claim for damages or rescission; (f) any payment,
loan, contribution, or other transfer of funds or other property to any
Stockholder of such Credit Party other than payment of compensation in the
ordinary course of business to Stockholders who are employees of such Credit
Party; and (g) any payment of management fees (or other fees of a similar
nature) by such Credit Party to any Stockholder of such Credit Party or its
Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that provides
for continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Revolving Credit Advance" has the meaning ascribed to it in Section
1.1(a)(i).
"Revolving Lenders" means, as of any date of determination, Lenders
having a Revolving Loan Commitment.
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"Revolving Loan" means, at any time, the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to Borrower plus (ii) the
aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" means (a) as to any Revolving Lender, the
aggregate commitment of such Revolving Lender to make Revolving Credit Advances
or incur Letter of Credit Obligations as set forth on Annex J to the Agreement
or in the most recent Assignment Agreement executed by such Revolving Lender and
(b) as to all Revolving Lenders, the aggregate commitment of all Revolving
Lenders to make Revolving Credit Advances or incur Letter of Credit Obligations,
which aggregate commitment shall be Fifty-Four Million Dollars ($54,000,000) on
the Effective Date, as such amount may be adjusted, if at all, from time to time
in accordance with the Agreement.
"Revolving Note" has the meaning ascribed to it in Section 1.1(a)(ii).
"Schaublin" means Xxxxxxxxx X.X, a Swiss corporation and wholly-owned
Subsidiary of Schaublin Holding (excluding directors' qualifying shares).
"Schaublin Financing" shall mean the credit facility provided to
Schaublin pursuant to that certain Credit Agreement dated on or about December
8, 2003 between Schaublin and Credit Suisse and all documents and agreements
executed and/or delivered in connection therewith, as the same may be amended,
restated, modified or supplemented from time to time.
"Schaublin Holding" means Schaublin Holding S.A., a Swiss corporation
and wholly-owned Subsidiary of Borrower (excluding directors' qualifying
shares).
"Security Agreement" means the Security Agreement dated as of the
Original Closing Date entered into by and among Agent, on behalf of itself and
Lenders, and each Credit Party that is a signatory thereto, as the same may be
amended, restated, modified and/or supplemented from time to time including,
without limitation, by any joinder thereto.
"Secured Guarantor" means a Guarantor (i) that is a Domestic Subsidiary
of Borrower (other than Xxxxxxx Acquisition Corp., a Delaware corporation), (ii)
that has granted Agent a first priority perfected Lien on all or substantially
all of its assets to secure payments and performance of the Obligations, (iii)
with respect to which Agent has received all opinions, certificates and other
documents requested by Agent, and (iv) whose outstanding equity interests have
been pledged to Agent to secure payment and performance of the Obligations.
"Senior Debt" means all Funded Debt of Borrower other than Senior
Subordinated Debt.
"Senior Subordinated Debt" means the Indebtedness of Borrower evidenced
by the Senior Subordinated Notes.
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"Senior Subordinated Indenture" means to that certain Indenture dated
as of June 15, 1997 among Borrower, its Subsidiaries party thereto and United
States Trust Company of New York, as trustee.
"Senior Subordinated Notes" means those certain 9-5/8% Senior
Subordinated Notes due 2007 issued by Borrower in an aggregate original
principal amount of $110,000,000 pursuant the Senior Subordinated Indenture.
"Settlement Date" has the meaning ascribed to it in Section 9.9(a)(ii).
"Software" means all "software" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, 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 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 as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall
be computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.
"SPC" has the meaning ascribed to it in Section 9.1(g).
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder of Stock
of such Person.
"Subordinated Debt" means the Senior Subordinated Debt and any other
Indebtedness of any Credit Party in an amount, on such terms, and subordinated
to the Obligations in a manner and form satisfactory to Agent and Lenders in
their sole discretion as to right and time of payment and as to any other terms,
rights and remedies thereunder.
"Subordinated Debt Documents" means the Senior Subordinated Notes, the
Senior Subordinated Indenture, and any other instrument, document or agreement
(including Subsidiary Guaranties delivered by applicable Subsidiaries of
Borrower) evidencing the Subordinated Debt, in each including all schedules,
A-29
exhibits, amendments, supplements, modifications, assignments and all other
documents delivered pursuant thereto or in connection therewith.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of the Borrower.
"Subsidiary Guaranty" means Subsidiary Guaranty dated as of the
Original Closing Date executed by each Secured Guarantor in favor of Agent, on
behalf of itself and Lenders as the same may be amended, restated, modified
and/or supplemented from time to time including, without limitation, by any
joinder thereto.
"Supporting Obligations" means all "supporting obligations" as such
term is defined in the Code, including letters of credit and guaranties issued
in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Swing Line Advance" has the meaning ascribed to it in Section
1.1(c)(i).
"Swing Line Availability" has the meaning ascribed to it in Section
1.1(c)(i).
"Swing Line Commitment" means, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Advances as set forth on
Annex J to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" means GE Capital.
"Swing Line Loan" means at any time, the aggregate amount of Swing Line
Advances outstanding to Borrower.
"Swing Line Note" has the meaning ascribed to it in Section 1.1(c)(ii).
"Swiss Loan" means the Indebtedness of RBC Xxxxxxxxx X.X. Delemont to
Credit Suisse pursuant to the terms of the Credit Agreement dated as of December
27, 1999 not to exceed Swiss Francs 11,000,000 in the aggregate.
A-30
"Tax Sharing Agreement" means the Tax Sharing Agreement dated June 16,
1997, by and among Holdings, Borrower and Subsidiaries.
"Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or any
political subdivision thereof.
"Term B Loan" shall have the meaning assigned to it in Section
1.1(d)(i).
"Term B Loan Commitment" shall mean (a) as to any Term B Loan Lender,
the commitment of such Term B Loan Lender to make its Pro Rata Share of the Term
B Loan as set forth on Annex J or in the most recent Assignment Agreement
executed by such Term B Loan Lender, and (b) as to all Term B Loan Lenders, the
aggregate commitment of all Term B Loan Lenders to make the Term B Loan, which
aggregate commitment shall be Ten Million Dollars ($10,000,000) on the Effective
Date, as to each of clauses (a) and (b), as such commitments may be reduced or
adjusted from time to time in accordance with the Agreement.
"Term B Loan Fee Letter" means that certain letter dated on or about
the Effective Date between GE Capital and Borrower with respect to certain Fees
to be paid from time to time by Borrower to GE Capital.
"Term B Loan Lenders" means those Lenders having Term B Loan
Commitments.
"Term B Loan Note" has the meaning assigned to it in Section 1.1(d)(i).
"Term B Loan Obligations" means all principal of, interest on and
repayment premium (if any), Fees and other Obligations now or hereafter due in
respect of the Term B Loan including any Obligation of any Guarantor in respect
thereof.
"Term Lenders" means those Lenders having Term Loan Commitments.
"Term Loan" has the meaning assigned to it in Section 1.1(b)(i).
"Term Loan Commitment" means (a) as to any Lender with a Term Loan
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term Loan
Commitment, the aggregate commitment of all Lenders to make the Term Loan, which
aggregate commitment was Forty Million Dollars ($40,000,000) on the Original
Closing Date and shall be equal to $32,900,000 as of the Effective Date. After
advancing the Term Loan, each reference to a Lender's Term Loan Commitment shall
refer to that Lender's Pro Rata Share of the outstanding Term Loan.
"Term Note" has the meaning assigned to it in Section 1.1(b)(i).
"Termination Date" means the date on which (a) the Loans have been
indefeasibly repaid in full, (b) all other Obligations under the Agreement and
the other Loan Documents have been completely discharged, (c) all Letter of
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Credit Obligations have been cash collateralized, cancelled or backed by standby
letters of credit in accordance with Annex B, and (d) Borrower shall not have
any further right to borrow any monies under the Agreement.
"Timing Reserve" means a reserve equal to unreconciled differences
between the perpetual Inventory balance and general ledger Inventory balance.
"Timken" means the Timken U.S. Corporation, a Delaware corporation.
"Timken Acquisition" means the acquisition of certain operating assets
of the Standard Plant of Timken located in Torrington, Connecticut by RBC
Aircraft Products, Inc. pursuant to the Timken Acquisition Agreement.
"Timken Acquisition Agreement" means that certain Asset Purchase
Agreement dated on or about the Effective Date among RBC Aircraft Products Inc.,
Borrower and Timken and MPB Corporation, a Delaware corporation.
"Timken Acquisition Documents" means the Timken Acquisition Agreement
and all documents and agreements executed or delivered in connection therewith.
"Title IV Plan" means a Pension Plan (other than a Multiemployer Plan),
that is covered by Title IV of ERISA or subject to Section 412 of IRC, and that
any Credit Party or ERISA Affiliate maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any of them.
"Trademark Security Agreements" means the Trademark Security Agreements
made in favor of Agent, on behalf of Lenders, by each applicable Credit Party,
as the same may be amended, restated, modified and/or supplemented from time to
time including, without limitation, by any joinder thereto.
"Trademark License" means rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"Tranche A Obligations" means principal of and interest (including
post-petition interest accruing in accordance with the provisions of this
Agreement during any bankruptcy case or receivership, reorganization,
insolvency, liquidation or dissolution proceeding, whether or not allowed as a
claim in such case or proceeding) and Fees on the Revolving Loan, the Term Loan,
A-32
the Swing Line Loan and all other Obligations that are accrued, due and payable
or may hereafter accrue or become due and payable to Agent, the Revolving
Lenders, the Term Lenders and the Swing Line Lender, in each case in their
capacities as such.
"Trigger Event" means any time that the Borrowing Availability for a
period of two (2) consecutive months is less than $10,000,000. Once a Trigger
Event has occurred, it shall remain in effect until Agent has determined that
(i) Borrowing Availability has exceeded $10,000,000 for a period of one (1)
calendar month and (ii) no Event of Default has occurred and continues to exist
during such calendar month.
"Unapplied Cash Reserve" means a reserve equal to cash received in
payment of Accounts that has not been applied to payment thereof in the general
ledger.
"Unfunded Pension Liability" means, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of 5 years following a transaction
which might reasonably be expected to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by any Credit Party
or any ERISA Affiliate as a result of such transaction.
"Welfare Plan" means a Plan described in Section 3(1) of ERISA.
"Zero Coupon Debt" means Indebtedness evidenced by Discount Debentures.
Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
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statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness of
a particular fact or circumstance.
X-00
XXXXX X (Section 1.2)
to
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the Agreement,
Agent and Revolving Lenders agree to incur, from time to time prior to the
Commitment Termination Date, upon the request of Borrower and for Borrower's
account, Letter of Credit Obligations by causing Letters of Credit to be issued
by GE Capital or a Subsidiary thereof or a bank or other legally authorized
Person selected by or acceptable to Agent in its sole discretion (each, an "L/C
Issuer") for Borrower's account and guaranteed by Agent; provided that if the
L/C Issuer is a Revolving Lender, then such Letters of Credit shall not be
guaranteed by Agent but rather each Revolving Lender shall, subject to the terms
and conditions hereinafter set forth, purchase (or be deemed to have purchased)
risk participations in all such Letters of Credit issued with the written
consent of Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall not at any time
exceed the least of (i) Twenty-Five Million Dollars ($25,000,000) (the "L/C
Sublimit"), and (ii) the Maximum Amount less the aggregate outstanding principal
balance of the Revolving Credit Advances and the Swing Line Loan, and (iii) the
Borrowing Base less the aggregate outstanding principal balance of the Revolving
Credit Advances and the Swing Line Loan. No such Letter of Credit shall have an
expiry date that is more than one year following the date of issuance thereof,
unless otherwise determined by Agent in its sole discretion, and neither Agent
nor Revolving Lenders shall be under any obligation to incur Letter of Credit
Obligations in respect of, or purchase risk participations in, any Letter of
Credit having an expiry date that is later than the Commitment Termination Date.
All letters of credit which constitute "Letters of Credit" under the Prior
Credit Agreement and which are outstanding on the Effective Date shall
constitute Letters of Credit hereunder.
(b)(i) Advances Automatic; Participations. In the event that Agent or
any Revolving Lender shall make any payment on or pursuant to any Letter of
Credit Obligation, such payment shall then be deemed automatically to constitute
a Revolving Credit Advance under Section 1.1(a) of the Agreement regardless of
whether a Default or Event of Default has occurred and is continuing and
notwithstanding Borrower's failure to satisfy the conditions precedent set forth
in Section 2, and each Revolving Lender shall be obligated to pay its Pro Rata
Share thereof in accordance with the Agreement. The failure of any Revolving
Lender to make available to Agent for Agent's own account its Pro Rata Share of
any such Revolving Credit Advance or payment by Agent under or in respect of a
Letter of Credit shall not relieve any other Revolving Lender of its obligation
hereunder to make available to Agent its Pro Rata Share thereof, but no
Revolving Lender shall be responsible for the failure of any other Revolving
Lender to make available such other Revolving Lender's Pro Rata Share of any
such payment.
(ii) If it shall be illegal or unlawful for Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in Sections 8.1(h) or (i) or otherwise or if it
shall be illegal or unlawful for any Revolving Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C Issuer,
B-1
or if the L/C Issuer is a Revolving Lender, then (A) immediately and without
further action whatsoever, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation equal to such Revolving
Lender's Pro Rata Share (based on the Revolving Loan Commitments) of the Letter
of Credit Obligations in respect of all Letters of Credit then outstanding and
(B) thereafter, immediately upon issuance of any Letter of Credit, each
Revolving Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an undivided
interest and participation in such Revolving Lender's Pro Rata Share (based on
the Revolving Loan Commitments) of the Letter of Credit Obligations with respect
to such Letter of Credit on the date of such issuance. Each Revolving Lender
shall fund its participation in all payments or disbursements made under the
Letters of Credit in the same manner as provided in the Agreement with respect
to Revolving Credit Advances.
(c) Cash Collateral. (i) If Borrower is required to provide cash
collateral for any Letter of Credit Obligations pursuant to the Agreement prior
to the Commitment Termination Date, Borrower will pay to Agent for the ratable
benefit of itself and Revolving Lenders cash or cash equivalents acceptable to
Agent ("Cash Equivalents") in an amount equal to 103% of the maximum amount then
available to be drawn under each applicable Letter of Credit outstanding, plus
fees and expenses reasonably expected to be incurred in connection with draws
thereunder. Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") maintained at a bank or
financial institution acceptable to Agent. The Cash Collateral Account shall be
in the name of Borrower and shall be pledged to, and subject to the control of,
Agent, for the benefit of Agent and Lenders, in a manner satisfactory to Agent.
Borrower hereby pledges and grants to Agent, on behalf of itself and Lenders, a
security interest in all such funds and Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of the Letter of Credit Obligations
and other Obligations, whether or not then due. The Agreement, including this
Annex B, shall constitute a security agreement under applicable law.
(ii) If any Letter of Credit Obligations, whether or not then
due and payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrower shall either (A) provide cash collateral therefor in
the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver a
stand-by letter (or letters) of credit in guarantee of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall be of like tenor
and duration (plus thirty (30) additional days) as, and in an amount equal to
103% of the aggregate maximum amount then available to be drawn under, the
Letters of Credit to which such outstanding Letter of Credit Obligations relate,
plus fees and expenses reasonably expected to be incurred in connection with
draws thereunder and shall be issued by a Person, and shall be subject to such
terms and conditions, as are be satisfactory to Agent in its sole discretion.
(iii) From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, and in such order as
Agent may elect, as shall be or shall become due and payable by Borrower to
B-2
Agent and Lenders with respect to such Letter of Credit Obligations of Borrower
and, upon the satisfaction in full of all Letter of Credit Obligations of
Borrower, to any other Obligations then due and payable.
(iv) Neither Borrower nor any Person claiming on behalf of or
through Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Agent and Lenders in respect thereof, any funds remaining
in the Cash Collateral Account shall be applied to other Obligations then due
and owing and upon payment in full of such Obligations, any remaining amount
shall be paid to Borrower or as otherwise required by law. Interest earned on
deposits in the Cash Collateral Account shall be for the account of Agent.
(d) Fees and Expenses. Borrower agrees to pay to Agent for the benefit
of Revolving Lenders, as compensation to such Lenders for Letter of Credit
Obligations incurred hereunder, (i) all costs and expenses incurred by Agent or
any Lender on account of such Letter of Credit Obligations, and (ii) for each
month during which any Letter of Credit Obligation shall remain outstanding, a
fee (the "Letter of Credit Fee") in an amount equal to two and one-quarter
percent (2.25%) per annum multiplied by the maximum amount available from time
to time to be drawn under the applicable Letter of Credit. Such fee shall be
paid to Agent for the benefit of the Revolving Lenders in arrears, on the first
day of each month and on the Commitment Termination Date. In addition, Borrower
shall pay to any L/C Issuer, on demand, such fees (including all per annum
fees), charges and expenses of such L/C Issuer in respect of the issuance,
negotiation, acceptance, amendment, transfer and payment of such Letter of
Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
shall give Agent at least two (2) Business Days' prior written notice requesting
the incurrence of any Letter of Credit Obligation. The notice shall be
accompanied by the form of the Letter of Credit (which shall be acceptable to
the L/C Issuer) and a completed Application for Standby Letter of Credit or
Application for Documentary Letter of Credit as applicable in the form Exhibit
B-1 or B-2 attached hereto. Notwithstanding anything contained herein to the
contrary, Letter of Credit applications by Borrower and approvals by Agent and
the L/C Issuer may be made and transmitted pursuant to electronic codes and
security measures mutually agreed upon and established by and among Borrower,
Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower to reimburse Agent
and Revolving Lenders for payments made with respect to any Letter of Credit
Obligation shall be absolute, unconditional and irrevocable, without necessity
of presentment, demand, protest or other formalities, and the obligations of
each Revolving Lender to make payments to Agent with respect to Letters of
Credit shall be unconditional and irrevocable. Such obligations of Borrower and
Revolving Lenders shall be paid strictly in accordance with the terms hereof
under all circumstances including the following:
(i) any lack of validity or enforceability of any Letter of
Credit or the Agreement or the other Loan Documents or any other
agreement;
B-3
(ii) the existence of any claim, setoff, defense or other
right that Borrower or any of its Affiliates or any Lender may at any
time have against a beneficiary or any transferee of any Letter of
Credit (or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection
with the Agreement, the Letter of Credit, the transactions contemplated
herein or therein or any unrelated transaction (including any
underlying transaction between Borrower or any of its Affiliates and
the beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided
in paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of
Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of
such Letter of Credit or such guaranty;
(v) any other circumstance or event whatsoever, that is
similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default has
occurred and is continuing.
(g) Indemnification; Nature of Lenders' Duties. (i) In addition to
amounts payable as elsewhere provided in the Agreement, Borrower hereby agrees
to pay and to protect, indemnify, and save harmless Agent and each Lender from
and against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees and allocated costs
of internal counsel) that Agent or any Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of Credit or
guaranty thereof, or (B) the failure of Agent or any Lender seeking
indemnification or of any L/C Issuer to honor a demand for payment under any
Letter of Credit or guaranty thereof as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent solely as a result
of the gross negligence or willful misconduct of Agent or such Lender (as
finally determined by a court of competent jurisdiction).
(ii) As between Agent and any Lender and Borrower, Borrower
assumes all risks of the acts and omissions of, or misuse of any Letter of
Credit by beneficiaries of any Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law neither
Agent nor any Lender shall be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document issued by any
party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any reason;
(C) failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to demand payment under such Letter of Credit;
B-4
provided that in the case of any payment by Agent under any Letter of Credit or
guaranty thereof, Agent shall be liable to the extent such payment was made
solely as a result of its gross negligence or willful misconduct (as finally
determined by a court of competent jurisdiction) in determining that the demand
for payment under such Letter of Credit or guaranty thereof complies on its face
with any applicable requirements for a demand for payment under such Letter of
Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they may be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise of any
document required in order to make a payment under any Letter of Credit or
guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of
any drawing under any Letter of Credit or guaranty thereof; and (H) any
consequences arising from causes beyond the control of Agent or any Lender. None
of the above shall affect, impair, or prevent the vesting of any of Agent's or
any Lender's rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to
expand any waivers, covenants or indemnities made by Borrower in favor of any
L/C Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between Borrower and such L/C Issuer,
including an Application and Agreement for Documentary Letter of Credit or a
Master Documentary Agreement and a Master Standby Agreement entered into with
Agent.
B-5
ANNEX C (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Borrower shall, and shall cause the Secured Guarantors to, establish
and maintain the Cash Management Systems described below:
(a) Before the Effective Date and until the Termination Date, Borrower
shall (i) establish lock boxes ("Lock Boxes") or, at Agent's discretion, blocked
accounts ("Blocked Accounts") at one or more of the banks set forth in
Disclosure Schedule (3.18), and shall request in writing and otherwise take such
reasonable steps to ensure that all Account Debtors forward payment directly to
such Lock Boxes, and (ii) deposit and cause the Secured Guarantors to deposit or
cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all cash, checks, drafts or
other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a Lock
Box) into one or more Blocked Accounts in Borrower's name or any such Secured
Guarantor's name and at a bank identified in Disclosure Schedule (3.18) (each, a
"Relationship Bank"). On or before the Original Closing Date, Borrower shall
have established a concentration account in its name (the "Concentration
Account") at the bank that shall be designated as the Concentration Account bank
for Borrower in Disclosure Schedule (3.18) (the "Concentration Account Bank")
which bank shall be reasonably satisfactory to Agent.
(b) Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances and Swing Line Advances made to Borrower pursuant
to Section 1.1 for use by Borrower in accordance with the provisions of Section
1.4.
(c) On or before the Effective Date (or such later date as Agent shall
consent to in writing), the Concentration Account Bank, each bank where a
Disbursement Account is maintained and all other Relationship Banks, shall have
entered into tri-party blocked account agreements with Agent, for the benefit of
itself and Lenders, and Borrower and the Secured Guarantors, as applicable, in
form and substance reasonably acceptable to Agent, which shall become operative
on or prior to the Effective Date. Each such blocked account agreement shall
provide, among other things, that (i) all items of payment deposited in such
account and proceeds thereof deposited in the Concentration Account are held by
such bank as agent or bailee-in-possession for Agent, on behalf of itself and
Lenders, (ii) the bank executing such agreement has no rights of setoff or
recoupment or any other claim against such account, as the case may be, other
than for payment of its service fees and other charges directly related to the
administration of such account and for returned checks or other items of
payment, and (iii) from and after the Effective Date (A) with respect to banks
at which a Blocked Account is maintained, such bank agrees, from and after the
receipt of a notice (an "Activation Notice") from Agent (which Activation Notice
may be given by Agent at any time at which an Event of Default described in
Sections 8.1(a), 8.1(b) (as a result of a breach of any of Sections 1.4, 1.8,
5.4(a), 6.1, 6.2, 6.5, 6.6, 6.7, 6.8, 6.10, 6.12, 6.14, and 6.19), 8.1(f),
C-1
8.1(h) or 8.1(i) has occurred and is continuing (any of the foregoing being
referred to herein as an "Activation Event"), to forward immediately all amounts
in each Blocked Account to the Concentration Account Bank and to commence the
process of daily sweeps from such Blocked Account into the Concentration Account
and (B) with respect to the Concentration Account Bank, such bank agrees from
and after the receipt of an Activation Notice from Agent upon the occurrence of
an Activation Event, to immediately forward all amounts received in the
Concentration Account to the Collection Account through daily sweeps from such
Concentration Account into the Collection Account. From and after the date Agent
has delivered an Activation Notice to any bank with respect to any Blocked
Account(s), Borrower shall not, and shall not cause or permit any Secured
Guarantor to, accumulate or maintain cash in Disbursement Accounts or payroll
accounts as of any date of determination in excess of checks outstanding against
such accounts as of that date and amounts necessary to meet minimum balance
requirements.
(d) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace any Concentration
Account or any Disbursement Account; provided that prior to the time of the
opening of such account or Lock Box, Borrower or the Secured Guarantors, as
applicable, and such bank shall have executed and delivered to Agent a tri-party
blocked account agreement, in form and substance reasonably satisfactory to
Agent. Borrower shall close any of its depository, lock box or concentration
accounts (and establish replacement accounts in accordance with the foregoing
sentence) promptly and in any event within thirty (30) days following notice
from Agent that the creditworthiness of any bank holding an account is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within sixty (60) days following notice from Agent that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts or Lock Boxes of the bank holding such accounts or Agent's
liability under any tri-party blocked account agreement with such bank is no
longer acceptable in Agent's reasonable judgment.
(e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and the
Concentration Account shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which Borrower and each Secured
Guarantor shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 and shall be applied (and
allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
(g) Borrower shall and shall cause its Affiliates, officers, employees,
agents, directors or other Persons acting for or in concert with Borrower (each
a "Related Person") to (i) hold in trust for Agent, for the benefit of itself
and Lenders, all checks, cash and other items of payment received by Borrower or
any such Related Person, and (ii) promptly after receipt by Borrower or any such
Related Person of any checks, cash or other items of payment, deposit the same
into a Blocked Account. Borrower and each Related Person thereof acknowledges
and agrees that all cash, checks or other items of payment constituting proceeds
C-2
of Collateral are part of the Collateral. All proceeds of the sale or other
disposition of any Collateral, shall be deposited directly into Blocked
Accounts.
(h) Until the occurrence of an Activation Event, Agent shall forward to
Borrower at the end of each Business Day all amounts received by Agent on such
Business Day in the Collection Account (Government Receivables) in good faith so
long as no Revolving Credit Advances are outstanding and no sums are then due
and payable to Agent or Lenders under the Credit Agreement. All such funds shall
be sent by wire transfer to the following Borrower's depositors account:
Bank: Wachovia/First Union National Bank
Charlotte, NC
ABA/Swift number: 000000000
Bank Account #: 2014146817950
Account Name: Roller Bearing Company of America, Inc.
C-3
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
----------------
CHECKLIST
---------
In addition to, and not in limitation of, the conditions described in
Section 2.1 of the Agreement, pursuant to Section 2.1(a), the items described on
the attached Closing Checklist must be received by Agent in form and substance
satisfactory to Agent on or prior to the Effective Date (each capitalized term
used but not otherwise defined herein shall have the meaning ascribed thereto in
Annex A to the Agreement).
[See Attached Closing Checklist]
D-1
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
----------------
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
-------------------------------------------------
Borrower shall deliver or cause to be delivered to Agent or to Agent
and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Month (other than a Fiscal Month that is the
last month of a Fiscal Quarter), financial information regarding Holdings,
Borrower and its Subsidiaries, certified by the Chief Financial Officer of
Borrower, consisting of consolidated and consolidating (i) unaudited balance
sheets as of the close of such Fiscal Month and the related statements of income
and cash flows for that portion of the Fiscal Year ending as of the close of
such Fiscal Month; (ii) unaudited statements of income and cash flows for such
Fiscal Month, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments); and (iii) a summary of the outstanding balance
of all Intercompany Notes as of the last day of that Fiscal Month. Such
financial information shall be accompanied by the certification of the Chief
Financial Officer of Borrower that (i) such financial information presents
fairly in accordance with GAAP (subject to normal year-end adjustments) the
financial position and results of operations of Holdings, Borrower and its
Subsidiaries, on a consolidated and consolidating basis, in each case as at the
end of such Fiscal Month and for that portion of the Fiscal Year then ended and
(ii) any other information presented is true, correct and complete in all
material respects and that there was no Default or Event of Default in existence
as of such time or, if a Default or Event of Default shall have occurred and be
continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default. In addition, Borrower shall deliver to Agent
and Lenders, within forty-five (45) days after the end of each Fiscal Month, a
management discussion and analysis of the financial performance of Holdings,
Borrower and its Subsidiaries prepared in accordance with Borrower's past
practices.
(b) Quarterly Financials. To Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Quarter, consolidated and consolidating
financial information regarding Holdings, Borrower and its Subsidiaries,
certified by the Chief Financial Officer of Borrower, including (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related statements
of income and cash flow for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter and (ii) unaudited statements of income and cash
flows for such Fiscal Quarter, in each case setting forth in comparative form
the figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments). Such financial information
shall be accompanied by (A) a statement in reasonable detail in the form of
Exhibit E-1 (each, a "Compliance Certificate") in respect of the Fixed Charge
Coverage Ratio Financial Covenant that is tested on a quarterly basis and (B)
the certification of the Chief Financial Officer of Borrower that (i) such
financial information presents fairly in accordance with GAAP (subject to normal
E-1
year-end adjustments) the financial position, results of operations and
statements of cash flows of Holdings, Borrower and its Subsidiaries, on both a
consolidated and consolidating basis, as at the end of such Fiscal Quarter and
for that portion of the Fiscal Year then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default has occurred and is continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default.
(c) Operating Plan. To Agent and Lenders, as soon as available, but not
later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan for Holdings and Borrower, approved by the Board of Directors of
Borrower, for the following Fiscal Year, which (i) includes a statement of all
of the material assumptions on which such plan is based, (ii) includes monthly
balance sheets and a quarterly budget for the following year and (iii)
integrates sales, gross profits, operating expenses, operating profit, cash flow
projections and Borrowing Availability projections, all prepared on the same
basis and in similar detail as that on which operating results are reported (and
in the case of cash flow projections, representing management's good faith
estimates of future financial performance based on historical performance), and
including plans for personnel, Capital Expenditures and facilities.
(d) Annual Audited Financials. To Agent and Lenders, within ninety (90)
days after the end of each Fiscal Year, or on a later date on which filing
thereof is required with the Securities and Exchange Commission, audited
Financial Statements for Holdings, Borrower and its Subsidiaries on a
consolidated and (unaudited) consolidating basis, consisting of balance sheets
and statements of income and retained earnings and cash flows, setting forth in
comparative form in each case the figures for the previous Fiscal Year, which
Financial Statements shall be prepared in accordance with GAAP and certified
without qualification, by an independent certified public accounting firm of
national standing or otherwise acceptable to Agent. Such Financial Statements
shall be accompanied by (i) the Compliance Certificate showing the calculations
used in determining compliance with the Fixed Charge Coverage Ratio Financial
Covenant, (ii) a report from such accounting firm to the effect that, in
connection with their audit examination, nothing has come to their attention to
cause them to believe that a Default or Event of Default has occurred with
respect to the Fixed Charge Coverage Ratio Financial Covenant (or specifying
those Defaults and Events of Default that they became aware of), it being
understood that such audit examination extended only to accounting matters and
that no special investigation was made with respect to the existence of Defaults
or Events of Default, (iii) the annual letters to such accountants in connection
with their audit examination detailing contingent liabilities and material
litigation matters, and (iv) the certification of the Chief Executive Officer or
Chief Financial Officer of Borrower that all such Financial Statements present
fairly in accordance with GAAP the financial position, results of operations and
statements of cash flows of Holdings, Borrower and its Subsidiaries on a
consolidated and consolidating basis, as at the end of such Fiscal Year and for
the period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default has occurred and
is continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default.
(e) Management Letters. To Agent and Lenders, within five (5) Business
Days after receipt thereof by any Credit Party, copies of all management
E-2
letters, exception reports or similar letters or reports received by such Credit
Party from its independent certified public accountants.
(f) Default Notices. To Agent and Lenders, as soon as practicable, and
in any event within five (5) Business Days after an executive officer of
Borrower has actual knowledge of the existence of any Default, Event of Default
or other event that has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day.
(g) SEC Filings and Press Releases. To Agent and Lenders, promptly upon
their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.
(h) Subordinated Debt and Equity Notices. To Agent and Lenders, as soon
as practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and,
within three (3) Business Days after any Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any Subordinated Debt,
notice of such event of default.
(i) Supplemental Schedules. To Agent, supplemental disclosures, if any,
required by Section 5.6.
(j) Litigation. To Agent and Lenders in writing, promptly upon learning
thereof, notice of any Litigation commenced or threatened against any Credit
Party that (i) seeks damages in excess of $250,000, (ii) seeks injunctive
relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its
assets or against any Credit Party or ERISA Affiliate in connection with any
Plan, (iv) alleges criminal misconduct by any Credit Party, (v) alleges the
violation of any law regarding, or seeks remedies in connection with, any
Environmental Liabilities; or (vi) involves any product recall.
(k) Insurance Notices. To Agent, disclosure of losses or casualties
required by Section 5.4.
(l) Lease Default Notices. To Agent, within five (5) Business Days
after receipt thereof, copies of (i) any and all default notices received under
or with respect to any leased location or public warehouse where Collateral is
located, and (ii) such other notices or documents as Agent may reasonably
request.
(m) Lease Amendments. To Agent, promptly after receipt thereof, copies
of all material amendments to real estate leases.
E-3
(n) Other Documents. To Agent and Lenders, such other financial and
other information respecting any Credit Party's business or financial condition
as Agent or any Lender shall, from time to time, reasonably request.
E-4
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
----------------
COLLATERAL REPORTS
------------------
Borrower shall deliver or cause to be delivered the following:
(a) To Agent, within ten (10) Business Days after the end of each
Fiscal Month (together with a copy of all or any part of the following reports
requested by any Lender in writing after the Original Closing Date), each of the
following reports, each of which shall be prepared by the Borrower as of the
last day of the immediately preceding Fiscal Month:
(i) a Borrowing Base Certificate with respect to Borrower and
Secured Guarantors, accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion;
(ii) with respect to Borrower and Secured Guarantors, a
summary of Inventory by location and type with a supporting perpetual
Inventory report, in each case accompanied by such supporting detail
and documentation as shall be requested by Agent in its reasonable
discretion; and
(iii) with respect to Borrower and Secured Guarantors, a
monthly trial balance showing Accounts outstanding aged from invoice
date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days
or more, accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion.
(b) As long as Borrowing Availability is less than $10,000,000 at the
time of the delivery of the Borrowing Base Certificates in accordance with
clause (a) above, to Agent and each Lender, at the time of such delivery, each
of the following reports, each of which shall be prepared by Borrower as of the
last day of the immediately preceding Fiscal Month:
(i) with respect to Borrower and Secured Guarantors, a summary
of Inventory by type with a supporting perpetual Inventory report;
(ii) with respect to Borrower and Secured Guarantors, a
monthly trial balance showing Accounts outstanding aged from invoice
date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days
or more;
(iii) with respect to Borrower and Secured Guarantors, agings
of accounts payable (and including information indicating the amounts
then owing to owners and lessors of leased premises, warehouses,
processors and other third parties from time to time in possession of
any Collateral);
(iv) schedules in a form satisfactory to Agent reflecting
sales made, credits issued, cash or other items of payment received and
other data relating to the collection of Accounts; and
F-1
(v) the percentages of all Eligible Accounts owing to each of
the five (5) largest Account Debtors and their Affiliates (excluding
the United States government as Account Debtor).
(c) To Agent, at the time of delivery of each of the monthly Financial
Statements delivered pursuant to Annex E:
(i) a reconciliation of the most recent Borrowing Base,
general ledger and month-end Inventory reports of Borrower to
Borrower's general ledger and monthly Financial Statements delivered
pursuant to such Annex E, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its
reasonable discretion;
(ii) a reconciliation of the perpetual inventory by location
to Borrower's most recent Borrowing Base Certificate, general ledger
and monthly Financial Statements delivered pursuant to Annex E, in each
case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;
(iii) an aging of accounts payable and a reconciliation of
that accounts payable aging to Borrower's general ledger and monthly
Financial Statements delivered pursuant to Annex E, in each case
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(iv) a reconciliation of the outstanding Loans as set forth in
the monthly Loan Account statement provided by Agent to Borrower's
general ledger and monthly Financial Statements delivered pursuant to
Annex E, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion;
(d) To Agent, at the time of delivery of each of the quarterly or
annual Financial Statements delivered pursuant to Annex E, (i) a listing of
government contracts of Borrower subject to the Federal Assignment of Claims Act
of 1940; and (ii) a list of any applications for the registration of any Patent,
Trademark or Copyright filed by any Credit Party with the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in the prior Fiscal Quarter;
(e) Borrower, at its own expense, shall deliver to Agent and Lenders
the results of each physical verification, if any, that Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person to
have made on their behalf, of all or any portion of their Inventory (and, if a
Default or an Event of Default has occurred and be continuing, Borrower shall,
upon the request of Agent, conduct, and deliver the results of, such physical
verifications as Agent may require);
(f) Borrower, at its own expense, shall deliver to Agent and Lenders
such appraisals of its assets as Agent may request at any time after the
occurrence and during the continuance of a Default or an Event of Default, such
appraisals to be conducted by an appraiser, and in form and substance reasonably
satisfactory to Agent;
F-2
(g) Such other reports, statements and reconciliations with respect to
the Borrowing Base or Collateral or Obligations of any or all Credit Parties as
Agent shall from time to time request in its reasonable discretion, including
additions and reductions of Accounts on an intra-month basis; and
(h) Borrower shall cause to be delivered to Agent all financial,
compliance, collateral and other reports and notices required to be furnished to
any lender under the Schaublin Financing as and when such items are delivered to
such lender(s).
F-3
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
----------------
FINANCIAL COVENANTS
-------------------
Borrower shall not breach or fail to comply with, and shall not permit
Holdings to breach or fail to comply with, any of the following financial
covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Fixed Charge Coverage Ratio. Holdings, on a consolidated basis
shall have at the end of each Fiscal Quarter a Fixed Charge Coverage Ratio for
the 12-month period then ended of not less than 1.10 to 1.00.
(b) Minimum Borrowing Availability. Except for Overadvances outstanding
under Section 1.1(a)(iii) and the greater minimum Borrowing Availability
required at times and amounts set forth in Sections 2.1(d), 6.3(b) and 6.14,
Borrower shall, at all times, cause the Borrowing Availability to exceed
$5,000,000.
Unless otherwise specifically provided herein, any accounting term used
in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrower, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
financial condition of Holdings, Borrower and its Subsidiaries shall be the same
after such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by Borrower's certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (iv) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Original Closing
Date (including capitalization of costs and expenses or payment of pre-Original
Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of EBITDA in such
period. If Agent, Borrower and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
G-1
applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrower and Requisite Lenders cannot agree upon the required amendments
within thirty (30) days following the date of implementation of any Accounting
Change, then all Financial Statements delivered and all calculations of
financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change. For purposes of Section 8.1,
a breach of a Financial Covenant contained in this Annex G shall be deemed to
have occurred as of any date of determination by Agent or as of the last day of
any specified measurement period, regardless of when the Financial Statements
reflecting such breach are delivered to Agent.
G-2
ANNEX H (Section 9.9(a))
to
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: Bankers Trust Company
New York, New York
ABA #: 000000000
Account #: 00000000
Account Name: GECC/CAF Depository
Reference: CFN 4731
H-1
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx and Xxxx Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
General Electric Capital Corporation
000 X. Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
Xxxxxx & Xxxxxxx
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel-Commercial Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-1
(B) If to Borrower, at
Roller Bearing Company of America, Inc.
00 Xxxxx Xxxx Xxxx
P. O. Xxx 000 Xxxxxxxxx, Xxxxxxxxxxx 00000-0000 Attention: Chief
Financial Officer Telecopier No.: (000) 000-0000 Telephone No.: (203)
255-1511
With copies to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: C. Xxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(C) If to Lenders, at
Congress Financial Corporation (Central)
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With copies to:
Otterbourg, Steindler, Houston & Xxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-2
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
----------------
PRO RATA SHARE
--------------
Commitments Lender(s) Pro Rata Share
----------- --------- --------------
Revolving Loan Commitment (including a General Electric Capital Corporation 63.8297%
Swing Line Commitment of $5,000,0000):
$34,468,085.11
Term Loan Commitment:* $25,531,914.89 General Electric Capital Corporation 63.8297%
Term B Loan Commitment: General Electric Capital Corporation 100%
$10,000,000
Revolving Loan Commitment: Congress Financial Corporation (Central) 36.1702%
$19,531,914.89
Term Loan Commitment:* $14,468,085.11 Congress Financial Corporation (Central) 36.1702%
----------------
* Term Loan Commitments as of Original Closing Date.
J-1
