1
EXHIBITS (1)(a)
COPY AS EXECUTED, TOGETHER
WITH EXHIBIT B THERETO AND
THE SECURITY AGREEMENT AND
GUARANTY REFERRED THEREIN,
EACH AS SEPARATELY
EXECUTED
PLY GEM INDUSTRIES, INC.
------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 26, 1997
------------------------------------------------
FLEET NATIONAL BANK, as Agent,
and
THE BANKS SIGNATORY HERETO
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS ................................................ 2
1.1 Defined Terms ................................................... 2
1.2 Other Definitional Provisions ................................... 24
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS ........................... 24
2.1 Commitments ..................................................... 24
2.2 Notes ........................................................... 26
2.3 Procedure for Loan Borrowings ................................... 26
2.4 Intentionally Omitted ........................................... 28
2.5 Intentionally Omitted ........................................... 28
2.6 Termination or Reduction of Commitments ......................... 28
2.7 Fees ............................................................ 29
2.8 Optional and Mandatory Prepayments .............................. 29
2.9 Repayment of Loans .............................................. 30
2.10 Interest Rates and Payment Dates ................................ 31
2.11 Computation of Interest and Fees ................................ 32
2.12 Inability to Determine Interest Rate ............................ 32
2.13 Taxes ........................................................... 33
2.14 Illegality ...................................................... 34
2.15 Increased Costs ................................................. 35
2.16 Indemnity ....................................................... 36
2.17 Maximum Number of Tranches ...................................... 37
2.18 Use of Proceeds ................................................. 37
2.19 Pro Rata Treatment and Payments; L/C Participation .............. 37
2.20 Guaranties ...................................................... 39
2.21 Security ........................................................ 39
2.22 Additional L/C Provisions ....................................... 40
2.23 Several Obligations ............................................. 43
SECTION 3. REPRESENTATIONS AND WARRANTIES ............................. 43
3.1 Financial Condition ............................................. 43
3.2 No Change ....................................................... 44
3.3 Corporate Existence; Compliance with the Law .................... 44
3.4 Corporate Power; Authorization; Enforceable Obligations ......... 44
3.5 No Legal Bar .................................................... 45
3.6 No Litigation ................................................... 45
3.7 Federal Regulations ............................................. 45
3.8 Investment Company Act .......................................... 45
3.9 Disclosure ...................................................... 45
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3.10 No Default ...................................................... 46
3.11 Taxes ........................................................... 46
3.12 Subsidiaries .................................................... 46
3.13 Ownership of Property; Liens .................................... 46
3.14 ERISA ........................................................... 46
3.15 Nortek Indentures ............................................... 48
3.16 SEC Reports ..................................................... 48
3.17 Intangible Assets ............................................... 48
3.18 Name Changes, Mergers, Acquisitions ............................. 48
3.19 Licenses and Approvals .......................................... 49
3.20 Labor Disputes; Collective Bargaining Agreements; Employee
Grievances ...................................................... 49
3.21 Solvency ........................................................ 49
3.22 Outstanding Indebtedness for Borrowed Money ..................... 49
3.23 Hazardous Materials ............................................. 49
SECTION 4. CONDITIONS PRECEDENT ....................................... 49
4.1 Conditions to Initial Loans and L/Cs ............................ 49
(a) Tender Offer and Merger .................................... 50
(b) Corporate Structure ........................................ 50
(c) No Material Adverse Change ................................. 50
(d) Pre-Commitment Information ................................. 50
(e) Capital Structure .......................................... 50
(f) Compliance; No Litigation .................................. 50
(g) Insurance .................................................. 51
(h) Fees and Expenses .......................................... 51
(i) Consents and Approvals ..................................... 51
(j) Agreement .................................................. 51
(k) Notes ...................................................... 51
(l) Guaranty ................................................... 51
(m) Collateral ................................................. 51
(n) Borrowing Certificates ..................................... 52
(o) Notice of Borrowing ........................................ 52
(p) Legal Opinions ............................................. 52
(q) Related Agreements ......................................... 53
(r) Corporate Proceedings ...................................... 53
(s) Related Documents and Nortek Indentures .................... 53
(t) Consents ................................................... 53
(u) Other Fees ................................................. 54
(v) Good Standings ............................................. 54
(w) Incumbency Certificates .................................... 54
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(x) Solvency Certificate ....................................... 54
(y) Ownership, Liens ........................................... 54
(z) Projections ................................................ 54
(aa) Other Documentation ........................................ 54
4.2 Conditions to All Loans ......................................... 54
(a) Representations and Warranties ............................. 55
(b) No Default or Event of Default ............................. 55
(c) No Violations of Law ....................................... 55
(d) Other ...................................................... 55
4.3 Conditions to Loans to New Designated Subsidiaries .............. 55
SECTION 5. AFFIRMATIVE COVENANTS ...................................... 56
5.1 Financial Statements ............................................ 56
5.2 Certificates; Other Information ................................. 57
5.3 Payment of Obligations .......................................... 57
5.4 Material Operating Subsidiaries ................................. 58
5.5 Conduct of Business and Maintenance of Existence ................ 58
5.6 Maintenance of Property; Insurance .............................. 58
5.7 Inspection of Property; Books and Records; Discussions .......... 58
5.8 Notices ......................................................... 59
5.9 Copies of Corporate Documents ................................... 60
5.10 Conditions Subsequent ........................................... 60
5.11 Hazardous Material .............................................. 60
5.12 Further Assurances .............................................. 61
5.13 Compliance with Terms of Leaseholds ............................. 61
5.14 Performance of Related Documents ................................ 62
5.15 Hedge Agreements ................................................ 62
5.16 Conditions Subsequent to Closing Date ........................... 62
SECTION 6. NEGATIVE COVENANTS ......................................... 63
6.1 Limitation on Indebtedness ...................................... 63
6.2 Limitation on Liens ............................................. 64
6.3 Limitation on Contingent Obligations ............................ 66
6.4 Limitation on Fundamental Changes ............................... 67
6.5 Distributions ................................................... 68
6.6 Limitation on Dividend Restrictions Regarding Subsidiaries ...... 68
6.7 Prohibition on Investments, Acquisitions, Loans and Advances .... 68
6.8 Prohibition on Optional Prepayments ............................. 70
6.9 Consolidated Net Worth .......................................... 71
6.10 Leverage Ratio .................................................. 71
6.11 Interest Coverage Ratio ......................................... 71
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6.12 Current Ratio ................................................... 71
6.13 Intentionally Omitted ........................................... 71
6.14 Amendment, Etc. of Related Documents ............................ 71
6.15 Fiscal Year ..................................................... 72
6.16 Transactions with Affiliates .................................... 72
6.17 Ownership of Designated Subsidiaries ............................ 72
6.18 Limitation on Capital Expenditures .............................. 72
6.19 Financing Leases ................................................ 72
6.20 Change in Nature of Business .................................... 73
6.21 Charter Amendments .............................................. 73
6.22 Accounting Changes .............................................. 73
6.23 Intentionally Omitted ........................................... 73
6.24 Negative Pledge ................................................. 73
6.25 Formation of Subsidiaries ...................................... 73
SECTION 7. EVENTS OF DEFAULT ............................................. 73
SECTION 8. THE AGENT .................................................. 77
8.1 Appointment ..................................................... 77
8.2 Delegation of Duties ............................................ 77
8.3 Exculpatory Provisions ......................................... 77
8.4 Reliance by Agent ............................................. 78
8.5 Notice of Default ............................................... 78
8.6 Non-Reliance on Agent and Other Banks ........................... 78
8.7 Indemnification ................................................. 79
8.8 Agent in Its Individual Capacity ................................ 79
8.9 Successor Agent ................................................. 79
8.10 Failure to Act .................................................. 80
SECTION 9. MISCELLANEOUS .............................................. 80
9.1 Amendments and Waivers .......................................... 80
9.2 Notices ......................................................... 81
9.3 No Waiver; Cumulative Remedies .................................. 83
9.4 Survival of Representations and Warranties ...................... 83
9.5 Payment of Expenses, Etc. ....................................... 83
9.6 Binding Effect; No Assignment or Delegation by Company or
any Designated Subsidiary ....................................... 84
9.7 Assignments and Participations by Banks; Pledge to
Federal Reserve Bank ............................................ 85
9.8 Further Assurances .............................................. 88
9.9 Adjustments; Set-off ............................................ 88
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9.10 Severability .................................................... 89
9.11 Confidentiality ................................................. 89
9.12 Counterparts .................................................... 90
9.13 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF TRIAL
BY JURY ......................................................... 90
SCHEDULES
I Initial Commitments and Loans
2.1 Existing Letters of Credit
2.20 Material Operating Subsidiaries
3.11 Taxes
3.12 Subsidiaries, including Non-Core Subsidiaries
3.14 Contingent Liability relating to Post- Retirement Benefit
3.18 Name Changes, Mergers, Acquisitions
3.20 Labor Disputes; Collective Bargaining Agreements; Employee Grievances
3.22 Indebtedness
6.2 Liens
6.3 Contingent Obligations
EXHIBITS
A Form of Note
B Form of Assignment and Agreement
C Form of Notice of Borrowing/Conversion
D-1 Form of Borrowing Certificate for the Company
D-2 Form of Borrowing Certificate for Subsidiaries
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of Xxxxxxx X. Xxxxxx
F-2 Form of Legal Opinion of Ropes & Xxxx
G Forms of Solvency Certificate
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 26, 1997,
among PLY GEM INDUSTRIES, INC., a Delaware corporation (the "Company");
the Designated Subsidiaries from time to time party hereto;
the Banks from time to time party hereto; and
FLEET NATIONAL BANK ("Fleet"), as agent for the Banks (in such
capacity, together with its successors in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Company and certain of the Designated Subsidiaries (the
"Existing Designated Subsidiaries") are borrowers under a Credit Agreement,
dated February 24, 1994 (as heretofore amended, the "Existing Credit
Agreement"), with the lenders party thereto (the "Existing Banks"), the
Co-Agents named therein and Fleet, as successor to National Westminster Bank
USA, as agent for the Existing Banks, which provides, among other things, for
the making of revolving credit loans to the Company and the Existing Designated
Subsidiaries in an aggregate principal amount not to exceed $200,000,000 at any
time outstanding;
WHEREAS, Nortek, Inc., a Delaware corporation ("Nortek"), has organized
a single-purpose, wholly-owned subsidiary (the "Purchaser") that, pursuant to a
merger agreement entered into with the Company (as amended, supplemented or
otherwise modified from time to time in accordance with its terms, to the extent
permitted in accordance with the Loan Documents, the "Merger Agreement"), will
purchase, pursuant to a tender offer (the "Tender Offer"), a majority of the
outstanding common stock of the Company for $19.50 per share, and subsequently
will be merged (the "Merger") with and into the Company, with the Company being
the surviving corporation;
WHEREAS, the Company has requested that the Existing Credit Agreement
be amended and restated in connection with the closing of the Tender Offer to
provide, among other things, for a term loan and letters of credit;
WHEREAS, the proceeds of the term loan will be used to refinance
certain existing debt of the Company and the Existing Designated Subsidiaries
under the Existing Credit Agreement;
WHEREAS, the Banks have agreed to amend and restate the Existing Credit
Agreement and to make the requested term loan and to maintain certain letters of
credit, in each case on the terms and conditions of this Agreement;
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WHEREAS, this Agreement shall constitute the "Ply Gem Credit Facility"
for purposes of that certain Nortek Indenture described in clause (c) of the
definition thereof in subsection 1.1;
WHEREAS, simultaneously with the execution hereof the Existing Banks
have entered into an Assignment and Agreement in the form of Exhibit B attached
hereto dated as of the date hereof (the "Assignment Agreement"), with the Agent
and the Banks hereunder pursuant to which such Existing Banks have agreed to
sell and assign to the Banks and the Banks have agreed to purchase and assume,
as of the Closing Date, all of the Existing Banks' rights and obligations under
the Existing Credit Agreement as of the Closing Date on the terms set forth in
the Assignment Agreement; and
WHEREAS, after giving effect to the Assignment Agreement, the
Commitments and Commitment Percentages of, and the amount of Loans owing to,
each of the Banks will be as set forth on Schedule I.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties to this Agreement hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following respective meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Additional Subsidiary Grantors" shall mean each of (a) Continental
Wood Preservers, Inc., a Michigan corporation, (b) SNE Enterprises Texas, Inc.,
a Delaware corporation, (c) SNE Special Services, Inc., a Delaware corporation,
and (d) SNE Transportation Company, Inc., a Wisconsin corporation.
"Account Party" shall mean with respect to each L/C, the Company or any
Designated Subsidiary, as the case may be, in its capacity as the Person for the
account of which such L/C is issued or deemed issued.
"Affiliate" of any Person shall mean (a) any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any other Person who is a
director or officer (i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such Person, or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
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"Agent" shall have the meaning ascribed thereto in the preamble hereto.
"Agreement" shall mean this Amended and Restated Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"Applicable Margin" shall mean, for any day for any Type of Loan, the
relevant rate per annum for such Type of Loan as determined by reference to the
applicable ratio of Senior Funded Debt to Consolidated EBITDA set forth in the
table below:
Ratio Prime Rate Loans Eurodollar Loans
----- ---------------- ----------------
Level I 3.25:1.00 or greater 0.0% 0.950%
Level II 3.00:1.00 or greater
but less than
3.25:1.00 0.0% 0.725%
Level III 2.50:1.00 or greater
but less than
3.00:1.00 0.0% 0.625%
Level IV 2.00:1.00 or greater
but less than
2.50:1.00 0.0% 0.525%
Level V 1.50:1.00 or greater
but less than
2.00:1.00 0.0% 0.400%
Level VI less than 1.50:1.00 0.0% 0.300%
The determination of the Applicable Margin pursuant to the table set
forth above shall be made on a quarterly basis based on an examination of the
consolidated financial statements of the Company and its Subsidiaries delivered
pursuant to and in compliance with subsection 5.1; provided, however, that the
initial Applicable Margin shall be at Level II in such table from the date
hereof until such time as audited annual consolidated financial statements of
the Company and its Subsidiaries indicating an Applicable Margin at a different
Level in such table are first delivered to the Agent and the Banks pursuant to
and in compliance with subsection 5.1. Each change in the Applicable Margin
shall be effective as of the first day of the calendar month following the date
of the Company's financial statements reflecting any change in the ratio of
Senior Funded Debt to Consolidated EBITDA. In the event that financial
statements for the four fiscal quarters most recently completed prior to such
date of determination either: (a) have not been
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delivered to the Agent in compliance with subsection 5.1, or (b) if delivered,
do not comply in form or substance with subsection 5.1, then the Agent may
determine, in its reasonable judgment, the ratio of Senior Funded Debt to
Consolidated EBITDA referred to above that would have been in effect as at such
date, and, consequently, the Applicable Margin in effect for the period
commencing on such date.
"Application" shall mean any agreement in form and substance
satisfactory to Fleet between Fleet, as issuing bank, and any Account Party in
respect of the issuance of an L/C.
"Asset Sale" shall mean any sale or other disposition by the Company or
any of the Subsidiaries (whether in one sale or a series of related sales) of
any business unit or units (including, without limitation, any Non-Core
Subsidiary) or any product line or group of product lines (whether pursuant to a
sale of stock or sale of assets).
"Assignment Agreement" shall have the meaning ascribed thereto in the
preamble hereto.
"Assignment and Acceptance" shall mean an agreement in the form of
Exhibit E hereto.
"Available Commitment" shall mean, as to each Bank, at a particular
time, an amount equal to the difference between (a) the amount of such Bank's
Commitment at such time and (b) the aggregate unpaid principal amount at such
time of (i) all Loans made by such Bank pursuant to subsection and (ii) such
Bank's Commitment Percentage of Bank L/C Obligations.
"Available L/C Commitment" at any date shall mean the lesser of (a) the
difference between the L/C Sublimit and the Specified L/C Obligations at such
date and (b) the Available Commitments.
"Banks" shall mean the Initial Banks and each Person that shall become
a Bank hereunder pursuant to subsection 9.7.
"Bank L/C Obligations" at any date shall mean the sum of (a) the
aggregate undrawn amount at such date of all L/Cs issued or deemed issued by
Fleet pursuant to this Agreement, plus (b) the amount of all Unpaid Drawings
relating to such L/Cs.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Boston, Massachusetts are authorized or
required by law to close.
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"Business of the Company" shall mean (a) the businesses described in
the Company's Form 10-K for the year ended December 31, 1996 and the Company's
1996 Annual Report to Stockholders and (b) other businesses related to, or
growing out of, such businesses.
"Capital Expenditures" shall mean, during any period, the amount of
additions to property, plant and equipment for such period as shown on the
consolidated financial statements of the Company and its Subsidiaries for such
period prepared in accordance with GAAP, net of Financing Leases.
"Cash Equivalents" shall mean (a) securities with maturities of one
year or less from the date of acquisition issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) certificates of deposit, acceptances and Eurodollar
time deposits with maturities of one year or less from the date of acquisition
and overnight or demand bank deposits of any Bank and certificates of deposit
with maturities of one year or less from the date of acquisition and overnight
or demand bank deposits of any other commercial bank having capital and surplus
in excess of $500,000,000, the holding company of which has a commercial paper
rating meeting the requirements specified in clause (d) below, (c) repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clauses (a) and (b) entered into with any bank meeting the
qualifications specified in clause (b) above, and (d) commercial paper of a
domestic issuer rated at least A- 2 or the equivalent thereof by Standard &
Poor's, a division of The XxXxxx-Xxxx Companies, Inc. or P-2 or the equivalent
thereof by Xxxxx'x Investors Service, Inc.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq., as
amended from time to time.
"Change of Control" shall occur when (a) any person or group of related
persons, excluding Permitted Shareholders, gains beneficial ownership of a
majority in voting interest of the outstanding voting stock of the Company or
has caused to be elected a majority of the Board of Directors of the Company
against the wishes of a majority of the voting interest held by Permitted
Shareholders; or (b) all or substantially all of the assets of the Company are
sold or liquidated.
"Closing Date" shall mean the date on which each of the conditions
precedent in Section 4 shall have been satisfied or duly waived.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
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"Collateral Grantor" shall have the meaning ascribed thereto in
subsection 2.21.
"Commitment" shall mean, as to any Bank, its obligation to make Loans
pursuant to subsection 2.1 and participate in L/Cs in an aggregate amount not to
exceed at any one time outstanding the amount set forth on Schedule I under the
heading "Commitment", as such amount may be adjusted from time to time pursuant
to subsection 2.6, 2.8 or 9.7; and, as to Fleet in its capacity as issuing bank,
its obligation to maintain L/Cs in an aggregate amount not to exceed at any time
outstanding the L/C Sublimit, as such amount may be reduced from time to time
pursuant to subsection 2.6.
"Commitment Percentage" as to any Bank, shall mean the percentage set
forth on Schedule I under the heading "Commitment Percentage" as such percentage
may increase or decrease from time to time pursuant to subsection 9.7.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Company or any Subsidiary
within the meaning of Section 4001(a)(14) of ERISA or Code Section 414(m) or
414(o).
"Company" shall have the meaning ascribed thereto in the preamble
hereto.
"Consolidated Current Assets" shall mean, at any date, the amount
which, in conformity with GAAP, would be set forth opposite the caption "total
current assets" (or any like caption) on a consolidated balance sheet of the
Company and its consolidated Subsidiaries as at such date.
"Consolidated Current Liabilities" shall mean, at any date, the amount
which, in conformity with GAAP, would be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet of
the Company and its consolidated Subsidiaries as at such date; provided,
however, that the Loans, the L/Cs and any current liabilities resulting from the
transactions contemplated by the Merger Agreement shall at all times be excluded
from the definition of Consolidated Current Liabilities.
"Consolidated EBIT" shall mean, for any period, the sum of (a)
Consolidated Net Income for such period, plus (b) all taxes based upon income
deducted in calculating such Consolidated Net Income plus (c), to the extent
deducted in calculating Consolidated Net Income, Consolidated Interest Expense
and consolidated amortization of Debt Discount and of expenses incurred in
connection with the incurrence of Indebtedness for such period, plus (d) all
extraordinary losses and the unusual losses set forth in clauses (i) through
(ix) below in each case to the extent deducted in calculating Consolidated Net
Income, minus (e) all extraordinary gains and the unusual gains set forth in
clauses (i) through (ix) below in each case to the extent included in
calculating Consolidated Net Income: (i) gain or loss
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arising from the sale, abandonment or other disposition of any property or asset
outside of the ordinary course of business or realized on the disposition of a
segment of a business; (ii) gain or loss resulting from any extinguishments of
debt; (iii) gain or loss resulting from a casualty, including but not limited to
fire, earthquake or hurricane; (iv) loss resulting from write-off of intangible
assets; (v) gain arising from the write-up in the book value of any asset; (vi)
provisions for plant closings and realignment of operations or restructuring
costs; (vii) cumulative effects of changes in accounting principles; (viii)
losses from expropriation or condemnation; and (ix) gain or loss arising from a
change from FIFO to LIFO inventory accounting.
"Consolidated EBITDA" shall mean, for any period, the sum of (a)
Consolidated EBIT, plus (b) depreciation expense plus (c) amortization expense,
in each case of the Company and its Subsidiaries determined on a consolidated
basis in accordance with GAAP for such period.
"Consolidated Interest Expense" shall mean, for any period, (a) the
aggregate amount of all interest charges paid or accrued during such period
(including imputed interest on obligations consisting of Financing Leases and
all amounts accrued or paid pursuant to Hedge Agreements but excluding
amortization of Debt Discount and of expenses incurred in connection with the
incurrence of Indebtedness) on Indebtedness of the Company and its consolidated
Subsidiaries, minus (b) the sum of (i) interest income and (ii) all amounts
received or receivable pursuant to Hedge Agreements, in each case of the Company
and its Subsidiaries determined on a consolidated basis.
"Consolidated Net Income" shall mean, for any period, the amount which,
in conformity with GAAP, would be set opposite the caption "net income" (or any
like caption) on a consolidated statement of income of the Company and its
consolidated Subsidiaries for such period.
"Consolidated Net Worth" shall mean, at a particular date, (a) all
amounts which would, in conformity with GAAP, be included under stockholders'
equity on a consolidated balance sheet of the Company and its consolidated
Subsidiaries at such date, plus (b) any unrealized losses to the extent
reflected in the calculation of stockholders' equity, minus (c) the sum of (i)
any unrealized gains to the extent reflected in the calculation of shareholders'
equity, and (ii) any investments made by the Company or any of its Subsidiaries
in Nortek or any of its Subsidiaries (other than Subsidiaries consisting of the
Company or any of its Subsidiaries).
"Contingent Obligation" as to any Person shall mean any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other contractual obligations ("primary obligations") of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of
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such Person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(b) to 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 of the
primary obligor, (c) to 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 or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Contractual Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound
(including, without limitation, in the case of each of the Loan Parties and
their respective Subsidiaries, the Nortek Indentures).
"Debt Discount" shall mean debt discount with respect to Subordinated
Indebtedness permitted by the provisions hereof.
"Default" shall mean any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Designated Subsidiary" shall mean, initially, each of the following
Subsidiaries: Sagebrush Sales, Inc., a New Mexico corporation; SNE Enterprises,
Inc., a Delaware corporation; Variform, Inc., a Missouri corporation; and Great
Lakes Window, Inc., an Ohio corporation. Subject to the reasonable approval of
the Agent and all of the Banks with respect to the financial condition and
maximum borrowing limit of a Subsidiary, the Company may at any time designate
as a Designated Subsidiary any wholly-owned Material Operating Subsidiary which
is not then a Designated Subsidiary by notice to the Agent, provided that the
Company contemporaneously delivers to the Agent a Solvency Certificate with
respect to such Subsidiary and causes such Subsidiary to deliver to the Agent
duly executed Notes payable to the order of the Banks, a duly executed Guaranty
and a duly executed Security Agreement supplement, each in form and substance
satisfactory to the Agent, and provided further that each Designated Subsidiary
shall be a wholly-owned Subsidiary of the Company so long as it is a Designated
Subsidiary. The Company may at any time remove any Subsidiary from the list of
Designated Subsidiaries by notice to the
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Agent, effective, however, only upon (a) payment in full of any Obligations owed
to the Agent and the Banks hereunder by such Designated Subsidiary and the
expiration or other termination of any L/C with respect to which such Designated
Subsidiary is the Account Party or (b) subject to the consent of the Agent and
the Required Banks (such consent not to be unreasonably withheld), the
assumption, in a writing satisfactory in form and substance to the Agent, by the
Company or another Designated Subsidiary of any obligations not so paid, so long
as such assumption shall not violate any provision of the Nortek Indentures or
any other indenture or agreement binding upon the Company or any of its
Subsidiaries, provided that, concurrently with such assumption, the Company
shall certify, and shall furnish an opinion of counsel, in each case to the
Agent and the Banks, to the effect that such assumption does not violate the
Nortek Indentures or any other indenture or agreement binding on the Company or
any of its Subsidiaries and otherwise in form and substance satisfactory to the
Agent. Any representation, warranty or covenant in this Agreement applicable at
any time to the Designated Subsidiaries shall be deemed applicable to those
Subsidiaries which, at such time, are Designated Subsidiaries as defined herein.
"Designated Subsidiary Borrowing Limit" shall mean, initially, the
following amounts for the indicated Subsidiaries:
Designated Subsidiaries Borrowing Limit
----------------------- ---------------
Sagebrush Sales, Inc. $ 6,000,000
SNE Enterprises, Inc. $ 45,000,000
Variform, Inc. $ 49,000,000
Great Lakes Window, Inc. $ 30,000,000
The Designated Subsidiary Borrowing Limit for any Designated Subsidiary may be
increased from time to time up to an amount not to exceed the aggregate amount
of the Commitments at such time, subject to the consent of the Company and the
Agent and so long as such increase shall not violate any provision of the Nortek
Indentures or any other indenture or agreement binding upon the Company or any
of its Subsidiaries, provided that, concurrently with such increase, the Company
shall certify, and shall furnish an opinion of counsel, in each case to the
Agent and the Banks, to the effect that such increase does not violate the
Nortek Indentures or any other indenture or agreement binding on the Company or
any of its Subsidiaries and otherwise in form and substance satisfactory to the
Agent.
"Disposal" shall mean the discharge, deposit, injection, dumping,
spilling, leaking or placing of any hazardous materials into or on any land or
water so that such hazardous materials or constituent thereof may enter the
environment or be emitted into the air or discharged into any waters, including
ground waters.
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"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Lending Office," shall mean, initially, the office of each
Bank designated as such on Schedule I under the heading "Domestic Lending Office
and Address for Notices"; thereafter, such other office of such Bank, if any,
which shall be making or maintaining Loans.
"Drawing Fee" shall have the meaning ascribed thereto in subsection
2.1(c)(v).
"Eligible Assignee" shall mean (a) any Bank and any entity controlled
by or under common control with such Bank and (b) a commercial bank having a
combined capital and surplus of at least $500,000,000, in either case which does
not, either directly or indirectly, engage in business competitive with the
business of the Company or any of its Subsidiaries and to which the Company and
the Agent shall have consented, such consent not to be unreasonably withheld.
"Eligible Participant" shall mean (a) any entity controlled by or under
common control with any Bank and (b) a commercial bank having a combined capital
and surplus of at least $200,000,000, in either case, which does not, either
directly or indirectly, engage in business competitive with the business of the
Company or any of its Subsidiaries.
"Environmental Laws and Regulations" shall mean all federal, state and
local, environmental, health and safety laws, regulations, ordinances, orders,
judgments and decrees applicable to the Company or any Subsidiary, or any of
their respective assets or properties.
"Environmental Liability" shall mean any liability under any applicable
Environmental Laws and Regulations for any Disposal, Release or threatened
Release of a Hazardous Substance, pollutant or contaminant as those terms are
defined under CERCLA and any liability which would require a removal, remedial
or response action, as those terms are defined under CERCLA, by any Person or
any environmental regulatory body having jurisdiction over the Company or any
other Subsidiary, and/or any liability arising under any Environmental Laws and
Regulations for the Company's or any other Subsidiary's failure to comply with
such laws and regulations including, without limitation, the failure to comply
with or obtain any applicable environmental permit.
"Environmental Proceeding" shall mean any judgment, action or
proceeding pending before any court or other Governmental Authority or any
notice, demand or order, with respect to the Company or any Subsidiary and
arising under or relating to any Environmental Laws and Regulations.
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11
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements" for any day after the Closing Date
as applied to a Eurodollar Loan shall mean the aggregate (without duplication)
of the rates (expressed as a decimal) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect
thereto), dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D) maintained
by a member bank of such System. The Banks confirm to the Company and the
Designated Subsidiaries that no Eurocurrency Reserve Requirements exist as of
the date hereof.
"Eurodollar Rate" shall mean, for any day during the Interest Period
for any Eurodollar Loan, an interest rate per annum equal to the rate per annum
(rounded upward, if necessary, to the nearest l/100 of one percent) obtained by
dividing (a) the rate per annum at which deposits in U.S. dollars are offered in
London, England to prime banks in the London interbank market, as set forth on
the "LIBO" page on the Reuters Monitor Money Rates Service screen, at 11:00 A.M.
(London time) two Business Days before the first day of such Interest Period in
an amount substantially equal to Fleet's Eurodollar Loan to be outstanding
during such Interest Period (or, if Fleet shall not have such a Eurodollar Loan,
$1,000,000) and for a period equal to such Interest Period by (b) a percentage
equal to one minus the Eurocurrency Reserve Requirements for such day.
"Eurodollar Lending Office" shall mean, with respect to each Bank,
initially, the office of such Bank designated as such on Schedule I under the
heading "Eurodollar Lending Office"; thereafter, such other office of such Bank,
if any, which shall be making or maintaining Eurodollar Loans.
"Eurodollar Loans" shall mean Loans hereunder at such time as they bear
interest based upon the Eurodollar Rate.
"Event of Default" shall mean any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Existing Banks" shall have the meaning ascribed thereto in the
preamble hereto.
"Existing Designated Subsidiaries" shall have the meaning ascribed
thereto in the preamble hereto.
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12
"Facility Fee" shall mean at any time of determination a fee equal to
the relevant annual fee percentage determined by reference to the applicable
ratio of Senior Funded Debt to Consolidated EBITDA set forth in the table below
multiplied by the aggregate amount of the Commitments at such time (whether used
or unused):
Ratio Annual Percentage Fee
Level I 3.25:1.00 or greater 0.300%
Level II 3.00:1.00 or greater but less
than 3.25:1.00 0.275%
Level III 2.50:1.00 or greater but less
than 3.00:1.00 0.250%
Level IV 2.00:1.00 or greater but less
than 2.50:1.00 0.225%
Level V 1.50:1.00 or greater but less
than 2.00:1.00 0.225%
Level VI less than 1.50:1.00 0.200%
The determination of the applicable fee pursuant to the table set forth
above shall be made on a quarterly basis based on an examination of the
consolidated financial statements of the Company and its Subsidiaries delivered
pursuant to and in compliance with subsection 5.1; provided, however, that the
initial Facility Fee shall be at Level II in such table until such time as
audited annual consolidated financial statements of the Company and its
Subsidiaries indicating a Facility Fee at a different Level in such table are
first delivered to the Agent and the Banks pursuant to and in compliance with
subsection 5.1. Each change in the Facility Fee shall be effective as of the
first day of the calendar month following the date of the Company's financial
statements reflecting any change in the ratio of Senior Funded Debt to
Consolidated EBITDA. In the event that financial statements for the four fiscal
quarters most recently completed prior to such date of determination either: (a)
have not been delivered to the Agent in compliance with subsection 5.1, or (b)
if delivered, do not comply in form or substance with subsection 5.1, then the
Agent may determine, in its reasonable judgment, the ratio of Senior Funded Debt
to Consolidated EBITDA referred to above that would have been in effect as at
such date, and, consequently, the Facility Fee in effect for the period
commencing on such date.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged
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13
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions received
by the Agent from three Federal funds brokers of recognized standing selected by
it.
"Fee Letter" shall mean the letter agreement between the Agent and
Nortek (on its behalf and on behalf of the Company) dated August 14, 1997.
"Fifth Third Letters of Credit" shall mean the existing letters of
credit issued by Fifth Third Bank as to which the Company or Great Lakes Window,
Inc. is the account party.
"Financing Lease" shall mean (a) any lease of property, real or
personal, the then present value of the minimum rental commitment of which
should, in accordance with GAAP, be capitalized on a balance sheet of the
lessee, and (b) any other such lease the obligations under which are capitalized
on a consolidated balance sheet of the Company and its Subsidiaries.
"First American Letter of Credit" shall mean the existing letter of
credit issued by M&I First American Bank as to which SNE Transportation Company,
Inc. is the account party.
"Fleet" shall have the meaning ascribed thereto in the preamble hereto.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect and applied in the Company's certified
financial statements as at December 31, 1996.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantor" shall have the meaning ascribed thereto in subsection 2.20
hereof.
"Guaranty" shall have the meaning ascribed thereto in subsection 2.20
hereof.
"Hazardous Materials" shall mean any Toxic Chemical, Hazardous
Substances, contaminants or pollutants, medical wastes, infectious wastes or
Hazardous Wastes.
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14
"Hazardous Substance" shall have the same meaning as set forth in
Section 101(14) of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601(14) or state or local law.
"Hazardous Waste" shall have the same meaning as set forth by the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6903(5), and the
Environmental Protection Agency's implementing regulations, or state or local
law.
"Hedge Agreement" shall mean any interest rate swap, cap or collar
agreement, interest rate future or option contract and any or other similar
agreement.
"Hedge Bank" shall mean any Bank or any of its Affiliates or any other
financial institution acceptable to the Required Banks that has become a party
to the Security Agreement and has appointed Fleet as its custodian thereunder,
in each case, in its capacity as a party to a Hedge Agreement with a Loan Party.
"Indebtedness" of a Person, at a particular date, shall mean the sum
(without duplication) at such date of (a) indebtedness of such Person for
borrowed money or evidenced by notes, bonds, debentures or like instruments, (b)
indebtedness of such Person for the deferred purchase price of property or
services, except (i) accounts payable and accrued expenses arising in the
ordinary course of business, (ii) obligations incurred in connection with
additions to property, plant or equipment which are deferred for no more than
100 days after the later of the acquisition or completion of installation of
such additions, (iii) other obligations (not including taxes) which are deferred
for no more than 100 days after the date on which they would first be reflected
as liabilities on a balance sheet of such Person and (iv) obligations to pay for
services of officers, directors or employees of the Company or any Subsidiary,
(c) obligations of such Person under any Financing Lease and (d) indebtedness of
such Person arising under acceptance facilities. Without limitation,
Indebtedness shall include undrawn letters of credit and unreimbursed draws on
letters of credit.
"Initial Banks" shall mean the financial institutions that have
executed the signature pages hereto.
"Insolvency" or "Insolvent", as to any Multiemployer Plan, shall have
the respective meanings assigned to such terms in Section 4245 of ERISA.
"Interest Payment Date" shall mean (a) as to any Prime Rate Loan, each
of (i) the date on which such Loan is paid, refinanced or converted and (ii) the
last day of each March, June, September and December after the date such Prime
Rate Loan is made and (b) as to any Eurodollar Loan, each of (i) the date on
which such Loan is paid, refinanced or converted and (ii) in the case of any
Eurodollar Loan in respect of which the Company or
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15
any Designated Subsidiary (as applicable) has selected an Interest Period of
one, two or three months, the last day of such Interest Period, and, in the case
of any Eurodollar Loan in respect of which the Company or any Designated
Subsidiary (as applicable) has selected an Interest Period of duration of more
than three months, each date which is three months from the first day of such
Interest Period.
"Interest Period" shall mean, with respect to any Eurodollar Loan, the
period commencing on the date of the making of such Eurodollar Loan or the date
of the conversion of any Prime Rate Loan into such Eurodollar Loan, and ending
one, two, three or six months (or, to the extent permitted by subsection 2.3(c),
one week) thereafter as selected by the Company or a Designated Subsidiary, as
applicable, in its notice of borrowing as provided in subsection 2.3 and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
the Company or a Designated Subsidiary, as applicable, in its notice of
conversion as provided in subsection 2.3; provided, however, that the foregoing
provision relating to Interest Periods is subject to the following:
(a) if the Interest Period in respect of any Eurodollar Loan would
otherwise end on a day which is not a Working Day, that Interest Period
shall be extended to the next succeeding Working Day unless the result of
such extension would be to carry such Interest Period into another calendar
month in which event such Interest Period shall end on the immediately
preceding Working Day;
(b) any Interest Period pertaining to a Eurodollar Loan that would
otherwise extend beyond the Termination Date shall end on the Termination
Date;
(c) any Interest Period in respect of a Eurodollar Loan that begins on
the last Working Day of a calendar month (or on a day for which there is no
numerically corresponding day in the succeeding calendar month at the end of
such Interest Period) shall end on the last Working Day of such succeeding
calendar month; and
(d) the number of Eurodollar Loan Tranches in effect at the same time
shall not be in excess of the Tranche Limit.
In the event that the Company or the Designated Subsidiary, as applicable, fails
to select the duration of an Interest Period for any Eurodollar Loan within the
time period and otherwise as provided in subsection 2.3, such Eurodollar Loan
will be automatically converted into a Prime Rate Loan on the last day of the
current Interest Period for such Eurodollar Loan.
"investments" shall have the meaning ascribed thereto in subsection
6.7.
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16
"Issuance Fee" shall mean at any time of determination a fee at an
annual rate determined by reference to the applicable ratio of Senior Funded
Debt to Consolidated EBITDA set forth in the table below payable on the undrawn
amount of each stand-by L/C issued or deemed issued by Fleet:
Ratio Annual Fee
Level I 3.25:1.00 or greater 0.950%
Level II 3.00:1.00 or greater but less
than 3.25:1.00 0.725%
Level III 2.50:1.00 or greater but less
than 3.00:1.00 0.625%
Level IV 2.00:1.00 or greater but less
than 2.50:1.00 0.525%
Level V 1.50:1.00 or greater but less
than 2.00:1.00 0.400%
Level VI less than 1.50:1.00 0.300%
The determination of the applicable fee pursuant to the table set forth above
shall be made on a quarterly basis based on an examination of the consolidated
financial statements of the Company and its Subsidiaries delivered pursuant to
and in compliance with subsection 5.1; provided, however, that the initial
Issuance Fee shall be at Level II in such table until such time as audited
annual consolidated financial statements of the Company and its Subsidiaries
indicating an Issuance Fee at a different Level in such table are first
delivered to the Agent and the Banks pursuant to and in compliance with
subsection 5.1. Each change in the Issuance Fee shall be effective as of the
first day of the calendar month following the date of the Company's financial
statements reflecting any change in the ratio of Senior Funded Debt to
Consolidated EBITDA. In the event that financial statements for the four fiscal
quarters most recently completed prior to such date of determination either: (a)
have not been delivered to the Agent in compliance with subsection 5.1 or (b) if
delivered, do not comply in form or substance with subsection 5.1, then the
Agent may determine, in its reasonable judgment, the ratio of Senior Funded Debt
to Consolidated EBITDA referred to above that would have been in effect as at
such date, and, consequently, the Issuance Fee in effect for the period
commencing on such date.
"L/C Participant" shall have the meaning ascribed thereto in subsection
2.19(c).
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"L/C Sublimit" shall mean initially the aggregate face amount of all
L/Cs outstanding on the Closing Date, as such amount may be permanently reduced
from time to time pursuant to subsection 2.6.
"L/Cs" shall have the meaning ascribed thereto in subsection 2.1(c)(i).
"Leverage Ratio" shall have the meaning ascribed thereto in subsection
6.10.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment or deposit by way of security, encumbrance, lien (statutory or
other), or preference, priority or other security interest or security agreement
or preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
Financing Lease and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Loan Documents" shall mean (a) for purposes of this Agreement and the
Notes and any amendment, supplement or modification hereof or thereof and for
all other purposes (other than for purposes of the Guaranties and the Security
Documents), (i) this Agreement, (ii) the Notes, (iii) the Guaranties, (iv) the
Security Documents and (v) each Application and (b) for purposes of the
Guaranties and the Security Documents, (i) this Agreement, (ii) the Notes, (iii)
the Guaranties, (iv) the Security Documents, (v) each Application and (vi) each
Hedge Agreement to which a Hedge Bank is a party, in each case as amended,
supplemented or otherwise modified from time to time.
"Loan Parties" means the Company, the Designated Subsidiaries, the
Guarantors and the Collateral Grantors.
"Loans" shall have the meaning ascribed thereto in subsection 2.1(a)(i)
hereof.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, condition (financial or otherwise), operations, performance or
properties of Company and its Subsidiaries, taken as a whole, (ii) the ability
of the Company, individually, or the Company and the other Loan Parties, taken
as a whole, to perform its or their respective obligations in any material
respect under any Loan Document or Related Document to which the Company or such
other Loan Party is a party or (iii) the rights and remedies of the Agent and
the Banks under any Loan Document or Related Document.
"Material Operating Subsidiaries" shall mean (a) each Designated
Subsidiary; (b) any Subsidiary of the Company which conducts business operations
and is material to the operations of the business of the Company and its
Subsidiaries, taken as a whole; and (c) each Subsidiary of the Company which the
Company designates as a Material Operating Subsidiary.
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18
"Merger" and "Merger Agreement" shall have the respective meanings
ascribed thereto in the preamble hereto.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean the aggregate cash proceeds received from
time to time (whether as initial consideration or through payment or disposition
of any deferred payment obligation) by the Company or any Subsidiary in respect
of any sale or other disposition of its assets (whether at the time of any such
sale or disposition or at any time thereafter), in each case net of (a) the
reasonable expenses (including legal fees and brokers' and underwriters'
commissions paid to third parties) incurred in effecting such asset sale or
other disposition, (b) any taxes reasonably attributable to such asset sale or
other disposition, (c) the amount of any Indebtedness (other than the
Obligations) secured by a Lien on any such asset that, by the terms of the
instrument evidencing such Indebtedness, is required to be repaid upon such sale
or other disposition and (d) to the extent the Company or such Subsidiary is
required to maintain reserves for liabilities resulting from such asset sale or
other disposition, reasonable reserves so long as such reserves are required to
be so maintained; provided, however, that (i) the amount of any liabilities
existing at the time of an asset sale or disposition which relate to the assets
sold, which are not assumed by the purchaser and which the seller remains
obligated to pay, shall be deducted from the aggregate cash proceeds of such
sale or disposition; (ii) if any deferred payment obligation is evidenced by any
note or other obligation of the purchaser or any third party, then any document
or instrument evidencing such obligation shall be pledged by the Company or the
Subsidiary involved to the Agent for the benefit of the Banks pursuant to the
Security Agreement or a security agreement similar to the Security Agreement but
only as collateral for the obligation to prepay pursuant to subsection 2.8(d)
with respect to the asset sale or disposition to which such document or
instrument relates (but subject to release if any such document is sold by the
Company or the Subsidiary involved so long as the proceeds are applied in
accordance with such subsection 2.8(d)); and provided that the Company will be
entitled, except after the occurrence and during the continuance of an Event of
Default, to receive all payments with respect to such instruments, subject to
the prepayment obligations in subsection 2.8(d); and (iii) Net Proceeds shall
not include cash proceeds of (A) asset sales permitted by subsections 6.4(a),
(c) and (g) and (B) mergers permitted by subsections 6.4(b) and (f).
"Non-Core Subsidiaries" shall mean each Subsidiary of the Company
identified as such on Schedule 3.12.
"Nortek" shall have the meaning ascribed thereto in the preamble
hereto.
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"Nortek Indentures" shall mean (a) the Indenture dated as of February
14, 1994 between Nortek and State Street Bank and Trust Company (the "Trustee")
pursuant to which Nortek's 9-7/8% Senior Subordinated Notes due March 1, 2004
were issued, (b) the Indenture dated as of March 17, 1997 between Nortek and the
Trustee pursuant to which Nortek's 9-1/4% Senior Notes due March 15, 2007 were
issued and (c) the Indenture dated as of August 26, 1997 between Nortek and the
Trustee pursuant to which Nortek's 9-1/8% Senior Notes due September 1, 2007
will be issued, in each case as amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Notes" shall have the meaning ascribed to such term in subsection 2.2.
"Notice of Borrowing/Conversion" shall have the meaning ascribed to
such term in subsection 2.3.
"Obligations" shall mean the unpaid principal of and interest on the
Notes and all other obligations and liabilities of the Company and the other
Loan Parties to the Agent or to the Banks, whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit Agreement, the
other Loan Documents and any other document made, delivered or given in
connection therewith or herewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation: (a) any interest accruing thereon after the date of filing
any petition by or against the Company or any Subsidiary in connection with any
bankruptcy or other proceeding, whether or not a claim by the Agent or any of
the Banks is enforceable in such proceeding; and (b) all fees and disbursements
of counsel to the Agent or to the Banks that are required to be paid by the
Company pursuant to the terms of the Credit Agreement) or otherwise.
"Participant" shall have the meaning ascribed thereto in subsection
9.7(d).
"Participating Interest" shall have the meaning ascribed thereto in
subsection 9.7(d).
"Patent Rights" shall have the meaning ascribed thereto in subsection
3.17.
"PBGC" shall mean the Pension Benefit Guaranty Corporation (or any
successor) established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Shareholders" means Nortek and the Purchaser, so long as it
is a wholly-owned Subsidiary of Nortek.
"Person" shall mean an individual, a partnership, a corporation, a
limited liability company, a business trust, a joint stock company, a trust, an
unincorporated
26
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association, a joint venture, a Governmental Authority or any other entity of
whatever nature.
"Plan" shall mean at any particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Company, any Subsidiary or
a Commonly Controlled Entity is (or, if such Plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Post-Default Rate" shall have the meaning ascribed thereto in
subsection 2.10(d).
"Pre-Commitment Information" shall mean all of the information relating
to Nortek, the Company or any of their respective Subsidiaries furnished to the
Agent by Nortek or the Company on or before August 14, 1997.
"Prime Rate" shall mean a fluctuating interest rate per annum in effect
from time to time, which rate shall at all times be equal to the higher of (a)
the rate of interest publicly announced by Fleet in Boston, Massachusetts from
time to time as its prime rate and (b) one half of one percent (1/2%) per annum
above the Federal Funds Rate. The Prime Rate is not intended to be the lowest
rate of interest charged by Fleet in connection with extensions of credit to
debtors. Each change in any interest rate provided for herein based upon the
Prime Rate shall take effect at the time of such change in the Prime Rate.
"Prime Rate Loans" shall mean Loans hereunder at such time as they bear
interest based upon the Prime Rate.
"Purchaser" shall have the meaning ascribed thereto in the preamble
hereto.
"Regulation A", "Regulation D", "Regulation G", "Regulation U" and
"Regulation X" shall mean, respectively, Regulation A, Regulation D, Regulation
G, Regulation U and Regulation X of the Board of Governors of the Federal
Reserve System, as from time to time in effect.
"Regulatory Change" shall mean the introduction of, or any change in,
United States federal, state or local laws or regulations (including Regulation
D) or treaties or foreign laws or regulations after the date of this Agreement
or the adoption or making after such date of any interpretations, directives,
guidelines or requests applying generally to a class of banks of or under any
United States federal, state or local laws or regulations or any treaties or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
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"Related Documents" shall mean the Merger Agreement and each of the
documents evidencing Subordinated Indebtedness.
"Release" shall have the same meaning as set forth in Section 101(22)
of the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601(22), or state or local law.
"Reorganization", as to any Multiemployer Plan, shall have the meaning
assigned to such term in Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA other than those events as to which the 30-day notice period is
waived.
"Required Banks" shall mean, at any date, Banks having at least 51% of
the aggregate amount of the Commitments, and, if the Commitments are terminated
and Loans and/or Bank L/C Obligations are outstanding, Banks holding at least
51% of the aggregate principal amount of outstanding Loans and/or Commitment
Percentages relating to Bank L/C Obligations, as the case may be.
"Requirement of Law" for any Person shall mean the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or guideline, or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Responsible Officer" shall mean the chief executive officer,
president, chief financial officer or treasurer, or any executive vice
president, of the Company.
"SEC Reports" shall mean the Company's annual report on Form 10-K for
the fiscal year ended December 31, 1996 and other documents filed by the Company
with the Securities and Exchange Commission during 1996.
"Secured Parties" shall mean the Agent, the Banks, Fleet in its
capacity as issuer of L/Cs hereunder and the Hedge Banks.
"Security Agreement" shall have the meaning ascribed thereto in
subsection 2.21.
"Security Documents" shall mean, collectively, the Security Agreement
and any other agreement that creates or purports to create a Lien in favor of
the Agent for the benefit of the Secured Parties.
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"Senior Funded Debt" shall mean, at any time of determination, the
average (calculated for the two most recent consecutive full fiscal quarters of
the Company for which consolidated financial statements of the Company and its
Subsidiaries have been delivered to the Agent and the Banks pursuant to and in
compliance with subsection 5.1) (a) aggregate Indebtedness of the Company and
its Subsidiaries less (b) the aggregate Subordinated Indebtedness of the Company
and its Subsidiaries, in each case calculated on a consolidated basis in
accordance with GAAP.
"Single Employer Plan" shall mean any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvency Certificate" shall mean a certificate substantially in the
form of Exhibit G hereto.
"Solvent" and "Solvency" shall mean with respect to any Person at the
time of determination:
(a) the then fair market value of its assets is greater than its
probable liability on its existing debts (including contingent debts) as
such debts become absolute and matured;
(b) the then present fair saleable value of its assets is not less than
the amount that will be required to pay its probable liability on its
existing debts (including contingent debts) as such debts become absolute
and matured;
(c) it is then able and expects to be able to pay its debts (including,
without limitation, contingent debts and other commitments) as they mature;
and
(d) it has capital sufficient to carry on its business as conducted and
as proposed to be conducted.
The amount of contingent debts and other commitments at any time shall be
computed as that amount that represents the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Special Subsidiary Loans" shall mean loans by the Company and/or any
of its Subsidiaries to Subsidiaries which are not, directly or indirectly,
wholly-owned Subsidiaries.
"Specified L/C Obligations" at any date shall mean the sum of (a) the
aggregate undrawn amount of all L/Cs as to which the Company or any Subsidiary
is an account party at such date (excluding (i) the Fifth Third Letters of
Credit and the First American Letter of Credit and (ii) any renewals, extensions
and replacements of any of the
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Fifth Third Letters of Credit or the First American Letter of Credit), plus (b)
the amount of all Unpaid Drawings.
"Subordinated Indebtedness" shall mean the Indebtedness permitted
pursuant to subsection 6.1(f).
"Subsidiary" of any Person shall mean a corporation or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries", in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.
"Taxes" shall have the meaning ascribed thereto in subsection 2.13.
"Tender Offer" shall have the meaning ascribed thereto in the preamble
hereto.
"Termination Date" shall mean August 26, 2002 or, if such day is not a
Business Day, the Business Day next preceding such day.
"Toxic Chemical" shall mean any substance on the list described in
Section 313(c) of the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. Section 11023(c).
"Tranche" shall mean all Eurodollar Loans of the same borrower with the
same Interest Period, which Interest Period ends on the same day.
"Tranche Limit" at any time shall mean a number equal to the sum of the
number of Designated Subsidiaries at such time plus six; provided that the
Tranche Limit shall not be less than 10.
"Type" shall mean, as to any Loan, its nature as a Prime Rate Loan or
Eurodollar Loan, as the case may be.
"Unpaid Drawings" shall have the meaning ascribed thereto in subsection
2.1(c)(i) hereof.
"Working Day" shall mean any Business Day on which dealings in foreign
currency and exchange between banks may be carried on in London, England and
Boston, Massachusetts.
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1.2 Other Definitional Provisions. (a) All terms defined in this
Agreement shall have such defined meanings when used in the Loan Documents or
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used herein, in the Loan Documents and in any certificate or
other document made or delivered pursuant hereto, accounting terms not defined
in subsection 1.1, and accounting terms partly defined in subsection 1.1 to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement, shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; and Section, subsection,
Schedule and Exhibit references contained in this Agreement are references to
Sections, subsections, Schedules and Exhibits in or to this Agreement unless
otherwise specified.
(d) In this Agreement in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding".
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS
2.1 Commitments. (a) (i) Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make a single term loan (individually,
a "Loan", collectively, the "Loans") to each of the Company and the Designated
Subsidiaries on the Closing Date in an aggregate principal amount which, when
added to such Bank's Commitment Percentage of the Bank L/C Obligations which are
to be outstanding immediately after giving effect to the borrowing and
application of such Loans, will not exceed the amount of its Commitment set
forth on Schedule I, as such amount may be reduced from time to time as provided
herein. Amounts borrowed under this subsection 2.1(a) and repaid or prepaid may
not be reborrowed.
(ii) Intentionally omitted.
(b) The Loans may be made as (i) Eurodollar Loans, (ii) Prime Rate
Loans or (iii) subject to the other provisions hereof, any combination thereof,
as determined by the Company and notified to the Agent in accordance with
subsection 2.3, provided that Loans made on the Closing Date shall be made as
Prime Rate Loans and shall be made in an amount not to exceed the amount by
which the Commitments on the Closing Date exceed the L/C Sublimit on the Closing
Date.
(c) (i) Effective as of the Closing Date, (A) the "L/Cs" issued for the
account of any Account Party by Fleet pursuant to the Existing Credit Agreement
(such
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"L/Cs" as are outstanding thereunder on the date hereof and set forth on
Schedule 2.1 being, collectively, the "L/Cs", and individually, an "L/C"), will
be deemed to be L/Cs hereunder for the account of such Account Party, (B) the
L/Cs will no longer be Obligations outstanding under the Existing Credit
Agreement and (C) Fleet will be deemed to have sold and transferred an undivided
interest and participation in respect of each L/C issued by it and each Bank
hereunder will be deemed to have purchased and received, without further action
on the part of any party, an undivided interest and participation in such L/C,
based on such Bank's Commitment Percentage of such L/C. Fleet shall notify the
Company of any payment or disbursement made by Fleet under any L/C in accordance
with its customary practice. The applicable Account Party shall reimburse Fleet
in immediately available funds at its office indicated on its Schedule I on the
same day as any draw is paid by Fleet under the L/Cs (all such amounts so paid
or disbursed until paid, are hereinafter referred to as "Unpaid Drawings").
(ii) Intentionally omitted.
(iii) If, notwithstanding the other provisions of this subsection
2.1(c), on the Termination Date there are outstanding any L/Cs which have not
expired or been terminated with the consent of the Company and the respective
beneficiaries thereof, then this Agreement (including, without limitation, this
subsection 2.1(c) and subsection 2.22) and the respective rights, obligations
and covenants of the Company, and the Designated Subsidiaries, Fleet and the
Banks under this Agreement shall remain in full force and effect until the date
on which the last of the L/Cs expire or is terminated with the consent of the
Company and the respective beneficiaries thereof and all payments made by Fleet
under the L/Cs are reimbursed in full by the Company or one or more of the
Designated Subsidiaries, except that the Commitment shall terminate on the
Termination Date.
(iv) Intentionally omitted.
(v) Upon the presentation for payment of any draft drawn under a trade
L/C, the Company shall pay to Fleet for the ratable benefit of the Banks a
payment commission or fee (each a "Drawing Fee") equal to one quarter of one
percent (1/4%) of the face amount of the draft.
(vi) The Company shall pay to the Agent for the ratable benefit of the
Banks an Issuance Fee for each stand-by L/C, on the undrawn amount of such L/C,
at an annual rate equal to the percentage set forth in the definition of
Issuance Fee, and payable on the date of issuance and thereafter in advance on
the first day of each January, April, July and October so long as such L/C is
outstanding; provided, however, that such Issuance Fee shall be pro rated for
the portion of any quarter during which the undrawn amount of such L/C is
reduced or the L/C is terminated and the Agent and the Banks shall refund to the
Company any unearned portion of such Issuance Fee.
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(vii) In the event that at any time when a draft is drawn under an L/C,
there are not sufficient funds in any account of the Account Party with Fleet or
sufficient Available Commitments to permit creation of a Loan sufficient to fund
payment of such draft, any funds advanced by Fleet, in payment thereof shall be
due and payable immediately and shall bear interest until paid in full at the
Post-Default Rate. In the event of any conflict, discrepancy or any omission of
terms provided herein between the terms established by Fleet in its Application
or otherwise and this Agreement, the terms provided herein shall prevail.
(viii) The obligations of each Account Party under this subsection
2.1(c) to reimburse Fleet with respect to Unpaid Drawings (including interest
thereon) shall, subject to the other provisions of this Agreement, including
without limitation subsection 2.22, be absolute and unconditional under any and
all circumstances and (but as so subject) irrespective of any setoff,
counterclaim or defense to payment which the Company or any Designated
Subsidiary may have or have had against Fleet, including (without limitation,
but as so subject) any defense based on the failure of any drawing under the L/C
to conform to the terms of such L/C or any non-application or misapplication by
the beneficiary of the L/C of the proceeds of such drawing.
2.2 Notes. The Loans made by each Bank shall be evidenced by promissory
notes, substantially in the form of Exhibit A with appropriate insertions as to
date, name of Bank and principal amount (individually, a "Note" and,
collectively, the "Notes"), payable to the order of such Bank and evidencing the
obligation of the Company or the applicable Designated Subsidiary, as the case
may be, to pay the outstanding principal amount thereof with interest on the
unpaid principal amount from time to time outstanding of such Note as prescribed
in subsection 2.10. Each Bank is hereby authorized to record the date, Type and
amount of each Loan, the maturity date therefor and the date and amount of each
repayment of principal thereof, and, in the case of Eurodollar Loans, the
interest rate with respect thereto, either on its own books and records or on
the schedule (or any continuations thereof) annexed to and constituting a part
of its Note, and any such recordation shall constitute prima facie evidence of
the accuracy of the information so recorded; provided that the failure to make
any such recordation shall not in any way affect the obligation of the Company
and the Designated Subsidiaries to repay the Loans. Each Note shall (a) be dated
the date hereof, (b) be payable with respect to principal as set forth in
subsection 2.9, and (c) bear interest on the unpaid principal amount thereof
from time to time outstanding until payment in full of the principal amount
thereof at the applicable interest rate per annum determined as provided in
subsection 2.10. Interest on the Notes shall be payable on the dates specified
in subsection 2.10.
2.3 Procedure for Loan Borrowings. (a) The Company may request for
itself or any Designated Subsidiary a borrowing under the Commitments on the
Closing Date, by giving irrevocable notice to the Agent (which notice must be
received by the Agent prior to 2:00 p.m., Boston, Massachusetts time) one
Business Day prior to the Closing Date;
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provided, however, that from time to time the Company may request for itself or
on behalf of any Designated Subsidiary that all or any portion of the Loans of
one Type be converted into Loans of the other Type by giving irrevocable notice
to the Agent, three Working Days prior to the requested conversion date, in the
case of Eurodollar Loans, and one Business Day prior to the requested conversion
date, in the case of Prime Rate Loans, provided that (i) in the case of any
conversion from a Prime Rate Loan to a Eurodollar Loan, (A) the Interest Period
available for such Eurodollar Loan shall be subject to subsection 2.3(c), (B)
the obligation of the Banks to make Eurodollar Loans shall not then be suspended
pursuant to subsection 2.12 or 2.14 and (C) the number of Eurodollar Loan
Tranches in effect after giving effect to such conversion shall not exceed the
Tranche Limit then in effect and (ii) in the case of any conversion from a
Eurodollar Loan to a Prime Rate Loan, (A) such conversion shall only be made on
the last day of an Interest Period for such Eurodollar Loan and (B) after giving
effect to such conversion, the aggregate amount of all Eurodollar Loans having
the same Interest Period ending on the same date is at least $1,000,000. Each
such notice of borrowing or conversion (a "Notice of Borrowing/Conversion")
shall specify: (1) the borrower and the amount to be borrowed or converted, (2)
the requested borrowing or conversion date, (3) whether the Type of Loan to be
borrowed, or into which a Loan shall be converted, is to be a Eurodollar Loan,
Prime Rate Loan or a combination thereof and, if a combination, the respective
amount of each Type of borrowing and (4) in the case of Eurodollar Loans, the
length of the Interest Period with respect thereto. The aggregate borrowings
under the Commitments on the Closing Date shall be in an aggregate principal
amount of not more than the then Available Commitments. The aggregate amount of
Loans to any Designated Subsidiary at any time outstanding shall not exceed the
Designated Subsidiary Borrowing Limit for such Designated Subsidiary in effect
at such time. Each Bank will make the amount of its pro rata share of each
borrowing available to the Agent for the account of the Company at the office of
the Agent in Boston, Massachusetts as set forth in subsection 9.2 by 11:00 a.m.,
Boston, Massachusetts time, on the Closing Date in funds immediately available
to the Agent. The proceeds of all such Loans will then be made available to the
Company or the applicable Designated Subsidiary, as the case may be, by the
Agent at such office of the Agent by crediting the account of the Company or
such Designated Subsidiary on the books of such office with the aggregate of the
amounts made available to the Agent by the Banks and in like funds as received
by the Agent.
(b) The provisions of subsection 2.3(a) notwithstanding, if the Company
shall not have given a timely notice of the next Interest Period for any
outstanding Eurodollar Loan, then unless the Agent shall have received notice
that the Company elects not to continue such Loan on the last day of such
Interest Period as a Eurodollar Loan (such notice to have been received at least
one Business Day prior to the last day of such Interest Period) the Company
shall be deemed irrevocably to have requested that Prime Rate Loans be made by
the Banks on the last day of such Interest Period in the same aggregate amount
as the Eurodollar Loans the last day of the Interest Period of which is on such
day (subject,
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however, to the requirement that the aggregate amount of the Loans outstanding
at any time pursuant to subsection 2.1 may not exceed the amounts of the
Available Commitments then in effect).
(c) Anything in subsection 2.3 (a) above to the contrary
notwithstanding, (i) during the period from the Closing Date to the date that is
the earlier of 30 days after the Closing Date and the date on which the Agent
notifies the Company and the Banks that the Commitments are fully syndicated,
the Company may request for itself or any Designated Subsidiary that (A) any
Prime Rate Loan hereunder be converted into a Eurodollar Loan having an initial
Interest Period of one week or (B) the next Interest Period for any outstanding
Eurodollar Loan be one week, and (ii) thereafter, the Company may, in accordance
with the provisions in the definition of "Interest Period," request Interest
Periods for any Eurodollar Loan if the aggregate amount of all Eurodollar Loans
having the same Interest Period is at least $1,000,000 and if the obligation of
the Banks to make Eurodollar Loans shall not then be suspended pursuant to
subsection 2.12 or subsection 2.14.
(d) The proceeds of the Loans hereunder shall be applied to the payment
in full of the principal and interest payable with respect to the Indebtedness
under the Existing Credit Agreement.
2.4 Intentionally Omitted.
2.5 Intentionally Omitted.
2.6 Termination or Reduction of Commitments. (a) Optional. The Company
shall have the right, upon not less than three Business Days' notice to the
Agent, to terminate the Commitments or, from time to time, to reduce the amount
of the Commitments, provided that no such reduction or termination shall be
permitted if, after giving effect thereto, and to any prepayments of the Loans
made on the effective date thereof, the then outstanding principal amount of the
Loans and Bank L/C Obligations would exceed the amount of the Commitments then
in effect. Any such reduction shall be in an amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and shall reduce permanently the amount
of the Commitments then in effect. The Commitments once terminated or reduced
may not be reinstated.
(b) Mandatory. After giving effect to the Loans made on the Closing
Date and the L/Cs outstanding on the Closing Date, upon each repayment or
prepayment of the Loans or of Unpaid Drawings and upon each expiration or
termination of an L/C (without any drawing in connection therewith), (i) the
aggregate Commitments of the Banks shall be automatically and permanently
reduced, on a pro rata basis, by an amount equal to the amount by which the
aggregate Commitments immediately prior to such reduction exceed the aggregate
unpaid principal amount or face amount, as the case may be, of the Loans, Unpaid
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Drawings and L/Cs then outstanding and (ii) the L/C Sublimit shall be
automatically and permanently reduced to an amount equal to the principal amount
or face amount of the Unpaid Drawings and L/Cs outstanding immediately after
such repayment, expiration or termination. The Commitments once terminated or
reduced may not be reinstated.
2.7 Fees. (a) The Company agrees to pay to the Agent for the account of
each Bank the Facility Fee for the period commencing on the date hereof
extending to but not including the earlier of (i) the date the Commitments are
terminated or (ii) the Termination Date. The accrued Facility Fee shall be
payable on the last day of each March, June, September or December and on the
Termination Date or such earlier date as the Commitments shall terminate as
provided herein, commencing on the first of such dates to occur after the date
hereof.
(b) The Company agrees to pay to the Agent the additional fees in the
amounts and upon the terms set forth in the Fee Letter.
2.8 Optional and Mandatory Prepayments. (a) The Company and each
Designated Subsidiary may at any time and from time to time prepay the Loans
then outstanding, in whole or in part, without premium or penalty, provided,
however, that if the Company or any Designated Subsidiary prepays any
Eurodollar Loans on any day other than the last day the Interest Period
therefor, the Company or such Designated Subsidiary shall concurrently pay any
amounts due under subsection 2.16 incurred in connection therewith. Optional
prepayments pursuant to this subsection 2.8(a) shall be made upon at least
three Working Days' prior irrevocable notice to the Agent in the case of
Eurodollar Loans, and one Business Day's prior irrevocable notice to the Agent
in the case of Prime Rate Loans, specifying (i) the date and amount of such
prepayment, (ii) whether the prepayment is of Eurodollar Loans, Prime Rate Loans
or a combination thereof, and, if of a combination thereof, the amount of
prepayment allocable to each Type and (iii) in the case of Eurodollar Loans, the
Interest Periods affected. If any such notice is given, the Company or the
Designated Subsidiary involved will make the prepayment specified therein, and
such prepayment shall be due and payable on the date specified therein, together
with accrued interest to such date on the amount prepaid. Each prepayment of the
Loans pursuant to this paragraph (a) shall be in an amount equal to $5,000,0000
or any whole multiple of $1,000,000 in excess thereof or the amount of all Loans
then outstanding, provided that prepayments of Eurodollar Loans pursuant to this
paragraph (a) shall be made in such a manner that, after giving effect to such
prepayments, no Eurodollar Loans having the same Interest Period shall be
maintained in an amount less than $1,000,000.
(b) Intentionally omitted.
(c) Intentionally omitted.
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(d) The Company shall prepay the Loans then outstanding and reduce the
Commitments as set forth in subsection 2.6(b) upon the receipt by the Company or
any Subsidiary of Net Proceeds of any sale or other disposition of any of its
assets to the extent set forth below:
(i) during such time as the Leverage Ratio (calculated based on the
financial statements most recently delivered to the Agent and the Banks pursuant
to and in compliance with subsection 5.1) is greater than or equal to 2.50:1.00,
75% of all such Net Proceeds shall be applied to prepay the installments
required to be made on the Loans pursuant to subsection 2.9 in direct order of
the maturity thereof; and
(ii) during such time as the Leverage Ratio (calculated based on the
financial statements most recently delivered to the Agent and the Banks pursuant
to and in compliance with subsection 5.1) is less than 2.50:1.00, 50% of all
such Net Proceeds shall be applied to prepay the installments required to be
made on the Loans pursuant to subsection 2.9 in direct order of the maturity
thereof.
(e) Any payment of the Loans pursuant to this subsection 2.8 or to
subsection 2.9 shall be applied first to the Prime Rate Loans then outstanding,
and the balance of any payment shall be applied to the Eurodollar Loans in
chronological order of the respective maturities thereof (or as the Company may
otherwise specify in writing to the Agent), together with any payments required
by subsection 2.16.
2.9 Repayment of Loans. The Company shall, and shall cause each
Designated Subsidiary to, repay to the Agent for the ratable account of the
Banks the aggregate outstanding principal amount of the Loans owing by the
Company or such Designated Subsidiary, as the case may be, on the following
dates in the aggregate amounts indicated for all such Loans being repaid on such
date (which amounts shall be reduced as a result of the application of
prepayments in accordance with the order of priority set forth in subsection
2.8(d)):
Date Amount
---- ------
March 31, 1998 $1,000,000
June 30, 1998 $1,000,000
September 30, 1998 $1,000,000
December 31, 1998 $1,000,000
March 31, 1999 $1,000,000
June 30, 1999 $1,000,000
September 30, 1999 $1,000,000
December 31, 1999 $1,000,000
March 31, 2000 $1,250,000
June 30, 2000 $1,250,000
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September 30, 2000 $1,250,000
December 31, 2000 $1,250,000
March 31, 2001 $1,500,000
June 30, 2001 $1,500,000
September 30, 2001 $1,500,000
December 31, 2001 $1,500,000
March 31, 2002 $3,000,000
June 30, 2002 $3,000,000
August 26, 2002 $96,728,225
provided, however, that the final principal installment shall be repaid on the
earlier of the Termination Date and the date of the termination in full of the
Commitments pursuant to subsection 2.6 or Section 7 and in any event shall be in
an amount equal to the aggregate principal amount of the Loans, Unpaid Drawings
and L/Cs outstanding on such date.
2.10 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for the Interest Period with respect thereto on the unpaid
principal amount thereof at a rate per annum equal to the Eurodollar Rate for
such Interest Period plus the Applicable Margin in effect from time to time.
(b) The Unpaid Drawings and each Prime Rate Loan shall bear interest on
the aggregate unpaid principal amount thereof at a rate per annum equal to the
Prime Rate in effect from time to time plus the Applicable Margin in effect from
time to time.
(c) Intentionally omitted.
(d) If all or a portion of the principal amount of any of the Loans or
Unpaid Drawings shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue principal amount shall, without
limiting the rights of the Banks under Section 7, bear interest at a rate per
annum which is two percent (2%) above the otherwise applicable rate (the
"Post-Default Rate"), from the date of such non-payment until paid in full
(before, as well as after, judgment); provided that if such overdue principal
amount is of Eurodollar Loans, then, at the end of the Interest Period relating
thereto, such Eurodollar Loans may be continued only as Prime Rate Loans and
shall bear interest at a rate per annum which is two percent (2%) above the rate
required to be paid on Prime Rate Loans pursuant to subsection 2.10(b) until
paid in full (before as well as after judgment).
(e) Interest on each Loan shall be payable in arrears on each Interest
Payment Date applicable thereto.
(f) Anything herein to the contrary notwithstanding, the obligation of
the Company and each Designated Subsidiary to make payments of interest shall be
subject to
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the limitation that payments of interest shall not be required to be made to any
Bank to the extent that such Bank's receipt thereof would not be permissible
under the law or laws applicable to such Bank limiting rates of interest which
may be charged or collected by such Bank; provided that nothing in this
subsection 2.10(f) shall release the Company or any Designated Subsidiary, as
applicable, from paying any portion of interest then payable to the extent that
such Bank's receipt thereof would be permissible under such law or laws. Any
such payments of interest which are not made to any Bank as a result of the
limitation referred to in the preceding sentence shall be made by the Company
and each Designated Subsidiary to such Bank on the earliest Interest Payment
Date or Dates on which the receipt thereof would be permissible under the laws
applicable to such Bank limiting rates of interest which may be charged or
collected by the Agent.
2.11 Computation of Interest and Fees. (a) The Facility Fee and
interest in respect of Prime Rate Loans shall be calculated on the basis of a
365 (or 366, as the case may be) day year for the actual days elapsed. Interest
on all Eurodollar Loans and Issuance Fees and the fees payable pursuant to
subsection 2.7(b) shall be calculated on the basis of a 360-day year for the
actual days elapsed. The Agent shall as soon as practicable, but not later than
the close of business on the date of determination, notify the Company and the
Designated Subsidiaries and the Banks of each determination of a Eurodollar
Rate. Any change in the interest rate on the Loans resulting from a change in
the Prime Rate or the Eurocurrency Reserve Requirements shall become effective
as of the opening of business on the day on which such change in the Prime Rate
is announced, or such change in the Eurocurrency Reserve Requirements shall
become effective, as the case may be. The Agent shall as soon as practicable,
but not later than three Business Days before the close of business on the
effective date, notify the Company and the Designated Subsidiaries and the Banks
of the effective date and the amount of each such change.
(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be prima facie evidence of the accuracy of the
facts so determined.
2.12 Inability to Determine Interest Rate. Notwithstanding any other
provision of this Agreement, in the event that the Required Banks shall
reasonably have determined (which determination shall be prima facie evidence of
the facts so deter-mined) that the rates quoted by Fleet for the purpose of
computing the Eurodollar Rate do not adequately and fairly reflect the cost to
the Banks of funding any Loans that the Company or any Designated Subsidiary has
requested be converted into Eurodollar Loans, such Banks shall notify the Agent
thereof and the Agent shall promptly give telecopier or telephonic notice of
such determination, confirmed in writing to the Company or such Designated
Subsidiary and the Banks at least one Business Day prior to the requested
conversion date for such Eurodollar Loans. Unless the Company or such Designated
Subsidiary shall have notified the Agent promptly after receipt of such
telecopier or telephonic notice that it wishes
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to rescind or modify its request regarding such Eurodollar Loans, any requested
Eurodollar Loans shall be made as Prime Rate Loans. Until any such notice has
been withdrawn by the Agent, no further Eurodollar Loans shall be made. The
Agent shall withdraw such notice promptly after it determines that the
circumstances giving rise to the delivery of such notice no longer exist.
2.13 Taxes. (a) All payments made by the Company and each Designated
Subsidiary under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority excluding, in the case of the Agent and each Bank, net
income and franchise taxes imposed on the Agent and such Bank by the
jurisdiction under the laws of which such Agent or such Bank is organized or any
political subdivision or taxing authority thereof or therein or by any
jurisdiction in which such Bank's Domestic Lending Office or Eurodollar Lending
Office, as the case may be, is located or any political subdivision or taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings being hereinafter called "Taxes"). If any
Taxes are required to be withheld from any amounts payable to any Bank hereunder
or under the Notes, the amounts so payable to such Bank shall be increased to
the extent necessary to yield to such Bank (after payment of all Taxes,
including Taxes on such increased amount) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the Notes. Whenever any Taxes are payable by the Company or any Designated
Subsidiary, as promptly as possible thereafter, the Company or such Designated
Subsidiary shall send to the Agent for the account of such Bank a certified copy
of an original official receipt received by the Company or such Designated
Subsidiary showing payment thereof. If the Company or any Designated Subsidiary
fails to pay any Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary evidence,
the Company or such Designated Subsidiary shall indemnify the Agent and the
Banks for any incremental taxes, interest or penalties that may become payable
by the Agent or any Bank as a result of any such failure. Each Bank confirms to
the Company and the Designated Subsidiaries that tax withholding requirements do
not currently apply to payments to be made to it hereunder.
(b) If the Company or any Designated Subsidiary shall at any time be
required to withhold any Taxes in respect of any amount payable to any Bank
hereunder or under the Notes, the Company or such Designated Subsidiary shall be
entitled to prepay the Loans allocable to such Bank, and the Company or such
Designated Subsidiary shall be entitled to terminate the Commitment of such
Bank (such prepayment to be made together with all other amounts due to such
Bank hereunder and under the Notes, including, without limitation, interest,
fees and any amounts payable pursuant to subsection 2.16).
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(c) Each Bank agrees to use reasonable efforts (including reasonable
efforts to change its Domestic Lending Office or Eurodollar Lending Office, as
the case may be) to avoid the imposition of any Taxes on payments hereunder or
to minimize any amounts which might otherwise be payable pursuant to this
subsection 2.13; provided, however, that such efforts shall not cause the
imposition on such Bank of any additional costs or legal or regulatory burden
deemed by such Bank to be material.
(d) If the Company or any Designated Subsidiary makes any additional
payment to the Agent or any Bank pursuant to this subsection 2.13 in respect of
any Taxes, and the Agent or such Bank determines that it has received (i) a
refund of such Taxes or (ii) a credit against or relief or remission for, or a
reduction in the amount of, any tax or other governmental charge solely as a
result of any deduction or credit for any Taxes with respect to which it has
received payments under this subsection 2.13, the Agent and such Bank shall, to
the extent that they can do so without prejudice to the retention of such
refund, credit, relief, remission or reduction, pay to the Company or such
Designated Subsidiary such amount as the Agent and such Bank shall have
determined to be attributable to the deduction or withholding of such Taxes. If
the Agent or such Bank later determines that it was not entitled to such refund,
credit, relief, remission or reduction to the full extent of any payment made
pursuant to the first sentence of this subsection 2.13(d), the Company or such
Designated Subsidiary shall upon demand of the Agent or such Bank promptly repay
the amount of such overpayment. Any determination made by the Agent or such Bank
pursuant to this subsection 2.13(d) shall constitute prima facie evidence of the
accuracy thereof, and nothing in this subsection 2.13(d) shall be construed as
requiring the Agent or any Bank to conduct its respective business or to arrange
or alter in any respect its respective tax or financial affairs so that it is
entitled to receive such a refund, credit or reduction or as allowing any person
to inspect any records, including tax returns, of the Agent or any Bank.
2.14 Illegality. Notwithstanding any other provision herein, if any
Regulatory Change shall make it unlawful for any Bank to make or maintain
Eurodollar Loans as contemplated by this Agreement or to accept deposits in
order to make or maintain such Eurodollar Loans, (a) the agreements of such Bank
hereunder to make Eurodollar Loans shall forthwith be suspended for the duration
of such illegality and (b) each Eurodollar Loan then outstanding, if any, shall
be converted into a Prime Rate Loan on the last day of the Interest Period
therefor or within such earlier period as required by law for the duration of
such illegality. If any such conversion of a Eurodollar Loan is made on a day
which is not the last day of the Interest Period therefor, the Company and each
Designated Subsidiary hereby agrees to pay promptly to any Bank, upon its
demand, any amounts required to be paid by the Company and each Designated
Subsidiary pursuant to subsection 2.16 (such Bank's reasonable notice of such
costs and the manner in which they were calculated, as certified to the Company,
shall constitute prima facie evidence of the accuracy of the amounts set forth
therein). This agreement shall survive termination of this Agreement and the
payment of the outstanding Notes. Each Bank shall use its reasonable efforts to
promptly
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notify the Company as soon as practicable as to any Regulatory Change described
in this subsection 2.14.
2.15 Increased Costs. (a) In the event that any Regulatory Change:
(i) subjects any Bank to any tax of any kind whatsoever with respect to
this Agreement, its Notes or any Loans made by it, or changes the
basis of taxation of payments to such Bank of principal, interest,
fees or any other amount payable hereunder (except for changes in
Taxes and except for taxes measured by the net income of such Bank);
(ii) imposes, modifies or holds applicable to such Bank any reserve,
Federal Deposit Insurance Corporation premium or assessment, special
deposit, compulsory loan or similar requirement against any
Eurodollar Loans made, or assets held by, or credit extended by, or
deposits or other liabilities in or for the account of, or
acquisition of funds by or for the account of, any office of such
Bank (or any Person controlling such Bank) (but only to the extent
not otherwise included in the determination of the Eurodollar Rate);
or
(iii) imposes on such Bank any other condition affecting this Agreement or
any Loans made hereunder;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining Loans or Commitments or to reduce any amount receivable by
it in respect of Loans or Commitments, then, in any such case, the Company or
the applicable Designated Subsidiary shall promptly pay the Bank, upon its
demand pursuant to subsection 2.15(c), any additional amounts necessary to
compensate such Bank (or any Person controlling such Bank) for such additional
cost or reduced amount receivable plus interest thereon at the Prime Rate, for
five (5) Business Days from the date demanded and thereafter, at the
Post-Default Rate, in each case until payment in full thereof.
(b) In the event that any Bank (or any Person controlling such Bank) shall
have reasonably determined that any Regulatory Change does or shall have the
effect of reducing the rate of return on such Bank's (or such Person's) capital
as a consequence of its obligations hereunder to a level below that which such
Bank (or such Person) could have achieved on the date hereof but for such
Regulatory Change (taking into consideration such Bank's policies with respect
to capital adequacy) by any amount reasonably deemed by such Bank to be
material, then from time to time, within 15 days after demand by such Bank
pursuant to subsection 2.15(c), the Company or the applicable Designated
Subsidiary shall promptly pay the Bank such additional amount or amounts as will
compensate such Bank (or such Person) for such reduction.
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(c) If any Bank (or any Person controlling such Bank) becomes entitled to
claim any additional amounts pursuant to this subsection 2.15, it shall promptly
after becoming aware thereof notify the Company of the event by reason of which
it has become so entitled. Any such claim for additional amounts by such Bank
shall be accompanied by a certificate setting forth in reasonable detail the
calculation thereof (provided, however, that such Bank shall not be required to
disclose proprietary or confidential information in such certificate), submitted
by such Bank to the Company, and such certificate shall constitute prima facie
evidence of the accuracy of the amount of such claim. This agreement shall
survive termination of the Commitments and the payment in full of the
outstanding Notes for 180 days (but not longer).
(d) If the Company or any Designated Subsidiary shall at any time be
required to pay amounts pursuant to this subsection 2.15 to any Bank (or any
Person controlling such Bank), the Company or such Designated Subsidiary shall
be entitled to prepay the Loans allocable to such Bank, and thereupon the
Company or such Designated Subsidiary shall be entitled to terminate the
Commitment of such Bank (such prepayment to be made together with all other
amounts due to such Bank hereunder and under the Notes, including, without
limitation, interest, fees and any amounts payable pursuant to subsection 2.16).
2.16 Indemnity. Each of the Company and each Designated Subsidiary agrees
to indemnify each Bank for, and to hold such Bank harmless from, any loss or
expense (but not including loss of Applicable Margin) which such Bank may
sustain or incur as a consequence of (a) any default by the Company or any
Designated Subsidiary in borrowing or failure to borrow for any reason such
Eurodollar Loans after the Company or such Designated Subsidiary has given a
notice in respect thereof in accordance with subsection 2.3, (b) receipt by such
Bank of any prepayment (whether optional or mandatory) of any Eurodollar Loan on
a day which is not the last day of an Interest Period applicable to such
Eurodollar Loan, (c) default by the Company or any Designated Subsidiary in
making any prepayment of a Eurodollar Loan after it has given a notice in
accordance with subsection 2.8(a) or (d) acceleration of any Eurodollar Loans,
and each Bank shall use reasonable efforts to minimize any amounts due to such
Bank pursuant to this subsection 2.16. The Company and each Designated
Subsidiary shall promptly pay to each Bank, upon its demand (accompanied by the
certificate described below), any amounts necessary to compensate such Bank for
such losses or expenses incurred by such Bank in making or maintaining any Loans
in accordance with this subsection 2.16, including, without limitation, any
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain its Eurodollar Loans. Any claim for additional amounts
pursuant to the foregoing sentence by such Bank shall be accompanied by a
certificate setting forth in reasonable detail the calculation thereof
(provided, however, that such Bank shall not be required to disclose proprietary
or confidential information in such certificate), submitted by such Bank to the
Company or such Designated Subsidiary, and such certificate shall
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constitute prima facie evidence of the accuracy of the amount of such claim,
provided that the determination of such amount is made on a reasonable basis.
This subsection 2.16 shall survive termination of the Commitments and the
payment in full of the outstanding Notes for 180 days (but not longer).
2.17 Maximum Number of Tranches. Notwithstanding any other provision
hereof, there shall not at any time be outstanding hereunder Tranches in excess
of the Tranche Limit.
2.18 Use of Proceeds. The proceeds of the Loans may only be used to
refinance existing Indebtedness of the Company and/or its Subsidiaries under the
Existing Credit Agreement.
2.19 Pro Rata Treatment and Payments; L/C Participation. (a) Each
borrowing of Loans by the Company or any Designated Subsidiary from the Banks,
each payment by the Company on account of any fees hereunder (including, without
limitation, any Issuance Fees and Drawing Fees in respect of L/Cs (but excluding
fees payable pursuant to subsection 2.7(b))), and any reduction of the
Commitments of the Banks hereunder shall be made pro rata according to the
respective Commitment Percentages of the Banks. Each payment (including each
prepayment) by the Company or any Designated Subsidiary on account of principal
of and interest on the Loans and other amounts due hereunder (other than
payments made pursuant to subsection 2.13, 2.14, 2.15 or 2.16) shall be made pro
rata according to the respective outstanding principal amounts of the Loans held
by each Bank. All payments (including prepayments) to be made by the Company or
any Designated Subsidiary on account of principal and interest on the Notes or
on account of any fees or other amounts due hereunder shall be made without
set-off or counterclaim and shall be made to the Agent, for the account of the
Banks, at the Agent's office in Boston, Massachusetts as set forth in subsection
9.2, in lawful money of the United States of America and in immediately
available funds not later than 11:00 a.m. Boston, Massachusetts time, on the
date on which such payment shall become due. The Agent shall distribute such
payments to the Banks promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Working Day, the maturity thereof shall be extended to the next
succeeding Working Day unless the result of such extension would be to extend
such payment into another calendar month in which event such payment shall be
made on the immediately preceding Working Day and with respect to payments of
principal interest thereon shall be payable at the then applicable rate during
such extension.
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(b) Unless the Agent shall have been notified in writing by any Bank prior
to a borrowing date that such Bank will not make the amount which would
constitute its Commitment Percentage of the Loans on such date available to the
Agent, the Agent may assume that such Bank has made such amount available to the
Agent on such borrowing date, and the Agent may, in reliance upon such
assumption, make available to the Company or a Designated Subsidiary, as
applicable, a corresponding amount. If such amount is made available to the
Agent on a date after such borrowing date, such Bank shall pay to the Agent on
demand an amount equal to the product of (i) the daily Federal Funds Rate during
such period, times (ii) the amount of such Bank's Commitment Percentage of such
borrowing, times (iii) a fraction the numerator of which is the number of days
that elapse from and including such borrowing date to the date on which such
Bank's Commitment Percentage of such borrowing shall have become immediately
available to the Agent and the denominator of which is 365. A certificate of the
Agent submitted to any Bank with respect to any amounts owing under this
subsection 2.19(b) shall be conclusive, absent manifest error. If such Bank's
Commitment Percentage of such borrowing is not in fact made available to the
Agent by such Bank within three Business Days of such borrowing date, the Agent
shall be entitled to recover such amount with interest thereon at the rate per
annum applicable to the Loans hereunder, on demand, from the Company or a
Designated Subsidiary, as applicable. Except as set forth in the immediately
preceding sentence, neither the Company nor the Subsidiaries shall have any
liability to any Person under this subsection 2.19(b).
(c) (i) Fleet, as the issuing bank with respect to each L/C, irrevocably
agrees to grant and hereby grants to each Bank (each Bank, in such capacity, an
"L/C Participant") and, to induce Fleet to maintain L/Cs hereunder, each L/C
Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from Fleet, on the terms and conditions hereinafter stated, for such
L/C Participant's own account and risk an undivided interest equal to such L/C
Participant's Commitment Percentage in Fleet's obligations and rights under each
L/C issued or deemed issued by it hereunder and the amount of Unpaid Drawings
with respect to any draft paid by Fleet thereunder, effective on the Closing
Date. Each L/C Participant unconditionally and irrevocably agrees with Fleet
with respect to any L/C that, if a draft is paid under such L/C for which Fleet
is not reimbursed in full by the relevant Account Party on the date required by
subsection 2.1(c)(vii), such L/C Participant shall pay to Fleet upon
notification or demand at Fleet's address for notices specified herein an amount
equal to such L/C Participant's Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.
(ii) If any amount required to be paid by any L/C Participant to Fleet
with respect to any L/C pursuant to subsection 2.19(c)(i) in respect of any
unreimbursed portion of any payment made by Fleet under such L/C is paid to
Fleet within three Business Days after the date such payment is due by such L/C
Participant, such L/C Participant shall pay to Fleet on demand an amount equal
to the product of (A) such amount, times (B) the daily average Federal Funds
Rate during the period from and including the date such payment is
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required to the date on which such payment is immediately available to Fleet,
times (C) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 365. If any such amount
required to be paid by any L/C Participant pursuant to subsection 2.19(c)(i) is
not in fact made available to Fleet by such L/C Participant within three
Business Days after the date such payment is due by such L/C Participant, Fleet
shall be entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per annum
applicable to Prime Rate Loans hereunder. A certificate of Fleet submitted to
any L/C Participant with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error.
(iii) Whenever, at any time after Fleet has made payment under any L/C
and has received from any L/C Participant its pro rata share of such payment in
accordance with subsection 2.19(c)(i), Fleet receives any payment related to
such L/C (whether directly from the Company, a Designated Subsidiary or
otherwise, including by means of set-off or the proceeds of collateral applied
thereto by Fleet), or any payment of interest on account thereof, Fleet will
distribute to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by Fleet shall be
required to be returned by it, such L/C Participant shall return to Fleet the
portion thereof previously distributed by Fleet to it. Neither the Company nor
any Subsidiary shall have any liability or obligation to any person under this
subsection 2.19(c).
2.20 Guaranties. The due payment and performance of the Obligations
shall be guaranteed to the Banks and the Agent by the Company and each of the
Material Operating Subsidiaries listed on Schedule 2.20 hereto (hereinafter,
together with any other Material Operating Subsidiary that executes and delivers
a Guaranty, referred to, individually, as a "Guarantor" and, collectively, as
the "Guarantors"), by the execution and delivery to the Agent, simultaneously
with the execution and delivery of this Agreement, by each Guarantor of a
Guaranty in form and substance satisfactory to the Agent (as amended,
supplemented or otherwise modified from time to time with its terms,
individually, a "Guaranty" and, collectively, as to all the Guarantors, the
"Guaranties"). In addition, each Material Operating Subsidiary that becomes a
Material Operating Subsidiary after the date hereof shall, concurrently with
becoming a Material Operating Subsidiary, execute and deliver to the Agent a
Guaranty, in form and substance satisfactory to the Agent, and upon such
execution and delivery, such Material Operating Subsidiary shall become a
Guarantor under the Loan Documents.
2.21 Security. In order to secure the due payment and performance by
the Company and each Designated Subsidiary of its respective Obligations,
simultaneously with the execution and delivery of this Agreement, each of the
Company, each other Guarantor and each Additional Subsidiary Grantor
(collectively, together with any other Subsidiary that executes and delivers a
Security Agreement or otherwise becomes a party to a Security
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Agreement, being referred to herein as "Collateral Grantors" and, individually,
a "Collateral Grantor") shall, pursuant to an amended and restated security
agreement in form and substance satisfactory to the Agent and the Banks dated as
of the Closing Date (as amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Security Agreement"), grant to the Agent
for the ratable benefit of the Secured Parties a first priority lien on and
security interest in the following:
(a) all of the issued and outstanding shares of capital stock of
each Guarantor (other than the Company);
(b) all present and future accounts receivable and inventory of such
Collateral Grantor; and
(c) all proceeds and products of the property and assets described
in clauses (a) and (b) above.
Each Collateral Grantor shall execute and deliver or cause to be
executed and delivered such other agreements, instruments and documents as the
Agent may reasonably require in order to effect the purposes of the Security
Agreement, this subsection 2.21 and this Agreement. In addition, each Material
Operating Subsidiary that becomes a Material Operating Subsidiary after the date
hereof shall, concurrently with becoming a Material Operating Subsidiary,
execute and deliver a Security Agreement supplement, in form and substance
satisfactory to the Agent, pursuant to which such Material Operating Subsidiary
will grant to the Agent for the ratable benefit of the Secured Parties a first
priority lien on and security interest in the assets described in clauses (b)
and (c) above, and upon such execution and delivery, such Material Operating
Subsidiary shall become a Collateral Grantor under the Loan Documents.
2.22 Additional L/C Provisions. (a) Without limiting the generality
of subsection 2.15, if:
(i) any Regulatory Change shall (A) impose, modify or deem applicable
any reserve, special deposit, capital maintenance, deposit insurance premium or
assessment, or similar requirement against letters of credit issued or deemed
issued by, or assets held by, or deposits made with or for the account of,
Fleet, (B) impose on Fleet any other condition regarding the L/Cs or (C) subject
Fleet to any tax, charge, fee, deduction or withholding of any kind whatsoever
(except for changes in Taxes and except for taxes measured by the net income of
Fleet); and
(ii) the result of any such event shall be to increase the cost to
Fleet of the issuance or maintenance of the L/Cs, or reduce the amount of
principal, interest, or any fee or compensation receivable by Fleet in respect
of the L/Cs;
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then, upon demand of Fleet, the Company or the applicable Designated Subsidiary
shall pay to Fleet, from time to time as specified by Fleet, all additional
amounts which are necessary to compensate Fleet for such increased cost or
reduction incurred by Fleet, accruing from and after the date initially demanded
by Fleet. All payments of compensation for such increased cost or reduction
shall be accompanied by interest thereon, at the Prime Rate from the date
demanded for five (5) Business Days, and thereafter, at the Post-Default Rate,
in each case until payment in full thereof. A certificate as to such increased
cost incurred by Fleet showing in reasonable detail the calculation thereof
shall be submitted by Fleet to the Company and shall constitute prima facie
evidence of the accuracy of the amounts set forth therein. For purposes of this
subsection 2.22, all references to L/Cs shall be deemed to refer to
participations in L/Cs, and all references to "Fleet" shall be deemed to include
any L/C Participant, except that amounts payable by the Company and the
Designated Subsidiaries shall only be paid to Fleet and then delivered to any
L/C Participant having such cost. In the event of any inconsistency between the
terms of this subsection 2.22 and subsection 2.15, the provisions of subsection
2.15 shall govern. This Agreement shall survive termination of the Commitment
and payment of the outstanding Notes for 180 days (but not longer).
(b) The obligations of the Company and each Designated Subsidiary under
this Agreement with respect to the L/Cs shall, absent gross negligence or
willful misconduct by Fleet, (x) be absolute, unconditional and irrevocable and
(y) be performed strictly in accordance with the terms of this Agreement, under
all circumstances whatsoever, including, without limitation, the following
circumstances:
(i) the L/Cs, the Notes, this Agreement or any other Loan Documents or
agreements, instruments or documents relating thereto proving to be forged,
fraudulent, invalid, unenforceable or insufficient in any respect;
(ii) any amendment or waiver of, or any consent to the departure from, all
or any of the Security Documents and any subsequent such agreements;
(iii) the existence of any claim, setoff, defense or other rights which
the Company or any Designated Subsidiary may have at any time against any
beneficiary or any transferee of any beneficiary (or any Persons or entities for
whom any beneficiary or any such transferee may be acting);
(iv) any demand presented under any L/C (or any endorsement thereon)
proving to be forged, fraudulent, invalid, unenforceable or insufficient in any
respect or any statement therein being inaccurate in any respect whatsoever;
(v) the failure of any document to bear reference, or to bear adequate
reference, to the applicable L/C;
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(vi) the use to which the L/Cs may be put or any acts or omissions of the
Company or any Designated Subsidiary or beneficiaries in connection therewith;
or
(vii) any other similar circumstances, provided that such circumstances or
happening shall not have constituted gross negligence or willful misconduct of
Fleet.
(c) Fleet shall not be responsible: (i) for the validity or insufficiency
of any instrument transferring or assigning or purporting to transfer or assign
the L/Cs or the rights or benefits thereunder or proceeds thereof in whole or in
part, which may prove to be invalid or ineffective for any reason; (ii) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable telegraph, telex or otherwise, whether or not they be
in cipher; (iii) for any loss or delay in the transmission or otherwise of any
document or draft required in order to make a draw under the L/Cs or of proceeds
thereof; and (iv) for any consequence arising from causes beyond the control of
Fleet provided that this paragraph (c) shall not apply to the gross negligence
or willful misconduct of Fleet. None of the above shall affect, impair or
prevent the vesting of any of Fleet's rights or powers hereunder.
(d) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by Fleet under or
in connection with the L/Cs or the related drafts or documents, unless
constituting gross negligence or willful misconduct, shall be binding upon the
Company and the Designated Subsidiaries and shall not put Fleet under any
resulting liability to the Company and the Designated Subsidiaries.
(e) The Company and each Designated Subsidiary shall at all times protect,
indemnify and save harmless Fleet and each Bank from and against any and all
claims, actions, suits and other legal proceedings, and from and against any and
all losses, claims, demands, liabilities, damages, costs, charges, counsel fees
and other expenses which Fleet or any Bank may, at any time, sustain or incur by
reason of or in consequence of or arising out of the issuance of the L/Cs; it
being the intention of the parties that this Agreement shall be construed and
applied to protect and indemnify Fleet and each Bank against any and all risk
involved in the issuance of the L/Cs, all of which risks are hereby assumed by
the Company and each Designated Subsidiary, including, without limitation, any
and all risks of the acts or omissions, whether rightful or wrongful, of any
present or future Governmental Authority (all such acts and omissions, herein
called the "Governmental Acts"); provided, however, that the Company and each
Designated Subsidiary shall not be required to indemnify Fleet or any Bank for
(i) any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by the willful misconduct or gross negligence of
Fleet (with respect to which, however, Fleet shall be liable to the other Banks)
or (ii) any breach of
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obligations of Fleet to other Banks. Notwithstanding any other provision
contained in this Agreement, the obligations of the Company and each Designated
Subsidiary under this subsection 2.22 shall survive the termination of this
Agreement.
(f) In the event that the credit rating of Fleet is downgraded to less
than "A-" by Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc. or
any successor to the rating agency business thereof and such down-grading will
cause the Company or any Designated Subsidiary to incur any additional expense
or otherwise be adversely affected, the Company or any Designated Subsidiary may
replace any L/C issued or deemed issued by Fleet with an L/C issued by any Bank
or any other bank, in each case with a credit rating of "A-" or better, provided
that any such letter of credit shall not be entitled to the benefits of this
Agreement, and shall constitute Specified L/C Obligations (to the extent
provided in the definition thereof) with the effect of reducing the Available
L/C Commitment (in accordance with the definition thereof).
2.23 Several Obligations. The failure of any Bank to make any Loan or fund
the L/C participation to be made or funded by it on the date specified therefor
shall not relieve the other Banks of their respective obligations to make their
Loans or fund their L/C participations on such date, but no Bank shall be
responsible for the failure of the other Banks to make the Loans or fund the L/C
participations to be made by such other Banks.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce (a) each Bank to enter into this Agreement and to make the Loans
and (b) Fleet to maintain L/Cs hereunder, the Company and each Designated
Subsidiary, as applicable, hereby represents and warrants to such Bank that,
except as disclosed in the SEC Reports:
3.1 Financial Condition. The consolidated balance sheet of the Company and
its consolidated Subsidiaries as at December 31, 1996 and the related
consolidated statements of income, stockholders' equity and cash flows for the
fiscal year ended on such date, certified by Xxxxx Xxxxxxxx, copies of which
have heretofore been furnished to each Bank, and the unaudited consolidated
balance sheet and related consolidated statements of income, stockholders equity
and cash flow of the Company and its consolidated Subsidiaries for the ending
quarter June 30, 1997 present fairly, in conformity with GAAP, the consolidated
financial condition of the Company and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and cash flows for the
period then ended (subject to normal year-end adjustments as to such June 30,
1997 financial statements). All such financial statements have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by such accountants and as disclosed therein). Neither the
Company nor any of its consolidated Subsidiaries had, at the dates of the
balance sheets referred to above, any Contingent Obligation, contingent
liability or
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liability for taxes, long-term lease or unusual forward or long-term commitment,
required to be reflected under GAAP which is not reflected in the foregoing
statements or in the notes thereto and which was material to the Company and its
consolidated Subsidiaries taken as a whole (including, without limitation, any
Environmental Liability).
3.2 No Change. Since December 31, 1996 there has been no material adverse
change in the business, operations, property, performance or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.
3.3 Corporate Existence; Compliance with the Law. Each of the Company and
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (b) has the corporate
power and authority and the legal right to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where qualification is
required by the nature of its business or the character and location of its
property or business and in which the failure to so qualify could have a
Material Adverse Effect and (d) is in compliance with all Requirements of Law,
including, without limitation, all applicable Environmental Laws and
Regulations, except to the extent that the failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. Each of the
Company and its Subsidiaries has the corporate power and authority to make,
deliver and perform each of this Agreement, the Notes, the other Loan Documents,
the Related Documents and the other documents contemplated hereby to which it is
a party and to consummate (a) the transactions contemplated by the Loan
Documents and Related Documents to which it is a party and (b) in the case of
the Company, the Merger and the other transactions contemplated thereby. Each of
the Company and its Subsidiaries has taken all necessary corporate action to
authorize the execution, delivery and performance of each of this Agreement, the
Notes, the other Loan Documents and the other documents contemplated hereby to
which it is a party. No consent or authorization of, or filing with, any Person
(including, without limitation, any Governmental Authority), is required in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement, the Notes, the other Loan Documents or the other documents
contemplated hereby or with the consummation of the Tender Offer or Merger or
the other transactions contemplated hereby or thereby, other than (i) the
Certificate of Ownership and Merger merging the Purchaser with and into the
Company and (ii) those consents, authorizations and filings which the failure to
obtain, take, give or make could not, either individually or in the aggregate,
be reasonably likely to (A) have a Material Adverse Effect, (B) affect the
enforceability, validity or binding effect of any of the Loan Documents or (C)
expose the Agent or any Bank to personal liability. This Agreement has been duly
executed and delivered on behalf of the
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Company and each Designated Subsidiary, and this Agreement, the Notes, the other
Loan Documents, the Related Documents and the other documents contemplated
hereby constitute, legal, valid and binding obligations of the Company and each
Subsidiary party thereto, enforceable against the Company and each Subsidiary
party thereto in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance of this
Agreement, the Notes, the other Loan Documents, the Related Documents and the
other documents contemplated hereby, the borrowings hereunder and the use of the
proceeds thereof, and the consummation of the Merger and the other transactions
contemplated hereby and thereby, will not violate any Requirement of Law or any
Contractual Obligation of the Company or any of its Subsidiaries, and will not
result in or require the creation or imposition of any Lien on any of its or
their respective properties pursuant to any Requirement of Law or any
Contractual Obligation, except, with respect to the foregoing other than with
respect to the Loan Documents, such violations as could not, either individually
or in the aggregate, be reasonably likely to (i) have a Material Adverse Effect,
(ii) subject any Loan Party or any of its Subsidiaries to any criminal penalties
or (iii) subject the Agent or any Bank to any civil or criminal penalties.
3.6 No Litigation. No action, suit, litigation, investigation or
proceeding, including, without limitation, any Environmental Proceeding, of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Company, threatened, by or against the Company or any of its Subsidiaries
or against any of their respective properties or revenues that could reasonably
be expected to have a Material Adverse Effect.
3.7 Federal Regulations. No part of the proceeds of any Loans hereunder
will be used in violation of the provisions of the Regulations of the Board of
Governors of the Federal Reserve System, including, without limitation,
Regulations G, U and X.
3.8 Investment Company Act. Neither the Company nor any Subsidiary is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
3.9 Disclosure. The financial statements, certificates, opinions, and
other statements furnished in writing to the Agent or the Banks by or on behalf
of the Company or any Subsidiary in connection with this Agreement or the
transactions contemplated hereby do not, taken as a whole, contain any untrue
statement of a fact, or omit to state any fact necessary in order to make the
statements contained therein or herein not misleading, except for matters that
could not reasonably be expected to have a Material Adverse Effect.
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3.10 No Default. Neither the Company nor any of its Subsidiaries is in
default under or with respect to any Contractual Obligation in any respect which
could reasonably be expected to have a Material Adverse Effect. After giving
effect to the amendment and restatement of the Existing Credit Agreement as this
Agreement, no Default or Event of Default has occurred and is continuing.
3.11 Taxes. Except as set forth on Schedule 3.11 hereto, each of the
Company and its Subsidiaries has filed or caused to be filed all material tax
returns which to its knowledge are required to be filed, and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its property and all other material taxes, fees or other charges
which to its knowledge have been imposed on it or any of its property by any
Governmental Authority (other than those the amount or validity of which is
currently being contested in good faith by appropriate proceedings diligently
pursued and with respect to which reserves in conformity with GAAP have been
provided in its books); no material tax liens have been filed and, to the
knowledge of the Company, no claims are being asserted with respect to any such
taxes, fees or other charges, except for claims not material to the Company and
its Subsidiaries taken as a whole.
3.12 Subsidiaries. At the date of this Agreement, the Company has no
Subsidiaries except those listed on Schedule 3.12, and the Company owns directly
or indirectly 100% of the outstanding voting shares of each such Subsidiary
except as disclosed therein.
3.13 Ownership of Property; Liens. Except as permitted in subsection 6.2,
each of the Company and its Subsidiaries has good title in fee simple to, or
valid leasehold interest in, all its real property, and good title to all its
other property, and none of such owned property is subject to any Lien, except
for the security interest granted pursuant to the Security Documents.
3.14 ERISA. Except as described on Schedule 3.14, as it may be updated
from time to time by the Company pursuant to subsection 5.8(c), neither the
Company, nor any Commonly Controlled Entity, is a participating employer in any
Plan in which more than one employer makes contributions as described in
Sections 4063 and 4064 of ERISA, which, together with all other liabilities
described in this subsection, could give rise to a liability which is material.
For purposes of this subsection, a liability is material if it, together with
all other liabilities described in this subsection, could subject the Company or
any of its Subsidiaries to any tax, penalty, or other liabilities that could
reasonably be expected to have a Material Adverse Effect. Except as described on
Schedule 3.14, as it may be updated from time to time, neither the Company or
any Subsidiary nor any Commonly Controlled Entity has any contingent liability
with respect to any post-retirement benefit under any employee welfare benefit
plan (as defined in Section 3(l) of ERISA) other than (a) liability for health
plan continuation coverage as described in Part 6 of Title 1 of ERISA, (b)
liability
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under any severance plan, (c) liability under plans or programs required by law,
and (d) disability benefits under any tax-qualified pension plans in an amount
which together with all other liabilities described in this subsection, could
give rise to a liability which is material. Neither the Company or any
Subsidiary nor any Commonly Controlled Entity has received any notice from the
PBGC that any of the Single Employer Plans is being involuntary terminated and
no event shall have occurred, and there exists no condition or set of
circumstances, which present a material risk of the distress termination (within
the meaning of Section 4041(c) of ERISA) or the involuntary termination of any
of the Single Employer Plans. Neither the Company or any Subsidiary nor any
Commonly Controlled Entity has incurred any liability to the PBGC which remains
outstanding other than the payment of premiums, and there are no premiums which
have become due which are unpaid. Each Single Employer Plan that is intended to
be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and each trust related to such plan
has been determined to be exempt under Section 501(a) of the Code, or the period
for obtaining such a determination letter has not expired; and no event has
occurred and no condition currently exists which might reasonably be expected to
give rise to a liability that is material as a result of the failure of any plan
that is intended to be qualified under Section 401(a) of the Code to be so
qualified. No Plan is being audited or investigated by any government agency or
subject to any pending or threatened claim or suit, which audit, investigation,
pending claim or suit could reasonably be expected to give rise to a liability,
which together with all other liabilities described in this subsection would be
material. Each Single Employer Plan currently meets and during the preceding six
years has met the minimum funding standard of Section 302 of ERISA and Section
412 of the Code (without regard to any funding waiver). With respect to each
Multiemployer Plan, the Company, each Subsidiary and each Commonly Controlled
Entity have paid or accrued to the extent required by GAAP all contributions
pursuant to the terms of each applicable collective bargaining agreement. No
Reportable Event has occurred during the six-year period prior to the date on
which this representation is made or deemed made with respect to any Single
Employer Plan which Reportable Event, together with all other liabilities
described in this subsection, could give rise to a liability which is material,
and each Single Employer Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. The present value of all benefit
liabilities (within the meaning of Title IV of ERISA) under each Single Employer
Plan maintained by the Company, any Subsidiary or any Commonly Controlled Entity
(based on those assumptions used to fund the respective Single Employer Plans)
did not, as of the last annual valuation date, exceed the value of the assets of
such Single Employer Plan allocable to such benefit liabilities by more than
$2,500,000. Except as described on Schedule 3.14, neither the Company or any
Subsidiary nor any Commonly Controlled Entity has any unsatisfied liability with
respect to a complete or partial withdrawal from any Multiemployer Plan, which
together with all other liabilities described in this subsection would be
material, and, to the best of the Company's knowledge, the liability to which
the Company, any Subsidiary or any Commonly Controlled Entity would become
subject under ERISA if the Company, any Subsidiary or any such Commonly
Controlled
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Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date hereof would not, together with
all other liabilities described in this subsection, be material. Neither the
Company or any Subsidiary nor any Commonly Controlled Entity has failed to make
any payment when due with respect to any complete or partial withdrawal from any
Multiemployer Plan. No such Multiemployer Plan is in Reorganization or
Insolvent, where the liability which could reasonably be expected to result is
in an amount which, taken together with all the liabilities described in this
subsection, is material. Neither the Company or any Subsidiary nor any Commonly
Controlled Entity is required to provide security to a Single Employer Plan
pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code. Neither the
Company or any Subsidiary nor any Commonly Controlled Entity has engaged in a
transaction which could reasonably be expected to subject it to liability under
Section 4069 or 4212(c) of ERISA which liability together with all other
liabilities described in this subsection is material. Except as disclosed in
Schedule 3.14, as it may be updated from time to time there are no agreements
which will provide payments to any officer, employee, shareholder or highly
compensated individual which will be parachute payments under Section 280G of
the Code that are nondeductible to the Company or any Subsidiary and which will
be subject to the tax under Section 4999 of the Code for which the Company or
any Subsidiary would have a material withholding liability.
3.15 Nortek Indentures. There have been delivered to the Agent and each
Bank a true and correct copy of each of the Nortek Indentures, including all
amendments, waivers and supplements thereto. To the knowledge of the Company,
the Nortek Indentures and all such other documents have been duly executed and
delivered by the parties thereto and are in full force and effect at the date
hereof.
3.16 SEC Reports. The Company has furnished the Agent with true copies of
the SEC Reports.
3.17 Intangible Assets. Each of the Company and the Subsidiaries possesses
all patents, trademarks, service marks, trade names, and copyrights and rights
with respect to the foregoing (collectively, "Patent Rights"), necessary to
conduct its business as now conducted and as proposed to be conducted, except
for technology not material to the operations of the Company and its
Subsidiaries taken as a whole. To the best knowledge of the Company, the Patent
Rights do not conflict with the patents, trademarks, service marks, trade names,
copyrights and other rights with respect to the foregoing of any other Person,
except for conflicts which are not material to the operations of the Company and
its Subsidiaries taken as a whole.
3.18 Name Changes, Mergers, Acquisitions. Except for the Merger and except
as set forth on Schedule 3.18, neither the Company nor any of the Material
Operating Subsidiaries has within the six-year period immediately preceding the
date of this Agreement
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changed its name, been the surviving entity of a merger or consolidation, or
acquired all or substantially all of the assets of any Person.
3.19 Licenses and Approvals. The Company and each of the Subsidiaries has
all necessary licenses, permits and governmental authorizations, including,
without limitation, licenses, permits and authorizations required to comply with
all Environmental Laws and Regulations, to own and operate its properties and to
carry on its business as now conducted, except for licenses, permits and
authorizations, which the failure to have does not materially adversely affect
the operations of the Company and its Subsidiaries taken as a whole.
3.20 Labor Disputes; Collective Bargaining Agreements; Employee
Grievances. Except as set forth on Schedule 3.20, there is no pending strike,
work stoppage, material unfair labor practice claim or charge, arbitration or
other material labor dispute against or affecting the Company or any Subsidiary
or their representative employees.
3.21 Solvency. To the best of the knowledge of the Company, each Loan
Party is Solvent, individually and together with its Subsidiaries and, after
giving effect to the receipt and application of the Loans and the issuance or
deemed issuance of L/Cs in accordance with the terms of this Agreement, each
Loan Party, individually and together with its Subsidiaries, shall continue to
be Solvent.
3.22 Outstanding Indebtedness for Borrowed Money. Schedule 3.22 sets forth
a complete and accurate list of all Indebtedness of the Company and its
Subsidiaries for borrowed money, and all available committed credit lines,
outstanding on the date hereof.
3.23 Hazardous Materials. Except as described in the Phase I Environmental
Assessments & Transaction Screens of Ply Gem Industries, Inc. and its
Subsidiaries across the United States draft dated June 20, 1997 prepared by
Dames & Xxxxx, Hazardous Materials have not been released, discharged or
disposed of at, or transported to or from, any of the real property currently
owned, leased or occupied by the Company or its Subsidiaries so as to give rise
to any liability under Environmental Laws and Regulations, except in such case
where the liability would not have a Material Adverse Effect.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans and L/Cs. The agreement of each Bank to
make its initial Loan hereunder and of Fleet to maintain L/Cs on the Closing
Date shall be subject to the satisfaction, immediately prior to or concurrently
with the making of such Loan or the issuance or deemed issuance of any such L/C,
of each of the following conditions precedent:
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(a) Tender Offer and Merger. The Tender Offer shall have been consummated
in accordance with the Merger Agreement without any waiver or amendment of any
term or condition therein not consented to by the Banks and in compliance with
all applicable laws and necessary approvals. The Banks shall be satisfied that
the restrictions in Section 203 of the Delaware General Corporation Law, any
other applicable state takeover law and any supermajority charter provisions are
not applicable to the Merger or that any conditions for avoiding the
restrictions set forth therein have been satisfied.
(b) Corporate Structure. The Agent and the Banks shall be satisfied with
the corporate and legal structure and capitalization of the Company and each of
the other Loan Parties, including, without limitation, the terms and conditions
of the charter, bylaws and each class of capital stock of the Company and each
other Loan Party and each agreement or instrument relating to such structure or
capitalization.
(c) No Material Adverse Change. Since December 31, 1996, there shall have
occurred no material adverse change in the business, condition (financial or
otherwise), operations, performance or properties of the Company and its
Subsidiaries, taken as a whole.
(d) Pre-Commitment Information. All of the Pre-Commitment Information
shall be true and correct in all material aspects; and no additional information
shall have come to the attention of the Agent or any of the Banks that is
inconsistent in any material respect with the Pre-Commitment Information or that
could reasonably be expected to have a Material Adverse Effect.
(e) Capital Structure. The Banks shall be satisfied with the terms and
conditions of (i) the $310,000,000 of senior notes issued by Nortek pursuant to
that certain Nortek Indenture described in clause (c) of the definition thereof
and (ii) the at least $400,000,000 of equity to be contributed by Nortek to the
Company in connection with the Merger, including, without limitation, the
payment terms, covenants and events of default thereof. The Company shall have
received at least $400,000,000 in gross cash proceeds from the sale of its
common stock to Nortek and all such proceeds shall have been used or shall be
used simultaneously with the occurrence of the Closing Date under this Agreement
in accordance with the terms of the Merger Agreement.
(f) Compliance; No Litigation. The Agent and the Banks shall be satisfied
that the Company and its Subsidiaries are, and will be after giving effect to
the occurrence of the Closing Date, in compliance with all applicable laws,
including, without limitation, ERISA and all Environmental Laws and Regulations,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. There shall exist no action, suit, investigation,
litigation or proceeding affecting the Company or any of its Subsidiaries
pending or threatened before any court, governmental agency or arbitrator that
(i) could be reasonably expected to have a Material Adverse Effect or (ii)
purports to affect
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the legality, validity or enforceability of the Tender Offer, the Merger, this
Agreement, any Note, any other Loan Document, any Related Document or the
consummation of the transactions contemplated hereby or thereby.
(g) Insurance. The Agent and the Banks shall be satisfied with the amount,
types and terms and conditions of all insurance maintained by the Company and
its Subsidiaries.
(h) Fees and Expenses. All accrued fees and expenses of the Agent and the
Banks (including the fees and expenses of counsel for the Agent and the Banks)
for which statements have been rendered on or prior to the Closing Date shall
have been paid.
(i) Consents and Approvals. All governmental and third party consents and
approvals necessary in connection with this Agreement, the other Loan Documents,
the Related Documents and the Nortek Indentures and the Tender Offer, the Merger
and the other transactions contemplated hereby and thereby shall have been
obtained (without the imposition of any conditions that are not acceptable to
the Banks) and shall remain in full force and effect; all applicable waiting
periods in connection with the Tender Offer, the Merger, and the other
transactions contemplated hereby shall have expired without any action having
been taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the Tender Offer, the Merger or the rights of
the Company or its Subsidiaries freely to transfer or otherwise dispose of, or
to create any Lien on, any properties now owned or hereafter acquired by any of
them.
(j) Agreement. The Agent and each Bank shall have received this Agreement,
duly executed and delivered by the Company and each Designated Subsidiary.
(k) Notes. The Agent shall have received, for the account of each Bank, a
Note conforming to the requirements hereof and executed and delivered by a duly
authorized officer of the Company and each Designated Subsidiary.
(l) Guaranty. The Agent and each Bank shall have received a Guaranty,
executed and delivered by a duly authorized officer of the Company and each
other Guarantor.
(m) Collateral. The Agent and each Bank shall have received the Security
Agreement, duly executed and delivered by the Collateral Grantors shall have
received each of the following:
(i) certificates representing the Pledged Shares (as defined in the
Security Agreement) accompanied by undated stock powers executed in blank
and instruments evidencing the Pledged Debt referred to therein indorsed
in blank;
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(ii) duly executed copies of proper financing statements, to be
filed under the Uniform Commercial Code of all jurisdictions that the
Agent may deem necessary or desirable in order to perfect and protect the
first priority liens and security interests created under the Security
Agreement, covering the Collateral (as defined in the Security Agreement);
(iii) completed requests for information to the extent the same
shall be available, dated on or before the Closing Date, listing all
effective financing statements filed in the jurisdictions referred to in
clause (B) above that name the Company or any other Collateral Grantor as
debtor, together with copies of such financing statements;
(iv) evidence of the completion of all other recordings and filings
of or with respect to the Security Agreement that the Agent may deem
necessary or desirable in order to perfect and protect the Liens created
thereby;
(v) evidence of the insurance required by the terms of the Security
Agreement; and
(vi) evidence that all other action (other than those actions
required to be taken under subsection 5.16) that the Agent may deem
necessary or desirable in order to perfect and protect the first priority
liens and security interests created under the Security Agreement has been
taken (including, without limitation, evidence satisfactory to the Agent
that all Liens on the Collateral in favor of any Person (other than the
Agent for the benefit of the Secured Parties) shall have been terminated).
(n) Borrowing Certificates. The Agent and each Bank shall have received
(i) a certificate of the Company in substantially the form of Exhibit D-1 dated
the Closing Date and executed and delivered by a duly authorized officer of the
Company and (ii) a certificate of each other Loan Party in substantially the
form of Exhibit D-2 dated the Closing Date and executed and delivered by a duly
authorized officer of each other Loan Party.
(o) Notice of Borrowing. The Agent shall have received a notice of
requested borrowing in accordance with subsection 2.3(a).
(p) Legal Opinions. (i) The Agent and each Bank shall have received the
executed legal opinion of (A) Xxxxxxx X. Xxxxxx, Esq., counsel to the Company
and each Subsidiary, dated the Closing Date, in substantially the form of
Exhibit F-1, and (B) Ropes & Xxxx, counsel to Nortek, dated the Closing Date, in
substantially the form of Exhibit F-2, in each case together with copies of the
legal opinions, if any, upon which such counsel relies, with such changes
thereto as may be approved by, and otherwise in form and
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substance satisfactory to the Agent and its counsel and covering such matters
incident to the transactions contemplated by this Agreement, the Notes, the
other Loan Documents, the Related Documents and the Nortek Indentures and by the
Tender Offer and Merger as the Agent may reasonably require.
(ii) The Agent and each Bank shall have received the executed legal
opinion of Shearman & Sterling, counsel to the Agent, dated the Closing Date, in
form and substance satisfactory to the Agent.
(q) Related Agreements. The Agent and each Bank shall have received true
and correct copies, certified as to authenticity by the Company and each
Subsidiary, of the Certificate of Incorporation and By-laws of the Company and
each such Subsidiary and such other documents or instruments to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
as may be reasonably requested by the Agent.
(r) Corporate Proceedings. The Agent and each Bank shall have received a
copy of the resolutions, in form and substance reasonably satisfactory to the
Agent, of the Board of Directors of the Company, each other Loan Party and each
Subsidiary authorizing the execution, delivery and performance of this
Agreement, the Notes, the other Loan Documents, the Related Documents and all
documents and instruments to be delivered in connection herewith, in each case
to which it is a party, and the consummation of the Merger and the other
transactions contemplated hereby and thereby, certified by the Secretary or an
Assistant Secretary of the Company or such other Loan Party (as applicable), as
of the Closing Date; and each such certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate.
(s) Related Documents and Nortek Indentures. The Agent shall have
received, with a copy for each Bank, a certified copy of each Related Document
and each Nortek Indenture, together with all amendments, waivers or supplements
thereto.
(t) Consents. The Agent, with a copy for each Bank, shall have received
true copies (in each case certified as to authenticity on such date by a duly
authorized officer of the Company or by such other Person as may be appropriate
or may be required by the Agent) of all documents and instruments, including all
consents, authorizations, filings and orders, required under any Requirement of
Law or by Contractual Obligations of the Company or any Subsidiary, in
connection with the execution, delivery, performance, validity and
enforceability of this Agreement, the Notes, the other Loan Documents and the
Related Documents and such consents, authorizations, filings and orders shall be
satisfactory in form and substance to the Agent and shall be in full force and
effect.
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(u) Other Fees. The Agent shall have received for itself or for the
account of each Bank, as appropriate, the fees payable on the Closing Date
pursuant to subsection 2.7.
(v) Good Standings. The Agent and each Bank shall have received good
standing certificates as of dates not more than forty-five (45) days prior to
the Closing Date, with respect to each of the Company and each other Loan Party
from the Secretaries of State of their respective states of incorporation and
each state in which each of them is qualified to do business.
(w) Incumbency Certificates. The Agent and each Bank shall have received
an incumbency certificate (with specimen signatures) with respect to the Company
and each other Loan Party.
(x) Solvency Certificate. The Agent and each Bank shall have received from
the Company and each other Loan Party a Solvency Certificate, in form and
substance satisfactory to the Banks, attesting to the Solvency of the Company or
such other Loan Party, as the case may be, in each case individually and
together with its Subsidiaries, taken as a whole, immediately before and
immediately after giving effect to the Tender Offer and the Loan Documents, from
the treasurer of the Company or an authorized officer of each other Loan Party,
as the case may be.
(y) Ownership, Liens. A majority of the capital stock of the Company and
the Company's Subsidiaries shall be directly or indirectly owned by Nortek, the
Company or one or more of the Company's Subsidiaries, in each case free and
clear of any lien, charge or encumbrance, other than the liens and security
interests created under the Loan Documents.
(z) Projections. The Agent and the Banks shall have received a copy of the
Company's five year projections (including, without limitation, a balance sheet,
an income statement and a statement of cash flows, as well as management
assumptions with respect thereto) on a consolidated basis with respect to the
Company and its Subsidiaries, all in form and substance reasonably satisfactory
to the Agent.
(aa) Other Documentation. Such other documentation as the Agent or the
Banks shall reasonably request, including, without limitation, the Assignment
and Agreement, duly executed by each party thereto.
4.2 Conditions to All Loans. The agreement of each Bank to make any Loan
(including the initial Loans) and of Fleet to issue or maintain any L/Cs
requested to be made or issued or deemed issued hereunder is subject to the
satisfaction, immediately prior
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to or concurrently with the making of such Loan or issuance of such L/C, of the
following additional conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Company and each other Loan Party in or pursuant to
this Agreement (other than subsections 3.21 and 3.22) and the other Loan
Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date (except any such
representations and warranties that, by their terms, refer to a specific
date other than the date of the relevant Loan, in which case as of such
specific date).
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date or after giving effect
to the Loans or L/Cs requested to be made or issued or deemed issued on
such date.
(c) No Violations of Law. Such Loan or L/C and the use of proceeds
thereof or any drawing thereon shall not contravene, violate or conflict
with, nor involve any Bank in a violation of, any law, rule, injunction,
or regulation, or determination of any court of law or other Governmental
Authority (including, without limitation, Regulation U).
(d) Other. All corporate or other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement, the Notes and the other Loan Documents
shall be reasonably satisfactory in form and substance to the Agent and
its counsel. Each borrowing by the Company and each Designated Subsidiary
hereunder or issuance or deemed issuance of an L/C hereunder shall
constitute a representation and warranty by the Company and each borrowing
Designated Subsidiary as of the date of such borrowing or issuance or
deemed issuance that the conditions to such or issuance or deemed issuance
contained in subsections 4.2(a), (b) and (c) have been satisfied.
4.3 Conditions to Loans to New Designated Subsidiaries. The
agreement of each Bank to make any Loan to any new Designated Subsidiary shall
be subject to the receipt by each Bank, as appropriate, of (a) a Note issued by
such Designated Subsidiary, (b) corporate documents of such new Designated
Subsidiary, (c) a copy of an opinion of counsel to the Company in substantially
the form provided with respect to Designated Subsidiaries on the Closing Date
(including, without limitation, an opinion to the effect that the execution,
delivery and performance of the Loan Documents by such Designated Subsidiary,
including without limitation any borrowing made by it thereunder, do not violate
the requirements of the Nortek Indentures or any indentures or other agreements
binding upon such Designated Subsidiary) and (d) any other documents reasonably
requested by the Agent or any of the Banks in connection therewith.
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SECTION 5. AFFIRMATIVE COVENANTS
The Company and each Designated Subsidiary hereby covenant and agree with the
Agent and the Banks that, from and after the date of this Agreement until the
Obligations are paid in full and the Commitments are terminated and all L/Cs
have expired or been duly terminated, the Company shall, and, in the case of the
agreements set forth in subsections 5.3, 5.5, 5.6, 5.7, 5.11, 5.13, and 5.16,
such Designated Subsidiary shall (and each of the Company and such Designated
Subsidiary shall cause each of its respective Subsidiaries to):
5.1 Financial Statements. Furnish to the Agent and each Bank:
(a) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Company, copies of (i) the consolidated balance sheets
of the Company and its consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income, stockholders' equity and
cash flows for such fiscal year, in each case setting forth in comparative form
the figures for the previous year, certified, without qualification, by Xxxxxx
Xxxxxxxx, L.L.P. or another independent certified public accountant of
recognized standing reasonably acceptable to the Banks, and (ii) the
consolidating balance sheet of the Company and its consolidated Subsidiaries as
at the end of such fiscal year and the related consolidating statement of income
for such fiscal year, in each case showing intercompany eliminations, certified
by the chief financial officer of the Company as being, to the best of such
officer's knowledge, fairly stated in all material respects when considered in
relation to the consolidated financial statements of the Company and its
consolidated Subsidiaries; and
(b) as soon as available, but in any event within 45 days after the end of
each of the first three fiscal quarters of the Company, copies of (i) the
unaudited consolidated balance sheets of the Company and its consolidated
Subsidiaries as at the end of such fiscal quarter and the related unaudited
consolidated statements of income and cash flows for such fiscal quarter and for
the portion of the fiscal year through such fiscal quarter, certified by the
chief financial officer of the Company as presenting fairly, to the best of such
officer's knowledge, the financial condition and results of operations of the
Company and its consolidated Subsidiaries (subject to normal year-end audit
adjustments) and (ii) the unaudited consolidating balance sheet of the Company
and its consolidated Subsidiaries as at the end of such fiscal quarter and the
related unaudited consolidating statement of income for the portion of the
fiscal year through such fiscal quarter, in each case showing intercompany
eliminations, certified by the chief financial officer of the Company as being,
to the best of such officer's knowledge, fairly stated in all material respects
when considered in relation to the consolidated financial statements of the
Company and its consolidated Subsidiaries; all such financial statements to be
prepared in reasonable
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detail and (in the case of such consolidated financial statements) in accordance
with GAAP applied consistently throughout the periods reflected therein (except
as approved by the Company's accountants or such financial officer, as the case
may be, and disclosed therein and subject to year-end adjustments).
5.2 Certificates; Other Information. Furnish to the Agent and each Bank:
(a) concurrently with the delivery of each set of the financial
statements referred to in clause (i) of paragraph (a) of subsection 5.1, a
certificate of the independent certified public accountants reporting on
such financial statements stating that in making the examination necessary
therefor no knowledge was obtained of any Default or Event of Default,
except as specified in such certificate;
(b) concurrently with the delivery of each set of the financial
statements referred to in paragraphs (a) and (b) of subsection 5.1, a
certificate of the chief financial officer of the Company (i) stating
that, to the best of such officer's knowledge, during such fiscal quarter
the Company has observed or performed in all material respects all of its
covenants and other agreements, and satisfied every condition contained in
this Agreement to be observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate, and (ii) showing in reasonable
detail the calculations supporting such statement in respect of
subsections 6.9, 6.10, 6.11, 6.12 and 6.18;
(c) within five days after the same are filed, copies of all
financial statements and reports which the Company may make to, or file
with, the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) not later than 90 days after the end of each fiscal year of the
Company, a copy of the projections by the Company of the operating budget
and cash flow of the Company and its Subsidiaries for the next succeeding
fiscal year, such projections to be accompanied by a certificate of a
Responsible Officer to the effect that such projections have been prepared
on a basis consistent with the Company's past practice (or otherwise
stating the basis on which such projections have been prepared); and
(e) promptly, such additional financial and other information as the
Agent or any Bank may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all (a)
lawful taxes, assessments and governmental charges or levies upon it or its
property or assets, and
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(b) claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons which, in any such case, if unpaid would by law
give rise to a Lien upon any of its property or assets, except when the amount
or validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Company or its Subsidiaries, as the case may be.
5.4 Material Operating Subsidiaries. Give notice to the Agent (which upon
receipt shall give a copy thereof to the Banks) of the occurrence of any
Subsidiary becoming a Material Operating Subsidiary concurrently with such
occurrence.
5.5 Conduct of Business and Maintenance of Existence. Except as permitted
by subsection 6.4, continue to engage in the Business of the Company, and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business; and comply with
all Contractual Obligations and Requirements of Law including, without
limitation, ERISA and all Environmental Laws and Regulations except to the
extent that the failure to comply therewith would not, in the aggregate, have a
Material Adverse Effect.
5.6 Maintenance of Property; Insurance. Keep all property useful and
reasonably necessary in its business in good working order and condition except
to the extent that breach of this clause would not materially adversely affect
the operations of the Company and its Subsidiaries taken as a whole; maintain
with reputable insurance companies believed by the Company to be financially
sound insurance on all its property in at least such amounts and with only such
deductibles and self insurance as are usually maintained by, and against at
least such risks (but including in any event product liability) as are usually
insured against in the same general area by, companies engaged in the same or a
similar business; and, furnish to the Agent and each Bank, upon written request,
full information as to the insurance carried.
5.7 Inspection of Property; Books and Records; Discussions. Keep proper
books of record and account in which full, true and correct entries in
conformity with GAAP and all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of the Agent or any Bank as the representative of the Agent to
visit and inspect any of its properties and examine and make abstracts from such
of its books and records as the Agent or such Bank may reasonably request at any
reasonable time and as often as may reasonably be desired, and to discuss the
aspects of the business, operations, properties and financial and other
condition of the Company and its Subsidiaries as the Agent or such Bank may
reasonably request with officers and employees of the Company and its
Subsidiaries and with its independent certified
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public accountants, provided that mutually satisfactory advance arrangements for
any such visit or inspection shall be made with appropriate representatives of
the Company.
5.8 Notices. Give notice to the Agent (which upon receipt shall give a
copy thereof to each of the Banks) promptly after a Responsible Officer has
actual knowledge thereof, but in any event within five (or 30, in the case of
any event described in clause (c)(i) below) Business Days after such officer
shall have obtained such actual knowledge:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, which,
in either case, if not cured or if adversely determined, would have a
Material Adverse Effect;
(c) of the following events: (i) the occurrence of any Reportable
Event with respect to any Single Employer Plan, which Reportable Event,
together with all other Reportable Events, if any, could subject the
Company or any of its Subsidiaries to any tax, penalty or other
liabilities that in the aggregate could reasonably be expected to have a
Material Adverse Effect, or any withdrawal from, or the receipt by the
Company, any Subsidiary or any Commonly Controlled Entity of any notice
regarding the termination, Reorganization or Insolvency of, any
Multiemployer Plan; (ii) the receipt or filing by the Company, any
Subsidiary or any Commonly Controlled Entity of any notice regarding the
institution of proceedings or the taking of any other action by PBGC, the
Company, any Subsidiary or any Commonly Controlled Entity or Multiemployer
Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan subject to Title IV of ERISA; or
(iii) that a prohibited transaction has occurred (as defined in Section
406 of ERISA or Section 4975 of the Code), which could subject the Company
or any Subsidiary to tax or penalty which could reasonably be expected to
have a Material Adverse Effect; and the Company shall update the schedules
referred to in subsection 3.14 as of the date any representations set
forth therein is deemed to be made;
(d) of any litigation or proceeding affecting the Company or any of
its Subsidiaries in which the amount involved is $10,000,000 or more and
not covered by insurance or in which material injunctive or similar relief
is sought;
(e) of a material adverse change in the business, operations,
property, performance or condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole from that reflected in the financial
statements most recently delivered to the Banks pursuant to subsection
5.1; and
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(f) (i) any notice of any violation or administrative or judicial
complaint or order having been filed against the Company or such other
Subsidiary alleging violations of any Environmental Laws and Regulations,
or (ii) any notice from any governmental body alleging that the Company or
such other Subsidiary is or may be subject to any Environmental Liability;
and promptly upon receipt thereof, provide the Agent with a copy of such
notice.
Upon the request of the Agent or any Bank, the Company will reasonably
consult with the Agent as to the subject matter of notices pursuant to this
subsection 5.8.
5.9 Copies of Corporate Documents. Promptly deliver to the Agent copies of
any amendments or modifications to the certificate of incorporation or by-laws
of the Company or any Subsidiary, certified with respect to the certificate of
incorporation by the Secretary of State of the state of incorporation of such
Person and, with respect to the by-laws, by the secretary or assistant secretary
of such Person.
5.10 Conditions Subsequent. Deliver to the Agent, in form and substance
satisfactory to the Agent and in sufficient copies for the Agent and each Bank,
as soon as possible and in any event within 45 days after the Closing Date (or
such later date as may be agreed by the Company and the Agent):
(a) acknowledgment copies of proper financing statements, duly filed
under the Uniform Commercial Code of all jurisdictions that the Agent may
deem necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the Security
Agreement, covering the Collateral;
(b) completed requests for information, listing the financing
statements referred to in clause (a) above and all other effective
financing statements filed in the jurisdictions referred to in clause (a)
above that name the Company or any of the other Collateral Grantors as
debtor, together with copies of such financing statements; and
(c) evidence that all other action as the Agent may deem necessary
or desirable in order to perfect and protect the first priority liens and
security interests created under the Security Documents has been taken.
5.11 Hazardous Material. Operate all property owned, operated or leased by
it in such a manner that (a) no Hazardous Material shall be placed, held,
located or disposed of, on, under or at the real property owned, operated or
leased by the Company or any Subsidiary or any part thereof, except for such
Hazardous Materials which are necessary for the Company's operation of its
business thereon and which shall be used, stored, treated and disposed of in
compliance with all applicable Environmental Laws and Regulations or
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(b) such real property owned, operated or leased by the Company or any
Subsidiary or any part thereof shall not be used as a collection, storage,
treatment or disposal site for any Hazardous Material, except, (i) in the
case of clause (b) above, in compliance with all Environmental Laws or
Regulations and (ii) in each case to the extent failure to comply with this
subsection 5.11, in the aggregate, would not have a material adverse effect
on the business, operations, property or financial condition of the Company
and its Subsidiaries taken as a whole.
5.12 Further Assurances. (a) Promptly upon request by the Agent, or any
Bank through the Agent, correct, and cause each of its Subsidiaries promptly to
correct, any material defect or error that may be discovered in any Loan
Document or in the execution, acknowledgment, filing or recordation thereof.
(b) Promptly upon request by the Agent, or any Bank through the Agent,
do, execute, acknowledge, deliver, record, rerecord, file, refile, register
and re-register, and cause each of its Subsidiaries promptly to do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, pledge agreements, assignments,
financing statements and continuations thereof, termination statements,
notices of assignment, transfers, certificates, assurances and other
instruments as the Agent, or any Bank through the Agent, may reasonably
require from time to time in order to (i) carry out more effectively the
purposes of this Agreement, the Notes or any other Loan Document, (ii) to
the fullest extent permitted by applicable law, subject any of the Company's
or any of its Subsidiaries' properties, assets, rights or interests to the
Liens now or hereafter intended to be covered by any of the Security
Documents, (iii) perfect and maintain the validity, effectiveness and
priority of any of the Security Documents and any of the Liens intended to
be created thereunder and (iv) assure, convey, grant, assign, transfer,
preserve, protect and confirm more effectively unto the Agent and the Banks
the rights granted or now or hereafter intended to be granted to the Agent
and the Banks under any Loan Document or under any other instrument executed
in connection with any Loan Document to which the Company or any of its
Subsidiaries is or is to be a party; provided, however, that in any event
this subsection 5.12 shall not require Liens on, and the execution and
delivery of Security Documents covering, any property to the extent not
otherwise required by the terms of the Loan Documents.
5.13 Compliance with Terms of Leaseholds. Make all payments and otherwise
perform all obligations in respect of all leases of real property to which the
Company or any of its Subsidiaries is a party, keep such leases in full force
and effect and not allow such leases to lapse or be terminated or any rights to
renew such leases to be forfeited or cancelled, notify the Agent of any default
by any party with respect to such leases and cooperate with the Agent in all
respects to cure any such default, except, in any case, where the failure to do
so, either individually or in the aggregate, would not be reasonably likely to
have a Material Adverse Effect.
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5.14 Performance of Related Documents. Perform and observe all of the
terms and provisions of each Related Document to be performed or observed by it,
maintain each such Related Document in full force and effect, enforce such
Related Document in accordance with its terms, take all such action to such end
as may be from time to time reasonably requested by the Agent and, upon request
of the Agent, make to each other party to each such Related Document such
demands and requests for information and reports or for action as the Company or
other Loan Party (as applicable) is entitled to make under such Related
Document, except, in any case, where the failure to do so, either individually
or in the aggregate, could not be reasonably expected to have a Material Adverse
Effect.
5.15 Hedge Agreements. Maintain at all times Hedge Agreements with Persons
acceptable to the Agent, covering a notional amount of not less than 40% of the
Commitments and providing for such Persons to make payments thereunder for a
period of no less than two years to the extent of increases in interest rates
greater than 3% above the weighted average Eurodollar Rate on the date hereof.
5.16 Conditions Subsequent to Closing Date. Use its best efforts to
deliver to the Agent, in form and substance satisfactory to the Agent and in
sufficient copies for each Bank, as soon as possible and in any event within 45
days after the Closing Date (or such later date as may be agreed by the Company
and the Agent):
(a) acknowledgment copies of proper financing statements (including,
without limitation, all UCC-1 financing statements and all UCC-3
termination statements), duly filed under the Uniform Commercial Code of
all jurisdictions that the Agent may deem necessary or desirable in order
to perfect and protect the first priority liens and security interests
created under the Security Agreement, covering the Collateral described in
the Security Agreement,
(b) completed requests for information, listing the financing statements
referred to in clause (a) above and all other effective financing
statements filed in the jurisdictions referred to in clause (a) above that
name any Loan Party as debtor, together with copies of such financing
statements,
(c) evidence that all other action as the Agent may deem necessary or
desirable in order to perfect and protect the first priority liens and
security interests created under the Security Agreement has been taken
(including, without limitation, obtaining landlord's letters, bailee's
letters or warehouseman's letters, each in form and substance reasonably
satisfactory to the Agent), and
(d) certificates representing the reissued Pledged Shares (as defined in
the Security Agreement) of Allied Plywood Corporation, Xxxxxxxxxx Group,
Inc.,
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Richwood Building Products, Inc. and Great Lakes Windows, Inc.,
respectively, together with undated stock powers executed in blank.
SECTION 6. NEGATIVE COVENANTS
Each of the Company and each Designated Subsidiary hereby covenants and
agrees with the Agent and the Banks that, from and after the date of this
Agreement until the Obligations are paid in full and the Commitments are
terminated and all L/Cs have expired or been duly terminated, neither the
Company nor any Designated Subsidiary shall, or shall permit any of its
Subsidiaries to, directly or indirectly:
6.1 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) the Loans and the L/Cs;
(b) Indebtedness of the Company to any Subsidiary, and of any Subsidiary
to the Company, any other Subsidiary, so long as such Indebtedness remains
subordinated to the Obligations under the Loan Documents on terms and
conditions satisfactory to the Banks;
(c) Indebtedness of the Company and any of its Subsidiaries under
Financing Leases, or Indebtedness incurred upon refinancing or replacement
of such Financing Leases, or Indebtedness incurred in connection with (and
not later than 180 days following, in the case of the acquisition of land or
improvements; or 45 days following, in the case of the acquisition of other
property) the acquisition of property, or Indebtedness incurred to renew,
extend, refund, refinance or replace the foregoing, in an aggregate
principal amount not exceeding as to the Company and its Subsidiaries
$35,000,000 at any one time outstanding; (d) certain Indebtedness
outstanding on the date hereof and listed on Schedule 3.22, and extensions,
renewals, refundings, refinancings and replacements thereof, provided that
Indebtedness under the Existing Credit Agreement may not be outstanding
after August 26, 1997; and Indebtedness incurred to finance property
currently subject to existing operating leases existing on the date hereof,
to the extent that (i) the corresponding operating lease is terminated, and
(ii) the aggregate debt service under such Indebtedness does not exceed the
aggregate rental payments saved as a consequence of the termination of such
lease;
(e) Indebtedness of a corporation which becomes a Subsidiary after the
date hereof, provided that such Indebtedness existed at the time such
corporation became a Subsidiary and was not created in anticipation thereof;
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(f) unsecured subordinated Indebtedness of the Company, provided that
such Indebtedness is on such terms and pursuant to such documentation as the
Required Banks shall approve, which approval shall not be unreasonably
withheld;
(g) Indebtedness of the Company and its Subsidiaries evidenced by
promissory notes or other contractual obligations of the Company given to
the sellers as part of the consideration for acquisitions permitted by
subsection 6.7; and
(h) other Indebtedness of the Company and its Subsidiaries not to exceed
$10,000,000 in the aggregate at any one time outstanding; provided, however,
that the aggregate Indebtedness of the Company under this clause (i), when
added to the Indebtedness under clauses (e) and (g) of this subsection 6.1,
shall not exceed, in the years indicated, the amounts set forth below:
Year Amount
1997 $20,000,000
1998 $25,000,000
1999 $30,000,000
2000 $35,000,000
2001 (and each year $40,000,000
thereafter)
provided, however, in each case that such Indebtedness shall not be owed to
Nortek or any of its Subsidiaries (other than Subsidiaries consisting of the
Company or any of its Subsidiaries, to the extent permitted above).
6.2 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, other than:
(a) Liens for taxes, assessments, fees or other governmental charges not
yet due or which are being contested in good faith by appropriate
proceedings or other appropriate actions, provided that adequate reserves
with respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) statutory liens of landlords, carriers', warehouseman's, mechanics',
materialmen's, repairmen's, or other like Liens arising in the ordinary
course of business and not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings or other
appropriate actions;
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(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of tenders, bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business or deposits incurred in
connection with other obligations to the extent such other obligations are
covered by insurance;
(e) easements, (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, minor defects or irregularities in title,
variations and other restrictions, charges or encumbrances (whether or not
recorded) affecting real or personal property, which individually or in the
aggregate do not or are not reasonably likely to have a material adverse
effect on the conduct by the Company and its Subsidiaries of their
businesses taken as a whole;
(f) Liens in existence on the date hereof listed on Schedule 6.2 securing
Indebtedness permitted by subsection 6.1, provided that no such Lien is
spread to cover any additional property (other than the proceeds thereof)
after the date hereof and that the principal amount of Indebtedness secured
thereby is not increased;
(g) Liens securing Indebtedness of the Company and its Subsidiaries
permitted by subsection 6.1(c) in respect of the deferred acquisition price
of property, provided that (i) such Liens shall be created not later than
(A) 180 days after the acquisition of such property in the case of land or
improvements, and (B) 45 days after the acquisition of other property, (ii)
such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and the proceeds of such property so financed,
(iii) the principal amount of Indebtedness secured thereby is not increased
and (iv) the principal amount of Indebtedness secured by any such Lien shall
at no time exceed the original acquisition price of such property;
(h) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by
subsection 6.1 (e), provided that (i) such Liens existed at the time such
corporation became a Subsidiary and were not created in anticipation
thereof, (ii) no such Lien is spread to cover any property or assets of such
corporation after the time such corporation becomes a Subsidiary (other than
proceeds of the property or assets which were the original subjects of such
Lien), and (iii) the principal amount of Indebtedness secured thereby is not
increased after such time;
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(i) Liens existing on property or assets prior to the acquisition thereof
by the Company or any Subsidiary, provided that (i) such Liens were not
created in anticipation thereof, (ii) no such Lien is spread to cover any
additional property (other than the proceeds of the property or assets which
were the original subject of such Lien) and (iii) the principal amount of
Indebtedness secured thereby is not increased;
(j) Liens arising out of the refinancing, extension, renewal, refunding or
replacement of any Indebtedness secured by any Lien permitted by any of the
other clauses of this subsection, provided that (i) no such Lien is spread
to cover any additional property (other than the proceeds of the property
which was the original subject of such Lien) and (ii) the principal amount
of Indebtedness secured thereby is not increased;
(k) Liens arising pursuant to any order of attachment, distraint or
similar legal process arising in connection with court proceedings so long
as the execution or other enforcement thereof is effectively stayed and the
claims secured thereby are being contested in good faith by appropriate
proceedings or other appropriate action;
(l) Liens securing reimbursement obligations in connection with trade
letters of credit issued on behalf of the Company or any Subsidiary in the
ordinary course of its business, provided that such Liens attach solely to
the goods the acquisition of which is financed by such letter of credit and
to the proceeds thereof;
(m) Intentionally omitted;
(n) Liens arising under the Security Documents;
(o) Financing Leases permitted under subsection 6.1; and
(p) Other Liens securing obligations which do not constitute Indebtedness,
the aggregate amount of which obligations does not exceed $2,500,000 at any
time outstanding.
6.3 Limitation on Contingent Obligations. Create, incur, assume or suffer
to exist any Contingent Obligation, except (a) Contingent Obligations in
existence on the date hereof listed on Schedule 6.3, (b) Contingent Obligations
of the Company in respect of obligations of any Material Operating Subsidiary or
of any Subsidiary in respect of Obligations of the Company or any Material
Operating Subsidiary and (c) Contingent Obligations of the Company and its
Subsidiaries supporting primary obligations of other Persons the aggregate
amount of which does not exceed $4,000,000 at any time.
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6.4 Limitation on Fundamental Changes. Enter into any merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of its property, business or assets except the following:
(a) The Company and any of its Subsidiaries may sell or otherwise dispose
of (i) inventory and Cash Equivalents in the ordinary course of business,
(ii) tangible assets to be replaced in the ordinary course of business
within 12 months by other tangible assets of equal or greater value and
(iii) tangible assets that are no longer used or useful in the business of
the Company or the applicable Subsidiary, the fair market value of which
shall not exceed $2,000,000 in any fiscal year of the Company.
(b) Mergers constituting investments permitted by subsection 6.7.
(c) Licensing of products and intangible assets for fair value in the
ordinary course of business.
(d) So long as immediately before and after giving effect thereto no
Default or Event of Default exists, the Company and its Subsidiaries may
sell assets having a fair market value not exceeding $25,000,000 in any
fiscal year of the Company so long as the Net Proceeds thereof are applied
to repay the Loans as required by subsection 2.8(d).
(e) Asset Sales; provided, however, that
(i) the Net Proceeds from all such sales or dispositions shall not
exceed $150,000,000 in the aggregate during the term of this Agreement;
(ii) the consideration received by the Company or its Subsidiaries
from each such sale or disposition is at least equal to the fair market
value of the assets sold or disposed of in such sale or disposition;
(iii) the Net Proceeds from such sale or disposition in each case
shall be applied in accordance with subsection 2.8(d); and
(iv) any evidence of indebtedness referred to in the definition of
Net Proceeds shall be pledged in accordance with the provisions of such
definition.
(f) Any Subsidiaries of the Company may be merged or consolidated with or
into the Company (provided that the continuing or surviving corporation
shall be the Company) or with or into any one or more wholly-owned
Subsidiaries of the
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Company (provided that a wholly-owned Subsidiary shall be the continuing
or surviving corporation and that any such wholly-owned Subsidiary shall
be organized under a state of the United States).
(g) Any wholly-owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Company or a wholly-owned Subsidiary of the Company.
(h) The Company may merge with the Purchaser pursuant to, and in
accordance with, the Merger Agreement.
6.5 Distributions. During such time as a Default or an Event of Default
shall have occurred and be continuing, or if a Default or Event of Default would
result therefrom, (a) declare or pay any dividends, (b) purchase, redeem,
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, (c) return any capital to its stockholders as such, (d) make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such, (e) issue or sell any capital stock or
any warrants, rights or options to acquire such capital stock or (f) permit any
of its Subsidiaries to purchase, redeem, retire, defease or otherwise acquire
for value any capital stock of the Company or any warrants, rights or options to
acquire such capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock; provided, however,
that notwithstanding the foregoing provisions of this subsection 6.5, but in any
event subject to the other provisions of this Agreement, during such time as a
Default or an Event of Default shall have occurred and be continuing, or if a
Default or Event of Default would result therefrom, the Company (i) may make any
dividend payable solely in shares of its common stock and (ii) may pay dividends
in an aggregate amount during any calendar year not to exceed the lesser of: (x)
twenty ($.20) cents per share of outstanding common stock and (y) $4,000,000.
6.6 Limitation on Dividend Restrictions Regarding Subsidiaries. Except for
any limitation or restriction pursuant to any applicable law or pursuant to this
Agreement, permit any limitation or restriction to exist upon the ability of any
Subsidiary to declare or pay dividends in respect of the capital stock of such
Subsidiary, whether such limitation or restriction is imposed through a covenant
limiting dividends, through financial covenants or otherwise.
6.7 Prohibition on Investments, Acquisitions, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of, or make any other
investment in, or purchase any assets constituting a going concern business
from, any Persons (all of the foregoing being herein called "investments"),
except:
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(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Company or its Subsidiaries for
travel, entertainment, relocation and similar expenses or otherwise, in the
ordinary course of business;
(d) investments by the Company in its Subsidiaries and investments by such
Subsidiaries in the Company and in other Subsidiaries; provided that there
shall not be outstanding at any time Special Subsidiary Loans in an
aggregate principal amount in excess of $15,000,000;
(e) investments not to exceed (i) $50,000,000 in the aggregate during any
fiscal year of the Company and (ii) $100,000,000 in the aggregate during the
term of this Agreement (the amount of any such investment to be determined
at cost, which cost shall include the aggregate amount of any Indebtedness
assumed or given in connection therewith) in connection with the acquisition
of the stock of any corporation or of the assets of any Person, provided
that (w) such acquisition shall have been approved or otherwise endorsed by
the board of directors of such Person or not contested (if no board approval
is required), (x) such corporation or assets are, prior to such acquisition,
engaged or used, as the case may be, in a business of the type described in
subsection 5.5, (y) the Company shall be in pro forma compliance with the
covenants contained in subsections 6.9, 6.10, 6.11 and 6.12, calculated
based on the most recent financial statements delivered to the Agent and the
Bank pursuant to subsection 5.1, as though such acquisition had occurred at
the beginning of the four-quarter period ending on the last day of the most
recently completed fiscal quarter of the Company, and (z) immediately before
and after giving effect to such acquisition, no Default shall have occurred
and be continuing or would result therefrom;
(f) investments made with capital stock of the Company in connection with
the acquisition of the stock of any corporation which becomes a Subsidiary,
which thereupon shall be deemed to be a Material Operating Subsidiary, or of
the assets of any Person, provided that (i) such acquisition shall have been
approved or otherwise endorsed by the board of directors of such Person or
not contested (if no board approval is required) and (ii) such corporation
or assets are, prior to such acquisition, engaged or used, as the case may
be, in a business of the type described in subsection 5.5;
(g) investments made with common stock of the Company in connection with
the acquisition of the stock of any corporation which does not become a
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Subsidiary as a result of such acquisition, provided that the aggregate
amount of such investments shall not exceed $10,000,000 during the term of
this Agreement (the amount of the investment, in the case of each such
acquisition, being the market value, on the date of such acquisition, of the
common stock of the Company delivered as consideration in such acquisition);
(h) other investments (but not a Special Subsidiary Loan) not to exceed
$20,000,000 in the aggregate (valued at cost) at any one time outstanding
and (except in the case of United States government securities) not to
exceed $4,000,000 in the securities of any one issuer; and
(i) so long as no Default or Event of Default has occurred and is
continuing and so long as no Default or Event of Default would result
therefrom, investments by the Company and its Subsidiaries in Nortek;
provided that, notwithstanding the foregoing, during the occurrence and
continuance of a Default or Event of Default, or if a Default or Event of
Default would result therefrom, the Company and its Subsidiaries may make
investments in Nortek to the extent that the Company and its Subsidiaries
are otherwise permitted to make investments under this subsection 6.7.
6.8 Prohibition on Optional Prepayments. Prepay, purchase, redeem, retire,
defease or otherwise acquire, or make any optional payment on account of any
principal of, interest on, or premium payable in connection with the optional
prepayment, redemption or retirement of any of its Subordinated Indebtedness,
provided, however, that in each other case nothing in this subsection 6.8 shall
be deemed to prevent the Company from:
(a) making a commitment to prepay, redeem or otherwise acquire or pay any
Subordinated Indebtedness which by its terms is convertible into common
stock of the Company for the purpose of inducing the holders of such
Indebtedness to so convert such Indebtedness; and
(b) in connection with any induced conversions of convertible subordinated
Indebtedness, acquiring or paying any such Indebtedness which is not
converted into common stock of the Company as a result of such inducement,
provided that the aggregate amount of money expended by the Company and its
Subsidiaries in connection with such acquisition and payment does not exceed
the sum of (i) the net cash proceeds to the Company of any substantially
contemporaneous sale of its common stock, (ii) an amount equal to 2% of the
aggregate principal amount of the issue of convertible subordinated
Indebtedness being so acquired or paid outstanding immediately prior to the
public announcement by the Company of such acquisition or payment and (iii)
the fees and expenses incurred in connection with such acquisition or
payment.
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6.9 Consolidated Net Worth. Permit Consolidated Net Worth, at any time, to
be less than an amount equal to the amount by which $375,000,000 exceeds the
lesser of (a) losses on the sale of Non-Core Subsidiaries after the date hereof
and (b) $25,000,000.
6.10 Leverage Ratio. Permit the ratio (the "Leverage Ratio") of (a)
consolidated Indebtedness of the Company and its Subsidiaries to (b)
Consolidated EBITDA for the four most recent consecutive full fiscal quarters of
the Company at any time within any period set forth below to exceed the ratio
set forth below for such period:
Quarter Ending On Maximum Leverage Ratio
----------------- ----------------------
September 30, 1997 3.25:1.00
December 31, 1997 3.00:1.00
March 31, 1998 3.00:1.00
June 30, 1998 3.00:1.00
September 30, 1998 3.00:1.00
December 31, 1998 2.75:1.00
March 31, 1999 2.75:1.00
June 30, 1999 2.50:1.00
September 30, 1999 2.50:1.00
December 31, 1999 2.50:1.00
March 31, 2000 2.50:1.00
June 30, 2000 and thereafter 2.00:1.00
6.11 Interest Coverage Ratio. Permit the ratio of (a) Consolidated EBITDA
to (b) Interest Expense for the four most recent consecutive full fiscal
quarters of the Company at any time to be less than 3.50:1.00.
6.12 Current Ratio. Permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities at any time to be less than 2.0 to 1.0.
6.13 Intentionally Omitted.
6.14 Amendment, Etc. of Related Documents. Cancel or terminate any Related
Document or consent to or accept any cancellation or termination thereof, amend,
modify or change in any manner any term or condition of any Related Document or
give any consent, waiver or approval thereunder, waive any default under or any
breach of any term or condition of any Related Document, agree in any manner to
any other amendment, modification or change of any term or condition of any
Related Document or take any other action in connection with any Related
Document, in each case, that would materially
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adversely affect the interest or rights of the Company or any Subsidiary
thereunder or that would materially adversely affect the rights or interests of
the Agent or any Bank under the Loan Documents.
6.15 Fiscal Year. Change its fiscal year, except (a) to conform to the
fiscal year of Nortek following the Merger or (b) with the consent of the Agent,
which will not be unreasonably withheld.
6.16 Transactions with Affiliates. Except as otherwise permitted by this
Agreement, directly or indirectly: (a) make any investment in an Affiliate
except that any investments permitted under subsection 6.7 shall be permitted
hereunder; (b) transfer, sell, lease, assign or otherwise dispose of any assets
to an Affiliate; (c) merge into or consolidate with or purchase or acquire
assets from an Affiliate; or (d) enter into any other transaction directly or
indirectly with any Affiliate; provided, however, that: (i) payments on
investments permitted by subsection 6.7 shall be permitted hereunder, (ii) any
Affiliate who is a natural person may serve as an employee or director of the
Company, any Subsidiary, Nortek or any of its Subsidiaries and receive such
compensation and benefits for his services in such capacity as the Board of
Directors of the Company or such Subsidiary shall in good faith determine, (iii)
any merger permitted under subsection 6.4 shall be permitted hereunder, (iv) any
dividend or other distribution permitted under subsection 6.5 shall be permitted
hereunder and (v) the Company or any Subsidiary may enter into any transaction
with an Affiliate if the monetary or business consideration arising therefrom
would be substantially as advantageous to the Company or a Subsidiary as the
monetary or business consideration that would reasonably be expected by the
Company or such Subsidiary to be obtained in a comparable arm's length
transaction with a Person not an Affiliate.
6.17 Ownership of Designated Subsidiaries. Cease to own all of the issued
and outstanding capital stock of any Designated Subsidiary so long as any such
Subsidiary continues to be a Designated Subsidiary.
6.18 Limitation on Capital Expenditures. Make Capital Expenditures (i) in
excess of $125,000,000 during the five-year period ending with the Termination
Date, (ii) in excess of $37,500,000 during any fiscal year which follows the
1996 fiscal year, or (iii) in excess of $56,250,000 during any period of two
consecutive fiscal years following the 1996 fiscal year.
6.19 Financing Leases. Create, incur, assume or suffer to exist any
Financing Leases obligations that would cause the direct and contingent
liabilities of the Company and its Subsidiaries, on a consolidated basis, in
respect of all such Financing Leases to exceed $35,000,000 at any time
outstanding.
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6.20 Change in Nature of Business. Engage in any business other than the
Business of the Company.
6.21 Charter Amendments. Amend its certificate of incorporation or bylaws
in any manner that would materially adversely affect the rights of the Agent and
the Banks under the Loan Documents.
6.22 Accounting Changes. Make or permit any change in accounting policies
or reporting practices, except as required by generally accepted accounting
principles and except for the purpose of conforming such policies and practices
of the Company with those of Nortek following the Merger.
6.23 Intentionally Omitted.
6.24 Negative Pledge. Enter into or suffer to exist any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any of
its property or assets other than (i) in favor of the Secured Parties or (ii) in
connection with the Nortek Indentures.
6.25 Formation of Subsidiaries. Organize or invest in any new Material
Operating Subsidiary or permit any existing Subsidiary to become a Material
Operating Subsidiary unless such Subsidiary shall have executed and delivered a
Guaranty and a Security Agreement supplement, each in form and substance
satisfactory to the Agent, and shall have become a Guarantor and a Collateral
Grantor under the Loan Documents.
SECTION 7. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
events:
(a) The Company or any Designated Subsidiary shall fail to pay any
principal of any Note or any Unpaid Drawing when due in accordance with the
terms of the Loan Documents or the Company or any other Loan Party shall
fail to pay any interest, any fee or any other payment under any Loan
Document, the amount of which is provided for herein, in the Fee Letter or
in such Loan Document, within five (5) Business Days after any such amount
becomes due in accordance with the terms hereof or thereof; or
(b) Any representation or warranty made or deemed made by the Company or
any of its Subsidiaries in this Agreement, any other Loan Document or in
any certificate, document or financial or other statement furnished at any
time under or in
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connection herewith or therewith shall prove to have been incorrect in any
material respect on or as of the date made, deemed made or confirmed; or
(c) The Company or any of its Subsidiaries shall default in the
observance or performance of any covenant or agreement contained in
subsection 5.8(a) or Section 6 of this Agreement; or
(d) The Company or any of its Subsidiaries shall default in the
observance or performance of any other covenant or agreement contained in
this Agreement, or contained in any of the other Loan Documents (other than
as set forth in clauses (a) through (c) of this Section 7) and such default
shall continue unremedied for a period of 30 days after the earlier of the
date on which (A) a Responsible Officer becomes aware of such failure or
(B) written notice thereof shall have been given to the Company by the
Agent or any Bank; or
(e) The Company or any of its Subsidiaries shall (i) default in the
payment of principal of or interest on any Indebtedness (other than the
Notes) which Indebtedness is in an aggregate principal amount equal to or
greater than $10,000,000 or in the payment of any Contingent Obligation
(other than any Guaranty) relating to any primary obligation the aggregate
principal amount of which is equal to or greater than $10,000,000, beyond
the period of grace, if any, provided in the instrument or agreement under
which such Indebtedness or Contingent Obligation was created or (ii)
default in the observance or performance of any other agreement or
condition relating to any such Indebtedness (other than the Notes) or
Contingent Obligation (other than any Guaranty) or contained in any
instrument or agreement evidencing, securing or relating thereto, or
contained in any Nortek Indenture, or any other event shall occur or
condition exist, the effect of which default or other event or condition
described in either clause (i) or (ii) of this paragraph is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Contingent Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause
such Indebtedness to become due prior to its stated maturity or such
Contingent Obligation to become payable; or
(f) (i) The Company or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it as bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, wind-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
assets, or the Company or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors;
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or (ii) there shall be commenced against the Company or any of its
Subsidiaries any such case, proceeding or other action referred to in
clause (i) which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, unstayed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Company or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part
of its assets which results in the entry of an order for any such relief
which shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) the Company or any of
its Subsidiaries shall take any action authorizing, or in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the
acts set forth above in clause (i), (ii) or (iii) above; or (v) the Company
or any of its Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
or
(g) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a liability
(to the extent not paid or fully covered by insurance) of $5,000,000 or
more and all such judgments or decrees shall not have been vacated,
satisfied, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan or engage in a transaction which could subject such person to
liability under Section 502(l) of ERISA, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any Single Employer Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or institution
of proceedings or appointment of a trustee is, in the reasonable opinion of
the Agent, likely to result in the termination of any Single Employer Plan
for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall,
other than in a standard termination, terminate for purposes of Title IV of
ERISA, or the Company, any Subsidiary or any Commonly Controlled Entity
shall file a notice of intent to terminate a Single Employer Plan in a
distress termination under Section 4041(c) of ERISA, or (v) the Company or
any Commonly Controlled Entity shall, or is, in the reasonable opinion of
the Agent, likely to, incur any liability in connection with its failure to
meet any obligation arising out of a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan and in each case in clauses (i)
through (v) above, such event or condition, together with all other such
events or conditions, if any, which have occurred or exist could reasonably
be expected to subject the
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Company or any of its Subsidiaries to any tax, penalty or other liabilities
that in the aggregate could reasonably be expected to have a Material
Adverse Effect; or
(i) A Change of Control shall occur; or
(j) any non-monetary judgment or decree shall be rendered against the
Company or any of its Subsidiaries that could reasonably be likely to have
a Material Adverse Effect, and such judgment or decree shall not have been
vacated, satisfied, discharged, stayed or bonded pending appeal within 60
days from the entry thereof; or
(k) (i) any provision of any Loan Document after delivery thereof
pursuant to subsection 4.1 shall for any reason (other than pursuant to the
terms thereof) cease to be valid and binding on, or enforceable against,
any of the Company or its Subsidiaries which are party thereto; or (ii) any
Security Document after delivery thereof pursuant to subsection 4.1 shall
for any reason (other than pursuant to the terms thereof) cease to create a
valid and perfected first priority (subject, during the first 45 days after
the Closing Date (or such later date as agreed by the Agent and the Company
as specified in subsection 5.16) only to the completion of the actions
required under subsection 5.16) lien on and security interest in the
Collateral purported to be covered thereby; or (iii) in the case of clause
(i) or (ii) above, the Company or any Subsidiary shall so state in writing;
then, and in any such event, (x) if such event is an Event of Default specified
in paragraph (f) above with respect to the Company, automatically the
Commitments shall immediately terminate and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the Notes
shall immediately become due and payable, and (y) if such event is any other
Event of Default, either or both of the following actions may be taken: (1) with
the consent of the Required Banks, the Agent may, or upon the request of the
Required Banks, the Agent shall, by notice to the Company, declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (2) with the consent of the Required Banks, the Agent
may, or upon the request of the Required Banks, the Agent shall, declare the
Loans (with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes to be due and payable forthwith, whereupon the same
shall immediately become due and payable. In addition, after the occurrence and
during the continuance of an Event of Default, the Company and each Subsidiary
shall, promptly upon demand by the Agent, deliver to the Agent cash collateral
in such form as reasonably requested by the Agent, for deposit in a cash
collateral account, in a maximum amount equal to the undrawn amount of all L/Cs
then outstanding, to be maintained by the Agent as an interest-bearing deposit
account under the sole dominion and control of the Agent as pledgee, and shall
execute and deliver such documents and instruments (including a pledge
agreement) as the Agent may reasonably request in order to
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perfect or protect the Agent's lien and security interest in such collateral
account to secure payment of the Reimbursement Obligations with respect to L/Cs
then outstanding. Such deposit shall be held by the Agent as such security for
the ratable benefit of the Banks. Upon cure of the Event of Default, all such
cash collateral (and interest accrued thereon) shall promptly be returned to the
Company and its Subsidiaries). Except as expressly provided above in this
Section 7, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
SECTION 8. THE AGENT
8.1 Appointment. Each Bank (in its capacity as a Bank and a
potential Hedge Bank) hereby irrevocably designates and appoints Fleet as the
Agent for such Bank under this Agreement and the other Loan Documents and each
such Bank irrevocably authorizes Fleet, as Agent for such Bank, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Agent.
8.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(a) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any of the other Loan
Documents (except for its or such Person's own gross negligence or willful
misconduct), or (b) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the Company, or any
Subsidiary or any officer thereof contained in this Agreement or any of the
other Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any of the other Loan Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any of the other Loan Documents or for any failure of the Company
or any Subsidiary to perform its obligations hereunder or thereunder. The Agent
shall be under no obligation to any Bank to ascertain or to inquire as to the
observance or
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performance of any of the agreements contained in, or conditions of, this
Agreement or any of the other Loan Documents, or to inspect the properties,
books or records of the Company or any Subsidiary.
8.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Company and any Subsidiary), independent accountants
and other experts selected by the Agent. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
or it shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Required Banks, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Banks and all future holders of the Notes.
8.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Bank, the Company or any
Subsidiary referring to this Agreement, describing such Default or Event of
Default and stating that the notice is a "notice of default". In the event that
the Agent receives such a notice, the Agent shall give prompt notice thereof to
the Banks. The Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks; provided
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Banks.
8.6 Non-Reliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Company or any Subsidiary, shall be deemed to
constitute any representation or warranty by the Agent to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon
the Agent or any other Bank, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business,
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operations, property, performance and other condition (financial or otherwise)
and creditworthiness of the Company and each Subsidiary and made its own
decision to make its Loans hereunder and enter into this Agreement. Each Bank
also represents that it will, independently and without reliance upon the Agent
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, performance and other condition (financial or otherwise)
and creditworthiness of the Company and each Subsidiary. Except for notices,
reports and other documents expressly required to be furnished to the Banks by
the Agent hereunder, the Agent shall have no duty or responsibility to provide
any Bank with any credit or other information concerning the business,
operations, property, performance and other condition (financial or otherwise)
or creditworthiness of the Company and its Subsidiaries which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
8.7 Indemnification. The Banks agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Company and without
limiting the obligation of the Company to do so), ratably according to the
respective amounts of their Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment of the Notes) be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement or any of the other Loan Documents or any
documents contemplated by or referred to herein or the transactions contemplated
hereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided that no Bank shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Notes and all other amounts payable
hereunder.
8.8 Agent in Its Individual Capacity. The Agent and its Affiliates
may make loans to, accept deposits from, issue or maintain L/Cs on account of
and generally engage in any kind of business with the Company and its
Subsidiaries as though the Agent were not the Agent hereunder. With respect to
its Loans made or renewed by it and any Note issued to it, the Agent shall have
the same rights and powers under this Agreement as any Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" and "Banks" shall
include the Agent in its individual capacity.
8.9 Successor Agent. The Agent may resign as an Agent upon 20
days' notice to the Banks. If the Agent shall resign as the Agent under this
Agreement, then the
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Required Banks shall appoint from among the Banks a successor agent for the
Banks which successor agent shall be approved by the Company, whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent
which resigned, and the term "Agent", shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as the
Agent shall be terminated, without any other or further act or deed on the part
of such former Agent or any of the parties to this Agreement or any holders of
the Notes; provided, however, that upon the occurrence and during the
continuance of an Event of Default the approval of the Company of the successor
agent shall not be required hereunder. Upon its resignation hereunder, each
Agent shall execute and deliver any documents relating to its actions as Agent
which may be necessary to permit the successor agent to act as Agent hereunder.
After any retiring Agent's resignation hereunder as the Agent, the provisions of
this subsection 8.9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Agent under this Agreement.
8.10 Failure to Act. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction by
the Banks against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. With the written consent of the
Required Banks, the Agent, the Company and the Designated Subsidiaries may, from
time to time, enter into written amendments, supplements or modifications hereto
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Banks or the Company and
the Designated Subsidiaries hereunder, and the Agent may execute and deliver to
the Company and the Designated Subsidiaries a written instrument waiving, on
such terms and conditions as the Agent may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (a) extend the maturity
of any Loan, or reduce the principal amount thereof, or change the amount or
termination date of any Bank's Commitment, or release, amend or modify any
Guaranty or any collateral covered by any of the Security Documents, or reduce
the interest rate or Facility Fee, Issuance Fee or Drawing Fee payable hereunder
or extend the time of payment of interest and any fees hereunder or the time of
reimbursement of any draws under L/Cs or amend the definition of "Required
Banks" or increase the L/C Sublimit, or amend, modify or waive any provision of
subsection 4.1, 4.2 or 5.16 or this subsection 9.1, or consent to the assignment
or transfer by the Company and each Designated Subsidiary of any of its rights
and obligations under this Agreement, in each case without the written consent
of all of the Banks, or (b) amend, modify or waive any provision of Section 8 or
otherwise affect the rights and obligations of the Agent under the Loan
Documents without the written consent of
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the then Agent (with any such change in any provision of Section 8 to be
effective prospectively only). Any such waiver and any such amendment,
supplement or modification shall be binding upon the parties to this Agreement
and all holders of the Notes. In the case of any waiver, the parties to this
Agreement shall be restored to their former position and rights hereunder and
under the outstanding Notes, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
9.2 Notices. All notices, consents, requests and demands to or
upon the respective parties hereto to be effective shall be in writing or by
telegraph or telecopy and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or four (4)
Business Days after deposit in the mail, registered mail, return receipt
requested, postage prepaid, or, in the case of telegraphic or telecopy notice,
when received, addressed as follows in the case of the Company and the
Designated Subsidiaries and the Agent, and as set forth on Schedule I in the
case of the other parties hereto, or to such address or other address as may be
hereafter notified by any of the respective parties hereto or any future holders
of the Notes:
The Company
or any
Designated
Subsidiary: Ply Gem Industries, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With copies to: Xxxxxxx X. Xxxxxx, Esq.
EAB Plaza
00xx Xxxxx
Xxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
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Nortek, Inc.
50 Xxxxxxx Plaza
Providence, Rhode Island
Attention: Xxxxxxx X. Xxxxxx
Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx., Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The Agent: Fleet National Bank
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxx, Agency Services
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Fleet National Bank
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Vice President
Telephone: 000-000-0000
Telecopy: 000-000-0000
with a copy to: Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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provided that any notice, request or demand to or upon the Agent or the Banks
pursuant to subsection 2.3, 2.6 or 2.8 shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes and the making of the
Loans and the issuance of L/Cs.
9.5 Payment of Expenses, Etc. The Company agrees (a) to pay or
reimburse the Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the preparation, execution and delivery of, and any
amendment, supplement or modification to, this Agreement, the other Loan
Documents and any other documents prepared in connection herewith, and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agent in connection therewith, all reasonable and customary syndication
expenses, including without limitation travel expenses incurred by the Agent in
connection with due diligence and syndication member and prospective member
meetings and typesetting duplication and binding expenses with respect to
materials for syndicate members, (b) to pay or reimburse each Bank and the Agent
for all its reasonable out-of-pocket costs and expenses incurred in connection
with the enforcement or preservation of any rights against the Company or any of
its Subsidiaries under this Agreement, the other Loan Documents and any such
other documents, (c) to pay, indemnify, and to hold each Bank and the Agent and
each of their Affiliates and their officers, directors, employees, agents and
advisors (each an "Indemnified Party") harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, if legal, which may be
payable or reasonably determined to be payable in connection with the execution
and delivery of, or consummation of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Indemnified Party harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to, or arising out of, the Commitments,
Loans and L/Cs, the actual or proposed use of proceeds thereof, the execution,
delivery, enforcement and performance of this
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Agreement, the other Loan Documents or the consummation of the transactions
contemplated thereby (including without limitation; the Tender Offer and the
Merger) or related to any Environmental Liability or Environmental Proceeding
(other than costs, expenses and disbursements incurred by Banks other than the
Agent in negotiating and closing the transactions contemplated hereby) (all the
foregoing, collectively, the "indemnified liabilities"); provided that the
Company shall have no obligation hereunder to any Indemnified Party with respect
to indemnified liabilities arising from (i) the gross negligence or willful
misconduct of such Indemnified Party, (ii) legal proceedings commenced against
such Indemnified Party by any security holder or creditor of such Indemnified
Party arising out of and based upon rights afforded any such security holder or
creditor solely in its capacity as such, (iii) any breach of obligations of any
Bank (including, without limitation, the Agent in its capacity as such) to any
other Bank or (iv) a successful claim by the Company or any of its Subsidiaries
against such Indemnified Party as determined in a final, non appealable judgment
by a court of competent jurisdiction. The Company acknowledges that the Agent
and the Banks shall, prior to foreclosure of, or exercise by them of proxy
rights with respect to, any of the shares of Subsidiaries securing the Loans,
have no liability or responsibility for either:
(A) damage, loss or injury to human health, the environment or
natural resources caused by the presence, disposal, release or
threatened release of Hazardous Materials on any part of the real
property owned, operated or leased by the Company or its Subsidiaries;
or
(B) abatement and/or clean-up required under any applicable
Environmental Laws and Regulations for a release, threatened release or
disposal of any Hazardous Materials located at the real property owned,
operated or leased by the Company or its Subsidiaries or used by or in
connection with the Company's or any Subsidiary's business.
The agreements in this subsection shall survive repayment of the Notes and all
other amounts payable hereunder; provided, however, that nothing herein shall
affect the provisions relating to 180-day periods contained in subsections 2.15,
2.16 and 2.22.
9.6 Binding Effect; No Assignment or Delegation by Company or any
Designated Subsidiary. This Agreement shall be binding upon and inure to the
benefit of the Company and each Designated Subsidiary and their successors and
to the benefit of the Banks and the Agent and their respective successors and
assigns. The rights and obligations of the Company and each Designated
Subsidiary under this Agreement shall not be assigned or delegated without the
prior written consent of the Agent, and each Bank, and any purported assignment
or delegation without such consent shall be void.
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9.7 Assignments and Participations by Banks; Pledge to Federal
Reserve Bank. (a) Each Bank may assign to one or more banks or other entities
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Loans owing to it,
and the Note or Notes held by it); provided, however, that: (i) each such
assignment shall be of a constant, and not a varying, percentage of all of the
assigning Bank's rights and obligations under this Agreement, (ii) except in
connection with the assignment by any Bank of its entire Commitment, the amount
of the Commitment of the assigning Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 and shall
be an integral multiple of $1,000,000, and (iii) each such assignment shall be
to an Eligible Assignee. Upon the execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least three Business Days after the execution
thereof: (x) the assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder,
and (y) the Bank assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto); and provided further,
that the Company shall not be required to pay any amount under this Agreement
that is greater than the amount which it would otherwise have been required to
pay had such assignment not been made.
(b) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Bank makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Company and
each Designated Subsidiary or the performance or observance by the Company and
each Designated Subsidiary of any of their respective obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of such financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Bank or any
other Bank and based on such documents and information as it shall deem
appropriate at the time,
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continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Bank. Neither the Company nor
any Subsidiary shall have any liability or obligation under this subsection
9.7(b).
(c) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an assignee representing that it is an Eligible Assignee,
together with any original Note subject to such assignment, the Agent shall
accept such Assignment and Acceptance, and give prompt notice thereof to the
Company. Within five Business Days after its receipt of such notice, each of the
Company and each Designated Subsidiary, at its own expense, shall execute and
deliver to the Agent in exchange for the surrendered Note a new Note to the
order of such Eligible Assignee in an amount equal to the Commitment assumed by
it pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained a Commitment hereunder, a new Note to the order of the assigning Bank
in an amount equal to the Commitment retained by it hereunder. Such new Note(s)
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially in the form of
Exhibit A.
(d) The Company and each Designated Subsidiary acknowledges that
any Bank may, in the ordinary course of its commercial banking business and in
accordance with applicable law, at any time: (i) sell to one or more Eligible
Participants participating interests in any Loan owing to such Bank, any Note
held by such Bank, any Commitment of such Bank or any other interest of such
Bank hereunder (each a "Participating Interest"), without in any such case the
need for any approval by the Company, and (ii) subject to the Company's prior
approval in each instance (but only when no Event of Default shall have occurred
and is continuing), which approval shall not be unreasonably withheld, sell to
one or more banks or other entities that do not, directly or indirectly, engage
in business competitive with the business of the Company and its Subsidiaries
(each such participant and each Eligible Participant is hereinafter referred to
individually as a "Participant" and collectively as the "Participants") a
Participating Interest provided that no Participant (other than an Affiliate of
such Bank which is a Subsidiary of such Bank or the parent holding company of
such Bank or a Subsidiary of such holding company) shall be entitled under the
relevant participation agreement or any associated agreement to require such
Bank to take or omit to take any action hereunder, except, to the extent that
any Participant has any interest directly affected thereby, action that extends
the final maturity of any Loan, reduces the rate or extends the time of payment
of interest on any Loan, extends the time for payment or reduces any fee payable
to such Bank hereunder, reduces the principal amount of any Loan
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or releases all or substantially all of the Collateral described in the Security
Agreement. In the event of any such sale by such Bank of participating interests
to a Participant, such Bank's obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Company shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under this
Agreement. The Company and each Designated Subsidiary also agrees that each
Participant shall be entitled to the benefits of subsections 2.13, 2.15, 2.16
and 2.22 with respect to its participation in the Commitments, and the
Eurodollar Loans outstanding from time to time; provided that no Participant
shall be entitled to receive any greater amount pursuant to such subsections
than the transferor Bank would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Bank to such
Participant had no such transfer occurred.
(e) The Company and each Designated Subsidiary authorizes each
Bank to disclose to any Eligible Assignee or Participant or potential Eligible
Assignee or Participant any and all financial information in its possession
concerning the Company and each Designated Subsidiary which has been delivered
to it by the Company and each Designated Subsidiary pursuant to this Agreement
or which has been delivered to it by the Company and each Designated Subsidiary
in connection with its credit evaluation of the Company prior to entering into
this Agreement; provided that the intended recipient first delivers
confidentiality undertakings for the benefit of the Company to the effect of
subsection 9.11 with respect to non-public information.
(f) If, pursuant to subsection 9.7(a) or (b), any interest in this
Agreement, a participation agreement or any Note is transferred to any
Participant or Eligible Assignee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Bank shall cause such Participant or Eligible Assignee concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Bank for the
benefit of the Company and its Subsidiaries that under applicable law and
treaties no taxes will be required to be withheld by the transferor Bank or the
Company or each Designated Subsidiary with respect to any Loans, (ii) to furnish
to the Bank and the Company either U.S. Internal Revenue Service Form 4224 or
U.S. Internal Revenue Service Form 1001 (wherein such Participant claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree to provide the transferor Bank a
new Form 4224 or Form 1001 upon the obsolescence of any previously delivered
form and comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such Participant, and
to comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
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(g) No person to whom a participation has been granted or who has
received an assignment hereunder may grant any participation or make any
assignment unless such participation or assignment would be permitted under this
subsection 9.7 if made by a Bank.
(h) Notwithstanding anything to the contrary herein, no assignment
or participation will be permitted if, after giving effect thereto, the
aggregate Commitment of the transferee (if other than the Agent in its capacity
as a Bank), together with such transferee's participating interest in the
Commitments, would exceed 25% of the aggregate Commitments.
(i) Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Loans owing to it and the Notes held by it) in favor of any Federal Reserve Bank
in accordance with Regulation A. No such assignment shall release the transferor
Bank from its obligations hereunder.
9.8 Further Assurances. At any time and from time to time, upon
the request of the Agent, the Company and each Designated Subsidiary shall
execute, deliver and acknowledge or cause to be executed, delivered and
acknowledged, such further documents and instruments and do such other acts and
things as the Agent may reasonably request in order to fully effect the purposes
of this Agreement and the other Loan Documents and any other agreements,
instruments and documents delivered pursuant hereto or in connection with the
Loans or the L/Cs.
9.9 Adjustments; Set-off. (a) If any Bank (a "Benefited Bank")
shall at any time receive any payment of all or part of any of its Loans or
interest thereon, or receive any collateral in respect thereof or any payment
under any Guaranty (whether voluntarily or involuntarily, by set-off, pursuant
to events or proceedings of the nature referred to in paragraph (f) of Section
7, or otherwise) in a greater proportion than any such payment to and collateral
received by any other Bank, if any, in respect of such other Bank's Loans, or
interest on any of the foregoing, such Benefited Bank shall purchase for cash
from each other Bank such portion of each such other Bank's Loans, or shall
provide each such other Bank with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefited Bank to share
the excess payment or benefits of such collateral or proceeds ratably with the
other Banks; provided, however, that if all or any portion of such excess
payment or benefits is hereafter recovered from such Benefited Bank, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. The Company and each
Designated Subsidiary agrees that each Bank so purchasing a portion of any other
Bank's Loans may exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if such Bank were
the direct holder of such portion. Any payments received after the
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Banks have taken action pursuant to this subsection 9.9 shall be allocated
ratably among the Loans and participations in L/Cs of all the Banks.
(b) In addition to any rights and remedies of each Bank provided
by law, upon the occurrence and during the continuation of an Event of Default,
each Bank shall have the right, without prior notice to the Company or any
Designated Subsidiary, any such notice being expressly waived to the extent
permitted by applicable law, to set off and apply against any indebtedness,
whether matured or unmatured, of the Company or any of its Subsidiaries to such
Bank under this Agreement or any of the other Loan Documents, any amount owing
from such Bank to the Company or any such Subsidiary at, or at any time after,
the happening of any of the above-mentioned events, and such right of set-off
may be exercised by such Bank against the Company or any such Subsidiary or
against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver, custodian or execution, judgment or attachment
creditor of the Company or any such Subsidiary or against anyone else claiming
through or against the Company or any such Subsidiary or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receivers, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of set-off shall not have been exercised by such Bank prior
to the making, filing or issuance, or service upon such Bank of, or of notice
of, any such petition, assignment for the benefit of creditors, appointment or
application for the appointment of a receiver, or issuance of execution,
subpoena, order or warrant. Each Bank agrees promptly to notify the Company, any
such Subsidiary, the Agent and each other Bank after any such set-off and
application made by such Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
9.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.11 Confidentiality. Each Bank agrees to maintain the
confidentiality of information designated as confidential and provided to it by
the Company, or any Subsidiary in connection with this Agreement or the other
Loan Documents; provided, however, that any Bank may disclose such information
(a) at the request of any bank regulatory authority or in connection with an
examination of such Bank by any such authority, (b) pursuant to subpoena or
other court process, (c) when required to do so in accordance with the
provisions of any applicable law, (d) as required by any other Governmental
Authority, (e) to such Bank's independent auditors, attorneys or other
professional advisors upon receipt of a confidentiality undertaking for the
benefit of the Company in conformity with this subsection 9.11 as to non-public
information or (f) to any Eligible Assignee or Participant or potential Eligible
Assignee or Participant; provided that such Eligible Assignee or Participant, as
the
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case may be, agrees in writing to maintain the confidentiality of such
information in conformity with this subsection 9.11.
9.12 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company, the Designated Subsidiaries and the Agent.
9.13 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF TRIAL BY JURY.
(a) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL OTHER
DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND
THEREWITH, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) EACH OF THE COMPANY AND EACH DESIGNATED SUBSIDIARY IRREVOCABLY
CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR
IN ANY MANNER RELATING TO THIS AGREEMENT, AND THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN ANY COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE COMPANY
AND EACH DESIGNATED SUBSIDIARY, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
EXPRESSLY AND IRREVOCABLY ASSENTS AND SUBMITS TO THE PERSONAL NONEXCLUSIVE
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. EACH OF THE
COMPANY AND EACH DESIGNATED SUBSIDIARY FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY SUCH
ACTION OR PROCEEDING BY DELIVERY THEREOF IN ACCORDANCE WITH APPLICABLE LAW. EACH
OF THE COMPANY AND EACH DESIGNATED SUBSIDIARY HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY
ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR
ANY SIMILAR BASIS. EACH OF THE COMPANY AND EACH DESIGNATED SUBSIDIARY SHALL NOT
BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR
ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK UNLESS SUCH
DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF NEW YORK. NOTHING
IN THIS SUBSECTION SHALL AFFECT OR IMPAIR IN ANY
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MANNER OR TO ANY EXTENT THE RIGHT OF ANY BANK TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY OR ANY DESIGNATED SUBSIDIARY IN ANY
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
98
(c) EACH OF THE COMPANY, THE DESIGNATED SUBSIDIARIES, THE BANKS
AND THE AGENT WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT
TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR
THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
PLY GEM INDUSTRIES, INC.
By /s/
-----------------------------------
Title: Exec VP
ACKNOWLEDGED AND AGREED AS TO
EACH PROVISION RELATING TO
ANY DESIGNATED SUBSIDIARY:
SAGEBRUSH SALES, INC.
By /s/ Xxxx Morgatsly
----------------------------
Title: Assistant Secretary
SNE ENTERPRISES, INC.
By /s/ Xxxx Morgatsly
----------------------------
Title: Assistant Secretary
VARIFORM, INC.
By /s/ Xxxx Morgatsly
----------------------------
Title: Assistant Secretary
99
GREAT LAKES WINDOW, INC.
By /s/ Xxxx Morgatsly
----------------------------
Title: Assistant Secretary
100
FLEET NATIONAL BANK,
as Agent and as a Bank
By /s/
----------------------------
Title Vice President
000
XXXX XX XXXXXXXX
By /s/ X.X.XxXxxxxx
----------------------------
Title X.X.XxXxxxxx
DIRECTOR
102
THE YASUDA TRUST AND BANKING
COMPANY, LIMITED NEW YORK
BRANCH
By /s/ Xxxx xxxxxxxxxxxxxx
----------------------------
Title Xxxx Xxxxxxxxxxxxxx
Senior Vice President
103
FLEET NATIONAL BANK,
as Agent and as a Bank
By /s/ Xxxxxxx X. Xxxxxx
-----------------------
Title Vice President
000
XXXX XX XXXXXXXX
By /s/ X.X. XxXxxxxx
-----------------------
Title X.X. XxXxxxxx
DIRECTOR
105
THE YASUDA TRUST AND BANKING
COMPANY, LIMITED NEW YORK
BRANCH
By /s/ Xxxx Xxxxxxxxxxxxxx
----------------------------
Title Xxxx Xxxxxxxxxxxxxx
Senior Vice President
