Exhibit 10.10
$15,500,000 US REVOLVING FACILITY
$4,000,000 CANADIAN REVOLVING FACILITY
$14,000,000 US TERM LOAN
$6,500,000 CANADIAN TERM LOAN
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
AMONG
CORRPRO COMPANIES, INC
CCFC, INC.
OCEAN CITY RESEARCH CORP.
CORRPRO INTERNATIONAL, INC.,
AS US BORROWER,
COMMONWEALTH XXXXXX HOLDINGS LTD.
CORRPRO CANADA, INC.
XXXXX INSPECTIONS LTD.
AS CANADIAN BORROWER,
CAPITAL SOURCE FINANCE, LLC
AS AGENT AND A US LENDER
CSE FINANCE, INC.
AS A CANADIAN LENDER
AND
THE OTHER US LENDERS AND CANADIAN LENDERS SIGNATORIES HERETO
DATED AS OF
MARCH 30, 2004
I. DEFINITIONS............................................................................................. 2
II. LOANS; PAYMENTS; INTEREST; AND COLLATERAL.............................................................. 2
2.1 The Revolving Facilities...................................................................... 2
2.2 The Revolving Notes; Maturity................................................................. 4
2.3 Interest on the Revolving Notes............................................................... 4
2.4 Revolving Facility Disbursements; Requirement to Deliver Borrowing Certificate................ 5
2.5 Standby Letters of Credit..................................................................... 6
2.6 Term Loans; Term Notes........................................................................ 10
2.7 Interest on Term Loans........................................................................ 11
2.8 Scheduled Repayment of the Term Loans; Maturity............................................... 11
2.9 Promise to Pay; Manner of Payment............................................................. 12
2.10 Repayment of Excess Revolving Advances........................................................ 12
2.11 Voluntary and Mandatory Prepayments........................................................... 13
2.12 Payments by Agent............................................................................. 15
2.13 Grant of Security Interest; Collateral........................................................ 16
2.14 Collateral Administration..................................................................... 18
2.15 Power of Attorney............................................................................. 20
2.16 Collections; Repayment; Borrowing and Lockbox................................................. 20
2.17 Notes......................................................................................... 23
2.18 Replacement of Lost Notes..................................................................... 23
2.19 Reallocation of Commitments................................................................... 23
2.20 Discretionary Bulge Commitment................................................................ 23
2.21 Several Obligations........................................................................... 24
2.22 Credit Party Representation; Reliance......................................................... 24
III. FEES AND OTHER CHARGES................................................................................. 25
3.1 Commitment Fee................................................................................ 25
3.2 Unused Line Fees.............................................................................. 25
3.3 Collateral Management Fee..................................................................... 25
3.4 Yield Maintenance Fee......................................................................... 26
3.5 Standby Letter of Credit Fees................................................................. 26
3.6 Computation of Fees; Lawful Limits............................................................ 27
3.7 Default Rate of Interest...................................................................... 28
3.8 Acknowledgement of Joint and Several Liability................................................ 28
IV. CONDITIONS PRECEDENT................................................................................... 29
4.1 Conditions to Initial Advance, Funding the Term Loans and Closing............................. 29
4.2 Conditions to Each Revolving Advance and Funding of the Term Loans............................ 33
V. REPRESENTATIONS AND WARRANTIES......................................................................... 34
5.1 Organization and Authority.................................................................... 34
5.2 Loan Documents and Related Documents.......................................................... 34
5.3 Subsidiaries, Capitalization and Ownership Interests.......................................... 35
5.4 Properties.................................................................................... 35
5.5 Other Agreements.............................................................................. 36
5.6 Litigation.................................................................................... 36
5.7 Hazardous Materials........................................................................... 37
5.8 Tax Returns; Governmental Reports............................................................. 37
5.9 Financial Statements and Reports.............................................................. 37
5.10 Compliance with Law; Business................................................................. 37
5.11 Intellectual Property......................................................................... 39
5.12 Permits; Labor................................................................................ 39
5.13 No Default; Solvency.......................................................................... 40
5.14 Disclosure.................................................................................... 40
5.15 Existing Indebtedness; Investments, Guarantees and Certain Contracts.......................... 40
5.16 Affiliated Agreements......................................................................... 41
5.17 Insurance..................................................................................... 41
5.18 Foreign Assets Control Regulations and Anti-Money Laundering.................................. 41
5.19 Names; Location of Offices, Records and Collateral; Deposit Accounts and Investment
Property...................................................................................... 41
5.20 Non-Subordination............................................................................. 42
5.21 Legal Investments; Use of Proceeds; Tax Regulations........................................... 42
5.22 Broker's or Finder's Commissions.............................................................. 42
5.23 Survival...................................................................................... 43
VI. AFFIRMATIVE COVENANTS.................................................................................. 43
6.1 Financial Statements, Reports and Other Information........................................... 43
6.2 Payment of Obligations........................................................................ 46
6.3 Conduct of Business and Maintenance of Existence and Assets................................... 47
6.4 Compliance with Legal and Other Obligations................................................... 47
6.5 Insurance..................................................................................... 47
6.6 True Books.................................................................................... 48
6.7 Inspection; Periodic Audits................................................................... 48
6.8 Further Assurances; Post Closing.............................................................. 48
6.9 Payment of Indebtedness....................................................................... 49
6.10 Lien Searches................................................................................. 49
6.11 Use of Proceeds............................................................................... 50
6.12 Collateral Documents; Security Interest in Collateral......................................... 50
6.13 Taxes and Other Charges....................................................................... 52
6.14 Future Leases; Future Real Estate............................................................. 53
6.15 Canadian Pension Plans and Benefit Plans...................................................... 53
VII. NEGATIVE COVENANTS..................................................................................... 54
7.1 Financial Covenants........................................................................... 54
7.2 Indebtedness.................................................................................. 55
7.3 Liens......................................................................................... 57
7.4 Investments; Investment Property; New Facilities or Collateral; Subsidiaries.................. 58
7.5 Dividends; Redemptions; Equity................................................................ 59
7.6 Transactions with Affiliates.................................................................. 60
7.7 Charter Documents; Fiscal Year; Use of Proceeds; Insurance Policies; Disposition of
Collateral; Taxes; Trade Names................................................................ 60
7.8 Transfer of Assets............................................................................ 61
7.9 Contingent Obligations........................................................................ 62
7.10 Truth of Statements........................................................................... 62
7.11 Payment on Debt............................................................................... 62
7.12 Modifications of Agreements................................................................... 63
7.13 Intellectual Property......................................................................... 63
7.14 Certain Agreements............................................................................ 63
7.15 Applications under CCAA....................................................................... 64
VIII. EVENTS OF DEFAULT...................................................................................... 64
8.1 Certain Agreements............................................................................ 64
IX. RIGHTS AND REMEDIES AFTER DEFAULT...................................................................... 67
9.1 Rights and Remedies........................................................................... 67
9.2 Application of Proceeds....................................................................... 70
9.3 Rights to Appoint Receiver.................................................................... 71
9.4 Blocked Accounts.............................................................................. 71
9.5 Rights and Remedies not Exclusive............................................................. 71
X. WAIVERS AND JUDICIAL PROCEEDINGS....................................................................... 72
10.1 Waivers....................................................................................... 72
10.2 Delay; No Waiver of Defaults.................................................................. 72
10.3 Jury Waiver................................................................................... 72
10.4 Amendment and Waivers......................................................................... 73
XI. EFFECTIVE DATE AND TERMINATION......................................................................... 74
11.1 Effectiveness and Termination................................................................. 74
11.2 Survival...................................................................................... 74
XII. AGENCY PROVISIONS...................................................................................... 74
12.1 Agent......................................................................................... 75
12.2 US Agent and Canadian Agent................................................................... 80
12.3 Set-off and Sharing of Payments............................................................... 80
12.4 Disbursement of Funds......................................................................... 81
12.5 Settlements; Payments and Information......................................................... 81
12.6 Dissemination of Information.................................................................. 83
12.7 Consents...................................................................................... 83
XIII. MISCELLANEOUS.......................................................................................... 84
13.1 Governing Law; Jurisdiction; Service of Process; Venue........................................ 84
13.2 Successors and Assigns; Assignments and Participations........................................ 84
13.3 Application of Payments....................................................................... 87
13.4 Indemnity..................................................................................... 88
13.5 Notice........................................................................................ 89
13.6 Severability; Captions; Counterparts; Facsimile Signatures.................................... 89
13.7 Expenses...................................................................................... 89
13.8 Entire Agreement.............................................................................. 90
13.9 Approvals and Duties.......................................................................... 91
13.10 Confidentiality and Publicity................................................................. 91
13.11 Release of Collateral......................................................................... 93
13.12 No Consequential Damages...................................................................... 93
13.13 Conflict...................................................................................... 93
13.14 Replacement of Lenders........................................................................ 93
XIV. GUARANTY............................................................................................... 94
14.1 Guaranty...................................................................................... 94
14.2 Guaranty Absolute............................................................................. 94
14.3 Waiver........................................................................................ 95
14.4 Continuing Guaranty; Assignments.............................................................. 95
14.5 Subrogation................................................................................... 96
14.6 Canadian Guarantors........................................................................... 96
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT (this
"AGREEMENT"), dated as of March 30, 2004, is entered into by and among CORRPRO
COMPANIES, INC., an Ohio corporation ("PARENT"), CCFC, INC., a Nevada
corporation, OCEAN CITY RESEARCH CORP., a New Jersey corporation and CORRPRO
INTERNATIONAL, INC., a Delaware corporation (together, "US BORROWER");
COMMONWEALTH XXXXXX HOLDINGS LTD., a corporation amalgamated under the laws of
the Province of Alberta, Canada and a Foreign Wholly-Owned Subsidiary of Parent,
CORRPRO CANADA, INC., a corporation amalgamated under the laws of the Province
of Alberta, Canada and XXXXX INSPECTIONS LTD., a corporation amalgamated under
the laws of the Province of Alberta, Canada (together, "CANADIAN BORROWER") (US
Borrower and Canadian Borrower sometimes hereinafter are referred to
individually as a "BORROWER" and collectively as "BORROWERS"); CAPITALSOURCE
FINANCE LLC, a Delaware limited liability company (in its individual capacity,
"CAPITALSOURCE"), as administrative, payment and collateral agent for the
Lenders (CapitalSource, in such capacities, "AGENT"); and the LENDERS from time
to time parties hereto.
WHEREAS, the Credit Parties have requested that Lenders make available
to (a) US Borrower (i) a revolving credit facility (the "US REVOLVING FACILITY")
in a maximum principal amount at any time outstanding of up to the US Revolving
Facility Maximum Amount in effect from time to time, the amount of which,
initially, shall be Fifteen Million Five Hundred Thousand Dollars ($15,500,000),
and (ii) a term loan in an aggregate original principal amount of Fourteen
Million Dollars ($14,000,000), and (b) Canadian Borrower (i) a revolving credit
facility (the "CANADIAN REVOLVING FACILITY") in a maximum principal amount at
any time outstanding of up to the Canadian Revolving Facility Maximum Amount in
effect from time to time, the amount of which, initially, shall be Four Million
Dollars ($4,000,000), and (ii) a term loan in an aggregate original principal
amount of Six Million Five Hundred Thousand Dollars ($6,500,000), the proceeds
of each of which shall be used by the Borrowers, each a service provider, to
refinance existing indebtedness incurred in the purchase or generation of
receivables and thereafter for the purchase or generation of receivables; and
WHEREAS, Lenders are willing to make the Revolving Facilities and the
Term Loans available to Borrowers upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt, sufficiency and adequacy of which
hereby are acknowledged, the Credit Parties, Agent and Lenders hereby agree as
follows:
I. DEFINITIONS
For purposes of the Loan Documents and all Annexes thereto, in addition
to the definitions above and elsewhere in this Agreement or the other Loan
Documents, the terms listed in Annex I and Appendix A hereto shall have the
meanings assigned to such terms in Annex I and Appendix A, respectively, which
are incorporated herein and made a part hereof. All capitalized terms used which
are not specifically defined shall have meanings provided in Article 9 of the
UCC or the PPSA, as the context may dictate or require, in each case as in
effect on the date hereof to the extent the same are used or defined therein.
Unless otherwise specified herein or in Appendix A, this Agreement and any
agreement or contract referred to herein or in Appendix A shall mean such
agreement or contract as modified, amended or supplemented from time to time,
subject to any applicable restrictions. Unless otherwise specified, as used in
the Loan Documents or in any certificate, report, instrument or other document
made or delivered pursuant to any of the Loan Documents, all accounting terms
not defined in Appendix A or elsewhere in this Agreement shall have the meanings
assigned to such terms in and shall be interpreted in accordance with GAAP as in
effect from time to time; provided that, if any change in GAAP results in a
change in the calculation of the financial covenants or interpretation of the
related provisions of this Agreement or any other Loan Document, then the Credit
Parties and Agent agree to amend such provisions of this Agreement so as to
equitably reflect such changes in GAAP with the desired result that the criteria
for evaluating the Credit Parties' financial condition shall be the same after
such change in GAAP as if such change had not been made. All dollars referred to
in this Agreement shall be U.S. Dollars unless otherwise expressly stated.
II. LOANS; PAYMENTS; INTEREST; AND COLLATERAL
2.1 THE REVOLVING FACILITIES
(a) Subject to the provisions of this Agreement, each US Revolving
Lender agrees to make available its Pro Rata Share of US Revolving Advances to
US Borrower under the US Revolving Facility from time to time during the Term;
provided, that (i) the Pro Rata Share of the US Revolving Advances of any US
Revolving Lender shall not at any time exceed its separate Commitment under the
US Revolving Facility, and (ii) the aggregate amount of all US Revolving
Advances at any time outstanding under the US Revolving Facility shall not
exceed the US Revolving Facility Maximum Amount then in effect. The "US
REVOLVING FACILITY MAXIMUM AMOUNT" at any time shall be equal to the lesser of:
(x) the value, in U.S. Dollars, of eighty-five
percent (85%) of US Borrower's Eligible Receivables in the US Borrowing
Base, minus (i) amounts reserved pursuant to this Agreement and (ii)
the undrawn face amount of US Standby Letters of Credit to the extent
they have not been cash collaterilized, plus the Additional Amount
(such calculated amount being referred to herein as the "US
AVAILABILITY"); and
(y) the US Revolving Facility Cap then in
effect.
The obligations of US Revolving Lenders under the US Revolving Facility shall be
several, and
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not joint or joint and several, up to the amount of the Commitments under the US
Revolving Facility. The US Revolving Facility is a revolving credit facility
which may be drawn, repaid and redrawn from time to time as permitted under this
Agreement. Any determination as to whether there is US Availability within the
US Borrowing Base for requested US Revolving Advances shall be made by Agent in
its Permitted Discretion and is final and binding upon US Borrower. Unless
otherwise permitted by Agent, each US Revolving Advance shall be in an amount of
at least One Hundred Thousand Dollars ($100,000). Subject to the provisions of
this Agreement, US Borrower may request US Revolving Advances up to and
including, and to the extent the aggregate outstanding principal amount thereof
does not exceed, the US Revolving Facility Maximum Amount in effect from time to
time. US Revolving Advances under the US Revolving Facility may automatically be
made for the payment of interest on the US Term Loan, the US Revolving Facility
and other US Obligations on the date when due to the extent available and as
provided for herein if such US Obligations are not directly paid by the US
Borrower when due. No Credit Party may at any time increase, reduce or otherwise
adjust the US Revolving Facility Cap without the prior written consent of Agent
and US Requisite Lenders. Agent shall have the right to establish and readjust
from time to time, in its Permitted Discretion, reserves against the US
Borrowing Base, which reserves shall have the effect of reducing the amounts
otherwise eligible to be disbursed to US Borrower under the US Revolving
Facility pursuant to this Agreement and, commencing September 30, 2004, in the
event that and for so long as the obligations of Parent under the letter from
Parent to National Westminster Bank PLC dated February 25, 2003 are not
terminated in form and substance satisfactory to Agent in its Permitted
Discretion, Agent shall establish a reserve against US Availability equal to the
liabilities of Parent and its subsidiaries under the Facilities referred to in
such letter, as determined from time to time by Agent in its Permitted
Discretion.
(b) Subject to the provisions of this Agreement, each Canadian
Revolving Lender agrees to make available its Pro Rata Share of Canadian
Revolving Advances to Canadian Borrower under the Canadian Revolving Facility
from time to time during the Term; provided, that (i) the Pro Rata Share of the
Canadian Revolving Advances of any Canadian Revolving Lender shall not at any
time exceed its separate Commitment under the Canadian Revolving Facility, and
(ii) the aggregate amount of all Canadian Revolving Advances at any time
outstanding under the Canadian Revolving Facility shall not exceed the Canadian
Revolving Facility Maximum Amount then in effect. The "CANADIAN REVOLVING
FACILITY MAXIMUM AMOUNT" at any time shall be equal to the lesser of:
(x) the value in U.S. Dollars of eighty-five
percent (85%) of Canadian Borrower's Eligible Receivables in the
Canadian Borrowing Base, minus (i) amounts reserved pursuant to this
Agreement and (ii) the undrawn face amount of Canadian Standby Letters
of Credit to the extent they have not been cash collaterilized (such
calculated amount being referred to herein as the "CANADIAN
AVAILABILITY"); and
(y) the Canadian Revolving Facility Cap then in
effect.
The obligations of Canadian Revolving Lenders under the Canadian Revolving
Facility shall be several, and not joint or joint and several, up to the amount
of the Commitments under the Canadian Revolving Facility. The Canadian Revolving
Facility is a revolving credit facility
3
which may be drawn, repaid and redrawn from time to time as permitted under this
Agreement. Any determination as to whether there is Canadian Availability within
the Canadian Borrowing Base for requested Canadian Revolving Advances shall be
made by Agent in its Permitted Discretion and is final and binding upon Canadian
Borrower. Unless otherwise permitted by Agent, each Canadian Revolving Advance
shall be in an amount of at least Fifty Thousand Dollars ($50,000). Subject to
the provisions of this Agreement, Canadian Borrower may request Canadian
Revolving Advances up to and including, and to the extent the aggregate
outstanding principal amount thereof does not exceed, the Canadian Revolving
Facility Maximum Amount in effect from time to time. Canadian Revolving Advances
under the Canadian Revolving Facility may automatically be made for the payment
of interest on the Canadian Term Loan, the Canadian Revolving Facility, and
other Canadian Obligations on the date when due to the extent available and as
provided for herein if such Canadian Obligations are not directly paid by
Canadian Borrower when due. No Credit Party may at any time increase, reduce or
otherwise adjust the Canadian Revolving Facility Cap without the prior written
consent of Agent and Canadian Requisite Lenders. Agent shall have the right to
establish and readjust from time to time, in its Permitted Discretion, reserves
against the Canadian Borrowing Base, which reserves shall have the effect of
reducing the amounts otherwise eligible to be disbursed to Canadian Borrower
under the Canadian Revolving Facility pursuant to this Agreement.
2.2 THE REVOLVING NOTES; MATURITY
(a) All Revolving Advances under the Revolving Facilities
shall be evidenced by the Revolving Notes, payable to the order of each
Revolving Lender in the principal amount of the Commitment of such Revolving
Lender under the Revolving Facilities, duly executed and delivered by US
Borrower or Canadian Borrower, as applicable. The US Revolving Notes shall
evidence the aggregate Indebtedness of US Borrowers to US Revolving Lenders
resulting from US Revolving Advances under the US Revolving Facilities from time
to time. The Canadian Revolving Notes shall evidence the aggregate Indebtedness
of Canadian Borrowers to Canadian Revolving Lenders resulting from Canadian
Revolving Advances under the Canadian Revolving Facilities from time to time.
Each Revolving Lender hereby is authorized, but is not obligated, to enter the
amount of such Revolving Lender's Pro Rata Share of each Revolving Advance under
either Revolving Facility, and the amount of each payment or prepayment of
principal or interest thereon in the appropriate spaces on the reverse of or on
an attachment to such Revolving Lender's Revolving Note(s). Agent will account
to Borrowers monthly with a statement of Revolving Advances under each Revolving
Facility, and any charges and payments made pursuant to this Agreement, and in
the absence of manifest error, such accounting rendered by Agent shall be deemed
final, binding and conclusive unless Agent is notified by Borrowers in writing
to the contrary within fifteen (15) calendar days of Receipt of each accounting,
which notice shall be deemed an objection only to items specifically objected to
therein.
(b) All amounts outstanding under the Revolving Notes and
all other Obligations under the Revolving Facilities shall be due and payable in
full, if not earlier in accordance with this Agreement, on the Maturity Date.
2.3 INTEREST ON THE REVOLVING NOTES
4
Subject to Section 3.7, Interest on outstanding Revolving
Advances under the Revolving Notes shall be payable monthly in arrears on the
first day of each calendar month commencing May 1, 2004 at an annual rate equal
to the Prime Rate plus one and three-quarters percent (1.75%) calculated on the
basis of a 360-day year and for the actual number of calendar days elapsed in
each interest calculation period. Interest accrued on each Revolving Advance
under the Revolving Notes shall be due and payable on the first day of each
calendar month, in accordance with the procedures provided for in Section 2.9,
commencing May 1, 2004 and continuing until the later of the expiration of the
Term and the full performance and indefeasible payment in full in cash of the
Obligations and termination of this Agreement.
2.4 REVOLVING FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER
BORROWING CERTIFICATE
(a) So long as no Default or Event of Default shall have
occurred and be continuing, US Borrower may give Agent irrevocable written
notice requesting a US Revolving Advance under the US Revolving Facility by
delivering to Agent not later than 12:00 noon (New York City time) at least one
(1) but not more than four (4) Business Days before the proposed Business Day on
which such requested US Revolving Advance is to be made (the "US REVOLVING
ADVANCE BORROWING DATE"), a completed Borrowing Certificate requesting such US
Revolving Advance accompanied by relevant supporting documentation set forth in
the most recent Monthly Borrowing Certificate (as adjusted pursuant to Section
2.14(d)) satisfactory to Agent in its Permitted Discretion, which shall (a)
specify the proposed US Revolving Advance Borrowing Date of such US Revolving
Advance, (b) specify the principal amount of such requested US Revolving
Advance, (c) certify the matters contained in Section 4.2 and, to the extent
applicable, provide calculations evidencing satisfaction of the conditions set
forth in Section 4.2 and (d) specify the other items and information required in
each Borrowing Certificate; provided, however, that with respect to any such
Borrowing Certificate provided by US Borrowers to Agent during a month, US
Borrowers shall not be required to update the calculation of Eligible
Receivables set forth in the Borrowing Certificate provided by US Borrowers to
Agent at the beginning of such month unless Agent so requests in its Permitted
Discretion. On each US Revolving Advance Borrowing Date, US Borrower irrevocably
authorizes Agent and Lenders to disburse the proceeds of the requested US
Revolving Advance to the applicable account(s) of US Borrower specified in the
applicable Borrowing Certificate, each of which accounts shall constitute one or
more of the accounts set forth on Schedule 2.4 that is the subject of a Bank
Agency Agreement (as such Schedule 2.4 may be supplemented or otherwise updated
from time to time by written notice by US Borrower to Agent), in all cases for
credit to US Borrower via Federal funds wire transfer no later than 3:00 p.m.
(New York City time). Notwithstanding anything to the contrary in this
Agreement, Agent and Lenders shall be entitled to rely upon the authority of any
authorized officer of US Borrower for communications with and instructions from
US Borrower until Agent has actually received written notice from US Borrower
that such officer no longer has such authority.
(b) So long as no Default or Event of Default shall have
occurred and be continuing, Canadian Borrower may give Agent irrevocable written
notice requesting a Canadian Revolving Advance under the Canadian Revolving
Facility by delivering to Agent not later than 12:00 noon (New York City time)
at least one (1) but not more than four (4) Business Days
5
before the proposed Business Day on which such requested Canadian Revolving
Advance is to be made (the "CANADIAN REVOLVING ADVANCE BORROWING DATE"), a
completed Borrowing Certificate requesting such Canadian Revolving Advance
accompanied by relevant supporting documentation satisfactory to Agent in its
Permitted Discretion, which shall (a) specify the proposed Canadian Revolving
Advance Borrowing Date of such Canadian Revolving Advance, (b) specify the
principal amount of such requested Canadian Revolving Advance, (c) certify the
matters contained in Section 4.2 and, to the extent applicable, provide
calculations evidencing satisfaction of the conditions set forth in Section 4.2
and (d) specify the other items and information required in each Borrowing
Certificate; provided, however, that with respect to any such Borrowing
Certificate provided by Canadian Borrowers to Agent during a month, Canadian
Borrowers shall not be required to update the calculation of Eligible
Receivables set forth in the Borrowing Certificate provided by Canadian
Borrowers to Agent at the beginning of such month unless Agent so requests in
its Permitted Discretion. On each Canadian Revolving Advance Borrowing Date,
Canadian Borrower irrevocably authorizes Agent and Lenders to disburse the
proceeds of the requested Canadian Revolving Advance to the applicable
account(s) of Canadian Borrower specified in the applicable Borrowing
Certificate, each of which accounts shall constitute one or more of the accounts
set forth on Schedule 2.4 that is the subject of a Bank Agency Agreement (as
such Schedule 2.4 may be supplemented or otherwise updated from time to time by
written notice by Canadian Borrower to Agent), in all cases for credit to
Canadian Borrower via Federal funds wire transfer no later than 3:00 p.m. (New
York City time). Notwithstanding anything to the contrary in this Agreement,
Agent and Lenders shall be entitled to rely upon the authority of any authorized
officer of Canadian Borrower for communications with and instructions from
Canadian Borrower until Agent has actually received written notice from Canadian
Borrower that such officer no longer has such authority.
(c) On the fifteenth (15th) Business Day of each calendar
month during the Term (and more frequently if Agent shall so request in its
Permitted Discretion but in no event more often than one (1) time per week
unless an Event of Default exists) until the Obligations are irrevocably paid in
cash in full and this Agreement is terminated, (i) Canadian Borrower shall
deliver to Agent a Borrowing Certificate (the "CANADIAN MONTHLY BORROWING
CERTIFICATE") and (ii) US Borrower shall deliver to Agent a Borrowing
Certificate (the "US MONTHLY BORROWING CERTIFICATE" and together with the
Canadian Monthly Borrowing Certificate the "MONTHLY BORROWING CERTIFICATE").
2.5 STANDBY LETTERS OF CREDIT
(a) Subject to the terms and conditions hereof, Agent
shall
(i) from time to time during the Term issue or
cause the US L/C Issuer to issue US Standby Letters of Credit for the
account of US Borrower; provided, however, that Agent will not be
required to issue or to cause to be issued any US Standby Letters of
Credit to the extent that the issuance of such US Standby Letters of
Credit would then cause the sum of the outstanding US Revolving
Advances and all outstanding US Letter of Credit Obligations to the
extent such US Letter of Credit Obligations are not cash collateralized
to exceed the US Revolving Facility Maximum Amount then in effect (with
the requested US Standby Letters of Credit being deemed to be
outstanding for the
6
purposes of calculating US Availability). The maximum amount of
outstanding US Standby Letters of Credit under the US Revolving
Facility shall not exceed Five Million Five Hundred Thousand Dollars
($5,500,000) in the aggregate at any time. Each disbursement or payment
by the US L/C Issuer or Agent of an amount drawn under US Standby
Letters of Credit shall be deemed to be a US Revolving Advance and
shall bear interest at the Applicable Rate for US Revolving Notes. US
Standby Letters of Credit that have not been drawn upon shall not bear
interest.
(ii) from time to time during the Term issue or
cause the Canadian L/C Issuer to issue Canadian Standby Letters of
Credit for the account of Canadian Borrower; provided, however, that
Agent will not be required to issue or to cause to be issued any
Canadian Standby Letters of Credit to the extent that the issuance of
such Canadian Standby Letters of Credit would then cause the sum of the
outstanding Canadian Revolving Advances and all outstanding Canadian
Letter of Credit Obligations to the extent such Canadian Letter of
Credit Obligations are not cash collateralized to exceed the Canadian
Revolving Facility Maximum Amount then in effect (with the requested
Canadian Standby Letters of Credit being deemed to be outstanding for
the purposes of calculating Canadian Availability). The maximum amount
of outstanding Canadian Standby Letters of Credit under the Canadian
Revolving Facility shall not exceed One Million Five Hundred Thousand
Dollars ($1,500,000) in the aggregate at any time. Each disbursement or
payment by the Canadian L/C Issuer or Agent of an amount drawn under
Canadian Standby Letters of Credit shall be deemed to be a Canadian
Revolving Advance and shall bear interest at the Applicable Rate for
Canadian Revolving Notes. Canadian Standby Letters of Credit that have
not been drawn upon shall not bear interest.
(b) The US Borrower and the Canadian Borrower may from
time to time upon notice not later than 11:00 a.m., New York City time, at least
three (3) Business Days in advance, request Agent to assist such Borrower in
establishing or opening a Standby Letter of Credit by delivering to Agent, the
L/C Issuer's standard form of standby letter of credit application (the "STANDBY
LETTER OF CREDIT APPLICATION") completed to the satisfaction of the US L/C
Issuer or Canadian L/C Issuer, respectively, and such other certificates,
documents and other papers and information as Agent or US L/C Issuer or Canadian
L/C Issuer, respectively may reasonably request.
(c) Each Standby Letter of Credit shall, among other
things, (i) provide for the payment of sight drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by the
documents described therein and (ii) have an expiry date not later than twelve
(12) months after such Standby Letter of Credit's date of issuance and in no
event later than the last day of the Term. Each Standby Letter of Credit
Application and each Standby Letter of Credit shall be subject to the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and any amendments or revision thereof.
(d) In connection with the issuance of any Standby Letter
of Credit issued on behalf of US Borrower, US Borrower shall indemnify, save and
hold Agent, each Lender and each US L/C Issuer harmless from any loss, cost,
expense or liability, including, without
7
limitation, payments made by Agent, any Lender or any US L/C Issuer, and
reasonable expenses and reasonable attorneys' fees incurred by Agent, any Lender
or any US L/C Issuer arising out of, or in connection with, any Standby Letter
of Credit to be issued for the account of such Borrower, except as such loss,
cost, expense or liability results from such Person's gross negligence, bad
faith or willful misconduct. US Borrower shall be bound by the US L/C Issuer's
regulations and good faith interpretations of any Standby Letter of Credit
issued or created for US Borrower's account, although this interpretation may be
different from US Borrower's own; and, neither Agent nor any Lender, any US L/C
Issuer, nor any of its correspondents shall be liable for any error, negligence,
or mistakes, whether of omission or commission, in following US Borrower's
instructions or those contained in any Standby Letter of Credit or of any
modifications, amendments or supplements thereto or in issuing or paying any
Standby Letter of Credit, except for Agent's, any Lender's, such US L/C Issuer's
or such correspondents' gross negligence, bad faith or willful misconduct.
(e) In connection with the issuance of any Standby Letter
of Credit issued on behalf of Canadian Borrower, Canadian Borrower shall
indemnify, save and hold Agent, each Lender and each Canadian L/C Issuer
harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Lender or any Canadian L/C Issuer, and
reasonable expenses and reasonable attorneys' fees incurred by Agent, any Lender
or any Canadian L/C Issuer arising out of, or in connection with, any Standby
Letter of Credit to be issued for the account of such Borrower, except as such
loss, cost, expense or liability results from such Person's gross negligence,
bad faith or willful misconduct. Canadian Borrower shall be bound by the
Canadian L/C Issuer's regulations and good faith interpretations of any Standby
Letter of Credit issued or created for Canadian Borrower's account, although
this interpretation may be different from Canadian Borrower's own; and, neither
Agent nor any Lender, any Canadian L/C Issuer, nor any of its correspondents
shall be liable for any error, negligence, or mistakes, whether of omission or
commission, in following Canadian Borrower's instructions or those contained in
any Standby Letter of Credit or of any modifications, amendments or supplements
thereto or in issuing or paying any Standby Letter of Credit, except for
Agent's, any Lender's, such Canadian L/C Issuer's or such correspondents' gross
negligence or willful misconduct.
(f) US Borrower shall authorize and direct the US L/C
Issuer to name US Borrower as the "Account Party" therein and to deliver to
Agent all instruments, documents, and other writings and property received by
the US L/C Issuer pursuant to the Standby Letters of Credit and to accept and
rely upon Agent's instructions and agreements with respect to all matters
arising in connection with the Standby Letters of Credit and the applications
therefor. Canadian Borrower shall authorize and direct the Canadian L/C Issuer
to name Canadian Borrower as the "Account Party" therein and to deliver to Agent
all instruments, documents, and other writings and property received by the
Canadian L/C Issuer pursuant to the Standby Letters of Credit and to accept and
rely upon Agent's instructions and agreements with respect to all matters
arising in connection with the Standby Letters of Credit and the applications
therefor.
(g) Each Revolving Lender shall to the extent of its Pro
Rata Share of the aggregate amount of all disbursements made with respect to the
Standby Letters of Credit be deemed to have irrevocably purchased an undivided
participation in each Revolving Advance
8
made as a consequence of such disbursement. If at the time a disbursement is
made the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the maximum amounts permitted under this Agreement
and if such disbursement is not reimbursed by Borrowers within two (2) Business
Days, then Agent shall promptly notify each Revolving Lender, and upon Agent's
demand each Revolving Lender shall pay to Agent such Revolving Lender's Pro Rata
Share of such unreimbursed disbursement together with such Revolving Lender's
Pro Rata Share of Agent's unreimbursed costs and expenses relating to such
unreimbursed disbursement. Upon receipt by Agent of a repayment from Borrowers
of any amount disbursed by Agent for which Agent had already been reimbursed by
the Lenders, Agent shall deliver to each of the Revolving Lenders that Revolving
Lender's Pro Rata Share of such repayment. Each Revolving Lender's participation
commitment shall continue until the last to occur of any of the following
events: (A) Agent ceases to be obligated to issue or to cause the issuance of
Standby Letters of Credit hereunder; (B) no Standby Letter of Credit issued
hereunder remains outstanding and uncancelled; or (C) all Persons (other than
Borrowers) have been fully reimbursed for all payments made under or relating to
Standby Letters of Credit.
(h) The obligations of a Revolving Lender to make
payments to the Agent for the account of the Agent or any L/C Issuer with
respect to a Standby Letter of Credit shall be irrevocable, without any
qualification or exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances:
(i) Nany lack of validity or enforceability of
this Agreement or any of the Loan Documents;
(ii) the existence of any claim, setoff, defense
or other right that Borrowers may have at any time against a beneficiary named
in such Standby Letter of Credit or any transferee of such Standby Letter of
Credit (or any Person for which any such transferee may be acting), the Agent,
L/C Issuer, any Lender, or any other person, whether in connection with this
Agreement, such Standby Letter of Credit, the transactions contemplated herein
or any related transactions (including any underlying transactions between
Borrower or any other party and the beneficiary named in such Standby Letter of
Credit);
(iii) any draft, certificate or any other document
presented under such Standby Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of this Agreement or any
of the Loan Documents;
(v) any failure by the Agent to provide any
notices required pursuant to this Agreement relating to such Standby Letter of
Credit;
(vi) any payment by the L/C Issuer under any of
the Standby Letters of Credit against presentation of a draft or certificate
which does not comply with the terms of such
9
Standby Letter of Credit (if, in the good faith opinion of the L/C Issuer, such
prepayment is deemed to be appropriate); or
(vii) the occurrence and continuation of any
Default or Event of Default;
provided, however, that after paying in full its reimbursement obligation
hereunder, nothing herein shall adversely affect the right of Borrowers or any
Lender, as the case may be, to commence any proceeding against such L/C Issuer
for any wrongful disbursement made by such L/C Issuer under a Standby Letter of
Credit as a result of acts or omissions constituting gross negligence, bad faith
or willful misconduct on the part of such L/C issuer.
2.6 TERM LOANS; TERM NOTES
(a) Subject to the terms and conditions set forth in this
Agreement, each US Term Lender agrees to loan to US Borrower on the Closing Date
its Pro Rata Share of the US Term Loan, which, in the aggregate, equals an
original principal amount of Fourteen Million Dollars ($14,000,000); provided
however that the amount of the Pro Rata Share of the US Term Loan of any US Term
Lender shall not at any time exceed its separate Commitment. The US Term Loan is
not a revolving credit facility and may not be drawn, repaid and redrawn. Any
repayments of principal on the US Term Loan shall be applied to permanently
reduce such US Term Loan. The obligations of the US Term Lenders hereunder are
several and not joint or joint and several. The US Term Loan shall be evidenced
by Term Notes, payable to the order of each US Term Lender in the principal
amount of the related Commitment of the applicable US Term Lender, duly executed
and delivered by US Borrower. Each US Term Lender hereby is authorized, but is
not obligated, to enter the amount of such US Term Lender's Pro Rata Share of
outstanding principal of the US Term Loan and the amount of each payment or
prepayment of principal and interest thereon on the reverse of or on an
attachment to such US Term Lender's Term Note. On the Closing Date, US Borrower
irrevocably authorizes Agent and US Term Lenders to disburse the proceeds of the
US Term Loan to the applicable account(s) of US Borrower set forth on Schedule
2.4, in all cases for credit to US Borrower, via Federal funds wire transfer.
(b) Subject to the terms and conditions set forth in this
Agreement, each Canadian Term Lender agrees to loan to Canadian Borrower on the
Closing Date its Pro Rata Share of the Canadian Term Loan, which, in the
aggregate, equals an original principal amount of Six Million Five Hundred
Thousand Dollars ($6,500,000); provided however that the amount of the Pro Rata
Share of the Canadian Term Loan of any Canadian Term Lender shall not at any
time exceed its separate Commitment. The Canadian Term Loan is not a revolving
credit facility and may not be drawn, repaid and redrawn. Any repayments of
principal on the Canadian Term Loan shall be applied to permanently reduce such
Canadian Term Loan. The obligations of the Canadian Term Lenders hereunder are
several and not joint or joint and several. The Canadian Term Loan shall be
evidenced by Term Notes, payable to the order of each Canadian Term Lender in
the principal amount of the related Commitment of the applicable Canadian Term
Lender, duly executed and delivered by Canadian Borrower. Each Canadian Term
Lender hereby is authorized, but is not obligated, to enter the amount of such
Canadian Term Lender's
10
Pro Rata Share of outstanding principal of the Canadian Term Loan and the amount
of each payment or prepayment of principal and interest thereon on the reverse
of or on an attachment to such Canadian Term Lender's Term Note. On the Closing
Date, Canadian Borrower irrevocably authorizes Agent and Canadian Term Lenders
to disburse the proceeds of the Canadian Term Loan to the applicable account(s)
of Canadian Borrower set forth on Schedule 2.4, in all cases for credit to
Canadian Borrower, via Federal funds wire transfer no.
2.7 INTEREST ON TERM LOANS
(a) Subject to Section 3.7, Interest on the outstanding
principal balance of the Term Loans under the Term Notes shall be payable in
cash monthly in arrears on the first day of each calendar month at an annual
rate equal to the greater of (i) the Prime Rate, plus 3.50% and (ii) 7.5%,
calculated on the basis of a 360-day year and shall be charged for the actual
number of calendar days elapsed in each interest calculation period. Interest
accrued on the Term Loans shall be due and payable in cash in arrears on the
first day of each calendar month commencing on May 1, 2004, and continuing until
the later of the expiration of the Term and the full performance and
indefeasible payment in full in cash of the Term Loans and all Obligations
related thereto.
(b) Revolving Advances under the US Revolving Facility
may be made for the payment of interest and principal on the Term Loans and
other Obligations on the date when due as provided for herein if such
Obligations are not directly paid by a Borrower. Revolving Advances under the
Canadian Revolving Facility may be made for the payment of interest and
principal on the Canadian Term Loan and other Canadian Obligations on the date
when due as provided for herein if such Canadian Obligations are not directly
paid by Canadian Borrower.
2.8 SCHEDULED REPAYMENT OF THE TERM LOANS; MATURITY
(a) Payment of the outstanding principal balance under
the US Term Loan (in addition to the interest payments) and all other amounts
(other than interest) outstanding under the US Term Loan shall be made by the US
Borrower in cash monthly in arrears on the first day of each calendar month
during the periods indicated below in the respective amounts set forth below:
Monthly Payment Date Monthly Principal Payment
May 1, 2004 to and including March 1, 2005 $159,090.91
April 1, 2005 to and including March 1, 2006 $204,166.67
April 1, 2006 to and including March 1, 2007 $233,333.33
April 1, 2007 to and including March 1, 2008 $262,500.00
April 1, 2008 to and including March 1, 2009 $320,833.33
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The unpaid principal amount of the US Term Loan and all other
Obligations under the US Term Loan shall be due and payable in full, and the
related Term Notes shall mature, if not earlier in accordance with this
Agreement, on the Maturity Date.
(b) Payment of the outstanding principal balance under
the Canadian Term Loan (in addition to the interest payments) and all other
amounts (other than interest) outstanding under the Canadian Term Loan shall be
made by Canadian Borrower in cash monthly in arrears on the first day of each
calendar month during the periods indicated below in the respective amounts set
forth below:
Monthly Payment Date Monthly Principal Payment
May 1, 2004 to and including March 1, 2005 $ 68,181.82
April 1, 2005 to and including March 1, 2006 $ 87,500.00
April 1, 2006 to and including March 1, 2007 $100,000.00
April 1, 2007 to and including March 1, 2008 $112,500.00
April 1, 2008 to and including March 1, 2009 $137,500.00
The unpaid principal amount of the Canadian Term Loan and all
other Obligations under the Canadian Term Loan shall be due and payable in full,
and the related Term Notes shall mature, if not earlier in accordance with this
Agreement, on the Maturity Date.
2.9 PROMISE TO PAY; MANNER OF PAYMENT.
Each Credit Party absolutely and unconditionally promises to
pay, when due and payable pursuant hereto, principal, interest and all other
amounts and Obligations payable by such Credit Party hereunder and under any
other Loan Document, without any right of rescission and without any deduction
whatsoever (subject to Section 6.13), including any deduction for set-off,
recoupment or counterclaim, notwithstanding any damage to, defects in or
destruction of the Collateral or any other event, including obsolescence of any
property or improvements. Any payments made by the Credit Parties (other than
payments automatically paid through Revolving Advances under a Revolving
Facility as provided herein) shall be made only by wire transfer on the date
when due, without offset, deduction or counterclaim, in Dollars, in immediately
available funds to such account as may be indicated in writing by Agent to
Borrowers from time to time. Any such payment received after 2:00 p.m. New York
City time on any date shall be deemed received on the following Business Day.
Whenever any payment hereunder shall be stated to be due or shall become due and
payable on a day other than a Business Day, the due date thereof shall be
extended to, and such payment shall be made on, the next succeeding Business
Day, and such extension of time in such case shall be included in the
computation of payment of any interest (at the interest rate then in effect
during such extension) and/or fees, as the case may be.
2.10 REPAYMENT OF EXCESS REVOLVING ADVANCES
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Any balance of Revolving Advances under the Revolving
Facilities outstanding at any time in excess of the US Revolving Facility
Maximum Amount or the Canadian Revolving Facility Maximum Amount, as applicable,
shall be due and payable by the respective Borrower on the date of delivery of
the Borrowing Certificate which sets forth such excess balance or within two
Business Days of written notice to such Borrower from Agent of such excess
balance, in each case without the necessity of any demand, at the Payment
Office, whether or not a Default or Event of Default has occurred and is
continuing and in the manner specified in Section 2.11(d) below and,
notwithstanding any other provision of this Agreement, such over-advance shall
be an Event of Default. For clarification purposes, no advance made by any
Lender under Section 2.20 shall be deemed a Revolving Advance for purposes of
this Section 2.10.
2.11 VOLUNTARY AND MANDATORY PREPAYMENTS
(a) In addition to and without limiting any provision of
any Loan Document
(i) if a Change of Control or the consummation
of a Public Offering of securities by Parent, other than an offering of
securities for an employee benefit plan on SEC Form S-8 or a successor form,
that realizes at least $14,000,000 in net proceeds to the Parent occurs that has
not been consented to in writing by Agent prior to the consummation thereof, on
or prior to the date of such Change of Control or Public Offering, Borrowers
shall prepay the Loans and all other Obligations in full in cash together with
accrued interest thereon to the date of prepayment, the applicable Yield
Maintenance Fee and all other amounts owing to Agent and Lenders under the Loan
Documents.
(ii) if any Credit Party or any of its
Subsidiaries, in any transaction or series of transactions: (A) sells any assets
or other properties (other than (x) sales of assets permitted under Sections
7.8(a)(i), (ii), (iii) and (vi), (y) proceeds from sales of assets pending as of
the date hereof and set forth on Schedule 2.11 hereto and (z) other sales of
assets, the fair market value of which does not exceed $250,000 in any fiscal
year of Borrowers, that are promptly (and in any event within one hundred eighty
(180) days) replaced with assets of a kind used or to be used in the Business of
such Credit Party or Subsidiary purchased or otherwise acquired with the
proceeds of such asset sales); (B) sells or issues any equity securities,
capital stock or ownership interests in connection with or as part of a Public
Offering; (C) receives any property damage insurance award or any other
insurance loss proceeds (but excluding reimbursement of defense costs or other
similar expenses) that are not used promptly (and in any event within one
hundred eighty (180) days) after receipt to repair or replace the property or
assets covered thereby; it being agreed and understood that such repair and
replace rights shall apply solely if no Default or Event of Default exists and
solely to such awards and proceeds to the extent not exceeding $250,000 in the
aggregate during any fiscal year of Borrowers; or (D) incurs any Indebtedness
other than, so long as no Default or Event of Default has occurred and is
continuing or would be cause by or result therefrom, Permitted Indebtedness,
then Borrowers shall apply 100% of the Net Proceeds thereof to the payment of
the Obligations in accordance with Section 2.11(d); provided, that, pending any
such reinvestment with respect to clause (A) or (C) above, such Net Proceeds
shall be either used to repay Revolving Advances (in which case the making of
all future Revolving Advances shall be subject to the terms and conditions of
this
13
Agreement) or held by the applicable Credit Party in an account of such Credit
Party subject to a Bank Agency Agreement and such Net Proceeds deposited therein
shall be used by Borrowers solely for reinvestment as and to the extent
permitted herein or otherwise shall be delivered promptly to Agent, for
distribution to the Lenders, as a prepayment of the Obligations, to be applied
in accordance with Section 2.11(d).
(b) In addition and notwithstanding any other provisions
of this Agreement or any Loan Document, until the Term Loans and Obligations
relating thereto are indefeasibly paid in full in cash and performed, fifty
percent (50%) of Borrowers' Excess Cash Flow for each fiscal year (commencing
with the fiscal year of Borrowers ending March 31, 2005) shall be paid by
Borrowers to Agent, for the ratable benefit of Term Lenders. Such payments shall
be made on the date of delivery to Agent of Borrowers' annual audited financial
statements, but in any event not later than ninety (90) days after the end of
the fiscal year to which such Excess Cash Flow relates. All amounts payable
pursuant to this Section 2.11(b) shall be applied by Agent, for the ratable
account of Term Lenders, to reduce the Obligations related to the Term Loans in
accordance with Section 2.11(d).
(c) Subject to the terms of this Section 2.11 and Section
3.4, and without limiting the requirements under the other provisions of this
Section 2.11, Borrowers may prepay to Agent, for the ratable benefit of the
applicable Term Lenders, the outstanding principal amount of the Term Loans and
all other Obligations related thereto, in whole or in part at any time. In
connection with any such prepayment and as a condition thereto, the Borrowers
shall pay to Agent, for the ratable benefit of the applicable Term Lenders, as
yield maintenance for the loss of bargain and not as a penalty, an amount equal
to the applicable Yield Maintenance Fee pursuant to Section 3.4. Borrowers may
make such prepayments subject to the following conditions:
(i) If Borrowers elect to make any prepayment of
the Term Loans pursuant to this Section 2.11(c), Borrowers shall give
notice of such prepayment to Agent not less than five (5) Business Days
but no more than forty-five (45) Business Days prior to the date such
prepayment is made, specifying (i) the date on which such prepayment is
to be made, (ii) the Loans to be prepaid and the amount of such
prepayment, (iii) the Yield Maintenance Fee, if any, and accrued
interest and fees applicable to such prepayment and (iv) to the extent
such prepayment is conditioned on the consummation of any transaction,
the condition to be satisfied prior to such prepayment . Such notice
shall be accompanied by a certificate of the chief financial officer,
controller or chief executive officer of Borrowers, on behalf of
Borrowers, that such payment is being made in compliance with this
Section 2.11(c). Notice of prepayment having --------------- been so
given, the aggregate principal amount of the Term Loans, as the case
may be, so specified to the prepaid, together with accrued interest and
the applicable Yield Maintenance Fee, if any, thereon, shall become due
and payable on the prepayment date set forth in such notice, provided
that any transaction upon which the prepayment is conditioned as set
forth in such notice has been consummated.
(ii) All prepayments made pursuant to this
Section 2.11(c) shall be made in accordance with Section 2.9 and shall
be designated as a prepayment pursuant to
14
this Section 2.11(c) on such wire. Except for prepayments made pursuant
hereto in accordance with Section 7.1, the amount of any particular
prepayment shall not be less than $250,000 or multiples of $100,000 in
excess thereof.
(iii) Anything herein contained to the contrary
notwithstanding, the Agent, in its sole and absolute discretion, may
require all or any portion of voluntary prepayments made by Borrowers
of Term Loans to be applied to the principal balance of the US Term
Loan and any related US Obligations prior to the application thereof to
the Canadian Term Loan and related Canadian Obligations.
(d) Subject to Section 2.11(c)(iii) above, any
prepayments made pursuant to Section 2.11(a), (b) or (c) shall be applied to the
Obligations as follows: first, to all then unpaid fees and expenses of Agent and
Lenders under the Loan Documents, including the Yield Maintenance Fee, if any,
applicable to such prepayment; second, to all accrued and unpaid interest on the
Loans; third, to the principal balance under the US Term Loan and Canadian Term
Loan (pro rata based upon the outstanding principal balance thereof immediately
prior to such prepayment) to be applied to remaining principal payments on a pro
rata basis (provided, however, that prepayments made pursuant to Section 2.11(b)
shall be applied first to the principal balance under the Canadian Term Loan
until the principal balance of the Canadian Term Loan is reduced by $500,000 as
a result of such prepayments made pursuant to Section 2.11(b)); and fourth to
the principal amount of the Revolving Loans (in each case with a corresponding
reduction in the US Revolving Facility Cap and the Canadian Revolving Facility
Cap, respectively), pro rata to such Loans based on the outstanding principal
balances thereof (or on such other basis as the Agent may elect, in its sole and
absolute discretion); provided, however, that the reduction of the principal
balance of the Loans shall not affect the timing of principal payments required
under this Agreement but shall reduce such payments on a pro rata basis.
Notwithstanding anything contained in this Section 2.11 to the contrary, if any
balance of US Revolving Advances under the US Revolving Facility outstanding
exceed the US Revolving Facility Maximum Amount or any balance of Canadian
Revolving Advances under the Canadian Revolving Facility outstanding exceed the
Canadian Revolving Facility Maximum Amount, at the time a payment is due under
Section 2.11(a), such payment shall be applied first to eliminate such excess
Revolving Advances and then shall be applied according to the provisions set
forth above.
(e) Anything herein contained to the contrary
notwithstanding, to the extent that Canadian Borrower directly (and not by way
of dividend, capital contribution, loan or otherwise) receives any of the
proceeds described in Sections 2.11(a) or (b) (such proceeds, collectively,
"FOREIGN DISPOSITION PROCEEDS"), and Borrowers have delivered to Agent evidence
satisfactory to Agent that any material incremental tax liability would result
from the application of proceeds set forth in the preceding paragraph, then, in
lieu of prepaying the Obligations in the order of priority set forth in the
preceding paragraph, Canadian Borrower shall be permitted to use Foreign
Disposition Proceeds received by it to first prepay Canadian Obligations to the
extent outstanding, provided such proceeds are otherwise applied in the order
dictated by and otherwise in accordance with the terms of this Agreement.
2.12 PAYMENTS BY AGENT
15
Should any amount required to be paid under any Loan Document be unpaid
beyond any applicable cure period, such amount may be paid by Agent, for the
account of Lenders, which payment shall be deemed a request for a US Revolving
Advance under the US Revolving Facility (or, if relating to a Canadian
Obligation, at Agent's option, a request for a Canadian Revolving Advance under
the Canadian Revolving Facility) as of the date such payment is due, and each
Borrower irrevocably authorizes disbursement of any such funds to Agent, for the
benefit of Lenders, by way of direct payment of the relevant amount, interest or
Obligations without necessity of any demand in accordance with Section 2.9
whether or not a Default or an Event of Default has occurred or is continuing.
No payment or prepayment of any amount by Agent, Lenders or any other Person
shall entitle any Person to be subrogated to the rights of Agent and/or Lenders
under any Loan Document unless and until the Obligations have been fully
performed and indefeasibly paid in full in cash and this Agreement has been
terminated. Any sums expended or amounts paid by Agent and/or Lenders as a
result of any Credit Party's failure to pay, perform or comply with any Loan
Document or any of the Obligations may be charged to US Borrower's account as a
US Revolving Advance under the US Revolving Facility (or, if relating to a
Canadian Obligation, at Agent's option, as a Canadian Revolving Advance under
the Canadian Revolving Facility) and added to the respective Obligations.
2.13 GRANT OF SECURITY INTEREST; COLLATERAL
(a) To secure the payment and performance of the
Obligations of each US Credit Party, such US Credit Party hereby grants to
Agent, for the benefit of itself and the Lenders, a valid, perfected and
continuing first priority (subject, with respect to property or assets covered
by Priority Permitted Liens, such Priority Permitted Liens) security interest in
and Lien upon, and pledges to Agent, for the benefit of itself and the Lenders,
all of its right, title and interest in and to and upon all of such US Credit
Party's assets and property (unless the US Requisite Lenders otherwise permit in
writing in their sole and absolute discretion), whether now owned or hereafter
acquired, including, without limitation, all of the following property and
interests in property of such US Credit Party:
(i) all of such Credit Party's tangible personal
property, including, without limitation, all present and future Goods,
Inventory and Equipment (including items of equipment which are or
become Fixtures), Computer Hardware and Software, now owned or
hereafter acquired;
(ii) all of such US Credit Party's intangible
personal property, including, without limitation, all present and
future Accounts, securities, Contract Rights, Permits, General
Intangibles, Chattel Paper, Investment Property, Intellectual Property,
Documents, Instruments, Deposit Accounts, Letter-of-Credit Rights and
Supporting Obligations, rights to the payment of money or other forms
of consideration of any kind, tax refunds and insurance proceeds
(including, without limitation, proceeds of any life insurance policy,
but excluding benefits payable to employees under employee benefit
plans), now owned or hereafter acquired, and all intangible and
tangible personal property relating to or arising out of any of the
foregoing;
16
(iii) all of such US Credit Party's interests in
owned and leased real property;
(iv) all of such US Credit Party's present and
future Government Contracts and rights thereunder and the related
Government Accounts and proceeds thereof, now or hereafter owned or
acquired by such US Credit Party; provided, however, that Agent shall
not have a security interest in any rights under any Government
Contract of such US Credit Party or in the related Government Account
where the taking of such security interest would be a violation of an
express prohibition contained in such Government Contract (for purposes
of this limitation, the fact that a Government Contract is subject to,
or otherwise refers to, Title 31,Section 203 or Title 41,Section 15 of
the United States Code shall not be deemed an express prohibition
against assignment thereof) or is prohibited by applicable law; and
(v) any and all additions to any of the
foregoing, and any and all replacements, products and proceeds
(including insurance proceeds but excluding benefits payable to
employees under employee benefits plans) of any of the foregoing.
(b) In addition to the foregoing, subject to Section
2.13(e) below, to secure the payment and performance of the Obligations of each
US Credit Party, such US Credit Party, has pledged, hereby pledges and shall
pledge to Agent, for its benefit and the benefit of the Lenders, all of the
securities it owns in any Subsidiary pursuant to the Pledge Agreement to which
it is a party.
(c) Each Credit Party shall promptly notify Agent of any
Commercial Tort Claims in which such Credit Party has an interest arising after
the Closing Date and shall provide all necessary information concerning each
such Commercial Tort Claim, or upon any and all Commercial Tort Claims upon
request by Agent, and make all necessary filings with respect thereto to perfect
Agent's (for its benefit and the benefit of the Lenders) first priority security
interest therein.
(d) Each Credit Party has full right and power to grant
to Agent, for the benefit of itself and the Lenders, a perfected, first priority
(other than with respect to property or assets covered by Priority Permitted
Liens) security interest and Lien in the Collateral pursuant to this Agreement.
Upon the execution and delivery of this Agreement and the Canadian Security
Agreement, as applicable, and upon the filing of the necessary financing
statements and/or appropriate filings and/or delivery of the necessary
certificates evidencing an equity interest, control and/or possession, as
applicable, without any further action, Agent, for the benefit of itself and the
Lenders, will have a good, valid and first priority (other than with respect to
property or assets covered by Priority Permitted Liens) and perfected Lien and
security interest in the Collateral, subject to no transfer or other
restrictions not otherwise permitted hereunder or Liens of any kind in favor of
any other Person except for Permitted Liens. No financing statement or other
similar statement or instrument relating to any of the Collateral is on file in
any public office except those (i) on behalf of Agent, for the benefit of itself
and the Lenders, and/or (ii) in connection with Permitted Liens. Each Credit
Party represents and
17
warrants to Agent and Lenders that it is not party to any agreement, document or
instrument that conflicts with this Section 2.13.
(e) Notwithstanding anything to the contrary contained in
this Section 2.13, no Foreign Subsidiary of US Borrower constituting a
"controlled foreign corporation," as defined in Section 957 of the Code, shall
be required to deliver any guaranty of the US Obligations or grant a security
interest in any of its Property to secure any such guaranty, and neither US
Borrower nor any of its Subsidiaries shall be required to pledge voting equity
securities constituting more than sixty-five percent (65%) (or other applicable
greater percentage) of the total combined voting power of all classes of voting
equity securities of any such Foreign Subsidiary of US Borrower as security for
the US Obligations, to the extent, in any such case, such guaranty or granting,
or a pledge of additional equity securities, would result in material and
adverse tax consequences to US Borrower under Section 956 of the Code as
determined by Agent and the Requisite Lenders in their Permitted Discretion.
(f) To secure the payment and performance of the Canadian
Obligations by each Canadian Credit Party, Canadian Borrower and its Foreign
Subsidiaries that are Canadian Guarantors have executed and delivered to and for
the benefit of Agent, for the benefit of itself and the Lenders, the Canadian
Security Agreement.
2.14 COLLATERAL ADMINISTRATION
(a) All Collateral (except Deposit Accounts and
Collateral in the possession of Agent) shall at all times be kept by the Credit
Parties at the locations from time to time set forth on Schedule 5.19B hereto,
and shall not, without thirty (30) calendar days' prior written notice to Agent,
be moved therefrom other than to another such location (except for movement of
equipment, inventory and related assets for performance of services in the
ordinary course of business), and in any case, (i) with respect to Collateral
owned by US Credit Parties, shall not be moved outside the United States, and
(ii) with respect to Collateral owned by Canadian Credit Parties, shall not be
moved outside the United States or Canada. In addition, except for movement of
equipment, inventory and related assets for performance of services in the
ordinary course of business, Borrowers shall not transfer any Collateral with
fair market value of more than $100,000, individually or in the aggregate,
whether in one transaction or a series of transactions, to any location for
which a Landlord Waiver and Consent has not been obtained, without the prior
written consent of Agent. Whether or not an Event of Default has occurred, any
of Agent's officers, employees, representatives or agents shall have the right,
upon reasonable notice (unless an Event of Default exists) at any time during
normal business hours, in the name of Agent, or any designee of Agent or any
Credit Party, to verify the validity, amount or any other matter relating to the
Collateral. Each Credit Party shall cooperate fully with Agent in an effort to
facilitate and promptly conclude such verification process. In addition to and
notwithstanding any provision of any Loan Document, Agent shall have the right
at all times after the occurrence and during the continuance of an Event of
Default to notify Persons owing Accounts to any Credit Party that its Accounts
have been assigned to Agent and to collect such Accounts directly in its own
name and to charge collection costs and expenses, including reasonable
attorney's fees, to the Credit Parties. The Credit Parties shall use
commercially
18
reasonable efforts to ensure collection of their respective Accounts for Agent,
for the account of Lenders.
(b) As and when determined by Agent in its Permitted
Discretion, Agent will perform the searches described in clauses (i) and (ii)
below against each Credit Party, all at the Credit Parties' expense: (i) UCC,
PPSA or similar foreign searches with the Secretary of State and local filing
offices or other applicable Governmental Authorities' offices of each
jurisdiction where any Credit Party is organized and/or maintains its respective
executive offices, a place of business or assets; and (ii) judgment, federal tax
lien and corporate and partnership tax lien searches, in each jurisdiction
searched under clause (i) above. Notwithstanding the foregoing, Agent shall not
conduct such searches more frequently than four times during any twelve (12)
month period unless an Event of Default has occurred and is continuing.
(c) Each Credit Party shall notify Agent of the existence
of, and promptly deliver to Agent upon its request, all items for which Agent
must receive possession to obtain a perfected Lien and security interest and all
notes, certificates, and documents of title, Chattel Paper, warehouse receipts,
Instruments, and any other similar Instruments constituting Collateral, in each
case to the extent not already in possession of Agent.
(d) Each Credit Party shall, and shall cause each of its
Subsidiaries to, keep accurate and complete records of the Collateral and all
payments and collections thereon and shall submit such records to Agent on such
periodic bases as Agent may request in its Permitted Discretion. In addition if
Accounts of Credit Parties in an aggregate face amount in excess of $500,000
become ineligible because they fall within one of the specified categories of
ineligibility set forth in the definition of Eligible Receivables, Credit
Parties shall notice Agent of such occurrence no later than five Business Days
following such occurrence and the Borrowing Base and the applicable Monthly
Borrowing Certificate shall thereupon be adjusted to reflect such occurrence. If
requested by Agent upon or at any time after the occurrence and during the
continuance of an Event of Default, each Credit Party shall, and shall cause
each of its Subsidiaries to, execute and deliver to Agent formal written
assignments of all of its respective Accounts as Agent may request, including
all Accounts created since the date of the last assignment, together with copies
of claims, invoices and/or other information related thereto. To the extent that
collections from such assigned Accounts exceed the amount of the Obligations,
such excess amount shall not accrue interest in favor of any Credit Party.
(e) Each Credit Party (i) upon request by Agent after the
occurrence and during the continuance of an Event of Default, shall provide
prompt written notice to its current bank(s) to transfer all items, collections
and remittances to the Concentration Account (or any other account designated by
Agent), (ii) upon request by Agent after the occurrence and during the
continuance of an Event of Default, shall provide prompt written notice to each
Account Debtor that Agent, for itself and the benefit of the Lenders, has been
granted a lien and security interest in, upon and to all Accounts payable by
such Account Debtor, (iii) shall direct or shall have directed each Account
Debtor to make payments to the appropriate Blocked Account, in each case not
later than ten (10) calendar days after the Person becomes an Account Debtor,
and hereby authorizes Agent and/or Lenders, upon any failure to send such
directions within the applicable time period, to send any and all similar
notices and directions or notice to such
19
Account Debtors and, after the occurrence and during the continuance of an Event
of Default, to collect such Accounts directly in its own name and to charge
collection costs and expenses to the Credit Parties, and (iv) shall do anything
further that may be lawfully required by Agent to secure Agent, for the benefit
of itself and Lenders, and effectuate the intentions of the Loan Documents.
2.15 POWER OF ATTORNEY
Agent is hereby irrevocably made, constituted and appointed
the true and lawful attorney for each Credit Party (without requiring Agent to
act as such) with full power of substitution to do the following: (i) after the
occurrence and during the continuance of an Event of Default, endorse the name
of such Credit Party upon any and all checks, drafts, money orders and other
instruments for the payment of money that are payable to such Credit Party and
constitutes collection on such Credit Party's Accounts; (ii) execute and/or file
in the name of such Credit Party any financing statements, amendments to
financing statements, schedules to financing statements, releases or
terminations thereof or other instruments (and such Credit Party hereby waives
any right to file any of the foregoing until the Obligations are indefeasibly
paid in full in cash and this Agreement is terminated (unless otherwise
permitted by the Requisite Lenders), (iii) execute and/or file in the name of
such Credit Party assignments, instruments, documents, schedules and statements
that it is obligated to give Agent under any of the Loan Documents; (iv) execute
and/or file such documents as may be necessary to register and/or otherwise
perfect Agent's (for the benefit of the Lenders) Lien on such Credit Party's
owned motor vehicles; (v) do such other and further acts and deeds in the name
of any such Credit Party that Agent may deem necessary or desirable in its
Permitted Discretion to enforce, make, create, maintain, continue or enforce or
perfect Agent's, for the benefit of itself and Lenders, security interest or
lien or rights in any Collateral; and (vi) do such other and further acts and
deeds in the name of such Credit Party that Agent may deem necessary in its
Permitted Discretion to enforce Agent's, for the benefit of itself and Lenders,
security interest or lien or rights in any Collateral. In addition, if any
Credit Party breaches its obligations hereunder to direct payments of Accounts
or the proceeds of any other Collateral to the appropriate Blocked Account,
Agent, as the irrevocably made, constituted and appointed true and lawful
attorney for such Person pursuant to this paragraph, may, by the signature or
other act of any of Agent's officers or authorized signatories (without
requiring any of them to do so), direct any foreign, federal, state or private
payor or fiscal intermediary to pay proceeds of Accounts or any other Collateral
to the appropriate Blocked Account. Said appointment shall create in Agent, for
its benefit and the benefit of Lenders, a power coupled with an interest.
2.16 COLLECTIONS; REPAYMENT; BORROWING AND LOCKBOX
(a) As to the Credit Parties other than the Canadian Credit
Parties,
(i) Each such Credit Party shall establish and
maintain a lockbox together with a blocked account (individually and
collectively, the "US BLOCKED ACCOUNTS") with one or more banks
acceptable to Agent (each, a "LOCKBOX BANK"), and shall execute with
each Lockbox Bank one or more agreements acceptable to Agent
(individually and collectively, the "LOCKBOX AGREEMENT"), and such
other agreements
20
related thereto as Agent may require. In such event, each such Credit
Party shall ensure that all collections of its Accounts and all other
cash payments received by such Credit Party are paid and delivered
directly from Account Debtors and other Persons into the US Blocked
Accounts.
(ii) The Lockbox Agreements shall provide that
the Lockbox Banks immediately will transfer all funds paid into the US
Blocked Accounts into a depository account or accounts maintained by
Agent or an Affiliate of Agent at such bank as Agent may communicate to
each Credit Party from time to time (the "US CONCENTRATION ACCOUNT").
Notwithstanding and without limiting any other provision of any Loan
Document, Agent shall apply, on a daily basis, all funds transferred
into the US Concentration Account pursuant to the Lockbox Agreements
and this Section 2.16 to the Obligations in such order and manner as
determined by Agent. Further, under such circumstances, to the extent
that any Account collections of any Credit Party or any other cash
payments received by any Credit Party are not sent directly to the US
Blocked Account but are received by any Credit Party or any Affiliate
of any Credit Party, such collections and proceeds shall be held in
trust for the benefit of Agent and Lenders and promptly remitted (and
in any event within one (1) Business Day), in the form received, to the
US Blocked Account for immediate transfer to the US Concentration
Account. All funds transferred to the US Concentration Account for
application to the Obligations under the US Revolving Facility shall be
applied when available to reduce the Obligations under the US Revolving
Facility, but, for purposes of calculating interest hereunder, shall be
subject to a two (2) Business Day clearance period. If as the result of
collections of Accounts and/or any other cash payments received by any
Credit Party pursuant to this Section 2.16 a credit balance exists with
respect to the US Concentration Account, such credit balance shall not
accrue interest in favor of any Credit Party.
(iii) Without limiting the foregoing, and in
addition thereto, on or prior to the Closing Date, or at any time
thereafter, Agent and each such Credit Party shall enter into a bank
agency agreement, in a form acceptable to Agent in its Permitted
Discretion (a "BANK AGENCY AGREEMENT"), with each financial institution
with which such Credit Party maintains from time to time any deposit
accounts (general or special). Pursuant to the Bank Agency Agreements
and pursuant hereto, the applicable Credit Party grants and shall grant
to Agent a continuing lien upon, and security interest in, all such
accounts and all funds at any time paid, deposited, credited or held in
such accounts (whether for collection, provisionally or otherwise) or
otherwise in the possession of such financial institutions, and each
such financial institution shall act as Agent's agent in connection
therewith. Following the Closing Date, no such Credit Party shall
establish any deposit account with any financial institution unless,
prior thereto, Agent and such Credit Party shall have entered into a
Bank Agency Agreement with such financial institution.
(b) As to the Canadian Credit Parties,
(i) Each Canadian Credit Party will establish
blocked accounts with a bank acceptable to Agent (individually and
collectively, the "CANADIAN BLOCKED
21
ACCOUNTS" and together with the US Block Accounts, the "BLOCKED
ACCOUNTS"). In such event, each such Credit Party shall ensure that all
collections of its Accounts and all other cash payments received by
such Credit Party are paid and delivered directly from Account Debtors
and other Persons into the Canadian Blocked Accounts.
(ii) The Canadian Credit Parties will transfer
all funds received into a Canadian Blocked Account. The agreements
governing such accounts will provide that all funds so deposited will
be transferred into a depository account or accounts maintained by
Agent or an Affiliate of Agent at such bank as Agent may communicate to
the Canadian Credit Parties and the bank from time to time (the
"CANADIAN CONCENTRATION ACCOUNT") at any time and in the amount
designated by the Agent by written notice to the Canadian Credit
Parties and the bank requiring either (i) either that a sweep occur at
a set amount and on a set day or (ii) that thereafter the Agent
requires a daily cash sweep. Notwithstanding and without limiting any
other provision of any Loan Document, Agent shall apply the funds
transferred into the Canadian Concentration Account pursuant to this
Section 2.16 to the Canadian Obligations of the Canadian Credit Parties
in such order and manner as determined by Agent. Monthly or at such
other period as shall the Agent request, the Canadian Borrower shall
advise the Agent as to the deposits made and Agent shall track the
deposits to the Canadian Blocked Account by the Canadian Credit Parties
against available amounts for advance based on the Canadian Borrowing
Base and will notionally consider the Canadian Revolving Loan to
revolve as if applied and re-advanced based on such calculation for the
purposes of this Agreement. Further, under such circumstances, to the
extent that any Account collections of any Canadian Credit Party or any
other cash payments received by any Canadian Credit Party are not sent
directly to the Canadian Blocked Account but are received by any
Canadian Credit Party or any Affiliate of any Canadian Credit Party,
such collections and proceeds shall be held in trust for the benefit of
Agent and Lenders and promptly remitted (and in any event within one
(1) Business Day), in the form received, to the Canadian Blocked
Account. Funds will be transferred to the Canadian Concentration
Account for application to the Canadian Obligations (other than the
Canadian Term Loans) upon notice given by the Agent to the Canadian
Borrower and the bank. It is the intention that notice and requirement
to transfer funds will be made by the Agent (A) at the times that the
Canadian Borrower is not in Default and does not have advances
outstanding in excess of the Canadian Borrowing Base, when such funds
are not required for the immediate business needs of the Canadian
Borrower and (B) at any time that the Canadian Borrower is in Default
or has advances outstanding in excess of the Canadian Borrowing Base,
in amounts and at such times as determined by the Agent. The Canadian
Borrower will at all times make the payments of interest, fees, costs
and expenses, and the repayment required if at any time the amount of
the Obligations under or related to the Canadian Revolving Loans
exceeds the Canadian Borrowing Base, at the times required under this
Agreement and failing which the Agent will forthwith notify the bank
and require sweep and transfer from the Canadian Block Accounts to
cover such amounts.
(iii) Each Canadian Credit Party shall and hereby
grants to Agent a continuing lien upon, and security interest in, all
accounts and all funds at any time paid,
22
deposited, credited or held in such accounts (whether for collection,
provisionally or otherwise) or otherwise in the possession of such
financial institutions, and each such financial institution shall act
as Agent's agent in connection therewith. Following the Closing Date,
no Canadian Credit Party shall establish any deposit account with any
financial institution unless, prior thereto, Agent shall be satisfied
as to its Canadian Blocked Account arrangements and security interest
as to such account.
2.17 NOTES
Upon Agent's or any Lender's request, and in any event within three (3)
Business Days of any such request, Borrowers shall execute and deliver to Agent
new Notes and/or split or divide the Notes in exchange for then existing Notes
in such smaller amounts or denominations as Agent or such Lender shall specify
in their respective sole and absolute discretion; provided, that the aggregate
principal amount of such new, split or divided Notes does not exceed the
aggregate principal amount of such existing Notes to be exchanged therefor.
2.18 REPLACEMENT OF LOST NOTES
Upon receipt of evidence reasonably satisfactory to the relevant
Borrower of the mutilation, destruction, loss or theft of any Notes and the
ownership thereof, Borrowers shall, upon the written request of the holder of
such Notes, execute and deliver in replacement thereof new Notes in the same
form, in the same original principal amount and dated the same date as the so
mutilated, destroyed, lost or stolen; and such Notes so mutilated, destroyed,
lost or stolen shall then be deemed no longer outstanding hereunder. If the
Notes being replaced have been mutilated, they shall be surrendered to Borrowers
after Agent's receipt of the replacement Notes; and if such replaced Notes have
been destroyed, lost or stolen, such holder shall furnish the applicable
Borrower with an indemnity in writing reasonably acceptable to such Borrower to
save them harmless in respect of such replaced Note.
2.19 REALLOCATION OF COMMITMENTS
The Credit Parties, Agent and the Lenders agree and acknowledge that,
on terms and conditions satisfactory to Borrowers, Agent and each of the
Lenders, any Commitment of any Lender hereunder for the benefit of either
Borrower may be reallocated and adjusted from time to time with any other
Commitment or Commitments of such Lender for the benefit of the other Borrower,
and the outstanding Loans thereunder reclassified or re-categorized in
connection therewith to evidence or effectuate any such reallocation and
adjustment, without constituting a novation, for any purpose, including, without
limitation, for purposes of accurately reflecting each Borrower's relative
contribution to, or allocable amount or share of, Borrowers' Consolidated
EBITDA, earnings, revenue, assets and/or liabilities. For clarification
purposes, any such reallocation and adjustment shall require the written consent
of each Borrower, Agent and each Lender and shall not, in any event, result in a
reduction of the aggregate Commitments contained herein.
2.20 DISCRETIONARY BULGE COMMITMENT
Upon written request of Canadian Borrower (with or without the consent
of US Borrower
23
or any other Credit Party), each Canadian Lender from time to time may make
additional advances to Canadian Borrower, in such Canadian Lender's sole and
absolute discretion, the proceeds of which shall be used by Canadian Borrower
for purposes approved in writing by Agent and Canadian Lenders. For
clarification purposes, the commitment of each Canadian Lender evidenced by this
Section 2.20 is strictly a discretionary commitment of such Canadian Lender and
no Canadian Lender shall have any obligation to make any advances hereunder (or,
in the event any Canadian Lender shall have made an prior advance hereunder, any
future advance hereunder). The written consent of Agent and each Canadian Lender
shall be required as a condition precedent to the funding or disbursement of any
such advance by any Canadian Lender. In the event any such advances is made in
accordance with the terms of this paragraph, such advance shall constitute Loans
and Canadian Obligations hereunder, shall be secured by the Collateral and the
Security Documents, shall be due and payable on demand and shall bear interest
from time to time at the highest interest rate applicable to any Canadian
Obligation in accordance with the terms of this Agreement. If Agent and Canadian
Lenders approve the making of any such advance in accordance with the terms
hereof, Canadian Borrower, Agent and Canadian Lenders shall execute and deliver
such agreements, documents and instruments as Agent and Canadian Lenders from
time to time request in furtherance of the intent of this paragraph and to
evidence the advances made pursuant hereto, each of which shall be in form and
substance satisfactory to Agent and Canadian Lenders.
2.21 SEVERAL OBLIGATIONS
Anything to the contrary contained in this Agreement or any other Loan
Document notwithstanding, to the extent any representation, warranty, covenant
or other provision contained herein or in such Loan Document that, by its terms,
is made by Borrowers on a joint and several basis would result in adverse tax
consequences to US Borrower under Section 956 of the Code due to such joint and
several nature with respect to any Credit Party, as determined by Agent and the
Requisite Lenders in their Permitted Discretion, such representation, warranty,
covenant or other provision shall be deemed to be made, without further action
or notice by or on behalf of Agent, any Lender or any other Person, by each such
Credit Party on a several, and not a joint basis or a joint and several basis,
to and for the benefit of Agent and each Lender.
2.22 CREDIT PARTY REPRESENTATION; RELIANCE
Each Credit Party irrevocably appoints Parent as its agent for all
purposes relevant to this Agreement and all other Loan Documents, including the
giving and receipt of notices and execution and delivery of all documents,
instruments, and certificates contemplated herein and therein and all
modifications hereto and thereto. Any acknowledgment, consent, direction,
certification, or other action which might otherwise be valid or effective only
if given, taken or received by all or any Credit Party acting singly, shall be
valid and effective if given, taken or received only by Parent, whether or not
any of the other Borrowers joins therein, and the Agent and the Lenders shall
have no duty or obligation to make further inquiry with respect to the authority
of Parent under this Section 2.22, provided that nothing in this Section 2.22
shall limit the effectiveness of, or the right of the Agent and the Lenders to
require and rely upon, any notice, document, instrument, certificate,
acknowledgment, consent, direction, certification, or other action to be
delivered by each Credit Party pursuant to this Agreement or the other Loan
24
Documents. With respect to any action hereunder, Agent and Lenders may
conclusively rely upon, and shall incur no liability to any Credit Party in
acting upon, any request or other communication that Agent or any Lender
reasonably believes to have been given or made by a Person authorized on such or
any Credit Party's behalf, whether or not such Person is listed on the
incumbency certificate delivered pursuant to this Agreement. In each such case,
each Credit Party hereby waives the right to dispute Agent's and Lenders'
actions based upon such request or other communication absent manifest error.
III. FEES AND OTHER CHARGES
3.1 COMMITMENT FEE
On or before the Closing Date, US Borrower and the Canadian Borrower,
as applicable, shall pay to Agent (after giving effect to payments previously
made by Parent to Agent) (a) for the ratable benefit of the US Revolving
Lenders, a nonrefundable commitment fee equal to One Hundred Ninety-Three
Thousand Seven Hundred Fifty Dollars ($193,750), (b) for the ratable benefit of
the Canadian Revolving Lenders, a nonrefundable commitment fee equal to Fifty
Thousand Dollars ($50,000), (c) for the ratable benefit of the US Term Lenders,
a nonrefundable commitment fee equal to Two Hundred Eighty Thousand Dollars
($280,000), and (d) for the ratable benefit of the Canadian Term Lenders, a
nonrefundable commitment fee equal to One Hundred Thirty Thousand Dollars
($130,000), in each case which fees shall be deemed fully earned and due and
payable on the Closing Date.
3.2 UNUSED LINE FEES
US Borrower shall pay to Agent, for the ratable benefit of US
Revolving Lenders, an unused line fee (the "US REVOLVING UNUSED LINE FEE") in an
amount equal to three-quarters of one percent (0.75%) per annum of the
difference derived by subtracting (i) the daily average amount of the balances
under the US Revolving Facility (including Letter of Credit Obligations)
outstanding during the preceding month from (ii) the US Revolving Facility Cap
as in effect from time to time. Canadian Borrower further shall pay to Agent,
for the ratable benefit of the Canadian Revolving Lenders, an unused line fee
(the "CANADIAN REVOLVING UNUSED LINE FEE" and together with the US Revolving
Unused Line Fee, the "REVOLVING UNUSED LINE FEES") in an amount equal to
three-quarters of one percent (0.75%) per annum of the difference derived by
subtracting (i) the daily average amount of the balances under the Canadian
Revolving Facility (including Letter of Credit Obligations) outstanding during
the preceding month from (ii) the Canadian Revolving Facility Cap as in effect
from time to time. The Revolving Unused Line Fees shall be payable monthly in
arrears on the first day of each successive calendar month, commencing with May
1, 2004.
3.3 COLLATERAL MANAGEMENT FEE
(i) US Borrower shall pay to Agent, for its own account,
a monthly collateral management fee (the "US COLLATERAL MANAGEMENT FEE") in an
amount equal to one-half of one percent (.50%) (per annum) of the daily average
amount of the US Revolving Loans outstanding
25
during the preceding month. The US Collateral Management Fee shall commence on
the date hereof and shall be payable monthly in arrears on the first day of each
calendar month commencing May 1, 2004 and on the expiration or termination of
the US Revolving Loans.
(ii) Canadian Borrower shall pay to Agent, for its own
account, a monthly collateral management fee (the "CANADIAN COLLATERAL
MANAGEMENT FEE" and together with the US Collateral Management Fee, the
"COLLATERAL MANAGEMENT FEE") in an amount equal to one-half of one percent
(.50%) (per annum) of the daily average amount of the Canadian Revolving Loans
outstanding during the preceding month. The Canadian Collateral Management Fee
shall commence on the date hereof and shall be payable monthly in arrears on the
first day of each calendar month commencing May 1, 2004 and on the expiration or
termination of the Canadian Revolving Loans.
(iii) Notwithstanding the foregoing, the aggregate
Collateral Management Fees due pursuant to this Section 3.3 during any 12 month
period shall not exceed $30,000.
3.4 YIELD MAINTENANCE FEE
If on or before March 30, 2006, (a) Borrowers prepay any Term Loans, in
whole or in part, under Section 2.11(c) or (b) the Obligations become due and
payable in full resulting (i) from a Change of Control or (ii) from an automatic
acceleration thereof, or payment or reduction of any Obligations, on account of
or during any bankruptcy, reorganization or other proceeding or liquidation or
pursuant to any Debtor Relief Law, then, on the effective date of any such
prepayment or when due, Borrowers, jointly and severally, shall pay to Agent,
for the ratable benefit of applicable Lenders, as yield maintenance for the loss
of bargain and not as a penalty, an amount equal to the Yield Maintenance Fee
(prior to giving effect to any payment of Obligations as a result thereof);
provided that the Yield Maintenance Fee due in connection with clause (b)(ii)
above shall only be due and payable upon a subsequent Change of Control.
3.5 STANDBY LETTER OF CREDIT FEES
(i) US Borrower shall pay to Agent, for the ratable
benefit of the US Revolving Lenders, a standby letter of credit fee equal to
3.0% per annum (the "US STANDBY LETTER OF CREDIT FEE") of the aggregate undrawn
face amount of all outstanding US Standby Letters of Credit issued for the
account of US Borrower, which fee shall be payable monthly in arrears on each
day that interest under the US Revolving Facility is payable hereunder. Upon the
occurrence and during the continuance of an Event of Default, all US Standby
Letter of Credit Fees shall be payable on demand at a rate equal to the US
Standby Letter of Credit Fee plus 2.0% per annum, in each case on the aggregate
undrawn face amount of all outstanding US Standby Letters of Credit issued for
the account of US Borrower. US Borrower shall also pay on demand the normal and
customary administrative charges for issuance, amendment, negotiation, renewal
or extension of any US Standby Letter of Credit imposed by the US L/C Issuer.
(ii) Canadian Borrower shall pay to Agent, for the ratable
benefit of the Canadian Revolving Lenders, a standby letter of credit fee equal
to 3.0% per annum (the "CANADIAN STANDBY LETTER OF CREDIT FEE" and together with
the US Standby Letter of Credit
26
Fee, the "STANDBY LETTER OF CREDIT FEES") of the aggregate undrawn face amount
of all outstanding Canadian Standby Letters of Credit issued for the account of
Canadian Borrower, which fee shall be payable monthly in arrears on each day
that interest under the Canadian Revolving Facility is payable hereunder. Upon
the occurrence and during the continuance of an Event of Default, all Canadian
Standby Letter of Credit Fees shall be payable on demand at a rate equal to the
Canadian Standby Letter of Credit Fee plus 2% per annum, in each case as the
aggregate undrawn face amount of all outstanding Canadian Standby Letters of
Credit issued for the account of Canadian Borrower. Canadian Borrower shall also
pay on demand the normal and customary administrative charges for issuance,
amendment, negotiation, renewal or extension of any Canadian Standby Letter of
Credit imposed by the Canadian L/C Issuer.
3.6 COMPUTATION OF FEES; LAWFUL LIMITS
(a) All fees hereunder shall be computed on the basis of
a year of 360 days and for the actual number of days elapsed in each calculation
period, as applicable.
(b) In no contingency or event whatsoever, whether by
reason of acceleration or otherwise, shall the interest and other charges paid
or agreed to be paid to Agent, for the benefit of Lenders, for the use,
forbearance or detention of money hereunder exceed the maximum rate permissible
under applicable law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. If, due to any circumstance whatsoever,
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall exceed any such limit, then, the obligation to be so
fulfilled shall be reduced to such lawful limit, and, if Agent or Lenders shall
have received interest or any other charges of any kind which might be deemed to
be interest under applicable law in excess of the maximum lawful rate, then such
excess shall be applied first to any unpaid fees and charges hereunder, then to
unpaid principal balance owed by any Borrower hereunder, and if the then
remaining excess interest is greater than the previously unpaid principal
balance, Agent and Lenders shall promptly refund such excess amount to such
Borrower and the provisions hereof shall be deemed amended to provide for such
permissible rate. The terms and provisions of this Section 3.6 shall control to
the extent any other provision of any Loan Document is inconsistent herewith.
(c) For the purposes of the Interest Act (Canada) and
disclosure thereunder, whenever any interest or any fee to be paid by a Borrower
hereunder or in connection herewith is to be calculated on the basis of any
period of time that is less than a calendar year (the "FIRST RATE"), the yearly
rate of interest to which the rate used in such calculation is equivalent is the
rate so used multiplied by the actual number of days in the calendar year in
which the same is to be ascertained and divided by 360. The rates of interest to
be paid under this Agreement are nominal rates, and not effective rates or
yields. The principle of deemed reinvestment of interest does not apply to any
calculation of interest under this Agreement.
(d) Without limiting the generality of Section 3.6(b)
above, with respect to the Canadian Obligations, in no event shall the aggregate
"interest" (as that term is defined in Section 347 of the Criminal Code
(Canada)) exceed the effective annual rate of interest on the "credit advanced"
(as defined therein) lawfully permitted under Section 347 of the Criminal Code
(Canada). The effective annual rate of interest shall be determined in
accordance with
27
generally accepted actuarial practices and principles over the term of the
applicable Loan, and in the event of a dispute, a certificate of a Fellow of the
Canadian Institute of Actuaries appointed by Agent will be conclusive for the
purposes of such determination.
3.7 DEFAULT RATE OF INTEREST
Upon the occurrence and during the continuance of any Event of Default,
the Applicable Rate of interest in effect at such time with respect to the
Obligations shall be increased by three percent (3.0%) per annum (the "DEFAULT
RATE") upon written notice of such increase given by Agent to Borrowers;
provided, that, from and after the occurrence of any Event of Default under
Section VIII(g) or (h), such increase shall be automatic and without any notice
from Agent, any Lender or any other Person. In all such events, and
notwithstanding the date on which application of the Default Rate is
communicated to Borrowers, the Default Rate shall accrue from the initial date
of such Event of Default until that Event of Default is cured or waived in
writing in accordance with the terms hereof and shall be payable upon demand.
The Lenders shall not be required to (A) accelerate the maturity of the Loans,
(B) terminate any Commitments or (C) exercise any other rights or remedies under
the Loan Documents in order to charge interest hereunder at the Default Rate.
3.8 ACKNOWLEDGEMENT OF JOINT AND SEVERAL LIABILITY
(a) Each US Borrower acknowledges that it is jointly and
severally liable for all of the US Obligations under the Loan Documents. Each US
Borrower expressly understands, agrees and acknowledges that (i) US Borrowers
are all Affiliates, (ii) each US Borrower desires to have the availability of
one common credit facility instead of separate credit facilities, (iii) each US
Borrower has requested that the Agent and the Lenders extend such a common
credit facility on the terms herein provided, (iv) the Lenders will be lending
against, and relying on a Lien upon, all of US Borrowers' assets even though the
proceeds of any particular loan made hereunder may not be advanced directly to a
particular US Borrower, (v) each US Borrower will nonetheless benefit by the
making of all such loans by each Lender and the availability of a single credit
facility of a size greater than each could independently warrant, (vi) all of
the representations, warranties, covenants, obligations, conditions, agreements
and other terms contained in the Loan Documents to which any US Borrower is a
party shall be applicable to and shall be binding upon each US Borrower, and
(vii) the US Borrowers have each executed the Notes as co-makers of the Notes
and that it would not be able to obtain the credit provided by the Lenders
hereunder without the financial support provided by the other US Borrowers.
(b) Each Canadian Borrower acknowledges that it is
jointly and severally liable for all of the Canadian Obligations under the Loan
Documents. Each Canadian Borrower expressly understands, agrees and acknowledges
that (i) Canadian Borrowers are all Affiliates, (ii) each Canadian Borrower
desires to have the availability of one common credit facility instead of
separate credit facilities, (iii) each Canadian Borrower has requested that the
Agent and the Lenders extend such a common credit facility on the terms herein
provided, (iv) the Lenders will be lending against, and relying on a Lien upon,
all of Canadian Borrowers' assets even though the proceeds of any particular
loan made hereunder may not be advanced directly to a particular Canadian
Borrower, (v) each Canadian Borrower will nonetheless benefit by the
28
making of all such loans by each Lender and the availability of a single credit
facility of a size greater than each could independently warrant, (vi) all of
the representations, warranties, covenants, obligations, conditions, agreements
and other terms contained in the Loan Documents to which any Canadian Borrower
is a party shall be applicable to and shall be binding upon each Canadian
Borrower, and (vii) the Canadian Borrowers have each executed the Notes as
co-makers of the Notes and that it would not be able to obtain the credit
provided by the Lenders hereunder without the financial support provided by the
other Canadian Borrowers.
IV. CONDITIONS PRECEDENT
4.1 CONDITIONS TO INITIAL ADVANCE, FUNDING THE TERM LOANS AND
CLOSING
The obligations of Lenders hereunder, including without limitation, to
consummate the transactions contemplated herein and to make the initial
Revolving Advances under the Revolving Facilities (the "INITIAL REVOLVING
ADVANCES") and fund the Term Loans are subject, in each case, to the
satisfaction of the following:
(a) each Credit Party shall have delivered to Agent (i)
the Loan Documents to which it is a party, each duly executed by an authorized
officer of such Credit Party and the other parties thereto and (ii) a Borrowing
Certificate for the Initial Revolving Advances, executed by an authorized
officer of Borrowers;
(b) all in form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have received (i) a report of Uniform
Commercial Code or PPSA financing statement, tax and judgment lien and similar
searches performed with respect to each Credit Party and any other Person in
each jurisdiction determined by Agent, and such report shall show no Liens on
the Collateral (other than Permitted Liens and Liens to be terminated at
Closing), (ii) each document (including, without limitation, any Uniform
Commercial Code financing statement (or similar statements in other
jurisdictions) and Bank Agency Agreements) required by any Loan Document or
under law or requested by Agent to be filed, registered or recorded to create,
in favor of Agent, for the benefit of Lenders, a first priority (other than with
respect to property or assets covered by Priority Permitted Liens) and perfected
security interest upon the Collateral, and (iii) evidence of each such filing,
registration or recordation and of the payment by Borrowers of any necessary
fee, tax or expense relating thereto;
(c) Agent shall have received (i) the Charter and Good
Standing Documents, all in form and substance acceptable to Agent, (ii) a
certificate of the corporate secretary or assistant secretary of each Credit
Party dated the Closing Date, as to the incumbency and signature of the Persons
executing the Loan Documents and the Related Documents on behalf of such Credit
Party, in form and substance acceptable to Agent, (iii) the written legal
opinions of counsel and/or special counsel for the Credit Parties, including,
without limitation, appropriate Canadian counsel licensed in such provinces of
Canada as requested by Agent, in each case in form and substance satisfactory to
Agent and (iv) a certificate executed by an authorized officer of Borrowers,
which shall constitute a representation and warranty by Borrowers as of the
Closing Date that the conditions contained in this Agreement have been
satisfied;
29
(d) Agent shall have received a certificate of the chief
financial officer (or, in the absence of a chief financial officer, the chief
executive officer) of the Credit Parties, in form and substance satisfactory to
Agent (the "SOLVENCY CERTIFICATE"), certifying (i) the solvency of each Credit
Party after giving effect to the transactions and the Indebtedness contemplated
by the Loan Documents, the Subordinated Debt issued by the Credit Parties to
American Capital Strategies, Ltd. on the date hereof and the transactions
contemplated by the Investment Documents, and (ii) as to such Credit Party's
financial resources and anticipated ability to meet its obligations and
liabilities as they become due, to the effect that as of the Closing Date and
the Borrowing Date for the Initial Revolving Advances and the date of funding of
the Term Loans, and after giving effect to such transactions and Indebtedness:
(A) the assets and business of such Credit Party, at a Fair Valuation, exceed
the total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person, and (B) no unreasonably small capital
base with which to engage in its anticipated business exists with respect to
such Credit Party;
(e) Agent shall have completed examinations, the results
of which shall be satisfactory in form and substance to Agent, of the
Collateral, the financial statements and the books, records, business,
obligations, financial condition and operational state of each Credit Party, and
each Credit Party shall have demonstrated to Agent's satisfaction in its
Permitted Discretion that (i) its operations comply, in all respects, with
applicable federal, state, provincial foreign and local laws, statutes and
regulations, (ii) its operations are not the subject of any governmental
investigation, evaluation or any remedial action which could result in any
expenditure or liability deemed material by Agent, in its Permitted Discretion,
and (iii) it has no liabilities or obligations (whether contingent or otherwise)
not permitted hereunder that are deemed material by Agent, in its Permitted
Discretion;
(f) Agent shall have received (or shall be satisfied that
it will receive simultaneously with the funding of the Term Loans and/or Initial
Revolving Advances, as applicable) all fees, charges and expenses due and
payable to Agent and Lenders on or prior to the Closing Date pursuant to the
Loan Documents;
(g) all in form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have received such consents, approvals and
agreements from such third parties as Agent and its counsel shall determine in
their Permitted Discretion are necessary or desirable with respect to (i) the
Loan Documents and/or the transactions contemplated thereby, (ii) claims against
any Credit Party or any of the Collateral, and/or (iii) agreements, documents or
instruments to which any Credit Party is a party or by which any of its
properties or assets are bound or subject, including without limitation Landlord
Waivers and Consents only with respect to each property lease by any Credit
Party for the properties located in Conyers, Georgia, Xxxxx Xxxxx, Louisiana,
Houston, Texas, Sand Springs, Oklahoma and San Leandro, California and for each
other property lease, if any, for which the consent of the landlord is needed in
connection with any change of control of the tenant;
(h) Each Borrower shall be in compliance with Section 7.7
and Section 6.5, and Agent shall have received original certificates of all such
required insurance policies and confirmed that they are in effect and that the
premiums then due and owing with respect thereto
30
have been paid in full and naming only the Agent, for the benefit of itself and
Lenders, as sole beneficiary or loss payee and additional insured, as
appropriate;
(i) Agent shall have received (i) an ALTA mortgagee's
policy of title insurance (ALTA Revised 1987 Form or such other form acceptable
to Agent) in favor of Agent with respect to each parcel of Real Estate located
in the United States, issued by a title company and in an amount satisfactory to
Agent in its Permitted Discretion, showing that the applicable Credit Party is
the owner of such parcel and has good and marketable title thereto and insuring
that the Mortgage covering such parcel constitutes a valid Lien on such parcel,
subject only to Permitted Liens and other matters approved by Agent in its
Permitted Discretion, each such policy to be in such form and containing such
endorsements as may be required by Agent in its Permitted Discretion and (ii)
evidence that all premiums with respect to such title insurance policies shall
have been paid in full by Borrowers;
(j) Agent shall have received a survey of each parcel of
Real Estate and the real estate subject to any leasehold estate identified on
Schedule 4.1(a) in sufficient detail to permit the elimination of any survey
exceptions to the title policy insuring the Lien of such Mortgage and otherwise
satisfactory to Agent in its Permitted Discretion;
(k) all corporate and other proceedings, documents,
instruments and other legal matters in connection with the transactions
contemplated by the Loan Documents and the Related Documents (including, but not
limited to, those relating to corporate and capital structures of each Credit
Party) shall be satisfactory to Agent in its Permitted Discretion;
(l) neither any Credit Party nor any principal or key
management personnel of any Credit Party shall have been indicted or under
active investigation by an U.S. Attorney and comparable Canadian authorities for
a felony crime;
(m) the Credit Parties shall have established the Blocked
Account(s) pursuant to Section 2.16;
(n) Agent shall have received copies of all Permits in
form and substance satisfactory to Agent in its Permitted Discretion required
for Credit Parties to conduct the business in which it is currently engaged or
is contemplated, pursuant to the Loan Documents, the absence of which would
reasonably be excepted to be, have or result in a Material Adverse Effect;
(o) all in form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have received evidence (i) of repayment in
full and termination of all liabilities and obligations of the Credit Parties to
Bank One, N.A., the Royal Bank of Canada and The Prudential Insurance Company of
America and all related documents, agreements and instruments and of all Liens
and Uniform Commercial Code or PPSA financing statements and similar statements
relating thereto, including, without limitation, any Liens and/or Uniform
Commercial Code financing statements covering or relating to any assets or
properties of any equity holders of any Credit Party, (ii) of release and
termination of, or Agent's authority to release and terminate, any and all Liens
and/or Uniform Commercial Code or PPSA financing
31
statements and similar statements in, on, against or with respect to any of the
Collateral (other than Permitted Liens), and (iii) that any and all existing
lockbox arrangements are terminated;
(p) there shall not have occurred any Material Adverse
Change or Material Adverse Effect from that which was reflected on the financial
statements provided to Agent or any liabilities or obligations of any nature
with respect to any Credit Party which could reasonably be expected to be, have
or result in a Material Adverse Effect;
(q) Agent shall have received final unaudited financial
statements of the Credit Parties on a consolidated, consolidating and pro-forma
basis for the nine (9)-month period ending and as of December 31, 2003, in form
and substance acceptable to Agent;
(r) Credit Parties shall have implemented a cash
collection system in form and substance acceptable to Agent in its Permitted
Discretion;
(s) Credit Parties shall have entered into the Employment
Agreements they are a party to;
(t) Agent shall have received from each Credit Party a
completed IRS Form 8821;
(u) Agent shall have received (i) executed Subordination
Agreements from all parties thereto (other than Agent) and (ii) certified copies
of each of the following; each of which shall be satisfactory to Agent: (a) the
Management Services Agreement; and (b) the leases of real property to which a
Credit Party is a party;
(v) Agent shall have received evidence satisfactory to
Agent that Adjusted EBITDA (as set forth in Exhibit C) of Borrowers, on a
consolidated basis, for the twelve (12)-month period ending on February 28, 2004
is at least Twelve Million Two Hundred Fifty Thousand Dollars ($12,250,000);
(w) Agent shall have completed a pre-closing audit to
determine the liquidity of Borrowers accounts receivable and a bring-down of the
procedures performed in connection with the September 30, 2003 financial
statements of Borrowers, and the results of that audit will be satisfactory to
Agent in its Permitted Discretion;
(x) Agent shall have received evidence satisfactory to
Agent that Parent has received proceeds in connection with the pending
divestiture of Parent's Middle East operations such that the Net Proceeds are at
least $2,500,000;
(y) Agent shall have received evidence satisfactory to
Agent of the issuance of no more than $14,000,000 of Indebtedness permitted
under Section 7.2(e), on terms reasonably acceptable to Agent;
(z) upon making the Initial Advance of the Revolving
Loans on the Closing Date, the Borrowers shall have US Availability and Canadian
Availability of at least $5,000,000 in the aggregate;
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(aa) Credit Parties shall have obtained credit insurance
for foreign receivables, on terms satisfactory to Agent in its Permitted
Discretion, in the amount of not less than $1,500,000; and
(bb) Regarding the Investment and the transactions
contemplated thereby:
(i) Agent shall have received from Parent
certified copies of the applicable Investment Documents and such
Investment Documents shall be satisfactory to Agent in its Permitted
Discretion, and all other information, agreements, instruments,
certificates or evidence requested by Agent that all conditions
precedent to the completion of the Investment shall have been
satisfied, and as additional security for the Obligations, Parent shall
have assigned to Agent all of their respective rights and remedies
under the applicable Investment Documents; and
(ii) Agent shall have received evidence that the
Investment of at least $13,000,000 (at least a majority of which was
provided by the Sponsor) shall have been consummated (or will be
consummated simultaneously with the Initial Revolving Advances).
4.2 CONDITIONS TO EACH REVOLVING ADVANCE AND FUNDING OF THE TERM
LOANS
The obligations of Lenders to make any Revolving Advance (including,
without limitation, the Initial Revolving Advances) and/or to fund the Term
Loans are subject to the satisfaction, in the sole judgment of Agent, of the
following additional conditions precedent:
(a) the Credit Parties shall have delivered to Agent, in
the case of any Revolving Advance, a Borrowing Certificate for such Advance with
necessary supporting documentation and executed by an authorized officer of
Borrowers, which shall constitute a representation and warranty by the Credit
Parties as of the US Revolving Advance Borrowing Date or the Canadian Revolving
Advance Borrowing Date, which shall constitute a representation and warranty by
all Credit Parties as of such Borrowing Date that the conditions contained in
this Section 4.2 and in Section 4.1 have been satisfied;
(b) each of the representations and warranties made by
each Credit Party and each other Person party thereto (other than Agent and
Lenders) in or pursuant to the Loan Documents shall be accurate in all material
respects before and after giving effect to funding of the Term Loans and/or the
making of such Revolving Advance (except for those representations and
warranties made as of a specific date, and no Default or Event of Default shall
have occurred and be continuing or otherwise would exist or arise after giving
effect to the requested Advance and/or Term Loans on such date;
(c) immediately after giving effect to the requested
Revolving Advance, the aggregate outstanding principal amount of US Revolving
Advances and Canadian Revolving Advances shall not exceed the US Revolving
Facility Maximum Amount or the Canadian Revolving Facility Maximum Amount,
respectively, then in effect and Agent shall have received a duly completed
Borrowing Certificate in accordance with the terms hereof setting forth
availability under the respective Revolving Facility as of a date not more than
five (5) days prior
33
to the respective US Revolving Advance Borrowing Date or Canadian Revolving
Advance Borrowing Date and, after giving effect to such Revolving Advance, the
outstanding principal balance of the US Revolving Advances and Canadian
Revolving Advances does not exceed the US Revolving Facility Maximum Amount or
the Canadian Revolving Facility Maximum Amount, respectively; and
(d) Agent shall have received all fees, charges and
expenses payable to Agent and/or Lenders on or prior to such date pursuant to
the Loan Documents.
V. REPRESENTATIONS AND WARRANTIES
Each Credit Party, jointly and severally, represents and warrants as of
the Closing Date, each Revolving Facility Borrowing Date and the date of funding
of the Term Loans as follows:
5.1 ORGANIZATION AND AUTHORITY
Each Credit Party is a corporation, partnership or limited liability
company, as the case may be, duly organized or formed, validly existing and in
good standing under the laws of its state or province of formation. Each Credit
Party (a) has all requisite corporate, partnership or limited liability company
power and authority to own its properties and assets (including, without
limitation, the Collateral) and to carry on its business as now being conducted
and as contemplated in the Loan Documents, (b) as of the Closing Date, is duly
qualified to do business in the jurisdictions set forth on Schedule 5.1, which
are all of the jurisdictions in which failure so to qualify could reasonably be
expected to be, have or result in a Material Adverse Effect, and (c) has all
requisite corporate, partnership or limited liability company power and
authority (i) to execute, deliver and perform the Loan Documents to which it is
a party, (ii) with respect to Borrowers, to borrow hereunder, (iii) to
consummate the transactions contemplated under the Loan Documents, and (iv) to
grant the Liens with regard to the Collateral pursuant to the Security Documents
to which it is a party. No Credit Party is an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as amended,
or is controlled by such an "investment company."
5.2 LOAN DOCUMENTS AND RELATED DOCUMENTS
The execution, delivery and performance by each Credit Party of the
Loan Documents to which it is a party, and the consummation of the transactions
contemplated thereby, (a) have been duly authorized by all requisite corporate,
partnership or limited liability company action of such Credit Party and have
been duly executed and delivered by or on behalf of such Credit Party; (b) do
not violate any provisions of (i) any applicable law, statute, rule, regulation,
ordinance or tariff, (ii) any order of any Governmental Authority binding on
such Credit Party or any of its properties, or (iii) the certificate or articles
of incorporation, amalgamation or continuance or bylaws (or any other equivalent
governing agreement or document) of such Credit Party, or any agreement between
such Credit Party and its shareholders, members, partners or equity owners or
among any such shareholders, members, partners or equity owners; (c) except as
set forth in Schedule 5.2, are not in conflict with, and do not result in a
breach or
34
default of or constitute an event of default, or an event, fact, condition or
circumstance which, with notice or passage of time, or both, would constitute or
result in a conflict, breach, default or event of default under, any indenture,
agreement or other instrument to which such Credit Party is a party, or by which
the properties or assets of such Credit Party are bound, the effect of which
could reasonably be expected to be, have or result in a Material Adverse Effect;
(d) except as set forth in the Loan Documents will not result in the creation or
imposition of any Lien of any nature upon any of the properties or assets of any
Credit Party; and (e) except for filings in connection with the perfection of
Agent's Liens, do not require the consent, approval or authorization of, or
filing, registration or qualification with, any Governmental Authority or any
other Person. When executed and delivered, each of the Loan Documents to which
such Credit Party is a party will constitute the legal, valid and binding
obligation of each Credit Party, enforceable against such Credit Party in
accordance with its terms, subject to the effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of general
principles of equity which may limit the availability of equitable remedies
(whether in a proceeding at law or in equity).
5.3 SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS
No Credit Party has any Subsidiaries other than those Persons listed as
Subsidiaries on Schedule 5.3. Schedule 5.3 sets forth the authorized and issued
capitalization of each Credit Party, and the number and class of equity
securities and/or ownership, voting or partnership interests issued and
outstanding of such Credit Party and the beneficial and record owners thereof
(including options, warrants, convertible notes and other rights to acquire any
of the foregoing) as of the Closing Date. The outstanding equity securities
and/or ownership, voting or partnership interests of each Credit Party have been
duly authorized and validly issued and is fully paid and nonassessable and each
Person listed on Schedule 5.3 as of the Closing Date owns beneficially and of
record all of the equity securities it is listed as owning free and clear of any
Liens other than Liens created by the Loan Documents. Schedule 5.3 also lists
the directors, members, managers and/or partners of each Credit Party as of the
Closing Date. Except as listed on Schedule 5.3 as of the Closing Date, no Credit
Party (a) owns any Investment Property, (b) owns any interest or participates or
engages in any joint venture, partnership or similar arrangements with any
Person, (c) is a party to or has knowledge of any agreements restricting the
transfer of its equity securities, (d) has issued any rights which can be
convertible into or exchangeable or exercisable for any of its equity
securities, or any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
any of its equity securities or any securities convertible into or exchangeable
or exercisable for any of its equity securities or (e) is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its equity securities or other convertible rights or options or
debt securities.
5.4 PROPERTIES
Except as set forth on Schedule 5.4, each Credit Party is the sole
owner and has good, valid and marketable title to, or a valid leasehold interest
in, license of, or right to use, all of its properties and assets, including the
Collateral, whether personal or real, free and clear of all
35
Liens other than Permitted Liens. Schedule 5.4 lists as of the Closing Date (i)
the locations of the chief executive office of each Credit Party and all other
locations of Collateral and all books and records in connection therewith or in
any way relating thereto or evidencing the Collateral, (ii) identifies the
common address and use of each such location, (iii) indicates whether such
location is owned or leased by such Credit Party or whether such Credit Party is
entitled to occupy or use such location by virtue of a license or easement, (iv)
if such location is leased, describes the parties to and date of such lease and
the name and current address of the landlord under the lease, (v) if such
location is owned, sets forth a complete and accurate legal description for such
location and (vi) if such Credit Party occupies or uses such location by virtue
of a license or easement agreement, describes such license or easement agreement
with reasonable specificity. Each Credit Party enjoys peaceful and undisturbed
possession under all such leases as of the Closing Date and such leases are
valid and subsisting and are in full force and effect. As of the Closing Date
all tangible personal property and tangible assets of each Credit Party are in
good repair, working order and condition (normal wear and tear excepted) and are
suitable and adequate for the uses for which they are being used or are
intended.
5.5 OTHER AGREEMENTS
No Credit Party is (a) a party to any judgment, order or decree or any
agreement, document or instrument, or subject to any restriction, which would
materially adversely affect its ability to execute and deliver, or perform
under, any Loan Document or to pay the Obligations, (b) in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any agreement, document or instrument to which it is a party or to
which any of its properties or assets are subject, which default would
reasonably be expected to be, have or result in a Material Adverse Effect, nor
is there any event, fact, condition or circumstance which, with notice or
passage of time or both, would constitute or result in a conflict, breach,
default or event of default under, any of the foregoing which would reasonably
be expected to be, have or result in a Material Adverse Effect, or (c) a party
or subject to any agreement, document or instrument with respect to, or
obligation to pay any, service or management fee with respect to, the ownership,
operation, leasing or performance of any of its business other than the
Management Services Agreement and service and licensing agreements in the
ordinary course of business.
5.6 LITIGATION
Except as set forth on Schedule 5.6, there is no action, suit,
proceeding or investigation pending or, to its knowledge, threatened against any
Credit Party that (a) questions or could reasonably be expected to prevent or
affect the validity of any of the Loan Documents or the right of such Credit
Party to enter into any Loan Document or to consummate the transactions
contemplated thereby or (b) could reasonably be expected to be, have or result
in, either individually or in the aggregate, any Material Adverse Change or
Material Adverse Effect. No Credit Party is aware that there is any basis for
the foregoing. No Credit Party is a party or subject to any order, writ,
injunction, judgment or decree of any Governmental Authority. As of the Closing
Date, there is no action, suit, proceeding or investigation initiated by any
Credit Party currently pending. Except as disclosed in the financial statements
most recently delivered
36
to Agent hereunder, no Credit Party has any existing accrued and/or unpaid
Indebtedness to any Governmental Authority or any other governmental payor.
5.7 HAZARDOUS MATERIALS
Except as set forth on Schedule 5.7, each Credit Party is in compliance
in all material respects with all applicable Environmental Laws. Except as set
forth on Schedule 5.7, no Credit Party has been notified of any action, suit,
proceeding or investigation (a) relating in any way to compliance by or
liability of such Credit Party under any Environmental Laws, (b) which otherwise
deals with any Hazardous Substance or any Environmental Law, or (c) which seeks
to suspend, revoke or terminate any license, permit or approval necessary for
the generation, handling, storage, treatment or disposal of any Hazardous
Substance.
5.8 TAX RETURNS; GOVERNMENTAL REPORTS
Each Credit Party (a) has filed all federal, state, foreign ,
provincial and local tax returns and other reports which are required by law to
be filed by such Credit Party, and (b) except as set forth on Schedule 5.8, has
paid all taxes, assessments, fees and other governmental charges, including,
without limitation, payroll and other employment related taxes, in each case
that are due and payable, except only for items that such Credit Party is
currently contesting in good faith and for which adequate reserves have been
established.
5.9 FINANCIAL STATEMENTS AND REPORTS
All financial statements and financial information relating to
any Credit Party that have been or may hereafter be delivered to Agent by any
Credit Party (a) except as set forth on Schedule 5.9, are and will be accurate
and complete in accordance with GAAP, (b) consistent with the books of account
and records of Credit Parties, (c) have been and will be prepared in accordance
with GAAP on a consistent basis throughout the indicated periods, except that
the unaudited financial statements contain no footnotes or year-end adjustments,
and (d) present fairly in all material respects the consolidated financial
condition, assets and liabilities and results of operations of the Borrowers and
their Consolidated Subsidiaries at the dates and for the relevant periods
indicated in accordance with GAAP on a basis consistently applied. Except as set
forth on Schedule 5.9, the Credit Parties have no material obligations or
liabilities of any kind not disclosed in such financial information or
statements, and since the date of the most recent financial statements submitted
to Agent, there has not occurred any Material Adverse Change or Material Adverse
Effect or, to Credit Parties' knowledge, any other event or condition that could
reasonably be expected to be, have or result in a Material Adverse Effect.
5.10 COMPLIANCE WITH LAW; BUSINESS
Each Credit Party (a) except as set forth on Schedule 5.10, is
in compliance with all laws, statutes, rules, regulations, ordinances and
tariffs of any Governmental Authority applicable to such Credit Party, the
Business and/or such Credit Party's assets or operations, including, without
limitation, ERISA and any laws or regulations pertaining to the Business, and
(b) is not in violation of any order of any Governmental Authority or other
board or tribunal, except, in the case of both (a) and (b), where noncompliance
or violation could not reasonably be
37
expected to be, have or result in a Material Adverse Effect. To the Credit
Parties' knowledge, there is no event, fact, condition or circumstance which,
with notice or passage of time, or both, would constitute or result in any
noncompliance with, or any violation of, any of the foregoing, in each case
except where noncompliance or violation could not reasonably be expected to be,
have or result in a Material Adverse Effect. No Credit Party has received any
notice that any Credit Party is not in material compliance in any respect with
any of the requirements of any of the foregoing. No Credit Party has (i) engaged
in any Prohibited Transactions as defined in Section 406 of ERISA and Section
4975 of the Code, (ii) failed to meet any applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans and no funding
requirements have been postponed or delayed, (iii) knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any of the employee
benefit plans, (iv) any fiduciary responsibility under ERISA for investments
with respect to any plan existing for the benefit of Persons other than its
employees or former employees, or (v) withdrawn, completely or partially, from
any multi-employer pension plans so as to incur liability under the
MultiEmployer Pension Plan Amendments of 1980. With respect to each Credit
Party, there exists no event described in Section 4043 of ERISA, excluding
Subsections 4043(b)(2) and 4043(b)(3) thereof, for which the thirty (30)-day
notice period contained in 12 C.F.R. Section 2615.3 has not been waived. With
respect to each scheme or arrangement mandated by a government other than the
United States providing for post-employment benefits (each, a "FOREIGN
GOVERNMENT SCHEME OR ARRANGEMENT") and with respect to each employee benefit
plan maintained or contributed to by any Credit Party that is not subject to
United States law providing for post-employment benefits (each, a "FOREIGN
PLAN"): (i) all employer and employee contributions required by law or by the
terms of any Foreign Government Scheme or Arrangement or any Foreign Plan have
been made, or, if applicable, accrued, in accordance with normal accounting
practices; (ii) the liability of each Credit Party with respect to a Foreign
Plan is reflected in accordance with normal accounting practices on the
financial statements of such Credit Party, as the case may be; (iii) each
Foreign Plan is funded in accordance with applicable law; and (iv) each Foreign
Plan required to be registered has been registered and has been maintained in
good standing with applicable regulatory authorities. Each Credit Party has
maintained in all material respects all records required to be maintained by any
applicable Governmental Authority. No Credit Party has engaged, or does engage,
directly or indirectly, in any business other than the Business.
As of the Closing Date, Schedule 5.10A lists all Canadian Benefit Plans
and Canadian Pension Plans currently maintained or contributed to by each Credit
Party. The Canadian Pension Plans are duly registered under the Income Tax Act
and all other applicable laws which require registration. Each Credit Party has
complied with and performed all of its obligations in all material respects
under and in respect of the Canadian Pension Plans and Canadian Benefit Plans
under the terms thereof, any funding agreements and all applicable laws
(including any fiduciary, funding, investment and administration obligations).
All employer and employee payments, contributions or premiums to be remitted,
paid to or in respect of each Canadian Pension Plan or Canadian Benefit Plan
have been paid in a timely fashion in accordance with the terms thereof, any
funding agreement and all applicable laws. There have been no improper
withdrawals or applications of the assets of the Canadian Pension Plans or the
Canadian Benefit Plans. Except as set forth on Schedule 5.10A, there are no
outstanding disputes concerning the assets of the Canadian Pension Plans or the
Canadian Benefit Plans. Except as set forth on
38
Schedule 5.10A, each of the Canadian Pension Plans is fully funded on a solvency
basis (using actuarial methods and assumptions which are consistent with the
valuations last filed with the applicable Governmental Authorities and which are
consistent with generally accepted actuarial principles).
5.11 INTELLECTUAL PROPERTY
Except as set forth on Schedule 5.11, as of the Closing Date or as
thereafter otherwise disclosed in writing to Agent from time to time, no Credit
Party owns, licenses or utilizes any registered patents, patent applications,
registered trademarks, trademark applications, registered service marks, service
xxxx applications, registered copyrights or copyright applications, or any
material trade names, software or licenses. Each Credit Party owns directly, or
is entitled to use by license or otherwise, all Intellectual Property of any
Person used in, necessary for or material to the conduct of such Credit Party's
businesses. All such items listed on Schedule 5.11 as of the Closing Date are
and, at all times after the Closing Date (except to the extent no longer deemed
necessary for or material to the conduct of the businesses of the Credit Parties
in the good faith business judgment of the Credit Parties) will be: (a)
subsisting and have not been adjudged invalid or unenforceable, in whole or
part, (b) valid and enforceable, and (c) in full force and effect and not in
known conflict with the rights of any Person. Each Credit Party has made all
filings and recordations necessary in the exercise of reasonable and prudent
business judgment to protect its interest in the material components of the
Intellectual Property of such Credit Party in the United States Patent and
Trademark Office, the United States Copyright Office and in corresponding
offices throughout the world, as appropriate in the exercise of reasonable and
prudent business judgment by the Credit Parties based on the Credit Parties'
operations. Each Credit Party has performed and will continue to perform all
acts and has paid and will continue to pay all required fees and taxes to
maintain each and every item of the Intellectual Property of such Credit Party
in full force and effect throughout the world, as applicable, except such items
of Intellectual Property as are no longer deemed necessary for or material to
the conduct of the businesses of the Credit Parties in the reasonable business
judgment of the Credit Parties. No litigation is pending or, to the knowledge of
each Credit Party, threatened which contains allegations respecting the
validity, enforceability, infringement or ownership of any of the Intellectual
Property of such Credit Party. No Credit Party is in breach of or default under
the provisions of any of the foregoing, nor is there any event, fact, condition
or circumstance which, with notice or passage of time or both, would constitute
or result in a conflict, breach, default or event of default under, any of the
foregoing which would reasonably be expected to be, have or result in a Material
Adverse Effect.
5.12 PERMITS; LABOR
Except as set forth on Schedule 5.12, each Credit Party is in
compliance with and has all Permits necessary or required by applicable law or
Governmental Authority for the operation of its Business as presently conducted
and as proposed to be conducted except where noncompliance, violation or lack
thereof could not reasonably be expected to be, have or result in a Material
Adverse Effect. All Permits necessary or required by applicable law or
Governmental Authority for the operation of Credit Parties' businesses are in
full force and effect and not in known conflict with the rights of others,
except where such conflict or lack of
39
being in full force and effect could not reasonably be expected to be, have or
result in a Material Adverse Effect. No Credit Party (a) is in breach of or
default under the provisions of any of the foregoing, nor is there any event,
fact, condition or circumstance which, with notice or passage of time or both,
would constitute or result in a conflict, breach, default or event of default
under, any of the foregoing which could reasonably be expected to be, have or
result in a Material Adverse Effect, and (b) is nor has been involved in any
labor dispute, strike, walkout or union organization.
5.13 NO DEFAULT; SOLVENCY
There does not exist any Default or Event of Default. Each Credit Party
is and, after giving effect to the transactions and the Indebtedness
contemplated by the Loan Documents, the Indebtedness permitted under Section
7.2(e) issued by the Credit Parties to American Capital Strategies, Ltd. on the
date hereof and the transactions contemplated by the Investment Documents, and
after the funding of each Revolving Advance and the Term Loans, will be solvent
and able to meet its obligations and liabilities as they become due, and the
assets and business (as a going concern) of such Credit Party, at a Fair
Valuation, exceed the total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Credit Party, and no
unreasonably small capital base with which to engage in its anticipated business
exists with respect to such Credit Party.
5.14 DISCLOSURE
No Loan Document nor any other written agreement, document,
certificate, or statement furnished to Agent or any Lender by or on behalf of
any Credit Party or any Sponsor in connection with the transactions contemplated
by or pursuant to the Loan Documents, nor any representation or warranty made by
any Credit Party or any Sponsor in any Loan Document, contains any untrue
statement of material fact or omits to state any fact necessary to make the
factual statements therein taken as a whole not materially misleading in light
of the circumstances under which it was furnished. There is no fact known to any
Credit Party or, to the best knowledge of the Credit Parties, any Sponsor which
has not been disclosed to Agent in writing which could reasonably be expected to
be, have or result in a Material Adverse Effect.
5.15 EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN
CONTRACTS
Except for Permitted Indebtedness or as otherwise expressly permitted
under this Agreement, no Credit Party (a) has outstanding Indebtedness, (b) is
subject or party to any mortgage, note, indenture, indemnity or guarantee of,
with respect to or evidencing any Indebtedness of any other Person, and/or (c)
owns or holds any equity or long-term debt investments in, nor has any
outstanding advances to or any outstanding guarantees for, the obligations of,
or any outstanding borrowings from, any other Person. Each Credit Party has
performed all material obligations required to be performed by such Credit Party
pursuant to or in connection with any Permitted Indebtedness and there has
occurred no breach, default or event of default under any document evidencing
any such items or any fact, circumstance, condition or event which, with the
giving of notice or passage of time or both, would constitute or result in a
breach, default or event of default thereunder. Except for Permitted
Indebtedness and actions
40
permitted under Section 7.4, no Credit Party, directly or indirectly, has made,
and there does not exist, any loans, advances or guarantees to or for the
benefit of any Person or agreements to assume, guarantee, endorse, contingently
agree to purchase or otherwise become liable for or upon or incur any obligation
of any Person.
5.16 AFFILIATED AGREEMENTS
Except as set forth on Schedule 5.16, (i) as of the Closing Date there
are no, and after the Closing Date except as permitted by Section 7.6 there will
be no, existing or proposed agreements, arrangements, understandings or
transactions between any Credit Party and any of such Credit Party's current or
former officers, members, managers, directors, stockholders, partners, other
interest holders, employees, or Affiliates or any members of their respective
families, and (ii) to each Credit Party's knowledge, none of the foregoing
Persons as of the Closing Date were, or after the Closing Date except as
permitted by Section 7.6 will be, directly or indirectly, indebted to or have
any direct or indirect ownership, partnership or voting interest in, any
Affiliate of any Credit Party or any Person with which any Credit Party has a
business relationship or which competes with any Credit Party (except that any
such Persons may own stock in (but not exceeding two percent (2%) of the
outstanding capital stock of) any publicly traded company that may compete with
any Credit Party.
5.17 INSURANCE
Each Credit Party has in full force and effect such insurance policies
as may be required pursuant to Section 6.5 hereof. All such insurance policies
as of the Closing Date are listed and described on Schedule 5.17.
5.18 FOREIGN ASSETS CONTROL REGULATIONS AND ANTI-MONEY LAUNDERING
(a) OFAC. No Credit Party (i) is a person whose property
or interest in property is blocked or subject to blocking pursuant to Section 1
of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions
prohibited by Section 2 of such executive order, or is otherwise associated with
any such person in any manner violative of Section 2, or (iii) is a person on
the list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury's Office
of Foreign Assets Control regulation or executive order.
(b) Patriot Act. Each Credit Party is in compliance, in
all material respects, with the Patriot Act. No part of the proceeds of the
Loans will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
5.19 NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL; DEPOSIT
ACCOUNTS AND INVESTMENT PROPERTY
41
During the preceding five (5) years, no Credit Party has nor, to the
Credit Party's knowledge, any of its predecessors, have conducted business under
or used any name (whether corporate, partnership or assumed) other than as shown
on Schedule 5.19A. The Credit Parties maintain their respective places of
business and chief executive offices only at the locations set forth on Schedule
5.19B or, after the Closing Date, as additionally disclosed to Agent in writing
in accordance with Section 7.4, and all Accounts of such Credit Party arise,
originate and are located, and all of the Collateral and all books and records
in connection therewith or in any way relating thereto or evidencing the
Collateral are located and shall be only, in and at such locations. All of the
Collateral is located only in the United States or in Canada. Schedule 5.19B
lists all of each Credit Party's Deposit Accounts and Investment Property as of
the Closing Date.
5.20 NON-SUBORDINATION
Except to the extent due to actions by the Lenders, the Obligations are
not subordinated in any way to any other obligations of any Credit Party or to
the rights of any other Person.
5.21 LEGAL INVESTMENTS; USE OF PROCEEDS; TAX REGULATIONS
(a) The Credit Parties are not engaged in the business of
extending credit for the purpose of purchasing or carrying any "margin stock" or
"margin security" (within the meaning of Regulations T, U or X issued by the
Board of Governors of the Federal Reserve System), and no proceeds of the Loans
will be used to purchase or carry any margin stock or margin security or to
extend credit to others for the purpose of purchasing or carrying any margin
stock or margin security.
(b) No Credit Party intends to treat the Loans, the Commitments
and/or any letters of credit and related transactions as being a "reportable
transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In
the event any Credit Party determines to take any action inconsistent with such
intention, it will promptly notify Agent thereof. If any Credit Party so
notifies Agent, such Credit Party acknowledges that one or more of the Lenders
may treat its Loans, Commitments and/or its interest in letters of credit as
part of a transaction that is subject to Treasury Regulation Section 301.6112-1,
and such Lender or Lenders, as applicable, will maintain the lists and other
records required by such Treasury Regulation.
5.22 BROKER'S OR FINDER'S COMMISSIONS
Except for the one-time closing fee payable pursuant to the terms of
the Preferred Stock Purchase Agreement not to exceed $500,000, fees payable
under the Management Services Agreement to the extent permitted by this
Agreement and fees payable at Closing to Brown, Gibbons, Lang and Company not to
exceed $1,470,000, which are the sole responsibility of Parent to pay, no
broker's or finder's or placement fee or commission will be payable to any
broker or agent engaged by any Credit Party or any of its officers, directors or
agents with respect to the issue of the Notes or the transactions contemplated
by this Agreement or the Investment Documents other than fees payable to Agent
and the Lenders. Each Credit Party, jointly and severally, agrees to indemnify
Agent and Lenders and hold them harmless from
42
against any claim, demand or liability for broker's or finder's or placement
fees or similar commissions, whether or not payable by the Credit Parties,
alleged to have been incurred in connection with such transactions, other than
any broker's or finder's fees payable to Persons engaged by Agent or Lenders
without the knowledge of the Credit Parties.
5.23 SURVIVAL
Each Credit Party agrees that the representations and warranties
contained herein and the other Loan Documents are made with the knowledge and
intention that Agent and Lenders are relying and will rely thereon. All such
representations and warranties will survive the execution and delivery of this
Agreement, the Closing and the making of any and all Revolving Advances and/or
the funding of the Term Loans.
VI. AFFIRMATIVE COVENANTS
Each Credit Party, jointly and severally, covenants and agrees
that, until full performance and satisfaction, and indefeasible payment in full
in cash, of all the Obligations and termination of this Agreement:
6.1 FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
(a) FINANCIAL REPORTS. The Credit Parties shall furnish
to Agent (i) as soon as available and in any event within ninety (90) calendar
days after the end of each fiscal year of Borrowers, audited annual consolidated
financial statements and unaudited annual consolidating financial statements of
Borrowers and their Consolidated Subsidiaries, including the notes thereto,
consisting of consolidated and consolidating balance sheets at the end of such
completed fiscal year and the related consolidated and consolidating statements
of income, retained earnings, cash flows and owners' equity for such completed
fiscal year, which financial statements shall be prepared and certified without
qualification by KPMG, LLP or any other independent certified public accounting
firm satisfactory to Agent in its Permitted Discretion and accompanied by
related management letters, if available, (ii) as soon as available and in any
event within forty-five (45) calendar days after the end of each fiscal quarter
of Borrowers (other than the last fiscal quarter of each fiscal year), unaudited
consolidated and consolidating financial statements of Borrowers and their
Consolidated Subsidiaries consisting of a balance sheet and statements of
income, retained earnings and cash flows and owners' equity as of the end of the
immediately preceding fiscal quarter, (iii) together with each Monthly Borrowing
Certificate, a separate detailed aging and categorization of the Borrowers'
accounts receivable and accounts payable and such other supporting documentation
with respect to the figures and information in the Borrowing Certificate as
Agent shall request in its Permitted Discretion, and (iv) as soon as available
and in any event within thirty (30) calendar days after the end of each calendar
month (other than the last calendar month of a fiscal quarter), unaudited
consolidated and consolidating financial statements of Borrowers and their
Consolidated Subsidiaries consisting of a balance sheet and statements of
income, retained earnings, cash flows and owners' equity as of the end of the
immediately preceding calendar month. All such financial statements shall be
prepared in accordance with GAAP consistently applied with prior periods
43
(subject, as to interim statements, to lack of footnotes and year-end
adjustments). With each quarterly and annual financial statement, Borrowers
shall also deliver a compliance certificate of its chief financial officer on
behalf of Borrowers in the form of Exhibit B hereto (each, a "COMPLIANCE
CERTIFICATE"). Such certificate shall be accompanied by the calculations
necessary to show compliance with the financial covenants set forth in Section
7.1 and Annex I in a form satisfactory to the Agent in its Permitted Discretion.
(b) OTHER MATERIALS. The Credit Parties shall furnish to
Agent as soon as available, and in any event within ten (10) calendar days after
the preparation or issuance thereof or such other time as set forth below, as
applicable: (i) within thirty (30) calendar days after the end of each calendar
month, a monthly operating report for each Credit Party, which report shall
include a detailed comparison of the actual year-to-date operating results
against (A) the projected operating budget for the current fiscal year, if any,
and (B) the actual operating results for the same period during the prior
calendar year, in each case inclusive of profit and loss statements, (ii) copies
of any reports submitted to the Credit Parties by their independent accountants
in connection with any interim audit of the books of such Person or any of its
Affiliates and copies of each management control letter provided by such
independent accountants, and (iii) such additional information, documents,
statements, reports and other materials as Agent may request in its Permitted
Discretion from time to time. The Credit Parties shall furnish to Agent not less
than thirty (30) calendar days prior to the commencement of each fiscal year in
the Term, a list setting forth the location of the Collateral.
(c) NOTICES. The Credit Parties shall promptly, and in
any event upon the earlier to occur of (y) five (5) Business Days after any
Credit Party or any authorized officer of any Credit Party obtains knowledge
thereof and (z) ten (10) Business Days after the occurrence thereof, notify
Agent in writing of (i) any pending or threatened litigation, suit,
investigation, arbitration, dispute resolution proceeding or administrative or
regulatory proceeding brought or initiated by or against any Credit Party or
otherwise affecting or involving or relating to any Credit Party or any Credit
Party's property or assets to the extent (A) the amount in controversy exceeds
$250,000 individually or $500,000 in the aggregate for all such events, or (B)
to the extent any of the foregoing seeks injunctive relief against a Credit
Party which could reasonably be expected to be, have or result in a Material
Adverse Effect, (ii) any Default or Event of Default, which notice shall specify
the nature and status thereof, the period of existence thereof and what action
is proposed to be taken with respect thereto, (iii) any other development,
event, fact, circumstance or condition that could reasonably be expected to be,
have or result in a Material Adverse Effect, in each case describing the nature
and status thereof and the action proposed to be taken with respect thereto,
(iv) any matter(s) in the amount of $250,000, individually or $500,000 in the
aggregate, in existence at any one time adversely affecting the value,
enforceability or collectibility of any of the Collateral, (v) any notice given
or received by any Credit Party to or from any other lenders of Indebtedness of
any such Credit Party in the amount of not less than $100,000 individually or
$250,000 in the aggregate, and shall furnish to Agent a copy of such notice,
(vi) receipt of any notice or request from any Governmental Authority regarding
any liability or claim of liability in the amount equal to or exceeding $250,000
individually or $500,000 in the aggregate, (vii) receipt of any notice by any
Credit Party regarding termination of any lease of real property (other than by
expiration of the term) or any senior executive, (viii) if any Account or other
Collateral becomes evidenced or secured by
44
an Instrument or Chattel Paper, (ix) the filing, recording or assessment of any
federal, state, local or foreign tax liens securing an amount of not less than
$250,000 individually or $500,000 in the aggregate against the Collateral or any
Credit Party, (x) any action taken or threatened to be taken by any Governmental
Authority (or any notice of any of the foregoing) with respect to any Credit
Party which could reasonably be expected to be, have or result in a Material
Adverse Effect or with respect to any Collateral, (xi) any change in the
corporate or legal name or the organization identification number of any Credit
Party, (xii) the loss, termination or expiration of any contract to which any
Credit Party is a party or by which its properties or assets are subject or
bound, which could reasonably be expected to be, have or result in a Material
Adverse Effect, (xiii) any event or occurrence materially affecting any Foreign
Government Scheme or Arrangement or Foreign Plan, (xiv) as soon as possible, and
in any event within thirty (30) days after the Credit Parties know or have
reason to know thereof, notice of (A) the establishment by the Credit Parties of
any Plan, (B) the commencement by the Credit Parties of contributions to a
Multiemployer Plan, (C) any failure by the Loan Parties or any of their ERISA
Affiliates to make contributions required by Section 302 of ERISA (whether or
not such requirement is waived pursuant to Section 303 of ERISA), or (D) the
occurrence of any Reportable Event with respect to any Plan or Multiemployer
Plan for which the reporting requirement is not waived, together with a
statement of an officer setting forth details as to such Reportable Event and
the action which the Loan Parties propose to take with respect thereto, together
with a copy of the notice of such Reportable Event given to the PBGC if any such
notice was provided by the Loan Parties, and (ii) promptly after receipt
thereof, a copy of any notice the Loan Parties may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or Multiemployer
Plan, or to appoint a trustee to administer any Plan or Multiemployer Plan,
and/or (xv) promptly after receipt thereof, a copy of any notice of withdrawal
liability from any Multiemployer Plan.
(d) CONSENTS. The Credit Parties shall obtain and deliver
to Agent from time to time all required consents, approvals and agreements from
such third parties as Agent shall determine are necessary or desirable in its
Permitted Discretion and that are satisfactory to Agent in its Permitted
Discretion with respect to (i) the Loan Documents and the transactions
contemplated thereby, (ii) claims against any Credit Party or the Collateral,
and/or (iii) any agreements, consents, documents or instruments to which any
Credit Party is a party or by which any properties or assets of any Credit Party
or any of the Collateral is or are bound or subject, including, without
limitation, Landlord Waivers and Consents with respect to leases.
(e) OPERATING BUDGET. Borrowers shall furnish to Agent on
or prior to the Closing Date and for each fiscal year of Borrowers thereafter
not less than thirty (30) calendar days prior to the commencement of such fiscal
year, consolidated and consolidating month by month projected operating budgets,
projections, profit and loss statements, income statements, balance sheets and
cash flow reports of and for the Credit Parties for such upcoming fiscal year
(including an income statement for and a balance sheet as at the end of each
month), and annual projections for the fiscal years remaining in the Term, in
each case prepared in accordance with GAAP consistently applied with prior
periods (subject to lack of footnotes and year-end adjustments); and within ten
(10) days after any material update or amendment of any such plan or forecast, a
copy of such update or amendment, including a description of and reasons for
such update or amendment. Each such projection, update or amendment shall be
accompanied by a written certificate signed by the Credit Parties' chief
financial officer to the effect that it has been
45
prepared on the basis of the Credit Parties' historical financial statements and
records, together with the assumptions set forth in such projection and that it
reflects expectations, after reasonable analysis, of the Credit Parties'
management as to the matters set forth therein.
(f) SHAREHOLDER / PARTNER REPORTS AND GOVERNMENT FILINGS.
Parent shall furnish to Agent, concurrently with the sending or filing thereof,
a copy of any proxy statements, financial statements or reports which Parent has
made available to its shareholders in their capacity as shareholders and a copy
of any material regular, periodic and special reports or registration statements
which any Credit Party files with the Securities and Exchange Commission, any
stock exchange or any Governmental Authority.
(g) DEPOSIT ACCOUNTS, OTHER ACCOUNTS AND INVESTMENT
PROPERTY. The Credit Parties shall (i) promptly, and in any event no later than
five (5) Business Days before any Credit Party (A) establishes any Deposit
Account, securities account, money market account or any similar account, or (B)
becomes the owner of any Investment Property, in each case, on and with respect
to which Agent, for itself and the benefit of the Lenders, does not have a
perfected, first priority Lien, notify Agent of such, and (ii) prior to such
establishment, or, with respect to any such Investment Property, promptly after
such ownership, deliver to Agent a fully executed Bank Agency Agreement or other
documentation to perfect Agent's, for its benefit and the benefit of the
Lenders, Lien thereon, in each case in form and substance acceptable to Agent in
its Permitted Discretion.
(h) INTELLECTUAL PROPERTY. The Credit Parties shall
furnish to Agent within thirty (30) calendar days after June 30 and December 31
of each year, a report specifying any material Intellectual Property interests
acquired by, obtained by, or licensed to any Credit Party during the six
(6)-month period then ended, and shall deliver to Agent, within ten (10)
Business Days, documentation to perfect Agent's, for its benefit and the benefit
of the Lenders, Lien in such Intellectual Property, in each case in form and
substance acceptable to Agent in its Permitted Discretion.
(i) PAYROLL TAXES. Without limiting or being limited by
any other provision of any Loan Document, the Credit Parties shall retain and
use a third-party acceptable to Agent in its Permitted Discretion to process,
manage and pay the payroll taxes of the Credit Parties and shall cause to be
delivered to Agent within fifteen (15) calendar days after the end of each
calendar month, a report of such payroll taxes of the Credit Parties for the
immediately preceding calendar month and evidence of payment thereof. Agent
acknowledges and agrees that ADP Payroll Services, Inc., the current provider of
such services to the Credit Parties, is acceptable as of the date hereof.
(j) LANDLORD WAIVERS AND CONSENTS. The Credit Parties
shall furnish to Agent within five (5) calendar days after the end of each
calendar month, commencing for the month ended May 31, 2004, a report specifying
the aggregate fair market value of the Collateral located at any leased location
for which a Landlord Waiver and Consent has not been obtained, in form and
substance acceptable to Agent in its Permitted Discretion.
6.2 PAYMENT OF OBLIGATIONS
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The US Credit Parties shall make full and timely indefeasible payment
in cash of the principal of and interest on the Loans, Revolving Advances and
all other Obligations when due and payable. The Canadian Credit Parties shall
make full and timely indefeasible payment in cash of the principal of and
interest on the Canadian Loans, Canadian Revolving Advances and all other
Obligations relating to the Canadian Loans when due and payable.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS
Each Credit Party shall (a) conduct its business in accordance with
good business practices customary to its industry, (b) engage principally in the
same or similar lines of business substantially as heretofore conducted, (c)
collect its Accounts in the ordinary course of business, (d) maintain all of its
material properties, assets and equipment used or useful in its business in good
repair, working order and condition (normal wear and tear excepted and except as
may be disposed of in the ordinary course of business and in accordance with the
terms of the Loan Documents), (e) from time to time make all necessary repairs,
renewals and replacements thereof, (f) maintain and keep, or cause to be
maintained and kept, in full force and effect its existence and all material
Permits and qualifications to do business and good standing in its jurisdiction
of formation and each other jurisdiction in which the ownership or lease of
property or the nature of its business makes such Permits or qualification
necessary, and in which failure to maintain such Permits or qualification could
reasonably be expected to be, have or result in a Material Adverse Effect; (g)
remain in good standing and maintain operations in all jurisdictions in which
currently located, except where the failure to remain in good standing or
maintain operations would not reasonably be expected to be, have or result in a
Material Adverse Effect, and (h) maintain, comply with and keep in full force
and effect its existence and all Intellectual Property necessary to conduct the
Business the loss of which or failure to maintain could reasonably be expected
to be, have or result in a Material Adverse Effect.
6.4 COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS
Each Credit Party shall (a) comply with all laws, statutes, rules,
regulations, ordinances and tariffs of all Governmental Authorities applicable
to it or its business, assets or operations, (b) pay all taxes, assessments,
fees, governmental charges, claims for labor, supplies, rent and all other
obligations or liabilities of any kind, except liabilities being contested in
good faith and against which adequate reserves have been established, (c)
subject to its right to contest in good faith by appropriate proceedings,
perform in accordance with its terms each contract, agreement or other
arrangement to which it is a party or by which it or any of the Collateral is
bound, and (d) properly file all reports required to be filed with any
Governmental Authority, except under clauses (a), (b), (c), and/or (d) where the
failure to comply, pay, file or perform would not reasonably be expected to be,
have or result in a Material Adverse Effect.
6.5 INSURANCE
Each Credit Party shall (a) keep all of its insurable
properties and assets adequately insured in all material respects against
losses, damages and hazards as are customarily insured against by businesses
engaging in similar activities or lines of business or owning similar assets or
properties and at least the minimum amount required by this
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Agreement, applicable law and any agreement to which such Credit Party is a
party or pursuant to which such Credit Party provides any services, including,
without limitation, liability, property and business interruption insurance, as
applicable; and (b) maintain general liability insurance at all times against
liability on account of damage to persons and property having such limits,
deductibles, exclusions and co-insurance and other provisions as are customary
for a business engaged in activities similar to those of such Credit Party; and
(c) maintain insurance under all applicable workers' compensation laws; all of
the foregoing insurance policies and coverage levels to (i) be satisfactory in
form and substance to Agent in its Permitted Discretion, (ii) name Agent, for
the benefit of itself and Lenders, as loss payee or additional insured
thereunder, as applicable, and (iii) expressly provide that they cannot be
altered, amended, modified, canceled or terminated without thirty (30) calendar
days' prior written notice to Agent, and that they inure to the benefit of
Agent, for the benefit of itself and Lenders, notwithstanding any action or
omission or negligence of or by such Credit Party, or any insured thereunder.
6.6 TRUE BOOKS
Each Credit Party shall (a) keep true, complete and accurate (in
accordance with GAAP) books of record and account in accordance with
commercially reasonable business practices in which true and correct entries are
made of all of its dealings and transactions in all material respects; and (b)
set up and maintain on its books such reserves as may be required by GAAP with
respect to doubtful Accounts and all taxes, assessments, charges, levies and
claims and with respect to its business, and include such reserves in its
quarterly as well as year end financial statements.
6.7 INSPECTION; PERIODIC AUDITS
Each Credit Party shall permit the representatives of Agent from time
to time during normal business hours upon reasonable notice, to (a) visit and
inspect any of such Credit Party's offices or properties or any other place
where Collateral is located to inspect the Collateral and/or to examine and/or
audit all of such Credit Party's books of account, records, reports and other
papers, (b) make copies and extracts therefrom, and (c) discuss such Credit
Party's business, operations, prospects, properties, assets, liabilities,
condition and/or Accounts with its officers and independent public accountants
(and by this provision such officers and accountants are authorized to discuss
the foregoing), provided, however, that no such notice shall be required to do
any of the foregoing if an Event of Default has occurred and is continuing. The
Credit Parties will pay, on demand, all out-of-pocket expenses and other
reasonable costs and expenses incurred by or on behalf of Agent, including,
without limitation, reasonable fees, costs, client charges and expenses of
counsel for Agent, accounting due diligence periodic field audits, physical
counts, valuations, investigations, searches and filings, monitoring of assets,
appraisals of Collateral, title searches and reviewing environmental
assessments, miscellaneous disbursements, examination, travel, lodging and
meals, arising from or related to these inspections. Such inspections shall not
take place more than three times per calendar year unless an Event of Default
exists and is continuing.
6.8 FURTHER ASSURANCES; POST CLOSING
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At the Credit Parties' cost and expense, each Credit Party
shall (a) take such further actions, obtain such consents and approvals and duly
execute and deliver such further agreements, assignments, instructions or
documents as Agent may request in its Permitted Discretion in order to carry out
the purposes, terms and conditions of the Loan Documents and the consummation of
the transactions contemplated thereby, whether before, at or after the
performance and/or consummation of the transactions contemplated hereby or the
occurrence of a Default or Event of Default, (b) without limiting and
notwithstanding any other provision of any Loan Document, execute and deliver,
or cause to be executed and delivered, such agreements and documents, and take
or cause to be taken such actions, and otherwise perform, observe and comply
with such obligations and covenants, as are set forth on Schedule 6.8, and (c)
upon the exercise by Agent, any Lender or any of their Affiliates of any power,
right, privilege or remedy pursuant to any Loan Document or under applicable law
or at equity which requires any consent, approval, registration, qualification
or authorization of any Person (including, without limitation, any Governmental
Authority), execute and deliver, or cause the execution and delivery of, all
applications, certificates, instruments and other documents that may be so
required for such consent, approval, registration, qualification or
authorization. Without limiting the foregoing, upon the exercise by Agent, any
Lender or any of their Affiliates of any right or remedy under any Loan Document
which requires any consent, approval or registration with, consent,
qualification or authorization by, any Governmental Authority or other Person
(including, without limitation, transfers of Licenses), each Credit Party shall
execute and deliver, or cause the execution and delivery of, all applications,
certificates, instruments and other documents that Agent, any Lender or such
Affiliate may be required to obtain for itself or on its behalf for such
consent, approval, registration, qualification or authorization. Agent may, and
upon the request of US Requisite Lenders or Canadian Requisite Lenders, as
applicable, shall, at any time and from time to time, request a certificate from
an officer of each Credit Party representing that all conditions precedent to
the making of Loans contained herein are satisfied (provided, that, if any such
conditions precedent are not satisfied, such certificate shall state the
conditions precedent that are not so satisfied). Lenders may, at their
respective option, cease to make any further Loans until Agent has received such
certificate, and, in addition, Agent has determined that such conditions are
satisfied, in its Permitted Discretion.
6.9 PAYMENT OF INDEBTEDNESS
Except as otherwise prescribed in the Loan Documents and, with respect
to Subordinated Debt, subject to any applicable Subordination Agreement or
subordination provisions, the Credit Parties shall pay, discharge or otherwise
satisfy at or before maturity (subject to applicable grace periods and, in the
case of trade payables, to ordinary course payment practices) all of its
obligations and liabilities, except (i) when the amount or validity thereof is
being contested in good faith by appropriate proceedings and such reserves as
Agent may deem proper and necessary in its Permitted Discretion shall have been
made or (ii) where the failure could not reasonably be expected to be, have or
result in a Material Adverse Effect.
6.10 LIEN SEARCHES
If Liens other than Permitted Liens exist at any time, the Credit
Parties promptly shall take all commercially reasonable actions and execute and
deliver all agreements, documents and
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instruments necessary to release and terminate such Liens and upon request of
Agent, shall provide evidence to Agent of such release and termination.
6.11 USE OF PROCEEDS
Borrowers shall use the proceeds from Revolving Advances under the
Revolving Facilities and the Term Loans solely for the purposes set forth in the
recitals of this Agreement.
6.12 COLLATERAL DOCUMENTS; SECURITY INTEREST IN COLLATERAL
(a) On demand by Agent in its Permitted Discretion, each
Credit Party shall make available to Agent copies of any and all documents,
instruments, materials and other items that relate to, secure, evidence, give
rise to or generate or otherwise involve Collateral, including, without
limitation, Accounts and Inventory of such Credit Party. Each Credit Party shall
(i) execute, obtain, deliver, file, register and/or record any and all financing
statements, continuation statements, similar statements and instruments, stock
powers, instruments and other documents, or cause the execution, filing,
registration, recording or delivery of any and all of the foregoing, including,
without limitation, Bank Agency Agreements, that are necessary or required under
law or otherwise or reasonably requested by Agent to be executed, filed,
registered, obtained, delivered or recorded to create, maintain, perfect,
preserve, validate or otherwise protect the pledge of the Collateral to Agent
and Agent's, for its benefit and the benefit of the Lenders, perfected first
priority (other than with respect to property or assets covered by Priority
Permitted Liens) Lien on the Collateral (and each Credit Party irrevocably
grants Agent the right, at Agent's option, to file any or all of the foregoing),
(ii) maintain, or cause to be maintained, at all times, the pledge of the
Collateral to Agent and Agent's, for its benefit and the benefit of the Lenders,
first priority (other than with respect to property or assets covered by
Priority Permitted Liens) and perfected Lien on the Collateral, and (iii) defend
the Collateral and Agent's, for its benefit and the benefit of the Lenders,
first priority (other than with respect to property or assets covered by
Priority Permitted Liens) and perfected Lien thereon against all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to Agent, and pay all costs and expenses (including, without limitation,
in-house documentation and diligence fees and legal expenses and reasonable
attorneys' fees and expenses) in connection with such defense, which shall be
added to the Obligations.
(b) If, after the date hereof, any Credit Party shall (i)
obtain any registered Trademark, Patent or Copyright, or apply for any such
registration in the United States Patent and Trademark Office, the United States
Copyright Office or in the Canadian Intellectual Property Office, as applicable,
or in any similar office or agency in the United States, any State thereof, any
political subdivision thereof or in any other country, including, without
limitation, Canada, or any province or other political subdivision thereof, or
(ii) becomes the owner of any Trademark, Patent or Copyright registrations or
applications for Trademark, Patent or Copyright registration used in the United
States or any State thereof, political subdivision thereof or in any other
country, including, without limitation, Canada, the provisions of Section 2.13
hereof shall automatically apply thereto. Upon the request of Agent, the Credit
Parties shall promptly execute and deliver to Agent any and all assignments,
agreements, instruments, documents and such other papers as may be requested by
Agent in its Permitted Discretion to evidence the
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security interest in and conditional assignment of such Trademark, Patent or
Copyright, as the case may be, in favor of Agent (for the benefit of itself and
the Lenders). The Credit Parties shall: (i) prosecute diligently any Trademark,
Patent or Copyright application at any time pending; (ii) make application for
registration or issuance of all new Trademarks, Patents and Copyrights as
reasonably deemed appropriate by such Credit Party; (iii) preserve and maintain
all rights in the Intellectual Property (except such items of Intellectual
Property as are no longer deemed necessary for or material to the conduct of the
businesses of the Credit Parties in the reasonable business judgment of the
Credit Parties); and (iv) use their best efforts to obtain any consents, waivers
or agreements necessary to enable Agent to exercise its remedies with respect to
such Intellectual Property. The Credit Parties shall not abandon any right to
file a material Trademark, Patent or Copyright application nor shall the Credit
Parties abandon any material pending Trademark, Patent or Copyright application,
or material Trademark, Patent or Copyright without the prior written consent of
Agent.
(c) Upon Agent's request, the Credit Parties shall (i)
make available to Agent the original certificates of title for the Credit
Parties' owned motor vehicles for which a certificate of title has been issued
and (ii) promptly execute such forms as required by Agent to register Agent's
(for the benefit of itself and the Lenders) liens on such certificates of title.
(d) Without limiting the generality of the foregoing and
except as otherwise approved in writing by Agent, but subject to Section
6.12(e), (i) each Credit Party shall cause its Subsidiaries (other than Foreign
Subsidiaries which are not Canadian Credit Parties) to guaranty the Obligations
of Borrowers and to cause each such Subsidiary to grant to Agent, for the
benefit of itself and Lenders, a security interest in all of such Subsidiary's
Property to secure such guaranty, (ii) Parent shall pledge the equity interests
in US Borrower to Agent, for the benefit of itself and Lenders, to secure the
Obligations, (iii) Parent shall pledge, or cause to be pledged, the equity
interests in Canadian Borrower to Agent, for the benefit of itself and Lenders,
to secure the Canadian Obligations, and (iv) each Credit Party shall pledge the
stock and other equity interest and securities of each of its Consolidated
Subsidiaries (other than Foreign Subsidiaries which are not Canadian Credit
Parties) to Agent, for the benefit of itself and Lenders, to secure the
Obligations. In furtherance thereof, each such Subsidiary of a Borrower shall
execute a Joinder Agreement and become a party to such of the Loan Documents,
including this Agreement, as Agent shall determine.
(e) Notwithstanding anything to the contrary contained in
this Section 6.12, no Foreign Subsidiary of US Borrower constituting a
"controlled foreign corporation," as defined in Section 957 of the Code, shall
be required to deliver any guaranty of the US Obligations or grant a security
interest in any of its Property to secure any such guaranty, and neither US
Borrower nor any of its Subsidiaries shall be required to pledge voting equity
securities constituting more than sixty-five percent (65%) (or other applicable
greater percentage) of the total combined voting power of all classes of voting
equity securities of any such Foreign Subsidiary of US Borrower as security for
the US Obligations, to the extent, in any such case, such guaranty or granting,
or a pledge of additional equity securities, would result in material and
adverse tax consequences to US Borrower under Section 956 of the Code as
determined by Agent and the Requisite Lenders in their Permitted Discretion.
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6.13 TAXES AND OTHER CHARGES
(a) All payments and reimbursements to Agent, for its own
account and/or for the benefit of Lenders, or any Lender made under any Loan
Document shall be free and clear of and without deduction for all taxes, levies,
imposts, deductions, assessments, charges or withholdings, and all liabilities
with respect thereto of any nature whatsoever, excluding (i) taxes to the extent
imposed on a Lender's net income, (ii) any withholding taxes imposed on amounts
payable to a Lender at the time such Lender becomes a party to this Agreement,
except to the extent such Lender's assignor (if any) was entitled, at the time
of assignment, to receive additional amounts from Borrowers with respect to such
Non-Excluded Taxes pursuant to this Section 6.13, and (iii) any withholding
taxes imposed on amounts payable by Canadian Borrower to CapitalSource, in its
capacities as a Canadian Revolving Lender and a Canadian Term Lender (provided,
that, this clause (iii) shall not exclude any amounts that may be payable by
Borrowers to CapitalSource Canada from time to time due to the operation of
paragraph (b) below). If any Credit Party shall be required by law to deduct any
such non-excluded taxes, levies, imposts, deductions, assessments, charges or
withholdings and all other liabilities with respect thereto (collectively,
"NON-EXCLUDED TAXES") from or in respect of any sum payable under any Loan
Document to Agent, for its own account and/or for the benefit of Lenders, or any
Lender, then the sum payable to Agent, for its own account and/or for the
benefit of Lenders, or such Lender shall be increased as may be necessary so
that, after making all such required deductions, Agent and each Lender receives
an amount equal to the sum it would have received had no such deductions been
made.
(b) Notwithstanding any other provision of any Loan
Document, if at any time after the Closing or the making of any Revolving
Advance or funding of the Term Loans (x) any change in any existing law,
regulation, treaty (including, without limitation, the Convention between Canada
and the United States of America with respect to Taxes on Income and on Capital
or directive or in the interpretation or application thereof, (y) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (z) compliance by Agent or any Lender with any request or directive
(whether or not having the force of law) from any Governmental Authority (which
request or directive, with respect to CapitalSource Canada or any of its
successors, assigns and participants, was made or issued after the Closing
Date): (i) subjects Agent or such Lender to any tax, levy, impost, deduction,
assessment, charge or withholding of any kind whatsoever with respect to any
Loan Document, or changes the basis of taxation of payments to Agent, for its
own account and/or for the benefit of Lenders, of any amount payable thereunder
(except for net income taxes imposed generally by federal, state or local taxing
authorities with respect to interest or commitment fees or other fees payable
hereunder or changes in the rate of tax on the overall net income of Agent
and/or each Lender), or (ii) imposes on Agent or Lenders any other condition or
increased cost in connection with the transactions contemplated thereby or
participations therein; and the result of any of the foregoing is to increase
the cost to Agent or Lenders of making or continuing or maintaining any Loan
hereunder or to reduce any amount receivable hereunder, then, in any such case,
the Credit Parties shall promptly pay to Agent, for its own account and/or for
the benefit of Lenders, any additional amounts necessary to compensate Agent and
each Lender, on an after-tax basis, for such additional cost or reduced amount
as determined by Agent and/or such Lender. If Agent or any Lender becomes
entitled to claim any additional amounts pursuant to this Section 6.13 it
52
shall reasonably promptly after obtaining knowledge thereof notify Borrowers of
the event by reason of which Agent or such Lender has become so entitled, and
each such notice of additional amounts payable pursuant to this Section 6.13
submitted by Agent or such Lender to the Credit Parties shall, absent manifest
error, be final, conclusive and binding for all purposes.
6.14 FUTURE LEASES; FUTURE REAL ESTATE
(a) Concurrently with the execution or assumption by any
Credit Party, as lessee, of any material lease pertaining to real property, such
Credit Party shall deliver to Agent (i) an executed copy thereof, (ii) at the
option of Agent, either a leasehold mortgage upon or a collateral assignment of
such lease in favor of Agent, in either case in form and substance reasonably
acceptable to Agent, (iii) a Landlord Waiver and Consent from the Landlord under
such lease, (iv) at the option of Agent, a lender's policy of title insurance,
in such form and amount and containing such endorsements as shall be reasonably
satisfactory to Agent, insuring the Lien of such leasehold mortgage or
collateral assignment of lease, together with a survey of such real property,
which survey shall be of a recent enough date and in sufficient detail so as to
permit the title company issuing such policy to eliminate any survey exceptions
to such policy and (v) such other documents and assurances with respect to such
real property as Agent may require in its Permitted Discretion.
(b) The applicable Credit Party shall deliver to Agent
concurrently with the (i) execution by any Credit Party of any contract relating
to the purchase by such Credit Party of real property, an executed copy of such
contract and (ii) closing of the purchase of such real property, (A) a first
mortgage or deed of trust in favor of Agent on such real property, in form and
substance reasonably acceptable to Agent, (B) a lender's policy of title
insurance, in such form and amount and containing such endorsements as shall be
satisfactory to Agent in its Permitted Discretion, (C) a survey of such real
property, which survey shall be of a recent enough date and in sufficient detail
so as to permit the title company issuing such policy to eliminate any survey
exceptions to such policy and (D) such other documents and assurances with
respect to such real property as Agent may require in its Permitted Discretion.
6.15 CANADIAN PENSION PLANS AND BENEFIT PLANS
(a) For each existing, or hereafter adopted, Canadian
Pension Plan and Canadian Benefit Plan, each Credit Party shall in a timely
fashion comply with and perform in all material respects all of its obligations
under and in respect of such Canadian Pension Plan or Canadian Benefit Plan,
including under any funding agreements and all applicable laws (including any
fiduciary, funding, investment and administration obligations)
(b) All employer or employee payments, contributions or
premiums required to be remitted, paid to or in respect of each Canadian Pension
Plan or Canadian Benefit Plan shall be paid or remitted by each Credit Party in
a timely fashion in accordance with the terms thereof, any funding agreements
and all applicable laws.
(c) The Credit Parties shall deliver to Agent (1) if
requested by Agent, copies of each annual and other return, report or valuation
with respect to each Canadian Pension Plan
53
as filed with any applicable Governmental Authority; (2) promptly after receipt
thereof, a copy of any direction, order, notice, ruling or opinion that any
Credit Party may receive from any applicable Governmental Authority with respect
to any Canadian Pension Plan; and (3) notification within 30 days of any
increases having a cost to one or more of the Credit Parties in excess of
$100,000 per annum in the aggregate, in the benefits of any existing Canadian
Pension Plan or Canadian Benefit Plan, or the establishment of any new Canadian
Pension Plan or Canadian Benefit Plan, or the commencement of contributions to
any such plan to which any Credit Party was not previously contributing.
VII. NEGATIVE COVENANTS
Each Credit Party, jointly and severally, covenants and agrees that,
until full performance and satisfaction, and indefeasible payment in full in
cash, of all the Obligations and termination of this Agreement:
7.1 FINANCIAL COVENANTS
No Credit Party shall violate, and each Credit Party shall fully comply
with, the financial covenants set forth on Annex I to this Agreement, which
annex is incorporated herein and made a part hereof. Notwithstanding the
foregoing, to the extent that the Credit Parties would otherwise violate any of
the financial covenants set forth on Annex I, Borrower may use the proceeds of
Permitted Securities or Subordinated Debt permitted under Section 7.2 to prepay
the Term Loans (such amounts to be applied to the Term Loans in accordance with
Section 2.11(c)) to avoid such a violation, in which case the proceeds received
by Borrower from such Permitted Securities or Subordinated Debt may be added to
Net Income in the calculation of EBITDA (as defined on Annex I) for the
applicable month to the extent necessary to avoid such violation and shall
continue to apply with respect to such month for so long as such month is
included in the applicable test period under Annex I; provided the following
conditions precedent have been satisfied as determined by Agent in the Agent's
Permitted Discretion: (i) upon issuance of such Permitted Securities or
Subordinated Debt, Borrower notifies Agent in writing that the proceeds of such
Permitted Securities or Subordinated Debt constitute amounts to be applied under
and in accordance with this Section 7.1; (ii) such Permitted Securities or
Subordinated Debt shall be made or incurred, as applicable, at any time during
the applicable test period or thereafter but no later than ten (10) Business
Days from the earlier to occur of (x) the date that Credit Parties delivered to
Agent the applicable quarterly compliance certificate required pursuant to
Section 6.1(a) or (y) the date that such compliance certificates are required to
be delivered under Section 6.1(a); (iii) the proceeds of such Permitted
Securities or Subordinated Debt are applied upon receipt to prepay the Term
Loans in accordance with Section 2.11(c), but without premium or penalty unless
such Term Loan is being fully repaid in connection therewith or such proceeds
are in excess of the deficiency in which case the excess shall be subject to the
Yield Maintenance Fee and shall be due and payable within five (5) Business Days
of the date it is determined that such proceeds are in excess of the deficiency;
(iv) the amount of the proceeds of such Permitted Securities and Subordinated
Debt does not exceed $1,000,000 in any fiscal year or $3,000,000 in the
aggregate during the Term, (v) Parent has not exercised its rights under this
Section 7.1 to cure a breach of any covenant in Annex I due to a shortfall in
EBITDA with respect to any such
54
covenant for the immediately preceding fiscal quarter; (vi) no other Event of
Default has occurred and is continuing; (vii) the utilization by Credit Parties
of such Permitted Securities or Subordinated Debt for purposes of avoiding a
violation of any of the financial covenants may not be used if Agent determines,
in its Permitted Discretion, that the breach being cured by such Permitted
Securities or Subordinated Debt has resulted in a Material Adverse Change.
7.2 INDEBTEDNESS
No Credit Party shall, and no Credit Party shall permit or cause any of
its Consolidated Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness, except the following (collectively, "PERMITTED INDEBTEDNESS"):
(a) Indebtedness under the Loan Documents;
(b) any Indebtedness of the Credit Parties set forth on
Schedule 7.2 and replacements thereof; provided, that, the principal amount,
interest rate or fees thereon are not increased and the maturity and weighted
average life thereof are not shortened;
(c) Indebtedness of the Credit Parties not to exceed
$250,000 in the aggregate at any time outstanding consisting of Capitalized
Lease Obligations;
(d) Indebtedness of the Credit Parties incurred after the
Closing Date pursuant to purchase money Liens permitted by Section 7.3(e);
provided, that the aggregate amount thereof outstanding at any time shall not
exceed $250,000;
(e) Indebtedness issued by the Credit Parties to American
Capital Strategies, Ltd. on the date hereof in the original principal amount not
to exceed $14,000,000 and replacements thereof; provided, that, such replacement
Indebtedness remains subject to the subordination provisions as contained in the
ACAS Subordination Agreement and the terms of such replacement Indebtedness do
not violate the terms of the ACAS Subordination Agreement;
(f) Subordinated Debt to the Sponsor or any of its
Affiliates to the extent permitted under Section 7.1;
(g) other Subordinated Debt consented to in writing by
the Requisite Lenders;
(h) Intercompany Indebtedness arising from loans made by
a US Borrower or any of its Domestic Wholly-Owned Subsidiaries to another US
Borrower or any Domestic Wholly-Owned Subsidiaries of a US Borrower; provided
that the obligations of each obligor shall be evidenced by notes, the sole
originally executed counterparts of which shall be pledged and delivered to
Agent, for the benefit of Agent and Lenders, as security for the Obligations and
have such other terms as the Agent may require and any such notes shall be
secured by a first priority (subject only to Liens in favor of Agent, for the
benefit of itself and the Lenders) Lien in all Property of the relevant Borrower
or Subsidiary, as the case may be, on terms and conditions satisfactory to
Agent, and such Lien shall have been assigned to Agent, for the benefit of
itself and the Lenders, in form and substance satisfactory to Agent, and Agent
shall have received such
55
agreements, documents, instruments and opinions requested by Agent in its
Permitted Discretion in respect thereof;
(i) Indebtedness arising from loans made by a Canadian
Borrower or any of its Wholly-Owned Subsidiaries to any other Credit Party;
provided that the obligations of each obligor shall be evidenced by notes, the
sole originally executed counterparts of which shall be pledged and delivered to
Agent, for the benefit of Agent and Lenders, as security for the Obligations and
have such other terms as the Agent may require and any such notes shall be
secured by a first priority (subject only to Liens in favor of Agent, for the
benefit of itself and the Lenders) Lien in all Property of the relevant Borrower
or Subsidiary, as the case may be, on terms and conditions satisfactory to
Agent, and such Lien shall have been assigned to Agent, for the benefit of
itself and the Lenders, in form and substance satisfactory to Agent, and Agent
shall have received such agreements, documents, instruments and opinions
requested by Agent in its Permitted Discretion in respect thereof;
(j) Contingent Obligations permitted under Section 7.9;
(k) Indebtedness for the deferred purchase price of
property due less than six months from the incurrence of such Indebtedness;
(l) Indebtedness incurred in connection with the
financing of insurance premiums in the ordinary course of business; provided
that the agreement evidencing such Indebtedness (a "PREMIUM FINANCING
AGREEMENT") must be in form and substance satisfactory to Agent in its Permitted
Discretion and must provide that (A) the lender providing such financing (the
"PREMIUM LENDER") shall give 30 days written notice to Agent prior to effecting
any cancellation of the financed policies (which notice must specify the nature
of the default and actions necessary to cure), (B) Agent and Lenders shall have
the right, but not the obligation, to cure such default and the Premium Lender
shall accept such payments to cure such default, (C) the Premium Lender shall
notify Agent prior to any assignment of the Premium Financing Agreement and any
such assignee must agree to the provisions required hereby and (D) Agent and
Lenders are deemed to be third party beneficiaries under the Premium Financing
Agreement;
(m) trade accounts payable and accrued obligations (other
than for borrowed money) which are not aged more than one hundred twenty (120)
calendar days from the billing date or thirty (30) days from the due date, in
each case incurred in the ordinary course of business and paid within such time
period, unless the same are being contested in good faith and by appropriate and
lawful proceedings and such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by such Borrower's independent accountants
shall have been reserved to the satisfaction of Agent in its Permitted
Discretion;
(n) Indebtedness in respect of taxes, assessments,
governmental charges or levies, claims of customs authorities and claims for
labor, worker's compensation, materials and supplies to the extent that payment
therefor shall not at the time be required to be made in accordance with the
provisions of Section 7.3;
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(o) Indebtedness in respect of judgments or awards under
circumstances not giving rise to a Default or Event of Default;
(p) other Indebtedness not to exceed $500,000 in the
aggregate at any time outstanding.
7.3 LIENS
No Credit Party shall, and no Credit Party shall permit or cause any of
its Consolidated Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon, in or against, or pledge of, any of the Collateral or any of its
properties or assets or any of its shares, securities or other equity or
ownership or partnership interests, whether now owned or hereafter acquired,
except the following (collectively, "PERMITTED LIENS"):
(a) Liens under the Loan Documents or otherwise arising
in favor of Agent, for the benefit of itself and Lenders;
(b) Liens imposed by law for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained by such
Person in accordance with GAAP to the satisfaction of Agent in its Permitted
Discretion;
(c) (i) statutory Liens of landlords, and of carriers,
warehousemen, mechanics and/or materialmen, and (ii) other Liens imposed by law
or that arise by operation of law in the ordinary course of business from the
date of creation thereof, in each case of the foregoing clauses (i) and (ii)
only for amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained by such Person in accordance with
GAAP to the satisfaction of Agent in its Permitted Discretion;
(d) Liens incurred or deposits made in the ordinary
course of business (including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the performance of tenders,
bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations which are not delinquent for
more than 90 days or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained by such Person to the satisfaction of Agent in
its Permitted Discretion;
(e) purchase money Liens securing Indebtedness permitted
under Section 7.2(d) and Liens arising under Capital Leases permitted under
Section 7.2(c), in each case to the extent such Liens attach only to the subject
Property;
(f) Liens securing Indebtedness permitted under Section
7.2(e);
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(g) any attachment or judgment Lien not otherwise
constituting an Event of Default;
(h) easements, rights of way, restrictions, zoning
ordinances, reservations, covenants and other similar charges, title exceptions
or encumbrances relating to real property of the Credit Parties that do not
interfere in any material respect with the ordinary conduct of the Business of
the Credit Parties or result in material diminution in value of the Collateral;
and
(i) Liens disclosed on Schedule 7.3 as of the Closing
Date.
7.4 INVESTMENTS; INVESTMENT PROPERTY; NEW FACILITIES OR
COLLATERAL; SUBSIDIARIES
No Credit Party shall, and no Credit Party shall permit or cause any of
its Consolidated Subsidiaries to, directly or indirectly, (a) merge or
amalgamate with, purchase, own, hold, invest in or otherwise acquire any
obligations or stock or securities of, or any other interest in, or all or
substantially all of the assets of, any Person or any joint venture or otherwise
consummate any Acquisition, (b) purchase, own, hold, invest in or otherwise
acquire any Investment Property (except Cash Equivalents with respect to which
Agent, for itself and the benefit of the Lenders, has a perfected, first
priority Lien), or (c) make or permit to exist any loans, advances, capital
contribution or guarantees to or for the benefit of any Person (including any
existing Subsidiary) or assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable for or upon or incur any obligation of any
Person (including any existing Subsidiary), other than:
(i) loans and guarantees created by the Loan
Documents;
(ii) Permitted Indebtedness to the extent
permitted under Section 7.2(h) or Section 7.2(i);
(iii) loans to employees for the purpose of
purchasing equity in Parent not to exceed $100,000 in the aggregate at
any time outstanding and advances for business travel and similar
temporary advances made in the ordinary course of business to officers,
directors and employees, not to exceed $250,000 in the aggregate at any
time outstanding;
(iv) the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary
course of business;
(v) any US Borrower or any of its Domestic
Wholly-Owned Subsidiaries may merge or amalgamate with, purchase, own,
hold, invest in or otherwise acquire any obligations or stock or
securities of, or any other interest in, or all or substantially all of
the assets of, any other US Borrower or any Domestic Wholly-Owned
Subsidiaries of a US Borrower;
(vi) any Canadian Borrower or any of its
Wholly-Owned Subsidiaries may merge or amalgamate with, purchase, own,
hold, invest in or otherwise acquire any obligations or stock or
securities of, or any other interest in, or all or substantially all of
the assets of, any other Canadian Borrower or any of its Canadian
Subsidiaries; and
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(vii) Contingent Obligations to the extent
permitted under Section 7.9.
No Credit Party shall, and no Credit Party shall permit or cause any of
its Consolidated Subsidiaries to, directly or indirectly, purchase, lease, own,
operate, hold, invest in or otherwise acquire (A) with respect to US Borrower or
any Domestic Subsidiary of US Borrower, any Property or any Collateral that is
located outside the United States or with respect to Canadian Borrower or any
Foreign Subsidiary of Canadian Borrower, any Property or any Collateral that is
located outside the United States or Canada, or (B) any Collateral that is
located at locations other than those from time to time set forth on Schedule
5.19B or transported to job sites in the ordinary course of business, unless, in
the case of this clause (B), such Credit Party or Subsidiary shall have provided
to Agent at least twenty (20) Business Days' prior written notice thereof. No
Credit Party shall have any Subsidiaries other than (i) the Subsidiaries listed
on Schedule 5.3 as of the Closing Date and (ii) such Subsidiaries of a Borrower
which have complied with the terms and provisions of this Agreement, including,
without limitation, Section 6.12, promptly, and in no event later than five (5)
days, after being formed or created.
7.5 DIVIDENDS; REDEMPTIONS; EQUITY
No Credit Party shall, and no Credit Party shall permit or cause any of
its Consolidated Subsidiaries to, (a) declare, pay or make any dividend or
distribution on any shares of capital stock or other securities or ownership
interests, (b) apply any of its funds, property or assets to the acquisition,
redemption or other retirement of any capital stock or other securities or
interests or of any options to purchase or acquire any of the foregoing, (c)
otherwise make any payments, dividends or Distributions to any stockholder,
director, member, partner or other equity owner in such Person's capacity as
such, or (d) issue, sell or create any capital stock or other equity securities.
Notwithstanding the foregoing:
(i) any Borrower or a Wholly-Owned Subsidiary of
any Borrower may declare and pay dividends or other distributions to a
US Borrower or any Domestic Wholly-Owned Subsidiary of a US Borrower;
(ii) any Canadian Borrower or a Wholly-Owned
Subsidiary of Canadian Borrower may declare and pay dividends or other
distributions to any Borrower or any Wholly-Owned Subsidiary of any
Borrower;
(iii) Borrowers may declare and make dividends or
other distributions payable solely in its equity securities (to the
extent constituting Permitted Securities and the same (other than
equity securities of Parent) are subject to a first priority Lien in
favor of Agent, for the benefit of itself and the Lenders, as security
for the Obligations);
(iv) Parent may issue shares or options to
purchase shares of capital stock under existing warrants and Option
Plans; and
(v) so long as no Default or Event of Default
has occurred and is continuing or would result therefrom, any Borrower
may make, upon termination of an employee of any Credit Party or in
accordance with any repurchase provision set forth in the Option Plan
or in accordance with any existing option grants, Distributions to such
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employee to redeem for cash equity securities or warrants or options to
acquire any equity securities of such Borrower owned by such employee
not to exceed $100,000 annually and $250,000 in the aggregate; provided
that after giving effect to such Distribution, the Borrowers are in
compliance on a pro forma basis with the financial covenants set forth
in Section 7.1 (recalculated for the most recent period for which
financial statements have been delivered).
7.6 TRANSACTIONS WITH AFFILIATES
Except as otherwise expressly provided by this Agreement, no Credit
Party shall, and no Credit Party shall permit or cause any of its Consolidated
Subsidiaries to, sell or transfer any property or assets to, or purchase or
acquire any property or assets from, or otherwise enter into or consummate any
transaction of any kind with any of its Affiliates other than: (a) salary,
bonus, employee stock option and other compensation and employment arrangements
with directors or employees in the ordinary course of business in amounts which
are reasonable and customary for directors or employees with similar
responsibility and experience of other comparable companies in the same industry
as the Credit Parties, (b) distributions and dividends permitted pursuant to
Section 7.5, (c) the Annual Corporate Charge, (d) so long as no Event of Default
has occurred and remains in effect or would be caused by or result therefrom,
management fees paid pursuant to, and in accordance with the terms of, the
Management Services Agreement and the Management Fee Subordination Agreement not
to exceed $400,000 for any fiscal year plus the amount of any accrued management
fees in prior fiscal years that were not previously paid in cash, (e) the
payment of a one-time closing fee pursuant to the terms of the Preferred Stock
Purchase Agreement in an amount not to exceed $500,000 and (f) other
transactions under and pursuant to written agreements entered into by and
between a Credit Party and one or more of its Affiliates that both (i) reflect
and constitute transactions and payments on overall terms at least as favorable
to such Credit Party as would be the case in an arm's length transaction between
unrelated parties of equal bargaining power and (ii) if Agent requests, are
subject to such subordination terms and conditions acceptable to Agent in its
Permitted Discretion.
7.7 CHARTER DOCUMENTS; FISCAL YEAR; USE OF PROCEEDS; INSURANCE
POLICIES; DISPOSITION OF COLLATERAL; TAXES; TRADE NAMES
No Credit Party shall, and no Credit Party shall permit or
cause any of its Consolidated Subsidiaries to, (a) amend, modify, restate or
change its certificate of incorporation or organization, its partnership
agreement, its bylaws or operating agreement or any other similar charter
document if such amendment, modification, restatement or change would reasonably
be expected to adversely affect the rights of Agent or the Lenders hereunder,
(b) change its state of organization or change its corporate or legal name
without thirty (30) Business Days' prior written notice to Agent, (c) change its
fiscal year or method of accounting (other than immaterial changes in methods)
except as required by GAAP, (d) use any proceeds of any Loans for "purchasing"
or "carrying" "margin stock" as defined in Regulations T, U or X of the Board of
Governors of the Federal Reserve System for any use not contemplated or
permitted by this Agreement, (e) amend, modify, restate or change any insurance
policy in any material respect (including, without limitation, any increase in
the amount of any deductibles payable by the Credit Parties under any such
insurance policy or any change in the coverage, coverage amount,
60
beneficiaries, loss payees and/or additional insureds), except in the ordinary
course of business consistent with past practices and which otherwise comply
with Section 6.5, (f) engage, directly or indirectly, in any business other than
the Business, (g) change its federal tax employer identification number,
organizational identification number, if any, or establish new or additional
trade names without providing at least thirty (30) days' advance written notice
to Agent, or (h) revoke, alter or amend any Tax Information Authorization (on
IRS Form 8821 or otherwise) given to Agent.
7.8 TRANSFER OF ASSETS
(a) No Credit Party shall, and no Credit Party shall
permit or cause any of its Consolidated Subsidiaries to, sell, lease, transfer,
pledge, assign or otherwise dispose of any Collateral or other Property or any
interest therein, or agree to do any of the foregoing, except that:
(i) any Credit Party may sell obsolete, worn out
or replaced equipment or excess equipment no longer needed in the
ordinary course of business and having a net book value not exceeding
$200,000 in the aggregate in any fiscal year;
(ii) any Credit Party may sell Inventory in the
ordinary course of business for fair market value and on an arm's
length basis;
(iii) any US Borrower or a Wholly-Owned Subsidiary
of US Borrower may transfer assets to a US Borrower or any Domestic
Wholly-Owned Subsidiary of a US Borrower;
(iv) any Canadian Borrower or a Wholly-Owned
Subsidiary of Canadian Borrower may transfer assets to any Borrower or
any Wholly-Owned Subsidiary of any Borrower; and
(v) any Credit Party may sell other assets or
properties not specifically permitted otherwise in this Section 7.8
(other than equity interests in Subsidiaries) only so long as (a) such
Credit Party complies with the mandatory prepayment provisions of
Section 2.11 in connection therewith (to the extent the proceeds
thereof are not reinvested in accordance with the terms of such Section
2.11), (b) the net book value of assets so sold by the Credit Parties
does not exceed $100,000 in the aggregate in any fiscal year, (c) no
Default or Event of Default exists or otherwise would result therefrom
and (d) the sole consideration thereof, which shall be at least equal
to fair market value, is cash; and
(vi) any Credit Party may complete the
dispositions set forth on Schedule 2.11.
(b) No Credit Party shall (i) transfer any material
portion of the Collateral, whether in one transaction or a series of
transactions, to any leased location for which a Landlord Waiver and Consent has
not been obtained or (ii) at any time after May 31, 2004, (A) maintain any books
or records of any Credit Party at all leased locations for which a Landlord
Waiver and Consent has not been obtained or (B) except for movement of
equipment, inventory and related
61
assets for performance of services in the ordinary course of business, maintain
any Collateral in excess of $100,000 in the aggregate at all leased locations
for which a Landlord Waiver and Consent has not been obtained.
(c) At no point shall the sum of the aggregate amount of
annualized payments on operating leases during any Fiscal Year exceed
$6,000,000.
7.9 CONTINGENT OBLIGATIONS
No Credit Party shall, and no Credit Party shall permit or cause any of
its Consolidated Subsidiaries to, directly or indirectly, create or become or be
liable with respect to any Contingent Obligation except (a) those resulting from
endorsement of negotiable instruments for collection in the ordinary course of
business; (b) those arising under indemnity agreements to title insurers to
cause such title insurers to issue to Agent mortgagee title insurance policies;
(c) those arising with respect to customary indemnification obligations incurred
in connection with asset sales; (d) those incurred in the ordinary course of
business and consistent with past practices with respect to surety and appeal
bonds, performance and return-of-money bonds and other similar obligations; (e)
guarantees of performance by a Consolidated Subsidiary incurred in the ordinary
course of business and consistent with past practices; (f) those incurred with
respect to Indebtedness permitted by Section 7.2 provided that any such
Contingent Obligation is subordinated to the Obligations to the same extent as
the Indebtedness to which it relates is subordinated to the Obligations and (g)
those arising under indemnification obligations under sale agreements in effect
as of the date hereof and set forth on Schedule 7.9. No Credit Party shall
assume or become subject to any risks or liabilities other than those relating
to its respective Business.
7.10 TRUTH OF STATEMENTS
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to, furnish to Agent or any Lender any certificate, document or
other information that contains any untrue statement of a material fact or that
omits to state a material fact necessary to make it not misleading in light of
the circumstances under which it was furnished.
7.11 PAYMENT ON DEBT
Except to the extent permitted by, and otherwise in accordance with and
subject to the terms of, the applicable Subordination Agreement or in respect of
scheduled payments of principal of and interest on Permitted Indebtedness
described in Sections 7.2(b), (c), (d), (h) and (i), no Credit Party shall, and
no Credit Party shall permit or cause any of its Subsidiaries to, (a) make any
payment of or on account of any part or all of any Indebtedness for Borrowed
Money or Subordinated Debt, including, without limitation, any voluntary or
mandatory prepayments, (b) repurchase, redeem, prepay or retire any unsecured
Indebtedness for Borrowed Money or Subordinated Debt, or (c) enter into any
agreement (oral or written) which could in any way be construed to amend, modify
or alter or terminate any one or more instruments or agreements evidencing or
relating to any such Indebtedness.
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7.12 MODIFICATIONS OF AGREEMENTS
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to, make, or agree to make, any modification, amendment or
waiver of any of the terms or provisions of, and will not fail to enforce or
diligently pursue its remedies under, (i) the Management Services Agreement,
(ii) except to the extent permitted by, and otherwise in accordance with and
subject to the terms of, the applicable Subordination Agreement, any and all
agreement, documents, instruments and/or certificates executed in connection
with any unsecured Indebtedness for Borrowed Money or Subordinated Debt, (iii)
any Investment Documents or (iv) the Employment Agreement, in each case as in
effect on the Closing Date (or, in the case of clause (iii) above, on the date
entered into), in a manner adverse to Agent or any Lender or any of their
interests as determined by Agent in its Permitted Discretion.
7.13 INTELLECTUAL PROPERTY
Except as determined by Borrowers in their good faith business judgment
as no longer being material to the Business:
(a) each Credit Party agrees that it will not do any act,
or omit to do any act, whereby Patents of such Credit Party may lapse or become
abandoned or dedicated to the public or unenforceable.
(b) each Credit Party agrees that it will not do any act,
or omit to do any act, whereby Copyrights of such Credit Party may lapse or
become invalid or unenforceable or placed in the public domain except upon
expiration of the end of an unrenewable term of a registration thereof; and
(c) each Credit Party agrees that it will not do any act,
or omit to do any act, whereby Trademarks of such Credit Party may lapse or
become invalid or unenforceable or lose value, including by reason of claims of
abandonment for non-use or as a result of any failure by such Credit Party to
maintain as in the past the quality of the products and services associated with
such Trademarks.
(d) Promptly upon Agent's request from time to time, each
Credit Party shall provide to Agent a complete copy (including any amendments)
of any Intellectual Property Agreement to which any Credit Party is a party or
otherwise bound and such other information regarding the Credit Parties'
Intellectual Property as Agent may request in its Permitted Discretion.
7.14 CERTAIN AGREEMENTS
Neither any Credit Party nor any Subsidiary of any Credit Party (i) is
currently or will become a Person whose property or interests in property are
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001),
(ii) will engage in any dealings or transactions prohibited by Section 2 of such
executive order, or be otherwise associated with any such person in any manner
63
violative of Section 2, or (iii) will otherwise become a Person on the list of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other OFAC regulation or executive order.
7.15 APPLICATIONS UNDER CCAA.
None of the Credit Parties shall file any plan or arrangement under the
Companies' Creditors Arrangement Act (Canada) that provides for, or would permit
directly or indirectly, the Agent or any Canadian Lender to be classified with
any other creditor of any Credit Party for the purposes of such Act or
otherwise.
VIII. EVENTS OF DEFAULT
8.1 CERTAIN AGREEMENTS
The occurrence of any one or more of the following shall constitute an
"EVENT OF DEFAULT":
(a) any Credit Party shall fail to pay (i) any principal
amount of any Note when due (in all cases, whether on any payment date, at
maturity, by reason of acceleration, by notice of intention to prepay, by
required prepayment or otherwise) or (ii) any interest, fees or other
Obligations (excluding principal) provided for in any Loan Document when due and
such default under this clause (ii) continues unremedied for a period of three
Business Days;
(b) any representation, statement or warranty made or
deemed made by any Credit Party, any Sponsor or any other Person (other than
Agent or any Lender), in any Loan Document or in any other written certificate,
document, report or opinion delivered pursuant to any Loan Document to which it
is a party, shall not be true and correct in all material respects or shall have
been false or misleading in any material respect on the date when made or deemed
to have been made (except to the extent already qualified by materiality, in
which case it shall be true and correct in all respects and shall not be false
or misleading in any respect) except those made as of a specific date; provided
that no default shall be deemed to occur under Section 5.14 solely as a result
of any environmental report, financial statement or similar document,
certificate or statement prepared by a third party and furnished to Agent or any
Lender on behalf of any Credit Party to the extent that such Credit Party has
and promptly exercises any rights to obtain adequate redress from such third
party for any damages resulting therefrom to the satisfaction of Agent in its
Permitted Discretion;
(c) any Credit Party or other Person party thereto (other
than Agent or any Lender) shall be in violation, breach or default of, or shall
fail to perform, observe or comply with, any covenant, obligation or agreement
set forth in, or any event of default occurs under, any Loan Document and such
violation, breach, default, event of default or failure shall not be cured
within the applicable period, if any, set forth in the applicable Loan Document;
provided that, with respect to the affirmative covenants set forth in Article VI
(other than Sections 6.1, 6.3(b), 6.5, 6.9, 6.11, or 6.12 for which there shall
be no cure period and Section 6.2 for which
64
there shall be a cure period to the extent provided in Section 8.1(a)), there
shall be a thirty (30) calendar day cure period, if any, commencing from the
earlier of (i) Receipt by such Person of written notice of such breach, default,
violation or failure, and (ii) the time at which such Person or any authorized
officer thereof knew or became aware of such failure, violation, breach or
default;
(d) (i) any of the Loan Documents ceases to be in full
force and effect (other than expiration or termination, in accordance with their
terms), or (ii) any Lien created thereunder ceases to constitute a valid first
priority (other than with respect to property or assets subject to Priority
Permitted Liens) perfected Lien on the Collateral in accordance with the terms
thereof, or Agent, for the benefit of itself and Lenders, ceases to have a valid
perfected first priority security interest in (subject to Priority Permitted
Liens) any material portion of the Collateral or any securities pledged to
Agent, for the benefit of itself and Lenders, pursuant to the Security
Documents;
(e) one or more judgments or decrees is rendered against
the Credit Parties or any of them in an amount in excess of $250,000
individually or $750,000 in the aggregate (excluding judgments to the extent
covered by third party insurance of such Persons where such coverage has been
acknowledged by such Person), which is/are not satisfied, stayed, vacated or
discharged of record within thirty (30) calendar days of being rendered;
(f) (i) any default or breach occurs, which is not cured
within any applicable grace period or waived in writing, (x) in the payment of
any amount with respect to any Indebtedness (other than the Obligations) of any
Credit Party in excess of $100,000 individually or $250,000 in the aggregate, or
(y) in the performance, observance or fulfillment of any provision contained in
any agreement, contract, document or instrument to which any Credit Party is a
party or to which any of its properties or assets are subject or bound (1) under
or pursuant to which any Indebtedness in excess of $100,000 individually or
$250,000 in the aggregate was issued, created, assumed, guaranteed or secured
and such default or breach entitles the holder of any such Indebtedness to
accelerate the maturity thereof, or (2) that is between any Credit Party and
Agent or any Lender or Affiliate of Agent or any Lender (other than the Loan
Documents), or (ii) any Indebtedness of any Credit Party in excess of $100,000
individually or $250,000 in the aggregate is declared to be due and payable or
is required to be prepaid prior to the stated maturity thereof, or any
obligation of such Person for the payment of Indebtedness in excess of $100,000
individually or $250,000 in the aggregate (other than the Obligations) is not
paid when due or within any applicable grace period, or any such obligation
becomes or is declared to be due and payable before the expressed maturity
thereof, or there occurs any event which, with the giving of notice or lapse of
time or both, would cause any such obligation to become, or allow any such
obligation to be declared, due and payable
(g) any Credit Party shall (i) be unable to pay its debts
generally as they become due, (ii) file a petition under any insolvency statute,
(iii) make a general assignment for the benefit of its creditors, (iv) commence
a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property or
shall otherwise be dissolved or liquidated, or (v) file a petition seeking
reorganization or liquidation or similar relief under any Debtor Relief Law or
any other applicable law or statute;
65
(h) (i) a court of competent jurisdiction shall (A) enter
an order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of any Credit Party or the whole or any substantial
part of any such Person's properties, which shall continue unstayed and in
effect for a period of sixty (60) calendar days, (B) approve a petition filed
against any Credit Party seeking reorganization, liquidation or similar relief
under the any Debtor Relief Law or any other applicable law or statute, which is
not dismissed within sixty (60) calendar days or, (C) under the provisions of
any Debtor Relief Law or other applicable law or statute, assume custody or
control of any Credit Party or of the whole or any substantial part of any such
Person's properties, which is not irrevocably relinquished within sixty (60)
calendar days, or (ii) there is commenced against any Credit Party any
proceeding or petition seeking reorganization, liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute, (A) which is
not unconditionally dismissed within sixty (60) calendar days after the date of
commencement, or (B) in respect of which such Credit Party takes any action to
indicate its approval of or consent to any such proceeding or petition;
(i) (i) any Change of Control occurs or (ii) any Material
Adverse Effect or Material Adverse Change occurs;
(j) uninsured damage to, or uninsured loss, theft or
destruction of, any portion of the Collateral occurs that exceeds $500,000 in
the aggregate;
(k) any Credit Party or any of its directors or senior
officers is criminally indicted or convicted of or under a felony or crime
involving fraud against or in relation to such Credit Party;
(l) the issuance of any process for levy, attachment or
garnishment (other than garnishment for employee wages in the ordinary course of
business) or execution upon or prior to any judgment against any Credit Party or
any of its or their material property or assets or against any of the
Collateral, in each case which is/are not satisfied, stayed, vacated, dismissed
or discharged within thirty (30) calendar days of being issued or executed;
(m) any Credit Party does, or enters into or becomes a
party to any agreement or commitment to do, or cause to be done, any of the
things described in this Article VIII;
(n) (i) the subordination provisions of any Subordination
Agreement and/or the subordination provisions contained in or otherwise
pertaining to any other agreement or instrument governing any Subordinated Debt
shall for any reason be revoked or invalidated, or otherwise cease to be in full
force and effect, or (ii) any Person shall contest in any manner the validity or
enforceability thereof, deny that it has any further liability or obligation
thereunder, or take any action in violation thereof or fail to take any action
required by the terms thereof, or (iii) the Obligations, for any reason shall
not have the priority contemplated by this Agreement, any such Subordination
Agreement or such subordination provisions;
(o) an "Event of Default" under any other Loan Document
occurs (to the extent, with respect to any such other Loan Document, not
otherwise constituting an Event of Default hereunder);
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(p) any Credit Party is enjoined, restrained or in any
way prevented by the order of any court or other Governmental Authority from
conducting all or any part of its business for more than fifteen (15) days which
is reasonably likely to have a Material Adverse Effect;
(q) both the following events shall occur; (i) a
Reportable Event, the occurrence of which would have a Material Adverse Effect
which could cause the imposition of a Lien under Section 4068 of ERISA, shall
have occurred with respect to any Plan or Plans; and (ii) the aggregate amount
of the then "current liability" (as defined in Section 412(l)(7) of the Code) of
all accrued benefits under such Plan or Plans exceeds the then current value of
the assets allocable to such benefits by more than $250,000 at such time; or
(r) any Credit Party that shall be required by law
(including, without limitation, the Income Tax Act (Canada) or the Excise Tax
Act (Canada)) to deduct or withhold any tax from or in respect of any sum
payable hereunder to Agent or any Lender shall fail to make such deductions
and/or pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law, or any such Credit Party shall fail
to furnish to Agent, within five (5) Business Days of demand therefor, the
original or certified copy of a receipt evidencing payment thereof, or other
evidence of payment reasonably satisfactory to Agent;
then, and in any such event, notwithstanding any other provision of any Loan
Document, Agent may (and at the request of the US Requisite Lenders or the
Canadian Requisite Lenders, as applicable, shall), by notice to Borrowers (i)
terminate Lenders' obligations hereunder, whereupon the same shall immediately
terminate, and (ii) declare all or any of the Loans and/or Notes, all interest
thereon and all other Obligations to be due and payable immediately (except in
the case of an Event of Default under Section 8(d), (g) or (h), in which event
all of the foregoing shall automatically and without further act by Agent or any
Lender be due and payable and Lenders obligations hereunder shall terminate; in
each case without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Credit Parties).
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1 RIGHTS AND REMEDIES
(a) In addition to the acceleration provisions set forth
in Article VIII above, upon the occurrence and continuance of an Event of
Default, Agent shall have the right to (and at the request of US Requisite
Lenders or the Canadian Requisite Lenders, as applicable, shall) exercise any
and all rights, options and remedies provided for in any Loan Document, under
the UCC, the PPSA or at law or in equity, including, without limitation, the
right to (i) apply any property of any Credit Party held by Agent, for the
benefit of Lenders, or Lenders to reduce the Obligations, (ii) foreclose the
Liens created under the Loan Documents, (iii) realize upon, take possession of
and/or sell any Collateral or securities pledged, with or without judicial
process, (iv) exercise all rights and powers with respect to the Collateral as
any Credit Party might
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exercise, (v) collect and send notices regarding the Collateral, with or without
judicial process, (vi) by its own peaceable means or with judicial assistance,
enter any premises at which Collateral and/or pledged securities are located, or
render any of the foregoing unusable or dispose of the Collateral and/or pledged
securities on such premises without any liability for rent, storage, utilities,
or other sums, and no Credit Party shall resist or interfere with such action,
(vii) at Credit Parties' expense, require that all or any part of the Collateral
be assembled and made available to Agent at any place designated by Agent in its
Permitted Discretion, (viii) reduce or otherwise change the US Revolving
Facility Maximum Amount, the Canadian Revolving Facility Maximum Amount, the US
Revolving Facility Cap, the Canadian Revolving Facility Cap and/or (ix)
relinquish or abandon any Collateral or securities pledged or any Lien thereon.
Notwithstanding any provision of any Loan Document, Agent, in its Permitted
Discretion, shall have the right, at any time that any Credit Party fails to do
so, and from time to time, without prior notice, to: (i) obtain insurance
covering any of the Collateral to the extent required hereunder; (ii) pay for
the performance of any of the Obligations; (iii) discharge taxes, levies and/or
Liens on any of the Collateral that are in violation of any Loan Document unless
such Credit Party is in good faith with due diligence by appropriate
proceedings, contesting those items; and (iv) pay for the maintenance, repair
and/or preservation of the Collateral. Such expenses and advances shall be added
to the Obligations until reimbursed to Agent and shall be secured by the
Collateral, and such payments by Agent shall not be construed as a waiver by
Agent or Lenders of any Event of Default or any other rights or remedies of
Agent and Lenders.
(b) The Credit Parties jointly and severally agree that
notice received by any of them at least ten (10) calendar days before (i) the
time of any intended public sale or (ii) the time after which any private sale
or other disposition of Collateral is to be made, shall be deemed to be
reasonable notice of such sale or other disposition. If permitted by applicable
law, any perishable Collateral which threatens to speedily decline in value or
which is sold on a recognized market may be sold immediately by Agent without
prior notice to any Credit Party. At any sale or disposition of Collateral or
securities pledged, Agent may (to the extent permitted by applicable law)
purchase all or any part thereof free from any right of redemption by the Credit
Parties which right is hereby waived and released. The Credit Parties jointly
and severally covenant and agree not to, and not to permit or cause any of their
Subsidiaries to, interfere with or impose any obstacle to Agent's exercise of
its rights and remedies with respect to the Collateral; provided that nothing in
this Section 9.1(b) shall prohibit the Credit Parties from exercising any rights
to purchase Collateral sold pursuant to the provisions hereof. In dealing with
or disposing of the Collateral or any part thereof, Agent and Lenders shall not
be required to give priority or preference to any item of Collateral or
otherwise to marshal assets or to take possession or sell any Collateral with
judicial process.
(c) Each Credit Party hereby grants to Agent, for the
benefit of itself and the Lenders, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to such Credit
Party) to use, assign, license or sublicense any Intellectual Property, now
owned or hereafter acquired by such Credit Party, and wherever the same may be
located, including in such license reasonable access as to all media in which
any of the licensed items may be recorded or stored and to all computer programs
and used for the compilation or printout thereof to the extent not prohibited by
any Intellectual Property Agreement related thereto. All proceeds
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received by Agent or Lenders in connection with such license will be used by
Agent or Lenders to satisfy the Obligations.
(d) Each purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part of any Credit
Party, and each Credit Party hereby waives (to the extent permitted by law) all
rights of redemption and appraisal which such Credit Party now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as Agent may fix and
state in the notice of such sale, and Agent shall not be obligated to make any
sale of any Collateral if Agent shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given, and Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice to any Credit Party or
anyone else, be made at the time and place to which the same was so adjourned.
(e) In case any sale of all or any part of the Collateral
is made on credit or for future delivery, the Collateral so sold may be retained
by Agent until the sale price is paid by the purchaser or purchasers thereof,
but Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for Collateral so sold and, in case of any such
failure, such Collateral may be sold again upon notice to the Credit Parties as
set forth in this Section 9.1.
(f) At any public sale, Agent may bid for or purchase,
free (to the extent permitted by law) from any right of redemption or appraisal
on the part of the Credit Parties (all said rights being also hereby waived and
released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using the
Obligations as a credit against the purchase price, and Agent may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to the Credit Parties therefor.
(g) For purposes of any sale of Collateral in accordance
with this Agreement, a written agreement to purchase the Collateral or any
portion thereof shall be treated as a sale thereof. Agent shall be free to carry
out such sale pursuant to such agreement, and the Credit Parties shall not be
entitled to the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after Agent shall have entered into such an
agreement, all Events of Default shall have been remedied and the Obligations
paid in full.
(h) Upon any sale of Collateral by Agent (including a
sale pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral being
sold, and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to Agent or such officer
or be answerable in any way for the misapplication thereof.
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(i) Upon the occurrence and continuance of an Event of
Default, the Credit Parties shall take such action as may be necessary to
provide that the rights to payment of any Account, the applicable Account Debtor
for such Account is any Governmental Authority, have been assigned to Agent, for
the benefit of itself and Lenders, pursuant to the Assignment of Claims Act of
1940, as amended (31 U.S.C. Section 3727, et seq. and 41 U.S.C. Section 15, et
seq.), or otherwise, and all applicable statutes or regulations respecting the
assignment of government Accounts have been complied with.
9.2 APPLICATION OF PROCEEDS
In addition to any other rights, options and remedies Agent and Lenders
have under the Loan Documents, the UCC, the PPSA, at law or in equity, all
dividends, interest, rents, issues, profits, fees, revenues, income and other
proceeds collected or received from collecting, holding, managing, renting,
selling, or otherwise disposing of all or any part of the Collateral or any
proceeds thereof upon exercise of its remedies hereunder upon the occurrence and
continuance of an Event of Default shall be applied in the following order of
priority:
(i) first, to the payment of all costs and expenses of
such collection, storage, lease, holding, operation, management, sale,
disposition or delivery and of conducting the Credit Parties' businesses and of
maintenance, repairs, replacements, alterations, additions and improvements of
or to the Collateral, and to the payment of all sums which Agent or Lenders may
be required or may elect to pay, if any, for taxes, assessments, insurance and
other charges upon the Collateral or any part thereof, and all other payments
that Agent, L/C Issuer (in such capacity) or Lenders may be required or
authorized to make under any provision of this Agreement and the other Loan
Documents (including, without limitation, in each such case, in-house
documentation and diligence fees and legal expenses, search, audit, recording,
professional and filing fees and expenses and reasonable attorneys' fees and all
expenses, liabilities and advances made or incurred in connection therewith);
(ii) second, to the payment of all other Obligations in
such order as determined by Agent in its sole discretion;
(iii) third, to the payment of any surplus then remaining
to the Credit Parties, unless otherwise provided by law or directed by a court
of competent jurisdiction, provided that the Credit Parties shall be liable for
any deficiency if such proceeds are insufficient to satisfy the Obligations or
any of the other items referred to in this Section.
Amounts collected or received due to the exercise of any rights and
remedies by Agent and/or the Lenders under any of the Loan Documents with
respect to Collateral pledged by (i) any US Credit Party to secure the
Obligations shall be applied to the Obligations in such order and manner as
determined by Agent in its sole and absolute discretion and (ii) any Canadian
Credit Party (other than a US Credit Party) to secure only the Canadian
Obligations shall be applied in accordance with the foregoing to the extent
constituting such Obligations.
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9.3 RIGHTS TO APPOINT RECEIVER
Without limiting and in addition to any other rights, options and
remedies Agent and Lenders have under the Loan Documents, the UCC, the PPSA, at
law or in equity, upon the occurrence and continuance of an Event of Default,
Agent and Lenders shall have the right to apply for and have a receiver
appointed by a court of competent jurisdiction in any action taken by Agent to
enforce its and Lenders' rights and remedies in order to manage, protect and
preserve the Collateral and such receiver shall have all available powers,
rights, options and remedies that Agent and Lenders have under the Loan
Documents, the UCC, the PPSA, at law or in equity, including, without
limitation, the right to sell or dispose of the Collateral and continue the
operation of the businesses of the Credit Parties and to collect all revenues
and profits thereof and apply the same to the payment of all expenses and other
charges of such receivership including the compensation of the receiver and to
the payments as aforesaid until a sale or other disposition of such Collateral
shall be finally made and consummated. To the extent not prohibited by
applicable law, each Credit Party hereby irrevocably consents to and waives any
right to object to or otherwise contest the appointment of a receiver as
provided above. Each Credit Party (i) grants such waiver and consent knowingly
after having discussed the implications thereof with counsel, (ii) acknowledges
that (A) the uncontested right to have a receiver appointed for the foregoing
purposes is considered essential by Agent and Lenders in connection with the
enforcement of their rights and remedies hereunder and under the other Loan
Documents and (B) the availability of such appointment as a remedy under the
foregoing circumstances was a material factor in inducing Lenders to make the
Loans to the Credit Parties and (iii) to the extent not prohibited by applicable
law, agrees to enter into any and all stipulations in any legal actions, or
agreements or other instruments required or reasonably appropriate in connection
with the foregoing, and to cooperate fully with Agent and Lenders in connection
with the assumption and exercise of control by any receiver over all or any
portion of the Collateral.
9.4 BLOCKED ACCOUNTS
Without limiting any other provision of any Loan Document, and in
addition to any other rights, options and remedies, Agent and Lenders have under
the Loan Documents, the UCC, the PPSA, at law or in equity, upon the occurrence
and during continuance of any Event of Default, Agent shall have the right to
require that all amounts in all Deposit Accounts of any Credit Party and that
all cash payments received by any Credit Party are paid and delivered directly
into a blocked account under the sole dominion and control of Agent and that all
such amounts are immediately transferred into a depository account or accounts
maintained by Agent or an Affiliate of Agent at such bank as Agent may determine
in its sole discretion.
9.5 RIGHTS AND REMEDIES NOT EXCLUSIVE
Agent shall have the right in its sole discretion to determine which
rights, Liens and/or remedies Agent or Lenders may at any time pursue,
relinquish, subordinate or modify, and such determination will not in any way
modify or affect any of Agent's or Lenders' rights, Liens or remedies under any
Loan Document, applicable law or equity. The enumeration of any rights and
remedies in any Loan Document is not intended to be exhaustive, and all rights
and remedies
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of Agent described in any Loan Document are cumulative and are not alternative
to or exclusive of any other rights or remedies which Agent or any Lender
otherwise may have. The partial or complete exercise of any right or remedy
shall not preclude any other further exercise of such or any other right or
remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1 WAIVERS
Except as expressly provided for herein, each Credit Party hereby
waives set-off, counterclaim, demand, presentment, protest, all defenses with
respect to any and all instruments and all notices and demands of any
description. Each Credit Party hereby waives any and all defenses and
counterclaims it may have or could interpose in any action or procedure brought
by Agent or any Lender to obtain an order of court recognizing the assignment
of, or Lien of Agent, for the benefit of itself and Lenders, in and to, any
Collateral.
10.2 DELAY; NO WAIVER OF DEFAULTS
No course of action or dealing, renewal, release or extension of any
provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Agent's or Lenders' part in
enforcing any such provision shall affect the liability of any Credit Party or
operate as a waiver of such provision or affect the liability of any Credit
Party or preclude any other or further exercise of such provision. No waiver by
any party to any Loan Document of any one or more defaults by any other party in
the performance of any of the provisions of any Loan Document shall operate or
be construed as a waiver of any future default, whether of a like or different
nature, and each such waiver shall be limited solely to the express terms and
provisions of such waiver. Notwithstanding any other provision of any Loan
Document, by completing the Closing under this Agreement and/or by making
Advances and/or funding the Term Loans, neither Agent nor any Lender waives any
breach of any representation or warranty of any Credit Party under any Loan
Document, and all of Agent's and Lenders' claims and rights resulting from any
such breach or misrepresentation are specifically reserved.
10.3 JURY WAIVER
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS OR IN
ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT
TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN
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EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS
TO TRIAL BY JURY.
10.4 AMENDMENT AND WAIVERS
(a) Except as otherwise provided herein, no amendment,
modification, termination, or waiver of any provision of this Agreement or any
Loan Document, or consent to any departure by the Credit Parties or any Sponsor,
or any of them therefrom, shall in any event be effective unless the same shall
be in writing and signed by Requisite Lenders, Agent and Borrowers (or such
Credit Party); provided, that no amendment, modification, termination, or waiver
shall, unless in writing and signed by each Lender directly affected thereby, do
any of the following: (i) increase or reinstate the Commitment of any individual
Lender (which action shall be deemed to directly affect all Lenders); (ii)
reduce the principal of, rate of interest on or fees payable with respect to any
Loan or the requirement that any of the foregoing be paid in full in cash; (iii)
extend the scheduled due date (including the Maturity Date), or reduce the
amount due on any scheduled due date, of any installment of principal, interest,
or fees payable with respect to any Loan, or waive, forgive, extend, defer or
postpone the payment thereof; (iv) change the percentage of the Commitments, of
the aggregate unpaid principal amount of the Loans, or of Lenders which shall be
required for Lenders or any of them to take any action hereunder (which action
shall be deemed to directly affect all Lenders) or change the definition of
"Requisite Lenders" or alter, as between or among the Revolving Lenders and Term
Lenders, the amount payable to each hereunder; (v) except as otherwise permitted
herein or in the other Loan Documents, release any Guaranty or release any of
the Collateral (which action shall be deemed to directly affect all Lenders)
(provided, that consent to such release shall not be required if such release is
made after and during the continuance of an Event of Default in connection with
the sale or disposition of the Collateral by Agent); (vi) amend, modify or waive
this Section 10.4 or the definitions of the terms used in this Section 10.4
insofar as the definitions affect the substance of this Section 10.4 (which
action shall be deemed to directly affect all Lenders); and (vii) consent to the
assignment or other transfer by any Credit Party or any other party (other than
Agent or any Lender) to any Loan Documents of any of their rights and
obligations under any Loan Document; and, provided, further, that no amendment,
modification, termination or waiver affecting the rights or duties of Agent
under any Loan Document shall in any event be effective, unless in writing and
signed by Agent, in addition to Lenders required herein above to take such
action. Notwithstanding anything contained in this Agreement to the contrary, no
waiver or consent with respect to any Default (if in connection therewith
Revolving Lenders have exercised their right to suspend the making or incurrence
of further Revolving Advances) or any Event of Default shall be effective for
purposes of the conditions precedent to the making of Revolving Advances unless
the same shall be in writing and signed by the Requisite Lenders with respect to
the relevant Revolving Lenders and Borrowers.
(b) Each amendment, modification, termination or waiver
shall be effective only in the specific instance and for the specific purpose
for which it was given. No amendment, modification, termination or waiver shall
be required for Agent, for the benefit of itself and the benefit of Lenders, to
take additional Collateral pursuant to any Loan Document.
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(c) Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 10.4 shall be binding upon
Agent, each Lender and the Credit Parties.
XI. EFFECTIVE DATE AND TERMINATION
11.1 EFFECTIVENESS AND TERMINATION
Subject to Agent's and Lenders rights to accelerate the Loans and
terminate and cease making and funding Advances in accordance with this
Agreement, this Agreement shall continue in full force and effect until full
performance and indefeasible payment in full in cash of all Obligations, unless
terminated sooner as provided in this Section 11.1. The Credit Parties may
terminate this Agreement at any time on not less than ten (10) Business Days'
prior written notice to Agent and upon full performance and indefeasible payment
in full in cash of all Obligations. All of the Obligations shall be immediately
due and payable upon the earlier of the Maturity Date or the termination date
stated in any notice of termination, as applicable. Notwithstanding the
foregoing, any termination notice by Borrowers pursuant to this Section 11.1
shall be revocable; provided, that any revocation shall be by written notice by
Borrowers to Agent and to the extent Borrowers wish to terminate this Agreement
after any such revocation it shall do so only in compliance with the time
periods and other requirements of this Section 11.1 (i.e., once a termination
notice is revoked, any subsequent termination notice shall be subject to the
full advance notice and effectiveness requirements of this Section 11.1).
Notwithstanding any other provision of any Loan Document, no termination of this
Agreement shall affect any Lender's or Agent's rights or any of the Obligations
existing as of the effective date of such termination, and the provisions of the
Loan Documents shall continue to be fully operative until the Obligations have
been fully performed and indefeasibly paid in cash in full and this Agreement
has terminated. The Liens granted to Agent, for the benefit of itself and
Lenders, under the Security Documents and the financing statements filed
pursuant thereto and the rights and powers of Agent and Lenders shall continue
in full force and effect notwithstanding the fact that Borrowers' borrowings
hereunder may from time to time be in a zero or credit position until all of the
Obligations have been fully performed and indefeasibly paid in full in cash.
11.2 SURVIVAL
All obligations, covenants, agreements, representations, warranties,
waivers and indemnities made by any Credit Party or any Sponsor in any Loan
Document shall survive the execution and delivery of the Loan Documents, the
Closing, the making and funding of the Loans and Advances and any termination of
this Agreement until all Obligations are fully performed and indefeasibly paid
in full in cash. The obligations and provisions of Sections 3.4, 3.6, 6.13,
10.1, 10.3, 11.1, 11.2, 13.3, 13.4, 13.7, 13.9, 13.10 and 13.11 and Article XII
shall survive termination of the Loan Documents and any payment, in full or in
part, of the Obligations.
XII. AGENCY PROVISIONS
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12.1 AGENT
(a) APPOINTMENT. Each Lender hereby designates and
appoints CapitalSource as the administrative agent, payment agent and collateral
agent, under this Agreement and the other Loan Documents, and each Lender hereby
irrevocably authorizes CapitalSource, as the administrative agent, payment agent
and collateral agent for such Lender, to take such action or to refrain from
taking 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
delegated to Agent by the terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental thereto. Agent
agrees to act as such on the conditions contained in this Article XII. The
provisions of this Article XII are solely for the benefit of Agent and Lenders,
and the Credit Parties shall have no rights as a third-party beneficiary of any
of the provisions of this Article XII other than the second sentence of Section
12.1(h)(iii). Agent may perform any of its duties hereunder, or under the Loan
Documents, by or through its agents or employees.
(b) NATURE OF DUTIES. In performing its functions and
duties under this Agreement, Agent is acting solely on behalf of Lenders and its
duties are administrative in nature and does not assume and shall not be deemed
to have assumed, any obligation toward or relationship of agency or trust with
or for Lenders, other than as expressly set forth herein and in the other Loan
Documents, or the Credit Parties. Agent shall have no duties, obligations or
responsibilities, except those expressly set forth in this Agreement or in the
other Loan Documents. Agent shall not have by reason of this Agreement or any
other Loan Document a fiduciary relationship in respect of any Lender. Each
Lender shall make its own independent investigation of the financial condition
and affairs of the Credit Parties in connection with the extension of credit
hereunder and shall make its own appraisal of the creditworthiness of the Credit
Parties. Except for information, notices, reports, and other documents expressly
required to be furnished to Lenders by Agent hereunder or given to Agent for the
account of or with copies for Lenders, Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the Closing Date or at any time or times thereafter. If
Agent seeks the consent or approval of any Lenders to the taking or refraining
from taking any action hereunder, then Agent shall send prior written notice
thereof to each Lender. Agent shall promptly notify (in writing) each Lender any
time that the applicable percentage of Lenders have instructed Agent to act or
refrain from acting pursuant hereto.
(c) RIGHTS, EXCULPATION, ETC. Neither Agent nor any of
its officers, directors, managers, members, equity owners, employees or agents
shall be liable to any Lender for any action lawfully taken or omitted by them
hereunder or under any of the other Loan Documents, or in connection herewith or
therewith. Notwithstanding the foregoing, Agent shall be obligated on the terms
set forth herein for performance of its express duties and obligations
hereunder, and Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith, and if any such apportionment
or distribution is subsequently determined to have been made in error, the sole
recourse of any Lender to whom payment was due but not made shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled
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(and such other Lenders hereby agree to return to such Lender any such erroneous
payments received by them). In performing its functions and duties hereunder,
Agent shall exercise the same care which it would in dealing with loans for its
own account. Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties made by the Credit Parties herein or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the other Loan
Documents or the transactions contemplated thereby, or for the financial
condition of the Credit Parties. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions,
or conditions of this Agreement or any of the Loan Documents or the financial
condition of the Credit Parties, or the existence or possible existence of any
Default or Event of Default. Agent may at any time request instructions from
Lenders with respect to any actions or approvals which by the terms of this
Agreement or of any of the other Loan Documents Agent is permitted or required
to take or to grant, and Agent shall be absolutely entitled to refrain from
taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from taking any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the applicable percentage of Lenders. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against Agent as a result of Agent acting or refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of the applicable percentage of Lenders and notwithstanding the instructions of
Lenders, Agent shall have no obligation to take any action if it, in good faith
believes that such action exposes Agent or any of its officers, directors,
managers, members, equity owners, employees or agents to any personal liability
unless Agent receives an indemnification reasonably satisfactory to it from
Lenders with respect to such action.
(d) RELIANCE. Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message or other communication (including any writing, telex, telecopy
or telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.
(e) INDEMNIFICATION. Each Lender, severally and not (i)
jointly or (ii) jointly and severally, agrees to reimburse and indemnify and
hold harmless Agent and its officers, directors, managers, members, equity
owners, employees and agents (to the extent not reimbursed by the Credit
Parties), ratably according to their respective Pro Rata Share in effect on the
date on which indemnification is sought under this subsection of the total
outstanding obligations (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Pro Rata Share immediately prior to
such date of the total outstanding obligations), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances, or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against Agent or any of its
officers, directors, managers, members, equity owners, employees or agents in
any way relating to or arising out of this Agreement or any of the other Loan
Documents or any action taken or omitted by Agent under this Agreement
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or any of the other Loan Documents; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements resulting from Agent's or any other indemnified Person's gross
negligence or willful misconduct. The obligations of Lenders under this Article
XII shall survive the payment in full of the Obligations and the termination of
this Agreement.
(f) CAPITALSOURCE INDIVIDUALLY. With respect to the Loans
made by it, and the Notes issued to it, CapitalSource shall have and may
exercise the same rights and powers hereunder and under the other Loan Documents
and is subject to the same obligations and liabilities as and to the extent set
forth herein and the other Loan Documents as any other Lender. The terms
"LENDERS", "US REQUISITE LENDERS", "CANADIAN REQUISITE LENDERS" or "REQUISITE
LENDERS" or any similar terms shall, unless the context clearly otherwise
indicates, include CapitalSource in its individual capacity as a Lender or one
of the Requisite Lenders. CapitalSource may lend money to, and generally engage
in any kind of banking, trust or other business with, any Credit Party or any
Subsidiary or Affiliates of any Credit Party as if it were not acting as Agent
pursuant hereto.
(g) SUCCESSOR AGENT.
(i) RESIGNATION. Agent may resign from the
performance of all or part of its functions and duties hereunder at any
time by giving not less than thirty (30) days' prior written notice to
Borrowers and Lenders. Such resignation shall take effect upon the
acceptance by a successor Agent of appointment pursuant to clause (ii)
below or as otherwise provided below.
(ii) APPOINTMENT OF SUCCESSOR. Upon any such
notice of resignation pursuant to clause (g)(i) of this Section
12.1(g), Requisite Lenders shall appoint a successor Agent reasonably
acceptable to Borrowers, which consent shall not be unreasonably
withheld, delayed or conditioned (provided, that, no such consent shall
not be required if any Event of Default exists). If a successor Agent
shall not have been so appointed within said thirty (30) day period,
the retiring Agent, upon notice to Borrowers, may, on behalf of
Lenders, then appoint a successor Agent reasonably acceptable to
Borrowers, which consent shall not be unreasonably withheld, delayed or
conditioned (provided, that, no such consent shall not be required if
any Event of Default exists), who shall serve as Agent until such time,
as Requisite Lenders, appoint a successor Agent as provided above. If
no successor Agent has been appointed pursuant to the foregoing within
said thirty (30) day period, the resignation shall become effective and
Requisite Lenders shall thereafter perform all the duties of Agent
hereunder, until such time, if any, as Requisite Lenders appoint a
successor Agent as provided above.
(iii) SUCCESSOR AGENT. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent,
such successor Agent shall thereupon succeed, to and become vested with
all the rights, powers, privileges and duties of the retiring Agent,
and, upon the earlier of such acceptance or the effective date of the
retiring Agent's resignation, the retiring Agent shall be discharged
from its duties and
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obligations under the Loan Documents, except that any indemnity rights
or other rights in favor of such retiring Agent shall continue. After
any retiring Agent's resignation as Agent under the Loan Documents, the
provisions of this Article XII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the
Loan Documents.
(h) COLLATERAL MATTERS.
(i) COLLATERAL. Each Lender agrees that any
action taken by Agent or the US Requisite Lenders or the Canadian
Requisite Lenders, as applicable (or, where required by the express
terms of this Agreement, a greater proportion of Lenders) in accordance
with the provisions of this Agreement or of the other Loan Documents
relating to the Collateral, and the exercise by Agent or the US
Requisite Lenders or the Canadian Requisite Lenders, as applicable (or,
where so required, such greater proportion) of the powers set forth
herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of Lenders
and Agent. Without limiting the generality of the foregoing, the Agent
shall have the sole and exclusive right and authority to (i) act as the
disbursing and collecting agent for Lenders with respect to all
payments and collections arising in connection herewith and with the
Loan Documents in connection with the Collateral; (ii) execute and
deliver each Loan Document relating to the Collateral and each
Subordination Agreement and accept delivery of each such agreement
delivered by the Credit Parties or any of their Subsidiaries and the
Sponsors; (iii) act as collateral agent for Lenders for purposes of the
perfection of all security interests and Liens created by such
agreements and all other purposes stated therein; (iv) manage,
supervise and otherwise deal with the Collateral; (v) take such action
as is necessary or desirable to maintain the perfection and priority of
the security interests and Liens created or purported to be created by
the Loan Documents relating to the Collateral,; and (vi) except as may
be otherwise specifically restricted by the terms hereof or of any
other Loan Document, exercise all remedies given to such Agent and
Lenders with respect to the Collateral under the Loan Documents
relating thereto, applicable law or otherwise.
(ii) RELEASE OF COLLATERAL. Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to
release any Lien granted to or held by Agent for the benefit of Lenders
upon any property covered by the Loan Documents (A) upon termination of
this Agreement and payment and satisfaction in full of all Obligations;
(B) constituting property being sold or disposed of if Borrowers
certify to Agent that the sale or disposition is made in compliance
with the provisions of the Loan Documents (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry);
or (C) constituting property leased to any Credit Party under a lease
which has expired or been terminated in a transaction permitted under
this Agreement or is about to expire and which has not been, and is not
intended by such Credit Party to be, renewed or extended.
(iii) CONFIRMATION OF AUTHORITY; EXECUTION OF
RELEASES. Without in any manner limiting Agent's authority to act
without any specific or further authorization
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or consent by Lenders (as set forth in Section 12.1(h)(i) and (ii)),
each Lender agrees to confirm in writing, upon request by Borrowers,
the authority to release any property covered by this Agreement or the
Loan Documents conferred upon Agent under Section 12.1(h)(ii). So long
as no Event of Default is then continuing, upon receipt by Agent of
confirmation from the requisite percentage of Lender of its authority
to release any particular item or types of property covered, by this
Agreement or the Loan Documents, and upon at least five (5) Business
Days' prior written request by Borrowers, Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to Agent for the
benefit of Lenders herein or pursuant hereto upon such Collateral;
provided, however, that (A) Agent shall not be required to execute any
such document on terms which, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than
the release of such Liens without recourse or warranty (other than that
such Collateral is free and clear, on the date of such delivery, of any
and all Liens arising from such Person's own acts), and (B) such
release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of the Credit Parties or
any Subsidiary of any Credit Party, in respect of all interests
retained by the Credit Parties or any Subsidiary of any Credit Party,
including, without limitation, the proceeds of any sale, all of which
shall continue to constitute part of the property covered by this
Agreement or the Loan Documents.
(iv) ABSENCE OF DUTY. Agent shall have no
obligation whatsoever to any Lender or any other Person to assure that
the property covered by this Agreement or the Loan Documents exists or
is owned by any Credit Party or is cared for, protected or insured or
has been encumbered or that the Liens granted to Agent on behalf of
Lenders herein or pursuant hereto have been properly or sufficiently or
lawfully created, perfected, protected, enforced or maintained or are
entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure, or fidelity,
or to continue exercising, any of the rights, authorities and powers
granted or available to Agent in this Section 12.1(h) or in any of the
Loan Documents, it being understood and agreed that in respect of the
property covered by this Agreement or the Loan Documents or any act,
omission, or event related thereto, Agent may act in any manner it may
deem appropriate, in its discretion, given Agent's own interest in
property covered by this Agreement or the Loan Documents as one of
Lenders and Agent shall have no duty or liability whatsoever to any of
the other Lenders; provided, that Agent shall exercise the same care
which it would in dealing with loans for its own account.
Notwithstanding the foregoing, Agent shall be liable with respect to
its own gross negligence or willful misconduct.
(i) AGENCY FOR PERFECTION. Each Lender hereby appoints
Agent as agent for the purpose of perfecting Lenders' security interest in
Collateral which, in accordance with Article 9 of the UCC in any applicable
jurisdiction or in accordance with the PPSA, can be perfected only by
possession. Should any Lender (other than Agent) obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor, shall deliver such Collateral to Agent or in accordance with
Agent's instructions, and prior to such delivery shall hold such Collateral in
trust for the benefit of Agent.
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(j) EXERCISE OF REMEDIES. Except as set forth in Section
12.3, each Lender agrees that it will not have any right individually to enforce
or seek to enforce this Agreement or any Loan Document or to realize upon any
collateral security for the Loans, it being understood and agreed that such
rights and remedies may be exercised only by Agent.
12.2 US AGENT AND CANADIAN AGENT
To the extent the use of a single Agent under the Loan Documents would
result in material and adverse tax consequences to US Borrower under Section 956
of the Code, as determined by Agent and the Requisite Lenders in their Permitted
Discretion, then the Loan Documents shall be deemed automatically amended and
modified so as to provide for the appointment of separate Agents in respect of
the US Obligations and the Canadian Obligations to the extent necessary to avoid
such tax consequences, and the terms and conditions of this Article 12 shall be
for the benefit of both such Agents. In such event, (i) the intent of the
parties to this Agreement is that such bifurcation shall not affect the
perfection or priority of any Lien granted pursuant to the Security Documents
and shall not constitute a novation, (ii) all decision-making authority granted
to the Agent under the Loan Documents shall be decided and determined on a
joint, unanimous basis between both Agents, and (iii) each Credit Party and each
Lender agrees to execute and deliver to such Agents such agreements, documents
and instruments as they may request to effectuate the intent of this paragraph.
12.3 SET-OFF AND SHARING OF PAYMENTS
In addition to any rights and remedies now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, each Lender is
hereby authorized by the Credit Parties at any time or from time to time, to the
fullest extent permitted by law, with reasonably prompt subsequent notice to
Borrowers or to any other Person (any prior or contemporaneous notice being
hereby expressly waived) to set off and to appropriate and to apply any and all
(a) balances (general or special, time or demand, provisional or final) held by
such Lender or such holder at any of its offices for the account of any Credit
Party (regardless of whether such balances are then due to any Credit Party),
and (b) other property at any time held or owing by such Lender or such holder
to or for the credit or for the account of any Credit Party, against and on
account of any of the Obligations which are not paid when due; except that no
Lender or any such holder shall exercise any such right without prior written
notice to Agent; provided, however, that the failure to give notice to any
Credit Party or to any other Person shall not affect the validity of such
set-off and application. Any Lender which has exercised its right to set-off or
otherwise has received any payment on account of the Obligations shall, to the
extent the amount of any such set off or payment exceeds its Pro Rata Share of
payments obtained by all of the Lenders on account of such Obligations, purchase
for cash (and the other Lenders or holders of the Loans shall sell)
participations in each such other Lender's or holder's Pro Rata Share of
Obligations as would be necessary to cause such Lender to share such excess with
each other Lenders or holders in accordance with their respective Pro Rata
Shares; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such purchasing Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery. Each Credit Party agrees, to the fullest extent permitted by
law, that (a) any Lender or
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holder may exercise its right to set-off with respect to amounts in excess of
its Pro Rata Share of the Obligations and may sell participations in such excess
to other Lenders and holders, and (b) any Lender or holder so purchasing a
participation in the Loans made or other Obligations held by other Lenders or
holders may exercise all rights of set-off, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender or
holder were a direct holder of Loans and other Obligations in the amount of such
participation.
12.4 DISBURSEMENT OF FUNDS
Agent may, on behalf of Revolving Lenders, disburse funds to Borrowers
for Advances requested. Each such Lender shall reimburse Agent on demand for its
Pro Rata Share of all funds disbursed on its behalf by Agent, or if Agent so
requests, each such Lender will remit to Agent its Pro Rata Share of any Advance
before Agent disburses same to Borrowers. If Agent elects to require that funds
be made available prior to disbursement to a Borrower, Agent shall advise each
applicable Lender by telephone, telex or telecopy of the amount of such Lender's
Pro Rata Share of such requested Advance no later than one (1) Business Day
prior to the funding date applicable thereto, and each such Lender shall pay
Agent such Lender's Pro Rata Share of such requested Loan, in same day funds, by
wire transfer to Agent's account not later than 3:00 p.m. (New York City time).
If any Lender fails to pay the amount of its Pro Rata Share forthwith upon
Agent's demand, Agent shall promptly notify Borrowers, and Borrowers shall
immediately repay such amount to Agent. Any repayment required pursuant to this
Section 12.4 shall be without premium or penalty. Nothing in this Section 12.4
or elsewhere in this Agreement or the other Loan Documents, including without
limitation the provisions of Section 12.5, shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights that
Agent or Borrowers may have against any Lender as a result of any default by
such Lender hereunder.
12.5 SETTLEMENTS; PAYMENTS AND INFORMATION
(a) ADVANCES; PAYMENTS; INTEREST AND FEE PAYMENTS.
(i) The amount of outstanding Loans pursuant to
Advances may fluctuate from day to day through Agent's disbursement of
funds to, and receipt of funds from, Borrowers. In order to minimize
the frequency of transfers of funds between Agent and each Lender
notwithstanding terms to the contrary set forth in Section 12.4,
Advances and repayments may be settled according to the procedures
described in Sections 12.5(a)(ii) and 12.5(a)(iii) of this Agreement.
Payments of principal, interest and fees in respect of the Loans will
be settled, in accordance with each Lender's Pro Rata Share on the
first Business Day after such payments are received. Notwithstanding
these procedures, each Lender's obligation to fund its Pro Rata Share
of any Advances made by Agent to Borrowers will commence on the date
such Advances are made by Agent; provided, however, nothing contained
in this Agreement shall obligate a Lender to make an Advance at any
time a Default or an Event of Default exists. Such payments will be
made by such Lender without set-off, counterclaim or reduction of any
kind.
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(ii) Once each week, or more frequently
(including daily), if Agent so elects (each such day being a
"SETTLEMENT DATE"), Agent will advise each Lender by 1:00 p.m. (New
York City time) on a Business Day by telephone, telex, or telecopy of
the amount of each such Lender's Pro Rata Share of the outstanding
Loans. In the event payments are necessary to adjust the amount of such
Lender's share of the Loans to such Lender's Pro Rata Share of the
Loans, the party from which such payment is due will pay the other
party, in same day funds, by wire transfer to the other's account not
later than 3:00 p.m. (New York City time) on the Business Day following
the Settlement Date.
(iii) On the first Business Day of each month
("INTEREST SETTLEMENT DATE"), Agent will advise each Lender by
telephone or facsimile of the amount of interest and fees charged to
and collected from Borrowers for the proceeding month in respect of the
applicable Loans. Provided that such Lender has made all payments
required to be made by it under this Agreement, Agent will pay to such
Lender, by wire transfer to such Lender's account (as specified by such
Lender on Schedule A of this Agreement as amended by such Lender from
time to time after the date hereof pursuant to the notice provisions
contained herein or in the applicable Lender Addition Agreement) not
later than 3:00 p.m. (New York City time) on the next Business Day
following the Interest Settlement Date such Lender's share of such
interest and fees.
(b) AVAILABILITY OF LENDERS' PRO RATA SHARE.
(i) Unless Agent has been notified by a
Revolving Lender prior to any proposed funding date of such Lender's
intention not to fund its Pro Rata Share of the Advance amount
requested by a Borrower, Agent may assume that such Lender will make
such amount available to Agent on the proposed funding date or the
Business Day following the next Settlement Date, as applicable;
provided, however, nothing contained in this Agreement shall obligate a
Lender to make an Advance at any time any Default or Event of Default
exists. If such amount is not, in fact, made available to Agent by such
Lender when due, Agent will be entitled to recover such amount on
demand from such Lender without set-off, counterclaim, or deduction of
any kind.
(ii) Nothing contained in this Section 12.5(b)
will be deemed to relieve a Lender of its obligation to fulfill its
commitments or to prejudice any rights Agent or Borrowers may have
against such Lender as a result of any default by such Lender under
this Agreement.
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(c) RETURN OF PAYMENTS.
(i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has
been or will be received by Agent from any Credit Party and such
related payment is not received by Agent, then Agent will be entitled
to recover such amount from such Lender without set-off, counterclaim
or deduction of any kind.
(ii) If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to any
Credit Party or paid to any other Person pursuant to any insolvency law
or otherwise, then, notwithstanding any other term or condition of this
Agreement, Agent will not be required to distribute any portion thereof
to any Lender. In addition, each Lender will repay to Agent on demand
any portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to
pay to Borrowers or such other Person, without set-off, counterclaim or
deduction of any kind.
12.6 DISSEMINATION OF INFORMATION
Upon request by a Lender, Agent will distribute promptly to such
Lender, unless previously provided by any Credit Party to such Lender, copies of
all notices, schedules, reports, projections, financial statements, agreements
and other material and other information, including, but not limited to,
financial and reporting information received from the Credit Parties or
generated by a third party (and excluding only internal information generated by
CapitalSource for its own use as a Lender or as Agent), as provided for in this
Agreement and the other Loan Documents as received by Agent. Agent shall not be
liable to any of the Lenders for any failure to comply with its obligations
under this Section 12.6, except to the extent that such failure is attributable
to Agent's gross negligence or willful misconduct and results in demonstrable
damages to such Lender.
12.7 CONSENTS
(a) In the event Agent requests the consent of a Lender
and does not receive a written denial thereof within three (3) Business Days
after such Lender's receipt of such request, then such Lender will be deemed to
have given such consent so long as such request contained a notice stating that
such failure to respond within three (3) Business Days would be deemed to be a
consent by such Lender.
(b) In the event Agent requests the consent of a Lender
in a situation where such Lender's consent would be required and such consent is
denied, then Agent may, at its option, require such Lender to assign its
interest in the Loans to Agent for a price equal to the then outstanding
principal amount thereof due such Lender plus accrued and unpaid interest and
fees due such Lender, which principal, interest and fees will be paid to the
Lender when collected from Credit Parties. In the event that Agent elects to
require any Lender to assign its interest to Agent pursuant to this Section
12.7, Agent will so notify such Lender in writing within
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forty-five (45) days following such Lender's denial, and such Lender will assign
its interest to Agent no later than five (5) calendar days following receipt of
such notice.
XIII. MISCELLANEOUS
13.1 GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS; VENUE
The Loan Documents shall be governed by and construed in accordance
with the internal laws of the State of Maryland without giving effect to its
choice of law provisions. Any judicial proceeding against any Credit Party with
respect to the Obligations, any Loan Document or any related agreement may be
brought in any federal or state court of competent jurisdiction located in the
State of Maryland. By execution and delivery of each Loan Document to which it
is a party, each Credit Party (i) accepts the non-exclusive jurisdiction of the
aforesaid courts and irrevocably agrees to be bound by any judgment rendered
thereby, (ii) waives personal service of process, (iii) agrees that service of
process upon it may be made by certified or registered mail, return receipt
requested, pursuant to Section 13.5 hereof, and (iv) waives any objection to
jurisdiction and venue of any action instituted hereunder and agrees not to
assert any defense based on lack of jurisdiction, venue, convenience or forum
non conveniens. Nothing shall affect the right of Agent or any Lender to serve
process in any manner permitted by law or shall limit the right of Agent or any
Lender to bring proceedings against any Credit Party in the courts of any other
jurisdiction having jurisdiction. Any judicial proceedings against Agent or any
Lender involving, directly or indirectly, the Obligations, any Loan Document or
any related agreement shall be brought only in a federal or state court located
in the State of Maryland. All parties acknowledge that they participated in the
negotiation and drafting of this Agreement with the assistance of counsel and
that, accordingly, no party shall move or petition a court construing this
Agreement to construe it more stringently against one party than against any
other.
If, for the purposes of obtaining judgment in any court in any
jurisdiction with respect to this Agreement or under any of the Loan Documents,
it becomes necessary to convert into the currency of such jurisdiction (the
"JUDGMENT CURRENCY") any amount due under this Agreement or any Loan Document in
any currency other than the Judgment Currency (the "CURRENCY DUE"), then
conversion shall be made at the rate of exchange prevailing on the Business Day
before the day on which judgment is given. For this purpose "rate of exchange"
means the rate at which Agent is able, on the relevant date, to purchase the
Currency Due with the Judgment Currency in accordance with its normal practice
at its head office in Maryland. In the event that there is a change in the rate
of exchange prevailing between the Business Day before the day on which the
judgment is given and the date of receipt by Agent of the amount due, the
relevant Borrower will on the date of receipt by Agent, pay such additional
amounts, if any, or be entitled to receive reimbursement of such amount, if any,
as may be necessary to ensure that the amount received by Agent on such date is
the amount in the Judgment Currency which when converted at the rate of exchange
prevailing on the date of receipt by Agent is the amount then due under this
Agreement in the Currency Due.
13.2 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS
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(a) Each Lender may at any time assign all or a portion
of its rights and delegate all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including all its rights and
obligations with respect to the Loans) to one or more Persons (a "TRANSFEREE");
provided, that such Transferee and such assigning Lender shall execute and
deliver to Agent for acceptance and recording in the Register, a Lender Addition
Agreement, which shall be in form and substance reasonably acceptable to Agent
in its Permitted Discretion and, unless an Event of Default has occurred and is
continuing, without the approval of the Parent (which approval shall not be
unreasonably withheld or delayed), CapitalSource may not transfer such rights
if, as a result of such transfer, (A) CapitalSource shall cease to constitute
the Requisite Lenders or (B) with respect to the transfer of any Canadian
Obligations to a U.S.-based Lender, additional amounts would be imposed by such
Lender on the Canadian Borrowers as a result of withholding taxes under Section
6.13(b). Upon such execution, delivery, acceptance and recording, from and after
the effective date determined pursuant to such Lender Addition Agreement, (i)
the Transferee thereunder shall be a party hereto and, to the extent provided in
such Lender Addition Agreement, have the same rights, benefits and obligations
as it would if it were a Lender hereunder, (ii) the assigning Lender shall be
relieved of its obligations hereunder with respect to its Commitment or assigned
portion thereof, as the case may be, to the extent that such obligations shall
have been expressly assumed by the Transferee pursuant to such Lender Addition
Agreement (and, in the case of a Lender Addition Agreement covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto but shall
nevertheless continue to be entitled to the benefits of Sections 13.4 and 13.7).
Each Borrower hereby acknowledges and agrees that any assignment will give rise
to a direct obligation of Borrowers to the Transferee and that the Transferee
shall be considered to be a "Lender" hereunder. No Credit Party may sell, assign
or transfer any interest in this Agreement, any of the other Loan Documents, or
any of the Obligations, or any portion thereof, including such Credit Party's
rights, title, interests, remedies, powers, and duties hereunder or thereunder.
(b) Each Lender may at any time sell participations in
all or any part of its rights and obligations under this Agreement and the other
Loan Documents (including all its rights and obligations with respect to the
Loans) to one or more Persons (each, a "PARTICIPANT"). In the event of any such
sale by a Lender of a participation to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Loan (and any Note
evidencing such Loan) for all purposes under this Agreement and the other Loan
Documents and the Credit Parties and Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. Any agreement
pursuant to which any Lender shall sell any such participation shall provide
that such Lender shall retain the sole right and responsibility to exercise such
Lender's rights and enforce each Credit Party's obligations hereunder, including
the right to consent to any amendment, supplement, modification or waiver of any
provision of this Agreement or any of the other Loan Documents; provided, that
such participation agreement may provide that such Lender will not agree,
without the consent of the Participant, to any amendment, supplement,
modification or waiver of: (i) any reduction in the principal amount, interest
rate or fees payable with respect to any Loan in which such holder participates;
(ii) any extension of the termination date of this Agreement or the date fixed
for any
85
payment of principal, interest or fees payable with respect to any Loan in which
such holder participates; and (iii) any release of all or substantially all of
the Collateral (other than in accordance with the terms of this Agreement or the
Loan Documents). The Credit Parties hereby acknowledge and agree that the
Participant under each participation shall, solely for the purposes of Sections
10.4, 13.4 and 13.7 of this Agreement be considered to be a "Lender" hereunder.
(c) Agent, on behalf of Borrowers, shall maintain, at its
address referred to in Section 13.5 a copy of each Lender Addition Agreement
delivered to it and a written or electronic register (the "REGISTER") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
the principal amount of the Loans owing to, and the Notes evidencing such Loans
owned by, each Lender from time to time. Notwithstanding anything in this
Agreement to the contrary, each of the Credit Parties, Agent and the Lenders
shall treat each Person whose name is recorded in the Register as the owner of
the Loans, the Notes and the Commitment recorded therein for all purposes of
this Agreement. The Register shall be available for inspection by Borrowers or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Notwithstanding anything in this Agreement to the
contrary, no assignment under Section 13.2(a) of any rights or obligations under
or in respect of the Loans or the Notes evidencing such Loans shall be effective
unless and until Agent shall have recorded the assignment pursuant to Section
13.2(c). Upon its receipt of a Lender Addition Agreement executed by an
assigning Lender and a Transferee, Agent shall (i) promptly accept such Lender
Addition Agreement and (ii) on the effective date determined pursuant thereto
record the information contained therein in the Register and give prompt notice
of such acceptance and recordation to the Lenders and Borrowers. On or prior to
such effective date, the assigning Lender shall surrender any outstanding Notes
held by it all or a portion of which are being assigned, and Borrowers, at their
own expense, shall, upon the request of Agent, the assigning Lender or the
Transferee, as applicable, execute and deliver to Agent, within five (5)
Business Days of any request, new Notes to reflect the interest held by the
assigning Lender and its Transferee.
(e) Except as otherwise provided in this Section 13.2 no
Lender shall, as among the Credit Parties and that Lender, be relieved of any of
its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning the Credit Parties in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to confidentiality requirements hereunder.
(f) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time grant 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 and the other Loan Documents and
Collateral.
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(g) Each Credit Party agrees to provide commercially
reasonable best efforts to assist any Lender in assigning or selling
participations in all or any part of any Loans made by such Lender to another
Person identified by such Lender.
(h) Notwithstanding anything in the Loan Documents to the
contrary, (i) any Lender and its respective Affiliates shall not be required to
execute and deliver a Lender Addition Agreement in connection with any
transaction involving their Affiliates, lenders or funding or financing sources,
(ii) no lender to or Affiliate, funding or financing source of any Lender or any
of their Affiliates shall be considered a Transferee, and (iii) there shall be
no limitation or restriction on (A) the ability of any Lender to assign or
otherwise transfer any Loan Document, Commitment or Obligation to any of their
respective Affiliates or lenders or financing or funding sources or (B) any such
lender's or funding or financing source's ability to assign or otherwise
transfer any Loan Document, Commitment or Obligation; provided, however, such
Lender shall continue to be liable as a "Lender" under the Loan Documents unless
any such Affiliate, lender or funding or financing source executes a Lender
Addition Agreement and thereby becomes a "Lender".
(i) The Loan Documents shall inure to the benefit of each
Lender, Agent, Transferees, Participants (to the extent expressly provided
therein only) and all future holders of the Notes, the Obligations and/or any of
the Collateral, and each of their respective successors and assigns. Each Loan
Document shall be binding upon the Persons other than Lender and Agent that are
parties thereto and their respective successors and assigns, and no such Person
may assign, delegate or transfer any Loan Document or any of its rights or
obligations thereunder without the prior written consent of all Lenders. No
rights are intended to be created under any Loan Document for the benefit of any
third party donee, creditor or incidental beneficiary of any Credit Party.
Nothing contained in any Loan Document shall be construed as a delegation to
Agent or any Lender of any other Person's duty of performance. THE CREDIT
PARTIES ACKNOWLEDGE AND AGREE THAT AGENT OR ANY LENDER AT ANY TIME AND FROM TIME
TO TIME MAY (I) DIVIDE AND REISSUE (WITHOUT SUBSTANTIVE CHANGES OTHER THAN THOSE
RESULTING FROM SUCH DIVISION) THE NOTES, AND/OR (II) SELL, ASSIGN OR GRANT
PARTICIPATING INTERESTS IN OR TRANSFER ALL OR ANY PART OF ITS RIGHTS OR
OBLIGATIONS UNDER ANY LOAN DOCUMENT, NOTE, THE OBLIGATIONS AND/OR THE COLLATERAL
TO OTHER PERSONS, IN EACH CASE ON THE TERMS AND CONDITIONS PROVIDED HEREIN. Each
Transferee and Participant shall have all of the rights and benefits with
respect to the Obligations, Notes, Collateral and/or Loan Documents held by it
as fully as if the original holder thereof, provided that, notwithstanding
anything to the contrary in any Loan Document, no Credit Party shall be
obligated to pay under this Agreement to any Transferee or Participant any sum
in excess of the sum which it would have been obligated to pay to the selling
Lender had such participation not been effected. Notwithstanding any other
provision of any Loan Document, Agent and Lenders may disclose to any Transferee
or Participant all information, reports, financial statements, certificates and
documents obtained under any provision of any Loan Document; provided, that
Transferees and Participants shall be subject to the confidentiality provisions
contained herein that are applicable to Agent and Lenders.
13.3 APPLICATION OF PAYMENTS
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To the extent that any payment made or received with respect to the
Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside, defeased or required to be repaid to a trustee, debtor
in possession, receiver, custodian or any other Person under any Debtor Relief
Law, common law or equitable cause or any other law, then the Obligations
intended to be satisfied by such payment shall be revived and shall continue as
if such payment had not been received by Agent of any Lender and the Liens
created hereby shall be revived automatically without any action on the part of
any party hereto and shall continue as if such payment had not been received by
Agent or any Lender.
13.4 INDEMNITY
The Credit Parties, jointly and severally, hereby indemnify Agent and
each Lender, their respective Affiliates and managers, members, officers,
employees, Affiliates, agents, representatives, successors, assigns, accountants
and attorneys (collectively, the "INDEMNIFIED PERSONS") from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, reasonable fees and disbursements of counsel and
reasonable fees and expenses for in-house documentation, diligence and legal
services) which may be imposed on, incurred by or asserted against any
Indemnified Person with respect to or arising out of, or in any litigation,
proceeding or investigation instituted or conducted by any Person with respect
to any aspect of, or any transaction contemplated by, or any matter related to,
any Loan Document, any Acquisition or any agreement, document or transaction
contemplated thereby, whether or not such Indemnified Person is a party thereto,
except to the extent that a final and nonappealable order of judgment binding on
such Indemnified Person of a court of competent jurisdiction determines that any
of the foregoing arises out of the gross negligence, bad faith or willful
misconduct of such Indemnified Person. If any Indemnified Person uses in-house
counsel for any purpose for which the Credit Parties are responsible to pay or
indemnify, the Credit Parties expressly agree that their indemnification
obligations include reasonable charges for such work commensurate with the
reasonable fees that would otherwise be charged by outside legal counsel
selected by such Indemnified Person in its sole discretion for the work
performed. Agent agrees to give Borrowers reasonable notice of any event of
which Agent becomes aware for which indemnification may be required under this
Section 13.4, and Agent may elect (but is not obligated) to direct the defense
thereof. Any Indemnified Person may, in its reasonable discretion, take such
actions as it deems necessary and appropriate to investigate, defend or settle
any event or take other remedial or corrective actions with respect thereto as
may be necessary for the protection of such Indemnified Person or the
Collateral. Notwithstanding the foregoing, if any insurer agrees to undertake
the defense of an event (an "INSURED EVENT"), Agent agrees not to exercise its
right to select counsel to defend the event if that would cause Borrowers'
insurer to deny coverage; provided, however, that Agent reserves the right to
retain counsel to represent any Indemnified Person with respect to an Insured
Event at its sole cost and expense. To the extent that Agent or any Lender
obtains recovery from a third party other than an Indemnified Person of any of
the amounts that the Credit Parties have paid to Agent or any Lender pursuant to
the indemnity set forth in this Section 13.4, then Agent and/or any such Lender
shall promptly pay to Borrowers the amount of such recovery. Without limiting
any of the foregoing, the Credit Parties, jointly and severally, indemnify the
Indemnified Parties for all claims for brokerage fees or commissions (other than
claims of a broker with whom such
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Indemnified Party has directly contracted in writing) which may be made in
connection with respect to any aspect of, or any transaction contemplated by or
referred to in, or any matter related to, any Loan Document, any Related
Document, any Acquisition or any other agreement, document or transaction
contemplated thereby.
13.5 NOTICE
Any notice or request under any Loan Document shall be given to any
party to this Agreement at such party's address set forth beneath its signature
on the signature page to this Agreement, or at such other address as such party
may hereafter specify in a notice given in the manner required under this
Section 13.5. Any notice or request hereunder shall be given only by, and shall
be deemed to have been received upon (each, a "RECEIPT"): (i) registered or
certified mail, return receipt requested, on the date on which such notice or
request is received as indicated in such return receipt, (ii) delivery by a
nationally recognized overnight courier, one (1) Business Day after deposit with
such courier, or (iii) facsimile or electronic transmission, in each case upon
telephone or further electronic communication from the recipient acknowledging
receipt (whether automatic or manual from recipient), as applicable.
13.6 SEVERABILITY; CAPTIONS; COUNTERPARTS; FACSIMILE SIGNATURES
If any provision of any Loan Document is adjudicated to be invalid
under applicable laws or regulations, such provision shall be inapplicable to
the extent of such invalidity without affecting the validity or enforceability
of the remainder of the Loan Documents which shall be given effect so far as
possible. The captions in the Loan Documents are intended for convenience and
reference only and shall not affect the meaning or interpretation of the Loan
Documents. The Loan Documents may be executed in one or more counterparts (which
taken together, as applicable, shall constitute one and the same instrument) and
by facsimile transmission, which facsimile signatures shall be considered
original executed counterparts. Each party to this Agreement agrees that it will
be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party.
13.7 EXPENSES
The Credit Parties shall pay, whether or not the Closing occurs, all
costs and expenses incurred by Agent, Lenders and/or their Affiliates,
including, without limitation, documentation and diligence fees and expenses,
all search, audit, appraisal, recording, professional and filing fees and
expenses and all other out-of-pocket charges and expenses (including, without
limitation, UCC, PPSA and judgment and tax lien and similar searches and UCC
filings and fees for post-Closing UCC, PPSA and judgment and tax lien and
similar searches and wire transfer fees and audit expenses), and reasonable
attorneys' fees and expenses, (i) in any effort to enforce, protect or collect
payment of any Obligation or to enforce any Loan Document, any Related Document
or any related agreement, document or instrument, (ii) in connection with
entering into, negotiating, preparing, reviewing and executing the Loan
Documents and/or any related agreements, documents or instruments, (iii) arising
in any way out of administration of the Obligations or the taking or refraining
from taking by Agent or any Lender of any action requested by any Credit Party,
(iv) in connection with instituting, maintaining, preserving,
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enforcing and/or foreclosing on Agent's, for the benefit of itself and Lenders,
Liens in any of the Collateral or securities pledged under the Loan Documents,
whether through judicial proceedings or otherwise, (v) in defending or
prosecuting any actions, claims or proceedings arising out of or relating to
Agent's and/or Lenders' transactions with the Credit Parties, (vi) in seeking,
obtaining or receiving any advice with respect to its rights and obligations
under any Loan Document and any related agreement, document or instrument, (vii)
arising out of or relating to any Default or Event of Default or occurring
thereafter or as a result thereof, (viii) in connection with all actions,
visits, audits and inspections undertaken by Agent or Lenders or their
Affiliates pursuant to the Loan Documents, and/or (ix) in connection with any
modification, restatement, supplement, amendment, waiver or extension of any
Loan Document, any Related Document and/or any related agreement, document or
instrument. All of the foregoing shall be charged to Borrowers' account and
shall be part of the Obligations. If Agent, any Lender or any of their
Affiliates uses in-house counsel for any purpose under any Loan Document for
which the Credit Parties are responsible to pay or indemnify, the Credit Parties
expressly agree that their Obligations include reasonable charges for such work
commensurate with the reasonable fees that would otherwise be charged by outside
legal counsel selected by Agent, such Lender or such Affiliate in its sole
discretion for the work performed. Without limiting the foregoing, the Credit
Parties shall pay all taxes (other than taxes based upon or measured by each
Lender's income or revenues or any personal property tax), if any, in connection
with the issuance of any Note and the filing and/or recording of any documents
and/or financing statements.
13.8 ENTIRE AGREEMENT
This Agreement and the other Loan Documents to which the Credit Parties
are parties constitute the entire agreement between and among the Credit
Parties, Agent and Lenders with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings (including but
not limited to the term sheet dated on or about December 15, 2003 and the
commitment letter dated on or about December 15, 2003, each relating to the
subject matter hereof or thereof). Any promises, representations, warranties or
guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing signed by Borrowers, Agent and Lenders, US Requisite
Lenders, the Canadian Requisite Lenders or Requisite Lenders, as appropriate.
Except as set forth in and subject to Section 10.4, no provision of any Loan
Document may be changed, modified, amended, restated, waived, supplemented,
discharged, canceled or terminated orally or by any course of dealing or in any
other manner other than by an agreement in writing signed by Borrowers, Agent
and Requisite Lenders; provided, that no consent or agreement by Borrowers shall
be required to amend, modify, change, restate, waive, supplement, discharge,
cancel or terminate any provision of Article XII so long as no additional
duties, obligations or liabilities are imposed on or required to be assumed by
the Credit Parties. Each party hereto acknowledges that it has been advised by
counsel in connection with the negotiation and execution of this Agreement and
is not relying upon oral representations or statements inconsistent with the
terms and provisions hereof. The schedules attached hereto may be amended or
supplemented by Borrowers upon delivery to Agent of such amendments or
supplements and, except as expressly provided otherwise in this Agreement, the
written approval thereof by the Requisite Lenders.
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13.9 APPROVALS AND DUTIES
Unless expressly provided herein to the contrary, any approval,
consent, waiver or satisfaction of Agent or Lenders with respect to any matter
that is subject of any Loan Document may be granted or withheld by Agent or
Lenders, as applicable, in their sole and absolute discretion. Other than
Agent's duty of reasonable care with respect to Collateral delivered pursuant to
the Loan Documents, Agent and Lenders shall have no responsibility for or
obligation or duty with respect to any of the Collateral or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof or to protect
or preserve any rights pertaining thereto.
13.10 CONFIDENTIALITY AND PUBLICITY
(a) Agent and each Lender reserve the right to review and
approve all materials that the Credit Parties or any of their Affiliates prepare
that contain Agent's or such Lender's name or describe or refer to any Loan
Document, any of the terms thereof or any of the transactions contemplated
thereby, which approval shall not be unreasonably withheld or delayed. The
Credit Parties shall not, and shall not permit any of their Affiliates to, use
either Agent's or any Lender's name (or the name of any of Agent's or any
Lenders' Affiliates) in connection with any of its business operations,
provided, that Borrowers may disclose the Lenders' names, the aggregate
principal amount of the Loans outstanding and other principal terms of such
Loans to (x) prospective purchasers of debt or equity securities of Borrowers
(other than Parent) so long as such Borrowers inform such prospective purchasers
of the confidential nature of such information and such Persons agree in writing
not to disclose the same to any other Person and to be bound by the
confidentiality provisions of this Agreement, (y) Governmental Authorities
regulating the Business in accordance with applicable legal requirements and (z)
any other Person to which such disclosure may be necessary in response to any
court order, subpoena or other legal process or formal investigative demand..
Nothing contained in any Loan Document is intended to permit or authorize any
Credit Party or any of its Affiliates to contract on behalf of Agent or any
Lender. The Credit Parties agree that Agent or any Affiliate of Agent may (i)
disclose a general description of transactions arising under the Loan Documents
for advertising, marketing or other similar purposes, and (ii) use any Credit
Party's name, logo or other indicia germane to such party in connection with
such advertising, marketing or other similar purposes, provided Agent or
Affiliate delivers a copy of such materials to Parent at least five (5) Business
Days prior to its initial publication and Parent does not object to such
materials prior to the publication date.
(b) Anything herein to the contrary notwithstanding,
"non-public information" shall not include, and Agent and each Lender may
disclose to any and all Persons, without limitation of any kind, any information
with respect to the "tax treatment" and "tax structure" (in each case, within
the meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to Agent or such Lender relating to such tax
treatment and tax structure; provided that with respect to any document or
similar item that in either case contains information concerning the tax
treatment or tax structure of the transaction as well as other information, this
sentence shall only apply to such portions of the document or similar item that
relate to the tax
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treatment or tax structure of the Loans, the Commitments, any letters of credit
and transactions contemplated hereby and by the other Loan Documents.
(c) Each of Agent and the Lenders agrees, on behalf of
itself and each of its Affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of the same nature and in accordance with safe and sound commercial practices,
any non-public information supplied to it by the Credit Parties pursuant to this
Agreement that is identified by such Person as being confidential at the time
the same is delivered to such party, provided that nothing herein shall limit
the disclosure of such information (a) after such information shall have become
public other than through a violation of this Section 13.10(c), (b) to the
extent required pursuant to a subpoena, civil investigative demand (or similar
process), order, statute, rule or other legal requirement promulgated or imposed
by a court or by a judicial, regulatory, self-regulatory or legislative body,
organization, agency or committee or otherwise in connection with any judicial
or administrative proceeding (including, without limitation, in response to oral
questions, interrogatories or requests for information or documents), (c) to
counsel, auditors, accountants, lenders, Affiliates, funding or financing
sources for any of the Agent or Lenders, (d) to any regulatory authority having
jurisdiction over the Agent or any Lenders, (e) to the Agent or any other
Lender, (f) in connection with any litigation to which any one or more of the
Agent or Lenders is a party, or in connection with the enforcement of rights or
remedies hereunder or under any of the Loan Documents, (g) to any Subsidiary,
Affiliate, partner, director, officer or employee of the Agent or any Lender
provided, such parties agree to be bound by provisions substantially similar to
this Section 13.10(c), (h) to any assignee or participant (or prospective
assignee or participant) permitted pursuant to Article XII or Section 13.4 so
long as such assignee or participant agrees to be bound by the provisions
hereof, or (i) with the consent of Parent. Each of the Agent and the Lenders
agrees that, to the extent Agent or such Lender has received relevant non-public
information supplied to it by the Credit Parties pursuant to this Agreement that
is identified by such Person as being confidential at the time the same is
delivered to such party, it will not buy, sell, trade or otherwise dispose of
any Common Stock of Parent during any period that Parent has instructed its
directors, officers and employees that any trading is prohibited, provided that
such Agent or Lenders has received notice in the same manner as the directors,
officers and employees of the Parent. Each of the Agent and the Lenders agrees
that, to the extent Agent or such Lender has received relevant non-public
information supplied to it by the Credit Parties pursuant to this Agreement that
is identified by such Person as being confidential at the time the same is
delivered to such party, it will not cause, induce or recommend to any of its
Affiliates to buy, sell, trade or otherwise dispose of any Common Stock of
Parent during any period that the Parent has instructed its directors, officers
and employees that any trading is prohibited, provided that such Agent or
Lenders has received notice in the same manner as the directors, officers and
employees of Parent. Each of the Agent and the Lenders further agrees that it
will, in accordance with its customary practices, place the Common Stock of
Parent on its restricted list of securities, if any, which directors, officers
and employees of Agent and the Lenders are instructed not to purchase or sell.
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13.11 RELEASE OF COLLATERAL
Subject to Section 12.3, promptly following full performance and
satisfaction and indefeasible payment in full in cash of all Obligations and the
termination of this Agreement, the Liens created hereby shall terminate and
Agent and Lenders shall, at Borrowers' sole cost and expense with proper
reserves and up front payments, execute and deliver such documents, at the
Credit Parties' expense, as are necessary to release Lenders' Liens in the
Collateral and shall return the Collateral to the Credit Parties; provided,
however, that the parties agree that, notwithstanding any such termination or
release or the execution, delivery or filing of any such documents or the return
of any Collateral, if and to the extent that any such payment made or received
with respect to the Obligations is subsequently invalidated, determined to be
fraudulent or preferential, set aside, defeased or required to be repaid to a
trustee, debtor in possession, receiver, custodian or any other Person under any
Debtor Relief Law, common law or equitable cause or any other law, then the
Obligations intended to be satisfied by such payment shall be revived and shall
continue as if such payment had not been received by Agent or any Lender and the
Liens created hereby shall be revived automatically without any action on the
part of any party hereto and shall continue as if such payment had not been
received by Agent or any Lender. Agent and Lenders shall not be deemed to have
made any representation or warranty with respect to any Collateral so delivered
except that such Collateral is free and clear, on the date of such delivery, of
any and all Liens arising from such Person's own acts.
13.12 NO CONSEQUENTIAL DAMAGES
No party to this Agreement, nor any agent or attorney of Agent or any
Lender, shall be liable to any other Person under any theory of liability for
any special, indirect, consequential or punitive damages.
13.13 CONFLICT
In the event of any conflict between any term, covenant or condition of
this Agreement and any term, covenant or condition of any of the other Loan
Documents, the provisions of this Agreement shall control and govern; provided,
that, for purposes of this Section 13.13, to the extent that any provisions of
any of the other Loan Documents provide rights, remedies and benefits to Agent
or Lenders that exceed the rights, remedies and benefits provided to Agent or
Lenders under this Agreement, such provisions of the applicable Loan Documents
shall be deemed to supplement (and not to conflict with) the provisions of this
Agreement.
13.14 REPLACEMENT OF LENDERS
In the event any Lender, other than CapitalSource, is a Defaulting
Lender or a Non-Consenting Lender, Agent may designate another Lender or any
other Person (with such other Lender's or such Person's consent) (such other
Lender or Person herein called a "REPLACEMENT LENDER") to purchase the Loans and
other Obligations of such Defaulting Lender or Non-Consenting Lender, as
applicable, and such Defaulting Lender's or Non-Consenting Lender's, as
applicable, rights hereunder, without recourse to or warranty by, or expensive
to, such Defaulting Lender or Non-consenting Lender, as applicable, for a
purchase price equal to the outstanding
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principal amount of the Loans owing to such Defaulting Lender or Non-Consenting
Lender, as applicable, plus any accrued but unpaid interest on such Loans and
other Obligations and accrued but unpaid fees in respect of such Defaulting
Lender's or Non-consenting Lender's as applicable, Commitment and any other
amounts payable to such Defaulting Lender or Non-Consenting Lender, as
applicable, under this Agreement, and to assume all the obligations of such
Defaulting Lender or Non-Consenting Lender, as applicable, hereunder and, upon
such purchase, such Defaulting Lender or Non-Consenting Lender, as applicable,
shall no longer be a party hereto or have any rights hereunder or under the
other Loan Documents (other than indemnities and other similar rights applicable
to such Defaulting Lender or Non-Consenting Lender, as applicable, prior to the
date of such assignment and assumption) and shall be relieved from all
obligations to Borrowers hereunder, and the Replacement Lender shall succeed to
the rights and obligations of such Defaulting Lender or Non-consenting Lender,
as applicable, hereunder and shall be deemed to be a Lender for all purposes
hereof.
XIV. GUARANTY
14.1 GUARANTY
Each US Credit Party hereby unconditionally and irrevocably guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of each Canadian Credit Party, including, without
limitation, each Canadian Borrower, now or hereafter existing under any Loan
Document, whether for principal, interest (including, without limitation, all
interest that accrues after the commencement of any proceeding of any Canadian
Borrower or any other Canadian Credit Party under any Debtor Relief Laws), fees,
commissions, expense reimbursements, indemnifications or otherwise (such
obligations, to the extent not paid by any Canadian Borrower or any other
Canadian Credit Party, the "GUARANTEED OBLIGATIONS"), and agrees to pay any and
all costs, fees and expenses (including reasonable counsel fees and expenses)
incurred by Agent and Lenders in enforcing any rights under the guaranty set
forth in this Article XIV. Without limiting the generality of the foregoing,
each US Credit Party's liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by any Canadian Borrower or
any other Canadian Credit Party to Agent and Lenders under any Loan Document,
but for the fact that they are unenforceable or not allowable due to the
existence of any proceeding under any Debtor Relief Laws involving any Canadian
Borrower or any other Canadian Credit Party.
14.2 GUARANTY ABSOLUTE
Each US Credit Party guarantees that the Guaranteed Obligations will be
paid strictly in accordance with the terms of the Loan Documents, regardless of
any law regulation or order now or hereafter in effect in any jurisdiction
affecting any such terms or the rights of Agent or Lenders with respect thereto.
The obligations of each US Credit Party under this Article XIV are independent
of the Guaranteed Obligations, and a separate action or actions may be brought
and prosecuted against each US Credit Party to enforce such obligations,
irrespective of whether any action is brought against any Credit Party or
whether any Credit Party is joined in any such action or actions. The liability
of each US Credit Party under this Article XIV shall be
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irrevocable, absolute and unconditional irrespective of, and each US Credit
Party hereby irrevocably waives any defenses it may now or hereafter have in any
way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Credit Party or
otherwise;
(c) any taking, exchange, release or non-perfection of
any Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any change, restructuring or termination of the
corporate, limited liability company or partnership structure or existence of
any Credit Party; or
(e) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by Agent or Lenders that might otherwise constitute a defense
available to, or a discharge of, any Credit Party or any other guarantor or
surety.
This Article XIV shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned to Agent or Lenders or any other
Person upon the insolvency, bankruptcy or reorganization of Canadian Borrower or
any other Canadian Credit Party or otherwise, all as though such payment had not
been made.
14.3 WAIVER
Each US Credit Party hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Article XIV and any requirement that Agent or Lenders
exhaust any right or take any action against any other Credit Party or any other
Person or any Collateral. Each US Credit Party acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated herein
and that the waiver set forth in this Section 14.3 is knowingly made in
contemplation of such benefits. Each US Credit Party hereby waives any right to
revoke this Article XIV, and acknowledges that this Article XIV is continuing in
nature and applies to all Guaranteed Obligations, whether existing now or in the
future.
14.4 CONTINUING GUARANTY; ASSIGNMENTS
This Article XIV is a continuing guaranty and shall (a) remain in full
force and effect until the indefeasible cash payment in full of the Guaranteed
Obligations and all other amounts
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payable under this Article XIV, (b) be binding upon each US Credit Party, its
successors and assigns and (c) inure to the benefit of, and be enforceable by,
Agent and Lenders and their successor, pledgees, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Lender may
pledge, assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement (including, without limitation, all or any
portion of its Commitments and the Loans owing to it) to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted such Lender herein or otherwise, in each case as provided in
this Agreement.
14.5 SUBROGATION
No US Credit Party will exercise any rights that it may now or
hereafter acquire against any other Credit Party or any other guarantor or that
arise from the existence, payment, performance or enforcement of such US Credit
Party's obligations under this Article XIV, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of Agent and
Lenders against any other Credit Party or any other guarantor or any Collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law including, without limitation, the right to take or
receive from any other Credit Party or any other guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until all of the Guaranteed Obligations and all other amounts payable under this
Article XIV shall have been indefeasibly paid in full in cash and all
commitments to lend hereunder shall have terminated; provided, however, that no
Canadian Credit Party shall have any rights hereunder against US Borrower or any
of its Subsidiaries if all or any portion of the Guaranteed Obligations shall
have been satisfied with proceeds from the exercise of remedies in respect of
the equity securities of US Borrower pursuant to a Pledge Agreement. If any
amount shall be paid to any US Credit Party in violation of the immediately
preceding sentence, such amount shall be held in trust for the benefit of Agent
and Lenders and shall forthwith be paid to Agent to be credited and applied to
the Guaranteed Obligations and all other amounts payable under this Article XIV,
whether matured or unmatured, in accordance with the terms of this Agreement, or
to be held as Collateral for any Guaranteed Obligations or other amounts payable
under this Article XIV thereafter arising. If (i) any US Credit Party shall make
payment to Agent and Lenders of all or any part of the Guaranteed Obligations,
(ii) all of the Guaranteed Obligations and all other amounts payable under this
Article XIV shall be paid in full in cash and (iii) all Commitments to lend
hereunder shall have been terminated, Agent and Lenders will, at such US Credit
Party's request and expense, execute and deliver to such US Credit Party or
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such US Credit Party of an
interest in the Guaranteed Obligations resulting from such payment by such US
Credit Party.
14.6 CANADIAN GUARANTORS
Canadian Borrower and each of its Consolidated Subsidiaries
unconditionally and irrevocably guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all Canadian
Obligations of each other Canadian Credit Party,
96
including, without limitation, Canadian Borrower, now or hereafter existing
under any Loan Document, pursuant to the terms and conditions of the Canadian
Guaranty.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW]
97
IN WITNESS WHEREOF, each of the parties has duly executed this Credit
Agreement as of the date first written above.
CORRPRO COMPANIES, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President and Chief
Financial Officer
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxx@xxxxxxx.xxx
CCFC, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President and Chief
Financial Officer
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxx@xxxxxxx.xxx
OCEAN CITY RESEARCH CORP.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President and Chief
Financial Officer
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxx@xxxxxxx.xxx
CORRPRO INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President and Chief
Financial Officer
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxx@xxxxxxx.xxx
COMMONWEALTH XXXXXX HOLDINGS LTD.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Officer
c/o Corrpro Companies, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxx@xxxxxxx.xxx
CORRPRO CANADA, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Officer
c/o Corrpro Companies, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxx@xxxxxxx.xxx
XXXXX INSPECTIONS LTD
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Officer
c/o Corrpro Companies, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxx@xxxxxxx.xxx
AGENT AND US LENDER: CAPITALSOURCE FINANCE LLC
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: General Counsel
CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Corporate Finance Group,
Portfolio Manager
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxx@xxxxxxxxxxxxx.xxx
CANADIAN LENDER: CSE FINANCE, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: General Counsel
c/o CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Corporate Finance Group,
Portfolio Manager
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxx@xxxxxxxxxxxxx.xxx
ANNEX I
FINANCIAL COVENANTS
1) SENIOR LEVERAGE RATIO
As measured on each of the following test dates, the Senior Leverage
Ratio shall not exceed the respective maximum ratio set forth in the table
below:
TEST DATE: MAXIMUM SENIOR LEVERAGE RATIO:
---------- ------------------------------
March 31, 2004, June 30, 2004 and September 30, 2004 3.5 to 1.0
December 31, 2004 3.25 to 1.0
March 31, 2005, June 30, 2005, September 30, 2005, and
December 31, 2005 2.75 to 1.0
March 31, 2006, June 30, 2006, September 30, 2006,
December 31, 2006 2.50 to 1.0
March 31, 2007, June 30, 2007, September 30, 2007,
December 31, 2007 2.00 to 1.0
March 31, 2008 and the end of each fiscal quarter thereafter 1.50 to 1.0
2) LEVERAGE RATIO
As measured on each of the following test dates, the Leverage Ratio
shall not exceed the respective maximum ratio set forth in the table below:
TEST DATE: MAXIMUM LEVERAGE RATIO:
---------- -----------------------
March 31, 2004, June 30, 2004 and September 30, 2004 5.00 to 1.0
December 31, 2004 4.75 to 1.0
March 31, 2005, June 30, 2005, September 30, 2005, and
December 31, 2005 4.25 to 1.0
March 31, 2006, June 30, 2006, September 30, 2006,
December 31, 2006 4.00 to 1.0
March 31, 2007, June 30, 2007, September 30, 2007,
December 31, 2007 3.50 to 1.0
March 31, 2008, June 30, 2008, September 30, 2008,
December 31, 2008 3.00 to 1.0
March 31, 2009 and the end of each fiscal quarter thereafter 2.50 to 1.0
3) MINIMUM EBITDA
As measured on each of the following test dates for the twelve
(12)-month period then ending taken as one accounting period, EBITDA for Credit
Parties shall not be less than the respective minimum amount set forth in the
table below:
TEST DATE: MINIMUM EBITDA:
---------- ---------------
March 31, 2004, June 30, 2004, September 30, 2004,
December 31, 2004 and March 31, 2005 $ 9,000,000
June 30, 2005, September 30, 2005, and December 31, 2005 $10,000,000
March 31, 2006, June 30, 2006, September 30, 2006,
December 31, 2006 $10,250,000
March 31, 2007, June 30, 2007, September 30, 2007,
December 31, 2007 $10,500,000
March 31, 2008, June 30, 2008, September 30, 2008,
December 31, 2008 $11,000,000
March 31, 2009 and the end of each fiscal quarter thereafter $12,000,000
4) FIXED CHARGE COVERAGE RATIO
As measured on the last day of each fiscal quarter, the Fixed Charge
Coverage Ratio shall not be less than (a) for each fiscal quarter ended on or
prior to September 30, 2004, 1.05 to 1.0 and (b) thereafter, 1.10 to 1.0.
5) MAXIMUM INTERCOMPANY BALANCE
As measured on each of the first day of each month, Intercompany
Balance shall not be more than $100,000.
6) CAPITAL EXPENDITURE
The Credit Parties shall not make or incur Capital Expenditures in an
aggregate amount in excess of the respective following amounts at any time
during the corresponding fiscal years set forth below:
FISCAL YEAR ENDED: MAXIMUM CAPITAL EXPENDITURES
------------------ ----------------------------
March 31, 2004 $1,250,000
March 31, 2005 $1,500,000
March 31, 2006 $1,750,000
March 31, 2007, and the last day of $2,000,000
Each fiscal year thereafter
7) DEFINED TERMS
For purposes of the covenants set forth in this Annex I, the terms
listed below shall have the following meanings:
"Annual Corporate Charge" shall mean any annual corporate charge that
Xxxxxx Xxxxxx Group Ltd. pays to Parent consistent with past practices.
"Capital Expenditures" shall mean, for any period, the sum (without
duplication) of all expenditures (whether paid in cash or accrued as
liabilities, but excluding any reasonable expenses incurred to comply with
paragraphs (a) through (e) set forth on Schedule 6.8 - Post-Closing
Deliverables) made by the Credit Parties on a Consolidated basis during such
period that are or are required to be treated as capital expenditures under
GAAP. For purposes of computing Capital Expenditures as of any measurement date
on or prior to March 31, 2005, Capital Expenditures for any period set forth on
Annex II included within the applicable 12 month measurement period shall be
deemed to be equal the applicable amount set forth on Annex II.
"Consolidated" shall mean the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies; provided that for
purposes of this Annex I, notwithstanding any provision to the contrary,
Subsidiaries of the Parent who are Foreign Subsidiaries but not Canadian Credit
Parties shall not be consolidated with the Credit Parties.
"EBITDA" shall mean, with respect to the Credit Parties on a
Consolidated basis and for any period, the sum, without duplication, of the
following for such period: Net Income determined in accordance with GAAP, plus
to the extent deducted in calculating Net Income (a) Interest Expense, (b) taxes
on income (c) depreciation expense, (d) amortization expense (e) all other
non-cash and/or non-recurring charges and expenses approved by Agent in its
Permitted Discretion, including non-cash charges related to marking outstanding
warrants to market, non-cash charges related to accounting for stock options and
non-cash charges related to contractual obligations with respect to the Parent's
chief executive officer positions, but excluding accruals for cash expenses made
in the ordinary course of business, (f) all costs related to the transactions
contemplated hereby, by the Preferred Stock Purchase Agreement or the documents
related to the Indebtedness under Section 4.1(y), including transaction bonuses
not to exceed $375,000 in the aggregate, (g) loss from any sale of assets, other
than sales in the ordinary course of business as permitted hereunder, (h)
management fees paid in cash to Sponsor pursuant to the Management Services
Agreement as permitted hereunder, (i) all reasonable expenses incurred to comply
with paragraphs (a) through (e) set forth on Schedule 6.8 - Post-Closing
Deliverables not to exceed $750,000 in the aggregate and (j) the Annual
Corporate Charge paid in cash in an amount not to exceed $600,000 in any fiscal
year, less to the extent added in calculating Net Income (x) gain from any sale
of assets, other than sales in the ordinary course of business and (y) all
non-cash and/or non-recurring income and less cash payments made on account of
any non-cash charges added to Net Income under clause (e) above, all of the
foregoing determined on a Consolidated basis and in accordance with GAAP. For
purposes of computing EBITDA as of any measurement date on or prior to Xxxxx 00,
0000, XXXXXX for any period set forth on Annex II included within the applicable
12 month measurement period shall be deemed to be equal the applicable amount
set forth on Annex II.
"Fixed Charge Coverage Ratio" shall mean, for the Credit Parties on a
Consolidated basis, at any date of determination, the ratio of (a) EBITDA, minus
non-financed Capital Expenditures and Capital Expenditures financed under a
revolving line of credit or similar facility, minus income taxes paid in cash,
to (b) Fixed Charges, in each case for the twelve (12) months then ending taken
as one accounting period. For purposes of computing income taxes paid in cash
under clause (a) above as of any measurement date on or prior to December 31,
2004, the amount of such income taxes paid in cash for the applicable 12 month
measurement period shall be deemed to be a pro forma amount of $1,756,000.
"Fixed Charges" shall mean for the applicable period and without
duplication, the sum of the following for the Credit Parties, on a Consolidated
basis: (a) Total Debt Service, plus (b) dividends, repurchases or redemptions of
equity and/or distributions paid in cash.
"Intercompany Balance" shall mean, in the aggregate, any amounts due
from any Foreign Subsidiaries that are not Canadian Credit Parties to a Credit
Party (including the amount of any Annual Corporate Charge), net of any amounts
due from a Credit Party to any Foreign Subsidiaries that are not Canadian Credit
Parties.
"Interest Expense" shall mean total interest expense generated during
the period in question (including attributable to conditional sales contracts,
Capital Leases and other title retention agreements in accordance with GAAP and
all unused line and commitment fees and administrative and similar fees) of the
Credit Parties on a Consolidated basis with respect to all outstanding
Indebtedness including accrued interest and interest paid in kind and
capitalized interest, but excluding commissions, discounts and other fees owed
with respect to letters of credit and bankers' acceptance financing, and net
costs under Interest Rate Agreements.
"Interest Rate Agreement" shall mean any interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to hedge the
position with respect to interest rates.
"Leverage Ratio" shall mean, for the Credit Parties on a Consolidated
basis, at any date of determination, the ratio of (i) Total Debt outstanding on
such date, to (ii) EBITDA for the twelve (12) months then ending taken as one
accounting period.
"Net Income" shall mean, for any Person, the net income (or loss) of
such Person on a consolidated basis for such period taken as a single accounting
period determined in conformity with GAAP; provided, that there shall be
excluded (i) the income (or loss) of any Person in which any other Person (other
than such Person) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to such Person by such Person
during such period, (ii) the income (or loss) of any Person accrued prior to the
date it becomes a Credit Party or is merged or amalgamated into or consolidated
with a Credit Party or that Person's assets are acquired by a Credit Party,
(iii) the income of any Subsidiary of a Credit Party to the extent that the
declaration or payment of dividends or similar distributions of that income by
that Subsidiary is not at the time permitted by operation of the terms of the
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, and (iv) the income (or
loss) associated with any Interest Rate Agreement.
"Senior Leverage Ratio" shall mean, for Credit Parties on a
Consolidated basis, at any date of determination, the ratio of (i) all
Obligations outstanding on such date, to (ii) EBITDA for the 12-month period
then ending taken as one accounting period.
"Total Debt" shall mean, at any date of determination, the sum of (i)
the total outstanding principal balance of all Indebtedness for Borrowed Money
of Credit Parties on a Consolidated basis, including, without limitation, all
Indebtedness under the Loan Documents, all undrawn amounts under the Standby
Letters of Credit, all Subordinated Debt and all Capital Leases Obligations and
(ii) all accrued interest on the foregoing including, without limitations, all
interest paid in kind. For all purposes of this Agreement, the term "Total Debt"
shall be calculated to include (i.e., not net of) discounts, deductions or
allocations relating or applicable to or arising from any equity or equity
participation or fees, whether under GAAP or otherwise, but shall not include
any Preferred Stock issued to Sponsor regardless of its accounting treatment
pursuant to GAAP or payments of principal paid by the Credit Parties on
Indebtedness satisfied with the proceeds of this Agreement.
"Total Debt Service" shall mean, for any period, the sum of (i)
scheduled or other required payments of principal on any and all Total Debt,
(ii) any other cash amounts due or payable with respect to, in connection with
or on Total Debt, and (iii) cash Interest Expense. For purposes of computing
Total Debt Service as of any measurement date on or prior to March 31, 2005,
Total Debt Service for any period set forth on Annex II included within the
applicable 12 month measurement period shall be deemed to be equal the
applicable amount set forth on Annex II.
ANNEX II
FINANCIAL COVENANT AMOUNTS
EBITDA
FISCAL MONTH ENDED: EBITDA
March 31, 2003 ($174,000)
April 30, 2003 $1,071,000
May 31, 2003 $1,287,000
June 30, 2003 $1,495,000
July 31, 2003 $1,458,000
August 31, 2003 $1,360,000
September 30, 2003 $1,316,000
October 31, 2003 $1,757,000
November 30, 2003 $1,002,000
December 31, 2003 $935,000
January 31, 2004 ($8,000)
February 29, 2004 ($189,000)
CAPITAL EXPENDITURES
FISCAL MONTH ENDED: CAPITAL EXPENDITURES
March 31, 2003 $38,431
April 30, 2003 $110,584
May 31, 2003 $3,313
June 30, 2003 $42,453
July 31, 2003 $68,462
August 31, 2003 $59,295
September 30, 2003 $6,574
October 31, 2003 $115,422
November 30, 2003 $24,866
December 31, 2003 $58,367
January 31, 2004 $1,267
February 29, 2004 $125,573
TOTAL DEBT SERVICE
FISCAL MONTH ENDED: PRINCIPAL INTEREST TOTAL DEBT SERVICE
April 30, 2003 $208,000 $335,167 $543,167
May 31, 2003 $208,000 $335,167 $543,167
June 30, 2003 $208,000 $335,167 $543,167
July 31, 2003 $208,000 $335,167 $543,167
August 31, 2003 $208,000 $335,167 $543,167
September 30, 2003 $208,000 $335,167 $543,167
October 31, 2003 $208,000 $335,167 $543,167
November 30, 2003 $208,000 $335,167 $543,167
December 31, 2003 $208,000 $335,167 $543,167
January 31, 2004 $208,000 $335,167 $543,167
February 29, 2004 $208,000 $335,167 $543,167
March 31, 2004 $208,000 $335,167 $543,167
APPENDIX A
DEFINITIONS
"ACAS Subordination Agreement" shall mean the Subordination Agreement
dated as of the Closing Date between Agent and holders of Indebtedness permitted
under Section 7.2(e), as the same may be modified, amended, restated,
substituted, replaced and/or supplemented from time to time.
"Account Debtor" shall mean any Person who is obligated under an
Account.
"Accounts" shall mean all "accounts" (as defined in the UCC with
respect to US Credit Parties and as defined in the PPSA with respect to Canadian
Credit Parties) of any Credit Party (or, if referring to another Person, of such
other Person), including without limitation, accounts, accounts receivables,
monies due or to become due and obligations in any form (whether arising in
connection with contracts, Contract Rights, Instruments, General Intangibles or
Chattel Paper), in each case whether arising out of goods sold or services
rendered or from any other transaction and whether or not earned by performance,
now or hereafter in existence, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of in excess of fifty
percent (50%) of the capital stock, partnership interests or equity of any
Person or otherwise causing any Person to become a Subsidiary of any Credit
Party, or (c) a merger, amalgamation or consolidation or any other combination
with another Person.
"Additional Amount" shall mean (a) at any time during the period from
and after the Closing Date and prior to September 30, 2004, $750,000, (b) at any
time during the period from and after September 30, 2004 and prior to December
31, 2004, $500,000 and (a) at any time during the period from and after December
31, 2004 and prior to March 31, 2005, $250,000.
"Advances" shall mean a Revolving Advance.
"Affiliate" or "affiliate" shall mean, as to any Person, any other
Person (a) that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person, (b)
who is a director or an officer (i) of such Person, (ii) of any Subsidiary of
such Person, or (iii) of any Person described in clause (a) above with respect
to such Person, or (c) which, directly or indirectly through one or more
intermediaries, is the beneficial or record owner (as defined in Rule 13d-3 of
the Securities Exchange Act of 1934, as amended, as the same is in effect on the
date hereof) of ten percent (10%) or more of any class of the outstanding voting
stock, securities or other equity or ownership interests of such Person. For
purposes of this definition, the term "control" (and the correlative terms,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to
A-1
direct or cause the direction of the management or policies, whether through
ownership of securities or other interests, by contract or otherwise.
"Agreement" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"Allocable Amount" shall have the meaning assigned to it in Section
3.7(c) hereof.
"Applicable Rate" shall mean the interest rates applicable from time to
time to Loans or other Obligations under this Agreement.
"Availability" shall mean US Availability or Canadian Availability or
both, as the context may dictate.
"Bank Agency Agreement" shall have the meaning assigned to such term in
Section 2.16 hereof.
"Blocked Accounts" shall have the meaning assigned to such term in
Section 2.16 and shall include the lockbox and accounts maintained by a Credit
Party at the Lockbox Banks into which all collections or payments on their
Accounts and other Collateral and other cash payments received by such Credit
Party are paid pursuant to this Agreement.
"Borrower" and "Borrowers" shall have the respective meanings assigned
to such terms in the Preamble of this Agreement, together with any Person who
joins this Agreement as a "Borrower" after the date hereof.
"Borrowing Base" shall mean, collectively, the US Borrowing Base and
the Canadian Borrowing Base.
"Borrowing Certificate" shall mean a Borrowing Certificate
substantially in the form of Exhibit A hereto.
"Business" shall mean providing corrosion control related services,
systems, equipment and materials to the infrastructure, environmental and energy
markets, including (i) corrosion control engineering services, systems and
equipment, (ii) coating services and (iii) pipeline integrity and risk
assessment services.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which the Federal Reserve or Agent is closed, and in reference to
any Canadian Obligation, any day other than a Saturday, Sunday or other day on
which commercial banks in Toronto, Canada are authorized or required by law to
be closed.
"Canadian Availability" shall have the meaning assigned to it in
Section 2.1 hereof.
"Canadian Benefit Plans" means any plan, fund, program, or policy,
whether oral or written, formal or informal, funded or unfunded, insured or
uninsured, providing material employee benefits, including medical, hospital
care, dental, sickness, accident, disability, life insurance, pension,
retirement or savings benefits, under which the Credit Parties have any
A-2
liability with respect to any employee or former employee, but excluding any
Canadian Pension Plans.
"Canadian Borrower" shall have the meaning assigned to such term in the
Preamble of this Agreement, together with any Person who joins this Agreement as
a "Canadian Borrower" after the date hereof.
"Canadian Borrowing Base" shall mean, as of any date of determination,
the net collectible value of Canadian Eligible Receivables, as determined with
reference to the most recent Borrowing Certificate and otherwise in accordance
with this Agreement.
"Canadian Credit Parties" shall mean, collectively, Canadian Borrower
and each guarantor under a Canadian Guaranty.
"Canadian Guaranty" shall mean a Guaranty, in form and substance
satisfactory to Agent, executed and delivered, on a joint and several basis, by
each Canadian Credit Party (other than the Borrowers) in favor of Agent, for the
benefit of itself and the Lenders.
"Canadian Lender" shall mean a Canadian Revolving Lender or a Canadian
Term Lender.
"Canadian L/C Issuer" shall mean any bank or financial institution that
issues to Canadian Borrower letters of credit under this Agreement and its
successors and assigns.
"Canadian Obligations" shall mean, without duplication, all present and
future obligations, Indebtedness and liabilities of Canadian Credit Parties to
Agent and/or Lenders at any time and from time to time of every kind, nature and
description, direct or indirect, secured or unsecured, joint and several,
absolute or contingent, due or to become due, matured or unmatured, now existing
or hereafter arising, contractual or tortious, liquidated or unliquidated,
including, without limitation, all of the foregoing under any of the Loan
Documents or otherwise relating to the Notes and/or Loans, including, without
limitation, interest, all applicable fees, charges and expenses and/or all
amounts paid or advanced by Agent or Lenders on behalf of or for the benefit of
any such Person for any reason at any time, including in each case obligations
of performance as well as obligations of payment and interest that accrue after
the commencement of any proceeding under any Debtor Relief Law by or against any
such Person. Without limiting the generality of the foregoing, "Canadian
Obligations" shall also include the obligations of any other Credit Party under
any guaranty of the Canadian Obligations as well as any Security Document
executed by such other Credit Party securing such guaranty.
"Canadian Pension Plans" means each pension plan required to be
registered under Canadian federal or provincial law that is maintained or
contributed to by a Credit Party for its employees or former employees, but does
not include the Canada Pension Plan or the Quebec Pension Plan as maintained by
the Government of Canada or the Province of Quebec, respectively.
"Canadian Requisite Lenders" shall mean, at any time, (a) Canadian
Lenders then holding at least fifty-one percent (51%) of the sum of the
Commitments under the Canadian Revolving Facility then in effect, plus the
aggregate unpaid principal balance of the Canadian
A-3
Term Loans then outstanding, or (b) if the Commitments under the Canadian
Revolving Facility have terminated, Canadian Lenders then having at least
fifty-one percent (51%) of the sum of the aggregate unpaid principal amount of
Canadian Term Loans then outstanding, plus the utilized portion of any
non-terminated Commitments, if any; provided, that, the foregoing
notwithstanding, if two (2) or less Canadian Lenders hold Commitments and
Canadian Term Loans hereunder, "Canadian Requisite Lenders" shall mean all
Canadian Lenders. For purposes of the immediately preceding sentence, Lenders
that are Affiliates of each other shall be deemed to be one and the same, single
Lender. Anything to the contrary contained in this definition notwithstanding,
to the extent the fact that each Lender is considered in determining Canadian
Requisite Lenders for any purpose relating to any Canadian Obligation would
result in material and adverse tax consequences to US Borrower under Section 956
of the Code, as determined by Agent and the Requisite Lenders in their Permitted
Discretion, then Canadian Requisite Lenders, for such purpose, shall be
determined in accordance with the terms of this definition but solely by
reference to and among the Canadian Revolving Lenders and/or the Canadian Term
Lenders, as applicable.
"Canadian Revolving Advance Borrowing Date" shall have the meaning
assigned to such term in Section 2.4(b) hereof.
"Canadian Revolving Advances" shall mean a borrowing under the Canadian
Revolving Facility.
"Canadian Revolving Facility" shall have the meaning assigned to such
term in the Recitals of this Agreement.
"Canadian Revolving Facility Cap" shall mean, initially, $4,000,000, as
reduced or otherwise adjusted from time to time in accordance with the terms of
this Agreement, including, without limitation, by adjustment as provided in
Section 9.1(a) hereof or otherwise in accordance herewith.
"Canadian Revolving Facility Maximum Amount" shall have the meaning
assigned to such term in Section 2.1(b) hereof.
"Canadian Revolving Lenders" shall mean the financial institutions from
time to time named on Schedule A under the heading "Canadian Revolving Lenders,"
their respective successors and permitted assigns (but not, except as expressly
set forth herein, any Participant that is not otherwise a party to this
Agreement).
"Canadian Revolving Loans" shall mean, collectively, the Canadian
Revolving Advances made by Canadian Revolving Lenders to Canadian Borrower in
the maximum aggregate principal amount equal to the Canadian Revolving Facility
Cap as in effect from time to time, and all Obligations related thereto.
"Canadian Revolving Unused Line Fee" shall have the meaning assigned to
such term in Section 3.2(a) hereof.
"Canadian Standby Letters of Credit" shall mean those standby letters
of credit issued for a Canadian Borrower's account in accordance with the terms
of Section 2.5(a)(ii).
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"Canadian Security Agreement" shall mean a Security Agreement, in form
and substance satisfactory to Agent, executed and delivered, on a joint and
several basis, by each Canadian Credit Party and Agent, on behalf of itself and
the Lenders.
"Canadian Term Lenders" shall mean the financial institutions from time
to time named on Schedule A under the heading "Canadian Term Lenders," their
respective successors and permitted assigns (but not, except as expressly set
forth herein, any Participant that is not otherwise a party to this Agreement).
"Canadian Term Loan" shall mean the term Loan made by Canadian Term
Lenders to Canadian Borrower pursuant to Section 2.6(a) in the aggregate
principal amount of Six Million Five Hundred Thousand Dollars ($6,500,000), and
all Obligations related thereto.
"Capital Lease" shall mean, as to any Person, a lease of any interest
in any kind of property or asset by that Person as lessee that is properly
recorded as a "capital lease" in accordance with GAAP.
"Capitalized Lease Obligations" shall mean all obligations of any
Person under Capital Leases, in each case, taken at the amount thereof accounted
for as a liability in accordance with GAAP.
"CapitalSource" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"CapitalSource Canada" shall mean CSE Finance, Inc., a Delaware
corporation, a Domestic Wholly-Owned Subsidiary of CapitalSource and the initial
Canadian Term Lender and the initial Canadian Revolving Lender.
"Cash Equivalents" shall mean (a) securities issued, or directly and
fully guaranteed or insured, by the United States or Canada as any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six (6)
months from the date of acquisition, (b) U.S. dollar or U.S. or Canadian
denominated time deposits, certificates of deposit and bankers' acceptances of
(i) any U.S. or Canadian domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000, or (ii) any bank (or the parent
company of such bank) whose short-term commercial paper rating from Standard &
Poor's Ratings Services ("S&P") is at least A-2 or the equivalent thereof or
from Xxxxx'x Investors Service, Inc. ("Xxxxx'x") is at least P-2 or the
equivalent thereof in each case with maturities of not more than six (6) months
from the date of acquisition (any bank meeting the qualifications specified in
clauses (b)(i) or (ii), an "Approved Bank"), (c) repurchase obligations with a
term of not more than seven (7) days for underlying securities of the types
described in clause (a), above, entered into with any Approved Bank, (d)
commercial paper issued by any Approved Bank or by the parent company of any
Approved Bank and commercial paper issued by, or guaranteed by, any industrial
or financial company with a short-term commercial paper rating of at least A-2
or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long term unsecured debt
rating of at least A or A2, or the equivalent of each thereof, from S&P or
Moody's, as the case may be, and in each case maturing within six (6) months
after the date of
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acquisition and (e) investments in money market funds substantially all of whose
assets are comprised of securities of the type described in clauses (a) through
(d) above.
"Change of Control" shall mean the occurrence of any of the following:
(i) a merger, amalgamation, consolidation,
reorganization, recapitalization or share or interest exchange, sale or
transfer or any other transaction or series of transactions in which
the stockholders, managers, partners, owners or interest holders of
Sponsor immediately prior to such transaction or series of transactions
receive, in exchange for the stock or interests owned by them, cash,
property or securities of the resulting or surviving entity or any
Affiliate thereof, and, as a result thereof, Persons who, individually
or in the aggregate, were holders of fifty percent (50%) or more of the
voting stock or other voting ownership interests of Sponsor, calculated
on a fully diluted basis, immediately prior to such transaction or
series of transactions hold less than fifty percent (50%) of the voting
stock or other voting ownership interests of the resulting or surviving
entity or such Affiliate thereof, calculated on a fully diluted basis;
or
(ii) any "change in/of control" or similar event as
defined in (a) any certificate or incorporation, certificate of limited
partnership or certificate of formation or statement of designations or
operating agreement or partnership agreement of any Credit Party or (b)
any document governing indebtedness of such Credit Party in excess of
$100,000, individually or $250,000 in the aggregate, which gives the
holder of such indebtedness the right to accelerate or otherwise
require payment of such indebtedness prior to the maturity date
thereof; or
(iii) the consummation of a Public Offering, other than an
offering of securities for an employee benefit plan on SEC Form S-8 or
a successor form, that realizes at least $14,000,000 in net proceeds to
Parent; or
(iv) a direct or indirect sale, transfer or other
conveyance or disposition, in any single transaction or a series of
transactions, of 40% of more of the assets of the Credit Parties, on a
consolidated basis; or
(v) Sponsor ceases, indirectly or directly, to have the
right to appoint or elect a majority of the Board of Directors of
Parent; or
(vi) Sponsor at any time ceases to own at least
seventy-five percent (75%) of the issued and outstanding preferred
stock of Parent owned by it on the Closing Date (as the same may be
adjusted for any combination, recapitalization or reclassification into
a greater or smaller number of shares), free and clear of all Liens; or
(vii) except as otherwise expressly permitted under the
terms and conditions of the Agreement, US Borrower for any reason at
any time ceases to own, directly, 100% of the outstanding equity
interests and securities of its Consolidated Subsidiaries, free and
clear of all Liens other than Liens created under the Security
Documents and Liens permitted under Section 7.3(f); or
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(viii) except as otherwise expressly permitted under the
terms and conditions of the Agreement, Canadian Borrower for any reason
at any time ceases to own, directly, 100% of the outstanding equity
interests and securities of its Consolidated Subsidiaries, free and
clear of all Liens other than Liens created under the Security
Documents and Liens permitted under Section 7.3(f).
"Charter and Good Standing Documents" shall mean, for each Credit
Party, (i) a copy of the certificate of incorporation, formation, amalgamation
or continuance (or other applicable charter document) certified, where
applicable, as of a date not more than ten (10) Business Days before the Closing
Date by the applicable Governmental Authority of the jurisdiction of
incorporation or organization of such Credit Party, (ii) a copy of the bylaws or
similar organizational documents of such Credit Party certified as of a date not
more than ten (10) Business Days before the Closing Date by the corporate
secretary or assistant secretary of such Credit Party (or its general partner,
as the case may be), (iii) an original certificate of status or good standing
(or its foreign jurisdiction equivalent) as of a date acceptable to Agent issued
by the applicable Governmental Authority of the jurisdiction of incorporation,
amalgamation or organization of such Credit Party and of every other
jurisdiction in which such Credit Party has an office or conducts business or is
otherwise required to be in good standing except for such jurisdictions where
the failure to be in good standing or to so qualify would not reasonably be
expected to have or result in a Material Adverse Effect, and (iv) copies of the
resolutions of the Board of Directors or managers (or other applicable governing
body) and, if required, stockholders, members, partners or other equity owners
of such Credit Parties authorizing the execution, delivery and performance of
the Loan Documents and the Related Documents to which such Credit Party is a
party, certified by an authorized officer of such Person as of the Closing Date.
"Closing" shall mean the satisfaction, or written waiver by Agent, of
all of the conditions precedent set forth in this Agreement required to be
satisfied prior to the consummation of the transactions contemplated hereby.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Collateral" shall mean, collectively and each individually, all
collateral and/or security granted and/or securities pledged to Agent, for the
benefit of itself and Lenders, by the Credit Parties and any other Person
pursuant to the Loan Documents including, without limitation, the items set
forth or otherwise described in Section 2.13 of this Agreement.
"Collateral Management Fee" shall have the meaning assigned to it in
Section 3.3 hereof.
"Commitment" or "Commitments" shall mean:
(i) with respect to either Revolving Facility, as to any
Revolving Lender, the aggregate commitment of such Revolving Lender to make
Revolving Advances under such Revolving Facility, as set forth on Schedule A or
in the most recent Lender Addition Agreement executed by such Revolving Lender;
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(ii) as to all Revolving Lenders, the aggregate commitment
of all Revolving Lenders to make Revolving Advances;
(iii) with respect to either Term Loan, as to any Term
Lender, the aggregate commitment of such Term Lender to fund such Term Loan, as
set forth on Schedule A or in the most recent Lender Addition Agreement executed
by such Term Lender;
(iv) as to all Term Lenders, the aggregate commitment of
all Term Lenders to fund the Term Loans; and
(v) as to all Lenders, the aggregate commitments of all
Lenders to fund the Loans, in each case as the same may be reduced, modified or
terminated pursuant to this Agreement.
"Compliance Certificate" shall have the meaning assigned to such term
in Section 6.1 hereof.
"Computer Hardware and Software" shall mean, with respect to any Credit
Party, all of such Credit Party's rights (including rights as licensee and
lessee) with respect to (a) computer and other electronic data processing
hardware, including all integrated computer systems, central processing units,
memory units, display terminals, printers, computer elements, card readers, tape
drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories, peripheral devices and other related
computer hardware; (b) all software and all software programs designed for use
on the computers and electronic data processing hardware described in clause (a)
above, including all operating system software, utilities and application
programs in any form (source code and object code in magnetic tape, disk or hard
copy format or any other listings whatsoever) and any other software; (c) any
firmware associated with any of the foregoing; (d) any other software; and (e)
any documentation for or related to hardware, software and firmware described in
clauses (a), (b), (c) and (d) above, including flow charts, logic diagrams,
manuals, specifications, training materials, charts and pseudo codes.
"Concentration Account" shall have the meaning assigned to such term in
Section 2.16 hereof.
"Consolidated Subsidiary" shall mean a Subsidiary of a Credit Party
which is Consolidated for purposes of Annex I.
"Contingent Obligations" shall mean, as to any Person, any obligation
of such Person guaranteeing or intending to guaranty any Indebtedness, leases,
dividends or other obligations ("PRIMARY OBLIGATIONS") of any other Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of 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
A-8
obligation, (d) otherwise to assure or to hold harmless the owner of such
primary obligation against loss in respect thereof, and shall include, without
limitation, Interest Rate Agreements, or (e) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; 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 (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Contract Right" shall mean any right of any Credit Party to payment
under a contract for the sale or lease of goods or the rendering of services,
which right is at the time not yet earned by performance.
"Controlled Group" means the "controlled group of corporations" as that
term is defined in Section 1563 of the Code, of which the Credit Parties are a
part from time to time.
"Copyrights" shall mean, with respect to any Credit Party, all of such
Credit Party's now existing or hereafter acquired right, title, and interest in
and to: (i) copyrights, rights and interests in copyrights, works protectable by
copyright, all applications, registrations and recordings relating to the
foregoing as may at any time be filed in the United States Copyright Office or
in any similar office or agency of the United States, any State thereof, any
political subdivision thereof or in any other country, and all research and
development relating to the foregoing; and (ii) all renewals of any of the
foregoing.
"Credit Party" shall mean any of the Credit Parties.
"Credit Parties" shall mean, collectively, the US Credit Parties and
the Canadian Credit Parties.
"Debtor Relief Law" shall mean, collectively, the Bankruptcy Code of
the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, as amended from time to
time, including, without limitation, the Bankruptcy and Insolvency Act (Canada)
and the Companies' Creditors Arrangement Act (Canada).
"Default" shall mean any event, fact, circumstance or condition that,
with the giving of applicable notice or passage of time or both, would
constitute or be or result in an Event of Default.
"Default Rate" shall have the meaning assigned to such term in Section
3.7 hereof.
"Default Lender" shall mean any Lender that fails to make available to
Agent or Borrowers its Pro Rata share of any Advance as, when and to the full
extent required by the provisions of this Agreement, and such Lender shall be
deemed a Defaulting Lender until such time as such delinquency is satisfied or
rectified, if ever.
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"Deposit Account" shall mean, individually and collectively, any
Blocked Accounts and all bank or other depository accounts of any Credit Party.
"Distribution" shall mean any fee, payment, disbursement, dividend,
bonus or other remuneration of any kind, and any repayment of or debt service on
loans or other indebtedness.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiary" of a Person shall mean a Subsidiary of that
Person that is incorporated or otherwise organized under the laws of a State of
the United States of America.
"Domestic Wholly-Owned Subsidiary" of a Person shall mean a
Wholly-Owned Subsidiary of that Person that is a Domestic Subsidiary of that
Person.
"Eligible Receivables" shall mean each Account arising in the ordinary
course of a Borrower's business from the sale of goods or rendering of services
which Agent, in its Permitted Discretion, deems an Eligible Receivable unless:
(a) it is not subject to a valid perfected first priority
security interest in favor of Agent, for the benefit of itself and Lenders,
subject to no other Lien other than Permitted Liens having a lower priority than
the Liens in favor of Agent, for the benefit of itself and Lenders;
(b) it is not evidenced by an invoice, statement or other
documentary evidence satisfactory to Agent; provided, however, that Agent in its
sole discretion may from time to time include as Accounts that are not evidenced
by an invoice, statement or other documentary evidence satisfactory to Agent as
Eligible Receivables and determine the advance rate and reserves applicable to
Advances made on any such Accounts;
(c) it arises out of services rendered or sales to, or
out of any other transaction between, among or with, one or more Affiliates of
such Borrower and /or one or more Borrowers (i.e., between or among Borrowers);
(d) it remains unpaid for longer than ninety (90)
calendar days after the original invoice date;
(e) with respect to all Accounts owed by any particular
Account Debtor and /or its Affiliates, if more than 50% of the aggregate balance
of all such Accounts owing from such Account Debtor and /or its Affiliates
remain unpaid for longer than 90 calendar days after the original invoice date;
(f) with respect to all Accounts owed by any particular
Account Debtor and /or its Affiliates, 50% or more of all such Accounts are not
deemed Eligible Receivables for any reason hereunder (which percentage may, in
Agent's Permitted Discretion, be increased or decreased);
(g) with respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates, if such Accounts exceed twenty percent
(20%) (such percentage or any
A-10
other percentage now or hereafter established for any particular Account Debtor,
a "CONCENTRATION LIMIT") of the net collectible dollar value of all Accounts at
any one time (but the portion of the Accounts not in excess of the applicable
percentages may be deemed Eligible Receivables, in the Agent's Permitted
Discretion);
(h) any covenant, agreement, representation or warranty
contained in any Loan Document with respect to such Account has been breached
and remains uncured;
(i) the Account Debtor for such Account has commenced a
voluntary case under any Debtor Relief Law or has made an assignment for the
benefit of creditors, or a decree or order for relief has been entered by a
court having jurisdiction in respect of such Account Debtor in an involuntary
case under any Debtor Relief Law, or any other petition or application for
relief under any Debtor Relief Law has been filed against such Account Debtor,
or such Account Debtor has failed, suspended business, ceased to be solvent,
called a meeting of its creditors, or has consented to or suffered a receiver,
trustee, liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs, or such Borrower, in the ordinary
course of business, should have known of any of the foregoing;
(j) it arises from the sale of property or services
rendered to one or more Account Debtors outside the United States or that have
their principal place of business or chief executive offices outside the United
States (unless backed by a letter of credit or credit insurance for foreign
receivables is obtained, in each case in form and substance satisfactory to
Agent in its Permitted Discretion);
(k) it represents the sale of goods or rendering of
services to an Account Debtor on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis, is evidenced by Chattel Paper or an Instrument of any kind or has been
reduced to judgment;
(l) the applicable Account Debtor for such Account is any
Governmental Authority, subject to the provisions of Section 9.1(i);
(m) it is subject to any offset, credit (including any
resource or other income credit or offset), deduction, defense, discount,
chargeback, freight claim, allowance, adjustment, dispute or counterclaim, or is
contingent in any respect or for any reason (but only to the extent of such
offset, credit, deduction, defense, discount, chargeback, freight claim,
allowance, adjustment, dispute or counterclaim or contingency), including
offsets by any amounts due to an Account Debtor from any Borrower;
(n) it represents the portion of any Account for an
Account Debtor evidenced by an invoice, statement or other documentary evidence
satisfactory to Agent for the sale of goods or rendering of services to an
Account Debtor to occur after the date of such invoice, statement or other
documentary evidence (the "UNEARNED PORTION") until such goods are sold or
services rendered, (provided, however, that Agent in its sole discretion may
from time to time reduce the Unearned Portion of any such Account by an amount
not to exceed the then-current amount of any other Account for such Account
Debtor for the sale of goods or rendering of
A-11
services occurring prior to such date which is not evidenced by an invoice,
statement or other documentary evidence satisfactory to Agent;
(o) there is any agreement with an Account Debtor for any
deduction from such Account, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each invoice
related thereto, such that only the discounted amount of such Account after
giving effect to such discounts and allowances shall be considered an Eligible
Receivable;
(p) any return, rejection or repossession of goods or
services related to it has occurred;
(q) it is not payable to any Borrower;
(r) such Borrower has agreed to accept or has accepted
any non-cash payment for such Account;
(s) at any time 90 days after the Closing Date, it
constitutes a re-billing of an amount previously billed or double billing (i.e.,
counted twice);
(t) it constitutes a billing for a sample;
(u) with respect to any Account arising from the sale of
goods, the goods have not been shipped to the Account Debtor or its designee;
(v) with respect to any Account arising from the
performance of services, the services have not been actually performed or the
services were undertaken in violation of any law;
(w) the applicable Account Debtor for such Account is
located in the States of New Jersey, Minnesota, or West Virginia (or any other
state that requires a creditor to file a business activity report or similar
document in order to bring suit or otherwise enforce its remedies against such
Account Debtor in the courts or through any judicial process of such state),
unless the Borrower to whom such Account is owing has qualified to do business
in New Jersey, Minnesota, West Virginia, or such other states, or has filed a
business activities report with the applicable division of taxation, the
department of revenue, or with such other state offices, as appropriate, for the
then-current year, or is exempt from such filing requirement;
(x) such Accounts do not arise from the actual and bona
fide sale and delivery of goods by any Borrower or rendition of services by such
Borrower in the ordinary course of its business which transactions are completed
in accordance with the terms and provisions contained in any documents related
thereto;
(y) it is an Account subject to a surety bond, guaranty,
indemnity or other similar arrangement but only if and to the extent that the
amount of all Accounts included as Eligible Receivables and subject to a surety
bond, guaranty, indemnity or other similar arrangement exceeds $750,000 in the
aggregate;
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(z) it is an Account owned by an Account Debtor that is
subject to legal process by any Borrower or against which such Borrower has
asserted a mechanics' or other similar lien or that is subject to collection by
any Borrower; or
(aa) it fails to meet such other specifications and
requirements which may from time to time be established by Agent or is not
otherwise satisfactory to Agent, as determined in Agent's Permitted Discretion.
In determining which Accounts are Eligible Receivables, Agent may rely
on all statements and representations made by Borrowers in writing with respect
to any Account.
"Employment Agreements" shall mean, collectively, the employment
agreements of the following Persons, in form and substance satisfactory to
Agent: Xxx Xxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxx Xxxxx, Xxxxx
Xxxxxxxx and Xxxx Xxxxx.
"Environmental Laws" shall mean, collectively and each individually,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendment and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, any other "Superfund" or "Superlien" law and all other
federal, state and local and foreign environmental, land use, zoning, health,
chemical use, safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances, in each case, as amended, and the
legally-binding rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of Governmental Authorities with respect
thereto, including, without limitation, any equivalent laws of Canada.
"Equipment" shall mean, with respect to any Credit Party, all
"equipment" (as defined in the UCC) of such Credit Party (or, if referring to
another Person, of such other Person), now owned or hereafter acquired, and all
documents of title or other documents representing any of the foregoing, and all
collateral security and guaranties of any kind, now or hereafter in existence,
given by any Person with respect to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.
"Event of Default" shall mean the occurrence of any event set forth in
Article VIII.
"Excess Cash Flow" shall mean, for any fiscal year, without
duplication, an amount equal to the sum of (i) EBITDA (as defined in Annex I
hereof), minus (ii) cash tax expense during such fiscal year, minus (iii) cash
interest expense paid during such fiscal year, minus (iv) an amount equal to the
aggregate amount of all prepayments of the Term Loans, minus (v) an amount equal
to non-financed Capital Expenditures (as defined in Annex I hereto) and Capital
Expenditures financed under a revolving line of credit or similar facility for
such period, minus (vi) an amount equal to the sum of all regularly scheduled
payments of principal on Indebtedness of Credit Parties actually made during
such period to the extent permitted hereunder, minus (vii) all reasonable
expenses incurred to comply with Schedule 6.8 - Post-Closing Deliverables not to
exceed $750,000 in the aggregate during the Term.
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"Fair Valuation" shall mean the determination of the value of the
consolidated assets of a Person on the basis of the amount which may be realized
by a willing seller within a reasonable time through collection or sale of such
assets at market value on a going concern basis to an interested buyer who is
willing to purchase under ordinary selling conditions in an arm's length
transaction.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upward to the nearest 1/100th of 1%) equal to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to Agent on such day on such transactions as determined by Agent in a
commercially reasonable manner.
"First Rate" shall have the meaning assigned to such term in Section
3.6(c) hereof.
"Foreign Disposition Proceeds" shall have the meaning assigned to such
term in Section 2.11(d) hereof.
"Foreign Government Scheme or Arrangement" shall have the meaning
assigned to such term in Section 5.10 hereof.
"Foreign Plan" shall have the meaning assigned to such term in Section
5.10 hereof.
"Foreign Subsidiary" of a Person shall mean a Subsidiary of that Person
that is not a Domestic Subsidiary of that Person.
"Foreign Wholly-Owned Subsidiary" of a Person shall mean a Wholly-Owned
Subsidiary of that Person that is a Foreign Subsidiary of that Person.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time as applied by nationally
recognized accounting firms.
"Governmental Authority" shall mean any federal, state, municipal,
national, local, provincial or other governmental department, court, commission,
board, bureau, agency or instrumentality or political subdivision thereof, or
any entity or officer exercising executive, legislative or judicial, regulatory
or administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, Canada or any province thereof, any other foreign sovereign entity or
country or jurisdiction or the District of Columbia.
"Government Account" shall be defined to mean all Accounts arising out
of or with respect to any Government Contract.
"Government Contracts" shall mean all contracts with the United States
government or any other Governmental Authority or any agency of any of the
foregoing, and all amendments, modifications and supplements thereto.
A-14
"Guaranteed Obligations" shall have the meaning assigned to such term
in Section 14.1 hereof.
"Guarantor" shall mean, any Canadian Guarantor or any US Guarantor, and
"Guarantors" shall mean all Canadian Guarantors or any US Guarantors.
"Guaranty" shall mean, collectively and each individually, all
guarantees executed by each Guarantor, including, without limitation, Article
XIV of this Agreement any guarantees set forth in any Pledge Agreement executed
by any Person.
"Hazardous Substances" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Indebtedness" of any Person means, without duplication: (a) all
Indebtedness for Borrowed Money; (b) the principal balance outstanding under any
synthetic lease, off-balance sheet loan or similar off balance sheet financing
product; (c) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (b) above,
and (d) all other items not specifically excluded above which, in accordance
with GAAP, would be included in determining total liabilities as shown on the
balance sheet of such Person.
"Indebtedness for Borrowed Money" of any Person shall mean, without
duplication, (a) all indebtedness of such Person for borrowed money, whether or
not evidenced by bonds, debentures, notes or similar instruments, (b) all
Capitalized Lease Obligations of such Person, (c) all Indebtedness of such
Person secured by any mortgage, pledge, security, Lien or conditional sale or
other title retention agreement to which any property or asset owned or held by
such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed, (d) all obligations issued, undertaken or assumed as the
deferred purchase price of Property or services (excluding trade accounts
payable and accrued obligations (other than for borrowed money) which are not
aged more than one hundred twenty (120) calendar days from the billing date or
thirty (30) days from the due date, in each case incurred in the ordinary course
of business and paid within such time period, unless the same are being
contested in good faith and by appropriate and lawful proceedings and such
reserves, if any, with respect thereto as are required by GAAP and deemed
adequate by such Borrower's independent accountants shall have been reserved to
the satisfaction of Agent in its Permitted Discretion); (e) the face amount of
all letters of credit issued for the account of such Person and without
duplication, all drafts drawn thereunder and all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments issued by such Person; (f) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to Property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such Property), (g) all
indebtedness for the deferred purchase price of property due more than six
months from the incurrence of such indebtedness and (h) all direct or indirect
guaranties of any or all of the foregoing.
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"Initial Revolving Advances" shall have the meaning assigned to such
term in Section 4.1 hereof.
"Insured Event" shall have the meaning assigned to such term in Section
13.4 hereof.
"Intellectual Property" shall mean all present and future: trade
secrets, know-how and other proprietary information; Trademarks, internet domain
names, service marks, trade dress, trade names, business names, designs, logos,
slogans (and all translations, adaptations, derivations and combinations of the
foregoing) indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; Copyrights (including Copyrights for computer programs)
and all tangible and intangible property embodying the Copyrights, unpatented
inventions (whether or not patentable); Patents; industrial design applications
and registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing (but
excluding any "shrink wrap" licenses); the right to xxx for all past, present
and future infringements of any of the foregoing; all other intellectual
property; and all common law and other rights throughout the world in and to all
of the foregoing.
"Intellectual Property Agreement" shall mean any agreement relating to
Intellectual Property, and including any agreements, rights, options, or
licenses to purchase or otherwise acquire or use or benefit from (or to sell or
otherwise permit any other Person to acquire or use or benefit from) any
Intellectual Property.
"Intellectual Property Security Agreement" shall mean those certain
Acknowledgment of Intellectual Property Collateral Lien executed by each Credit
Party in favor of Agent, for the benefit of itself and Lenders, as such may be
modified, amended or supplemented from time to time.
"Inventory" shall mean, with respect to any Credit Party, all
"inventory" (as defined in the UCC) of such Credit Party (or, if referring to
another Person, of such other Person), now owned or hereafter acquired, and all
documents of title or other documents representing any of the foregoing, and all
collateral security and guaranties of any kind, now or hereafter in existence,
given by any Person with respect to any of the foregoing.
"Investment" shall mean a cash equity investment by Sponsor and certain
other investors of at least $13,000,0000 on the terms and conditions set forth
in the Investment Documents.
"Investment Documents" shall mean all agreements, documents and
instruments, including purchase agreements, certificates, executed and/or
delivered in connection with an Investment.
"Joinder Agreement" shall mean an agreement in form and substance
acceptable to Agent in its Permitted Discretion, the material terms of which
shall provide that a Person shall become a party to and become bound by the
terms of this Agreement and/or the other Loan Documents in the same capacity and
to the same extent as a Credit Party (other than a Borrower).
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"Landlord Waiver and Consent" shall mean a waiver/consent in form and
substance satisfactory to Agent in its Permitted Discretion from the
owner/lessor of any premises not owned by a Credit Party at which any of the
Collateral is now or hereafter located for the purpose of providing Agent access
to such Collateral, in each case as such may be modified, amended or
supplemented from time to time.
"L/C Issuer" shall mean any bank or financial institution that issues
to Borrowers letters of credit under this Agreement and its successors and
assigns.
"Lender Addition Agreement" shall mean an agreement among Agent, a
Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans, the Commitments and other
interests under this Agreement and the other Loan Documents, in form and
substance acceptable to Agent in its Permitted Discretion.
"Lenders" shall mean the financial institutions, from time to time
named on Schedule A under the headings "US Revolving Lenders," "Canadian
Revolving Lenders," "US Term Lenders" and "Canadian Term Lenders," their
respective successors and permitted assigns (but not, except as expressly set
forth herein, any Participant that is not otherwise a party to this Agreement).
"Letter of Credit Obligations" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn amount of all Standby
Letters of Credit and (ii) the aggregate unreimbursed amount of all drawn
Standby Letters of Credit.
"Lien" shall mean any mortgage, pledge, hypothecation, security
interest, encumbrance, transfer or other restriction, lien or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement or any lease in the nature thereof), or any
other arrangement pursuant to which title to the property is retained by or
vested in some other Person for security purposes.
"Loan" or "Loans" shall mean, individually and collectively, the Term
Loans, the Revolving Facilities, and all Revolving Advances.
"Loan Documents" shall mean, collectively and each individually, this
Agreement, the Notes, the Security Documents, the Negative Pledge Agreements,
the Borrowing Certificates and all other agreements, documents, instruments and
certificates heretofore or hereafter executed or delivered by the Credit Parties
to Agent or Lenders in connection with any of the foregoing or the Loans
(including, without limitation, Compliance Certificates), as the same may be
amended, modified or supplemented from time to time.
"Lockbox Agreement" shall have the meaning assigned to such term in
Section 2.16 hereof.
"Lockbox Bank" shall have the meaning assigned to such term in Section
2.16 hereof.
"Management Services Agreement" shall mean that certain Services
Agreement of even date between Parent and Sponsor.
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"Management Fee Subordination Agreement" shall mean that certain
Management Subordination Agreement by and between Parent, Sponsor and Agent, as
such may be modified, amended or supplemented from time to time, in form and
substance satisfactory to Agent.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
event, condition, obligation, liability or circumstance or set of events,
conditions, obligations, liabilities or circumstances or any change(s) which (i)
has, had or could reasonably be expected to have any material adverse effect
upon or change in the validity or enforceability of any Loan Document, (ii) has
been or could reasonably be expected to be material and adverse (a) to the value
of a material portion of any of the Collateral or (b) to the business,
operations, properties, assets, liabilities or financial condition of the Credit
Parties, taken as a whole, or (iii) has materially impaired or could reasonably
be expected to materially impair the ability of any Credit Party to perform any
of the Obligations owing by such Person or to consummate the transactions under
the Loan Documents executed by such Persons.
"Maturity Date" shall mean the earliest to occur of (i) an Event of
Default if any Obligations shall become due and payable in connection therewith
or as a result thereof as required by this Agreement and (ii) the last day of
the Term.
"Monthly Borrowing Certificate" has the meaning assigned to such term
in Section 2.4 hereof.
"Mortgage" shall mean a (i) mortgage or deed of trust to be executed by
a Credit Party or Guarantor in favor of Agent upon each parcel of Real Estate
owned by such Person or (ii) a leasehold deed of trust or mortgage to be
executed by any Credit Party or Guarantor in favor of Agent encumbering such
Person's leasehold estate in a parcel of real property, in each case in form and
substance acceptable to Agent.
"Multiemployer Plan" means a multiemployer plan (within the meaning of
Section 3(37) of ERISA) that is maintained for the benefit of the employees of
the Credit Parties or any member of the Controlled Group.
"Negative Pledge Agreements" means each of the Negative Pledge
Agreements dated as of the Closing Date from Fusion Alloys, Ltd., CSI Coating
Systems, Inc., Corrpro Companies, C.A. (Venezuela), Corrpro Tecna Ltda
(Columbia) and Corrpro Companies (UK) Limited (England), as such may be
modified, amended, restated or supplemented from time to time.
"Net Proceeds" shall mean: (i) in respect of any issuance of debt or
equity securities, cash proceeds and non-cash proceeds received or receivable in
connection therewith, net of underwriting discounts and reasonable out-of-pocket
costs and expenses paid or incurred in connection therewith (excluding fees and
other amounts paid or payable to Affiliates of any Credit Party in connection
therewith to the extent exceeding the amount thereof that would be paid or
payable in an arm's length transaction between unrelated parties); and (ii) in
respect of any sale, transfer or other disposition of Property or any casualty,
taking, condemnation or similar event of loss or taking, proceeds in cash,
checks or other cash equivalent financial instruments (including Cash
Equivalents) as and when received by the Person making such sale, transfer or
other disposition and insurance proceeds and awards received on account of such
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casualty, taking, condemnation or similar event of loss, net of: (a) in the
event of any such sale, transfer or other disposition (I) the direct costs
relating thereto (excluding fees and other amounts paid or payable to Affiliates
of any Credit Party in connection therewith to the extent exceeding the amount
thereof that would be paid or payable in an arm's length transaction between
unrelated parties), (II) income, sale, use or other transaction taxes paid or
payable as a result thereof, and (III) amounts required to be applied to repay
principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Lien on the asset which is the subject thereof, and (b) in the
event of any such casualty, taking, condemnation or similar event of loss, (I)
all money actually applied to repair, replace or reconstruct the damaged
property or property affected by the casualty, taking, condemnation or similar
event of loss, as applicable, in accordance with the terms hereof, (II) all of
the costs and expenses reasonably incurred in connection with the collection of
such proceeds, award or other payments, and (III) any amounts retained by or
paid to parties having superior rights to such proceeds, awards or other
payments.
"Non-Consenting Lender" shall mean any Lender, other than
CapitalSource, that fails to consent to any proposed amendment, modification,
waiver or termination requiring the consent of all Lenders which has been
consented to by Requisite Lenders.
"Non-Excluded Taxes" shall have the meaning assigned to such term in
Section 6.13(a).
"Note" shall mean, collectively and each individually, the Revolving
Notes and the Term Notes as the same may be amended, modified, divided, split,
supplemented and/or restated from time to time.
"Obligations" shall mean, collectively, the US Obligations and the
Canadian Obligations.
"OFAC" shall mean the United States Department of Treasury's Office of
Foreign Assets Control or any successor thereto.
"Option Plans" means (i) the 1997 Long-Term Incentive Plan of Parent,
(ii) the 1997 Non-Employee Directors' Stock Option Plan of Parent and (iii) any
other stock option plan for the directors, officers and/or employees of Parent
adopted by the Board of Directors of Parent and, to the extent required by
applicable law, approved by the shareholders of Parent.
"Participant" shall have the meaning assigned to such term in Section
13.2(b) hereof.
"Patents" shall mean, with respect to any Credit Party, all of such
Credit Party's now existing or hereafter acquired right, title and interest in
and to: (i) all patents, patent applications, inventions, invention disclosures
and improvements, and all applications, registrations and recordings relating to
the foregoing as may at any time be filed in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, any political subdivision thereof or in any other country, and
all research and development relating to the foregoing; and (ii) the reissues,
divisions, continuances, renewals, extensions and continuances-in-part of any of
the foregoing.
"Payment Office" shall mean initially the address set forth beneath
Agent's name on the signature page of this Agreement, and thereafter, such other
office of Agent, if any, which it may designate by notice to Borrowers to be the
Payment Office.
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"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any other Governmental Authority
succeeding to the functions thereof.
"Permit" shall mean collectively all licenses, leases, powers, permits,
franchises, certificates, authorizations and approvals insured by a Governmental
Authority.
"Permitted Discretion" shall mean a determination or judgment made in
good faith in the exercise of reasonable (from the perspective of a secured
lender) credit or business judgment.
"Permitted Indebtedness" shall have the meaning assigned to such term
in Section 7.2 hereof.
"Permitted Liens" shall have the meaning assigned to such term in
Section 7.3 hereof.
"Permitted Securities" shall mean any shares, units or interests of
equity securities or ownership interests of Parent that by their terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event or otherwise (A) are not
convertible or exchangeable for Indebtedness or any securities that are not
Permitted Securities, (B) (i) do not mature and (ii) are not putable or
redeemable at the option of the holder thereof, in each case under clause (i) or
(ii) in whole or in part on or prior to the date six (6) months after the
earlier of the end of the Term or the indefeasible payment in full in cash of
the Obligations, (C) do not have payments of dividends on or prior to the date
six (6) months after the earlier of the end of the Term or the actual payment in
full of the Obligations, (D) are unsecured and by operation of law or by legally
binding agreement are subordinated in right of repayment, liens, security and
remedies to all of the Obligations and to all of Agent's and Lenders' rights,
Liens and remedies, (E) do not have any veto or supermajority voting rights or
approval rights with respect to any issues other than to protect their own
rights and preferences, and /or (F) are not sold, issued or otherwise
transferred in connection with or as a part of a Public Offering.
"Person" shall mean an individual, a partnership, a corporation, a
limited liability company, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a Governmental Authority or any
other entity of whatever nature.
"Plan" means any employee benefit plan (within the meaning of Section
3(3) of ERISA), other than a Multiemployer Plan, established or maintained by
any of the Credit Parties or any member of the Controlled Group.
"Pledge Agreement" shall mean, collectively and individually, if
applicable, all pledge agreements executed by and between Agent and any Credit
Party (or any other Person to the extent relating to equity interests or
securities of any Credit Party), in each case as such may be modified, amended
or supplemented from time to time.
"PPSA" shall mean the Personal Property Security Act (Alberta), as in
effect from time to time.
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"Preferred Stock Purchase Agreement" means that certain Securities
Purchase Agreement dated December 15, 2003, between Corrpro Investments, LLC and
Parent.
"Prime Rate" shall mean a fluctuating interest rate per annum equal at
all times to the greater of (i) the rate of interest announced publicly from
time to time by Citibank, N.A. as its base rate; provided, that such rate is not
necessarily the best rate offered to its customers, and, should Agent be unable
to determine such rate, such other indication of the prevailing prime rate of
interest as may reasonably be chosen by Agent, and (ii) the sum of the Federal
Funds Rate in effect from time to time, plus one half of one percent (0.5%). Any
change in the Prime Rate due to a change in such base rate or the Federal Funds
Rate shall be effective immediately on the effective date of such change in such
base rate or the Federal Funds Rate.
"Priority Permitted Liens" shall mean Permitted Liens contemplated by
and permitted pursuant to Section 7.3(b), (c)(ii), (d), (e) and (i).
"Property" shall mean all types of real, personal or mixed property and
all types of tangible or intangible property.
"Pro Rata Share" shall mean:
(a) with respect to matters relating to a
particular Commitment of a Revolving Lender under either Revolving
Facility or Standby Letter of Credit, the percentage obtained by
dividing (i) such Commitment of that Revolving Lender by (ii) all such
Commitments of all Revolving Lenders with respect to such Revolving
Facility; provided, however, that if any such Commitment of a Revolving
Lender is terminated pursuant to the terms hereof, then "Pro Rata
Share" means the percentage obtained by dividing (x) the aggregate
amount of such Revolving Lender's outstanding applicable Revolving
Advances by (y) the aggregate amount of all outstanding applicable
Revolving Advances;
(b) with respect to matters relating to a
particular Term Loan of a Term Lender, the percentage obtained by
dividing (i) the aggregate amount of the portion of such outstanding
Term Loan made by such Term Lender by (ii) the aggregate amount of such
outstanding Term Loan; and
(c) with respect to all other matters, the
percentage obtained by dividing (i) the aggregate amount of a Lender's
Loans outstanding and such Lender's Commitment(s) by (ii) the aggregate
amount of all Lenders' Loans outstanding and all Lenders' Commitments;
in any case as such percentage may be adjusted by assignments permitted
pursuant to Section 13.2.
"Public Offering" shall mean any offer or sale of securities after the
Closing Date pursuant to any registration statement filed and effective with the
Securities and Exchange Commission or any other Governmental Authority.
"Real Estate" shall mean each parcel of real property owned by any
Credit Party.
"Receipt" shall have the meaning given such term in Section 13.5.
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"Replacement Lender" shall have the meaning assigned to such term in
Section 13.14.
"Reportable Event" means any of the events which are reportable under
Section 4043 of ERISA and the regulations promulgated thereunder, other than an
occurrence for which the thirty (30) day notice contained in 29 C.F.R. Section
2615.3(a) is waived.
"Requisite Lenders" shall mean, at any time, (a) Lenders then holding
at least fifty-one percent (51%) of the sum of the Commitments under the
Revolving Facilities then in effect, plus the aggregate unpaid principal balance
of the Term Loans then outstanding, or (b) if the Commitments under the
Revolving Facilities have terminated, Lenders then having at least fifty-one
percent (51%) of the sum of the aggregate unpaid principal amount of Loans then
outstanding, plus the utilized portion of any non-terminated Commitments, if
any; provided, that, the foregoing notwithstanding, if two (2) or less Lenders
hold Commitments and Loans hereunder, "Requisite Lenders" shall mean all
Lenders. For purposes of the immediately preceding sentence, Lenders that are
Affiliates of each other shall be deemed to be one and the same, single Lender.
Anything to the contrary contained in this definition notwithstanding, to the
extent the fact that each Lender is considered in determining Requisite Lenders
for any purpose relating to any Canadian Obligation would result in material and
adverse tax consequences to US Borrower under Section 956 of the Code, as
determined by Agent and the Requisite Lenders in their Permitted Discretion,
then Requisite Lenders, for such purpose, shall be determined in accordance with
the terms of this definition but solely by reference to and among the Canadian
Revolving Lenders and/or the Canadian Term Lenders, as applicable.
"Revolving Advances" shall mean either US Revolving Advances or
Canadian Revolving Advances or both, as the context may dictate.
"Revolving Facilities" shall mean, collectively the US Revolving
Facility and the Canadian Revolving Facility.
"Revolving Lenders" shall mean, collectively, US Revolving Lenders and
Canadian Revolving Lenders.
"Revolving Note(s)" shall mean, individually and collectively, one or
more Revolving Notes and any additional promissory note(s) payable to the order
of each Revolving Lender executed by the relevant Borrower evidencing the
respective Revolving Facilities and Revolving Advances thereunder, as the same
may be amended, modified, divided, split, supplemented and/or restated from time
to time.
"Revolving Unused Line Fees" shall mean, collectively, the US Revolving
Unused Line Fee and the Canadian Revolving Unused Line Fee.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Documents" shall mean, collectively, this Agreement, the
Canadian Security Agreement, the Canadian Guaranty, the Intellectual Property
Security Agreement, the Guarantees, the Pledge Agreements, the Lockbox
Agreements, UCC financing statements, equivalent statements, notifications or
instruments under the PPSA, the Subordination Agreements, all agreements related
to Accounts, and all other documents or instruments
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necessary to create or perfect the Liens in the Collateral, as such may be
modified, amended, restated or supplemented from time to time.
"Solvency Certificate" shall have the meaning assigned to such term in
Section 4.1(f) hereof.
"Sponsor" shall mean Xxxxxxx Partners III, L.P.
"Standby Letter of Credit" shall mean, collectively, the Canadian
Standby Letters of Credit and the US Standby Letters of Credit.
"Standby Letter of Credit Application" shall mean those stand-by
letters of credit issued for a Borrower's account in accordance with the terms
of Section 2.5.
"Standby Letter of Credit Fees" shall have the meaning set forth in
Section 3.5.
"Subordinated Debt" shall mean any Indebtedness, contingent equity,
earnout or other obligations that is unsecured and subordinated by written
contract in right of repayment, liens, security and remedies to all of the
Obligations and to all of Agent's and Lenders' rights, Liens and remedies and in
form and substance satisfactory to Agent.
"Subordination Agreement" shall mean, individually and collectively,
(i) the Management Fee Subordination Agreement, (ii) the ACAS Subordination
Agreement and (iii) any other agreements between Agent and holders of
Subordinated Debt relating to Subordinated Debt, in each case as the same may be
modified, amended, restated, substituted, replaced and/or supplemented from time
to time, in each case in form and substance satisfactory to Agent.
"Subsidiary" shall mean, as to any initial Person, any other Person in
which more than fifty percent (50%) of all equity, membership, partnership or
other ownership or equity interests is owned directly or indirectly by such
initial Person or one or more of its Subsidiaries. For purposes of the Loan
Documents, any reference to "Subsidiary" shall be deemed to refer to a
Subsidiary of a Borrower unless the context provides otherwise.
"Term" shall mean the period commencing on the Closing Date and ending
on March 30, 2009.
"Term Lenders" shall mean, collectively, US Term Lenders and Canadian
Term Lenders.
"Term Loans" shall mean, collectively, the US Term Loan and the
Canadian Term Loan.
"Term Note(s)" shall mean, individually and collectively, one or more
Term Notes and any additional promissory note(s) payable to the order of each
Term Lender executed by the relevant Borrower evidencing the respective Term
Loan, as the same may be amended, modified, split, divided, supplemented and/or
restated from time to time.
"Trademarks" shall mean, with respect to any Credit Party, all of such
Credit Party's now existing or hereafter acquired right, title, and interest in
and to: (i) trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles,
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service marks, logos, other business identifiers, prints and labels on which any
of the foregoing have appeared or appear, all applications, registrations and
recordings relating to the foregoing as may at any time be filed in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof, any political subdivision thereof or in any
other country, and all research and development relating to the foregoing; (ii)
all renewals thereof; and (iii) all designs and general intangibles of a like
nature.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of Maryland from time to time; provided, that to the extent the UCC is used to
define any term herein or in any other Loan Document and such term is defined
differently in different Articles or Divisions of the UCC the definition of such
term contained in Article or Division 9, as the case may be, shall govern.
"UFTA" shall have the meaning assigned to it in Section 3.7(c) hereof.
"US Availability" shall have the meaning assigned to it in Section 2.1
hereof.
"US Borrower" shall have the meaning assigned to such term in the
Preamble of this Agreement , together with any Person who joins this Agreement
as a "US Borrower" after the date hereof.
"US Borrowing Base" shall mean, as of any date of determination, the
net collectible value of US Eligible Receivables, as determined with reference
to the most recent Borrowing Certificate and otherwise in accordance with this
Agreement.
"US Credit Parties" shall mean, collectively, US Borrower and each
guarantor under a US Guaranty.
"US Guaranty" shall mean a Guaranty, in form and substance satisfactory
to Agent, executed and delivered, on a joint and several basis, by each US
Credit Party (other than the Borrowers) in favor of Agent, for the benefit of
itself and the Lenders.
"US Lender" shall mean a US Revolving Lender or a US Term Lender.
"US L/C Issuer" shall mean any bank or financial institution that
issues to US Borrower letters of credit under this Agreement and its successors
and assigns.
"US Requisite Lenders" shall mean, at any time, (a) US Lenders then
holding at least fifty-one percent (51%) of the sum of the Commitments under the
US Revolving Facility then in effect, plus the aggregate unpaid principal
balance of the US Term Loans then outstanding, or (b) if the Commitments under
the US Revolving Facility have terminated, US Lenders then having at least
fifty-one percent (51%) of the sum of the aggregate unpaid principal amount of
US Term Loans then outstanding, plus the utilized portion of any non-terminated
Commitments, if any; provided, that, the foregoing notwithstanding, if two (2)
or less US Lenders hold Commitments and US Term Loans hereunder, "US Requisite
Lenders" shall mean all US Lenders. For purposes of the immediately preceding
sentence, Lenders that are Affiliates of each other shall be deemed to be one
and the same, single Lender.
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"US Obligations" shall mean, without duplication, all present and
future obligations, Indebtedness and liabilities of US Credit Parties to Agent
and/or Lenders at any time and from time to time of every kind, nature and
description, direct or indirect, secured or unsecured, joint and several,
absolute or contingent, due or to become due, matured or unmatured, now existing
or hereafter arising, contractual or tortious, liquidated or unliquidated,
including, without limitation, all of the foregoing under any of the Loan
Documents or otherwise relating to the Notes and/or Loans, including, without
limitation, interest, all applicable fees, charges and expenses and/or all
amounts paid or advanced by Agent or Lenders on behalf of or for the benefit of
any such Person for any reason at any time, including in each case obligations
of performance as well as obligations of payment and interest that accrue after
the commencement of any proceeding under any Debtor Relief Law by or against any
such Person.
"US Revolving Advance Borrowing Date" shall have the meaning assigned
to such term in Section 2.4(a) hereof.
"US Revolving Advances" shall mean a borrowing under the US Revolving
Facility.
"US Revolving Facility" shall have the meaning assigned to such term in
the Recitals of this Agreement.
"US Revolving Facility Cap" shall mean, initially, $15,500,000, as
reduced or otherwise adjusted from time to time in accordance with the terms of
this Agreement, including, without limitation, by adjustment as provided in
Section 9.1(a) hereof or otherwise in accordance herewith.
"US Revolving Facility Maximum Amount" shall have the meaning assigned
to such term in Section 2.1(a) hereof.
"US Revolving Lenders" shall mean the financial institutions from time
to time named on Schedule A under the heading "US Revolving Lenders," their
respective successors and permitted assigns (but not, except as expressly set
forth herein, any Participant that is not otherwise a party to this Agreement).
"US Revolving Loans" shall mean, collectively, the US Revolving
Advances made by US Revolving Lenders to US Borrower in the maximum aggregate
principal amount equal to the US Revolving Facility Cap as in effect from time
to time, and all Obligations related thereto.
"US Revolving Unused Line Fee" shall have the meaning assigned to such
term in Section 3.2(a) hereof.
"US Standby Letters of Credit" shall mean, those standby letters of
credit issued for a US Borrower's account in accordance with the terms of
Section 2.5(a)(i).
"US Term Lenders" shall mean the financial institutions from time to
time named on Schedule A under the heading "US Term Lenders," their respective
successors and permitted assigns (but not, except as expressly set forth herein,
any Participant that is not otherwise a party to this Agreement).
A-25
"US Term Loan" shall mean the term Loan made by US Term Lenders to US
Borrower pursuant to Section 2.6(a) in the aggregate principal amount of
Fourteen Million Dollars ($14,000,000), and all Obligations related thereto.
"Wholly-Owned Subsidiary" of a Person shall mean any Subsidiary of that
Person in which (other than directors' qualifying shares required by law) 100%
of the equity, at the time as of which any determination is being made, is
owned, beneficially and of record, by that Person, or by one or more of the
other Wholly-Owned Subsidiaries of that Person, or both.
"Yield Maintenance Fee" shall mean an amount equal to the difference
between (x) the maximum total interest (but not at any default rate) and fees
which could have been earned based on the interest rate hereunder in effect on
the date of such prepayment on the principal amount of the Term Loans being
prepaid from the effective date of any prepayment through and including March
30, 2006, and (y) the total amount of interest which would accrue on an amount
equal to the amount being prepaid from the date of such prepayment through and
including March 30, 2006 calculated at an interest rate per annum equal to the
latest published (as published in the Wall Street Journal) rate preceding the
later of the effective date of any prepayment for United States Treasury Notes
or Bills (Bills on a discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the last day of the Term.
A-26
SCHEDULE A
LENDERS/COMMITMENTS
US REVOLVING LENDERS US REVOLVING COMMITMENT
-------------------------------------------------------------------------------------------------------
CAPITALSOURCE FINANCE LLC $15,500,000
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-Mail: xxxxx@xxxxxxxxxxxxx.xxx
Wire Instructions:
Bank: Bank of America, Charlotte, NC
Account: 003930559738
ABA: 000000000
Account Name: CapitalSource Funding LLC - CFG
Reference: Corrpro
-------------------------------------------------------------------------------------------------------
TOTAL (SUBJECT TO THE TERMS OF THIS AGREEMENT): $15,500,000
=======================================================================================================
US TERM LOAN
US TERM LENDERS COMMITMENT
-------------------------------------------------------------------------------------------------------
CAPITALSOURCE FINANCE LLC $14,000,000
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-Mail: xxxxx@xxxxxxxxxxxxx.xxx
Wire Instructions:
Bank: Bank of America, Charlotte, NC
Account: 003930559738
ABA: 000000000
Account Name: CapitalSource Funding LLC - CFG
Reference: Corrpro
-------------------------------------------------------------------------------------------------------
TOTAL: $14,000,000
=======================================================================================================
CANADIAN REVOLVING
CANADIAN REVOLVING LENDERS COMMITMENT
-------------------------------------------------------------------------------------------------------
CSE FINANCE, INC. $4,000,000
c/o CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-Mail: xxxxx@xxxxxxxxxxxxx.xxx
Wire Instructions:
Bank: Bank of America, Charlotte, NC
Account: 003930559738
ABA: 000000000
Account Name: CapitalSource Funding LLC - CFG
Reference: Corrpro
-------------------------------------------------------------------------------------------------------
TOTAL: $4,000,000
=======================================================================================================
CANADIAN TERM LOAN
CANADIAN TERM LENDERS COMMITMENT
-------------------------------------------------------------------------------------------------------
CSE FINANCE, INC. $6,500,000
c/o CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-Mail: xxxxx@xxxxxxxxxxxxx.xxx
Wire Instructions:
Bank: Bank of America, Charlotte, NC
Account: 003930559738
ABA: 000000000
Account Name: CapitalSource Funding LLC - CFG
Reference: Corrpro
-------------------------------------------------------------------------------------------------------
TOTAL: $6,500,000
=======================================================================================================
