Exhibit 10.31
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LOAN AND SECURITY AGREEMENT
by and among
PHIBRO ANIMAL HEALTH CORPORATION
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
XXXXX FARGO FOOTHILL, INC.
as the Arranger and Administrative Agent
Dated as of October 21, 2003
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION.............................................1
1.1 Definitions.....................................................1
1.2 Accounting Terms...............................................32
1.3 Code...........................................................32
1.4 Construction...................................................32
1.5 Schedules and Exhibits.........................................32
2. LOAN AND TERMS OF PAYMENT...............................................33
2.1 Revolver Advances..............................................33
2.2 Term Loan......................................................33
2.3 Borrowing Procedures and Settlements...........................34
2.4 Payments.......................................................41
2.5 Overadvances...................................................44
2.6 Interest Rates and Letter of Credit Fee: Rates,
Payments, and Calculations.....................................44
2.7 Cash Management................................................45
2.8 Crediting Payments; Float Charge...............................46
2.9 Designated Account.............................................47
2.10 Maintenance of Loan Account; Statements of Obligations.........47
2.11 Fees...........................................................48
2.12 Letters of Credit..............................................48
2.13 LIBOR Option...................................................52
2.14 Capital Requirements...........................................54
2.15 Joint and Several Liability of Borrowers.......................55
3. CONDITIONS; TERM OF AGREEMENT...........................................58
3.1 Conditions Precedent to the Initial Extension of Credit........58
3.2 Conditions Subsequent to the Initial Extension of Credit.......61
3.3 Conditions Precedent to all Extensions of Credit...............63
3.4 Term...........................................................63
3.5 Effect of Termination..........................................63
3.6 Early Termination by Borrowers.................................64
4. CREATION OF SECURITY INTEREST...........................................65
4.1 Grant of Security Interest.....................................65
4.2 Negotiable Collateral..........................................65
4.3 Collection of Accounts, General Intangibles,
and Negotiable Collateral......................................65
4.4 Filing of Financing Statements; Commercial Tort Claims;
Delivery of Additional Documentation Required..................65
4.5 Power of Attorney..............................................66
4.6 Right to Inspect...............................................67
4.7 Control Agreements.............................................67
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5. REPRESENTATIONS AND WARRANTIES..........................................67
5.1 No Encumbrances................................................68
5.2 Eligible Accounts..............................................68
5.3 Eligible Inventory.............................................68
5.4 Equipment......................................................68
5.5 Location of Inventory and Equipment............................68
5.6 Inventory Records..............................................68
5.7 State of Incorporation; Location of Chief Executive
Office; FEIN; Organizational ID Number; Commercial
Tort Claims....................................................68
5.8 Due Organization and Qualification; Subsidiaries...............69
5.9 Due Authorization; No Conflict.................................69
5.10 Litigation.....................................................71
5.11 No Material Adverse Change.....................................71
5.12 Fraudulent Transfer............................................71
5.13 Employee Benefits..............................................72
5.14 Environmental Condition........................................72
5.15 Brokerage Fees.................................................72
5.16 Intellectual Property..........................................72
5.17 Leases.........................................................73
5.18 DDAs...........................................................73
5.19 Complete Disclosure............................................73
5.20 Indebtedness...................................................73
6. AFFIRMATIVE COVENANTS...................................................74
6.1 Accounting System..............................................74
6.2 Collateral Reporting...........................................74
6.3 Financial Statements, Reports, Certificates....................75
6.4 [intentionally omitted]........................................78
6.5 Returns........................................................78
6.6 Maintenance of Properties......................................78
6.7 Taxes..........................................................78
6.8 Insurance......................................................78
6.9 Location of Inventory and Equipment............................79
6.10 Compliance with Laws...........................................79
6.11 Leases.........................................................79
6.12 Existence......................................................79
6.13 Environmental..................................................80
6.14 Disclosure Updates.............................................80
7. NEGATIVE COVENANTS......................................................81
7.1 Indebtedness...................................................81
7.2 Liens..........................................................82
7.3 Restrictions on Fundamental Changes............................82
7.4 Disposal of Assets.............................................83
7.5 Change Name....................................................83
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7.6 Nature of Business.............................................83
7.7 Prepayments and Amendments.....................................83
7.8 Change of Control..............................................83
7.9 Consignments...................................................83
7.10 Distributions..................................................84
7.11 Accounting Methods.............................................84
7.12 Investments....................................................84
7.13 Transactions with Affiliates...................................84
7.14 Suspension.....................................................84
7.15 Compensation...................................................84
7.16 Use of Proceeds................................................85
7.17 Inventory and Equipment with Bailees...........................85
7.18 Financial Covenants............................................85
8. EVENTS OF DEFAULT.......................................................87
9. THE LENDER GROUP'S RIGHTS AND REMEDIES..................................90
9.1 Rights and Remedies............................................90
9.2 Remedies Cumulative............................................92
10. TAXES AND EXPENSES......................................................92
11. WAIVERS; INDEMNIFICATION................................................93
11.1 Demand; Protest; etc...........................................93
11.2 The Lender Group's Liability for Borrower Collateral...........93
11.3 Indemnification................................................93
12. NOTICES.................................................................94
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................95
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..............................96
14.1 Assignments and Participations.................................96
14.2 Successors.....................................................98
15. AMENDMENTS; WAIVERS.....................................................99
15.1 Amendments and Waivers.........................................99
15.2 Replacement of Holdout Lender.................................100
15.3 No Waivers; Cumulative Remedies...............................100
16. AGENT; THE LENDER GROUP................................................100
16.1 Appointment and Authorization of Agent........................101
16.2 Delegation of Duties..........................................101
16.3 Liability of Agent............................................102
16.4 Reliance by Agent.............................................102
16.5 Notice of Default or Event of Default.........................102
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16.6 Credit Decision...............................................103
16.7 Costs and Expenses; Indemnification...........................103
16.8 Agent in Individual Capacity..................................104
16.9 Successor Agent...............................................104
16.10 Lender in Individual Capacity.................................105
16.11 Withholding Taxes.............................................105
16.12 Collateral Matters............................................107
16.13 Restrictions on Actions by Lenders; Sharing of Payments.......108
16.14 Agency for Perfection.........................................109
16.15 Payments by Agent to the Lenders..............................109
16.16 Concerning the Collateral and Related Loan Documents..........109
16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information.........109
16.18 Several Obligations; No Liability.............................110
16.19 Legal Representation of Agent.................................111
17. GENERAL PROVISIONS.....................................................111
17.1 Effectiveness.................................................111
17.2 Section Headings..............................................111
17.3 Interpretation................................................111
17.4 Severability of Provisions....................................111
17.5 Amendments in Writing.........................................111
17.6 Counterparts; Telefacsimile Execution.........................111
17.7 Revival and Reinstatement of Obligations......................111
17.8 Confidentiality...............................................112
17.9 Integration...................................................113
17.10 Parent as Agent for Borrowers.................................113
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) States of Organization
Schedule 5.7(b) Chief Executive Offices
Schedule 5.7(c) XXXXX
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Deposit Accounts and Securities Accounts
Schedule 5.20 Permitted Indebtedness
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into
as of October 21, 2003, by and among, on the one hand, the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and permitted assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), XXXXX FARGO FOOTHILL, INC., a
California corporation, as the arranger and administrative agent for the Lenders
("Agent"), and, on the other hand, PHIBRO ANIMAL HEALTH CORPORATION, a New York
corporation ("Parent"), and each of Parent's Subsidiaries identified on the
signature pages hereof (such Subsidiaries, together with Parent, are referred to
hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have
the following definitions:
"Account" means an account (as that term is defined in Article 9 of
the Code), and any and all supporting obligations in respect thereof.
"Account Debtor" means any Person who is obligated under, with
respect to, or on account of, an Account, chattel paper, or a General
Intangible.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by a Bank Product
Provider for the account of Administrative Borrower or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.4(c).
"Administrative Borrower" has the meaning set forth in Section
17.10.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of the definition of Eligible Accounts and
Section 7.13 hereof: (a) any Person which owns directly or indirectly 10% or
more of the Stock having ordinary voting power for the election of directors or
other members of the governing
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body of a Person or 10% or more of the partnership or other ownership interests
of a Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person
shall be deemed to be an Affiliate of such Person, and (c) each partnership or
joint venture in which a Person is a partner or joint venturer shall be deemed
an Affiliate of such Person.
"Agent" means WFF, in its capacity as arranger and administrative
agent hereunder, and any successor thereto.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent-Related Persons" means Agent, together with its Affiliates,
officers, directors, employees, attorneys, and agents.
"Agent's Account" means the Deposit Account of Agent identified on
Schedule A-1.
"Agent's Liens" means the Liens granted by Borrowers or their
Subsidiaries to Agent under this Agreement or the other Loan Documents.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period from and after the date
of the execution and delivery of this Agreement up to the date that is the
second anniversary of the Closing Date, 3% times the Maximum Revolver Amount,
(b) during the period from and including the date that is the second anniversary
of the Closing Date up to the date that is the third anniversary of the Closing
Date, 2% times the Maximum Revolver Amount, and (c) during the period from and
including the date that is the third anniversary of the Closing Date up to the
Maturity Date, 0%.
"Asset Sale" has the meaning ascribed thereto in the New Indenture
and the Existing Indenture, as applicable.
"Assignee" has the meaning set forth in Section 14.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
"Authorized Person" means any officer or employee of Administrative
Borrower.
"Availability" means, as of any date of determination, the amount
that Borrowers are entitled to borrow as Advances hereunder (after giving effect
to all then outstanding Obligations (other than Bank Product Obligations) and
all sublimits and reserves then applicable hereunder).
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"Bank Product" means any financial accommodation extended to
Administrative Borrower or its Subsidiaries by a Bank Product Provider (other
than pursuant to this Agreement) including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services, or
(g) transactions under Hedge Agreements.
"Bank Product Agreements" means those agreements entered into from
time to time by Administrative Borrower or its Subsidiaries with a Bank Product
Provider in connection with the obtaining of any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Administrative
Borrower or its Subsidiaries to any Bank Product Provider pursuant to or
evidenced by the Bank Product Agreements and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all such amounts
that Administrative Borrower or its Subsidiaries are obligated to reimburse to
Agent or any member of the Lender Group as a result of Agent or such member of
the Lender Group purchasing participations from, or executing indemnities or
reimbursement obligations to, a Bank Product Provider with respect to the Bank
Products provided by such Bank Product Provider to Administrative Borrower or
its Subsidiaries.
"Bank Product Provider" means Xxxxx Fargo or any of its Affiliates.
"Bank Product Reserve" means, as of any date of determination, the
lesser of (a) $4,000,000 and (b) the amount of reserves that Agent has
established (based upon the Bank Product Providers' reasonable determination of
the credit exposure in respect of then extant Bank Products) in respect of Bank
Products then provided or outstanding.
"Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%), to be the rate at which Dollar deposits (for delivery on the
first day of the requested Interest Period) are offered to major banks in the
London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of an extant LIBOR Rate Loan or as
a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Administrative
Borrower in accordance with this Agreement, which determination shall be
conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced, from time to
time, within Xxxxx Fargo at its principal office in San Francisco as its "prime
rate", with the understanding that the "prime rate" is one of Xxxxx Fargo's base
rates (not necessarily the
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lowest of such rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publications as Xxxxx Fargo may designate.
"Base Rate Loan" means the portion of the Advances that bears
interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 0.50 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of
any Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf of
the board of directors (or comparable managers).
"Books" means all of Administrative Borrower's and its Subsidiaries'
now owned or hereafter acquired books and records (including all of their
Records indicating, summarizing, or evidencing their assets (including the
Collateral) or liabilities, all of Administrative Borrower's and its
Subsidiaries' Records relating to their business operations or financial
condition, and all of their goods or General Intangibles related to such
information).
"Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.
"Borrower Collateral" means all of each Borrower's now owned or
hereafter acquired right, title, and interest in and to each of the following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its commercial tort claims,
(d) all of its Deposit Accounts,
(e) all of its Equipment,
(f) all of its General Intangibles,
(g) all of its Inventory,
(h) all of its Investment Property (including all of its
securities and Securities Accounts),
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(i) all of its Negotiable Collateral,
(j) money or other assets of such Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(k) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment,
General Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
Anything contained in this Agreement to the contrary
notwithstanding, the term "Borrower Collateral" shall not include Investment
Property constituting Stock of any of a Borrower's Subsidiaries that is a CFC,
solely to the extent that such Investment Property represents more than 65% of
the total combined voting power of all classes of Stock of such CFC entitled to
vote.
"Borrowing" means a borrowing hereunder consisting of Advances made
on the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender
in the case of a Swing Loan, or by Agent in the case of an Agent Advance, in
each case, to Administrative Borrower.
"Borrowing Base" means, as of any date of determination, the result
of:
(a) the lesser of
(i) 85% of the amount of Eligible Accounts, less
the amount, if any, of the Dilution Reserve, and
(ii) an amount equal to Borrowers' Collections
with respect to Accounts for the immediately preceding
75 day period, plus
(b) the lowest of
(i) 62.5% times the then extant Maximum Revolver
Amount,
(ii) 65% of the value of Eligible Inventory,
(iii) 85% times the then extant Net Liquidation
Percentage times the book value of Borrowers' Eligible
Inventory, and
(iv) 150% of the amount of credit availability
created by clause (a) above, minus
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(c) without double counting, the sum of (i) the Bank Product
Reserve, (ii) the Landlord Reserves, (iii) the Tolling Reserve, (iv) the
Indenture Reserve, and (v) aggregate amount of reserves, if any, established by
Agent under Section 2.1(b).
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks are authorized or required to close in the state of New
York, except that, if a determination of a Business Day shall relate to a LIBOR
Rate Loan, the term "Business Day" also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.
"Capital Expenditures" means, with respect to any Person for any
period, the sum of (a) the aggregate of all expenditures by such Person and its
Subsidiaries during such period that are capital expenditures as determined in
accordance with GAAP, whether such expenditures are paid in cash or financed,
and (b) to the extent not covered by clause (a), the aggregate of all
expenditures by such Person and its Subsidiaries during such period to acquire
by purchase or otherwise the business or capitalized assets of, or the Capital
Stock of, any other Person.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) demand Deposit Accounts maintained with any
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any individual bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.
"Cash Flow" has the meaning ascribed thereto in the New Indenture.
"Cash Management Account" has the meaning set forth in Section
2.7(a).
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"Cash Management Agreements" means those certain cash management
agreements, in form and substance satisfactory to Agent, each of which is among
Administrative Borrower or one of its Subsidiaries, Agent, and one of the Cash
Management Banks.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"CFC" means a controlled foreign corporation (as that term is
defined in the IRC).
"Change of Control" means that (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than
Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 10%, or more, of the Stock of
Parent having the general voting power under ordinary circumstances to vote for
the election of a majority of the members of the Board of Directors, or (b) a
majority of the members of the Board of Directors do not constitute Continuing
Directors, or (c) except for the consummation of the PMC Sale Transactions or
Permitted Reorganization Transactions, any Borrower or Guarantor ceases to own,
directly or indirectly, and control 100% of the outstanding Stock of each of its
Subsidiaries, or such lesser percentage ownership of each of the Foreign
Subsidiaries owned and extant as of the Closing Date, or (d) the occurrence of
an Indenture Change of Control.
"Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder or the date on which Agent sends
Administrative Borrower a written notice that each of the conditions precedent
set forth in Section 3.1 either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the 1 year period following the Closing Date, on a month by month
basis, in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"Closing Date Required Availability" means that the sum of (a)
Excess Availability, plus (b) Qualified Cash exceeds $3,500,000.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Collateral" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Administrative Borrower or its
Subsidiaries in or upon which a Lien is granted under any of the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Administrative Borrower's or its Subsidiaries' Books,
Equipment or, Inventory, in each case, in form and substance satisfactory to
Agent.
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"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Commercial Tort Claim Assignments" has the meaning set forth in
Section 4.4(b).
"Commitment" means, with respect to each Lender, its Revolver
Commitment and, with respect to all Lenders, their Revolver Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant
to which such Lender became a Lender hereunder in accordance with the provisions
of Section 14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, by the Noteholders
Representative, by Permitted Holders, or by Palladium, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent and whose initial assumption of office resulted from such contest or the
settlement thereof.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the Administrative Borrower or
one of its Subsidiaries, Agent, and the applicable securities intermediary (with
respect to a Securities Account) or a bank (with respect to a Deposit Account).
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses (whether or
not incorporated) under common control which, together with the Parent or any of
its Subsidiaries, are treated as a single employer under Section 414 of the IRC.
"Daily Balance" means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
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"Defaulting Lender Rate" means (a) for the first 3 days from and
after the date the relevant payment is due, the Base Rate, and (b) thereafter,
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Deposit Account" means any deposit account (as that term is defined
in the Code).
"Designated Account" means the Deposit Account of Administrative
Borrower identified on Schedule D-1.
"Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1.
"Dilution" means, as of any date of determination, the greater of
(a) the percentage based upon the experience of the immediately prior 90
consecutive days, or (b) the percentage based upon the experience of the
immediately prior 12 months, in each case that is the result of dividing the
Dollar amount of (a) bad debt write-downs, discounts, advertising allowances,
credits, or other dilutive items with respect to Borrowers' Accounts during such
period, by (b) Borrowers' xxxxxxxx with respect to Accounts during such period.
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by 1 percentage
point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which is satisfactory
to Agent.
"Dollars" or "$" means United States dollars.
"Domestic Subsidiary" means any Subsidiary of any Borrower that is
not a CFC.
"EBITDA" means, with respect to any fiscal period, consolidated net
earnings (or loss), minus extraordinary gains, interest income, and intercompany
allocations plus interest expense, income taxes, and depreciation and
amortization for such period, as determined in accordance with GAAP.
"Eligible Accounts" means those Accounts created by one of Borrowers
in the ordinary course of its business, that arise out of its sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made in the Loan Documents, and that are
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, however, that such criteria may be revised from time
to time by Agent in Agent's Permitted Discretion to address the results of any
audit performed by Agent from time to time after the Closing Date. In
determining the amount to
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be included, Eligible Accounts shall be calculated net of customer deposits and
unapplied cash. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within
90 days of original invoice date or Accounts with selling terms of more than 30
days,
(b) Accounts owed by an Account Debtor (or its Affiliates)
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
Affiliate of any Borrower or an employee or agent of any Borrower or any
Affiliate of any Borrower,
(d) Accounts arising in a transaction wherein goods are placed
on consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a xxxx and hold, or any other terms by reason of which the
payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either
(i) does not maintain its chief executive office in the United States, or (ii)
is not organized under the laws of the United States or any state thereof, or
(iii) is the government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit satisfactory to
Agent (as to form, substance, and issuer or domestic confirming bank) that has
been delivered to Agent and is directly drawable by Agent, or (z) the Account is
covered by credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is
either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC ss. 3727), or (ii) any state of the United
States,
(h) Accounts with respect to which the Account Debtor is a
creditor of any Borrower, has or has asserted a right of setoff, or has disputed
its obligation to pay all or any portion of the Account, to the extent of such
claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 10% (such percentage, as applied to a
particular Account Debtor, being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates) of all
Eligible Accounts, to the extent of the obligations owing by such Account Debtor
in excess of such percentage; provided,
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however, that, in each case, the amount of Eligible Accounts that are excluded
because they exceed the foregoing percentage shall be determined by Agent based
on all of the otherwise Eligible Accounts prior to giving effect to any
eliminations based upon the foregoing concentration limit,
(j) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, has gone out of business, or as to which a
Borrower has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is
located in a state or jurisdiction (e.g., New Jersey, Minnesota, and West
Virginia) that requires, as a condition to access to the courts of such
jurisdiction, that a creditor qualify to transact business, file a business
activities report or other report or form, or take one or more other actions,
unless the applicable Borrower has so qualified, filed such reports or forms, or
taken such actions (and, in each case, paid any required fees or other charges),
except to the extent that the applicable Borrower may qualify subsequently as a
foreign entity authorized to transact business in such state or jurisdiction and
gain access to such courts, without incurring any cost or penalty viewed by
Agent to be significant in amount, and such later qualification cures any access
to such courts to enforce payment of such Account,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected
first priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise
to such Account have not been shipped and billed to the Account Debtor, or (ii)
the services giving rise to such Account have not been performed and billed to
the Account Debtor, or
(o) Accounts that represent the right to receive progress
payments or other advance xxxxxxxx that are due prior to the completion of
performance by the applicable Borrower of the subject contract for goods or
services.
"Eligible Inventory" means Inventory of Borrowers consisting of
first quality raw materials or finished goods held for sale in the ordinary
course of Borrowers' business, that complies with each of the representations
and warranties respecting Eligible Inventory made in the Loan Documents, and
that is not excluded as ineligible by virtue of the one or more of the excluding
criteria set forth below; provided, however, that such criteria may be revised
from time to time by Agent in Agent's Permitted Discretion to address the
results of any audit or appraisal performed by Agent from time to time after the
Closing Date. In determining the amount to be so included, Inventory shall be
valued at the lower of cost or market on a basis consistent with Borrowers'
historical accounting practices. An item of Inventory shall not be included in
Eligible Inventory if:
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(a) a Borrower does not have good, valid, and marketable title
thereto,
(b) it is not located at one of the locations in the
continental United States set forth on Schedule E-1 unless in-transit from one
such location to another such location,
(c) it is located on real property leased by a Borrower or in
a contract warehouse, in each case, unless (i) in the case of the Love Box
Locations, from and after the date that is 10 days after the Closing Date, it is
the subject of a Collateral Access Agreement, (ii) in the case of all other
locations, it is either the subject of a Collateral Access Agreement or a
Landlord Reserve, (iii) the value of the Inventory at such location is at least
$100,000, and (iv) in the case of all such locations, it is it is segregated or
otherwise separately identifiable from goods of others, if any, stored on the
premises,
(d) it is located at a location of a manufacturer or
processor, unless (i) in the case of raw materials, it is either the subject of
a Tolling Agreement and a Collateral Access Agreement or is the subject of a
Landlord Reserve and a Tolling Reserve, (ii) in the case of all other Inventory,
it is either the subject of a Collateral Access Agreement or a Landlord Reserve,
(iii) the value of the Inventory at such location is at least $100,000, and (iv)
in the case of all such locations, it is it is segregated or otherwise
separately identifiable from goods of others, if any, stored on the premises,
(e) it is not subject to a valid and perfected first priority
security Agent's Lien,
(f) it consists of goods returned or rejected by a Borrower's
customers, or
(g) it consists of goods that are obsolete or slow moving,
restrictive or custom items, work-in-process, or goods that constitute spare
parts, packaging and shipping materials, supplies used or consumed in a
Borrower's business, xxxx and hold goods, defective goods, "seconds," or
Inventory acquired on consignment.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so
long as no Event of Default has occurred and is continuing, any other Person
approved by Agent and Administrative Borrower (which approval of Administrative
Borrower shall not be unreasonably, withheld,
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delayed, or conditioned), and (f) during the continuation of an Event of
Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower, any Subsidiary of a Borrower, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or (c)
from or onto any facilities which received Hazardous Materials generated by any
Borrower, any Subsidiary of a Borrower, or any of their predecessors in
interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on any Borrower or any
Subsidiary of a Borrower, relating to the environment, employee health and
safety, or Hazardous Materials, including CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 USC ss. 1251 et seq; the Toxic Substances Control Act,
15 USC ss. 2601 et seq; the Clean Air Act, 42 USC ss. 7401 et seq.; the Safe
Drinking Water Act, 42 USC ss. 3803 et seq.; the Oil Pollution Act of 1990, 33
USC ss. 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 USC ss. 11001 et seq.; the Hazardous Material Transportation Act, 49
USC ss. 1801 et seq.; and the Occupational Safety and Health Act, 29 USC ss.651
et seq. (to the extent it regulates occupational exposure to Hazardous
Materials); any state and local or foreign counterparts or equivalents, in each
case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means equipment (as that term is defined in the Code),
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), computer hardware, tools, parts, and goods
(other than consumer goods, farm products, or Inventory), wherever located,
including all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
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"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower or a Subsidiary of a Borrower under IRC Section 414(b), (b) any trade
or business subject to ERISA whose employees are treated as employed by the same
employer as the employees of a Borrower or a Subsidiary of a Borrower under IRC
Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which a Borrower or a Subsidiary of a Borrower is a member
under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Borrower or a Subsidiary of a Borrower and whose employees
are aggregated with the employees of a Borrower or a Subsidiary of a Borrower
under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means, as of any date of determination, the
amount equal to Availability minus the aggregate amount, if any, of all trade
payables of Borrowers and their Domestic Subsidiaries aged in excess of their
historical levels with respect thereto and all book overdrafts of Borrowers and
their Domestic Subsidiaries in excess of their historical practices with respect
thereto, in each case as determined by Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect from time
to time.
"Excess Cash Flow" has the meaning ascribed thereto in the New
Indenture.
"Existing Indenture" means the Indenture dated as of June 11, 1998,
as amended, among Parent, Parent's Subsidiaries that are signatories thereto and
the Existing Indenture Trustee.
"Existing Indenture Change of Control" means a "Change of Control"
as that term is defined in the Existing Indenture.
"Existing Indenture Trustee" means The Chase Manhattan Bank.
"Existing Notes" means Parent's Senior Subordinated Notes issued
pursuant to the Existing Indenture.
"Existing Lender" means PNC Business Credit.
"Family Member" means, with respect to any individual, any other
individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
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"Family Trusts" means, with respect to any individual, trusts or
other estate planning vehicles established for the benefit of such individual or
Family Members of such individual and in respect of which such individual serves
as trustee or in a similar capacity.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrowers and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"Foreign Issuer" means Xxxxxxx Xxxxxxxx Netherlands III BV.
"Foreign Subsidiary" means any subsidiary of any Borrower that is
not a Domestic Subsidiary.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means general intangibles (as that term is
defined in the Code), including payment intangibles, contract rights, rights to
payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trade secrets, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any and all supporting obligations in respect thereof, and
any other personal property other than Accounts, Deposit Accounts, goods,
Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantor" means each Domestic Subsidiary of Parent that is not a
Borrower other than Prince Mfg and PMC; provided, however, that if the PMC Sale
Transactions have not closed on or before December 31, 2003, then each of Prince
Mfg and PMC shall become Guarantors under this Agreement.
-15-
"Guarantor Security Agreement" means one or more security agreements
executed and delivered by each Guarantor in favor of Agent, in each case, in
form and substance satisfactory to Agent.
"Guaranty" means that certain general continuing guaranty executed
and delivered by each Guarantor in favor of Agent, for the benefit of the Lender
Group and the Bank Product Providers, in form and substance satisfactory to
Agent.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all agreements, or documents now
existing or hereafter entered into by Administrative Borrower or its
Subsidiaries that provide for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging
Administrative Borrower's or its Subsidiaries' exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"Holdout Lender" has the meaning set forth in Section 15.2(a).
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products, (c) all
obligations as a lessee under Capital Leases, (d) all obligations or liabilities
of others secured by a Lien on any asset of a Person or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations to pay the deferred purchase price of assets (other than trade
payables incurred in the ordinary course of business and repayable in accordance
with customary trade practices), (f) all obligations owing under Hedge
Agreements, and (g) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
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"Indenture Change of Control" has the meaning ascribed to a Change
of Control in the New Indenture or the Existing Indenture, as applicable.
"Indenture Collateral Agent" means HSBC Bank USA, a New York banking
corporation.
"Indenture Purposes" means letters of credit issued in the ordinary
course of business (A) in respect of (1) workers' compensations claims or
self-insurance or (2) other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims or self-insurance or (B) for
regulatory, environmental or insurance purposes.
"Indenture Reserve" means a reserve established and maintained by
Agent in an amount or amounts equal to (a) during the 30 day period preceding
the date on which a scheduled payment of interest is due on the Indenture
Securities, the aggregate amount of such interest and (b) during the 30 day
period preceding the date on which a scheduled payment of interest is due on the
Existing Notes, the aggregate amount of such interest; provided, however, that
from the Closing Date until November 15, 2003, the Indenture Reserve shall be
$2,500,000, from November 16, 2003 until November 30, 2003, the Indenture
Reserve shall be $3,250,000, and after November 30, 2003, the Indenture Reserve
shall be $4,000,000 until the payment of interest due on December 1, 2003 with
respect to the Indenture Securities and the Existing Notes.
"Indenture Securities" means (a) the 105,000 Units (the "Units")
issued by the Parent and the Foreign Issuer pursuant to the Indenture,
consisting of $85,000,000 aggregate principal amount of 13.0% Senior Secured
Notes due 2007 issued by the Parent (the "New Domestic Notes") and $20,000,000
aggregate principal amount of 13.0% Senior Secured Notes due 2007 issued by the
Foreign Issuer (the "New Foreign Notes" and, together with the Domestic Notes,
the "Notes") and (b) any units or notes, as the case may be, that may be issued
by the Parent or the Foreign Issuer pursuant to the Indenture in exchange
therefor.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intercompany Advances" means loans or advances or the repayment of
loans or advances from Parent or one of its Subsidiaries to Parent or one of its
Subsidiaries.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrowers and each of the Guarantors and
Agent, the form and substance of which is satisfactory to Agent.
"Intercreditor Agreement" means an intercreditor agreement, in form
and substance satisfactory to Agent, between Agent and the Indenture Collateral
Agent, dated as
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of the Closing Date, as the same may be amended, supplemented or modified from
time to time.
"Interest Expense" means, for any period, the aggregate of the
interest expense of Parent and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrowers (or Administrative Borrower on behalf
thereof) may not elect an Interest Period which will end after the Maturity
Date.
"Inventory" means inventory (as that term is defined in the Code).
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any division or business line of such other Person),
and any other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.
"Investment Property" means investment property (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"Issuing Lender" means WFF or any other Lender that, at the request
of Administrative Borrower and with the consent of Agent, agrees, in such
Lender's sole
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discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C
Undertakings pursuant to Section 2.12.
"Landlord Reserve" means, with respect to Inventory included within
Eligible Inventory, a reserve in an amount equal to the greater of (a) the
number of months rent for which a landlord will have, under the applicable
statutory lien, a Lien in the assets of Borrowers to secure the payment of rent
or other amounts under a lease, or (b) 3 months rent under the lease, for each
leased location at which Borrowers store Inventory, in each case as to which a
Collateral Access Agreement has not been received by Agent.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Borrower or its
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in
connection with the Lender Group's transactions with Borrowers or their
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Agent in the
disbursement of funds to or for the account of Borrowers or other members of the
Lender Group (by wire transfer or otherwise), (d) charges paid or incurred by
Agent resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by the Lender Group to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) audit fees and expenses of Agent related to
audit examinations of the Books to the extent of the fees and charges (and up to
the amount of any limitation) contained in this Agreement, (g) reasonable costs
and expenses of third party claims or any other suit paid or incurred by the
Lender Group in enforcing or defending the Loan Documents or in connection with
the transactions
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contemplated by the Loan Documents or the Lender Group's relationship with any
Borrower or any Subsidiary of a Borrower, (h) Agent's and each Lender's
reasonable costs and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, syndicating, or amending the
Loan Documents, and (i) Agent's and each Lender's reasonable costs and expenses
(including attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning any
Borrower or any Subsidiary of a Borrower or in exercising rights or remedies
under the Loan Documents), or defending the Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the
Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, officers, directors, employees,
attorneys, and agents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period,
by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on
and as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 2.75 percentage points.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract, (b)
such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term "Lien" includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions,
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encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product Agreements,
the Cash Management Agreements, the Control Agreements, the Disbursement Letter,
the Fee Letter, the Guarantor Security Agreement, the Guaranty, the Intercompany
Subordination Agreement, the Letters of Credit, the Mortgages, the Officers'
Certificate, the Patent Security Agreement, the Stock Pledge Agreement, the
Trademark Security Agreement, any note or notes executed by a Borrower in
connection with this Agreement and payable to a member of the Lender Group, and
any other agreement entered into, now or in the future, by a Borrower and the
Lender Group in connection with this Agreement.
"Love Box Locations" means the contract warehouse locations at which
Borrowers store Inventory that are owned or managed by Love Box Company.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers and their Subsidiaries, taken as
a whole, (b) a material impairment of a Borrower's or a Subsidiary of a
Borrower's ability to perform its obligations under the Loan Documents to which
it is a party or of the Lender Group's ability to enforce the Obligations or
realize upon the Collateral, or (c) a material impairment of the enforceability
or priority of the Agent's Liens with respect to the Collateral as a result of
an action or failure to act on the part of a Borrower or a Subsidiary of a
Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $15,000,000, as such amount may be
increased up to a maximum amount of $40,000,000, upon and subject to the
satisfaction of the conditions set forth in Section 2.2 hereof.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Borrower or a Subsidiary of Borrower in favor of Agent, in form and substance
satisfactory to Agent, that encumber the Real Property Collateral and the
related improvements thereto.
"MRT" means Mineral Resource Technologies, Inc., a Delaware
corporation.
"MRT Holdings" means MRT Holdings, LLC, a Delaware limited liability
company.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, which is covered by Title IV of ERISA and to which
the Parent or any member of the Controlled Group is or was obligated to make
contributions.
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"NADAs" means "new animal drug applications" as that term is used by
the U.S. Food and Drug Administration.
"Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.
"Net Liquidation Percentage" means the percentage of the book value
of Borrowers' Inventory that is estimated to be recoverable, net of expenses of
liquidation, in an orderly liquidation of such Inventory, such percentage to be
as determined from time to time by a qualified appraisal company selected by
Agent.
"New Domestic Notes" has the meaning set forth in the definition of
Indenture Securities.
"New Foreign Notes" has the meaning set forth in the definition of
Indenture Securities.
"New Indenture" means the Indenture dated as of October 21, 2003
among Parent, Foreign Issuer, Parent's Subsidiaries that are signatories thereto
and the Indenture Collateral Agent.
"New Indenture Change of Control" means a "Change of Control" as
that term is defined in the New Indenture.
"Non-Obligor" means any Subsidiary of Parent's that is not a
Borrower or a Guarantor.
"Norwegian Subsidiaries" means Odda Holdings A.S. and Odda
Smelteverk A.S.
"Obligations" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the commencement of an Insolvency
Proceeding, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Borrowers' Loan Account pursuant hereto), obligations
(including indemnification obligations), fees (including the fees provided for
in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or
expenses that, but for the commencement of an Insolvency Proceeding, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and
description owing by Borrowers to the Lender Group pursuant to or evidenced by
the Loan Documents and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all interest not paid when due and all
Lender Group Expenses that Borrowers are required to pay or reimburse by the
Loan Documents, by law, or otherwise, and (b) all Bank Product Obligations. Any
reference in this Agreement or in the Loan Documents to the Obligations
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shall include all extensions, modifications, renewals, or alterations thereof,
both prior and subsequent to any Insolvency Proceeding.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Palladium" means Palladium Equity Partners II, L.P., a Delaware
limited partnership, Palladium Equity Partners II-A, L.P., a Delaware limited
partnership, and Palladium Equity Investors II, L.P., a Delaware limited
partnership or their respective Affiliates.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Patent Security Agreement" means a patent security agreement
executed and delivered by Borrowers and Agent, the form and substance of which
is satisfactory to Agent.
"Pay-Off Letter" means a letter, in form and substance satisfactory
to Agent, from Existing Lender respecting the amount necessary to repay in full
all of the obligations of Borrowers and their Subsidiaries owing to Existing
Lender and obtain a release of all of the Liens existing in favor of Existing
Lender in and to the assets of Borrowers and their Subsidiaries.
"Permitted Discretion" means a determination made in good faith and
in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions of
Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
(d) the licensing of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business, provided that such license
permits the Borrower or any Subsidiary of the Borrower to use the intellectual
property so licensed without any payment therefor, (e) so long as no Default or
Event of Default has occurred and is continuing, dispositions of assets (other
than current Accounts, intellectual property, or Inventory) so long as made at
fair market value and the aggregate amount of all such dispositions in any
fiscal year does not exceed $250,000, (f) the consummation of the PMC Sale
Transactions on or before December 31, 2003, (g) so long as no Default or Event
of Default has occurred and is continuing, any sale or other disposition of any
assets of a Non-Obligor to a Person that is not an Affiliate of Parent or any of
its Subsidiaries for fair market value and on an arm's length basis, (h) so long
as no Default or Event of Default has occurred and is continuing, transfers of
property from a Borrower to another Borrower or Guarantor, (i) so long as no
Default or Event of Default has occurred and is continuing,
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transfers of property from a Guarantor to a Borrower or another Guarantor, and
(j) transfers of assets from any Non-Obligor to any Borrower or Guarantor.
"Permitted Distributions" means the payment, in cash, of dividends
or distributions of capital stock (a) made by any Borrower to any other
Borrower, (b) made by any Guarantor to a Borrower, (c) made by any Borrower to a
Guarantor, (d) made to a Borrower or a Guarantor by a Non-Obligor, (e) made by
Non-Obligor to any other Non-Obligor, (f) made to Palladium as set forth in the
PMC Sale Transactions; provided that such PMC Sale Transactions occur on or
before December 31, 2003, (f) the redemption, repurchase, retirement or other
acquisition of the Series B or Series C Preferred Stock of the Parent
outstanding as of the Closing Date in exchange for, or out of the proceeds of,
the substantially concurrent sale of, or equity contribution with respect to,
capital stock of the Parent, and (g) the repurchase of capital stock of the
Parent (including options, warrants or other rights to acquire such capital
stock) from departing or deceased directors, officers and employees of the
Parent and its Subsidiaries pursuant to the terms of an employee benefit plan,
employee agreement or shareholders agreement by utilizing the cash proceeds of
those insurance policies listed on Exhibit P-1 plus an amount not to exceed
$500,000 in the aggregate for all such repurchases.
"Permitted Holder" means Xxxx X. Xxxxxxxx, his Family Members, and
his Family Trusts.
"Permitted Intercompany Advance" means Intercompany Advances (a)
made by any Borrower to any other Borrower, (b) made by any Guarantor to a
Borrower or a Guarantor, (c) made by any Borrower to a Guarantor, (d) made by a
Non-Obligor to any other Non-Obligor or to any Borrower or Guarantor, (e) so
long as no Default or Event of Default has occurred and is continuing or would
result therefrom and so long as Excess Availability is at least $1 million both
before and after giving effect to any such Intercompany Advance, made by any
Borrower or Guarantor to any Non-Obligor up to the aggregate principal amount of
all such Intercompany Advances from all Borrowers and all Guarantors,
collectively, to all Non-Obligors, collectively, of (i) $2,000,000 at any time
outstanding from the Closing Date through and including December 31, 2003; and
(ii) $3,000,000 at any time outstanding after December 31, 2003.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments received in settlement of amounts due to a
Borrower or any Subsidiary of a Borrower effected in the ordinary course of
business or owing to a Borrower or any Subsidiary of a Borrower as a result of
Insolvency Proceedings involving an Account Debtor or upon the foreclosure or
enforcement of any Lien in favor of a Borrower or any Subsidiary of a Borrower,
(e) loans or advances to employees in the ordinary course of business in an
amount not to exceed $200,000 per individual and $500,000 in the aggregate, (f)
an Investment the sole consideration for which consists of, or is made with the
proceeds of, the substantially concurrent sale of, or equity contribution with
respect to, capital stock of the
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Parent, (g) Hedge Agreements entered into in the ordinary course of the business
of the Borrowers and their Subsidiaries, (h) notes, obligations, and other
securities received in connection with Permitted Dispositions, (i) Investments
by any Non-Obligor; and (j) Investments comprising the PMC Sale Transactions.
"Permitted Liens" means (a) Liens held by Agent, (b) Liens for
unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute
an Event of Default hereunder and are the subject of Permitted Protests, (c)
Liens set forth on Schedule P-1, (d) the interests of lessors under operating
leases, (e) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of Borrowers' business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits made in connection with obtaining worker's compensation or
other unemployment insurance, (h) Liens or deposits to secure performance of
bids, tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder, (k) with respect to any Real Property, easements, rights
of way, zoning restrictions, title irregularities and other similar charges or
encumbrances that do not materially interfere with or impair the use or
operation thereof, (l) Liens in and to the assets and properties of the
Borrowers and Guarantors in favor of the Indenture Collateral Agent, (m) Liens
in and to the assets and properties of the Foreign Issuer and its Subsidiaries
in favor of the Indenture Collateral Agent (or any sub-collateral agent thereof)
to secure the New Foreign Notes, (n) Liens in favor of customs and revenue
authorities arising as a matter of the law to secure the payment of customs and
duties in connection with the importation of goods, (o) Liens securing
obligations arising from statutory, regulatory, or warranty requirements,
including the performance of statutory obligations, surety or appeal bonds or
performance bonds or landlords', carriers', warehousemen's, mechanics',
suppliers', materialmen's or any other like Liens, in any case incurred in the
ordinary course of business provided that the foregoing does not secure
Indebtedness and the Liens do not attach to Accounts or Inventory, (p) Liens
securing Indebtedness of a Person existing at the time that such Person is
merged into or consolidated with a Borrower or a Guarantor; provided, however,
that such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
that is merged or consolidated with a Borrower or a Guarantor, (q) Liens on
property acquired by a Borrower or a Guarantor; provided, however, that such
Liens were in existence prior to the contemplation of such acquisition and do
not extend to any other property other than the acquired property, (r) Liens in
respect of Hedge Agreements entered into the ordinary course of business, (s)
leases or subleases granted to others that do not materially interfere with the
ordinary course of business of a Borrower or its Subsidiaries, (t) Liens arising
from filing precautionary Uniform Commercial Code financing statements regarding
operating leases, (u) Liens securing Indebtedness incurred to
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amend, modify, renew, refund, replace or refinance Indebtedness that has been
secured by a Lien permitted under this Agreement, provided that (1) and such
Lien does not extend to or cover any assets or property not securing the
Indebtedness so amended, modified, renewed, refunded, replaced, or refinanced
and (2) the subject Indebtedness is permitted under this Agreement, (v) Liens on
amounts deposited with a trustee under an indenture solely to secure the
administrative fees due to such trustee, (w) Liens solely upon assets of Foreign
Subsidiaries securing Indebtedness or obligations of Foreign Subsidiaries,
provided that no asset of Parent or any Domestic Subsidiary is subject to any
such Lien, (x) bankers' acceptances issued or created for the account of any
Person to the extent that the Indebtedness evidenced thereby was permitted to be
incurred under the terms of this Agreement, and (y) Liens arising in connection
with the placement by any Borrower or any Subsidiary, as the case may be, of a
reasonable amount of cash (as determined in good faith by such Person's board of
directors) not to exceed $1 million in escrow against any obligations to
Palladium under the PMC Sale Transactions as permitted pursuant to Section
7.1(l).
"Permitted Protest" means the right of Administrative Borrower
or any of its Subsidiaries to protest any Lien (other than any Lien that secures
the Obligations), taxes (other than payroll taxes or taxes that are the subject
of a United States federal tax lien), or rental payment, provided that (a) a
reserve with respect to such obligation is established on the Books in such
amount as is required under GAAP, (b) any such protest is instituted promptly
and prosecuted diligently by Administrative Borrower or any of its Subsidiaries,
as applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no material impairment of the enforceability,
validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $5,000,000.
"Permitted Reorganization Transactions" means (a) the merger of one
Borrower (other than Parent) with and into another Borrower, (b) the dissolution
and transfer of assets or properties by a Borrower (other than Parent) to
another Borrower, (c) the merger of one Guarantor with and into another
Guarantor or into a Borrower, (d) the dissolution and transfer of assets or
properties by a Guarantor to another Guarantor or a Borrower, (e) the merger of
a Non-Obligor with and into another Non-Obligor, or (f) the dissolution and
transfer of the assets or properties of a Non-Obligor to another Non-Obligor, a
Guarantor, or to a Borrower (so long as, in the case of a Guarantor or a
Borrower they do not become liable, directly or indirectly, for any liabilities
of such Non-Obligor).
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
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"Pfizer" means Pfizer Inc., a Delaware corporation.
"Pfizer Pay-Off Letter" means a letter, in form and substance
satisfactory to Agent, from Pfizer respecting the amount necessary to repay in
full all of the Indebtedness of Borrowers and their Subsidiaries owing to
Pfizer.
"Plan" means an employee pension benefit plan, excluding any
Multiemployer Plan, which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the IRC as to which the Parent or
any ERISA Affiliate, may have any liability.
"PMC" means The Prince Manufacturing Company, an Illinois
corporation.
"PMC Sale Transactions" means the following transactions and
payments, including payments required pursuant to the documents evidencing such
transactions: (a) the transfer of ownership to Palladium of PMC, which would be
valued at approximately $21 million, (b) the reduction of the preferred stock in
Parent held by Palladium to $15.2 million (as of September 30, 2003), (c) the
termination of any obligation of Parent or its Subsidiaries in respect of the
$2,250,000 annual management advisory fee, subject to reinstatement if these
transactions are not consummated on or before December 31,2003, (d) a cash
payment to Palladium of $10,000,000 from the recent sale of MRT, (e) payments by
PMC to Borrowers for central support services for the three years ending June
30, 2006 of $1,000,000, $500,000, and $200,000, respectively, (f) supply
arrangements between Borrowers and PMC with respect to manganous oxide and red
iron oxide, (g) customary representations, warranties and indemnities by Parent
and provisions for closing working capital balance adjustments, settlement of
intercompany accounts owed to PMC, a closing fee of $500,000 payable to
Palladium and the agreement of Parent to pay or reimburse Palladium for its
reasonable out-of-pocket expenses, (h) on or before the date of the consummation
of the other transactions, the transfer by PMC to Prince Agriproducts of (i)
that portion of the Real Property owned by PMC located in Quincy, Illinois that
includes the office building, the parking lot, and the laboratory, and (ii) the
information technology and other systems related to the operation of the
business of PMC and Prince Agriproducts, and (h) the establishment by Parent of
a $1,000,000 escrow or other credit support for two years to secure its net
working capital and indemnification obligations and the indemnification of
Palladium, payable after the maturity of the Domestic Notes, for a portion, at
the rate of $0.65 for every dollar, of the amount they receive in respect of the
disposition of PMC less than $21 million, up to a maximum payment by Parent of
$4,000,000.
"Prince Agriproducts" means Prince Agriproducts, Inc., a Delaware
corporation.
"Prince Mfg" means Prince Mfg, LLC, a Delaware limited liability
company.
"Prince Real Property" means the Real Property owned by PMC located
in Quincy, Illinois, Bowmanstown, Pennsylvania and Phoenix City, Alabama.
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"Projections" means Parent's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Revolver Commitments being terminated or reduced to
zero, the percentage obtained by dividing (y) such Lender's Revolver Commitment,
by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from and
after the time that the Revolver Commitments have been terminated or reduced to
zero, the percentage obtained by dividing (y) the aggregate outstanding
principal amount of such Lender's Advances by (z) the aggregate outstanding
principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in Letters
of Credit, to reimburse the Issuing Lender, and to receive payments of fees with
respect thereto, (i) prior to the Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender's Revolver
Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii)
from and after the time that the Revolver Commitments have been terminated or
reduced to zero, the percentage obtained by dividing (y) the aggregate
outstanding principal amount of such Lender's Advances by (z) the aggregate
outstanding principal amount of all Advances,
(c) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) such Lender's Revolver Commitment, by (ii)
the aggregate amount of Revolver Commitments of all Lenders; provided, however,
that in the event the Revolver Commitments have been terminated or reduced to
zero, Pro Rata Share under this clause shall be the percentage obtained by
dividing (A) the outstanding principal amount of such Lender's Advances plus
such Lender's ratable portion of the Risk Participation Liability with respect
to outstanding Letters of Credit, by (B) the outstanding principal amount of all
Advances plus the aggregate amount of the Risk Participation Liability with
respect to outstanding Letters of Credit.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Qualified Cash" means, as of any date of determination, the amount
of unrestricted cash and Cash Equivalents of Borrowers and their Subsidiaries
that is in Deposit Accounts or in Securities Accounts, or any combination
thereof, and which such Deposit Account or Securities Account is the subject of
a Control Agreement and is maintained by a branch office of the bank or
securities intermediary located within the United States.
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"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower or a Subsidiary of any Borrower and
the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1 and any Real Property hereafter acquired by
a Borrower or any Subsidiary of a Borrower.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Replacement Lender" has the meaning set forth in Section 15.2(a).
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means that Excess Availability exceeds
$15,000,000.
"Required Lenders" means, at any time, Lenders whose aggregate Pro
Rata Shares (calculated under clause (c) of the definition of Pro Rata Shares)
equal or exceed 50.1%.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
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"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrowers to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Single Employer Plan" means a Plan maintained by Parent or any
ERISA Affiliate for employees of the Parent or any member of the Controlled
Group.
"Solvent" means, with respect to any Person on a particular date,
that, at fair valuations, the sum of such Person's assets is greater than all of
such Person's debts.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in form and
substance satisfactory to Agent, executed and delivered by each Borrower and
each Guarantor that owns Stock of a Subsidiary of Parent.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Supplemental Indenture" means a supplement to the Existing
Indenture, in form and substance reasonably satisfactory to Agent, which defines
this Agreement as a Credit Facility thereunder.
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"Swing Lender" means WFF or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become the Swing Lender under Section 2.3(d).
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Tolling Agreement" means a tolling agreement executed and delivered
by each processor of raw materials constituting Inventory of a Borrower and
Agent, the form and substance of which is satisfactory to Agent.
"Tolling Reserve" means, with respect to Inventory included within
Eligible Inventory, a reserve established and maintained by Agent, in its
Permitted Discretion, in an amount equal to Agent's estimate of the costs of
completing the processing of raw materials by a manufacturer or processor other
than Parent or any of its Subsidiaries (and any work in process with the same
manufacturer or processor) into finished goods and obtaining the release thereof
from the manufacturer or processor (including the discharge of any Lien that
such Person has as to the subject Inventory).
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by each Borrower and Agent, the form and substance of
which is satisfactory to Agent.
"UCC Filing Authorization Letter" means a letter duly executed by
each Borrower and each Guarantor authorizing Agent to file appropriate financing
statements on Form UCC-1 without the signature of such Borrower or Guarantor, as
applicable, in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect the security interests purported to be created by
the Loan Documents.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"Unfunded Liabilities" means the amount, if any, by which the
current liability as shown on line 1d(2)(a) of the most recently filed Schedule
B of Form 5500 under each Single Employer Plan subject to Title IV of ERISA
exceeds the fair market value of all such Plan's assets allocable to such
benefits, all determined as of the then most recent valuation date for such Plan
for which a Schedule B is available.
"United States" means the United States of America.
"Voidable Transfer" has the meaning set forth in Section 17.7.
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"Xxxxxx Industries Location" means the contract warehouse locations
at which Borrowers store Inventory that are owned or managed by Xxxxxx
Industries.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
"WFF" means Xxxxx Fargo Foothill, Inc., a California corporation.
1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to the repayment in full of the
Obligations shall mean the repayment in full in cash of all Obligations other
than contingent indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and are not required to be repaid or cash
collateralized pursuant to the provisions of this Agreement. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
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2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the sum of (A) the Letter of Credit Usage, and (B) the
Indenture Reserve, (ii) the Borrowing Base less the Letter of Credit Usage, or
(iii) $15,000,000.
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right (without double counting) to
establish reserves in such amounts, and with respect to such matters, as Agent
in its Permitted Discretion shall deem necessary or appropriate, against the
Borrowing Base, including reserves with respect to (i) sums that Borrowers are
required to pay (such as taxes, assessments, insurance premiums, or, in the case
of leased assets, rents or other amounts payable under such leases) and has
failed to pay under any Section of this Agreement or any other Loan Document,
and (ii) amounts owing by Borrowers or their Subsidiaries to any Person to the
extent secured by a Lien on, or trust over, any of the Collateral (other than
any Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral. In addition to the foregoing, Agent shall have the right to have
the Borrowers' Inventory reappraised by a qualified appraisal company selected
by Agent from time to time after the Closing Date for the purpose of
re-determining the Net Liquidation Percentage of the Eligible Inventory and, as
a result, re-determining the Borrowing Base.
(c) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section 2.1 may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement.
2.2 Increase in the Maximum Revolver Amount At any time within 90 days
after the Closing Date, upon 5 Business Days prior written notice by
Administrative Borrower to Agent, Borrowers may request an increase in the
Maximum Revolver Amount from $15,000,000 up to $40,000,000. Subject to the
foregoing, and so long as no Default or Event of Default has occurred and is
continuing as of the proposed date of such increase, so long as Agent has
completed all of its legal, business, and collateral due diligence with respect
to Borrowers and Guarantors, and so long as WFF has obtained credit committee
approval for the increase in the Maximum Revolver Amount for amounts in excess
of
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$15,000,000 (it being expressly understood and agreed that, as of the Closing
Date, WFF does not have such credit approval and has made no commitments or
assurances that such credit approval will be forthcoming), the Maximum Revolver
Amount shall automatically increase by the amount requested by Administrative
Borrower on the date of the proposed increase. Borrowers acknowledge and agree
that the Applicable Prepayment Premium and the unused line fee set forth in the
Fee Letter are each calculated by reference to the Maximum Revolver Amount and
an increase in the amount thereof pursuant hereto will have the effect of
increasing such fee. The increase in the Maximum Revolver Amount pursuant to
this Section 2.2 shall increase the Revolving Commitment of each Lender
proportionately in accordance with its Pro Rata Share thereof.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 1:00 p.m. (New York time) on the
Business Day prior to the date that is the requested Funding Date specifying (i)
the amount of such Borrowing, and (ii) the requested Funding Date, which shall
be a Business Day; provided, however, that in the case of a request for Swing
Loan in an amount of $3,000,000, or less, such notice will be timely received if
it is received by Agent no later than 1:00 p.m. (New York time) on the Business
Day that is the requested Funding Date). At Agent's election, in lieu of
delivering the above-described written request, any Authorized Person may give
Agent telephonic notice of such request by the required time. In such
circumstances, Borrowers agree that any such telephonic notice will be confirmed
in writing within 24 hours of the giving of such notice and the failure to
provide such written confirmation shall not affect the validity of the request.
(b) Agent's Election. Promptly after receipt of a request for
a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of Section 2.3(c) apply to such requested Borrowing, or
(ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing
Loan pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) Making of Loans.
(i) In the event that Agent shall elect to have the terms of
this Section 2.3(c) apply to a requested Borrowing as described in
Section 2.3(b), then promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall notify the
Lenders, not later than 4:00 p.m. (New York time) on the Business
Day immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such
Lender's Pro Rata Share of the requested Borrowing available to
Agent in immediately available funds, to Agent's Account, not later
than 1:00 p.m. (New York time)
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on the Funding Date applicable thereto. After Agent's receipt of the
proceeds of such Advances, Agent shall make the proceeds thereof
available to Administrative Borrower on the applicable Funding Date
by transferring immediately available funds equal to such proceeds
received by Agent to Administrative Borrower's Designated Account;
provided, however, that, subject to the provisions of Section
2.3(i), Agent shall not request any Lender to make, and no Lender
shall have the obligation to make, any Advance if Agent shall have
actual knowledge that (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would
exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing
Date, prior to noon (New York time) on the date of such Borrowing,
that such Lender will not make available as and when required
hereunder to Agent for the account of Borrowers the amount of that
Lender's Pro Rata Share of the Borrowing, Agent may assume that each
Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make
available to Borrowers on such date a corresponding amount. If and
to the extent any Lender shall not have made its full amount
available to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that
Lender shall on the Business Day following such Funding Date make
such amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute
such Lender's Advance on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to Agent on the
Business Day following the Funding Date, Agent will notify
Administrative Borrower of such failure to fund and, upon demand by
Agent, Borrowers shall pay such amount to Agent for Agent's account,
together with interest thereon for each day elapsed since the date
of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall
not relieve any other Lender of any obligation hereunder to make an
Advance on such Funding Date, but no Lender shall be responsible for
the failure of any other Lender to make the Advance to be made by
such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the Defaulting
Lender's
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benefit, and, in the absence of such transfer to the Defaulting
Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by Administrative Borrower and if
no Default or Event of Default had occurred and is continuing (and
to the extent such Defaulting Lender's Advance was not funded by the
Lender Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend
to Borrowers for the account of such Defaulting Lender the amount of
all such payments received and retained by Agent for the account of
such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such
Defaulting Lender shall be deemed not to be a "Lender" and such
Lender's Commitment shall be deemed to be zero. This Section shall
remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall
have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such
Defaulting Lender's default in writing, or (z) the Defaulting Lender
makes its Pro Rata Share of the applicable Advance and pays to Agent
all amounts owing by Defaulting Lender in respect thereof. The
operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse
the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the
performance by Borrowers of their duties and obligations hereunder
to Agent or to the Lenders other than such Defaulting Lender. Any
such failure to fund by any Defaulting Lender shall constitute a
material breach by such Defaulting Lender of this Agreement and
shall entitle Administrative Borrower at its option, upon written
notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to
refuse to be replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance in favor of the
substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject
only to being repaid its share of the outstanding Obligations (other
than Bank Product Obligations, but including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any
premium or penalty of any kind whatsoever; provided --------
however, that any such assumption of the Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any
of the Lender Groups' or Borrowers' rights or remedies against any
such Defaulting Lender arising out of or in relation to such failure
to fund.
(d) Making of Swing Loans.
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(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section 2.3(d) apply
to a requested Borrowing as described in Section 2.3(b), Swing
Lender as a Lender shall make such Advance in the amount of such
Borrowing (any such Advance made solely by Swing Lender as a Lender
pursuant to this Section 2.3(d) being referred to as a "Swing Loan"
and such Advances being referred to collectively as "Swing Loans")
available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Administrative
Borrower's Designated Account. Each Swing Loan shall be deemed to be
an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that no such Swing
Loan shall be eligible to be a LIBOR Rate Loan and all payments on
any Swing Loan shall be payable to Swing Lender as a Lender solely
for its own account (and for the account of the holder of any
participation interest with respect to such Swing Loan). Subject to
the provisions of Section 2.3(i), Agent shall not request Swing
Lender as a Lender to make, and Swing Lender as a Lender shall not
make, any Swing Loan if Agent has actual knowledge that (i) one or
more of the applicable conditions precedent set forth in Section 3
will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (ii)
the requested Borrowing would exceed the Availability on such
Funding Date. Swing Lender as a Lender shall not otherwise be
required to determine whether the applicable conditions precedent
set forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion, any
Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens,
constitute Obligations hereunder, and bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrowers and the Lenders,
from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of the other applicable
conditions precedent set forth in Section 3 have not been satisfied,
to make Advances to Borrowers on behalf of the Lenders that Agent,
in its Permitted Discretion deems necessary or desirable (A) to
preserve or protect the Collateral, or any portion thereof, (B) to
enhance the likelihood of repayment of the Obligations (other than
the Bank Product Obligations), or (C) to pay any other amount
chargeable to Borrowers pursuant to the terms of this Agreement,
including Lender Group Expenses and the costs, fees, and expenses
described in Section 10 (any of the Advances described in this
Section 2.3(e) shall be referred to as "Agent Advances"). Each Agent
Advance shall be deemed to be an Advance hereunder, except that no
such
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Agent Advance shall be eligible to be a LIBOR Rate Loan and all
payments thereon shall be payable to Agent solely for its own
account.
(ii) The Agent Advances shall be repayable on demand, secured
by the Agent's Liens granted to Agent under the Loan Documents,
constitute Obligations hereunder, and bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.
(f) Settlement. It is agreed that each Lender's funded portion
of the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to
each outstanding Swing Loan, (2) for itself, with respect to each
Agent Advance, and (3) with respect to Borrowers' or their
Subsidiaries' Collections received, as to each by notifying the
Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 5:00 p.m.
(New York time) on the Business Day immediately prior to the date of
such requested Settlement (the date of such requested Settlement
being the "Settlement Date"). Such notice of a Settlement Date shall
include a summary statement of the amount of outstanding Advances,
Swing Loans, and Agent Advances for the period since the prior
Settlement Date. Subject to the terms and conditions contained
herein (including Section 2.3(c)(iii)): (y) if a Lender's balance of
the Advances (including Swing Loans and Agent Advances) exceeds such
Lender's Pro Rata Share of the Advances (including Swing Loans and
Agent Advances) as of a Settlement Date, then Agent shall, by no
later than noon (New York time) on the Settlement Date, transfer in
immediately available funds to a Deposit Account of such Lender (as
such Lender may designate), an amount such that each such Lender
shall, upon receipt of such amount, have as of the Settlement Date,
its Pro Rata Share of the Advances (including Swing Loans and Agent
Advances), and (z) if a Lender's balance of the Advances (including
Swing Loans and Agent Advances) is less than such Lender's Pro Rata
Share of the Advances (including Swing Loans and Agent Advances) as
of a Settlement Date, such Lender shall no later than noon (New York
time) on the Settlement Date transfer in immediately available funds
to the Agent's Account, an amount such that each such Lender shall,
upon transfer of such amount, have as of the Settlement Date, its
Pro Rata Share of the Advances (including Swing Loans and Agent
Advances). Such amounts made available to Agent under clause (z) of
the immediately preceding sentence shall be
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applied against the amounts of the applicable Swing Loans or Agent
Advances and, together with the portion of such Swing Loans or Agent
Advances representing Swing Lender's Pro Rata Share thereof, shall
constitute Advances of such Lenders. If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable
thereto to the extent required by the terms hereof, Agent shall be
entitled to recover for its account such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing
Loans, and Agent Advances as of a Settlement Date, Agent shall, as
part of the relevant Settlement, apply to such balance the portion
of payments actually received in good funds by Agent with respect to
principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a
net amount is owed to any such Lender after such application, such
net amount shall be distributed by Agent to that Lender as part of
such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with the
terms of this Agreement would be applied to the reduction of the
Advances, for application to Swing Lender's Pro Rata Share of the
Advances. If, as of any Settlement Date, Collections of Borrowers or
their Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata Share
of the Advances other than to Swing Loans, as provided for in the
previous sentence, Swing Lender shall pay to Agent for the accounts
of the Lenders, and Agent shall pay to the Lenders, to be applied to
the outstanding Advances of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During the
period between Settlement Dates, Swing Lender with respect to Swing
Loans, Agent with respect to Agent Advances, and each Lender
(subject to the effect of letter agreements between Agent and
individual Lenders) with respect to the Advances other than Swing
Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the daily
amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.
(g) Notation. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time and such records shall, absent manifest error,
conclusively be presumed to be correct and accurate. In addition, each Lender is
authorized, at such Lender's option, to note the date
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and amount of each payment or prepayment of principal of such Lender's Advances
in its books and records, including computer records.
(h) Lenders' Failure to Perform. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby
would be created, so long as (i) after giving effect to such Advances, the
outstanding Revolver Usage does not exceed the Borrowing Base by more than
$4,000,000, (ii) after giving effect to such Advances, the outstanding Revolver
Usage (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver
Amount, and (iii) at the time of the making of any such Advance, Agent does not
believe, in good faith, that the Overadvance created by such Advance will be
outstanding for more than 90 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrowers in any way. The Advances and Swing Loans, as applicable,
that are made pursuant to this Section 2.3(i) shall be subject to the same terms
and conditions as any other Advance or Swing Loan, as applicable, except that
they shall not be eligible for the LIBOR Option and the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Loans under Section 2.6(c) hereof without regard to the presence or absence of a
Default or Event of Default.
A. In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such
excess, Agent shall notify the Lenders as soon as practicable
(and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses)
unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value), and the Lenders
with Revolver Commitments thereupon shall, together with
Agent, jointly determine the terms of arrangements that shall
be implemented with Borrowers intended to reduce, within a
reasonable time, the outstanding principal amount of the
Advances to Borrowers to an amount permitted by the preceding
paragraph. In the event Agent or any Lender disagrees over the
terms of reduction or repayment of any
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Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required
Lenders.
B. Each Lender with a Revolver Commitment shall be
obligated to settle with Agent as provided in Section 2.3(f)
for the amount of such Lender's Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender,
any intentional Overadvances made as permitted under this
Section 2.3(i), and any Overadvances resulting from the
charging to the Loan Account of interest, fees, or Lender
Group Expenses.
2.4 Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the
account of the Lender Group and shall be made in immediately
available funds, no later than 2:00 p.m. (New York time) on the date
specified herein. Any payment received by Agent later than 2:00 p.m.
(New York time), shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative Borrower
prior to the date on which any payment is due to the Lenders that
Borrowers will not make such payment in full as and when required,
Agent may assume that Borrowers have made (or will make) such
payment in full to Agent on such date in immediately available funds
and Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent
Borrowers do not make such payment in full to Agent on the date when
due, each Lender severally shall repay to Agent on demand such
amount distributed to such Lender, together with interest thereon at
the Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) Apportionment and Application.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents
(including letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned
ratably among the Lenders (according to the unpaid principal balance
of the Obligations to which such payments relate held by each
Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect
to any letter agreements between Agent and individual Lenders) shall
be
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apportioned ratably among the Lenders having a Pro Rata Share of the
type of Commitment or Obligation to which a particular fee relates.
All payments shall be remitted to Agent and all such payments, and
all proceeds of Collateral received by Agent, shall be applied as
follows:
A. first, to pay any Lender Group Expenses then due to
Agent under the Loan Documents, until paid in full,
B. second, to pay any Lender Group Expenses then due to
the Lenders under the Loan Documents, on a ratable basis,
until paid in full,
C. third, to pay any fees then due to Agent (for its
separate accounts, after giving effect to any letter
agreements between Agent and the individual Lenders) under the
Loan Documents until paid in full,
D. fourth, to pay any fees then due to any or all of the
Lenders (after giving effect to any letter agreements between
Agent and individual Lenders) under the Loan Documents, on a
ratable basis, until paid in full,
E. fifth, to pay interest due in respect of all Agent
Advances, until paid in full,
F. sixth, ratably to pay interest due in respect of the
Advances (other than Agent Advances), and the Swing Loans
until paid in full,
G. seventh, to pay the principal of all Agent Advances
until paid in full,
H. eighth, to pay the principal of all Swing Loans until
paid in full,
I. ninth, so long as no Event of Default has occurred
and is continuing, and at Agent's election (which election
Agent agrees will not be made if an Overadvance would be
created thereby), to pay amounts then due and owing by
Administrative Borrower or its Subsidiaries in respect of Bank
Products, until paid in full,
J. tenth, so long as no Event of Default has occurred
and is continuing, to pay the principal of all Advances until
paid in full,
K. eleventh, if an Event of Default has occurred and is
continuing, ratably (i) to pay the principal of all Advances
until paid in full, (ii) to Agent, to be held by Agent, for
the ratable benefit of Issuing
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Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter
of Credit Usage until paid in full, and (iii) to Agent, to be
held by Agent, for the benefit of the Bank Product Providers,
as cash collateral in an amount up to the amount of the Bank
Product Reserve established prior to the occurrence of, and
not in contemplation of, the subject Event of Default until
Administrative Borrower's and its Subsidiaries' obligations in
respect of the then extant Bank Products have been paid in
full or the cash collateral amount has been exhausted,
L. twelfth, if an Event of Default has occurred and is
continuing, to pay any other Obligations (including the
provision of amounts to Agent, to be held by Agent, for the
benefit of the Bank Product Providers, as cash collateral in
an amount up to the amount determined by Agent in its
Permitted Discretion as the amount necessary to secure
Administrative Borrower's and its Subsidiaries' obligations in
respect of the then extant Bank Products), and
M. thirteenth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant
to the applicable wire instructions received from each Lender in
writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided in Section 2.3(f).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, this Section 2.4(b) shall not be deemed
to apply to any payment by Borrowers specified by Borrowers to be
for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to
the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after
the commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or not any
of the foregoing would be or is allowed or disallowed in whole or in
part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together
and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual,
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irreconcilable conflict that cannot be resolved as aforesaid, the
terms and provisions of this Section 2.4 shall control and govern.
2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Section 2.1 or Section 2.12 is greater than either the
Dollar or percentage limitations set forth in Section 2.1 or Section 2.12, as
applicable (an "Overadvance"), Borrowers immediately shall pay to Agent, in
cash, the amount of such excess, which amount shall be used by Agent to reduce
the Obligations in accordance with the priorities set forth in Section 2.4(b).
In addition, Borrowers hereby promise to pay the Obligations (including
principal, interest, fees, costs, and expenses) in Dollars in full as and when
due and payable under the terms of this Agreement and the other Loan Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof as follows (i) if
the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum
rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise, at
a per annum rate equal to the Base Rate plus the Base Rate Margin.
The foregoing notwithstanding, at no time shall any portion of
the Obligations (other than Bank Product Obligations or Letters of Credit) bear
interest on the Daily Balance thereof at a per annum rate less than 3.50%. To
the extent that interest accrued hereunder at the rate set forth herein would be
less than the foregoing minimum daily rate, the interest rate chargeable
hereunder for such day automatically shall be deemed increased to the minimum
rate.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to 2.75% per annum times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate
equal to 4 percentage points above the per annum rate
otherwise applicable hereunder, and
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(ii) the Letter of Credit fee provided for above shall
be increased to 4 percentage points above the per annum rate
otherwise applicable hereunder.
(d) Payment. Except as provided to the contrary in Section
2.12(a), interest, Letter of Credit fees, and all other fees payable hereunder
shall be due and payable, in arrears, on the first day of each month at any time
that Obligations or Commitments are outstanding. Borrowers hereby authorize
Agent, from time to time, without prior notice to Borrowers, to charge such
interest and fees, all Lender Group Expenses (as and when incurred), the
charges, commissions, fees, and costs provided for in Section 2.12(e) (as and
when accrued or incurred), the fees and costs provided for in Section 2.11 (as
and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including any amounts due and payable to the
Bank Product Providers in respect of Bank Products up to the amount of the then
extant Bank Product Reserve) to Borrowers' Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded by being charged to Borrowers' Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Obligations to the
extent of such excess.
2.7 Cash Management.
(a) Borrowers shall and shall cause each of the Guarantors to
(i) within 5 Business Days of the Closing Date, establish and maintain cash
management services of a type and on terms satisfactory to Agent at one or more
of the banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and
shall request in writing and otherwise take
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such reasonable steps to ensure that all of the Account Debtors of the Borrowers
and the Guarantors forward payment of the amounts owed by them directly to such
Cash Management Bank, (ii) deposit or cause to be deposited promptly, and in any
event no later than the first Business Day after the date of receipt thereof,
all of their Collections (including those sent directly by their Account Debtors
to a Cash Management Bank) into a bank account in Agent's name (a "Cash
Management Account") at one of the Cash Management Banks, and (iii) from and
after the Closing Date, shall segregate all Deposit Accounts, cash and Cash
Equivalents of the Borrowers and Guarantors from the Deposit Accounts, cash and
Cash Equivalents of the Non-Obligors.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Agent and Borrowers, in form and substance
acceptable to Agent. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account.
(c) So long as no Default or Event of Default has occurred and
is continuing, Administrative Borrower may amend Schedule 2.7(a) or (b) to add
or replace a Cash Management Account Bank or Cash Management Account; provided,
however, that (i) such prospective Cash Management Bank shall be satisfactory to
Agent and Agent shall have consented in writing in advance to the opening of
such Cash Management Account with the prospective Cash Management Bank, and (ii)
prior to the time of the opening of such Cash Management Account, a Borrower or
a Guarantor, as applicable, and such prospective Cash Management Bank shall have
executed and delivered to Agent a Cash Management Agreement. A Borrower or a
Guarantor, as applicable shall close any of their Cash Management Accounts (and
establish replacement cash management accounts in accordance with the foregoing
sentence) promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in Agent's
reasonable judgment, or as promptly as practicable and in any event within 60
days of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with respect
to Cash Management Accounts or Agent's liability under any Cash Management
Agreement with such Cash Management Bank is no longer acceptable in Agent's
reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrowers are hereby grants a
Lien to Agent.
2.8 Crediting Payments; Float Charge. The receipt of any payment item by
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash
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Management Agreements or otherwise) shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available federal
funds made to the Agent's Account or unless and until such payment item is
honored when presented for payment. Should any payment item not be honored when
presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 2:00 p.m. (New York time). If any payment item is received into the
Agent's Account on a non-Business Day or after 2:00 p.m. (New York time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. From and after
the Closing Date, Agent shall be entitled to charge Borrowers for one Business
Day of `clearance' or `float' at the rate then applicable under Section 2.6 to
Advances that are Base Rate Loans on all Collections that are received by
Borrowers and Guarantors (regardless of whether forwarded by the Cash Management
Banks to Agent). This across the board one Business Day clearance or float
charge on all Collections of Borrowers and Guarantors is acknowledged by the
parties to constitute an integral aspect of the pricing of the financing of
Borrowers and Guarantors and shall apply irrespective of whether or not there
are any outstanding monetary Obligations; the effect of such clearance or float
charge being the equivalent of charging interest on such Collections through the
completion of a period ending one Business Day after the receipt thereof. The
parties acknowledge and agree that the economic benefit of the foregoing
provisions of this Section 2.8 shall be for the exclusive benefit of Agent.
2.9 Designated Account. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrowers and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower,
any Advance, Agent Advance, or Swing Loan requested by Borrowers and made by
Agent or the Lenders hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with the Advances (including Agent Advances
and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for
Borrowers' account, the Letters of Credit issued by Issuing Lender for
Borrowers' account, and with all other payment Obligations hereunder or under
the other Loan Documents (except for Bank Product Obligations), including,
accrued interest, fees and expenses, and Lender Group Expenses. In accordance
with Section 2.8, the Loan Account will be credited with all payments received
by Agent from Borrowers or for Borrowers' account, including all amounts
received in the Agent's Account from any Cash Management Bank. Agent shall
render statements regarding the Loan Account to Administrative Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Group
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Expenses owing, and such statements, absent manifest error, shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 30 days after
receipt thereof by Administrative Borrower, Administrative Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.
2.11 Fees. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) Unused Line Fee. On the first day of each month during the
term of this Agreement, an unused line fee in the amount equal to 0.375% per
annum times the result of (i) the Maximum Revolver Amount, less (ii) the sum of
(A) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (B) the average Daily Balance of the Letter of
Credit Usage during the immediately preceding month,
(b) Fee Letter Fees. As and when due and payable under the
terms of the Fee Letter, the fees set forth in the Fee Letter, and
(c) Audit, Appraisal, and Valuation Charges. Audit, appraisal,
and valuation fees and charges as follows (i) a fee of $850 per day, per
auditor, plus out-of-pocket expenses for each financial audit of Borrower
performed by personnel employed by Agent, (ii) if implemented, a fee of $850 per
day, per applicable individual, plus out-of-pocket expenses for the
establishment of electronic collateral reporting systems, (iii) a fee of $1,500
per day per appraiser, plus out-of-pocket expenses, for each appraisal of the
Collateral, or any portion thereof, performed by personnel employed by Agent,
and (iv) the actual charges paid or incurred by Agent if it elects to employ the
services of one or more third Persons to perform financial audits of Borrowers
or their Subsidiaries, to establish electronic collateral reporting systems, to
appraise the Collateral, or any portion thereof, or to assess Borrowers' and
their Subsidiaries' business valuation.
2.12 Letters of Credit
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C
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Undertaking, or identifying the L/C or L/C Undertaking to be amended, renewed,
or extended, the date of issuance, amendment, renewal, or extension, the date on
which such L/C or L/C Undertaking is to expire, the amount of such L/C or L/C
Undertaking, the name and address of the beneficiary thereof (or of the
Underlying Letter of Credit, as applicable), and such other information as shall
be necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If
requested by the Issuing Lender, Borrowers also shall be an applicant under the
application with respect to any Underlying Letter of Credit that is to be the
subject of an L/C Undertaking. The Issuing Lender shall have no obligation to
issue a Letter of Credit if any of the following would result after giving
effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the then extant amount of outstanding Advances, or
(ii) the Letter of Credit Usage for Indenture Purposes would
exceed $20,000,000 and for all other purposes would exceed
$5,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the sum of (A) the then extant amount of
outstanding Advances and (B) the Indenture Reserve.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 2:00 p.m., New York time, on the date that such L/C Disbursement is made,
if Administrative Borrower shall have received written or telephonic notice of
such L/C Disbursement prior to 1:00 p.m., New York time, on such date, or, if
such notice has not been received by Administrative Borrower prior to such time
on such date, then not later than 2:00 p.m., New York time, on (i) the Business
Day that Administrative Borrower receives such notice, if such notice is
received prior to 1:00 p.m., New York time, on the date of receipt, and, in the
absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder (so long as to do so
would not create an Overadvance) and, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under Section 2.6. If
deeming an L/C Disbursement to be an Advance would create an Overadvance, such
amount shall be immediately due and payable and the unpaid amount thereof shall
accrue interest at the rate then applicable to Advances that are Base Rate
Loans. To the extent an L/C Disbursement is deemed to be an Advance hereunder,
Borrowers' obligation to reimburse such L/C Disbursement shall be discharged and
replaced by the resulting Advance. Promptly following receipt by Agent of any
payment from Borrowers pursuant to this paragraph, Agent shall distribute such
payment to
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the Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in clause (a) of
this Section, or of any reimbursement payment required to be refunded to
Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges
and agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share of each L/C
Disbursement made by the Issuing Lender pursuant to this Section 2.12(b) shall
be absolute and unconditional and such remittance shall be made notwithstanding
the occurrence or continuation of an Event of Default or Default or the failure
to satisfy any condition set forth in Section 3 hereof. If any such Lender fails
to make available to Agent the amount of such Lender's Pro Rata Share of each
L/C Disbursement made by the Issuing Lender in respect of such Letter of Credit
as provided in this Section, such Lender shall be deemed to be a Defaulting
Lender and Agent (for the account of the Issuing Lender) shall be entitled to
recover such amount on demand from such Lender together with interest thereon at
the Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend,
and hold the Lender Group harmless from any loss, cost, expense, or liability,
and reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the gross negligence or willful misconduct of
the Issuing Lender or any other member of the Lender Group. Each Borrower agrees
to be bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission
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or commission, in following Borrowers' instructions or those contained in the
Letter of Credit or any modifications, amendments, or supplements thereto. Each
Borrower understands that the L/C Undertakings may require Issuing Lender to
indemnify the Underlying Issuer for certain costs or liabilities arising out of
claims by Borrowers against such Underlying Issuer. Each Borrower hereby agrees
to indemnify, save, defend, and hold the Lender Group harmless with respect to
any loss, cost, expense (including reasonable attorneys fees), or liability
incurred by the Lender Group under any L/C Undertaking as a result of the Lender
Group's indemnification of any Underlying Issuer; provided, however, that no
Borrower shall be obligated hereunder to indemnify for any loss, cost, expense,
or liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
usage charge imposed by the prospective Underlying Issuer is .60% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change after the Closing Date in
any applicable law, treaty, rule, or regulation or any change in the
interpretation or application thereof by any Governmental Authority, or (ii)
compliance by the Underlying Issuer or the Lender Group with any direction,
request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor thereto)
and not in effect on the Closing Date:
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the
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amount received is reduced, notify Administrative Borrower, and Borrowers shall
pay on demand such amounts as Agent may specify to be necessary to compensate
the Lender Group for such additional cost or reduced receipt, together with
interest on such amount from the date of such demand until payment in full
thereof at the rate then applicable to Base Rate Loans hereunder. The
determination by Agent of any amount due pursuant to this Section, as set forth
in a certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and conclusive
and binding on all of the parties hereto.
2.13 LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having
interest charged at the rate based upon the Base Rate, Borrowers shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof have
elected to accelerate the maturity of all or any portion of the Obligations, or
(iii) termination of this Agreement pursuant to the terms hereof. On the last
day of each applicable Interest Period, unless Administrative Borrower properly
has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that Advances bear interest at the LIBOR
Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR Election.
(i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is continuing,
elect to exercise the LIBOR Option by notifying Agent prior to 2:00
p.m. (New York time) at least 3 Business Days prior to the
commencement of the proposed Interest Period (the "LIBOR Deadline").
Notice of Administrative Borrower's election of the LIBOR Option for
a permitted portion of the Advances and an Interest Period pursuant
to this Section shall be made by delivery to Agent of a LIBOR Notice
received by Agent before the LIBOR Deadline, or by telephonic notice
received by Agent before the LIBOR Deadline (to be confirmed by
delivery to Agent of a LIBOR Notice received by Agent prior to 5:00
p.m. (New York time) on the same day). Promptly upon its receipt of
each such LIBOR Notice, Agent shall provide a copy thereof to each
of the Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower
shall
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indemnify, defend, and hold Agent and the Lenders harmless against
any loss, cost, or expense incurred by Agent or any Lender as a
result of (a) the payment of any principal of any LIBOR Rate Loan
other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion
of any LIBOR Rate Loan other than on the last day of the Interest
Period applicable thereto, or (c) the failure to borrow, convert,
continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, and
expenses, collectively, "Funding Losses"). Funding Losses shall,
with respect to Agent or any Lender, be deemed to equal the amount
determined by Agent or such Lender to be the excess, if any, of (i)
the amount of interest that would have accrued on the principal
amount of such LIBOR Rate Loan had such event not occurred, at the
LIBOR Rate that would have been applicable thereto, for the period
from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the
Interest Period therefor), minus (ii) the amount of interest that
would accrue on such principal amount for such period at the
interest rate which Agent or such Lender would be offered were it to
be offered, at the commencement of such period, Dollar deposits of a
comparable amount and period in the London interbank market. A
certificate of Agent or a Lender delivered to Administrative
Borrower setting forth any amount or amounts that Agent or such
Lender is entitled to receive pursuant to this Section 2.13 shall be
conclusive absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR
Option for LIBOR Rate Loans of at least $1,000,000 and integral
multiples of $500,000 in excess thereof.
(c) Prepayments. Borrowers may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Borrowers' and their Subsidiaries'
Collections in accordance with Section 2.4(b) or for any other reason, including
early termination of the term of this Agreement or acceleration of all or any
portion of the Obligations pursuant to the terms hereof, each Borrower shall
indemnify, defend, and hold Agent and the Lenders and their Participants
harmless against any and all Funding Losses in accordance with clause (b) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to changes
in applicable law occurring subsequent to the
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commencement of the then applicable Interest Period, including
changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements
imposed by the Board of Governors of the Federal Reserve System (or
any successor), excluding the Reserve Percentage, which additional
or increased costs would increase the cost of funding loans bearing
interest at the LIBOR Rate. In any such event, the affected Lender
shall give Administrative Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the
notice to each other Lender and, upon its receipt of the notice from
the affected Lender, Administrative Borrower may, by notice to such
affected Lender (y) require such Lender to furnish to Administrative
Borrower a statement setting forth the basis for adjusting such
LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which
such adjustment is made (together with any amounts due under clause
(b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in
the interpretation of application thereof, shall at any time after
the date hereof, in the reasonable opinion of any Lender, make it
unlawful or impractical for such Lender to fund or maintain LIBOR
Advances or to continue such funding or maintaining, or to determine
or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agent and Administrative
Borrower and Agent promptly shall transmit the notice to each other
Lender and (y) in the case of any LIBOR Rate Loans of such Lender
that are outstanding, the date specified in such Lender's notice
shall be deemed to be the last day of the Interest Period of such
LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such
Lender thereafter shall accrue interest at the rate then applicable
to Base Rate Loans, and (z) Borrowers shall not be entitled to elect
the LIBOR Option until such Lender determines that it would no
longer be unlawful or impractical to do so.
(e) No Requirement of Matched Funding. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline,
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request or directive of any such entity regarding capital adequacy (whether or
not having the force of law) not in effect on the Closing Date, has the effect
of reducing the return on such Lender's or such holding company's capital as a
consequence of such Lender's Commitments hereunder to a level below that which
such Lender or such holding company could have achieved but for such adoption,
change, or compliance (taking into consideration such Lender's or such holding
company's then existing policies with respect to capital adequacy and assuming
the full utilization of such entity's capital) by any amount deemed by such
Lender to be material, then such Lender may notify Administrative Borrower and
Agent thereof. Following receipt of such notice, Borrowers agree to pay such
Lender on demand the amount of such reduction of return of capital as and when
such reduction is determined, payable within 90 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail such
Lender's calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error).
In determining such amount, such Lender may use any reasonable averaging and
attribution methods.
2.15 Joint and Several Liability of Borrowers.
(a) Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of each Borrower and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Persons composing Borrowers will make such payment with respect
to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement,
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notice of the occurrence of any Default, Event of Default, or of any demand for
any payment under this Agreement, notice of any action at any time taken or
omitted by Agent or Lenders under or in respect of any of the Obligations, any
requirement of diligence or to mitigate damages and, generally, to the extent
permitted by applicable law, all demands, notices and other formalities of every
kind in connection with this Agreement (except as otherwise provided in this
Agreement). Each Person composing Borrowers hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Person composing Borrowers in the performance or satisfaction of
any term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Person composing Borrowers.
Without limiting the generality of the foregoing, each Borrower assents to any
other action or delay in acting or failure to act on the part of any Agent or
Lender with respect to the failure by any Person composing Borrowers to comply
with any of its respective Obligations, including, without limitation, any
failure strictly or diligently to assert any right or to pursue any remedy or to
comply fully with applicable laws or regulations thereunder, which might, but
for the provisions of this Section 2.15 afford grounds for terminating,
discharging or relieving any Person composing Borrowers, in whole or in part,
from any of its Obligations under this Section 2.15, it being the intention of
each Person composing Borrowers that, so long as any of the Obligations
hereunder remain unsatisfied, the Obligations of such Person composing Borrowers
under this Section 2.15 shall not be discharged except by performance and then
only to the extent of such performance. The Obligations of each Person composing
Borrowers under this Section 2.15 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any Person composing
Borrowers or any Agent or Lender. The joint and several liability of the Persons
composing Borrowers hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to Agent
and Lenders that such Borrower is currently informed of the financial condition
of Borrowers and of all other circumstances which a diligent inquiry would
reveal and which bear upon the risk of nonpayment of the Obligations. Each
Person composing Borrowers further represents and warrants to Agent and Lenders
that such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition, the financial
condition of other guarantors, if any, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations.
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(g) Each of the Persons composing Borrowers waives all rights and
defenses arising out of an election of remedies by the Agent or any Lender, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed the Agent's or such
Lender's rights of subrogation and reimbursement against such Borrower by the
operation of Section 580(d) of the California Code of Civil Procedure or
otherwise:
(h) Each of the Persons composing Borrowers waives all rights and
defenses that such Borrower may have because the Obligations are secured by Real
Property. This means, among other things:
(i) Agent and Lenders may collect from such Borrower without
first foreclosing on any Real or Personal Property Collateral
pledged by Borrowers.
(ii) If Agent or any Lender forecloses on any Real Property
Collateral pledged by Borrowers:
A. The amount of the Obligations may be reduced only by
the price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale
price.
B. Agent and Lenders may collect from such Borrower even
if Agent or Lenders, by foreclosing on the Real Property
Collateral, has destroyed any right such Borrower may have to
collect from the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
(i) The provisions of this Section 2.15 are made for the
benefit of the Agent, the Lenders and their respective successors and assigns,
and may be enforced by it or them from time to time against any or all of the
Persons composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any of the Persons composing Borrowers, or
otherwise, the provisions of
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this Section 2.15 will forthwith be reinstated in effect, as though such payment
had not been made.
(j) Each of the Persons composing Borrowers hereby agrees that
it will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and junior in
right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(k) Each of the Persons composing Borrowers hereby agrees
that, after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that
after the occurrence and during the continuance of any Default or Event of
Default, such Borrower will not demand, xxx for or otherwise attempt to collect
any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Agent, and such Borrower shall
deliver any such amounts to Agent for application to the Obligations in
accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before October 22,
2003;
(b) Agent shall have received (i) a UCC Filing Authorization
Letter, duly executed by each Borrower and each Guarantor, and (ii) confirmation
that appropriate financing statements respecting each Borrower and each
Guarantor have been duly filed in such office or offices as may be necessary or,
in the opinion of Agent, desirable to perfect the Agent's Liens in and to the
Collateral;
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(c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:
(i) the Disbursement Letter,
(ii) the Fee Letter,
(iii) the Guarantor Security Agreement,
(iv) the Guaranty,
(v) the Intercompany Subordination Agreement,
(vi) the Intercreditor Agreement,
(vii) the Patent Security Agreement,
(viii) the Pay-Off Letter, together with UCC termination
statements and other documentation evidencing the termination by
Existing Lender of its Liens in and to the properties and assets of
Borrowers and their Subsidiaries,
(ix) the Pfizer Pay-Off Letter,
(x) the Stock Pledge Agreement, together with all certificates
representing the shares of Stock pledged thereunder, as well as
Stock powers with respect thereto endorsed in blank, and
(xi) the Trademark Security Agreement.
(d) Agent shall have received a certificate from the Secretary
of each Borrower attesting to the resolutions of such Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Borrower is a party and authorizing
specific officers of such Borrower to execute the same;
(e) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with
respect to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the
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appropriate officer of the jurisdictions (other than the jurisdiction of
organization of such Borrower) in which its failure to be duly qualified or
licensed would constitute a Material Adverse Change, which certificates shall
indicate that such Borrower is in good standing in such jurisdictions;
(h) Agent shall have received a certificate from the Secretary
of each Guarantor attesting to the resolutions of such Guarantor's Board of
Directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party and authorizing specific officers
of such Guarantor to execute the same;
(i) Agent shall have received copies of each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor;
(j) Agent shall have received a certificate of status with
respect to each Guarantor, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor, which certificate shall indicate that such
Guarantor is in good standing in such jurisdiction;
(k) Agent shall have received certificates of status with
respect to each Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be satisfactory to Agent;
(m) Agent shall have received opinions of Borrowers' counsel
in form and substance satisfactory to Agent;
(n) Agent shall have received satisfactory evidence (including
a certificate of the chief financial officer of Parent) that all tax returns
required to be filed by Borrowers and their Subsidiaries have been timely filed
and all taxes upon Borrowers and their Subsidiaries or their properties, assets,
income, and franchises (including Real Property taxes, sales taxes, and payroll
taxes) have been paid prior to delinquency, except such taxes that are the
subject of a Permitted Protest;
(o) Borrowers shall have the Closing Date Required
Availability after giving effect to the initial extensions of credit hereunder
and the payment of all fees and expenses required to be paid by Borrowers on the
Closing Date under this Agreement or the other Loan Documents;
(p) [Intentionally omitted];
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(q) Agent shall have received Borrowers' Closing Date Business
Plan;
(r) Borrowers shall have paid all Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
(s) Agent shall have received a copy of the New Indenture and
each of the other material agreements entered into in connection with the
issuance of the New Domestic Notes and the New Foreign Notes, together with a
certificate of the Secretary of Parent certifying each such document as being a
true, correct, and complete copy thereof;
(t) Parent shall have provided Agent with evidence sufficient
to demonstrate that the offering of the New Domestic Notes and the New Foreign
Notes described in the New Indenture has closed;
(u) Agent shall have received a copy of the Supplemental
Indenture to the Existing Indenture, together with a certificate of the
Secretary of Parent certifying each such document as being a true, correct, and
complete copy thereof;
(v) Borrowers and each of their Subsidiaries shall have
received all licenses, approvals or evidence of other actions required by any
Governmental Authority in connection with the execution and delivery by
Borrowers or their Subsidiaries of the Loan Document or with the consummation of
the transactions contemplated thereby; and
(w) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Agent
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
be satisfactory to Agent and its counsel; and
(b) within 30 days of the Closing Date, Agent shall have
received an appraisal of the Liquidation Percentage applicable to Borrowers'
Inventory, the results of which shall be satisfactory to Agent;
(c) within 10 Business Days of the Closing Date, Agent shall
have received completed reference checks with respect to Borrowers' senior
management, the results of which are satisfactory to Agent in its sole
discretion;
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(d) (i) within 30 days of the Closing Date, Agent shall have
received the Mortgages relative to the Real Property Collateral (other than the
Prince Real Property), and (ii) within 30 days of the Closing Date, Agent shall
have received mortgagee title insurance policies (or marked commitments to issue
the same) for the Real Property Collateral (other than the Prince Real Property)
issued by a title insurance company satisfactory to Agent (each a "Mortgage
Policy" and, collectively, the "Mortgage Policies") in amounts satisfactory to
Agent assuring Agent that the Mortgages on such Real Property Collateral are
valid and enforceable first priority mortgage Liens on such Real Property
Collateral free and clear of all defects and encumbrances except Permitted
Liens, and the Mortgage Policies otherwise shall be in form and substance
satisfactory to Agent;
(e) (i) on or before December 31, 2003, if the PMC Sale
Transactions shall not have been closed, Agent shall have received the Mortgages
relative to the Prince Real Property, (ii) on or before December 31, 2003, if
the PMC Sale Transactions have been closed, Agent shall have received the
Mortgages relative to the Prince Real Property that is not part of the PMC Sale
Transactions; and (iii) on or before December 31, 2003, Agent shall have
received a Mortgage Policy in amounts satisfactory to Agent assuring Agent that
the Mortgages on such Real Property Collateral are valid and enforceable first
priority mortgage Liens on such Real Property Collateral free and clear of all
defects and encumbrances except Permitted Liens, and the Mortgage Policies
otherwise shall be in form and substance satisfactory to Agent;
(f) on January 1, 2004, if the PMC Sale Transactions have not
been closed, Parent shall pledge the Stock of Prince Mfg to Agent, for the
benefit of the Lender Group and the Bank Product Providers, cause PMC and Prince
Mfg to execute a Control Agreement and joinder to the Guaranty and the Guarantor
Security Agreement, and cause Prince Mfg to execute a joinder to the Stock
Pledge Agreement and pledge the stock of PMC to Agent, for the benefit of the
Lender Group and the Bank Product Providers;
(g) within 10 Business Days of the Closing Date, Agent shall
have received evidence satisfactory to it that MRT Holdings has been dissolved;
and
(h) within 10 Business Days of the Closing Date, Agent shall
have received Collateral Access Agreements with respect to the Love Box
Locations and the Xxxxxx Industries Location;
(i) within 45 days of the Closing Date, Agent shall have
received Collateral Access Agreements with respect to: (i) Xxx Xxxxxx Xxxxx,
Xxxx Xxx, XX 00000, (ii) 0000 Xxxx Xxxx, Xxxxx Xx Xxxxxxx, XX 00000, and (iii)
000 Xxxxx 00 Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000;
(j) within 60 days of the Closing Date, Agent shall have
completed its audit of the books and records of the Borrowers and their Domestic
Subsidiaries, with the results of such audit to be satisfactory to Agent in its
sole discretion;
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(k) within 20 days of the Closing Date, Agent shall have
received confirmation that the Borrowers and their Domestic Subsidiaries have
registered their NADAs with the United States Copyright Office;
(l) within 30 days of the Closing Date, Agent shall have
received a copyright security agreement, in form and substance satisfactory to
Agent, to be filed with the United States Copyright Office; and
(m) within 30 days of the Closing Date, Agent shall have
received an updated Schedule 5.18 which shall include information regarding
Deposit Accounts and Securities Accounts of Borrowers' Foreign Subsidiaries.
3.3 Conditions Precedent to all Extensions of Credit. The obligation of
the Lender Group (or any member thereof) to make any Advances hereunder at any
time (or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date), except for changes permitted by
the Loan Documents;
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature restricting or prohibiting, directly or indirectly, the extending of
such credit shall have been issued and remain in force by any Governmental
Authority against any Borrower, Agent, any Lender, or any of their Affiliates;
and
(d) no Material Adverse Change shall have occurred.
3.4 Term. This Agreement shall continue in full force and effect for a
term ending on October 31, 2007 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to any outstanding Letters of Credit and including all Bank
Products Obligations) immediately shall become due and payable without notice or
demand (including (a) either (i) providing cash collateral to be held by Agent
for the benefit of those Lenders with a Revolver Commitment in an amount equal
to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to the Issuing Lender, and (b) providing
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cash collateral (in an amount determined by Agent as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Agent for the benefit of the
Bank Product Providers with respect to the then extant Bank Products
Obligations). No termination of this Agreement, however, shall relieve or
discharge Borrowers or their Subsidiaries of their duties, Obligations, or
covenants hereunder and the Agent's Liens in the Collateral shall remain in
effect until all Obligations have been paid in full and the Lender Group's
obligations to provide additional credit hereunder have been terminated. When
this Agreement has been terminated and all of the Obligations have been paid in
full and the Lender Group's obligations to provide additional credit under the
Loan Documents have been terminated irrevocably, Agent will, at Borrowers' sole
expense, execute and deliver any UCC termination statements, lien releases,
mortgage releases, re-assignments of trademarks, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record, the
Agent's Liens and all notices of security interests and liens previously filed
by Agent with respect to the Obligations.
3.6 Early Termination by Borrowers. Borrowers have the option, at any time
upon 90 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, in cash, the Obligations (including
(a) either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders with a Revolver Commitment in an amount equal to 105% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral (in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product
Providers with respect to the then extant Bank Products Obligations), in full,
together with the Applicable Prepayment Premium (to be allocated based upon
letter agreements between Agent and individual Lenders). If Administrative
Borrower has sent a notice of termination pursuant to the provisions of this
Section, then the Commitments shall terminate and Borrowers shall be obligated
to repay the Obligations (including (a) either (i) providing cash collateral to
be held by Agent for the benefit of those Lenders with a Revolver Commitment in
an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender, and
(b) providing cash collateral (in an amount determined by Agent as sufficient to
satisfy the reasonably estimated credit exposure) to be held by Agent for the
benefit of the Bank Product Providers with respect to the then extant Bank
Products Obligations), in full, together with the Applicable Prepayment Premium,
on the date set forth as the date of termination of this Agreement in such
notice. In the event of the termination of this Agreement and repayment of the
Obligations at any time prior to the Maturity Date, for any other reason,
including (a) termination upon the election of the Required Lenders to terminate
after the occurrence and during the continuation of an Event of Default, (b)
foreclosure and sale of Collateral, (c) sale of the Collateral in any Insolvency
Proceeding, or (d) restructure, reorganization or compromise of the Obligations
by the confirmation of a plan of reorganization, or any other plan of
compromise, restructure, or arrangement in any Insolvency Proceeding, then, in
view of the impracticability and extreme difficulty of ascertaining the actual
amount of damages to the Lender Group or profits lost by the Lender Group as a
result of such early termination,
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and by mutual agreement of the parties as to a reasonable estimation and
calculation of the lost profits or damages of the Lender Group, Borrowers shall
pay the Applicable Prepayment Premium to Agent (to be allocated based upon
letter agreements between Agent and individual Lenders), measured as of the date
of such termination. The foregoing to the contrary notwithstanding, in the event
that Borrower repays the Obligations in full and terminates this Agreement
pursuant to the first sentence of this Section 3.6 and if such repayment occurs
with the proceeds of a refinancing provided by Xxxxx Fargo, then the Applicable
Prepayment Premium shall equal zero.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest Each Borrower hereby grants to Agent, for
the benefit of the Lender Group and the Bank Product Providers, a continuing
security interest in all of its right, title, and interest in all currently
existing and hereafter acquired or arising Borrower Collateral in order to
secure prompt repayment of any and all of the Obligations in accordance with the
terms and conditions of the Loan Documents and in order to secure prompt
performance by Borrowers of each of their covenants and duties under the Loan
Documents. The Agent's Liens in and to the Borrower Collateral shall attach to
all Borrower Collateral without further act on the part of Agent or Borrowers.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers and their
Subsidiaries have no authority, express or implied, to dispose of any item or
portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that Agent determines that perfection or priority of Agent's
security interest is dependent on or enhanced by possession, the applicable
Borrower, immediately upon the request of Agent, shall endorse and deliver
physical possession of such Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Borrowers' Accounts, chattel paper, or General Intangibles
have been assigned to Agent or that Agent has a security interest therein, or
(b) collect the Borrowers' Accounts, chattel paper, or General Intangibles
directly and charge the collection costs and expenses to the Loan Account. Each
Borrower agrees that it will hold in trust for the Lender Group, as the Lender
Group's trustee, any of its or any Guarantor's Collections that it receives and
immediately will deliver such Collections to Agent or a Cash Management Bank in
their original form as received by such Borrower or the Guarantors.
4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of
Additional Documentation Required. Borrowers authorize Agent to file any
financing statement necessary or desirable to effectuate the transactions
contemplated by the Loan Documents, and any continuation statement or amendment
with respect thereto, in any appropriate filing office without the signature of
Borrowers where permitted by applicable
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law. Borrowers hereby ratify the filing of any financing statement filed without
the signature of Borrowers prior to the date hereof.
(b) If Borrowers or Guarantors acquire any commercial tort
claims after the date hereof, Borrowers shall promptly (but in any event within
3 Business Days after such acquisition) deliver to Agent a written description
of such commercial tort claim and shall deliver a written agreement, in form and
substance satisfactory to Agent, pursuant to which the applicable Borrower or
its Subsidiary shall pledge and collaterally assign all of its right, title and
interest in and to such commercial tort claim to Agent, as security for the
Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the request of Agent, Borrowers shall
execute or deliver to Agent and shall cause their Guarantors to execute or
deliver to Agent any and all financing statements, original financing statements
in lieu of continuation statements, fixture filings, security agreements,
pledges, assignments, Commercial Tort Claim Assignments, endorsements of
certificates of title, and all other documents (collectively, the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
substance satisfactory to Agent, to create, perfect, and continue perfected or
to better perfect the Agent's Liens in the assets of Borrowers and their
Guarantors (whether now owned or hereafter arising or acquired, tangible or
intangible, real or personal), to create and perfect Liens in favor of Agent in
any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, each Borrower
authorizes Agent to execute any such Additional Documents in the applicable
Borrower's name and authorizes Agent to file such executed Additional Documents
in any appropriate filing office. In addition, on such periodic basis as Agent
shall require, Borrowers shall (i) provide Agent with a report of all new
material patentable, copyrightable, or trademarkable materials acquired or
generated by any Borrower or its Guarantors during the prior period, (ii) cause
all material patents, copyrights, and trademarks acquired or generated by
Borrowers or their Guarantors that are not already the subject of a registration
with the appropriate filing office (or an application therefor diligently
prosecuted) to be registered with such appropriate filing office in a manner
sufficient to impart constructive notice of a Borrower's or a Guarantor's
ownership thereof, and (iii) cause to be prepared, executed, and delivered to
Agent supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or xxxx of lading relating to the Borrower Collateral, drafts against Account
Debtors, or notices to Account Debtors, (c) send requests for verification of
Borrowers' or their Domestic Subsidiaries' Accounts, (d) endorse such Borrower's
name on any of its payment
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items (including all of its Collections) that may come into the Lender Group's
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under such Borrower's policies
of insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting Borrowers'
or their Domestic Subsidiaries' Accounts, chattel paper, or General Intangibles
directly with Account Debtors, for amounts and upon terms that Agent determines
to be reasonable, and Agent may cause to be executed and delivered any documents
and releases that Agent determines to be necessary. The appointment of Agent as
each Borrower's attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully and finally repaid and performed and the Lender Group's obligations to
extend credit hereunder are terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books and make copies or abstracts thereof and to
check, test, and appraise the Collateral, or any portion thereof, in order to
verify Borrowers' and their Subsidiaries' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
4.7 Control Agreements. Borrowers agree that they will not, and will not
permit their Domestic Subsidiaries to, transfer assets out of any of their
Deposit Accounts or Securities Accounts; provided, however, that (a) Prince Mfg
and PMC may transfer assets out of their respective Deposit Accounts or
Securities Accounts to Palladium under the PMC Sale Transactions (regardless of
whether or not an Event of Default has occurred and is continuing or would
result therefrom); and (b) so long as no Event of Default has occurred and is
continuing or would result therefrom, Borrowers and their Domestic Subsidiaries
may use such assets (and the proceeds thereof) to the extent not prohibited by
this Agreement or the other Loan Documents and, if the transfer is to another
bank or securities intermediary, so long as the applicable Borrower or Domestic
Subsidiary, Agent, and the substitute bank or securities intermediary have
entered into a Control Agreement. Borrowers agree that they will and will cause
their Domestic Subsidiaries to take any or all reasonable steps that Agent
requests in order for Agent to obtain control in accordance with Sections 9-104,
9-105, 9-106, and 9-107 of the Code with respect to any of its or their
Securities Accounts, Deposit Accounts, electronic chattel paper, Investment
Property, and letter-of-credit rights. No arrangement contemplated hereby or by
any Control Agreement in respect of any Securities Accounts or other Investment
Property shall be modified by Borrowers without the prior written consent of
Agent. Upon the occurrence and during the continuance of a Default or Event of
Default, Agent may notify any bank or securities intermediary to liquidate the
applicable Deposit Account or Securities Account or any related Investment
Property maintained or held thereby and remit the proceeds thereof to the
Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
each Borrower makes the following representations and warranties to the Lender
Group which
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shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and at and as of the date of the making of each Advance (or
other extension of credit) made thereafter, as though made on and as of the date
of such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances. Each Borrower and its Domestic Subsidiaries has good
and indefeasible title to their personal property assets and good and marketable
title to their Real Property, in each case, free and clear of Liens except for
Permitted Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrowers' business, owed to Borrowers without any known defenses,
disputes, offsets, counterclaims, or rights of return or cancellation. As to
each Account that is identified by Administrative Borrower as an Eligible
Account in a borrowing base report submitted to Agent, such Account is as of the
date of such report not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Accounts.
5.3 Eligible Inventory. All Eligible Inventory is of good and merchantable
quality, free from known defects. As to each item of Inventory that is
identified by Administrative Borrower as Eligible Inventory in a borrowing base
report submitted to Agent, such Inventory is not as of the date of such report
excluded as ineligible by virtue of one or more of the excluding criteria set
forth in the definition of Eligible Inventory.
5.4 Equipment. All of the Equipment of Borrowers and their Domestic
Subsidiaries in all material respects is used or held for use in their business
and is fit for such purposes, subject to ordinary wear and tear.
5.5 Location of Inventory and Equipment. Except as set forth on Schedule
5.5, the Inventory and Equipment of Borrowers and their Domestic Subsidiaries
are not stored with a bailee, warehouseman, or similar party and are located
only at, or in-transit between, the locations identified on Schedule 5.5 (as
such Schedule may be updated pursuant to Section 6.9).
5.6 Inventory Records. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its Domestic
Subsidiaries' Inventory and the book value thereof.
5.7 State of Incorporation; Location of Chief Executive Office; FEIN;
Organizational ID Number; Commercial Tort Claims.
(a) The jurisdiction of organization of each Borrower and each
of its Subsidiaries is set forth on Schedule 5.7(a).
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(b) The chief executive office of each Borrower and each of
its Subsidiaries is located at the address indicated on Schedule 5.7(b) (as such
Schedule may be updated pursuant to Section 6.9).
(c) Each Borrower's and each of its Domestic Subsidiaries'
FEIN and organizational identification number, if any, are identified on
Schedule 5.7(c).
(d) As of the Closing Date, Borrowers and their Domestic
Subsidiaries do not hold any commercial tort claims, except as set forth on
Schedule 5.7(d).
5.8 Due Organization and Qualification; Subsidiaries
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. Except as set forth on
Schedule 5.8(b), no Borrower is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital Stock or any security convertible into or exchangeable for any of its
capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of each Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization; (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by the applicable Borrower. All of the outstanding
capital Stock of each such Domestic Subsidiary has been validly issued and is
fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8(d), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. Except as set forth
on Schedule 5.8(d), no Borrower or any of its respective Subsidiaries is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of any Borrower's Subsidiaries' capital Stock or any
security convertible into or exchangeable for any such capital Stock.
5.9 Due Authorization; No Conflict.
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(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the other Loan Documents to
which it is a party have been duly authorized by all necessary action on the
part of such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the other Loan Documents to
which it is a party do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to any Borrower, the Governing
Documents of any Borrower, or any order, judgment, or decree of any court or
other Governmental Authority binding on any Borrower, (ii) conflict with, result
in a breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of any Borrower, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of Borrower, other than Permitted Liens, or (iv)
require any approval of any Borrower's interestholders or any approval or
consent of any Person under any material contractual obligation of any Borrower,
other than in the case of clause (iii) and (iv), consents or approvals that have
been obtained and that are still in force and effect.
(c) Other than the filing of financing statements, the
recordation of the Mortgages, the filings required with the Patent & Trademark
Office and any consents required in foreign jurisdictions as a matter of
applicable law with respect to the stock pledges of the equity interests in the
Non-Obligors, the execution, delivery, and performance by each Borrower of this
Agreement and the other Loan Documents to which such Borrower is a party do not
and will not require any registration with, consent, or approval of, or notice
to, or other action with or by, any Governmental Authority, other than consents
or approvals that have been obtained and that are still in force and effect.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute
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(with due notice or lapse of time or both) a default under any material
contractual obligation of such Guarantor, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of such Guarantor, other than Permitted Liens, or (iv) require any
approval of such Guarantor's interestholders or any approval or consent of any
Person under any material contractual obligation of such Guarantor, other than
in the case of clause (iii) and (iv), consents or approvals that have been
obtained and that are still in force and effect.
(h) Other than the filing of financing statements, the
recordation of the Mortgages, the filings required with the Patent & Trademark
Office and any consents required in foreign jurisdictions as a matter of
applicable law with respect to the stock pledges of the equity interests in the
Non-Obligors, the execution, delivery, and performance by each Guarantor of the
Loan Documents to which such Guarantor is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority, other than consents or approvals that
have been obtained and that are still in force and effect.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to
Borrowers and their Subsidiaries that have been delivered by Borrowers to the
Lender Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Borrowers' and their Subsidiaries' financial condition as of the date thereof
and results of operations for the period then ended. There has not been a
Material Adverse Change with respect to Borrowers and their Subsidiaries since
the date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.
5.12 Fraudulent Transfer.
(a) Each Borrower and each Domestic Subsidiary of a Borrower
is Solvent.
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(b) No transfer of property is being made by any Borrower or
any Domestic Subsidiary of a Borrower and no obligation is being incurred by any
Borrower or any Domestic Subsidiary of a Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of
Borrowers or their Domestic Subsidiaries.
5.13 Employee Benefits. Except as set forth on Schedule 5.13, none of
Borrowers, any of their Domestic Subsidiaries, or any of their ERISA Affiliates
maintains or contributes to any Benefit Plan. As of June 30, 2002, the Unfunded
Liabilities of all Benefit Plans do not in the aggregate exceed $250,000. As of
the Closing Date, each such Plan complies with all minimum funding requirements
under ERISA. As of the Closing Date, there are no Multiemployer Plans nor could
Borrower or any Controlled Group member reasonably be expected to have any
liability to any Multiemployer Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, and
except for items that could not reasonably be expected to result in a Material
Adverse Change, (a) to Borrowers' knowledge, none of Borrowers' or their
Domestic Subsidiaries' properties or assets has ever been used by Borrowers,
their Domestic Subsidiaries, or by previous owners or operators in the disposal
of, or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such production, storage, handling, treatment, release or
transport was in violation, in any material respect, of applicable Environmental
Law, (b) to Borrowers' knowledge, none of Borrowers' nor their Domestic
Subsidiaries' properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) none of Borrowers nor any of their Domestic Subsidiaries have
received notice that a currently effective Lien arising under any Environmental
Law has attached to any revenues or to any Real Property owned or operated by
Borrowers or their Subsidiaries, and (d) none of Borrowers nor any of their
Domestic Subsidiaries have received a currently effective summons, citation,
notice, or directive from the Environmental Protection Agency or any other
federal or state governmental agency concerning any action or omission by any
Borrower or any Subsidiary of a Borrower resulting in the releasing or disposing
of Hazardous Materials into the environment.
5.15 Brokerage Fees. Borrowers and their Subsidiaries have not utilized
the services of any broker or finder in connection with obtaining financing from
the Lender Group under this Agreement except Xxxxxxxxx & Company, Inc. and any
brokerage commission or finders fee is payable solely by Borrowers or their
Subsidiaries in connection herewith.
5.16 Intellectual Property. Each Borrower and each Domestic Subsidiary of
a Borrower owns, or holds licenses in, all trademarks, trade names, copyrights,
patents, patent rights, and licenses that are necessary to the conduct of its
business as currently conducted.. Attached hereto as Schedule 5.16 (as updated
from time to time) is a true, correct, and complete listing of all material
patents, patent applications, trademarks, trademark
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applications, copyrights, and copyright registrations as to which each Borrower
or one of its Domestic Subsidiaries is the owner or is an exclusive licensee.
5.17 Leases. Borrowers and their Domestic Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating. All of such leases are valid
and subsisting and no material default by Borrowers or their Subsidiaries exists
under any of them.
5.18 Deposits and Securities Accounts. Set forth on Schedule 5.18 are all
of Borrowers' and their Subsidiaries' Deposit Accounts and Securities Accounts,
including, with respect to each bank or securities intermediary (i) the name and
address of such Person, and (ii) the account numbers of the Deposit Accounts or
Securities Accounts maintained with such Person.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent
or any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Borrowers or their Subsidiaries in writing to the Agent or any
Lender will be, true and accurate in all material respects on the date as of
which such information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided. On the Closing Date, the Closing Date
Projections represent, and as of the date on which any other Projections are
delivered to Agent, such additional Projections represent Borrowers' good faith
best estimate of their and their Subsidiaries' future performance for the
periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of each Borrower and each Subsidiary of a Borrower
outstanding immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such Schedule accurately reflects the aggregate
principal amount of such Indebtedness and the principal terms thereof.
5.21 MRT Holdings. MRT Holdings has no assets or liabilities and conducts
and has conducted no business activities.
5.22 Prince Mfg. Prince Mfg conducts no business activities and its only
assets are Cash Equivalents of approximately $18,000,000 as of the Closing Date
and the Stock of PMC, has no other assets or liabilities and conducts and has
conducted no business activities.
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6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, until termination of all of
the Commitments and payment in full of the Obligations, Borrowers shall and
shall cause each of their respective Subsidiaries to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to their and their Subsidiaries' Inventory.
6.2 Collateral Reporting. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
================================================================================
Daily (a) Accounts Receivable rollforward with respect to
Borrowers and their Domestic Subsidiaries and support in
form and substance satisfactory to Agent,
(b) notice of all claims, offsets, or disputes asserted
by Account Debtors with respect to Borrowers' and their
Domestic Subsidiaries' Accounts,
--------------------------------------------------------------------------------
Weekly (c) a sales journal, collection journal, and credit
register since the last such schedule, a report
regarding credit memoranda that have been issued since
the last such report, and a calculation of the Borrowing
Base as of such date,
(d) A detailed aging, by total, of the Accounts of
Borrowers in electronic form,
(e) Electronic Inventory reports specifying the cost of
Borrowers' and their Domestic Subsidiaries' Inventory,
by category and location,
--------------------------------------------------------------------------------
Monthly (not later (f) a detailed calculation of the Borrowing Base
than the 20th day (including detail regarding those Accounts of Borrowers
of each month) that are not Eligible Accounts),
(g) a detailed aging, by total, of the Accounts of
Borrowers, together with a reconciliation to the
detailed calculation of the Borrowing Base and financial
statements previously provided to Agent,
(h) a detailed aging, by vendor, of Borrowers' and their
Domestic Subsidiaries' accounts payable and any book
overdraft, and a reconciliation to the financial
statements,
================================================================================
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================================================================================
(i) a detailed report regarding Borrowers' and their
Domestic Subsidiaries' cash and Cash Equivalents
including an indication of which amounts constitute
Qualified Cash,
(j) a calculation of Dilution for the month most
recently ended,
(k) a reconciliation of the Inventory reports for the
month to the financial statements,
--------------------------------------------------------------------------------
Quarterly (l) a detailed list of each Borrower's and each Domestic
Subsidiary of a Borrower's customers, and
(m) a report regarding each Borrower's and each Domestic
Subsidiary of a Borrower's accrued, but unpaid, ad
valorem taxes.
--------------------------------------------------------------------------------
Upon request (n) copies of invoices in connection with Borrowers' and
by Agent their Domestic Subsidiaries' Accounts, credit memos,
remittance advices, deposit slips, shipping and delivery
documents in connection with Borrowers' and their
Domestic Subsidiaries' Accounts and, for Inventory and
Equipment acquired by Borrowers or their Domestic
Subsidiaries, purchase orders and invoices, and
(o) such other reports as to the Collateral or the
financial condition of Borrowers and their Domestic
Subsidiaries, as Agent may request.
================================================================================
In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of Parent's fiscal quarters)
after the end of each month during each of Parent's fiscal years,
(i) a company prepared consolidated and consolidating balance
sheet, income statement, and statement of cash flow covering
Parent's and its Subsidiaries' operations during such period,
(ii) a certificate signed on behalf of Parent by the chief
financial officer of Parent to the effect that:
A. the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes
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and being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of
Parent and its Subsidiaries,
B. the representations and warranties of Borrowers
contained in this Agreement and the other Loan Documents are
true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such
date (except to the extent that such representations and
warranties relate solely to an earlier date and except for
changes permitted under the Loan Documents and reflected in an
updated schedule delivered by the Borrowers), and
C. there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent
of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrowers
have taken, are taking, or propose to take with respect
thereto), and
(iii) for each month that is the date on which a financial
covenant in Section 7.18 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
7.18,
(b) as soon as available, but in any event within 90 days
after the end of each of Parent's fiscal years,
(i) consolidated financial statements of Parent and its
Subsidiaries for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Agent and
certified (other than as to consolidating statements), without any
qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
consolidated and consolidating balance sheet, income statement, and
statement of cash flow and, if prepared, such accountants' letter to
management), and
(ii) a certificate of such accountants addressed to Agent and
the Lenders stating that such accountants do not have knowledge of
the existence of any Default or Event of Default under Section 7.18,
(c) as soon as available, but in any event within 30 days
prior to the start of each of Parent's fiscal years, copies of Borrowers'
Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent, in its sole discretion, for the forthcoming
fiscal year, month by month, certified on behalf of Parent by the chief
financial officer of Parent as being its good faith best estimate of the
financial performance of Parent and its Subsidiaries during the period covered
thereby,
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(d) if and when filed by any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports, and Form
8-K current reports,
(ii) any other filings made by any Borrower with the SEC,
(iii) copies of Borrowers' federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Parent to its
noteholders generally,
(e) if and when filed by any Borrower or any Domestic
Subsidiary of a Borrower and as requested by Agent, satisfactory evidence of
payment of applicable excise taxes in each jurisdiction in which (i) any
Borrower or any Domestic Subsidiary of a Borrower conducts business or is
required to pay any such excise tax, (ii) where any Borrower's or any Domestic
Subsidiary of a Borrower's failure to pay any such applicable excise tax would
result in a Lien on the properties or assets of such Borrower or such Domestic
Subsidiary, or (iii) where any Borrower's or any Domestic Subsidiary of a
Borrower's failure to pay any such applicable excise tax reasonably could be
expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that Borrowers propose to take with respect
thereto,
(g) promptly after the commencement thereof, but in any event
within 5 days after the service of process with respect thereto on any Borrower
or any Domestic Subsidiary of a Borrower, notice of all actions, suits, or
proceedings brought by or against any Borrower or any Domestic Subsidiary of a
Borrower before any Governmental Authority which, if determined adversely to
such Borrower or such Domestic Subsidiary, reasonably could be expected to
result in a Material Adverse Change, and
(h) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrowers or their Domestic
Subsidiaries.
In addition to the financial statements referred to above, Borrowers
agree to deliver financial statements prepared on both a consolidated and
consolidating basis and agree that no Domestic Subsidiary of Parent will have a
fiscal year different from that of Parent. Borrowers agree to cooperate with
Agent to allow Agent to consult with their independent certified public
accountants if Agent reasonably requests the right to do so and that, in such
connection, their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Borrowers or their Subsidiaries that Agent reasonably may request.
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6.4 [intentionally omitted].
6.5 Returns. Cause returns and allowances as between Borrowers and their
Domestic Subsidiaries and their Account Debtors, to be on the same basis and in
accordance with the usual customary practices of Borrowers and their Domestic
Subsidiaries, as they exist at the time of the execution and delivery of this
Agreement.
6.6 Maintenance of Properties. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct to their business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee
and necessary or useful in the proper conduct of their businesses, so as to
prevent any loss or forfeiture thereof or thereunder.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers,
their Domestic Subsidiaries, or any of their respective assets to be paid in
full, before delinquency or before the expiration of any extension period,
except to the extent that the validity of such assessment or tax shall be the
subject of a Permitted Protest. Borrowers will and will cause their Domestic
Subsidiaries to make timely payment or deposit of all tax payments and
withholding taxes required of them by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Borrower or Domestic Subsidiary of a
Borrower has made such payments or deposits.
6.8 Insurance At Borrowers' expense, maintain insurance respecting
their and their Domestic Subsidiaries' assets wherever located, covering loss or
damage by fire, theft, explosion, and all other hazards and risks as ordinarily
are insured against by other Persons engaged in the same or similar businesses.
Borrowers also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
or additional insured, as appropriate, with respect to insurance covering Parent
and its Domestic Subsidiaries. Each policy of insurance or endorsement covering
Parent and its Domestic Subsidiaries shall contain a clause requiring the
insurer to give not less than 30 days prior written notice to Agent in the event
of cancellation of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of
any loss covered by such insurance. So long as no Default or Event of Default
has occurred and is continuing, Borrowers shall have the right to adjust any
losses claimed after the Closing Date with Agent's consent. At any time
following the occurrence and during the continuance of a Default or an Event of
Default, Agent shall have the exclusive right to adjust any losses claimed after
the Closing Date without any liability to Borrower whatsoever in respect of such
adjustments. During the continuance of a Default or an Event of Default, Agent
shall
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have the exclusive right to adjust any losses claimed under any such insurance
policies, without any liability to Borrowers whatsoever in respect of such
adjustments, and any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Agent to be applied at the option of the Required Lenders either
to the prepayment of the Obligations or shall be disbursed to Administrative
Borrower under staged payment terms reasonably satisfactory to the Required
Lenders for application to the cost of repairs, replacements, or restorations.
Any such repairs, replacements, or restorations shall be effected with
reasonable promptness and shall be of a value at least equal to the value of the
items or property destroyed prior to such damage or destruction.
(c) Borrowers shall not, and shall not suffer or permit their
Domestic Subsidiaries to, take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 6.8, unless Agent is included thereon as named insured with the loss
payable to Agent under a lender's loss payable endorsement or its equivalent.
Administrative Borrower immediately shall notify Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.
6.9 Location of Inventory and Equipment. Keep Borrowers' and their
Domestic Subsidiaries' Inventory and Equipment only at the locations identified
on Schedule 5.5 and their chief executive offices only at the locations
identified on Schedule 5.7(b); provided, however, that Administrative Borrower
may amend Schedule 5.5 and Schedule 5.7 so long as such amendment occurs by
written notice to Agent not less than 30 days after the date on which such
Inventory or Equipment is moved to such new location or such chief executive
office is relocated, so long as such new location is within the continental
United States, and so long as, at the time of such written notification, the
applicable Borrower provides Agent a Collateral Access Agreement with respect
thereto.
6.10 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable under any
leases to which any Borrower or any Domestic Subsidiary of a Borrower is a party
or by which any Borrower's or any Domestic Subsidiary of a Borrower's properties
and assets are bound, unless such payments are the subject of a Permitted
Protest.
6.12 Existence. Except for the consummation of the PMC Sale Transactions
or the Permitted Reorganization Transactions, and other than the Norwegian
Subsidiaries, at all times preserve and keep in full force and effect each
Borrower's and each Subsidiary of a
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Borrower's valid existence and good standing and any rights and franchises
material to their businesses.
6.13 Environmental. (a) Keep any property either owned or operated by any
Borrower or any Domestic Subsidiary of a Borrower free of any Environmental
Liens or post bonds or other financial assurances sufficient to satisfy the
obligations or liability evidenced by such Environmental Liens, (b) comply, in
all material respects, with Environmental Laws and provide to Agent
documentation of such compliance which Agent reasonably requests, (c) promptly
notify Agent of any release of a Hazardous Material of any reportable quantity
from or onto property owned or operated by any Borrower or any Domestic
Subsidiary of a Borrower and take any Remedial Actions required to xxxxx said
release or otherwise to come into compliance with applicable Environmental Law,
and (d) promptly, but in any event within 5 days of its receipt thereof, provide
Agent with written notice of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of any Borrower or any Domestic Subsidiary of a Borrower, (ii) commencement of
any Environmental Action or notice that an Environmental Action will be filed
against any Borrower or any Domestic Subsidiary of a Borrower, and (iii) notice
of a violation, citation, or other administrative order, which in any case under
clause (i), (ii) or (iii) reasonably could be expected to result in a Material
Adverse Change.
6.14 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained any untrue statement
of a material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made. The foregoing to the contrary notwithstanding, any notification
pursuant to the foregoing provision will not cure or remedy the effect of the
prior untrue statement of a material fact or omission of any material fact nor
shall any such notification have the affect of amending or modifying this
Agreement or any of the Schedules hereto.
6.15 Formation of Subsidiaries. At the time that any Borrower or any
Guarantor forms any direct or indirect Domestic Subsidiary or acquires any
direct or indirect Domestic Subsidiary after the Closing Date, such Borrower or
such Guarantor shall (a) cause such new Subsidiary to provide to Agent a joinder
to this Agreement or the Guaranty and the Guarantor Security Agreement, together
with such other security documents (including Mortgages with respect to any Real
Property of such new Subsidiary), as well as appropriate UCC-1 financing
statements (and with respect to all property subject to a Mortgage, fixture
filings), all in form and substance satisfactory to Agent (including being
sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary), (b) provide to
Agent a pledge agreement and appropriate certificates and powers or financing
statements, hypothecating all of the direct or beneficial ownership interest in
such new Subsidiary, in form and substance satisfactory to Agent, and (c)
provide to Agent all other documentation, including one or more opinions of
counsel satisfactory to Agent, which in its opinion is appropriate with respect
to the execution and delivery of the applicable documentation referred to above
(including policies of title
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insurance or other documentation with respect to all property subject to a
Mortgage). Any document, agreement, or instrument executed or issued pursuant to
this Section 6.15 shall be a Loan Document.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, until termination of all of
the Commitments and payment in full of the Obligations, Borrowers will not and
will not permit any of their respective Subsidiaries to do any of the following:
7.1 IndebtednessCreate, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c), (h), (i) and (k) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Agent's judgment, materially impair the prospects of repayment of the
Obligations by Borrowers or materially impair Borrowers' creditworthiness, (ii)
such refinancings, renewals, or extensions do not result in an increase in the
then extant principal amount of the Indebtedness so refinanced, renewed, or
extended or add one or more Borrowers as liable with respect thereto if such
additional Borrowers were not liable with respect to the original Indebtedness,
(iii) such refinancings, renewals, or extensions do not result in a shortening
of the average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions, that, taken as a whole, are
materially more burdensome or restrictive to the applicable Borrower, (iv) if
the Indebtedness that is refinanced, renewed, or extended was subordinated in
right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must be include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended Indebtedness, and
(v) the Indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended;
(e) endorsement of instruments or other payment items for
deposit;
(f) Indebtedness composing Permitted Investments (including
Permitted Intercompany Advances);
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(g) Hedge Agreements of Borrowers or any Subsidiary of
Borrower covering Indebtedness of Borrowers or any Subsidiary of Borrowers;
provided, however, that such Hedge Agreements are entered into in the ordinary
course of business, are not for speculative purposes and are entered into for
the purpose of fixing or hedging interest rates with respect to any fixed or
variable rate Indebtedness that is permitted hereunder;
(h) Indebtedness of a Non-Obligor to Persons that are not
Affiliates of Parent or any Permitted Holder in an aggregate outstanding
principal amount not to exceed $16,000,000 (which amount shall not include any
other amounts otherwise permitted under this Section 7.1);
(i) any guaranty by any Borrower or any Guarantor of each
other's Indebtedness or performance of obligations; provided that such other's
Indebtedness or obligation is permitted to be incurred under this Agreement;
(j) Indebtedness incurred in connection with the purchase or
redemption of shares of Parent or a Subsidiary permitted under this Agreement;
(k) Indebtedness arising from agreements of Parent or a
Subsidiary with Palladium providing for the guarantee, indemnification,
adjustment of purchase price or similar obligations, in each case, incurred in
connection with the PMC Sales Transactions; provided that the maximum aggregate
liability in respect of such Indebtedness shall at no time exceed the gross
proceeds or value of the consideration actually received by Parent and its
Subsidiaries in connection with such transaction; and
(l) Indebtedness arising from agreements of Parent or a
Subsidiary providing for the guarantee, indemnification, adjustment of purchase
price or similar obligation, in each case, incurred under the PMC Sale
Transactions; provided that in no event may the maximum aggregate liability in
respect of such Indebtedness exceed the gross proceeds actually received by
Parent and its Domestic Subsidiaries in the PMC Sale Transactions.
7.2 Liens. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Except in connection with the consummation of the PMC Sale
Transactions or the consummation of the Permitted Reorganization Transactions,
enter into any merger, consolidation, reorganization, or recapitalization, or
reclassify its Stock.
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(b) Except in connection with the consummation of the PMC Sale
Transactions or the consummation of the Permitted Reorganization Transactions,
liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).
(c) Except in connection with the consummation of the PMC Sale
Transactions or the consummation of the Permitted Reorganization Transactions,
convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
assets.
7.4 Disposal of Assets. Other than Permitted Dispositions and except in
connection with the consummation of the Permitted Reorganization Transactions,
convey, sell, lease, license, assign, transfer, or otherwise dispose of any of
the assets of any Borrower or any Subsidiary of a Borrower.
7.5 Change Name. Change any Borrower's or any Domestic Subsidiary of a
Borrower's name, FEIN, organizational identification number, state of
organization, or organizational identity; provided, however, that a Borrower or
a Subsidiary of a Borrower may change its name upon at least 30 days prior
written notice by Administrative Borrower to Agent of such change and so long
as, at the time of such written notification, such Borrower or such Subsidiary
provides any financing statements necessary to perfect and continue perfected
Agent's Liens.
7.6 Nature of Business. Engage in any business other than the business in
which they are engaged as of the Closing Date and any business that is
reasonably related to or complimentary to such business.
7.7 Prepayments and Amendments. Except in connection with a refinancing
permitted by Section 7.1(d) and except for mandatory redemptions of the Old
Notes and/or New Notes required under the terms of the Existing Indenture or the
New Indenture (as in effect on the date hereof) as a result of an Indenture
Change of Control or as a result of Asset Sales (for the avoidance of doubt, the
foregoing shall not include mandatory prepayments on account of Excess Cash
Flow),
(a) prepay, redeem, defease, purchase, or otherwise acquire
any Indebtedness of any Borrower or any Subsidiary of a Borrower, other than the
Obligations in accordance with this Agreement, or
(b) directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Section 7.1(b) or (c).
7.8 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.9 Consignments. In the case of Borrowers or any of their Domestic
Subsidiaries, consign any of their Inventory or sell any of their Inventory on
xxxx and hold, sale or return,
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sale on approval, or other conditional terms of sale in an aggregate amount of
more than $2,000,000 at any time outstanding; provided however that in no event
shall any such Inventory constitute Eligible Inventory.
7.10 Distributions. Other than Permitted Distributions, make any
distribution or declare or pay any dividends (in cash or other property, other
than common Stock) on, or purchase, acquire, redeem, or retire the Stock of
Parent or any of its Subsidiaries, of any class, whether now or hereafter
outstanding.
7.11 Accounting Methods. Modify or change their fiscal year or their
method of accounting (other than as may be required to conform to GAAP) or enter
into, modify, or terminate any agreement currently existing, or at any time
hereafter entered into with any third party accounting firm or service bureau
for the preparation or storage of Borrowers' or their Subsidiaries' accounting
records without said accounting firm or service bureau agreeing to provide Agent
information regarding Borrowers' and their Subsidiaries' financial condition.
7.12 Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Administrative Borrower and its Domestic Subsidiaries shall not
have Permitted Investments (other than in the Cash Management Accounts) in
Deposit Accounts or Securities Accounts in an aggregate amount in excess of
$100,000 outstanding at any one time unless Administrative Borrower or its
Domestic Subsidiary, as applicable, and the applicable securities intermediary
or bank have entered into Control Agreements or similar arrangements governing
such Permitted Investments in order to perfect (and further establish) the
Agent's Liens in such Permitted Investments. Subject to the foregoing proviso,
Borrowers shall not, and shall not permit their Domestic Subsidiaries to,
establish or maintain any Deposit Account or Securities Account unless Agent
shall have received a Control Agreement in respect of such Deposit Account or
Securities Account.
7.13 Transactions with Affiliates. Except as disclosed in Schedule 7.13
hereto and except for (a) Permitted Intercompany Advances, (b) Permitted
Distributions, (c) payments permitted to be made under Section 7.15, (d) the
consummation of the PMC Sale Transactions, and (e) Permitted Investments
pursuant to clauses (e), (f) and (i) of the definition of Permitted Investments,
directly or indirectly enter into or permit to exist any transaction with any
Affiliate of any Borrower except for transactions that are in the ordinary
course of Borrowers' business, upon fair and reasonable terms, that are fully
disclosed to Agent, and that are no less favorable to Borrowers than would be
obtained in an arm's length transaction with a non-Affiliate.
7.14 Suspension. Suspend or go out of a substantial portion of their
business.
7.15 Compensation. Pay cash salary and bonus in the aggregate to Xxxx
Xxxxxxxx in respect of each fiscal year beginning on or after July 1, 2004 (a)
for which Cash Flow of the prior fiscal year is less than $25,000,000 in excess
of $750,000, (b) for which Cash Flow
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of the prior fiscal year is greater than or equal to $25,000,000 but less than
$36,000,000, in excess of the sum of (i) $1,000,000 plus (ii) (A) $650,000 times
(B) a ratio, the numerator of which is Cash Flow with respect to such prior
fiscal year less $25,000,000 and the denominator of which is $11,000,000, and
(c) for which Cash Flow of the prior fiscal year is greater than or equal to
$36,000,000, in excess of the lesser of (y) the amount determined by the
Compensation Committee of the Board of Directors, and (z) $2,000,000.
7.16 Use of Proceeds. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to repay in full the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender, and (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) thereafter, consistent with the terms
and conditions hereof, for its lawful and permitted purposes.
7.17 Inventory and Equipment with Bailees. Except as otherwise expressly
permitted under this Agreement, store the Inventory or Equipment of Borrowers or
their Domestic Subsidiaries at any time now or hereafter with a bailee,
warehouseman, or similar party without Agent's prior written consent.
7.18 Financial Covenants(a) At any time that Borrowers do not have
Required Availability:
(i) Minimum Domestic EBITDA. Fail to maintain or achieve
EBITDA for Parent and its Domestic Subsidiaries, measured on a
month-end basis, of at least the required amount set forth in the
following table for the applicable period set forth opposite
thereto:
--------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------
$2,700,000 For the 2 month period
ending November 30, 2003
--------------------------------------------------------------------------------
$4,100,000 For the 3 month period
ending December 31, 2003
--------------------------------------------------------------------------------
$5,000,000 For the 4 month period
ending January 31, 2004
--------------------------------------------------------------------------------
$6,000,000 For the 5 month period
ending February 29, 2004
--------------------------------------------------------------------------------
$8,000,000 For the 6 month period
ending March 31, 2004
--------------------------------------------------------------------------------
$9,000,000 For the 7 month period
ending April 30, 2004
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
$10,000,000 For the 8 month period
ending May 31, 2004
--------------------------------------------------------------------------------
$12,000,000 For the 9 month period
ending June 30, 2004
--------------------------------------------------------------------------------
(ii) Consolidated Minimum EBITDA. Fail to maintain or achieve
EBITDA for Parent and its Subsidiaries, measured on a month-end
basis, of at least the required amount set forth in the following
table for the applicable period set forth opposite thereto:
--------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------
$5,200,000 For the 2 month period
ending November 30, 2003
--------------------------------------------------------------------------------
$7,500,000 For the 3 month period
ending December 31, 2003
--------------------------------------------------------------------------------
$10,000,000 For the 4 month period
ending January 31, 2004
--------------------------------------------------------------------------------
$12,000,000 For the 5 month period
ending February 29, 2004
--------------------------------------------------------------------------------
$15,500,000 For the 6 month period
ending March 31, 2004
--------------------------------------------------------------------------------
$18,000,000 For the 7 month period
ending April 30, 2004
--------------------------------------------------------------------------------
$21,000,000 For the 8 month period
ending May 31, 2004
--------------------------------------------------------------------------------
$24,000,000 For the 9 month period
ending June 30, 2004
--------------------------------------------------------------------------------
(b) Make:
(i) Capital Expenditures. Capital Expenditures in any fiscal
year in excess of the amount set forth in the following table for
the applicable period:
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--------------------------------------------------------------------------------
Fiscal Year 2004 Fiscal Year 2005 Fiscal Year 2006 Fiscal Year 2007
--------------------------------------------------------------------------------
$11,300,000 $11,300,000 $11,300,000 $11,300,000
--------------------------------------------------------------------------------
(c) Determination of Future Levels. Agent shall, in its
Permitted Discretion, establish the monthly minimum EBITDA and capital
expenditures covenants for the 10 month period ended July 31, 2004, the 11 month
period ended August 31, 2004, and the 12 month period ended September 30, 2004,
and for each trailing 12 month period thereafter based upon Borrowers'
Projections for such fiscal year delivered pursuant to Section 6.3(c) of this
Agreement, which Borrowers' Projections shall be satisfactory to Agent in all
respects. Borrowers shall execute any amendment to this Section 7.18 requested
by Agent to document the inclusion of such covenant levels. If Borrowers fail to
timely deliver the Borrowers' Projections pursuant to Section 6.3(c), the EBITDA
level for (i) the 10 month period ended July 31, 2004, the 11 month period ended
August 31, 2004, and the 12 month period ended September 30, 2004, shall be
measured on a monthly basis at an amount equal to 110% of the most recent prior
period and (ii) each succeeding trailing 12 month period after September 30,
2004 shall be measured on a monthly basis at an amount equal to 110% of the last
trailing 12 months.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or when declared due and
payable, all or any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due the Lender Group,
reimbursement of Lender Group Expenses, or other amounts constituting
Obligations) ); provided, however, that in the case of Overadvances that are
caused by the charging of interest, fees, or Lender Expenses to the Loan
Account, such event shall not constitute an Event of Default if, within 3
Business Days of its receipt of telephonic notice of such Overadvance, Borrowers
eliminate such Overadvance;
8.2 If any Borrower:
(a) fails to perform, keep, or observe any term, provision,
covenant, or agreement contained in Sections 2.7, 3.2, 4.2, 4.4, 4.6, 6.8, 6.12,
6.15, 6.16, 6.17, and 7.1 through 7.18 of this Agreement;
(b) fails or neglects to perform, keep, or observe any term,
provision, covenant, or agreement contained in Sections 4.5, 6.2, 6.3, 6.5, 6.6,
6.7, 6.9, 6.10, 6.11, and 6.14 of this Agreement and such failure continues for
a period of 5 Business Days; or
(c) fails or neglects to perform, keep, or observe any other
term, provision, covenant, or agreement contained in this Agreement, or in any
of the other Loan Documents (giving effect to any grace periods, cure periods,
or required notices, if any, expressly provided for in such Loan Documents); in
each case, other than any such term,
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provision, covenant, or agreement that is the subject of another provision of
this Section 8 (in which event such other provision of this Section 8 shall
govern), and such failure continues for a period of 10 Business Days;
; provided that, during any period of time that any such failure or
neglect referred to in this paragraph exists, even if such failure or neglect is
not yet an Event of Default, the Lender Group shall be relieved of its
obligation to extend credit hereunder;
8.3 If any material portion of any Borrower's or any Subsidiary of a
Borrower's assets is attached, seized, subjected to a writ or distress warrant,
levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by any Borrower or any
Subsidiary of a Borrower;
8.5 If an Insolvency Proceeding is commenced against any Borrower or any
Subsidiary of a Borrower, and any of the following events occur: (a) the
applicable Borrower or Subsidiary consents to the institution of the Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted; provided, however, that, during the pendency of such
period, each member of the Lender Group shall be relieved of its obligations to
extend credit hereunder, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 45 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period, each member of the
Lender Group shall be relieved of its obligation to extend credit hereunder, (d)
an interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, any Borrower or any Subsidiary of a Borrower, or (e)
an order for relief shall have been entered therein;
8.6 If any Borrower or any Subsidiary of a Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If (a) a notice of Lien is filed of record with respect to Borrower's
or any of its Domestic Subsidiaries' assets by the United States or any
department, agency, or instrumentality thereof (a "Federal Lien"), or by any
state, county, municipal, or governmental agency and such state, county,
municipal, or governmental agency Lien has priority over the Liens of Lender in
and to the Collateral or any portion thereof (a "Non-Federal Priority Lien"); or
(b) a notice of Lien is filed of record with respect to Borrowers' assets or any
of its Subsidiaries' assets by any state, county, municipal, or governmental
agency that is not a Non-Federal Priority Lien (a "Non-Federal Non-Priority
Lien"); provided, however, that, if the aggregate amount claimed with respect to
any such Non-Federal Non-Priority Liens, or combination thereof, is less than
$500,000, an Event of Default shall not occur under this subsection if the
claims that are the subject of such Liens are the subject of Permitted Protests
and if the Liens are released, discharged, or bonded against within 30 days of
each such Lien first being filed of record or, if earlier, at least 5 days prior
to the date on which assets that are subject to such Liens are subject to being
sold
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or forfeited and, in any such case, Lender shall have the absolute right to
establish and maintain a reserve against the Borrowing Base and the Maximum
Revolver Amount in an amount equal to the aggregate amount of the underlying
claims (determined by Lender, in its Permitted Discretion, and irrespective of
any Permitted Protests with respect thereto and including any penalties or
interest that are estimated by Lender, in its Permitted Discretion, to arise in
connection therewith);
8.8 If one or more judgments or other claims involving an aggregate amount
of $500,000, or more, in excess of the amount covered by insurance, becomes a
Lien or encumbrance upon any of Borrower's assets and the same is not released,
discharged, bonded against, or stayed pending appeal before the earlier of 30
days after the date it first arises or 5 days prior to the date on which such
asset is subject to being forfeited by Borrower;
8.9 If:
(a) there is a default (that is not waived or cured prior to the
earlier of (i) 30 days of the initial occurrence thereof, (ii) the acceleration
of the subject Indebtedness, or (iii) the expiration of any applicable grace or
cure period provided in the subject documents) in respect of outstanding
Indebtedness of Parent or its Subsidiaries of $500,000, or more;
(b) there is a breach by Parent or any of its Domestic Subsidiaries
of any material provision of any other material agreement to which Parent or
such Subsidiary is a party, and such breach results in a right by the other
party thereto, irrespective of whether exercised, to accelerate the maturity of
such Person's obligations thereunder, to terminate such agreement, or to refuse
to renew such agreement pursuant to an automatic renewal right therein; or
(c) on or before June 30, 2007, Borrowers and Guarantors shall have
failed to obtain an extension of the scheduled maturity of the Indenture
Securities to a date on or after March 1, 2008;
8.10 If any Borrower or any Subsidiary of a Borrower makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by any Borrower, any Subsidiary of a Borrower, or any officer,
employee, agent, or director of any Borrower or any Subsidiary of a Borrower;
8.12 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor thereunder;
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8.13 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby; or
8.14 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Borrower or any Subsidiary of a Borrower, or a proceeding
shall be commenced by any Borrower or any Subsidiary of a Borrower, or by any
Governmental Authority having jurisdiction over any Borrower or any Subsidiary
of a Borrower, seeking to establish the invalidity or unenforceability thereof,
or any Borrower or any Domestic Subsidiary of a Borrower shall deny that it has
any liability or obligation purported to be created under any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly with
Borrowers' Account Debtors for amounts and upon terms which Agent considers
advisable, and in such cases, Agent will credit the Loan Account with only the
net amounts received by Agent in payment of such disputed Accounts after
deducting all Lender Group Expenses incurred or expended in connection
therewith;
(e) Cause Borrowers to hold all of their returned Inventory in
trust for the Lender Group and segregate all such Inventory from all other
assets of Borrowers or in Borrowers' possession;
(f) Without notice to or demand upon any Borrower, make such
payments and do such acts as Agent considers necessary or reasonable to protect
its security
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interests in the Collateral. Each Borrower agrees to assemble the Collateral if
Agent so requires, and to make the Collateral available to Agent at a place that
Agent may designate which is reasonably convenient to both parties. Each
Borrower authorizes Agent to enter the premises where the Collateral is located,
to take and maintain possession of the Collateral, or any part of it, and to
pay, purchase, contest, or compromise any Lien that in Agent's determination
appears to conflict with the Agent's Liens in and to the Collateral and to pay
all expenses incurred in connection therewith and to charge Borrowers' Loan
Account therefor. With respect to any of Borrowers' owned or leased premises,
each Borrower hereby grants Agent a license to enter into possession of such
premises and to occupy the same, without charge, in order to exercise any of the
Lender Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting an acceptance of any collateral in
full or partial satisfaction of an obligation (within the meaning of the Code),
set off and apply to the Obligations any and all (i) balances and deposits of
any Borrower held by the Lender Group (including any amounts received in the
Cash Management Accounts), or (ii) Indebtedness at any time owing to or for the
credit or the account of any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and
deposits of any Borrower held by the Lender Group, and any amounts received in
the Cash Management Accounts, to secure the full and final repayment of all of
the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Borrower Collateral. Each Borrower hereby grants to Agent a license
or other right to use, without charge, such Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Borrower Collateral, in completing production of, advertising for sale, and
selling any Borrower Collateral and such Borrower's rights under all licenses
and all franchise agreements shall inure to the Lender Group's benefit;
(j) Sell the Borrower Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrowers' premises) as
Agent determines is commercially reasonable. It is not necessary that the
Borrower Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Borrower
Collateral as follows:
(i) Agent shall give Administrative Borrower (for the benefit
of the applicable Borrower) a notice in writing of the time and
place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Borrower Collateral, the time on or after which the private sale or
other disposition is to be made; and
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(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in Section
12, at least 10 days before the earliest time of disposition set
forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Borrower Collateral that is
perishable or threatens to decline speedily in value or that is of a
type customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit bid and
purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Borrower Collateral or to operate
same and, to the maximum extent permitted by law, may seek the appointment of
such a receiver without the requirement of prior notice or a hearing; and
(n) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents;
provided, however, that upon the occurrence of any Event of Default described in
Section 8.4 or Section 8.5, in addition to the remedies set forth above, without
any notice to Borrowers or any other Person or any act by the Lender Group, the
Commitments shall automatically terminate and the Obligations then outstanding,
together with all accrued and unpaid interest thereon, and all fees and all
other amounts due under this Agreement and the other Loan Documents, shall
automatically and immediately become due and payable, without presentment,
demand, protest, or notice of any kind, all of which are expressly waived by
Borrowers.
9.2 Remedies Cumulative. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an
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agreement by the Lender Group to make similar payments in the future or a waiver
by the Lender Group of any Event of Default under this Agreement. Agent need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.
11.2 The Lender Group's Liability for Borrower Collateral. Each Borrower
hereby agrees that: (a) so long as the Lender Group complies with its
obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Borrower Collateral, (ii)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause, (iii) any diminution in the value thereof, or (iv) any act or default
of any carrier, warehouseman, bailee, forwarding agency, or other Person, and
(b) all risk of loss, damage, or destruction of the Borrower Collateral shall be
borne by Borrowers.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons, and each Participant
(each, an "Indemnified Person") harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable attorneys fees and
disbursements and other costs and expenses actually incurred in connection
therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of them
(a) in connection with or as a result of or related to the execution, delivery,
enforcement, performance, or administration (including any restructuring or
workout with respect hereto) of this Agreement, any of the other Loan Documents,
or the transactions contemplated hereby or thereby or the monitoring of
Borrowers' and their Subsidiaries' compliance with the terms of the Loan
Documents, and (b) with respect to any investigation, litigation, or proceeding
related to this Agreement, any other Loan Document, or the use of the proceeds
of the credit provided hereunder (irrespective of whether any Indemnified Person
is a party thereto), or any act, omission, event, or circumstance in any manner
related thereto (all the foregoing, collectively, the "Indemnified
Liabilities"). The foregoing to the contrary notwithstanding, Borrowers shall
have no obligation to any Indemnified Person under this Section 11.3 with
respect to any Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or willful
misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were
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required to indemnify the Indemnified Person receiving such payment, the
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Borrowers with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY
NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative
Borrower: PHIBRO ANIMAL HEALTH CORPORATION
One Xxxxxx Plaza
000 Xxxxx Xxxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: President
Fax No. 000-000-0000
with copies to: GOLENBECK XXXXXXX XXXXX XXXX & XXXXXX LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxx, Esq.
Fax No. 000-000-0000
If to Agent: XXXXX FARGO FOOTHILL, INC.
Xxxxx Fargo Foothill, Inc.
Attn: Business Finance Division Manager
Xxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
with copies to: PAUL, HASTINGS, XXXXXXXX & XXXXXX LLP
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000-000-0000
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Agent and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received
on the earlier of the date of actual receipt or 3 Business Days after the
deposit thereof in the mail. Each Borrower acknowledges and agrees that notices
sent by the Lender Group in connection with the exercise of enforcement rights
against Borrower Collateral under the provisions of the Code shall be deemed
sent when deposited in the mail or personally delivered, or, where permitted by
law, transmitted by telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY BORROWER COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH BORROWER COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWERS AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 13(b).
BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE
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LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Any Lender may assign and delegate to one or more
assignees (each an "Assignee") that are Eligible Transferees all, or any ratable
part of all, of the Obligations, the Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents, in a
minimum amount of $5,000,000; provided, however, that Borrowers and Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Administrative Borrower and Agent by
such Lender and the Assignee, (ii) such Lender and its Assignee have delivered
to Administrative Borrower and Agent an Assignment and Acceptance, and (iii) the
assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding, the payment of any fees shall not be required and the
Assignee need not be an Eligible Transferee if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of the assigning
Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except with respect to Section 11.3 hereof) and be released from any future
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation between Borrowers and the Assignee; provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of this Agreement, including such assigning Lender's
obligations under Article 16 and Section 17.8 of this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each
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other and the other parties hereto as follows: (1) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(2) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrowers or the
performance or observance by Borrowers of any of their obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(4) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (5) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon Agent's receipt of the required
processing fee payment and the fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or
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consent or waiver with respect to this Agreement or of any other Loan Document
would (A) extend the final maturity date of the Obligations hereunder in which
such Participant is participating, (B) reduce the interest rate applicable to
the Obligations hereunder in which such Participant is participating, (C)
release all or substantially all of the Collateral or guaranties (except to the
extent expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections of Borrowers or their Subsidiaries, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to the provisions of
Section 17.8, disclose all documents and information which it now or hereafter
may have relating to Borrowers and their Subsidiaries and their respective
businesses.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss. 203.24, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
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15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required
to take any action hereunder,
(e) amend or modify this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section
16.12,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or Guarantor from any obligation for
the payment of money, or
(j) change the definition of Borrowing Base or the definitions
of Eligible Accounts, Eligible Inventory, Maximum Revolver Amount, or change
Section 2.1(b); or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver,
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consent, termination, or release of, or with respect to, any provision of this
Agreement or any other Loan Document that relates only to the relationship of
the Lender Group among themselves, and that does not affect the rights or
obligations of Borrowers, shall not require consent by or the agreement of
Borrowers.
15.2 Replacement of Holdout Lender If any action to be taken by the Lender
Group or Agent hereunder requires the unanimous consent, authorization, or
agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "Replacement
Lender"), and the Holdout Lender shall have not right to refuse to be replaced
hereunder. Such notice to replace the Holdout Lender shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby designates
and appoints WFF as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other
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Loan Documents on its behalf and to take such other action on its behalf under
the provisions of this Agreement and each other Loan Document and to exercise
such powers and perform such duties as are expressly delegated to Agent by the
terms of this Agreement or any other Loan Document, together with such powers as
are reasonably incidental thereto. Agent agrees to act as such on the express
conditions contained in this Section 16. The provisions of this Section 16
(other than the proviso to Section 16.11(d)) are solely for the benefit of
Agent, and the Lenders, and Borrowers and their Subsidiaries shall have no
rights as a third party beneficiary of any of the provisions contained herein.
Any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent; it being expressly understood and agreed that the use of the word
"Agent" is for convenience only, that WFF is merely the representative of the
Lenders, and only has the contractual duties set forth herein. Except as
expressly otherwise provided in this Agreement, Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections of Borrowers and their
Subsidiaries, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections of Borrowers and their Subsidiaries as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management accounts
as Agent deems necessary and appropriate in accordance with the Loan Documents
for the foregoing purposes with respect to the Collateral and the Collections of
Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the Collections of Borrowers and their
Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
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16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
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Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person party to a Loan Document, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrowers. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person party to a Loan Document. Except for notices, reports, and
other documents expressly herein required to be furnished to the Lenders by
Agent, Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of
Borrowers and any other Person party to a Loan Document that may come into the
possession of any of the Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
the Collections of Borrowers and their Subsidiaries received by Agent to
reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not reimbursed for
such costs and expenses from the Collections of Borrowers and their Subsidiaries
received by Agent, each Lender hereby agrees that it is and shall be obligated
to pay to or reimburse Agent for the amount of such Lender's Pro Rata Share
thereof. Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent
not reimbursed by or
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on behalf of Borrowers and without limiting the obligation of Borrowers to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's Pro Rata Share of any costs or out-of-pocket expenses
(including attorneys, accountants, advisors, and consultants fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 Agent in Individual Capacity. WFF and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though WFF were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Borrowers or their Affiliates and
any other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include WFF in its individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent
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has accepted appointment as Agent by the date which is 45 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrowers
or such other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver such
Lender will use its reasonable best efforts to obtain), such Lender not shall be
under any obligation to provide such information to them. With respect to the
Swing Loans and Agent Advances, Swing Lender shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not the sub-agent of the Agent.
16.11 Withholding Taxes.
(a) If any Lender is a "foreign person" within the meaning of
the IRC and such Lender claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees with
and in favor of Agent and Borrowers, to deliver to Agent and Administrative
Borrower:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (A) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a
"bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder of a Borrower (within the meaning of Section
871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to a Borrower within the meaning of Section 864(d)(4) of the
IRC, and (B) a properly completed and executed IRS Form W-8BEN,
before the first payment of any interest under this Agreement and at
any other time reasonably requested by Agent or Administrative
Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed and executed IRS Form W-8BEN before the first payment of
any interest under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower;
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(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form
W-8ECI before the first payment of any interest is due under this
Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iv) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any note
or other Loan Document will be made without setoff, counterclaim, or other
defense, except as required by applicable law other than for Taxes (as defined
below). All such payments will be made free and clear of, and without deduction
or withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or
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hereafter imposed by any jurisdiction (other than the United States) or by any
political subdivision or taxing authority thereof or therein (other than of the
United States) with respect to such payments (but excluding, any tax imposed by
any jurisdiction or by any political subdivision or taxing authority thereof or
therein (i) measured by or based on the net income or net profits of a Lender,
or (ii) to the extent that such tax results from a change in the circumstances
of the Lender, including a change in the residence, place of organization, or
principal place of business of the Lender, or a change in the branch or lending
office of the Lender participating in the transactions set forth herein) and all
interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "Taxes"). If any Taxes are so levied or
imposed, each Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any note, including any amount paid pursuant to
this Section 16.11(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrowers shall not be required to increase any such amounts payable to
Agent or any Lender (i) that is not organized under the laws of the United
States, if such Person fails to comply with the other requirements of this
Section 16.11, or (ii) if the increase in such amount payable results from
Agent's or such Lender's own willful misconduct or gross negligence. Borrowers
will furnish to Agent as promptly as possible after the date the payment of any
Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by Borrowers.
16.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Borrower or its Subsidiaries owned any
interest at the time the Agent's Lien was granted nor at any time thereafter, or
(iv) constituting property leased to a Borrower or its Subsidiaries under a
lease that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 16.12; provided, however, that (1) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or
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obligations of Borrowers in respect of) all interests retained by Borrowers,
including, the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrowers or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the written request of Agent, set off against
the Obligations, any amounts owing by such Lender to Borrowers or any deposit
accounts of Borrowers now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that to the extent that such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.
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16.14 Agency for Perfection. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession or control. Should any Lender
obtain possession or control of any such Collateral, such Lender shall notify
Agent thereof, and, promptly upon Agent's request therefor shall deliver
possession or control of such Collateral to Agent or in accordance with Agent's
instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer of immediately available
funds pursuant to such wire transfer instructions as each party may designate
for itself by written notice to Agent. Concurrently with each such payment,
Agent shall identify whether such payment (or any portion thereof) represents
principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information. By becoming a party to this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon the Books, as well as on representations of
Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner in
accordance with Section 17.8, and
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(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to
Borrowers, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of Borrowers; and (ii) to pay and protect,
and indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
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16.19 Legal Representation of Agent. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Paul, Hastings,
Xxxxxxxx & Xxxxxx LLP ("Xxxx Xxxxxxxx") only has represented and only shall
represent WFF in its capacity as Agent and as a Lender. Each other Lender hereby
acknowledges that Xxxx Xxxxxxxx does not represent it in connection with any
such matters.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by Borrowers, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6 Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by any Borrower or Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code
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relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (collectively, a
"Voidable Transfer"), and if the Lender Group is required to repay or restore,
in whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable Transfer, or the
amount thereof that the Lender Group is required or elects to repay or restore,
and as to all reasonable costs, expenses, and attorneys fees of the Lender Group
related thereto, the liability of Borrowers or Guarantor automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
17.8 Confidentiality. The Agent and the Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information
regarding Borrowers and their Subsidiaries, their operations, assets, and
existing and contemplated business plans shall be treated by Agent and the
Lenders in a confidential manner, and shall not be disclosed by Agent and the
Lenders to Persons who are not parties to this Agreement, except: (a) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group, (b) to Subsidiaries and Affiliates of any member of
the Lender Group (including the Bank Product Providers), provided that any such
Subsidiary or Affiliate shall have agreed to receive such information hereunder
subject to the terms of this Section 17.8, (c) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation, (d) as may
be agreed to in advance by Administrative Borrower or its Subsidiaries or as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, (e) as to any such information that is or becomes generally
available to the public (other than as a result of prohibited disclosure by
Agent or the Lenders), (f) in connection with any assignment, prospective
assignment, sale, prospective sale, participation or prospective participations,
or pledge or prospective pledge of any Lender's interest under this Agreement,
provided that any such assignee, prospective assignee, purchaser, prospective
purchaser, participant, prospective participant, pledgee, or prospective pledgee
shall have agreed in writing to receive such information hereunder subject to
the terms of this Section, and (g) in connection with any litigation or other
adversary proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents. The provisions of this Section 17.8
shall survive for 2 years after the payment in full of the Obligations. Anything
contained herein or in any other Loan Document to the contrary notwithstanding,
the obligations of confidentiality contained herein and therein, as they relate
to the transactions contemplated hereby, shall not apply to the federal tax
structure or federal tax treatment of such transactions, and each party hereto
(and any employee, representative, or agent of any party hereto) may disclose to
any and all Persons, without limitation of any kind, the federal tax structure
and federal tax treatment of such transactions (including all written materials
related to such tax structure and tax treatment). The preceding sentence is
intended to cause the transactions contemplated hereby to not be treated as
having been offered under conditions of confidentiality for purposes of Section
1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the IRC, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or
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exclusive rights to the tax structure of the transactions contemplated hereby or
any tax matter or tax idea related thereto.
17.9 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.10 Parent as Agent for Borrowers Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
PHIBRO ANIMAL HEALTH CORPORATION,
a New York corporation
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President & Chief Financial Officer
PHIBRO ANIMAL HEALTH U.S., INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
PHIBRO ANIMAL HEALTH HOLDINGS, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
PHIBRO AGRIPRODUCTS, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
PHIBRO-TECH, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
XXXXX FARGO FOOTHILL, INC.
a California corporation, as Agent and as a Lender
By: /s/ Xxxxx X. XxXxxxxx
------------------------------------------
Title: Xxxxx X. XxXxxxxx
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