SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF MARCH 20, 2007
AMONG
STANDARD MOTOR PRODUCTS, INC.,
MARDEVCO CREDIT CORP., AND
STANRIC, INC.,
AS BORROWERS,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
AS CREDIT PARTIES,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
AS LENDERS,
GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT AND A LENDER,
BANK OF AMERICA, N.A.,
AS A LENDER AND AS CO-SYNDICATION AGENT,
WACHOVIA BANK, N.A.,
AS A LENDER AND AS CO-SYNDICATION AGENT
AND
JPMORGAN CHASE BANK, N.A.
AS A LENDER AND AS DOCUMENTATION AGENT
TABLE OF CONTENTS
1. AMOUNT AND TERMS OF CREDIT............................................2
1.1. Credit Facilities............................................2
1.2. Letters of Credit............................................4
1.2A. Swap Related Reimbursement Obligations.......................4
1.3. Prepayments..................................................5
1.4. Use of Proceeds..............................................7
1.5. Interest and Applicable Margins..............................7
1.6. Eligible Accounts............................................9
1.7. Eligible Inventory..........................................12
1.8. Cash Management Systems.....................................13
1.9. Fees........................................................14
1.10. Receipt of Payments.........................................14
1.11. Application and Allocation of Payments......................14
1.12. Loan Account and Accounting.................................15
1.13. Indemnity...................................................15
1.14. Access......................................................17
1.15. Taxes.......................................................17
1.16. Capital Adequacy; Increased Costs; Illegality...............18
1.17. Single Loan.................................................19
1.18. Increase of the Maximum Amount by Borrowers.................20
2. CONDITIONS PRECEDENT.................................................21
2.1. Conditions to the Initial Loans.............................21
2.2. Further Conditions to Each Loan.............................22
3. REPRESENTATIONS AND WARRANTIES.......................................23
3.1. Corporate Existence; Compliance with Law....................23
3.2. Executive Offices, Collateral Locations, FEIN...............24
3.3. Corporate Power, Authorization, Enforceable Obligations.....24
3.4. Financial Statements and Projections........................24
3.5. Material Adverse Effect.....................................25
3.6. Ownership of Property; Liens................................25
3.7. Labor Matters...............................................26
3.8. Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness....................26
3.9. Government Regulation.......................................27
3.10. Margin Regulations..........................................27
3.11. Taxes.......................................................27
3.12. ERISA.......................................................28
3.13. No Litigation...............................................28
3.14. Brokers.....................................................29
3.15. Intellectual Property.......................................29
3.16. Full Disclosure.............................................29
3.17. Environmental Matters.......................................29
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3.18. Insurance...................................................30
3.19. Deposit and Disbursement Accounts...........................30
3.20. Government Contracts........................................30
3.21. Customer and Trade Relations................................30
3.22. Agreements and Other Documents..............................30
3.23. Solvency....................................................31
3.24. Subordinated Debt...........................................31
3.25. Anti-Terrorism Laws.........................................31
3.26. Trading with the Enemy......................................32
4. FINANCIAL STATEMENTS AND INFORMATION.................................32
4.1. Reports and Notices.........................................32
4.2. Communication with Accountants..............................32
5. AFFIRMATIVE COVENANTS................................................33
5.1. Maintenance of Existence and Conduct of Business............33
5.2. Payment of Charges..........................................33
5.3. Books and Records...........................................34
5.4. Insurance; Damage to or Destruction of Collateral...........34
5.5. Compliance with Laws........................................35
5.6. Supplemental Disclosure.....................................36
5.7. Intellectual Property.......................................36
5.8. Environmental Matters.......................................36
5.9. Landlords' Agreements, Mortgagee Agreements,
Bailee Letters and Real Estate Purchases..............37
5.10. Further Assurances..........................................37
6. NEGATIVE COVENANTS...................................................37
6.1. Mergers, Subsidiaries, Etc..................................38
6.2. Investments; Loans and Advances.............................40
6.3. Indebtedness................................................40
6.4. Employee Loans and Affiliate Transactions...................41
6.5. Capital Structure and Business..............................42
6.6. Guaranteed Indebtedness.....................................42
6.7. Liens.......................................................42
6.8. Sale of Stock and Assets....................................43
6.9. ERISA.......................................................43
6.10. Financial Covenants.........................................43
6.11. Hazardous Materials.........................................44
6.12. Sale Leasebacks.............................................44
6.13. Cancellation of Indebtedness................................44
6.14. Restricted Payments.........................................44
6.15. Change of Corporate Name, State of Incorporation
or Location; Change of Fiscal Year....................44
6.16. No Impairment of Intercompany Transfers.....................45
6.17. No Speculative Transactions.................................45
6.18. Leases......................................................45
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6.19. Changes Relating to Subordinated Debt;
Material Contracts....................................45
6.20. Inactive Subsidiaries.......................................45
7. TERM.................................................................46
7.1. Termination.................................................46
7.2. Survival of Obligations Upon Termination
of Financing Arrangements.............................46
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES...............................46
8.1. Events of Default...........................................46
8.2. Remedies....................................................48
8.3. Waivers by Credit Parties...................................49
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT..................49
9.1. Assignment and Participations...............................49
9.2. Appointment of Agent........................................51
9.3. Agent's Reliance, Etc.......................................52
9.4. GE Capital and Affiliates...................................53
9.5. Lender Credit Decision......................................53
9.6. Indemnification.............................................53
9.7. Successor Agent.............................................53
9.8. Setoff and Sharing of Payments..............................54
9.9. Advances; Payments; Non-Funding Lenders;
Information; Actions in Concert.......................55
9.10. Syndication and Documentation Agents........................57
10. SUCCESSORS AND ASSIGNS...............................................57
10.1. Successors and Assigns......................................57
11. MISCELLANEOUS........................................................57
11.1. Complete Agreement; Modification of Agreement...............57
11.2. Amendments and Waivers......................................58
11.3. Fees and Expenses...........................................60
11.4. No Waiver...................................................61
11.5. Remedies....................................................61
11.6. Severability................................................61
11.7. Conflict of Terms...........................................61
11.8. Confidentiality.............................................62
11.9. GOVERNING LAW...............................................62
11.10. Notices.....................................................63
11.11. Section Titles..............................................63
11.12. Counterparts................................................63
11.13. WAIVER OF JURY TRIAL........................................63
11.14. Press Releases and Related Matters..........................64
11.15. Reinstatement...............................................64
11.16. Advice of Counsel...........................................64
11.17. No Strict Construction......................................64
11.18. Reaffirmation of Collateral Documents.......................64
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11.19. Certifications From Banks and Participants;
US PATRIOT Act........................................65
12. CROSS-GUARANTY.......................................................65
12.1. Cross-Guaranty..............................................65
12.2. Waivers by Borrowers........................................66
12.3. Benefit of Guaranty.........................................66
12.4. Subordination of Subrogation, Etc...........................66
12.5. Election of Remedies........................................66
12.6. Limitation..................................................67
12.7. Contribution with Respect to Guaranty Obligations...........67
12.8. Liability Cumulative........................................68
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INDEX OF APPENDICES
Annex A (Recitals) Definitions
Annex B (Section 1.2) Letters of Credit
Annex C (Section 1.8) Cash Management System
Annex D-1 (Section 2.1(a)) Closing Checklist
Annex E (Section 4.1(a)) Financial Statements and Projections--Reporting
Annex F (Section 4.1(b)) Collateral Reports
Annex G (Section 6.10) Financial Covenants
Annex H (Section 9.9(a)) Lenders' Wire Transfer Information
Annex I (Section 11.10) Notice Addresses
Annex J (from Annex A Commitments as of Closing Date
Commitments definition)
Exhibit 1.1(a)(i) Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) Form of Revolving Note
Exhibit 1.5(d) Form of Notice of Conversion/Continuation
Exhibit 4.1(b) Form of Borrowing Base Certificate
Exhibit 9.1(a) Form of Assignment Agreement
Exhibit B-1 Application for Standby Letter of Credit
Exhibit B-2 Application and Agreement for Documentary Letter of Credit
Exhibit B-3 Application for Documentary Letter of Credit
Schedule 1.1 Agent's Representatives
Disclosure Schedule 1.4 Sources and Uses; Funds Flow Memorandum
Disclosure Schedule 1.6 Customer Program Financial Institutions
Disclosure Schedule 3.1 Type of Entity; State of Organization
Disclosure Schedule 3.2 Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(a) Financial Statements
Disclosure Schedule 3.4(b) Projections
Disclosure Schedule 3.6 Real Estate and Leases
Disclosure Schedule 3.7 Labor Matters
Disclosure Schedule 3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 3.11 Tax Matters
Disclosure Schedule 3.12 ERISA Plans
Disclosure Schedule 3.13 Litigation
Disclosure Schedule 3.15 Intellectual Property
Disclosure Schedule 3.17 Hazardous Materials
Disclosure Schedule 3.18 Insurance
Disclosure Schedule 3.19 Deposit and Disbursement Accounts
Disclosure Schedule 3.20 Government Contracts
Disclosure Schedule 3.22 Agreements and Other Documents
Disclosure Schedule 5.1 Trade Names
Disclosure Schedule 6.2 Investments
Disclosure Schedule 6.3 Indebtedness
Disclosure Schedule 6.4(a) Transactions with Affiliates
Disclosure Schedule 6.6 Guaranteed Indebtedness
Disclosure Schedule 6.7 Existing Liens
Disclosure Schedule E Equipment subject to Capital Leases
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This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"),
dated as of March 20, 2007 among STANDARD MOTOR PRODUCTS, INC. a New York
corporation ("SMP"), STANRIC, INC., a Delaware corporation ("SI") and MARDEVCO
CREDIT CORP., a New York corporation ("MCC") (SMP, SI and MCC are sometimes
collectively referred to herein as the "Borrowers" and individually as a
"Borrower"); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (in its individual capacity, "GE Capital"),
for itself, as a Lender, and as Agent for Lenders, BANK OF AMERICA, N.A., for
itself, as a Lender, and as a Co-Syndication Agent, WACHOVIA BANK, N.A., for
itself as a Lender, and as a Co-Syndication Agent and JPMORGAN CHASE BANK, N.A.,
for itself as a Lender, and as Documentation Agent and the other Lenders
signatory hereto from time to time.
RECITALS
WHEREAS, Credit Parties and Original Lenders were parties to the
Original Credit Agreement pursuant to which Original Lenders extended revolving
credit facilities to Borrowers of up to Three Hundred and Five Million Dollars
($305,000,000) in the aggregate; and
WHEREAS, Borrowers have requested that Lenders (i) amend and restate
the Original Credit Agreement and (ii) extend revolving credit facilities to
Borrowers of up to Two Hundred and Sixty Three Million Dollars ($263,000,000) in
the aggregate (plus an optional Fifty Million Dollar ($50,000,000) accordion
facility) for the purpose of (a) providing working capital financing for the
general corporate purposes of Borrowers and (b) providing funds for other
purposes permitted hereunder; including, without limitation, the refinancing,
repurchase and/or redemption of Subordinated Debt, and for these purposes,
Lenders are willing to make certain loans and other extensions of credit to
Borrowers of up to such amount upon the terms and conditions set forth herein;
and
WHEREAS, Credit Parties have agreed to secure all of their obligations
under the Loan Documents by granting to Agent, for the benefit of Agent and
Lenders, a security interest in and lien upon substantially all of their
existing and after-acquired personal and real property; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
AMENDMENT AND RESTATEMENT
As of the date of this Agreement, the terms, conditions, covenants,
agreements, representations and warranties contained in the Original Credit
Agreement shall be deemed amended and restated in their entirety as follows and
the Original Credit Agreement shall be consolidated with and into and superceded
by this Agreement without breaking continuity; provided, however, that nothing
contained in this Agreement shall impair, limit or affect the security interests
heretofore granted, pledged and or assigned to Agent as security for the
Obligations under the Original Credit Agreement and this Agreement does not
constitute a novation of the Original Credit Agreement or the security interests
granted in connection therewith. Outstanding Revolving Credit Advances under the
Original Credit Agreement shall constitute Revolving Credit Advances under this
Agreement. Outstanding Letter of Credit Obligations under the Original Credit
Agreement shall constitute Letter of Credit Obligations under this Agreement
1. AMOUNT AND TERMS OF CREDIT
1.1. CREDIT FACILITIES.
(a) REVOLVING CREDIT FACILITY.
(i) Subject to the terms and conditions hereof each
Lender agrees to make available to Borrowers from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each, a "Revolving
Credit Advance"). The Pro Rata Share of the Revolving Loans of any Lender shall
not at any time exceed its separate Commitment. The obligations of each Lender
hereunder shall be several and not joint. Until the Commitment Termination Date,
Borrowers may borrow, repay and reborrow under this Section 1.1(a)(i); provided
that the amount of any Revolving Credit Advance to be made at any time shall not
exceed Borrowing Availability at such time. Borrowing Availability may be
reduced by Reserves imposed by Agent in its reasonable credit judgment.
Moreover, Revolving Loans outstanding to any Borrower shall not exceed at any
time that Borrower's separate Borrowing Base. Each Revolving Credit Advance
shall be made on notice by Borrower Representative on behalf of the applicable
Borrower to one of the representatives of Agent identified in Schedule 1.1 at
the address specified therein. Any such notice must be given no later than (1)
noon (New York time) on the Business Day of the proposed Revolving Credit
Advance, in the case of an Index Rate Loan, or (2) noon (New York time) on the
date which is three (3) Business Days prior to the proposed Revolving Credit
Advance, in the case of a LIBOR Loan. Each such notice (a "Notice of Revolving
Credit Advance") must be given in writing (by telecopy or overnight courier)
substantially in the form of Exhibit 1.1(a)(i), and shall include the
information required in such Exhibit and such other information as may be
reasonably required by Agent. If any Borrower desires to have the Revolving
Credit Advances bear interest by reference to a LIBOR Rate, Borrower
Representative must comply with Section 1.5(e).
(ii) Except as provided in Section 1.12, each
Borrower shall execute and deliver to each Lender a note to evidence the
Commitment of that Lender. Each note shall be in the principal amount of the
Commitment of the applicable Lender, dated the Closing Date and substantially in
the form of Exhibit 1.1(a)(ii) (each a "Revolving Note" and, collectively, the
"Revolving Notes"). Each Revolving Note shall represent the obligation of the
applicable Borrower to pay the amount of the applicable Lender's Commitment or,
if less, such Lender's Pro Rata Share of the aggregate unpaid principal amount
of all Revolving Credit Advances to such Borrower together with interest thereon
as prescribed in Section 1.5. The entire unpaid balance of the aggregate
Revolving Loan and all other non-contingent Obligations shall be immediately due
and payable in full in immediately available funds on the Commitment Termination
Date.
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(iii) Anything in this Agreement to the contrary
notwithstanding, at the request of Borrower Representative, in its discretion
Agent may (but shall have absolutely no obligation to), make Revolving Credit
Advances to Borrowers on behalf of Lenders in amounts that cause the outstanding
balance of the aggregate Revolving Loan to exceed the Aggregate Borrowing Base
or which cause the outstanding balance of the Revolving Loan owing by any
Borrower to exceed that Borrower's separate Borrowing Base (any such excess
Revolving Credit Advances are herein referred to collectively as "Overadvances")
which the Agent, in its reasonable business judgment, deems necessary or
desirable (a) to preserve or protect the Collateral, or any portion thereof, (b)
to enhance the likelihood of, or maximize the amount of, repayment of the
Revolving Loans and other Obligations, or (c) to pay any other amount chargeable
to the Borrowers pursuant to the terms of this Agreement; provided that (A) no
such event or occurrence shall cause or constitute a waiver of Agent's or
Lenders' right to refuse to make any further Overadvances or Revolving Credit
Advances, or incur any Letter of Credit Obligations, as the case may be, at any
time that an Overadvance exists, and (B) no Overadvance shall result in a
Default or Event of Default based on Borrowers' failure to comply with Section
1.3(b)(i) for so long as Agent permits such Overadvances to be outstanding, but
solely with respect to the amount of such Overadvance. In addition, Overadvances
may be made even if the conditions to lending set forth in Section 2 have not
been met. All Overadvances shall constitute Index Rate Loans, shall bear
interest at the Default Rate and shall be payable on the earlier of demand or
the Commitment Termination Date. Except as otherwise provided in Section
1.11(b), the authority of Agent to make Overadvances is limited to an aggregate
amount not to exceed $15,000,000 at any time, shall not cause the aggregate
Revolving Loan to exceed the Maximum Amount, and may be revoked prospectively by
a written notice to Agent (with a copy thereof to Borrower Representative)
signed by Requisite Lenders.
(iv) In no event, at any time, shall (x) the
Aggregate Amortizing Availability included in determining the Aggregate
Borrowing Base exceed $35,000,000, and (y) the amount included in Aggregate
Amortizing Availability based upon the Fair Market Value of Eligible Real Estate
exceed 50% of such Aggregate Amortizing Availability.
(b) INTENTIONALLY OMITTED.
(c) INTENTIONALLY OMITTED.
(d) RELIANCE ON NOTICES; APPOINTMENT OF BORROWER
REPRESENTATIVE. Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Notice of Revolving Credit Advance, any Notice of
Conversion/Continuation or any similar notice believed by Agent to be genuine.
Agent may assume that each Person executing and delivering any notice in
accordance herewith was duly authorized, unless the responsible individual
acting thereon for Agent has actual knowledge to the contrary. Each Borrower
hereby designates SMP as its representative and agent on its behalf for the
purposes of issuing Notices of Revolving Credit Advances and Notices of
Conversion/ Continuation, giving instructions with respect to the disbursement
of the proceeds of the Loans, selecting interest rate options, requesting
Letters of Credit, giving and receiving all other notices and consents hereunder
or under any of the other Loan Documents and taking all other actions (including
in respect of compliance with covenants) on behalf of any Borrower or Borrowers
under the Loan Documents. Borrower Representative hereby accepts such
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appointment. Agent and each Lender may regard any notice or other communication
pursuant to any Loan Document from Borrower Representative as a notice or
communication from all Borrowers, and may give any notice or communication
required or permitted to be given to any Borrower or Borrowers hereunder to
Borrower Representative on behalf of such Borrower or Borrowers. Each Borrower
agrees that each notice, election, representation and warranty, covenant,
agreement and undertaking made on its behalf by Borrower Representative shall be
deemed for all purposes to have been made by such Borrower and shall be binding
upon and enforceable against such Borrower to the same extent as if the same had
been made directly by such Borrower.
1.2. LETTERS OF CREDIT. Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower Representative, on behalf
of the applicable Borrower, shall have the right to request, and, Lenders agree
to incur, or purchase participations in, Letter of Credit Obligations in respect
of each Borrower.
1.2A SWAP RELATED REIMBURSEMENT OBLIGATIONS.
(a) Borrowers agree to reimburse GE Capital in immediately
available funds in the amount of any payment made by GE Capital under a Swap
Related L/C (such reimbursement obligation, whether contingent upon payment by
GE Capital under the Swap Related L/C or otherwise, being herein called a "Swap
Related Reimbursement Obligation"). No Swap Related Reimbursement Obligation for
any Swap Related L/C may exceed the amount of the payment obligations owed by
Borrowers under the interest rate protection or hedging agreement or transaction
supported by the Swap Related L/C.
(b) A Swap Related Reimbursement Obligation shall be due and
payable by Borrowers within one (1) Business Day after the date on which the
related payment is made by GE Capital under the Swap Related L/C.
(c) Any Swap Related Reimbursement Obligation shall, during
the period in which it is unpaid, bear interest at the rate per annum equal to
the LIBOR Rate plus one percent (1%), as if the unpaid amount of the Swap
Related Reimbursement Obligation were a LIBOR Loan, and not at any otherwise
applicable Default Rate. Such interest shall be payable upon demand. The
following additional provisions apply to the calculation and charging of
interest on Swap Related Reimbursement Obligations by reference to the LIBOR
Rate:
(i) The LIBOR Rate shall be determined for each
successive one-month LIBOR Period during which the Swap Related Reimbursement
Obligation is unpaid, notwithstanding the occurrence of any Event of Default and
even if the LIBOR Period were to extend beyond the Commitment Termination Date.
(ii) If a Swap Related Reimbursement Obligation is
paid during a monthly period for which the LIBOR Rate is determined, interest
shall be prorated and charged for the portion of the monthly period during which
the Swap Related Reimbursement Obligation was unpaid. Section 1.3(b) shall not
apply to any payment of a Swap Related Reimbursement Obligation during the
monthly period.
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(d) Except as provided in the foregoing provisions of this
Section 1.2A and in Section 11.3, Borrowers shall not be obligated to pay to GE
Capital or any of its Affiliates any Letter of Credit Fee, or any other fees,
charges or expenses, in respect of a Swap Related L/C or arranging for any
interest rate protection or hedging agreement or transaction supported by the
Swap Related L/C. GE Capital and its Affiliates shall look to the beneficiary of
a Swap Related L/C for payment of any such letter of credit fees or other fees,
charges or expenses and such beneficiary may factor such fees, charges, or
expenses into the pricing of any interest rate protection or hedging arrangement
or transaction supported by the Swap Related L/C.
(e) If any Swap Related L/C is revocable prior to its
scheduled expiry date, GE Capital agrees not to revoke the Swap Related L/C
unless the Commitment Termination Date or an Event of Default has occurred.
(f) GE Capital or any of its Affiliates shall be permitted to
(i) provide confidential or other information furnished to it by any of the
Credit Parties (including, without limitation, copies of any documents and
information in or referred to in the Closing Checklist, Financial Statements and
Compliance Certificates) to a beneficiary or potential beneficiary of a Swap
Related L/C and (ii) receive confidential or other information from the
beneficiary or potential beneficiary relating to any agreement or transaction
supported or to be supported by the Swap Related L/C. However, no confidential
information shall be provided to any Person under this paragraph unless the
Person has agreed to comply with the covenant substantially as contained in
Section 11.8 of this Agreement.
1.3. PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Borrowers may at any time on at
least five (5) days' prior written notice by Borrower Representative to Agent
terminate the Commitment; provided that upon such termination, all Loans and
other Obligations shall be immediately due and payable in full and all Letter of
Credit Obligations shall be cash collateralized or otherwise satisfied in
accordance with Annex B. Any such termination of the Commitment must be
accompanied by the payment of any LIBOR funding breakage costs in accordance
with Section 1.13(b). Upon any termination of the Commitment, each Borrower's
right to request Revolving Credit Advances, or request that Letter of Credit
Obligations be incurred on its behalf shall simultaneously be terminated.
(b) MANDATORY PREPAYMENTS.
(i) If at any time the aggregate outstanding balances
of the Revolving Loan exceed the lesser of (A) the Maximum Amount and (B) the
Aggregate Borrowing Base, Borrowers shall immediately repay the aggregate
outstanding Revolving Credit Advances to the extent required to eliminate such
excess. If any such excess remains after repayment in full of the aggregate
outstanding Revolving Credit Advances, Borrowers shall provide cash collateral
for the Letter of Credit Obligations in the manner set forth in Annex B to the
extent required to eliminate such excess. Furthermore, if, at any time, the
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outstanding balance of the Revolving Loan of any Borrower exceeds that
Borrower's separate Borrowing Base, the applicable Borrower shall immediately
repay its Revolving Credit Advances in the amount of such excess (and, if
necessary, shall provide cash collateral for its Letter of Credit Obligations as
described above). Notwithstanding the foregoing, any Overadvance made pursuant
to Section 1.1(a)(iii) shall be repaid in accordance with Section 1.1(a)(iii).
(ii) Within three (3) Business Days after receipt by
any Credit Party of cash proceeds of any asset disposition (excluding proceeds
of asset dispositions permitted by Section 6.8 (a)) or any sale of Stock of any
Subsidiary of any Credit Party (other than a sale to any Credit Party),
Borrowers shall prepay the Loans in an amount equal to all such proceeds, net of
(A) commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by Borrowers in
connection therewith (in each case, paid to non-Affiliates), (B) transfer or
other related taxes, (C) amounts payable to holders of senior Liens on such
assets (to the extent such Liens constitute Permitted Encumbrances hereunder),
if any, (D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith, and (E) amounts permitted to be retained by the Credit
Parties in the form of cash or cash equivalents pursuant to Section 6.2 of this
Agreement. Any such prepayment shall be applied in accordance with Section
1.3(c).
(iii) If any Borrower issues Stock to any
non-Borrower or non-Credit Party third party for cash consideration, no later
than the Business Day following the date of receipt of the proceeds thereof, the
issuing Borrower shall prepay the Loans (and cash collateralize Letter of Credit
Obligations) in an amount equal to all such proceeds, net of underwriting
discounts and commissions and other reasonable costs paid to non-Affiliates in
connection therewith. Any such prepayment shall be applied in accordance with
Section 1.3(c).
(c) APPLICATION OF CERTAIN MANDATORY PREPAYMENTS. Any
prepayments made by any Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii)
above shall be applied as follows: first, to Fees and reimbursable expenses of
Agent then due and payable pursuant to any of the Loan Documents; second, to
interest then due and payable on Revolving Credit Advances made to that
Borrower; third, to the principal balance of Revolving Credit Advances
outstanding to that Borrower until the same has been paid in full; fourth, to
any Letter of Credit Obligations of such Borrower to provide cash collateral
therefor in the manner set forth in Annex B, until all such Letter of Credit
Obligations have been fully cash collateralized in the manner set forth in Annex
B; fifth, to interest then due and payable on the Revolving Credit Advances
outstanding to each other Borrower, pro rata; sixth, to the principal balance of
the Revolving Credit Advances made to each other Borrower, pro rata, until the
same has been paid in full; seventh, to any Letter of Credit Obligations of each
other Borrower, pro rata, to provide cash collateral therefore in the manner set
forth in Annex B, until all such Letter of Credit Obligations have been fully
cash collateralized; eighth, to any Rate Protection Obligations which may be due
and payable by such Borrower until the same has been paid in full; and ninth, to
any Rate Protection Obligations which may be due and payable by each other
Borrower, pro rata, until the same has been paid in full. The Commitment shall
not be permanently reduced by the amount of any such prepayments.
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(d) APPLICATION OF PREPAYMENTS FROM INSURANCE AND CONDEMNATION
PROCEEDS. Prepayments from insurance or condemnation proceeds in accordance with
Section 5.4(c) and the Mortgage(s), respectively, shall be applied, to the
Revolving Credit Advances of the Borrower that incurred such casualties or
losses. The Commitment shall not be permanently reduced by the amount of any
such prepayments. If insurance or condemnation proceeds received by a particular
Borrower exceed the outstanding principal balances of the Loans to that
Borrower, or if the precise amount of insurance or condemnation proceeds
allocable to Inventory as compared to Equipment, Fixtures and Real Estate are
not otherwise determined, the allocation and application of those proceeds shall
be determined by Agent, subject to the approval of Requisite Lenders.
(e) NO IMPLIED CONSENT. Nothing in this Section 1.3 shall be
construed to constitute Agent's or any Lender's consent to any transaction that
is not permitted by other provisions of this Agreement or the other Loan
Documents.
1.4. USE OF PROCEEDS. Borrowers shall utilize the proceeds of the Loans
solely for the financing of Borrowers' ordinary working capital and general
corporate needs, including, without limitation, to fund any refinancing,
purchase or redemption of Subordinated Debt otherwise permitted pursuant to
Section 6.14. Disclosure Schedule (1.4) contains a description of Borrowers'
sources and uses of funds as of the Closing Date, including Loans and Letter of
Credit Obligations to be made or incurred on that date, and a funds flow
memorandum directing the Agent how funds from each source are to be transferred
to particular uses.
1.5. INTEREST AND APPLICABLE MARGINS.
(a) (i) INTENTIONALLY OMITTED.
(ii) On and after the Closing Date, Borrowers shall
pay interest to Agent, for the ratable benefit of Lenders in accordance with the
various Loans being made by each Lender, in arrears on each applicable Interest
Payment Date, at the following rates: the Index Rate plus the Applicable
Revolver Index Margin per annum or, at the election of Borrower Representative,
the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum,
based on the aggregate Revolving Credit Advances outstanding from time to time.
As of the Closing Date, the Applicable
Margins are set at Level IV of the Applicable Margin grid set forth below.
Commencing June 30, 2007 and in accordance
with clause (iii) below, the Applicable Margins shall be subject to adjustment
(up or down) prospectively based on Borrower's consolidated Excess Formula
Availability as of (i) June 30, 2007 for the Fiscal Quarter then ended, (ii)
September 30, 2007 for the two Fiscal Quarters then ended, (iii) December 31,
2007 for the three fiscal quarters then ended and (iv) March 31, 2008 and the
end of each Fiscal Quarter thereafter, for the four Fiscal Quarters then ended,
each in accordance with the following grids which will be in effect on and after
the Closing Date:
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---------------------------------------------- -------------------------
IF EXCESS FORMULA AVAILABILITY: LEVEL OF
APPLICABLE MARGINS:
---------------------------------------------- -------------------------
---------------------------------------------- -------------------------
< $40,000,000 Level I
-
---------------------------------------------- -------------------------
---------------------------------------------- -------------------------
>$40,000,000, but < $50,000,000 Level II
-
---------------------------------------------- -------------------------
---------------------------------------------- -------------------------
>$50,000,000, but < $60,000,000 Level III
-
---------------------------------------------- -------------------------
---------------------------------------------- -------------------------
>$60,000,000 Level IV
---------------------------------------------- -------------------------
--------------------------------------------------------------------------------
APPLICABLE MARGINS
--------------------------------------------------------------------------------
------------------------------------ ---------- ---------- ----------- ---------
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇
------------------------------------ ---------- ---------- ----------- ---------
------------------------------------ ---------- ---------- ----------- ---------
Applicable Revolver Index Margin 0.25% 0.25% 0.00% -0.25%
------------------------------------ ---------- ---------- ----------- ---------
------------------------------------ ---------- ---------- ----------- ---------
Applicable Revolver LIBOR Margin 2.00% 1.75% 1.50% 1.25%
------------------------------------ ---------- ---------- ----------- ---------
------------------------------------ ---------- ---------- ----------- ---------
Applicable Unused Line Fee Margin 0.25% 0.25% 0.25% 0.25%
------------------------------------ ---------- ---------- ----------- ---------
------------------------------------ ---------- ---------- ----------- ---------
Applicable L/C Fee Margin 1.50% 1.50% 1.50% 1.25%
------------------------------------ ---------- ---------- ----------- ---------
(iii) All adjustments in the Applicable Margins shall
be implemented on a prospective basis on the first day of each Fiscal Quarter
based upon Agent's determination of Excess Formula Availability, for each
calendar month. If a Default or Event of Default has occurred and is continuing
at the time any reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the first day of the first calendar month
following the date on which such Default or Event of Default is waived or cured.
If any payment on any Loan becomes due and
payable on a day other than a Business Day, the maturity thereof will be
extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
(b) All computations of Fees calculated on a per annum basis
and interest shall be made by Agent on the basis of a 360-day year, in each case
for the actual number of days occurring in the period for which such interest
and Fees are payable. The Index Rate is a floating rate determined for each day.
Each determination by Agent of an interest rate and Fees hereunder shall be
final, binding and conclusive on Borrowers, absent manifest error.
(c) So long as an Event of Default has occurred and is
continuing under Section 8.1(a), (h) or (i) or so long as any other Event of
Default has occurred and is continuing and at the election of Agent (or upon the
written request of Requisite Lenders) confirmed by written notice from Agent to
Borrower Representative, the interest rates applicable to the Loans and the
Letter of Credit Fees shall be increased by two percentage points (2%) per annum
above the rates of interest or the rate of such Letter of Credit Fees otherwise
applicable hereunder unless Agent (not having received any prior written request
of Requisite Lenders and, in any event, subject to the consent of Requisite
Lenders) elects to impose a smaller increase ("Default Rate"), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit Fees at the Default Rate shall
accrue from the initial date of such Event of Default until that Event of
Default is cured or waived and shall be payable upon demand.
(d) Subject to the conditions precedent set forth in Section
2.2, Borrower Representative shall have the option to (i) request that any
Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time all
or any part of outstanding Loans from Index Rate Loans to LIBOR Loans, (iii)
convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with Section 1.13(b) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
-8-
all or any portion of any Loan as a LIBOR Loan upon the expiration of the
applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan
shall commence on the first day after the last day of the LIBOR Period of the
Loan to be continued. Any Loan or group of Loans having the same proposed LIBOR
Period to be made or continued as, or converted into, a LIBOR Loan must be in a
minimum amount of $1,000,000 and integral multiples of $500,000 in excess of
such amount. Any such election must be made by noon (New York time) on the third
Business Day prior to (1) the date of any proposed Advance which is to bear
interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any
LIBOR Loans to be continued as such, or (3) the date on which Borrower
Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by Borrower Representative in such election. If no election is
received with respect to a LIBOR Loan by noon (New York time) on the third
Business Day prior to the end of the LIBOR Period with respect thereto (or if a
Default or an Event of Default has occurred and is continuing or if the
additional conditions precedent set forth in Section 2.2 shall not have been
satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end
of its LIBOR Period. Borrower Representative must make such election by notice
to Agent in writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.5(d).
(e) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(e), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by law, promptly apply such excess in the order specified in Section
1.11 and thereafter shall refund any excess to Borrowers or as a court of
competent jurisdiction may otherwise order.
-9-
1.6. ELIGIBLE ACCOUNTS. All of the Accounts owned by each Borrower and
reflected in the most recent Borrowing Base Certificate delivered by each
Borrower to Agent shall be "ELIGIBLE ACCOUNTS" for purposes of this Agreement,
except (i) to the extent Accounts which are permitted to be paid after 90 days
following their original invoice date but within 210 days following their
original invoice date exceed $115,000,000 in the aggregate at any time or from
time to time such Accounts shall not constitute Eligible Accounts to the extent
of such excess, or (ii) any Account to which any of the exclusionary criteria
set forth below applies. Agent shall have the right to establish, modify or
eliminate Reserves against Eligible Accounts from time to time in its reasonable
credit judgment. In addition, Agent reserves the right, at any time and from
time to time after the Closing Date, to adjust any of the criteria set forth
below, to establish new criteria and to adjust advance rates with respect to
Eligible Accounts, in its reasonable credit judgment, subject to the approval of
Supermajority Lenders in the case of adjustments or new criteria or changes in
advance rates (subject to Section 11.2(c)(vii)) or the elimination of Reserves
(except no such approval shall be required with respect to the reduction or
elimination of Reserves which may be established and maintained from time to
time by Agent with respect to Rate Protection Obligations under Rate Protection
Agreements) which have the effect of making more credit available. Eligible
Accounts shall not include any Account of any Borrower:
(a) that does not arise from the sale of goods or the
performance of services by such Borrower in the ordinary course of its business;
(b) (i) upon which such Borrower's right to receive payment is
not absolute or is contingent upon the fulfillment of any condition whatsoever
or (ii) as to which such Borrower is not able to bring suit or otherwise enforce
its remedies against the Account Debtor through judicial process or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to such Borrower's completion
of further performance under such contract or is subject to the equitable lien
of a surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff or
dispute is asserted as to such Account or to the extent that any credits which
have been issued have not been applied to an Account Debtor's statement or
account, but only to the extent of such defense, counterclaim, setoff, dispute,
or credit;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor, including
pre-billed items;
(e) with respect to which an invoice, reasonably acceptable to
Agent in form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Borrower or (ii) is subject to any Lien of any
other Person, other than Liens in favor of Agent, on behalf of itself and
Lenders;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity that has any common
officer or director with any Credit Party;
(h) that is the obligation of an Account Debtor that is the
United States government or a political subdivision thereof, or any state,
county or municipality or department, agency or instrumentality thereof unless
Agent, in its sole discretion, has agreed to the contrary in writing and such
Borrower, if necessary or desirable, has complied with respect to such
obligation with the Federal Assignment of Claims Act of 1940, or any applicable
state, county or municipal law restricting assignment thereof.
-10-
(i) that is the obligation of an Account Debtor located in a
foreign country other than Canada unless payment thereof is assured by a letter
of credit assigned and delivered to Agent, reasonably satisfactory to Agent as
to form, amount and issuer.
(j) to the extent such Borrower or any Subsidiary thereof is
liable for goods sold or services rendered by the applicable Account Debtor to
such Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods that are delivered on a
▇▇▇▇ and hold, cash on delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier of:
sixty (60) days following its due date or two hundred ten (210) days following
its original invoice date;
(ii) the Account Debtor obligated upon such Account
suspends business, makes a general assignment for the benefit of creditors or
fails to pay its debts generally as they come due; or
(iii) a petition is filed by or against any Account
Debtor obligated upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership, insolvency
relief or other law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if fifty
percent (50%) or more of the Dollar amount of all Accounts owing by that Account
Debtor are ineligible under the other criteria set forth in this Section 1.6
other than with respect to Car Quest Long Term Accounts;
(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties in
the Loan Documents are untrue;
(p) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment;
(r) to the extent that such Account, together with all other
Accounts owing by such Account Debtor and its Affiliates as of any date of
determination exceed twenty-five (25%) of all Eligible Accounts; provided,
however, that with respect to the financial institutions which are a party to a
Customer Program and identified on Schedule 1.6, no such threshold amount shall
apply;
-11-
(s) that is payable in any currency other than Dollars; or
(t) that is otherwise unacceptable to Agent in its reasonable
credit judgment.
For purposes of this SECTION 1.6, Customer Drafts received by SMP from
any Customer Program (in each case for so long as such drafts remain the
property of SMP and have not been sold to any third party), shall be treated as
if they constituted "Accounts" so long as Agent or its designee has possession
of such Customer Drafts.
1.7. ELIGIBLE INVENTORY. All of the Inventory owned by the Borrowers
and reflected in the most recent Borrowing Base Certificate delivered by each
Borrower to Agent shall be "Eligible Inventory" for purposes of this Agreement,
except any Inventory to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish or modify or eliminate Reserves
against Eligible Inventory from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the Closing Date, to adjust any of the criteria set forth below, to establish
new criteria and to adjust advance rates with respect to Eligible Inventory, in
its reasonable credit judgment, subject to the approval of Supermajority Lenders
in the case of adjustments or new criteria or changes in advance rates (subject
to Section 11.2(c)(vii)) or the elimination of Reserves (except no such approval
shall be required with respect to the reduction or elimination of Reserves which
may be established and maintained from time to time by Agent with respect to
Rate Protection Obligations under Rate Protection Agreements) which have the
effect of making more credit available. Eligible Inventory shall not include any
Inventory of any Borrower that:
(a) is not owned by such Borrower free and clear of all Liens
and rights of any other Person (including the rights of a purchaser that has
made progress payments and the rights of a surety that has issued a bond to
assure such Borrower's performance with respect to that Inventory), except the
Liens in favor of Agent, on behalf of itself and Lenders, and Permitted
Encumbrances in favor of landlords and bailees to the extent permitted in
Section 5.9 hereof (subject to Reserves established by Agent in accordance with
Section 5.9 hereof);
(b) (i) is not located on premises owned, leased or rented by
such Borrower and set forth in Disclosure Schedule (3.2) or identified pursuant
to Section 6.15, or (ii) is stored at a leased location, unless Agent has given
its prior consent thereto and unless either (x) a reasonably satisfactory
landlord waiver has been delivered to Agent, or (y) Reserves reasonably
satisfactory to Agent have been established with respect thereto or (iii) is
stored with a bailee or warehouseman unless a reasonably satisfactory,
acknowledged bailee letter has been received by Agent or Reserves reasonably
satisfactory to Agent have been established with respect thereto, or (iv) is
located at an owned location subject to a mortgage in favor of a lender other
than Agent unless a reasonably satisfactory mortgagee waiver has been delivered
to Agent or Reserves reasonably satisfactory to Agent have been established with
respect thereto, or (v) other than with respect to 3 locations which Borrowers
may designate in writing to Agent from time to time, is located at any site if
the aggregate book value of Inventory at any such location is less than
$100,000; or (vi) is located outside of the United States of America, its
territories or Canada;
-12-
(c) is placed on consignment or is in transit, except for
Inventory in transit between domestic locations of Credit Parties as to which
Agent's Liens have been perfected at origin and destination.
(d) is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;
(e) is excess, obsolete, unsalable, shopworn, seconds
(excluding cores), damaged or unfit for sale;
(f) consists of display items or packing or shipping
materials, manufacturing supplies, work in process Inventory or replacement
parts;
(g) consists of goods which have been returned by the buyer
unless such returned goods consist of (i) cores or (ii) goods which have been
restored to Inventory as first quality, saleable merchandise;
(h) is not of a type held for sale in the ordinary course of
such Borrower's business;
(i) is not subject to a first priority lien in favor of Agent
on behalf of itself and Lenders;
(j) breaches any of the representations or warranties
pertaining to Inventory set forth in the Loan Documents;
(k) consists of any costs associated with "freight in" charges
or favorable purchase price variances;
(l) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(m) is not covered by casualty insurance reasonably acceptable
to Agent; or
(n) is subject to any patent or trademark license requiring
the payment of royalties or fees or requiring the consent of the licensor for a
sale thereof by Agent (where such consent has not been obtained); or
(o) is otherwise unacceptable to Agent in its reasonable
credit judgment.
1.8. CASH MANAGEMENT SYSTEMS. On or prior to the Closing Date,
Borrowers will establish and will maintain until the Termination Date, the cash
management systems described in Annex C (the "Cash Management Systems"). Absent
a Default or Event of Default, Agent shall not give notice to the Relationship
Banks and Concentration Account Bank that Agent is exercising its right of
dominion and control over the Blocked Accounts and Concentration Account unless
Borrowing Availability as to all Borrowers is less than $40,000,000.
-13-
1.9. FEES.
(a) Borrowers shall pay to GE Capital, individually, the Fees
specified in that certain fee letter dated as of March 20, 2007 between Borrower
Representative and GE Capital (as amended, the "GE Capital Fee Letter"), at the
times specified for payment therein.
(b) (i) On the Closing Date, Borrowers shall pay to Agent, for
the ratable benefit of Lenders a non-refundable closing fee in the amount of
$394,500.
(ii) As additional compensation for the Lenders,
Borrowers shall pay to Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a Fee for Borrower's
non-use of available funds in an amount equal to the Applicable Unused Line Fee
Margin per annum (calculated on the basis of a 360-day year for actual days
elapsed) multiplied by the difference between (x) the Maximum Amount, and (y)
the average for the period of the daily closing balances of the aggregate
Revolver Loan outstanding during the period for which such Fee is due. For
purposes of determining the unused line fee hereunder, the Indenture Maturity
Reserve shall be deemed to be $0.
(c) Intentionally Omitted.
(d) Borrowers shall pay to Agent, for the ratable benefit of
Lenders, the Letter of Credit Fee as provided in Annex B.
(e) Any time Borrowers elect to consummate a Borrower Revolver
Increase, Borrowers shall pay to Agent the fees referenced in Section 1.18(b).
1.10. RECEIPT OF PAYMENTS. Borrowers shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability as of any
date, all payments shall be deemed received on the Business Day on which
immediately available funds therefor are received in the Collection Account
prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York
time on any Business Day or on a day that is not a Business Day shall be deemed
to have been received on the following Business Day.
1.11. APPLICATION AND ALLOCATION OF PAYMENTS.
(a) So long as no Default or Event of Default has occurred and
is continuing, (i) payments consisting of proceeds of Accounts received in the
ordinary course of business shall be applied to, the Revolving Loan; (ii)
voluntary prepayments shall be applied in accordance with the provisions of
Section 1.3(a); and (iii) mandatory prepayments shall be applied as set forth in
Sections 1.3(c) and 1.3(d). All payments and prepayments applied to a particular
Loan shall be applied ratably to the portion thereof held by each Lender as
determined by its Pro Rata Share. As to any other payment, and as to all
payments made when a Default or Event of Default has occurred and is continuing
-14-
or following the Commitment Termination Date, each Borrower hereby irrevocably
waives the right to direct the application of any and all payments received from
or on behalf of such Borrower, and each Borrower hereby irrevocably agrees that
Agent shall have the continuing exclusive right to apply any and all such
payments against the Obligations of Borrowers then due and payable in the
following order: (1) to Fees and Agent's expenses reimbursable hereunder; (2) to
interest on the Revolving Loans; (3) to principal payments on the Revolving
Loans and to provide cash collateral for Letter of Credit Obligations in the
manner described in Annex B, ratably to the aggregate, combined principal
balance of the Revolving Loans and outstanding Letter of Credit Obligations; (4)
to all other Obligations (other than Rate Protection Agreements and Swap Related
Reimbursement Obligations), including expenses to Lenders to the extent
reimbursable under Section 11.3, and to payments under the Canadian Guaranty;
and (5) to Rate Protection Agreements and unpaid Swap Related Reimbursement
Obligations ratably in proportion to the aggregate amounts owed as to each Rate
Protection Agreement and unpaid Swap Related Reimbursement Obligation, as
applicable.
(b) Agent is authorized to, and at its sole election may,
charge to the Revolving Loan balance on behalf of each Borrower and cause to be
paid all Fees, expenses, Charges, costs (including insurance premiums in
accordance with Section 5.4(a)) and interest and principal, other than principal
of the Revolving Loan, owing by Borrowers under this Agreement or any of the
other Loan Documents if and to the extent Borrowers fail to pay promptly any
such amounts as and when due, even if the amount of such charges would exceed
Borrowing Availability at such time or would cause the balance of the Revolving
Loan to any Borrower to exceed such Borrower's separate Borrowing Base after
giving effect to such charges. At Agent's option and to the extent permitted by
law, any charges so made shall constitute part of the Revolving Loan hereunder.
1.12. LOAN ACCOUNT AND ACCOUNTING. Agent shall maintain a loan account
(the "Loan Account") on its books to record: all Advances, all payments made by
Borrowers, and all other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations. All entries in the Loan Account
shall be made in accordance with Agent's customary accounting practices as in
effect from time to time. The balance in the Loan Account, as recorded on
Agent's most recent printout or other written statement, shall, absent manifest
error, be presumptive evidence of the amounts due and owing to Agent and Lenders
by each Borrower; provided that any failure to so record or any error in so
recording shall not limit or otherwise affect any Borrower's duty to pay the
Obligations. Agent shall render to Borrower Representative a monthly accounting
of transactions with respect to the Loans setting forth the balance of the Loan
Account as to each Borrower for the immediately preceding month. Unless Borrower
Representative notifies Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within sixty (60) days
after the date thereof, each and every such accounting shall (absent manifest
error) be deemed final, binding and conclusive on Borrowers in all respects as
to all matters reflected therein. Only those items expressly objected to in such
notice shall be deemed to be disputed by Borrowers. Notwithstanding any
provision herein contained to the contrary, any Lender may elect (which election
may be revoked) to dispense with the issuance of Notes to that Lender and may
rely on the Loan Account as evidence of the amount of Obligations from time to
time owing to it.
-15-
1.13. INDEMNITY.
(a) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) that may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and reasonable legal costs and expenses arising out of or incurred in connection
with disputes between or among any parties to any of the Loan Documents
(collectively, "Indemnified Liabilities"); provided, that no such Credit Party
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY
OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the
terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
occurs as a result of acceleration, by operation of law or otherwise); (ii) any
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) any Borrower shall refuse to accept any
borrowing of, or shall request a termination of, any borrowing of, conversion
into or continuation of, LIBOR Loans after Borrower Representative has given
notice requesting the same in accordance herewith; or (iv) any Borrower shall
fail to make any prepayment of a LIBOR Loan after Borrower Representative has
given a notice thereof in accordance herewith, then Borrowers shall jointly and
severally indemnify and hold harmless each Lender from and against all losses,
costs and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
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circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.13(b), and
(absent manifest error) such calculation shall be binding on the parties hereto
unless Borrower Representative shall object in writing within ten (10) Business
Days of receipt thereof, specifying the basis for such objection in detail.
1.14. ACCESS. Each Credit Party that is a party hereto shall, during
normal business hours, from time to time upon at least two (2) Business Days'
prior notice as frequently as Agent reasonably determines to be appropriate: (a)
provide Agent and any of its officers, employees and agents access to its
properties, facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agent, and any of its officers,
employees and agents, to inspect, audit and make extracts from any Credit
Party's books and records, and (c) permit Agent, and its officers, employees and
agents, to inspect, review, evaluate and make test verifications and counts of
the Accounts, Inventory and other Collateral of any Credit Party; provided,
however, that unless a Default or Event of Default has occurred and is
continuing, Borrowers' obligation to pay for such audits shall be limited to two
per calendar year. If a Default or Event of Default has occurred and is
continuing or if access is necessary to preserve or protect the Collateral as
determined by Agent, each such Credit Party shall provide such access to Agent
and to each Lender at all times and without advance notice. Furthermore, so long
as any Event of Default has occurred and is continuing, Borrowers shall provide
Agent and each Lender with access to their suppliers and customers. Each Credit
Party shall make available to Agent and its counsel, as quickly as is possible
under the circumstances, originals or copies of all books and records that Agent
may reasonably request. Each Credit Party shall deliver any document or
instrument necessary for Agent, as it may from time to time reasonably request,
to obtain records from any service bureau or other Person that maintains records
for such Credit Party, and shall maintain duplicate records or supporting
documentation on media, including computer tapes and discs owned by such Credit
Party. Agent will give Lenders at least fifteen (15) days' prior written notice
of regularly scheduled audits. Representatives of other Lenders may accompany
Agent's representatives on regularly scheduled audits at no charge to Borrowers.
1.15. TAXES.
(a) Any and all payments by each Borrower hereunder (including
any payments made pursuant to Section 12) or under the Notes shall be made, in
accordance with this Section 1.15, free and clear of and without deduction for
any and all present or future Taxes. If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder (including any
sum payable pursuant to Section 12) or under the Notes, (i) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.15) Agent or Lenders, as applicable, receive an amount
equal to the sum they would have received had no such deductions been made, (ii)
such Borrower shall make such deductions, and (iii) such Borrower shall pay the
full amount deducted to the relevant taxing or other authority in accordance
with applicable law. Within thirty (30) days after the date of any payment of
Taxes, Borrower Representative shall furnish to Agent the original or a
certified copy of a receipt evidencing payment thereof. Agent and Lenders shall
not be obligated to return or refund any amounts received pursuant to this
Section.
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(b) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and, within ten (10) days of demand therefor, pay Agent
and each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. Agent and affected Lenders shall provide
Borrower Representative with an original or certified copy of a receipt
evidencing the payment of such amounts by Agent or such Lenders.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower Representative and Agent a properly completed and executed IRS Form W
8ECI or Form W 8BEN or other applicable form, certificate or document prescribed
by the IRS or the United States certifying as to such Foreign Lender's
entitlement to such exemption (a "Certificate of Exemption"). Any foreign Person
that seeks to become a Lender under this Agreement shall provide a Certificate
of Exemption to Borrower Representative and Agent prior to becoming a Lender
hereunder. No foreign Person may become a Lender hereunder if such Person fails
to deliver a Certificate of Exemption in advance of becoming a Lender.
1.16. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY.
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrowers
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower Representative and to Agent shall, absent
manifest error, be final, conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower
Representative and to Agent by such Lender, shall be conclusive and binding on
Borrowers for all purposes, absent manifest error. Each Lender agrees that, as
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promptly as practicable after it becomes aware of any circumstances referred to
above which would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein,
if the introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower Representative
through Agent, (i) the obligation of such Lender to agree to make or to make or
to continue to fund or maintain LIBOR Loans shall terminate and (ii) each
Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by
such Borrower to such Lender, together with interest accrued thereon, unless
Borrower Representative on behalf of such Borrower, within five (5) Business
Days after the delivery of such notice and demand, converts all LIBOR Loans into
Index Rate Loans.
(d) Within fifteen (15) days after receipt by Borrower
Representative of written notice and demand from any Lender (an "Affected
Lender") for payment of additional amounts or increased costs as provided in
Sections 1.15(a), 1.16(a) or 1.16(b), Borrower Representative may, at its
option, notify Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Default or Event of Default has occurred and is
continuing, Borrower Representative, with the consent of Agent, may obtain, at
Borrowers' expense, a replacement Lender ("Replacement Lender") for the Affected
Lender, which Replacement Lender must be reasonably satisfactory to Agent. If
Borrowers obtain a Replacement Lender within ninety (90) days following notice
of their intention to do so, the Affected Lender must sell and assign its Loans
and Commitments to such Replacement Lender for an amount equal to the principal
balance of all Loans held by the Affected Lender and all accrued interest and
Fees with respect thereto through the date of such sale and such assignment
shall not require the payment of an assignment fee to Agent; provided, that
Borrowers shall have reimbursed such Affected Lender for the additional amounts
or increased costs that it is entitled to receive under this Agreement through
the date of such sale and assignment. Notwithstanding the foregoing, Borrowers
shall not have the right to obtain a Replacement Lender if the Affected Lender
rescinds its demand for increased costs or additional amounts (effective
retroactively to the date of such demand) within fifteen (15) days following its
receipt of Borrowers' notice of intention to replace such Affected Lender.
Furthermore, if Borrowers give a notice of intention to replace and do not so
replace such Affected Lender within ninety (90) days thereafter, Borrowers'
rights under this Section 1.16(d) shall terminate with respect to such Affected
Lender and Borrowers shall promptly pay all increased costs or additional
amounts demanded by such Affected Lender pursuant to Sections 1.15(a), 1.16(a)
and 1.16(b).
1.17. SINGLE LOAN. All Loans to each Borrower and all of the other
Obligations of each Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of that Borrower secured,
until the Termination Date, by all of the Collateral.
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1.18. INCREASE OF THE MAXIMUM AMOUNT BY BORROWERS.
(a) The Borrowers may at any time, by written notice to the
Agent, request that Agent increase the Maximum Amount (each a "Borrower Revolver
Increase") by (i) adding one or more new lenders to the revolving credit
facility under this Agreement (each a "Section 1.18 New Lender") who wish to
participate in such Borrower Revolver Increase and/or (ii) increasing the
Commitment of one or more Lenders party to this Agreement who wish to
participate in such Borrower Revolver Increase; provided, however, that (w) the
Borrowers may only add a Section 1.18 New Lender if, and only to the extent,
there is insufficient participation on behalf of the existing Lenders, (x) no
Default or Event of Default shall have occurred and be continuing as of the date
of such request or as of the effective date of such Borrower Revolver Increase
(each a "Borrower Increase Date") or shall occur as a result thereof, (y) any
Section 1.18 New Lender that becomes party to this Agreement pursuant to this
Section 1.18 shall satisfy the requirements of Section 9.1 hereof and shall be
acceptable to Agent and (z) the other conditions set forth in this Section 1.18
are satisfied. The Agent shall use commercially reasonable efforts to arrange
for the syndication of any Borrower Revolver Increase. The Agent shall promptly
inform the Lenders of any such request made by the Borrowers. The aggregate
amount of Borrower Revolver Increases hereunder shall not exceed $50,000,000; no
single Borrower Revolver Increase shall be for an amount less than $10,000,000
and any Borrower Revolver Increase shall be in integral multiples of
$10,000,000.
(b) On a Borrower Increase Date, (i) each Section 1.18 New
Lender that has chosen to participate in such Borrower Revolver Increase shall,
subject to the conditions set forth in Section 1.18(a), become a Lender party to
this Agreement as of such Borrower Increase Date and shall have a Commitment in
an amount equal to its share of such Borrower Revolver Increase (and its
Commitment percentage shall be equal to the percentage equivalent of a fraction
the numerator of which shall be the Commitment of such Section 1.18 New Lender
and the denominator of which shall be the Maximum Amount after giving effect to
such Borrower Revolver Increase) and (ii) each Lender that has chosen to
increase its Commitment pursuant to this Section 1.18 will have its Commitment
increased by the amount of its share of the Borrower Revolver Increase as of
such Borrower Increase Date (and its Commitment percentage shall be adjusted as
appropriate); provided, however, that (y) Agent shall have received from the
Borrowers (i) payment of the arrangement fee referenced in the Fee Letter with
respect to such Borrower Revolver Increase, (ii) a non-refundable fee for the
benefit of each Section 1.18 New Lender and each Lender that has chosen to
increase its Commitment pursuant to this Section 1.18, in an amount equal to
0.15% of such Section 1.18 New Lenders' Commitment or such Lenders' increase of
its Commitment pursuant hereto, as the case may be, and (iii) payment of all
reasonable out-of-pocket costs and expenses incurred by Agent or any Lender in
connection with such Borrower Revolver Increase, and (z) Agent shall have
received on or before such Borrower Increase Date the following, each dated such
date:
(i) an assumption agreement from each Section 1.18
New Lender participating in such Borrower Revolver Increase, if any, in form and
substance satisfactory to the Agent, duly executed by such Section 1.18 New
Lender, the Agent and the Borrowers;
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(ii) confirmation from each Lender, if any,
participating in such Borrower Revolver Increase of the increase in the amount
of its Commitment and of any change in its Commitment percentage, in form and
substance satisfactory to the Agent;
(iii) a certificate of Borrower Representative
certifying that no Default or Event of Default shall have occurred and be
continuing or shall occur as a result of such Borrower Revolver Increase;
(iv) a certificate of Borrower Representative
certifying that the representations and warranties made by each Credit Party
herein and in the Loan Documents are true and complete in all material respects
with the same force and effect as if made on and as of such date (or, to the
extent any such representation or warranty specifically relates to an earlier
date, such representation or warranty is true and complete in all material
respects as of such earlier date);
(v) supplements or modifications to this Agreement
and the Loan Documents and such additional Loan Documents, including any new
Revolving Notes to Section 1.18 New Lenders and replacement Revolving Notes to
Lenders that agree to participate in such Borrower Revolver Increase, that the
Agent reasonably deems necessary in order to document such Borrower Revolver
Increase and otherwise assure and give effect to the rights of the Agent and the
Lenders in this Agreement and the Loan Documents; and
(vi) such other documents, instruments and
information as the Agent or its counsel shall reasonably deem necessary in
connection with such Borrower Revolver Increase.
(c) On such Borrower Increase Date, upon fulfillment of the
conditions set forth in this Section 1.18, the Agent shall (i) effect a
settlement of all outstanding Advances among the Lenders that will reflect the
adjustments to the Commitments and Commitment percentages of the Lenders as a
result of such Borrower Revolver Increase and (ii) notify the Lenders, any
Section 1.18 New Lenders participating in such Borrower Revolver Increase and
the Borrowers, on or before noon (New York time), by telecopier or e-mail, of
the occurrence of such Borrower Revolver Increase to be effected on such
Borrower Increase Date.
2. CONDITIONS PRECEDENT
2.1. CONDITIONS TO THE INITIAL LOANS. No Lender shall be obligated to
make any Loan or incur any Letter of Credit Obligations on the Closing Date, or
to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to
Agent, or waived in writing by Agent and Lenders:
(a) CREDIT AGREEMENT; LOAN DOCUMENTS. This Agreement or
counterparts hereof shall have been duly executed by Borrowers and each other
Credit Party, and delivered to Agent and Lenders; and Agent shall have received
such documents, instruments, agreements and legal opinions as Agent shall
reasonably request in connection with the transactions contemplated by this
Agreement and the other Loan Documents, including all those listed in the
Closing Checklist attached hereto as Annex D-1, each in form and substance
reasonably satisfactory to Agent.
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(b) CLOSING DATE BORROWING AVAILABILITY. Borrowing
Availability of all Borrowers in the aggregate (on a pro-forma basis) after
giving effect to the transactions contemplated hereunder shall be at least
$60,000,000.
(c) APPROVALS. Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated thereunder or
(ii) an officer's certificate in form and substance reasonably satisfactory to
Agent affirming that no such consents or approvals are required.
(d) PAYMENT OF FEES. Borrowers shall have paid the Fees
required to be paid on the Closing Date in the respective amounts specified in
Section 1.9 (including the Fees specified in the GE Capital Fee Letter), and
shall have reimbursed Agent for all reasonable fees, costs and expenses of
closing presented as of the Closing Date.
(e) CAPITAL STRUCTURE: OTHER INDEBTEDNESS. The capital
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party not being repaid shall be acceptable to Agent in its
reasonable discretion.
(f) DUE DILIGENCE. Agent shall have completed its business and
legal due diligence, including a roll forward of its previous Collateral audit
with results reasonably satisfactory to Agent.
(g) INDENTURE SUBORDINATED DEBT. No less than $90,000,000
shall be outstanding under the Indenture Subordinated Debt on the Closing Date.
(h) MATERIAL ADVERSE EVENTS. As of the Closing Date, there
will have been (i) since December 31, 2006, no material adverse change,
individually or in the aggregate, in the business, financial or other condition
of Borrowers taken as a whole, the industry in which Borrowers operate, or the
Collateral which will be subject to the security interest granted to Agent or in
the projections of Borrowers taken as a whole, (ii) no litigation commenced
which, if successful, would have a material adverse impact on Borrowers taken as
a whole, their businesses, or their ability to repay the loans, or which would
challenge the transactions under consideration, and (iii) since December 31,
2006, no material increase in the liabilities, liquidated or contingent, of
Borrowers taken as a whole, or a material decrease in the assets of Borrowers
taken as a whole.
2.2. FURTHER CONDITIONS TO EACH LOAN. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:
(a) any representation or warranty by any Credit Party
contained herein or in any other Loan Document is untrue or incorrect as of such
date, except to the extent that such representation or warranty expressly
relates to an earlier date and except for changes therein expressly permitted or
expressly contemplated by this Agreement and Agent or Requisite Lenders have
determined not to make such Advance, convert or continue any Loan as LIBOR Loan
or incur such Letter of Credit Obligation as a result of the fact that such
warranty or representation is untrue or incorrect;
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(b) any event or circumstance having a Material Adverse Effect
has occurred since the date hereof as determined by the Requisite Lenders and
Agent or Requisite Lenders have determined not to make such Advance, convert or
continue any Loan as a LIBOR Loan or incur such Letter of Credit Obligation as a
result of the fact that such event or circumstance has occurred;
(c) any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligation), and Agent or Requisite Lenders shall have
determined not to make any Advance, convert or continue any Loan as a LIBOR Loan
or incur any Letter of Credit Obligation as a result of that Default or Event of
Default; or
(d) after giving effect to any Advance (or the incurrence of
any Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan would exceed the lesser of the Aggregate Borrowing Base
and the Maximum Amount or (ii) the outstanding principal amount of the Revolving
Loan of the applicable Borrower would exceed such Borrower's separate Borrowing
Base.
The request and acceptance by any Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrowers that the conditions
in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrowers of
the cross-guaranty provisions set forth in Section 12 and of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
3.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Credit Party (a) is
a corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or liabilities in
excess of $250,000; (c) has the requisite power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws and any scheduled exceptions
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thereto, has all material licenses, permits, consents or approvals from or by,
and has made all material filings with, and has given all material notices to,
all Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct; (e) is in compliance with its charter and
bylaws or partnership or operating agreement, as applicable; and (f) subject to
specific representations and any scheduled exceptions thereto set forth herein
regarding ERISA, Environmental Laws, tax and other laws, is in compliance with
all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
3.2. EXECUTIVE OFFICES, COLLATERAL LOCATIONS, FEIN. As of the Closing
Date, the current location of each Credit Party's chief executive office and the
warehouses and premises at which any Collateral is located are set forth in
Disclosure Schedule (3.2), and, except as set forth in Disclosure Schedule
(3.2), none of such locations has changed within the twelve (12) months
preceding the Closing Date. In addition, Disclosure Schedule (3.2) lists the
federal employer identification number of each Credit Party.
3.3. CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's power; (b) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person's charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(c), all of which will have been duly obtained,
made or complied with prior to the Closing Date. Each of the Loan Documents
shall be duly executed and delivered by each Credit Party that is a party
thereto and each such Loan Document shall constitute a legal, valid and binding
obligation of such Credit Party enforceable against it in accordance with its
terms.
3.4. FINANCIAL STATEMENTS AND PROJECTIONS. Except for the Projections,
all Financial Statements concerning Borrowers and their respective Subsidiaries
that are referred to below have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the
periods then ended.
(a) FINANCIAL STATEMENTS. The following Financial Statements
attached hereto as Disclosure Schedule (3.4(a)) have been delivered on the date
hereof:
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(i) The audited consolidated and consolidating
balance sheets at December 31, 2005 and the related statements of income and
cash flows of Borrowers and their Subsidiaries for the Fiscal Years then ended,
certified by ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP.
(ii) The unaudited balance sheet(s) at December 31,
2006 and the related statement(s) of income and cash flows of Borrowers and
their Subsidiaries for the twelve months then ended.
(b) PROJECTIONS. The Projections delivered on the date hereof
and attached hereto as Disclosure Schedule (3.4(b)) have been prepared by
Borrowers in light of the past operations of their businesses and reflect
projections for the five year period beginning on January 1, 2007 on a monthly
basis for the first year and on a quarterly basis for the Fiscal Years 2008 and
2009 and on a year-by-year basis thereafter. The Projections are based upon the
same accounting principles as those used in the preparation of the financial
statements described above and the estimates and assumptions stated therein, all
of which Borrowers believe to be reasonable and fair in light of current
conditions and current facts known to Borrowers and, as of the Closing Date,
reflect Borrowers' good faith and reasonable estimates of the future financial
performance of Borrowers.
3.5. MATERIAL ADVERSE EFFECT. Between December 31, 2006 and the Closing
Date: (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Financial
Statements and that, alone or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, (b) no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become binding upon
any Credit Party's assets and no law or regulation applicable to any Credit
Party has been adopted that in either case has had or could reasonably be
expected to have a Material Adverse Effect, and (c) no Credit Party is in
default and to the best of Borrowers' knowledge no third party is in default
under any material contract, lease or other agreement or instrument, which
defaults alone or in the aggregate could reasonably be expected to have a
Material Adverse Effect. Between December 31, 2006 and the Closing Date no event
has occurred, that alone or together with other events, could reasonably be
expected to have a Material Adverse Effect.
3.6. OWNERSHIP OF PROPERTY; LIENS. As of the Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned Real
Estate, and valid leasehold interests in all of its leased Real Estate, all as
described on Disclosure Schedule (3.6), and copies of all such leases or a
summary of terms thereof reasonably satisfactory to Agent have been delivered to
Agent. Disclosure Schedule (3.6) further describes any Real Estate with respect
to which any Credit Party is a lessor, sublessor or assignor as of the Closing
Date. Each Credit Party also has good and marketable title to, or valid
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leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and except as disclosed on
Disclosure Schedule 3.17, there are no facts, circumstances or conditions known
to any Credit Party that may result in any Liens (including Liens arising under
Environmental Laws) other than Permitted Encumbrances. Each Credit Party has
received all deeds, assignments, waivers, consents, nondisturbance and
attornment or similar agreements, bills of sale and other documents, and has
duly effected all recordings, filings and other actions necessary to establish,
protect and perfect such Credit Party's right, title and interest in and to all
such Real Estate and other properties and assets. Disclosure Schedule (3.6) also
describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any Real Estate. As of the Closing Date, no
portion of any Credit Party's Real Estate has suffered any material damage by
fire or other casualty loss that has not heretofore been repaired and restored
in all material respects to its original condition or otherwise remedied. As of
the Closing Date, all material permits required to have been issued or
appropriate to enable the Real Estate to be lawfully occupied and used for all
of the purposes for which it is currently occupied and used have been lawfully
issued and are in full force and effect.
3.7. LABOR MATTERS. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matters; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
except as set forth in Disclosure Schedule (3.7), no Credit Party is a party to
or bound by any collective bargaining agreement, management agreement,
consulting agreement, employment agreement (with senior level officers or
directors), bonus, restricted stock, stock option, or stock appreciation plan or
agreement or any similar plan, agreement or arrangement (and true and complete
copies of any agreements described on Disclosure Schedule (3.7) have been
delivered to Agent); (e) there is no organizing activity involving any Credit
Party pending or, to any Credit Party's knowledge, threatened by any labor union
or group of employees; (f) there are no representation proceedings pending or,
to any Credit Party's knowledge, threatened with the National Labor Relations
Board, and no labor organization or group of employees of any Credit Party has
made a pending demand for recognition; and (g) except as set forth in Disclosure
Schedule (3.7), there are no material complaints or charges against any Credit
Party pending or, to the knowledge of any Credit Party, threatened to be filed
with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by any Credit Party of any individual.
3.8. VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND
INDEBTEDNESS. Except as set forth in Disclosure Schedule (3.8), as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Credit Party is owned by
each of the Stockholders and in the amounts set forth in Disclosure Schedule
(3.8). Except as set forth in Disclosure Schedule (3.8), there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness and
Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for
the Obligations) is described in Section 6.3 (including Disclosure Schedule
(6.3)). None of the Credit Parties or their Subsidiaries identified on
Disclosure Schedule (3.8) as "inactive" has any material assets (except Stock of
their Subsidiaries) or any Indebtedness or Guaranteed Indebtedness or conducts
any trade or business.
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3.9. GOVERNMENT REGULATION. No Credit Party is an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Loans by Lenders to Borrowers, the
incurrence of the Letter of Credit Obligations on behalf of Borrowers, the
application of the proceeds thereof and repayment thereof and the consummation
of the transactions hereunder will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.10. MARGIN REGULATIONS. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11. TAXES. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof (or any such fine,
penalty, interest, late charge or loss has been paid), excluding (a) Charges or
other amounts being contested in accordance with Section 5.2(b) and (b) filings
relating to local qualifications to do business where the exposure to losses,
damages or liabilities is less than $100,000 in the aggregate for all
jurisdictions. Proper and accurate amounts have been withheld by each Credit
Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign laws and such
withholdings have been timely paid to the respective Governmental Authorities.
Disclosure Schedule (3.11) sets forth as of the Closing Date those taxable years
for which any Credit Party's tax returns are currently being audited by the IRS
or any other applicable Governmental Authority, and any assessments or
threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described in Disclosure Schedule (3.11), no Credit Party
has executed or filed with the IRS or any other Governmental Authority any
agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any Charges. None of the Credit Parties
and their respective predecessors are liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to each Credit Party's
knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed
or been requested to make any adjustment under IRC Section 481(a), by reason of
a change in accounting method or otherwise, which would reasonably be expected
to have a Material Adverse Effect.
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3.12. ERISA.
(a) Disclosure Schedule (3.12) lists (i) all ERISA Affiliates
and (ii) all Plans and separately identifies all Pension Plans, including Title
IV Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree
Welfare Plans. Copies of all such listed Plans, together with a copy of the
latest form IRS/DOL 5500-series, as applicable, for each such Plan, have been
made available to Agent. Except with respect to Multiemployer Plans, each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, the trusts created thereunder have been determined to be exempt from
tax under the provisions of Section 501 of the IRC, and nothing has occurred
that would cause the loss of such qualification or tax exempt status. Each Plan
is in compliance with the applicable provisions of ERISA, the IRC and its terms,
including the timely filing of all reports required under the IRC or ERISA,
including the statement required by 29 CFR Section 2520.104 23. Neither any
Credit Party nor ERISA Affiliate has failed to make any contribution or pay any
amount due as required by either Section 412 of the IRC or Section 302 of ERISA
or the terms of any such Plan. No "prohibited transaction," as defined in
Section 406 of ERISA and Section 4975 of the IRC, has occurred with respect to
any Plan, that would subject any Credit Party to a material tax on prohibited
transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor
has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at
any time within the last five years) with Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such
time); (vi) except in the case of any ESOP, Stock of all Credit Parties and
their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair
market value of the assets of any Plan measured on the basis of fair market
value as of the latest valuation date of any Plan; and (vii) no liability under
any Title IV Plan has been satisfied with the purchase of a contract from an
insurance company that is not rated AAA by the Standard & Poor's Corporation or
an equivalent rating by another nationally recognized rating agency.
3.13. NO LITIGATION. No action, claim, lawsuit, demand, investigation
or proceeding is now pending or, to the knowledge of any Credit Party,
threatened against any Credit Party, before any Governmental Authority or before
any arbitrator or panel of arbitrators (collectively, "Litigation"), (a) that
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
has a reasonable risk of being determined adversely to any Credit Party and
that, if so determined, could be reasonably be expected to have a Material
Adverse Effect. Except as set forth on Disclosure Schedule (3.13), as of the
Closing Date there is no Litigation pending or, to any Credit Party's knowledge,
threatened, that seeks damages in excess of $250,000 or injunctive relief
against, or alleges criminal misconduct of, any Credit Party.
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3.14. BROKERS. No broker or finder brought about the obtaining, making
or closing of the Loans, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.15. INTELLECTUAL PROPERTY. As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15). Each Credit Party uses reasonable commercial efforts to conduct
its business and affairs so as to avoid infringement of or interference with any
Intellectual Property of any other Person in any material respect. Except as set
forth in Disclosure Schedule (3.15), no Credit Party is aware of any
infringement claim by any other Person with respect to any Intellectual
Property.
3.16. FULL DISCLOSURE. No information contained in this Agreement, any
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other written reports from time to time prepared by any Credit Party
and delivered hereunder or any written statement prepared by any Credit Party
and furnished by or on behalf of any Credit Party to Agent or any Lender
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances.
3.17. ENVIRONMENTAL MATTERS.
(a) Except as set forth in Disclosure Schedule (3.17), as of
the Closing Date: (i) the Real Estate is free of contamination from any
Hazardous Material except for such contamination that would not adversely impact
the value or marketability of such Real Estate and that would not result in
Environmental Liabilities that could reasonably be expected to exceed $200,000;
(ii) no Credit Party has caused or suffered to occur any Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate in
violation of Environmental Laws and Environmental Permits; (iii) the Credit
Parties are and have been in compliance with all Environmental Laws, except for
such noncompliance that would not result in Environmental Liabilities which
could reasonably be expected to exceed $200,000; (iv) the Credit Parties have
obtained, and are in compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective businesses as
presently conducted or as proposed to be conducted, except where the failure to
so obtain or comply with such Environmental Permits would not result in
Environmental Liabilities that could reasonably be expected to exceed $200,000,
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and all such Environmental Permits are valid, uncontested and in good standing;
(v) no Credit Party is involved in operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $200,000, and no Credit Party has
consented to any current or former tenant or occupant of the Real Estate
engaging in any such operations; (vi) there is no Litigation arising under or
related to any Environmental Laws, Environmental Permits or Hazardous Material
that seeks damages, penalties, fines, costs or expenses in excess of $200,000 or
injunctive relief against, or that alleges criminal misconduct by, any Credit
Party; (vii) no notice has been received by any Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit Parties, there are
no facts, circumstances or conditions that may result in any Credit Party being
identified as a "potentially responsible party" under CERCLA or analogous state
statutes; and (viii) the Credit Parties have provided to Agent copies of all
existing environmental reports, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now, and has not ever been, in control of any of the Real
Estate or any Credit Party's affairs, and (ii) does not have the capacity
through the provisions of the Loan Documents or otherwise to influence any
Credit Party's conduct with respect to the ownership, operation or management of
any of its Real Estate or compliance with Environmental Laws or Environmental
Permits.
3.18. INSURANCE. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.
3.19. DEPOSIT AND DISBURSEMENT ACCOUNTS. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which any Credit Party
maintains deposit or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20. GOVERNMENT CONTRACTS. Except as set forth in Disclosure Schedule
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any
similar state or local law.
3.21. CUSTOMER AND TRADE RELATIONS. As of the Closing Date, there
exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in: the business relationship of any Credit Party with any customer or group of
customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party; or the business
relationship of any Credit Party with any supplier material to its operations.
3.22. AGREEMENTS AND OTHER DOCUMENTS. Disclosure Schedule (3.22)
accurately lists each of the following agreements or documents to which any
Credit Party is subject as of the Closing Date: supply agreements and purchase
agreements not terminable by such Credit Party within 60 days following written
notice issued by such Credit Party and involving transactions in excess of
$3,000,000 with respect to vendor supply agreements and $6,000,000 with respect
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to customer purchase agreements, in each case per annum; leases of Equipment
having a remaining term of one year or longer and requiring aggregate rental and
other payments in excess of $500,000 per annum; any surety bond agreement or
bonding requirement with respect to products or services sold by it or any
trademark or patent license agreement with respect to products sold by it; any
other licenses and permits held by the Credit Parties, the absence of which
could be reasonably likely to have a Material Adverse Effect; instruments and
documents evidencing any Indebtedness or Guaranteed Indebtedness of such Credit
Party and any Lien granted by such Credit Party with respect thereto; and
instruments and agreements evidencing the issuance of any equity securities,
warrants, rights or options to purchase equity securities of such Credit Party.
3.23. SOLVENCY. Both before and after giving effect to (a) the Loans
and Letter of Credit Obligations to be made or incurred on the Closing Date or
such other date as Loans and Letter of Credit Obligations requested hereunder
are made or incurred and the other transactions contemplated hereunder, (b) the
disbursement of the proceeds of such Loans pursuant to the instructions of
Borrower Representative; and (c) the payment and accrual of all transaction
costs in connection with the foregoing, each Credit Party is and will be
Solvent.
3.24. SUBORDINATED DEBT. As of the Closing Date, Borrowers have
delivered to Agent a complete and correct copy of the Subordinated Debt
Documents then in effect (including all schedules, exhibits, amendments,
supplements, modifications, assignments and all other documents delivered
pursuant thereto or in connection therewith). SMP has the corporate power and
authority to incur the Indebtedness evidenced by such Subordinated Debt
Documents. The subordination provisions of such Subordinated Debt Documents are
enforceable against the holders of such Subordinated Debt Documents by Agent and
Lenders. All Obligations, including the Letter of Credit Obligations, constitute
senior Indebtedness entitled to the benefits of the subordination provisions
contained in such Subordinated Debt Documents. Borrowers acknowledge that Agent
and each Lender are entering into this Agreement and are extending the
Commitments in reliance upon the subordination provisions of such Subordinated
Debt Documents and this SECTION 3.24.
3.25. ANTI-TERRORISM LAWS.
(a) General. Neither any Borrower nor any Affiliate of any
Borrower is in violation of any Anti-Terrorism Law or engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.
(b) Executive Order No. 13224. Neither any Borrower nor any
Affiliate of any Borrower or their respective agents acting or benefiting in any
capacity in connection with the Advances or other transactions hereunder, is any
of the following (each a "Blocked Person"):
(i) a Person that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order No. 13224;
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(ii) a Person owned or controlled by, or acting for
or on behalf of, any Person that is listed in the annex to, or is otherwise
subject to the provisions of, the Executive Order No. 13224;
(iii) a Person or entity with which any Lender is
prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law;
(iv) a Person or entity that commits, threatens or
conspires to commit or supports "terrorism" as defined in the Executive Order
No. 13224;
(v) a Person or entity that is named as a "specially
designated national" on the most current list published by the U.S. Treasury
Department Office of Foreign Asset Control at its official website or any
replacement website or other replacement official publication of such list, or
(vi) a Person or entity who is affiliated or
associated with a Person or entity listed above.
Neither any Borrower nor to the knowledge of any Borrower, any
of its agents acting in any capacity in connection with the Advances or other
transactions hereunder (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (ii) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order No. 13224.
3.26. TRADING WITH THE ENEMY. No Borrower has engaged, nor does it
intend to engage, in any business or activity prohibited by the Trading with the
Enemy Act.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1. REPORTS AND NOTICES.
(a) SMP, in its capacity as Borrower Representative, hereby
agrees that from and after the Closing Date and until the Termination Date, it
shall deliver to Agent or to Agent and Lenders, as required, the Financial
Statements, notices, Projections and other information at the times, to the
Persons and in the manner set forth in Annex E.
(b) SMP, in its capacity as Borrower Representative, hereby
agrees that, from and after the Closing Date and until the Termination Date, it
shall deliver to Agent or to Agent and Lenders, as required, the various
Collateral Reports (including Borrowing Base Certificates in the form of Exhibit
4.1(b)) at the times, to the Persons and in the manner set forth in Annex F.
4.2. COMMUNICATION WITH ACCOUNTANTS. Each Credit Party executing this
Agreement authorizes (a) Agent and (b) so long as an Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified public accountants, including ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, and
authorizes and, at Agent's request, shall instruct those accountants and
advisors to disclose and make available to Agent and each Lender any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including copies of any issued
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management letters) with respect to the business, financial condition and other
affairs of any Credit Party. Unless an Event of Default has occurred which is
then continuing, Agent shall (i) notify SMP at least five (5) Business Days
prior to any such communication with its accountants, and (ii) permit Borrowers
to participate in any such discussions or meetings.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof and until
the Termination Date:
5.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Each Credit
Party shall: do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and its rights and franchises;
continue to conduct its business substantially as now conducted or as otherwise
permitted hereunder; at all times maintain, preserve and protect all of its
assets and properties used or useful in the conduct of its business, and keep
the same in good repair, working order and condition in all material respects
(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices; and transact business
only in such corporate and trade names as are set forth in Disclosure Schedule
(5.1) or reported in accordance with Section 6.15. Notwithstanding the foregoing
or any provision herein to the contrary, each of SI and MCC may be dissolved or
liquidated at any time at the discretion of SMP, provided that any assets then
owned by SI or MCC, as the case may be, are transferred to SMP and the
applicable Borrowing Bases are recalculated accordingly.
5.2. PAYMENT OF CHARGES.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful
claims for labor, materials, supplies and services or otherwise, and (iii) all
storage or rental charges payable to warehousemen or bailees, in each case,
before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges, Taxes or claims
described in Section 5.2(a); provided, that (i) adequate reserves with respect
to such contest are maintained on the books of such Credit Party, in accordance
with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges
(other than payments to warehousemen and/or bailees) that is superior to any of
the Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges; (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest; and (iv) such Credit Party shall
promptly pay or discharge such contested Charges, Taxes or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
met.
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5.3. BOOKS AND RECORDS. Each Credit Party shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as DISCLOSURE SCHEDULE
(3.4(A)).
5.4. INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL.
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule (3.18) as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Agent. Such policies of insurance (or the loss payable
and additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide thirty (30) days prior written
notice (or 10 days in the case of non-payment of premiums) to Agent in the event
of any non-renewal, cancellation or amendment of any such insurance policy. If
any Credit Party at any time or times hereafter shall fail to obtain or maintain
any of the policies of insurance required above, or to pay all premiums relating
thereto, Agent may at any time or times thereafter obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto that Agent deems advisable. Agent shall have no obligation to
obtain insurance for any Credit Party or pay any premiums therefor. By doing so,
Agent shall not be deemed to have waived any Default or Event of Default arising
from any Credit Party's failure to maintain such insurance or pay any premiums
therefor. All sums so disbursed, including reasonable attorneys' fees, court
costs and other charges related thereto, shall be payable on demand by Borrowers
to Agent and shall be additional Obligations hereunder secured by the
Collateral.
(b) Agent reserves the right at any time upon any change in
any Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability of
such Credit Party), upon delivery to the Borrower Representative of no less than
thirty (30) days' prior written notice to such effect, to require additional
forms and limits of insurance to, in Agent's opinion, adequately protect both
Agent's and Lenders' interests in all or any portion of the Collateral and to
ensure that each Credit Party is protected by insurance in amounts and with
coverage customary for its industry. If reasonably requested by Agent, each
Credit Party shall deliver to Agent from time to time a report of a reputable
insurance broker, reasonably satisfactory to Agent, with respect to its
insurance policies.
(c) Each Credit Party shall deliver to Agent, in form and
substance reasonably satisfactory to Agent, endorsements to (i) all "All Risk"
and business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee, and (ii) all general liability and other liability
policies naming Agent, on behalf of itself and Lenders, as additional insured.
Each Credit Party irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent), so long as any Event of
Default has occurred and is continuing or the anticipated insurance proceeds
exceed $500,000, as such Credit Party's true and lawful agent and attorney in
fact for the purpose of making, settling and adjusting claims under such "All
Risk" policies of insurance, endorsing the name of such Credit Party on any
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check or other item of payment for the proceeds of such "All Risk" policies of
insurance and for making all determinations and decisions with respect to such
"All Risk" policies of insurance. Agent shall have no duty to exercise any
rights or powers granted to it pursuant to the foregoing power-of-attorney.
Borrower Representative shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $250,000 or more, whether or not
covered by insurance. After deducting from such proceeds (i) the expenses, if
any, incurred by Agent in the collection or handling thereof, and (ii) the
amounts required to be paid to creditors (other than Lenders) having Permitted
Encumbrances, Agent may, at its option, apply such proceeds to the reduction of
the Obligations in accordance with Section 1.3(d) (provided that in the case of
insurance proceeds pertaining to any Credit Party that is not a Borrower, such
insurance proceeds shall be applied ratably to all of the Loans owing by each
Borrower), or permit or require the applicable Credit Party to use such money,
or any part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such insurance
proceeds could not reasonably be expected to have a Material Adverse Effect and
such insurance proceeds do not exceed $500,000 in the aggregate, Agent shall
permit the applicable Credit Party to replace, restore, repair or rebuild the
property; provided that if such Credit Party shall not have completed or entered
into binding agreements to complete such replacement, restoration, repair or
rebuilding within 180 days of such casualty, Agent may apply such insurance
proceeds to the Obligations in accordance with Section 1.3(d); provided,
further, that in the case of insurance proceeds pertaining to any Credit Party
that is not a Borrower, such insurance proceeds shall be applied ratably to all
of the Loans owing by each Borrower. All insurance proceeds that are to be made
available to any Borrower to replace, repair, restore or rebuild the Collateral
shall be applied by Agent to reduce the outstanding principal balance of the
Revolving Loan of such Borrower (which application shall not result in a
permanent reduction of the Commitment) and upon such application, Agent shall
establish a Reserve against the separate Borrowing Base of the affected Borrower
in an amount equal to the amount of such proceeds so applied. All insurance
proceeds made available to any Credit Party that is not a Borrower to replace,
repair, restore or rebuild Collateral shall be deposited in a cash collateral
account. Thereafter, such funds shall be made available to that Borrower or
Credit Party to provide funds to replace, repair, restore or rebuild the
Collateral as follows: (i) Borrower Representative shall request a Revolving
Credit Advance or a release from the cash collateral account be made to such
Borrower or Credit Party in the amount requested to be released; (ii) so long as
the conditions set forth in Section 2.2 have been met, Lenders shall make such
Revolving Credit Advance or Agent shall release funds from the cash collateral
account; and (iii) in the case of insurance proceeds applied against the
Revolving Loan, the Reserve established with respect to such insurance proceeds
shall be reduced by the amount of such Revolving Credit Advance. To the extent
not used to replace, repair, restore or rebuild the Collateral, such insurance
proceeds shall be applied in accordance with Section 1.3(d); provided that in
the case of insurance proceeds pertaining to any Credit Party that is not a
Borrower, such insurance proceeds shall be applied ratably to all of the Loans
owing by each Borrower.
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5.5. COMPLIANCE WITH LAWS. Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to ERISA, labor laws and Environmental Laws and
Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.6. SUPPLEMENTAL DISCLOSURE. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default) or at Credit Parties' election, the Credit Parties shall supplement
each Disclosure Schedule hereto, or any representation herein or in any other
Loan Document, with respect to any matter hereafter arising that, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Disclosure Schedule or as an exception to such
representation or that is necessary to correct any information in such
Disclosure Schedule or representation which has been rendered inaccurate thereby
(and, in the case of any supplements to any Disclosure Schedule, such Disclosure
Schedule shall be appropriately marked to show the changes made therein);
provided that (a) except as provided below, no such supplement to any such
Disclosure Schedule or representation shall amend, supplement or otherwise
modify any Disclosure Schedule or representation, or be or be deemed a waiver of
any Default or Event of Default resulting from the matters disclosed therein,
except as consented to by Agent and Requisite Lenders in writing, and (b) no
supplement shall be required or permitted as to representations and warranties
that relate solely to the Closing Date.
5.7. INTELLECTUAL PROPERTY. Each Credit Party will conduct its business
and affairs without infringement of or interference with any Intellectual
Property of any other Person in any material respect and shall comply in all
material respects with the terms of its Licenses.
5.8. ENVIRONMENTAL MATTERS. Each Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to comply with Environmental Laws and Environmental Permits pertaining
to the presence, generation, treatment, storage, use, disposal, transportation
or Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate; (c) notify Agent promptly after such Credit Party
becomes aware of any violation of Environmental Laws or Environmental Permits or
any Release on, at, in, under, above, to, from or about any Real Estate that is
reasonably likely to result in Environmental Liabilities in excess of $100,000;
and (d) promptly forward to Agent a copy of any order, notice, request for
information or any written communication or report received by such Credit Party
in connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits that could reasonably be
expected to result in Environmental Liabilities in excess of $100,000, in each
case whether or not the Environmental Protection Agency or any Governmental
Authority has taken or threatened any action in connection with any such
violation, Release or other matter. If Agent at any time has a reasonable basis
to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability arising
thereunder, or a Release of Hazardous Materials on, at, in, under, above, to,
from or about any of its Real Estate, that, in each case, could reasonably be
expected to have a Material Adverse Effect, then each Credit Party shall, upon
Agent's written request, and subject to the requirements and restrictions
imposed by any Person from which such Credit Party leases the applicable Real
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Estate, (i) cause the performance of such environmental audits including
subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at Borrowers' expense, as Agent may from time to time
reasonably request, which shall be conducted by reputable environmental
consulting firms reasonably acceptable to Agent and shall be in form and
substance reasonably acceptable to Agent, and (ii) permit Agent or its
representatives to have reasonable access to all Real Estate for the purpose of
conducting such environmental audits and testing as Agent deems appropriate,
including subsurface sampling of soil and groundwater. Borrowers shall reimburse
Agent for the costs of such audits and tests and the same will constitute a part
of the Obligations secured hereunder.
5.9. LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS, BAILEE LETTERS AND
REAL ESTATE PURCHASES. Each Credit Party shall obtain a landlord's agreement,
mortgagee agreement or bailee letter, as applicable, from the lessor of each
leased property, mortgagee of owned property or bailee with respect to any
warehouse, processor or converter facility or other location where Collateral is
stored or located, which agreement or letter shall contain a waiver or
subordination of all Liens or claims that the landlord, mortgagee or bailee may
assert against the Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to Agent. With respect to such
locations or warehouse space leased or owned as of the Closing Date and
thereafter, if Agent has not received a landlord or mortgagee agreement or
bailee letter as of the Closing Date (or, if later, as of the date such location
is acquired or leased), any Borrower's Eligible Inventory at that location
shall, in Agent's discretion, be excluded from the Borrowing Base or be subject
to such Reserves as may be established by Agent in its reasonable credit
judgment. After the Closing Date, no real property or warehouse space shall be
leased by any Credit Party and no Inventory shall be shipped to a processor or
converter under arrangements established after the Closing Date without the
prior written consent of Agent (which consent, in Agent's discretion, may be
conditioned upon the exclusion from the Borrowing Base of Eligible Inventory at
that location or the establishment of Reserves acceptable to Agent) or, unless
and until a reasonably satisfactory landlord agreement or bailee letter, as
appropriate, shall first have been obtained with respect to such location. Each
Credit Party shall timely and fully pay and perform its obligations under all
leases and other agreements with respect to each leased location or public
warehouse where any Collateral is or may be located. To the extent otherwise
permitted hereunder, if any Credit Party proposes to acquire a fee ownership
interest in Real Estate after the Closing Date, it shall first provide to Agent
a mortgage or deed of trust granting Agent a first priority Lien on such Real
Estate, together with environmental audits, mortgage title insurance commitment,
real property survey, local counsel opinion(s), and, if required by Agent,
supplemental casualty insurance and flood insurance, and such other documents,
instruments or agreements reasonably requested by Agent, in each case, in form
and substance reasonably satisfactory to Agent.
5.10. FURTHER ASSURANCES. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause to
be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement and each Loan Document.
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6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof until the
Termination Date:
6.1. MERGERS, SUBSIDIARIES, ETC. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) except as otherwise permitted
in connection with a Permitted Acquisition, form any Subsidiary, or (b) merge
with, consolidate with, acquire all or substantially all of the assets or Stock
of, or otherwise combine with or acquire, any Person, except that any Borrower
may merge with another Borrower and any other Credit Party may merge into any
Borrower, PROVIDED that Borrower Representative shall be the survivor of any
such merger to which it is a party. Notwithstanding the foregoing clause (b),
any Borrower, may acquire or, subject to the last sentence of this Section 6.1,
form a Subsidiary to acquire, all or substantially all of the assets or Stock of
any Person (the "Target") (in each case, a "Permitted Acquisition") subject to
the satisfaction of each of the following conditions.
(i) Agent shall receive at least fifteen (15)
Business Days' prior written notice of such proposed Permitted Acquisition,
which notice shall include a reasonably detailed description of such proposed
Permitted Acquisition;
(ii) such Permitted Acquisition shall only involve
assets comprising a business, or those assets of a business, of, or similar to,
the types engaged in by Borrowers as of the Closing Date, and which business
would not subject Agent or any Lender to regulatory or third party approvals in
connection with the exercise of its rights and remedies under this Agreement or
any other Loan Documents other than approvals applicable to the exercise of such
rights and remedies with respect to Borrowers prior to such Permitted
Acquisition;
(iii) such Permitted Acquisition shall be consensual
and shall have been approved by the Target's board of directors;
(iv) Concurrently with delivery of the notice
referred to in clause (i) above, with respect to any Permitted Acquisition
involving a purchase price consideration (inclusive of any assumption of
liabilities) in excess of $5,000,000, Borrowers shall have delivered to Agent,
in form and substance reasonably satisfactory to Agent:
(A) a pro forma consolidated balance sheet,
income statement and cash flow statement of Borrowers
and their respective Subsidiaries (the "Acquisition
Pro Forma"), based on recent financial statements,
which shall be complete and shall fairly present in
all material respects the assets, liabilities,
financial condition and results of operations of
Borrowers and their respective Subsidiaries in
accordance with GAAP consistently applied, but taking
into account such Permitted Acquisition and the
funding of all Loans in connection therewith;
(B) updated versions of the most recently
delivered Projections covering the 1-year period
commencing on the date of such Permitted Acquisition
and otherwise prepared in accordance with the
Projections (the "Acquisition Projections") and based
upon historical financial data of a recent date
reasonably satisfactory to Agent, taking into account
such Permitted Acquisition; and
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(C) a certificate of the chief financial
officer or treasurer of each Borrower to the effect
that: (w) each Borrower (after taking into
consideration all rights of contribution and
indemnity such Borrower has against each other
Subsidiary of each Borrower) will be Solvent upon the
consummation of the Permitted Acquisition; (x) the
Acquisition Pro Forma fairly presents the financial
condition of Borrowers (on a consolidated basis) as
of the date thereof after giving effect to the
Permitted Acquisition; (y) the Acquisition
Projections are reasonable estimates of the future
financial performance of Borrowers subsequent to the
date thereof based upon the historical performance of
Borrowers and the Target and show that Borrowers
shall continue to be in compliance with the financial
covenants set forth in Annex G for the 3-year period
thereafter; and (z) Borrowers have completed their
due diligence investigation with respect to the
Target and such Permitted Acquisition, which
investigation was conducted in a manner similar to
that which would have been conducted by a prudent
purchaser of a comparable business and the results of
which investigation were delivered to Agent and
Lenders;
(v) on or prior to the date of such Permitted
Acquisition, Agent shall have received copies of the acquisition agreement and
related agreements and instruments, and all opinions, certificates, lien search
results and other documents relating thereto; and
(vi) at the time of such Permitted Acquisition and
after giving effect thereto, (x) Borrowing Availability of all Borrowers exceeds
$19,725,000 and (y) no Default or Event of Default has occurred and is
continuing.
Notwithstanding the foregoing, (a) the Accounts, Inventory,
Equipment and Real Estate of the Target shall not be included in Eligible
Accounts, Eligible Inventory, Eligible Equipment and Eligible Real Estate until
(x) Agent determines, on the basis of any field examinations and appraisals
conducted by it in connection with such Permitted Acquisition, the appropriate
advance rates and Reserves applicable thereto and (y) such assets become subject
to the first priority perfected security interests of Agent and otherwise meet
the eligibility criteria which apply to such assets and (b) whether or not the
assets thereof become part of the Borrowing Base, if a new Subsidiary is formed
in connection with any Permitted Acquisition, or, if the Permitted Acquisition
is of Stock of a Person which, upon consummation thereof, would become a
Subsidiary, such Subsidiary shall (i) if a domestic Subsidiary, (x) become a
Credit Party hereunder, (y) enter into a guaranty and a security agreement, each
in form and substance identical to the Subsidiary Guaranty and the Security
Agreement, and (z) take such other action as may be reasonably requested by
Agent to have the assets of such Subsidiary become subject to the first priority
perfected security interests of Agent, and (ii) if a foreign Subsidiary, take
such action as may be reasonably requested by Agent to have 51% of the Stock of
such foreign Subsidiary to be pledged to Agent and subject to the first priority
perfected security interest of Agent provided that if such .foreign Subsidiary
is a "check the box" subsidiary, 100% of the stock shall be pledged to Agent and
subject to the first priority perfected security interest of Agent.
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6.2. INVESTMENTS; LOANS AND ADVANCES. Except as otherwise expressly
permitted by this Section 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that: (a) Borrowers may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to any Borrower pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of business,
so long as the aggregate amount of such Accounts so settled by Borrowers does
not exceed, without the prior written approval of Agent, $1,500,000, plus those
in existence on the Closing Date which are set forth on DISCLOSURE SCHEDULE
(6.2); (b) each Credit Party may maintain its existing investments in its
Subsidiaries, and joint ventures identified on DISCLOSURE SCHEDULE (6.2), as of
the Closing Date plus up to the sum of $5,000,000 during each Fiscal Year (with
respect to such joint ventures), so long as after giving effect thereto (x)
Borrowing Availability of all Borrowers exceeds $16,000,000 and (y) no Default
or Event of Default has occurred and is continuing; (c) SI and SMP HK may
maintain deposits of cash and investments in cash equivalents in an amount not
to exceed $10,000,000 at anytime in the case of SI and $5,000,000 in the case of
SMP HK; (d) MCC may maintain deposits of cash and investments in cash
equivalents in an amount not to exceed at any time the sum of $3,000,000; (e)
SMP may maintain deposits of cash and investments in cash equivalents in an
amount not to exceed, in the aggregate, $5,000,000 at any time; (f) Borrowers
may make overnight investments of credit balances with respect to Index Rate
Loans in Permitted Overnight Investments; (g) Borrowers may make loans to its
Subsidiaries, so long as after giving effect thereto (x) Borrowing Availability
of all Borrowers exceeds $16,000,000 and (y) no Default or Event of Default has
occurred and is continuing, up to the sum of $20,000,000 at any time outstanding
in the aggregate, less the amount of loans converted to equity pursuant to
clause (i) hereinbelow; (h) Borrowers may increase their investments in
Subsidiaries, and/or purchase a minority stock interest in other entities, not
earlier than fifteen (15) Business Days after delivering to Agent a notice
similar to that required under SECTION 6.1(A)(I) together with financial
statements substantially similar to an Acquisition Pro Forma described in
SECTION 6.1(A)(IV)(A) indicating that (x) average daily Borrowing Availability
of all Borrowers for the 30-day period preceding the consummation of such
investment would have exceeded $16,000,000 on a pro forma basis (after giving
effect to such investment and all Loans funded in connection therewith as if
made on the first day of such period) and (y) on a pro forma basis, no Event of
Default has occurred and is continuing or would result after giving effect to
such investment, and (i) Borrowers may convert to equity up to an aggregate
amount of $6,000,000 of loans due from Subsidiaries.
6.3. INDEBTEDNESS.
(a) No Credit Party shall create, incur, assume or permit to
exist any Indebtedness, except (without duplication) (i) Indebtedness secured by
purchase money security interests and Capital Leases permitted in Section 6.7(c)
or as otherwise permitted in Section 6.7(c), (ii) the Loans and the other
Obligations, (iii) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain unfunded
under applicable law, (iv) existing Indebtedness described in Disclosure
Schedule (6.3) and refinancings thereof or amendments or modifications thereto
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that do not have the effect of increasing the principal amount thereof or
changing the amortization thereof (other than to extend the same) and that are
otherwise on terms and conditions no less favorable to any Credit Party, Agent
or any Lender, as determined by Agent, than the terms of the Indebtedness being
refinanced, amended or modified, (v) Indebtedness consisting of intercompany
loans and advances made by SMP Canada or any Borrower to any other Borrower or
to SMP Canada as the case may be; provided, that: (A) each Borrower and SMP
Canada shall have executed and delivered to each other Borrower or SMP Canada as
the case may be, on the Closing Date, a demand note (collectively, the
"Intercompany Notes") to evidence any such intercompany Indebtedness owing at
any time by such Borrower or SMP Canada to such other Borrowers or SMP Canada,
as the case may be, which Intercompany Notes shall be in form and substance
reasonably satisfactory to Agent and shall be pledged and delivered to Agent
pursuant to the applicable Pledge Agreement or Security Agreement as additional
collateral security for the Obligations; (B) each Borrower and SMP Canada shall
record all intercompany transactions on its books and records in a manner
reasonably satisfactory to Agent; (C) the obligations of each Borrower and SMP
Canada under any such Intercompany Notes shall be subordinated to the
Obligations of such Borrower or SMP Canada hereunder in a manner reasonably
satisfactory to Agent; (D) at the time any such intercompany loan or advance is
made by any Borrower to any other Borrower or SMP Canada and after giving effect
thereto, each such Borrower shall be Solvent; (E) no Default or Event of Default
would occur and be continuing after giving effect to any such proposed
intercompany loan; and (F) in the case of any intercompany Indebtedness, the
Borrower advancing such funds shall have Borrowing Availability under its
separate Borrowing Base of not less than (x) $1,850,000 in the case of SMP, (y)
$350,000 in the case of SI and (z) $50,000 in the case of MCC, each after giving
effect to such intercompany loan, (vi) Indebtedness consisting of intercompany
loans and advances made by a Subsidiary of any Credit Party which is not itself
a Credit Party to any other Credit Party, (vii) Capital Leases to the extent
they are permitted in Section 6.7(a), (viii) Indebtedness incurred pursuant to
the Canadian Loan Agreement and (ix) Indebtedness incurred pursuant to Rate
Protection Agreements and any interest rate swap, cap, collar, or similar
agreement arranged by GE Capital and supported by a Swap Related L/C.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness prior to its scheduled
maturity, other than (i) the Obligations; (ii) the refinancing, repurchase
and/or redemption of Subordinated Debt in accordance with the terms of Section
6.14(e)(iii); (iii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Sections 6.8(b) or (c); (iv) Indebtedness permitted by Section 6.3(a)(iv)
upon any refinancing thereof in accordance with Section 6.3(a)(iv); and (v) as
otherwise permitted in Section 6.14.
6.4. EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS.
(a) Except as otherwise expressly permitted in this Section 6
with respect to Affiliates, no Credit Party shall enter into or be a party to
any transaction with any other Credit Party or any Affiliate thereof except in
the ordinary course of and pursuant to the reasonable requirements of such
Credit Party's business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a comparable arm's
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length transaction with a Person not an Affiliate of such Credit Party. In
addition, if any such transaction or series of related transactions not
otherwise permitted under Article 6 involves payments in excess of $50,000 for
any single transaction or $250,000 in the aggregate for all Credit Parties, the
terms of these transactions must be disclosed in advance to Agent and Lenders.
All such transactions existing as of the date hereof are described in Disclosure
Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except (i) loans to its
respective employees in the ordinary course of business consistent with past
practices for travel and entertainment expenses, (ii) loans to its respective
employees in an amount not to exceed for each employee 25% of the employee's
compensation to finance such employee's purchase of SMP Stock, (iii) loans to
executive officers to finance their purchase of SMP Stock in which under Credit
Parties' policies such officers are to have invested at any time an amount equal
to 50% of their current compensation, and (iv) loans to employees who have been
relocated at a Credit Party's request to assist them in financing the purchase
of a new residence and related moving expenses pending the sale of their former
residence, not to exceed, in the aggregate with respect to all such employee or
executive officer loans described in clauses (i), (ii), (iii) and (iv) of this
subsection (b), a maximum of $1,000,000 to any employee or executive officer and
up to a maximum of $2,000,000 in the aggregate at any one time outstanding for
all employees and executive officers.
6.5. CAPITAL STRUCTURE AND BUSINESS. No Credit Party shall (a) make any
changes in any of its business objectives, purposes or operations that could
reasonably be expected to have or result in a Material Adverse Effect, (b) make
any change in its capital structure as described in DISCLOSURE SCHEDULE (3.8),
including the issuance or sale of any shares of Stock, warrants or other
securities convertible into Stock or any revision of the terms of its
outstanding Stock; provided that (i) any Credit Party may issue or sell shares
of its stock to any other Credit Party, and (ii) SMP may buy or sell shares of
its Stock for cash so long as (x) the proceeds thereof are applied in prepayment
of the Obligations as required by Section 1.3(b)(iii), and (y) no Change of
Control occurs after giving effect thereto, or (c) amend its charter or bylaws
in a manner that would adversely affect Agent or Lenders or such Credit Party's
duty or ability to repay the Obligations. No Credit Party shall engage in any
business other than the businesses currently engaged in by it or businesses
reasonably similar or related thereto.
6.6. GUARANTEED INDEBTEDNESS. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, (b) for Guaranteed Indebtedness incurred for the benefit of any
other Credit Party if the primary obligation is expressly permitted by this
Agreement other than Indebtedness, if any, of a Target existing at the time such
Target is acquired, (c) Guaranteed Indebtedness incurred by SMP for the payment
or performance of lease obligations for the benefit of its Subsidiaries not to
exceed $2,500,000 in the aggregate at any time, (d) for Guaranteed Indebtedness
incurred pursuant to the Guaranty dated June 27, 2003 made by SMP in favor of
JPMorgan Chase Bank in connection with the transfer of ownership to SMP LLC of
the Real Estate of SMP located in Long Island City, New York and (e) for
Guaranteed Indebtedness in place as of the date hereof and listed on Schedule
6.6 hereto.
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6.7. LIENS. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7) securing the Indebtedness described on Disclosure
Schedule (6.3) and permitted refinancings, extensions and renewals thereof,
including extensions or renewals of any such Liens; provided that the principal
amount of the Indebtedness so secured is not increased and the Lien does not
attach to any other property; (c) Liens created after the date hereof (i) by
conditional sale or other title retention agreements (including Capital Leases)
or (ii) in connection with purchase money Indebtedness with respect to
Equipment, Fixtures and Real Estate acquired by any Credit Party in the ordinary
course of business, involving the incurrence of an aggregate amount of purchase
money Indebtedness and Capital Lease Obligations of not more than $10,000,000
outstanding at any one time for all such Liens (provided that all such Liens
described in this subsection 6.7(c)(ii) attach only to the assets subject to
such purchase money debt and such Indebtedness is incurred within 20 days
following such purchase and does not exceed 100% of the purchase price of the
subject assets); and (d) Liens securing the Indebtedness incurred under or
pursuant to the Canadian Loan Agreement.
6.8. SALE OF STOCK AND ASSETS. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including the Stock of any of its Subsidiaries (whether in a public or a private
offering or otherwise) or any of its Accounts, other than (a) the sale of
Inventory in the ordinary course of business, and (b) the sale, transfer,
conveyance or other disposition by a Credit Party of Equipment, Fixtures or Real
Estate that are obsolete or no longer used or useful in such Credit Party's
business and having a net book value, not exceeding $2,000,000 in the aggregate
in any Fiscal Year; (c) other Equipment and Fixtures having a net book value not
exceeding $5,000,000 in the aggregate in any Fiscal Year (d) the sale of
approximately 8 acres of vacant land located in Coppell, Texas; (e) licenses of
Intellectual Property for uses not pursued by Credit Parties or in geographic
markets not served by Credit Parties or in order to enable a supplier to
manufacture Inventory for a Credit Party as long as the proceeds from such
licenses are remitted to Agent for application to the Loans; (f) the sale of the
Real Estate owned by the Credit Parties in ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇; and (g) Draft
Monetization. With respect to any disposition of assets or other properties
permitted pursuant to clauses (b), (c) and (d) above, subject to Section 1.3(b),
Agent agrees on reasonable prior written notice to release its Lien on such
assets or other properties in order to permit the applicable Credit Party to
effect such disposition and shall execute, if necessary, and deliver to
Borrowers, at Borrowers' expense, appropriate UCC-3 termination statements and
other releases as reasonably requested by Borrowers.
6.9. ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur (i) an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or (ii) cause or permit to occur an ERISA Event to the extent such ERISA
Event could reasonably be expected to have a Material Adverse Effect.
6.10. FINANCIAL COVENANTS. Any time the aggregate Borrowing
Availability as to all Borrowers in the aggregate is less than $30,000,000,
Borrowers shall not breach or fail to comply with any of the Financial
Covenants. In the event the foregoing Borrowing Availability threshold is
violated, Borrowers shall be required to comply with the Financial Covenants
until Borrowers have maintained an average Borrowing Availability of $30,000,000
or greater for a continuous ninety (90) day period, as determined by Agent in
its reasonable discretion.
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6.11. HAZARDOUS MATERIALS. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the owned Real Estate or any of the Collateral, other
than such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.
6.12. SALE LEASEBACKS. No Credit Party shall engage in any sale
leaseback, synthetic lease or similar transaction involving any of its assets.
6.13. CANCELLATION OF INDEBTEDNESS. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's length basis and in the ordinary course of its business consistent with
past practices.
6.14. RESTRICTED PAYMENTS. No Credit Party shall make any Restricted
Payment, except (a) intercompany loans and advances between Borrowers to the
extent permitted by Section 6.3, (b) dividends and distributions by Subsidiaries
of any Borrower paid to such Borrower, (c) employee loans permitted under
SECTION 6.4(B), (d) payments of principal and interest of Intercompany Notes
issued in accordance with SECTION 6.3 and, to the extent not prohibited by any
applicable subordination provisions, payments of interest on Subordinated Debt;
and (e) subject to the provisos which follow in each of subsections (i), (ii)
and (iii) below, SMP may (i) pay cash dividends up to $10,000,000 in any twelve
(12) month period provided that (x) Borrowers shall have Excess Formula
Availability on a pro forma basis of not less than the greater of (1) five
percent (5%) of the Maximum Amount or (2) $13,150,000 and (y) no Default or
Event of Default shall have occurred and be continuing or would occur as a
result of the payment of such cash dividend, and (ii) make payments on account
of the purchase or redemption of its common stock, provided that (x) the
aggregate cash utilized to effectuate such purchases or redemptions shall not
exceed $5,000,000 during the term of this Agreement, (y) Borrowers shall have
Excess Formula Availability on a pro forma basis of not less than the greater of
(1) ten percent (10%) of the Maximum Amount or (2) $26,300,000, and (z) no
Default or Event of Default shall have occurred and be continuing or would occur
as a result of such purchases or redemptions and (iii) refinance, repurchase or
redeem Subordinated Debt under the Indenture provided that (x) no Default or
Event of Default shall have occurred or be continuing or would occur as result
of such refinance, repurchase or redemption and (y) Borrowers shall have Excess
Formula Availability on a pro forma basis of not less than $30,000,000 after
giving effect to such refinance, repurchase or redemption.
6.15. CHANGE OF CORPORATE NAME, STATE OF INCORPORATION OR LOCATION;
CHANGE OF FISCAL YEAR. No Credit Party shall (a) change its corporate name or
trade name or (b) change its chief executive office, principal place of
business, corporate offices or warehouses or locations at which Collateral is
held or stored, or the location of its records concerning the Collateral, in
each case without at least thirty (30) days prior written notice to Agent and
after Agent's written acknowledgment that any reasonable action requested by
Agent in connection therewith, including to continue the perfection of any Liens
in favor of Agent, on behalf of Lenders, in any Collateral, has been completed
or taken, and provided that any such new location shall be in the continental
United States or, with respect to SMP Canada, Canada. No Credit Party shall
change its Fiscal Year.
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6.16. NO IMPAIRMENT OF INTERCOMPANY TRANSFERS. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of any Borrower
to any Borrower or between Borrowers.
6.17. NO SPECULATIVE TRANSACTIONS. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars, so long as such
proposed hedging transaction is upon prior notice of same to Agent and the
agreements effectuating such proposed hedging transaction are satisfactory to
Agent in form and substance.
6.18. LEASES. No Credit Party shall enter into any operating lease for
Equipment or Real Estate, if the aggregate of all such operating lease payments
payable in any Fiscal Year for all Credit Parties on a consolidated basis would
exceed One Hundred and Twenty percent (120%) of the aggregate of all such
payments in the prior Fiscal Year.
6.19. CHANGES RELATING TO SUBORDINATED DEBT; MATERIAL CONTRACTS.
(a) No Credit Party shall change or amend the terms of any
Subordinated Debt (or any indenture or agreement in connection therewith) if the
effect of such amendment is to: (a) increase the interest rate on such
Subordinated Debt; (b) change the dates upon which payments of principal or
interest are due on such Subordinated Debt other than to extend such dates; (c)
change any default or event of default other than to delete or make less
restrictive any default provision therein, or add any covenant with respect to
such Subordinated Debt; (d) change the redemption or prepayment provisions of
such Subordinated Debt other than to extend the dates therefor or to reduce the
premiums payable in connection therewith; (e) grant any security or collateral
to secure payment of such Subordinated Debt; or (f) change or amend any other
term if such change or amendment would materially increase the obligations of
the Credit Party thereunder or confer additional material rights on the holder
of such Subordinated Debt in a manner adverse to any Credit Party, Agent or any
Lender.
(b) No Credit Party shall change or amend the terms of any of
purchase or sale agreement involving the acquisition or disposition of any
business of such Credit Party relating to indemnity provisions or deferred
purchase payments.
6.20. INACTIVE SUBSIDIARIES. None of the Credit Parties or their
Subsidiaries identified on Disclosure Schedule (3.8) as "inactive" shall engage
in any trade or business, or own any assets (other than Stock of their
Subsidiaries) or incur any Indebtedness or Guaranteed Indebtedness (other than
the Obligations).
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7. TERM
7.1. TERMINATION. The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated, or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided, that the
provisions of Section 11, the payment obligations under Sections 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Any Borrower (i) fails to make any payment of principal
of, or interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following Agent's demand for such reimbursement or payment
of expenses.
(b) Any Credit Party fails or neglects to perform, keep or
observe any of the provisions of Sections 1.4, 1.8, 5.4(a) or 6, or any of the
provisions set forth in Annexes C or G, respectively.
(c) Any Borrower fails or neglects to perform, keep or observe
any of the provisions of Section 4 or any provisions set forth in Annexes E or
F, respectively, and the same shall remain unremedied for five (5) Business Days
or more.
(d) Any Credit Party fails or neglects to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for thirty (30) days
or more.
(e) A default or breach occurs under any other agreement,
document or instrument to which any Credit Party is a party that is not cured or
waived within any applicable grace period therefor, and such default or breach
(i) involves the failure to make any payment when due in respect of any
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Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any
Credit Party in excess of $500,000 in the aggregate (including (x) undrawn
committed or available amounts and (y) amounts owing to all creditors under any
combined or syndicated credit arrangements), or (ii) causes, or permits any
holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause,
Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of
$500,000 in the aggregate to become due prior to its stated maturity or prior to
its regularly scheduled dates of payment, or cash collateral in respect thereof
to be demanded, in each case, regardless of whether such default is waived
beyond any applicable cure period, or such right is exercised, by such holder or
trustee.
(f) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect (other than inadvertent,
immaterial errors not exceeding $250,000 in the aggregate in any Borrowing Base
Certificate), or any representation or warranty herein or in any Loan Document
or in any written statement, report, financial statement or certificate (other
than a Borrowing Base Certificate) made or delivered to Agent or any Lender by
any Credit Party is untrue or incorrect in any material respect as of the date
when made or deemed made.
(g) Assets of any Credit Party with a fair market value of
$100,000 or more are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for thirty (30) days or more.
(h) A case or proceeding is commenced against any Credit Party
seeking a decree or order in respect of such Credit Party (i) under the
Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for such Credit Party or for any
substantial part of any such Credit Party's assets, or (iii) ordering the
winding up or liquidation of the affairs of such Credit Party, and such case or
proceeding shall remain undismissed or unstayed for sixty (60) days or more or a
decree or order granting the relief sought in such case or proceeding is granted
by a court of competent jurisdiction.
(i) Any Credit Party (i) files a petition seeking relief under
the Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consents to or fails to contest in a
timely and appropriate manner the institution of proceedings thereunder or the
filing of any such petition or the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Credit Party or for any substantial part of any such Credit
Party's assets, (iii) makes an assignment for the benefit of creditors, (iv)
takes any action in furtherance of any of the foregoing; or (v) admits in
writing its inability to, or is generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of money in
excess of $500,000 in the aggregate at any time are outstanding against one or
more of the Credit Parties and the same are not, within thirty (30) days after
the entry thereof, discharged or execution thereof stayed or bonded pending
appeal, or such judgments are not discharged prior to the expiration of any such
stay.
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(k) Any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any Lien created under any Loan Document (other than due to the gross
negligence or willful misconduct of Agent or any Lender following timely
compliance by each Credit Party with all of the requirements of each relevant
Loan Document) ceases to be a valid and perfected first priority Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby.
(l) Any Change of Control occurs.
(m) Any event occurs, whether or not insured or insurable, as
a result of which revenue-producing activities cease or are substantially
curtailed at facilities of Borrowers generating more than 10% of Borrowers'
consolidated revenues for the Fiscal Year preceding such event and 10% of
Borrowers' EBITDA for the preceding twelve Fiscal Months and such cessation or
curtailment continues for more than ninety (90) days.
8.2. REMEDIES.
(a) If any Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Lenders shall), without
notice, suspend the Revolving Loan facility with respect to additional Advances
and/or the incurrence of additional Letter of Credit Obligations, whereupon any
additional Advances and additional Letter of Credit Obligations shall be made or
incurred in Agent's sole discretion (or in the sole discretion of the Requisite
Lenders, if such suspension occurred at their direction) so long as such Default
or Event of Default is continuing. If any Event of Default has occurred and is
continuing, Agent may (and at the written request of Requisite Lenders shall),
without notice except as otherwise expressly provided herein, increase the rate
of interest applicable to the Loans and the Letter of Credit Fees to the Default
Rate.
(b) If any Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Lenders shall), upon
written notice: (i) terminate the Revolving Loan facility with respect to
further Advances or the incurrence of further Letter of Credit Obligations; (ii)
reduce the Commitment from time to time; (iii) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and
payable, and require that the Letter of Credit Obligations be cash
collateralized in the manner set forth in Annex B, all without presentment,
demand, protest or further notice of any kind, all of which are expressly waived
by Borrowers and each other Credit Party; or (iv) exercise any rights and
remedies provided to Agent under the Loan Documents or at law or equity,
including all remedies provided under the Code; provided, that upon the
occurrence of an Event of Default specified in Sections 8.1(h) or (i), the
Revolving Loan facility shall be immediately terminated and all of the
Obligations, including the aggregate Revolving Loan, shall become immediately
due and payable without declaration, notice or demand by any Person.
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8.3. WAIVERS BY CREDIT PARTIES. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives (including for
purposes of Section 12): (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which any Credit Party may in any way be liable, and hereby ratifies and
confirms whatever Agent may do in this regard, (b) all rights to notice and a
hearing prior to Agent's taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security that might be
required by any court prior to allowing Agent to exercise any of its remedies,
and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1. ASSIGNMENT AND PARTICIPATIONS.
(a) Subject to the terms of this Section 9.1, any Lender may
make an assignment to a Qualified Assignee of, or sell participations in, at any
time or times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder. Any assignment
by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the
execution of an assignment agreement (an "Assignment Agreement") substantially
in the form attached hereto as Exhibit 9.1(a) and otherwise in form and
substance reasonably satisfactory to, and acknowledged by, Agent; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Loans to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof; (iii) after giving effect to any such partial assignment, the assignee
Lender shall have Commitments in an amount at least equal to $5,000,000 and the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; and (iv) include a payment to Agent of an assignment fee of $3,500,
except no assignment fee is payable for assignments to an Affiliate of such
assigning Lender. In the case of an assignment by a Lender under this Section
9.1, the assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as all other Lenders hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment. Each
Borrower hereby acknowledges and agrees that any assignment shall give rise to a
direct obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrowers and Borrowers shall, upon the
request of Agent or such Lender, execute new Notes in exchange for the Notes, if
any, being assigned. Notwithstanding the foregoing provisions of this Section
9.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to a Federal
Reserve Bank, and any Lender that is an investment fund may assign the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender's obligations hereunder or under any other Loan
Document.
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(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.13,
1.15, 1.16 and 9.8, each Borrower acknowledges and agrees that a participation
shall give rise to a direct obligation of Borrowers to the participant and the
participant shall be considered to be a "Lender"; provided, however, that a
participant shall not be entitled to receive any greater payment under Sections
1.13, 1.15 or 1.16 than the Lender from which such participant acquired its
participation would be entitled to receive in respect of the amount of the
participation. Except as set forth in the preceding sentence no Borrower or
Credit Party shall have any obligation or duty to any participant. Neither Agent
nor any Lender (other than the Lender selling a participation) shall have any
duty to any participant and may continue to deal solely with the Lender selling
a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrowers and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist
any Lender permitted to sell assignments or participations under this Section
9.1 as reasonably required to enable the assigning or selling Lender to effect
any such assignment or participation, including the execution and delivery of
any and all agreements, notes and other documents and instruments as shall be
requested and, if requested by Agent, the preparation of informational materials
for, and the participation of management in meetings with, potential assignees
or participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by them
and all other information provided by them and included in such materials,
except that any Projections delivered by Borrowers shall only be certified by
Borrowers as having been prepared by Borrowers in compliance with the
representations contained in Section 3.4(b).
(e) Any Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants); provided that
such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 11.8.
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(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.16(a),
increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.15(a) to an
extent greater than that applicable to the assigning or selling Lender.
(g) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender"), may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing by the Granting Lender to Agent and
Borrowers, the option to provide to Borrowers all or any part of any Loans that
such Granting Lender would otherwise be obligated to make to Borrowers pursuant
to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan; and (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if such Loan were made by such
Granting Lender. No SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). Any SPC may (i) with notice to, but without the prior written
consent of, Borrowers and Agent and without paying any processing fee therefor
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by Borrowers and Agent) providing
liquidity and/or credit support to or for the account of such SPC to support the
funding or maintenance of Loans and (ii) disclose on a confidential basis any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancement to such SPC. This Section 9.1(g) may not be amended without the
prior written consent of each Granting Lender, all or any of whose Loans are
being funded by an SPC at the time of such amendment. For the avoidance of
doubt, the Granting Lender shall for all purposes, including without limitation,
the approval of any amendment or waiver of any provision of any Loan Document or
the obligation to pay any amount otherwise payable by the Granting Lender under
the Loan Documents, continue to be the Lender of record hereunder.
(h) Nothing contained in this Section 9 shall require the
consent of any party for GE Capital to assign any of its rights in respect of
any Swap Related Reimbursement Obligation.
9.2. APPOINTMENT OF AGENT. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
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Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Except as expressly set forth in this Agreement and the
other Loan Documents, Agent shall not have any duty to disclose, and shall not
be liable for failure to disclose, any information relating to any Credit Party
or any of their respective Subsidiaries or any Account Debtor that is
communicated to or obtained by GE Capital or any of its Affiliates in any
capacity. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders,
Supermajority Lenders or all affected Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, then Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from Requisite
Lenders, Supermajority Lenders or all affected Lenders, as the case may be, and
Agent shall not incur liability to any Person by reason of so refraining. Agent
shall be fully justified in failing or refusing to take any action hereunder or
under any other Loan Document (a) if such action would, in the opinion of Agent,
be contrary to law or the terms of this Agreement or any other Loan Document,
(b) if such action would, in the opinion of Agent, expose Agent to Environmental
Liabilities or (c) if Agent shall not first be indemnified to its satisfaction
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Without limiting the foregoing,
no Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of Requisite Lenders, Supermajority
Lenders or all affected Lenders, as applicable.
9.3. AGENT'S RELIANCE, ETC. Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) unless specifically directed, in writing, by the Requisite
Lenders shall not have any duty to ascertain or to inquire as to the performance
or observance of any of the terms, covenants or conditions of this Agreement or
the other Loan Documents on the part of any Credit Party or to inspect the
Collateral (including the books and records) of any Credit Party; (e) shall not
be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; and (f) shall incur no liability under or in respect of this Agreement
or the other Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
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9.4. GE CAPITAL AND AFFILIATES. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as Agent.
9.5. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6. INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent
not reimbursed by Credit Parties and without limiting the obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted to be taken by Agent in connection
therewith; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Credit Parties.
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9.7. SUCCESSOR AGENT. Agent may resign at any time by giving not less
than thirty (30) days' prior written notice thereof to Lenders and Borrower
Representative. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within thirty (30) days after the resigning Agent's giving notice of
resignation, then the resigning Agent may, on behalf of Lenders, appoint a
successor Agent, which shall be a Lender, if a Lender is willing to accept such
appointment, or otherwise shall be a commercial bank or financial institution or
a subsidiary of a commercial bank or financial institution if such commercial
bank or financial institution is organized under the laws of the United States
of America or of any State thereof and has a combined capital and surplus of at
least $300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, within thirty (30) days after the date such notice of resignation was
given by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Requisite Lenders or the
resigning Agent hereunder shall be subject to the approval of Borrower
Representative, such approval not to be unreasonably withheld or delayed;
provided that such approval shall not be required if a Default or an Event of
Default has occurred and is continuing. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, such successor Agent shall succeed to
and become vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the earlier of the acceptance of any appointment as Agent
hereunder by a successor Agent or the effective date of the resigning Agent's
resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents, except that any
indemnity rights or other rights in favor of such resigning Agent shall
continue. After any resigning Agent's resignation hereunder, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was acting as Agent under this Agreement and the other
Loan Documents.
9.8. SETOFF AND SHARING OF PAYMENTS. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without prior notice to any Credit Party or to any Person
other than Agent, any such notice being hereby expressly waived, to offset and
to appropriate and to apply any and all balances held by it at any of its
offices for the account of any Borrower or Guarantor (regardless of whether such
balances are then due to such Borrower or Guarantor) and any other properties or
assets at any time held or owing by that Lender or that holder to or for the
credit or for the account of any Borrower or Guarantor against and on account of
any of the Obligations that are not paid when due, provided that the Lender
exercising such offset rights shall give notice thereof to the affected Credit
Party promptly after exercising such rights. Any Lender exercising a right of
setoff or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so offset or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares (other than
offset rights exercised by any Lender with respect to SECTIONS 1.13, 1.15 OR
1.16). Each Credit Party that is a Borrower or Guarantor agrees, to the fullest
extent permitted by law, that (a) any Lender may exercise its right to offset
with respect to amounts in excess of its Pro Rata Share of the Obligations and
may sell participations in such amounts so offset to other Lenders and holders
and (b) any Lender so purchasing a participation in the Loans made or other
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Obligations held by other Lenders or holders may exercise all rights of offset,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of the Loans and the
other Obligations in the amount of such participation. Notwithstanding the
foregoing, if all or any portion of the offset amount or payment otherwise
received is thereafter recovered from the Lender that has exercised the right of
offset, the purchase of participations by that Lender shall be rescinded and the
purchase price restored without interest.
9.9. ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION; ACTIONS IN
CONCERT.
(a) ADVANCES; PAYMENTS.
(i) Each Lender shall make the amount of such
Lender's Pro Rata Share of such Revolving Credit Advance available to Agent in
same day funds by wire transfer to Agent's account as set forth in Annex H not
later than 3:00 p.m. (New York time) on the requested funding date, in the case
of an Index Rate Loan, and not later than 11:00 a.m. (New York time) on the
requested funding date, in the case of a LIBOR Loan. After receipt of such wire
transfers (or, in the Agent's sole discretion, before receipt of such wire
transfers), subject to the terms hereof, Agent shall make the requested
Revolving Credit Advance to the Borrower designated by Borrower Representative
in the Notice of Revolving Credit Advance. All payments by each Lender shall be
made without setoff, counterclaim or deduction of any kind.
(ii) On the 2nd Business Day of each calendar week or
more frequently at Agent's election (each, a "Settlement Date"), Agent shall
advise each Lender by telephone, or telecopy of the amount of such Lender's Pro
Rata Share of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that each Lender has funded all
payments or Advances required to be made by it and has purchased all
participations required to be purchased by it under this Agreement and the other
Loan Documents as of such Settlement Date, Agent shall pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid by Borrowers since
the previous Settlement Date for the benefit of such Lender on the Loans held by
it. To the extent that any Lender (a "Non Funding Lender") has failed to fund
all such payments and Advances or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the funding short fall
against that Non Funding Lender's Pro Rata Share of all payments received from
Borrowers. Such payments shall be made by wire transfer to such Lender's account
(as specified by such Lender in Annex H or the applicable Assignment Agreement)
not later than 2:00 p.m. (New York time) on the next Business Day following each
Settlement Date.
(b) AVAILABILITY OF LENDER'S PRO RATA SHARE. Agent may assume
that each Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each funding date. If such Pro Rata Share is not, in fact,
paid to Agent by such Lender when due, Agent will be entitled to recover such
amount on demand from such Lender without setoff, counterclaim or deduction of
any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith
upon Agent's demand, Agent shall promptly notify Borrower Representative and
Borrowers shall immediately repay such amount to Agent. Nothing in this Section
9.9(b) or elsewhere in this Agreement or the other Loan Documents shall be
deemed to require Agent to advance funds on behalf of any Lender or to relieve
any Lender from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Borrowers may have against any Lender as a result of
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any default by such Lender hereunder. To the extent that Agent advances funds to
any Borrower on behalf of any Lender and is not reimbursed therefor on the same
Business Day as such Advance is made, Agent shall be entitled to retain for its
account all interest accrued on such Advance until reimbursed by the applicable
Lender.
(c) RETURN OF PAYMENTS.
(i) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrowers and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender on
demand without setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to any Borrower or paid
to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to any Borrower or such other
Person, without setoff, counterclaim or deduction of any kind.
(d) NON-FUNDING LENDERS. The failure of any Non Funding Lender
to make any Revolving Credit Advance or any payment required by it hereunder
shall not relieve any other Lender (each such other Lender, an "Other Lender")
of its obligations to make such Advance or purchase such participation on such
date, but neither any Other Lender nor Agent shall be responsible for the
failure of any Non-Funding Lender to make an Advance, purchase a participation
or make any other payment required hereunder. Notwithstanding anything set forth
herein to the contrary, a Non-Funding Lender shall not have any voting or
consent rights under or with respect to any Loan Document or constitute a
"Lender" (or be included in the calculation of "Requisite Lenders" or
"Supermajority Lenders" hereunder) for any voting or consent rights under or
with respect to any Loan Document. At Borrower Representative's request, Agent
or a Person reasonably acceptable to Agent shall have the right with Agent's
consent and in Agent's sole discretion (but shall have no obligation) to
purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that it
shall, at Agent's request, sell and assign to Agent or such Person, all of the
Commitments of that Non-Funding Lender for an amount equal to the principal
balance of all Loans held by such Non-Funding Lender and all accrued interest
and fees with respect thereto through the date of sale, such purchase and sale
to be consummated pursuant to an executed Assignment Agreement.
(e) DISSEMINATION OF INFORMATION. Agent shall use commercially
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Agent from, or delivered by Agent to, any Credit Party, with
notice of any Event of Default of which Agent has actually become aware and with
notice of any action taken by Agent following any Event of Default; provided,
that Agent shall not be liable to any Lender for any failure to do so, except to
the extent that such failure is attributable to Agent's gross negligence or
willful misconduct. Lenders acknowledge that Borrowers are required to provide
Financial Statements and Collateral Reports to Lenders in accordance with
Annexes E and F hereto and agree that Agent shall have no duty to provide the
same to Lenders.
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(f) ACTIONS IN CONCERT. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent or Requisite Lenders.
9.10. SYNDICATION AND DOCUMENTATION AGENTS. The entities identified on
the cover page of this Agreement as the "Syndication Agent" and the
"Documentation Agent", respectively, shall, in each case, not have any right,
power, obligation, liability, responsibility or duty under this Agreement (or
any other Loan Document) other than those applicable to all Lenders as such.
Without limiting the foregoing, the entities so identified as the "Syndication
Agent" and the "Documentation Agent", respectively, shall not have or be deemed
to have any fiduciary relationship with any Lender. Each Lender acknowledges
that it has not relied, and will not rely, on the entities so identified as the
"Syndication Agent" and the "Documentation Agent", respectively, in deciding to
enter into this Agreement and each other Loan Document to which it is a party or
in taking or not taking action hereunder or thereunder.
10. SUCCESSORS AND ASSIGNS
10.1. SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, or fee letter
(other than the GE Capital Fee Letter) or confidentiality agreement between any
Credit Party and Agent or any Lender or any of their respective Affiliates,
predating this Agreement and relating to a financing of substantially similar
form, purpose or effect shall be superseded by this Agreement.
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11.2. AMENDMENTS AND WAIVERS.
(a) Except for actions expressly permitted to be taken by
Agent, no amendment, modification, termination or waiver of any provision of
this Agreement or any other Loan Document, or any consent to any departure by
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrowers, and by Requisite Lenders,
Supermajority Lenders, or all affected Lenders, as applicable. Except as set
forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that makes less
restrictive the nondiscretionary criteria for exclusion from Eligible Accounts
and Eligible Inventory set forth in Sections 1.6 and 1.7, shall be effective
unless the same shall be in writing and signed by Agent, Supermajority Lenders
and Borrowers. No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement that waives compliance with the
conditions precedent set forth in Section 2.2 to the making of any Loan or the
incurrence of any Letter of Credit Obligations shall be effective unless the
same shall be in writing and signed by Agent, Requisite Lenders and Borrowers.
Notwithstanding anything contained in this Agreement to the contrary, no waiver
or consent with respect to any Default or any Event of Default shall be
effective for purposes of the conditions precedent to the making of Loans or the
incurrence of Letter of Credit Obligations set forth in Section 2.2 unless the
same shall be in writing and signed by Agent, Requisite Lenders and Borrowers.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby:
(i) increase the principal amount of any Lender's Commitment (which action shall
be deemed to directly affect all Lenders); (ii) reduce the principal of, rate of
interest on or Fees payable with respect to any Loan or Letter of Credit
Obligations of any affected Lender; (iii) extend any scheduled payment date
(other than payment dates of mandatory prepayments under Section
1.3(b)(ii)-(iii)) or final maturity date of the principal amount of any Loan of
any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment
of interest or Fees as to any affected Lender; (v) release any Guaranty (except
in connection with a sale of the Stock of the applicable Guarantor which is not
in violation of the terms of this Agreement) or, except as otherwise permitted
herein or in the other Loan Documents, release, subordinate the Agent's Lien or
permit any Credit Party to sell or otherwise dispose of, any Collateral with a
value exceeding $5,000,000 in the aggregate (which action shall be deemed to
directly affect all Lenders); (vi) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans that shall be required for
Lenders or any of them to take any action hereunder; (vii) increase the
percentage advance rates set forth in the definition of the SMP Borrowing Base,
the SI Borrowing Base, or the MCC Borrowing Base, or the percentage in Section
1.1(a)(iv)(y) beyond the rates in effect on the Closing Date, or the aggregate
amount of Overadvances permitted pursuant to Section 1.1(a)(iii); (viii) amend
or waive this Section 11.2 or the definitions of the terms "Requisite Lenders"
or "Supermajority Lenders" insofar as such definitions affect the substance of
this Section 11.2 and (ix) amend Section 1.11(a). Furthermore, no amendment,
modification, termination or waiver affecting the rights or duties of Agent or
L/C Issuer, or of GE Capital in respect of any Swap Related Reimbursement
Obligations, under this Agreement or any other Loan Document, including any
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release of any Guaranty or Collateral requiring a writing signed by all Lenders,
shall be effective unless in writing and signed by Agent or L/C Issuer or GE
Capital, as the case may be, in addition to Lenders required hereinabove to take
such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 11.2 shall be binding upon
each Lender at such time and each future Lender.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) (requiring the consent of all affected Lenders,
the consent of Requisite Lenders is obtained, but the consent of other Lenders
whose consent is required is not obtained (any such Lender whose consent is not
obtained as described in this clause (i) and in clauses (ii), (iii) and (iv)
below being referred to as a "Non-Consenting Lender"),
(ii) requiring the consent of Supermajority Lenders,
the consent of Requisite Lenders is obtained, but the consent of Supermajority
Lenders is not obtained,
(iii) requiring the consent of Requisite Lenders, the
consent of Lenders holding 51% or more of the aggregate applicable Commitments
is obtained, but the consent of Requisite Lenders, is not obtained, or
(iv) requiring the consent of Requisite Lenders, the
consent of Lenders holding 51% or more of the aggregate Commitments is obtained,
but the consent of the Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request, Agent or a Person reasonably acceptable to Agent shall
have the right with Agent's consent and in Agent's sole discretion (but shall
have no obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Commitments of such Non-Consenting
Lenders for an amount equal to the principal balance of all Loans held by the
Non-Consenting Lenders and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement within 180 days from the time such consent is
requested.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders (other than
claims for gross negligence or willful misconduct), and so long as no suits,
actions, proceedings or claims are pending or threatened against any Indemnified
Person asserting any damages, losses or liabilities that are Indemnified
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Liabilities, Agent shall deliver to Borrowers termination statements, mortgage
releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
11.3. FEES AND EXPENSES. Borrowers shall reimburse (i) Agent for all
fees, costs and expenses (including the reasonable fees and expenses of all of
its counsel, advisors, consultants and auditors) and (ii) Agent (and, with
respect to clauses (c) and (d) below, all Lenders) for all fees, costs and
expenses, including the reasonable fees, costs and expenses of counsel or other
advisors (including environmental and management consultants and appraisers),
incurred in connection with the negotiation and preparation of the Loan
Documents and incurred in connection with:
(a) the forwarding to Borrowers or any other Person on behalf
of Borrowers by Agent of the proceeds of any Loan (including a wire transfer fee
of $10 per wire transfer);
(b) any amendment, modification or waiver of, consent with
respect to, or termination of, any of the Loan Documents or advice in connection
with the syndication and administration of the Loans made pursuant hereto or its
rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Borrower or any other
Person and whether as a party, witness or otherwise) in any way relating to the
Collateral, any of the Loan Documents or any other agreement to be executed or
delivered in connection herewith or therewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
Borrowers or any other Person that may be obligated to Agent by virtue of the
Loan Documents; including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders; provided,
further, that no Person shall be entitled to reimbursement under this clause (c)
in respect of any litigation, contest, dispute, suit, proceeding or action to
the extent any of the foregoing results from such Person's gross negligence or
willful misconduct;
(d) any attempt to enforce any remedies of Agent against any
or all of the Credit Parties or any other Person that may be obligated to Agent
or any Lender by virtue of any of the Loan Documents, including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided, that
in the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any workout or restructuring of the Loans during the
pendency of one or more Events of Default; and
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(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all reasonable expenses,
costs, charges and other fees incurred by such counsel and others in connection
with or relating to any of the events or actions described in this Section 11.3,
all of which shall be payable, on demand, by Borrowers to Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4. NO WAIVER. Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrowers specifying
such suspension or waiver.
11.5. REMEDIES. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6. SEVERABILITY. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.
11.7. CONFLICT OF TERMS. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
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11.8. CONFIDENTIALITY. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all confidential information provided to them by the Credit
Parties and designated as confidential for a period of two (2) years following
the Termination Date, except that Agent and any Lender may disclose such
information (a) to Affiliates and/or Persons employed or engaged by Agent or
such Lender in evaluating, approving, structuring or administering the Loans and
the Commitments; (b) to any bona fide assignee or participant or potential
assignee or participant that has agreed to comply with the covenant contained in
this Section 11.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed by Agent or such Lender to
be compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of Agent's or such Lender's counsel, is required
by law; (e) in connection with the exercise of any right or remedy under the
Loan Documents or in connection with any Litigation to which Agent or such
Lender is a party; or (f) that ceases to be confidential through no fault of
Agent or any Lender.
11.9. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH PARTY HERETO
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT.
EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY
WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH CREDIT PARTY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND
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OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT
PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED
STATES MAILS, PROPER POSTAGE PREPAID.
11.10. NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered: (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10); (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated in Annex I or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower Representative or Agent)
designated in Annex I to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.11. SECTION TITLES. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12. COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
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11.14. PRESS RELEASES AND RELATED MATTERS. Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in the future
issue any press releases or other public disclosure using the name of GE Capital
or its affiliates or referring to this Agreement, the other Loan Documents
without at least two (2) Business Days' prior notice to GE Capital and without
the prior written consent of GE Capital unless (and only to the extent that)
such Credit Party or Affiliate is required to do so under law and then, in any
event, such Credit Party or Affiliate will consult with GE Capital before
issuing such press release or other public disclosure. Each Credit Party
consents to the publication by Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by this
Agreement using Borrowers' name, product photographs, logo or trademark. Agent
or such Lender shall provide a draft of any advertising material to each Credit
Party for review and comment prior to the publication thereof. Agent reserves
the right to provide to industry trade organizations information necessary and
customary for inclusion in league table measurements.
11.15. REINSTATEMENT. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Borrower for liquidation or reorganization, should any Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16. ADVICE OF COUNSEL. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
11.18. REAFFIRMATION OF COLLATERAL DOCUMENTS. Each Credit Party (i)
acknowledges and confirms that notwithstanding the execution of this Agreement
and the consummation of the transactions contemplated hereunder or any other
facts and circumstances, all of the terms and conditions, representations and
covenants contained in the Collateral Documents are and shall remain in full
force and effect in accordance with their respective terms and the security
interests and liens theretofore granted, pledged and/or assigned under the
Collateral Documents as security for the Obligations shall not be impaired,
limited or affected in any manner whatsoever; and (ii) represents, warrants and
confirms that no offsets, counterclaims or defenses exist with respect to each
of the Credit Parties' obligations under the Collateral Documents.
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11.19. CERTIFICATIONS FROM BANKS AND PARTICIPANTS; US PATRIOT ACT. Each
Lender or assignee or participant of a Lender that is not incorporated under the
Laws of the United States of America or a state thereof (and is not excepted
from the certification requirement contained in Section 313 of the USA PATRIOT
Act and the applicable regulations because it is both (i) an affiliate of a
depository institution or foreign bank that maintains a physical presence in the
United States or foreign country, and (ii) subject to supervision by a banking
authority regulating such affiliated depository institution or foreign bank)
shall deliver to the Agent the certification, or, if applicable,
recertification, certifying that such Lender is not a "shell" and certifying to
other matters as required by Section 313 of the USA PATRIOT Act and the
applicable regulations: (1) within 10 days after the Closing Date, and (2) as
such other times as are required under the USA PATRIOT Act.
12. CROSS-GUARANTY
12.1. CROSS-GUARANTY. Each Borrower hereby agrees that such Borrower is
jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 12 shall not be
discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 12 shall be absolute and
unconditional, irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Agreement, any other Loan Document
or any other agreement, document or instrument to which any Borrower is or may
become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 12) or any other Loan Document or the waiver or consent
by Agent and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any action, or the
absence of any action, by Agent and Lenders in respect thereof (including the
release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
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12.2. WAIVERS BY BORROWERS. Each Borrower expressly waives all rights
it may have now or in the future under any statute, or at common law, or at law
or in equity, or otherwise, to compel Agent or Lenders to marshal assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agent and Lenders would
decline to enter into this Agreement.
12.3. BENEFIT OF GUARANTY. Each Borrower agrees that the provisions of
this Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
12.4. SUBORDINATION OF SUBROGATION, ETC. Notwithstanding anything to
the contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit Agent and Lenders and shall not limit or otherwise affect such
Borrower's liability hereunder or the enforceability of this Section 12, and
that Agent, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 12.4.
12.5. ELECTION OF REMEDIES. If Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving Agent or such Lender a Lien upon any Collateral, whether owned by any
Borrower or by any other Person, either by judicial foreclosure or by non
judicial sale or enforcement, Agent or any Lender may, at its sole option,
determine which of its remedies or rights it may pursue without affecting any of
its rights and remedies under this Section 12. If, in the exercise of any of its
rights and remedies, Agent or any Lender shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to "election of remedies" or the like, each Borrower hereby consents to such
action by Agent or such Lender and waives any claim based upon such action, even
if such action by Agent or such Lender shall result in a full or partial loss of
any rights of subrogation that each Borrower might otherwise have had but for
such action by Agent or such Lender. Any election of remedies that results in
the denial or impairment of the right of Agent or any Lender to seek a
deficiency judgment against any Borrower shall not impair any other Borrower's
obligation to pay the full amount of the Obligations. In the event Agent or any
Lender shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or the Loan Documents, Agent or such Lender may bid all or less
than the amount of the Obligations and the amount of such bid need not be paid
by Agent or such Lender but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether Agent, Lender or any
other party is the successful bidder, shall be conclusively deemed to be the
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fair market value of the Collateral and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this Section 12, notwithstanding
that any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which Agent or any Lender
might otherwise be entitled but for such bidding at any such sale.
12.6. LIMITATION. Notwithstanding any provision herein contained to the
contrary, each Borrower's liability under this Section 12 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower
under this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(b) the amount that could be claimed by Agent and Lenders from
such Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 12.7.
12.7. CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS
(a) To the extent that any Borrower shall make a payment under
this Section 12 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a "Guarantor Payment") that, taking
into account all other Guarantor Payments then previously or concurrently made
by any other Borrower, exceeds the amount that such Borrower would otherwise
have paid if each Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower's "Allocable Amount"
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim that could then
be recovered from such Borrower under this Section 12 without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
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(c) This Section 12.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 12.7 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including Section 12.1. Nothing contained in this
Section 12.7 shall limit the liability of any Borrower to pay the Loans made
directly or indirectly to that Borrower and accrued interest, Fees and expenses
with respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other
Credit Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
12.8. LIABILITY CUMULATIVE. The liability of Borrowers under this
Section 12 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
STANDARD MOTOR PRODUCTS, INC.
By:______________________________
Name:____________________________
Title:___________________________
STANRIC, INC.
By:______________________________
Name:____________________________
Title:___________________________
MARDEVCO CREDIT CORP.
By:______________________________
Name:____________________________
Title:___________________________
SMP MOTOR PRODUCTS, LTD.
By:______________________________
Name:____________________________
Title:___________________________
(SIGNATURES CONTINUED ON NEXT PAGE)
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and
a Lender
By:______________________________
Name:____________________________
Title:___________________________
BANK OF AMERICA, N.A.,
as Co-Syndication Agent and
a Lender
By:______________________________
Name:____________________________
Title:___________________________
WACHOVIA BANK, NATIONAL
ASSOCIATION, as Co-Syndication
Agent and a Lender
By:______________________________
Name:____________________________
Title:___________________________
JPMORGAN CHASE BANK, N.A., as
Documentation Agent and a Lender
By:______________________________
Name:____________________________
Title:___________________________
(SIGNATURES CONTINUED ON NEXT PAGE)
HSBC BANK USA, NATIONAL
ASSOCIATION, as a Lender
By:______________________________
Name:____________________________
Title:___________________________
▇▇▇▇▇ FARGO FOOTHILL, LLC,
as a Lender
By:______________________________
Name:____________________________
Title:___________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL, a Division
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS
FINANCIAL SERVICES INC.,
as a Lender
By:______________________________
Name:____________________________
Title:___________________________
GE BUSINESS CAPITAL CORPORATION,
as a Lender
By:______________________________
Name:____________________________
Title:___________________________
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings, and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:
"ACCOUNT DEBTOR" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
"ACCOUNTING CHANGES" has the meaning ascribed thereto in Annex G.
"ACCOUNTS" means all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments) (including
any such obligations that may be characterized as an account or contract right
under the Code), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all rights
to payment due to any Credit Party for property sold, leased, licensed, assigned
or otherwise disposed of, for a policy of insurance issued or to be issued, for
a secondary obligation incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit
Party), (e) all health care insurance receivables and (f) all collateral
security of any kind, given by any Account Debtor or any other Person with
respect to any of the foregoing.
"ADDITIONAL MCC AMORTIZING AVAILABILITY" means (i) as to any Eligible
Real Estate purchased by MCC after the Closing Date fifty percent (50%) of the
Fair Market Value of such Eligible Real Estate and as to Eligible Equipment
purchased by MCC after the Closing Date 85% of the Net Orderly Liquidation Value
of such Eligible Equipment less (ii) one-twenty fourth of the amount determined
under clause (i) for each full Fiscal Quarter occurring after the purchase of
such Eligible Real Estate or Eligible Equipment, as the case may be.
Annex A-1
"ADDITIONAL SI AMORTIZING AVAILABILITY" means as to each item of
Eligible Equipment purchased by SI after the Closing Date, (i) 85% of the Net
Orderly Liquidation Value of such Eligible Equipment less (ii) one-twenty fourth
of the amount determined under clause (i) for each full Fiscal Quarter occurring
after the purchase of such Eligible Equipment.
"ADDITIONAL SMP AMORTIZING AVAILABILITY" means (i) as to any Eligible
Real Estate purchased by SMP after the Closing Date fifty percent (50%) of the
Fair Market Value of such Eligible Real Estate and as to Eligible Equipment
purchased by SMP after the Closing Date 85% of the Net Orderly Liquidation Value
of such Eligible Equipment less (ii) one-twenty fourth of the amount determined
under clause (i) for each full Fiscal Quarter occurring after the purchase of
such Eligible Real Estate or Eligible Equipment, as the case may be.
"ADDITIONAL SMP CANADA AMORTIZING AVAILABILITY" means (i) up to the
lesser of (x) $3,500,000 or (y) the sum of (a) as to SMP Canada Eligible Real
Estate purchased by SMP Canada after December 29, 2005, fifty percent (50%) of
the Fair Market Value of such SMP Canada Eligible Real Estate and (b) as to SMP
Canada Eligible Equipment purchased by SMP Canada after December 29, 2005, 85%
of the Net Orderly Liquidation Value of such SMP Canada Eligible Equipment as
set forth in the most recent appraisal prepared by an independent appraisal firm
acceptable to Agent (Agent agrees that ▇▇▇▇▇▇▇ ▇▇▇ International shall be deemed
an acceptable appraiser with respect to SMP Canada's machinery and equipment);
provided, however, that Borrowing Availability arising solely under this clause
(i)(y) shall not exceed 50% of the total SMP Canada's Borrowing Availability
less (ii) one-twenty fourth of the amount determined under clause (i) for each
full Fiscal Quarter occurring after the purchase of such SMP Canada Eligible
Real Estate or SMP Canada Eligible Equipment, as the case may be.
"ADVANCE" means any Revolving Credit Advance.
"AFFILIATE" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 5% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrowers, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of any Borrower. For the purposes
of this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude Agent and each Lender.
"AGENT" means GE Capital in its capacity as Agent for Lenders or its
successor appointed pursuant to Section 9.7.
"AGGREGATE AMORTIZING AVAILABILITY" means the sum of MCC Amortizing
Availability, SI Amortizing Availability and SMP Amortizing Availability,
subject to the limitation in Section 1.1(a)(iv).
"AGGREGATE BORROWING BASE" means as of any date of determination, an
amount equal to (i) the sum of the MCC Borrowing Base, the SMP Borrowing Base
and the SI Borrowing Base; less (ii) any Reserves except to the extent already
deducted therefrom.
Annex A-2
"AGREEMENT" means the Second Amended and Restated Credit Agreement by
and among Borrowers, the other Credit Parties party thereto, GE Capital, as
Agent and Lender and the other Lenders from time to time party thereto, as the
same may be amended, supplemented, restated or otherwise modified from time to
time.
"ANTI-TERRORISM LAWS" shall mean any applicable laws relating to
terrorism or money laundering, including Executive Order No. 13224, the USA
PATRIOT Act, the applicable laws comprising or implementing the Bank Secrecy
Act, and the applicable laws administered by the United States Treasury
Department's Office of Foreign Asset Control (as any of the foregoing applicable
laws may from time to time be amended, renewed, extended, or replaced).
"APPENDICES" has the meaning ascribed to it in the recitals to the
Agreement.
"APPLICABLE L/C FEE MARGIN" means the fee payable by Borrowers in
respect of Lenders' incurrence of Letter of Credit Obligations pursuant to
Section 1.9(d), which fee is determined by reference to 1.5(a).
"APPLICABLE MARGINS" means collectively the Applicable Unused Line Fee
Margin, the Applicable Revolver Index Margin, the Applicable Revolver LIBOR
Margin and the Applicable L/C Fee Margin.
"APPLICABLE REVOLVER INDEX MARGIN" means the per annum interest rate
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a).
"APPLICABLE REVOLVER LIBOR MARGIN" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as determined by reference to Section 1.5(a).
"APPLICABLE UNUSED LINE FEE MARGIN" means the per annum fee, from time
to time in effect, payable in respect of Borrowers' non-use of committed funds
pursuant to Section 1.9(b)(ii), which fee is determined by reference to Section
1.5(a).
"ASBESTOS CLAIMS" means claims seeking to impose liability on SMP in
connection with any alleged exposure to asbestos.
"ASSIGNMENT AGREEMENT" has the meaning ascribed to it in Section
9.1(a).
"BANKRUPTCY CODE" means the provisions of Title 11 of the United States
Code, 11 U.S.C. ss.ss.101 et seq.
"BLOCKED ACCOUNTS" has the meaning ascribed to it in Annex C.
"BORROWER REPRESENTATIVE" means SMP in its capacity as Borrower
Representative pursuant to the provisions of Section 1.1(d).
"BORROWER REVOLVER INCREASE" has the meaning ascribed to it in Section
1.18(a).
"BORROWERS" and "Borrower" have the respective meanings ascribed
thereto in the preamble to the Agreement.
Annex A-3
"BORROWING AVAILABILITY" means as of any date of determination (a) as
to all Borrowers, the lesser of (i) the Maximum Amount and (ii) the Aggregate
Borrowing Base, in each case, LESS the aggregate Revolving Credit Advances then
outstanding, or (b) as to an individual Borrower, the lesser of (i) the Maximum
Amount LESS the Revolving Loan outstanding to all other Borrowers and (ii) that
Borrower's separate Borrowing Base, LESS the Revolving Credit Advances
outstanding to that Borrower; PROVIDED that an Overadvance in accordance with
SECTION 1.1(A)(III) may cause the Revolving Loan to exceed the Aggregate
Borrowing Base or a Borrower's separate Borrowing Base by the amount of such
permitted Overadvance. Borrowing Availability for purposes of clauses (a) and
(b) shall be determined (x) with trade payables being paid consistent with past
practices, with expenses and liabilities being paid in the ordinary course of
business, without acceleration of sales and without deterioration of working
capital and (y) less the Canadian Reserve and the Indenture Maturity Reserve.
"BORROWING BASE" means as the context may require, the SMP Canada
Borrowing Base, the MCC Borrowing Base, the SMP Borrowing Base, and the SI
Borrowing Base or any such Borrowing Base. Notwithstanding anything contained
herein to the contrary, for purposes of determining any Borrowing Base, (a) the
value of Eligible Inventory acquired by any Credit Party from any other Credit
Party shall be the lower of cost (determined on a first-in, first-out basis) or
market of either the selling Credit Party or the purchasing Credit Party,
whichever is lower and (b) the Net Orderly Liquidation Value of any Eligible
Equipment or Eligible Inventory and the Fair Market Value of any Eligible Real
Estate may be adjusted by Agent from time to time to reflect the results of the
most recent appraisal thereof.
"BORROWING BASE CERTIFICATE" means a certificate to be executed and
delivered from time to time by each Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State New York and
in reference to LIBOR Loans shall mean any such day that is also a LIBOR
Business Day.
"CANADIAN AGENT" shall mean GE Canada Finance Holding Company, a Nova
Scotia unlimited liability company.
"CANADIAN GUARANTY" shall mean that certain Guaranty dated December 29,
2005, executed by Borrowers in favor of Canadian Agent in respect of the
Obligations (as defined in the Canadian Loan Agreement).
"CANADIAN LENDERS" shall mean the Lenders as such term is defined in
Canadian Loan Agreement.
"CANADIAN LOAN AGREEMENT" shall mean the Credit Agreement (as amended,
restated, supplemented or otherwise modified from time to time), dated as of
December 29, 2005 among SMP Canada, Canadian Agent, as lender, and as agent for
the secured parties, and the other lenders signatory thereto from time to time.
"CANADIAN RESERVE" means, as of the date of determination by Agent, the
amount by which the outstanding balance of the Term Loan exceeds the SMP Canada
Borrowing Base (with each being calculated in U.S. Dollars).
Annex A-4
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"CAPITAL LEASE" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease of
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"CASH COLLATERAL ACCOUNT" has the meaning ascribed to it Annex B.
"CASH EQUIVALENTS" has the meaning ascribed to it in Annex B.
"CASH MANAGEMENT SYSTEMS" has the meaning ascribed to it in Section
1.8.
"CHANGE OF CONTROL" means any of the following: (a) any person or group
of persons (within the meaning of the Securities Exchange Act of 1934,) other
than the Existing Stockholder Group shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934,) of 30% or more of the
issued and outstanding shares of capital Stock of SMP having the right to vote
for the election of directors of SMP under ordinary circumstances; (b) during
any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of SMP (together
with any new directors whose election by the board of directors of SMP or whose
nomination for election by the Stockholders of SMP was approved by a vote of at
least two-thirds of the directors then still in office who either were directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office; or (c) SMP ceases to own
and control all of the economic and voting rights associated with all of the
outstanding capital Stock of any of its Subsidiaries other than as set forth on
Disclosure Schedule (3.8).
"CHARGES" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
the Code, including electronic chattel paper, now owned or hereafter acquired by
any Credit Party.
"CLOSING DATE" means March 20, 2007.
Annex A-5
"CLOSING CHECKLIST" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.
"CODE" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided, further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"COLLATERAL" means the property covered by the Security Agreement, the
Mortgages and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"COLLATERAL DOCUMENTS" means the Security Agreement, the Pledge
Agreements, the Guaranties, the Mortgages, the Intellectual Property Security
Agreement, and all similar agreements entered into guaranteeing payment of, or
granting a Lien upon property as security for payment of, the Obligations.
"COLLATERAL REPORTS" means the reports with respect to the Collateral
referred to in Annex F.
"COLLECTION ACCOUNT" means that certain account of Agent, account
number ▇▇▇-▇▇▇-▇▇ in the name of Agent at DeutscheBank Trust Company Americas in
New York, New York ABA No. 021 001 033, or such other account as may be
specified in writing by Agent as the "Collection Account."
"COMMITMENT" means (i) as to any Lender, the aggregate commitment of
such Lender to make Revolving Credit Advances or incur Letter of Credit
Obligations as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender and (ii) as to all Lenders, the
aggregate commitment of all Lenders to make Revolving Credit Advances or incur
Letter of Credit Obligations, which aggregate commitment shall be Two Hundred
and Sixty Three Million Dollars ($263,000,000) as such amount may be adjusted,
if at all, from time to time in accordance with the Agreement including, without
limitation, Section 1.18 hereof.
Annex A-6
"COMMITMENT TERMINATION DATE" means the earliest of (a) ▇▇▇▇▇ ▇▇, ▇▇▇▇,
(▇) the date of termination of Lenders' obligations to make Advances and to
incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrowers of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of all Commitments to zero dollars ($0).
"COMPLIANCE CERTIFICATE" has the meaning ascribed to it in Annex E.
"CONCENTRATION ACCOUNT" has the meaning ascribed to it in Annex C.
"CONTRACTS" means all "contracts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which any Credit Party may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.
"CONTROL LETTER" means a letter agreement between Agent and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Credit
Party, whereby, among other things, the issuer, securities intermediary or
futures commission merchant disclaims any security interest in the applicable
financial assets, acknowledges the Lien of Agent, on behalf of itself and
Lenders, on such financial assets, and agrees to follow the instructions or
entitlement orders of Agent without further consent by the affected Credit
Party.
"COPYRIGHT LICENSE" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"COPYRIGHT SECURITY AGREEMENTS" means the Copyright Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party, as amended, modified or supplemented from time to time.
"COPYRIGHTs" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"CREDIT PARTIES" means each Borrower and, except with respect to
Section 1 of the Credit Agreement, SMP Canada.
"CUSTOMER DRAFTS" means the negotiable drafts issued by an Account
Debtor in connection with a Customer Program.
Annex A-7
"CUSTOMER PROGRAM" means a program established between an Account
Debtor and a financial institution reasonably acceptable to Agent, pursuant to
which such Account Debtor consolidates multiple invoices from a supplier into a
single large payment and issues a negotiable draft to a Credit Party which draft
is purchased from the Credit Party by such financial institution for an agreed
upon purchase price.
"DEFAULT" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"DEFAULT RATE" has the meaning ascribed to it in Section 1.5(c).
"DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is defined
in the Code, now or hereafter held in the name of any Credit Party including,
without limitation, all checking accounts.
"DISBURSEMENT ACCOUNTS" has the meaning ascribed to it in Annex C.
"DISCLOSURE SCHEDULES" means the Schedules prepared by Borrowers and
denominated as Disclosure Schedules (1.4) through (6.7) in the Index to the
Agreement.
"DOCUMENTS" means all "documents," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located.
"DOLLARS" or "$" means lawful currency of the United States of America
and, solely for purposes of Section 1.6, of Canada.
"DRAFT MONETIZATION" shall mean the sale of Customer Drafts more than
ten (10) days prior to the maturity date of such drafts to an acceptable
financial institution with whom Agent has entered into a satisfactory
intercreditor agreement regarding the payment of the purchase price for the
Customer Drafts being sold to such financial institution.
"EBITDA" means, with respect to any Person for any fiscal period,
without duplication, an amount equal to (a) consolidated net income of such
Person for such period determined in accordance with GAAP, MINUS (b) the sum of
(i) income tax credits, (ii) gain from extraordinary items for such period,
(iii) any aggregate net gain (but not any aggregate net loss) during such period
arising from the sale, exchange or other disposition of capital assets by such
Person (including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets and all
securities), and (iv) any other non-operating, non-cash gains that have been
added in determining consolidated net income, in each case to the extent
included in the calculation of consolidated net income of such Person for such
period in accordance with GAAP, but without duplication, PLUS (c) the sum of (i)
any provision for income taxes, (ii) Interest Expense, (iii) loss from
extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized debt
discount for such period, and (vi) the amount of any deduction to consolidated
net income as the result of any grant to any members of the management of such
Person of any Stock, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
but without duplication. For purposes of this definition, the following items
shall be excluded in determining consolidated net income of a Person: (1) the
Annex A-8
income (or deficit) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of such
Person's Subsidiaries; (2) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(3) any restoration to income of any reserve established for specific
non-recurring items, except to the extent that provision for such reserve was
made out of income accrued during such period; (4) any write-up of any asset;
(5) any net gain from the collection of the proceeds of life insurance policies;
(6) any net gain arising from the acquisition of any securities, or the
extinguishment, under GAAP, of any Indebtedness, of such Person; (7) in the case
of a successor to such Person by consolidation or merger or as a transferee of
its assets, any earnings of such successor prior to such consolidation, merger
or transfer of assets; (8) any deferred credit representing the excess of equity
in any Subsidiary of such Person at the date of acquisition of such Subsidiary
over the cost to such Person of the investment in such Subsidiary; and (9) until
December 31, 2007, a write-off of losses incurred due to the sale of the stock
of Four Seasons S.r.l. and Four Seasons Europe SARL, in an aggregate amount not
to exceed $6,500,000.
"ELIGIBLE ACCOUNTS" has the meaning ascribed to it in Section 1.6.
"ELIGIBLE EQUIPMENT" means, as to any Borrower, Equipment which is
subject to a first priority Lien in favor of Agent, for its benefit and for the
ratable benefit of Lenders, and which is appraised by an appraiser satisfactory
to Agent.
"ELIGIBLE INVENTORY" has the meaning ascribed to it in Section 1.7.
"ELIGIBLE REAL ESTATE" means as to any Borrower, real estate with
respect to which Agent shall have received (a) Mortgages covering all of such
real estate together with (i) title insurance policies, current as-built
surveys, zoning letters and certificates of occupancy, in each case reasonably
satisfactory in form and substance to Agent, (ii) evidence that counterparts of
the Mortgages have been recorded in all places to the extent necessary or
desirable, in the judgment of Agent, to create a valid and enforceable first
priority Lien (subject to Permitted Encumbrances) on such real estate in favor
of Agent for the benefit of itself and Lenders (or in favor of such other
trustee as may be required or desired under local law); and (iii) an opinion of
counsel in each state in which any such real estate is located in form and
substance and from counsel reasonably satisfactory to Agent, (b) Phase I
Environmental Site Assessment Reports, consistent with American Society for
Testing and Materials (ASTM) Standard E 1527-00 and applicable state
requirements, on all of such real estate, dated no more than 6 months prior to
the date of purchase of such real estate, prepared by environmental engineers
reasonably satisfactory to Agent, all in form and substance reasonably
satisfactory to Agent, in its sole discretion and Agent shall have further
received (i) such environmental review and audit reports, including Phase II
reports, with respect to such real estate as Agent may request, and Agent shall
be satisfied in its sole discretion, with the contents of all such environmental
reports, and (ii) letters executed by the environmental firms preparing such
environmental reports, in form and substance reasonably satisfactory to Agent,
authorizing Agent and Lenders to rely on such reports, and (c) appraisals of
such real estate which shall be in form and substance, and prepared by
appraisers, reasonably satisfactory to Agent.
Annex A-9
"ENVIRONMENTAL LAWS" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any legally binding applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of (i)
human health or safety from exposure to Hazardous Material or (ii) the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
▇▇.▇▇. 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. ▇▇.▇▇. 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ▇▇.▇▇. 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. ▇▇.▇▇. 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. ▇▇.▇▇. 2601 et seq.); the Clean Air Act (42 U.S.C. ▇▇.▇▇.
7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. ▇▇.▇▇. 1251 et
seq.); the Occupational Safety and Health Act (29 U.S.C. ▇▇.▇▇. 651 et seq.);
and the Safe Drinking Water Act (42 U.S.C. ▇▇.▇▇. 300(f) et seq.), and any and
all regulations promulgated thereunder, and all analogous state, local and
foreign counterparts or equivalents and any transfer of ownership notification
or approval statutes.
"ENVIRONMENTAL LIABILITIES" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"EQUIPMENT" means all "equipment," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located and, in
any event, including all such Credit Party's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
Annex A-10
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA AFFILIATE" means, with respect to any Credit Party, any trade or
business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA EVENT" means, with respect to any Credit Party or any ERISA
Affiliate, (a) with respect to a Title IV Plan, any event described in Section
4043(c) of ERISA for which notice to the PBGC has not been waived; (b) the
withdrawal of any Credit Party or ERISA Affiliate from a Title IV Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial
withdrawal of any Credit Party or any ERISA Affiliate from any Multiemployer
Plan; (d) the filing of a notice of intent to terminate a Title IV Plan in a
distress termination described in Section 4041(c) of ERISA or the treatment of a
plan amendment as a termination under Section 4041 of ERISA; (e) the institution
of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC;
(f) with respect to a Title IV Plan, the existence of an "accumulated funding
deficiency" (as defined in Section 412 of the IRC or Section 302 of ERISA
whether or not waived, or the failure to make by its due date a required
installment under Section 412(m) of the IRC or the failure to make any required
contribution to a Multiemployer Plan; (g) the filing pursuant to Section 412(d)
of the IRC or Section 303(d) of ERISA of an application for the waiver of the
minimum funding standard with respect to a Title IV Plan; (h) the making of any
amendment to any Title IV Plan which could result in the imposition of a lien or
the posting of a bond or other security; (i) with respect to a Title IV Plan or
event described in Section 4062(e) of ERISA, (j) any other event or condition
that might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or for the imposition of liability under
Section 4069 or 4212(c) of ERISA; (k) the termination of a Multiemployer Plan
under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or 4245 of ERISA; or (l) the loss of a
Qualified Plan's qualification or tax exempt status; or (m) the termination of a
Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"EVENT OF DEFAULT" has the meaning ascribed to it in Section 8.1.
"EXCESS FORMULA AVAILABILITY" means the average daily difference, for
any period of determination, between (a) the Aggregate Borrowing Base and (b)
the total outstanding balance of Revolving Loans (with trade payables being paid
consistent with past practices, expenses and liabilities being paid in the
ordinary course of business, without acceleration of sales and without
deterioration of working capital). For purposes of determining "Excess Formula
Availability" under Section 1.5(a)(ii), the Indenture Maturity Reserve is deemed
to be $0.
"EXISTING STOCKHOLDER GROUP" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, the ▇▇▇▇▇ Family Foundation, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇ and the various Fife family trusts for which any of the foregoing
are trustees.
Annex A-11
"FAIR LABOR STANDARDS ACT" means the Fair Labor Standards Act, 29
U.S.C. ss.201 et seq.
"FAIR MARKET VALUE" means the fair market value of the asset being
valued based upon an appraisal, in form and substance satisfactory to Agent, by
an appraiser satisfactory to Agent.
"FEDERAL FUNDS RATE" means, for any day, a floating rate equal to the
weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System.
"FEES" means any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.
"FINANCIAL COVENANTS" means the financial covenants set forth in Annex
G.
"FINANCIAL STATEMENTS" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrowers delivered
in accordance with Section 3.4 and Annex E.
"FISCAL MONTH" means any of the monthly accounting periods of
Borrowers.
"FISCAL QUARTER" means any of the quarterly accounting periods of
Borrowers, ending on or about the last day of March, June, September and
December of each year.
"FISCAL YEAR" means any of the annual accounting periods of Borrowers
ending on or about December 31 of each year.
"FIXED CHARGES" means with respect to any Person for any fiscal period
(a) the aggregate of all Interest Expense paid or accrued during such period,
plus (b) scheduled payments of principal with respect to Indebtedness during
such period, plus (c) Capital Expenditures during such period, plus (d)
dividends paid during such period, plus (e) cash taxes paid during such period,
plus (f) amounts paid in accordance with Section 6.14(e)(ii) and (iii), plus (g)
cash settlement amounts in excess of $3,000,000 associated with the discontinued
operations of Borrowers' EIS Brake division and Industrial and Automotive
Associates, Inc. Notwithstanding anything herein to the contrary, Fixed Charges
specifically exclude prepayments made in connection with repayments and/or
redemptions of the debentures under the Indenture.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any
fiscal period, the ratio of EBITDA to Fixed Charges.
"FIXTURES" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.
Annex A-12
"FUNDED DEBT" means, with respect to any Person, without duplication,
all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness that by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long term debt, revolving credit and short term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.
"GAAP" means generally accepted accounting principles in the United
States of America consistently applied, as such term is further defined in Annex
G to the Agreement.
"GE CAPITAL" means General Electric Capital Corporation, a Delaware
corporation.
"GE CAPITAL FEE LETTER" shall have the meaning given to such term in
Section 1.9(a).
"GENERAL INTANGIBLES" means all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), choses in action, rights to receive tax refunds and other payments,
rights to receive dividends, distributions, cash, Instruments and other property
in respect of or in exchange for pledged Stock and Investment Property, rights
of indemnification, all books and records, correspondence, credit files,
invoices and other papers, including without limitation all tapes, cards,
computer runs and other papers and documents in the possession or under the
control of such Credit Party or any computer bureau or service company from time
to time acting for such Credit Party.
"GOODS" MEANS ALL "GOODS" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Annex A-13
"GUARANTEED INDEBTEDNESS" means as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("primary obligation") of any
other Person (the "primary obligor") in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, (d) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"GUARANTIES" means, collectively, each Subsidiary Guaranty, the
Canadian Guaranty and any other guaranty executed by any Guarantor in favor of
Agent and Lenders in respect of the Obligations.
"GUARANTORS" means each Subsidiary of each Borrower, and each other
Person, if any, that executes a guaranty or other similar agreement in favor of
Agent, for itself and the ratable benefit of Lenders, in connection with the
transactions contemplated by the Agreement and the other Loan Documents.
"HAZARDOUS MATERIAL" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred 6 months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than 6 months unless being
contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
Annex A-14
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (i) the
Obligations.
"INDEMNIFIED LIABILITIES" has the meaning ascribed to it in Section
1.13.
"INDEMNIFIED PERSON" has the meaning ascribed to in Section 1.13.
"INDENTURE" means that certain Indenture dated as of July 26, 1999
between SMP and HSBC Bank USA, as trustee and any documents, agreements or
instruments executed in connection therewith, each as amended, restated,
supplemented or otherwise modified from time to time.
"INDENTURE MATURITY RESERVE" means a reserve which (i) on January 15,
2008, equals one-sixth of the aggregate outstanding principal amount of the
notes issued under the Indenture, (ii) on April 15, 2008, equals one-third of
the aggregate outstanding principal amount of the notes issued under the
Indenture, (iii) on July 15, 2008, equals one-half of the aggregate outstanding
principal amount of the notes issued under the Indenture, (iv) on October 15,
2008, equals two-thirds of the aggregate outstanding principal amount of the
notes issued under the Indenture, (v) on January 15, 2008, equals five-sixths of
the aggregate outstanding principal amount of the notes issued under the
Indenture, and (vi) on April 15, 2009 and thereafter, equals the aggregate
outstanding principal amount of the notes issued under the Indenture.
"INDEX RATE" means, for any day, a floating rate equal to the higher of
(i) the rate publicly quoted from time to time by THE WALL STREET JOURNAL as the
"prime rate" (or, if THE WALL STREET JOURNAL ceases quoting a prime rate, the
highest per annum rate of interest published by the Federal Reserve Board in
Federal Reserve statistical release H.15 (519) entitled "Selected Interest
Rates" as the Bank prime loan rate or its equivalent), and (ii) the Federal
Funds Rate plus 50 basis points per annum. Each change in any interest rate
provided for in the Agreement based upon the Index Rate shall take effect at the
time of such change in the Index Rate.
"INDEX RATE LOAN" means a Loan or portion thereof bearing interest by
reference to the Index Rate.
"INSTRUMENTS" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificates of deposit, and all promissory
notes and other evidences of indebtedness, other than instruments that
constitute, or are a part of a group of writings that constitute, Chattel Paper.
"INTELLECTUAL PROPERTY" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"INTERCOMPANY NOTES" has the meaning ascribed to it in Section 6.3.
Annex A-15
"INTEREST EXPENSE" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including,
interest expense with respect to any Funded Debt of such Person and interest
expense for the relevant period that has been capitalized on the balance sheet
of such Person.
"INTEREST PAYMENT DATE" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; provided that,
in addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest that has then accrued under the Agreement.
"INVENTORY" means all "inventory," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located, and in
any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including other supplies
and embedded software.
"INVESTMENT PROPERTY" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986 and all regulations
promulgated thereunder.
"IRS" means the Internal Revenue Service.
"L/C ISSUER" has the meaning ascribed to it in Annex B.
"L/C SUBLIMIT" has the meaning ascribed to it in Annex B.
"LENDERS" means GE Capital, the other Lenders named on the signature
pages of the Agreement, and, if any such Lender shall decide to assign all or
any portion of the Obligations, such term shall include any assignee of such
Lender.
"LETTER OF CREDIT FEE" has the meaning ascribed to it in Annex B.
Annex A-16
"LETTER OF CREDIT OBLIGATIONS" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrower Representative, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of Letters of Credit by Agent or another L/C Issuer or the purchase
of a participation as set forth in Annex B with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount
that may be payable at such time or at any time thereafter by Agent or Lenders
thereupon or pursuant thereto
"LETTER OF CREDIT RIGHTS" means letter of credit rights as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.
"LETTERS OF CREDIT" means documentary or standby letters of credit
issued for the account of any Borrower by any L/C Issuer. The term does not
include any Swap Related L/C.
"LIBOR BUSINESS DAY" means a Business Day on which banks in the City of
London are generally open for interbank or foreign exchange transactions.
"LIBOR LOAN" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR PERIOD" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower Representative pursuant
to the Agreement and ending one, two or three months thereafter, as selected by
Borrower Representative's irrevocable notice to Agent as set forth in Section
1.5(e); provided, that the foregoing provision relating to LIBOR Periods is
subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be to
carry such LIBOR Period into another calendar month in which event such LIBOR
Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end on the immediately preceding LIBOR
Business Day;
(c) any LIBOR Period that begins on the last LIBOR Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR Period) shall
end on the last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as
not to require a payment or prepayment of any LIBOR Loan during a LIBOR Period
for such Loan; and
(e) Borrower Representative shall select LIBOR Periods so that
there shall be no more than ten (10) separate LIBOR Loans in existence at any
one time.
Annex A-17
"LIBOR RATE" means for each LIBOR Period, a rate of interest determined
by Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the first
day of such LIBOR Period; divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is two (2) LIBOR Business Days prior to
the beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board that are
required to be maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to Agent
and Borrower Representative.
"LICENSE" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
"LIEN" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"LITIGATION" has the meaning ascribed to it in Section 3.13.
"LOAN ACCOUNT" has the meaning ascribed to it in Section 1.12.
"LOAN DOCUMENTS" means the Agreement, the Notes, the Collateral
Documents, the Master Standby Agreement, the Master Documentary Agreement, the
Rate Protection Agreement, the GE Capital Fee Letter and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to Agent or any Lender in connection with the Agreement or
the transactions contemplated thereby. Any reference in the Agreement or any
other Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as
the same may be in effect at any and all times such reference becomes operative.
Annex A-18
"LOANS" means the Revolving Loan.
"LOCK BOXES" has the meaning ascribed to it in Annex C.
"MARGIN STOCK" has the meaning ascribed to in Section 3.10.
"MASTER DOCUMENTARY AGREEMENT" means the Master Agreement for
Documentary Letters of Credit dated as of February 7, 2003 among Borrowers, as
Applicant(s), and GE Capital.
"MASTER STANDBY AGREEMENT" means the Master Agreement for Standby
Letters of Credit dated as of February 7, 2003 among Borrowers, as Applicant(s),
and GE Capital, as issuer.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, operations or financial or other condition of any Credit Party
or the Credit Parties considered as a whole, (b) any Borrower's ability to pay
any of the Loans or any of the other Obligations in accordance with the terms of
the Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and
Lenders, on the Collateral or the priority of such Liens, or (d) Agent's or any
Lender's rights and remedies under the Agreement and the other Loan Documents.
Without limiting the generality of the foregoing, any event or occurrence
adverse to one or more Credit Parties which results or could reasonably be
expected to result in costs, damages, liabilities, expenditures or net loss of
revenues, individually or in the aggregate, to any Credit Party in any 20-day
period in excess of $30,000,000 shall constitute a Material Adverse Effect.
"MAXIMUM AMOUNT" means, as of any date of determination, an amount
equal to the Commitment of all Lenders as of that date.
"MCC" means Mardevco Credit Corp., a New York corporation.
"MCC AMORTIZING AVAILABILITY" means (A) $4,116,000 less $171,000 per
Fiscal Quarter commencing with the Fiscal Quarter ending March 31, 2007, plus
(B) the Additional MCC Amortizing Availability, minus (C) an amount equal to (i)
50% of the Fair Market Value of any Eligible Real Estate as of the Closing Date
or the date it is purchased by MCC or 85% of the Net Orderly Liquidation Value
of any Eligible Equipment as of the Closing Date or the date it is purchased by
MCC, which is the basis of MCC Amortizing Availability, and which is subject to
a loss, sale, destruction or other disposition, less (ii) the product of
one-twenty fourth of the amount determined under the preceding clause (i) and
the number of full Fiscal Quarters that have occurred since the Closing Date or
the purchase of such Eligible Real Estate or Eligible Equipment to the date of
such loss, sale, destruction or other disposition, as the case may be.
"MCC BORROWING BASE" means, as of any date of termination by Agent,
from time to time, an amount equal to the sum, at such time of:
(a) up to 85% of the book value of MCC's Eligible Accounts;
and
Annex A-19
(b) up to the lesser of (i) 60% of the book value of MCC's
Eligible Inventory valued at the lower of cost (determined on a first-in,
first-out basis) or market or (ii) 85% of the Net Orderly Liquidation Value of
MCC's Eligible Inventory as set forth in the most recent appraisal prepared by
an independent appraisal firm acceptable to Agent, in each case valued at the
lower of cost (determined on a first in, first out basis) or market; and
(c) with respect to documentary Letters of Credit opened
solely for the purposes of purchasing Eligible Inventory and having an expiry
date of 90 days or less from the date of issuance, a percentage equal to
inventory advance rate in effect at the time of issuance of any such Letter of
Credit multiplied by the cost of the goods constituting Eligible Inventory being
purchased under such documentary Letters of Credit (so long as such Eligible
Inventory is (i) fully insured, (ii) is subject to a first priority security
interest in and lien upon such goods in favor of Agent and (iii) is evidenced or
deliverable pursuant to documents, notices, instruments, statements and bills of
lading that have been delivered to Agent or an agent acting on its behalf), and
(d) MCC Amortizing Availability; less
(e) Letter of Credit Obligations incurred on behalf of MCC,
in each case less any Reserves established by Agent at such time in its
reasonable credit judgment.
"MORTGAGED PROPERTIES" has the meaning assigned to it in Annex D.
"MORTGAGES" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent on behalf
of itself and Lenders with respect to the Mortgaged Properties, as amended,
modified or supplemented from time to time, all in form and substance reasonably
satisfactory to Agent.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Sections 3(37) or 4001(a)(3) of ERISA, and to which any Credit Party or ERISA
Affiliate is making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"NET ORDERLY LIQUIDATION VALUE" means the orderly liquidation value of
the asset being valued based upon an appraisal, in form and substance
satisfactory to Agent, by an appraiser satisfactory to Agent.
"NET WORTH" means, with respect to any Person as of any date of
determination, the book value of the assets of such Person, minus the sum of (a)
reserves applicable thereto, and (b) all of such Person's liabilities on a
consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.
"NON-FUNDING LENDER" has the meaning ascribed to it in Section
9.9(a)(ii).
"NOTES" means the Revolving Notes.
"NOTICE OF CONVERSION/CONTINUATION" has the meaning ascribed to it in
Section 1.5(d).
Annex A-20
"NOTICE OF REVOLVING CREDIT ADVANCE" has the meaning ascribed to it in
Section 1.1(a).
"OBLIGATIONS" means all loans, advances, debts, liabilities and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents or pursuant to any cash management services provided by
any Lender to any Credit Party. This term includes all principal, interest
(including all interest that accrues after the commencement of any case or
proceeding by or against any Credit Party in bankruptcy, whether or not allowed
in such case or proceeding), Fees, Charges, Swap Related Reimbursement
Obligations, any obligations under any Rate Protection Agreement, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents.
"ORIGINAL CLOSING DATE" means February 7, 2003.
"ORIGINAL CREDIT AGREEMENT" means the Amended and Restated Credit
Agreement dated as of February 7, 2003 by and among Borrowers, the other Credit
Parties party thereto, GE Capital as Agent and Lender and the other Original
Lenders party thereto, as same was amended, supplemented or otherwise modified
prior to the Closing Date.
"ORIGINAL LENDERS" means the Lenders who were Lenders under the
Original Credit Agreement.
"OVERADVANCE" has the meaning ascribed to it in Section 1.1(a)(iii).
"PATENT LICENSE" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"PATENT SECURITY AGREEMENTS" means the Patent Security Agreements made
in favor of Agent, on behalf of itself and Lenders, by each applicable Credit
Party, as amended, modified or supplemented from time to time.
"PATENTS" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or of any other country, all registrations and recordings thereof, and
all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State, or any other country, and (b) all reissues,
continuations, continuations in part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" means a Plan described in Section 3(2) of ERISA.
"PERMITTED ACQUISITION" has the meaning ascribed to it in Section 6.1.
Annex A-21
"PERMITTED ENCUMBRANCES" means the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable
or which are being contested in accordance with Section 5.2(b); (b) pledges or
deposits of money securing statutory obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $500,000 at any time, so long as such Liens attach only
to Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(j); (h)
zoning restrictions, easements, licenses, or other restrictions on the use of
any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (i) presently existing or hereafter created
Liens in favor of Agent, on behalf of Lenders; (j) Liens expressly permitted
under clauses (b) and (c) of Section 6.7 of the Agreement; (k) liens on SMP's
publicly-held stock which is held in trust for SMP's ESOP and (l) the Capital
Leases of up to $13,000,000 in the aggregate.
"PERMITTED OVERNIGHT INVESTMENTS" means investments in a money market
fund which invests in (a) marketable direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof; (b)
investments in commercial paper maturing within six months from the date of
acquisition thereof and having, at such date of acquisition, a rating of at
least "P2" or the equivalent thereof from S&P or of at least "A2" or the
equivalent thereof from ▇▇▇▇▇'▇; (c) investments in certificates of deposit,
banker's acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not
less than $250,000,000; and (d) repurchase agreements with a term of not more
than 90 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
Annex A-22
"PLAN" means, at any time, an "employee benefit plan", as defined in
Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to or has maintained,
contributed to or had an obligation to contribute to at any time within the past
7 years on behalf of participants who are or were employed by any Credit Party
or ERISA Affiliate.
"PLEDGE AGREEMENTS" means, collectively, the SMP Pledge Agreement and
any pledge agreements entered into after the Closing Date by any Credit Party
(as required by the Agreement or any other Loan Document), as amended, modified
or supplemented from time to time.
"PLEDGED CASH" means cash, which may at any time be pledged by SI in
favor of Agent, pursuant to documentation satisfactory to Agent, which cash is
or shall be on deposit at Banco Popular, or any other bank reasonably acceptable
to Agent, in the form of a time deposit.
"PLEDGED SECURITIES" means marketable securities, which may at any time
be pledged by SI in favor of Agent, pursuant to documentation satisfactory to
Agent.
"PROCEEDS" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of, interference with the use of, defects in,
or infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to payment
or other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral or otherwise.
"PROJECTIONS" means Borrowers' forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary or division-by-division basis, if applicable, and otherwise
consistent with the historical Financial Statements of the Borrowers, together
with appropriate supporting details and a statement of underlying assumptions.
"PRO RATA SHARE" means with respect to all matters relating to any
Lender, (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Commitment of that Lender by (ii) the aggregate Commitments of
all Lenders, and (b) with respect to all Revolving Loans on and after the
Commitment Termination Date, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Revolving Loans held by that
Lender, by (ii) the outstanding principal balance of the Revolving Loans held by
all Lenders.
Annex A-23
"QUALIFIED PLAN" means a Pension Plan that is intended to be tax
qualified under Section 401(a) of the IRC.
"QUALIFIED ASSIGNEE" means (a) any Lender, any Affiliate of any Lender
or any entity (whether a corporation, partnership, trust or otherwise) that is
engaged in making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or an Affiliate of such Lender and, with
respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor, and (b) any commercial bank, savings and
loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from ▇▇▇▇▇'▇ at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrowers
without the imposition of any withholding or similar taxes; provided that no
Person proposed to become a Lender after the Closing Date and determined by
Agent to be acting in the capacity of a vulture fund or distressed debt
purchaser shall be a Qualified Assignee, and no Person or Affiliate of such
Person that holds Subordinated Debt or Stock issued by any Credit Party shall be
a Qualified Assignee.
"RATE PROTECTION AGREEMENT" means, collectively, any interest rate
swap, cap, collar or similar agreement entered into by any Borrower or any of
its Subsidiaries under which the counterparty of such agreement is (or at the
time such agreement was entered into, was) a Lender or an Affiliate of a Lender.
For the avoidance of doubt, "Rate Protection Agreement" shall not include any
interest rate swap, cap, collar or similar agreement arranged by GE Capital and
supported by a Swap Related L/C.
"RATE PROTECTION OBLIGATIONS" means Obligations which arise under any
Rate Protection Agreement.
"REAL ESTATE" has the meaning ascribed to it in Section 3.6.
"REAL ESTATE RESERVE" means, as of the date of determination by Agent
an amount equal to 50% of the appraised value of any Eligible Real Estate or SMP
Canada Eligible Real Estate, as the case may be, that does not have a
corresponding Environmental Site Assessment Report, consistent with American
Society for Testing and Materials (ASTM) Standard E 1527-00 and applicable state
or provincial requirements, prepared by environmental engineers reasonably
satisfactory to Agent, in form and substance reasonably satisfactory to Agent in
its sole discretion; provided such Real Estate Reserves shall be implemented or
withdrawn in Agent's sole discretion.
"RELEASE" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
Annex A-24
"REQUISITE LENDERS" means Lenders having (a) 66-2/3% of the Commitments
of all Lenders, or (b) if the Commitments have been terminated, 66-2/3% of the
aggregate outstanding amount of the Revolving Loan.
"RESERVES" means (a) reserves established by Agent from time to time
against Eligible Inventory pursuant to SECTION 5.9, (b) reserves established
pursuant to SECTION 5.4(C), (c) the Canadian Reserve established by Agent from
time to time, (d) the Indenture Maturity Reserve, (e) the Real Estate Reserve
established by Agent from time to time and (f) such other reserves (including,
without limitation, reserves for Rate Protection Agreements) against Eligible
Accounts, Eligible Inventory or Borrowing Availability of any Borrower that
Agent may, in its reasonable credit judgment, establish from time to time.
Without limiting the generality of the foregoing, Reserves established to ensure
the payment of accrued Interest Expenses or Indebtedness shall be deemed to be a
reasonable exercise of Agent's credit judgment.
"RESTRICTED PAYMENT" means, with respect to any Credit Party (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Subordinated Debt; (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Credit
Party now or hereafter outstanding; (e) any payment of a claim for the
rescission of the purchase or sale of, or for material damages arising from the
purchase or sale of, any shares of such Credit Party's Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission; (f) any loan, contribution, or other
transfer of funds or other property to any Stockholder of such Credit Party who
has filed Form 13-G other (i) than payment of compensation in the ordinary
course of business to Stockholders who have filled a Form 13-G and who are
employees of or consultants to such Person and (ii) payment of trade payables
incurred in the ordinary course of such Credit Party's business; and (g) any
payment of management fees (or other fees of a similar nature) by such Credit
Party to any Stockholder of such Credit Party or its Affiliates.
"RETIREE WELFARE PLAN" means, at any time, a welfare plan (within the
meaning of Section 3(1) of ERISA) that provides for continuing coverage or
benefits for any participant or any beneficiary of a participant after such
participant's termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC or other similar state law and at
the sole expense of the participant or the beneficiary of the participant.
"REVOLVING CREDIT ADVANCE" has the meaning ascribed to it in Section
1.1(a)(i).
Annex A-25
"REVOLVING LOAN" means, at any time, the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to Borrowers plus (ii) the
aggregate Letter of Credit Obligations incurred on behalf of Borrowers. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"REVOLVING NOTE" has the meaning ascribed to it in Section 1.1(a)(ii).
"SECURITY AGREEMENT" means the Security Agreement dated April 27, 2001
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto, as amended, supplemented or
modified from time to time.
"SI" means Stanric, Inc., a Delaware corporation.
"SI AMORTIZING AVAILABILITY" means (A) $1,296,000 less $54,000 per
Fiscal Quarter commencing with the Fiscal Quarter ending March 31, 2007, plus
(B) the Additional SI Amortizing Availability, minus (C) an amount equal to (i)
85% of the Net Orderly Liquidation Value of any Eligible Equipment, as of the
Closing Date or the date it is purchased by SI, which is the basis of SI
Amortizing Availability, and which is subject to a loss, sale, destruction or
other disposition, less (ii) the product of one-twenty fourth of the amount
determined under the preceding clause (i) and the number of full Fiscal Quarters
that have occurred since the Closing Date or the purchase of such Eligible
Equipment to the date of such loss, sale, destruction or other disposition, as
the case may be.
"SI BORROWING BASE" means, as of any date of termination by Agent, from
time to time, an amount equal to the sum, at such time of:
(a) up to 85% of the book value of SI's Eligible Accounts; and
(b) up to the lesser of (i) 60% of the book value of SI's
Eligible Inventory valued at the lower of cost (determined on a first in, first
out basis) or market; or (ii) 85% of the Net Orderly Liquidation Value of SI's
Eligible Inventory as set forth in the most recent appraisal prepared by an
independent appraisal firm acceptable to Agent;
(c) with respect to documentary Letters of Credit opened
solely for the purposes of purchasing Eligible Inventory and having an expiry
date of 90 days or less from the date of issuance, a percentage equal to the
inventory advance rate in effect at the time of issuance of any such Letter of
Credit multiplied by the cost of the goods constituting Eligible Inventory being
purchased under such documentary Letters of Credit (so long as such Eligible
Inventory is (i) fully insured, (ii) is subject to a first priority security
interest in and lien upon such goods in favor of Agent and (iii) is evidenced or
deliverable pursuant to documents, notices, instruments, statements and bills of
lading that have been delivered to Agent or an agent acting on its behalf); and
(d) SI Amortizing Availability; less
(e) Letter of Credit Obligations incurred on behalf of SI,
Annex A-26
in each case less any Reserves established by Agent at such time in its
reasonable credit judgment.
"SMP" means Standard Motor Products, Inc., a New York corporation.
"SMP AMORTIZING AVAILABILITY" means (A) $18,573,000 less $774,000 per
Fiscal Quarter commencing with the Fiscal Quarter ending March 31, 2007, plus
(B) the Additional SMP Amortizing Availability, minus (C) an amount equal to (i)
50% of the Fair Market Value of any Eligible Real Estate as of the Closing Date
or the date it is purchased by SMP or 85% of the Net Orderly Liquidation Value
of any Eligible Equipment as of the Closing Date or the date it is purchased by
SMP, which is the basis of SMP Amortizing Availability, and which is subject to
a loss, sale, destruction or other disposition, less (ii) the product of
one-twenty fourth of the amount determined under the preceding clause (i) and
the number of full Fiscal Quarters that have occurred since the Closing Date or
the purchase of such Eligible Real Estate or Eligible Equipment to the date of
such loss, sale, destruction or other disposition, as the case may be.
"SMP BORROWING BASE" means, as of any date of determination by Agent,
from time to time, an amount equal to the sum at such time of:
(a) up to 85% of the book value of SMP's Eligible Accounts;
and
(b) up to the lesser of (i) 60% of the book value of SMP's
Eligible Inventory valued at the lower of cost (determined on a first in, first
out basis) or market; or (ii) 85% of the Net Orderly Liquidation Value of SMP's
Eligible Inventory as set forth in the most recent appraisal prepared by an
independent appraisal firm acceptable to Agent; and
(c) with respect to documentary Letters of Credit opened
solely for the purposes of purchasing Eligible Inventory and having an expiry
date of 90 days or less from the date of issuance, a percentage equal to the
inventory advance rate in effect at the time of issuance of any such Letter of
Credit multiplied by the cost of the goods constituting Eligible Inventory being
purchased under such documentary Letters of Credit (so long as such Eligible
Inventory is (i) fully insured, (ii) is subject to a first priority security
interest in and lien upon such goods in favor of Agent and (iii) is evidenced or
deliverable pursuant to documents, notices, instruments, statements and bills of
lading that have been delivered to Agent or an agent acting on its behalf); and
(d) SMP Amortizing Availability; less
(e) Letter of Credit Obligations incurred on behalf of SMP,
in each case less any Reserves established by Agent at such time in its
reasonable credit judgment.
"SMP CANADA" means SMP Motor Products, Ltd., a corporation amalgamated
under the laws of Canada.
Annex A-27
"SMP CANADA AMORTIZING AVAILABILITY" means (A) $756,000 less $31,000
per Fiscal Quarter commencing with the Fiscal Quarter ending March 31, 2006,
plus (B) the Additional SMP Canada Amortizing Availability, minus (C) an amount
equal to (i) 50% of the Fair Market Value of any SMP Canada Eligible Real Estate
as of December 29, 2005 or the date it is purchased by SMP Canada or 85% of the
Net Orderly Liquidation Value of any SMP Canada Eligible Equipment as of
December 29, 2005 or the date it is purchased by SMP Canada, which is the basis
of SMP Canada Amortizing Availability, and which is subject to a loss, sale,
destruction or other disposition, less (ii) the product of one-twenty fourth of
the amount determined under the preceding clause (i) and the number of full
Fiscal Quarters that have occurred since December 29, 2005 or the purchase of
such SMP Canada Eligible Real Estate or SMP Canada Eligible Equipment to the
date of such loss, sale, destruction or other disposition, as the case may be.
"SMP CANADA BORROWING BASE" means, as of any date of determination by
Agent, from time to time, an amount equal to the sum, at such time of:
(a) up to 85% of the book value of SMP Canada's Eligible
Accounts; and
(b) up to the lesser of (i) 60% of the book value of SMP
Canada's Eligible Inventory valued at the lower of cost (determined on a
first-in, first-out basis) or market or (ii) 85% of the Net Orderly Liquidation
Value of SMP Canada's Eligible Inventory as set forth in the most recent
appraisal prepared by an independent appraisal firm acceptable to Agent, in each
case valued at the lower of cost (determined on a first in, first out basis) or
market (Agent agrees that Hilco Real Estate, LLC shall be deemed an acceptable
appraiser with respect to SMP Canada's real property and inventory); and
(c) SMP Canada Amortizing Availability; less
in each case less any Reserves established by Agent at such time in its
reasonable credit judgment (including without limitation, a Real Estate Reserve,
reserves established with respect to Liens created by applicable law (in
contrast with Liens voluntarily granted) which rank or are capable of ranking
prior or pari passu with Canadian Agent's security interests (or interests
similar thereto under applicable law) against all or part of the Collateral (as
defined in the Canadian Loan Agreement), including for amounts owing for
employee source deductions, goods and services taxes, sales taxes, harmonized
sales taxes, municipal taxes, workers' compensation, Quebec corporate taxes,
pension fund obligations and overdue rents). Borrowing Availability arising out
of clause (c) above shall amortize on a straight line basis over 24 quarters and
shall be reduced proportionally to the extent permitted fixed asset sales occur,
provided, that any such reduction in availability due to a fixed asset sale may
be replenished by a corresponding capital expenditure in an amount up to the sum
of 85% of the appraised net orderly liquidation value of SMP Canada's Eligible
Equipment and 50% of the appraised fair market value of SMP Canada Eligible Real
Estate, provided, that Borrowing Availability, solely with respect to any such
capital expenditure, shall amortize on a straight line basis over 24 quarters
and shall commence immediately following such capital expenditure.
"SMP CANADA ELIGIBLE ACCOUNTS" shall mean all of the Accounts owned by
SMP Canada that meet the eligibility criteria set forth in Section 1.6 hereof.
Annex A-28
"SMP CANADA ELIGIBLE EQUIPMENT" means, as to SMP Canada, Equipment
which is subject to a first priority Lien in favor of Canadian Agent, for its
benefit and for the ratable benefit of Canadian Lenders, and which is appraised
by an appraiser satisfactory to Agent.
"SMP CANADA ELIGIBLE INVENTORY" shall mean all of the Inventory owned
by SMP Canada that meets the eligibility criteria set forth in Section 1.7
hereof.
"SMP CANADA ELIGIBLE REAL ESTATE" means as to SMP Canada, real estate
with respect to which Canadian Agent shall have received (a) mortgages covering
all of such real estate together with (i) title insurance policies, current
as-built surveys, zoning letters and certificates of occupancy, in each case
reasonably satisfactory in form and substance to Agent, (ii) evidence that
counterparts of the Mortgages have been recorded in all places to the extent
necessary or desirable, in the judgment of Canadian Agent, to create a valid and
enforceable first priority Lien (subject to Permitted Encumbrances, as defined
in the Canadian Loan Agreement) on such real estate in favor of Canadian Agent
for the benefit of itself and Lenders (or in favor of such other trustee as may
be required or desired under local law); and (iii) an opinion of counsel in each
jurisdiction in which any such real estate is located in form and substance and
from counsel reasonably satisfactory to Agent, (b) an Environmental Site
Assessment Report, prepared by environmental engineers reasonably acceptable to
Agent, and in form and substance reasonably acceptable to Agent, and Agent shall
have further received (x) such environmental review and audit reports, including
Phase II reports, with respect to such real estate as Agent may request, and
Agent shall be satisfied in its sole discretion, with the contents of all such
environmental reports, and (y) letters executed by the environmental firms
preparing such environmental reports, in form and substance reasonably
satisfactory to Agent, authorizing Agent and Lenders to rely on such reports,
and (c) appraisals of such real estate which shall be in form and substance, and
prepared by appraisers, reasonably acceptable to Agent.
"SMP HK" means Standard Motor Products (Hong Kong) Limited, a Hong Kong
Corporation.
"SMP LLC" means SMP Real Estate LLC, a Delaware limited liability
company.
"SMP PLEDGE AGREEMENT" means the Pledge Agreement dated April 27, 2001
executed by SMP in favor of Agent, on behalf of itself and Lenders, pledging all
Stock of its Subsidiaries (except with respect to foreign Subsidiaries other
than a "check the box" subsidiary, 51% of the capital stock shall be pledged),
if any, and all Intercompany Notes owing to or held by it, as amended, modified
or supplemented from time to time.
"SOFTWARE" means all "software" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of goods, including all computer programs and all
supporting information provided in connection, with a transaction related to any
program.
"SOLVENT" means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
Annex A-29
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall
be computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.
"STOCK" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11 1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"STOCKHOLDER" means, with respect to any Person, each holder of Stock
of such Person.
"SUBORDINATED DEBT" means the Indebtedness of SMP evidenced by the
Subordinated Debt Documents and any other Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"SUBORDINATED DEBT DOCUMENTS" means the Indenture.
"SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Borrower.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty dated April 27,
2001 executed by each domestic Subsidiary of each Borrower, each in favor of
Agent, on behalf of itself and Lenders, as amended, modified or supplemented
from time to time.
"SUPERMAJORITY LENDERS" means Lenders having (a) 80% or more of the
Commitments of all Lenders, or (b) if the Commitments have been terminated, 80%
or more of the aggregate outstanding amount of the Revolving Loan and Letter of
Credit Obligations.
Annex A-30
"SUPPORTING OBLIGATIONS" means all supporting obligations as such term
is defined in the Code, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments
or Investment Property.
"SWAP RELATED L/C" means a letter of credit or other credit enhancement
provided by GE Capital to the extent supporting the payment obligations by any
Borrower under an interest rate protection or hedging agreement or transaction
(including, but not limited to, interest rate swaps, caps, collars, floors and
similar transactions) designed to protect or manage exposure to the fluctuations
in the interest rates applicable to any of the Loans, and which agreement or
transaction any Borrower entered into as a result of a specific referral
pursuant to which GE Capital, GE Corporate Financial Services, Inc. or any other
Affiliate of GE Capital had arranged for such Borrower to enter into such
agreement or transaction. The term includes a Swap Related L/C as it may be
increased from time to time fully to support such Borrower's payment obligations
under any and all such interest rate protection or hedging agreements or
transactions.
"SWAP RELATED REIMBURSEMENT OBLIGATION" has the meaning ascribed to it
in Section 1.2A.
"TANGIBLE NET WORTH" means, with respect to any Person at any date, the
Net Worth of such Person at such date, excluding, however, from the
determination of the total assets at such date, (a) all goodwill, capitalized
organizational expenses, capitalized research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other intangible items, (b) all unamortized debt
discount and expense, (c) treasury Stock, and (d) any write-up in the book value
of any asset resulting from a revaluation thereof.
"TARGET" has the meaning ascribed to it in Section 6.1.
"TAXES" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or any
political subdivision thereof.
"TERM LOAN" shall have the meaning set forth in Section 1.1(a) of the
Canadian Loan Agreement.
"TERMINATION DATE" means the date on which (a) the Loans have been
indefeasibly repaid in full, (b) all other Obligations under the Agreement and
the other Loan Documents have been completely discharged (c) all Letter of
Credit Obligations have been cash collateralized, canceled or backed by standby
letters of credit in accordance with Annex B, and (d) none of Borrowers shall
have any further right to borrow any monies under the Agreement.
"TITLE IV PLAN" means a Pension Plan (other than a Multiemployer Plan),
that is subject to Title IV of ERISA or Section 412 of the IRC, and that any
Credit Party or ERISA Affiliate maintains, contributes to or has an obligation
to contribute to on behalf of participants who are or were employed by any of
them.
Annex A-31
"TRADEMARK LICENSE" means rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"TRADEMARK SECURITY AGREEMENTS" means the Trademark Security Agreements
made in favor of Agent, on behalf of Lenders, by each applicable Credit Party,
as amended, modified or supplemented from time to time.
"TRADEMARKS" means all of the following now owned or hereafter existing
or adopted or acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"TRADING WITH THE ENEMY ACT" shall mean the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) and any enabling legislation or executive order relating
thereto.
"UNFUNDED PENSION LIABILITY" means, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of 5 years following a transaction
which might reasonably be expected to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by any Credit Party
or any ERISA Affiliate as a result of such transaction.
"UNIFORM COMMERCIAL CODE JURISDICTION" means any jurisdiction that had
adopted all or substantially all of article 9 as contained in the 2000 Official
Text of the Uniform Commercial Code, as recommended by the National Conference
of Commissioners on Uniform State Laws and the American Law Institute, together
with any subsequent amendments or modification to the Official Text.
"WELFARE PLAN" means a Plan described in Section 3(i) of ERISA.
Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code as in
effect in the State of New York to the extent the same are used or defined
therein. Unless otherwise specified, references in the Agreement or any of the
Appendices to a Section, subsection or clause refer to such Section, subsection
or clause as contained in the Agreement. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole,
including all Annexes, Exhibits and Schedules, as the same may from time to time
be amended, restated, modified or supplemented, and not to any particular
section, subsection or clause contained in the Agreement or any such Annex,
Exhibit or Schedule.
Annex A-32
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness of
a particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.
Annex A-33
ANNEX B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) ISSUANCE. Subject to the terms and conditions of the
Agreement, Agent and Lenders agree to incur, from time to time prior to the
Commitment Termination Date, upon the request of Borrower Representative on
behalf of the applicable Borrower and for such Borrower's account, Letter of
Credit Obligations by causing Letters of Credit to be issued by GE Capital or a
Subsidiary thereof or a bank or other legally authorized Person selected by
Agent or by Borrower Representative and acceptable to Agent in its sole
discretion (each, an "L/C Issuer") for such Borrower's account and guaranteed by
Agent; provided, that if the L/C Issuer is a Lender, then such Letters of Credit
shall not be guaranteed by Agent but rather each Lender shall, subject to the
terms and conditions hereinafter set forth, purchase (or be deemed to have
purchased) risk participations in all such Letters of Credit issued with the
written consent of Agent, as more fully described in paragraph (b)(ii) below.
The aggregate amount of all such Letter of Credit Obligations shall not at any
time exceed Twenty Five Million Dollars ($25,000,000) (the "L/C Sublimit") and
(ii) the Maximum Amount less the aggregate outstanding principal balance of the
Revolving Credit Advances, and (iii) the Aggregate Borrowing Base (adjusted as
if no Letters of Credit are outstanding) less the aggregate outstanding
principal balance of the Revolving Credit Advances. Furthermore, the aggregate
amount of any Letter of Credit Obligations incurred on behalf of any Borrower
shall not at any time exceed such Borrower's separate Borrowing Base less the
aggregate principal balance of the Revolving Credit Advances to such Borrower.
No such Letter of Credit shall have an expiry date that is more than one year
following the date of issuance thereof, unless otherwise determined by the
Agent, in its sole discretion (including with respect to customary evergreen
provisions), and neither Agent nor Lenders shall be under any obligation to
incur Letter of Credit Obligations in respect of, or purchase risk
participations in, any Letter of Credit having an expiry date that is later than
the Commitment Termination Date.
(b) (i) ADVANCES AUTOMATIC; PARTICIPATIONS. In the event that
Agent or any Lender shall make any payment on or pursuant to any Letter of
Credit Obligation, such payment shall then be deemed automatically to constitute
a Revolving Credit Advance to the applicable Borrower under Section 1.1(a) of
the Agreement regardless of whether a Default or Event of Default has occurred
and is continuing and notwithstanding any Borrower's failure to satisfy the
conditions precedent set forth in Section 2, and each Lender shall be obligated
to pay its Pro Rata Share thereof in accordance with the Agreement. The failure
of any Lender to make available to Agent for Agent's own account its Pro Rata
Share of any such Revolving Credit Advance or payment by Agent under or in
respect of a Letter of Credit shall not relieve any other Lender of its
obligation hereunder to make available to Agent its Pro Rata Share thereof, but
no Lender shall be responsible for the failure of any other Lender to make
available such other Lender's Pro Rata Share of any such payment.
Annex B-1
(ii) If it shall be illegal or unlawful for any
Borrower to incur Revolving Credit Advances as contemplated by paragraph (b)(i)
above because of an Event of Default described in Sections 8.1(h) or (i) or
otherwise or if it shall be illegal or unlawful for any Lender to be deemed to
have assumed a ratable share of the reimbursement obligations owed to an L/C
Issuer, or if the L/C Issuer is a Lender, then (A) immediately and without
further action whatsoever, each Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation equal to such Lender's Pro Rata Share
(based on the Commitments) of the Letter of Credit Obligations in respect of all
Letters of Credit then outstanding and (B) thereafter, immediately upon issuance
of any Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation in such Lender's Pro Rata Share (based on
the Commitments) of the Letter of Credit Obligations with respect to such Letter
of Credit on the date of such issuance. Each Lender shall fund its participation
in all payments or disbursements made under the Letters of Credit in the same
manner as provided in the Agreement with respect to Revolving Credit Advances.
(c) CASH COLLATERAL.
(i) If Borrowers are required to provide cash
collateral for any Letter of Credit Obligations pursuant to the Agreement,
including Section 8.2 of the Agreement, prior to the Commitment Termination
Date, each Borrower will pay to Agent for the ratable benefit of itself and
Lenders cash or cash equivalents acceptable to Agent ("Cash Equivalents") in an
amount equal to 105% of the maximum amount then available to be drawn under each
applicable Letter of Credit outstanding for the benefit of such Borrower. Such
funds or Cash Equivalents shall be held by Agent in a cash collateral account
(the "Cash Collateral Account") maintained at a bank or financial institution
acceptable to Agent. The Cash Collateral Account shall be in the name of the
applicable Borrower and shall be pledged to, and subject to the control of,
Agent, for the benefit of Agent and Lenders, in a manner satisfactory to Agent.
Each Borrower hereby pledges and grants to Agent, on behalf of itself and
Lenders, a security interest in all such funds and Cash Equivalents held in the
Cash Collateral Account from time to time and all proceeds thereof, as security
for the payment of all amounts due in respect of the Letter of Credit
Obligations and other Obligations, whether or not then due. The Agreement,
including this Annex B, shall constitute a security agreement under applicable
law.
(ii) If any Letter of Credit Obligations, whether or
not then due and payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrowers shall either (A) provide cash collateral therefor in
the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver a
stand-by letter (or letters) of credit in guaranty of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall be of like tenor
and duration (plus thirty (30) additional days) as, and in an amount equal to
105% of, the aggregate maximum amount then available to be drawn under, the
Letters of Credit to which such outstanding Letter of Credit Obligations relate
and shall be issued by a Person, and shall be subject to such terms and
conditions, as are be satisfactory to Agent in its sole discretion.
Annex B-2
(iii) From time to time after funds are deposited in
the Cash Collateral Account by any Borrower, whether before or after the
Commitment Termination Date, Agent may apply such funds or Cash Equivalents then
held in the Cash Collateral Account to the payment of any amounts, and in such
order as Agent may elect, as shall be or shall become due and payable by such
Borrower to Agent and Lenders with respect to such Letter of Credit Obligations
of such Borrower and, upon the satisfaction in full of all Letter of Credit
Obligations of such Borrower, to any other Obligations of any Borrower then due
and payable.
(iv) No Borrower nor any Person claiming on behalf of
or through any Borrower shall have any right to withdraw any of the funds or
Cash Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrowers to Agent and Lenders in respect thereof, any funds
remaining in the Cash Collateral Account shall be applied to other Obligations
then due and owing and upon payment in full of such Obligations, any remaining
amount shall be paid to Borrowers or as otherwise required by law. Interest
earned on deposits in the Cash Collateral Account shall be for the account of
Agent.
(d) FEES AND EXPENSES. Borrowers agree to pay to Agent for the
benefit of Lenders, as compensation to such Lenders for Letter of Credit
Obligations incurred hereunder, (i) all costs and expenses incurred by Agent or
any Lender on account of such Letter of Credit Obligations, and (ii) for each
month during which any Letter of Credit Obligation shall remain outstanding, a
fee (the "LETTER OF CREDIT FEE") in an amount equal to the Applicable L/C Fee
Margin multiplied by the maximum amount available from time to time to be drawn
under the applicable Letter of Credit. Such fee shall be paid to Agent for the
benefit of the Lenders in arrears, on the first day of each month and on the
Commitment Termination Date. In addition, Borrowers shall pay to any L/C Issuer,
on demand, such fees (including all per annum fees), charges and expenses of
such L/C Issuer in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Letter of Credit or otherwise payable pursuant to
the application and related documentation under which such Letter of Credit is
issued.
(e) REQUEST FOR INCURRENCE OF LETTER OF CREDIT OBLIGATIONS.
Borrower Representative shall give Agent at least two (2) Business Days' prior
written notice requesting the incurrence of any Letter of Credit Obligation. The
notice shall be accompanied by the form of the Letter of Credit (which shall be
acceptable to the L/C Issuer) and a completed Application for Standby Letter of
Credit or Application and Agreement for Documentary Letter of Credit or
Application for Documentary Letter of Credit, as applicable, in the form of
Exhibit B-1, or B-2 or B-3 attached hereto. Notwithstanding anything contained
herein to the contrary, Letter of Credit applications by Borrower Representative
and approvals by Agent and the L/C Issuer may be made and transmitted pursuant
to electronic codes and security measures mutually agreed upon and established
by and among Borrower Representative, Agent and the L/C Issuer.
(f) OBLIGATION ABSOLUTE. The obligation of Borrowers to
reimburse Agent and Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Lender to make payments to Agent with respect to Letters of
Credit shall be unconditional and irrevocable. Such obligations of Borrowers and
Lenders shall be paid strictly in accordance with the terms hereof under all
circumstances including the following:
Annex B-3
(i) any lack of validity or enforceability of any
Letter of Credit or the Agreement or the other Loan Documents or any other
agreement;
(ii) the existence of any claim, setoff, defense or
other right that any Borrower or any of their respective Affiliates or any
Lender may at any time have against a beneficiary or any transferee of any
Letter of Credit (or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection with the
Agreement, the Letter of Credit, the transactions contemplated herein or therein
or any unrelated transaction (including any underlying transaction between any
Borrower or any of their respective Affiliates and the beneficiary for which the
Letter of Credit was procured);
(iii) any draft, demand, certificate or any other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly
provided in paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of
Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of such Letter
of Credit or such guaranty;
(v) any other circumstance or event whatsoever, that
is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default
has occurred and is continuing.
(g) INDEMNIFICATION; NATURE OF LENDERS' DUTIES.
(i) In addition to amounts payable as elsewhere
provided in the Agreement, Borrowers hereby agree to pay and to protect,
indemnify, and save harmless Agent and each Lender from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and allocated costs of internal counsel)
that Agent or any Lender may incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any Letter of Credit or guaranty thereof, or
(B) the failure of Agent or any Lender seeking indemnification or of any L/C
Issuer to honor a demand for payment under any Letter of Credit or guaranty
thereof as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental Authority, in
each case other than to the extent solely as a result of the gross negligence or
willful misconduct of Agent or such Lender (as finally determined by a court of
competent jurisdiction).
(ii) As between Agent and any Lender and Borrowers,
Borrowers assume all risks of the acts and omissions of, or misuse of any Letter
of Credit by beneficiaries, of any Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law, neither
Agent nor any Lender shall be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document issued by any
Annex B-4
party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any reason;
(C) failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to demand payment under such Letter of Credit;
provided, that in the case of any payment by Agent under any Letter of Credit or
guaranty thereof, Agent shall be liable to the extent such payment was made
solely as a result of its gross negligence or willful misconduct (as finally
determined by a court of competent jurisdiction) in determining that the demand
for payment under such Letter of Credit or guaranty thereof complies on its face
with any applicable requirements for a demand for payment under such Letter of
Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they may be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise of any
document required in order to make a payment under any Letter of Credit or
guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of
any drawing under any Letter of Credit or guaranty thereof; and (H) any
consequences arising from causes beyond the control of Agent or any Lender. None
of the above shall affect, impair, or prevent the vesting of any of Agent's or
any Lender's rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to
limit or to expand any waivers, covenants or indemnities made by Borrowers in
favor of any L/C Issuer in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between or among
Borrowers and such L/C Issuer, including an Application and Agreement For
Documentary Letter of Credit, a Master Documentary Agreement and a Master
Standby Agreement entered into with Agent.
Annex B-5
ANNEX C (SECTION 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Each Borrower shall, and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the Termination Date,
each Borrower shall (i) establish lock boxes ("Lock Boxes") or at Agent's
discretion, blocked accounts ("Blocked Accounts") at one or more of the banks
set forth in Disclosure Schedule (3.19), and shall request in writing and
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, and (ii) deposit and cause its Subsidiaries
to deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a Lock
Box) into one or more Blocked Accounts in such Borrower's name or any such
Subsidiary's name and at a bank identified in Disclosure Schedule (3.19) (each,
a "Relationship Bank"). On or before the Closing Date, Borrower Representative
shall have established a concentration account in its name (a "Concentration
Account") at the bank that shall be designated as the Concentration Account bank
in Disclosure Schedule (3.19) (a "Concentration Account Bank"), which bank shall
be reasonably satisfactory to Agent.
(b) Each Borrower may maintain, in its name, one or more accounts
(each a "Disbursement Account" and collectively, the "Disbursement Accounts") at
a bank reasonably acceptable to Agent into which Agent shall, from time to time,
deposit proceeds of Revolving Credit Advances made to such Borrower pursuant to
Section 1.1 for use by such Borrower solely in accordance with the provisions of
Section 1.4.
(c) On or before the Closing Date (or such later date as Agent
shall consent to in writing), Concentration Account Bank, each bank where a
Disbursement Account is maintained and all other Relationship Banks, shall have
entered into tri-party blocked account agreements with Agent, for the benefit of
itself and Lenders, and the applicable Borrower and Subsidiaries thereof, as
applicable, in form and substance reasonably acceptable to Agent, which shall
become operative on or prior to the Closing Date. Each such blocked account
agreement shall provide, among other things, that (i) all items of payment
deposited in such account and proceeds thereof deposited in the Concentration
Account are held by such bank as agent or bailee-in-possession for Agent, on
behalf of itself and Lenders, (ii) the bank executing such agreement has no
rights of setoff or recoupment or any other claim against such account, as the
case may be, other than for payment of its service fees and other charges
directly related to the administration of such account and for returned checks
or other items of payment, and (iii) upon written notice from Agent (A) with
respect to banks at which a Blocked Account is maintained, such bank agrees to
forward immediately all amounts in each Blocked Account to the Concentration
Account Bank and to commence the process of daily sweeps from such Blocked
Account into the Concentration Account and (B) with respect to Concentration
Account Bank, such bank agrees to immediately forward all amounts received in
the Concentration Account to the Collection Account through daily sweeps from
Annex C-1
such Concentration Account into the Collection Account. No Borrower shall, or
shall cause or permit any Subsidiary thereof to, accumulate or maintain cash in
Disbursement Accounts or payroll accounts as of any date of determination in
excess of checks outstanding against such accounts as of that date and amounts
necessary to meet minimum balance requirements.
(d) So long as no Default or Event of Default has occurred and is
continuing, Borrowers may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace the Concentration
Account or any Disbursement Account; provided, that (i) Agent shall have
consented in writing in advance to the opening of such account or Lock Box with
the relevant bank and (ii) prior to the time of the opening of such account or
Lock Box, the applicable Borrower or its Subsidiaries, as applicable, and such
bank shall have executed and delivered to Agent a tri-party blocked account
agreement, in form and substance reasonably satisfactory to Agent; provided,
further, that Borrowers shall obtain the necessary tri-party blocked account
agreement(s) required pursuant to clause (ii) above with respect to each such
account. Borrowers shall close any of their accounts (and establish replacement
accounts in accordance with the foregoing sentence) promptly and in any event
within thirty (30) days following notice from Agent that the creditworthiness of
any bank holding an account is no longer acceptable in Agent's reasonable
judgment, or as promptly as practicable and in any event within sixty (60) days
following notice from Agent that the operating performance, funds transfer or
availability procedures or performance with respect to accounts or Lock Boxes of
the bank holding such accounts or Agent's liability under any tri-party blocked
account agreement with such bank is no longer acceptable in Agent's reasonable
judgment.
(e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and
the Concentration Account shall be cash collateral accounts, with all cash,
checks and other similar items of payment in such accounts securing payment of
the Loans and all other Obligations, and in which each Borrower and each
Subsidiary thereof shall have granted a Lien to Agent, on behalf of itself and
Lenders, pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall be
deemed received by Agent in accordance with Section 1.10 and shall be applied
(and allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
(g) Each Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with such
Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
received by such Borrower or any such Related Person, and (ii) within one (1)
Business Day after receipt by such Borrower or any such Related Person of any
checks, cash or other items of payment, deposit the same into a Blocked Account
of such Borrower. Each Borrower on behalf of itself and each Related Person
thereof acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral are part of the Collateral. All proceeds of
the sale or other disposition of any Collateral, shall be deposited directly
into the applicable Blocked Accounts.
Annex C-2
ANNEX D (SECTION 2.1(A))
TO
CREDIT AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions described in
Section 2.1 of the Agreement, pursuant to Section 2.1(a), the following items
must be received by Agent in form and substance satisfactory to Agent on or
prior to the Closing Date (each capitalized term used but not otherwise defined
herein shall have the meaning ascribed thereto in Annex A to the Agreement):
A. APPENDICES. All Appendices to the Agreement, in form and
substance satisfactory to Agent.
B. NOTES. Duly executed originals of the Notes for each
applicable Lender, dated the Closing Date.
C. BLOCKED ACCOUNT AGREEMENTS. Fully executed triparty agreements
among Agent, Borrowers and each Relationship Bank and Concentration Account
Bank, in form and substance satisfactory to Agent.
D. INSURANCE. Satisfactory evidence that the insurance policies
required by Section 5.4 are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or endorsements,
as requested by Agent, in favor of Agent, on behalf of Lenders.
E. SECURITY INTERESTS AND CODE FILINGS.
(a) Evidence satisfactory to Agent that Agent (for the benefit
of itself and Lenders) has a valid and perfected first priority security
interest in the Collateral other than Equipment subject to Capital Leases and
set forth on Disclosure Schedule E, including (i) such documents duly executed
by each Credit Party (including financing statements under the Code and other
applicable documents under the laws of any jurisdiction with respect to the
perfection of Liens) as Agent may request in order to perfect its security
interests in the Collateral and (ii) copies of Code search reports listing all
effective financing statements that name any Credit Party as debtor, together
with copies of such financing statements, none of which shall cover the
Collateral.
(b) Evidence satisfactory to Agent, including copies, of all
UCC-1 and other financing statements filed in favor of any Credit Party with
respect to each location, if any, at which Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated
securities and financial assets held by each Borrower, (ii) all securities
intermediaries with respect to all securities accounts and securities
entitlements of each Borrower, and (iii) all futures commission agents and
clearing houses with respect to all commodities contracts and commodities
accounts held by any Borrower.
Annex D-1
F. BORROWING BASE CERTIFICATE. Duly executed originals of
Borrowing Base Certificate from each Borrower, dated the Closing Date,
reflecting information concerning Eligible Accounts, Eligible Inventory,
Eligible Equipment and Eligible Real Estate of such Borrower as of a date not
more than 7 days prior to the Closing Date.
G. NOTICE OF REVOLVING CREDIT ADVANCE. Duly executed originals of
a Notice of Revolving Credit Advance, dated the Closing Date, with respect to
the Revolving Credit Advance to be requested by Borrower Representative on the
Closing Date.
H. LETTER OF DIRECTION. Duly executed originals of a letter of
direction from Borrower Representative addressed to Agent, on behalf of itself
and Lenders, with respect to the disbursement on the Closing Date of the
proceeds of the Revolving Credit Advance to be made on the Closing Date.
I. CHARTER AND GOOD STANDING. For each Credit Party, such
Person's (a) charter and all amendments thereto, (b) good standing certificates
(including verification of tax status) in its state of incorporation and (c)
good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Closing Date and certified
by the applicable Secretary of State or other authorized Governmental Authority.
J. BYLAWS AND RESOLUTIONS. For each Credit Party, (a) such
Person's bylaws, together with all amendments thereto and (b) resolutions of
such Person's Board of Directors and stockholders, approving and authorizing the
execution, delivery and performance of the Loan Documents to which such Person
is a party and the transactions to be consummated in connection therewith, each
certified as of the Closing Date by such Person's corporate secretary or an
assistant secretary as being in full force and effect without any modification
or amendment.
K. INCUMBENCY CERTIFICATES. For each Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.\
L. Opinion of Counsel. Duly executed original opinion of ▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel for the Credit Parties dated the Closing Date, in
form and substance satisfactory to Agent and its counsel.
M. WAIVERS. Agent, on behalf of Lenders, shall have received
landlord waivers and consents and mortgagee agreements in form and substance
reasonably satisfactory to Agent, in each case as required pursuant to Section
5.9.
Annex D-2
N. MORTGAGES. Mortgage Modifications covering all of the Real
Estate with the exception of the facilities of the Credit Parties located in
Long Island City, New York (the "Mortgaged Properties") together with: (a)
evidence that counterparts of the Mortgage Modifications have been recorded in
all places to the extent necessary or desirable, in the judgment of Agent, to
create a valid and enforceable first priority lien (subject to Permitted
Encumbrances) on each Mortgaged Property in favor of Agent for the benefit of
itself and Lenders (or in favor of such other trustee as may be required or
desired under local law); and (b) an opinion of counsel in each state in which
any Mortgaged Property is located in form and substance and from counsel
reasonably satisfactory to Agent.
O. SUBORDINATION AND INTERCREDITOR AGREEMENTS. Agent and Lenders
shall have received any and all subordination and/or intercreditor agreements,
all in form and substance reasonably satisfactory to Agent, in its sole
discretion, as Agent shall have deemed necessary or appropriate with respect to
any Indebtedness of any Credit Party.
P. AUDITED FINANCIALS; FINANCIAL CONDITION. Agent shall have
received the Financial Statements, Projections and other materials set forth in
Section 3.4, certified by Borrower Representative's chief financial officer or
treasurer, in each case in form and substance reasonably satisfactory to Agent,
and Agent shall be satisfied, in its sole discretion, with all of the foregoing.
Agent shall have further received a certificate of the chief executive officer
and the chief financial officer or treasurer of each Borrower, based on such
Projections, to the effect that (a) such Borrower will be Solvent upon the
consummation of the transactions contemplated herein; (b) the Projections are
based upon estimates and assumptions stated therein, all of which such Borrower
believes to be reasonable and fair in light of current conditions and current
facts known to such Borrower and, as of the Closing Date, reflect such
Borrower's good faith and reasonable estimates of its future financial
performance and of the other information projected therein for the period set
forth therein; and (c) containing such other statements with respect to the
solvency of such Borrower and matters related thereto as Agent shall request.
Q. OTHER DOCUMENTS. Such other certificates, documents and
agreements respecting any Credit Party as Agent may reasonably request.
Annex D-3
ANNEX E (SECTION 4.1(A))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS--REPORTING
Borrowers shall deliver or cause to be delivered to Agent or to Agent
and Lenders, as indicated, the following:
(a) MONTHLY FINANCIALS. To Agent and Lenders, within thirty (30)
days after the end of each Fiscal Month (other than January), financial
information regarding Borrowers and their Subsidiaries, certified by the chief
financial officer or treasurer of Borrower Representative, consisting of
consolidated and consolidating (i) unaudited balance sheets as of the close of
such Fiscal Month and the related statements of income and cash flows for that
portion of the Fiscal Year ending as of the close of such Fiscal Month; (ii)
unaudited statements of income and cash flows for such Fiscal Month, setting
forth in comparative form the figures for the corresponding period in the prior
year and the figures contained in the Projections for such Fiscal Year, all
prepared (other than the Projections) in accordance with GAAP (subject to normal
year-end adjustments); (iii) a summary of the outstanding balance of all
Intercompany Notes as of the last day of that Fiscal Month; and (iv) a summary
of the total Net Sales as of the last day of that Fiscal Month for such Fiscal
Month and for the Fiscal Year to date. Such financial information shall be
accompanied by the certification of the chief financial officer or treasurer of
Borrower Representative that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the financial
position and results of operations of Borrowers and their Subsidiaries, on a
consolidated and consolidating basis, in each case as at the end of such Fiscal
Month and for that portion of the Fiscal Year then ended and (ii) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of
Default.
(b) QUARTERLY FINANCIALS. To Agent and Lenders, within forty-five
(45) days after the end of each Fiscal Quarter, consolidated and consolidating
financial information regarding Borrowers and their Subsidiaries, certified by
the chief financial officer or treasurer of Borrower Representative, including
(i) unaudited balance sheets as of the close of such Fiscal Quarter and the
related statements of income and cash flow for that portion of the Fiscal Year
ending as of the close of such Fiscal Quarter and (ii) unaudited statements of
income and cash flows for such Fiscal Quarter, in each case setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all prepared
(other than the Projections) in accordance with GAAP (subject to normal year-end
adjustments). Such financial information shall be accompanied by (A) a statement
in reasonable detail (each, a "Compliance Certificate" showing the calculations
used in determining compliance with each of the Financial Covenants that is
tested on a quarterly basis and (B) the certification of the chief financial
officer or treasurer of Borrower Representative that (i) such financial
information presents fairly in accordance with GAAP (subject to normal year-end
Annex E-1
adjustments) the financial position, results of operations and statements of
cash flows of Borrowers and their Subsidiaries, on both a consolidated and
consolidating basis, as at the end of such Fiscal Quarter and for that portion
of the Fiscal Year then ended and (ii) any other information presented is true,
correct and complete in all material respects and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default. In addition,
Borrowers shall deliver to Agent and Lenders, within forty-five (45) days after
the end of each Fiscal Quarter, a management discussion and to the extent not
otherwise set forth on SMP's Form 10Q, analysis that includes a comparison to
budget for that Fiscal Quarter and a comparison of performance for that Fiscal
Quarter to the corresponding period in the prior year.
(c) OPERATING PLAN. To Agent and Lenders, as soon as available,
but not later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan for Borrowers, on a consolidated and consolidating basis,
approved by the Board of Directors of Borrowers, for the following Fiscal Year,
which (i) includes a statement of all of the material assumptions on which such
plan is based, (ii) includes monthly balance sheets, income statements and
statements of cash flows for the following year and (iii) integrates sales,
gross profits, operating expenses, operating profit, cash flow projections and
Borrowing Availability projections, all prepared on the same basis and in
similar detail as that on which operating results are reported (and in the case
of cash flow projections, representing management's good faith estimates of
future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities.
(d) ANNUAL AUDITED FINANCIALS. To Agent and Lenders, within ninety
(90) days after the end of each Fiscal Year, audited Financial Statements for
Borrowers and their Subsidiaries on a consolidated and (unaudited) consolidating
basis, consisting of balance sheets and statements of income and retained
earnings and cash flows, setting forth in comparative form in each case the
figures for the previous Fiscal Year, which Financial Statements shall be
prepared in accordance with GAAP and certified without qualification, by an
independent certified public accounting firm of national standing or otherwise
acceptable to Agent. Such Financial Statements shall be accompanied by (i) a
statement prepared in reasonable detail showing the calculations used in
determining compliance with each of the Financial Covenants, (ii) a report from
such accounting firm to the effect that, in connection with their audit
examination, nothing has come to their attention to cause them to believe that a
Default or Event of Default has occurred (or specifying those Defaults and
Events of Default that they became aware of), it being understood that such
audit examination extended only to accounting matters and that no special
investigation was made with respect to the existence of Defaults or Events of
Default, (iii) the annual letters to such accountants in connection with their
audit examination detailing contingent liabilities and material litigation
matters, and (iv) the certification of the chief executive officer or chief
financial officer or treasurer of Borrowers that all such Financial Statements
present fairly in accordance with GAAP the financial position, results of
operations and statements of cash flows of Borrowers and their Subsidiaries on a
consolidated and consolidating basis, as at the end of such Fiscal Year and for
the period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default has occurred and
is continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default.
Annex E-2
(e) MANAGEMENT LETTERS. To Agent and Lenders, within five (5)
Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants.
(f) DEFAULT NOTICES. To Agent and Lenders, as soon as practicable,
and in any event within five (5) Business Days after an executive officer of any
Borrower has actual knowledge of the existence of any Default, Event of Default
or other event that has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day.
(g) SEC FILINGS AND PRESS RELEASES. To Agent and Lenders, promptly
upon their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; including but not limited to all
Form 8-Ks, quarterly 10-Q's and annual 10-K statements and (iii) all press
releases and other statements made available by any Credit Party to the public
concerning material changes or developments in the business of any such Person.
(h) SUBORDINATED DEBT AND EQUITY NOTICES. To Agent, as soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and,
within two (2) Business Days after any Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any Subordinated Debt,
notice of such event of default.
(i) SUPPLEMENTAL SCHEDULES. To Agent, supplemental disclosures, if
any, required by Section 5.6.
(j) LITIGATION. To Agent in writing, promptly upon learning
thereof, notice of any Litigation commenced or threatened against any Credit
Party that (i) seeks damages in excess of $250,000, (ii) seeks injunctive
relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its
assets or against any Credit Party or ERISA Affiliate in connection with any
Plan which would reasonably be expected to result in a liability to any Credit
Party in excess of $250,000, (iv) alleges criminal misconduct by any Credit
Party, (v) alleges the violation of any law regarding, or seeks remedies in
connection with, any Environmental Liabilities or (vi) involves any product
recall. To the Agent, at the end of each month, a report of all Asbestos Claims
commenced or disposed of during such month.
(k) INSURANCE NOTICES. To Agent, disclosure of losses or casualties
required by Section 5.4.
(l) LEASE DEFAULT NOTICES. To Agent, within 2 Business Days after
receipt thereof, copies of (i) any and all default notices received under or
with respect to any leased location or public warehouse where Collateral is
located, and (ii) such other notices or documents as Agent may reasonably
request with respect to such leased locations or public warehouses.
Annex E-3
(m) LEASE AMENDMENTS. To Agent, within two (2) Business Days after
receipt thereof, copies of all material amendments to real estate leases specify
leases of particular concern.
(n) RATE PROTECTION AGREEMENTS. To Agent, notice of intention to
enter into any Rate Protection Agreement, together with form of proposed Rate
Protection Agreement.
(o) OTHER DOCUMENTS. To Agent and Lenders, such other financial
and other information respecting any Credit Party's business or financial
condition as Agent or any Lender shall from time to time reasonably request.
Annex E-4
ANNEX F (SECTION 4.1(B))
TO
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered the following:
(a) To Agent, upon its request, and in any event no less
frequently than ten (10) Business Days after the end of each Fiscal Month
(together with a copy of all or any part of the following reports requested by
any Lender in writing after the Closing Date), each of the following reports,
each of which shall be prepared by the applicable Borrower as of the last day of
the immediately preceding Fiscal Month or the date two (2) days prior to the
date of any such request:
(i) a Borrowing Base Certificate with respect to each
Borrower, in each case accompanied by such supporting detail and documentation
as shall be requested by Agent in its reasonable discretion;
(ii) with respect to each Borrower, a summary of Inventory by
location and type with a supporting perpetual Inventory report, in each case
accompanied by such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion; and
(iii) with respect to each Borrower, a monthly trial balance
showing Accounts outstanding aged from invoice date as follows: 1 to 30 days, 31
to 60 days, 61 to 90 days, 91 days to 180 days and 181 days or more, accompanied
by such supporting detail and documentation as shall be requested by Agent in
its reasonable discretion.
(b) To Agent, on a weekly basis or at such more frequent intervals
as Agent may request from time to time, including, at Agent's option, on a daily
basis if average daily Borrowing Availability for all Borrowers for any 90 day
period is less than $16,000,000 (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), collateral
reports with respect to each Borrower, including all additions and reductions
(cash and non-cash) with respect to Accounts of such Borrower, in each case
accompanied by such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion each of which shall be prepared by the
applicable Borrower as of the last day of the immediately preceding week or the
date two (2) days prior to the date of any such request;
(c) To Agent, at the time of delivery of each of the monthly
Financial Statements delivered pursuant to Annex E:
(i) a reconciliation of the Accounts trial balance of each
Borrower to such Borrower's most recent Borrowing Base Certificate, general
ledger and monthly Financial Statements delivered pursuant to Annex E, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
Annex F-1
(ii) a reconciliation of the perpetual inventory by location
of each Borrower to such Borrower's most recent Borrowing Base Certificate,
general ledger and monthly Financial Statements delivered pursuant to Annex E,
in each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(iii) an aging of accounts payable and a reconciliation of
that accounts payable aging to each Borrower's general ledger and monthly
Financial Statements delivered pursuant to Annex E, in each case accompanied by
such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
(iv) a reconciliation of the outstanding Loans as set forth in
the monthly Loan Account statement provided by Agent to each Borrower's general
ledger and monthly Financial Statements delivered pursuant to Annex E, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(d) To Agent, at the time of delivery of each of the quarterly or
annual Financial Statements delivered pursuant to Annex E, (i) a listing of
government contracts of each Borrower subject to the Federal Assignment of
Claims Act of 1940; and (ii) a list of any applications for the registration of
any Patent, Trademark or Copyright filed by any Credit Party with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in the prior Fiscal Quarter;
(e) Each Borrower, at its own expense, shall deliver to Agent the
results of each physical verification, if any, that such Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person to
have made on their behalf, of all or any portion of their Inventory (and, if a
Default or an Event of Default has occurred and is continuing, each Borrower
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require);
(f) Each Borrower, at its own expense, shall deliver to Agent such
appraisals of its assets as Agent may request, no more frequently than once a
year and at any time after the occurrence and during the continuance of a
Default or an Event of Default, such appraisals to be conducted by an appraiser,
and in form and substance reasonably satisfactory to Agent; and
(g) Such other reports, statements and reconciliations with
respect to the Borrowing Base, Collateral or Obligations of any or all Credit
Parties as Agent shall from time to time request in its reasonable discretion,
including, without limitation, an annual actuarial study performed by an actuary
acceptable to Agent.
Annex F-2
ANNEX G (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
1. Any time Borrowers' Borrowing Availability is less than
$30,000,000, Borrowers shall not breach or fail to comply with any of the
following financial covenants, with the Minimum Fixed Charge Coverage Ratio to
be measured commencing with the Fiscal Quarter immediately preceding the Fiscal
Quarter in which the foregoing Borrowing Availability threshold is violated and
with each such financial covenant being calculated in accordance with GAAP
consistently applied:
(a) MINIMUM FIXED CHARGE COVER RATIO. Borrowers and their
Subsidiaries on a consolidated basis shall have, at the end of each Fiscal
Quarter, a Fixed Charge Coverage Ratio for the 12-month period then ended of not
less than 1.10 to 1.00.
(b) MAXIMUM CAPITAL EXPENDITURES. Borrowers and their
Subsidiaries on a consolidated basis shall not make Capital Expenditures during
any Fiscal Year set forth below in excess of the amount set forth below;
provided, however, that twenty-five percent (25%) of the unused portion of such
sum may be carried over and expended in any subsequent Fiscal Year.
Fiscal Year Maximum Capital Expenditure
2007 $18,000,000
2008 $18,000,000
2009 $18,000,000
2010 $18,000,000
2011 $18,000,000
2012 $18,000,000
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrowers, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrowers' and their Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Annex G-1
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by any Borrower's certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (iv) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrowers and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrowers and Requisite
Lenders cannot agree upon the required amendments within thirty (30) days
following the date of implementation of any Accounting Change, then all
Financial Statements delivered and all calculations of financial covenants and
other standards and terms in accordance with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change. For purposes of Section 8.1, a breach of a Financial Covenant
contained in this Annex G shall be deemed to have occurred as of any date of
determination by Agent or as of the last day of any specified measurement
period, regardless of when the Financial Statements reflecting such breach are
delivered to Agent.
Annex G-2
ANNEX H (SECTION 9.9(A))
TO
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: DeutscheBank Trust Company Americas
New York, New York
ABA #: ▇▇▇▇▇▇▇▇▇
Account #: ▇▇▇▇▇▇▇▇
Account Name: GECC/CAF Depository
Reference: CFN 4451
Annex H-1
Annex I - 2
ANNEX I (SECTION 11.10)
TO
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Manager - Standard Motor Products, Inc.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇ & Hessen LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
General Electric Capital Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Counsel - Commercial Finance
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to any Borrower, to Borrower Representative, at
Standard Motor Products, Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Annex I-1
with copies to:
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Annex I-2
ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
TO
CREDIT AGREEMENT
---------------------------------------- ---------------------------------------
Commitments Lenders
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
$86,614,457.83 GE Capital Corporation
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
$43,783,132.53 Bank of America, N.A.
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
$39,024,096.39 Wachovia Bank, National Association
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
$25,698,795.18 JPMorgan Chase Bank, N.A.
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
$18,084,337.35 HSBC Bank USA, National Association
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
$23,795,180.72 ▇▇▇▇▇ Fargo Foothill, LLC
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
$26,000,000.00 ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital
---------------------------------------- ---------------------------------------
Annex J-1
