EXHIBIT 10(xciv)
================================================================================
$140,000,000
CREDIT AGREEMENT
Dated as of December 17, 2002
among
XXXXXXXX BEACH/XXXXXXX-SILEX, INC.,
and
Certain of its Subsidiaries,
as Borrowers,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 14.3 HEREOF,
as Lenders,
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
ABN AMRO BANK N.V., CANADA BRANCH,
as Canadian Agent,
KEY BANK, NATIONAL ASSOCIATION, as Syndication Agent,
FLEET CAPITAL CORPORATION, as Documentation Agent,
LASALLE BUSINESS CREDIT, INC., as Documentation Agent,
and
NATIONAL CITY COMMERCIAL FINANCE, INC., as Documentation Agent
================================================================================
WACHOVIA SECURITIES, INC.,
AS SOLE LEAD ARRANGER, MANAGER AND BOOK RUNNER
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS................................................ 1
1.1 General Definitions............................................................ 1
1.2 Accounting Terms............................................................... 35
1.3 Other Definitional Provisions.................................................. 36
1.4 Dollar Equivalent Provisions................................................... 36
ARTICLE II THE LOANS....................................................................... 36
2.1 The U.S. Revolving Loans....................................................... 36
2.2 Letter of Credit Subfacility................................................... 37
2.3 The Canadian Revolving Loans................................................... 42
2.4 Facility Reallocation Increase................................................. 43
2.5 Bankers' Acceptances........................................................... 44
2.6 Minimum Amounts of Loans....................................................... 47
2.7 Funding of Loans to Borrowers.................................................. 48
2.8 Term........................................................................... 53
2.9 Revolving Notes................................................................ 53
2.10 Reduction of Revolving Loan Commitments........................................ 53
ARTICLE III CASH MANAGEMENT ARRANGEMENTS.................................................... 53
3.1 U.S. Lockbox Arrangements...................................................... 53
3.2 Canadian Collection and Payment Arrangements................................... 55
3.3 Maintenance of Account......................................................... 56
3.4 Statement of Account........................................................... 56
ARTICLE IV ADDITIONAL PROVISIONS REGARDING LOANS AND LETTERS OF CREDIT..................... 57
4.1 Continuations and Conversions.................................................. 57
4.2 Interest....................................................................... 58
4.3 Place and Manner of Payments................................................... 59
4.4 Prepayments.................................................................... 60
4.5 Fees........................................................................... 61
4.6 Pro Rata Treatment............................................................. 62
4.7 Allocation of Payments After Event of Default.................................. 63
4.8 Sharing of Payments............................................................ 64
4.9 Capital Adequacy............................................................... 65
4.10 Inability To Determine Interest Rate or Create Bankers' Acceptances............ 66
4.11 Illegality..................................................................... 67
4.12 Requirements of Law............................................................ 67
4.13 Taxes.......................................................................... 68
4.14 Compensation................................................................... 71
4.15 Certain Limitations............................................................ 72
ARTICLE V CONDITIONS PRECEDENT............................................................ 73
5.1 Closing Conditions............................................................. 73
5.2 Conditions to All Extensions of Credit......................................... 78
ARTICLE VI REPRESENTATIONS AND WARRANTIES.................................................. 78
6.1 Organization and Good Standing................................................. 78
6.2 Due Authorization.............................................................. 79
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6.3 No Conflicts................................................................... 79
6.4 Consents....................................................................... 79
6.5 Enforceable Obligations........................................................ 79
6.6 Financial Data; Material Adverse Change........................................ 80
6.7 No Default..................................................................... 80
6.8 Liens.......................................................................... 80
6.9 Indebtedness................................................................... 81
6.10 Litigation..................................................................... 81
6.11 Material Contracts............................................................. 81
6.12 Taxes.......................................................................... 81
6.13 Compliance with Law............................................................ 81
6.14 ERISA.......................................................................... 82
6.15 Subsidiaries................................................................... 84
6.16 Ownership...................................................................... 84
6.17 Use of Proceeds; Margin Stock.................................................. 84
6.18 Government Regulation.......................................................... 85
6.19 Hazardous Substances........................................................... 85
6.20 Intellectual Property.......................................................... 85
6.21 Solvency....................................................................... 85
6.22 Location of Assets............................................................. 86
6.23 D/B/A or Trade Names........................................................... 86
6.24 Trade Suppliers................................................................ 86
6.25 No Employee Disputes........................................................... 86
6.26 Brokers' Fees.................................................................. 86
6.27 Labor Matters.................................................................. 87
6.28 Status of Accounts............................................................. 87
6.29 Key Members of Management...................................................... 87
6.30 Accuracy and Completeness of Information....................................... 87
6.31 Altoona........................................................................ 88
ARTICLE VII AFFIRMATIVE COVENANTS........................................................... 88
7.1 Information Covenants.......................................................... 88
7.2 Preservation of Existence and Franchises....................................... 91
7.3 Books and Records.............................................................. 91
7.4 Compliance with Law............................................................ 91
7.5 Payment of Taxes and Other Indebtedness........................................ 92
7.6 Insurance; Casualty Loss....................................................... 92
7.7 Maintenance of Property........................................................ 93
7.8 Mexican Receivables............................................................ 93
7.9 ERISA.......................................................................... 94
7.10 Use of Proceeds................................................................ 95
7.11 Additional Subsidiaries........................................................ 95
7.12 Audits/Inspections............................................................. 96
7.13 Inventory...................................................................... 96
7.14 Collateral Records............................................................. 97
7.15 Security Interests............................................................. 97
7.16 Schedules of Accounts and Purchase Orders...................................... 98
7.17 Collection of Accounts......................................................... 98
7.18 Notice; Credit Memoranda; and Returned Goods................................... 99
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7.19 Acknowledgment Agreements...................................................... 99
7.20 Trademarks..................................................................... 99
7.21 Revisions or Updates to Schedules.............................................. 99
ARTICLE VIII FINANCIAL COVENANTS............................................................. 100
8.1 Leverage Ratio................................................................. 100
8.2 Fixed Charge Coverage Ratio.................................................... 100
8.3 Capital Expenditures........................................................... 100
ARTICLE IX NEGATIVE COVENANTS.............................................................. 100
9.1 Indebtedness................................................................... 100
9.2 Liens.......................................................................... 102
9.3 Nature of Business............................................................. 102
9.4 Consolidation or Merger........................................................ 102
9.5 Disposition of Assets.......................................................... 102
9.6 [Reserved]..................................................................... 103
9.7 Transactions with Affiliates................................................... 103
9.8 Ownership of Subsidiaries...................................................... 104
9.9 Fiscal Year.................................................................... 104
9.10 Investments.................................................................... 104
9.11 Restricted Payments............................................................ 104
9.12 No Additional Bank Accounts.................................................... 105
9.13 Amendments of Material Contracts; Organizational Documents..................... 105
9.14 Additional Negative Pledges.................................................... 106
9.15 Other Indebtedness............................................................. 106
9.16 Licenses, Etc.................................................................. 106
9.17 Limitations.................................................................... 106
9.18 Issuance of Capital Stock...................................................... 107
9.19 Sale and Leaseback............................................................. 107
ARTICLE X POWERS.......................................................................... 107
10.1 Appointment of Administrative Agent as Attorney-in-Fact........................ 107
10.2 Limitation on Exercise of Power................................................ 108
10.3 Canadian Agent................................................................. 108
ARTICLE XI EVENTS OF DEFAULT AND REMEDIES.................................................. 108
11.1 Events of Default.............................................................. 108
11.2 Acceleration; Remedies......................................................... 110
11.3. Conversion and Redenomination Certain Loans; Purchase of Risk Participations... 111
ARTICLE XII TERMINATION..................................................................... 112
ARTICLE XIII THE AGENTS...................................................................... 112
13.1 Appointment.................................................................... 112
13.2 Delegation of Duties........................................................... 113
13.3 Exculpatory Provisions......................................................... 113
13.4 Reliance on Communications..................................................... 114
13.5 Notice of Default.............................................................. 114
13.6 Non-Reliance on Agents and Other Lenders....................................... 115
13.7 Indemnification................................................................ 115
13.8 Agent in its Individual Capacity............................................... 116
13.9 Successor Agent................................................................ 116
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13.10 Collateral Matters............................................................. 116
13.11 Rights and Remedies to be Exercised by Agent Only.............................. 118
13.12 Syndication Agent and Documentation Agents..................................... 118
ARTICLE XIV MISCELLANEOUS................................................................... 118
14.1 Notices........................................................................ 118
14.2 Right of Set-Off............................................................... 119
14.3 Benefit of Agreement........................................................... 119
14.4 No Waiver; Remedies Cumulative................................................. 121
14.5 Payment of Expenses; Indemnification........................................... 121
14.6 Amendments, Waivers and Consents............................................... 122
14.7 Defaulting Lender.............................................................. 123
14.8 Counterparts................................................................... 123
14.9 Headings....................................................................... 123
14.10 Survival of Indemnification and Representations and Warranties................. 123
14.11 Currency....................................................................... 124
14.12 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE............................... 124
14.13 Damages........................................................................ 124
14.14 Waiver of Jury Trial........................................................... 125
14.15 Severability................................................................... 125
14.16 Loan Entirety.................................................................. 125
14.17 Binding Effect; Further Assurances............................................. 125
14.18 Confidentiality................................................................ 125
14.19 Judgment Currency.............................................................. 126
14.20 Maximum Rate................................................................... 126
14.21 Concerning Joint and Several Liability of the U.S. Borrowers................... 127
14.22 Concerning Joint and Several Liability of the Canadian Borrowers............... 129
14.23 Nonliability of Agents and Lenders............................................. 132
14.24 Independent Nature of Lenders' Rights.......................................... 132
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Acknowledgment Agreement
Exhibit B Form of Guaranty Agreement
Exhibit C Form of Landlord Agreement
Exhibit D Form of Notice of Borrowing/Continuation/Conversion
Exhibit E [reserved]
Exhibit F Form of Revolving Credit Note
Exhibit G Form of Bankers' Acceptance Notice
Exhibit H-1 Form of U.S. Security Agreement
Exhibit H-2 Form of Canadian Security Agreement
Exhibit I-1 Form of Lockbox Letter
Exhibit I-2 Form of Blocked Account Agreement
Exhibit J Form of Borrowing Base Certificate
Exhibit K Form of Solvency Certificate
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Exhibit L Form of Compliance Certificate
Exhibit M Form of Assignment and Acceptance
Exhibit N Form of Joinder Agreement
Exhibit O Form of Pledge Agreement
Exhibit P Form of Account Designation Letter
Exhibit Q Form of Licensor Consent
Exhibit R Form of Holdings Pledge Agreement
Exhibit S Form of Subordinated Note
SCHEDULES
Schedule 1.1A Lenders and Commitments
Schedule 1.1B Eligible Trademarks
Schedule 1.1C Existing Letters of Credit
Schedule 1.1D Investments
Schedule 1.1E Liens
Schedule 5.1(m) Corporate Structure
Schedule 6.1 Jurisdictions of Organization
Schedule 6.2 Authorization
Schedule 6.9 Indebtedness
Schedule 6.10 Litigation
Schedule 6.11 Material Contracts
Schedule 6.15 Subsidiaries
Schedule 6.16 Real Estate
Schedule 6.19 Hazardous Substances
Schedule 6.20 Intellectual Property
Schedule 6.22 Collateral Locations
Schedule 6.23 Fictitious Business Names
Schedule 6.24 Trade Suppliers
Schedule 6.26 Brokers' Fees
Schedule 6.29 Key Members of Management
Schedule 6.31 Altoona Description
Schedule 7.6 Insurance
Schedule 9.12 Bank Accounts
Schedule 14.1 Addresses for Notices
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of December 17, 2002, among XXXXXXXX
BEACH/XXXXXXX-SILEX, INC., a Delaware corporation (the "Company"), its U.S. and
Canadian Subsidiaries identified as Subsidiary Borrowers on the signature pages
hereto and any additional U.S. or Canadian Subsidiaries of the Company which
become parties hereto in accordance with the terms hereof (collectively referred
to as the "Subsidiary Borrowers" or individually referred to as a "Subsidiary
Borrower") (hereinafter, the Company and the Subsidiary Borrowers are
collectively referred to as the "Borrowers" or individually referred to as a
"Borrower"), each of the financial institutions identified as Lenders on
Schedule 1.1A hereto (together with each of their successors and assigns,
referred to individually as a "Lender" and, collectively, as the "Lenders"),
WACHOVIA BANK, NATIONAL ASSOCIATION ("Wachovia"), acting in the manner and to
the extent described in Article XIII hereof (in such capacity, the
"Administrative Agent" or the "Agent"), ABN AMRO BANK N.V., CANADA BRANCH,
acting in the manner and to the extent described in Article XIII hereof (in such
capacity, the "Canadian Agent"), KEY BANK, NATIONAL ASSOCIATION, as Syndication
Agent, FLEET CAPITAL CORPORATION, as Documentation Agent, LASALLE BUSINESS
CREDIT, INC., as Documentation Agent, and NATIONAL CITY COMMERCIAL FINANCE,
INC., as Documentation Agent.
W I T N E S S E T H:
WHEREAS, the Borrowers wish to obtain a revolving credit facility to
refinance existing indebtedness of the Company and to provide for the working
capital, letter of credit, capital expenditure and general corporate needs of
the Borrowers; and
WHEREAS, upon the terms and subject to the conditions set forth herein,
the Lenders are willing to make loans, advances and other financial
accommodations to the Borrowers;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Borrowers, the Lenders, the
Administrative Agent and the Canadian Agent agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS.
1.1 GENERAL DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified:
"Acceptance Fee" means, in respect of a particular Bankers' Acceptance
accepted by a Canadian Lender, an amount equal to the product of (a) the
Applicable Percentage for Eurodollar Loans and Bankers' Acceptances as at the
date of acceptance of such Bankers' Acceptance; (b) the aggregate Face Amount of
such Bankers' Acceptance; and (c) a fraction (i) the numerator of which is the
number of days in the term of such Bankers' Acceptance, and (ii) the denominator
of which is the number of days in the then current calendar year, and shall
include, as the context requires, the interest payable on a BA Equivalent Loan..
"Account Designation Letter" means the Notice of Account Designation
Letter dated the Closing Date from the Borrowers to the Administrative Agent
substantially in the form attached hereto as Exhibit P.
"Accounting Changes" means, with respect to any Person, changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or any successor thereto or
any agency with similar functions).
"Accounts" means all of each Borrower's "accounts" (as defined in the
UCC or the PPSA, as applicable), whether now existing or existing in the future,
and shall include (whether or not otherwise included in such definitions, and
without limiting the generality thereof), all (i) accounts receivable (whether
or not specifically listed on schedules furnished to the Administrative Agent),
including, without limitation, all accounts created by or arising from all of
each Borrower's sales of goods or rendition of services made under any of each
Borrower's trade names or styles, or through any of each Borrower's divisions;
(ii) unpaid seller's rights (including rescission, replevin, reclamation and
stopping in transit) relating to the foregoing or arising therefrom, (iii)
rights to any goods represented by any of the foregoing, including returned or
repossessed goods; (iv) reserves and credit balances held by each Borrower with
respect to any such accounts receivable or account debtors; (v) guarantees or
collateral for any of the foregoing; and (vi) insurance policies or rights
relating to any of the foregoing.
"Acknowledgment Agreements" means (i) the acknowledgment agreements,
substantially in the form of Exhibit A hereto (or such other form as shall be
reasonably acceptable to the Administrative Agent), between each Credit Party's
warehousemen, fillers, packers, processors and mortgagees and the Administrative
Agent, (ii) Landlord Agreements and (iii) Licensor Consents.
"Adjusted Eurodollar Rate" means the Eurodollar Rate, plus the
Applicable Percentage.
"Adjusted Non-Seasonal Rate" means, on any date of determination, a
percentage equal to the lesser of (i) 60% and (ii) the percentage, which when
multiplied by Eligible Inventory of the Borrowers, would yield an amount equal
to the product of eighty-five percent (85%) multiplied by the Net Orderly
Liquidation Value of the finished goods Inventory of the Borrowers.
"Adjusted Seasonal Rate" means, on any date of determination, a
percentage equal to the lesser of (i) 70% and (ii) the sum of (a) 10% and (b)
the Adjusted Non-Seasonal Rate most recently in effect for the immediately
preceding period from January 1 through July 31.
"Administrative Agent" means Wachovia Bank, National Association, a
national banking association.
"Administrative Agent Fee Letter" means the letter agreement, dated as
of November 6, 2002, between the Administrative Agent and the Company, as
amended, modified and replaced from time to time.
"Affected Lender" has the meaning set forth in Section 4.15.
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"Affiliate" of any Person means any other Person directly or indirectly
controlling (including but not limited to all directors and officers of such
Person), controlled by or under direct or indirect common control with such
Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power (a) to vote ten percent (10%) or
more of the securities having ordinary voting power for the election of
directors of such corporation or (b) to direct or cause direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Agents" means the Administrative Agent and the Canadian Agent.
"Altoona" means Altoona Services, Inc., a wholly-owned subsidiary of
the Company, a Pennsylvania corporation.
"Applicable BA Discount Rate" means with respect to any Canadian Lender
that is a Schedule I Bank, as applicable to a Bankers' Acceptance being
purchased by such Lender on any day, the respective percentage discount rate per
annum for a Canadian Dollar bankers' acceptance for the term and face amount
comparable to the term and face amount of such Bankers' Acceptance that appears
on the Reuters Screen CDOR Page as of 10:00 a.m., Toronto, Ontario time, on the
date of determination as reported by the Canadian Agent; provided, however, that
(a) if the Canadian Lender is not a Schedule I Bank or (b) if on such day no
rate appears on the Reuters Screen CDOR Page as contemplated, the rate for such
day shall be the average (as calculated by the Canadian Agent) of the respective
percentage discount rates (expressed to two decimal places and rounded upward,
if necessary, to the nearest 1/100th of 1%) quoted to the Canadian Agent by each
of the five largest Schedule I Banks (each a "Schedule I Reference Bank") as the
percentage discount rate at which such Schedule I Reference Bank would, in
accordance with its normal practices, at or about 10:00 a.m., Toronto, Ontario
time, on such day, be prepared to purchase bankers' acceptances accepted by such
Schedule I Reference Bank having a term and a face amount comparable to the term
and face amount of such Bankers' Acceptance.
"Applicable Inventory Percentage" means the advance rate established
from time to time by the Administrative Agent in its reasonable discretion. The
initial Applicable Inventory Percentage on the Closing Date for Eligible
Inventory included in the U.S. Borrowing Base or the Canadian Borrowing Base
shall be (i) for the period from January 1 through July 31 in any calendar year,
the Adjusted Non-Seasonal Rate and (ii) for the period from August 1 through
December 31 in any calendar year, the Adjusted Seasonal Rate. The Applicable
Inventory Percentage shall be readjusted periodically based on each new
Inventory Appraisal. The above-mentioned advance rates may not be increased
without the consent of all the Lenders; provided, however, that the foregoing
shall not prevent the Administrative Agent from increasing the advance rates
which had been lowered by the Administrative Agent back to the levels as in
effect on the Closing Date or to intermediate levels, but in no event higher
than the rates that would be in effect if such rates were determined in
accordance with the definitions of Adjusted Non-Seasonal Rate and Adjusted
Seasonal Rate, as applicable.
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"Applicable Percentage" means for Eurodollar Loans, Base Rate Loans,
Bankers' Acceptances, Letter of Credit Fees and Unused Fees, the appropriate
applicable percentages corresponding to the Leverage Ratio in effect as of the
most recent Calculation Date (defined below) as shown below:
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Applicable Percentage
for Eurodollar Loans, Applicable Applicable
Bankers' Acceptances and Percentage for Percentage for
Tier Levels Leverage Ratio Letter of Credit Fees Base Rate Loans Unused Fees
----------------------------------------------------------------------------------------------------------
1 >3.75 to 1.00 3.00% 1.75% 0.50%
----------------------------------------------------------------------------------------------------------
> 3.25 to 1.00,
2 but < than = to 3.75 to 1.00 2.75% 1.50% 0.50%
----------------------------------------------------------------------------------------------------------
> 2.75 to 1.00,
3 but < than = to 3.25 to 1.00 2.50% 1.25% 0.50%
----------------------------------------------------------------------------------------------------------
> 2.25 to 1.00,
4 but < than = to 2.75 to 1.00 2.25% 1.00% 0.50%
----------------------------------------------------------------------------------------------------------
> 1.75 to 1.00,
5 but < than = to 2.25 to 1.00 2.00% 0.75% 0.375%
----------------------------------------------------------------------------------------------------------
6 < than = to 1.75 to 1.00 1.75% 0.50% 0.375%
----------------------------------------------------------------------------------------------------------
The Applicable Percentages shall be determined and adjusted quarterly on the
date (each a "Calculation Date") which is the first day of the first calendar
month after the date on which the Company provides the officer's certificate for
each fiscal quarter in accordance with the provisions of Section 7.1(d);
provided, however, that (i) the initial Applicable Percentages shall be based on
Tier Level 2 (as shown above) and shall remain at Tier Level 2 until the first
day of the first calendar month after the date on which the Company provides the
annual officer's certificate and the audited financial statements for fiscal
year 2002 in accordance with the provisions of Section 7.1(d), and, thereafter,
the Tier Level shall be determined by the then current Leverage Ratio, and (ii)
if the Company fails to provide the officer's certificate to the Administrative
Agent for any fiscal quarter as required by and within the time limits set forth
in Section 7.1(d), the Applicable Percentages from the applicable date of such
failure shall be based on Tier Level 1 until five (5) Business Days after an
appropriate officer's certificate is provided, whereupon the Tier Level shall be
determined by the then current Leverage Ratio; provided, that such new Tier
Level shall be effective only from the fifth Business Day following the date of
delivery of such officer's certificate and no interest paid at the higher Tier
Level shall be rebated to the Borrowers. Except as set forth above, each
Applicable Percentage shall be effective from one Calculation Date until the
next Calculation Date. Any adjustment in the Applicable Percentage shall be
applicable to all existing Loans and Letters of Credit as well as any new Loans
made or Bankers' Acceptances or Letters of Credit issued.
"Arranger" has the meaning set forth in Section 13.6.
"Asset Disposition" means the disposition (other than (i) a disposition
of inventory made in the ordinary course of business, (ii) a disposition
described in clause (b) or (c) of Section 9.5, so long as the proceeds thereof
are used to repair existing assets or acquire other assets or property useful in
the relevant Borrower's business within one hundred eighty (180) days of such
disposition, or (iii) any dispositions described in clauses (d) through (h) of
Section 9.5) of any or all of the assets (including, without limitation, the
Capital Stock of a Borrower or Subsidiary of a
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Borrower) of any Credit Party, whether by sale, lease, transfer or otherwise, in
a single transaction, or in a series of related transactions.
"Average Consolidated Funded Debt" means, as of the date of
determination, the simple average of the Consolidated Funded Debt as of the end
of each month in the trailing 12-month period, as verified by the Administrative
Agent.
"BA Discount Proceeds" means proceeds in respect of any Bankers'
Acceptance to be purchased on any day under Section 2.5(b), in an amount
(rounded to the nearest whole Canadian cent, and with one-half of one Canadian
cent being rounded up) calculated on such day by dividing:
(a) the Face Amount of such Bankers' Acceptance; by
(b) the sum of one plus the product of:
(i) the Applicable BA Discount Rate
(expressed as a decimal) applicable to such Bankers'
Acceptance; and
(ii) a fraction, the numerator of which
is the number of days in the term of such Bankers'
Acceptance and the denominator of which is the number
of days in the then current calendar year;
with such product being rounded up or down to the fifth
decimal place and .000005 being rounded up to .00001.
"BA Documents" means with respect to any Bankers' Acceptance or BA
Equivalent Loan, such documents and agreements as the Canadian Lenders accepting
the same may require in connection with the creation of such Bankers' Acceptance
or the making of a BA Equivalent Loan, as the case may be.
"BA Equivalent Loan" means such term as defined in Section 2.5(i)(iii).
"BA Obligations" means all obligations of the Canadian Borrowers with
respect to Bankers' Acceptances created, and BA Equivalent Loans made, under the
Canadian Revolving Loan Commitment.
"Bankers' Acceptance" means a depository xxxx as defined in the
Depository Bills and Notes Act (Canada) in Canadian Dollars that is in the form
of an order signed by the Canadian Borrowers and accepted by a Canadian Lender
pursuant to this Credit Agreement or, for Lenders not participating in clearing
services contemplated in that Act, a draft or xxxx of exchange in Canadian
Dollars payable in Canada that is drawn in Canada by the Canadian Borrowers and
accepted by a Canadian Lender pursuant to this Credit Agreement. Orders that
become depository bills, drafts and bills of exchange are sometimes collectively
referred to in this Credit Agreement as "orders".
"Bankruptcy Event" means, with respect to any Person, the occurrence of
any of the following with respect to such Person: (a) a court or governmental
agency having jurisdiction in the premises shall enter a decree or order for
relief in respect of such Person in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
5
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its property
or ordering the winding up or liquidation of its affairs; or (b) any proceeding
shall be instituted against such Person seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding-up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property including, but not limited to, an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect is
commenced against a Person and any such proceeding or petition remains unstayed
and in effect for a period of sixty (60) consecutive days; or (c) such Person
shall commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to the
appointment or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or any substantial
part of its property or make any general assignment for the benefit of
creditors; or (d) such Person shall generally not pay its debts as such debts
become due or shall admit in writing its inability to pay its debts generally as
they become due or any action shall be taken by such Person in furtherance of
any of the aforesaid purposes.
"Base Rate Loans" means all Loans accruing interest based on the U.S.
Base Rate, the CA U.S. Base Rate or the Canadian Prime Rate.
"Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which any U.S. Borrower
or any ERISA Affiliate is, or within the immediately preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA.
"Blocked Account Agreement" means an agreement among the Administrative
Agent and/or the Canadian Agent, the applicable depository bank and a Credit
Party in the form of Exhibit I-2 hereto or such other form as is acceptable to
the Administrative Agent.
"Borrower" means any of the U.S. Borrowers or the Canadian Borrowers.
"Borrowers" means the U.S. Borrowers and the Canadian Borrowers.
"Borrowing Base Certificate" means such term as defined in Section
7.1(i).
"Business Day" means (a) with respect to the Canadian Borrowers, any
day other than a Saturday, a Sunday, a legal holiday in Charlotte, North
Carolina, New York, New York or Toronto, Ontario or a day on which banking
institutions located in Charlotte, North Carolina, New York, New York or
Toronto, Ontario are authorized by law or other governmental actions to close,
(b) with respect to the U.S. Borrowers, any day other than a Saturday, a Sunday,
a legal holiday in Charlotte, North Carolina, or New York, New York or a day on
which banking institutions located in Charlotte, North Carolina or New York, New
York are authorized by law or other governmental actions to close and (c) in the
case of Eurodollar Loans, a Business Day shall also be a day on which dealings
between banks are carried on in U.S. dollar deposits in the London interbank
Eurodollar market.
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"Business Entity" means a partnership (limited, general or other),
corporation, business trust, limited liability company, joint stock company,
trust, association, joint venture, company, firm, sociedad anonima de la capital
variable and any other business organization under the laws of any applicable
jurisdiction.
"CA U.S. Base Rate" means, at any time, the fluctuating rate of
interest per annum that is equal to the greater of (a) the Federal Funds Rate
plus 0.5% or (b) the CA U.S. Prime Rate; provided, however, that if, in the
reasonable judgment of the Canadian Agent, the Federal Funds Rate cannot be
determined, then the CA U.S. Prime Rate shall apply until the circumstances
giving rise to such inability to determine the Federal Funds Rate no longer
exist. Any change in the CA U.S. Base Rate due to a change in the CA U.S. Prime
Rate or the Federal Funds Rate shall be effective as of the opening of business
on the effective day of such change in the CA U.S. Base Rate or the Federal
Funds Rate, respectively.
"CA U.S. Base Rate Loans" means the Revolving Loans made by the
Canadian Lenders in U.S. Dollars accruing interest based on the CA U.S. Base
Rate.
"CA U.S. Prime Rate" means, for any day, the fluctuating rate of
interest per annum publicly announced by the Canadian Agent as its "prime rate"
or "reference rate" for loans made in U.S. dollars, which rate is not
necessarily the best or lowest rate of interest offered for loans in U.S.
dollars by the Canadian Agent.
"Canadian Account" means Account No. 000-000-0, established and
maintained in the name of the Canadian Agent at Royal Bank of Canada, in
Toronto, Ontario, Transit No. 00000, Bank No. 003 or such other account as the
Canadian Agent may establish from time to time with the prior written consent of
the Administrative Agent.
"Canadian Agent" or "CA" means ABN AMRO Bank N.V., Canada Branch, a
resident of Canada for purposes of the Income Tax Act (Canada) or any successor
Canadian Agent appointed pursuant to Section 13.9.
"Canadian Base Rate Loans" means, collectively, CA U.S. Base Rate Loans
and Canadian Prime Rate Loans.
"Canadian Borrowers" means Xxxxxxx-Silex Canada Inc. and such other
Persons organized under the laws of Canada or any province thereof, and resident
in Canada, that become parties hereto pursuant to Joinder Agreements in
accordance with Section 7.11, and "Canadian Borrower" means any one of them.
"Canadian Borrowing Base" means a U.S. dollar amount equal to the sum
of (a) an amount equal to 85% of Eligible Accounts Receivable of the Canadian
Borrowers, plus (b) an amount equal to the Applicable Inventory Percentage of
Eligible Inventory of the Canadian Borrowers, minus (c) reserves established by
the Administrative Agent from time to time in its sole discretion.
"Canadian Collateral" means any and all assets and rights and interests
in or to property of the Canadian Credit Parties pledged from time to time as
security for the Canadian Obligations pursuant to the Security Documents,
whether now owned or hereafter acquired.
7
"Canadian Credit Parties" means the Canadian Borrowers and all of their
Canadian Subsidiaries whether direct or indirect and whether now owned or
hereafter acquired.
"Canadian Dollars" and "C$" mean dollars in the lawful currency of
Canada.
"Canadian Lenders" means ABN AMRO Bank N.V., Canada Branch, and such
other Lenders permitted under Canadian law to lend money in Canada as may be
added as Canadian Lenders in accordance with the terms of this Agreement, each
of whom is a Canadian Taxable Lender.
"Canadian Obligations" means the Obligations of the Canadian Borrowers.
"Canadian Prime Rate" means, at any time, the greater of (i) the rate
of interest equal to the sum of (A) the fluctuating rate of interest per annum
publicly announced by the Canadian Agent as its "prime rate" in effect for
determining interest rates on Canadian Dollar denominated commercial loans in
Canada and (B) one-half percent (0.50%) per annum, and (ii) the annual rate of
interest equal to the sum of (A) the CDOR Rate at such time and (B) one and
one-fourth percent (1.25%) per annum.
"Canadian Prime Rate Loans" means Revolving Loans made by the Canadian
Lenders in Canadian Dollars accruing interest based on the Canadian Prime Rate.
"Canadian Revolving Loan Commitment" means $10,000,000 (U.S.), or its
equivalent as determined from time to time in Canadian Dollars, as such amount
may be reduced in accordance with Section 2.10 or increased in accordance with
Section 2.4.
"Canadian Revolving Loan Commitment Percentage" means, for each
Canadian Lender, the percentage identified as its Canadian Revolving Loan
Commitment Percentage opposite such Canadian Lender's name on Schedule 1.1A as
such percentage may be modified by assignment in accordance with the terms of
this Agreement.
"Canadian Revolving Loans" means the revolving loans made by the
Canadian Lenders to the Canadian Borrowers pursuant to Section 2.3.
"Canadian Security Agreement" means the Security Agreement, of even
date herewith, among the Canadian Agent, the Administrative Agent and the
Canadian Credit Parties, in the form attached hereto as Exhibit H-2.
"Canadian Taxable Lender" means a Business Entity which is permitted
under Canadian law to lend money in Canada, and is either (a) resident in Canada
for the purposes of the Income Tax Act (Canada) (the "ITA") or (b) an authorized
foreign bank for the purposes of the Bank Act (Canada) for which the Canadian
Obligations are in respect of its Canadian banking business as defined in
subsection 248(1) of the ITA, and which is accordingly deemed resident in Canada
pursuant to subsection 212(13.3) of the ITA for purposes of withholding tax on
the Canadian Obligations.
"Canadian Unutilized Revolving Commitment" means, for any period, the
amount by which (a) the then applicable Canadian Revolving Loan Commitment
exceeds (b) the daily average
8
sum for such period of the outstanding aggregate principal amount of all
Canadian Revolving Loans and BA Obligations.
"Capital Expenditures" means, for any applicable period of computation,
without duplication, an amount equal to the consolidated aggregate expenditures
of the Company and its consolidated Subsidiaries during such period for the
acquisition (including the acquisition by way of Capital Lease) or improvement
of capital assets that, in conformity with U.S. GAAP, are required to be
classified as capital expenditures but excluding (a) interest capitalized
relating to and during construction of Property, (b) expenditures made in
connection with the replacement or restoration of Property to the extent
reimbursed or financed from insurance or condemnation proceeds not constituting
net cash proceeds of sale of such Property, and (c) expenditures made with the
proceeds from the sales of similar Property but only to the extent of the
proceeds of such sales and to the extent such sales and reinvestments are
otherwise permitted under this Agreement.
"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 U.S. GAAP, would be required to be classified and accounted for
as a capital lease on a balance sheet of such Person.
"Capital Stock" means (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other equity interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Cash Equivalents" means, as to any Person, (i) securities issued or
directly and fully guaranteed or insured by the United States, the government of
Canada, or any agency or instrumentality thereof (provided that the full faith
and credit of the United States or Canada is pledged in support thereof) having
maturities of not more than one (1) year from the date of acquisition, (ii) time
deposits or certificates of deposit or bankers' acceptances of any commercial
bank incorporated under the laws of the United States or any state thereof, or
of Canada, of recognized standing having capital and unimpaired surplus in
excess of $1,000,000,000 and whose short-term commercial paper rating at the
time of acquisition is at least A-1 or the equivalent thereof by S&P or at least
P-1 or the equivalent thereof by Xxxxx'x (any such bank, an "Approved Bank"),
with such deposits or certificates having maturities of not more than one (1)
year from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven (7) days for underlying securities of the types described in
clauses (i) and (ii) above entered into with any Approved Bank, (iv) commercial
paper or finance company paper issued by any Person incorporated under the laws
of the United States or any state thereof or under the laws of Canada or any
province thereof and rated at least A-1 or the equivalent thereof by S&P or at
least P-1 or the equivalent thereof by Xxxxx'x and in each case maturing not
more than one year after the date of acquisition, and (v) investments in money
market funds that are registered under the Investment Company Act of 1940, as
amended, which have net assets of at least $1,000,000,000 and at least
eighty-five percent (85%) of whose assets consist of securities and other
obligations of the type described in clauses (i) through (iv) above. All such
Cash Equivalents must be denominated solely for payment in Dollars or Canadian
Dollars.
"Cash Management Event" means such term as defined in Section 7.17.
9
"Cash Management Products" means any one or more of the following types
of services or facilities extended to the Borrowers by any Lender or any
Affiliate of a Lender in reliance on such Lender's agreement to indemnify such
Affiliate: (i) Automated Clearing House (ACH) transactions; (ii) cash
management, including controlled disbursement services; and (iii) establishing
and maintaining deposit accounts.
"Casualty Loss" means such term as defined in Section 7.6(b).
"CDOR Rate" means, on any day, the annual rate of interest which is the
rate based on an average 30 day rate applicable to Canadian Dollar bankers'
acceptances appearing on the "Reuters Screen CDOR Page" (as defined in the
International Swap Dealer Association, Inc., definitions, as modified and
amended from time to time) as of 10:00 a.m. on such day; provided, that if such
rate does not appear on the Reuters Screen CDOR Page as contemplated, then the
CDOR Rate on any day shall be the 30 day rate applicable to Canadian Dollar
bankers' acceptances quoted by the Canadian Agent or, if the Canadian Agent is
not quoting such rate, any Schedule I Bank selected by the Canadian Agent as of
10:00 a.m. on such day.
"Change of Control" means the occurrence of any of the following
events: (a) NACCO shall fail to own, directly or indirectly, 100% of the
outstanding shares of Capital Stock of Holdings, (b) Holdings shall fail to own,
directly or indirectly, 100% of the outstanding shares of Capital Stock of the
Company, or (c) the Company shall fail to own, directly or indirectly, 100% of
the outstanding shares of Capital Stock of the other Credit Parties owned by the
Company as of the Closing Date.
"Chase/Scotia Swap Agreements" means each of the Interest Rate Swap
Agreements between the Company and (i) The Bank of Nova Scotia, expiring on
March 12, 2005 for the notional amount of $10,000,000, (ii) The Chase Manhattan
Bank (n/k/a JPMorgan Chase Bank), expiring March 12, 2004 for the notional
amount of $10,000,000, and (iii) The Chase Manhattan Bank (n/k/a JPMorgan Chase
Bank), expiring March 12, 2003 for the notional amount of $25,000,000.
"Closing Date" means the date hereof.
"Closing Date Interest Rate Protection Agreements" means the Interest
Rate Protection Agreements in effect on the Closing Date (together with renewals
or replacements thereof, but only to the extent that the then accumulated
Derivative Reserve for such Interest Rate Protection Agreements immediately
after such renewal or replacement would remain at the same relative level as
immediately prior to any such renewal or replacement).
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations issued
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed also to refer to any successor sections.
"Collateral" means collectively, the U.S. Collateral and the Canadian
Collateral.
"Commitments" means the U.S. Revolving Loan Commitment and the Canadian
Revolving Loan Commitment.
10
"Commitment Percentage" means, with respect to any Lender, at any time
after all the Commitments have terminated, the percentage which such Lender's
Credit Exposure constitutes of the aggregate principal amount of all Loans, LOC
Obligations and BA Obligations then outstanding under this Credit Agreement.
"Commitment Termination Event" means such term as defined in Section
11.3(a).
"Company" has the meaning set forth in the introductory paragraph
hereof.
"Consolidated Adjusted EBITDA" means, for any applicable period of
computation, without duplication, the sum of (i) Consolidated EBITDA for such
period plus (ii) nonrecurring items determined by the Company and acceptable to
the Required Lenders for such period, including specifically write-offs of
Pre-Bankruptcy Kmart Accounts plus (iii) equity contributions made in cash by
Holdings or NACCO to the Company or any of the other Borrowers during such
period or within thirty days following the end of such period and specifically
designated for allocation to such period and not in the period in which made.
The applicable period of computation shall be the trailing 12-month period
ending as of the date of determination.
"Consolidated Cash Taxes" means, for any applicable period of
computation, the aggregate of all income taxes (including, without duplication,
franchise and foreign withholding taxes and any state single business unitary or
similar tax) of the Consolidated Group determined on a consolidated basis in
accordance with applicable law and U.S. GAAP applied on a consistent basis for
such period, to the extent the same are paid in cash during such period, net of
all tax refunds and payments under the Tax Sharing Agreement received in cash
during such period.
"Consolidated EBITDA" means, for any applicable period of computation,
without duplication, the sum of (i) Consolidated Net Income for such period, but
excluding therefrom all extraordinary gains and losses determined in accordance
with U.S. GAAP, plus (ii) to the extent deducted in determining Consolidated Net
Income for such period, but without duplication, the aggregate amount of (a)
depreciation and amortization charges and expenses, (b) aggregate Consolidated
Interest Expense for such period, (c) the aggregate amount of all income taxes
reflected on the consolidated statements of income of the Company and its
Subsidiaries for such period, (d) non-recurring non-cash charges and expenses
(including the cumulative effect of any Accounting Changes), net of cash charges
for such period relating to non-recurring charges and expenses included in the
computation of Consolidated EBITDA for any prior period, (e) accruals for
long-term deferred compensation (net of cash payments of deferred compensation
accrued in prior periods(except for Excluded Deferred Compensation Payments))
and (f) non-cash charges relating to the xxxx to market provision for, the
termination of, or terminated, Hedging Agreements and minus (iii) to the extent
included in determining Consolidated Net Income for such period, but without
duplication, (a) non-recurring non-cash gains (including the cumulative effect
of any Accounting Changes), net of cash received for such period relating to
such gains included in the computation of Consolidated EBITDA for any prior
period and (b) non-cash income relating to the xxxx to market provision for, the
termination of, or terminated, Hedging Agreements. The applicable period of
computation shall be the trailing 12-month period ending as of the date of
determination.
11
"Consolidated Fixed Charges" means, for any applicable period of
computation, without duplication, the sum of (i) all Consolidated Interest
Expense and termination payments under Hedging Agreements (other than the
Chase/Scotia Swap Agreements) and other fees and charges associated with Funded
Debt (including, in the case of any Credit Party, Loans, Letters of Credit and
Bankers' Acceptances), to the extent paid in cash during the applicable period
(other than the amortization of deferred financing fees and expenses included in
Consolidated Interest Expense) plus (ii) all Consolidated Scheduled Funded Debt
Payments for the applicable period plus (iii) cash dividends or other
distributions paid by the Company pursuant to Section 9.11 during the applicable
period (excluding any Special Dividend paid during such period, provided that in
determining compliance with the Fixed Charge Coverage Ratio required to make a
Special Dividend as provided in Section 9.11(b)(ii)(B), such Special Dividend
shall be included in the calculation of Consolidated Fixed Charges). Except as
otherwise provided herein, the applicable period of computation shall be the
trailing 12-month period ending as of the date of determination.
"Consolidated Funded Debt" means, as of the date of determination, all
Funded Debt of the Consolidated Group, determined on a consolidated basis in
accordance with U.S. GAAP.
"Consolidated Group" means the Company and all of its consolidated
Subsidiaries whether direct or indirect and whether now owned or hereafter
acquired.
"Consolidated Interest Expense" means, for any period, all interest
expense of the Consolidated Group for such period, including any settlement
payments under Hedging Agreements, net of interest income for such period, all
as determined in accordance with U.S. GAAP.
"Consolidated Net Income" means, for any period, the net income after
taxes of the Consolidated Group for such period, as determined in accordance
with U.S. GAAP.
"Consolidated Parties" means the members of the Consolidated Group, and
"Consolidated Party" means any one of them.
"Consolidated Scheduled Funded Debt Payments" means, as of the date of
determination, the sum of all scheduled payments of principal on Consolidated
Funded Debt for the applicable period ending on such date (including the
principal component of payments due on Capital Leases or under any synthetic
lease, tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product during the applicable period ending on such
date).
"Conversion Date" means such term as defined in Section 11.3 (a).
"Credit Agreement" or "Agreement" means this credit agreement, dated as
of the date hereof, as the same may be modified, amended, extended, restated or
supplemented from time to time.
"Credit Documents" means this Credit Agreement, the Revolving Credit
Notes, the LOC Documents, the BA Documents, the Guaranty Agreements, the
Security Documents and all other documents and instruments executed or delivered
pursuant thereto, as the same may be modified, amended, extended, restated or
supplemented from time to time.
12
"Credit Exposure" means such term as defined in the definition of
Required Lenders.
"Credit Parties" means, collectively, the U.S. Credit Parties and the
Canadian Credit Parties.
"Current Derivative Exposure" means, as of any date of determination,
for (i) the Closing Date Interest Rate Protection Agreements, 100% of the
aggregate xxxx-to-market exposure then owing by one or more of the Borrowers
under such Closing Date Interest Rate Protection Agreements or (ii) the Interest
Rate Protection Agreements entered into subsequent to the Closing Date, 100% of
the aggregate xxxx-to-market exposure then owing by one or more of the Borrowers
under such Interest Rate Protection Agreements.
"Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, at such time,
(a) has failed to make a Loan, create a Bankers' Acceptance (or make a BA
Equivalent Loan) or purchase a Participation Interest required pursuant to the
terms of this Agreement, (b) has failed to pay to the Administrative Agent, the
Canadian Agent or any Lender an amount owed by such Lender pursuant to the terms
of this Agreement or (c) has become insolvent or has become subject to a
receiver, trustee or similar official.
"Derivative Reserve" means (a) with respect to Closing Date Interest
Rate Protection Agreements, a reserve equal to the lesser of (i) the Current
Derivative Exposure or (ii) an amount commencing March 31, 2003 and updated
quarterly thereafter calculated as 1/12th of the Initial Current Derivative
Exposure times the number of fiscal quarters then elapsed from and including
March 31, 2003; provided, however, the Administrative Agent shall have the right
to recalculate the Current Derivative Exposure at any time, and if upon any such
recalculation (each, a "Recalculation Date") the Current Derivative Exposure
times the number of fiscal quarters then elapsed from and including March 31,
2003 divided by 12 shall exceed the then Funded Derivative Reserve, then the
Administrative Agent may increase such Derivative Reserve by an amount equal to
1/12th of such excess times the number of fiscal quarters then elapsed from and
including March 31, 2003 on such Recalculation Date, and thereafter by an
additional 1/12th of such excess at the end of each fiscal quarter until such
time as the Funded Derivative Reserve shall no longer be less than the Current
Derivative Exposure and (b) with respect to Interest Rate Protection Agreements
entered into after the Closing Date, a reserve equal to the Current Derivative
Exposure for such Interest Rate Protection Agreements, as reasonably determined
by the Administrative Agent from time to time.
"DOL" means the U.S. Department of Labor and any successor department
or agency.
"Effective Date" means the date on which all of the conditions set
forth in Section 5.1 have been fulfilled or waived by the Lenders.
"Eligible Accounts Receivable" means the aggregate face amount of the
Borrowers' Accounts that conform in all material respects to the warranties
contained herein, provided, that, unless otherwise approved in writing by the
Administrative Agent, no Account, without duplication, shall be deemed to be an
Eligible Account Receivable if:
13
(i) the Account arises out of a sale made by any Borrower
to an Affiliate (except to Kitchen Collection, Inc. so long as the
aggregate face amount of such Accounts does not exceed $1,500,000); or
(ii) the Account is unpaid more than ninety (90) days
after the original invoice date or more than sixty (60) days after the
original payment due date, with respect to Accounts the invoice for
which provides that payment is due in sixty (60) days or less from the
date of such invoice (for purposes hereof, a "Regular Account"); or
(iii) the Account is unpaid more than thirty (30) days
after the original payment due date or more than one hundred twenty
(120) days after the original invoice date, with respect to Accounts
the invoice for which provides that payment is due more than sixty (60)
days from the date of such invoice (for purposes hereof, a "Dated
Account") (provided, however, Accounts the invoice for which provides
that payment is due more than sixty (60) days from the date of the
original invoice but not more than one hundred-twenty (120) days from
the date of the original invoice and which are not more than thirty
(30) days delinquent after the original payment due date therefor shall
be included as Eligible Account Receivable in a face amount not to
exceed in the aggregate $3,000,000 for the period from February 1
through August 31 in any calendar year or $6,000,000 for the period
from September 1 through January 31 in any calendar year); or
(iv) (A) in the case of any Regular Account, such
Account is from the same account debtor (or any affiliate thereof) and
fifty percent (50%) or more, in face amount, of other Accounts from
such account debtor (or any affiliate thereof) are due or unpaid more
than ninety (90) days after the original invoice date or more than
sixty (60) days after the original payment due date and (B) in the case
of any Dated Account, such Account is from the same account debtor (or
any affiliate thereof) and fifty percent (50%) or more, in face amount,
of other Accounts from such account debtor (or any affiliate thereof)
are due or unpaid more than thirty (30) days after the original payment
due date or more than one hundred twenty (120) days after the original
invoice date; or
(v) (A) the account debtor is also a creditor of any
Borrower, to the extent of the amount owed by such Borrower to the
account debtor, (B) the account debtor has disputed its liability on,
or the account debtor has made any claim with respect to its obligation
to pay such Account due from such account debtor to such Borrower,
which has not been resolved, to the extent of such dispute or claim or
(C) the Account otherwise is subject to any right of setoff by the
account debtor, to the extent of the amount of such setoff; or
(vi) the Account is owing by an account debtor that has
commenced a voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or made an assignment for the benefit
of creditors, or if a decree or order for relief has been entered by a
court having jurisdiction in the premises in respect to such account
debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or if any other petition or other
application for relief under the federal bankruptcy laws has been filed
by or against the account debtor, or if such account debtor has failed,
suspended business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or
for all or a
14
significant portion of its assets or affairs; provided, however, that
the Kmart Accounts, other than any Pre-Bankruptcy Kmart Accounts, may
be considered Eligible Accounts Receivable to the extent otherwise
permitted by the terms of this Agreement; or
(vii) the sale is to an account debtor outside the United
States or Canada, unless the sale is on letter of credit, guaranty or
acceptance terms, or subject to credit insurance, billing procedures
and collection procedures, in each case acceptable to the
Administrative Agent in its reasonable discretion (provided, that such
Accounts which are owed by account debtors in Mexico may be included as
Eligible Accounts Receivable hereunder solely if they otherwise meet
the eligibility standards set forth in this definition and in the
definition of Eligible Mexican Accounts Receivable and such Accounts
shall not exceed more than $6,000,000 in the aggregate); or
(viii) the sale to the account debtor is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis
or made pursuant to any other written agreement providing for
repurchase or return; or
(ix) the account debtor is the United States of America or
any department, agency or instrumentality thereof, unless the
applicable Borrower duly assigns its rights to payment of such Account
to the Administrative Agent pursuant to the Assignment of Claims Act of
1940, as amended (31 U.S.C. Section 3727 et seq.); or
(x) the account debtor is the government of Canada or
any department, agency or instrumentality thereof to which Part VII of
the Financial Administration Act (Canada) applies, or the government of
a province or territory of Canada (or any department, agency or
instrumentality thereof) in which legislation is in force which limits
or restricts the assignment of Crown debts, unless the applicable
Borrower has complied with the provisions of such Part (or such
legislation, as the case may be) in respect of the assignment of such
Account to the Administrative Agent; or
(xi) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the account debtor or its
designee or the services giving rise to such Account have not been
performed by or on behalf of the applicable Borrower and accepted by
the account debtor or its designee or the Account otherwise does not
represent a final sale; or
(xii) the Administrative Agent does not have a first
priority, perfected security interest in the Account subject to no
other Liens; or
(xiii) the amount of the Account, when aggregated with all
other Accounts of such account debtor (excluding Wal Mart), exceeds
twenty percent (20%) in face value of all Accounts of the Borrowers
then outstanding, to the extent of such excess (provided, that the
Accounts owed by Kmart shall not exceed $10,000,000 from the Closing
Date through March 31, 2003 and $5,000,000 thereafter); or
(xiv) the Administrative Agent, in the exercise of its
reasonable discretion, determines it to be ineligible.
15
In addition to the foregoing, Eligible Accounts Receivable shall
include such Accounts as the Borrowers shall request and that the Administrative
Agent approves in advance, in writing and in its reasonable discretion.
"Eligible Assignee" means (a) any Lender or Affiliate or Subsidiary of
a Lender and (b) any other commercial bank, financial institution, institutional
lender or "accredited investor" (as defined in Regulation D of the Securities
and Exchange Commission) with a net worth of at least $2,000,000,000; provided,
that, in the case of the Canadian Revolving Loans and other Canadian
Obligations, (i) so long as no Event of Default has occurred and is continuing,
any such Lender shall also be a Canadian Taxable Lender and (ii) upon the
occurrence and during the continuance of an Event of Default, any such Lender
shall be a financial institution meeting the requirements of clause (a) or (b)
hereof, regardless of residence status.
"Eligible Inventory" means (i) the aggregate gross amount of each
Borrower's finished goods Inventory, valued at the lower of cost (on a FIFO
basis) or market, which (A) is owned solely by such Borrower and with respect to
which such Borrower has good, valid and marketable title, (B) is stored on
property that is either (1) owned or leased by such Borrower or (2) owned or
leased by a warehouseman that has contracted with such Borrower to store
Inventory on such warehouseman's property or by a filler, processor or packer of
such Borrower (provided that, with respect to Inventory stored on property
leased by such Borrower, such Borrower shall have delivered in favor of the
Administrative Agent an Acknowledgment Agreement from the landlord of such
leased location, and, with respect to Inventory stored on property owned or
leased by a warehouseman, filler, processor or packer, such Borrower shall have
delivered to the Administrative Agent an Acknowledgment Agreement executed by
such warehouseman, filler, processor or packer); or if not so stored, such
Inventory (x) constitutes In-Transit Inventory or (y) has been consigned by the
Company to the Canadian Borrower and is in the possession of the Canadian
Borrower stored on property which otherwise meets the requirements of clause
(B)(1) or (2) above, provided, that the Company retains good, valid and
marketable title thereto, the Administrative Agent will have a first priority,
perfected security interest therein, U.S. and Canadian legal counsel shall
provide satisfactory legal opinions as to the perfection of the Administrative
Agent's security interest therein and such consignment arrangement has been
documented in a manner reasonably satisfactory to the Administrative Agent; (C)
is subject to a valid, enforceable and first priority perfected Lien in favor of
the Administrative Agent subject to no other Liens, except, with respect to
Inventory stored at sites described in clause (B), above for normal and
customary landlord, warehouseman, filler, packer and processor charges); (D) is
located in the United States or Canada; and (E) is not obsolete, slow moving or
discontinued, and which otherwise conforms in all material respects to the
warranties contained herein, less (ii) markdown reserves, less (iii) any goods
returned or rejected by such Borrower's customers for which a credit has not yet
been issued and goods in transit to third parties (other than to such Borrower's
agents, landlords, warehouses, fillers, processors or packers that comply with
clause (i)(B) above or which constitutes In-Transit Inventory), less (iv)
damaged Inventory, less (v) any Inventory that is a no charge or sample item,
less (vi) packaging supplies to the extent included in finished goods Inventory,
less (vii) any reserves required by the Administrative Agent in its reasonable
discretion for special order goods, less (viii) any Inventory which is held by a
Borrower pursuant to consignment, sale or return, sale on approval or similar
arrangement (it being understood that Eligible Inventory of a U.S. Borrower
consigned to a Canadian Borrower pursuant to clause (i)(B)(y) immediately above
shall constitute Eligible Inventory of such U.S. Borrower), less (ix) any
Inventory that the Administrative Agent determines in its reasonable discretion
to be ineligible. In addition to the foregoing, Eligible
16
Inventory shall include such items of such Borrower's Inventory as such Borrower
shall request and that the Administrative Agent approves in advance, in writing
and in its reasonable discretion.
"Eligible Mexican Accounts Receivable" means Accounts of the Borrowers
owed by account debtors in Mexico which, subject to clause (vii) of the
definition herein of Eligible Accounts Receivable, constitute Eligible Accounts
Receivable and (i) which have been originated by a Borrower or purchased by a
Borrower from a Mexican Subsidiary pursuant to a valid and enforceable sales
contract in form and substance satisfactory to the Administrative Agent, (ii)
which provide for payment to be made by the account debtor by wire transfer
directly to a bank account of the applicable Borrower located in the United
States of America, which account shall be at Wachovia or with another bank so
long as such account is subject to a Blocked Account Agreement with the
Administrative Agent, (iii) which are subject to credit insurance, billing
procedures and collection procedures, in each case acceptable to the
Administrative Agent in its reasonable discretion, (iv) which have been
collaterally assigned to the Administrative Agent in compliance in all material
respects with the laws of Mexico, including, without limitation, all applicable
notice requirements, (v) which are not evidenced by promissory notes or other
negotiable instruments, (vi) which are subject to a valid, first priority
security interest in favor of the Administrative Agent under the laws of Mexico
and (vi) with respect to which the Administrative Agent has received an opinion
of Mexican legal counsel to the Company in form and substance satisfactory to
the Administrative Agent. In addition to the foregoing, Eligible Mexican
Accounts Receivable shall include such of the Borrowers' Accounts owed by
account debtors in Mexico as the Borrowers shall request and that the
Administrative Agent approves in advance, in writing and in its reasonable
discretion.
"Eligible Trademarks" means those trademarks owned by the Borrowers,
free and clear of any adverse claims, and listed on Schedule 1.1B hereto.
"Eligible Trademarks Amount" means the most recent appraised value of
the Eligible Trademarks reviewed and accepted by the Administrative Agent,
provided that in no event shall the Eligible Trademarks Amount equal more than
(a) $15,000,000 for the period from the Closing Date through January 31, 2004,
(b) $10,000,000 for the period from February 1, 2004 through January 31, 2005 or
(c) $5,000,000 from February 1, 2005 through the Maturity Date.
"Environmental Laws" means any current or future Requirement of Law of
any Governmental Authority applicable to the Credit Parties pertaining to (a)
the protection of health, safety, and the environment, (b) the conservation,
management, or use of natural resources and wildlife, (c) the protection or use
of surface water and groundwater or (d) the management, manufacture, possession,
presence, use, generation, transportation, treatment, storage, disposal,
release, threatened release, abatement, removal, remediation or handling of, or
exposure to, any hazardous or toxic substance or material and includes, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and
Solid Waste Amendments of 1984, 42 USC 6901 et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et seq.,
Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic Substances Control
Act of 1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC
App. 1801 et seq., Occupational Safety and Health Act of 1970, as amended, 29
USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency
17
Planning and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National
Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act
of 1974, as amended, 42 USC 300(f) et seq., the Canadian Environmental
Protection Xxx 0000, S.C. 1999, c. 33 as amended, the Fisheries Act, R.S.C.
1985, c. F-14 as amended, the Transportation of Dangerous Goods Act, 1992, S.C.
1992, c. 34, the Environmental Protection Act, R.S.O. 1990, c. E.19 as amended,
the Ontario Water Resources Act, R.S.O. 1990, c. O.40 as amended, the Technical
Standards and Safety Xxx, 0000, S.O. 2000, c. 16 and all other applicable
Canadian federal or provincial environmental statutes and municipal or regional
bylaws pertaining to environmental matters, any analogous implementing or
successor law, and any amendment, rule, regulation, order, legally enforceable
guideline, or directive issued thereunder.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity, whether or not incorporated, which
is under common control with the U.S. Borrowers within the meaning of Section
4001(a)(14) of ERISA, or is a member of a group which includes the U.S.
Borrowers and which is treated as a single employer under Sections 414(b) or (c)
of the Code.
"ERISA Event" means (a) with respect to any Benefit Plan, the
occurrence of a Reportable Event or the substantial cessation of operations
(within the meaning of Section 4062(e) of ERISA); (b) the withdrawal of the U.S.
Borrowers or any ERISA Affiliate from a Multiple Employer Plan during a plan
year in which it was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (c) the
distribution of a notice of intent to terminate or the actual termination of a
Single Employer Plan or Multiemployer Plan pursuant to Section 4041(a)(2) or
4041A of ERISA; (d) the institution of proceedings to terminate or the actual
termination of a Single Employer Plan or a Multiemployer Plan by the PBGC under
Section 4042 of ERISA; (e) the termination of, or the appointment of a trustee
to administer, any Single Employer Plan or Multiemployer Plan pursuant to
Section 4042 of ERISA; (f) the complete or partial withdrawal of the U.S.
Borrowers or any ERISA Affiliate from a Multiemployer Plan; (g) the conditions
for imposition of a Lien under Section 302(f) of ERISA exist with respect to any
Single Employer Plan; or (h) the adoption of an amendment to any Single Employer
Plan requiring the application of Section 307 of ERISA.
"Eurodollar Loans" means Loans accruing interest at the Adjusted
Eurodollar Rate. All Eurodollar Loans shall be made in U.S. dollars.
"Eurodollar Rate" means, for the applicable Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including continuations
and conversions), a per annum interest rate determined pursuant to the following
formula:
London Interbank Offered Rate
Eurodollar Rate = -----------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time
18
or any successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or marginal
reserves) applicable with respect to Eurocurrency liabilities as that term is
defined in Regulation D (or against any other category of liabilities that
includes deposits by reference to which the interest rate of Eurodollar Loans is
determined), whether or not a Lender has any Eurocurrency liabilities subject to
such reserve requirement at that time. Eurodollar Loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject to
reserve requirements without benefits of credits for proration, exceptions or
offsets that may be available from time to time to a Lender. The Eurodollar Rate
shall be adjusted automatically on and as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Event of Default" means such terms as defined in Section 11.1.
"Excess Availability" means at any time (a) the lesser of (i) the U.S.
Revolving Loan Commitment and (ii) the U.S. Borrowing Base minus (b) the
aggregate amount of (i) U.S. Revolving Loans outstanding plus (ii) the LOC
Obligations.
"Excluded Deferred Compensation Payments" means cash payments in
connection with the termination of the Xxxxxxxx Beach/Xxxxxxx-Silex, Inc. Long
Term Incentive Compensation Plan not to exceed $2,500,000 in the aggregate.
"Existing Letters of Credit" means the letters of credit issued by Key
Bank, National Association and as identified on Schedule 1.1C.
"Face Amount" means, in respect of a Bankers' Acceptance, the amount
payable to the holder thereof at maturity, and when used in relation to Bankers'
Acceptances generally, includes the principal amount of any BA Equivalent Loans
outstanding.
"Federal Funds Rate" means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve Bank of New York, or if such rate is not released on any Business Day,
the arithmetic average (rounded upwards to the next 1/100th of 1%), as
determined by the Administrative Agent, of the quotations for the day of such
transactions, received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Statements" means such term as defined in Section 6.6.
"Fixed Charge Coverage Ratio" means, as of the date of determination,
the ratio of (i) Consolidated Adjusted EBITDA less Unfinanced Capital
Expenditures less Consolidated Cash Taxes to (ii) total Consolidated Fixed
Charges. The applicable period of computation shall be the trailing 12-month
period ending as of the date of determination.
"Funded Debt" means, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by
19
such Person (other than trade debt incurred in the ordinary course of business
and due within six months of the incurrence thereof) which would appear as
liabilities on a balance sheet of such Person, (e) the principal portion of all
obligations of such Person under Capital Leases, (f) the maximum amount of all
letters of credit issued or bankers' acceptances facilities created for the
account of such Person and, without duplication, all drafts drawn thereunder (to
the extent unreimbursed), (g) all preferred Capital Stock issued by such Person
and required by the terms thereof to be redeemed, or for which mandatory sinking
fund payments are due, by a fixed date prior to 180 days following the Maturity
Date, (h) the principal portion of all obligations of such Person under
off-balance sheet financing arrangements (including synthetic leases but
excluding true operating leases), (i) all Indebtedness of another Person of the
type referred to in clauses (a) through (h) above secured by (or for which the
holder of such Funded Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production from,
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (j) all Guaranty Obligations of such Person
with respect to Indebtedness of the type referred to in clauses (a) through (h)
above of another Person and (k) Indebtedness of the type referred to in clauses
(a) through (h) above of any partnership or unincorporated joint venture in
which such Person is legally obligated or has a reasonable expectation of being
liable with respect thereto.
"Funded Derivative Reserve" means the most recent determination of the
Derivative Reserve for the Closing Date Interest Rate Protection Agreements as
reflected on the Company's most recent Borrowing Base Certificate.
"Government Acts" means such term as defined in Section 2.2(k)(i).
"Governmental Authority" means any Federal, State, Provincial, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Grupo" means Grupo HB/PS, Sociedad Anonima de Capital Variable, a
Mexican Subsidiary of the Company.
"Guarantor" means any U.S. Borrower.
"Guaranty Agreements" means the Guaranty Agreement in the form attached
hereto as Exhibit B executed by the U.S. Borrowers with respect to the
obligations of the Canadian Borrowers and any future Guaranty Agreement executed
in accordance with the terms of this Agreement, as each such Guaranty Agreement
may be amended, modified or replaced from time to time.
"Guaranty Obligations" of any Person means any obligations (other than
(a) endorsements in the ordinary course of business of negotiable instruments
for deposit or collection, (b) obligations arising under the Guaranty Agreements
and (c) obligations arising under guaranties by a U.S. Credit Party of another
U.S. Credit Party or by a Canadian Credit Party of another Canadian Credit
Party) guaranteeing or intended to guarantee any Indebtedness, leases, dividends
or other obligations of any other Person in any manner, whether direct or
indirect, and including, without limitation, any obligation, whether or not
contingent to, (i) purchase any such Indebtedness or other obligation or any
property constituting security therefor, (ii) advance or provide funds or other
support for the payment or purchase of such Indebtedness or obligation or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including, without
20
limitation, keep well agreements, maintenance agreements, comfort letters or
similar agreements or arrangements), (iii) lease or purchase property,
securities or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation, or (iv) otherwise assure or hold harmless the owner
of such Indebtedness or obligation against loss in respect thereof.
"Xxxxxxxx Beach Mexico" means Xxxxxxxx Beach/Xxxxxxx-Silex de Mexico
Sociedad Anonima de Capital Variable, a Mexican Subsidiary of the Company
"Hedging Agreements" means any interest rate protection agreement,
foreign currency exchange agreement, commodity purchase or option agreement or
other interest or exchange rate or commodity price hedging agreements.
"Highest Lawful Rate" means, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness under this Credit
Agreement, under the laws of the State of New York (or the law of any other
jurisdiction whose laws may be mandatorily applicable notwithstanding other
provisions of this Credit Agreement and the other Credit Documents), or under
applicable United States or Canadian federal laws which may presently or
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than under New York or such other jurisdiction's law, in any case after
taking into account, to the extent permitted by applicable law, any and all
relevant payments or charges under this Credit Agreement and any other Credit
Documents executed in connection herewith, and any available exemptions,
exceptions and exclusions. Without limiting the generality of the foregoing, in
relation to any amount payable hereunder by any Canadian Borrower or to any
Canadian Lender, "Highest Lawful Rate" shall mean a rate of "interest" on the
"credit advanced", calculated in accordance with the definition of "criminal
rate" (all such terms being used herein as defined by section 347 of the
Criminal Code of Canada or any successor provision in force at the relevant
time) equal to 59%.
"Holdings" means HB-PS Holding Company, Inc., a Delaware corporation.
"Holdings Pledge Agreement" means the Pledge Agreement, of even date
herewith, between the Administrative Agent and Holdings, in the form attached
hereto as Exhibit R, as amended, supplemented or otherwise modified from time to
time.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
guaranties of such Person
21
with respect to Indebtedness of the type referred to in this definition of
another Person, (h) the principal portion of all obligations of such Person
under Capital Leases, (i) the net amount of all obligations of such Person under
Hedging Agreements, (j) the maximum amount of all letters of credit issued or
bankers' acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent unreimbursed),
(k) all preferred Capital Stock issued by such Person and required by the terms
thereof to be redeemed, or for which mandatory sinking fund payments are due, by
a fixed date, (l) the principal portion of all obligations of such Person under
off-balance sheet financing arrangements (including synthetic leases but
excluding true operating leases) and (m) the Indebtedness of any partnership or
unincorporated joint venture in which such Person is a general partner or a
joint venturer.
"Initial Current Derivative Exposure" means the Current Derivative
Exposure as of March 31, 2003 for the Closing Date Interest Rate Protection
Agreements.
"Interest Payment Date" means (a) as to all Loans, other than
Eurodollar Loans, the last day of each month, (b) as to Eurodollar Loans having
an Interest Period of three months or less, the last day of each applicable
Interest Period and (c) as to Eurodollar Loans having an Interest Period longer
than three months, each day which is three months after the first day of the
Interest Period and the last day of such Interest Period; provided, that if an
Interest Payment Date falls on a date which is not a Business Day, such Interest
Payment Date shall be deemed to be the next succeeding Business Day, except that
in the case of an Interest Period where the next succeeding Business Day falls
in the next succeeding calendar month, then on the next preceding Business Day.
"Interest Period" means, with respect to Eurodollar Loans, a period of
one, two, three or six month's duration, as the Borrowers may elect from time to
time, commencing, in each case, on the date of the borrowing (or continuation or
conversion thereof); provided, however, (a) if any Interest Period would end on
a day which is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day (except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day), (b) no Interest Period shall extend beyond the Maturity Date and (c) where
an Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is to end,
such Interest Period shall end on the last Business Day of such calendar month.
"Interest Rate Protection Agreement" means any interest rate protection
agreement or any other interest rate derivative product arrangement between any
Borrower and any Lender, or any affiliate of a Lender.
"In-Transit Inventory" means Inventory of a Borrower which is in
transit to such Borrower (a) aboard trucks or other transport vehicles within
the United States or Canada owned or leased by a Borrower or by a common carrier
that has delivered in favor of the Administrative Agent an acknowledgement and
lien waiver agreement in form and substance satisfactory to the Administrative
Agent or (b) at sea or by inland waterway to, or at a port in, the United States
or Canada so long as, with respect to Inventory in transit at sea or by inland
waterway, the applicable xxxx of lading shall run to the order of the
Administrative Agent and shall promptly be furnished to the applicable freight
forwarder and, with respect to Inventory at a port, the applicable freight
forwarder shall have delivered in favor of the Administrative Agent an
acknowledgement and lien waiver agreement in form and substance satisfactory to
the Administrative Agent.
22
"Inventory" means all of each Borrower's inventory, including without
limitation, (i) all raw materials, work in process, parts, components,
assemblies, supplies and materials used or consumed in the Borrowers' business;
(ii) all goods, wares and merchandise, finished or unfinished, held for sale;
and (iii) all goods returned to or repossessed by the Borrowers.
"Inventory Appraisal" means an appraisal of the Inventory performed by
an appraiser selected by the Administrative Agent, in form and substance
reasonably satisfactory to the Administrative Agent. The Administrative Agent
will promptly notify the Company if it selects an appraiser other than Ozer
Valuation Services, LLC and shall disclose the identity of such appraiser to the
Company.
"Investment" means, with respect to any Person, (a) the acquisition
(whether for cash, property, services, assumption of Indebtedness or securities
or otherwise) of assets comprising a business, shares of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of another Person, (b) any deposit with, or advance, loan or other extension of
credit to, such other Person (other than deposits made in the ordinary course of
business and trade credit extended to Consolidated Parties so long as it does
not constitute Indebtedness)) or (c) any other investment in such other Person,
including without limitation, any Guaranty Obligation for the benefit of such
other Person.
"Issuing Lender" means Wachovia and, with respect to the Existing
Letters of Credit, Key Bank, National Association.
"Issuing Lender Fee" means such term as defined in Section 4.5(b)(ii).
"Joinder Agreement" means the form of Joinder Agreement to be executed
by each new Borrower under the Credit Agreement pursuant to Section 7.11 hereof,
substantially in the form of Exhibit N hereto.
"Landlord Agreement" means a Landlord Lien Waiver Agreement,
substantially in the form of Exhibit C hereto, between a Credit Party's landlord
and the Administrative Agent.
"Lender Hedging Agreement" means any Hedging Agreement between any
Borrower and any Lender, or any affiliate of a Lender.
"Lenders" means U.S. Lenders and Canadian Lenders.
"Letter of Credit" means a Letter of Credit issued for the account of a
U.S. Borrower or one of its U.S. Subsidiaries by the Issuing Lender pursuant to
the LOC Subfacility as referenced in Section 2.2, as such Letter of Credit may
be amended, modified, extended, renewed or replaced, and the Existing Letters of
Credit.
"Letter of Credit Fee" means such term as defined in Section 4.5(b).
"Leverage Ratio" means, as of the date of determination, the ratio of
(a) Average Consolidated Funded Debt to (b) Consolidated Adjusted EBITDA. The
applicable period of computation shall be the trailing 12-month period ending as
of the date of determination.
23
"Licensor Consent" means a consent substantially in the form of Exhibit
Q hereto (or such other form as shall be reasonably acceptable to the
Administrative Agent) given by the licensor of any intellectual property
licensed to a Credit Party.
"Lien" means any mortgage, pledge, hypothecation, collateral
assignment, security deposit arrangement, security interest, encumbrance, lien
(statutory or otherwise), hypothec, preference, priority, or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any financing or similar statement filed under
the Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction, the PPSA, or other similar recording or notice statute, and any
lease in the nature thereof).
"Loans" means the Revolving Loans (or a portion of any Revolving Loan),
individually or collectively, as appropriate.
"LOC Documents" means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered thereunder,
and any other agreements, instruments, guarantees or other documents (whether
general in application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned or at risk
or (b) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (a) the maximum amount
which is, or at any time thereafter may become, available to be drawn under all
Letters of Credit then outstanding, assuming compliance with all requirements
for drawings referred to in such Letters of Credit plus (b) the aggregate amount
of all drawings under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.
"LOC Subfacility" means the Letter of Credit subfacility established
pursuant to Section 2.2.
"Lockbox Agreement" means such term as defined in Section 3.1(b).
"Lockbox Letter" means a letter agreement between a depository bank and
the Administrative Agent, substantially in the form attached hereto as Exhibit
I-1.
"London Interbank Offered Rate" means, with respect to any Eurodollar
Loan for the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in U.S. dollars at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
specified on Telerate Page 3750 (or any successor page), the applicable rate
shall be the arithmetic mean of all such rates. If, for any reason, such rate is
not available, the term "London Interbank Offered Rate" shall mean, with respect
to any Eurodollar Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in U.S. dollars at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
24
"Mandatory Borrowing" means such term as defined in Section 2.2(e).
"Material Adverse Effect" means a material adverse effect, after taking
into account any applicable insurance (to the extent the provider of such
insurance has the financial ability to support its obligations with respect
thereto and is not disputing or refusing to acknowledge same), on (a) the
business, assets, operations, or financial condition of the Consolidated Group,
taken as a whole, (b) the ability of (i) the U.S. Borrowers to perform their
obligations under this Credit Agreement or any of the other Credit Documents,
(ii) the Canadian Borrowers to perform their obligations under this Credit
Agreement or any other Credit Documents, or (iii) the Credit Parties, taken as a
whole, to perform their obligations under this Agreement or any of the other
Credit Documents, (c) the Collateral or (d) the validity or enforceability of
this Agreement, any of the other Credit Documents, or the rights and remedies of
the Lenders hereunder or thereunder, taken as a whole.
"Material Contract" means any written contract or other arrangement to
which any Borrower or any of its Subsidiaries is a party as to which the breach,
nonperformance, termination, cancellation or failure to renew by any party
thereto could reasonably be expected to have a Material Adverse Effect.
"Maturity Date" means the third anniversary of the Closing Date.
"Mexican Property" means the real estate owned by Xxxxxxxx Beach
Mexico, located at Parque Industrial Xxxxxxx Xxxxx, 00-0000 Xxxxxxxx, Xxxxxxxx,
Xxxxxx C.P. 25017.
"Mexican Property Financing" means (i) the sale and leaseback of any
Mexican Property, or (ii) the mortgage financing of any Mexican Property.
"Mexican Special Purpose Subsidiary" means any special purpose entity
formed by the Company or by an existing Mexican Subsidiary for the purpose of
creating Eligible Mexican Accounts Receivable.
"Mexican Subsidiaries" means, collectively, Grupo, Xxxxxxxx Beach
Mexico and Xxxxxxx-Silex Mexico and any Mexican Special Purpose Subsidiary.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan (other than a Multiemployer Plan)
which the U.S. Borrowers or any ERISA Affiliate and at least one other employer
other than any U.S. Borrower or any ERISA Affiliate are contributing sponsors.
"NACCO" means NACCO Industries, Inc., a Delaware corporation.
"Net Orderly Liquidation Value" means the appraised orderly liquidation
value of Eligible Inventory, net of all costs, fees and expenses of such
liquidation as determined from time to time pursuant to an Inventory Appraisal.
"Notes" means the Revolving Credit Notes, individually or collectively,
as appropriate.
25
"Notice of Borrowing" means the request by a Borrower for a Revolving
Loan in the form of Exhibit D.
"Notice of Continuation/Conversion" means a request by (a) the U.S.
Borrowers to (i) continue an existing Eurodollar Loan, (ii) convert a U.S. Base
Rate Loan to a Eurodollar Loan, or (iii) convert a Eurodollar Loan to a U.S.
Base Rate Loan or (b) the Canadian Borrowers to (i) continue a maturing Bankers'
Acceptance to a new maturity date, (ii) convert a maturing Bankers' Acceptance
to a Canadian Prime Rate Loan, (iii) convert a Canadian Prime Rate Loan to a
Bankers' Acceptance, (iv) continue an existing Eurodollar Loan, (v) convert a CA
U.S. Base Rate Loan to a Eurodollar Loan or (vi) convert a Eurodollar Loan to a
CA U.S. Base Rate Loan, in the form of Exhibit D.
"Obligations" means the Loans, any other loans and advances or
extensions of credit made or to be made by any Lender to any Borrower, or to
others for any Borrower's account in each case pursuant to the terms and
provisions of this Credit Agreement, together with interest thereon (including
interest which would be payable as post-petition interest in connection with any
bankruptcy or similar proceeding) and, including, without limitation, any
reimbursement obligation or indemnity of the Borrowers on account of Letters of
Credit, all other Letter of Credit Obligations and all BA Obligations and all
indebtedness, fees, liabilities and obligations which may at any time be owing
by any Borrower to any Lender (or an Affiliate of any Lender) in each case
pursuant to this Credit Agreement or any other Credit Document, whether now in
existence or incurred by a Borrower from time to time hereafter, whether
unsecured or secured by pledge, Lien upon or security interest in any of a
Borrower's assets or property or the assets or property of any other Person,
whether such indebtedness is absolute or contingent, joint or several, matured
or unmatured, direct or indirect and whether such Borrower is liable to such
Lender (or such Affiliate) for such indebtedness as principal, surety, endorser,
guarantor or otherwise. Obligations shall also include any other indebtedness
owing to any Lender (or an Affiliate of any Lender) by any Borrower under this
Credit Agreement and the other Credit Documents, any Borrower's liability to any
Lender (or an Affiliate of any Lender) pursuant to this Credit Agreement as
maker or endorser of any promissory note or other instrument for the payment of
money, any Borrower's liability to any Lender (or an Affiliate of any Lender)
pursuant to this Credit Agreement or any other Credit Document under any
instrument of guaranty or indemnity, or arising under any guaranty, endorsement
or undertaking which any Lender (or an Affiliate of any Lender) may make or
issue to others for any such Borrower's account pursuant to this Credit
Agreement, including any accommodation extended with respect to applications for
Letters of Credit, all liabilities and obligations owing from any Borrower to
any Lender, or any Affiliate of a Lender, arising under Lender Hedging
Agreements, all liabilities and obligations now or hereafter arising from or in
connection with any Cash Management Products, and all obligations of the
Guarantors to any Lender (or an Affiliate of any Lender) and the Administrative
Agent arising under or in connection with the Guaranty Agreement or any other
Credit Document, including, without limitation, the Guaranteed Obligations (as
defined in any Guaranty Agreement).
"Overadvance" means such term as defined in Section 2.1(c).
"Participation Interest" means a participation in Letters of Credit or
LOC Obligations purchased pursuant to Section 2.2 or in Loans or BA Obligations
purchased pursuant to Section 4.6 or Section 11.3.
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"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereof.
"Permitted Investments" means:
(a) cash and Cash Equivalents;
(b) money market investment programs that invest
exclusively in Cash Equivalents and that are classified as a current
asset in accordance with U.S. GAAP and that are administered by
broker-dealers reasonably acceptable to the Administrative Agent;
(c) Investments by (i) U.S. Credit Parties in Canadian
Credit Parties not to exceed $5,000,000 in the aggregate outstanding at
any time (which $5,000,000 limitation will include loans made pursuant
to Section 9.1(e)(iii)), (ii) Consolidated Parties in U.S. Credit
Parties; provided that the amount of the proceeds of Canadian Loans
invested in U.S. Credit Parties by the Canadian Borrower shall not
exceed the amount permitted by Section 9.1(e) and may only be invested
in the U.S. Credit Parties if the conditions in Section 9.1(e) are
satisfied, and (iii) Consolidated Parties (other than Credit Parties)
in Consolidated Parties;
(d) loans or advances in the usual and ordinary course of
business to officers, directors and employees for expenses incidental
to carrying on the business of the Credit Parties, including, without,
limitation, travel, entertainment, relocation and other reasonable
expenses associated with employee, officer, or director compensation
and perquisites;
(e) accounts receivable arising from the sale of goods
and services in the ordinary course of business of the Credit Parties;
(f) Investments received in settlement of debts (created
in the ordinary course of business) owing to a Credit Party;
(g) Investments existing on the Closing Date and set
forth on Schedule 1.1D attached hereto;
(h) Investments to the extent permitted pursuant to
Sections 9.1, 9.2, 9.4, 9.5, 9.7 and 9.11;
(i) promissory notes issued as consideration in
connection with asset sales and other dispositions permitted hereunder;
(j) Investments in deposit accounts opened in the
ordinary course of business;
(k) Investments in the Mexican Subsidiaries not to exceed
$3,000,000 in the aggregate for the term of this Credit Agreement;
(l) Investments of a nature not contemplated by the
foregoing clauses hereof not to exceed $3,000,000 in the aggregate for
the term of this Credit Agreement; and
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(m) such other Investments as the Administrative Agent
and the Required Lenders may approve in their reasonable discretion.
"Permitted Liens" means:
(a) Liens in favor of the Agents, the Issuing Lender and
the Lenders pursuant to any Credit Document or any Lender Hedging
Agreement;
(b) Liens for taxes, assessments, charges or other
government levies not yet due or as to which the period of grace, if
any, related thereto has not expired or which are being contested in
good faith by appropriate proceedings for which adequate reserves
determined in accordance with U.S. GAAP have been established;
(c) Liens in respect of property imposed by law arising
in the ordinary course of business such as landlord's, materialmen's,
mechanics', warehousemen's, supplier's or vendor's and other like Liens
provided that such Liens secure only amounts not delinquent by more
than 60 days or which are being contested in good faith by appropriate
actions or proceedings and for which adequate reserves have been
established;
(d) pledges or deposits made to secure payment of
workers' compensation insurance, unemployment insurance, pensions or
social security programs and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements;
(e) Liens arising from good faith deposits in connection
with or to secure performance of tenders, legal or other statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (other than
obligations in respect of the payment of borrowed money);
(f) easements, covenants, rights-of-way, restrictions
(including zoning restrictions, municipal ordinances, entitlements,
land use and environmental regulations), minor defects or
irregularities in title (including reservations, limitations, provisos
and conditions expressed in original grants from the Crown or other
grants of real or immovable property, or interests therein) and other
similar charges or encumbrances not impairing, in any material respect,
the use of such property for its intended purposes or interfering, in
any material respect, with the ordinary conduct of business of the
Credit Parties;
(g) Liens securing purchase money Indebtedness (including
Capital Leases) (it being understood for the purposes of this Agreement
that conditional sales contracts shall constitute purchase money
indebtedness) permitted by Section 9.1(d);
(h) Liens existing on property or assets of any Credit
Party as of the date of this Agreement and disclosed on Schedule 1.1E;
provided that the Liens set forth on Schedule 1.1E shall not extend to
or secure any Indebtedness other than any such Indebtedness outstanding
on the date hereof;
(i) judgments and other similar Liens arising in
connection with court proceedings to the extent such judgments do not
constitute Events of Default; provided the
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execution or other enforcement of such Lien is effectively stayed or
the claims secured thereby are being actively contested in good faith
and by appropriate proceedings;
(j) any interest or title of a lessor in the property
subject to any Capital Lease or operating lease; and
(k) Liens on the Mexican Property to secure the
Indebtedness permitted to be incurred hereunder pursuant to Section
9.1(k).
"Person" means any individual, Business Entity or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
ERISA) which is covered by ERISA and with respect to which the U.S. Borrowers or
any ERISA Affiliate is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" within the meaning of
Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement, of even date herewith,
between the Administrative Agent and the U.S. Borrowers, in the form attached
hereto as Exhibit O, as amended, supplemented or otherwise modified from time to
time.
"Pledged Collateral" shall have the meaning given to such term in the
Pledge Agreement.
"PPSA" means the Personal Property Security Act in effect from time to
time in Ontario, Canada (or such other analogous statute in effect from time to
time in any other province or territory of Canada, as applicable).
"Pre-Bankruptcy Kmart Accounts" means Accounts of Kmart with respect to
Inventory sold to Kmart prior to Kmart filing a voluntary petition for
bankruptcy on January 22, 2002.
"Xxxxxxx-Silex Mexico" means Xxxxxxx-Silex de Mexico Sociedad Anonima
de Capital Variable, a Mexican Subsidiary of the Company.
"Property" means any Real Estate, personal property or other asset
owned, leased or operated by any Credit Party or any of its Subsidiaries, as
applicable.
"Real Estate" means the real property owned or leased by the Credit
Parties described in Schedule 6.16 attached hereto, together with all
improvements and structures thereon.
"Regulation U or X" means Regulation U or X, respectively, of the Board
of Governors of the Federal Reserve System as from time to time in effect and
any successor to all or a portion thereof establishing reserve requirements.
"Replacement Lender" has the meaning set forth in Section 4.15.
"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the notice requirement has been
waived by regulation.
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"Required Lenders" means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitutes at least 51% of the aggregate Credit Exposure
of all Lenders at such time; provided, that if any Lender shall be a Defaulting
Lender at such time then there shall be excluded from the determination of
Required Lenders at such time the aggregate principal amount of Credit Exposure
of such Lender at such time. For purposes of the preceding sentence, the term
"Credit Exposure" as applied to each Lender shall mean (a) at any time prior to
the termination of the Commitments, the sum of (i) the U.S. Revolving Loan
Commitment Percentage of such Lender multiplied by the U.S. Revolving Loan
Commitments, plus (ii) the Canadian Revolving Loan Commitment Percentage of such
Lender multiplied by the Canadian Revolving Loan Commitments, and (b) at any
time after the termination of the Commitments, the sum of (i) the principal
balance of outstanding Revolving Loans of such Lender, plus (ii) the Face Amount
of all Bankers' Acceptances created by such Lender, plus (iii) such Lender's
Participation Interests in the face amount of outstanding Letters of Credit. In
determining each Lender's Credit Exposure as set forth above, amounts
denominated in Canadian Dollars shall be converted into U.S. Dollars based on an
exchange rate determined by the Administrative Agent in accordance with its
normal practices.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or final,
non-appealable determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or to which
any of its property is subject.
"Restricted Payment" means (i) any cash dividend or other cash
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any member of the Consolidated Group, now or hereafter
outstanding, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of Capital Stock of any member of the Consolidated Group now or
hereafter outstanding by such member of the Consolidated Group, except for any
redemption, retirement, sinking funds or similar payment payable solely in such
shares of that class of stock or in any class of stock junior to that class,
(iii) any cash payment made to redeem, purchase, repurchase or retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to
acquire any shares of any class of Capital Stock of any member of the
Consolidated Group now or hereafter outstanding or (iv) any payment to any
Affiliate of any Credit Party, including, without limitation, any management
fees payable to any Affiliate, except to the extent otherwise expressly
permitted in this Credit Agreement.
"Revolving Credit Notes" means the promissory notes of the Borrowers in
favor of each Lender evidencing the Revolving Loans and substantially in the
form of Exhibit F, as such promissory notes may be amended, modified,
supplemented or replaced from time to time.
"Revolving Loan Commitments" means the U.S. Revolving Loan Commitment
and the Canadian Revolving Loan Commitment.
"Revolving Loans" means the loans made pursuant to Section 2.1 and 2.3,
which may be U.S. Revolving Loans and/or Canadian Revolving Loans.
"Schedule I Bank" means a chartered bank listed in Schedule I to the
Bank Act (Canada).
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"Security Agreements" means the Canadian Security Agreement and the
U.S. Security Agreement.
"Security Documents" means, collectively, the Security Agreements, the
Pledge Agreement, the Holdings Pledge Agreement, any Acknowledgment Agreements
and any Lockbox Agreement.
"Senior Financial Officers" means the Senior Vice President, Finance
and Chief Financial Officer; Treasurer; or Assistant Treasurer of the Company or
any other Credit Party.
"Senior Management Members" means the President and Chief Executive
Officer; Vice President, Engineering and New Product Development; Vice
President, General Counsel and Secretary; Vice President, Marketing; Vice
President, Manufacturing; and Senior Vice President, Sales of the Company.
"Senior Officers" means each of the Senior Financial Officers and each
Senior Management Member and any other senior executive officer or similar
senior official of any of the Credit Parties responsible for administration of
the obligations of any such Credit Parties under or arising from or related to
this Credit Agreement.
"Settlement Period" means such term as defined in Section 2.7(a) and
(b).
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Solvent" means, with respect to any Person as of a particular date,
that as of such date (a) such Person is able to pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the
normal course of business, (b) 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 in their ordinary course, (c) such
Person is not engaged in a business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged or is to engage, (d)
the fair value of the assets of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities (without
duplication of any underlying liability related thereto), of such Person with
such assets being valued and liabilities being determined consistent with the
standards applicable under Section 101(32) of the Bankruptcy Code and Section 2
of the Uniform Fraudulent Transfer Act, and (e) the present fair saleable value
of the assets of such Person (on a going-concern basis) is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount which, in light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Special Dividend" means a dividend made by the Company pursuant to
Section 9.11(b)(ii)(B).
"Subordinated Debt" means unsecured Indebtedness incurred by Holdings,
the Company or any other Credit Party, which, in each case, is expressly
subordinated and made junior to the
31
payment and performance in full of the Obligations and contains terms and
conditions satisfactory to the Required Lenders; provided that Indebtedness from
a Credit Party to any direct or indirect owner of the Company that is evidenced
by a promissory note substantially in the form of Exhibit S shall constitute
Subordinated Debt for all purposes hereunder.
"Subsidiary" of any Person means (a) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of the capital stock of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person directly or indirectly
through Subsidiaries of such Person, and (b) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries of such Person has more than 50% of the equity interest at any
time.
"SunTrust Account" means Account No. 1000007622060, Routing No.
000000000, established and maintained in the name of the U.S. Borrowers at
SunTrust Bank, in Richmond, Virginia, or such other bank as the U.S. Borrowers
may elect with the consent of the Administrative Agent as secured party thereon.
"Tax Sharing Agreement" means that certain Amended Tax Sharing
Agreement dated as of May 14, 1997 among the affiliated group of corporations,
within the meaning of Section 1504(a) of the Code, of which NACCO is the common
parent.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan; (ii) the withdrawal of any U.S. Borrower or
any ERISA Affiliate from a Benefit Plan during a plan year in which such entity
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii)
the providing of notice of intent to terminate a Benefit Plan pursuant to
Section 4041 of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan or Multiemployer Plan; (v) any event or condition (a)
which is reasonably likely to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Benefit
Plan or Multiemployer Plan, or (b) that is reasonably likely to result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi)
the partial or complete withdrawal within the meaning of Sections 4203 and 4205
of ERISA, of any U.S. Borrower or any ERISA Affiliate from a Multiemployer Plan.
"Total Borrowing Base" means a U.S. dollar amount equal to the sum of
the U.S. Borrowing Base and the Canadian Borrowing Base.
"UCC" means such term as defined in Section 1.3.
"Unfinanced Capital Expenditures" means, for any period, all Capital
Expenditures not financed from proceeds of Consolidated Funded Debt (other than
Loans made under this Agreement).
"Unused Fees" means such term as defined in Section 4.5(a).
"U.S. Base Rate" means the higher of (a) the Federal Funds Rate plus
0.5% or (b) the U.S. Prime Rate; provided, however, that if in the reasonable
judgment of the Administrative Agent the Federal Funds Rate cannot be determined
then the U.S. Prime Rate shall apply until the
32
circumstances giving rise to such inability to determine the Federal Funds Rate
no longer exist. Any change in the U.S. Base Rate due to a change in the U.S.
Prime Rate or the Federal Funds Rate shall be effective as of the opening of
business on the effective day of such change in the U.S. Base Rate or the
Federal Funds Rate, respectively.
"U.S. Base Rate Loans" means any Loans accruing interest based on the
U.S. Base Rate.
"U.S. Borrowers" means the Company and such other Persons organized
under the laws of, and resident in, the United States that become parties hereto
pursuant to a Joinder Agreement in accordance with Section 7.11.
"U.S. Borrowing Base" means a U.S. dollar amount equal to the sum of
(a) an amount equal to the product of (i) 85% multiplied by (ii) the Eligible
Accounts Receivable of the U.S. Borrowers, plus (b) the U.S. Eligible Inventory
Amount, plus (c) the Eligible Trademarks Amount minus (d) $10,000,000, minus (e)
the Derivative Reserve minus (f) other reserves established by the
Administrative Agent from time to time in its sole discretion. Subject to the
relevant terms and provisions set forth herein, the Administrative Agent at all
times shall be entitled to adjust the advance rates and standards of eligibility
under this Credit Agreement in its sole discretion. Promptly, and in any event
within ten Business Days' thereafter, the Administrative Agent will notify the
Company if it establishes reserves or if it adjusts the advance rates and
standards of eligibility under this Credit Agreement.
"U.S. Collateral" means any and all assets and rights and interests in
or to property of the U.S. Credit Parties pledged from time to time as security
for the Obligations pursuant to the Security Documents whether now owned or
hereafter acquired.
"U.S. Credit Parties" means the U.S. Borrowers and all of their U.S.
Subsidiaries whether direct or indirect and whether now owned or hereafter
acquired, excluding Altoona.
"U.S. Dollar Equivalent" means such term as defined in Section 1.4.
"U.S. Eligible Inventory Amount" means, on any date of determination,
the lesser of (a) $60,000,000 (minus the amount of Eligible Inventory then
included in the Canadian Borrowing Base) and (b) the product of (i) the
Applicable Inventory Percentage applicable on such date multiplied by (ii) the
Eligible Inventory of the U.S. Borrowers as of such date.
"U.S. GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of Section
1.2.
"U.S. Lenders" means the Lenders identified as such on Schedule 1.1A
and such other Lenders as may be added in accordance with the terms of this
Agreement.
"U.S. Lockbox" means such term as defined in Section 3.1(a).
"U.S. Lockbox Account" means such term as defined in Section 3.1(b)(i).
"U.S. Lockbox Bank" means such term as defined in Section 3.1(a).
"U.S. Obligations" means the Obligations of the U.S. Borrowers.
33
"U.S. Prime Rate" means the per annum rate of interest established from
time to time by the Administrative Agent at its principal office in Charlotte,
North Carolina (or such other principal office of the Administrative Agent as
communicated in writing to the Borrowers and the Lenders) as its Prime Rate. Any
change in the interest rate resulting from a change in the U.S. Prime Rate shall
become effective as of 12:01 a.m. of the Business Day on which each change in
the U.S. Prime Rate is announced by the Administrative Agent. The U.S. Prime
Rate is a reference rate used by the Administrative Agent in determining
interest rates on certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit to any debtor.
"U.S. Revolving Loan Commitment" means $130,000,000 (U.S.), as such
amount may be reduced in accordance with Section 2.10 or increased in accordance
with Section 2.4.
"U.S. Revolving Loan Commitment Percentage" means, for each U.S.
Lender, the percentage identified as its U.S. Revolving Loan Commitment
Percentage opposite such U.S. Lender's name on Schedule 1.1A, as such percentage
may be modified by assignment in accordance with the terms of this Agreement.
"U.S. Revolving Loans" means the revolving loans made by the U.S.
Lenders to the U.S. Borrowers pursuant to Section 2.1.
"U.S. Security Agreement" means the Security Agreement, of even date
herewith, between the Administrative Agent and the U.S. Borrowers, in the form
attached hereto as Exhibit H-1.
"U.S. Unutilized Revolving Commitment" means, for any period, the
amount by which (a) the then applicable U.S. Revolving Loan Commitment exceeds
(b) the daily average sum for such period of the outstanding aggregate principal
amount of all U.S. Revolving Loans plus the daily average balance of LOC
Obligations for such period.
"Voting Stock" means, with respect to any Person, Capital Stock issued
by such Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even if the right so to vote has
been suspended by the happening of such a contingency.
"Wachovia" means Wachovia Bank, National Association, having its
principal office in North Carolina, and its successors and permitted assigns.
"Wachovia Account" means the internal Wachovia concentration account
into which funds transferred from the Wachovia Clearing Account will be
deposited and applied to the Obligations, established and maintained in the name
of the Administrative Agent at Wachovia.
"Wachovia Clearing Account" means the Wachovia Clearing Account No.
0000201037165, Routing No. 000000000, established and maintained in the name of
the U.S. Borrowers at SunTrust Bank or such other bank as the Administrative
Agent may elect, with the Administrative Agent named as secured party thereon or
such other account as the Administrative Agent shall establish from time to
time.
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1.2 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared in accordance with U.S. GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Agreement shall (except as otherwise expressly provided herein) be made by
application of U.S. GAAP applied on a basis consistent with those used in the
preparation of the latest annual, quarterly or monthly financial statements
under Section 7.1 (or prior to the delivery of the first financial statements
under Section 7.1 used in the preparation of the financial statements described
in Section 6.6). For purposes of calculating "pro forma" compliance with the
financial covenants set forth in Article VIII or the other financial tests set
forth in Article IX in respect of a proposed transaction, such transaction shall
be deemed to have occurred as of the first day of the twelve-month period ending
as of the most recent calendar month end preceding the date of such transaction
with respect to which the Administrative Agent has received the most recent
annual, monthly or quarterly financial reports of the Consolidated Group, as
applicable, provided, however, with respect to the calculation of the Fixed
Charge Coverage Ratio and the Leverage Ratio in Section 9.11(b)(ii)(B) hereof,
for purposes of calculating "pro forma" compliance with the requirements set
forth therein in order to pay a Special Dividend, the payment of such Special
Dividend shall be deemed to have occurred on the first day of the last month
occurring in the twelve-month period ending immediately prior to the date of
such proposed payment with respect to which the Administrative Agent has
received the most recent annual, monthly or quarterly financial reports of the
Consolidated Group, as applicable.
The Borrowers shall deliver to the Lenders at the same time as the
delivery of any annual, quarterly or monthly financial statement under Section
7.1, (a) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the most recent preceding annual, quarterly or monthly financial
statements and (b) reasonable estimates of the difference between such
statements arising as a consequence thereof.
Notwithstanding the foregoing, if any change in the accounting
principles used in the preparation of the latest annual, quarterly or monthly
financial statements under Section 7 is hereafter required or permitted by the
rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and are adopted by the
Consolidated Parties with the agreement of their independent certified public
accountants and such change results in a change in the method of calculation of
any of the covenants, standards or terms found in Article VIII or Article IX,
the parties hereto agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such change with the desired result that
the criteria for evaluating compliance with such covenants, standards and terms
by the Consolidated Parties shall be the same after such change as if such
change had not been made; provided, however, that no change in U.S. GAAP that
would affect the method of calculation of any of the covenants, standards or
terms shall be given effect in such calculations until such provisions are
amended, in a manner satisfactory to the Required Lenders and the Borrowers, so
as to reflect such change in accounting principles.
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1.3 OTHER DEFINITIONAL PROVISIONS.
Terms not otherwise defined herein which are defined in the Uniform
Commercial Code as in effect in the State of New York (the "UCC") shall have the
meanings given them in the UCC. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Credit Agreement shall refer to the
Credit Agreement as a whole and not to any particular provision of this Credit
Agreement, unless otherwise specifically provided. References in this Agreement
to "Articles", "Sections", "Schedules" or "Exhibits" shall be to Articles,
Sections, Schedules or Exhibits of or to this Agreement unless otherwise
specifically provided. Any of the terms defined in Section 1.1 may, unless the
context otherwise requires, be used in the singular or plural depending on the
reference. "Include", "includes" and "including" shall be deemed to be followed
by "without limitation" whether or not they are in fact followed by such words
or words of like import. "Writing", "written" and comparable terms refer to
printing, typing, computer disk, e-mail and other means of reproducing words in
a visible form. References to any agreement or contract are to such agreement or
contract as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof. References to any Person include the
successors and permitted assigns of such Person. References "from" or "through"
any date mean, unless otherwise specified, "from and including" or "through and
including", respectively. References to any times herein unless otherwise
specified herein shall refer to Eastern Standard or Daylight Savings time, as
from time to time in effect. Whenever any provision in any Credit Document
refers to the knowledge (or an analogous phrase) of any Credit Party, such words
are intended to signify that a Senior Officer of such Credit Party has actual or
constructive knowledge or awareness of a particular fact or circumstance.
1.4 DOLLAR EQUIVALENT PROVISIONS.
For the purpose of any provision of this Credit Agreement in which any
limitation, requirement, condition, event or circumstance is expressed by
reference to an amount in U.S. dollars: (a) any amount outstanding in Canadian
Dollars shall be converted to an amount in U.S. dollars (the "U.S. Dollar
Equivalent") based on an exchange rate as of the relevant date(s) determined by
the Canadian Agent in accordance with normal practices; and (b) such U.S. dollar
amount shall be converted to an amount in Canadian Dollars (the "Canadian Dollar
Equivalent") based on an exchange rate as of the relevant date(s) determined by
the Canadian Agent in accordance with normal practices.
ARTICLE II
THE LOANS
2.1 THE U.S. REVOLVING LOANS.
(a) U.S. Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each U.S. Lender agrees, severally and not jointly,
at any time and from time to time from the Effective Date to the Maturity Date,
to make revolving loans (each a "U.S. Revolving Loan" and collectively, the
"U.S. Revolving Loans") in U.S. dollars to the U.S. Borrowers; provided,
however, that (i) the aggregate amount of U.S. Revolving Loans outstanding plus
LOC Obligations outstanding at any one time may not exceed the lesser of the
U.S. Borrowing Base and the U.S.
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Revolving Loan Commitment; (ii) the aggregate amount of U.S. Revolving Loans
outstanding plus Canadian Revolving Loans outstanding plus LOC Obligations
outstanding plus the aggregate Face Amount of Bankers' Acceptances at any one
time may not exceed the lesser of the Total Borrowing Base and $140,000,000
(U.S.); and (iii) with regard to each individual U.S. Lender, the U.S. Lender's
pro rata share of outstanding U.S. Revolving Loans plus LOC Obligations
outstanding shall not exceed such U.S. Lender's U.S. Revolving Loan Commitment
Percentage of the U.S. Revolving Loan Commitment. U.S. Revolving Loans shall
consist of U.S. Base Rate Loans or Eurodollar Loans (or a combination thereof)
as the U.S. Borrowers may request, and the U.S. Borrowers may borrow, repay and
reborrow in accordance with the terms hereof.
(b) Method of Borrowing for U.S. Revolving Loans.
(i) U.S. Base Rate Loans. By no later than 12:00 noon, on
the date of the request, the applicable U.S. Borrower shall submit a
Notice of Borrowing to the Administrative Agent setting forth the
amount requested, the desire to have such Revolving Loan made as a U.S.
Base Rate Loan and complying in all respects with Section 5.2.
(ii) Eurodollar Loans. By no later than 12:00 noon, three
(3) Business Days prior to the date of the requested Eurodollar Loan,
the applicable U.S. Borrower shall submit a Notice of Borrowing to the
Administrative Agent setting forth the amount thereof, the desire to
have such Revolving Loan made as a Eurodollar Loan, the Interest Period
applicable thereto and complying in all respects with Section 5.2.
(c) Overadvances. Notwithstanding anything to the contrary
contained elsewhere herein, and whether or not a Default or Event of Default
exists at the time, unless otherwise objected to by the Required Lenders in
writing, the Administrative Agent may in its discretion require all U.S. Lenders
to honor requests or deemed requests by the U.S. Borrowers for U.S. Revolving
Loans at a time that an Overadvance exists or which would result in an
Overadvance and each U.S. Lender shall be obligated to continue to make its pro
rata share of U.S. Revolving Loans, up to a maximum amount outstanding equal to
its U.S. Revolving Loan Commitment, so long as (i) such Overadvance is not known
by the Administrative Agent to exceed $7,000,000, (ii) such Overadvance is not
outstanding for more than ten (10) consecutive Business Days, (iii) no other
Overadvance shall have been outstanding during the five (5) Business Days
immediately preceding the making of such Overadvance and (iv) no more than three
(3) Overadvances, including the Overadvance being requested, have been
outstanding during the 12 month period ending on the date for which such
Overadvance is requested. "Overadvance" shall mean, as of any date of
determination, the amount, if any, by which the outstanding principal balance of
U.S. Revolving Loans and LOC Obligations exceeds the U.S. Borrowing Base.
2.2 LETTER OF CREDIT SUBFACILITY.
(a) Issuance. Subject to the terms and conditions hereof and of
the LOC Documents, if any, and any other terms and conditions which the Issuing
Lender may reasonably require (so long as such terms and conditions do not
impose any financial obligation on or require any Lien not otherwise
contemplated by this Agreement to be given by any Credit Party or conflict with
any obligation of, or detract from any action which may be taken by, any Credit
Party under this Agreement), the Issuing Lender shall from time to time upon
request issue, in U.S. dollars, and the U.S. Lenders shall participate in,
letters of credit (the "Letters of Credit") for the account of the U.S.
Borrowers or any of their U.S. Subsidiaries, from the Effective Date until the
Maturity Date, in
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a form reasonably acceptable to the Issuing Lender; provided, however, that (i)
the aggregate amount of LOC Obligations shall not at any time exceed $5,000,000
(U.S.), (ii) the sum of the aggregate amount of LOC Obligations outstanding plus
U.S. Revolving Loans shall not exceed the lesser of the U.S. Borrowing Base and
the U.S. Revolving Loan Commitment, (iii) with respect to each individual U.S.
Lender, the U.S. Lender's pro rata share of outstanding U.S. Revolving Loans
plus its pro rata share of outstanding LOC Obligations shall not exceed such
U.S. Lender's Revolving Loan Commitment Percentage of the U.S. Revolving Loan
Commitment and (iv) the sum of U.S. Revolving Loans outstanding plus Canadian
Revolving Loans outstanding plus LOC Obligations outstanding plus the aggregate
Face Amount of Bankers' Acceptances at any one time shall not exceed the lesser
of the Total Borrowing Base and $140,000,000 (U.S.). The issuance and expiry
date of each Letter of Credit shall be a Business Day. Except as otherwise
expressly agreed upon by all the U.S. Lenders, no Letter of Credit shall have an
original expiry date more than one year from the date of issuance, or as
extended, shall have an expiry date extending beyond the Maturity Date, except
that prior to the Maturity Date a Letter of Credit may be issued or extended
with an expiry date extending beyond the Maturity Date, if and to the extent
that the U.S. Borrowers shall provide cash collateral to the Issuing Lender on
the Maturity Date in an amount equal to the maximum amount available to be drawn
under such Letter of Credit and the Required Lenders or the Issuing Lender shall
not otherwise object. Each Letter of Credit shall be either (x) a standby letter
of credit issued to support the obligations (including pension or insurance
obligations), contingent or otherwise, of a U.S. Borrower or any of its U.S.
Subsidiaries, or (y) a commercial letter of credit in respect of the purchase of
goods or services by a U.S. Borrower or any of its U.S. Subsidiaries in the
ordinary course of business. Each Letter of Credit shall comply with the related
LOC Documents.
(b) Notice and Reports. The request for the issuance of a Letter
of Credit shall be submitted to the Issuing Lender at least three (3) Business
Days prior to the requested date of issuance. The Issuing Lender will, at least
quarterly and more frequently upon request, provide to the Administrative Agent
for dissemination to the Lenders a detailed report specifying the Letters of
Credit which are then issued by it and outstanding and any activity with respect
thereto which may have occurred since the date of the prior report, and
including therein, among other things, the account party, the beneficiary, the
face amount, and the expiry date as well as any payments or expirations which
may have occurred. The Issuing Lender will further provide to the Administrative
Agent, promptly upon request, copies of the Letters of Credit issued by it.
(c) Participations. Each U.S. Lender, upon issuance of a Letter of
Credit, and as of the Closing Date with respect to the Existing Letters of
Credit, shall be deemed to have purchased without recourse a risk participation
from the Issuing Lender in such Letter of Credit and the obligations arising
thereunder and any collateral relating thereto, in each case in an amount equal
to its U.S. Revolving Loan Commitment Percentage of the obligations under such
Letter of Credit, and shall absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be obligated to pay to the Issuing
Lender therefor and discharge when due, its U.S. Revolving Loan Commitment
Percentage of the obligations arising under such Letter of Credit. Without
limiting the scope and nature of each U.S. Lender's participation in any Letter
of Credit, to the extent that the Issuing Lender has not been reimbursed as
required hereunder or under any such Letter of Credit, each such U.S. Lender
shall pay to the Issuing Lender its U.S. Revolving Loan Commitment Percentage of
such unreimbursed drawing in same day funds on the day of notification by the
Issuing Lender of an unreimbursed drawing pursuant to the provisions of
subsection (d) hereof. The obligation of each U.S. Lender to so reimburse the
Issuing Lender shall be absolute and unconditional and shall not be affected by
the occurrence of a Default, an Event of
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Default or any other occurrence or event. Any such reimbursement shall not
relieve or otherwise impair the obligation of the U.S. Borrowers or any other
U.S. Credit Party to reimburse the Issuing Lender under any Letter of Credit,
together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the U.S. Borrowers. Unless the
U.S. Borrowers shall immediately notify the Issuing Lender of its intent to
otherwise reimburse the Issuing Lender, the U.S. Borrowers shall be deemed to
have requested a U.S. Revolving Loan made as a U.S. Base Rate Loan, in the
amount of the drawing as provided in subsection (e) hereof, the proceeds of
which will be used to satisfy the reimbursement obligations. The U.S. Borrowers
shall reimburse the Issuing Lender on the day of drawing under any Letter of
Credit either with the proceeds of a U.S. Revolving Loan obtained hereunder or
otherwise in same day funds as provided herein or in the LOC Documents. If the
U.S. Borrowers shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear interest at a
per annum rate equal to the U.S. Base Rate, plus the sum of the Applicable
Percentage for Base Rate Loans and two percent (2%). Subject to Section
2.2(k)(v), the U.S. Borrowers' reimbursement obligations hereunder shall be
absolute and unconditional under all circumstances irrespective of (but without
waiver of) any rights of set-off, counterclaim or defense to payment that the
applicable account party or the U.S. Borrowers may claim or have against the
Issuing Lender, the Administrative Agent, the U.S. Lenders, the beneficiary of
the Letter of Credit drawn upon or any other Person, including without
limitation, any defense based on any failure of the applicable account party,
the U.S. Borrowers or any other U.S. Credit Party to receive consideration or
the legality, validity, regularity or unenforceability of the Letter of Credit.
The Issuing Lender will promptly notify the U.S. Lenders of the amount of any
unreimbursed drawing with respect to any Letters of Credit issued by it and each
U.S. Lender shall promptly pay to the Administrative Agent for the account of
the Issuing Lender, in Dollars and in immediately available funds, the amount of
such U.S. Lender's Revolving Loan Commitment Percentage of such unreimbursed
drawing. Such payment shall be made on the day such notice is received by such
U.S. Lender from the Issuing Lender if such notice is received at or before 2:00
p.m., otherwise such payment shall be made at or before 12:00 noon on the
Business Day next succeeding the day such notice is received. If such U.S.
Lender does not pay such amount to the Issuing Lender in full upon such request,
such U.S. Lender shall, on demand, pay to the Administrative Agent for the
account of the Issuing Lender interest on the unpaid amount during the period
from the date the U.S. Lender received the notice regarding the unreimbursed
drawing until such U.S. Lender pays such amount to the Issuing Lender in full at
a rate per annum equal to, if paid within two (2) Business Days of the date of
drawing, the Federal Funds Rate and thereafter at a rate equal to the U.S. Base
Rate. Each U.S. Lender's obligation to make such payment to the Issuing Lender,
and the right of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and without
regard to the termination of this Agreement or the Commitments hereunder, the
existence of a Default or Event of Default or the acceleration of the
obligations hereunder and shall be made without any offset, abatement,
withholding or reduction whatsoever. Simultaneously with the making of each such
payment by a U.S. Lender to the Issuing Lender, such U.S. Lender shall,
automatically and without any further action on the part of the Issuing Lender
or such U.S. Lender, acquire a participation in an amount equal to such payment
(excluding the portion of such payment constituting interest owing to the
Issuing Lender) in the related unreimbursed drawing portion of the LOC
Obligation and in the interest thereon and in the related LOC Documents, and
shall have a claim against the U.S. Borrowers and the other applicable U.S.
Credit Parties with respect thereto.
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(e) Repayment with Revolving Loans. On any day on which the U.S.
Borrowers shall have requested, or been deemed to have requested, a U.S.
Revolving Loan borrowing to reimburse a drawing under a Letter of Credit, the
Administrative Agent shall give notice to the U.S. Lenders that a U.S. Revolving
Loan has been requested or deemed requested in connection with a drawing under a
Letter of Credit, in which case a U.S. Revolving Loan borrowing comprised solely
of U.S. Base Rate Loans (each such borrowing, a "Mandatory Borrowing") shall be
immediately made from all U.S. Lenders (without giving effect to any termination
of the Commitments pursuant to Section 11.2) pro rata based on each U.S.
Lender's respective U.S. Revolving Loan Commitment Percentage and the proceeds
thereof shall be paid directly to the Issuing Lender for application to the
respective LOC Obligations. Each such U.S. Lender hereby irrevocably agrees to
make such U.S. Revolving Loans immediately upon any such request or deemed
request on account of each such Mandatory Borrowing in the amount and in the
manner specified in the preceding sentence and on the same such date
notwithstanding (i) the amount of Mandatory Borrowing may not comply with the
minimum amount for borrowings of U.S. Revolving Loans otherwise required
hereunder, (ii) whether any conditions specified in Section 5.2 are then
satisfied, (iii) whether a Default or Event of Default then exists, (iv) the
failure of any such request or deemed request for U.S. Revolving Loans to be
made by the time otherwise required hereunder, (v) the date of such Mandatory
Borrowing, or (vi) any reduction in the U.S. Revolving Loan Commitment or any
termination of the Commitments. In the event that any Mandatory Borrowing cannot
for any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the U.S.
Bankruptcy Code with respect to the U.S. Borrowers or any other U.S. Credit
Party), then each such U.S. Lender hereby agrees that it shall forthwith fund
(as of the date the Mandatory Borrowing would otherwise have occurred, but
adjusted for any payments received from the U.S. Borrowers on or after such date
and prior to such purchase) its Participation Interest in the outstanding LOC
Obligations; provided, further, that in the event any U.S. Lender shall fail to
fund its Participation Interest on the day the Mandatory Borrowing would
otherwise have occurred, then the amount of such U.S. Lender's unfunded
Participation Interest therein shall bear interest payable to the Issuing Lender
upon demand, at the rate equal to, if paid within two (2) Business Days of such
date, the Federal Funds Rate, and thereafter at a rate equal to the U.S. Base
Rate.
(f) Designation of Subsidiaries as Account Parties.
Notwithstanding anything to the contrary set forth in this Agreement, a Letter
of Credit issued hereunder may contain a statement to the effect that such
Letter of Credit is issued for the account of a U.S. Subsidiary of a U.S.
Borrower; provided that notwithstanding such statement, such U.S. Borrower shall
be the actual account party for all purposes of this Agreement for such Letter
of Credit and such statement shall not affect the U.S. Borrowers' reimbursement
obligations hereunder with respect to such Letter of Credit.
(g) Renewal and Extension. The issuance of any renewal of or
extensions to any Letter of Credit shall, for purposes hereof, be treated in all
respects the same as the issuance of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Letters of Credit shall be
subject to The Uniform Customs and Practice for Documentary Credits, as
published as of the date of issue by the International Chamber of Commerce
(Publication No. 500 or the most recent publication, the "UCP").
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(i) Responsibility of Issuing Lender. It is expressly understood
and agreed that the obligations of the Issuing Lender hereunder to the U.S.
Lenders are only those expressly set forth in this Agreement and that the
Issuing Lender shall be entitled to assume that the conditions precedent set
forth in Section 5.2 have been satisfied unless it shall have acquired actual
knowledge that any such condition precedent has not been satisfied; provided,
however, that nothing set forth in this Section 2.2 shall be deemed to prejudice
the right of any U.S. Lender to recover from the Issuing Lender any amounts made
available by such U.S. Lender to the Issuing Lender pursuant to this Section 2.2
in the event that it is determined by a court of competent jurisdiction that the
payment with respect to a Letter of Credit constituted gross negligence or
willful misconduct on the part of the Issuing Lender.
(j) Conflict with LOC Documents. In the event of any conflict
between this Agreement and any LOC Document, this Agreement shall govern.
(k) Indemnification of Issuing Lender.
(i) In addition to its other obligations under this
Agreement, the U.S. Borrowers hereby agree to protect, indemnify, pay
and save the Issuing Lender harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) that the Issuing Lender
may incur or be subject to as a consequence, direct or indirect, of (A)
the issuance of any Letter of Credit or (B) the failure of the Issuing
Lender to honor a drawing under a Letter of Credit 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 (all such acts
or omissions, herein called "Government Acts").
(ii) As between the U.S. Borrowers and the Issuing Lender,
the U.S. Borrowers shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof. The Issuing
Lender shall not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (B) the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective for any reason;
(C) failure of the beneficiary of a Letter of Credit to comply fully
with conditions required in order to draw upon a Letter of Credit; (D)
errors, omissions, interruptions or delays in transmission or delivery
of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under a
Letter of Credit or of the proceeds thereof; and (F) any consequences
arising from causes beyond the control of the Issuing Lender,
including, without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of the Issuing Lender's
rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any Letter
of Credit or the related certificates, if taken or omitted in good
faith, shall not put the Issuing Lender under any resulting liability
to the U.S. Borrowers or
41
any other U.S. Credit Party. It is the intention of the parties that
this Agreement shall be construed and applied to protect and indemnify
the Issuing Lender against any and all risks involved in the issuance
of the Letters of Credit, all of which risks are hereby assumed by the
U.S. Borrowers, including, without limitation, any and all risks of the
acts or omissions, whether rightful or wrongful, of any present or
future Government Acts. The Issuing Lender shall not, in any way, be
liable for any failure by the Issuing Lender or anyone else to pay any
drawing under any Letter of Credit as a result of any Government Acts
or any other cause beyond the control of the Issuing Lender.
(iv) Nothing in this subsection (k) is intended to limit
the reimbursement obligation of the U.S. Borrowers contained in this
Section 2.2. The obligations of the U.S. Borrowers under this
subsection (k) shall survive the termination of this Agreement. No act
or omission of any current or prior beneficiary of a Letter of Credit
shall in any way affect or impair the rights of the Issuing Lender to
enforce any right, power or benefit under this Agreement.
(v) Notwithstanding anything to the contrary contained in
this subsection (k), the U.S. Borrowers shall have no obligation to
indemnify the Issuing Lender in respect of any claim, demand, loss,
cost, charge, expense and liability incurred by the Issuing Lender
arising out of the gross negligence or willful misconduct of the
Issuing Lender, as determined by a court of competent jurisdiction.
Nothing in this Agreement shall relieve the Issuing Lender of any
liability to the U.S. Borrowers in respect of any action taken by the
Issuing Lender which action constitutes gross negligence or willful
misconduct of the Issuing Lender or a violation of the UCP or Uniform
Commercial Code (as applicable), as determined by a court of competent
jurisdiction.
2.3 THE CANADIAN REVOLVING LOANS.
(a) Canadian Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each Canadian Lender agrees, severally and not
jointly, at any time and from time to time from the Effective Date to the
Maturity Date, to make revolving loans (each a "Canadian Revolving Loan" and
collectively, the "Canadian Revolving Loans") to the Canadian Borrowers in
Canadian Dollars or U.S. Dollars, as requested by the Canadian Borrowers;
provided, however, that (i) the aggregate amount of Canadian Revolving Loans
plus the aggregate Face Amount of Bankers' Acceptances at any time outstanding
may not exceed the lesser of the Canadian Borrowing Base and the Canadian
Revolving Loan Commitment; (ii) the aggregate amount of U.S. Revolving Loans
outstanding plus Canadian Revolving Loans outstanding plus LOC Obligations
outstanding plus the aggregate Face Amount of Bankers' Acceptances at any time
outstanding may not exceed the lesser of the Total Borrowing Base and
$140,000,000 (U.S.); and (iii) with regard to each individual Canadian Lender,
the Canadian Lender's pro rata share of Canadian Revolving Loans outstanding
plus such Canadian Lender's pro rata share of the aggregate Face Amount of
Bankers' Acceptances at any time outstanding shall not exceed such Canadian
Lender's Canadian Revolving Loan Commitment Percentage of the Canadian Revolving
Loan Commitment. Canadian Revolving Loans shall consist of Canadian Base Rate
Loans or Eurodollar Loans (or a combination thereof) as the Canadian Borrowers
may request and the Canadian Borrowers may borrow, repay and reborrow in
accordance with the terms hereof. All Canadian Revolving Loans advanced on the
Effective Date shall be Canadian Base Rate Loans and may thereafter be converted
to Eurodollar Loans in accordance with Section 4.1.
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(b) Method of Borrowing for Canadian Revolving Loans.
(i) Canadian Base Rate Loans. By no later than 12:00
noon, Toronto, Ontario time, on the date of the request, the applicable
Canadian Borrower shall submit a Notice of Borrowing to the Canadian
Agent setting forth the amount requested, the desire to have such
Revolving Loan made as a CA U.S. Base Rate Loan or a Canadian Prime
Rate Loan and complying in all respects with Section 5.2; provided,
however, that certain Canadian Base Rate Loans may be made without a
Notice of Borrowing in accordance with Section 2.7(b). All or any
portion of such CA U.S. Base Rate Loans may be converted into
Eurodollar Loans and all or any portion of such Canadian Prime Rate
Loans may be converted into Bankers' Acceptances, in each case, in
accordance with the terms of Section 4.1.
(ii) Eurodollar Loans. By no later than 12:00 noon,
Toronto, Ontario time, three (3) Business Days prior to the date of the
requested Canadian Revolving Loan, the applicable Canadian Borrower
shall submit a Notice of Borrowing to the Canadian Agent setting forth
the amount thereof, the desire to have such Revolving Loan made as a
Eurodollar Loan, the Interest Period applicable thereto, and complying
in all respects with Section 5.2.
(iii) Bankers' Acceptances. In addition to Canadian Base
Rate Loans and Eurodollar Loans, the Canadian Revolving Loan Commitment
may be utilized by the creation of Bankers' Acceptances pursuant to
Section 2.5 hereof.
2.4 FACILITY REALLOCATION INCREASE.
Subject to the terms and conditions set forth herein, the Borrowers
shall have the right, at any time and from time to time from the Closing Date
until the Maturity Date, in addition to the rights set forth in Section 2.10
hereof, (a) to reduce the Canadian Revolving Loan Commitment or the U.S.
Revolving Loan Commitment by up to $10,000,000, on a pro rata or individual
basis, and (b) may either increase the Canadian Revolving Loan Commitment to up
to $15,000,000 or the U.S. Revolving Loan Commitment to up to $140,000,000, but
in each case by not more than the amount by which the other facility shall have
been reduced in accordance with clause (a) of this Section 2.4 (each, a
"Facility Reallocation Increase"). The following terms and conditions shall
apply to each Facility Reallocation Increase: (i) the Borrowers shall notify the
Agents in writing at least thirty (30) days in advance of the proposed effective
date of the Facility Reallocation Increase, (ii) the extensions of credit made
under any such Facility Reallocation Increase shall constitute Obligations and
will be secured and guaranteed with the other Obligations as provided in the
Security Documents, (iii) any such Facility Reallocation Increase shall be
obtained from existing Lenders or from other banks, financial institutions or
investment funds, in each case in accordance with the terms set forth below,
(iv) any such Facility Reallocation Increase shall be in a minimum principal
amount of $1,000,000 and integral multiples of $1,000,000 in excess thereof, (v)
the Borrowers shall execute such promissory notes as are necessary to reflect
the additional Revolving Loans under any such Facility Reallocation Increase,
and (vi) the conditions to Extensions of Credit in Section 5.2 shall have been
satisfied. Participation in any such Facility Reallocation Increase hereunder
shall be offered first to Wachovia (or its affiliates) and then to each of the
other existing Lenders, but each such Lender shall have no obligation to provide
all or any portion of such Facility Reallocation Increase. If the amount of the
Facility Reallocation Increase requested by the Company shall exceed the
43
commitments which the existing Lenders are willing to provide with respect to
such Facility Reallocation Increase, then the Company may invite other banks,
financial institutions and investment funds reasonably acceptable to the
Administrative Agent to join this Agreement as Lenders hereunder for the portion
of such Facility Reallocation Increase not taken by existing Lenders, provided
that such other banks, financial institutions and investment funds shall enter
into such joinder agreements to give effect thereto as the Administrative Agent
and the Company may reasonably request. The Administrative Agent is authorized
to enter into, on behalf of the Lenders, any amendment to this Agreement or any
other Credit Document as may be necessary for the sole purpose of incorporating
the terms of any new Facility Reallocation Increase therein.
2.5 BANKERS' ACCEPTANCES.
(a) Form.
(i) To facilitate the acceptance of Bankers' Acceptances
hereunder, the Canadian Borrowers hereby appoint each Canadian Lender
as their attorney to sign and endorse on their behalf, as and when
considered necessary by such Canadian Lender, an appropriate number of
orders in the form prescribed by such Canadian Lender.
(ii) Each Canadian Lender may, at its option, execute any
order in handwriting or by the facsimile or mechanical signature of any
of its authorized officers, and the Canadian Lenders are hereby
authorized to accept or pay, as the case may be, any order of the
Canadian Borrowers which purports to bear such a signature
notwithstanding that any such individual has ceased to be an authorized
officer of such Canadian Lender. Any such order or Bankers' Acceptance
shall be as valid as if he or she were an authorized officer at the
date of issue of the order or Bankers' Acceptance.
(iii) Any order signed by a Canadian Lender as attorney for
the Canadian Borrowers, whether signed in handwriting or by the
facsimile or mechanical signature of an authorized officer of a
Canadian Lender, may be dealt with by the Canadian Agent or any
Canadian Lender for all intents and purposes and shall bind the
Canadian Borrowers as if duly signed and issued by the Canadian
Borrowers.
(iv) The receipt by the Canadian Agent of a notice under
Section 2.5(d) requesting Bankers' Acceptances shall be each Canadian
Lender's sufficient authority to execute, and each Canadian Lender
shall, subject to the terms and conditions of this Credit Agreement,
execute orders in accordance with such request, and the orders so
executed shall thereupon be deemed to have been presented for
acceptance.
(b) Issuance. Subject to the terms and conditions hereof and of
the BA Documents executed in connection with the creation of each Banker's
Acceptance and any other terms and conditions which the Canadian Lenders may
reasonably require (so long as such terms and conditions do not impose any
financial obligation on or require any Lien (not otherwise contemplated by this
Credit Agreement) to be given by the Canadian Borrowers or any other Credit
Party or conflict with any obligation of, or detract from any action which may
be taken by, any Credit Party under this Agreement), each Canadian Lender
agrees, subject to Section 2.5(i)(iii) below, severally and not jointly, at any
time and from time to time (from the Effective Date to the Maturity Date or such
earlier date on which the Canadian Revolving Loan Commitment has been terminated
as provided herein), to create Bankers' Acceptances by accepting orders of the
Canadian
44
Borrowers presented to it for acceptance equal to such Canadian Lender's
Canadian Revolving Loan Commitment Percentage of such Bankers' Acceptances as
the Canadian Borrowers may request on such date; provided, however, that (i) the
sum of the aggregate Face Amount of Bankers' Acceptances outstanding plus the
aggregate amount of Canadian Revolving Loans outstanding shall not exceed the
Canadian Revolving Loan Commitment, (ii) with respect to each individual
Canadian Lender, such Lender's pro rata share of outstanding Canadian Revolving
Loans plus its pro rata share of the Face Amount of Bankers' Acceptances
outstanding shall not exceed such Lender's Canadian Revolving Loan Commitment
Percentage of the Canadian Revolving Loan Commitment, and (iii) if the Face
Amount of a Bankers' Acceptance, which would otherwise be accepted by a Canadian
Lender, would not be C$100,000 or a larger multiple thereof, such Face Amount
shall be increased or reduced by the Canadian Agent in its discretion to the
nearest multiple of C$100,000. Upon the acceptance of any order of the Canadian
Borrowers pursuant hereto, the Canadian Borrowers shall pay to the Canadian
Agent on behalf of each of the applicable Canadian Lenders, in advance, the
Acceptance Fee, which payment shall be satisfied by the Canadian Lenders
deducting the same from the BA Discount Proceeds in accordance with Section
2.5(i)(ii). Forthwith after each request for drawdown of, continuation of or
conversion into Bankers' Acceptances, the Canadian Agent shall notify each
Canadian Lender of the amount of Bankers' Acceptances to be accepted by such
Canadian Lender. The Canadian Borrowers shall as soon as practical deliver to
the Canadian Agent a notice confirming the issuance of Bankers' Acceptances and
specifying the BA Discount Proceeds derived therefrom. For greater certainty,
with respect to each extension of credit by way of Bankers' Acceptances, each
Bankers' Acceptance shall have the same term and, upon sale, each Bankers'
Acceptance shall be discounted at the Applicable BA Discount Rate.
(c) Requirements of Bankers' Acceptances. Each Bankers' Acceptance
shall comply with the related BA Documents and shall be executed by the Canadian
Borrowers and presented to the Canadian Lenders pursuant to such procedures as
are provided for in such BA Documents or as otherwise provided or required by a
Canadian Lender. The creation and maturity date of each Bankers' Acceptance
shall be a Business Day and no Bankers' Acceptance shall have a maturity date
later than the Maturity Date.
(d) Method of Requesting a Bankers' Acceptance. By no later than
12:00 noon, Toronto, Ontario time, on the date of the requested Bankers'
Acceptance, which shall be a Business Day, the Canadian Borrowers shall submit
an irrevocable notice, substantially in the form of Exhibit G, or in the event
of a conversion or continuation under Section 4.1(b)(ii), Exhibit D, to the
Canadian Agent setting forth the aggregate amount of Bankers' Acceptances
requested and the maturity date of the requested Bankers' Acceptances which
shall be for periods of 30, 60, 90 or 180 days, at the election of the Canadian
Borrowers, and complying in all respects with subsection 5.2.
(e) Safekeeping of Orders. Any executed orders to be used as
Bankers' Acceptances which are delivered to or held by a Canadian Lender shall
be held in safekeeping with the same degree of care as if they were such
Canadian Lender's own property, and shall be kept at the place at which such
orders are ordinarily held by such Canadian Lender, provided that such Canadian
Lender shall not be deemed to be an insurer thereof.
(f) Maturity/Continuations. The Canadian Borrowers shall pay to
the Canadian Agent, and there shall become due and payable, at 2:00 p.m.,
Toronto, Ontario time, on the maturity date for each Bankers' Acceptance an
amount in Canadian Dollars in same day funds equal to the Face Amount of such
Bankers' Acceptance (notwithstanding that any Canadian Lender which accepted
45
any such Bankers' Acceptance may be the holder thereof at maturity); provided,
however, that subject to Section 4.10 and provided that the Canadian Borrowers
have, by giving notice in accordance with Section 2.5(d) or Section 4.1,
requested the Canadian Lenders to accept their orders to replace all or a
portion of outstanding Bankers' Acceptances as they mature, each Canadian Lender
shall, on the maturity of such Bankers' Acceptances, accept the Canadian
Borrowers' order(s) having an aggregate Face Amount equal to such Canadian
Lender's pro rata share of such new Face Amount as will result in the aggregate
BA Discount Proceeds, net of the Acceptance Fees, of the new order(s) being
equal to (or, due to the operation of 2.5(h), exceeding to the least extent
possible) the aggregate Face Amount of the matured Bankers' Acceptances or the
portion thereof to be replaced.
(g) Repayments Prior to Maturity. Repayment of the Face Amount of
a Bankers' Acceptance may be made, prior to the maturity date thereof, by the
Canadian Borrowers to the Canadian Agent on behalf of the Canadian Lender that
has accepted such Bankers' Acceptance, but the amount repaid shall be held on
deposit by such Canadian Lender until the maturity date of such Bankers'
Acceptance. The Canadian Borrowers shall be entitled to the benefit of any
interest accruing on such deposit, and on the maturity date of such Bankers'
Acceptance, such Canadian Lender shall apply such interest in payment of amounts
owed by the Canadian Borrowers hereunder. Any such repayment of the Face Amount
of a Bankers' Acceptance by the Canadian Borrowers to the Canadian Agent on
behalf of a Canadian Lender shall satisfy the Canadian Borrowers' obligations
under the Bankers' Acceptance so repaid, and such Canadian Lender shall
thereafter be solely responsible for the payment of such Bankers' Acceptance.
(h) Minimum Amounts. Each request for Bankers' Acceptances shall
be in a minimum aggregate amount of C$1,000,000 and in an integral multiple of
C$100,000 above such amount. The Face Amount of each Bankers' Acceptance created
hereunder shall be C$100,000 or any multiple thereof.
(i) Funding of Bankers' Acceptances.
(i) Subject to subsections (ii) and (iii) below, each
Canadian Lender shall, not later than 2:00 p.m., Toronto, Ontario time,
on the date of creation of Bankers' Acceptances, accept orders of the
Canadian Borrowers which are presented to it for acceptance in an
amount equal to each Canadian Lender's Canadian Revolving Loan
Commitment Percentage of the aggregate Face Amounts of Bankers'
Acceptances created on such date; provided, however, that if the Face
Amount of a Banker's Acceptance, which would otherwise be accepted by a
Canadian Lender, would not be C$100,000 or a larger multiple thereof,
such Face Amount shall be increased or reduced by the Canadian Agent in
its discretion to the nearest multiple of C$100,000. Subject to the
provisions hereof, the Canadian Agent shall be responsible for making
all necessary arrangements with each of the Canadian Lenders with
respect to the acceptance of Bankers' Acceptances.
(ii) Each Canadian Lender shall transfer to the Canadian
Agent for value on such creation date immediately available Canadian
Dollars in an aggregate amount equal to the BA Discount Proceeds of all
Bankers' Acceptances accepted and sold or purchased by such Canadian
Lender on such date net of the applicable Acceptance Fee and net of the
amount required to pay any of its previously accepted Bankers'
Acceptances that are maturing on such date or its percentage of any
Canadian Revolving Loan that is being converted to Bankers' Acceptances
on such date.
46
(iii) Subject to subsection 4.10, if (A) a Canadian Lender
is not a bank, and gives a general notice to the Canadian Agent and the
Canadian Borrowers that such Canadian Lender is therefore unable to
create Bankers' Acceptances, or (B) in the sole judgment of a Canadian
Lender, such Canadian Lender is unable to create a Bankers' Acceptance
in accordance with this Agreement, such Canadian Lender shall give an
irrevocable notice to such effect to the Canadian Agent and the
Canadian Borrowers prior to 12:00 noon, Toronto, Ontario time, one
Business Day prior to the date of such requested Bankers' Acceptance.
In such event, such Canadian Lender shall make available to the
Canadian Borrowers prior to 2:00 p.m., Toronto, Ontario time, on the
date of the requested creation of the Bankers' Acceptance, a Canadian
Dollar loan (a "BA Equivalent Loan") in a principal amount equal to the
BA Discount Proceeds of such Canadian Lender's pro rata share of the
aggregate of the Face Amounts of Bankers' Acceptances to be created on
such date and all of such BA Equivalent Loans to be made pursuant to
this Section 2.5(i)(iii) on such date, such BA Equivalent Loan to be
funded in the same manner as the Bankers' Acceptances provided by the
other Canadian Lenders. A BA Equivalent Loan shall have the same term
as the Bankers' Acceptance for which it is a substitute and shall bear
such interest per annum throughout the term thereof as shall permit
such Canadian Lender to obtain the same effective rate as if such
Canadian Lender had accepted and purchased a Bankers' Acceptance at the
same Acceptance Fee and pricing at which the Canadian Agent would have
accepted and purchased such Bankers' Acceptance on the bid side of the
market at approximately 2:00 p.m., Toronto, Ontario time, on the date
such BA Equivalent Loan is made. The Canadian Borrowers hereby agree
that if a BA Equivalent Loan is made by a Canadian Lender interest
shall be payable in advance on the date of such loan by deducting the
interest payable in respect thereof from the principal amount of such
BA Equivalent Loan. It is the intention of the parties that BA
Equivalent Loans be considered the equivalent of Bankers' Acceptances,
and that references in this Agreement to Bankers' Acceptances be
construed accordingly; without limiting the generality of the
foregoing, whenever in this Agreement a reference is made to the
creation, conversion into or from, continuation, prepayment or
repayment of any Bankers' Acceptances, such reference shall, unless the
context requires otherwise, be read as including a reference to the
making, conversion into or from, continuation, prepayment or repayment
of the BA Equivalent Loans made concurrently with the creation of such
Bankers' Acceptances.
The Canadian Agent shall promptly inform the Administrative Agent of the
creation of Bankers' Acceptances and the terms thereof. No Canadian Lender shall
be responsible for the failure or delay by any other Canadian Lender in its
obligation to create Bankers' Acceptances hereunder; provided, however, that the
failure of any Canadian Lender to fulfill its Commitment hereunder shall not
relieve any other Canadian Lender of its Commitment hereunder.
2.6 MINIMUM AMOUNTS OF LOANS.
Revolving Loans made as Base Rate Loans shall be in minimum principal
amounts of $500,000 and in $100,000 increments in excess thereof (provided,
however, that Base Rate Loans made pursuant to Section 2.7(a)(ii) or 2.7(b)(ii)
may be made in minimum principal amounts of $100,000 and in $10,000 increments
in excess thereof). Revolving Loans made as Eurodollar Loans shall be in minimum
principal amounts of $1,000,000 and in $500,000 increments in excess thereof. No
more than eight (8) Eurodollar Loans shall be outstanding hereunder at any one
time. For the purposes of this Section, (i) Eurodollar Loans with the same
47
Interest Period shall be considered as one Eurodollar Loan and (ii) Eurodollar
Loans with different Interest Periods shall be considered as separate Eurodollar
Loans, even if they begin on the same date, although borrowings, conversions and
continuations may, in accordance with the provisions hereof, be combined at the
end of existing Interest Periods to constitute a new Eurodollar Loan with a
single Interest Period.
2.7 FUNDING OF LOANS TO BORROWERS.
(a) U.S. Revolving Loans.
(i) Upon receipt of a Notice of Borrowing requesting U.S.
Revolving Loans, the Administrative Agent shall promptly inform the
U.S. Lenders as to the terms thereof. Each U.S. Lender will make its
pro rata share of each U.S. Revolving Loan available to the
Administrative Agent by 2:00 p.m., on the date specified in the Notice
of Borrowing by deposit (in U.S. dollars) of immediately available
funds at the offices of the Administrative Agent at the address
provided in Section 14.1, or at such other address as the
Administrative Agent may designate in writing. All U.S. Revolving Loans
shall be made by the U.S. Lenders pro rata on the basis of each U.S.
Lender's U.S. Revolving Loan Commitment Percentage. The amount of the
U.S. Revolving Loans will then be made available to the U.S. Borrowers
by the Administrative Agent by crediting the account of the U.S.
Borrowers on the books of such office of the Administrative Agent to
the extent of the amount of such U.S. Revolving Loans made available to
the Administrative Agent.
(ii) Because the U.S. Borrowers anticipate requesting
borrowings of U.S. Revolving Loans on a daily basis and repaying U.S.
Revolving Loans on a daily basis through the collection of Accounts and
the proceeds of other Collateral, resulting in the amount of
outstanding U.S. Revolving Loans fluctuating from day to day, in order
to administer the U.S. Revolving Loans in an efficient manner and to
minimize the transfer of funds between the Administrative Agent and the
U.S. Lenders, the U.S. Lenders hereby instruct the Administrative
Agent, and the Administrative Agent may (but is not obligated to) (A)
make available, on behalf of the U.S. Lenders, the full amount of all
U.S. Revolving Loans requested by the U.S. Borrowers (by telephone,
followed by written confirmation) not to exceed $10,000,000 in the
aggregate at any one time outstanding without requiring that the U.S.
Borrowers give the Administrative Agent a written Notice of Borrowing
with respect to such borrowing and without giving each U.S. Lender
prior notice of the proposed borrowing, of such U.S. Lender's Revolving
Loan Commitment Percentage thereof and the other matters covered by the
Notice of Borrowing and (B) if the Administrative Agent has made any
such amounts available as provided in clause (A), upon repayment of
U.S. Revolving Loans by the U.S. Borrowers, apply such amounts repaid
directly to the amounts made available by the Administrative Agent in
accordance with clause (A) and not yet settled as described below;
provided that the Administrative Agent shall not advance funds as
described in clause (A) above if the Administrative Agent has actually
received prior to such borrowing (1) an officer's certificate from the
Company or any U.S. Borrower pursuant to and in accordance with Section
7.1(g) that a Default or Event of Default is in existence, which
Default or Event of Default has not been cured or waived in accordance
with the terms hereof, or (2) a Notice of Borrowing with respect to
such borrowing from any U.S. Borrower wherein the certification
provided therein states that the conditions to the making of the
requested U.S. Revolving Loans have not been satisfied or (3) a written
notice from any U.S.
48
Lender that the conditions to such borrowing have not been satisfied,
which officer's certificate, Notice of Borrowing or notice, in each
case, shall not have been rescinded.
Proceeds of U.S. Revolving Loans made pursuant to this Section
2.7(a)(ii) shall be transferred directly to the Wachovia Clearing
Account and applied to the payment of control disbursement checks and
other appropriate charges to such account designated from time to time
by the U.S. Borrowers or as otherwise provided for herein and in the
other Credit Documents. Wire transfers on any Business Day from the
Wachovia Clearing Account must be specifically requested by the U.S.
Borrowers by telecopy by no later than 1:00 p.m. on such Business Day.
If the Administrative Agent advances U.S. Revolving Loans on
behalf of the U.S. Lenders, as provided in the immediately preceding
paragraphs, the amount of outstanding U.S. Revolving Loans and each
U.S. Lender's U.S. Revolving Loan Commitment Percentage thereof shall
be computed weekly rather than daily and shall be adjusted upward or
downward on the basis of the amount of outstanding U.S. Revolving Loans
as of 5:00 p.m. on the Business Day immediately preceding the date of
each computation; provided, however, that the Administrative Agent
retains the absolute right at any time or from time to time to make the
aforedescribed adjustments at intervals more frequent than weekly. The
Administrative Agent shall deliver to each of the U.S. Lenders after
the end of each week, or such lesser period or periods as the
Administrative Agent shall determine, a summary statement of the amount
of outstanding U.S. Revolving Loans for such period (such week or
lesser period or periods being hereafter referred to as a "Settlement
Period"). If the summary statement is sent by the Administrative Agent
and received by the U.S. Lenders prior to 12:00 noon on any Business
Day each U.S. Lender shall make the transfers described in the next
succeeding sentence no later than 3:00 p.m. on the day such summary
statement was sent; and if such summary statement is sent by the
Administrative Agent and received by the U.S. Lenders after 12:00 noon
on any Business Day, each U.S. Lender shall make such transfers no
later than 3:00 p.m. on the next succeeding Business Day. If in any
Settlement Period, the amount of a U.S. Lender's U.S. Revolving Loan
Commitment Percentage of the U.S. Revolving Loans is in excess of the
amount of U.S. Revolving Loans actually funded by such U.S. Lender,
such U.S. Lender shall forthwith (but in no event later than the time
set forth in the next preceding sentence) transfer to the
Administrative Agent by wire transfer in immediately available funds
the amount of such excess; and if the amount of a U.S. Lender's U.S.
Revolving Loan Commitment Percentage of the U.S. Revolving Loans in any
Settlement Period is less than the amount of U.S. Revolving Loans
actually funded by such U.S. Lender, the Administrative Agent shall
forthwith transfer to such U.S. Lender by wire transfer in immediately
available funds the amount of such difference. The obligation of each
of the U.S. Lenders to transfer such funds shall be irrevocable and
unconditional and without recourse to or warranty by the Administrative
Agent.
Each of the Administrative Agent and the U.S. Lenders agree to
xxxx their respective books and records at the end of each Settlement
Period to show at all times the dollar amount of their respective U.S.
Revolving Loan Commitment Percentages of the outstanding U.S. Revolving
Loans. Because the Administrative Agent on behalf of the U.S. Lenders
may be advancing and/or may be repaid U.S. Revolving Loans prior to the
time when the U.S. Lenders will actually advance and/or be repaid U.S.
Revolving Loans, interest with respect to U.S. Revolving Loans shall be
allocated by the Administrative
49
Agent to each U.S. Lender (including the Administrative Agent) in
accordance with the amount of U.S. Revolving Loans actually advanced by
and repaid to each U.S. Lender (including the Administrative Agent)
during each Settlement Period and shall accrue from and including the
date such U.S. Revolving Loans are advanced by the Administrative Agent
to but excluding the date such U.S. Revolving Loans are repaid by the
U.S. Borrowers in accordance with Section 4.3 or actually settled by
the applicable U.S. Lender as described in this Section 2.7(a)(ii). For
purposes hereof, the U.S. Revolving Loans shall be deemed paid as and
to the extent set forth in Section 3.1(b). All such U.S. Revolving
Loans shall be made as U.S. Base Rate Loans.
(b) Canadian Revolving Loans.
(i) Upon receipt of a Notice of Borrowing requesting a
Canadian Revolving Loan, the Canadian Agent shall promptly inform the
Canadian Lenders of the receipt thereof. Each Canadian Lender will make
its pro rata share of such Canadian Revolving Loan available to the
Canadian Agent by 12:00 noon, Toronto, Ontario time, on the date
specified in the Notice of Borrowing by deposit (in Canadian Dollars or
U.S. dollars, as appropriate, as requested by the Canadian Borrowers)
of immediately available funds at the office of the Canadian Agent at
the address provided in Section 14.1. All Canadian Revolving Loans
shall be made by the Canadian Lenders pro rata on the basis of each
Canadian Lender's Canadian Revolving Loan Commitment Percentage. The
amount of the Canadian Revolving Loans will then be made available to
the applicable Canadian Borrower by the Canadian Agent by crediting the
account of such Canadian Borrower on the books of such office of the
Canadian Agent to the extent of the amount of such Canadian Revolving
Loan made available to the Canadian Agent.
(ii) Because the Canadian Borrowers anticipate requesting
borrowings of Canadian Revolving Loans on a daily basis and repaying
Canadian Revolving Loans on a daily basis through the collection of
Accounts and the proceeds of other Collateral, resulting in the amount
of outstanding Canadian Revolving Loans fluctuating from day to day, in
order to administer the Canadian Revolving Loans in an efficient manner
and to minimize the transfer of funds between the Canadian Agent and
the Canadian Lenders, the Canadian Lenders hereby instruct the Canadian
Agent, and the Canadian Agent may (but is not obligated to) (A) make
available, on behalf of the Canadian Lenders, the full amount of all
Canadian Revolving Loans requested by the Canadian Borrowers (by
telephone, followed by written confirmation) not to exceed the U.S.
Dollar Equivalent of $2,000,000 in the aggregate at any one time
without requiring that the Canadian Borrowers give the Canadian Agent a
written Notice of Borrowing with respect to such borrowing and without
giving each Canadian Lender prior notice of the proposed borrowing, of
such Canadian Lender's Revolving Loan Commitment Percentage thereof and
the other matters covered by the Notice of Borrowing and (B) if the
Canadian Agent has made any such amounts available as provided in
clause (A), upon repayment of Canadian Revolving Loans by the Canadian
Borrowers, apply such amounts repaid directly to the amounts made
available by the Canadian Agent in accordance with clause (A) and not
yet settled as described below; provided that the Canadian Agent shall
not advance funds as described in clause (A) above if the Canadian
Agent has actually received prior to such borrowing (1) an officer's
certificate from the Company pursuant to and in accordance with Section
7.1(g) that a Default or Event of Default is in existence, which
Default or Event of Default has not been cured or waived in accordance
with the
50
terms hereof, or (2) a Notice of Borrowing with respect to such
borrowing from the Canadian Borrowers wherein the certification
provided therein states that the conditions to the making of the
requested Canadian Revolving Loans have not been satisfied or (3) a
written notice from any Canadian Lender that the conditions to such
borrowing have not been satisfied, which officer's certificate, Notice
of Borrowing or notice, in each case, shall not have been rescinded.
Proceeds of Canadian Revolving Loans made pursuant to this
Section 2.7(b)(ii) shall be transferred directly to the Canadian
Account and applied to the payment of control disbursement checks and
other appropriate charges to such account designated from time to time
by the Canadian Borrowers or as otherwise provided for herein and in
the other Credit Documents.
If the Canadian Agent advances Canadian Revolving Loans on
behalf of the Canadian Lenders, as provided in the immediately
preceding paragraphs, the amount of outstanding Canadian Revolving
Loans and each Canadian Lender's Canadian Revolving Loan Commitment
Percentage thereof shall be computed weekly rather than daily and shall
be adjusted upward or downward on the basis of the amount of
outstanding Canadian Revolving Loans as of 5:00 p.m. on the Business
Day immediately preceding the date of each computation; provided,
however, that the Canadian Agent retains the absolute right at any time
or from time to time to make the aforedescribed adjustments at
intervals more frequent than weekly subject to the approval of the
Administrative Agent. The Canadian Agent shall deliver to each of the
Canadian Lenders after the end of each week, or such lesser period or
periods as the Canadian Agent shall determine, a summary statement of
the amount of outstanding Canadian Revolving Loans for such period
(such week or lesser period or periods being hereafter referred to as a
"Settlement Period"). If the summary statement is sent by the Canadian
Agent and received by the Canadian Lenders prior to 12:00 noon on any
Business Day each Canadian Lender shall make the transfers described in
the next succeeding sentence no later than 3:00 p.m. on the day such
summary statement was sent; and if such summary statement is sent by
the Canadian Agent and received by the Canadian Lenders after 12:00
noon on any Business Day, each Canadian Lender shall make such
transfers no later than 3:00 p.m. on the next succeeding Business Day.
If in any Settlement Period, the amount of a Canadian Lender's Canadian
Revolving Loan Commitment Percentage of the Canadian Revolving Loans is
in excess of the amount of Canadian Revolving Loans actually funded by
such Canadian Lender, such Canadian Lender shall forthwith (but in no
event later than the time set forth in the next preceding sentence)
transfer to the Canadian Agent by wire transfer in immediately
available funds the amount of such excess; and, on the other hand, if
the amount of a Canadian Lender's Canadian Revolving Loan Commitment
Percentage of the Canadian Revolving Loans in any Settlement Period is
less than the amount of Canadian Revolving Loans actually funded by
such Canadian Lender, the Canadian Agent shall forthwith transfer to
such Canadian Lender by wire transfer in immediately available funds
the amount of such difference. The obligation of each of the Canadian
Lenders to transfer such funds shall be irrevocable and unconditional
and without recourse to or warranty by the Canadian Agent.
Each of the Canadian Agent and the Canadian Lenders agree to
xxxx their respective books and records at the end of each Settlement
Period to show at all times the dollar amount of their respective
Canadian Revolving Loan Commitment Percentages of
51
the outstanding Canadian Revolving Loans. Because the Canadian Agent on
behalf of the Canadian Lenders may be advancing and/or may be repaid
Canadian Revolving Loans prior to the time when the Canadian Lenders
will actually advance and/or be repaid Canadian Revolving Loans,
interest with respect to Canadian Revolving Loans shall be allocated by
the Canadian Agent to each Canadian Lender (including the Canadian
Agent) in accordance with the amount of Canadian Revolving Loans
actually advanced by and repaid to each Canadian Lender (including the
Canadian Agent) during each Settlement Period and shall accrue from and
including the date such Canadian Revolving Loans are advanced by the
Canadian Agent to but excluding the date such Canadian Revolving Loans
are repaid by the Canadian Borrowers in accordance with Section 4.3 or
actually settled by the applicable Canadian Lender as described in this
Section 2.7(b)(ii). For purposes hereof, the Canadian Revolving Loans
shall be deemed paid as and to the extent set forth in Section 3.2(b).
All such Canadian Revolving Loans shall be made as Canadian Base Rate
Loans.
(c) All Revolving Loans.
The Canadian Agent shall promptly inform the Administrative
Agent and the Administrative Agent shall promptly inform the Canadian
Agent, by telecopy, of the funding of any Revolving Loan and the terms
thereof. No Lender shall be responsible for the failure or delay by any
other Lender in its obligation to make Revolving Loans hereunder;
provided, however, that the failure of any Lender to fulfill its
Commitment hereunder shall not relieve any other Lender of its
Commitment hereunder. Unless the Administrative Agent or the Canadian
Agent, as the case may be, shall have been notified by any Lender prior
to the date of any Revolving Loan advance pursuant to a Notice of
Borrowing that such Lender does not intend to make available to the
Administrative Agent or the Canadian Agent, as the case may be, its
portion of the Revolving Loan advance to be made on such date, the
Administrative Agent or the Canadian Agent, as the case may be, may
assume that such Lender has made such amount available to the
Administrative Agent or the Canadian Agent, as the case may be, on the
date of such Revolving Loan advance, and the Administrative Agent or
the Canadian Agent, as the case may be, in reliance upon such
assumption, may (in its sole discretion without any obligation to do
so) make available to the applicable Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the
Administrative Agent or the Canadian Agent, as the case may be, the
Administrative Agent or the Canadian Agent, as the case may be, shall
be entitled to recover such corresponding amount from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's or, as the case may be, the Canadian Agent's
demand therefor, the Administrative Agent or the Canadian Agent, as the
case may be, will promptly notify the applicable Borrower and such
Borrower shall immediately pay such corresponding amount to the
Administrative Agent or the Canadian Agent, as the case may be. The
Administrative Agent or the Canadian Agent, as the case may be, shall
also be entitled to recover from such Lender or such Borrower, as the
case may be, interest on such corresponding amount in respect of each
day from the date such corresponding amount was made available by the
Administrative Agent or the Canadian Agent, as the case may be, to such
Borrower to the date such corresponding amount is recovered by the
Administrative Agent or the Canadian Agent, as the case may be, at a
per annum rate equal to the Federal Funds Rate.
52
2.8 TERM.
The obligation of the Lenders to make Revolving Loans and to issue
Banker's Acceptances shall expire at the Administrative Agent's close of
business in Charlotte, North Carolina on the Maturity Date or such earlier date
if the Commitments are terminated pursuant to Section 11.2. On the Maturity
Date, the entire outstanding principal balance of all amounts outstanding under
the U.S. Revolving Loan Commitment and the Canadian Revolving Loan Commitment,
together with accrued but unpaid interest and all other sums owing under this
Agreement, shall be due and payable in full, unless accelerated sooner pursuant
to Section 11.2.
2.9 REVOLVING NOTES.
The Revolving Loans made by each Lender shall be evidenced by a duly
executed promissory note of the applicable Borrower, dated as of the Closing
Date, in an original principal amount equal to such Lender's U.S. Revolving Loan
Commitment or Canadian Revolving Loan Commitment, as applicable, and
substantially in the form of Exhibit F.
2.10 REDUCTION OF REVOLVING LOAN COMMITMENTS.
Upon at least three (3) Business Days' notice, (a) the Borrowers may,
from time to time, permanently reduce the Canadian Revolving Loan Commitment in
whole or in part; provided that, (i) such reduction must be in a minimum amount
of $1,000,000 and in integral multiples of $500,000 above such amount until the
Canadian Revolving Loan Commitment has been reduced to $5,000,000 and
thereafter, such reduction must be in a minimum amount of $5,000,000 and (ii) no
reduction shall be made which would reduce the Canadian Revolving Loan
Commitment to an amount less than the sum of Canadian Revolving Loans then
outstanding plus the aggregate Face Amount of Bankers' Acceptances then
outstanding; and (b) the U.S. Borrowers may from time to time permanently reduce
the U.S. Revolving Loan Commitment in whole or in part; provided that, (i) such
reduction must be in a minimum amount of $5,000,000 and in integral multiples of
$1,000,000 above such amount and (ii) no reduction shall be made which would
reduce the U.S. Revolving Loan Commitment to an amount less than the sum of U.S.
Revolving Loans then outstanding plus LOC Obligations then outstanding.
ARTICLE III
CASH MANAGEMENT ARRANGEMENTS
3.1 U.S. LOCKBOX ARRANGEMENTS.
(a) The U.S. Borrowers shall have each established and shall
maintain one or more lockboxes (each a "U.S. Lockbox") with financial
institutions, including Wachovia, selected by them and reasonably acceptable to
the Administrative Agent (each a "U.S. Lockbox Bank") and shall instruct all
account debtors on the Accounts of each U.S. Borrowers to remit all payments to
its respective U.S. Lockboxes. All amounts received by the U.S. Borrowers from
any account debtor, in addition to all other cash proceeds from the U.S.
Collateral, shall be promptly deposited into the applicable U.S. Lockbox Account
(as defined below).
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(b) Each U.S. Borrower, the Administrative Agent and each U.S.
Lockbox Bank shall enter into three party agreements in form and substance
acceptable to the Administrative Agent (each a "Lockbox Agreement"), providing,
among other things, for the following:
(i) The U.S. Borrowers will open and establish for the
benefit of the Administrative Agent on behalf of the U.S. Lenders an
account at each U.S. Lockbox Bank (each a "U.S. Lockbox Account").
(ii) (A) All receipts held in the U.S. Lockboxes
shall be remitted daily to the appropriate U.S. Lockbox Account. All
funds deposited into the U.S. Lockbox Accounts on any Business Day
shall be transferred to the Wachovia Clearing Account on such Business
Day. Prior to the occurrence of a Cash Management Event, all funds
deposited into the Wachovia Clearing Account on any Business Day shall
be transferred to the SunTrust Account and may be used by the Borrowers
for any lawful corporate purpose not prohibited by this Agreement.
(B) On and after the occurrence of a Cash
Management Event, all funds deposited into the Wachovia
Clearing Account on any Business Day shall be transferred to
the Wachovia Account on such Business Day. All collected funds
deposited on any Business Day to the Wachovia Account shall be
applied by the Administrative Agent on such Business Day to
reduce the then outstanding balance of the U.S. Revolving
Loans and to pay accrued interest thereon (which is due and
payable) and to pay any other outstanding Obligations of the
U.S. Borrowers which are then due and payable hereunder;
provided that for the purpose of determining the availability
of U.S. Revolving Loans hereunder, such funds deposited into
the Wachovia Account shall be deemed to have reduced the
outstanding U.S. Revolving Loans on the Business Day such
funds were deposited into such account. All amounts received
directly by the U.S. Borrowers from any account debtor, in
addition to all other cash proceeds from the U.S. Collateral
(subject to Section 7.6 hereof), shall be held in trust by the
U.S. Borrowers and promptly deposited into the applicable U.S.
Lockbox Account or, if made by wire transfer, directly to the
Wachovia Clearing Account.
(iii) All funds deposited into the Wachovia Account shall
immediately be under the sole dominion and control of the
Administrative Agent, and the U.S. Borrowers shall obtain the agreement
by the U.S. Lockbox Banks to waive any specified offset rights against
the funds so deposited. The Administrative Agent assumes no
responsibility for the U.S. Lockbox arrangements, including without
limitation, any claim of accord and satisfaction or release with
respect to deposits accepted by the U.S. Lockbox Banks thereunder.
(iv) The U.S. Borrowers may close U.S. Lockboxes and/or
open new U.S. Lockboxes with the prior written consent of the
Administrative Agent and subject to prior execution and delivery to the
Administrative Agent of Lockbox Agreements consistent with the
provisions of this Section 3.1(b) and in form and substance
satisfactory to the Administrative Agent.
(v) Notwithstanding the foregoing to the contrary, with
respect to U.S. Lockboxes and related Lockbox Accounts in existence
prior to the Closing Date, the U.S.
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Borrowers may, in lieu of entering into a Lockbox Agreement, deliver a
Lockbox Letter or Blocked Account Agreement, countersigned by the
applicable U.S. Lockbox Bank.
(c) The U.S. Borrowers hereby authorize the Administrative Agent
and/or each U.S. Lender, effective upon the occurrence of a Cash Management
Event or upon the occurrence and during the continuance of an Event of Default,
to charge from time to time against any or all of the U.S. Borrowers' accounts
with the Administrative Agent or such U.S. Lender any of the Obligations which
are then due and payable by such U.S. Borrowers. Each U.S. Lender receiving any
payment as a result of charging any such account shall promptly notify the
Administrative Agent thereof and make such arrangements as the Administrative
Agent shall request to share the benefit thereof in accordance with Section 4.8.
3.2 CANADIAN COLLECTION AND PAYMENT ARRANGEMENTS.
(a) The Canadian Agent shall have established and shall maintain
the Canadian Account in its own name, naming the Administrative Agent as secured
party thereon. All amounts received by the Canadian Credit Parties from any
account debtor, in addition to all other cash proceeds from the Canadian
Collateral, shall be promptly deposited into the Canadian Account.
(b) All funds collected by the Canadian Borrowers on any Business
Day shall be deposited into the Canadian Account on such Business Day. Prior to
the occurrence of a Cash Management Event, all funds deposited into the Canadian
Account may be used by the Canadian Borrowers for any lawful corporate purpose
not prohibited by this Agreement. After the occurrence and during the
continuance of a Cash Management Event after prior notice to the Canadian
Borrowers, all good funds credited on any Business Day to the Canadian Account
shall be applied by the Canadian Agent on the same Business Day to reduce the
then outstanding balance of the Canadian Revolving Loans and to pay accrued
interest thereon (which is due and payable) and to pay any other outstanding
Obligations which are then due and payable hereunder by the Canadian Borrowers.
All amounts received directly by the Canadian Credit Parties from any account
debtor, in addition to all other cash proceeds from the Canadian Collateral,
shall be held in trust by the Canadian Credit Parties and promptly deposited
into the Canadian Account.
(c) All funds deposited into the Canadian Account shall
immediately become the property of the Canadian Agent, held on behalf of the
Administrative Agent, and shall, subject to Section 3.2(b) hereof, immediately
be under the sole dominion and control of the Administrative Agent on behalf of
the Lenders. The Agents assume no responsibility for the Canadian collection and
payment arrangements, including, without limitation, any claim of accord and
satisfaction or release with respect to deposits for the account of the Canadian
Borrowers.
(d) The Canadian Borrowers hereby authorize the Administrative
Agent, the Canadian Agent and/or each Canadian Lender, effective upon the
occurrence of a Cash Management Event or upon the occurrence and during the
continuance of an Event of Default, to charge from time to time against any or
all of the Canadian Credit Parties' accounts with the Administrative Agent, the
Canadian Agent or such Canadian Lender any of the Obligations which are then due
and payable by such Canadian Borrowers. Each Canadian Lender receiving any
payment as a result of charging any such account shall promptly notify the
Canadian Agent thereof and make such arrangements as the Agents shall request to
share the benefit thereof in accordance with Section 4.8.
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3.3 MAINTENANCE OF ACCOUNT.
Each Agent shall maintain an account on its books in the name of the
U.S. Borrowers or the Canadian Borrowers, as applicable, in which such Borrowers
will be charged with all loans and advances made by the applicable Lenders to
such Borrowers or for such Borrowers' account, including the Revolving Loans,
the LOC Obligations, the BA Obligations and any other Obligations, including any
and all costs, expenses and attorney's fees which the Agents may incur. The
Borrowers will be credited in accordance with Section 3.1 or 3.2 above, as
applicable, with all amounts received by the Lenders from the Borrowers or from
others for the Borrowers' account, including, as above set forth, all amounts
received by the Agents in payment of Accounts. In no event shall prior recourse
to any Accounts or other Collateral be a prerequisite to an Agent's right to
demand payment of any Obligation upon its maturity. Further, it is understood
that the Agents shall have no obligation whatsoever to perform in any respect
any of the Credit Parties' contracts or obligations relating to the Accounts.
3.4 STATEMENT OF ACCOUNT
After the end of each month, the Agents shall send the applicable
Borrowers (directed to the Borrowers' Glen Allen, Virginia office in the case of
the U.S. Borrowers and to the Borrowers' Markham, Ontario office in the case of
the Canadian Borrowers, with a copy to the Borrowers' Glen Allen, Virginia
office) a statement showing the accounting for the charges, loans, advances and
other transactions occurring between the Lenders and the applicable Borrowers
during that month. The monthly statements, absent manifest error, shall be
deemed correct and binding upon the applicable Borrowers and shall constitute an
account stated between the applicable Borrowers and the Lenders unless the
applicable Agent receives a written statement of the applicable Borrowers'
exceptions within sixty (60) days after same is mailed to the applicable
Borrowers.
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ARTICLE IV
ADDITIONAL PROVISIONS REGARDING LOANS AND LETTERS OF CREDIT
4.1 CONTINUATIONS AND CONVERSIONS.
(a) U.S. Borrowers. The U.S. Borrowers shall have the option, on
any Business Day, to continue an existing Eurodollar Loan into a subsequent
Interest Period, to convert a Base Rate Loan into a Eurodollar Loan or to
convert a Eurodollar Loan into a Base Rate Loan; provided, however, that (i)
each such continuation must be requested by the U.S. Borrowers pursuant to a
written Notice of Continuation/Conversion, in the form of Exhibit D, in
compliance with the terms set forth below and (ii) except as provided in Section
4.11, Eurodollar Loans may be converted into Base Rate Loans only on the last
day of an Interest Period applicable thereto; (iii) Eurodollar Loans may be
continued and Base Rate Loans may be converted into Eurodollar Loans only if no
Event of Default is in existence on the date of continuation or conversion; and
(iv) failure by the U.S. Borrowers to properly continue a Eurodollar Loan at the
end of an Interest Period shall be deemed a conversion to a Base Rate Loan. Each
continuation or conversion must be requested by the U.S. Borrowers, directed to
the Administrative Agent at the address set forth on Schedule 1.1A hereto, no
later than 12:00 noon, (A) on the date of a requested conversion of a Eurodollar
Loan to a Base Rate Loan or (B) three (3) Business Days prior to the date of a
requested continuation of a Eurodollar Loan or conversion of a Base Rate Loan to
a Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Administrative Agent which shall set
forth (x) whether the applicable U.S. Borrower wishes to continue or convert
such Loans and (y) if the request is to continue a Eurodollar Loan or convert a
Base Rate Loan to a Eurodollar Loan, the Interest Period applicable thereto. The
Administrative Agent shall give each U.S. Lender notice as promptly as
practicable of any such proposed extension or conversion pursuant to this
section.
(b) Canadian Borrowers.
(i) The Canadian Borrowers shall have the option, on any
Business Day, to continue an existing Eurodollar Loan into a subsequent
Interest Period, to convert a CA U.S. Base Rate Loan into a Eurodollar
Loan or to convert a Eurodollar Loan into a CA U.S. Base Rate Loan;
provided, however, that (A) each such continuation must be requested by
the Canadian Borrowers, directed to the Canadian Agent at the address
set forth on Schedule 1.1A hereto, pursuant to a written Notice of
Continuation/Conversion, in the form of Exhibit D, in compliance with
the terms set forth below and (B) except as provided in Section 4.11,
Eurodollar Loans may be converted into CA U.S. Base Rate Loans only on
the last day of an Interest Period applicable thereto; (C) Eurodollar
Loans may be continued and CA U.S. Base Rate Loans may be converted
into Eurodollar Loans only if no Event of Default is in existence on
the date of continuation or conversion; and (D) failure by the Canadian
Borrowers to properly continue a Eurodollar Loan at the end of an
Interest Period shall be deemed a conversion to a CA U.S. Base Rate
Loan. Each continuation or conversion must be requested by the Canadian
Borrowers no later than 12:00 noon, Toronto, Ontario time, (x) on the
date of a requested conversion of a Eurodollar Loan to a CA U.S. Base
Rate Loan or (y) three (3) Business Days prior to the date of a
requested continuation of a Eurodollar Loan or conversion of a CA U.S.
Base Rate Loan to a Eurodollar Loan, in each case pursuant to a written
Notice of Continuation/Conversion submitted to the Canadian Agent which
shall set forth (1) whether the Canadian Borrowers wish to continue or
convert such Loans and (2) if the request is to continue a Eurodollar
57
Loan or convert a CA U.S. Base Rate Loan to a Eurodollar Loan, the
Interest Period applicable thereto. The Canadian Agent shall give each
Canadian Lender notice as promptly as practicable of any such proposed
extension or conversion pursuant to this section.
(ii) The Canadian Borrowers shall have the option, on any
Business Day, to convert a Canadian Prime Rate Loan into a Bankers'
Acceptance, to continue a maturing Bankers' Acceptance in accordance
with Section 2.5 or to convert a maturing Bankers' Acceptance into a
Canadian Prime Rate Loan; provided, however, (A) each such continuation
or conversion must be requested by the Canadian Borrowers pursuant to
an irrevocable notice to the Canadian Agent, substantially in the form
of Exhibit D, in compliance with the terms set forth below, (B) the
Canadian Borrowers must comply with all the requirements of Section
2.5, and (C) failure by the Canadian Borrowers to properly continue a
Bankers' Acceptance shall be deemed a conversion to a Canadian Prime
Rate Loan. Each continuation or conversion must be requested by the
Canadian Borrowers no later than 12:00 noon, Toronto, Ontario time, (x)
one Business Day prior to the date of a requested conversion of a
Bankers' Acceptance to a Canadian Prime Rate Loan or (y) one Business
Day prior to the date of a requested continuation of a Bankers'
Acceptance or conversion of a Canadian Prime Rate Loan to a Bankers'
Acceptance, in each case pursuant to an irrevocable notice submitted to
the Canadian Agent which shall set forth (1) that the Loans to be
continued or converted are Canadian Prime Rate Loans, (2) whether the
Canadian Borrowers wish to continue or convert such Loans and (3) if
the request is to continue a Bankers' Acceptance or convert a Canadian
Prime Rate Loan to a Bankers' Acceptance, the maturity date applicable
thereto. The Canadian Agent shall give each Canadian Lender notice as
promptly as practicable of any such proposed continuation or conversion
pursuant to this Section.
4.2 INTEREST.
(a) Interest Rate. All U.S. Base Rate Loans shall accrue interest
at the U.S. Base Rate, plus the Applicable Percentage. All Canadian Prime Rate
Loans shall accrue interest at the Canadian Prime Rate, plus the Applicable
Percentage, payable in Canadian Dollars. All CA U.S. Base Rate Loans shall
accrue interest at the CA U.S. Base Rate, plus the Applicable Percentage,
payable in U.S. dollars. All Eurodollar Loans shall accrue interest at the
Adjusted Eurodollar Rate for the applicable Interest Period.
(b) Default Rate of Interest. Upon the occurrence, and during the
continuance, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing (but not
timely paid) hereunder or under the other Credit Documents (including without
limitation fees and expenses) shall bear interest, payable on demand, at a per
annum rate equal to (i) for U.S. Obligations and Canadian Obligations
denominated in U.S. Dollars, the U.S. Base Rate, plus the sum of the Tier Xxxxx
0 Xxxxxxxxxx Xxxxxxxxxx for Base Rate Loans and two percent (2%) per annum and
(ii) for Canadian Obligations denominated in Canadian Dollars, the Canadian
Prime Rate, plus the sum of the Tier Xxxxx 0 Xxxxxxxxxx Xxxxxxxxxx for Base Rate
Loans and two percent (2%) per annum, provided, however, on and after the
Conversion Date interest on the Loans and any other amounts owing (but not
timely paid) hereunder or under the other Credit Documents (including without
limitation fees and expenses) shall bear interest, payable on demand, at a per
annum rate equal to the U.S. Base Rate, plus the sum of the Tier Xxxxx 0
Xxxxxxxxxx Xxxxxxxxxx for Base Rate Loans and two percent (2%) per annum.
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(c) Interest Payments. Interest on Loans shall be due and payable
in arrears on each Interest Payment Date. If an Interest Payment Date falls on a
date which is not a Business Day, such Interest Payment Date shall be deemed to
be the next succeeding Business Day, except that in the case of Eurodollar Loans
where the next succeeding Business Day falls in the next succeeding calendar
month, then on the next preceding day.
(d) Computation of Interest. All computations of interest
hereunder on Canadian Base Rate Loans (other than Canadian Base Rate Loans
accruing interest at the Canadian Prime Rate), Eurodollar Loans and U.S. Base
Rate Loans shall be made on the basis of the actual number of days elapsed over
a year of 360 days. All computations of interest hereunder on Bankers'
Acceptances and Canadian Base Rate Loans accruing interest at the Canadian Prime
Rate shall be made on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be.
(e) Interest Act (Canada). Each Borrower hereby acknowledges that
the rate or rates of interest applicable to certain of the Loans and fees as
specified hereunder may be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed. For purposes of the Interest Act
(Canada), if interest computed on the basis of a 360-day year is payable for any
part of the calendar year, the equivalent yearly rate of interest may be
determined by multiplying the specified rate of interest by the number of days
(365 or 366) in such calendar year and dividing such product by 360. For the
purpose of the Interest Act (Canada) and any other purpose, (i) the principle of
deemed reinvestment shall not apply to any interest calculation under this
Agreement, and (ii) the rates of interest stipulated in this Agreement are
intended to be nominal rates and not effective rates or yields.
4.3 PLACE AND MANNER OF PAYMENTS.
All payments of principal, interest and fees in connection with the
Canadian Revolving Loans and BA Obligations shall be made by the Borrowers to
the Canadian Agent at its offices located at the address set forth on Schedule
1.1A hereto on the date due by 2:00 p.m., Toronto, Ontario time, (in Canadian
Dollars or U.S. Dollars, as applicable) in immediately available funds or by
direct charge against the Canadian Revolving Loan Commitment, if available,
pursuant to Section 3.2(b) hereof, in each case, without setoff, deduction,
counterclaim or withholding of any kind, except as permitted pursuant to Section
4.13. All other payments of principal, interest, fees, expenses and other
amounts to be made by the Borrowers under this Agreement (including, but not
limited to, the U.S. Revolving Loans) shall be received not later than 2:00
p.m., Charlotte, North Carolina time, on the date when due in U.S. Dollars and
in immediately available funds or by direct charge against the U.S. Revolving
Loan Commitment, if available, pursuant to Section 3.1(b) hereof, in each case,
without setoff, deduction, counterclaim or withholding of any kind, except as
permitted pursuant to Section 4.13, by the Administrative Agent at its offices
located at the address set forth on Schedule 1.1A hereto. A Borrower shall, at
the time it makes any payment under this Agreement, specify to the
Administrative Agent, or the Canadian Agent as applicable, the Loans, Letters of
Credit, fees or other amounts payable by the Borrowers hereunder to which such
payment is to be applied (and in the event that it fails to specify, or if such
application would be inconsistent with the terms hereof, the Administrative
Agent, or the Canadian Agent as applicable, shall distribute such payment to the
Lenders in the manner described in Section 4.6). The Canadian Agent shall inform
the Administrative Agent and the Administrative Agent shall inform the Canadian
Agent, by telecopy as of the first Business Day of each month, of all principal,
interest or
59
fees received from the Borrowers during the prior month, except for fees
received pursuant to Section 4.5(c). The Administrative Agent or the Canadian
Agent, as applicable, will distribute such payments to the applicable Lenders on
the date of receipt if any such payment is received prior to 2:00 p.m.
(Charlotte, North Carolina time or Toronto, Ontario time, as applicable);
otherwise the Administrative Agent or the Canadian Agent, as applicable, will
distribute such payment to the applicable Lenders on the next succeeding
Business Day. The Borrowers' obligations to the Lenders with respect to such
payments shall be discharged by making such payments to the applicable Agent
pursuant to this Section 4.3 or if not timely paid or an Event of Default then
exists, may be added to the principal amount of the Revolving Loans outstanding.
Whenever any payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day (subject to accrual of interest and fees for the period of such
extension), except that in the case of Eurodollar Loans, if the extension would
cause the payment to be made in the next following calendar month, then such
payment shall instead be made on the next preceding Business Day.
4.4 PREPAYMENTS.
(a) Voluntary Prepayments. The Borrowers shall have the right to
prepay Loans and Bankers' Acceptances in whole or in part from time to time
without premium or penalty; provided, however, that (i) Eurodollar Loans may
only be prepaid on three (3) Business Day's prior written notice to the
Administrative Agent or the Canadian Agent, as the case may be, and any
prepayment of Eurodollar Loans will be subject to Section 4.14, (ii) each such
partial prepayment of Eurodollar Loans shall be in the minimum principal amount
of $1,000,000, and (iii) that portion of the Canadian Revolving Loan Commitment
subject to the creation of a Bankers' Acceptance may be prepaid prior to the
maturity of such Bankers' Acceptance only in accordance with Section 2.5(g).
Prepayments on U.S. Revolving Loans shall be applied first to U.S. Base Rate
Loans and then to Eurodollar Loans in direct order of Interest Period
maturities. Prepayments on the Canadian Revolving Loans or Bankers' Acceptances
shall be applied (1) in the case of funds received in Canadian Dollars, to the
Canadian Revolving Loans and Banker's Acceptances (first to Canadian Prime Rate
Loans and then to Bankers' Acceptances in direct order of maturities) and (2) in
the case of funds received in U.S. Dollars, to the Canadian Revolving Loans
(first to CA U.S. Base Rate Loans and then to Eurodollar Loans, in direct order
of Interest Period maturities).
(b) Mandatory Prepayments.
(i) If, at any time (A) the sum of U.S. Revolving Loans
outstanding plus Canadian Revolving Loans outstanding plus LOC
Obligations plus BA Obligations exceeds the lesser of the Total
Borrowing Base and $140,000,000; (B) the U.S. Revolving Loans
outstanding plus the LOC Obligations outstanding exceed the lesser of
the U.S. Borrowing Base and the U.S. Revolving Loan Commitment; or (C)
the Canadian Revolving Loans outstanding plus BA Obligations exceed the
lesser of the Canadian Borrowing Base and the Canadian Revolving Loan
Commitment, then, subject to Section 2.1(c), each applicable Borrower
shall immediately make a payment with respect to its Loans in an amount
equal to the net deficiency. Payments made under (A) shall be applied
first pro rata to U.S. Base Rate Loans and Canadian Base Rate Loans in
the applicable currency and then to Eurodollar Loans (pro rata between
those made under the Canadian Revolving Loan Commitment and the U.S.
Revolving Loan Commitment) in direct order of Interest Period
maturities and then to Bankers' Acceptances in direct order of Interest
Period maturities. Payments made under (B) shall be applied first to
U.S. Base Rate Loans and then to
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Eurodollar Loans of the U.S. Borrowers in direct order of Interest
Period maturities. Payments made under (C) shall be applied first to
Canadian Base Rate Loans and then to Eurodollar Loans of the Canadian
Borrowers in direct order of Interest Period maturities and then to
Bankers' Acceptances in direct order of Interest Period maturities.
Prepayments made on Bankers' Acceptances shall be made in accordance
with Section 2.5(g).
(ii) The U.S. Borrowers shall immediately repay any
outstanding Overadvance upon receipt of the net proceeds of any sale of
assets by the U.S. Borrowers made pursuant Section 9.5(b) hereof.
Payments made hereunder shall be applied first to U.S. Base Rate Loans
and then to Eurodollar Loans of the U.S. Borrowers in direct order of
Interest Period maturities.
4.5 FEES.
(a) Unused Fees. In consideration of the Revolving Loan
Commitments being made available by the Lenders hereunder, (i) the U.S.
Borrowers agree to pay to the Administrative Agent, for the account of the U.S.
Lenders, a per annum fee equal to the Applicable Percentage for the Unused Fees
(calculated on the basis of the actual number of days elapsed in a 360 day year)
on the U.S. Unutilized Revolving Commitment and (ii) the Canadian Borrowers
agree to pay to the Canadian Agent, for the account of the Canadian Lenders, a
per annum fee equal to the Applicable Percentage for the Unused Fees (calculated
on the basis of the actual number of days elapsed in a 365 or 366 day year, as
the case may be) on the Canadian Unutilized Revolving Commitment (collectively,
the "Unused Fees"). The accrued Unused Fees shall be due and payable monthly in
arrears on the last Business Day of each calendar month (as well as on the
Maturity Date and on any date that a Revolving Loan Commitment is reduced) for
the month then ending (or portion thereof), beginning with the first of such
dates to occur after the Closing Date.
(b) Letter of Credit Fees.
(i) Letter of Credit Fee. In consideration of the
issuance of Letters of Credit hereunder, the U.S. Borrowers agree to
pay to the applicable Issuing Lender in respect of outstanding Letters
of Credit for the pro rata benefit of the U.S. Lenders (based on each
U.S. Lender's U.S. Revolving Loan Commitment Percentage of the U.S.
Revolving Loan Commitment (calculated on the basis of the actual number
of days elapsed in a 360 day year)), an annual fee (the "Letter of
Credit Fee") equal to the Applicable Percentage for the Letter of
Credit Fee on the average daily maximum amount available to be drawn
under each such Letter of Credit from the date of issuance to the date
of expiration. The Letter of Credit Fee will be payable monthly in
arrears on the last Business Day of each calendar month and on the
Maturity Date.
(ii) Issuing Lender Fee. In addition to the Letter of
Credit Fees payable pursuant to subsection (i) above, each of the U.S.
Borrowers shall pay to the applicable Issuing Lender for its own
account, without sharing by the other Lenders, a fee equal to
one-eighth of one percent (0.125%) per annum on the total sum of all
Letters of Credit issued by the Issuing Lender, such fee to be paid
monthly in arrears on the last Business Day of each calendar month (as
well as on the Maturity Date) (the "Issuing Lender Fee").
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(c) Administrative Fees. The U.S. Borrowers agree to pay to the
Administrative Agent, for its own account, an annual fee as agreed to between
the U.S. Borrowers and the Administrative Agent in the Administrative Agent Fee
Letter.
(d) Authorization to Charge Account. Each Borrower hereby
authorizes the Administrative Agent or the Canadian Agent, as the case may be,
to charge such Borrower's Revolving Loan account with the amount of fees due by
it hereunder to the Lenders, the Administrative Agent, the Canadian Agent and
the Issuing Lender as and when such payments become due. The Borrowers confirm
that any charges which the applicable Agent may so make to the Borrowers'
Revolving Loan accounts as herein provided will be made as an accommodation to
the Borrowers and solely at the applicable Agent's discretion.
4.6 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including,
without limitation, each Mandatory Borrowing), each creation of
Bankers' Acceptances, each payment or prepayment of principal of any
Loan, each payment of fees (other than the Issuing Lender Fee retained
by each of the Issuing Lenders for its own account, the Acceptance Fees
retained by each Canadian Lender accepting Bankers' Acceptances for it
own account and the administrative fees retained by the Administrative
Agent for its own account), each reduction of the U.S. Revolving Loan
Commitment or the Canadian Revolving Loan Commitment, and each
conversion or continuation of any Loan, shall be allocated pro rata
among the relevant Lenders in accordance with the respective U.S.
Revolving Loan Commitment Percentages or Canadian Revolving Loan
Commitment Percentages, as applicable, of such Lenders; it being
understood that payments under the U.S. Revolving Loans shall be
allocated pro rata among the U.S. Lenders and payments under the
Canadian Revolving Loans shall be allocated pro rata among the Canadian
Lenders (or, if the Commitments of such Lenders have expired or been
terminated, in accordance with the respective principal amounts of the
outstanding Loans, Bankers' Acceptances and Participation Interests of
such Lenders); provided that, if any Lender shall have failed to pay
its applicable pro rata share of any Revolving Loan, then any amount to
which such Lender would otherwise be entitled pursuant to this
subsection (a) shall instead be payable to the Administrative Agent or
the Canadian Agent, as applicable; provided further, that in the event
any amount paid to any Lender pursuant to this subsection (a) is
rescinded or must otherwise be returned by the Administrative Agent or
the Canadian Agent, as applicable, each Lender shall, upon the request
of the Administrative Agent or the Canadian Agent, as applicable, repay
to the Administrative Agent or the Canadian Agent, as applicable the
amount so paid to such Lender, with interest for the period commencing
on the date such payment is returned by the Administrative Agent or the
Canadian Agent, as applicable until the date the Administrative Agent
or the Canadian Agent, as applicable receives such repayment at a rate
per annum equal to, during the period to but excluding the date two (2)
Business Days after such request, the Federal Funds Rate, and
thereafter, the U.S. Base Rate plus two percent (2%) per annum; and
(b) Letters of Credit. Each payment of unreimbursed
drawings in respect of LOC Obligations shall be allocated to each U.S.
Lender pro rata in accordance with its U.S. Lender Revolving Loan
Commitment Percentage; provided that, if any Lender shall have
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failed to pay its applicable pro rata share of any drawing under any
Letter of Credit, then any amount to which such Lender would otherwise
be entitled pursuant to this subsection (b) shall instead be payable to
the Issuing Lender; provided further, that in the event any amount paid
to any Lender pursuant to this subsection (b) is rescinded or must
otherwise be returned by the Issuing Lender, each Lender shall, upon
the request of the Issuing Lender, repay to the Administrative Agent
for the account of the Issuing Lender the amount so paid to such
Lender, with interest for the period commencing on the date such
payment is returned by the Issuing Lender until the date the Issuing
Lender receives such repayment at a rate per annum equal to, during the
period to but excluding the date two (2) Business Days after such
request, the Federal Funds Rate, and thereafter, the U.S. Base Rate,
plus two percent (2%) per annum.
4.7 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.
Notwithstanding any other provisions of this Agreement, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by an Agent or any Lender on account of amounts
outstanding with respect to any of the U.S. Obligations or in respect of the
U.S. Collateral, and all amounts collected or received by an Agent or any Lender
on account of amounts outstanding with respect to any of the Canadian
Obligations or the Canadian Collateral, shall be paid over or delivered to make
the following payments (as the same become due at maturity, by acceleration or
otherwise) (it being understood that (i) amounts collected or received with
respect to Canadian Obligations and Canadian Collateral shall be applied in the
following manner only to satisfy Canadian Obligations and (ii) amounts collected
or received with respect to U.S. Obligations and U.S. Collateral shall be
applied in the following manner but first to satisfy all U.S. Obligations (other
than obligations under the Guaranty Agreements) in full and then to satisfy the
U.S. Obligations under the Guaranty Agreements and the Canadian Obligations):
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agents in connection with enforcing the rights of the Lenders
under the Credit Documents and any protective advances made by the
Agents with respect to the Collateral under or pursuant to the terms of
the Security Documents;
SECOND, to payment of any fees owed to an Agent or an Issuing
Lender hereunder or under any other Credit Document;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses, (including, without limitation, reasonable attorneys'
fees) of each of the Lenders in connection with enforcing its rights
under the Credit Documents;
FOURTH, to the payment of all Obligations consisting of
accrued fees and interest payable to the Lenders hereunder, and
including with respect to any Interest Rate Protection Agreement, to
the extent such Interest Rate Protection Agreement is permitted by the
Agreement, any fees, premiums and scheduled periodic payments due under
such Interest Rate Protection Agreement and any interest accrued
thereon;
FIFTH, to the payment of the outstanding principal amount of
the Loans and to the payment or cash collateralization of the
outstanding LOC Obligations and BA Obligations,
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pro rata, as set forth below and including with respect to any Interest
Rate Protection Agreement, to the extent such Interest Rate Protection
Agreement is permitted by the Agreement, any breakage, termination or
other payments due under such Interest Rate Protection Agreement and
any interest accrued thereon;
SIXTH, to all other Obligations which shall have become due
and payable under the Credit Documents and not repaid pursuant to
clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b)(i) each of the U.S. Lenders shall receive an amount
equal to its pro rata share (based on the proportion that its then outstanding
U.S. Revolving Loans, LOC Obligations and obligations outstanding under the
Interest Rate Protection Agreements and other Lender Hedging Agreements (if any)
permitted by this Agreement bears to the aggregate then outstanding U.S.
Revolving Loans, LOC Obligations, and obligations outstanding under the Interest
Rate Protection Agreements and any other Lender Hedging Agreements permitted by
this Agreement) of amounts available to be applied pursuant to clauses "THIRD",
"FOURTH," "FIFTH," and "SIXTH" above (it being understood that the Canadian
Lenders shall be deemed U.S. Lenders for purposes of this clause (b)(i) to the
extent of their Participation Interests in the U.S. Obligations acquired
pursuant to Section 11.3(b) hereof) and (ii) each of the Canadian Lenders shall
receive an amount equal to its pro rata share (based on the proportion that its
then outstanding Canadian Revolving Loans, BA Obligations and obligations
outstanding under the Interest Rate Protection Agreements and other Lender
Hedging Agreements (if any) permitted by this Agreement) bears to the aggregate
then outstanding Canadian Revolving Loans, BA Obligations and obligations
outstanding under the Interest Rate Protection Agreements and any other Lender
Hedging Agreements permitted by this Agreement) of amounts available to be
applied pursuant to clauses "THIRD", "FOURTH," "FIFTH," and "SIXTH" above (it
being understood that the U.S. Lenders shall be deemed Canadian Lenders for
purposes of this clause (b)(ii) to the extent of their Participation Interests
in the Canadian Obligations acquired pursuant to Section 11.3(b) hereof); (c) to
the extent that any amounts available for distribution pursuant to clause
"FIFTH" above are attributable to the issued but undrawn amount of outstanding
Letters of Credit, such amounts shall be held by the Administrative Agent in a
cash collateral account (which account shall be an interest bearing checking
account) and applied (x) first, to reimburse the Issuing Lender from time to
time for any drawings under such Letters of Credit and (y) then, following the
expiration of all Letters of Credit, to all other obligations of the types
described in clause "SIXTH" above in the manner provided in this Section 4.7 and
in the Security Documents; and (d) amounts received on account of BA Obligations
to be held in accordance with Section 2.5(g), shall be held and applied by the
applicable Lender in accordance with Section 2.5(g).
4.8 SHARING OF PAYMENTS.
The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect of
any Loan or Bankers' Acceptance, unreimbursed drawing with respect to any LOC
Obligations or any other obligation owing to such Lender under this Agreement
through the exercise of a right of setoff, banker's lien or counterclaim, or
pursuant to a secured claim under Section 506 of the U.S. Bankruptcy Code (or
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similar provision of the Canadian bankruptcy laws) or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Agreement, such Lender shall promptly pay in cash or purchase from the
other applicable Lenders a participation in such Loans, LOC Obligations, BA
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Agreement. The Lenders further agree among themselves that
if payment to a Lender obtained by such Lender through the exercise of a right
of setoff, banker's lien, counterclaim or other event as aforesaid shall be
rescinded or must otherwise be restored, each applicable Lender which shall have
shared the benefit of such payment shall, by payment in cash or a repurchase of
a participation theretofore sold, return its share of that benefit (together
with its share of any accrued interest payable with respect thereto) to each
Lender whose payment shall have been rescinded or otherwise restored. The
Borrowers agree that any Lender so purchasing such a participation may, to the
fullest extent permitted by law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Loan, LOC Obligation, BA
Obligation or other obligation in the amount of such participation. Except as
otherwise expressly provided in this Agreement, if any Lender or an Agent shall
fail to remit to an Agent or any other Lender an amount payable by such Lender
or such Agent to such Agent or such other Lender pursuant to this Agreement on
the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to such Agent or such other Lender at a rate per annum equal
to the Federal Funds Rate. If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a setoff to
which this Section 4.8 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders under this Section 4.8 to share in the benefits of any
recovery on such secured claim.
4.9 CAPITAL ADEQUACY.
If, after the date hereof, any Lender has determined that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender, or its parent corporation, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's (or parent corporation's)
capital or assets as a consequence of its commitments or obligations hereunder
to a level below that which such Lender, or its parent corporation, could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's (or parent corporation's) policies with respect to
capital adequacy), then, upon written notice from such Lender to the Borrowers,
the U.S. Borrowers shall be obligated to pay to any such U.S. Lender, and the
Canadian Borrowers shall be obligated to pay to any such Canadian Lender, as
applicable, such additional amount or amounts as will compensate such Lender on
an after-tax basis (after taking into account applicable deductions and credits
in respect of the amount indemnified) for such reduction; provided that the
Borrowers shall not be required to compensate any Lender pursuant to this
Section 4.9 for any increased capital costs incurred more than 180 days prior to
the date such Lender notifies the applicable Borrower of the event giving rise
to such increased capital cost and of such Lender's intention to claim
compensation therefor; provided further, however, that such
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180-day limitation shall not apply to any cost that is applicable retroactively
so long as the applicable Lender notifies the Borrowers of such cost within 180
days of a responsible officer of such Lender receiving actual knowledge thereof.
Such written notice shall be accompanied by a certificate setting forth the
basis for such claim for compensation and a calculation thereof in reasonable
detail. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
4.10 INABILITY TO DETERMINE INTEREST RATE OR CREATE BANKERS'
ACCEPTANCES.
(a) If prior to the first day of any Interest Period, (i) the
Administrative Agent shall have determined in good faith (which determination
shall be conclusive and binding upon the Borrowers) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, (ii)
the Administrative Agent has received notice from the Required Lenders that the
Eurodollar Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or maintaining
their Eurodollar Loans during such Interest Period, or (iii) U.S. Dollar
deposits in the principal amounts of the Eurodollar Loans to which such Interest
Period is to be applicable are not generally available in the London interbank
market, the Administrative Agent shall give telecopy or telephonic notice
thereof to the Borrowers and the Lenders as soon as practicable thereafter, and
will also give prompt written notice to the Borrowers when such conditions no
longer exist. If such notice is given, (A) any Eurodollar Loans requested to be
made on the first day of such Interest Period shall be made as Base Rate Loans,
(B) any Loans that were to have been converted on the first day of such Interest
Period to or continued as Eurodollar Loans shall be converted to or continued as
Base Rate Loans and (C) each outstanding Eurodollar Loan shall be converted, on
the last day of the then-current Interest Period thereof, to Base Rate Loans.
Until such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrowers
have the right to convert Base Rate Loans to Eurodollar Loans.
(b) If the Canadian Agent determines in good faith, which
determination shall be final, conclusive and binding upon the Canadian Borrowers
absent manifest error, and notifies the Canadian Borrowers and each of the
Canadian Lenders that, by reason of circumstances affecting the money market (i)
there is no market for Bankers' Acceptances; or (ii) the demand for Bankers'
Acceptances is insufficient to allow the sale or trading of the Bankers'
Acceptances created and purchased hereunder, then,
(A) the right of the Canadian Borrowers to request a
borrowing by way of Bankers' Acceptances shall be suspended until the
Canadian Agent determines in good faith that the circumstances causing
such suspension no longer exist and the Canadian Agent so notifies the
Canadian Borrowers;
(B) any notice of requested Bankers' Acceptances which is
outstanding shall be canceled and the Bankers' Acceptance requested
therein shall not be made; and
(C) the Canadian Agent shall promptly notify the Canadian
Borrowers of the suspension of the Canadian Borrowers' right to request
Bankers' Acceptances and of the termination of any such suspension.
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4.11 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
by the relevant Government Authority occurring after the Closing Date shall make
it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated
by this Agreement, (a) such Lender shall promptly give written notice of such
circumstances to the Borrowers and the Administrative Agent or the Canadian
Agent, as applicable (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to Eurodollar Loans shall forthwith be suspended and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrowers shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 4.14.
4.12 REQUIREMENTS OF LAW.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance by
any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit or any Loans made or
issued by it or its obligation to make or issue any of the foregoing,
or change the basis of taxation of payments to such Lender in respect
thereof (except for Non-Excluded Taxes covered by Section 4.13 and
changes in taxes measured by or imposed upon the overall net income, or
franchise tax imposed in lieu of such net income tax, of such Lender or
its applicable lending office, branch, or any affiliate thereof);
(b) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate or the
Acceptance Fee in respect of Bankers' Acceptances hereunder; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender, acting reasonably, deems to be material, of
making, converting into, continuing or maintaining Eurodollar Loans or issuing
or participating in Letters of Credit or creating Bankers'
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Acceptances or to reduce any amount receivable hereunder in respect thereof,
then, in any such case, upon written notice to the applicable Borrowers from
such Lender, through either of the Agents, in accordance herewith, the
applicable Borrowers shall be obligated to promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate such Lender on an
after-tax basis (after taking into account applicable deductions and credits in
respect of the amount indemnified) for such increased cost or reduced amount
receivable; provided that, in any such case, the Borrowers may elect to convert
the Eurodollar Loans made by such Lender hereunder to Base Rate Loans by giving
the Administrative Agent at least one (1) Business Day's notice of such
election, in which case the applicable Borrowers shall promptly pay to such
Lender, upon demand, without duplication, such amounts, if any, as may be
required pursuant to Section 4.14; provided, further that the Borrowers shall
not be required to compensate any Lender pursuant to this Section 4.12 for any
increased costs or reduced amount receivable arising more than 180 days prior to
the date such Lender notifies the applicable Borrower of the change resulting in
such increased cost or reduced amount receivable and of such Lender's or Issuing
Lender's intention to claim compensation therefor; provided further, however,
that such 180-day limitation shall not apply to any increased cost or reduced
amount receivable that arises retroactively to periods prior to the effective
date of the applicable change so long as the applicable Lender notifies the
Borrowers of such change within 180 days of a responsible officer of the Lender
receiving actual knowledge thereof. If any Lender becomes entitled to claim any
additional amounts pursuant to this Section 4.12, it shall provide prompt
written notice thereof to the Borrowers, through the Administrative Agent,
certifying (x) that one of the events described in this Section 4.12 has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed explanation
of the calculation thereof. Such a certificate as to any additional amounts
payable pursuant to this Section 4.12 submitted by such Lender, through the
Administrative Agent, to the Borrowers shall be conclusive and binding on the
parties hereto in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
4.13 TAXES.
(a) Except as provided below in this Section 4.13, all payments
made by the Borrowers under this Agreement, any Notes and any documents relating
hereto shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any court, or governmental
body, agency or other official, including interest, penalties and liabilities
with respect thereto ("Taxes"), excluding taxes measured by or imposed upon the
overall net income of any Agent or any Lender or its applicable lending office,
or any branch or affiliate thereof, and all franchise taxes, branch taxes, taxes
on doing business or taxes on the overall capital or net worth of any Agent or
any Lender or its applicable lending office, or any branch or affiliate thereof,
imposed: (i) by the jurisdiction under the laws of which such Agent or such
Lender, applicable lending office, branch or affiliate is organized or is
located, or in which its principal executive office is located, or any nation
within which such jurisdiction is located or any political subdivision thereof;
or (ii) by reason of any connection between the jurisdiction imposing such tax
and such Agent or such Lender, applicable lending office, branch or affiliate
other than a connection arising solely from such Agent or such Lender having
executed, delivered or performed its obligations, or received payment under or
enforced, this Agreement or any Notes. If any such non-excluded Taxes,
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
an Agent or any Lender hereunder or
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under any Notes or other documents relating thereto, (A) the Borrowers shall
withhold and remit such Non-Excluded Taxes to the relevant authority when and as
due, (B) the amounts so payable to an Agent or such Lender shall be increased to
the extent necessary to yield to an Agent or such Lender (after payment of all
Non-Excluded Taxes, including Non-Excluded Taxes in respect of additional
amounts payable hereunder) interest or any such other amounts payable hereunder
or under the Notes or any other document relating hereto at the rates or in the
amounts specified in this Agreement and any Notes, provided, however, that the
Borrowers shall be entitled to deduct and withhold any Non-Excluded Taxes and
shall not be required to increase any such amounts payable to: (I) any U.S.
Lender that is not organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the requirements of paragraph
(b) of this Section 4.13 or (II) any Canadian Lender that fails to comply with
the requirements of paragraph (d) of Section 4.13, in the case of either (I) or
(II), whenever any Non-Excluded Taxes are payable by the Borrowers, and (C) as
promptly as possible thereafter the Borrowers shall send to such Agent for its
own account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by the Borrowers showing prompt
payment thereof. If any Borrower fails to pay any Non-Excluded Taxes when due to
the appropriate taxing authority or fails to remit to the Administrative Agent
the required receipts or other required documentary evidence, such Borrower
shall indemnify an Agent and any Lender for any incremental Taxes, interest or
penalties that may become payable by an Agent or any Lender as a result of any
such failure. If a Lender shall change its office that makes or maintains a Loan
hereunder, the Borrowers shall not be required to pay any increased amounts to
the Lender in respect of any Non-Excluded Taxes pursuant to this Section 4.13
over and above any obligation to withhold or deduct any amount with respect to
such Non-Excluded Taxes that existed on the date the Lender changed such office,
unless the Lender changed the office at the request of any Borrower in which
case such Borrower shall indemnify the Lender in respect of such increased
amounts. The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each U.S. Lender that is not incorporated under the laws of
the United States of America or a state thereof shall:
(i) (A) before the date of any payment by the U.S.
Borrowers under this Agreement or Notes to such Lender,
deliver to the U.S. Borrowers and the Administrative Agent two
duly completed copies of United States Internal Revenue
Service Form W-8BEN, W-8ECI, W-8 EXP, W-8IMY or W-9 (or
successor thereto or other appropriate form), or successor
applicable form, as the case may be, certifying that it is
entitled to receive payments under this Agreement and any
Notes without deduction, withholding or backup withholding of
any United States federal income taxes;
(B) deliver to the U.S. Borrowers and the
Administrative Agent two further copies of any such form or
certification before the date that any such form or
certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent
form previously delivered by it to the U.S. Borrowers; and
(C) obtain such extensions of time for filing
and complete such forms or certifications as may reasonably be
requested by the U.S. Borrowers or the Administrative Agent;
or
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(ii) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code, (A) represent
to the U.S. Borrowers (for the benefit of the U.S. Borrowers and the
Administrative Agent) that (x) it is not a bank within the meaning of
Section 881(c)(3)(A) of the Code, is not subject to regulatory or other
legal requirements as a bank in any jurisdiction, and has not been
treated as a bank for purposes of any tax, securities law or other
filing or submission made to any governmental authority, any
application made to a rating agency or qualification for any exemption
from any tax, securities law or other legal requirements, (y) is not a
10-percent shareholder for purposes of section 881(c)(3)(B) of the Code
and (z) is not a controlled foreign corporation receiving interest from
a related person for purposes of Section 881(c)(3)(C) of the Code, (B)
agree to furnish to the U.S. Borrowers, on or before the date of any
payment by the U.S. Borrowers, with a copy to the Administrative Agent,
two accurate and complete original signed copies of Internal Revenue
Service Form W-8BEN, W-8ECI, W-8EXP or W-8IMY, (or successor applicable
form) certifying to such Lender's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax under the
provisions of Section 881(c) of the Code with respect to payments to be
made under this Agreement and any Notes (and to deliver to the U.S.
Borrowers and the Administrative Agent two further copies of such form
before the date it expires or becomes obsolete and after the occurrence
of any event (including a change in its applicable lending office)
requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by the
U.S. Borrowers or the Administrative Agent for filing and completing
such forms), and (C) agree, to the extent legally entitled to do so,
upon reasonable request by the U.S. Borrowers, to provide to the U.S.
Borrowers (for the benefit of the U.S. Borrowers and the Administrative
Agent) such other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an exemption from
withholding with respect to payments under this Agreement and any
Notes.
Notwithstanding the above, if any change in treaty, law or regulation
has occurred after the date such Person becomes a Lender hereunder
which renders all such forms ineffective to secure an exemption from
United States federal withholding tax or which would prevent such
Lender from duly completing and delivering any such form with respect
to it and such Lender so advises the U.S. Borrowers and the
Administrative Agent then such Lender shall be exempt from such
requirements. Each such Lender will promptly notify the Administrative
Agent and the Borrowers of any changes in circumstances that could
reasonably modify or render invalid any claimed exemption. Each Person
that shall become a Lender or a participant of a Lender pursuant to
Section 14.3 shall, upon the effectiveness of the related transfer, be
required to provide all of the forms, certifications and statements
required pursuant to this subsection (b); provided that in the case of
a participant of a Lender, the obligations of such participant of a
Lender pursuant to this subsection (b) shall be determined as if the
participant of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and
statements to the Lender from which the related participation shall
have been purchased.
(c) If any such Non-Excluded Taxes shall be or become applicable
after the date of this Agreement to such payments by the Borrowers to a Lender,
such Lender shall use reasonable efforts to make, fund or maintain the Loan or
Loans, as the case may be, through another lending office located in another
jurisdiction so as to reduce, to the fullest extent possible, the Borrowers'
liability hereunder, if the making, funding or maintenance of such Loan or Loans
through such
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other office does not, in the reasonable judgment of the Lender, materially
affect the Lender of such Loan. If the Borrowers are required to make any
additional payment to or on behalf of a Lender pursuant to this Section 4.13,
and any such Lender receives, or is entitled to receive, a credit against,
remission for, or repayment of, any tax paid or payable by it in respect of, or
calculated with reference to, the taxes giving rise to such payment, such Lender
shall, within a reasonable time after it receives such credit, relief, remission
or repayment, reimburse the Borrowers the amount of any such credit, relief,
remission or repayment.
(d) Each Canadian Lender shall, before the date of any payments by
the Canadian Borrowers under this Agreement on Notes to such Lender, deliver to
the Canadian Borrowers and the Administrative Agent a certificate stating that
such Canadian Lender is a Canadian Taxable Lender, and such other Canadian tax
certifications or other documentation as may be required under Canadian law to
evidence that payments to be received by such Canadian Lender under this
Agreement are not subject to Canadian federal or provincial withholding tax.
(e) Notwithstanding the foregoing to the contrary, any U.S. Lender
which acquires a Participation Interest pursuant to Section 11.3(b) hereof shall
be exempt from the requirements set forth in subsections (c) and (d) of this
Section 4.13 and any Canadian Lender which acquires a Participation Interest
pursuant to Section 11.3(b) hereof shall be exempt from the requirements set
forth in subsections (b) and (c) of this Section 4.13 and all such Lenders shall
be entitled to the rights and benefits set forth in subsection (a) of this
Section 4.13 in respect of such Participation Interests.
4.14 COMPENSATION.
(a) The U.S. Borrowers promise to indemnify each U.S. Lender and
to hold each U.S. Lender harmless from any loss or expense which such U.S.
Lender may sustain or incur (other than through such U.S. Lender's gross
negligence or willful misconduct) as a consequence of (a) default by a U.S.
Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after such U.S. Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by a U.S. Borrower
in making any prepayment of a Eurodollar Loan after such U.S. Borrower has given
a notice thereof in accordance with the provisions of this Agreement and (c) the
making of a prepayment of Eurodollar Loans on a day which is not the last day of
an Interest Period with respect thereto. Such indemnification may include an
amount equal to (i) the present value of the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein (excluding,
however, the Applicable Percentage included therein, if any) minus (ii) the
amount of interest (as reasonably determined by such U.S. Lender) which would
have accrued to such U.S. Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank Eurodollar
market. Such a certificate as to any amounts payable pursuant to this Section
4.14(a) submitted by a U.S. Lender, through the Administrative Agent to the U.S.
Lenders, shall be conclusive and binding in the absence of manifest error. The
agreements in this Section 4.14(a) shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
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(b) The Canadian Borrowers promise to indemnify each Canadian
Lender and to hold each Canadian Lender harmless from any loss or expense which
such Canadian Lender may sustain or incur (other than through such Canadian
Lender's gross negligence or willful misconduct) as a consequence of (a) default
by a Canadian Borrower in making a borrowing of, conversion into or continuation
of Eurodollar Loans after such Canadian Borrower has given a notice requesting
the same in accordance with the provisions of this Agreement, (b) default by a
Canadian Borrower in making any prepayment of a Eurodollar Loan after such
Canadian Borrower has given a notice thereof in accordance with the provisions
of this Agreement and (c) the making of a prepayment of Eurodollar Loans on a
day which is not the last day of an Interest Period with respect thereto or the
repayment of a Bankers' Acceptance prior to its maturity date. Such
indemnification may include an amount equal to (i) the present value of the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Loans provided for herein (excluding, however, the Applicable Percentage
included therein, if any) minus (ii) the amount of interest (as reasonably
determined by such Canadian Lender) which would have accrued to such Canadian
Lender on such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank Eurodollar market. Such a certificate as to
any amounts payable pursuant to this Section 4.14(b) submitted by a Canadian
Lender, through the Administrative Agent to the Canadian Lenders, shall be
conclusive and binding in the absence of manifest error. The agreements in this
Section 4.14(b) shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
4.15 CERTAIN LIMITATIONS.
Each Lender shall promptly notify the Borrowers and the Administrative
Agent (i) in the event it becomes unlawful for such Lender to make, maintain or
fund Eurodollar Loans and (ii) of any event of which it has knowledge occurring
after the date hereof, which will entitle such Lender to compensation or
indemnification pursuant to Section 4.9, 4.12 or 4.13, and such Lender will
agree to use reasonable efforts to change the jurisdiction of its lending office
if such change will allow such Lender to make, maintain and fund Eurodollar
Loans or avoid the need for, or reduce the amount of, such compensation or
indemnification and will not in the judgment of such Lender, be otherwise
disadvantageous to it, except where such compensation or indemnification arises
as a result of a Lender acquiring a Participation Interest pursuant to Section
11.3(b) hereof. Any Lender claiming compensation or indemnification under
Section 4.9, 4.12 or 4.13 shall furnish to the Company and the Administrative
Agent a statement in reasonable detail setting forth the additional amount or
amounts to be paid to it under the applicable Section and, in the case of
indemnification sought under Sections 4.12(a) or 4.13, a copy of the notice
received by the Lender from the Governmental Authority evidencing its tax claim,
which shall be conclusive in the absence of manifest error. Except in the case
of amounts claimed under Sections 4.12(a) or 4.13, in determining such amount,
such Lender may use any reasonable averaging and attribution methods.
If any Lender claims compensation or indemnification under Section 4.9,
4.12 or 4.13, (any such Lender making a claim, an "Affected Lender") the Company
may, at its option, notify the Administrative 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, the Company,
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with the consent of the Administrative Agent, may obtain, at the Company's
expense, a replacement Lender ("Replacement Lender") to replace the Affected
Lender, which Replacement Lender, if not already a Lender, must be reasonably
satisfactory to the Administrative Agent. If the Company obtains a Replacement
Lender within 90 days following notice of its intention to do so, the Affected
Lender must sell and assign its Loans and Commitments to such Replacement Lender
for an amount equal to the principal balance of all Loans held by the Affected
Lender and all accrued interest and fees with respect thereto through the date
of such sale; provided, that the Company 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.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CLOSING CONDITIONS.
The obligation of the Lenders to enter into this Agreement is subject
to satisfaction of the following conditions (in form and substance acceptable to
the Administrative Agent):
(a) Executed Credit Documents. Receipt by the
Administrative Agent of duly executed copies of (i) this Agreement;
(ii) the Revolving Credit Notes; (iii) the Guaranty Agreements; (iv)
each of the Security Agreements; (v) the Pledge Agreement; (vi) the
Holdings Pledge Agreement; and (vii) all other Credit Documents.
(b) No Default; Representations and Warranties. As of the
Closing Date (i) there shall exist no Default or Event of Default and
(ii) all representations and warranties contained herein and in the
other Credit Documents shall be true and correct in all material
respects.
(c) Opinions of Counsel. Receipt by the Administrative
Agent of an opinion, or opinions, in form and substance satisfactory to
the Administrative Agent and the Canadian Agent, addressed to the
Agents on behalf of the Lenders and dated as of the Closing Date, from
U.S., Canadian and Mexican legal counsel to the Credit Parties which
covers, among other matters, valid corporate existence and authority,
legality, validity and binding effect of all loan, guaranty and
security documents, perfection of security interests, and the absence
of any violation of law or regulation or conflict with any existing
material contracts.
(d) Corporate Documents. Receipt by the Administrative
Agent of the following:
(i) Charter Documents. Copies of the articles or
certificates of incorporation or other charter documents of
each Credit Party that is a party to a Credit Document,
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary
or assistant secretary as of the Closing Date to be true and
correct.
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(ii) Resolutions. Copies of resolutions of the
Board of Directors or other comparable managing body of each
Credit Party that is party to a Credit Document, approving and
adopting the Credit Documents to which it is a party and the
transactions contemplated therein and authorizing execution
and delivery thereof, certified by a secretary or assistant
secretary as of the Closing Date to be true and correct and in
force and effect as of such date.
(iii) Bylaws/Operating Agreements. A copy of the
bylaws or operating agreement of each Credit Party that is a
party to a Credit Document, certified by a secretary or
assistant secretary as of the Closing Date to be true and
correct and in force and effect as of such date.
(iv) Good Standing. Copies of (i) certificates of
good standing, existence or its equivalent with respect to
each Credit Party that is a party to a Credit Document,
certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of organization
and each other jurisdiction in which such Credit Party carries
on business and is required by the laws of such jurisdiction
to be qualified therein to do so except where failure to be so
qualified could not reasonably be expected to have a Material
Adverse Effect and (ii) where applicable, a certificate
indicating payment of all corporate franchise taxes certified
as of a recent date by the appropriate governmental taxing
authorities.
(v) Incumbency. An incumbency certificate of
each Credit Party certified by a secretary or assistant
secretary to be true and correct as of the Closing Date.
(e) Compliance with Financial Obligations. The Credit
Parties shall be in compliance in all material respects with all
existing financial obligations owed to third parties.
(f) Personal Property Collateral. The Administrative
Agent shall have received:
(i) searches of filings under the UCC and PPSA
(or corresponding local laws) in the jurisdiction of the chief
executive office of each Credit Party, the jurisdiction of
organization of each Credit Party and each jurisdiction where
any Collateral is located or where a filing would need to be
made in order to perfect the Administrative Agent's security
interest in the Collateral, copies of the financing statements
on file in such jurisdictions and evidence that no Liens exist
other than Permitted Liens;
(ii) searches of the appropriate Mexican
registries in the jurisdictions of registration of each of the
Mexican Subsidiaries and evidence that no Liens exist other
than Permitted Liens;
(iii) duly completed financing statements under
the UCC and PPSA for each appropriate jurisdiction as is
necessary, in the Administrative Agent's reasonable
discretion, to perfect (or otherwise render opposable to third
parties) the Administrative Agent's security interest in the
Collateral;
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(iv) searches of ownership of intellectual
property in the appropriate governmental offices and such
patent/trademark/copyright filings as requested by the
Administrative Agent in order to perfect the Administrative
Agent's security interest in the Collateral;
(v) all instruments and chattel paper in the
possession of any of the Credit Parties, together with
allonges or assignments as may be necessary or appropriate to
perfect the Administrative Agent's security interest in the
Collateral to the extent required under the Security
Agreements;
(vi) duly executed consents as are necessary, in
the Administrative Agent's reasonable discretion, to perfect
the Lenders' security interest in the Collateral including,
without limitation, such Acknowledgment Agreements from
lessors of real property as the Administrative Agent may
require where collateral value is $100,000 or more;
(vii) Blocked Account Agreements with respect to each
of the deposit accounts, other than those excluded pursuant to
the last sentence of Section 9.12, of the Credit Parties not
maintained with the Administrative Agent substantially in the
form of Exhibit I-2 or other tri-party agreements in form and
substance reasonably satisfactory to the Administrative Agent;
(viii) copies of (x) the Ozer Valuation Services
LLC Inventory Appraisal Report dated October 2002 and (y) the
Corporate Valuation Advisors, Inc. Valuation made as of
September 1, 2002; and
(ix) all stock certificates evidencing the
Capital Stock pledged to the Agent pursuant to the Pledge
Agreement and the Holdings Pledge Agreement, together with
duly executed in blank undated stock powers attached thereto.
(g) No Material Adverse Effect. No event shall have
occurred since December 31, 2001 that has had or could reasonably be
expected to have material adverse effect on the business, assets,
operations, prospects or condition (financial or otherwise) of
Borrowers and their Subsidiaries, taken as a whole.
(h) Litigation. There shall be no action, suit,
investigation or proceeding pending or, to the knowledge of any Credit
Party, threatened, in any court or before any arbitrator or
Governmental Authority that could reasonably be expected (i) to
materially and adversely affect the Borrowers or any of their
respective Subsidiaries or (ii) to materially and adversely affect any
transaction contemplated by this Agreement or any of the other Credit
Documents or the ability of the Borrowers to perform their respective
obligations under the Credit Documents.
(i) Consents and Approvals. Receipt by the Administrative
Agent of evidence that all material governmental, shareholder and third
party consents and approvals necessary or desirable in connection with
the execution and delivery of the Credit Documents and the consummation
of the transactions set forth therein have been obtained.
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(j) Officer's Certificate. The Administrative Agent shall
have received a certificate or certificates executed by a Senior
Financial Officer of the Company on behalf of the Credit Parties as of
the Closing Date stating that (A) each Credit Party is in compliance
with all existing material financial obligations, (B) all material
governmental, shareholder and third party consents and approvals, if
any, with respect to the Credit Documents and the other transactions
contemplated thereby have been obtained, (C) no action, suit,
investigation or proceeding is pending or threatened in any court or
before any arbitrator or governmental instrumentality that purports to
affect a member of the Consolidated Group or any other transaction
contemplated by the Credit Documents, if such action, suit,
investigation or proceeding could reasonably be expected to have a
Material Adverse Effect, and (D) immediately after giving effect to
this Agreement, the other Credit Documents and the other transactions
contemplated therein to occur on such date, (1) no Default or Event of
Default exists, (2) all representations and warranties contained herein
and in the other Credit Documents are true and correct in all material
respects, and (3) Excess Availability after giving effect to the
payment of fees and expenses associated with the closing of this
Agreement after giving effect to the making of Loans and the
application of the proceeds thereof to be made on the Closing Date and
after deductions for past due payables and other obligations is at
least $5,000,000.
(k) Priority of Liens. The Administrative Agent shall
have received satisfactory evidence that (i) other than Permitted
Liens, the Administrative Agent, on behalf of the applicable Lenders,
holds a perfected, first priority Lien on all applicable Collateral and
(ii) none of the Collateral is subject to any other Liens other than
Permitted Liens.
(l) Evidence of Insurance. Receipt by the Administrative
Agent of copies of certificates of insurance of the Credit Parties
evidencing general comprehensive liability and property insurance
meeting the requirements set forth in the Credit Documents, including,
without limitation, naming the Administrative Agent as loss payee on
behalf of the Lenders and each Lender as additional insured, as
applicable, and copies of credit insurance policies insuring foreign
Accounts to be included as Eligible Accounts Receivable.
(m) Consolidated Group Structure. The capital and
ownership structure of the Consolidated Group shall be as described in
Schedule 5.1(m).
(n) Solvency Certificate. Receipt by the Administrative
Agent of an officer's certificate for each of the Credit Parties
prepared by a Senior Financial Officer of such Credit Party as to the
financial condition, solvency and related matters of such Credit Party,
in each case after giving effect to the initial borrowings under the
Credit Documents, in substantially the form of Exhibit K hereto.
(o) Sources and Uses; Payment Instructions. Receipt by
the Administrative Agent from the Company of (i) a statement of sources
and uses of funds covering all payments reasonably expected to be made
by the Company in connection with the Closing Date, including an
itemized estimate of all fees, expenses and other closing costs and
(ii) payment instructions with respect to each wire transfer to be made
by the Agents on behalf of the Lenders or the Borrowers on the Closing
Date setting forth the amount of such transfer, the purpose of such
transfer, the name and number of the account to which such
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transfer is to be made, the name and ABA number of the bank or other
financial institution where such account is located and the name and
telephone number of an individual that can be contacted to confirm
receipt of such transfer.
(p) Opening Borrowing Base Certificate. Receipt by the
Administrative Agent of a Borrowing Base Certificate for the U.S.
Borrowing Base and the Canadian Borrowing Base as of November 30, 2002
(or a more recent date, if information is available), and dated the
Closing Date and, substantially in the form of Exhibit J and certified
by a Senior Financial Officer of the Company to be true and correct.
(q) Financial Statements. The Administrative Agent shall
have received (i) the Financial Statements described in Section 6.6 and
(ii) financial and operational projections for the Consolidated Group
monthly for the fiscal year ending December 31, 2003 and annually for
each fiscal year thereafter through the fiscal year ending December 31,
2005.
(r) Fees and Expenses. All fees and expenses required to
be paid under this Agreement on or prior to the Closing Date shall have
been paid in full.
(s) Due Diligence. The Administrative Agent shall have
completed its legal and tax due diligence with respect to the Borrowers
and their Subsidiaries and the results of such due diligence shall be
satisfactory to the Administrative Agent in all respects in its sole
discretion.
(t) [Intentionally Omitted].
(u) Minimum Excess Availability. The Borrowers shall have
Excess Availability of at least $5,000,000 as of the Closing Date,
after giving effect to the payment of fees and expenses associated with
the closing of this Agreement, after giving effect to the making of
Loans and other extensions of credit and the application of the
proceeds thereof to be made on the Closing Date and after deductions
for past due payables and other obligations.
(v) Existing Indebtedness. All of the existing
Indebtedness for borrowed money of the Borrowers and their respective
Subsidiaries shall be repaid in full and all liens and guarantees
related thereto shall be terminated on the Closing Date, other than any
existing Indebtedness permitted pursuant to Section 9.1 and any
Permitted Liens.
(w) Account Designation Letter. The Administrative Agent
shall have received an Account Designation Letter.
(x) Assignment of Credit Insurance. The Administrative
Agent shall have received evidence satisfactory to the Administrative
Agent of the assignment of each Euler credit insurance policy to the
Administrative Agent.
(y) Other. The Administrative Agent shall have received
such other documents, agreements or information as reasonably requested
by the Administrative Agent or any Lender.
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5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans or create Bankers' Acceptances, nor
shall the Issuing Lender be required to issue or extend a Letter of Credit,
unless:
(a) Notice. The applicable Borrower shall have delivered
(i) in the case of any Loan, a Notice of Borrowing, duly executed and
completed, by the time specified in Sections 2.1 or 2.3, as appropriate
and (ii) in the case of any Letter of Credit, the Issuing Lender shall
have received an appropriate request for issuance in accordance with
the provisions of Section 2.2 and (iii) in the case of a Bankers'
Acceptance, to the Canadian Agent, an appropriate notice in accordance
with Section 2.5;
(b) Representations and Warranties. The representations
and warranties made by a Credit Party in any Credit Document are true
and correct in all material respects at and as if made as of such date,
except for representations and warranties expressly stated to relate to
a specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of
such earlier date;
(c) No Default. No Default or Event of Default shall
exist or be continuing either prior to or after giving effect thereto;
and
(d) Availability. Immediately after giving effect to the
making of a Loan or the issuance of a Letter of Credit or the creation
of a Bankers' Acceptance, as the case may be, the Borrowers shall be in
compliance with Section 4.4(b).
The delivery of each Notice of Borrowing and each request for a Letter of Credit
or Bankers' Acceptance shall constitute a representation and warranty by the
applicable Borrower of the correctness of the matters specified in subsections
(b), (c), and (d) above.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrowers hereby represent and warrant to each Lender that:
6.1 ORGANIZATION AND GOOD STANDING.
Except as set forth on Schedule 6.1, each Credit Party resident in the
United States (i) is a corporation or limited liability company duly
incorporated or formed, as the case may be, validly existing and in good
standing under the laws of the State of its incorporation or formation, as the
case may be, (ii) is duly qualified and in good standing as a foreign
corporation or limited liability company authorized to do business in every
jurisdiction where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect, and (iii) has the requisite corporate or limited
liability company power and authority to own its properties and to carry on its
business as now conducted and as proposed to be conducted. Each Credit Party
resident in Canada (A) is a corporation duly incorporated or amalgamated and
validly subsisting under the laws of its jurisdiction of incorporation, (B) is
duly qualified and in good standing as a foreign or extra-
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provincial corporation authorized to do business in every jurisdiction where the
failure to so qualify could reasonably be expected to have a Material Adverse
Effect and (C) has the corporate power and authority to carry on its business as
now conducted and as proposed to be conducted.
6.2 DUE AUTHORIZATION.
Except as set forth on Schedule 6.2, each Credit Party (a) has the
requisite corporate power and authority to execute, deliver and perform such of
the Credit Documents to which it is a party and to incur the obligations herein
and therein provided for, and (b) is duly authorized to, and has been authorized
by all necessary corporate action, to execute, deliver and perform such of the
Credit Documents to which it is a party.
6.3 NO CONFLICTS.
With respect to each Credit Party, neither the execution and delivery
of the Credit Documents, nor the consummation of the transactions contemplated
therein, nor performance of and compliance with the terms and provisions thereof
will (a) violate or conflict in any material respect with any provision of its
articles or certificate of incorporation or bylaws or other organizational
documents, as applicable, (b) violate, contravene or conflict in any material
respect with any law, regulation (including without limitation Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit applicable to
it, which violation, contravention or conflict could reasonably be expected to
have a Material Adverse Effect, (c) violate, contravene or conflict in any
material respect with contractual provisions of, or cause an event of default
under, any indenture, loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which it is a party or by which it may be bound,
which violation, contravention or conflict could reasonably be expected to have
a Material Adverse Effect, or (d) result in or require the creation of any
material Lien upon or with respect to its properties except in favor of the
Lenders.
6.4 CONSENTS.
No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party in respect of any Credit Party is required in connection with the
execution, delivery or performance of this Agreement or any of the other Credit
Documents other than those consents, authorizations, approvals, orders, filings,
registrations, and qualifications which have been obtained, copies of which have
been delivered to the Administrative Agent, or the failure of which to receive,
make or obtain could not reasonably be expected to have a Material Adverse
Effect.
6.5 ENFORCEABLE OBLIGATIONS.
This Agreement and the other Credit Documents have been duly executed
and delivered and constitute legal, valid and binding obligations of each Credit
Party (with regard to each agreement or instrument to which it is a party)
enforceable in accordance with their respective terms, except as may be limited
by bankruptcy, reorganization, moratorium or insolvency laws or similar laws
affecting creditors' rights generally and by general equitable principles.
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6.6 FINANCIAL DATA; MATERIAL ADVERSE CHANGE.
(a) The financial statements provided to the Lenders (the
"Financial Statements"), consist of the following financial statements: (i) the
consolidated balance sheet of the Company as of, and consolidated statements of
income, shareholders equity and cash flows for the fiscal years ended December
31, 2000 and December 31, 2001 audited by independent certified public
accountants, (ii) the unaudited consolidated balance sheet of the Company as of,
and consolidated statement of income, shareholders equity and cash flows for the
monthly periods ending as of the last day of each calendar month from January 1,
2002 through October 31, 2002 prepared by a Senior Financial Officer of the
Company, (iii) monthly financial and operational projections for each month
during fiscal year 2003 and yearly financial and operational projections for
fiscal years 2004 and 2005 (the "Projections"). The Financial Statements (other
than the Projections) are in accordance with the books and records of the
Company and its Subsidiaries and fairly present in all material respects the
consolidated financial condition of the Consolidated Group at the dates thereof
and the results of operations for the periods indicated (subject, in the case of
unaudited financial statements, to normal year-end adjustments), and such
Financial Statements (other than the Projections) have been prepared in
conformity with U.S. GAAP consistently applied throughout the periods involved.
The Projections have been prepared in good faith based upon assumptions believed
by the Company to be reasonable at the time made.
(b) The financial statements delivered to the Lenders pursuant to
Sections 7.1(a), (b), and (c) are in accordance with the books and records of
the Company and its Subsidiaries and have been prepared in accordance with U.S.
GAAP and present fairly in all material respects the consolidated and
consolidating (as applicable) financial condition, results of operations and
cash flows of the Consolidated Group as of such date and for such periods.
(c) Since December 31, 2001, there has been no development or
event relating to or affecting a Consolidated Party which has had or could
reasonably be expected to have a Material Adverse Effect.
6.7 NO DEFAULT.
None of the Credit Parties is in default under any term of any
indenture, contract, lease, agreement, instrument or other commitment to which
any of them is a party or by which any of them is bound which default has had or
could reasonably be expected to have a Material Adverse Effect. None of the
Credit Parties knows of any dispute regarding any indenture, contract, lease,
agreement, instrument or other commitment which could reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
6.8 LIENS.
There are no Liens in favor of third parties with respect to any of the
Collateral, including, without limitation, with respect to the Inventory,
wherever located, other than Permitted Liens. To the knowledge of the applicable
Credit Party, no lessor, warehouseman, filler, processor or packer of any such
Credit Party has granted any Lien with respect to the Inventory maintained by
such Credit Party at the property of any such lessor, warehousemen, filler,
processor or packer. Upon the proper filing of financing statements and the
proper recordation of other applicable documents with the appropriate filing or
recordation offices in
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each of the necessary jurisdictions and the payment of applicable filing fees,
the security interests granted pursuant to the Credit Documents constitute and
shall at all times constitute valid and enforceable first, prior and perfected
Liens on the Collateral (subject to Permitted Liens). The Credit Parties are or
will be at the time additional Collateral is acquired by them, the absolute
owners of the Collateral with full right to pledge, sell, consign, transfer and
create a Lien therein, free and clear of any and all Liens in favor of third
parties, except Permitted Liens. The Credit Parties will at their expense
warrant, until payment in full of the Obligations and termination of the
Commitments, and, at the Administrative Agent's request, defend the Collateral
from any and all Liens (other than Permitted Liens) of any third party. The
Credit Parties will not grant, create or permit to exist, any Lien upon the
Collateral, or any proceeds thereof, in favor of any third party (other than
Permitted Liens).
6.9 INDEBTEDNESS.
The Consolidated Group has no Indebtedness except (a) as disclosed in
the Financial Statements referenced in Section 6.6, (b) as set forth in Schedule
6.9, and (c) as otherwise permitted under the terms of this Agreement.
6.10 LITIGATION.
Except as disclosed in Schedule 6.10, there are no actions, suits or
legal, equitable, arbitration or administrative proceedings, pending or, to the
knowledge of the Borrowers threatened, against any Credit Party which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.
6.11 MATERIAL CONTRACTS.
Attached hereto as Schedule 6.11 is a true, correct and complete list
of all the Material Contracts currently in effect on the Closing Date. All of
the Material Contracts are in full force and effect as of the Closing Date.
6.12 TAXES.
Each Credit Party has filed, or caused to be filed, all income tax
returns and other material tax returns (federal, state, local and foreign)
required to be filed and paid all amounts of taxes shown thereon to be due
(including interest and penalties) and has paid all other taxes, fees,
assessments and other governmental charges (including mortgage recording taxes,
documentary stamp taxes and intangibles taxes) owing by it, except for such
taxes, fees, assessment or government charges (a) that are not yet delinquent,
(b) that are being contested in good faith and by proper proceedings, and
against which adequate reserves are being maintained in accordance with U.S.
GAAP or (c) the failure to pay could not reasonably be expected to have a
Material Adverse Effect. None of the Credit Parties is aware of any proposed
material tax assessments against it or any other Credit Party.
6.13 COMPLIANCE WITH LAW.
None of the Credit Parties has violated or failed to comply with any
statute, law, ordinance, regulation, rule or order of any foreign, federal,
state, provincial or local government, or any other Governmental Authority or
any self regulatory organization, or any judgment,
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decree or order of any court, applicable to its business or operations except
where the aggregate of all such violations or failures to comply could not
reasonably be expected to have a Material Adverse Effect. The conduct of the
business of each of the Credit Parties is in conformity with all securities,
commodities, energy, public utility, zoning, building code, health, OSHA and
environmental requirements and all other foreign, federal, state, provincial and
local governmental and regulatory requirements and requirements of any self
regulatory organizations, except where such non-conformities could not
reasonably be expected to have a Material Adverse Effect. None of the Credit
Parties has received any notice to the effect that, or otherwise been advised
that, it is not in compliance with, and none of such Credit Parties knows of any
currently existing circumstances that are likely to result in the violation of,
any such statute, law, ordinance, regulation, rule, judgment, decree or order,
which non-compliance or violation could reasonably be expected to have a
Material Adverse Effect.
6.14 ERISA.
(a) Except as would not reasonably be expected to have a Material
Adverse Effect, during the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred, and, to
the best of the Borrowers' or any ERISA Affiliate's knowledge, no event or
condition has occurred or exists as a result of which any ERISA Event could
reasonably be expected to occur, with respect to any Plan; (ii) no "accumulated
funding deficiency," as such term is defined in Section 302 of ERISA and Section
412 of the Code, whether or not waived, has occurred with respect to any Single
Employer Plan; (iii) each Plan, Single Employer Plan and, to the best of the
Borrowers' or any ERISA Affiliate's knowledge, each Multiemployer Plan has been
maintained, operated, and funded in compliance in all material respects with its
own terms and in compliance in all material respects with the provisions of
ERISA, the Code, and any other applicable federal or state laws; and (iv) no
Lien in favor of the PBGC or a Single Employer Plan has arisen or is reasonably
likely to arise on account of any Single Employer Plan.
(b) As of the Closing Date, the actuarial present value of all
"benefit liabilities" on a going concern basis, whether or not vested, under
each Single Employer Plan, as of the last annual valuation date prior to the
date on which this representation is made or deemed made (determined, in each
case, utilizing the actuarial assumptions used in such Plan's most recent
actuarial valuation report), did not exceed as of such valuation date the fair
market value of the assets of all such Plans by more than $10,000,000 in the
aggregate.
(c) Except as would not reasonably be expected to have a Material
Adverse Effect, neither the Borrowers nor any ERISA Affiliate has incurred, or,
to the best of the Borrowers' or any ERISA Affiliate's knowledge, is reasonably
expected to incur, any withdrawal liability under ERISA with respect to any
Multiemployer Plan or Multiple Employer Plan. Except as would not reasonably be
expected to have a Material Adverse Effect, neither Borrower nor any ERISA
Affiliate would become subject to any withdrawal liability under ERISA if such
Borrower or any such ERISA Affiliate were to withdraw completely from all
Multiemployer Plans and Multiple Employer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made.
Neither Borrower nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization (within the meaning of Section 4241 of
ERISA), is insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no Multiemployer Plan
is, to the best of
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the Borrowers' or any ERISA Affiliate's knowledge, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject the Borrowers
or any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which the Borrowers or any ERISA Affiliate has agreed or
is required to indemnify any person against any such liability, except for any
such prohibited transaction or breach which would not reasonably be expected to
have a Material Adverse Effect.
(e) Except as set forth in the Financial Statements, the Borrowers
and their ERISA Affiliates have no material liability with respect to "expected
post-retirement benefit obligations" within the meaning of the Financial
Accounting Standards Board Statement 106. Each Plan which is a welfare plan (as
defined in Section 3(1) of ERISA) to which Sections 601-609 of ERISA and Section
4980B of the Code apply has been administered in compliance in all material
respects with such sections.
(f) Each of the Canadian benefit plans and Canadian pension plans
and any similar plans of the Canadian Borrowers and their Subsidiaries that are
maintained, contributed to or required to be contributed to, by any of the
Canadian Borrowers and their Subsidiaries, or to which any of the Canadian
Borrowers and their Subsidiaries is a party, or by which any of them is bound,
or under which any of the Canadian Borrowers and their Subsidiaries has any
liability or contingent liability (collectively the "Canadian Employee Plans")
is, and has been, duly established and registered under all applicable federal
and provincial laws including, without limitation, the provisions of the
applicable pension legislation and the Income Tax Act (Canada), to the extent
required under such applicable pension legislation and to the extent required to
qualify the applicable Canadian Employee Plan for tax-favored treatment under
the Income Tax Act (Canada) respectively, and no event has occurred which would
cause a loss of such registered status. Except as could not reasonably be
expected to have a Material Adverse Effect, each of the Canadian Employee Plans
has been administered in accordance with such laws and the terms of the
applicable Canadian Employee Plan. All material obligations (including fiduciary
and funding obligations) of the Canadian Borrowers and their Subsidiaries and
their respective agents under each of the Canadian Employee Plans have been
performed except where the failure to perform such obligations could not
reasonably be expected to have a Material Adverse Effect. There are no material
disputes, proceedings or investigations by any applicable Governmental Authority
(including, without limitation, any applicable pension regulator or tax
authority) pending or, to the knowledge of the Canadian Borrowers, threatened in
respect of any of the Canadian Employee Plans or their assets. All employer and
employee contributions or premiums required to be paid or remitted to or in
respect of each of the Canadian Employee Plans have been paid or remitted in a
timely fashion in accordance with the terms of such Canadian Employee Plans and
applicable laws. Each of the Canadian Employee Plans has satisfied the funding
requirements (if any) applicable to such plans under the terms of the applicable
Canadian Employee Plan and any applicable law, regulations or other legislative
or administrative promulgations.
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6.15 SUBSIDIARIES.
Set forth in Schedule 6.15 is a complete and accurate list of all
Subsidiaries of each member of the Consolidated Group. Information on the
attached Schedule 6.15 includes a complete and accurate list of the jurisdiction
of organization of each member of the Consolidated Group and the percentage
ownership interest of voting stock owned by the direct parent company in each
such member. The outstanding Capital Stock of all Credit Parties is validly
issued, fully paid and non-assessable and is owned by the Borrowers, directly or
indirectly, free and clear of all Liens (other than those arising under or
contemplated in connection with the Credit Documents). No Subsidiary of the
Company has outstanding any securities convertible into or exchangeable for its
Capital Stock nor does any such Person have outstanding any rights to subscribe
for or to purchase or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to its Capital Stock.
6.16 OWNERSHIP.
Each Credit Party has (i) good and marketable fee simple title to or
valid leasehold interests in all of its real property (all such real property
and the nature of such Borrower's or any of its Subsidiaries' interest therein
is disclosed on Schedule 6.16) and (ii) good and marketable title to all of its
other material assets, in each case subject to no Liens other than Permitted
Liens. Each Credit Party enjoys peaceful and undisturbed possession of all its
real property and there is no pending or, to the knowledge of the Credit
Parties, threatened condemnation or expropriation proceeding relating to any
such real property. The leases with respect to the leased property, together
with any leases of real property entered into by any Credit Party after the
Closing Date, are referred to collectively as the "Leases." All of the real
property and the structures thereon and other tangible assets owned, leased or
used by any Credit Party in the conduct of its business are (a) insured to the
extent and in a manner customary in the industry in which the Credit Parties are
engaged, (b) structurally sound with no known material defects, (c) in good
operating condition and repair, subject to ordinary wear and tear and casualty,
(d) not in need of maintenance or repair except for ordinary, routine
maintenance and repair the cost of which would not be material or as a result of
casualty, (e) sufficient for the operation of the business of such Credit Party
as presently conducted thereon and (f) in conformity with all applicable laws,
ordinances, orders, regulations and other requirements (including applicable
zoning, environmental, motor vehicle safety, occupational safety and health laws
and regulations) relating thereto, except where the failure to comply or conform
with any of the foregoing could not reasonably be expected to have a Material
Adverse Effect.
6.17 USE OF PROCEEDS; MARGIN STOCK.
The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.10. None of such proceeds will be used for the
purpose of purchasing or carrying any "margin stock" as defined in Regulation U
or Regulation X, or for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry "margin stock" or for any
other purpose which might constitute this transaction a "purpose credit" within
the meaning of Regulation U or Regulation X.
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6.18 GOVERNMENT REGULATION.
No Credit Party is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940 or the Interstate Commerce Act, each as amended. In addition, none of
the Credit Parties is (a) an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (b) a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary" or a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
6.19 HAZARDOUS SUBSTANCES.
Except as disclosed on Schedule 6.19 or except as could not reasonably
be expected to have a Material Adverse Effect: (a) all real property owned or
leased by any Credit Party or on which any Credit Party operates (the "Subject
Property") is free from "hazardous substances" "contaminants" or "pollutants" or
similar substances as defined in the applicable Environmental Laws in
concentrations or amounts that require cleanup under any Environmental Laws; (b)
no portion of the Subject Property is subject to federal, provincial, state or
local, complaint, investigation or, to the Borrowers' knowledge, liability under
applicable Environmental Laws because of the presence of leaked or spilled
petroleum products, waste materials or debris, "PCB's" or PCB items (as defined
in 40 C.F.R. Section 763.3), underground storage tanks, "asbestos" (as defined
in 40 C.F.R. Section 763.63) or the past or present accumulation, spillage or
leakage of any such substance subject to regulation under the Environmental
Laws; (c) each Credit Party is in compliance with all Environmental Laws
applicable in connection with the operation of its businesses, and (d) no
Borrower knows of any complaint or investigation under Environmental Laws
regarding the Subject Property.
6.20 INTELLECTUAL PROPERTY.
Each Credit Party owns, or has the legal right to use, all trademarks,
tradenames, copyrights, technology, know-how and processes (the "Intellectual
Property") necessary for each of them to conduct its business as currently
conducted except for those the failure to own or have such legal right to use
could not reasonably be expected to have a Material Adverse Effect. Set forth on
Schedule 6.20 is a list of all material Intellectual Property owned by each
Credit Party or that any Credit Party has the right to use. Except as provided
on Schedule 6.20, no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does any Credit
Party know of any such claim, and to the Credit Parties' knowledge the use of
such Intellectual Property by any Credit Party does not infringe on the rights
of any Person, except for such claims and infringements that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
6.21 SOLVENCY.
Each Credit Party individually, and the Credit Parties as a whole, are
and, after consummation of this Agreement and after giving effect to all
Indebtedness incurred hereunder will be Solvent.
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6.22 LOCATION OF ASSETS.
The Credit Parties' chief executive offices are at the locations set
forth on Schedule 6.22 hereto, and the books and records of the Credit Parties
and all chattel paper and all records of accounts are located at the chief
executive offices of the Credit Parties or as otherwise noted on Schedule 6.22.
All other locations where the Credit Parties keep, store or maintain any
Collateral are set forth on Schedule 6.22 hereto. There is no jurisdiction in
which any Credit Party has any Collateral (except for Inventory held for
shipment by third Persons, Inventory in transit, Inventory held for processing
by third Persons, or immaterial quantities of Inventory) other than those
jurisdictions listed on Schedule 6.22. Schedule 6.22 is a true, correct and
complete list in all material respects of (i) the names and addresses of each
warehouseman, filler, processor and packer at which Inventory is stored, (ii)
the address of the chief executive offices of the Credit Parties, (iii) the
address of all offices where records and books of account of the Credit Parties
are kept or where Collateral is kept, stored or maintained and (iv) the state of
incorporation or formation of each of the Credit Parties. None of the receipts
received by any of the Credit Parties from any warehouseman, filler, processor
or packer states that the goods covered thereby are to be delivered to bearer or
to the order of a named person or to a named person and such named person's
assigns.
6.23 D/B/A OR TRADE NAMES.
None of the Credit Parties has used any Business Entity, d/b/a or trade
name during the five (5) years preceding the date hereof, other than the
Business Entity name shown on its Articles or Certificate of Incorporation or
other organizational documents and as set forth on Schedule 6.23.
6.24 TRADE SUPPLIERS.
Attached hereto as Schedule 6.24 is a true, correct and complete list
of all of the suppliers who have sold goods to the Credit Parties during the
fiscal year ended December 31, 2001, for an amount representing five (5) percent
or more of the accounts of the Credit Parties payable for such year.
6.25 NO EMPLOYEE DISPUTES.
There are no controversies pending or, to the best knowledge of the
Borrowers after diligent inquiry, threatened between any Credit Parties and any
of their respective employees, other than employee grievances which could not,
in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.26 BROKERS' FEES.
Except for fees payable to the Arranger in connection with the closing
and syndication of this Credit Agreement, no Credit Party has any obligation to
any Person in respect of any finder's, broker's, investment banking or other
similar fee in connection with any of the transactions contemplated under the
Credit Documents to occur on the Closing Date other than the closing and other
fees payable pursuant to this Agreement and those fees set forth in Schedule
6.26.
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6.27 LABOR MATTERS.
None of the Credit Parties is engaged in any unfair labor practice.
There is (a) no material unfair labor practice complaint pending against any
Credit Party or, to the best knowledge of the Borrowers, threatened against any
of them, before the National Labor Relations Board, the Canada Industrial
Relations Board or any applicable provincial labor relations board, and no
grievance or arbitration proceeding arising out of or under collective
bargaining agreements that could reasonably be expected to have a Material
Adverse Effect is so pending against any Credit Party or, to the best knowledge
of the Borrowers, threatened against any of them, (b) no strike, labor dispute,
slowdown or stoppage pending against any Credit Party or, to the best knowledge
of the Borrowers, threatened against any of them, which could reasonably be
expected to have a Material Adverse Effect and (c) to the best of the knowledge
of the Borrowers, no union representation questions with respect to the
employees of any of the Credit Parties and no union organizing activities which
could reasonably be expected to have a Material Adverse Effect.
6.28 STATUS OF ACCOUNTS.
Each Account of each Credit Party is based on an actual and bona fide
sale and delivery of goods to, rendition of services to, or the provision of
other consideration to customers, made by such Credit Party in the ordinary
course of its business, except for those Accounts which are insurance proceeds;
the goods and inventory being sold or leased and the Accounts created are its
exclusive property and are not and shall not be subject to any Lien, consignment
arrangement, encumbrance, security interest or financing statement whatsoever,
other than the Permitted Liens; and such Credit Party's customers have accepted
the goods or services, owe and are obligated to pay the full amounts stated in
the invoices according to their terms, without any dispute, offset, defense,
counterclaim or contra that could reasonably be expected to have, when
aggregated with any such other disputes, offsets, defenses, counterclaims or
contras, a Material Adverse Effect. Each Credit Party confirms to the Lenders
that any and all taxes or fees relating to the Accounts or the goods relating
thereto, are its sole responsibility and that same will be paid by such Credit
Party when due (unless duly contested and adequately reserved for) and that none
of said taxes or fees is or will become a lien on or claim against the Accounts.
6.29 KEY MEMBERS OF MANAGEMENT.
Attached hereto as Schedule 6.29 is a true, correct and complete list
of the members of management of the Credit Parties who report to the Chief
Executive Officer of the Company as of the date hereof.
6.30 ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information heretofore, contemporaneously or hereafter
furnished by or on behalf of the Credit Parties to the Administrative Agent, the
Canadian Agent, or any Lender for purposes of or in connection with this Credit
Agreement or any Credit Documents, or any transaction contemplated hereby or
thereby is or will be true and accurate in all material respects on the date as
of which such information is dated or certified and not incomplete by omitting
to state any material fact necessary to make such information not misleading at
such time in light of then current circumstances, when taken as a whole. There
is no fact now known to any Senior Officer of any Credit Party which has had, or
could reasonably be expected to have, a Material
87
Adverse Effect which fact has not been set forth herein, in the Financial
Statements, or any certificate, opinion or other written statement made or
furnished by any Credit Party to the Administrative Agent.
6.31 ALTOONA.
Except as described in Schedule 6.31 hereto, Altoona has no business
activities and its capital and assets do not exceed $1,500,000.
ARTICLE VII
AFFIRMATIVE COVENANTS
Each Borrower hereby covenants and agrees that so long as this
Agreement is in effect and until the Loans, LOC Obligations and BA Obligations,
together with interest, fees and other Obligations hereunder, have been paid in
full and the Commitments and Letters of Credit hereunder shall have terminated
that they will do or cause to be done the following:
7.1 INFORMATION COVENANTS.
The Borrowers will furnish, or cause to be furnished, to the
Administrative Agent and each Lender:
(a) Annual Financial Statements. As soon as available and
in any event within one-hundred twenty (120) days after the close of
each fiscal year of the Consolidated Group, a consolidated and
consolidating balance sheet of the Consolidated Group as at the end of
such fiscal year together with related consolidated and consolidating
statements of income, shareholder's equity and of cash flows for such
fiscal year, setting forth in comparative form consolidated and
consolidating figures for the preceding fiscal year, all in reasonable
detail and, in the case of the consolidated financial statements,
audited by independent certified public accountants of recognized
national standing and whose opinion shall be to the effect that such
consolidated financial statements have been prepared in accordance with
U.S. GAAP and shall not be limited as to the scope of the audit or
qualified as to the status of the Consolidated Group as a going
concern. It is specifically understood and agreed that failure of the
annual financial statements to be accompanied by an opinion of such
accountants in form and substance as provided herein shall constitute
an Event of Default hereunder. The financial statements delivered
pursuant to this Section 7.1(a) will have been prepared in accordance
with U.S. GAAP and will present fairly in all material respects the
consolidated and consolidating financial condition, results of
operations and cash flows of the Consolidated Group as of the date
thereof.
(b) Quarterly Financial Statements. As soon as available
and in any event within forty-five (45) days after the end of each of
the first three fiscal quarters of each fiscal year of the Consolidated
Group, a consolidated balance sheet and unaudited statements of income
of the Consolidated Group as at the end of such quarterly period
together with related consolidated statements of retained earnings,
shareholder's equity and of cash flows for such quarterly period and
for the portion of the fiscal year ending with such period, in each
case setting forth in comparative form figures for the corresponding
period of the preceding fiscal
88
year, all in reasonable form and detail acceptable to the
Administrative Agent, and accompanied by a certificate of a Senior
Financial Officer of the Company as being true and correct and as
having been prepared in accordance with U.S. GAAP, subject to changes
resulting from audit and normal year-end audit adjustments and the
absence of footnotes. The financial statements delivered pursuant to
this Section 7.1(b) will have been prepared in accordance with U.S.
GAAP and will present fairly in all material respects the consolidated
financial condition, results of operations and cash flows of the
Consolidated Group as of the date thereof.
(c) Monthly Financial Statements. As soon as available
and in any event within thirty (30) days after the end of each fiscal
month of the Consolidated Group, an unaudited consolidated balance
sheet of the Consolidated Group as at the end of such fiscal month,
together with related consolidated statements of income, shareholder's
equity and cash flows for such fiscal month, in each case as of the end
of such period and for such period then ended and for the period from
the beginning of the current fiscal year to the end of such period,
setting forth in comparative form the corresponding figures for the
comparable period in the preceding fiscal year, prepared in accordance
with US GAAP (subject to changes resulting from audit and normal
year-end adjustments and the absence of footnotes) and certified by a
Senior Financial Officer of the Company.
(d) Officer's Certificate. At the time of delivery of the
financial statements provided for in Sections 7.1(a), (b) and (c), a
certificate of a Senior Financial Officer of the Company substantially
in the form of Exhibit L to the effect that no Default or Event of
Default exists, or if any Default or Event of Default does exist
specifying the nature and extent thereof and what action the Borrowers
propose to take with respect thereto. In addition, for each fiscal
month, such certificate shall (i) demonstrate compliance with the
financial covenants contained in Article VIII by calculation thereof as
of the end of each such fiscal period and (ii) for each such
certificate delivered in connection with the financial statements
provided for in Sections 7.1(a) and 7.1(b), contain information
regarding expenditures made by the Credit Parties as to Permitted
Investments and Capital Expenditures during the prior fiscal year or
fiscal quarter, as applicable, and for each fiscal quarter, such
certificate shall demonstrate the quarterly calculation of the Leverage
Ratio for purposes of calculating the Applicable Percentage.
(e) Auditor's Reports. Promptly upon receipt thereof, a
copy of any other report or "management letter" submitted by
independent accountants to a member of the Consolidated Group in
connection with any annual, interim or special audit of the books of
the Consolidated Group.
(f) SEC and Other Reports. Promptly upon transmission or
receipt thereof, (i) copies of any filings and registrations with, and
material reports to or from, the Securities and Exchange Commission, or
any successor agency and (ii) upon the request of the Administrative
Agent, all material reports and written information to and from the
United States Environmental Protection Agency, or any Canadian,
foreign, state, provincial or local agency responsible for
environmental matters, the United States Occupational Safety and Health
Administration, or any Canadian, foreign, state, provincial or local
agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety
matters relating to a member of the Consolidated Group.
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(g) Notices. Promptly, but in no event later than three
(3) Business Days after a Senior Officer obtains knowledge thereof,
written notice of the occurrence of an event or condition consisting of
a Default or Event of Default, specifying the nature and existence
thereof and what action the Borrowers propose to take with respect
thereto, and (ii) promptly, but in no event later than five (5)
Business Days after a Senior Officer obtains knowledge thereof, of the
occurrence of any of the following with respect to a Credit Party (A)
the pendency or commencement of any litigation, arbitral or
governmental proceeding against such Credit Party which, if adversely
determined, could reasonably be expected to have, a Material Adverse
Effect, (B) any levy of an attachment, execution or other process
against the assets of a Credit Party having a value of $500,000 or
more, (C) the occurrence of an event or condition which shall
constitute a default or event of default under any Indebtedness of a
member of the Consolidated Group in excess of $500,000, (D) any
development in the business or affairs of any member of the
Consolidated Group which has resulted in, or which the Company
reasonably believes may result in, a Material Adverse Effect, (E) the
receipt of written notice by any Credit Party of potential liability or
responsibility for violation, or alleged violation of any applicable
federal, foreign, state, provincial or local law, rule or regulation,
including but not limited to, Environmental Laws, the violation of
which could reasonably be expected to have a Material Adverse Effect or
(F) promptly, of any change in the name of any Credit Party.
(h) Annual Budget. For each fiscal year of the
Consolidated Group, not later than the earlier of (i) the date which is
two weeks following the board meeting of the Company's directors
approving the annual budget of the Consolidated Group for each such
fiscal year and (ii) the end of the first fiscal quarter of each such
fiscal year, beginning with the fiscal year commencing January 1, 2003,
an annual budget of the Consolidated Group containing, among other
things, pro forma financial statements, projected loan usage and excess
availability under this Credit Agreement and projected compliance with
the financial covenants contained in Article VIII by calculation
thereof as of the end of such fiscal year, prepared on a monthly basis.
(i) Borrowing Base Certificate, etc. Not later than 2:00
p.m. on the 15th of each month (or if such day is not a Business Day,
then on the next succeeding Business Day) and within five (5) Business
Days following the date of any Asset Disposition or Casualty Loss in
excess of $5,000,000, the Borrowers shall deliver a monthly borrowing
base certificate (the "Borrowing Base Certificate") for both the
Canadian Borrowing Base and the U.S. Borrowing Base in substantially
the form of Exhibits J hereto, duly completed and certified by a Senior
Financial Officer of the Company detailing the Eligible Accounts
Receivable and Eligible Inventory of the Canadian Borrowers and the
U.S. Borrowers, respectively, as of the last day of the immediately
preceding month. In addition, on the 15th day of each month (or if such
day is not a Business Day, then on the next succeeding Business Day),
the Company shall furnish a written report to the Lenders setting forth
(i) a summary of the accounts receivable aged trial balance at the
immediately preceding month end for each account debtor, (ii) the
accounts payable aging summary for the immediately preceding month,
(iii) an inventory summary as of the immediately preceding month end
and (iv) a schedule and other confirmatory information showing sales,
cash receipts and such other information as the Administrative Agent
may request for such immediately preceding month. The summary aging
reports shall indicate which Accounts are current, up to 30, 30 to 60
and over 60
90
days past due and shall list the names of all applicable account
debtors. The Administrative Agent may, but shall not be required to,
rely on the Borrowing Base Certificate delivered hereunder as
accurately setting forth the available U.S. Borrowing Base and Canadian
Borrowing Base for all purposes of this Credit Agreement until such
time as a new Borrowing Base Certificate is delivered to the
Administrative Agent in accordance herewith. Borrowing Base
Certificates may be prepared and submitted to the Lenders by the
Borrowers on a more frequent basis than monthly, provided that such
certificates shall comply with the requirements set forth elsewhere
herein. The Borrowers shall provide Borrowing Base Certificates on a
more frequent basis than monthly upon the request of the Administrative
Agent.
(j) Canadian Taxes. Each Borrower will give written
notice to the Administrative Agent and the Canadian Agent promptly, but
in no event later than five (5) Business Days after a Senior Officer
obtains knowledge thereof, if the Minister of National Revenue has,
pursuant to section 224 or any successor section of the Income Tax Act
(Canada) or section 317 or any successor section of the Excise Tax Act
(Canada), or if any other Governmental Authority in Canada has, under
any comparable provision of similar legislation, required any other
person to pay to the Minister (or to such other Governmental Authority,
as the case may be), any amount which would otherwise have been payable
to any Canadian Credit Party (or, by reason of a security interest
granted by any Canadian Credit Party, to a secured creditor of such
Canadian Credit Party, including, without limitation, the Agents and
the Lenders).
(k) Other Information. With reasonable promptness upon
receipt of any such request, such other information regarding the
business, properties or financial condition of the Consolidated Group
as the Administrative Agent or the Lenders may reasonably request.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
Each Credit Party will do all things necessary to preserve and keep
(and will cause each of its Subsidiaries to keep) in full force and effect its
existence, franchises and authority, except for corporate reorganizations and
other similar transactions which could not reasonably be expected to have a
Material Adverse Effect.
7.3 BOOKS AND RECORDS.
The Credit Parties will keep complete and accurate books and records of
its transactions in accordance with sound accounting practices on the basis of
U.S. GAAP and in compliance with applicable law. In addition, each Credit Party
will maintain books and records pertaining to the Collateral in such detail,
form and scope as is consistent with sound business practice and in compliance
with applicable law.
7.4 COMPLIANCE WITH LAW.
Each of the Credit Parties will comply with all material laws, rules,
regulations and orders of, and all applicable restrictions imposed by all
applicable Governmental Authorities applicable to it, including applicable
Environmental Laws if noncompliance could reasonably be expected to have a
Material Adverse Effect.
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7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each of the Credit Parties will pay and discharge (a) all material
taxes, assessments and governmental charges or levies imposed upon it or them,
or upon its or their capital, income or profits, or upon any of its or their
properties or any taxes, assessments and governmental charges or levies required
to be collected and remitted by them, before they shall become delinquent, or
(b) all lawful claims (including claims for labor, materials and supplies)
which, if unpaid, would give rise to a Lien or charge upon any of its or their
properties, other than a Permitted Lien; provided, however, that there is no
requirement to pay any such tax, assessment, charge, levy, or claim which is
being contested in good faith by appropriate proceedings and as to which
adequate reserves therefor have been established in accordance with U.S. GAAP,
unless the failure to make any such payment (i) shall give rise to an immediate
right to foreclosure on a Lien (other than a Permitted Lien) securing such
amounts or (ii) otherwise could reasonably be expected to have a Material
Adverse Effect.
7.6 INSURANCE; CASUALTY LOSS.
(a) Each of the Credit Parties will maintain comprehensive general
liability insurance covering third party property damage and insurance covering
the Collateral up to the replacement value thereof, with such insurance
companies, in such amounts and covering such risks as are at all times
satisfactory to the Administrative Agent in its reasonable discretion. The
present coverage of the Credit Parties is outlined as to carrier, policy number,
expiration date, type and amount on Schedule 7.6 hereto. All policies covering
the Collateral are to name the applicable Credit Parties and the Administrative
Agent as loss payees in case of loss, as their interests may appear, and are to
contain such other provisions as the Administrative Agent may reasonably require
to fully protect the Administrative Agent's interest in the Collateral and to
any payments to be made under such policies. All comprehensive general liability
policies of the Credit Parties are to name the Administrative Agent and each
Lender as an additional insured. Certificates of insurance evidencing the
insurance covering the Collateral are to be delivered to the Administrative
Agent on or prior to the Closing Date, premium prepaid, with the loss payable
endorsement in the Administrative Agent's favor, and shall provide for not less
than thirty (30) days prior written notice to the Administrative Agent, of the
exercise of any right of cancellation. True copies of all original insurance
policies shall be delivered to the Administrative Agent on or prior to the
Closing Date. In the event any Credit Party fails to respond in a timely and
appropriate manner (as determined by the Administrative Agent in its reasonable
discretion) with respect to collecting under any insurance policies required to
be maintained under this Section 7.6, the Administrative Agent shall have the
right, in the name of itself or any Credit Party, to file claims under such
insurance policies, to receive and give acquittance for any payments that may be
payable thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.
(b) Each of the Credit Parties will provide written notice to the
Administrative Agent of the occurrence of any of the following events promptly,
but in no event later than five (5) Business Days after a Senior Officer obtains
knowledge of the occurrence of such event: any of the Collateral is (i) damaged
or destroyed, or suffers any other loss or (ii) is condemned, confiscated or
otherwise taken, in whole or in part, or the use thereof is otherwise diminished
so as to render impracticable or unreasonable the use of such Collateral for the
purpose to which
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such Collateral was used immediately prior to such condemnation, confiscation or
taking, by exercise of the powers of condemnation or eminent domain or
otherwise, and in either case the amount of the damage, destruction, loss or
diminution in value of such Collateral is in excess of $1,000,000 (collectively,
a "Casualty Loss"). The applicable Credit Party will diligently file and
prosecute its claim or claims for any award or payment in connection with a
Casualty Loss. Subject to clause (c) below, in connection with any Casualty
Loss, the Credit Parties will pay to the Administrative Agent, promptly upon
receipt thereof, any and all insurance proceeds and payments received by any of
the Credit Parties on account of damage, destruction or loss of all or any
portion of the Collateral and the Administrative Agent shall cause such proceeds
to be applied or released for application in accordance with Section 7 of the
applicable Security Agreement. At any time an Event of Default has occurred and
is continuing or in the case of a Casualty Loss in excess of $1,000,000, no
settlement on account of any such Casualty Loss shall be made without the
consent of the Administrative Agent, which consent shall not be unreasonably
withheld, and the Credit Parties will deliver to the Administrative Agent such
documents as may be requested by the Administrative Agent in connection
therewith and will consult with the Administrative Agent, its attorneys and
agents in the making and prosecution of such claim or claims. Each of the Credit
Parties hereby irrevocably authorizes and appoints the Administrative Agent its
attorney-in-fact, after the occurrence and during the continuance of an Event of
Default, to collect and receive for any such award or payment and to file and
prosecute such claim or claims, which power of attorney shall be irrevocable and
shall be deemed to be coupled with an interest, and each of the Credit Parties
shall, upon demand of the Administrative Agent, make, execute and deliver any
and all assignments and other instruments sufficient for the purpose of
assigning any such award or payment to the Administrative Agent for the benefit
of the Lenders, free and clear of any encumbrances of any kind or nature
whatsoever.
(c) Notwithstanding the foregoing to the contrary, only if a
Casualty Loss exceeds $2,000,000, the Administrative Agent, at its election and
in its sole discretion, shall either (A) apply the proceeds realized from such
loss to payment of accrued and unpaid interest or outstanding principal of the
Loans or (B) deposit such proceeds to an account specified by the Credit Parties
to be used to repair, replace or rebuild the Collateral or portion thereof that
was the subject of the loss in accordance with and subject to the terms and
provisions of Section 7 of the applicable Security Agreement.
7.7 MAINTENANCE OF PROPERTY.
Each of the Credit Parties will maintain and preserve its properties
and equipment necessary in its business (in whomever's possession as they may
be) in good repair, working order and condition, normal wear and tear and
casualty excepted (and having regard to their respective ages), and will make,
or cause to be made, in such properties and equipment from time to time all
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent and in the manner
customary for companies in similar businesses.
7.8 MEXICAN RECEIVABLES.
If the U.S. Borrowers intend to include Accounts owed by account
debtors in Mexico in the U.S. Borrowing Base, they shall provide to the
Administrative Agent (a) thirty (30) days written notice of their intention to
do so and (b) evidence satisfactory to the Administrative Agent of the
satisfaction of each of the requirements in the definition of Eligible Mexican
Accounts Receivable.
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7.9 ERISA.
The Company will give written notice to the Administrative Agent
promptly, but in no event later than five (5) Business Days after a Senior
Officer obtains knowledge thereof, of: (a) any event or condition, including,
but not limited to, any Reportable Event, that constitutes, or could reasonably
be expected to lead to, an ERISA Event; (b) with respect to any Multiemployer
Plan, the receipt of notice as prescribed in ERISA or otherwise of any
withdrawal liability assessed against the Company or any ERISA Affiliate, or of
a determination that any Multiemployer Plan is in reorganization or insolvent
(both within the meaning of Title IV of ERISA); (c) the failure to make full
payment on or before the due date (including extensions) thereof of all amounts
which the Company or any ERISA Affiliate is required to contribute to each
Single Employer Plan or Multiemployer Plan pursuant to its terms and as required
to meet the minimum funding standard set forth in ERISA and the Code with
respect thereto; or (d) any change in the funding status of any Single Employer
Plan, in each case, that could reasonably be expected to have a Material Adverse
Effect; together, with a description of any such event or condition or a copy of
any such notice and a statement by a Senior Financial Officer of the Company
briefly setting forth the details regarding such event, condition, or notice,
and the action, if any, which has been or is being taken or is proposed to be
taken by the Company or any ERISA Affiliate with respect thereto. Promptly upon
request, the Company shall furnish the Administrative Agent and the Lenders with
such additional information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return (Form 5500
series), as well as all schedules and attachments thereto required to filed with
the DOL and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section 3(39) of
ERISA).
Each of the Canadian Employee Plans (as defined by Section 6.14(f)
above) will be duly registered under all applicable federal and provincial laws
including, without limitation, the provisions of the applicable pension
legislation and the Income Tax Act (Canada), to the extent required under such
applicable pension legislation and to the extent required to qualify the
applicable Canadian Employee Plan for tax-favored treatment under the Income Tax
Act (Canada) respectively, and no event will be allowed to occur which would
cause a loss of such registered status. Except as could not reasonably be
expected to have a Material Adverse Effect, each of the Canadian Employee Plans
will be administered in accordance with such laws and in accordance with the
terms of the applicable Canadian Employee Plan. All material obligations
(including fiduciary and funding obligations) of the Canadian Borrowers and
their Subsidiaries and their respective agents required to be performed under
each of the Canadian Employee Plans will be performed, except where the failure
to perform such obligations could not reasonably be expected to have a Material
Adverse Effect. There will be no material disputes, proceedings or
investigations by any applicable Governmental Authority (including, without
limitation, any applicable pension regulator or tax authority) in respect of any
of the Canadian Employee Plans or their assets. All employer and employee
contributions or premiums required to be paid or remitted to or in respect of
each of the Canadian Employee Plans will be paid or remitted in a timely fashion
in accordance with the terms of such Canadian Employee Plans and applicable
laws. To the extent required by applicable law, each of the Canadian Employee
Plans will be funded on an ongoing basis in accordance with the actuarial
assumptions and methods specified in the actuarial reports, in accordance with
the terms of the applicable Canadian Employee Plan and the applicable law,
regulations or other legislative or administrative promulgations.
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7.10 USE OF PROCEEDS.
The proceeds of the Loans hereunder will be used solely (a) to repay
existing Indebtedness, (b) for capital expenditures and general corporate and
working capital purposes of the Borrowers and their Subsidiaries in the ordinary
course of business and (c) as otherwise permitted under this Agreement.
7.11 ADDITIONAL SUBSIDIARIES.
Promptly, or in any event within thirty (30) days, upon any Person
becoming a direct or indirect Subsidiary of a Borrower, the Borrowers shall so
notify the Administrative Agent and the Canadian Agent and shall, (a) in the
case of a Person organized and resident in the United States cause (i) such
Person to become a U.S. Borrower hereunder pursuant to a Joinder Agreement, (ii)
such Person to execute a Guaranty Agreement in substantially the same form as
the Guaranty Agreements executed by the other Guarantors organized and resident
in the United States, (iii) the U.S. Collateral of such Person to be pledged to
the Lenders pursuant to a Security Agreement similar to those executed by the
U.S. Borrowers, (iv) such Person to cause all of its Capital Stock to be
delivered to the Administrative Agent, together with undated stock powers signed
in blank and pledged to the Administrative Agent pursuant to an appropriate
pledge agreement(s) in substantially the form of the Pledge Agreement and
otherwise in form acceptable to the Administrative Agent, (v) such Person to
execute Revolving Notes in favor of the U.S. Lenders and (vi) such Person to
deliver such other documentation as the Administrative Agent may reasonably
request in connection with the foregoing, including, without limitation,
appropriate UCC-1 Financing Statements, Acknowledgment Agreements, certified
resolutions and other organizational and authorizing documents of such Person
and favorable opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
documentation referred to above), all in form, content and scope reasonably
satisfactory to the Administrative Agent and (b) in the case of a Person
organized (or resident for tax purposes) in Canada (i) cause such Person to
become a Canadian Borrower hereunder pursuant to a Joinder Agreement, (ii) cause
the Canadian Collateral of such Person to be pledged to the Canadian Lenders
pursuant to a Security Agreement similar to those executed by the Canadian
Borrowers, (iii) cause such Person to execute Revolving Notes in favor of the
Canadian Lenders, (iv) execute and deliver to the Administrative Agent a pledge
agreement in form and substance satisfactory to the Administrative Agent
pursuant to which the applicable Borrower pledges to the Administrative Agent
the Capital Stock of the newly formed entity and (v) cause such Person to
deliver such other documentation as the Administrative Agent or the Canadian
Agent may reasonably request in connection with the foregoing, including,
without limitation, appropriate PPSA financing statements (or equivalent
filings), Acknowledgment Agreements, certified resolutions and other
organizational and authorizing documents of such Person and favorable opinions
of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to
above), all in form, content and scope reasonably satisfactory to the
Administrative Agent. Notwithstanding the foregoing, in no event shall any
Credit Party form or acquire any Subsidiary organized outside the United States
or Canada without the prior written consent of the Administrative Agent, except
that the Company may form or cause to be formed a Mexican Special Purpose
Subsidiary.
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7.12 AUDITS/INSPECTIONS.
Each of the Credit Parties agrees that the Administrative Agent or its
agents may enter upon the premises of any of the Credit Parties at any time and
from time to time, during normal business hours, upon reasonable prior notice
and, on and after the occurrence and during the continuation of an Event of
Default which continues and is continuing beyond the expiration of any grace or
cure period applicable thereto and which has not otherwise been waived by the
Administrative Agent, at any time at all, for the purpose of (a) enabling the
Administrative Agent's internal auditors or other designees to conduct field
examinations at such of the Credit Parties' expense, (b) inspecting the
Collateral, (c) inspecting and/or copying (at the Credit Parties' expense) any
and all records pertaining thereto, (d) discussing the affairs, finances and
business of any Credit Party with any officers, employees and directors of such
Credit Party or with its certified independent accountant; provided, that a
designated representative of the Borrowers shall be given a reasonable
opportunity to participate in any such discussion, and (e) verifying Eligible
Accounts Receivable and/or Eligible Inventory. The Lenders, in the reasonable
discretion of the Administrative Agent, may accompany the Administrative Agent
at their sole expense in connection with the foregoing inspections. Ongoing
field examinations may be conducted by the Administrative Agent's exam staff at
any time. Prior to the occurrence and continuance of an Event of Default, the
first three field examinations per fiscal year shall be conducted at the Credit
Parties' expense (which shall include out-of-pocket expenses, including a per
diem cost per examiner). After the occurrence and during the continuance of an
Event of Default, all field examinations shall be conducted at the Credit
Parties' expense (which shall include out-of-pocket expenses, including a per
diem cost per examiner). As of the Closing Date, the per diem cost per examiner
is $750. Upon written request made to the Administrative Agent by a Lender, the
Administrative Agent shall reasonably promptly furnish to such Lender a copy of
any final, non-proprietary report prepared or obtained by the Administrative
Agent in connection with an inspection made by the Administrative Agent pursuant
to this Section 7.12.
7.13 INVENTORY.
Within thirty (30) days after the end of each month, upon the request
of the Administrative Agent from time to time, the Credit Parties will provide
to the Administrative Agent written statements listing categories of Inventory
in reasonable detail as requested by the Administrative Agent. The U.S. Credit
Parties will conduct annually a physical count of their Inventory and will
provide the Administrative Agent with prior written notice indicating when the
physical count is to be performed, and the Canadian Credit Parties will conduct
annually a physical count of their Inventory (or in lieu thereof, such other
test(s) as their independent auditors shall approve and which are acceptable to
the Administrative Agent) and will provide the Administrative Agent with prior
written notice indicating when the physical count (or such other test(s)) is to
be performed and a copy of such count (or test(s)) will be promptly supplied to
the Administrative Agent accompanied by a report of the value (valued at FIFO)
of such Inventory; provided that the Credit Parties will conduct such a physical
count at such other times and as of such dates as the Administrative Agent shall
reasonably request. The Administrative Agent shall be entitled to obtain new
Inventory Appraisals from time to time as it deems necessary, but not less
frequently than annually. Prior to the occurrence and continuance of an Event of
Default, the first two Inventory Appraisals per annum shall be at the sole
expense of the Credit Parties. After the occurrence and during the continuance
of an Event of Default, each Inventory Appraisal shall be at the sole expense of
the Credit Parties. Upon receipt of each new
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Inventory Appraisal, the Administrative Agent shall be entitled to adjust the
Applicable Inventory Percentage, as appropriate.
7.14 COLLATERAL RECORDS.
Each Credit Party agrees to maintain such books and records regarding
Accounts and the other Collateral as the Administrative Agent may reasonably
require, and agrees that such books and records will reflect the Lenders'
interest in the Accounts and such other Collateral. Each of the Credit Parties
agrees to afford the Administrative Agent thirty (30) days prior written notice
of any change in the location at which any Collateral is stored or maintained
(other than Inventory held for shipment by third Persons, Inventory in transit,
Inventory held for processing by third Persons or immaterial quantities of
assets, equipment or Inventory) or in the location of its chief executive office
or place of business from the locations specified in Schedule 6.22, and to
execute in advance of such change, cause to be filed and/or delivered to the
Administrative Agent any financing statements or other documents required by the
Administrative Agent, all in form and substance satisfactory to the
Administrative Agent. Each of the Credit Parties agrees to advise the
Administrative Agent promptly, in sufficient detail, of any material change
relating to the type, quantity or quality of the Collateral or any related event
which could reasonably be expected to have a Material Adverse Effect.
7.15 SECURITY INTERESTS.
(a) If, subsequent to the Closing Date, a Credit Party shall
acquire any intellectual property, securities, instruments, chattel paper or
other personal property required to be delivered to the Administrative Agent as
Collateral hereunder or under any of the Security Documents, the Borrowers shall
notify the Administrative Agent of the same in each case as provided under the
Security Documents or, if not specifically provided therein, as soon as
practicable after the acquisition thereof. Each Credit Party shall take such
action as requested by the Administrative Agent and at its own expense, to
ensure that the Administrative Agent shall have a first priority perfected Lien
in all personal property of the Credit Parties (whether now owned or hereafter
acquired), subject only to Permitted Liens. Each Credit Party shall, and shall
cause each of its Subsidiaries to, adhere to the covenants regarding the
location of personal property as set forth in the applicable Security Agreement.
Each Credit Party shall use its best efforts to deliver to the Administrative
Agent with respect to all leases for real property entered into by any Credit
Party subsequent to the Closing Date where a Borrower maintains Inventory valued
at $100,000 or more or where material books and records of the Credit Parties
are maintained or stored, landlord waivers and consents with respect to each
such leased property, in each case in form and substance reasonably satisfactory
to the Administrative Agent.
(b) Each Credit Party and its Subsidiaries will at its expense,
for so long as the Credit Documents remain effective, warrant and defend the
Collateral against any and all claims, demands and Liens (other than Permitted
Liens) of any third party. No Credit Party will, or will permit any of its
Subsidiaries to, grant, create or permit to exist, any Lien upon the Collateral,
or any proceeds thereof, in favor of any third party (other than Permitted
Liens). Each Credit Party agrees to comply with the requirements of all state,
provincial and federal laws in order to grant to the Lenders a valid and
perfected first priority security interest in the Collateral (subject only to
Permitted Liens). The Administrative Agent is hereby authorized by each Credit
Party to file any financing statements covering the Collateral. Each Credit
Party agrees to take such actions as the Administrative Agent may reasonably
request, from time to time, by way of: filing notices
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of liens, financing statements, fixture filings and amendments, renewals and
continuations thereof; cooperating with the Administrative Agent's custodians;
keeping stock records; obtaining lien waivers from landlords and mortgagees and
from warehousemen, fillers, processors and packers and their respective
landlords and mortgagees; paying claims, which might if unpaid, become a Lien
(other than a Permitted Lien) on the Collateral; and performing such further
acts as the Administrative Agent may reasonably require in order to effect the
purposes of this Credit Agreement and the other Credit Documents.
7.16 SCHEDULES OF ACCOUNTS AND PURCHASE ORDERS.
In furtherance of the continuing assignment and security interest in
the Accounts of each Borrower granted pursuant to the Security Agreement, upon
the creation of Accounts, at the request of the Administrative Agent, each
Borrower will execute and deliver to the Administrative Agent in such form and
manner as the Administrative Agent may require, solely for its convenience in
maintaining records of collateral, such confirmatory schedules of Accounts, and
other appropriate reports designating, identifying and describing the Accounts
as the Administrative Agent may require. In addition, upon the Administrative
Agent's request, each Borrower will provide the Administrative Agent with copies
of agreements with, or purchase orders from, the customers of each Borrower and
its Subsidiaries, and copies of invoices to customers, proof of shipment or
delivery and such other documentation and information relating to said Accounts
and other collateral as the Administrative Agent may require. Failure to provide
the Administrative Agent with any of the foregoing shall in no way affect,
diminish, modify or otherwise limit the security interests granted herein. Each
Borrower hereby authorizes the Administrative Agent to regard such Borrower's or
its Subsidiaries' printed name or rubber stamp signature on assignment schedules
or invoices as the equivalent of a manual signature by such Borrower's or such
Subsidiaries' authorized officers or agents.
7.17 COLLECTION OF ACCOUNTS.
Unless (a) Excess Availability shall fall below $5,000,000, (b) a
development or event relating to or affecting a Consolidated Party which has had
or could reasonably be expected to have a Material Adverse Effect shall have
occurred, in the reasonable judgment of the Administrative Agent or the Required
Lenders, or (c) an Event of Default shall have occurred and be continuing, and
the Administrative Agent or the Required Lenders shall have, in its or their
sole discretion, elected to enforce, collect and receive all amounts owing on
the Accounts and/or other Collateral (each a "Cash Management Event"), each
Borrower may and will enforce, collect and receive all amounts owing on the
Accounts (subject to any amounts that such Borrower is required to rebate to the
applicable account debtor pursuant to any agreement between such Borrower and
such account debtor), for the Lenders' benefit and on the Lenders' behalf but at
the Borrowers' expense in accordance with the provisions of Section 3.1 or 3.2,
as applicable; upon the occurrence of any Event of Default under Section
11.1(f), such privilege shall terminate automatically, without notice to the
Borrowers which is hereby expressly waived by the Borrowers. Any checks, cash,
notes or other instruments or property received by any Borrower with respect to
any Accounts shall be held by such Borrower in trust for the benefit of the
Lenders, separate from such Borrower's own property and funds, and deposited
promptly into the depository accounts of the Borrowers subject to Blocked
Account Agreements or Lockbox Agreements, provided, however, that upon the
occurrence of a Cash Management Event, such checks, cash, notes or other
instruments or property shall be immediately turned over to the Administrative
Agent or the Canadian Agent, as applicable, with proper assignments or
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endorsements. No checks, drafts or other instruments received by an Agent shall
constitute final payment unless and until such instruments have actually been
collected.
7.18 NOTICE; CREDIT MEMORANDA; AND RETURNED GOODS.
Each Borrower will notify the Administrative Agent promptly after a
Senior Officer obtains knowledge thereof of any matters materially affecting the
value, enforceability or collectibility of any Account, and of all material
customer disputes, offsets, defenses, counterclaims, returns and rejections, and
all reclaimed or repossessed merchandise or goods, provided, however, that such
notice shall only be required as to any such matter that affects Accounts
outstanding at any one time from any account debtor, which affected Accounts
have a value greater than $1,000,000, or to the extent that the outcome of such
matter could reasonably be expected to have a Material Adverse Effect. Each
Borrower will issue credit memoranda promptly (with duplicates to the
Administrative Agent upon its request for same) upon accepting returns or
granting allowances, and may continue to do so until the occurrence of an Event
of Default which continues beyond the expiration of the applicable grace or cure
period, or which has not otherwise been waived by the Required Lenders.
7.19 ACKNOWLEDGMENT AGREEMENTS.
Each Borrower will assist the Administrative Agent in obtaining
executed Acknowledgment Agreements from each of the warehousemen, processors,
packers, fillers, landlords and mortgagees where such Borrower maintains
Inventory valued at $100,000 or more or where material books and records of the
Credit Parties are maintained or stored.
7.20 TRADEMARKS.
Each Credit Party will do and cause to be done all things necessary to
preserve and keep in full force and effect all registrations of trademarks,
service marks and other marks, trade names or other trade rights owned or
licensed by such Credit Party, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect; provided, however,
that, with respect to any such trade rights licensed by a Credit Party, such
Credit Party shall be obligated only to pursue rights and remedies under its
license agreement with respect to such licensed trade rights.
7.21 REVISIONS OR UPDATES TO SCHEDULES.
If any of the information or disclosures provided on any of Schedules
6.15, 6.16, 6.20, 6.22 or 6.23, originally attached hereto become outdated or
incorrect in any material respect, the Borrowers shall deliver to the
Administrative Agent and the Lenders as part of the Compliance Certificate
required pursuant to Section 7.1(d) (or more frequently in the Borrowers'
reasonable judgment or upon the request of the Administrative Agent) such
revision or updates to such Schedule(s) as may be necessary or appropriate to
update or correct such Schedule(s), which revisions shall be effective from the
date accepted in writing by the Administrative Agent, such acceptance not to be
unreasonably withheld; provided, that no such revisions or updates to any such
Schedule(s) shall be deemed to have cured any breach of warranty or
misrepresentation occurring prior to the delivery of such revision or update by
reason of the inaccuracy or incompleteness of any such Schedule(s) at the time
such warranty or representation previously was made or deemed to be made.
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ARTICLE VIII
FINANCIAL COVENANTS
Each Borrower hereby covenants and agrees that so long as this
Agreement is in effect and until the Loans, LOC Obligations and BA Obligations,
together with interest, fees and other Obligations hereunder, have been paid in
full and the Commitments and Letters of Credit hereunder shall have terminated
that they will do or cause to be done the following:
8.1 LEVERAGE RATIO.
The Consolidated Group shall maintain a Leverage Ratio of no greater
than 4.25 to 1.0 as of the last day of each fiscal month.
8.2 FIXED CHARGE COVERAGE RATIO.
The Consolidated Group shall maintain a Fixed Charge Coverage Ratio of
not less than 1.20 to 1.0 as of the last day of each fiscal month.
8.3 CAPITAL EXPENDITURES.
The Consolidated Group shall not make Consolidated Capital Expenditures
in excess of $15,000,000 during any fiscal year, plus the lesser of (a)
$5,000,000 and (b) fifty percent (50%) of the unused amount available for
Consolidated Capital Expenditures under this Section 8.3 for the immediately
preceding fiscal year (excluding any carry forward available from any prior
fiscal year); provided, however, that with respect to any fiscal year,
Consolidated Capital Expenditures made during such fiscal year shall be deemed
to be made first with respect to the applicable limitation for such fiscal year
and then with respect to any carry-forward from the immediately preceding fiscal
year.
ARTICLE IX
NEGATIVE COVENANTS
Each Borrower hereby covenants and agrees that so long as this
Agreement is in effect and until the Loans, LOC Obligations and BA Obligations,
together with interest, fees and other Obligations hereunder, have been paid in
full and the Commitments, Letters of Credit and Bankers' Acceptances hereunder
shall have terminated:
9.1 INDEBTEDNESS.
The Consolidated Parties will not contract, create, incur, assume or
permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Agreement and the
other Credit Documents;
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(b) Subordinated Debt;
(c) Indebtedness in respect of current accounts payable
and accrued expenses incurred in the ordinary course of business
including, to the extent not current, accounts payable and accrued
expenses that are subject to bona fide dispute;
(d) purchase money Indebtedness (including Capital
Leases) incurred by the Credit Parties to finance the purchase,
construction, or improvement of fixed assets (excluding the Mexican
Property Financing); provided that (i) the total of all such
Indebtedness for all of the Credit Parties taken together shall not
exceed an aggregate principal amount of $3,000,000 at any one time
outstanding; (ii) such Indebtedness when incurred shall not exceed the
purchase price of the asset(s) financed; and (iii) no such Indebtedness
shall be refinanced for a principal amount in excess of the principal
balance outstanding thereon at the time of such refinancing;
(e) unsecured Indebtedness owing from (i) the U.S. Credit
Parties to the Consolidated Parties; provided, that the U. S. Credit
Parties may borrow proceeds of the Canadian Loans from the Canadian
Borrowers (A) in an amount no greater than $15,000,000 in the aggregate
at any time outstanding, (B) only if such loans are evidenced by
promissory notes in form and substance, including subordination
provisions, satisfactory to the Administrative Agent, and (C) only if
such promissory notes are pledged and delivered to the Administrative
Agent (which $15,000,000 limitation shall include Investments made
pursuant to clause (c)(ii) of the definition of Permitted Investments),
(ii) the Canadian Credit Parties to the Consolidated Parties (other
than the U.S. Credit Parties), (iii) the Canadian Credit Parties to the
U.S. Credit Parties not to exceed $5,000,000 in the aggregate at any
time outstanding (which $5,000,000 limitation shall include Investments
made pursuant to clause (c)(i) of the definition of Permitted
Investments), (iv) the Mexican Subsidiaries to the Consolidated Parties
not to exceed $3,000,000 in the aggregate for the term of this Credit
Agreement (which $3,000,000 limitation shall include Investments made
pursuant to clause (k) of the definition of Permitted Investments), and
(v) Consolidated Parties (other than Credit Parties) to Consolidated
Parties (other than Credit Parties).
(f) (i)(A) obligations of the Borrowers under Closing
Date Interest Rate Protection Agreements and (B) additional obligations
of the Borrowers in respect of Interest Rate Protection Agreements
entered into after the Closing Date so long as (x) immediately prior to
incurring such additional obligations, the Derivative Reserve for the
Closing Date Interest Rate Protection Agreements and any other Interest
Rate Protection Agreements then in effect is equal to or greater than
the Current Derivative Exposure therefor and (y) immediately after
incurring such additional obligations, the Derivative Reserve for the
related Interest Rate Protection Agreements is equal to or greater than
the Current Derivative Exposure therefor, and (ii) obligations of the
Borrowers in respect of Hedging Agreements (other than Interest Rate
Protection Agreements) entered into in order to manage existing or
anticipated exchange rate or commodity price risks and not for
speculative purposes;
(g) (i) the guaranty by one Credit Party of another
Credit Party's obligations, to the extent such obligations constitute
Indebtedness permitted hereunder; and (ii) the guaranty by the Company
of the obligations under the Mexican Property Financing;
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(h) Indebtedness existing as of the Closing Date and set
out more specifically in Schedule 6.9 hereto and renewals, refinancings
or extensions thereof in a principal amount not in excess of that
outstanding as of the date of such renewal, refinancing or extension or
as otherwise permitted elsewhere herein;
(i) Indebtedness under performance, surety, statutory or
appeal bonds or with respect to workers' compensation claims or other
bonds permitted under the definition of Permitted Liens and incurred in
the ordinary course of business;
(j) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain
unfunded under applicable law;
(k) the Mexican Property Financing so long as the net
proceeds thereof (after payment of fees, expenses, costs and taxes
related thereto) are paid to and retained by the Company; and
(l) other unsecured Indebtedness which does not exceed
$3,000,000 in the aggregate at any time outstanding.
9.2 LIENS.
No Consolidated Party shall contract, create, incur, assume or permit
to exist any Lien with respect to any of its Property, whether now owned or
after acquired, except for Permitted Liens.
9.3 NATURE OF BUSINESS.
The Consolidated Parties shall not substantively alter the character of
their business in any material respect from that conducted as of the Closing
Date.
9.4 CONSOLIDATION OR MERGER.
No Consolidated Party shall enter into any transaction of merger,
amalgamation or consolidation or dissolve, liquidate, or wind up its affairs
other than the merger, amalgamation or consolidation of (a) a U.S. Subsidiary of
a Credit Party with or into a U.S. Credit Party or with or into another U.S.
Subsidiary of a U.S. Credit Party, (b) a Canadian Subsidiary of a Credit Party
with a Canadian Credit Party or with another Canadian Subsidiary of a Canadian
Credit Party, (c) a U.S. Credit Party with a U.S. Credit Party or a Canadian
Credit Party with a Canadian Credit Party; provided that if any such merger
involves a Borrower, a Borrower shall be the surviving entity, or (d) any
Consolidated Party (other than a Credit Party) into another Consolidated Party
(other than a Credit Party).
9.5 DISPOSITION OF ASSETS.
The Consolidated Parties will not convey, sell, lease (as lessor),
assign, transfer or otherwise dispose of any assets (including the Capital Stock
of any Subsidiary of the Company) other than (a) sales of Inventory in the
ordinary course of business, (b) sales or other dispositions in the ordinary
course of business of assets or properties that are obsolete or that are no
longer used or useful in the conduct of the business of the applicable Borrower
or Subsidiary (not to exceed in the aggregate in any fiscal year assets with a
net book value of $2,500,000), (c) sales in
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the ordinary course of business of assets or properties (other than Inventory)
used in such Borrower's or Subsidiaries' business that are worn out or in need
of replacement and that are replaced with assets of reasonably equivalent value
or utility or which are otherwise productive or useful in the conduct of such
Person's business, (d) (i) sales, leases, assignments, transfers and other
dispositions among the U.S. Credit Parties, (ii) sales, leases, assignments,
transfers and other dispositions among the Canadian Credit Parties, (iii) sales,
leases, assignments, transfers and other dispositions among the Consolidated
Parties (other than the Credit Parties), (iv) sales, leases, assignments,
transfers and other dispositions from the Consolidated Parties (other than the
Credit Parties) to the Credit Parties, (v) sales, leases, assignments, transfers
and other dispositions from the U.S. Credit Parties to the Canadian Credit
Parties not to exceed $5,000,000 (which $5,000,000 limitation shall include
Investments made pursuant to clause (c)(i) of the definition of Permitted
Investments and loans under Section 9.1(e)(iii)) (provided that the foregoing
limitation shall not restrict any sales, consignments and other transfers of
Inventory from the U.S. Credit Parties to the Canadian Credit Parties in the
ordinary course of business), and (vi) sales, leases, assignments, transfers and
other dispositions from the Canadian Credit Parties to the U.S. Credit Parties
not to exceed $15,000,000 (which $15,000,000 limitation shall include
Investments made pursuant to clause (c)(ii) of the definition of Permitted
Investments and loans under Section 9.1(e)(i)) (provided that the foregoing
limitation shall not restrict any sales, consignments and other transfers of
Inventory from the Canadian Credit Parties to the U.S. Credit Parties in the
ordinary course of business), (e) the sale of Investments under items (a) and
(b) of the definition of Permitted Investments, (f) sales, leases, assignments,
transfers and other dispositions of any Property located in Mexico by any
Mexican Subsidiary, provided that the net consideration received by such Mexican
Subsidiary (after payment of fees, expenses, costs and taxes related thereto) in
connection with such disposition is distributed to the Company, and the Company
shall promptly notify the Administrative Agent of any such disposition in excess
of $2,500,000, (g) the disposition by the Company of any Capital Stock of any
Mexican Subsidiary so long as the net proceeds of such disposition (after
payment of fees, expenses, costs and taxes related thereto) are paid to the
Company, (h) the disposition by any U.S. Credit Party of its Property located in
Mexico, provided that no U.S. Credit Party shall transfer or relocate its
Property to Mexico after the Closing Date, in any fiscal year, commencing with
the fiscal year ending December 31, 2002, having a value in excess of $4,000,000
in the aggregate for all such U.S. Credit Parties, plus the unused amount for
the immediately preceding fiscal year (excluding any carry forward available
from any prior fiscal year); (i) sales, licenses, assignments, transfers and
other dispositions of Intellectual Property not constituting Material
Intellectual Property (as such term is defined in the Security Agreement) in the
ordinary course of business; and (j) sales, leases, assignments, transfers and
other dispositions approved by the Required Lenders.
To the extent the Required Lenders waive the provision of this Section
9.5 with respect to the sale or disposition of any Collateral, or any Collateral
is sold or disposed of as permitted by this Section 9.5, such Collateral in each
case shall be sold or otherwise disposed of free and clear of the Liens created
by the Security Documents and the applicable Agent shall take such actions as
are appropriate in connection therewith.
9.6 [RESERVED].
9.7 TRANSACTIONS WITH AFFILIATES.
The Consolidated Parties will not enter into any transaction or series
of transactions (other than transactions between the Credit Parties), whether or
not in the ordinary course of business,
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with any officer, director, shareholder, Subsidiary or Affiliate of any
Consolidated Party other than upon terms and conditions that would be obtainable
in a comparable arm's-length transaction with a Person other than an Affiliate
and which are approved by the board of directors (or managers, as applicable) of
the applicable member of the Consolidated Group and fully disclosed to the
Administrative Agent if outside the ordinary course of the business of the
Consolidated Group; provided, that the following transactions shall be permitted
(i) short-term revocable licenses of intellectual property from the Company to
Kitchen Collection, Inc. without the right to sublicense, (ii) payments or
repayments of advances to NACCO or Holdings pursuant to the Tax Sharing
Agreement to the extent consistent with past practices, and (iii) transactions
permitted pursuant to Sections 9.1, 9.4, 9.5, 9.10 or 9.11.
9.8 OWNERSHIP OF SUBSIDIARIES.
The Consolidated Parties will not sell, transfer or otherwise dispose
of, any shares of Capital Stock of any of their Subsidiaries, or permit any of
their Subsidiaries to issue, sell or otherwise dispose of, any shares of Capital
Stock of any of their Subsidiaries, except as permitted under Section 9.5.
9.9 FISCAL YEAR.
The Consolidated Parties will not change any of their respective fiscal
years without the prior written consent of the Administrative Agent.
9.10 INVESTMENTS.
The Consolidated Parties will not make any Investments except for
Permitted Investments.
9.11 RESTRICTED PAYMENTS.
The Consolidated Parties will not make any Restricted Payment other
than, without duplication, (a)(i) dividends, distributions or other payments
from any Consolidated Party (other than a Credit Party) to any Borrower, (ii)
distributions or other payments from any U.S. Credit Party to any Canadian
Credit Party not to exceed $5,000,000 in the aggregate (which $5,000,000
limitation shall include Investments made pursuant to clause (c)(i) of the
definition of Permitted Investments, loans under Section 9.1(e)(iii) and asset
dispositions under Section 9.5(d)(v)), and (iii) dividends, distributions or
other payments from any Canadian Credit Party to any U.S. Credit Party not to
exceed $15,000,000 in the aggregate (which $15,000,000 limitation shall include
Investments made pursuant to clause (c)(ii) of the definition of Permitted
Investments, loans under Section 9.1(e)(i) and asset dispositions under Section
9.5(d)(vi)), (b)(i) prior to the date on which the Derivative Reserve is fully
accumulated, the payment by the Company of cash dividends on its common Capital
Stock not to exceed $2,000,000 in the aggregate in any fiscal year; and (ii)
after the date on which the Derivative Reserve is fully accumulated, (A) the
payment by the Company of cash dividends on its common Capital Stock not to
exceed in the aggregate in any fiscal year the lesser of (x) ninety percent
(90%) of Consolidated Net Income for the immediately prior fiscal year or (y)
Consolidated Adjusted EBITDA for the immediately prior fiscal year less
Unfinanced Capital Expenditures for the immediately prior fiscal year less
Consolidated Cash Taxes due and payable in the immediately prior fiscal year,
and (B) the payment by the Company in any fiscal year of cash dividends on its
common Capital Stock in excess of the limits set forth in Section 9.11(b)(ii)(A)
so long as (1) such payment shall occur after March 31, 2004, (2) the
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Leverage Ratio shall have been less than 1.50 to 1.00 for the two consecutive
fiscal quarters ending immediately prior to the proposed date for making such
cash dividends, (3) after giving effect to the payment of such cash dividends,
the Fixed Charge Coverage Ratio shall not be less than 1.00 to 1.00, and (4) the
Company shall have delivered to the Agent and the Lenders a 12-month financial
forecast containing, among other things, pro forma financial statements,
projected loan usage and excess availability under this Credit Agreement and
projected compliance with the financial covenants contained in Article VIII by
calculation thereof as of the end of such 12-month period, prepared on a monthly
basis, which forecast shall give effect to the payment of such cash dividends
and shall demonstrate adequate liquidity and pro forma covenant compliance with
the financial covenants contained in Article VIII and shall be in form and
substance satisfactory to the Required Lenders, and in each case under this
Section 9.11(b), so long as no Default or Event of Default then exists or would
occur as a result therefrom, and after giving effect thereto, the Borrowers
shall be in pro forma compliance with the financial covenants set forth in
Article VIII hereof, (c) dividends or distributions by the Company to Holdings
or NACCO consistent with past practices (i) to pay franchise taxes and other
amounts allocable to the Company and its Subsidiaries required by Holdings or
NACCO to maintain its corporate existence, (ii) to pay NACCO fees, determined on
an arm's length basis, for services provided by NACCO in the ordinary course of
business to the Company and its Subsidiaries that would otherwise have been
performed by third parties, and (iii) to reimburse NACCO for the payment of
amounts relating to travel and entertainment expenses and legal, consulting,
software, accounting and other similar services provided by third parties on the
Company's or any of its Subsidiaries' behalf in the ordinary course of its
business; (d) dividends or distributions by the Company to Holdings or NACCO
consistent with past practices to pay for all operating and overhead expenses of
Holdings or NACCO allocable to the Company and its Subsidiaries (including,
without limitation, salaries and other compensation of employees, and directors'
fees and expenses) incurred by Holdings or NACCO in the ordinary course of its
business in an aggregate amount not to exceed $2,000,000 in any fiscal year of
the Company, and (e) payments or repayments of advances to NACCO or Holdings
pursuant to the Tax Sharing Agreement to the extent permitted under Section 9.7.
9.12 NO ADDITIONAL BANK ACCOUNTS.
The Consolidated Parties will not open, maintain or otherwise have any
checking, savings or other accounts at any bank or other financial institution,
or any other account where money is or may be deposited or maintained with any
Person, other than the accounts set forth on Schedule 9.12 hereto on the Closing
Date and, after the Closing Date, such other accounts so long as each such
account is subject to a tri-party lockbox or other blocked account agreement
reasonably satisfactory to the Administrative Agent. All such checking, savings
or other accounts of the Consolidated Parties shall be under the sole dominion
and control of the Administrative Agent in accordance with Section 3.1 or 3.2,
as the case may be. Notwithstanding the foregoing, the Consolidated Parties may
open new and/or maintain existing accounts not under the sole dominion and
control of the Administrative Agent so long as the balance in any such account
does not exceed $50,000 at any time and the aggregate balance in all such
accounts does not exceed $100,000 or such accounts are payroll accounts,
zero-balance accounts or used solely as disbursement accounts for the proceeds
of the Loans.
9.13 AMENDMENTS OF MATERIAL CONTRACTS; ORGANIZATIONAL DOCUMENTS.
(a) Without the prior written consent of the Administrative Agent,
the Consolidated Parties will not amend, modify, cancel or terminate or permit
the amendment, modification,
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cancellation or termination of any of the Material Contracts if the same could
reasonably be expected to have a Material Adverse Effect.
(b) Without the prior written consent of the Administrative Agent,
the Consolidated Parties will not amend or modify, or permit the amendment or
modification of the Articles or Certificate of Incorporation, operating
agreement or other equivalent organizational document of any of the Consolidated
Parties if such amendment or modification would adversely affect the interests
of the Administrative Agent or the Lenders.
9.14 ADDITIONAL NEGATIVE PLEDGES.
The Credit Parties will not create or otherwise cause or suffer to
exist or become effective, directly or indirectly, (a) any prohibition or
restriction (including any agreement to provide equal and ratable security to
any other Person in the event a Lien is granted to or for the benefit of the
Administrative Agent and the Lenders) on the creation or existence of any Lien
upon the assets of any Credit Party, other than Permitted Liens or (b) any
contractual obligation which may restrict or inhibit the Administrative Agent's
rights or ability to sell or otherwise dispose of the Collateral or any part
thereof after the occurrence and during the continuance of an Event of Default,
except for (i) customary provisions in licenses, leases and other contracts
restricting the assignment or sale thereof or of the assets or property subject
thereto and (ii) restrictions and conditions imposed by law.
9.15 OTHER INDEBTEDNESS.
The Credit Parties will not effect or permit any change in or amendment
to any document or instrument pertaining to the subordination, terms of payment
or required prepayments of any Subordinated Debt, effect or permit any change in
or amendment to any document or instrument pertaining to the covenants or events
of default of any Subordinated Debt if the effect of any such change or
amendment is to make such covenants or events of default more restrictive, give
any notice of optional redemption or optional prepayment or offer to repurchase
under any such document or instrument, or, directly or indirectly, make any
payment of principal of or interest on or in redemption, retirement or
repurchase of any Subordinated Debt, except for the scheduled payments required
by the terms of the documents and instruments evidencing Subordinated Debt and
permitted by the subordination provisions of the documents and instruments
evidencing Subordinated Debt.
9.16 LICENSES, ETC.
The Credit Parties will not enter into licenses of, or otherwise
restrict the use of, any Material Intellectual Property (as such term is defined
in the applicable Security Agreement) which would prevent any Credit Party from
selling, transferring, encumbering or otherwise disposing of any such patent,
trademark or copyright.
9.17 LIMITATIONS.
The Credit Parties will not, directly or indirectly, create or
otherwise cause, incur, assume, suffer or permit to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any
Credit Party to (a) pay dividends or make any other distribution on any of its
Capital Stock, (b) pay any Indebtedness owed to another Credit Party, (c) make
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loans or advances to another Credit Party, (d) transfer any of its property to
any other Credit Party, except for encumbrances or restrictions existing under
or by reason of (i) customary non-assignment provisions in any license, lease or
other contract, (ii) any agreement or other instrument of a Person existing at
the time it becomes a Subsidiary of a Credit Party; provided that such
encumbrance or restriction is not applicable to any other Person, or any
property of any other Person, other than such Person becoming a Subsidiary of a
Credit Party and was not entered into in contemplation of such Person becoming a
Subsidiary of a Credit Party, (iii) this Credit Agreement and the other Credit
Documents, and (iv) applicable law.
9.18 ISSUANCE OF CAPITAL STOCK.
The Credit Parties will not, nor will they permit any of their
Subsidiaries to sell or issue any Capital Stock having a preference over the
common stock of such Person if such preferred Capital Stock would constitute
Indebtedness hereunder.
9.19 SALE AND LEASEBACK.
The Credit Parties will not enter into any arrangement, directly or
indirectly, whereby the Company or any Subsidiary shall sell or transfer any
property owned by it to a Person (other than the Company or any Subsidiary) in
order then or thereafter to lease such property or lease other property which
the Company or any Subsidiary intends to use for substantially the same purpose
as the property being sold or transferred, other than in connection with the
Mexican Property Financing.
ARTICLE X
POWERS
10.1 APPOINTMENT OF ADMINISTRATIVE AGENT AS ATTORNEY-IN-FACT.
Each Borrower hereby irrevocably authorizes and appoints the
Administrative Agent, or any Person or agent the Administrative Agent may
designate, as such Borrower's attorney-in-fact, at the Borrowers' cost and
expense, to exercise, subject to the limitations set forth in Section 10.2, all
of the following powers, which being coupled with an interest, shall be
irrevocable until all of the Obligations to the Lenders have been paid and
satisfied in full and all of the Commitments have been terminated:
(a) To receive, take, endorse, sign, assign and deliver,
all in the name of the Administrative Agent, the Lenders or such
Borrower, as the case may be, any and all checks, notes, drafts, and
other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to
such Borrower and to notify postal authorities to change the address
for delivery thereof to such address as the Administrative Agent may
designate;
(c) To request at any time from customers indebted on
Accounts, in the name of such Borrower or a third party designee of the
Administrative Agent, information concerning the Accounts and the
amounts owing thereon;
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(d) To give customers indebted on Accounts notice of the
Lenders' interest therein, and/or to instruct such customers to make
payment directly to the Administrative Agent for such Borrower's
account;
(e) To take or bring, in the name of the Administrative
Agent, the Lenders or such Borrower, all steps, actions, suits or
proceedings deemed by the Administrative Agent necessary or desirable
to enforce or effect collection of the Accounts; and
(f) To file, record and register any or all of the
Lenders' security interest in intellectual property of the Borrowers
with the United States Patent and Trademark Office or the Canadian
Intellectual Property Office.
10.2 LIMITATION ON EXERCISE OF POWER.
Notwithstanding anything hereinabove to the contrary, the powers set
forth in Section 10.1(b), (d) and (e) above may only be exercised by the
Administrative Agent on and after the occurrence and during the continuation of
an Event of Default which has not otherwise been waived by the Administrative
Agent. The powers set forth in Section 10.1(a), (c) and (f) above may be
exercised by the Administrative Agent at any time.
10.3 CANADIAN AGENT.
For the purposes of Section 10.1 and Section 10.2 only, all references
to the Administrative Agent shall include the Canadian Agent in the case of the
Canadian Borrowers.
ARTICLE XI
EVENTS OF DEFAULT AND REMEDIES
11.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Borrower shall (i) default in the
payment when due of any principal owing hereunder, under any of the
Credit Documents or in connection herewith, (ii) fail to reimburse the
Issuing Lender for any LOC Obligations when due in accordance with the
terms hereof, (iii) fail to repay the Face Amount of any Bankers'
Acceptance when due in accordance with the terms thereof, (iv) default
in the payment within three (3) Business Days of any interest or fees
owing under this Agreement, under any of the other Credit Documents,
including, without limitation, the LOC Documents and the BA Documents,
or in connection herewith, or (v) default in the payment within five
(5) Business Days of demand of other amounts owing hereunder, under any
of the other Credit Documents or in connection herewith;
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein, in any
of the Credit Documents, or in any
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written statement or certificate delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of
which it was made or deemed to have been made;
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance
of any term condition or agreement contained in Section
7.1(g)(i), Section 7.2, Section 7.3 Section 7.12, Article VIII
or Article IX, or
(ii) default in the due performance or observance
of any term or condition or agreement contained in Section
7.1(i) and such default shall remain unremedied for a period
of five (5) Business Days after the occurrence thereof, or
(iii) default in the due performance or observance
of any term or condition contained in Section 7.1(a), (b), (c)
or (d) and such default shall remain unremedied for a period
of ten (10) Business Days after the occurrence thereof, or
(iv) default in the due performance or observance
of any term, covenant or agreement (other than those referred
to in subsections (a), (b), (c)(i), (c)(ii) or (c)(iii) of
this Section 11.1) contained in this Agreement or any other
Credit Document and, to the extent such default is capable of
being cured, such default shall continue unremedied for a
period of thirty (30) days after the occurrence thereof;
(d) Other Credit Documents. Any covenant, agreement or
obligation of any Credit Party contained in or evidenced by any of the
Credit Documents shall cease to be enforceable in accordance with its
terms, or any Credit Party shall deny or disaffirm its obligations
under any of the Credit Documents, or any Credit Document shall be
canceled, terminated, revoked or rescinded without the express prior
written consent of the Administrative Agent, or any action or
proceeding shall have been commenced by any Credit Party seeking to
cancel, revoke, rescind or disaffirm the obligations of any Credit
Party, or any court or other Governmental Authority shall issue a
judgment, order, decree or ruling to the effect that any of the
obligations of any party to any Credit Document are illegal, invalid or
unenforceable;
(e) Guaranties. Any Guarantor or any Person acting by or
on behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under a Guaranty Agreement;
(f) Bankruptcy, etc. The occurrence of any Bankruptcy
Event with respect to a Credit Party;
(g) Defaults under Other Agreements. With respect to any
Indebtedness in excess of $1,000,000, individually or in the aggregate
(other than Indebtedness outstanding under this Agreement), (i) a
Credit Party shall (A) default in any payment (beyond the applicable
grace period with respect thereto, if any) with respect to any such
Indebtedness, or (B) default in the observance or performance relating
to such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto (beyond the applicable grace
period with respect thereto), or any other event or condition shall
occur or
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condition exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause,
any such Indebtedness to become due prior to its stated maturity; or
(ii) any such Indebtedness shall be declared due and payable, or
required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof;
(h) Judgments. One or more judgments or decrees shall be
entered against one or more of the Credit Parties involving a liability
of $1,000,000 or more, individually or in the aggregate (to the extent
not paid or fully covered by insurance (subject to payment of the
applicable deductible), provided by a carrier who, upon request, has
not denied coverage) and any such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within thirty
(30) days from the entry thereof;
(i) ERISA. Any Termination Event with respect to a
Benefit Plan shall have occurred and be continuing thirty (30) days
after notice thereof shall have been given to the Company by the
Administrative Agent or any Lender, and the then current value of such
Benefit Plan's benefits guaranteed under Title IV of ERISA exceeds the
then current value of such Benefit Plan's assets allocable to such
benefits by more than $10,000,000 (or in the case of a Termination
Event involving the withdrawal of a substantial employer, the
withdrawing employer's proportionate share of such excess exceeds such
amount);
(j) Ownership. There shall occur a Change of Control;
(k) Subordinated Debt. (i) Any Governmental Authority
with applicable jurisdiction determines that the Subordinated Debt is
not subordinated to any of the Obligations, or (ii) the subordination
provisions in any agreement relating to the Subordinated Debt shall, in
whole or in part, terminate, cease to be effective or cease to be
legally valid, binding and enforceable as to any holder of such
Indebtedness; or
(l) Defective Liens. Any Security Document shall fail to
be in full force and effect or to give the Administrative Agent and/or
the Lenders the security interests, liens, rights, powers and
privileges purported to be created thereby (except as such documents
may be terminated or no longer in force and effect in accordance with
the terms thereof, other than those indemnities and provisions which by
their terms shall survive).
11.2 ACCELERATION; REMEDIES.
Upon the occurrence and during the continuation of an Event of Default,
the Administrative Agent may, with the consent of, and shall, upon the request
and direction of, the Required Lenders, by written notice to the Borrowers, take
any of the following actions without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against any Credit
Party, except as otherwise specifically provided for herein:
(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal
of and any accrued interest in respect of all Loans and any and all
other indebtedness or obligations of any and every kind owing by the
Borrowers to any of the Lenders hereunder to be due whereupon
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the same shall be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby
waived by the Borrowers.
(c) Cash Collateral. Direct the applicable Borrowers to
pay (and the Borrowers agree that upon receipt of such notice, or upon
the occurrence of an Event of Default under Section 11.1(e), they will
immediately pay) to the Administrative Agent additional cash, to be
held by the Administrative Agent, for the benefit of the applicable
Lenders, in a cash collateral account as security for the LOC
Obligations or the BA Obligations, as applicable, in respect of
subsequent drawings under all then outstanding Letters of Credit and
repayment of the Face Amount of outstanding Bankers' Acceptances,
respectively, in an aggregate amount equal to the maximum aggregate
amount which may be drawn under all Letters of Credits then outstanding
and the Face Amount of outstanding Bankers' Acceptances, as applicable.
Accrued interest on the cash collateral account at standard rates for
ordinary deposit accounts shall be for the account of the Borrowers,
subject to the prior payment in full in cash of all of the Obligations.
(d) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents or at law,
including, without limitation, the Guaranty Agreements and the Security
Agreements, and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
11.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit and Bankers'
Acceptances, all accrued interest in respect thereof, all accrued and unpaid
fees and other indebtedness or obligations owing to the Lenders hereunder shall
immediately become due and payable without the giving of any notice or other
action by the Agents or the Lenders which notice or other action is expressly
waived by the Borrowers.
11.3. CONVERSION AND REDENOMINATION CERTAIN LOANS; PURCHASE OF RISK
PARTICIPATIONS.
(a) Conversion and Redenomination of Loans.
Notwithstanding anything herein to the contrary, upon a termination of
the Commitments following the occurrence of an Event of Default (a
"Commitment Termination Event"), (i) all outstanding Loans denominated
in Canadian Dollars or bearing interest at a rate other than the U.S.
Base Rate shall be redenominated and/or converted into U.S. Base Rate
Loans denominated in Dollars and (ii) all BA Obligations owed to a
Canadian Lender in Canadian Dollars shall be redenominated into BA
Obligations owed in Dollars, on and with effect from the soonest
practicable date following the Commitment Termination Event as
determined by the Administrative Agent (the "Conversion Date") and at
the Bank of Canada published noon exchange rate or closing exchange
rate (whichever is closer to the time of payment) in effect as of such
Conversion Date. The U.S. Borrowers hereby agree to pay to the
Administrative Agent, for the pro rata benefit of the U.S. Lenders, on
the Conversion Date any amounts owing pursuant to Section 4.14(a) as a
result of any such conversion occurring prior to the end of an Interest
Period and the Canadian Borrowers hereby agree to pay to the
Administrative Agent, for the pro rata benefit of the Canadian Lenders,
on the Conversion Date any similar amounts owing pursuant to Section
4.14(b). The Administrative Agent will promptly notify the Borrowers
and the Lenders of any such redenomination and conversion following a
Commitment Termination Event.
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(b) Purchase of Risk Participations. Each Lender hereby
agrees that it shall forthwith purchase, as of the Conversion Date (but
adjusted for any payments received from a Borrower on or after such
date and prior to such purchase), from the other Lenders such
Participation Interests in the outstanding Loans, LOC Obligations and
BA Obligations (whether or not such Loans, LOC Obligations and BA
Obligations have been redenominated or converted pursuant to Section
11.3(a)) as shall be necessary to cause each such Lender to share in
all Loans, LOC Obligations and BA Obligations ratably based upon its
Commitment Percentage with respect to Participation Interests in all
Loans, LOC Obligations and BA Obligations (determined before giving
effect to any termination of the Commitments), provided that (1) all
interest and fees payable on a Loan, LOC Obligation or BA Obligation
shall be for the account of the Lender that originally extended such
Loan or issued or participated in the related Letters of Credit or
Bankers' Acceptances, as the case may be, until the date as of which
the respective Participation Interest is purchased and (2) if any
purchase of a Participation Interest required to be made pursuant to
this sentence is not made on the Conversion Date, then at the time such
purchase is actually made the purchasing Lender shall be required to
pay to the selling Lender, to the extent not paid to such selling
Lender by the applicable Borrower in accordance with the terms of this
Credit Agreement, interest on the principal amount of the Participation
Interest purchased for each day from and including the day upon which
such purchase of the Participation Interest would otherwise have
occurred to but excluding the date of actual payment for the purchase
of such Participation Interest, at the rate equal to the Federal Funds
Rate.
ARTICLE XII
TERMINATION
Except as otherwise provided in Article XI of this Credit Agreement,
the Commitments made hereunder shall terminate on the Maturity Date and all then
outstanding Loans and BA Obligations shall be immediately due and payable in
full and all outstanding Letters of Credit shall be fully cash collateralized.
Unless sooner demanded in accordance with this Agreement, all Obligations shall
become due and payable as of any termination hereunder or under Article XI and,
pending a final accounting, the Administrative Agent may withhold, or cause to
be withheld, any balances in the Borrowers' Loan accounts, in an amount
sufficient, in the Administrative Agent's reasonable discretion, to cover all of
the Obligations, whether absolute or contingent, unless supplied with a
satisfactory indemnity to cover all of such Obligations. All of the Agents' and
the Lenders' rights, liens and security interests shall continue after any
termination until all Obligations have been paid and satisfied in full.
ARTICLE XIII
THE AGENTS
13.1 APPOINTMENT.
Each Lender hereby designates and appoints Wachovia as Administrative
Agent and ABN AMRO Bank N.V., Canada Branch, as Canadian Agent to act as
specified herein and the other
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Credit Documents, and each such Lender hereby authorizes the Agents as the agent
for such Lender, to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exercise such powers and perform
such duties as are expressly delegated by the terms hereof and of the other
Credit Documents, together with such other powers as are reasonably incidental
thereto, including, without limitation, holding all Collateral and all payments
of principal, interest, fees, charges and expenses received pursuant to this
Credit Agreement or any other Credit Document for the benefit of the Lenders and
executing and delivering the Credit Documents (other than the Credit Agreement)
as Agent for the Lenders. Notwithstanding any provision to the contrary
elsewhere herein and in the other Credit Documents, the Agents shall not have
any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any of the other Credit Documents, or shall
otherwise exist against the Agents. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agents is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Administrative Agent shall have and may use its sole discretion with respect
to exercising or refraining from exercising any discretionary rights or taking
or refraining from taking any actions which the Administrative Agent is
expressly entitled to take or assert under this Agreement and the other Credit
Documents. The provisions of this Article are solely for the benefit of the
Agents and the Lenders and none of the members of the Consolidated Group shall
have any rights as a third party beneficiary of the provisions hereof. In
performing its functions and duties under this Agreement and the other Credit
Documents, the Agents shall act solely as agent of the Lenders and do not assume
and shall not be deemed to have assumed any obligation or relationship of agency
or trust with or for the Borrowers or any other member of the Consolidated
Group. Notwithstanding any provision to the contrary in this Agreement or any of
the other Credit Documents, the Canadian Agent shall not take or omit to take
any discretionary action under this Agreement or any of the other Credit
Documents without the prior authorization of the Administrative Agent.
Without limiting the generality of this Section 13.1, each Lender
expressly authorizes the Administrative Agent to determine, subject to the terms
of this Credit Agreement, on behalf of such Lender whether or not Accounts shall
be deemed to constitute Eligible Accounts Receivable or Inventory shall be
deemed to constitute Eligible Inventory and the required levels of advance rates
against Eligible Accounts Receivable and Eligible Inventory.
13.2 DELEGATION OF DUTIES.
The Agents may execute any of their respective duties hereunder or
under the other Credit Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agents shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected with reasonable care.
13.3 EXCULPATORY PROVISIONS.
Each of the Agents or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall not be (a) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection herewith or in connection with any of the other Credit Documents
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(except for its or such Person's own gross negligence or willful misconduct), or
(b) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any member of the Consolidated
Group contained herein or in any of the other Credit Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by an Agent under or in connection herewith or in connection with
the other Credit Documents, or enforceability or sufficiency therefor of any of
the other Credit Documents, or for any failure of any of the Borrowers to
perform its obligations hereunder or thereunder. An Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement, or any of the
other Credit Documents or for any representations, warranties, recitals or
statements made herein or therein or made by the Borrowers or any member of the
Consolidated Group in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents in
connection herewith or therewith furnished or made by an Agent to the Lenders or
by or on behalf of the Consolidated Group to an Agent or any Lender or be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained herein or
therein or as to the use of the proceeds of the Loans or of the existence or
possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Consolidated Group, except as directed by
the Required Lenders (or to the extent specifically provided in Section 14.6,
all the Lenders) in accordance with the terms hereof. The Agents are not
trustees for the Lenders and owe no fiduciary duty to any of the Lenders.
13.4 RELIANCE ON COMMUNICATIONS.
The Agents shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrowers or any of the other members of the
Consolidated Group, independent accountants and other experts selected by the
Administrative Agent with reasonable care). Each of the Agents may deem and
treat the Lenders as the owner of its respective interests hereunder for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the appropriate Agent in accordance with Section
14.3(b). Each of the Agents shall be fully justified in failing or refusing to
take any action under this Agreement or under any of the other Credit Documents
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. Each Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder or under any of the other Credit Documents in accordance with a
request of the Required Lenders (or to the extent specifically provided in
Section 14.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including their
successors and assigns).
13.5 NOTICE OF DEFAULT.
An Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless such Agent has
received notice from a Lender or a member of the Consolidated Group referring to
the Credit Document, describing such Default or Event of Default and stating
that such notice is a "notice of default." In the event that an Agent receives
such
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a notice, such Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be directed by the Required Lenders (or to the extent
specifically provided in Section 14.6, all the Lenders).
13.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS.
Each Lender expressly acknowledges that neither of the Agents nor any
of their officers, directors, employees, agents, attorneys-in-fact or affiliates
(including, without limitation, Wachovia Securities, Inc. (the "Arranger"); it
being understood that each reference to affiliate in this Section 13.6 shall
include the Arranger) has made any representations or warranties to it and that
no act by an Agent or any affiliate thereof hereinafter taken, including any
review of the affairs of the Consolidated Group, shall be deemed to constitute
any representation or warranty by an Agent to any Lender. Each Lender represents
to the Agents that it has, independently and without reliance upon the Agents or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Consolidated Group and made its own decision to make its
Loans hereunder and enter into this Agreement. Each Lender also represents that
it will, independently and without reliance upon the Agents 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 analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Consolidated Group. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agents hereunder, the Agents
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, assets, property,
financial or other conditions, prospects or creditworthiness of the Consolidated
Group which may come into the possession of an Agent or any of its respective
officers, directors, employees, agents, attorneys-in-fact or affiliates.
13.7 INDEMNIFICATION.
The Lenders agree to indemnify each Agent in its capacity as such (to
the extent not reimbursed by the Borrowers and without limiting the obligation
of the Borrowers to do so), ratably according to their respective Commitments,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including without limitation at any time
following the payment of the Obligations) be imposed on, incurred by or asserted
against an Agent in its respective capacity as such in any way relating to or
arising out of this Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by an Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of an Agent. If any
indemnity furnished to an Agent for any purpose shall, in the opinion of such
Agent, acting reasonably, be insufficient or become impaired, such Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished. The agreements
in this Section shall survive the payment of the Obligations and all other
amounts payable hereunder and under the other Credit Documents.
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13.8 AGENT IN ITS INDIVIDUAL CAPACITY.
The Agents and their respective affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrowers or
any other member of the Consolidated Group as though such Agents were not agents
hereunder. With respect to the Loans made, the Agents shall have the same rights
and powers under this Agreement as any Lender and may exercise the same as
though they were not agents hereunder, and the terms "Lender" and "Lenders"
shall include the Administrative Agent and the Canadian Agent in their
individual capacities.
13.9 SUCCESSOR AGENT.
An Agent may, at any time, resign upon twenty (20) days' written notice
to the Lenders. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Administrative Agent or Canadian Agent, as the case
may be, which successor, so long as no Event of Default shall then exist, shall
be reasonably acceptable to the Company. If no successor Agent shall have been
so appointed by the Required Lenders, and shall have accepted such appointment,
within thirty (30) days after the notice of resignation, then the retiring Agent
shall select a successor Agent, provided that such successor is a Lender
hereunder or a commercial bank or financial institution organized or licensed
under the laws of the United States of America or any State thereof or of Canada
or any province thereof, as applicable, and, together with its Affiliates in the
case of a successor Canadian Agent, has a combined capital and surplus of at
least $500,000,000 and is a Canadian Taxable Lender, provided, further that such
requirement for a successor Canadian Agent to be a Canadian Taxable Lender shall
be suspended upon the occurrence and during the continuance of an Event of
Default. Upon the acceptance of any appointment as Administrative Agent or
Canadian Agent, as the case may be, hereunder by a successor, such successor
Administrative Agent or Canadian Agent, as the case may be, shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent or Canadian Agent, as the case may be, and
the retiring Administrative Agent or Canadian Agent, as the case may be, shall
be discharged from its duties and obligations as Administrative Agent or
Canadian Agent, as the case may be, as appropriate, under this Agreement and the
other Credit Documents and the provisions of this Section 13.9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement.
13.10 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs each of the Agents to enter
into the Security Documents for the benefit of the Lenders. Each Lender
authorizes and directs the Administrative Agent to make such changes to the form
of Acknowledgment Agreement attached hereto as Exhibit A as it deems necessary
from time to time in order to obtain any Acknowledgment Agreement from any
landlord, warehouseman, filler, packer, processor, mortgagee or any other party
who has an interest in any real property where Collateral is located with
respect to any Credit Party. Each Lender also authorizes and directs each of the
Agents to review and approve all agreements regarding the lockboxes and the
lockbox accounts (including the Lockbox Agreements) on such terms as the Agents
deem necessary. Each Lender hereby agrees, and each holder of any Note by the
acceptance thereof will be deemed to agree, that, except as otherwise set forth
herein, any action taken by the Required Lenders or each of the Lenders, as
applicable, in accordance with the provisions of this Credit Agreement or the
Security Documents, and the exercise by the Required Lenders or each of the
Lenders, as applicable, of the powers set forth
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herein or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all of the Lenders. The
Administrative Agent and, with the prior approval of the Administrative Agent,
the Canadian Agent, is hereby authorized on behalf of all of the Lenders,
without the necessity of any notice to or further consent from any Lender, from
time to time prior to an Event of Default, to take any action with respect to
any Collateral or Security Document which may be necessary or appropriate to
perfect and maintain perfected the security interest in and liens upon the
Collateral granted pursuant to the Security Documents.
(b) The Lenders hereby authorize the Administrative Agent and,
with the prior approval of the Administrative Agent, the Canadian Agent, at its
option and in its discretion, to release any Lien granted to or held by either
such Agent upon any Collateral (i) upon termination of the Commitments and
payment in cash and satisfaction of all of the Obligations (including the LOC
Obligations) at any time arising under or in respect of this Credit Agreement or
the Credit Documents or the transactions contemplated hereby or thereby, (ii)
constituting property being sold or disposed of upon receipt of the proceeds of
such sale by an Agent if the applicable Credit Party certifies to such Agent
that the sale or disposition is made in compliance with Section 9.5 (and such
Agent may rely conclusively on any such certificate, without further inquiry) or
(iii) if approved, authorized or ratified in writing by the Required Lenders,
unless such release is required to be approved by all of the Lenders hereunder.
Upon request by an Agent at any time, the Lenders will confirm in writing such
Agent's authority to release particular types or items of Collateral pursuant to
this Section 13.10(b).
(c) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Credit Agreement, or consented to in
writing by the Required Lenders or all of the Lenders, as applicable, and upon
at least five (5) Business Days' prior written request by the applicable Credit
Party, the Administrative Agent and, with the prior approval of the
Administrative Agent, the Canadian Agent, shall (and is hereby irrevocably
authorized by the Lenders to) execute such documents as may be necessary to
evidence the release of the Liens granted to the Administrative Agent for the
benefit of the Lenders herein or pursuant hereto upon the Collateral that was
sold or transferred; provided that (i) such Agent shall not be required to
execute any such document on terms which, in such Agent's opinion, acting
reasonably, would expose such Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of such Credit Party in
respect of) all interests retained by such Credit Party, including, without
limitation, the proceeds of the sale, all of which shall continue to constitute
part of the Collateral. In the event of any sale or transfer of Collateral, or
any foreclosure with respect to any of the Collateral, the Administrative Agent
and, with the prior approval of the Administrative Agent, the Canadian Agent,
shall be authorized to deduct all of the expenses reasonably incurred by such
Agent from the proceeds of any such sale, transfer or foreclosure.
(d) Neither Agent shall have any obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists or is owned
by the Credit Parties or is cared for, protected or insured or that the liens
granted to either such Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to either such Agent in
this Section 13.10 or in any of the Security Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event related
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thereto, the Administrative Agent and, with the prior approval of the
Administrative Agent, the Canadian Agent, may act in any manner it may deem
appropriate, in its reasonable discretion, given either such Agent's own
interest in the Collateral as one of the Lenders and that either such Agent
shall have no duty or liability whatsoever to the Lenders, except for its gross
negligence or willful misconduct.
(e) The Administrative Agent hereby authorizes and appoints the
Canadian Agent as the Administrative Agent's attorney-in-fact, to exercise all
of the powers granted to the Canadian Agent in subsections (b) and (c) of this
Section 13.10 on behalf of the Administrative Agent in its capacity as
collateral agent under the Canadian Security Agreement.
13.11 RIGHTS AND REMEDIES TO BE EXERCISED BY AGENT ONLY.
Each Lender agrees that, except as set forth in Subsection 14.2, no
Lender shall have any right individually (i) to realize upon the security
created by the Security Agreement or any other Credit Document, (ii) to enforce
any provision of this Credit Agreement or any other Credit Document against one
or more of the Credit Parties, or (iii) to make demand under this Credit
Agreement or any other Credit Document against one or more of the Credit
Parties.
13.12 SYNDICATION AGENT AND DOCUMENTATION AGENTS.
The term "Syndication Agent" and the term "Documentation Agent" shall
not confer any rights, powers, duties, liabilities, fiduciary relationships or
obligations under this Credit Agreement or any of the other documents related
hereto.
ARTICLE XIV
MISCELLANEOUS
14.1 NOTICES.
Except as otherwise expressly provided herein, all notices, requests
and other communications shall have been duly given and shall be effective (a)
when delivered by hand, (b) when transmitted via telecopy (or other facsimile
device), (c) the Business Day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (d)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address or telecopy numbers set forth on Schedule 14.1 attached hereto, or
at such other address as such party may specify by written notice to the other
parties hereto; provided, however, that if any notice is delivered on a day
other than a Business Day, or after 5:00 p.m. on any Business Day, then such
notice shall not be effective until the next Business Day; and provided further,
that notices of default shall be effective only upon delivery by hand or by a
reputable national overnight air courier service (unless a telecopy notice of
default is sent and receipt is confirmed by telephone or telecopy by a Senior
Officer of the Company, in which case such notice of default shall be effective
upon receipt).
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14.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence and during the continuation of an Event of Default, each Lender is
authorized at any time and from time to time, without presentment, demand,
protest or other notice of any kind (all of which rights being hereby expressly
waived), to set-off and to appropriate and apply any and all deposits (general
or special) and any other indebtedness at any time held or owing by such Lender
(including, without limitation branches, agencies or Affiliates of such Lender
wherever located) to or for the credit or the account of a Credit Party against
obligations and liabilities of a Credit Party to such Lender hereunder, under
the Notes, the other Credit Documents or otherwise, irrespective of whether such
Lender shall have made any demand hereunder and although such obligations,
liabilities or claims, or any of them, may be contingent or unmatured, and any
such set-off shall be deemed to have been made immediately upon the occurrence
of an Event of Default even though such charge is made or entered on the books
of such Lender subsequent thereto, it being understood, however, that the right
of set-off described in this Section 14.2 does not permit set-off against
deposits or Indebtedness owing to a Canadian Borrower for obligations or
liabilities of a U.S. Borrower. Each Credit Party hereby agrees that any Person
purchasing a participation in the Loans and Commitments hereunder pursuant to
Section 14.3(c) and whose participation has been disclosed to the Company may
exercise all rights of set-off with respect to its participation interest as
fully as if such Person were a Lender hereunder.
14.3 BENEFIT OF AGREEMENT.
(a) Generally. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and permitted
assigns of the parties hereto; provided that a Borrower may not assign and
transfer any of its interests without prior written consent of the Lenders; and
provided further that the rights of each Lender to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be limited as
set forth in this Section 14.3.
(b) Assignments. Subject to the consent of the Borrowers
(provided, however, that no consent shall be required during the existence and
continuation of an Event of Default) and of the Administrative Agent, which
consents shall not be unreasonably withheld, each Lender may assign all or a
portion of its rights and obligations hereunder pursuant to an assignment
agreement substantially in the form of Exhibit M to one or more Eligible
Assignees; provided that any such assignment shall be in a minimum aggregate
amount of $1,000,000 of the Commitments and Loans and in integral multiples of
$1,000,000 above such amount (or, if less, the entire amount of the Commitments
and Loans of such Lender) and that each such assignment shall be of a constant,
not varying, percentage of all of the assigning Lender's rights and obligations
under this Agreement. Any assignment hereunder shall be effective upon
satisfaction of the conditions set forth in the preceding sentence and delivery
to the Administrative Agent of written notice of the assignment together with a
transfer fee of $3,500 (or with respect to an assignment of the Canadian
Revolving Loan Commitment, a transfer fee of $1,750) payable to the
Administrative Agent for its own account; provided that any assignment of the
Canadian Revolving Loan Commitment shall require delivery of written notice of
the assignment to the Canadian Agent, together with a transfer fee of $1,750
payable to the Canadian Agent for its own account. Upon the effectiveness of any
such assignment, the assignee shall become a "Lender" for all purposes of this
Agreement and the other Credit Documents and, to the extent of such assignment,
the assigning Lender shall be relieved of
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its obligations hereunder to the extent of the Loans and Commitment components
being assigned. Along such lines, the Borrowers agree that upon effectiveness of
any such assignment and surrender of the appropriate Note or Notes, it will
promptly provide to the assigning Lender and to the assignee separate promissory
notes in the amount of their respective interests substantially in the form of
the original Note (but with notation thereon that it is given in substitution
for and replacement of the original Note or any replacement notes thereof). In
addition to the assignments permitted under this Section 14.3(b), any Lender may
(without notice to the Borrowers, the Administrative Agent or any other Lender
and without payment of any fee) (i) assign and pledge all or any portion of its
Loans and its Notes to any Federal Reserve Bank as collateral security pursuant
to Regulation A and any Operating Circular issued by such Federal Reserve Bank
and (ii) assign all or any portion of its rights under this Agreement and its
Loans and its Notes to an Affiliate that is an Eligible Assignee. No such
assignment, as set forth in clause (i) of the preceding sentence, shall release
the assigning Lender from its obligations hereunder.
By executing and delivering an assignment agreement in accordance with
this Section 14.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the other
parties hereto as follows: (i) such assigning Lender warrants that it is the
legal and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim and the assignee warrants that it is an Eligible Assignee;
(ii) except as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any of the
other Credit Documents or any other instrument or document furnished pursuant
hereto or thereto or the financial condition of any member of the Consolidated
Group or the performance or observance by any member of the Consolidated Group
of any of its obligations under this Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such assignment agreement; (iv) such assignee confirms
that it has received a copy of this Agreement, the other Credit Documents and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such assignment agreement; (v)
such assignee will independently and without reliance upon the Agents, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Credit Documents; (vi) such assignee appoints and authorizes the Agents to
take such action on its behalf and to exercise such powers under this Agreement
or any other Credit Document as are delegated to the Agents by the terms hereof
or thereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement and the other Credit
Documents are required to be performed by it as a Lender.
(c) Participations. Each Lender may sell, transfer, grant or
assign participations in all or any part of such Lender's rights, obligations or
rights and obligations hereunder; provided that (i) such selling Lender shall
remain a "Lender" for all purposes under this Agreement (such selling Lender's
obligations under the Credit Documents remaining unchanged) and the participant
shall not constitute a Lender hereunder, (ii) no such participant shall have, or
be granted, rights to approve any amendment or waiver relating to this Agreement
or the other Credit Documents except to the extent any such amendment or waiver
would (A) reduce the principal of or rate of interest on
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or fees in respect of any Loans in which the participant is participating, (B)
postpone the date fixed for any payment of principal (including extension of the
Maturity Date but excluding any mandatory prepayment), interest or fees in which
the participant is participating, or (C) release all or substantially all of the
guaranties or the collateral (except as expressly provided in the Credit
Documents) supporting any of the Loans or Commitments in which the participant
is participating, and (iii) sub-participations by the participant (except to an
affiliate, parent company or affiliate of a parent company of the participant)
shall be prohibited. In the case of any such participation, the participant
shall not have any rights under this Agreement or the other Credit Documents
(the participant's rights against the selling Lender in respect of such
participation to be those set forth in the participation agreement with such
Lender creating such participation) and all amounts payable by the Borrowers
hereunder shall be determined as if such Lender had not sold such participation,
provided, however, that such participant shall be entitled to receive additional
amounts under Sections 4.9 through 4.14; except that such participant shall not
be entitled to receive any amount greater than such selling Lender would have
received had such Lender not sold such participation.
14.4 NO WAIVER; REMEDIES CUMULATIVE.
The Borrowers hereby waive due diligence, demand, presentment and
protest and any notices thereof as well as notice of nonpayment. No failure or
delay on the part of an Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrowers or any other Credit Party and an Agent or any Lender shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights and remedies provided herein
are cumulative and not exclusive of any rights or remedies which the Agents or
any Lender would otherwise have. No notice to or demand on the Borrowers in any
case shall entitle the Borrowers or any other Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Administrative Agent or the Lenders to any other or
further action in any circumstances without notice or demand.
14.5 PAYMENT OF EXPENSES; INDEMNIFICATION.
Each Borrower agrees to: (a) pay all reasonable out-of-pocket costs and
expenses of (i) the Administrative Agent, the Canadian Agent and the Arranger in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Credit Documents and the documents and instruments
referred to therein (including, without limitation, the reasonable fees and
expenses of Xxxxx & Xxx Xxxxx, PLLC, special counsel to the Agents, as well as
Canadian counsel to the Agents), any appraisals, field exams or inspections
(subject to the limitations set forth in Sections 7.12 and 7.13 hereof), any
amendment, waiver or consent relating to the Credit Documents including, but not
limited to, any such amendments, waivers or consents resulting from or related
to any work-out, renegotiation or restructure relating to the performance by the
Borrowers under this Agreement or any other Credit Party under the other Credit
Documents and with respect to the Collateral or the Obligations, including,
without limitation, filing public notices, preparing or filing documents, making
title examinations or rendering opinions, protecting, maintaining, or preserving
the Collateral or its interest therein, enforcing or foreclosing the Liens under
the Security Documents, whether through judicial procedures or otherwise; and
defending or prosecuting any actions or proceedings arising out of or relating
to its transactions with any Borrower or any of its Subsidiaries under this
Credit Agreement or any other Credit Document and (ii) the Agents and the
Lenders in connection with enforcement of the
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Credit Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the Agents and each of the
Lenders); provided, however, that in the case of both (i) and (ii), the Canadian
Borrowers agree to pay only such amounts as may relate to the Canadian
Obligations; (b) pay and hold each of the U.S. Lenders (in the case of a U.S.
Borrower) and the Canadian Lenders (in the case of a Canadian Borrower) harmless
from and against any and all claims for Non-Excluded Taxes to the extent set
forth in Section 4.13 and hold each of the U.S. Lenders (in the case of a U.S.
Borrower) and the Canadian Lenders (in the case of a Canadian Borrower) harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Lender) to pay
such Non-Excluded Taxes; and (c) indemnify each Agent, the Arranger and each
U.S. Lender (in the case of a U.S. Borrower) and each Canadian Lender (in the
case of a Canadian Borrower), its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not any Agent, the
Arranger or Lender is a party thereto) related to the entering into and/or
performance of any Credit Document or the use of proceeds of any of the U.S.
Loans (in the case of a U.S. Borrower) or the Canadian Loans (in the case of a
Canadian Borrower) (including, in each case, other extensions of credit)
hereunder or the consummation of any other transactions contemplated in any
Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent they relate to disputes solely between
or among the Lenders (excluding Wachovia acting in its capacity as
Administrative Agent or ABN AMRO Bank N.V., Canada Branch, acting in its
capacity as Canadian Agent) or they are incurred by reason of gross negligence
or willful misconduct on the part of the Person to be indemnified).
14.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither the amendment or waiver of any provision of this Credit
Agreement or any other Credit Document, nor the consent to any departure by any
Borrower or other Credit Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Lenders, or if the
Lenders shall not be parties thereto, by the parties thereto and consented to by
the Required Lenders, and each such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that no amendment, waiver or consent shall unless in writing and
signed by each of the Lenders, do any of the following: (a) increase the
Commitments of any Lender or subject any Lender to any additional obligations,
(b) except as otherwise expressly provided in this Credit Agreement, reduce the
principal of, or the amount or rate of interest on (other than a waiver of
default rate interest), any Note or any Letter of Credit reimbursement
obligations or any fees hereunder, (c) extend the Maturity Date or postpone any
date fixed for any payment in respect of principal of, or interest on, any Note
or any Letter of Credit reimbursement obligations or any fees hereunder, (d)
change the percentage of the Commitments, or any minimum requirement necessary
for the Lenders or the Required Lenders to take any action hereunder, (e) amend
or waive this Section 14.6, or change the definition of Required Lenders, (f)
release any Borrower or Guarantor, (g) except as otherwise expressly provided in
this Credit Agreement, and other than in connection with the financing,
refinancing, sale or other disposition of any asset of the Credit Parties
permitted under this Credit Agreement, release any Liens in favor of the Lenders
on any material portion of the Collateral or (h) increase the advance rates in
the definition of "Applicable
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Inventory Percentage", "U.S. Borrowing Base" or "Canadian Borrowing Base" such
that more credit would be available to the Borrowers; provided, however, that
the foregoing shall not prevent the Administrative Agent from increasing the
advance rates of the "U.S. Borrowing Base" or "Canadian Borrowing Base" or the
"Applicable Inventory Percentage" which had been lowered by the Administrative
Agent back to the levels as in effect on the Closing Date or to intermediate
levels, subject to the limitation set forth in the definition of Applicable
Inventory Percentage; and provided, further, that no amendment, waiver or
consent affecting the rights or duties of the Agents or the Issuing Lender under
any Credit Document shall in any event be effective, unless in writing and
signed by the Agents and/or the Issuing Lender, as applicable, in addition to
the Lenders required hereinabove to take such action. Notwithstanding any of the
foregoing to the contrary, the consent of the Borrowers shall not be required
for any amendment, modification or waiver of the provisions of Article XIII
(other than the provisions of Section 13.9) so long as any such amendment,
modification or waiver is not adverse to the Borrowers. In addition, the
Borrowers and the Lenders hereby authorize the Administrative Agent to modify
this Credit Agreement by unilaterally amending or supplementing Schedule 1.1A
from time to time in the manner requested by the Borrowers, the Agents or any
Lender in order to reflect any assignments or transfers of the Loans as provided
for hereunder; provided, however, that the Administrative Agent shall promptly
deliver a copy of any such modification to the Borrowers and each Lender.
14.7 DEFAULTING LENDER.
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then it shall not be entitled to vote on any matter requiring the consent
of the Required Lenders or to object to any matter requiring the consent of all
the Lenders and that all other benefits and obligations under the Credit
Documents shall apply to such Defaulting Lender in the Administrative Agent's
reasonable discretion.
14.8 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which where so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart. Delivery of an executed counterpart by telecopy shall be as
effective as delivery of a manually executed counterpart hereto and shall
constitute a representation that an original executed counterpart will be
provided.
14.9 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.
14.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND
WARRANTIES.
All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Agreement, the
making of the Loans, the issuance of the Letters of Credit, and the repayment of
the Loans, LOC Obligations and other obligations and the termination of the
Commitments hereunder.
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14.11 CURRENCY.
The use of term "dollars" or "Dollars" or the symbol "$" or "U.S. $" in
the Credit Documents shall mean a reference to lawful money of the United States
of America unless specifically indicated otherwise.
14.12 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. Any legal action or proceeding with respect to this Credit Agreement or
any other Credit Document shall be brought in state court in Mecklenburg County,
North Carolina or New York County, New York, or in any federal court for the
Western District of North Carolina or for the Southern District of New York,
and, by execution and delivery of this Credit Agreement, each of the Borrowers
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the nonexclusive jurisdiction of such courts. Each of the
Borrowers further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at the
address set out for notices pursuant to Section 14.1, such service to become
effective three (3) days after such mailing. Nothing herein shall affect the
right of the Administrative Agent or any Lender to serve process in any other
manner permitted by law or to commence legal proceedings or to otherwise proceed
against any Borrower in any other jurisdiction.
(b) Each of the Borrowers hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred to
in subsection (a) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
(c) Each Canadian Borrower hereby irrevocably appoints the Company
as its agent to receive service of process or other legal summons for purposes
of any legal action or proceeding. So long as such Canadian Borrower has any
obligation under this Credit Agreement or any of the Credit Documents, it will
maintain the Company as its duly appointed agent for the service of such process
or summons in the United States (or any state thereof), and if it fails to
maintain such an agent, any such process or summons may be served by mailing a
copy thereof by registered mail, or a form of mail substantially equivalent
thereto, addressed to it at its address as provided for notices hereunder.
14.13 DAMAGES.
To the extent permitted by applicable law, no Credit Party shall
assert, and each hereby waives, any claim against any Agent or Lender, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Credit Agreement, any other Credit Document or any
agreement or instrument contemplated hereby or thereby, any Loan, Letter of
Credit, Bankers' Acceptance or the use of the proceeds thereof.
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14.14 WAIVER OF JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF
THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
14.15 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable to
the extent of such illegality, invalidity or unenforceability and the remaining
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions.
14.16 LOAN ENTIRETY.
This Agreement together with the other Credit Documents represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein; provided, however, that the Administrative
Agent Fee Letter shall remain in effect subsequent to the execution and delivery
of this Agreement.
14.17 BINDING EFFECT; FURTHER ASSURANCES.
This Agreement shall become effective at such time, on or after the
Closing Date, that the conditions precedent set forth in Section 5.1 have been
satisfied and when it shall have been executed by each Borrower and the Agents,
and the Agents shall receive copies hereof (telecopied or otherwise) which, when
taken together, bear the signatures of each Lender (including the Issuing
Lenders), and thereafter this Agreement shall be binding upon and inure to the
benefit of each Borrower, each Lender (including the Issuing Lenders) and the
Agents, together with their respective successors and permitted assigns. The
Borrowers agree, upon the request of the Administrative Agent and/or the
Required Lenders, to promptly take such actions, as reasonably requested, as are
appropriate to carry out the intent of this Agreement and the other Credit
Documents, including, but not limited to, such actions as are reasonably
necessary to ensure that the Lenders have a perfected security interest in all
collateral securing the Obligations, subject to no Liens other than Permitted
Liens.
14.18 CONFIDENTIALITY.
The Agents and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agents or any such Lender by or on behalf of the Credit Parties
(whether before or after the Closing Date) which relates to the Credit Parties
(the "Information"). Notwithstanding the foregoing, the Agents and Lenders shall
be permitted to disclose Information (i) to its affiliates, officers, directors,
employees, agents and representatives in connection with their participation in
any of the transactions evidenced by this Agreement or any
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other Credit Documents or the administration of this Agreement or any other
Credit Documents (so long as such Persons are notified of the confidential
nature of the information); (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by any
Governmental Authority; (iii) to the extent such Information (A) becomes
publicly available other than as a result of a breach of this Credit Agreement
or any agreement entered into pursuant to clause (iv) below, (B) becomes
available to the Agents or any Lender on a non-confidential basis or (C) was
available to the Agents or Lenders on a non-confidential basis prior to its
disclosure to the Agents or any Lender by the Credit Parties; (iv) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) first
specifically agrees in a writing furnished to and for the benefit of the parties
hereto to be bound by the terms of this Section; (v) to Gold Sheets and other
similar bank trade publications; such information to consist of deal terms and
other information customarily found in such publications or (vi) to the extent
that the Credit Parties shall have consented in writing to such disclosure.
Nothing set forth in this Section shall obligate the Agents or any Lender to
return any materials furnished by the Credit Parties.
14.19 JUDGMENT CURRENCY.
(a) If for the purposes of obtaining judgment in any court it is
necessary to convert all or any part of the Indebtedness or any other amount due
to the Lenders hereunder or under any security in respect of the Borrowers'
obligations hereunder in any currency (the "Original Currency") into another
currency (the "Other Currency") each Borrower to the fullest extent that it may
effectively do so, agrees that the rate of exchange used shall be that at which,
in accordance with normal banking procedures, the Administrative Agent could
purchase the Original Currency with the Other Currency at its principal offices
in Charlotte, North Carolina on the day (a "Business Day") on which the
Administrative Agent is open for the transaction of its banking business at such
offices immediately preceding the day on which any such judgment, or any
relevant part thereof, is paid or otherwise satisfied.
(b) The obligation of each Borrower in respect of any sum due in
the Original Currency from it to the Lenders hereunder or under any security in
respect of the Borrowers' obligation hereunder shall, notwithstanding any
judgment in any Other Currency, be discharged only to the extent that on the
Business Day following receipt by the Agents of any sum adjudged to be so due in
such Other Currency or of any other sum in any Other Currency the Agents may, in
accordance with their normal banking procedures, purchase the Original Currency
with such Other Currency. If the amount of the Original Currency so purchased is
less than the sum originally due to the Lenders in the Original Currency, the
Borrowers shall, as a separate obligation and notwithstanding any such judgment,
indemnify the Agents against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to the Lenders, the Agents
shall remit such excess to the Borrowers.
14.20 MAXIMUM RATE.
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrowers, the
Administrative Agent, the Canadian Agent and the Lenders hereby agree that all
agreements among them under this Credit Agreement and the other Credit
Documents, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to the Administrative Agent or any Lender
for the use, forbearance, or
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detention of the money loaned to any Borrower and evidenced hereby or thereby or
for the performance or payment of any covenant or obligation contained herein or
therein (including, in relation to any amount payable hereunder by any Canadian
Borrower or to any Canadian Lender, any amount constituting "interest" for
purposes of section 347 of the Criminal Code (Canada) or any successor provision
in force at the relevant time, and references in this Section 14.20 shall be
read accordingly), exceed the Highest Lawful Rate. If due to any circumstance
whatsoever, fulfillment of any provisions of this Credit Agreement or any of the
other Credit Documents at the time performance of such provision shall be due
shall exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance any
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied to the reduction of the principal amount then outstanding hereunder or
on account of any other then outstanding Obligations and not to the payment of
interest, or if such excessive interest exceeds the principal unpaid balance
then outstanding hereunder and such other then outstanding Obligations, such
excess shall be refunded to the applicable Borrower. All sums paid or agreed to
be paid to the Administrative Agent, the Canadian Agent or any Lender for the
use, forbearance, or detention of the Obligations and other indebtedness of the
Borrowers to the Administrative Agent, the Canadian Agent or any Lender shall,
to the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such indebtedness until payment in full so
that the actual rate of interest on account of all such indebtedness does not
exceed the Highest Lawful Rate throughout the entire term of such indebtedness.
The terms and provisions of this Section shall control every other provision of
this Credit Agreement and all agreements among the Borrowers, the Administrative
Agent, the Canadian Agent and the Lenders.
14.21 CONCERNING JOINT AND SEVERAL LIABILITY OF THE U.S. BORROWERS.
(a) Each of the U.S. Borrowers is accepting joint and several
liability hereunder in consideration of the financial accommodation to be
provided by the Lenders under this Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the U.S. Borrowers and in consideration of
the undertakings of each of the U.S. Borrowers to accept joint and several
liability for the obligations of each of them.
(b) Each of the U.S. Borrowers jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other U.S. Borrowers with
respect to the payment and performance of all of the Obligations, it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each of the U.S. Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of the U.S. Borrowers shall fail
to make any payment with respect to any of the Obligations as and when due or to
perform any of the Obligations in accordance with the terms thereof, then in
each such event, the other U.S. Borrowers will make such payment with respect
to, or perform, such Obligation.
(d) The obligations of each U.S. Borrower under the provisions of
this Section 14.21 constitute full recourse obligations of such U.S. Borrower,
enforceable against it to the full extent of its properties and assets,
irrespective of the validity, regularity or enforceability of this Credit
Agreement or any other circumstances whatsoever.
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(e) Except as otherwise expressly provided herein or in the other
Credit Documents, each U.S. Borrower hereby waives notice of acceptance of its
joint and several liability, notice of any Loan made under this Credit
Agreement, notice of occurrence of any Event of Default, or of any demand for
any payment under this Credit Agreement, notice of any action at any time taken
or omitted by any Lender under or in respect of any of the Obligations, any
requirement of diligence and, generally, all demands, notices and other
formalities of every kind in connection with this Credit Agreement. Each U.S.
Borrower hereby assents to, and waives notice of, any extension or postponement
of the time for the payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
any Lender at any time or times in respect of any default by any U.S. Borrower
in the performance or satisfaction of any term, covenant, condition or provision
of this Credit Agreement, any and all other indulgences whatsoever by any Lender
in respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or in part, at any time or times, of any security for any of the
Obligations or the addition, substitution or release, in whole or in part, of
any U.S. Borrower. Without limiting the generality of the foregoing, each U.S.
Borrower assents to any other action or delay in acting or failure to act on the
part of any Lender, including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply fully with
the applicable laws or regulations thereunder which might, but for the
provisions of this Section 14.21, afford grounds for terminating, discharging or
relieving such U.S. Borrower, in whole or in part, from any of its obligations
under this Section 14.21, it being the intention of each U.S. Borrower that, so
long as any of the Obligations remain unsatisfied, the obligations of such U.S.
Borrower under this Section 14.21 shall not be discharged except by performance
and then only to the extent of such performance. The Obligations of each U.S.
Borrower under this Section 14.21 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any U.S. Borrower or any
Lender. The joint and several liability of the U.S. Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, membership,
constitution or place of formation of any Borrower or any Lender.
(f) The provisions of this Section 14.21 are made for the benefit
of the Lenders and their respective successors and assigns, and may be enforced
by any such Person from time to time against any of the U.S. Borrowers as often
as occasion therefor may arise and without requirement on the part of any Lender
first to marshal any of its claims or to exercise any of its rights against any
of the other U.S. Borrowers or to exhaust any remedies available to it against
any of the other U.S. Borrowers or to resort to any other source or means of
obtaining payment of any of the Obligations or to elect any other remedy. The
provisions of this Section 14.21 shall remain in effect until all the
Obligations shall have been paid in full or otherwise fully satisfied. If at any
time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by any
Lender upon the insolvency, bankruptcy or reorganization of any of the U.S.
Borrowers, or otherwise, the provisions of this Section 14.21 will forthwith be
reinstated in effect, as though such payment had not been made.
(g) Notwithstanding any provision to the contrary contained herein
or in any other of the Credit Documents, to the extent the joint obligations of
a U.S. Borrower shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
128
obligations of each U.S. Borrower hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and
including, without limitation, the U.S. federal Bankruptcy Code).
(h) The U.S. Borrowers hereby agree, as among themselves, that if
any U.S. Borrower shall become an Excess Funding Borrower (as defined below),
each other U.S. Borrower shall, on demand of such Excess Funding Borrower (but
subject to the next sentence hereof and to subsection (B) below), pay to such
Excess Funding Borrower an amount equal to such U.S. Borrower's Pro Rata Share
(as defined below and determined, for this purpose, without reference to the
properties, assets, liabilities and debts of such Excess Funding Borrower) of
such Excess Payment (as defined below). The payment obligation of any U.S.
Borrower to any Excess Funding Borrower under this Section 14.21(h) shall be
subordinate and subject in right of payment to the prior payment in full of the
Obligations of such U.S. Borrower under the other provisions of this Credit
Agreement, and such Excess Funding Borrower shall not exercise any right or
remedy with respect to such excess until payment and satisfaction in full of all
of such Obligations. For purposes hereof, (i) "Excess Funding Borrower" shall
mean, in respect of any Obligations arising under the other provisions of this
Credit Agreement (hereafter, the "Joint Obligations"), a U.S. Borrower that has
paid an amount in excess of its Pro Rata Share of the Joint Obligations; (ii)
"Excess Payment" shall mean, in respect of any Joint Obligations, the amount
paid by an Excess Funding Borrower in excess of its Pro Rata Share of such Joint
Obligations; and (iii) "Pro Rata Share", for the purposes of this Section
14.21(h), shall mean, for any U.S. Borrower, the ratio (expressed as a
percentage) of (A) the amount by which the aggregate present fair salable value
of all of its assets and properties exceeds the amount of all debts and
liabilities of such U.S. Borrower (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of such
U.S. Borrower hereunder) to (B) the amount by which the aggregate present fair
salable value of all assets and other properties of such U.S. Borrower and all
of the other U.S. Borrowers exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of such U.S. Borrower and the other
U.S. Borrowers hereunder) of such U.S. Borrower and all of the other U.S.
Borrowers, all as of the Closing Date (if any U.S. Borrower becomes a party
hereto subsequent to the Closing Date, then for the purposes of this Section
14.21(h) such subsequent U.S. Borrower shall be deemed to have been a U.S.
Borrower as of the Closing Date and the information pertaining to, and only
pertaining to, such U.S. Borrower as of the date such U.S. Borrower became a
U.S. Borrower shall be deemed true as of the Closing Date).
14.22 CONCERNING JOINT AND SEVERAL LIABILITY OF THE CANADIAN
BORROWERS.
(a) Each of the Canadian Borrowers is accepting joint and several
liability hereunder in consideration of the financial accommodation to be
provided by the Lenders under this Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the Canadian Borrowers and in consideration
of the undertakings of each of the Canadian Borrowers to accept joint and
several liability for the obligations of each of them.
(b) Each of the Canadian Borrowers jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Canadian Borrowers with
respect to the payment and performance of all of the Canadian Obligations, it
being the intention of the parties hereto that all the Canadian
129
Obligations shall be the joint and several obligations of each of the Canadian
Borrowers without preferences or distinction among them.
(c) If and to the extent that any of the Canadian Borrowers shall
fail to make any payment with respect to any of the Canadian Obligations as and
when due or to perform any of the Canadian Obligations in accordance with the
terms thereof, then in each such event, the other Canadian Borrowers will make
such payment with respect to, or perform, such Canadian Obligation.
(d) The obligations of each Canadian Borrower under the provisions
of this Section 14.22 constitute full recourse obligations of such Canadian
Borrower, enforceable against it to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Credit Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided herein or in the other
Credit Documents, each Canadian Borrower hereby waives notice of acceptance of
its joint and several liability, notice of any Loan made under this Credit
Agreement, notice of occurrence of any Event of Default, or of any demand for
any payment under this Credit Agreement, notice of any action at any time taken
or omitted by any Lender under or in respect of any of the Canadian Obligations,
any requirement of diligence and, generally, all demands, notices and other
formalities of every kind in connection with this Credit Agreement. Each
Canadian Borrower hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Canadian Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by any Lender at any time or times in respect of any default by
any Canadian Borrower in the performance or satisfaction of any term, covenant,
condition or provision of this Credit Agreement, any and all other indulgences
whatsoever by any Lender in respect of any of the Canadian Obligations, and the
taking, addition, substitution or release, in whole or in part, at any time or
times, of any security for any of the Canadian Obligations or in part, at any
time or times, of any security for any of the Canadian Obligations or the
addition, substitution or release, in whole or in part, of any Canadian
Borrower. Without limiting the generality of the foregoing, each Canadian
Borrower assents to any other action or delay in acting or failure to act on the
part of any Lender, including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply fully with
the applicable laws or regulations thereunder which might, but for the
provisions of this Section 14.22, afford grounds for terminating, discharging or
relieving such Canadian Borrower, in whole or in part, from any of its
obligations under this Section 14.22, it being the intention of each Canadian
Borrower that, so long as any of the Canadian Obligations remain unsatisfied,
the obligations of such Canadian Borrower under this Section 14.22 shall not be
discharged except by performance and then only to the extent of such
performance. The Canadian Obligations of each Canadian Borrower under this
Section 14.22 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Canadian Borrower or any Lender. The joint and
several liability of the Canadian Borrowers hereunder shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, membership, constitution or place of
formation of any Borrower or any Lender.
(f) The provisions of this Section 14.22 are made for the benefit
of the Canadian Lenders and their respective successors and assigns, and may be
enforced by any such Person from time to time against any of the Canadian
Borrowers as often as occasion therefor may arise
130
and without requirement on the part of any Lender first to marshal any of its
claims or to exercise any of its rights against any of the other Canadian
Borrowers or to exhaust any remedies available to it against any of the other
Canadian Borrowers or to resort to any other source or means of obtaining
payment of any of the Canadian Obligations or to elect any other remedy. The
provisions of this Section 14.22 shall remain in effect until all the Canadian
Obligations shall have been paid in full or otherwise fully satisfied. If at any
time, any payment, or any part thereof, made in respect of any of the Canadian
Obligations, is rescinded or must otherwise be restored or returned by any
Lender upon the insolvency, bankruptcy or reorganization of any of the Canadian
Borrowers, or otherwise, the provisions of this Section 14.22 will forthwith be
reinstated in effect, as though such payment had not been made.
(g) Notwithstanding any provision to the contrary contained herein
or in any other of the Credit Documents, to the extent the joint obligations of
a Canadian Borrower shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable federal, state
or provincial law relating to fraudulent conveyances or transfers) then the
obligations of each Canadian Borrower hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether United States or
Canadian federal, state or provincial and including, without limitation, the
U.S. federal Bankruptcy Code and the Bankruptcy and Insolvency Act (Canada)).
(h) The Canadian Borrowers hereby agree, as among themselves, that
if any Canadian Borrower shall become an Excess Funding Borrower (as defined
below), each other Canadian Borrower shall, on demand of such Excess Funding
Borrower (but subject to the next sentence hereof and to subsection (B) below),
pay to such Excess Funding Borrower an amount equal to such Canadian Borrower's
Pro Rata Share (as defined below and determined, for this purpose, without
reference to the properties, assets, liabilities and debts of such Excess
Funding Borrower) of such Excess Payment (as defined below). The payment
obligation of any Canadian Borrower to any Excess Funding Borrower under this
Section 14.22(h) shall be subordinate and subject in right of payment to the
prior payment in full of the Canadian Obligations of such Canadian Borrower
under the other provisions of this Credit Agreement, and such Excess Funding
Borrower shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such Canadian Obligations. For
purposes hereof, (i) "Excess Funding Borrower" shall mean, in respect of any
Canadian Obligations arising under the other provisions of this Credit Agreement
(hereafter, the "Joint Canadian Obligations"), a Canadian Borrower that has paid
an amount in excess of its Pro Rata Share of the Joint Canadian Obligations;
(ii) "Excess Payment" shall mean, in respect of any Joint Canadian Obligations,
the amount paid by an Excess Funding Borrower in excess of its Pro Rata Share of
such Joint Canadian Obligations; and (iii) "Pro Rata Share", for the purposes of
this Section 14.22(h), shall mean, for any Canadian Borrower, the ratio
(expressed as a percentage) of (A) the amount by which the aggregate present
fair salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Canadian Borrower (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of such Canadian Borrower hereunder) to (B) the amount by which the
aggregate present fair salable value of all assets and other properties of such
Canadian Borrower and all of the other Canadian Borrowers exceeds the amount of
all of the debts and liabilities (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of such Canadian
Borrower and the other Canadian Borrowers hereunder) of such Canadian Borrower
and all of the other Canadian Borrowers, all as of the Closing Date (if any
Canadian Borrower becomes a party hereto subsequent to the Closing Date, then
for the purposes of this Section
131
14.22(h) such subsequent Canadian Borrower shall be deemed to have been a
Canadian Borrower as of the Closing Date and the information pertaining to, and
only pertaining to, such Canadian Borrower as of the date such Canadian Borrower
became a Canadian Borrower shall be deemed true as of the Closing Date).
14.23 NONLIABILITY OF AGENTS AND LENDERS.
The relationship between any Borrower on the one hand and the Lenders
and the Agents on the other hand shall be solely that of borrower and lender.
Neither the Agents nor any Lender shall have any fiduciary responsibilities to
any Borrower. Neither the Agents nor any Lender undertakes any responsibility to
any Borrower to review or inform such Borrower of any matter in connection with
any phase of such Borrower's business or operations.
14.24 INDEPENDENT NATURE OF LENDERS' RIGHTS.
The amounts payable at any time hereunder to each Lender under such
Lender's Note or Notes shall be a separate and independent debt.
[Remainder of page intentionally left blank]
132
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
COMPANY:
XXXXXXXX BEACH/XXXXXXX-SILEX, INC.,
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
U.S. SUBSIDIARY BORROWERS:
[NONE]
CANADIAN BORROWER:
XXXXXXX-SILEX CANADA INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Treasurer
S-1
AGENTS AND LENDERS:
WACHOVIA BANK, NATIONAL ASSOCIATION,
in its capacity as Administrative Agent and
as a Lender
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxx X. Xxxx
Title: Director
S-2
ABN AMRO BANK N.V., CANADA BRANCH,
in its capacity as Canadian Agent and as a
Lender
By: /s/ Xxxxx Xxxx /s/ D. Xxxxx Xxxxxx
-----------------------------------------
Name: Xxxxx Xxxx D. Xxxxx Xxxxxx
Title: V.P., Asset Based Lending S.V.P.,
Asset Based Lending
S-3
KEY BANK, NATIONAL ASSOCIATION,
in its capacity as Syndication Agent and as
a Lender
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Assistant Vice President
S-4
FLEET CAPITAL CORPORATION,
in its capacity as Documentation Agent and
as a Lender
By: /s/ Xxxxxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: Vice President
S-5
LASALLE BUSINESS CREDIT, INC.,
in its capacity as Documentation Agent and
as a Lender
By: /s/ Xxxx X. XxXxxxxx
-----------------------------------------
Name: Xxxx X. XxXxxxxx
Title: First Vice President
S-6
NATIONAL CITY COMMERCIAL FINANCE, INC.,
in its capacity as Documentation Agent and
as a Lender
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
S-7
WASHINGTON MUTUAL BANK, as a Lender
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
S-8
SUNTRUST BANK, as a Lender
By: /s/ Xxxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: Vice President
S-9
SOVEREIGN BANK, as a Lender
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxx X. Xxxx
Title: V.P.
S-11
THE PROVIDENT BANK, as a Lender
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
S-12
EXHIBIT A
FORM OF ACKNOWLEDGMENT AGREEMENT
Wachovia Bank, National Association, as Administrative Agent
One Wachovia Center
000 Xxxxx Xxxxxxx Xxxxxx, XX-0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx X'Xxxxxx
Ladies and Gentlemen:
__________________________________ ("Company") now does or hereafter
may store certain of its merchandise, inventory, or other of its personal
property at premises (the "Premises") owned or leased by the undersigned,
including, without limitation, such Premises described on Schedule I attached
hereto.
Company has entered or may enter into certain financing and/or security
arrangements (as amended, supplemented or otherwise modified from time to time,
the "Credit Facility") with certain financial institutions (the "Lenders") and
Wachovia Bank, National Association, as agent for the Lenders (in such capacity,
the "Agent") and, as a condition to the Lenders entering into any such Credit
Facility with Company, the Lenders require, among other things, liens on all of
Company's personal property located on the Premises from time to time
("Collateral").
To induce the Lenders (together with their respective agents and
assigns) to provide said Credit Facility, and for other good and valuable
consideration, the undersigned hereby agrees that:
(i) the undersigned acknowledges and agrees that Company
is the owner of the Collateral, and that the Agent's lien upon or
security interest in the Collateral is prior and superior to any
interest, lien or claim of any nature the undersigned may now have or
hereafter obtain in the Collateral whether by operation of law,
contract or otherwise;
(ii) upon payment in full of all outstanding normal and
customary [WAREHOUSE] [PACKAGING] [PROCESSING] charges payable by
Company to the undersigned (and excluding indemnity payments and
similar payments payable under the lease between Company and the
undersigned for default or similar charges ("Excluded Payments")), the
undersigned will not assert against any of Company's assets any
statutory or possessory liens, including, without limitation, rights of
levy or distraint for rent, all of which it hereby waives;
(iii) the Collateral shall be identifiable as being owned
by Company and kept reasonably separate and distinct from other
property in the undersigned's possession;
(iv) none of the Collateral located on the Premises shall
be deemed to be fixtures;
A-1
(v) if Company defaults on its obligations to the Lenders
or the Agent and, as a result, the Agent, on behalf of itself and the
Lenders, undertakes to enforce its security interest in the Collateral,
the undersigned will cooperate with the Agent in its efforts to
assemble all of the Collateral located on the Premises and will permit
the Agent, upon payment in full of all outstanding normal and customary
[WAREHOUSE] [PACKAGING] [PROCESSING] charges (but excluding Excluded
Payments) payable by Company to the undersigned, to either remain on
the Premises for sixty (60) days after the Agent provides notice to the
undersigned, or, at the Agent's option, to remove the Collateral from
the Premises within a reasonable time, not to exceed sixty (60) days
after the Agent provides notice to the undersigned, provided that the
Agent leaves the Premises in the same condition as existed immediately
prior to such sixty (60) day period; the Agent agrees to indemnify the
undersigned for any property damage arising out of its temporary
occupancy of the Premises, and the undersigned agrees not to hinder the
Agent's actions in enforcing its liens on the Collateral;
(vi) the undersigned shall send to the Agent a copy of any
notice or statement sent to Company by the undersigned with respect to
the Collateral or amounts owed in connection therewith. Such copy shall
be sent to the Agent at the same time such notice or statement is sent
to Company. The undersigned shall not pursue any right or remedy
against Company until the undersigned shall have given thirty (30)
days' prior written notice to the Agent to the address provided above.
Any notice(s) required or desired to be given hereunder shall be
directed to the party to be notified at the address stated herein.
The agreements contained herein shall continue in force until all of
Company's obligations and liabilities to the Lenders and the Agent are paid and
satisfied in full and all financing and/or security arrangements among the
Lenders, the Agent and Company have been terminated.
The undersigned will notify all successor owners, transferees,
purchasers and mortgagees of the Premises of the existence of this agreement.
The agreements contained herein may not be modified or terminated orally and
shall be binding upon the successors, assigns and personal representatives of
the undersigned, upon any successor owner or transferee of the Premises, and
upon any purchasers, including any mortgagee, from the undersigned.
Executed and delivered this_____________day of_______________, 200_.
_______________________________
[Premises Owner/Lessee]
By ____________________________
Title _________________________
Address _______________________
A-2
Accepted and Agreed:
[Applicable Company]
By:_________________________
Name: ______________________
Title: _____________________
A-3
Schedule I
to Acknowledgment Agreement
Location of Premises
B-1
EXHIBIT B
FORM OF GUARANTY AGREEMENT
[TO BE DELIVERED SEPARATELY]
B-1
EXHIBIT C
FORM OF LANDLORD LIEN WAIVER AGREEMENT
__________________________________ (the "Company") now does or
hereafter may store certain of its merchandise, inventory, or other of its
personal property at premises (the "Premises") owned or leased by the
undersigned (the "Landlord"), including, without limitation, such Premises
described on Schedule I attached hereto, which the Landlord leases to the
Company pursuant to the terms of a lease agreement between the Landlord and the
Company (the "Lease").
The Company has entered or may enter into certain financing and/or
security arrangements (as amended, supplemented or otherwise modified from time
to time, the "Credit Facility") with certain financial institutions (the
"Lenders") and Wachovia Bank, National Association, as agent for the Lenders (in
such capacity, the "Agent") and, as a condition to the Lenders entering into any
such Credit Facility with Company, the Lenders require, among other things,
liens on all of Company's personal property located on the Premises from time to
time (the "Collateral").
To induce the Lenders (together with their respective agents and
assigns) to provide said Credit Facility, and for other good and valuable
consideration, the Landlord hereby agrees that:
1. The Lease is in full force and effect and has not been
assigned, modified, supplemented or amended in any way.
2. To the best knowledge of the Landlord, neither the Company nor
the Landlord is in default under the Lease, and no event or circumstance has
occurred or exists which, with the passage of time or the giving of notice or
both, would constitute a default under the Lease.
3. The Landlord agrees that: (a) the Agent's lien upon or
security interest in the Collateral is prior and superior to any interest, lien
or claim of any nature the Landlord may now have or hereafter obtain in the
Collateral whether by operation of law, contract or otherwise and the Landlord
hereby subordinates to the Agent, for the benefit of the Lenders, any rights,
liens or claims it has with respect to the Collateral; (b) either the Company or
the Agent may enter the Premises and remove the Collateral from the Premises at
any time without hindrance on the part of the Landlord, provided that no
unreasonable damage is caused to the Premises, and the Company shall be
responsible for any damage to the Landlord's property as the result of such
removal; and (c) the Landlord shall deem the Collateral to be personal property
and not fixtures, notwithstanding the manner or mode of the attachment of the
Collateral to the land.
4. The Landlord shall send to the Agent (in the manner provided
herein) a copy of any notice or statement sent to the Company by the Landlord
asserting a default under the Lease. Such copy shall be sent to the Agent at the
same time such notice or statement is sent to the Company. Notices shall be sent
to the Agent by prepaid, registered or certified mail, addressed to the Agent at
the following address, or such other address as the Agent shall designate to the
Landlord in writing:
Wachovia Bank, National Association
One Wachovia Center
C-1
000 Xxxxx Xxxxxxx Xxxxxx, XX-0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx X'Xxxxxx
with a copy to:
Xxxxx & Xxx Xxxxx, PLLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 00
Xxxxxxxxx, Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxx XxXxxx
The Landlord shall not terminate the Lease or pursue any other right or
remedy under the Lease by reason of any default of the Company under the Lease,
until the Landlord shall have given a copy of such written notice to the Agent
as provided above and, in the event any such default is not cured by the Company
within any time period provided for under the terms and conditions of the Lease,
the Landlord will allow the Agent (a) thirty (30) days from the expiration of
the Company's cure period under the Lease within which the Agent shall have the
right, but shall not be obligated, to remedy such act, omission or other default
and Landlord will accept such performance by the Agent and (b) up to an
additional sixty (60) days to occupy the Premises; provided that during such
period of occupation the Agent shall pay to the Landlord the basic rent due
under the Lease pro-rated on a per diem basis determined on a 30-day month
(provided, that such rent shall exclude any rent adjustments, indemnity payments
or similar amounts payable under the Lease for default, holdover status or
similar charges).
The agreements contained herein shall continue in force until all of
Company's obligations and liabilities to the Lenders and the Agent are paid and
satisfied in full and all financing and/or security arrangements among the
Lenders, the Agent and the Company have been terminated.
The undersigned will notify all successor owners, transferees,
purchasers and mortgagees of the Premises of the existence of this agreement.
The agreements contained herein may not be modified or terminated orally and
shall be binding upon the successors, assigns and personal representatives of
the undersigned, upon any successor owner or transferee of the Premises, and
upon any purchasers, including any mortgagee, from the undersigned.
C-2
EXECUTED under seal this_________________day of_______________, 200_.
LANDLORD:
[Name of Landlord]
By: _____________________________________
Name: ___________________________________
Title: __________________________________
C-3
Schedule I
to Landlord Lien Waiver Agreement
Location of Premises
EXHIBIT D
FORM OF
[NOTICE OF BORROWING]
[NOTICE OF CONTINUATION/CONVERSION]
TO: _______ Wachovia Bank, National Association, as Administrative Agent
000 Xxxxx Xxxxxxx Xxxxxx XX-0
Xxxxxxxxx, XX 00000
Attn: Syndication Agency Services
_______ ABN AMRO Bank N.V., Canada Branch, as Canadian Agent
Suite 1500 Maritime Life Tower
00 Xxxxxxxxxx Xxxxxx Xxxx
P.O. Box 114, Toronto Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxxx Early
RE: Credit Agreement dated as of December__________, 2002 among
Xxxxxxxx Beach/Xxxxxxx-Silex, Inc. and certain of its
Subsidiaries (the "Borrowers"), Wachovia Bank, National
Association, as Administrative Agent, ABN AMRO Bank N.V.,
Canada Branch, as Canadian Agent, and the Lenders party
thereto (as amended or modified from time to time, the
"Credit Agreement").
DATE: ____________
1. This Notice of [Borrowing][Continuation/Conversion] is made pursuant to
the terms of the Credit Agreement. All capitalized terms used herein
unless otherwise defined herein shall have the meanings set forth in
the Credit Agreement.
2. __________Please be advised that the U.S. Borrowers are requesting a
U.S. Revolving Loan in the amount of $________________to be funded
on___________________,________to accrue interest at the interest rate
set forth in paragraph 6 below. Subsequent to the funding of the
requested U.S. Revolving Loan, the aggregate amount of outstanding U.S.
Revolving Loans will be $________________________.
3. ________Please be advised that the U.S. Borrowers are requesting that a
portion of the current outstanding U.S. Revolving Loans in the amount
of $__________________________that is currently accruing interest at
the________________be [continued at or converted to] the interest rate
option set forth in paragraph 7 below on____________________,_________.
4. _______Please be advised that the Canadian Borrowers are requesting a
Canadian Revolving Loan in the amount of [C]$____________________to be
funded on___________________ 200___to accrue interest at the interest
rate set forth in paragraph 8 below. Subsequent to the funding of the
requested Canadian Revolving Loan, the aggregate amount of outstanding
Canadian Revolving Loans will be $______________________in Canadian
Dollars and $___________in U.S. Dollars.
5. ______Please be advised that the Canadian Borrowers are requesting:
D-1
a._________that a portion of the current outstanding Canadian Revolving
Loans in the amount of $___________________that is currently accruing
interest at the_________________be [continued at or converted to] the
interest rate option set forth in paragraph 9 below
on____________________,________;
b._________that a portion of the current outstanding Canadian Revolving
Loans in the amount of C$____________________that is currently accruing
interest at the Canadian Prime Rate be converted into a Bankers'
Acceptance for the period set forth in paragraph 10 below
on_____________________,_______;
c.________that Bankers' Acceptances in aggregate Face Amount of
C$____________________________maturing on_________________,______be
converted on the maturity date into a Canadian Prime Rate Loan; or
d._________that the Bankers' Acceptance maturing on__________,_________
be continued as a Bankers' Acceptance for the period set forth in
paragraph 10 below on_______________________,_________.
6. The interest rate option applicable to the requested U.S. Revolving
Loan set forth in paragraph 2 above shall be:
a. ______ the U.S. Base Rate; or
b. ______ the Adjusted Eurodollar Rate for an Interest Period of:
______ one month
______ two months
______ three months
______ six months
7. The interest rate option applicable to the continuation or conversion
of all or part of the existing U.S. Revolving Loans, as set forth in
paragraph 3 above, shall be equal to:
a. ______ the U.S. Base Rate
b. ______ the Adjusted Eurodollar Rate for an Interest Period
of:
_______ one month
_______ two months
_______ three months
_______ six months
8. The interest rate option applicable to the requested Canadian Revolving
Loan set forth in paragraph 4 above shall be:*
a. ______ the Canadian Prime Rate; or
b. ______ the CA U.S. Base Rate; or
c. ______ the Adjusted Eurodollar Rate for a period of
______ one month
______ two months
D-2
______ three months
______ six months
9. The interest rate option applicable to the continuation or conversion
of all or part of the existing Canadian Revolving Loans, as set forth
in paragraph 5(a) above, shall be equal to:
a. ______ the CA U.S. Base Rate
b. ______ the Adjusted Eurodollar Rate for an
Interest Period of:
_______ one month
_______ two months
_______ three months
_______ six months
10. The period of the Bankers' Acceptance requested by the Canadian
Borrowers pursuant to paragraph [5(b)][5(d)] above shall
be_______________________[insert from 30 up to 180] days.
11. Subsequent to the continuation or conversion of all or part of the
existing Revolving Loans, (a) the sum of U.S. Revolving Loans
outstanding plus LOG Obligations outstanding will not exceed the U.S.
Revolving Loan Commitment; and (b) the sum of Canadian Revolving Loans
outstanding plus the aggregate Face Amount of Bankers' Acceptances will
not exceed the Canadian Revolving Loan Commitment.
12. The representations and warranties made by the Credit Parties in any
Credit Document are true and correct in all material respects at and as
if made on the date of the requested [borrowing][continuation/
conversion] except for representations and warranties expressly stated
to relate to a specific earlier date, in which case such
representations and warranties are true and correct in all material
respects as of such earlier date.
13. As of the date hereof, no Default or Event of Default has occurred and
is continuing or would be caused by the requested [borrowing]
[continuation/conversion].
14. No Material Adverse Effect has occurred since the Closing Date.
15. Immediately after giving effect to the requested [borrowing]
[continuation/conversion], the sum of (a) U.S. Revolving Loans
outstanding plus Canadian Revolving Loans outstanding plus LOC
Obligations outstanding plus BA Obligations will not exceed the lesser
of the Total Borrowing Base or $140,000,000; (b) U.S. Revolving Loans
outstanding plus LOC Obligations will not exceed the lesser of the U.S.
Borrowing Base and the U.S. Revolving Loan Commitment; and (c) the sum
of Canadian Revolving Loans outstanding plus BA Obligations will not
exceed the lesser of the Canadian Borrowing Base and the Canadian
Revolving Loan Commitment.
[CREDIT PARTY]
By:________________________________
Name: _____________________________
Title: ____________________________
D-3
--------------------------------------------------------------------------------
* Canadian Prime Rate Loans are Canadian Dollar Loans. CA U.S. Base Rate
Loans and Eurodollar Loans are U.S. Dollar Loans.
D-4
EXHIBIT E
[RESERVED]
E-1
EXHIBIT F
FORM OF REVOLVING CREDIT NOTE
$_________________ <>
FOR VALUE RECEIVED, the undersigned, _________________________________,
a _____________________ (the "[U.S.][Canadian] Borrower[s]"), hereby promise[s]
to pay to the order of___________________________________ (the "[U.S.][Canadian]
Lender") c/o__________________________________, as agent for the [U.S.]
[Canadian] Lender (the "[Administrative] [Canadian] Agent"), ___________________
(or at such other place or places as the holder of this Revolving Credit Note
may designate) in lawful money (in the currency in which each Revolving Loan was
made) and in immediately available funds, the principal amount of
___________________________________ Dollars ($_________________), or such lesser
amount as may then constitute the unpaid aggregate principal amount of all
Revolving Loans made by the [U.S.][Canadian] Lender to the [U.S.][Canadian]
Borrower[s] pursuant to the Credit Agreement (as defined below), at the times
set forth in the Credit Agreement, but no later than the Maturity Date.
The [U.S.][Canadian] Borrower[s] further agree[s] to pay interest at said
office, in like money, on the unpaid principal amount owing hereunder from time
to time outstanding from the date of disbursement on the dates and at the rates
specified in Article IV of the Credit Agreement.
This promissory note is one of the Revolving Credit Notes referred to in the
Credit Agreement, dated as of December_______, 2002 (together with all
modifications, renewals or replacements, the "Credit Agreement"), among the
Borrowers, the [U.S.][Canadian] Lender, certain other financial institutions
party thereto, Wachovia Bank, National Association, as Administrative Agent, and
ABN AMRO Bank N.V., Canada Branch, as Canadian Agent, and is subject to, and
entitled to, all provisions and benefits thereof and is subject to optional and
mandatory prepayment in whole or in part as provided therein. Capitalized terms
used herein without definition shall have the meanings given to such terms in
the Credit Agreement. The Credit Agreement, among other things, provides [after
giving effect to the Assignment and Acceptance executed by the [U.S.][Canadian]
Lender and [name of assigning Lender] as of the date hereof] for the making of
Revolving Loans by the [U.S.][Canadian] Lender to the [U.S.][Canadian]
Borrower[s] from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned.
This promissory note is secured by security agreements and other collateral
documents dated as of December______, 2002 [and re-evidences the indebtedness
outstanding on the date hereof with respect to the Revolving Loans which
indebtedness has been assigned to the [U.S.][Canadian] Lender pursuant to
Section 14.3 of the Credit Agreement].
The [U.S.][Canadian] Borrower[s] hereby waives presentment, demand, protest and
notice of any kind. No failure to exercise, and no delay in exercising any
rights hereunder on the part of the holder hereof shall operate as a waiver of
such rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS PROMISSORY NOTE
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[_____________________________]
By:____________________________
Title: ________________________
F-1
EXHIBIT G
FORM OF
BANKERS' ACCEPTANCE NOTICE
TO: ABN AMRO Bank N.V., Canada Branch, as Canadian Agent
Suite 1500 Maritime Life Tower
00 Xxxxxxxxxx Xxxxxx Xxxx
P.O. Box 114, Toronto Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxxx Early
RE: Credit Agreement dated as of December __, 2002 among Xxxxxxxx
Beach/Xxxxxxx-Silex, Inc. and certain of its Subsidiaries
(the "Borrowers"), Wachovia Bank, National Association, as
Administrative Agent, ABN AMRO Bank N.V., Canada Branch, as
Canadian Agent, and the Lenders party thereto (as amended or
modified from time to time, the "Credit Agreement").
DATE: _________, _________
1. This Bankers' Acceptance Notice is made pursuant to the terms of the
Credit Agreement. All capitalized terms used herein unless otherwise defined
herein shall have the meanings set forth in the Credit Agreement.
2. Please be advised that the Canadian Borrowers are requesting the
Canadian Lenders to create Bankers' Acceptances in the aggregate amount of
C$__________________on_____________,_______for a period of _____________ [insert
from 30 up to 180] days.
3. The representations and warranties made by the Credit Parties in any
Credit Document are true and correct in all material respects at and as if made
on the date of the requested Bankers' Acceptance except for representations and
warranties expressly stated to relate to a specific earlier date, in which case
such representations and warranties are true and correct in all material
respects as of such earlier date.
4. No Default or Event of Default exists or shall be continuing either
prior to or after giving effect to the Bankers' Acceptance requested by this
Bankers' Acceptance Notice.
5. No Material Adverse Effect has occurred since the Closing Date.
6. Immediately after giving effect to the Bankers' Acceptances requested
by this Bankers' Acceptance Notice, the sum of (a) U.S. Revolving Loans
outstanding plus Canadian Revolving Loans outstanding plus LOC Obligations
outstanding plus BA Obligations will not exceed the lesser of the Total
Borrowing Base or $140,000,000; (b) U.S. Revolving Loans outstanding plus LOC
Obligations will not exceed the lesser of the U.S. Borrowing Base and the U.S.
Revolving Loan Commitment; and (c) the sum of Canadian Revolving Loans
outstanding plus BA Obligations will not exceed the lesser of the Canadian
Borrowing Base and the Canadian Revolving Loan Commitment.
G-1
[CANADIAN BORROWER(S)]
By:_________________________
Name:_______________________
Title:______________________
G-2
EXHIBIT H-l
FORM OF
U.S. SECURITY AGREEMENT
[TO BE DELIVERED SEPARATELY]
X-0-0
XXXXXXX X-0
XXXX XX
XXXXXXXX SECURITY AGREEMENT
[TO BE DELIVERED SEPARATELY]
H-2-1
EXHIBIT I-1
FORM OF LOCKBOX LETTER
______________,200_
[Name and Address of Lockbox Bank]
Re: Xxxxxxxx Beach/Xxxxxxx-Silex, Inc.
Ladies and Gentlemen:
We hereby notify you that effective _________________________________,
200_, we have transferred exclusive control of our lock-box account(s) no[s].
____________________________________________(the "Lockbox Accounts]") maintained
with you under the terms of the [Deposit Agreement] attached hereto as Exhibit A
(the "Lockbox Agreement[s]") to Wachovia Bank, National Association, as
Administrative Agent (the "Administrative Agent"), in connection with that
certain Credit Agreement dated as of December_______________, 2002 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among us, the other borrowers party thereto, certain financial institutions
party thereto as lenders (the "Lenders"), the Administrative Agent, ABN AMRO
Bank N.V., Canada Branch, as Canadian Agent, and Key Bank National Association,
as Syndication Agent.
We hereby irrevocably instruct you to make all payments to be made by
you out of or in connection with the Lockbox Account(s) in accordance with the
instructions of the Administrative Agent.
We also hereby notify you that the Administrative Agent shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the Lockbox Account(s), including, without limitation, the right
to specify when payments are to be made out of or in connection with the Lockbox
Account(s).
No funds deposited into the Lockbox Account(s) will be subject to
deduction, set-off, banker's lien or any other right in favor of any other
person than the Administrative Agent, except that you may set-off against the
Lockbox Account(s) the face amount of any check deposited in and credited to
such Lockbox Account(s) which is subsequently returned for any reason. Your
compensation for providing the service contemplated herein shall be mutually
agreed between you and us from time to time and we will continue to pay such
compensation.
I-1-1
Please confirm your acknowledgment of and agreement to the foregoing
instructions by signing in the space provided below
Very truly yours,
XXXXXXXX BEACH/XXXXXXX-SILEX, INC.
By:_______________________________
Name: ____________________________
Title: ___________________________
Acknowledged and agreed
to as of this________day
of_______________, 200_.
[LOCKBOX BANK]
By:_______________________
Name:_____________________
Title:____________________
I-1-2
____________, 200_
[BANK]
[address]
Attention:
Re: Xxxxxxxx Beach/Xxxxxxx-Silex, Inc.
Ladies and Gentlemen:
We refer to account number_______________________(the "Lockbox
Account") maintained with you under the terms of the [Deposit Agreement] between
you and Xxxxxxxx Beach/Xxxxxxx-Silex, Inc. (the "Company") and to the
instructions furnished to you by the Company dated ________________, 200_
regarding the Lockbox Account. Unless you are notified in writing by us to the
contrary, you are hereby authorized to make (upon the order of the Company or
otherwise) any withdrawal, transfer, payment or investment of funds from the
Lockbox Account. Upon such written notification by us, we hereby instruct you
that you shall transfer all collected funds in the Lockbox Account to such
accounts as the Administrative Agent may designate in writing, from time to
time.
Very truly yours,
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:____________________________________
Name: _________________________________
Title: ________________________________
Acknowledged and agreed to as
of this_______day of________, 200_.
[BANK]
By:__________________________________
Name:________________________________
Title:_______________________________
I-1-3
EXHIBIT I-2
FORM OF BLOCKED ACCOUNT AGREEMENT
ACCOUNT CONTROL AGREEMENT
This ACCOUNT CONTROL AGREEMENT ("Agreement") is made and entered into as of this
________day of_____________2002, by and among___________________________________
("Depository Bank"), Xxxxxxxx Beach/Xxxxxxx-Silex, Inc. ("Company"), and
WACHOVIA BANK, NATIONAL ASSOCIATION (either for itself, or as agent for itself
and other lenders, as applicable, referred to as "Lender").
STATEMENT OF FACTS
The Depository Bank acknowledges that as of this date it maintains in the name
of the Company certain deposit accounts. One or more of these deposit accounts
may be served by lockboxes operated by the Depository Bank. Such deposit
accounts and the lockboxes, if applicable, are governed by the terms and
conditions of the Company's signature card and deposit account agreement with
the Depository Bank [INSERT EXACT NAME OF DEPOSIT ACCOUNT AGREEMENT]
(collectively, the "Deposit Agreement"). In consideration of certain financing
provided to the Company by the Lender, the Company hereby informs the Depository
Bank that it has granted to the Lender a security interest in, among other
things, the following (collectively, the "Account Collateral"): the deposit
accounts listed on Exhibit "A" hereto (each an "Account" and collectively, the
"Accounts"), the checks, drafts, instruments and other items at any time
received in any lockbox listed on Exhibit "A" hereto (individually or
collectively as the context shall required referred to as the "Lockbox") or
received directly by the Depository Bank for deposit in any Account (subject to
the specific Lockbox instructions for processing the contents of mail received
in the Lockbox), and electronic funds transfers, cash or other funds deposited
in, credited to, or held for deposit in or credit to, any Account. The checks,
drafts, instruments, cash, and any other items at any time received in the
Lockbox and the checks, drafts, instruments and any other items as well as any
automated clearing house ("ACH") entry, credit from a merchant card transaction
and other electronic funds transfers directed for deposit to or credited to any
Account shall be referred to collectively as "Items Collateral".
The parties desire to enter into this Agreement in order to set forth their
relative rights and duties with respect to the Account Collateral. To the extent
that any conflict may exist between the provisions of any other agreement
between the Company and the Depository Bank and this Agreement, then this
Agreement shall control.
NOW, THEREFORE, in consideration of the mutual covenants herein, as well as
other good and valuable consideration, the parties agree as follows:
STATEMENT OF TERMS
1. The parties agree that the foregoing Statement of Facts is
true and correct, and is incorporated herein by reference.
I-2-1
2. Company hereby authorizes and directs the Depository Bank to
comply, and the Depository Bank agrees to comply, with instructions originated
by the Lender in accordance with this Agreement directing the disposition of
funds from time to time in any Account or as to any other matters relating to
any Account or any of the other Account Collateral without further consent by
the Company, but subject to the terms of this Agreement.
(a) If a Lockbox is listed on Exhibit "A", the Company
has directed some of its customers to remit payments to the Lockbox and other
customers to remit payments directly to an Account by electronic funds transfer.
The Company and the Lender hereby authorize and direct the Depository Bank, and
the Depository Bank hereby agrees unless and until the Depository Bank shall
have received written instructions from the Lender to the contrary, effective as
of the date of this Agreement, all Items Collateral received by the Depository
Bank in a Lockbox, subject to the specific Lockbox instructions for processing
the contents of mail received in the Lockbox, shall be deposited to the Account
listed opposite such Lockbox on Exhibit "A", all other Items Collateral received
directly by the Depository Bank for credit to an Account shall be credited to
such Account, and all available funds in an Account either shall (i)
automatically and without further direction on each business day be remitted, at
the Company's expense, solely to the account of the Lender set forth on Exhibit
"B" hereto, or (ii) be subject to withdrawal or transfer based on instructions
originated by the Lender in accordance with this Agreement. Unless otherwise
instructed by the Lender in writing, none of the officers, agents or other
representatives of the Company or any of its affiliates shall at any time have
any authority to direct the disposition of funds in any Account, or to draw upon
or otherwise exercise any authority or powers with respect to the Lockbox, the
Accounts and all Account Collateral related thereto. The Company and the Lender
hereby authorize and direct the Depository Bank to supply the Company's or the
Lender's endorsement, as appropriate, to any Items Collateral which the
Depository Bank receives and deposits for collection to any Account.
(b) At the Lender's request, the Depository Bank will
furnish in accordance with its standard practices copies of all correspondence,
notices, and account statements (but not canceled checks) or other information
which the Depository Bank is otherwise obligated to send to the Company (by law,
agreement or otherwise) to the Lender by regular U.S. mail at the address
specified below. The Depository Bank also agrees to provide copies of account
statements and operating account balance information and other account
information to the Company, including account balances by telephone and by
computer to the extent practicable and as requested by Company. The Depository
Bank's liability for failure to comply with this paragraph shall not exceed the
cost of providing such information.
3. The Depository Bank has not entered into and will not enter
into any agreement with any person other than the Lender by which the Depository
Bank is obligated for any reason to comply with instructions from such other
person as to the disposition of funds in or from the Accounts other than those
approved in writing by the Lender. The Depository Bank will not agree that any
person other than the Company or the Lender is the Depository Bank's customer
with respect to any Account.
I-2-2
4. The Depository Bank will not exercise or claim any security
interest, lien, right of set-off, deduction, recoupment or banker's lien or any
other interest in or against any Account or any other Account Collateral and the
Depository Bank hereby waives any such interest, right or lien which it may have
against any Account or any of the other Account Collateral, except that the
Depository Bank may offset and charge any Account for the face amount of each
Returned Item (as that term is hereinafter defined), and may offset and charge
such Accounts for all service charges, fees, expenses, adjustments or correction
of posting or encoding errors and other items normally chargeable to any
Account, whether incurred before or after the date of this Agreement. As used in
this Agreement, "Returned Item" means (i) any Items Collateral deposited to any
Account either before or after the date of this Agreement and returned unpaid,
or otherwise uncollected, whether for insufficient funds or for any other
reason, within 60 days of such deposit; (ii) any Items Collateral subject to a
claim against Depository Bank of breach of transfer or presentment warranty
under the Uniform Commercial Code, as adopted in the applicable state; (iii) any
ACH entry credited to any Account and returned unpaid or subject to an
adjustment entry under applicable clearing house rules, whether for insufficient
funds or for any other reason, within 15 days of such entry being made; (iv) any
credit to any Account from a merchant card transaction, against which a
contractual demand for chargeback has been made; and (v) any credit to any
Account made in error. Depository Bank shall promptly charge the Account(s) for
such Returned Items, fees and expenses, adjustments and corrections.
(a) If there are insufficient funds in the Accounts or
accounts designated to pay such amounts, or if the Depository Bank in
good faith believes that any legal process or applicable law prohibits
contact with the Company and/or such charges or offsets against such
Account or Accounts, or the Account or Accounts are closed, then the
Depository Bank may charge any of the other Accounts and/or the
Depository Bank may demand that the Lender pay and the Lender agrees to
pay the Depository Bank within thirty (30) business days of written
notice of demand the following: (i) normal and customary service
charges, fees, expenses, adjustments or correction of posting or
encoding errors (including reasonable attorney fees actually incurred
in connection with enforcement by the Depository Bank of the
obligations of the Lender hereunder) and other items normally
chargeable to the Accounts, (ii) the face amount of each Returned Item,
and (iii) any overdrafts in the Accounts.
(b) The Company agrees to reimburse the Lender for any
monies that the Lender forwards to the Depository Bank in settlement
and satisfaction of any charges and amounts as detailed above and the
Lender may, at its option, charge the loan account of the Company any
such amounts. In the absence of gross negligence or willful misconduct
on the part of the Depository Bank, the Company shall bear all risk of
loss associated with any Account. The Depository Bank reserves the
right to charge any Account regardless of any agreement to be
compensated by means of balances.
5. (a) This Agreement may be terminated by the Company but
only with the express prior written consent of the Lender, and in that
case the Lender and the Company shall jointly notify the Depository
Bank of such termination. This Agreement may be terminated by the
Lender at any time upon its delivery of written notice of such
termination to the Depository Bank.
I-2-3
(b) This Agreement may be terminated by the Depository
Bank at any time on not less than thirty (30) days' prior written
notice of such intention delivered by it to each of the Company and the
Lender.
(c) Upon any termination of this Agreement, all funds
remaining in the Accounts, shall be forwarded by the Depository Bank
directly to the Lender or to the Lender's account specified in
paragraph 2(a) above, if applicable, unless written notification in
accordance with paragraph 8 is received by the Depository Bank from the
Lender prior to the expiration of the thirty (30) day period set forth
in paragraph 5(b) above directing that such funds should be sent to
another depository institution approved by the Lender and the Company.
6. The Depository Bank shall be entitled to rely conclusively
upon any notice or instruction it receives from the Lender and the Depository
Bank shall have no obligation to investigate or verify the authenticity or
correctness of any such notice or instruction. The Depository Bank shall have no
liability to the Company for the Depository Bank's honoring of any instructions
or directions regarding any Account or other Account Collateral which the
Depository Bank receives from the Lender, and the Depository Bank shall be fully
discharged from liability with respect to any funds on deposit in any Account to
the extent it honors such instructions and transfers same to or at the direction
of the Lender. The Depository Bank will use due care in performing its duties
and responsibilities and shall only be responsible for any loss which the
Company or the Lender sustains to the extent that such loss is proximately
caused by the Depository Bank's willful misconduct or gross negligence. The
Depository Bank shall have no liability to any party for failure of, or delay in
its performance under this Agreement as a result of any act of God, fire, other
catastrophe, electrical or computer failure, any events beyond the control of
the Depository Bank or fraud committed by third parties.
7. The Company hereby agrees to indemnify the Depository Bank and
hold it harmless against any loss, damage or expense, including but not limited
to unpaid charges, fees, and Returned Items for which the Lender and/or the
Company originally received the benefit (including reasonable attorney's fees,
court costs and other litigation expenses), which it may suffer as a direct
result of the Depository Bank's entering into this Agreement, honoring any
instructions or directions it receives from the Lender with respect to the
Lockbox, any Account and the Account Collateral during the term of this
Agreement or, to the extent required by this Agreement, not honoring any
instructions it receives from the Company with respect to the Lockbox, any
Account and the Account Collateral during the term of this Agreement, except in
the event of the Depository Bank's gross negligence or willful misconduct. In no
event shall any party be liable to any other party for lost profits or special,
indirect, exemplary, consequential or punitive damages, even if it shall have
been advised of the possibility of such damages.
8. All notices or other communications required or provided
under this Agreement shall be in writing and shall be sent to each party at its
respective address and be issued by or directed to the designated officer (the
"Designated Officer") set forth beneath its signature below (or at such other
address and to or by such other Designated Officer as such party may designate
in writing to the other parties). Such notices or communications shall be
effective not more than two (2) banking days (exclusive of the date actually
received) after receipt by the Designated Officer.
I-2-4
9. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
10. This Agreement shall be governed by the laws of the State
where the Accounts are maintained (without giving effect to its conflicts of law
rules), which shall also be the jurisdiction of the Depository Bank for purposes
of the applicable Uniform Commercial Code.
11. This Agreement may be executed in any number of several
counterparts.
12. This Agreement shall only be modified or amended by written
agreement of the parties evidencing such modification or amendment.
13. EXCEPT AS MAY BE PROHIBITED BY APPLICABLE LAW, EACH OF THE
LENDER, THE DEPOSITORY BANK AND THE COMPANY IRREVOCABLY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING ANY COUNTERCLAIM) OF ANY
TYPE IN WHICH THE LENDER, THE DEPOSITORY BANK OR THE COMPANY ARE PARTIES AS TO
ALL MATTERS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT.
[Remainder of the page intentionally left blank]
I-2-5
IN WITNESS WHEREOF, each of the parties has executed and delivered this
Agreement as of the day and year first above set forth.
DEPOSITORY BANK:
_________________________________
By:______________________________
Name:____________________________
Title:___________________________
Address:
Attn:
Fax No:
Phone No.:
COMPANY:
XXXXXXXX BEACH/XXXXXXX-SILEX, INC.
By:______________________________
Name:____________________________
Title:___________________________
Address:
Attn:
Fax No:
Phone No.:
LENDER:
WACHOVIA BANK,
NATIONAL ASSOCIATION
By:______________________________
Name:____________________________
Title:___________________________
Address:
Attn:
Fax No:
Phone No.:
I-2-6
EXHIBIT "A"
ACCOUNTS OF COMPANY
----------------------------------------------------------------------
Related Lockbox State Where Account
Account Number Number (if any) Account Name is Located
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
I-2-7
EXHIBIT "B"
LENDER'S DESIGNATED ACCOUNT
SUNTRUST BANK
[address]
ABA No.
Account No.
Account Name: Wachovia Clearing Account
Reference: Wachovia Bank, National Association/Xxxxxxxx Beach
I-2-8
EXHIBIT X-x
FORM OF
BORROWING BASE CERTIFICATE - CANADA
[TO BE DELIVERED BY XXXXXXXX]
X-0-0
XXXXXXX X-0
FORM OF
BORROWING BASE CERTIFICATE - U.S.
[TO BE DELIVERED BY WACHOVIA]
J-2-1
EXHIBIT K
FORM OF SOLVENCY CERTIFICATE
The undersigned solely in [his] [her] capacity as [title], a Senior
Financial Officer of [name of Credit Party] (the "Company"),
a___________________________, is familiar with the properties, businesses,
assets and liabilities of the Company and is duly authorized to execute this
certificate on behalf of the Company.
Reference is made to that certain Credit Agreement dated as of December
___, 2002 among Xxxxxxxx Beach/Xxxxxxx-Silex, Inc. and certain of its
Subsidiaries (the "Borrowers"), Wachovia Bank, National Association, as
Administrative Agent, ABN AMRO Bank N.V., Canada Branch, as Canadian Agent, and
the Lenders party thereto (as amended or modified from time to time, the "Credit
Agreement"). All capitalized terms used and not defined herein have the meanings
stated in the Credit Agreement.
The undersigned solely in [his] [her] capacity as [title] certifies
that s/he has made such investigation and inquiries as to the financial
condition of the Company as s/he deems necessary and prudent for the purpose of
providing this Certificate. The undersigned acknowledges that the Administrative
Agent and the Lenders are relying on the truth and accuracy of this Certificate
in connection with making of the Loans under the Credit Agreement.
The undersigned certifies that the financial information, projections
and assumptions which underlie and form the basis for the representations made
in this Certificate were reasonable when made and were made in good faith and
continue to be reasonable as of the date hereof.
BASED ON THE FOREGOING, the undersigned certifies that, both before and
after giving effect to the Loans, Bankers' Acceptances and Letters of Credit:
A. The Company and its Subsidiaries, on a consolidated basis, are
able to pay their debts and other liabilities, contingent obligations
and other commitments as they mature in the normal course of business.
B. The Company and its Subsidiaries, on a consolidated basis, do
not intend to, and do not believe that they will, incur debts or
liabilities beyond their ability to pay as such debts and liabilities
mature in their ordinary course.
C. The Company and its Subsidiaries, on a consolidated basis, are
not engaged in any business or transaction, and are not about to engage
in any business or transaction, for which the assets of the Company and
its Subsidiaries, on a consolidated basis, would constitute
unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Company and its
Subsidiaries are engaged or are to engage.
D. The present fair saleable value of the consolidated assets of
the Company and its Subsidiaries is not less than the amount that will
be required to pay the probable liability on the debts of the Company
and its Subsidiaries, on a consolidated basis, as they become absolute
and matured.
K-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_________________________ day of December, 2002, in his/her capacity as the
[title] of the Company.
[CREDIT PARTY]
By:______________________________
Name:____________________________
Title:___________________________
K-2
EXHIBIT L
FORM OF
COMPLIANCE CERTIFICATE
[Letterhead of Company]
[Date]
Wachovia Bank, National Association
as Administrative Agent for the Lenders
000 Xxxxx Xxxxxxx Xxxxxx XX-0
Xxxxxxxxx, XX 00000
Attn: Syndication Agency Services
Ladies and Gentlemen:
Solely in my capacity as [Title] of Xxxxxxxx
Beach/Xxxxxxx-Silex, Inc., a Delaware corporation (the "Company"), I hereby
certify to you as follows:
(a) I am the duly elected [Title] of the Company and, therefore, a
Senior Financial Officer (as defined in the Credit Agreement referred to below).
Capitalized terms used but not otherwise defined in this Certificate shall have
the meanings assigned to them in the Credit Agreement dated as of December ____,
2002 among Xxxxxxxx Beach/Xxxxxxx-Silex, Inc. and certain of its Subsidiaries
(the "Borrowers"), Wachovia Bank, National Association, as Administrative Agent,
ABN AMRO Bank N.V., Canada Branch, as Canadian Agent, and the Lenders party
thereto (as amended or modified from time to time, the "Credit Agreement").
(b) I have reviewed the terms of the Credit Agreement, and have
made, or have caused to be made under my supervision, a review in reasonable
detail of the transactions and the condition of the Consolidated Group during
the immediately preceding [month] [fiscal quarter] [fiscal year].
(c) The review described in paragraph (b) above did not disclose
the existence during or at the end of such period, and I have no knowledge of
the existence as of the date hereof, of any condition or event which constitutes
a Default or an Event of Default. [IF ANY DEFAULT OR EVENT OF DEFAULT DOES EXIST
SPECIFY THE NATURE AND EXTENT THEREOF AND WHAT ACTION THE BORROWERS PROPOSE TO
TAKE WITH RESPECT THERETO]
(d) Based on the review described in paragraph (b) above, no
Consolidated Party at any time during or at the end of such period did any of
the following:
1. Contracted, created, incurred, assumed or permitted
to exist any Indebtedness. [LIST EXCEPTIONS, IF ANY, AND
PROVIDE EVIDENCE OF COMPLIANCE WITH SECTION 9.1 OF THE CREDIT
AGREEMENT]
2. Contracted, created, incurred, assumed or permitted
to exist any Lien with respect to any of its Property, other
than Permitted Liens.
3. Substantively altered the character of its business
in any material respect from that conducted by it as of the
Closing Date.
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4. Entered into any transaction of merger, amalgamation
or consolidation or dissolved, liquidated, or wound up its
affairs. [LIST EXCEPTIONS, IF ANY, AND PROVIDE EVIDENCE OF
COMPLIANCE WITH SECTION 9.4 OF THE CREDIT AGREEMENT]
5. Conveyed, sold, leased (as lesser), assigned,
transferred or otherwise disposed of any assets (including the
Capital Stock of any Subsidiary of the Company). [LIST
EXCEPTIONS, IF ANY, AND PROVIDE EVIDENCE OF COMPLIANCE WITH
SECTION 9.5 OF THE CREDIT AGREEMENT]
6. Entered into any transaction or series of
transactions with any officer, director, shareholder,
Subsidiary or Affiliate of any Consolidated Party other than
(a) upon terms and conditions that would be obtainable in a
comparable arm's-length transaction with a Person other than
an Affiliate and which are approved by the board of directors
(or managers, as applicable) of the applicable member of the
Consolidated Group and fully disclosed to the Administrative
Agent if outside the ordinary course of the business of the
Consolidated Group and (b) as otherwise permitted under
Section 9.7 of the Credit Agreement.
7. Sold, transferred or otherwise disposed of, any
shares of Capital Stock of any of its Subsidiaries, or
permitted any of its Subsidiaries to issue, sell or otherwise
dispose of, any shares of Capital Stock of any of its
Subsidiaries.
8. Changed its fiscal year.
9. Made any Investments, other than the following
Permitted Investments:
[DESCRIBE ANY PERMITTED INVESTMENTS]
10. Made any Restricted Payments. [LIST EXCEPTIONS, IF
ANY, AND PROVIDE EVIDENCE OF COMPLIANCE WITH SECTION 9.11 OF
THE CREDIT AGREEMENT]
11. Opened or maintained any checking, savings or other
accounts at any bank or other financial institution, or any
other account where money is or may be deposited or maintained
with any Person, other than as permitted under Section 9.12 of
the Credit Agreement.
12. Either (a) amended, modified, cancelled or terminated
or permitted the amendment, modification, cancellation or
termination of any of the Material Contracts if the same could
reasonably be expected to have a Material Adverse Effect, or
(b) amended or modified, or permitted the amendment or
modification of the Articles or Certificate of Incorporation,
operating agreement or other equivalent organizational
document if such amendment or modification would adversely
affect the interests of the Administrative Agent or the
Lenders.
13. Created or otherwise caused or suffered to exist or
become effective, directly or indirectly, (a) any prohibition
or restriction (including any agreement to provide equal and
ratable security to any other Person in the event a Lien is
granted to or for the benefit of the Administrative Agent and
the Lenders) on the creation or existence of any Lien upon the
assets of any Credit Party, other than Permitted Liens or (b)
any contractual obligation which may restrict or inhibit the
Administrative Agent's rights or ability to sell or otherwise
dispose of the Collateral or any part thereof after the
occurrence and
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during the continuance of an Event of Default, except for (i)
customary provisions in licenses, leases and other contracts
restricting the assignment or sale thereof or of the assets or
property subject thereto and (ii) restrictions and conditions
imposed by law.
14. Effected or permitted any change in or amendment to
any document or instrument pertaining to the subordination,
terms of payment or required prepayments of any Subordinated
Debt, effected or permitted any change in or amendment to any
document or instrument pertaining to the covenants or events
of default of any Subordinated Debt, given any notice of
optional redemption or optional prepayment or offered to
repurchase under any such document or instrument, or, directly
or indirectly, made any payment of principal of or interest on
or in redemption, retirement or repurchase of any Subordinated
Debt, other than as permitted under Section 9.15 of the Credit
Agreement.
15. Entered into licenses of, or otherwise restricted the
use of, any material patents, trademarks or copyrights which
would prevent any Credit Party from selling, transferring,
encumbering or otherwise disposing of any such patent,
trademark or copyright.
16. Created or otherwise caused, incurred, assumed,
suffered or permitted to exist or become effective any
consensual encumbrance or restriction of any kind on the
ability of any Credit Party to (a) pay dividends or make any
other distribution on any of its Capital Stock, (b) pay any
Indebtedness owed to another Credit Party, (c) make loans or
advances to another Credit Party, or (d) transfer any of its
property to any other Credit Party, other than as permitted
under Section 9.17 of the credit Agreement.
17. Sold or issued, or permitted any of its Subsidiaries
to sell or issue, any Capital Stock having a preference over
the common stock of such Person if such preferred Capital
Stock would constitute Indebtedness under the Credit
Agreement.
18. Entered into any arrangement, directly or indirectly,
whereby it has sold or transferred any property owned by it to
a Person (other than the Company or any Subsidiary of the
Company) in order then or thereafter to lease such property or
lease other property which it intends to use for substantially
the same purpose as the property being sold or transferred,
other than in connection with the Mexican Property Financing.
19. Changed its corporate name, or transacted business
under any trade name, style, or fictitious name, other than
those previously described to you and set forth in the Credit
Agreement.
20. Changed the jurisdiction of its formation or the
location of its chief executive office or established any new
Collateral locations.
21. Completed any equity issuance or otherwise changed
its capital structure.
22. Changed the terms upon which it sells goods(including
sales on consignment) or provides services, nor has any vendor
or trade supplier to any of the Borrowers during or at the end
of such month decreased the terms upon which it supplies goods
to any of such Borrowers, in any manner that could reasonably
be expected to have a Material Adverse Effect.
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23. Obtained knowledge of the occurrence of any of the
following with respect to a Credit Party (A) the pendency or
commencement of any litigation, arbitral or governmental
proceeding against such Credit Party which, if adversely
determined, could reasonably be expected to have, a Material
Adverse Effect, (B) any levy of an attachment, execution or
other process against the assets of a Credit Party having a
value of $500,000 or more, (C) the occurrence of an event or
condition which shall constitute a default or event of default
under any Indebtedness of a member of the Consolidated Group
in excess of $500,000, (D) any development in the business or
affairs of any member of the Consolidated Group which has
resulted in, or which the Company reasonably believes may
result in, a Material Adverse Effect, or (E) the receipt of
written notice by any Credit Party of potential liability or
responsibility for violation, or alleged violation of any
applicable federal, foreign, state, provincial or local law,
rule or regulation, including but not limited to,
Environmental Laws, the violation of which could reasonably be
expected to have a Material Adverse Effect.
(e) The Leverage Ratio for the most recently ended fiscal quarter
was _______: l.OO, as computed on Attachment 1 hereto.
The maximum Leverage Ratio permitted pursuant to Section 8.1 of the
Credit Agreement is 4.25:1.00 and, accordingly, the Consolidated Group [has][has
not] complied with the Leverage Ratio covenant.
(f) The Fixed Charge Coverage Ratio [MOST RECENTLY ENDED FISCAL
MONTH] WAS_________: 1.00, as computed on Attachment 1 hereto.
The minimum Fixed Charge Coverage Ratio permitted pursuant to Section
8.2 of the Credit Agreement is 1.20:1.00 and, accordingly, the Consolidated
Group [has][has not] complied with the Fixed Charge Coverage Ratio covenant.
(g) The aggregate Consolidated Capital Expenditures for the [MOST
RECENTLY ENDED FISCAL YEAR] total $______.
The maximum aggregate Consolidated Capital Expenditures for any fiscal
year permitted pursuant to Section 8.3 of the Credit Agreement is $15,000,000,
plus the lesser of (a) $5,000,000 and (b) fifty percent (50%) of the unused
amount available for Consolidated Capital Expenditures for the immediately
preceding fiscal year (excluding any carry forward available from any prior
fiscal year). Accordingly, the Consolidated Group [has] [has not] satisfied the
Consolidated Capital Expenditures covenant.
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The foregoing certifications are made and delivered this________day
of________________, 2002
Very truly yours,
XXXXXXXX BEACH/XXXXXXX-SILEX, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
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ATTACHMENT 1 TO COMPLIANCE CERTIFICATE
C. Compliance with Section 8.1:
Leverage Ratio
1. Average Consolidated Funded Debt $_________
2. Consolidated Adjusted EBITDA
(See Attached Exhibit A) $_________
3. Leverage Ratio
(Line 1/Line 2) _______ :1.00
C. Compliance with Section 8.2:
Fixed Charge Coverage Ratio
1. Consolidated Adjusted EBITDA
(See Attached Exhibit A) $_________
2. Unfinanced Capital Expenditures $_________
3. Consolidated Cash Taxes $_________
4. Line 1 - Line 2 - Line 3 $_________
5. Consolidated Fixed Charges $_________
6. Fixed Charge Coverage Ratio
(Line 4/Line 5) _______ :1.00
EXHIBIT A to
ATTACHMENT 1
Calculation Schedule to Compliance Certificate
As of ___________________
---------------------------------------------------------------------------------------------------------
Twelve
Months
CONSOLIDATED ADJUSTED EBITDA Ended
_______
---------------------------------------------------------------------------------------------------------
Consolidated Net Income (excluding extraordinary items of gains or loss)
---------------------------------------------------------------------------------------------------------
+ Depreciation
---------------------------------------------------------------------------------------------------------
+ Amortization
---------------------------------------------------------------------------------------------------------
+ Consolidated Interest Expense
---------------------------------------------------------------------------------------------------------
+ Taxes
---------------------------------------------------------------------------------------------------------
+ Non-recurring non-cash charges and expenses
---------------------------------------------------------------------------------------------------------
+ Accruals for long-term deferred compensation
---------------------------------------------------------------------------------------------------------
+ Non-cash charges relating to the xxxx to market provision for Hedging Agreements
---------------------------------------------------------------------------------------------------------
+ Nonrecurring items determined by the Company and acceptable to the Agent (include Pre-
Bankruptcy KMART Account write-offs)
---------------------------------------------------------------------------------------------------------
+ Equity contributions made by Holdings or NACCO
---------------------------------------------------------------------------------------------------------
- Non-recurring non-cash gains
---------------------------------------------------------------------------------------------------------
- Non-cash income relating to the xxxx to market provision for Hedging Agreements
---------------------------------------------------------------------------------------------------------
= ADJUSTED CONSOLIDATED EBITDA
---------------------------------------------------------------------------------------------------------
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EXHIBIT M
FORM OF
ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE dated as of___________,_______is entered
into between _______________________("Assignor") and______________("Assignee").
Reference is made to that certain Credit Agreement dated as of
December___________, 2002 among Xxxxxxxx Beach/Xxxxxxx-Silex, Inc., a Delaware
Corporation, and certain of its Subsidiaries (the "Borrowers"), Wachovia Bank,
National Association, as Administrative Agent, ABN AMRO Bank N.V., Canada
Branch, as Canadian Agent, and the Lenders party thereto (as amended or modified
from time to time, the "Credit Agreement"). All capitalized terms used and not
defined herein shall have the meanings ascribed thereto in the Credit Agreement.
1. The Assignor hereby sells and assigns, without recourse, to
the Assignee, and the Assignee hereby purchases and assumes, without recourse,
from the Assignor, effective as of the Effective Date set forth below, the
interests set forth below (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth below, in the Commitments of the Assignor on the effective
date of the assignment designated below (the "Effective Date") and the Loans and
other extensions of credit owing to the Assignor which are outstanding on the
Effective Date, together with unpaid interest accrued on the assigned Loans and
other extensions of credit to the Effective Date and the amount, if any, set
forth below of the Fees accrued to the Effective Date for the account of the
Assignor. Each of the Assignor and the Assignee hereby makes and agrees to be
bound by all of the representations, warranties and agreements set forth in
Section 14.3(b) of the Credit Agreement, a copy of which has been received by
each such party. From and after the Effective Date (i) the Assignee, if it is
not already a Lender under the Credit Agreement, shall be a party to and be
bound by the provisions of the Credit Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of
the interests assigned by this Assignment and Acceptance, relinquish its rights
(other than any rights it may have pursuant to Section 14.5 of the Credit
Agreement which will survive) and be released from its obligations under the
Credit Agreement (and, in the case of an assignment of all or the remaining
portion of the Assignor's rights and obligations under the Credit Agreement, the
Assignor shall cease to be a party to the Credit Agreement).
2. The Assignor represents and warrants to the Assignee that (i)
it is the legal and beneficial owner of the interest being assigned hereby free
and clear of any adverse claim and (ii) it is legally authorized to enter into
this Assignment and Acceptance. [THE ASSIGNEE REPRESENTS THAT IT IS A TAXABLE
CANADIAN BANK.] [FOR CANADIAN LENDER ASSIGNMENT ONLY]
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
4. Terms of Assignment
(a) Date of Assignment _____________
(b) Legal Name of Assignor _____________
(c) Legal Name of Assignee _____________
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(d) Effective Date of Assignment _____________
(e) U.S. Revolving Loan Commitment
Percentage assigned ___________%
(f) U.S. Revolving Loan Commitment
Percentage of Assignor
after assignment ____________%
(g) Total U.S. Revolving Loans
outstanding as of Effective
Date $____________
(h) U.S. Revolving Loans assigned
on Effective Date (the amount
set forth in (g) multiplied
by the percentage set forth
in(e)) $____________
(i) U.S. Revolving Loan Commitment $____________
(j) Principal amount of U.S.
Revolving Loan Commitment
assigned on the Effective
Date (the amount set forth in
(i) multiplied by the
percentage set forth in (e)) $____________
(k) U.S. Revolving Loan Commitment
of Assignor after Effective Date $____________
(1) U.S. Revolving Loan Commitment
of Assignee after Effective
Date $____________
(m) Canadian Revolving Loan
Commitment Percentage assigned ____________%
(n) Canadian Revolving Loan
Commitment Percentage of
Assignor after assignment ____________%
(o) Total U.S. dollar equivalent
of Canadian Revolving Loans and the
Face Amount of BA Obligations
outstanding as of Effective Date $____________
(p) U.S. dollar equivalent of
Canadian Revolving Loans assigned
on Effective Date (the amount
set forth in (o) multiplied by the
percentage set forth in (m)) $____________
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(q) Canadian Revolving Loan
Commitment $____________
(r) U.S. dollar equivalent of
principal amount of Canadian
Revolving Loan Commitment
assigned on the Effective
Date (the amount set forth in
(q) multiplied by the percentage
set forth in (m)) $____________
(s) Canadian Revolving Loan
Commitment of Assignor after
Effective Date $____________
(t) Canadian Revolving Loan
Commitment of Assignee after
Effective Date $____________
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The terms set forth above are hereby agreed to:
_______________________________, as Assignor
By:____________________________
Name:__________________________
Title:_________________________
_______________________________, as Assignee
By:____________________________
Name:__________________________
Title:_________________________
CONSENTED TO (if applicable):
XXXXXXXX BEACH/XXXXXXX-SILEX, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
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EXHIBIT N
FORM OF JOINDER AGREEMENT
THIS BORROWER JOINDER AGREEMENT (the "Agreement"), dated as of
_________, 20_, is by and among________________________, a______________________
(the "Applicant Borrower"), XXXXXXXX BEACH/XXXXXXX-SILEX, INC., a Delaware
corporation (the "Company"), certain of the Company's U.S. and Canadian
Subsidiaries (the "Subsidiary Borrowers") and WACHOVIA BANK, NATIONAL
ASSOCIATION, in its capacity as Administrative Agent under that certain Credit
Agreement (as amended and modified, the "Credit Agreement"), dated as of
December_____________________, 2002, by and among the Company and the Subsidiary
Borrowers (collectively, the "Credit Parties"), the Lenders party thereto, the
Administrative Agent and ABN AMRO Bank N.V., Canada Branch, as Canadian Agent.
All capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Credit Agreement.
The Applicant Borrower has indicated its desire to become a
[U.S.][Canadian] Borrower pursuant to the terms of the Credit Agreement.
Accordingly the Applicant Borrower hereby agrees as follows with the
Administrative Agent, for the benefit of the Lenders:
1. The Applicant Borrower hereby acknowledges, agrees and
confirms that, by its execution of this Agreement, the Applicant Borrower will
be deemed to be a party to the Credit Agreement and a "[U.S.][Canadian]
Borrower" for all purposes of the Credit Agreement and the other Credit
Documents, and shall have all of the obligations of a [U.S.][Canadian] Borrower
thereunder as if it has executed the Credit Agreement and the other Credit
Documents. The Applicant Borrower hereby ratifies, as of the date hereof, and
agrees to be bound by, all of the terms, provisions and conditions contained in
the Credit Agreement and in the Credit Documents, including without limitation
(i) all of the representations and warranties of the Credit Parties set forth in
Article VI of the Credit Agreement, as supplemented from time to time in
accordance with the term thereof, and (ii) all of the affirmative and negative
covenants set forth in Articles VII, VIII and IX of the Credit Agreement.
2. The Applicant Borrower hereby acknowledges, agrees and
confirms that, by its execution of this Agreement, the Applicant Borrower will
be deemed to be a party to the Guaranty Agreement, and shall have all of the
obligations of a "Guarantor" (as such term is defined in the Guaranty Agreement)
thereunder as if it had executed the Guaranty Agreement. The Applicant Borrower
hereby ratifies, as of the date hereof, and agrees to be bound by, all of the
terms, provisions and conditions contained in the Guaranty Agreement [FOR U.S.
BORROWERS ONLY].
3. The Applicant Borrower hereby acknowledges, agrees and
confirms that, by its execution of this Agreement, the Applicant Borrower will
be deemed to be a party to the [U.S.][Canadian] Security Agreement, and shall
have all of the obligations of an "Obligor" (as such term is defined in the
[U.S.][Canadian] Security Agreement) thereunder as if it had executed the
[U.S.][Canadian] Security Agreement. The Applicant Borrower hereby ratifies, as
of the date hereof, and agrees to be bound by, all of the terms, provisions and
conditions contained in the [U.S.][Canadian] Security Agreement. Without
limiting the generality of the foregoing terms of this paragraph 3, the
Applicant Borrower hereby grants to the Administrative Agent, for the benefit of
the Lenders, a continuing security interest in, and a right of set off against
any and all right, title and interest of the Applicant Borrower in and to the
Collateral (as such term is defined in Section 2 of the [U.S.][Canadian]
Security Agreement) of the Applicant Borrower to secure the prompt payment and
performance in full when due, whether by lapse of time, acceleration, mandatory
prepayment or otherwise, of the Secured Obligations (as such term is defined in
Section 1 of the [U.S.][Canadian] Security Agreement)
N-1
4. The Applicant Borrower hereby acknowledges, agrees and
confirms that, by its execution of this Agreement, the Applicant Borrower will
be deemed to be a party to the Pledge Agreement, and shall have all of the
obligations of a "Pledgor" (as such term is defined in the Pledge Agreement)
thereunder as if it had executed the Pledge Agreement. The Applicant Borrower
hereby ratifies, as of the date hereof, and agrees to be bound by, all of the
terms, provisions and conditions contained in the Pledge Agreement [FOR U.S.
BORROWERS ONLY].
5. The Applicant Borrower acknowledges and confirms that it has
received a copy of the Credit Agreement and the schedules and exhibits thereto,
the [U.S.][Canadian] Security Agreement and the schedules and exhibits relating
thereto, [the Guaranty Agreement and the Pledge Agreement and the schedules and
exhibits thereto]. The information on the Schedules to the Credit Agreement and
each of the Security Documents is amended to provide the information shown on
the attached Schedule A.
6. Each of the undersigned confirms that all of its obligations
under the Credit Agreement are, and upon the Applicant Borrower becoming a
[U.S.][Canadian] Borrower shall continue to be, in full force and effect. Each
of the undersigned further confirms that immediately upon the Applicant Borrower
becoming a [U.S.][Canadian] Borrower the term "Obligations", as used in the
Credit Agreement, shall include all Obligations of such Applicant Borrower under
the Credit Agreement and under each other Credit Document.
7. The Applicant Borrower hereby agrees that upon becoming a
[U.S.][Canadian] Borrower it will assume all Obligations of a [U.S.][Canadian]
Borrower as set forth in the Credit Agreement. By its execution of this
Agreement, the Applicant Borrower appoints each of_____________________________,
[title] and_________________________, [title], of the Company, to be its
attorneys ("its Attorneys") and in its name and on its behalf and as its act and
deed or otherwise to sign all documents and carry out all such acts as are
necessary or appropriate in connection with executing any Notice of Borrowing,
Notice of Extension/Conversion or any Borrowing Base Certificate or any security
documents (the "Documents") in connection with the Credit Agreement, provided
that such Documents are in substantially the form provided therefor in the
applicable exhibits thereto. This Power of Attorney shall be valid for the
duration of the term of the Credit Agreement. The Applicant Borrower hereby
undertakes to ratify everything which either of its Attorneys shall do in order
to execute the Documents mentioned herein.
8. Each of the undersigned agrees that at any time and from time
to time, upon the written request of the Administrative Agent, it will execute
and deliver such further documents and do such further acts and things as the
Administrative Agent may reasonably request in order to effect the purposes of
this Agreement.
9. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute one contract.
10. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, each of the undersigned has caused this Borrower
Joinder Agreement to be duly executed by its authorized officers, and the
Administrative Agent, for the benefit of the Lenders, has caused the same to be
accepted by its authorized officer, as of the day and year first above written.
APPLICANT BORROWER: [APPLICANT BORROWER]
By:_________________________________
Name:_______________________________
Title:______________________________
COMPANY: XXXXXXXX BEACH/XXXXXXX-SILEX, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
SUBSIDIARY BORROWERS [SUBSIDIARY BORROWER]
By:_________________________________
Name:_______________________________
Title:______________________________
ADMINISTRATIVE AGENT WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:_________________________________
Name:_______________________________
Title:______________________________
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SCHEDULE A
to
Borrower Joinder Agreement
Schedules to Credit Agreement
------------------------------
(to be updated as necessary)
Schedules to [U. S.] [Canadian] Security Agreement
---------------------------------------------------
(to be updated as necessary)
Schedules to Pledge Agreement
-----------------------------
(to be updated as necessary)
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EXHIBIT O
FORM OF PLEDGE AGREEMENT
[TO BE DELIVERED SEPARATELY]
O-1
EXHIBIT P
FORM OF ACCOUNT DESIGNATION LETTER
[Date]
Wachovia Bank, National Association, as Administrative Agent
000 Xxxxx Xxxxxxx Xxxxxx XX-0
Xxxxxxxxx, XX 00000
Attn: Syndication Agency Services
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you by Xxxxxxxx
Beach/Xxxxxxx-Silex, Inc., a Delaware corporation (the "Company"), under the
Credit Agreement dated as of December___, 2002 among the Company and certain of
its Subsidiaries (the "Borrowers"), Wachovia Bank, National Association, as
Administrative Agent, ABN AMRO Bank N.V., Canada Branch, as Canadian Agent, and
the Lenders party thereto (as amended or modified from time to time, the "Credit
Agreement"). All capitalized terms used but not otherwise defined herein shall
have the meanings ascribed thereto in the Credit Agreement.
The Administrative Agent is hereby authorized to disburse all U.S.
Revolving Loan proceeds into the following account, unless the Company shall
designate, in writing to the Administrative Agent, one or more other accounts:
[____________________]
ABA Routing Number [_______]
Account #[_________]
Notwithstanding the foregoing, on the closing date of the Credit
Agreement, funds borrowed under the Credit Agreement shall be sent to the
institutions and/or persons designated on the attached payment instructions.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account
Designation this______day of__________, 2002.
XXXXXXXX BEACH/XXXXXXX-SILEX, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
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EXHIBIT Q
FORM OF
LICENSOR CONSENT
[Licensor letterhead]
[Licensor]
[Address]
Wachovia Bank, National Association, as Administrative Agent
One Wachovia Center
000 Xxxxx Xxxxxxx Xxxxxx, XX-0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx X'Xxxxxx
Xxxxxxxx Beach/Xxxxxxx-Silex, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx, Vice President Customer Operations
RE: Acknowledgement of Security Interest
Gentlemen:
We understand that in order to obtain loans and other financial
accommodations from certain lenders, [APPLICABLE ENTITY] ("Licensee") has agreed
to grant to Wachovia Bank, National Association (as administrative agent for
those lenders (the "Agent")) a security interest in the [TRADEMARK] license
currently in force between us and Licensee, a copy of which is attached as
Exhibit A to this letter ("License Agreement"), to secure such loans and other
financial accommodations. As part of that security interest, the Agent will have
certain rights in the event Licensee defaults or breaches the loan agreements.
You have requested that we acknowledge the existence of the security
interest and the rights that the Agent has pursuant to that security interest.
Accordingly, we acknowledge, confirm and agree that:
(a) there is no current default or event of default under
the License Agreement and the License Agreement is in full force and
effect on the date hereof. Licensee's grant of a security interest to
Agent in the License Agreement will not constitute a default or event
of default on the part of Licensee under the License Agreement;
(b) we will provide the Agent with a copy of any notice
that we give to Licensee under the License Agreement at the address set
forth below, simultaneously with the giving of such notice to Licensee.
The License Agreement will not be terminated unless we have given
notice to the Agent and the Agent has been given the same cure period
as is given to Licensee under the License Agreement;
(c) if Licensee defaults in the performance of any of its
obligations under the License Agreement, the Agent shall have the right
to make good such default within the period set forth in the License
Agreement and we will accept such performance on the part of the Agent
as though the same had been performed by Licensee; and
Q-1
(d) If Licensee is in default of its obligations under
the loan agreements, the Agent may, for a term beginning on the date of
the first sale by Agent of products licensed under License Agreement
and ending 180 days thereafter (with such 180-day term tolled during
any stay imposed on the sale by Agent of such products): (i) sell any
remaining inventory of products licensed under the License Agreement
and manufacture a reasonable quantity of such products for sale to
existing customers from materials then in Licensee's inventory or (ii)
assign the limited right to sell and manufacture in the foregoing
clause to a third party assignee or to any purchaser pursuant to a
private or public foreclosure sale. We will have the right to approve
any third party assignee or other purchaser, with such approval not to
be unreasonably withheld. All of the other covenants, conditions and
restrictions set forth in the License Agreement shall remain in full
force and effect, and all amounts then due and owing to us under the
License Agreement shall be paid concurrently with the granting of any
such approval by us. We acknowledge that Agent has a first priority
lien on any inventory or products produced under the authority of this
paragraph and we will not assert any rights in the inventory or
products that are superior or equal to the Agent's rights in such
inventory or products.
Sincerely,
[Licensor]
LICENSEE:
[NAME]
By:____________________________
Name:__________________________
Title:_________________________
AGENT:
WACHOVIA BANK, NATIONAL ASSOCIATION
By:____________________________
Name:__________________________
Title:_________________________
Q-2
EXHIBIT R
FORM OF
HOLDINGS PLEDGE AGREEMENT
[to be delivered separately]
R-1
EXHIBIT S
FORM OF
SUBORDINATED NOTE
PAYMENT WITH RESPECT TO THIS NOTE IS SUBJECT TO CERTAIN SUBORDINATION
PROVISIONS SET FORTH IN SECTION 3 HEREIN. THIS NOTE WAS ORIGINALLY
ISSUED ON ___________, 200_ AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY COMPARABLE STATE SECURITIES
LAW. [THE________ AGREEMENT DATED _______________, 2002 (THE
"AGREEMENT") BY AND AMONG XXXXXXXX BEACH/XXXXXXX-SILEX, INC. (THE
"COMPANY") AND ______________________ (THE "AFFILIATE") CONTAINS TERMS
GOVERNING THE RIGHTS OF THE HOLDER OF THIS NOTE, AND ALL PROVISIONS OF
THE AGREEMENT ARE HEREBY INCORPORATED HEREIN BY REFERENCE. A COPY OF
THE AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S
PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.]
XXXXXXXX BEACH/XXXXXXX-SILEX, INC.
SUBORDINATED PROMISSORY NOTE
__________, 200_ $[_________]
XXXXXXXX BEACH/XXXXXXX-SILEX, INC. (the "Company") hereby promises to
pay to the order of [_____________] the principal amount of $[__________],
together with interest thereon calculated from the date hereof in accordance
with the provisions of this Note.
This Subordinated Promissory Note (this "Note") is issued to___________
(the "Affiliate") in connection with the consummation of the transactions
contemplated by the __________________________Agreement dated as of the date
hereof by and among the Affiliate and the Company.
1. Interest. Interest shall accrue on a daily basis at
[__________]% per annum [NOT TO EXCEED TEN PERCENT] on the sum of (a) the unpaid
principal amount of this Note then outstanding and (b) all interest which was
accrued and unpaid as of the immediately preceding Interest Reference Date. For
purposes of this Note, the last day of each_________________________,
beginning_________________________, 200_, shall be an "Interest Reference Date."
Any accrued interest which for any reason has not theretofore been paid shall be
paid in full on the date on which the final principal payment on this Note is
made. Notwithstanding the foregoing, interest shall be paid only if; and to the
extent, such payment is permitted by Section 3 hereof.
2. Payment of Principal on Note.
(a) Scheduled Payment. The Company shall pay the
principal amount of $[_____] (or such lesser principal amount
then outstanding) to the holder of this
Note on________________________, 200_ [MATURITY NOT TO OCCUR EARLIER
THAN JUNE 31, 2006], together with all accrued and unpaid interest on
the principal amount being repaid.
(b) Prepayments. The Company may, at any time and from
time to time without premium or penalty, prepay all or any portion of
the outstanding principal amount of, or interest on, the Notes;
provided that such prepayment is not prohibited by the provisions of
Section 3 hereof. In connection with each prepayment of principal
hereunder, the Company shall also pay all accrued and unpaid interest
on the principal amount of the Notes being repaid.
3. Subordination: Restrictions on Payment.
(a) Anything in this Note to the contrary
notwithstanding, the obligations of the Company in respect of the
principal, interest, fees and charges on this Note shall be subordinate
and junior in right of payment, to the extent and in the manner
hereinafter set forth, to all Senior Debt.
(b) In the event that the Company makes a general
assignment for the benefit of creditors; or an order, judgment or
decree is entered adjudicating the Company bankrupt or insolvent; or
any order for relief with respect to the Company is entered under the
Federal Bankruptcy Code; or the Company petitions or applies to any
tribunal for the appointment of a custodian, trustee, receiver or
liquidator of the Company or of any substantial part of the assets of
the Company, or commences any proceeding relating to the Company under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any jurisdiction; or any
such petition or application is filed, or any such proceeding is
commenced, against the Company (collectively referred to as an
"Insolvency Event"), or upon any acceleration of Senior Debt, then:
(i) the holders of the Senior Debt shall be
entitled to receive payment in full in cash of all principal,
premium, interest, fees, charges and other amounts then due on
all Senior Debt (including interest, fees, charges and other
amounts accruing thereon after the commencement of any such
Insolvency Event at the rate provided in the documentation for
such Senior Debt (irrespective of whether such interest, fees,
charges or other amounts are allowed as a claim in such
proceedings)) before the holder of this Note is entitled to
receive any payment of any kind or character on account of
principal, interest or other amounts due (or past due) upon
this Note, and the holders of the Senior Debt shall be
entitled to receive for application in payment thereof any
payment or distribution of any kind or character, whether in
cash, property or securities or by set-off or otherwise, which
may be payable or deliverable in any such proceedings in
respect of this Note; and
(ii) any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, to which the holder of this Note would be entitled
except for the provisions of this Section 3(b) shall be paid
or delivered by the Company (or any receiver or trustee in
such proceedings) directly to the holders of the Senior Debt
or their duly appointed agents for application of payment
according to the priorities of the Senior Debt and ratably
among the holders of any class of Senior Debt until all Senior
Debt (including
interest, fees, charges and other amounts accrued thereon
after the date of commencement of such proceedings at the rate
provided in the documentation for such Senior Debt
(irrespective of whether such interest, fees, charges or other
amounts are allowed as a claim in such proceedings)) shall
have been paid in full in cash.
(c) In any proceedings with respect to any Insolvency
Event, or the application of the assets of the Company to the payment
or liquidation thereof; or upon the dissolution or other winding up of
the business of the Company or upon the sale of all or substantially
all of the assets of the Company, then, and in any such event, (A) each
holder of the Senior Debt shall be entitled to receive full and
indefeasible payment and satisfaction in cash of the Senior Debt prior
to the payment of all or any part of the Subordinated Debt by the
Company, and (B) any payment or distribution of any kind or character
from the Company, or either, of its assets, whether in cash, securities
or other property, which shall be payable or deliverable upon or with
respect to any or all of the Subordinated Debt, shall be paid or
delivered directly to holders of the Senior Debt for application to the
Senior Debt, due or not due, until such Senior Debt shall have first
been fully and indefeasibly paid in cash and satisfied and all
financing arrangements terminated. The holder of this Note irrevocably
authorizes, empowers and directs all receivers, trustees, liquidators,
custodians, conservators and others having authority in the premises to
effect all such payments and distributions. The holder of this Note
agrees not to initiate or prosecute or encourage any other person to
initiate or prosecute any claim, action or other proceeding challenging
the enforceability of the Senior Debt or any liens and security
interests securing the Senior Debt. The holder of this Note agrees to
execute, verify, deliver and file any proofs of claim in respect of the
Subordinated Debt in connection with any such proceeding, it being
understood that the holder of this Note retains his her or its right to
vote such claims in any such proceeding. The Senior Debt shall continue
to be treated as Senior Debt and the provisions of this Note shall
continue to cover the relative rights and priorities of Lenders and the
holder of this Note even if all or part of the Senior Debt or the
security interests securing the Senior Debt are subordinated, set
aside, avoided or disallowed in connection with any such proceeding and
this Note shall be reinstated if at any time any payment of any of the
Senior Debt is rescinded or must otherwise be returned by any holder of
Senior Debt or any representative of such holder.
(d) No payment or prepayment of principal, interest or
other amounts on this Note shall be made by or on behalf of the Company
if any Senior Debt remains outstanding or any commitment to fund Senior
Debt is still in effect (collectively, the "Blockage Events"). Upon
termination of the Blockage Events, the Company shall resume making
payments pursuant to the terms and conditions of this Note.
(e) Except as permitted herein, no holder of the
Subordinated Debt will, except as otherwise agreed to by the holders of
Senior Debt, ask, demand, xxx for, take or receive from the Company, by
set off or in any other manner, the whole or any part of the
Subordinated Debt (whether such amounts represent principal or
interest, or obligations which are due or not due, including costs,
fees and expenses with respect to the Notes, direct or indirect,
absolute or contingent), including, without limitation, the taking of
any negotiable instruments evidencing such Subordinated Debt nor any
security for any Subordinated Debt, unless and until all Senior Debt,
whether now existing or hereafter arising directly between the Company
and any holder of the Senior Debt, or acquired
outright, conditionally or as collateral security from another by any
holder the Senior Debt, shall have been fully and indefeasibly paid in
foil in cash and satisfied and all financing arrangements between the
Company and all holders of the Senior Debt have been terminated.
(f) The holders of Senior Debt may, at any time, in their
discretion, renew, amend, extend or otherwise modify the terms and
provisions of Senior Debt so held or exercise any of their rights under
the Senior Debt including, without limitation, the waiver of defaults
thereunder and the amendment of any of the terms or provisions thereof
(or any notice evidencing or creating the same), all without notice to
or assent from the holder of this Note. No compromise, alteration,
amendment, renewal or other change of; or waiver, consent or other
action in respect of any liability or obligation under or in respect
of; any terms, covenants or conditions of the Senior Debt (or any
instrument evidencing or creating the same), whether or not such
release is in accordance with the provisions of the Senior Debt (or any
instrument evidencing or creating the same), shall in any way alter or
affect any of the subordination provisions of this Note.
(g) If, notwithstanding the provisions of Section 3 of
this Note, any payment or distribution of any kind or character
(whether in cash, securities or other property) or any security shall
be received by the holder of this Note in contravention of this Section
3, such payment, distribution or security shall be held in trust for
the benefit of; and shall be immediately paid over or delivered or
transferred to, the holders of the Senior Debt. Any such payments
received by the holder of this Note and not delivered to the holders of
the Senior Debt shall be deemed not to be a payment on this Note for
any reason whatsoever and the indebtedness under this Note shall remain
as if such payment had never been paid by the Company or received by
the holder of this Note. In the event of the failure of any holder of
this Note to endorse or assign any such payment, distribution or
security, each holder of any Senior Debt is hereby irrevocably
authorized to endorse or assign the same.
(h) No present or future holder of Senior Debt shall be
prejudiced in its right to enforce the provisions of Section 3 of this
Note by any act or failure to act on the part of the Company.
(i) If there shall exist (i) any Blockage Event, or (ii)
any Event of Default under this Note, the holder of this Note shall not
take or continue any action, or exercise or continue to exercise any
rights, remedies or powers under the terms of this Note, or exercise or
continue to exercise any other right or remedy at law or equity that
such holder might otherwise possess, to collect any amount due and
payable in respect of this Note, including, without limitation, the
acceleration of this Note), the commencement of any foreclosure on any
lien or security interest, the filing of any petition in bankruptcy or
the taking advantage of any other insolvency law of any jurisdiction,
unless and until the Senior Debt shall have been fully and finally
paid, in cash, and satisfied, unless the holders of the Senior Debt
shall have accelerated the maturity of the Senior Debt, in an amount in
excess of $1,000,000, in which case the holder of this Note shall be
entitled to accelerate the maturity hereof but shall not be entitled to
take any other action described above and, provided further, that the
holder of this Note acknowledges and agrees that the acceleration of
this Note shall immediately be reversed if and when (A) one or more
holders of Senior Debt take similar action which results in the
aggregate amount of Senior Debt to be accelerated to be less than
$1,000,000 or (B) such accelerated Senior
Debt is fully and finally paid in cash. Notwithstanding the foregoing
or any permissible action taken by the holder of this Note, the holder
of this Note shall not be entitled to receive any payment in
contravention of the other provisions of this Section 3, including
without limitation Sections 3(b), 3(d) and 3(g).
(j) If any payment or distribution to which any holder of
this Note would otherwise have been entitled but for the provisions of
this Section 3 shall have been applied, pursuant to the provisions of
this Section 3, to the payment of Senior Debt, then and in such case
and to such extent, the holder of this Note (A) following payment in
full of the Senior Debt in cash, shall be entitled to receive any and
all further payments or distributions applicable to Senior Debt, and
(B) following payment in full of the Senior Debt in cash, shall be
subrogated to the rights of the holders of the Senior Debt to receive
distributions applicable to the Senior Debt, in each case until this
Note shall have been paid in full in cash or such other consideration
acceptable to the Holder of this Note in its sole discretion. If any
holder of this Note has been subrogated to the rights of the holders of
Senior Debt due to the operation of this Section 3(j), the Company
agrees to take all such reasonable actions as are requested by such
holder of this Note in order to cause such holder to be able to obtain
payments from the Company with respect to such subrogation rights as
soon as possible.
(k) Until payment in full in cash of the Senior Debt, the
holder of this Note will not ask, demand, accept, receive or retain any
guarantee of this Note, or any collateral security for the payment of
this Note, or any other form of payment assurance as to this Note, from
the Company or any Subsidiary of the Company, except only the
obligation of the Company evidenced by this Note, and will not initiate
or prosecute, or encourage any other person to initiate or prosecute
any claim or other proceeding.
(l) The provisions of this Section 3 are solely for the
purpose of defining the relative rights of the holders of Senior Debt,
on the one hand, and the holder of this Note on the other, against the
Company and its assets, and nothing herein is intended to or shall
impair, as between the Company and the holder of this Note, the
obligations of the Company which are absolute and unconditional, to pay
to the holder the principal and interest on this Note as and when they
become due and payable in accordance with their terms, or is intended
to or will affect the relative rights of the holder of this Note and
creditors of the Company other than the holders of the Senior Debt,
nor, except as provided in this Section 3, will anything herein or
therein prevent the holder of this Note from exercising all remedies
otherwise permitted by applicable law upon default under this Note
subject to the rights, if any, under this Section 3 of the holders of
Senior Debt in respect of cash, property or securities of the Company
received upon the exercise of any such remedy and subject to this
Section 3.
(m) The holders of Senior Debt have made loans and
extended credit to the Company in reliance on this Section 3 and
Section 7 and are entitled to the benefits of the provisions thereof.
Accordingly, any holder of Senior Debt shall be entitled to enforce any
provisions of such Sections against the holder and/or the Company.
4. Events of Default.
(a) Definition. For purposes of this Note, an Event of
Default shall be deemed to have occurred if
(i) the Company fails to pay when due and
payable (whether at maturity or otherwise) the full amount of
interest then accrued on any Note or the full amount of any
principal payment on any Note, and such failure to pay is not
cured within thirty business days after the occurrence
thereof; or
(ii) the Company makes an assignment for the
benefit of creditors or admits in writing its inability to pay
its debts generally as they become due; or an order, judgment
or decree is entered adjudicating the Company bankrupt or
insolvent; or any order for relief with respect to the Company
is entered under the Federal Bankruptcy Code; or the Company
petitions or applies to any tribunal for the appointment of a
custodian, trustee, receiver or liquidator of the Company, or
of any substantial part of the assets of the Company, or
commences any proceeding relating to the Company under any
bankruptcy reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction; or any such petition or application is filed, or
any such proceeding is commenced, against the Company and
either (A) the Company by any act indicates its approval
thereof; consent thereto or acquiescence therein or (B) such
petition, application or proceeding is not dismissed within 90
days.
The foregoing shall constitute Events of Default whatever the reason or cause
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
(b) Consequences of Events of Default. Subject to Section 3:
(i) If any Event of Default of the type described in
Section 4(a)(i) has occurred and is continuing, the interest rate on
this Note shall increase immediately by an increment of two percentage
points (2%) to the extent permitted by law. Any increase of the
interest rate resulting from the operation of this subparagraph shall
terminate as of the close of business on the date on which no Events of
Default exist (subject to subsequent increases pursuant to this
subparagraph).
(ii) Subject to Section 3 hereof; if any Event of Default
of the type described in Section 4(a)(i) has occurred and is
continuing, the holder of this Note may declare all or any portion of
the outstanding principal amount of this Note (together with all
accrued but unpaid interest thereon and all other amounts due in
connection therewith) due and payable and demand immediate payment
thereof.
(iii) Subject to Section 3 hereof; if an Event of Default
of the type described in Section 4(a)(ii) has occurred, the principal
amount of this Note (together with all accrued interest thereon and all
other amounts due and payable with respect thereto) shall become
immediately due and payable without any action on the part of the
holder of this Note, and the Company shall immediately pay to the
holder of this Note all amounts due and payable with respect to this
Note.
(iv) Subject to Section 3 hereof; the holder of this Note
shall also have any other rights which such holder may have been
afforded under any contract or agreement at any time and any other
rights which such holder may have pursuant to applicable law.
(v) The Company hereby waives diligence, presentment,
protest and demand and notice of protest and demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any
payment hereunder, may be extended from time to time and that the
holder hereof may accept security for this Note or release security for
this Note, all without in any way affecting the liability of the
Company hereunder.
5. Definitions. For purposes of the Notes, the following
capitalized terms shall have the following meanings:
"Credit Agreement" means that certain Credit Agreement dated as of
December____, 2002; by and among the Company and certain of its subsidiaries,
Wachovia Bank, National Association, as Administrative Agent, and certain other
lenders (the "Lenders") and agents party thereto.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Senior Debt" means (i) indebtedness under the Credit Agreement,
including, without limitation, principal, reimbursement obligations under
letters of credit, bankers acceptances, interest rate protection agreements, and
similar obligations, interest accruing before and after any Insolvency Event at
the rate provided in the documentation with respect thereto (irrespective of
whether such interest is allowed as a claim in any such proceeding), premiums,
penalties, fees, indemnities or expenses, and regardless of whether direct or
indirect, now existing or hereafter arising, absolute or contingent, secured or
unsecured, or long or short term, (ii) obligations arising under guarantees
executed by the Company or any of its Subsidiaries of items described in (i)
above, and (iii) renewals, extensions, refundings, refinancings, deferrals,
restructuring, amendments (including amendments which increase the principal
amount thereof and interest and fees thereon) and modifications of the items
described in (i) and/or (ii) above.
"Subordinated Debt" means (i) indebtedness under the Notes, including,
without limitation, principal, premium, interest and other liabilities payable
from time to time and similar obligations, premiums, penalties, fees,
indemnities or expenses, and regardless of whether direct or indirect, now
existing or hereafter arising, absolute or contingent, secured or unsecured, or
long or short term, (ii) obligations arising under guarantees executed by the
Company or any of its Subsidiaries of items described in (i) above, and (iii)
renewals, extensions, refundings, refinancings, deferrals, restructurings,
amendments and modifications of the items described in (i) and/or (ii) above.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof; or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof For purposes hereof; a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability
company, partnership, association or other business entity if such Person or
Persons shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control any
managing director or general partner of such limited liability company,
partnership, association or other business entity.
6. Transfer Restrictions. The holder of this Note agrees not to
sell, transfer, assign, pledge or otherwise dispose of any interest in this Note
to any Person who or which is not an "accredited investor" within the meaning of
Rule 501 of Regulation D of the Securities and Exchange Commission. Any transfer
or attempted transfer of this Note in violation of any provision of this Section
6 shall be void, and the Company shall not record such transfer on its books or
treat any purported transferee of this Note as the owner of this Note for any
purpose.
7. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holder of this Note. No amendment, modification, termination or waiver shall,
unless consented to by the holders of a majority in aggregate principal amount
of the Senior Debt, do any of the following: (a) increase the interest rate or
modify Section 1 hereof in any other respect; (b) change the dates upon which
payments of principal or interest are due on this Note; (c) change any event of
default or add or make more restrictive any covenant with respect to this Note;
(d) change the prepayment provisions of this Note or the Agreement; (e) change
the subordination provisions of this Note (or the subordination terms of any
guaranty thereof); or (f) change or amend any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights upon the holders of this Note in a manner adverse to
the Company or the Lenders.
8. Cancellation. After all principal and accrued interest at any
time owed on this Note has been paid in full, this Note shall be surrendered to
the Company for cancellation and shall not be reissued.
9. Payments. All payments to be made to the holder of this Note
shall be made in the lawful money of the United States of America in immediately
available funds.
10. Place of Payment. Payments of principal and interest shall be
delivered to the holder of this Note at such address as is specified by prior
written notice by the holder to the Company.
11. Governing Law. All questions concerning the construction,
validity and interpretation of this Note will be governed by and construed in
accordance with the domestic laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
12. Waiver of Presentment. Demand and Dishonor. The Company hereby
waives presentment for payment, protest, demand, notice of protest, notice of
nonpayment and diligence with respect to this Note, and waives and renounces all
rights to the benefits of any statute of limitations or any moratorium,
appraisement, exemption, or homestead now provided or that hereafter may be
provided by any federal or applicable state statute, including but not limited
to exemptions provided by or allowed under the Federal Bankruptcy Code, both as
to itself and as
to all of its property, whether real or personal, against the enforcement and
collection of the obligations evidenced by this Note and any and all extensions,
renewals, and modifications hereof.
13. Business Days. If any payment is due, or any time period for
giving notice or taking action expires, on a day which is a Saturday, Sunday or
legal holiday in the State of _______________________________or the State of
Virginia, the payment shall be due and payable on, and the time period shall
automatically be extended to, the next business day immediately following such
Saturday, Sunday or legal holiday, and interest shall continue to accrue at the
required rate hereunder until any such payment is made.
14. Replacement. Upon receipt of evidence reasonably satisfactory
to the Company of the mutilation, destruction, loss or theft of this Note and
the ownership thereof; and, in the case of any such mutilation, upon surrender
and cancellation of this Note, the Company shall, upon the written request of
the holder of this Note, execute and deliver in replacement thereof a new Note
in the same form, in the same original principal amount and dated the same date
as this Note so mutilated, destroyed, lost or stolen, and such Note so
mutilated, destroyed, lost or stolen shall then be deemed no longer outstanding
hereunder.
15. Remedies. No remedy herein conferred upon the holder of this
Note is intended to be exclusive of any other remedy, and each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
16. Usury Laws. It is the intention of the Company and the holder
of this Note to conform strictly to all applicable usury laws now or hereafter
in force, and any interest payable under this Note shall be subject to reduction
to the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Note is accelerated by
reason of an election by the holder hereof resulting from an Event of Default,
voluntary prepayment by the Company or otherwise, then earned interest may never
include more than the maximum amount permitted by law, computed from the date
hereof until payment, and any interest in excess of the maximum amount permitted
by law shall be canceled automatically and, if theretofore paid, shall at the
option of the holder hereof either be rebated to the Company or credited on the
principal amount of this Note, or if this Note has been paid, then the excess
shall be rebated to the Company. The aggregate of all interest (whether
designated as interest, service charges, points or otherwise) contracted for,
chargeable, or receivable under this Note shall under no circumstances exceed
the maximum legal rate upon the unpaid principal balance of this Note remaining
unpaid from time to time. If such interest does exceed the maximum legal rate,
it shall be deemed a mistake and such excess shall be canceled automatically
and, if theretofore paid, rebated to the Company or credited on the principal
amount of this Note, or if this Note has been repaid, then such excess shall be
rebated to the Company.
IN WITNESS WHEREOF, the Company has executed and delivered this
Subordinated Promissory Note on the date first above written.
XXXXXXXX BEACH/XXXXXXX-SILEX, INC.
By:
Its:_____________________________________
