Exhibit 4.37
--------------------------------------------------------------------------------
CREDIT AGREEMENT
BY AND AMONG
BAIRNCO CORPORATION
AS PARENT
CERTAIN OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
ABLECO FINANCE LLC
AS ADMINISTRATIVE AGENT
DATED AS OF JULY 17, 2007
--------------------------------------------------------------------------------
PAGE
1. DEFINITIONS AND CONSTRUCTION..............................................................1
1.1 DEFINITIONS......................................................................1
1.2 ACCOUNTING TERMS.................................................................1
1.3 CODE.............................................................................1
1.4 CONSTRUCTION.....................................................................1
1.5 PROVINCE OF QUEBEC...............................................................2
1.6 SCHEDULES AND EXHIBITS...........................................................2
2. LOAN AND TERMS OF PAYMENT.................................................................2
2.1 TERM LOAN........................................................................2
2.2 BORROWING PROCEDURES AND SETTLEMENTS.............................................2
2.3 PAYMENTS.........................................................................3
2.4 INTEREST RATES: RATES, PAYMENTS, AND CALCULATIONS...............................6
2.5 CASH MANAGEMENT..................................................................7
2.6 CREDITING PAYMENTS...............................................................8
2.7 DESIGNATED ACCOUNT...............................................................8
2.8 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS...........................8
2.9 FEES.............................................................................9
2.10 LIBOR OPTION.....................................................................9
2.11 CAPITAL REQUIREMENTS............................................................10
2.12 JOINT AND SEVERAL LIABILITY OF BORROWERS........................................11
2.13 SECURITIZATION..................................................................13
3. CONDITIONS; TERM OF AGREEMENT............................................................14
3.1 CONDITIONS PRECEDENT TO THE TERM LOAN...........................................14
3.2 TERM............................................................................14
3.3 EFFECT OF TERMINATION...........................................................14
3.4 EARLY TERMINATION BY BORROWERS..................................................14
4. REPRESENTATIONS AND WARRANTIES...........................................................14
4.1 NO ENCUMBRANCES.................................................................15
4.2 [INTENTIONALLY OMITTED].........................................................15
4.3 [INTENTIONALLY OMITTED.]........................................................15
4.4 EQUIPMENT.......................................................................15
4.5 LOCATION OF COLLATERAL..........................................................15
4.6 INVENTORY RECORDS...............................................................15
4.7 JURISDICTION OF ORGANIZATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS....................15
4.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES................................15
4.9 DUE AUTHORIZATION; NO CONFLICT..................................................16
4.10 LITIGATION......................................................................17
4.11 NO MATERIAL ADVERSE CHANGE......................................................17
4.12 FRAUDULENT TRANSFER.............................................................18
4.13 EMPLOYEE BENEFITS...............................................................18
4.14 ENVIRONMENTAL CONDITION.........................................................19
4.15 INTELLECTUAL PROPERTY...........................................................19
4.16 LEASES; ETC.....................................................................19
4.17 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS........................................19
4.18 COMPLETE DISCLOSURE.............................................................20
4.19 INDEBTEDNESS....................................................................20
4.20 MATERIAL CONTRACTS..............................................................20
4.21 PERMITS, LICENSES, ETC..........................................................20
4.22 SUPPLIERS.......................................................................20
4.23 MARGIN STOCK....................................................................21
4.24 INSURANCE.......................................................................21
4.25 INVESTMENT COMPANY ACT, ETC.....................................................21
4.26 TAXES, ETC......................................................................21
4.27 NATURE OF BUSINESS..............................................................21
4.28 RELATED TRANSACTION DOCUMENTS...................................................21
4.29 NO IMMUNITY.....................................................................21
4.30 NO TAXES........................................................................21
5. AFFIRMATIVE COVENANTS....................................................................22
5.1 ACCOUNTING SYSTEM...............................................................22
5.2 COLLATERAL REPORTING............................................................22
5.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.....................................22
5.4 GUARANTOR REPORTS...............................................................22
5.5 INSPECTION......................................................................22
5.6 MAINTENANCE OF PROPERTIES.......................................................22
5.7 TAXES...........................................................................22
5.8 INSURANCE.......................................................................23
5.9 LOCATION OF COLLATERAL..........................................................23
5.10 COMPLIANCE WITH LAWS............................................................23
5.11 LEASES..........................................................................24
5.12 EXISTENCE.......................................................................24
5.13 ENVIRONMENTAL...................................................................24
5.14 DISCLOSURE UPDATES..............................................................24
5.15 CONTROL AGREEMENTS..............................................................24
5.16 FORMATION OF SUBSIDIARIES.......................................................24
5.17 FURTHER ASSURANCES..............................................................25
5.18 MATERIAL CONTRACTS..............................................................25
5.19 SUBORDINATION...................................................................25
5.20 AFTER ACQUIRED REAL PROPERTY....................................................25
6. NEGATIVE COVENANTS.......................................................................26
6.1 INDEBTEDNESS....................................................................26
6.2 LIENS...........................................................................27
6.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.............................................27
6.4 DISPOSAL OF ASSETS..............................................................27
6.5 CHANGE NAME.....................................................................27
6.6 NATURE OF BUSINESS..............................................................27
6.7 PREPAYMENTS AND AMENDMENTS......................................................27
6.8 CHANGE OF CONTROL...............................................................28
6.9 CONSIGNMENTS....................................................................28
6.10 DISTRIBUTIONS...................................................................28
6.11 ACCOUNTING METHODS..............................................................28
6.12 INVESTMENTS.....................................................................28
6.13 TRANSACTIONS WITH AFFILIATES....................................................29
6.14 USE OF PROCEEDS.................................................................29
6.15 INVENTORY AND EQUIPMENT WITH BAILEES............................................29
6.16 FINANCIAL COVENANTS.............................................................29
6.17 PARENT AS HOLDING COMPANY.......................................................31
6.18 EMPLOYEE BENEFITS...............................................................31
6.19 LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES....................................................................31
6.20 LEASE OBLIGATIONS...............................................................32
6.21 FEDERAL RESERVE REGULATIONS.....................................................32
6.22 INVESTMENT COMPANY ACT OF 1940..................................................32
7. EVENTS OF DEFAULT........................................................................32
8. THE LENDER GROUP'S RIGHTS AND REMEDIES...................................................34
8.1 RIGHTS AND REMEDIES.............................................................34
8.2 REMEDIES CUMULATIVE.............................................................35
9. TAXES AND EXPENSES.......................................................................35
10. WAIVERS; INDEMNIFICATION.................................................................35
10.1 DEMAND; PROTEST; ETC............................................................35
10.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL.....................................35
10.3 INDEMNIFICATION.................................................................35
11. NOTICES..................................................................................36
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...............................................37
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...............................................38
13.1 ASSIGNMENTS AND PARTICIPATIONS..................................................38
13.2 SUCCESSORS......................................................................40
14. AMENDMENTS; WAIVERS......................................................................40
14.1 AMENDMENTS AND WAIVERS..........................................................40
14.2 REPLACEMENT OF HOLDOUT LENDER...................................................41
14.3 NO WAIVERS; CUMULATIVE REMEDIES.................................................41
15. AGENT; THE LENDER GROUP..................................................................42
15.1 APPOINTMENT AND AUTHORIZATION OF AGENT..........................................42
15.2 DELEGATION OF DUTIES............................................................42
15.3 LIABILITY OF AGENT..............................................................42
15.4 RELIANCE BY AGENT...............................................................43
15.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT...........................................43
15.6 CREDIT DECISION.................................................................43
15.7 COSTS AND EXPENSES; INDEMNIFICATION.............................................44
15.8 AGENT IN INDIVIDUAL CAPACITY....................................................44
15.9 SUCCESSOR AGENT.................................................................44
15.10 LENDER IN INDIVIDUAL CAPACITY...................................................45
15.11 COLLATERAL MATTERS..............................................................45
15.12 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.........................46
15.13 AGENCY FOR PERFECTION...........................................................46
15.14 PAYMENTS BY AGENT TO THE LENDERS................................................46
15.15 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS............................46
15.16 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY LENDERS; OTHER REPORTS AND INFORMATION.......................................46
15.17 SEVERAL OBLIGATIONS; NO LIABILITY...............................................47
15.18 QUEBEC SECURITY DOCUMENTS.......................................................48
16. WITHHOLDING TAXES........................................................................48
17. GENERAL PROVISIONS.......................................................................50
17.1 EFFECTIVENESS...................................................................50
17.2 SECTION HEADINGS................................................................50
17.3 INTERPRETATION..................................................................50
17.4 SEVERABILITY OF PROVISIONS......................................................50
17.5 DEBTORCREDITOR RELATIONSHIP.....................................................50
17.6 COUNTERPARTS; ELECTRONIC EXECUTION..............................................50
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS........................................51
17.8 CONFIDENTIALITY.................................................................51
17.9 LENDER GROUP EXPENSES...........................................................51
17.10 USA PATRIOT ACT.................................................................51
17.11 INTEGRATION.....................................................................51
17.12 PARENT AS AGENT FOR BORROWERS...................................................52
17.13 INTERCREDITOR AGREEMENT.........................................................52
17.14 JUDGMENT CURRENCY...............................................................52
17.15 IMMUNITY........................................................................53
EXHIBITS AND SCHEDULES
Exhibit A1 Form of Assignment and Acceptance
Exhibit C1 Form of Compliance Certificate
Exhibit L1 Form of LIBOR Notice
Schedule A1 Agent's Account
Schedule A2 Authorized Persons
Schedule A3 Approved AddBack Expenses
Schedule C1 Commitments
Schedule D1 Designated Account
Schedule K1 Kasco Nonrecurring Expenses
Schedule P2 Permitted Liens
Schedule P3 Survey Exceptions
Schedule R1 Real Property Collateral
Schedule 1.1 Definitions
Schedule 2.5(a) Cash Management Banks
Schedule 3.1 Conditions Precedent
Schedule 3.1(x) Mortgage Policy
Schedule 4.5 Locations of Collateral
Schedule 4.7(a) States of Organization
Schedule 4.7(b) Chief Executive Offices
Schedule 4.7(c) Organizational Identification Numbers
Schedule 4.7(d) Commercial Tort Claims
Schedule 4.8(b) Capitalization of Borrowers
Schedule 4.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 4.10 Litigation
Schedule 4.13 Labor and Employee Matters
Schedule 4.14 Environmental Matters
Schedule 4.15 Intellectual Property
Schedule 4.16 Properties
Schedule 4.17 Deposit Accounts and Securities Accounts
Schedule 4.19 Permitted Indebtedness
Schedule 4.20 Material Contracts
Schedule 4.24 Insurance
Schedule 5.2 Collateral Reporting
Schedule 5.3 Financial Statements, Reports, Certificates
Schedule 6.6 Description of Business
Schedule 6.17 Holding Company Operations
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "AGREEMENT"), is entered into as
of July 17, 2007, by and among the lenders identified on the signature pages
hereof (such lenders, together with their respective successors and permitted
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "LENDERS"), ABLECO FINANCE LLC, a Delaware limited liability
company, as administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, "AGENT"), BAIRNCO CORPORATION,
a Delaware corporation ("PARENT"), and each of Parent's Subsidiaries identified
on the signature pages hereof as a Borrower (such Subsidiaries are referred to
hereinafter each individually as a "BORROWER", and individually and
collectively, jointly and severally, as the "BORROWERS").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. Capitalized terms used in this Agreement shall
have the meanings specified therefor on SCHEDULE 1.1.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrowers" or the term "Parent" is used in respect of a
financial covenant or a related definition, it shall be understood to mean
Parent and its Subsidiaries on a consolidated basis, unless the context clearly
requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in
the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein; PROVIDED, HOWEVER, that to the extent that the Code is
used to define any term herein and such term is defined differently in different
Articles of the Code, the definition of such term contained in Article 9 of the
Code shall govern.
1.4 CONSTRUCTION. Unless the context of this Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the terms
"includes" and "including" are not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Agreement or any other Loan Document refer to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular provision of
this Agreement or such other Loan Document, as the case may be. Section,
subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement or in any
other Loan Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). References to statutes or
regulations are to be construed as including all statutory and regulatory
provisions consolidating, amending, supplementing, interpreting, or replacing
the statute or regulation referred to, and, to the extent the context so
requires, any equivalent, similar or comparable statute or regulation in any
applicable jurisdiction. Any reference herein or in any other Loan Document to
the satisfaction or repayment in full of the Obligations shall mean the
repayment in full in cash of all Obligations other than unasserted contingent
indemnification Obligations. Any reference herein to any Person shall be
construed to include such Person's successors and assigns. Any requirement of a
writing contained herein or in any other Loan Document shall be satisfied by the
transmission of a Record and any Record transmitted shall be treated and have
the same effect as if such Record was furnished in writing. An Event of Default,
if one occurs, shall "exist", "continue" or "be continuing" until such Event of
Default has been waived in writing in accordance with SECTION 14.1.
1.5 PROVINCE OF QUEBEC. With respect to real or tangible personal
property located in the Province of Quebec, (a) the terms "real property",
"personal property" and "real and personal property" and words of similar import
shall be deemed to also refer to "immovable property", "movable property" and
"immovable and movable property". The terms "tangible" and "intangible" and
words of similar import shall be deemed to also refer to "corporeal" and
"incorporeal".
1.6 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 TERM LOAN.
(a) Subject to the terms and conditions of this Agreement, on
the Closing Date each Lender agrees (severally, not jointly or jointly and
severally) to make term loans (collectively, the "TERM LOAN") to Borrowers in an
amount equal to such Lender's Pro Rata Share of the Term Loan Amount provided
that the Term Loan shall be funded in full for the benefit of the Borrowers. The
outstanding unpaid principal balance and all accrued and unpaid interest on the
Term Loan shall be due and payable on the earliest of (i) the Maturity Date,
(ii) the date of the acceleration of the Term Loan in accordance with the terms
hereof, and (iii) the date of termination of this Agreement pursuant to SECTION
8.1(B). All principal of, interest on, and other amounts payable in respect of
the Term Loan shall constitute Obligations.
(b) Any principal amount of the Term Loan that has been
repaid or prepaid may not be reborrowed.
2.2 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. The Administrative Borrower
shall give the Agent prior written notice (a "Notice of Borrowing")), not later
than 12:00 noon (New York City time) on the date which is five (5) Business Days
prior to the date of the proposed Term Loan (or such shorter period as the Agent
is willing to accommodate, but in no event later than (x) one (1) Business Day
prior to the date of the proposed Term Loan if the Term Loan is to consist
exclusively of Base Rate Loans, and (y) three (3) Business Days prior to the
date of the proposed Term Loan, if any portion of the Term Loan is to consist of
a LIBOR Rate Loan. Such Notice of Borrowing shall specify (i) the principal
amount of the proposed Term Loan, (ii) whether the proposed Term Loan is
requested to consist of Reference Rate Loans or LIBOR Rate Loans and, in the
case of LIBOR Rate Loans, the initial Interest Periods with respect thereto,
(iii) the use of the proceeds of such proposed Term Loan, and (iv) the proposed
borrowing date, which must be (A) a Business Day and (B) the Closing Date.
(b) MAKING OF LOANS. Promptly after receipt of a request for
the Term Loan pursuant to SECTION 2.2(A), Agent shall notify the Lenders, not
later than 1:00 p.m. (New York time) on the Business Day immediately preceding
the Closing Date, by telecopy, telephone, or other similar form of transmission,
of the requested Term Loan. Each Lender shall make the amount of such Lender's
Pro Rata Share of the requested Term Loan available to Agent in immediately
available funds, to Agent's Account, not later than 10:00 a.m. (New York time)
on the Closing Date. After Agent's receipt of the proceeds of the Term Loan,
Agent shall make the proceeds thereof available to Administrative Borrower on
the Closing Date by transferring immediately available funds equal to such
proceeds received by Agent in accordance with written instructions from the
Administrative Borrower; PROVIDED, HOWEVER, that Agent shall not request any
Lender to make, and no Lender shall have the obligation to make, the Term Loan
if Agent shall have actual knowledge that one or more of the applicable
conditions precedent set forth in SECTION 3 will not be satisfied on the
requested Closing Date.
2
(c) PROTECTIVE ADVANCES.
(i) Agent hereby is authorized by Borrowers and the
Lenders, from time to time in Agent's sole discretion, (A) after the occurrence
and during the continuance of a Default or an Event of Default, or (B) at any
time that Agent, in its Permitted Discretion deems necessary or desirable, to
make extensions of credit to (or on behalf of) Borrowers (1) to preserve or
protect the Collateral, or any portion thereof, (2) to enhance the likelihood of
repayment of the Obligations, or (3) to pay any other amount chargeable to
Borrowers pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in SECTION 9 (any of the
advances described in this SECTION 2.2(C)(I) shall be referred to as "PROTECTIVE
ADVANCES").
(ii) All payments on the Protective Advances shall be
payable to Agent solely for its own account. The Protective Advances shall be
repayable on demand, secured by the Agent's Liens, constitute Obligations
hereunder, and bear interest at the rate applicable from time to time to Base
Rate Loans. The provisions of this SECTION 2.2(C) are for the exclusive benefit
of Agent and the Lenders and are not intended to benefit any Loan Party in any
way.
(d) NOTATION. Agent shall record on its books the principal
amount of the portion of the Term Loan owing to each Lender and Protective
Advances owing to Agent, and the interests therein of each Lender, from time to
time and such records shall, absent manifest error, conclusively be presumed to
be correct and accurate.
(e) LENDERS' FAILURE TO PERFORM. The Term Loan shall be made
by the Lenders contemporaneously and in accordance with their Pro Rata Shares.
It is understood that (i) no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make its portion of the Term Loan (or
other extension of credit) hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to perform
its obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.
2.3 PAYMENTS.
(a) PAYMENTS BY BORROWERS. Except as otherwise expressly
provided herein, all payments by (or on behalf of) Borrowers shall be made to
Agent's Account for the account of the Lender Group and shall be made in
immediately available funds, no later than 4:00 p.m. (New York time) on the date
specified herein. Any payment received by Agent later than 4:00 p.m. (New York
time), shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue until such following
Business Day.
(b) APPORTIONMENT AND APPLICATION.
(i) So long as no Event of Default has occurred and is
continuing, all principal and interest payments shall be apportioned ratably
among the Lenders (according to the unpaid principal balance of the Obligations
to which such payments relate held by each Lender) and all payments of fees and
expenses (other than fees or expenses that are for Agent's separate account)
shall be apportioned ratably among the Lenders having a Pro Rata Share of the
type of Commitment or Obligation to which a particular fee or expense relates.
All payments to be made hereunder by Borrowers shall be remitted to Agent and
all (subject to Section 2.3(b)(iv) hereof) such payments, and all proceeds of
Collateral received by Agent, shall be applied, so long as no Event of Default
has occurred and is continuing, to reduce the balance of the Term Loan
outstanding and, thereafter, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
3
(ii) Subject to Section 2.3(e)(i), at any time that an
Event of Default has occurred and is continuing (and subject to the terms of the
Intercreditor Agreement) all payments remitted to Agent and all proceeds of
Collateral received by Agent shall be applied as follows:
(A) FIRST, to pay any Lender Group Expenses
(including cost or expense reimbursements) or indemnities then due to Agent
under the Loan Documents, until paid in full,
(B) SECOND, to pay any fees or premiums then due to
Agent under the Loan Documents until paid in full,
(C) THIRD, to pay interest due in respect of all
Protective Advances until paid in full,
(D) FOURTH, to pay the principal of all Protective
Advances until paid in full,
(E) FIFTH, ratably to pay any Lender Group Expenses
(including cost or expense reimbursements) or indemnities then due to any of the
Lenders under the Loan Documents, until paid in full,
(F) SIXTH, ratably to pay any fees or premiums then
due to any of the Lenders under the Loan Documents until paid in full,
(G) SEVENTH, ratably to pay interest due in respect
of the Term Loan until paid in full,
(H) EIGHTH, to pay the outstanding principal
balance of the Term Loan until the Term Loan is paid in full,
(I) NINTH, to pay any other Obligations, and
(J) TENTH, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.
(iii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each Lender in
writing, such funds as it may be entitled to receive.
(iv) In each instance, so long as no Event of Default has
occurred and is continuing, SECTION 2.3(B)(I) shall not apply to any payment
made by Borrowers to Agent and specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement.
(v) For purposes of SECTION 2.3(B)(II), "paid in full"
means payment of all amounts owing under the Loan Documents according to the
terms thereof, including loan fees, service fees, professional fees, interest
(and specifically including interest accrued after the commencement of any
Insolvency Proceeding), default interest, interest on interest, and expense
reimbursements, whether or not any of the foregoing would be or is allowed or
disallowed in whole or in part in any Insolvency Proceeding.
(vi) In the event of a direct conflict between the
priority provisions of this SECTION 2.3 and any other provision contained in any
other Loan Document, it is the intention of the parties hereto that such
provisions be read together and construed, to the fullest extent possible, to be
in concert with each other. In the event of any actual, irreconcilable conflict
that cannot be resolved as aforesaid, the terms and provisions of this SECTION
2.3 shall control and govern.
4
(c) OPTIONAL PREPAYMENTS. Borrowers may voluntarily prepay,
without penalty or premium, the Term Loan in full or in part at any time and
from time to time upon at least three (3) Business Days prior written notice to
Agent so long as any such payment is (i) in an amount equal to or greater than
$100,000 and an integral multiple of $100,000, and (ii) not prohibited under the
Working Capital Credit Agreement. Any prepayments of the Term Loan made pursuant
to this SECTION 2.3(C) shall be accompanied by all accrued interest and
applicable fees on the principal amount being prepaid to the date of prepayment;
PROVIDED, HOWEVER, if an Event of Default then exists, such prepayment shall be
applied to the Obligations pursuant to SECTION 2.3(B)(II).
(d) MANDATORY PREPAYMENTS.
(i) Immediately upon the receipt by Parent or any of its
Subsidiaries of the proceeds of any Permitted Kasco Sale Transaction, Borrowers
shall prepay the outstanding principal amount of the Obligations, the Working
Capital Indebtedness and the Subordinated Indebtedness, as the case may be, in
accordance with SECTION 2.3(E)(I) in an aggregate amount equal to 100% of the
Net Cash Proceeds received by Parent or its Subsidiaries in connection with such
sale. Nothing contained in this SECTION 2.3(D)(I) shall permit Parent or any of
its Subsidiaries to sell or otherwise dispose of any property or assets other
than in accordance the requirements of the definition of Permitted Kasco Sale
Transaction or as otherwise permitted hereunder.
(ii) Immediately upon the receipt by Parent or any of its
Subsidiaries of the proceeds of any voluntary or involuntary sale or disposition
by Parent or any of its Subsidiaries of property or assets (including casualty
losses or condemnations but excluding sales or dispositions which qualify as
Permitted Dispositions under clauses (a), (b), (c), or (d) of the definition of
Permitted Dispositions or any Permitted Kasco Sale Transaction), Borrowers shall
prepay the outstanding principal amount of the Obligations in accordance with
SECTION 2.3(E)(II) in an amount equal to 100% of the Net Cash Proceeds
(including condemnation awards and payments in lieu thereof) received by Parent
or its Subsidiaries in connection with such sales or dispositions; PROVIDED
that, so long as (A) no Default or Event of Default shall have occurred and is
continuing, (B) Administrative Borrower shall have given Agent prior written
notice of Borrowers' intention to apply such monies to the costs of replacement
of the properties or assets that are the subject of such sale or disposition,
casualty loss or condemnation, or the cost of purchase or construction of other
assets useful in the business of Borrowers or their Subsidiaries, (C) the monies
are held in a cash collateral account in which Agent (or, so long as the Working
Capital Credit Agreement is in effect, Working Capital Agent, acting as agent
for the Agent) has a perfected first-priority security interest, and (D)
Borrowers or their Subsidiaries, as applicable, complete such replacement,
purchase, or construction within 180 days after the initial receipt of such
monies, Borrowers and their Subsidiaries shall have the option to apply such
monies to the costs of replacement of the property or assets that are the
subject of such sale or disposition or the costs of purchase or construction of
other assets useful in the business of Borrowers and their Subsidiaries unless
and to the extent that such applicable period shall have expired without such
replacement, purchase or construction being made or completed, in which case,
any amounts remaining in the cash collateral account shall be paid to Agent and
applied in accordance with SECTION 2.3(E)(II). Nothing contained in this SECTION
2.3(D)(II) shall permit Parent or any of its Subsidiaries to sell or otherwise
dispose of any property or assets other than in accordance with SECTION 6.4.
(iii) Immediately upon the receipt by Parent or any of
its Subsidiaries of any Extraordinary Receipts, Borrowers shall prepay the
outstanding principal amount of the Obligations in accordance with SECTION
2.3(E)(II) in an amount equal to 100% of such Extraordinary Receipts, net of any
reasonable expenses incurred in collecting such Extraordinary Receipts.
(iv) Immediately upon the issuance or incurrence by
Parent or any of its Subsidiaries of any Indebtedness (other than Indebtedness
permitted under SECTION 6.1(A), (B), (C), (D), or (E)) or the issuance by Parent
or any of its Subsidiaries of any shares of Parent's or its Subsidiaries' Stock
(other than (A) the issuance of Stock under an employee stock option or
incentive plan of any Loan Party to the extent permitted hereunder or (B) in the
event that Parent or any Subsidiary of Parent forms a Subsidiary in accordance
5
with the terms hereof, the issuance by such Subsidiary of Stock to Parent or
such Subsidiary, as applicable), Borrowers shall prepay the outstanding
principal amount of the Obligations in accordance with SECTION 2.3(E)(II) in an
amount equal to 100% of the Net Cash Proceeds received by Parent or its
Subsidiaries in connection with such issuance or incurrence. The provisions of
this SECTION 2.3(D)(IV) shall not be deemed to be implied consent to any such
issuance or incurrence otherwise prohibited by the terms and conditions of this
Agreement.
(e) APPLICATION OF PAYMENTS.
(i) Each prepayment pursuant to SECTION 2.3(D)(I) above
shall (A) so long as no Application Event shall have occurred and be continuing,
be applied, FIRST, to the outstanding principal amount of the Working Capital
Advances, or to cash collateralize the Working Capital Letters of Credit in an
amount equal to 105% of the then extant Working Capital Letter of Credit Usage,
in an amount equal to the book value of Eligible Accounts, Eligible Inventory,
Eligible Canadian Inventory, Eligible Foreign Inventory and Eligible Kasco
Inventory (in each case, as defined in the Working Capital Credit Agreement)
sold in a Permitted Kasco Sale Transaction multiplied by the advance rate for
such item of Collateral as contained in the definition of Working Capital
Borrowing Base; SECOND, to the outstanding principal amount of the Working
Capital Term Loan in an amount up to $15,000,000, less any principal payments
made with respect to the Term Loan prior to such date; THIRD, to prepay any
Working Capital Advances, or to cash collateralize the Working Capital Letters
of Credit in an amount equal to 105% of the then extant Working Capital Letter
of Credit Usage, such that after giving effect to such prepayment the Working
Capital Availability is not less than $5,000,000; FOURTH, to prepay the Term
Loan such that, following such prepayment, the pro forma Senior Leverage Ratio
(but excluding any outstanding letters of credit) is less than 4.4 to 1.00 for
the four fiscal quarters then ended (measured as if the Permitted Kasco Sale
Transaction and such prepayment had occurred on the first day of such four
fiscal quarter period); FIFTH, to prepay the Subordinated Indebtedness in an
amount up to $4,000,000; and SIXTH, the balance of such Net Cash Proceeds shall
used to prepay the Term Loan and the Subordinated Indebtedness in the ratio of
1:2, respectively, and (B) if an Application Event shall have occurred and be
continuing, be applied in the manner set forth in SECTION 2.3(B)(II).
(ii) Each prepayment pursuant to SECTION 2.3(D)(II),
2.3(D)(III), or 2.3(D)(IV) above shall (A) so long as no Event of Default shall
have occurred and be continuing, be applied, FIRST, to the outstanding principal
amount of the Working Capital Term Loan until paid in full, SECOND, to the
outstanding principal amount of the Working Capital Advances (with a
corresponding permanent reduction in the Working Capital Maximum Revolver
Amount, until paid in full, and THIRD, to the outstanding principal amount of
the Term Loan until paid in full, and fourth, to cash collateralize the Working
Capital Letters of Credit in an amount equal to 105% of the then extant Working
Capital Letter of Credit Usage (with a corresponding permanent reduction in the
Working Capital Maximum Revolver Amount, and (B) if an Event of Default shall
have occurred and be continuing, the amounts payable to Agent pursuant to clause
"third" may be applied in the manner set forth in SECTION 2.3(B)(II).
Notwithstanding the foregoing or anything to the contrary herein, any required
prepayment resulting from tax refunds related to the tax year ended December 31,
2006 and the stub period ended April 13, 2007 received by the Parent or any
Subsidiary up to $2,000,000 shall be applied first to repay any Working Capital
Advances.
2.4 INTEREST RATES: RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATES. Except as provided in SECTION 2.4(B), all
Obligations whether or not charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows:
(i) if the relevant Obligation is a LIBOR Rate Loan, at a
per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and
6
(ii) otherwise, at a per annum rate equal to the Base
Rate plus the Base Rate Margin.
(b) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders), all Obligations whether or not charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof at
a per annum rate equal to 2.0 percentage points above the per annum rate
otherwise applicable hereunder.
(c) PAYMENT. Except as provided to the contrary in SECTION
2.9, interest payable hereunder shall be due and payable, in arrears, on the
first day of each month at any time that Obligations are outstanding. Any
interest not paid when due shall be compounded by being charged to the Loan
Account and shall thereafter constitute Obligations hereunder and shall accrue
interest at the rate then applicable to Base Rate Loans.
(d) COMPUTATION. All interest chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(e) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; PROVIDED, HOWEVER, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, IPSO FACTO, as of the date of this Agreement, Borrowers are and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Obligations to the
extent of such excess.
2.5 CASH MANAGEMENT.
(a) Parent and Borrowers shall and shall cause each of their
Subsidiaries to (i) establish and maintain cash management services of a type
and on terms satisfactory to Agent at one or more of the banks set forth on
SCHEDULE 2.5(A) (each a "CASH MANAGEMENT BANK"), and shall request in writing
and otherwise take such reasonable steps to ensure that all of their and their
Subsidiaries' Account Debtors forward payment of the amounts owed by them
directly to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day (or, with
respect to Collections not to exceed $100,000 in the aggregate, the second
Business Day) after the date of receipt thereof, all of their Collections
(including those sent directly by their Account Debtors to Parent, Borrowers or
their respective Subsidiaries) into a bank account in Agent's name (or in
Working Capital Agent's name, as applicable) (a "CASH MANAGEMENT ACCOUNT") at
one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Agent, Working Capital Agent and Loan Parties.
Each such Cash Management Agreement shall provide, among other things, that (i)
the Cash Management Bank will comply with any instructions originated by Agent
or Working Capital Agent directing the disposition of the funds in such Cash
Management Account without further consent by Loan Parties or their
Subsidiaries, as applicable, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) upon the instruction of Agent or
Working Capital Agent (an "ACTIVATION INSTRUCTION"), it will forward by daily
sweep all amounts in the applicable Cash Management Account to the account
7
designated in the Activation Instruction. Agent agrees not to issue an
Activation Instruction with respect to the Cash Management Accounts unless an
Event of Default has occurred and is continuing at the time such Activation
Instruction is issued. Agent agrees to use commercially reasonable efforts to
rescind an Activation Instruction (the "RESCISSION") if: (x) the Event of
Default upon which such Activation Instruction was issued has been waived in
writing in accordance with the terms of this Agreement, (y) no additional
Default or Event of Default has occurred and is continuing prior to the date of
the Rescission or is reasonably expected to occur on or immediately after the
date of the Rescission.
(c) So long as no Default or Event of Default has occurred
and is continuing, Administrative Borrower may amend SCHEDULE 2.5(A) to add or
replace a Cash Management Bank or Cash Management Account; PROVIDED, HOWEVER,
that (i) such prospective Cash Management Bank shall be reasonably satisfactory
to Agent, and (ii) prior to the time of the opening of such Cash Management
Account, a Loan Party (or its Subsidiary, as applicable) and such prospective
Cash Management Bank shall have executed and delivered to Agent a Cash
Management Agreement. Loan Parties (or their Subsidiaries, as applicable) shall
close any of their Cash Management Accounts (and establish replacement cash
management accounts in accordance with the foregoing sentence) promptly and in
any event within 30 days of notice from Agent that the creditworthiness of any
Cash Management Bank is no longer acceptable in Agent's reasonable judgment, or
as promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) Each Cash Management Account shall be a cash collateral
account subject to a Control Agreement.
2.6 CREDITING PAYMENTS. The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 12:00 p.m. (New York time). If any payment item is received into the
Agent's Account on a non-Business Day or after 12:00 p.m. (New York time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.
2.7 DESIGNATED ACCOUNT. Agent is authorized to make the Term Loan
under this Agreement based upon instructions received from anyone purporting to
be an Authorized Person. Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank.
2.8 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrowers (the "LOAN
ACCOUNT") on which Borrowers will be charged with the Term Loan, all Protective
Advances made by Agent or the Lenders to Borrowers or for Borrowers' account,
and with all other payment Obligations hereunder or under the other Loan
Documents, including, accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with SECTION 2.6, the Loan Account will be credited with
all payments received by Agent from Borrowers or for Borrowers' account,
including all amounts received in the Agent's Account from any Cash Management
Bank. Agent shall render statements regarding the Loan Account to Administrative
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements, absent manifest error, shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and the Lender
Group unless, within 30 days after receipt thereof by Administrative Borrower,
8
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
2.9 FEES. On or prior to the Closing Date, Borrowers shall pay to
Agent for the account of the Lenders, in accordance with their Pro Rata Shares,
a non-refundable closing fee (the "CLOSING FEE") equal to $960,000, which shall
be deemed fully earned when paid.
2.10 LIBOR OPTION.
(a) INTEREST. In lieu of having interest charged at the rate
based upon the Base Rate, Borrowers shall have the option (the "LIBOR OPTION")
to have interest on all or a portion of the Term Loan be charged (whether at the
time when made (unless otherwise provided herein), upon conversion from a Base
Rate Loan to a LIBOR Rate Loan, or upon continuation of a LIBOR Rate Loan as a
LIBOR Rate Loan) at a rate of interest based upon the LIBOR Rate. On the last
day of each applicable Interest Period, unless Administrative Borrower properly
has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that the Term Loan bear interest at a
rate based upon the LIBOR Rate, and Agent shall have the right, at the end of
the applicable Interest Period for each LIBOR Rate Loan, to convert the interest
rate on such LIBOR Rate Loan to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and from
time to time, so long as no Event of Default has occurred and is continuing,
elect to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. (New
York time) at least 3 Business Days prior to the commencement of the proposed
Interest Period (the "LIBOR DEADLINE"). Notice of Administrative Borrower's
election of the LIBOR Option for a permitted portion of the Term Loan and an
Interest Period pursuant to this Section shall be made by delivery to Agent of a
LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic
notice received by Agent before the LIBOR Deadline (to be confirmed by delivery
to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m. (New York time)
on the same day). Promptly upon its receipt of each such LIBOR Notice, Agent
shall provide a copy thereof to each of the affected Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding
on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any loss,
cost, or expense incurred by Agent or any Lender as a result of (A) the payment
of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (B) the conversion of any LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses,
"FUNDING LOSSES"). Funding Losses shall, with respect to Agent or any Lender, be
deemed to equal the amount determined by Agent or such Lender to be the excess,
if any, of (1) the amount of interest that would have accrued on the principal
amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate
that would have been applicable thereto, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert, or continue, for the period that would
have been the Interest Period therefor), MINUS (2) the amount of interest that
would accrue on such principal amount for such period at the interest rate which
Agent or such Lender would be offered were it to be offered, at the commencement
of such period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Administrative
Borrower setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this SECTION 2.10 shall be conclusive absent
manifest error.
9
(iii) Borrowers shall have not more than three LIBOR Rate
Loans in effect at any given time. Borrowers only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $1,000,000.
(c) CONVERSION. Borrowers may convert LIBOR Rate Loans to
Base Rate Loans at any time; PROVIDED, HOWEVER, that in the event that LIBOR
Rate Loans are converted or prepaid on any date that is not the last day of the
Interest Period applicable thereto, including as a result of any automatic
prepayment through the required application by Agent of proceeds of Loan
Parties' and their Subsidiaries' Collections in accordance with SECTION 2.3(B)
or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with SECTION 2.10 (B)(II) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with
respect to any Lender on a prospective basis to take into account any additional
or increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs, in each case, due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding or maintaining loans bearing interest at the LIBOR
Rate. In any such event, the affected Lender shall give Administrative Borrower
and Agent notice of such a determination and adjustment and Agent promptly shall
transmit the notice to each other Lender and, upon its receipt of the notice
from the affected Lender, Administrative Borrower may, by notice to such
affected Lender (y) require such Lender to furnish to Administrative Borrower a
statement setting forth the basis for adjusting such LIBOR Rate and the method
for determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans
with respect to which such adjustment is made (together with any amounts due
under SECTION 2.10(B)(II)).
(ii) In the event that any change in market conditions
or any law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date hereof,
in the reasonable opinion of any Lender, make it unlawful or impractical for
such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and
Administrative Borrower and Agent promptly shall transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be deemed to be
the last day of the Interest Period of such LIBOR Rate Loans, and interest upon
the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to
elect the LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.11 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
10
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.12 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender Group under this Agreement, for the
mutual benefit, directly and indirectly, of each Borrower and in consideration
of the undertakings of the other Borrowers to accept joint and several liability
for the Obligations. Each Borrower hereby further irrevocably and
unconditionally guaranties as and for its own debt, until final payment in full
thereof has been made, (a) the payment of the Obligations, when and as the same
shall become due and payable, whether at maturity, pursuant to a mandatory
prepayment requirement, by acceleration, or otherwise; it being the intent of
each Borrower that the guaranty set forth herein shall be a guaranty of payment
and not a guaranty of collection; and (b) the punctual and faithful performance,
keeping, observance, and fulfillment by each Borrower of all of the agreements,
conditions, covenants, and obligations of such Borrower contained in this
Agreement and under each of the other Loan Documents.
(b) Each Borrower, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the Obligations (including any Obligations
arising under this SECTION 2.12), it being the intention of the parties hereto
that all the Obligations shall be the joint and several obligations of each
Borrower without preferences or distinction among them.
(c) If and to the extent that any Borrower 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 Borrowers will make such payment with respect to, or perform,
such Obligation.
(d) The Obligations of each Borrower under the provisions of
this SECTION 2.12 constitute the absolute and unconditional, full recourse
Obligations of each Borrower enforceable against each Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Borrower hereby waives notice of acceptance of its joint and several
liability, notice of the Term Loan or any other advance or extension of credit
made under or pursuant to this Agreement, notice of the occurrence of any
Default, Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by Agent or Lenders
under or in respect of any of the Obligations, any requirement of diligence or
to mitigate damages and, generally, to the extent permitted by applicable law,
all demands, notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each 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 payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Borrower in the performance or satisfaction of
any term, covenant, condition or provision of this Agreement, any and all other
11
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without limiting
the generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
SECTION 2.12 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this SECTION
2.12, it being the intention of each Borrower that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of each Borrower under
this SECTION 2.12 shall not be discharged except by performance and then only to
the extent of such performance. The Obligations of each Borrower under this
SECTION 2.12 shall not be diminished or rendered unenforceable by any
unenforceability of this Agreement or any other Loan Document against one or
more of the other Borrowers or any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Borrower
or any Agent or Lender.
(f) Each Borrower represents and warrants to Agent and
Lenders that such Borrower is currently informed of the financial condition of
Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Borrower
further represents and warrants to Agent and Lenders that such Borrower has read
and understands the terms and conditions of the Loan Documents. Each Borrower
hereby covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) Each Borrower waives all rights and defenses arising out
of an election of remedies by Agent or any Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Agent's or such Lender's rights of
subrogation and reimbursement against such Borrower by the operation of Section
580(d) of the California Code of Civil Procedure or otherwise:
(h) Each Borrower waives all rights and defenses that such
Borrower may have because the Obligations are secured by Real Property. This
means, among other things:
(i) Agent and Lenders may collect from such Borrower
without first foreclosing on any Real or Personal Property Collateral pledged by
Borrowers.
(ii) If Agent or any Lender forecloses on any Real
Property Collateral pledged by Borrowers:
(A) The amount of the Obligations may be reduced
only by the price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price.
(B) Agent and Lenders may collect from such
Borrower even if Agent or Lenders, by foreclosing on the Real Property
Collateral, has destroyed any right such Borrower may have to collect from the
other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
(i) The provisions of this SECTION 2.12 are made for the
benefit of Agent, Lenders and their respective successors and assigns, and may
be enforced by it or them from time to time against any or all Borrowers as
12
often as occasion therefor may arise and without requirement on the part of
Agent, Lender, successor or assign first to marshal any of its or their claims
or to exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this SECTION 2.12 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this SECTION
2.12 will forthwith be reinstated in effect, as though such payment had not been
made.
(j) Until the Obligations have been paid in full, each
Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Borrower with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Agent or Lenders with respect to any of the Obligations
or any collateral security therefor. Any claim which any Borrower may have
against any other Borrower with respect to any payments to any Agent or Lender
hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment to the prior payment in full in cash
of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Borrower, its debts or its assets,
whether voluntary or involuntary, all such Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to any other Borrower therefor.
(k) Each Borrower hereby agrees that, after the occurrence
and during the continuance of any Default or Event of Default, the payment of
any amounts due with respect to the indebtedness owing by any Borrower to any
other Borrower is hereby subordinated to the prior payment in full in cash of
the Obligations. Each Borrower hereby agrees that after the occurrence and
during the continuance of any Default or Event of Default, such Borrower will
not demand, xxx for or otherwise attempt to collect any indebtedness of any
other Borrower owing to such Borrower until the Obligations shall have been paid
in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for Agent, and such Borrower shall deliver any such amounts to Agent for
application to the Obligations in accordance with SECTION 2.3(B).
2.13 SECURITIZATION. Parent and each Borrower (on behalf of
themselves and their respective Subsidiaries) hereby acknowledge that each
Lender and each of its Affiliates and Related Funds may sell or securitize its
portion of the Term Loan (a "SECURITIZATION") through the pledge of its portion
of the Term Loan as collateral security for loans to such Lender or its
Affiliates or Related Funds or through the sale of its portion of the Term Loan
or the issuance of direct or indirect interests in its portion of the Term Loan,
which loans to such Lender or its Affiliates or Related Funds or direct or
indirect interests will be rated by Xxxxx'x, S&P or one or more other rating
agencies (the "RATING AGENCIES"). Parent and each Borrower (on behalf of
themselves and their Subsidiaries) agree to cooperate with such Lenders and
their Affiliates and Related Funds to effect the Securitization, including,
without limitation, by (a) executing such additional documents, as reasonably
requested by such Lenders in connection with the Securitization, provided that
(i) any such additional documentation does not impose additional costs on
Borrowers (other than costs of a de minimis nature), and (ii) any such
additional documentation does not adversely affect the rights, or increase the
obligations (other than increases of a de minimis nature), of Borrowers under
the Loan Documents or change or affect in a manner adverse to Borrowers the
financial terms of the Term Loan, and (b) providing such information as may be
reasonably requested by such Lenders in connection with the rating of the Term
Loan or the Securitization.
13
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE TERM LOAN. The obligation of each
Lender to make the Term Loan provided for hereunder, is subject to the
fulfillment, to the satisfaction of Agent and each Lender of (a) each of the
conditions precedent set forth on SCHEDULE 3.1 (the making of the Term Loan by a
Lender being conclusively deemed to be its satisfaction or waiver of such
conditions precedent), and (b) each of the following conditions precedent:
(i) the representations and warranties of the Loan
Parties and their Subsidiaries contained in this Agreement or in the other Loan
Documents shall be true and correct in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(ii) no Default or Event of Default shall have occurred
and be continuing on the date of such extension of credit, nor shall either
result from the making thereof;
(iii) no injunction, writ, restraining order, or other
order, or any law, rule or regulation, of any nature restricting or prohibiting,
directly or indirectly, the extending of such credit shall have been issued and
remain in force by any Governmental Authority against any Loan Party, Agent, or
any Lender; and
(iv) no Material Adverse Change shall have occurred since
December 31, 2006, provided that the transactions contemplated by this Agreement
and the transactions made in connection with the Permitted Merger shall not
constitute a Material Adverse Change.
3.2 TERM. This Agreement shall continue in full force and effect
for a term ending on July 17, 2012 (the "MATURITY DATE"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.3 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Loan Parties or their Subsidiaries of their duties, Obligations, or
covenants hereunder or under any other Loan Document and the Agent's Liens in
the Collateral shall remain in effect until all Obligations have been paid in
full. When this Agreement has been terminated and all of the Obligations have
been paid in full, Agent will, at Borrowers' sole expense, execute and deliver
any termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Agent's Liens and all notices of
security interests and liens previously filed by Agent with respect to the
Obligations.
3.4 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at
any time upon 30 days prior written notice to Agent, to terminate this
Agreement, without penalty or premium, by paying to Agent, in cash, the
Obligations, in full. If Borrowers have sent a notice of termination pursuant to
the provisions of this Section, then Borrowers shall be obligated to repay the
Obligations, in full, on the date set forth as the date of termination of this
Agreement in such notice.
4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, Parent and each Borrower make the following representations and
14
warranties to the Lender Group which shall be true, correct, and complete as of
the Closing Date (except to the extent that such representations and warranties
relate solely to an earlier date or any Schedule or Projection referred to
herein has been updated or amended in accordance herewith) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
4.1 NO ENCUMBRANCES. Each Loan Party and its Subsidiaries has
good and indefeasible title to, or a valid leasehold interest in, their personal
property assets and good and marketable title to, or a valid leasehold interest
in, their Real Property, in each case, free and clear of Liens except for
Permitted Liens.
4.2 [INTENTIONALLY OMITTED].
4.3 [INTENTIONALLY OMITTED.].
4.4 EQUIPMENT. Each material item of Equipment of Loan Parties
and their Subsidiaries is used or held for use in their business and is in good
working order, ordinary wear and tear and damage by casualty excepted.
4.5 LOCATION OF COLLATERAL. The Collateral (other than vehicles,
Inventory maintained on vehicles and Equipment out for repair) of Loan Parties
and their Subsidiaries is not stored with a bailee, warehouseman, or similar
party (except with respect to Inventory in the ordinary course of business), and
is located only at, or in-transit between, the locations identified on SCHEDULE
4.5 (as such Schedule may be updated pursuant to SECTION 5.9).
4.6 INVENTORY RECORDS. Each Loan Party keeps correct and accurate
records in all material respects itemizing and describing the type, quality, and
quantity of its and its Subsidiaries' Inventory and the book value thereof.
4.7 JURISDICTION OF ORGANIZATION; LOCATION OF CHIEF EXECUTIVE
OFFICE; ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.
(a) The name of (within the meaning of Section 9-503 of the
Code) and jurisdiction of organization of each Loan Party and each of its
Subsidiaries is set forth on SCHEDULE 4.7(A) (as such Schedule may be updated
from time to time to reflect changes permitted to be made under SECTION 6.5).
(b) The chief executive office of each Loan Party is located
at the address indicated on SCHEDULE 4.7(B) (as such Schedule may be updated
from time to time to reflect changes permitted to be made under SECTION 5.9).
(c) Each Loan Party's tax identification numbers and
organizational identification numbers, if any, are identified on SCHEDULE 4.7(C)
(as such Schedule may be updated from time to time to reflect changes permitted
to be made under SECTION 6.5).
(d) As of the Closing Date, the Loan Parties and their
Subsidiaries do not hold any commercial tort claims, except as set forth on
SCHEDULE 4.7(D).
4.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Loan Party (i) is duly organized and existing and in
good standing (or the non-U.S. equivalent thereof) under the laws of the
jurisdiction of its organization and qualified to do business in each
jurisdiction where the failure to be so qualified reasonably could be expected
to result in a Material Adverse Change, and (ii) has all requisite power and
authority to conduct its business as now conducted and as currently
contemplated, to make the borrowings hereunder (in the case of Borrowers), and
to execute and deliver each Loan Document to which it is a party, and to
consummate the transactions contemplated thereby.
15
(b) Set forth on SCHEDULE 4.8(B) (as such Schedule may be
updated from time to time to reflect changes permitted to be made under SECTION
5.16), is a complete and accurate description of the authorized capital Stock of
each Loan Party, by class, and, as of the Closing Date, a description of the
number of shares of each such class that are issued and outstanding. Other than
as described on SCHEDULE 4.8(B), there are no subscriptions, options, warrants,
or calls relating to any shares (or other equity interest) of each Loan Party's
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. No Loan Party is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on SCHEDULE 4.8(C) (as such Schedule may be
updated from time to time to reflect changes permitted to be made under SECTION
5.16), is a complete and accurate list of each Loan Party's direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the
number of shares of each class of common and preferred Stock authorized for each
of such Subsidiaries, and (iii) the number and the percentage of the outstanding
shares of each such class owned directly or indirectly by the applicable Loan
Party. All of the outstanding capital Stock of each such Subsidiary has been
validly issued and is fully paid and non-assessable.
(d) Except as set forth on SCHEDULE 4.8(C), there are no
subscriptions, options, warrants, or calls relating to any shares of any Loan
Party's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Loan Party or
any of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any Loan
Party's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
4.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the other Loan Documents to
which it is a party do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to such Borrower, the Governing
Documents of such Borrower, or any order, judgment, or decree of any court or
other Governmental Authority binding on such Borrower, (ii) conflict with,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any Material Contract of such Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of such Borrower, other than Permitted Liens, (iv) do not
and will not result in any default, noncompliance, suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to its operations or any of its properties, or (v) require
any approval of such Borrower's interestholders or any approval or consent of
any Person under any Material Contract of such Borrower, other than consents or
approvals that have been obtained and that are still in force and effect.
(c) Other than the filing of financing statements, the
recordation of the Mortgages, and other filings or actions necessary to perfect
Liens granted to Agent in the Collateral, the execution, delivery, and
performance by each Borrower of this Agreement and the other Loan Documents to
which such Borrower is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
16
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected (other
than (i) in respect of motor vehicles and (ii) any Deposit Accounts and
Securities Accounts not subject to a Control Agreement as permitted by SECTION
6.12, and subject only to the filing of financing statements and the recordation
of the Mortgages, and (ii) to the extent such Liens are not validly created or
perfected solely as a result of the gross negligence of Agent), and first
priority Liens (subject only to Permitted Priority Liens).
(f) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which it is a party have been duly authorized
by all necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to such Guarantor, the Governing Documents of such Guarantor, or any order,
judgment, or decree of any court or other Governmental Authority binding on such
Guarantor, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any Material Contract of such
Guarantor, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of such Guarantor, other
than Permitted Liens, (iv) do not and will not result in any default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to its operations or
any of its properties, or (v) require any approval of such Guarantor's
interestholders or any approval or consent of any Person under any Material
Contract of such Guarantor, other than consents or approvals that have been
obtained and that are still in force and effect.
(h) Other than the filing of financing statements and the
recordation of the Mortgages, and other filings or actions necessary to perfect
Liens granted to Agent in the Collateral, the execution, delivery, and
performance by each Guarantor of the Loan Documents to which such Guarantor is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority, other
than consents or approvals that have been obtained and that are still in force
and effect.
(i) The Loan Documents to which each Guarantor is a party,
and all other documents contemplated hereby and thereby, when executed and
delivered by such Guarantor will be the legally valid and binding obligations of
such Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
4.10 LITIGATION. Other than those matters disclosed on SCHEDULE
4.10 and other than matters arising after the Closing Date that reasonably could
not be expected to result in a Material Adverse Change, there are no actions,
suits, or proceedings pending or, to the knowledge of Parent and each Borrower,
threatened against any Loan Party or any of its Subsidiaries. As of the Closing
Date, none of the Loan Parties holds any commercial tort claims in respect of
which a claim has been filed in a court of law or a written notice by an
attorney has been given to a potential defendant
4.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating
to Parent and its Subsidiaries that have been delivered by any Loan Party to the
Lender Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Parent's and its Subsidiaries' financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Parent and its Subsidiaries since December 31,
2006. Notwithstanding anything to the contrary herein, for purposes of this
17
Agreement, no Material Adverse Change shall be deemed to have occurred on the
Closing Date as a direct result (i) of the making of the Term Loan or (ii) from
transactions completed prior to the Closing Date directly related to the
consummation of the Permitted Merger.
4.12 FRAUDULENT TRANSFER.
(a) Each Loan Party and each Subsidiary of a Loan Party is
Solvent.
(b) No transfer of property is being made by any Loan Party
or any Subsidiary of a Loan Party and no obligation is being incurred by any
Loan Party or any Subsidiary of a Loan Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of the Loan Parties
or their Subsidiaries.
4.13 EMPLOYEE BENEFITS.
(a) Except as set forth on Schedule 4.13, (i) each Employee
Plan is in substantial compliance with ERISA and the IRC, (ii) no Termination
Event has occurred nor is reasonably expected to occur with respect to any
Employee Plan, (iii) the most recent annual report (Form 5500 Series) with
respect to each Employee Plan, including any required Schedule B (Actuarial
Information) thereto, copies of which have been filed with the Internal Revenue
Service and delivered to Agent, is to the knowledge of Borrower complete and
correct, and since the date of such report there has been no Material Adverse
Change in such funding status, (iv) copies of each agreement entered into with
the PBGC, the U.S. Department of Labor or the Internal Revenue Service with
respect to any Employee Plan have been delivered to Agent, (v) no Employee Plan
had an accumulated or waived funding deficiency or permitted decrease which
would create a deficiency in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
IRC at any time during the previous 60 months, and (vi) no Lien imposed under
the IRC or ERISA exists or is likely to arise on account of any Employee Plan
within the meaning of Section 412 of the IRC. Except as set forth on Schedule
4.13, no Loan Party or any of its ERISA Affiliates has incurred any withdrawal
liability under ERISA with respect to any Multiemployer Plan, or is aware of any
facts indicating that it or any of its ERISA Affiliates may in the future
reasonably be expected to incur any such withdrawal liability. Except as set
forth on Schedule 4.13, no Loan Party or any of its ERISA Affiliates nor any
fiduciary of any Employee Plan has (A) engaged in a nonexempt prohibited
transaction described in Sections 406 of ERISA or 4975 of the IRC that could
reasonably be expected to result in a Material Adverse Change, (B) failed to pay
any required installment or other payment required under Section 412 of the IRC
on or before the due date for such required installment or payment if such
failure is not cured within 3 Business Days, (C) engaged in a transaction within
the meaning of Section 4069 of ERISA or (D) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums, and there are no
premium payments which have become due which are unpaid. There are no pending
or, to the knowledge of any Loan Party, threatened claims, actions, proceedings
or lawsuits (other than claims for benefits in the normal course) asserted or
instituted against (1) any Employee Plan or its assets, (2) any fiduciary with
respect to any Employee Plan, or (3) any Loan Party or any of its ERISA
Affiliates with respect to any Employee Plan. Except as required by Section
4980B of the IRC, no Loan Party or any of its ERISA Affiliates maintains an
employee welfare benefit plan (as defined in Section 3(1) of ERISA) which
provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of any Loan Party or any of its
ERISA Affiliates or coverage after a participant's termination of employment.
(b) Except as set forth on SCHEDULE 4.13, there is (a) no
unfair labor practice complaint pending or, to Parent's and each Borrower's
knowledge, threatened against any Loan Party before any Governmental Authority
and no grievance or arbitration proceeding pending or threatened against any
Loan Party which arises out of or under any collective bargaining agreement, (b)
no strike, labor dispute, slowdown, stoppage or similar action or grievance
pending or, to the best knowledge of Parent and each Borrower, threatened
against any Loan Party and (c) no union representation question existing with
respect to the employees of any Loan Party and no union organizing activity
18
taking place with respect to any of the employees of any of them. No Loan Party,
nor any ERISA Affiliate of any Loan Party has incurred any liability or
obligation under the Worker Adjustment and Retraining Notification Act or
similar state law, which remains unpaid or unsatisfied. The hours worked and
payments made to employees of Loan Parties have not been in violation of the
Fair Labor Standards Act or any other applicable legal requirements. All
material payments due from any Loan Party on account of workers compensation,
wages and employee health and welfare insurance and other benefits have been
paid or accrued as a liability on the books of such Loan Party.
4.14 ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE
4.14, (a) to Parent's and each Borrower's knowledge, none of the Loan Parties'
or their Subsidiaries' properties or assets has ever been used by the Loan
Parties or their Subsidiaries, or, to their knowledge, by previous owners or
operators in the disposal of, or to produce, store, handle, treat, release, or
transport, any Hazardous Materials, where such use, production, storage,
handling, treatment, release or transport was in violation, in any material
respect, of any applicable material Environmental Law, (b) to Parent's and each
Borrower's knowledge, none of the Loan Parties' nor their Subsidiaries'
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) none of the Loan Parties nor any of their Subsidiaries have
received written notice that a Lien arising under any Environmental Law has
attached to any revenues or to any Real Property owned or operated by the Loan
Parties or their Subsidiaries, and (d) none of the Loan Parties nor any of their
Subsidiaries have received a summons, citation, written notice, or directive
from the United States Environmental Protection Agency or any other federal or
state governmental agency concerning any material action or omission by any Loan
Party or any Subsidiary of a Loan Party resulting in the releasing or disposing
of Hazardous Materials into the environment.
4.15 INTELLECTUAL PROPERTY. Each Loan Party and each Subsidiary of
a Loan Party owns, or holds licenses in, all trademarks, trade names,
copyrights, patents, patent rights, and licenses that are necessary to the
conduct of its business as currently conducted, and attached hereto as SCHEDULE
4.15 (as updated from time to time) is a true, correct, and complete listing of
all material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Loan Party or one of
its Subsidiaries is the owner or is an exclusive licensee; PROVIDED, HOWEVER,
that Administrative Borrower may amend SCHEDULE 4.15 to add additional property
so long as such amendment occurs by written notice to Agent not less than 10
days before the date on which a Loan Party or any Subsidiary of a Loan Party
acquires any such property after the Closing Date.
4.16 LEASES; ETC..
(a) Loan Parties and their Subsidiaries enjoy peaceful and
undisturbed possession in all material respects, under all leases material to
their business and to which they are parties or under which they are operating
and all of such material leases are valid and subsisting and no material default
by Loan Parties or their Subsidiaries exists under any of them.
(b) Schedule 4.16 sets forth a complete and accurate list, as
of the Closing Date, of the location, by street address, of all real property
owned or leased by each Loan Party. No consent or approval of any landlord or
other third party in connection with any such lease is necessary for any Loan
Party to enter into and execute the Loan Documents to which it is a party,
except as set forth on Schedule 4.16. To the best knowledge of any Loan Party,
no other party to any such lease is in default of its obligations thereunder,
and no Loan Party (or any other party to any such lease) has at any time
delivered or received any notice of default which remains uncured under any such
lease and, as of the Closing Date, no event has occurred which, with the giving
of notice or the passage of time or both, would constitute a material default
under any such lease.
4.17 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on
SCHEDULE 4.17 is a listing of all of the Loan Parties' and their Subsidiaries'
Deposit Accounts and Securities Accounts, including, with respect to each bank
19
or securities intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.
4.18 COMPLETE DISCLOSURE. All factual information (taken as a
whole) furnished by or on behalf of the Loan Parties or their Subsidiaries in
writing to Agent or any Lender (including all information contained in the
Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents, or any transaction
contemplated herein or therein is, and will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading in any material respect at such
time in light of the circumstances under which such information was provided. On
the Closing Date, the Closing Date Projections represent, and as of the date on
which any other Projections are delivered to Agent, such additional Projections
represent Parent's and each Borrower's good faith estimate of their and their
Subsidiaries' future performance for the periods covered thereby based upon
assumptions believed by Parent and each of the Borrowers to be reasonable at the
time of the delivery thereof to Agent (it being understood that such projections
and forecasts are subject to uncertainties and contingencies, many of which are
beyond the control of the Loan Parties and their Subsidiaries and no assurances
can be given that such projections or forecasts will be realized).
4.19 INDEBTEDNESS. Set forth on SCHEDULE 4.19 is a true and
complete list of all Indebtedness of each Loan Party and each Subsidiary of a
Loan Party outstanding immediately prior to the Closing Date that is to remain
outstanding after the Closing Date and such Schedule accurately sets forth the
aggregate principal amount of such Indebtedness and the principal terms thereof.
4.20 MATERIAL CONTRACTS. Set forth on SCHEDULE 4.20 is a
description of all Material Contracts of Parent and its Subsidiaries, showing
the parties and principal subject matter thereof and amendments and
modifications thereto; PROVIDED, HOWEVER, that Administrative Borrower may amend
SCHEDULE 4.20 to add additional Material Contracts so long as such amendment
occurs by written notice to Agent not less than 5 days after the date on which
Parent or its Subsidiary enters into such Material Contract after the Closing
Date. Except for matters which, either individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Change, each Material
Contract (other than those that have expired at the end of their normal terms)
(a) is in full force and effect and is binding upon and enforceable against
Parent or its Subsidiary and, to the best of Parent's and each Borrower's
knowledge, each other Person that is a party thereto in accordance with its
terms, (b) has not been otherwise amended or modified (other than amendments or
modifications permitted by SECTION 6.7(C)), and (c) is not in default due to the
action or inaction of Parent or any of its Subsidiaries.
4.21 PERMITS, LICENSES, ETC. Parent and its Subsidiaries are in
compliance in all respects with all governmental permits, licenses,
authorizations, approvals, entitlements and accreditations required and material
for such Person lawfully to own, lease, manage or operate, or to acquire, each
business currently owned, leased, managed or operated, or previously acquired,
by such Person. No condition exists or event has occurred which could reasonably
be expected to result in the suspension, revocation, impairment, forfeiture or
non-renewal of any such permit, license, authorization, approval, entitlement or
accreditation, and there is no outstanding claim by any Governmental Authority
that any such permit, license, authorization, approval, entitlement or
accreditation is not in full force and effect.
4.22 SUPPLIERS. There exists no actual or, to the best knowledge
of Parent and each Borrower, threatened termination, cancellation or limitation
of, or modification to or change in, the business relationship between Parent
and any Subsidiary of Parent, on the one hand, and any material supplier
thereof, on the other hand which could reasonably be expected to result in a
Material Adverse Change; and, to the best knowledge of Parent and each Borrower,
there exists no present state of facts or circumstances that could give rise to
or result in any such termination, cancellation, limitation, modification or
change.
20
4.23 MARGIN STOCK. None of Loan Parties or any of their respective
Subsidiaries is nor will be engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System),
and no proceeds of the Term Loan will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock.
4.24 INSURANCE. Parent and each of its Subsidiaries keeps its
property adequately insured and maintains (a) insurance to such extent and
against such risks, including fire, as is customary with companies in the same
or similar businesses, (b) workers' compensation insurance in the amount
required by applicable law, (c) public liability insurance in the amount
customary with companies in the same or similar business against claims for
personal injury or death on properties owned, occupied or controlled by it, and
(d) such other insurance as may be required by law or as may be reasonably
required by Agent (including, without limitation, against larceny, embezzlement
or other criminal misappropriation). SCHEDULE 4.24 sets forth a list of all
insurance maintained by Parent and its Subsidiaries on the Closing Date.
4.25 INVESTMENT COMPANY ACT, ETC.. No Loan Party is (a) an
"investment company" or an "affiliated person" or "promoter" of, or "principal
underwriter" of or for, an "investment company", as such terms are defined in
the Investment Company Act of 1940, as amended, or (b) subject to regulation
under any xxxxxxx, xxxxx, xxxxxxxxxx, xxxxxxxxxxx, local or foreign statute or
regulation which may limit its ability to incur Indebtedness or which may
otherwise render all or any portion of the Obligations unenforceable.
4.26 TAXES, ETC. All federal, state, provincial, territorial,
supranational, local and foreign tax returns and other reports required by
applicable law to be filed by any Loan Party have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon any Loan Party or any property of any Loan Party and which have become due
and payable on or prior to the date hereof have been paid, except as otherwise
permitted under SECTION 5.7.
4.27 NATURE OF BUSINESS. No Loan Party is engaged in any business
other than (a) designing, manufacturing, and selling engineered materials and
components for the electronic, industrial and commercial markets, (b)
manufacturing and distributing meat-room products and maintenance services for
the meat and deli departments of supermarkets; restaurants; meat, poultry and
fish processing plants; and (c) distributing electrical saws and food processing
equipment.
4.28 RELATED TRANSACTION DOCUMENTS. The Parent has delivered to
Agent a complete and correct copy of each Related Transaction Document,
including all schedules and exhibits thereto. The Related Transaction Documents
set forth the entire agreement and understanding of the parties thereto relating
to the subject matter thereof, and there are no other agreements, arrangements
or understandings, written or oral, relating to the matters covered thereby. The
execution, delivery and performance of the Related Transaction Documents have
been duly authorized by all necessary action (including, without limitation, the
obtaining of any consent of stockholders or other holders of Capital Stock
required by law or by any applicable corporate or other organizational
documents) on the part of each such Person. No authorization or approval or
other action by, and no notice to filing with or license from, any Governmental
Authority is required for such sale other than such as have been obtained on or
prior to the Closing Date. The Related Transaction Documents are the legal,
valid and binding obligation of the parties thereto, enforceable against such
parties in accordance with their terms.
4.29 NO IMMUNITY. No Loan Party nor any Subsidiary of any Loan
Party or any of their respective property has any immunity from jurisdiction of
any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) under the laws of the United States or its jurisdiction of
organization.
4.30 NO TAXES. Except for any withholding tax imposed on interest
payable by any Loan Party hereunder, there is no tax, levy, impost, duty, fee,
assessment or other governmental charge, or any deduction or withholding,
21
imposed by any Governmental Authority either (i) on or by virtue of the
execution or delivery of the Loan Documents or (ii) on any payment to be made by
any Loan Party pursuant to the Loan Documents.
5. AFFIRMATIVE COVENANTS.
Parent and each Borrower covenants and agrees that, until the
payment in full of the Obligations, Parent and each of the Borrowers shall and
shall cause each of their respective Subsidiaries to do all of the following:
5.1 ACCOUNTING SYSTEM. Maintain a system of accounting that
enables Loan Parties to produce financial statements in accordance with GAAP and
maintain records pertaining to the Collateral that contain information as from
time to time reasonably may be requested by Agent. Loan Parties also shall keep
a reporting system that shows all additions, sales, claims, returns, and
allowances with respect to their and their Subsidiaries' sales. Loan Parties
shall also maintain their billing systems/practices as approved by Agent prior
to the Closing Date and shall only make material modifications thereto with
notice to, and consent of, Agent.
5.2 COLLATERAL REPORTING. Provide Agent (and if so requested by
Agent, with copies for each Lender) with each of the reports set forth on
SCHEDULE 5.2 at the times specified therein. In addition, each Borrower agrees
to cooperate fully with Agent to facilitate and implement a system of electronic
collateral reporting in order to provide electronic reporting of each of the
items set forth above.
5.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to
Agent, with copies to each Lender, each of the financial statements, reports, or
other items set forth on SCHEDULE 5.3 at the times specified therein. In
addition, Parent agrees that no Subsidiary of Parent will have a fiscal year
different from that of Parent.
5.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Parent's financial statements.
5.5 INSPECTION. Permit Agent, each Lender, and each of their duly
authorized representatives or agents to visit any of its properties and inspect
any of its assets or books and records, to examine and make copies of its books
and records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees at such reasonable times
and intervals as Agent or any such Lender may designate and, so long as no
Default or Event of Default exists, with reasonable prior notice to
Administrative Borrower. In furtherance of the foregoing, during the continuance
of an Event of Default, Parent and each Borrower hereby authorizes its
independent accountants, and the independent accountants of each of its
Subsidiaries, to discuss the affairs, finances and accounts of such Person
(independently or together with representatives of such Person) with the agents
and representatives of Agent in accordance with this Section 5.5.
5.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct of their business
in good working order and condition, ordinary wear, tear, and casualty excepted
(and except where the failure to do so could not be expected to result in a
Material Adverse Change), and comply at all times with the provisions of all
material leases to which it is a party as lessee, so as to prevent any material
loss or forfeiture thereof or thereunder.
5.7 TAXES. Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Loan Parties, their Subsidiaries, or any of their respective assets to
be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that the validity of such assessment or tax shall
be the subject of a Permitted Protest and except for assessments and taxes not
exceeding $100,000 in the aggregate. Loan Parties will and will cause their
Subsidiaries to make timely payment or deposit of all tax payments and
withholding taxes required of them by applicable laws, including those laws
22
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Loan Party or Subsidiary of a Loan Party
has made such payments or deposits.
5.8 INSURANCE.
(a) At Parent's or Borrowers' expense, maintain insurance
(with responsible and reputable insurance companies) respecting their and their
Subsidiaries' assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Parent or Borrowers
also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Administrative Borrower shall deliver copies of all such policies to
Agent with an endorsement naming Agent as the loss payee (under a satisfactory
lender's loss payable endorsement) or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of
any loss exceeding $250,000 covered by such insurance. So long as no Event of
Default has occurred and is continuing, Borrowers shall have the exclusive right
to adjust any losses payable under any such insurance policies which are less
than $500,000. Following the occurrence and during the continuation of an Event
of Default, or in the case of any losses payable under such insurance exceeding
$500,000, Agent shall have the exclusive right to adjust any losses payable
under any such insurance policies, without any liability to Loan Parties or
their Subsidiaries whatsoever in respect of such adjustments; PROVIDED, HOWEVER,
that if no Event of Default exists, the Borrowers and Agent shall use
commercially reasonable efforts to adjust any losses by agreement of the
parties.
5.9 LOCATION OF COLLATERAL. Keep each Loan Party's and its
Subsidiaries' Inventory and Equipment (other than vehicles, Inventory maintained
on vehicles and Equipment out for repair) only at the locations identified on
SCHEDULE 4.5 and their chief executive offices only at the locations identified
on SCHEDULE 4.7(B); PROVIDED, however, that Administrative Borrower may amend
SCHEDULE 4.5 or SCHEDULE 4.7 so long as such amendment occurs by written notice
to Agent not less than 30 days after the date on which such Inventory or
Equipment is moved to such new location or such chief executive office is
relocated, so long as such new location is within the continental United States
or Canada, and so long as, at the time of such written notification, the Loan
Party provides Agent a Collateral Access Agreement with respect thereto.
5.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change, such compliance to include, without limitation, (a)
paying before the same become delinquent all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or upon any of
its properties, (b) paying all lawful claims which if unpaid might become a Lien
or charge upon any of its properties, except to the extent contested in good
faith by proper proceedings which stay the imposition of any penalty, fine or
Lien resulting from the non-payment thereof and with respect to which adequate
reserves have been set aside for the payment thereof in accordance with GAAP,
(c) withholding from each payment made to any of its past or present employees,
officers or directors, and to any non resident of the country in which it is
resident, the amount of all Taxes and other deductions required to be withheld
therefrom and paying the same to the proper tax or other receiving officers
within the time required under any applicable laws, and (d) collect from all
Persons the amount of all Taxes required to be collected from them and remit the
same to the proper tax or other receiving officers within the time required
under any applicable laws.
23
5.11 LEASES. Pay when due all rents and other amounts payable
under any material leases to which any Loan Party or any Subsidiary of a Loan
Party is a party or by which any Loan Party's or any of its Subsidiaries'
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.
5.12 EXISTENCE. At all times preserve and keep in full force and
effect each Loan Party's and each of its Subsidiaries', valid existence, good
standing in its jurisdiction of organization and qualifications to do business
as a foreign entity in each jurisdiction in which it is required to be so
qualified and, except as could not reasonably be expected to result in a
Material Adverse Change, any rights, franchises, permits, licenses,
accreditations, authorizations, or other approvals material to their businesses.
5.13 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any Loan
Party or any Subsidiary of a Loan Party free of any Environmental Liens or post
bonds or other financial assurances sufficient to satisfy the obligations or
liability evidenced by such Environmental Liens,
(b) comply, in all material respects, with Environmental Laws
and provide to Agent documentation of such compliance which Agent reasonably
requests,
(c) promptly notify Agent of any release of a Hazardous
Material in any reportable quantity from or onto property owned or operated by
any Loan Party or any Subsidiary of a Loan Party and take any Remedial Actions
required to xxxxx said release or otherwise to come into compliance with
applicable Environmental Law, and
(d) promptly, but in any event within 5 days of its receipt
thereof, provide Agent with written notice of any of the following: (i) actual
knowledge or written notice that an Environmental Lien has been filed against
any of the real or personal property of any Loan Party or any Subsidiary of a
Loan Party, (ii) actual knowledge or written notice of the commencement of any
Environmental Action or written notice that an Environmental Action will be
filed against any Loan Party or any Subsidiary of a Loan Party, and (iii)
written notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse Change.
5.14 DISCLOSURE UPDATES. Promptly and in no event later than 5
Business Days after obtaining knowledge thereof, notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained, at the
time it was furnished, any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made. The foregoing to the
contrary notwithstanding, any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior untrue statement of a material
fact or omission of any material fact nor shall any such notification have the
effect of amending or modifying this Agreement or any of the Schedules hereto.
5.15 CONTROL AGREEMENTS. Take all reasonable steps in order for
Agent to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106,
and 9-107 of the Code with respect to (subject to the proviso contained in
SECTION 6.12) all of its Securities Accounts, Deposit Accounts, electronic
chattel paper, investment property, and letter-of-credit rights.
5.16 FORMATION OF SUBSIDIARIES. At the time that any Loan Party
forms any direct or indirect Subsidiary or acquires any direct or indirect
Subsidiary after the Closing Date, such Loan Party shall (a) cause such new
Subsidiary to provide to Agent a joinder to the Guaranty and the Security
Agreement, together with such other security documents (including Mortgages with
respect to any Real Property of such new Subsidiary), as well as appropriate
financing statements (and with respect to all property subject to a Mortgage,
fixture filings), all in form and substance satisfactory to Agent (including
being sufficient to grant Agent a first priority Lien (subject to Permitted
Priority Liens) in and to the assets of such newly formed or acquired
24
Subsidiary), (b) provide to Agent a pledge agreement and appropriate
certificates and powers or financing statements, hypothecating all of the direct
or beneficial ownership interest in such new Subsidiary, in form and substance
satisfactory to Agent, and (c) provide to Agent all other documentation,
including one or more opinions of counsel satisfactory to Agent, which in its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above (including policies of title
insurance or other documentation with respect to all property subject to a
Mortgage). Any document, agreement, or instrument executed or issued pursuant to
this SECTION 5.16 shall be a Loan Document.
5.17 FURTHER ASSURANCES. At any time upon the request of Agent,
the Loan Parties shall execute or deliver to Agent, and shall cause their
Subsidiaries to execute or deliver to Agent, any and all financing statements,
fixture filings, security agreements, pledges, assignments, endorsements of
certificates of title, mortgages, deeds of trust, opinions of counsel, and all
other documents (collectively, the "ADDITIONAL DOCUMENTS") that Agent may
request in form and substance reasonably satisfactory to Agent, to create,
perfect, and continue perfected or to better perfect the Agent's Liens in all of
the properties and assets of the Loan Parties and their Subsidiaries (whether
now owned or hereafter arising or acquired, tangible or intangible, real or
personal), to create and perfect Liens in favor of Agent in any Real Property
acquired by the Loan Parties or their Subsidiaries after the Closing Date, and
in order to fully consummate all of the transactions contemplated hereby and
under the other Loan Documents. To the maximum extent permitted by applicable
law, Parent and each Borrower authorize Agent to execute any such Additional
Documents in the Loan Party's or their Subsidiaries' names, as applicable, and
authorizes Agent to file such executed Additional Documents in any appropriate
filing office.
5.18 MATERIAL CONTRACTS. Contemporaneously with the delivery of
each Compliance Certificate pursuant hereto, provide Agent with copies of (a)
each Material Contract entered into since the delivery of the previous
Compliance Certificate, and (b) each amendment or modification of any Material
Contract entered into since the delivery of the previous Compliance Certificate.
5.19 SUBORDINATION. Cause all Indebtedness and other obligations
now or hereafter owed by it to any of its Affiliates, to be subordinated in
right of payment and security to the Indebtedness and other Obligations owing to
the Agent and the Lenders in accordance with a subordination agreement in form
and substance satisfactory to the Agent.
5.20 AFTER ACQUIRED REAL PROPERTY. Upon the acquisition by it or
any of its Subsidiaries after the date hereof of any interest (whether fee or
leasehold) in any Real Property (wherever located) (each such interest being an
"AFTER ACQUIRED PROPERTY") (x) with a Current Value (as defined below) in excess
of $150,000 in the case of a fee interest, or (y) requiring the payment of
annual rent exceeding in the aggregate $250,000 in the case of leasehold
interest, immediately so notify Agent, setting forth with specificity a
description of the interest acquired, the location of the real property, any
structures or improvements thereon and either an appraisal or such Loan Party's
good-faith estimate of the current value of such real property (for purposes of
this Section, the "CURRENT VALUE"). Agent shall notify such Loan Party in
writing whether it intends to require a Mortgage and the other documents
referred to below or in the case of leasehold, a leasehold Mortgage or a
Collateral Access Agreement. Upon receipt of such notice requesting a Mortgage,
the Person which has acquired such After Acquired Property shall furnish to
Agent within a reasonable time thereafter the following, each in form and
substance reasonably satisfactory to Agent: (a) in the case of a fee interest, a
Mortgage with respect to such real property and related assets located at the
After Acquired Property, each duly executed by such Person and in recordable
form; (b) in the case of a fee interest, evidence of the recording of the
Mortgage referred to in clause (a) above in such office or offices as may be
necessary or, in the reasonable opinion of Agent, desirable to create and
perfect a valid and enforceable first priority lien on the property purported to
be covered thereby or to otherwise protect the rights of Agent and the Lenders
thereunder, (c) in the case of a fee interest, a title insurance policy
satisfactory to Agent, (d) in the case of a fee interest, a survey of such real
property, certified to Agent and to the issuer of the title insurance policy
referred to in clause (c) above by a licensed professional surveyor reasonably
satisfactory to Agent, (v) in the case of a fee interest, Phase I environmental
site assessments with respect to such real property, certified to Agent by a
company reasonably satisfactory to Agent, or such other evidence or description
of the environmental status of the property reasonably acceptable to Agent, (e)
25
in the case of a leasehold interest, a certified copy of the lease between the
landlord and such Person with respect to such Real Property in which such Person
has a leasehold interest, and the certificate of occupancy, if any, with respect
thereto, and (f) such other documents or instruments (including opinions of
counsel) as Agent may reasonably require. In the case of a leasehold interest,
the Person which has acquired such After Acquired property shall request of the
landlord an attornment and nondisturbance agreement between the landlord (and
any fee mortgagee) with respect to such real property and Agent. Borrowers shall
pay all reasonable fees and expenses, including reasonable attorneys' fees and
expenses, and all title insurance charges and premiums, in connection with each
Loan Party's obligations under this SECTION 5.21.
6. NEGATIVE COVENANTS.
Parent and each Borrower covenants and agrees that until the
payment in full of the Obligations, Parent and each of the Borrowers will not
and will not permit any of their respective Subsidiaries to do any of the
following:
6.1 INDEBTEDNESS. Create, incur, assume, suffer to exist,
guarantee, or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents,
(b) Indebtedness set forth on SCHEDULE 4.19 and any
Refinancing Indebtedness in respect of such Indebtedness,
(c) Permitted Purchase Money Indebtedness and any Refinancing
Indebtedness in respect of such Indebtedness,
(d) endorsement of instruments or other payment items for
deposit,
(e) Indebtedness composing Permitted Investments,
(f) (a) Indebtedness under the Working Capital Credit
Agreement in an aggregate principal amount not to exceed (A) in the case of
Working Capital Indebtedness in respect of Working Capital Advances, letter of
credit reimbursement obligations and bank product obligations, the lesser of (I)
$35,000,000 and (II) 110% of Working Capital Borrowing Base (after giving effect
to all reserves then in effect), plus (B) the aggregate principal amount of the
Working Capital Term Loan outstanding on the date hereof, minus the aggregate
amount of all principal payments received by the Working Capital Lenders with
respect thereto; provided that, (i) the Working Capital Agent and the Loan
Parties shall have executed and delivered to Agent the Intercreditor Agreement,
and (ii) the Working Capital Credit Agreement is not amended to increase Working
Capital Availability thereunder, including any amendment, waiver or other
modification with respect to the Working Capital Borrowing Base, the
requirements to impose permanent reserves against Working Capital Availability
and/or the Working Capital Borrowing Base and to reduce the Working Capital
Commitments upon the occurrence of certain events, and (b) the refinancing of
the Indebtedness under the Working Capital Credit Agreement; provided, that (i)
the aggregate outstanding principal amount of the loans, letter of credit
accommodations made, issued or incurred pursuant to such new working capital
credit facility shall not exceed the amounts set forth in clause (a) above, (ii)
the lender or lenders under such new working capital facility and the Loan
Parties shall have executed and delivered to the Agent an intercreditor
agreement, substantially in the form of the Intercreditor Agreement, and (iii)
the Working Capital Credit Agreement is replaced with another working capital
agreement, the terms and conditions of which are no less favorable to the Loan
Parties and the Lenders than the Working Capital Credit Agreement entered into
on the Closing Date (including with respect to the Working Capital Borrowing
Base, the imposition of permanent reserves against Working Capital Availability
and/or the Working Capital Borrowing Base);
26
(g) the Subordinated Indebtedness and the obligations under
the WHX Guaranty Documents, subject to the execution and delivery of a joinder
to the terms of the Subordination Agreement, any Refinancing Indebtedness of
such Indebtedness,
(h) Indebtedness incurred by the Parent's Subsidiaries
organized outside of the United States and Canada (other than Indebtedness
described on SCHEDULE 4.19), provided that (i) the aggregate principal amount of
such Indebtedness shall not exceed $3,000,000 outstanding at any time and (ii)
such Indebtedness is supported by one or more issued and outstanding Working
Capital Letters of Credit (for the avoidance of doubt, Indebtedness shall not
include any contingent obligations arising under undrawn letters of credit that
provide credit support for Indebtedness permitted under this clause (h)); and
(i) Other Subordinated Indebtedness.
6.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.
6.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, amalgamation,
reorganization, or recapitalization, or reclassify its Stock except that so long
as no Default or Event of Default exists or would result therefrom, (i) a
Borrower or any Domestic Subsidiary thereof may merge with a Borrower, provided
such Borrower is the continuing or surviving Person, (ii) the Loan Parties may
consummate a merger or similar transaction in connection with a Permitted Kasco
Sale Transaction and (iii) Loan Parties may effectuate a restructuring for tax
purposes with the prior written consent of Agent, such consent to be granted or
withheld by Agent in its sole and absolute discretion (provided that so long as
such tax restructuring is not adverse to the interests of the Lender Group, as
determined by Agent in its sole discretion, Agent's consent shall not be
unreasonably withheld).
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution),
(c) Suspend or go out of a substantial portion of its or
their business.
6.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions or a
Permitted Kasco Sale Transaction, convey, sell, lease, license, assign,
transfer, or otherwise dispose of (or enter into an agreement to convey, sell,
lease, license, assign, transfer, or otherwise dispose of) any of the assets of
any Loan Party or any Subsidiary of a Loan Party.
6.5 CHANGE NAME. Change any Loan Party's or any of its
Subsidiaries' name, organizational identification number, state of organization
or organizational identity; PROVIDED, HOWEVER, that a Loan Party or a Subsidiary
of a Loan Party may change its name upon at least 30 days prior written notice
by Administrative Borrower to Agent of such change and so long as, at the time
of such written notification, such Loan Party or such Subsidiary provides any
financing statements necessary to perfect and continue perfected the Agent's
Liens.
6.6 NATURE OF BUSINESS. Make any change in the nature of their
business as described in SCHEDULE 6.6 or acquire any properties or assets that
are not reasonably related to the conduct of such business activities.
6.7 PREPAYMENTS AND AMENDMENTS. Except in connection with
Refinancing Indebtedness permitted by SECTION 6.1,
27
(a) optionally prepay, redeem, defease, purchase, or
otherwise acquire any Indebtedness of any Loan Party or any Subsidiary of a Loan
Party, other than (i) the Obligations in accordance with this Agreement, and
(ii) the Working Capital Indebtedness in accordance with the Working Capital
Credit Agreement,
(b) make any payment on account of Indebtedness that has been
contractually subordinated in right of payment if such payment is not permitted
at such time under the subordination terms and conditions, or
(c) directly or indirectly, amend, modify, alter, increase,
or change any of the terms or conditions of (i) the Working Capital Loan
Documents (except as specifically permitted by the Intercreditor Agreement),
(ii) any other agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under SECTION 6.1, (iii) except
to the extent that such amendment, modification, alteration, increase, or change
could not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Change, any other Material Contract, or (iv) its certificate
of incorporation or bylaws (or other similar organizational documents),
including, without limitation, by the filing or modification of any certificate
of designation, or any agreement or arrangement entered into by it, with respect
to any of its Stock (including any shareholders' agreement), or enter into any
new agreement with respect to any of its Stock, without the prior written
consent of Agent, except any such amendments, modifications or changes or any
such new agreements or arrangements pursuant to this clause (iv) that are not
adverse to the interests of any member of the Lender Group, or
(d) amend, modify or otherwise change its name, jurisdiction
of organization, organizational identification number or FEIN, without at least
twenty (20) days prior written notice to Agent.
6.8 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
6.9 CONSIGNMENTS. Consign any of their Inventory or sell any of
their Inventory on xxxx and hold, sale or return, sale on approval, or other
conditional terms of sale, in an aggregate amount at any time outstanding
exceeding $1,000,000.
6.10 DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock of the Parent) on,
or purchase, acquire, redeem, or retire any of Parent's Stock, of any class,
whether now or hereafter outstanding.
6.11 ACCOUNTING METHODS. Modify or change their fiscal year,
method of accounting (other than as may be required to conform to GAAP) or
auditors, or enter into, modify, or terminate any agreement currently existing,
or at any time hereafter entered into, with any third party accounting firm or
service bureau for the preparation or storage of Loan Parties' or their
Subsidiaries' accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding Loan Parties' and their
Subsidiaries' financial condition.
6.12 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; PROVIDED,
HOWEVER, that the Loan Parties shall not have Permitted Investments (other than
in the Cash Management Accounts) in Deposit Accounts or Securities Accounts in
an aggregate amount in excess of $100,000 at any one time unless the applicable
Loan Party and the applicable securities intermediary or bank have entered into
Control Agreements governing such Permitted Investments in order to perfect (and
further establish) the Agent's Liens in such Permitted Investments; provided,
however, the applicable Loan Party shall transfer any Investment with account
balance in excess of $25,000 to a Deposit Account or Securities Account that is
subject to a Control Agreement within one (1) Business Day of such account
balance exceeding $25,000. Subject to the foregoing proviso, Loan Parties shall
28
not and shall not permit their Domestic Subsidiaries to establish or maintain
any Deposit Account or Securities Account unless Agent shall have received a
Control Agreement in respect of such Deposit Account or Securities Account.
6.13 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter
into or permit to exist any transaction with any Affiliate (which is not a Loan
Party) of any Loan Party or any Subsidiary (which is not a Loan Party) of a Loan
Party except for:
(a) transactions (other the payment of management,
consulting, monitoring, or advisory fees) between the Loan Parties or their
Subsidiaries, on the one hand, and any Affiliate of the Loan Parties or their
Subsidiaries, on the other hand, so long as such transactions (i) are in the
ordinary course of business and desirable for the prudent operation of its
business, upon fair and reasonable terms, (ii) are fully disclosed to Agent if
they involve one or more payments by any Loan Party or any of Subsidiary of a
Loan Party in excess of $250,000 for any single transaction or series of
transactions, and (iii) are no less favorable to Loan Parties or their
Subsidiaries, as applicable, than would be obtained in an arm's length
transaction with a non-Affiliate; and
(b) the payment of reasonable fees, compensation, or employee
benefit arrangements to, and any indemnity provided for the benefit of, outside
directors of Parent in the ordinary course of business and consistent with
industry practice.
6.14 USE OF PROCEEDS. Use the proceeds of the Term Loan for any
purpose other than to repay, in full, the outstanding principal, accrued
interest, and accrued fees and expenses owing to Existing Lender, (ii) to
partially repay the outstanding obligations under the Bridge Facility in an
amount equal to $56,659,776.38, and (iii) to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (b) consistent with
the terms and conditions hereof, for other lawful and permitted purposes.
6.15 INVENTORY AND EQUIPMENT WITH BAILEES. Except in the ordinary
course of business, store any Inventory or Equipment of Loan Parties or their
Subsidiaries at any time now or hereafter with a bailee, warehouseman, or
similar party.
6.16 FINANCIAL COVENANTS.
(a) MINIMUM TTM EBITDA. Permit TTM EBITDA to be less than the
required amount set forth in the following table for the applicable period set
forth opposite thereto:
-------------------------------------------------------------------------------
Applicable Amount Applicable Period
-------------------------------------------------------------------------------
$17,250,000 For the 12- month period
ending September 30, 2007
-------------------------------------------------------------------------------
$17,250,000 For the 12- month period
ending December 31, 2007
-------------------------------------------------------------------------------
$18,500,000 For the 12- month period
ending March 31, 2008
-------------------------------------------------------------------------------
$19,500,000 For the 12- month period
ending June 30, 2008
-------------------------------------------------------------------------------
$20,250,000 For the 12- month period
ending September 30, 2008
-------------------------------------------------------------------------------
$20,750,000 For the 12- month period ending December 31, 2008
and ending each fiscal quarter thereafter
-------------------------------------------------------------------------------
29
(b) FIXED CHARGE COVERAGE RATIO. Have a Fixed Charge Coverage
Ratio, measured on a quarterly basis, less than the required amount set forth in
the following table for the applicable period set forth opposite thereto:
-------------------------------------------------------------------------------
Applicable Ratio Applicable Period
-------------------------------------------------------------------------------
0.81:1.0 For the 12- month period
ending September 30, 2007
-------------------------------------------------------------------------------
0.83:1.0 For the 12- month period
ending December 31, 2007
-------------------------------------------------------------------------------
0.90:1.0 For the 12- month period
ending March 31, 2008
-------------------------------------------------------------------------------
1.02:1.0 For the 12- month period
ending June 30, 2008
-------------------------------------------------------------------------------
1.10:1.0 For the 12- month period
ending September 30, 2008
-------------------------------------------------------------------------------
1.15:1.0 For the 12- month period ending December 31, 2008
and ending each fiscal quarter thereafter
-------------------------------------------------------------------------------
(c) LEVERAGE RATIO. Have a Leverage Ratio, measured on a
quarterly basis, more than the applicable ratio set forth in the following table
for the applicable date set forth opposite thereto:
-------------------------------------------------------------------------------
Applicable Ratio Applicable Date
-------------------------------------------------------------------------------
5.22:1.0 September 30, 2007
-------------------------------------------------------------------------------
5.00:1.0 December 31, 2007
-------------------------------------------------------------------------------
4.90:1.0 March 31, 2008
-------------------------------------------------------------------------------
4.54:1.0 June 30, 2008
-------------------------------------------------------------------------------
4.12:1.0 September 30, 2008
-------------------------------------------------------------------------------
4.00:1.0 December 31, 2008 and the last day of each
fiscal quarter thereafter
-------------------------------------------------------------------------------
30
(d) CAPITAL EXPENDITURES. Make Capital Expenditures in any
fiscal year in excess of the amount set forth in the following table for the
applicable period:
-------------------------------------------------------------------------------------------------------------
Fiscal Year 2007 Fiscal Year 2008 Fiscal Year 2009 Fiscal Year 2010 Fiscal Year 2011 Fiscal Year 2011
-------------------------------------------------------------------------------------------------------------
$9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000
-------------------------------------------------------------------------------------------------------------
; PROVIDED, HOWEVER, that if during any fiscal year the amount of Capital
Expenditures permitted for that fiscal year is not utilized, 50% of such
unutilized amount (exclusive of any amounts carried over from the prior fiscal
year) may be utilized in the immediately succeeding fiscal year.
6.17 PARENT AS HOLDING COMPANY. Permit Parent to incur any
liabilities (other than liabilities arising under the Loan Documents or the
Working Capital Loan Documents, the Subordinated Debt Loan Documents or the WHX
Guaranty Documents), own or acquire any assets (other than the Stock of its
Subsidiaries) or engage itself in any operations or business except as set forth
on SCHEDULE 6.17.
6.18 EMPLOYEE BENEFITS. (i) Engage, or permit any ERISA Affiliate
to engage, in any transaction described in Section 4069 of ERISA; (ii) engage,
or permit any ERISA Affiliate to engage, in any prohibited transaction described
in Section 406 of ERISA or 4975 of the IRC for which a statutory or class
exemption is not available or a private exemption has not previously been
obtained from the U.S. Department of Labor; (iii) adopt or permit any ERISA
Affiliate to adopt any employee welfare benefit plan within the meaning of
Section 3(1) of ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA or applicable law;
(iv) fail to make any contribution or payment to any Multiemployer Plan which it
or any ERISA Affiliate may be required to make under any agreement relating to
such Multiemployer Plan, or any law pertaining thereto; (v) fail, or permit any
ERISA Affiliate to fail, to pay any required installment or any other payment
required under Section 412 of the IRC on or before the due date for such
installment or other payment; or (vi) merge or otherwise consolidate any
Employee Plan of any Loan Party with any other Employee Plan without the prior
written consent of Agent, such consent to be granted or withheld by Agent in
sole and absolute discretion (provided that so long as such merger or
consolidation is not adverse to the interests of the Lender Group, as determined
by Agent in its sole discretion, Agent's consent shall not be unreasonably
withheld).
6.19 LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES. 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 Subsidiary of any Loan Party (i) to pay dividends
or to make any other distribution on any shares of Stock of such Subsidiary
owned by any Loan Party or any of its Subsidiaries, (ii) to pay or prepay or to
subordinate any Indebtedness owed to any Loan Party or any of its Subsidiaries,
(iii) to make loans or advances to any Loan Party or any of its Subsidiaries or
(iv) to transfer any of its property or assets to any Loan Party or any of its
Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing;
PROVIDED, HOWEVER, that nothing in any of clauses (i) through (iv) of this
SECTION 6.19 shall prohibit or restrict compliance with:
(a) this Agreement, the other Loan Documents, and the Working
Capital Loan Documents;
(b) any applicable law, rule or regulation (including
applicable currency control laws and applicable state
corporate statutes restricting the payment of dividends in
certain circumstances);
31
(c) in the case of clause (iv), any agreement setting forth
customary restrictions on the subletting, assignment or
transfer of any property or asset that is leased or licensed;
or
(d) in the case of clause (iv), any agreement, instrument or
other document evidencing a Permitted Lien that restricts, on
customary terms, the transfer of any property or assets
subject thereto.
6.20 LEASE OBLIGATIONS. Create, incur or suffer to exist, or
permit any of its Subsidiaries to create, incur or suffer to exist, any
obligations as lessee (i) for the payment of rent for any real or personal
property in connection with any sale and leaseback transaction, or (ii) for the
payment of rent for any real or personal property under leases or agreements to
lease other than (A) Capital Lease Obligations which would not cause the
aggregate amount of all obligations under Capital Leases entered into after the
Closing Date owing by all Loan Parties and their Subsidiaries in any fiscal year
to exceed the amounts SECTION 6.16(D), and (B) Operating Lease Obligations which
would not cause the aggregate amount of all Operating Lease Obligations owing by
all Loan Parties and their Subsidiaries in any fiscal year to exceed $5,000,000.
6.21 FEDERAL RESERVE REGULATIONS. Permit the Term Loan, or the
proceeds thereof, to be used for any purpose that would cause the Term Loan to
be a margin loan under the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
6.22 INVESTMENT COMPANY ACT OF 1940. Engage in any business, enter
into any transaction, use any securities or take any other action or permit any
of its Subsidiaries to do any of the foregoing, that would cause it or any of
its Subsidiaries to become subject to the registration requirements of the
Investment Company Act of 1940, as amended, by virtue of being an "investment
company" or a company "controlled" by an "investment company" not entitled to an
exemption within the meaning of such Act.
7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "EVENT OF DEFAULT") under this Agreement:
7.1 If any Loan Party fail to pay when due and payable, or when
declared due and payable, (a) all or any portion of the Obligations consisting
of interest, fees, or charges due the Lender Group, reimbursement of Lender
Group Expenses, or other amounts (other than any portion thereof constituting
principal) constituting Obligations (including any portion thereof that accrues
after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), and such failure continues for a period of 3 Business Days, or (b)
all or any portion of the principal of the Obligations;
7.2 If any Loan Party or any Subsidiary of any Loan Party;
(a) fails to perform or observe any covenant or other
agreement contained in any of SECTIONS 2.5, 5.2, 5.3, 5.4, 5.5, 5.8, 5.12, 5.14,
5.16, 5.17 and 6.1 through 6.22 of this Agreement or Section 6 of the Security
Agreement; provided, that no more than two (2) times during any fiscal year of
Parent, any Loan Party may fail to deliver in a timely manner a delivery
required under SECTIONS 5.2, 5.3 or 5.4, if such delivery shall occur no later
than two (2) Business Days following notice by Agent;
(b) fails to perform or observe any covenant or other
agreement contained in any of SECTIONS 5.6, 5.7, 5.9, 5.10, 5.11 and 5.15 of
this Agreement and such failure continues for a period of 10 days after the
earlier of (i) the date on which such failure shall first become known to any
officer of any Loan Party, or (ii) written notice thereof is given to
Administrative Borrower by Agent;
32
(c) fails to perform or observe any covenant or other
agreement contained in this Agreement, or in any of the other Loan Documents, in
each case, other than any such covenant or agreement that is the subject of
another provision of this SECTION 7 (in which event such other provision of this
SECTION 7 shall govern), and such failure continues for a period of 20 days
after the earlier of (i) the date on which such failure shall first become known
to any officer of any Loan Party, or (ii) written notice thereof is given to
Administrative Borrower by Agent.
7.3 If any material portion of any Loan Party's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of any third Person and
the same is not discharged before the earlier of 30 days after the date it first
arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by such Loan Party or the applicable Subsidiary;
7.4 If an Insolvency Proceeding is commenced by any Loan Party or
any Subsidiary of a Loan Party;
7.5 If an Insolvency Proceeding is commenced against any Loan
Party or any Subsidiary of a Loan Party, and any of the following events occur:
(a) the applicable Loan Party or Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof, (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, any Loan Party or any Subsidiary
of a Loan Party, or (e) an order for relief shall have been issued or entered
therein;
7.6 If any Loan Party or any Subsidiary of a Loan Party is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs;
7.7 If one or more judgments, orders, or awards involving an
aggregate amount of $250,000, or more (except to the extent fully covered by
insurance pursuant to which the insurer has accepted liability therefor in
writing) shall be entered or filed against any Loan Party or any Subsidiary of
any Loan Party or with respect to any of their respective assets, and the same
is not released, discharged, bonded against, or stayed pending appeal before the
earlier of 30 days after the date it first arises or 5 days prior to the date on
which such asset is subject to being forfeited by the applicable Loan Party or
the applicable Subsidiary;
7.8 If there is a default in one or more agreements to which any
Loan Party or any Subsidiary of a Loan Party is a party with one or more third
Persons relative to Indebtedness of any Loan Party or any Subsidiary of any Loan
Party involving an aggregate amount of $250,000, or more, and such default (i)
occurs at the final maturity of the obligations thereunder, or (ii) results in a
right by such third Person(s), irrespective of whether exercised, to accelerate
the maturity of the applicable Loan Party's or Subsidiary's obligations
thereunder;
7.9 If any warranty, representation, material written statement,
or material Record made herein or in any other Loan Document or delivered to
Agent or any Lender in connection with this Agreement or any other Loan Document
proves to be untrue in any material respect (except that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof) as of the
date of issuance or making or deemed making thereof;
7.10 If the obligation of any Guarantor under the Guaranty is
limited or terminated by operation of law or by such Guarantor, or any such
Guarantor becomes the subject of an Insolvency Proceeding;
7.11 If the Security Agreement, the Canadian Security Agreement,
any Mortgage or any other Loan Document that purports to create a Lien, shall,
for any reason, fail or cease to create a valid and perfected and, except to the
33
extent permitted by the terms hereof or thereof, first priority Lien (subject to
Permitted Priority Liens) on or security interest in the Collateral covered
hereby or thereby, except (a) as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement or (b) solely as a
result of the gross negligence of Agent;
7.12 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void (except solely as a result of the gross
negligence of Agent), or the validity or enforceability thereof shall be
contested by any Loan Party or any Subsidiary of a Loan Party, or a proceeding
shall be commenced by any Loan Party or any Subsidiary of a Loan Party, or by
any Governmental Authority having jurisdiction over any Loan Party or any
Subsidiary of a Loan Party, seeking to establish the invalidity or
unenforceability thereof, or any Loan Party or any Subsidiary of a Loan Party
shall deny that it has any liability or obligation purported to be created under
any Loan Document;
7.13 Any material damage to, or loss, theft or destruction of, any
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which
causes, for more than thirty (30) consecutive days and which is not reasonably
capable of remedy within such period, the cessation or substantial curtailment
of revenue producing activities at any facility of any Loan Party, if any such
event or circumstance could reasonably be expected to have a Material Adverse
Effect; or
7.14 Any cessation of a substantial part of the business of the
Parent or any of its Subsidiaries, taken as a whole, for a period which
materially and adversely affects the ability of such business to be continued on
a profitable basis.
7.15 Any Loan Party or any of its ERISA Affiliates shall have made
a complete or partial withdrawal from a Multiemployer Plan, and, as a result of
such complete or partial withdrawal, any Loan Party or any of its ERISA
Affiliates incurs a withdrawal liability in an annual amount exceeding $250,000;
or a Multiemployer Plan enters reorganization status under Section 4241 of
ERISA, and, as a result thereof any Loan Party's or any of its ERISA Affiliates'
annual contribution requirements with respect to such Multiemployer Plan
increases in an annual amount exceeding $250,000; or
7.16 Any Termination Event with respect to any Employee Plan shall
have occurred, and, 30 days after notice thereof shall have been given to any
Loan Party by any Agent, (i) such Termination Event (if correctable) shall not
have been corrected, and (ii) the then current value of such Employee Plan's
vested benefits exceeds the then current value of assets allocable to such
benefits in such Employee Plan by more than $250,000 (or, in the case of a
Termination Event involving liability under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 of the IRC,
which liabilities will not be aggregated, the liability is in excess of such
amount).
8. THE LENDER GROUP'S RIGHTS AND REMEDIES.
8.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by Parent
and each of the Borrowers:
(a) Declare all or any portion of the Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations; and
34
(c) The Lender Group shall have all other rights and
remedies available at law or in equity or pursuant to any other Loan Document.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in SECTION 7.4 or SECTION 7.5, in addition to the remedies
set forth above, without any notice to Loan Parties or any other Person or any
act by the Lender Group and the Obligations then outstanding, together with all
accrued and unpaid interest thereon and all fees and all other amounts due under
this Agreement and the other Loan Documents, shall automatically and immediately
become due and payable, without presentment, demand, protest, or notice of any
kind, all of which are expressly waived by Parent and each of the Borrowers.
8.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender
Group under this Agreement, the other Loan Documents, and all other agreements
shall be cumulative. The Lender Group shall have all other rights and remedies
not inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
9. TAXES AND EXPENSES.
If any Loan Party or its Subsidiaries fail to pay any monies
(whether taxes, assessments, insurance premiums, or, in the case of leased
properties or assets, rents or other amounts payable under such leases) due to
third Persons, or fails to make any deposits or furnish any required proof of
payment or deposit, all as required under the terms of this Agreement, then,
Agent, in its sole discretion and without prior notice to any Loan Party, may do
any or all of the following: (a) make payment of the same or any part thereof,
or (b) in the case of the failure to comply with SECTION 5.8 hereof, obtain and
maintain insurance policies of the type described in SECTION 5.8 and take any
action with respect to such policies as Agent deems prudent. Any such amounts
paid by Agent shall constitute Lender Group Expenses and any such payments shall
not constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
10. WAIVERS; INDEMNIFICATION.
10.1 DEMAND; PROTEST; ETC. Except to the extent expressly provided
herein, Parent and each Borrower waives (on behalf of themselves and their
respective Subsidiaries) demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments, chattel
paper, and guarantees at any time held by the Lender Group on which Parent, such
Borrower or any Subsidiary may in any way be liable.
10.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Parent and each
Borrower hereby agrees (on behalf of themselves and their respective
Subsidiaries) that: (a) so long as Agent complies with its obligations, if any,
under the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Loan Parties.
10.3 INDEMNIFICATION. Parent and each Borrower, jointly and
severally, shall pay, indemnify, defend, and hold the Agent-Related Persons, the
Lender-Related Persons, and each Participant (each, an "INDEMNIFIED PERSON")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, liabilities,
fines, costs, penalties, and damages, and all reasonable fees and disbursements
of attorneys, experts, or consultants and all other costs and expenses actually
35
incurred in connection therewith or in connection with the enforcement of this
indemnification (as and when they are incurred and irrespective of whether suit
is brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution,
delivery, enforcement, performance, or administration (including any
restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of the Loan Parties' and their Subsidiaries' compliance with the
terms of the Loan Documents, (b) with respect to any investigation, litigation,
or proceeding related to this Agreement, any other Loan Document, or the use of
the proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto, and (c) in connection with or
arising out of any presence or release of Hazardous Materials at, on, under, to
or from any assets or properties owned, leased or operated by Parent or any of
its Subsidiaries or any Environmental Actions, Environmental Liabilities and
Costs or Remedial Actions related in any way to any such assets or properties of
Parent or any of its Subsidiaries (each and all of the foregoing, the
"INDEMNIFIED LIABILITIES"). The foregoing to the contrary notwithstanding,
Parent and the Borrowers shall have no obligation to any Indemnified Person
under this SECTION 10.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person or from such
Indemnified Person's breach of its material obligations under the Loan
Documents. This provision shall survive the termination of this Agreement and
the repayment of the Obligations. If any Indemnified Person makes any payment to
any other Indemnified Person with respect to an Indemnified Liability as to
which Parent or the Borrowers were required to indemnify the Indemnified Person
receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Parent and the Borrowers with respect
thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH
INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN
PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
11. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Parent, Borrowers or Agent to the other relating to this Agreement or
any other Loan Document shall be in writing and (except for financial statements
and other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative BAIRNCO CORPORATION
Borrower: 000 Xxxxxxx Xxxx.
Xxxxx 000
Xxxx Xxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
Fax No.: 000-000-0000
With copies to: XXXXXX XXXXXXXX FROME XXXXXXXXXX &
WOLOSKY LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx , Xxx Xxxx 00000-0000
Attn: Xxxxx Xxxxxxx, Esq.
Fax No.: 000-000-0000
36
If to Agent: ABLECO FINANCE LLC
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxx
Fax No.: 000-000-0000
With copies to: XXXXXXX XXXX & XXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Fax No.: 000-000-0000
Agent and Parent and the Borrowers may change the address at
which they are to receive notices hereunder, by notice in writing in the
foregoing manner given to the other party. All notices or demands sent in
accordance with this SECTION 11, other than notices by Agent in connection with
enforcement rights against the Collateral under the provisions of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3
Business Days after the deposit thereof in the mail. Parent and each Borrower
acknowledges and agrees (on behalf of themselves and their Subsidiaries) that
notices sent by the Lender Group in connection with the exercise of enforcement
rights against Collateral under the provisions of the Code shall be deemed sent
when deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE
LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. EACH OF THE PARTIES HERETO WAIVE, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 12(B).
(c) EACH OF THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH OF THE PARTIES HERETO REPRESENT THAT EACH
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
37
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
13.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender may with the written consent of Agent,
assign to one or more other lenders or other entities all or a portion of its
rights and obligations under this Agreement with respect to all or a portion of
its Term Loan Commitment and any Term Loan made by it; PROVIDED, HOWEVER, that
(i) such assignment is in an amount which is at least $1,000,000 or a multiple
of $100,000 in excess thereof (or the remainder of such Lender's Commitment)
(except such minimum amount shall not apply to an assignment by a Lender to (x)
a Lender, an Affiliate of such Lender or a Related Fund of such Lender or (y) a
group of new Lenders, each of whom is an Affiliate or Related Fund of each other
to the extent the aggregate amount to be assigned to all such new Lenders is at
least $1,000,000 or a multiple of $100,000 in excess thereof), (ii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance, an Assignment and Acceptance, together with any promissory note
subject to such assignment and such parties shall deliver to the Agent, for the
benefit of the Agent, a processing and recordation fee of $3,500 (except the
payment of such fee shall not be required in connection with an assignment by a
Lender to a Lender, an Affiliate of such Lender or a Related Fund of such
Lender) and (iii) no written consent of the Agent shall be required if such
assignment is in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the business or loan
portfolio of such Lender. Upon such execution, delivery and acceptance, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least 3 Business Days after the delivery thereof to
the Agent (or such shorter period as shall be agreed to by the Agent and the
parties to such assignment), (A) the assignee thereunder shall become a "Lender"
hereunder and, in addition to the rights and obligations hereunder held by it
immediately prior to such effective date, have the rights and obligations
hereunder that have been assigned to it pursuant to such Assignment and
Acceptance and (B) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(b) By executing and delivering an Assignment and
Acceptance, the assigning Lender and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto; (ii) the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or any of its Subsidiaries or the
performance or observance by any Loan Party of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Loan Documents, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the assigning Lender, any Agent or any 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 Loan Documents; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental hereto and thereto; and (vi) such assignee agrees that it
38
will perform in accordance with their terms all of the obligations which by the
terms of this Agreement and the other Loan Documents are required to be
performed by it as a Lender.
(c) The Agent shall, acting solely for this purpose as a
non-fiduciary agent of the Borrowers, maintain, or cause to be maintained at the
Payment Office, a copy of each Assignment and Acceptance delivered to and
accepted by it and a register (the "REGISTER") for the recordation of the names
and addresses of the Lenders and the Commitments of, and the principal amount of
the Term Loan (and stated interest thereon) (the "REGISTERED LOANS") owing to
each Lender from time to time. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrowers, the
Agent and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Administrative Borrower and any Lender
at any reasonable time and from time to time upon reasonable prior notice. Agent
shall use commercially reasonable efforts to notify the Administrative Borrower,
within five (5) days prior to the effectiveness of an Assignment and Acceptance
(except in connection with an assignment by a Lender to a Lender, an Affiliate
of such Lender or a Related Fund of such Lender in which case no notice shall be
given), of the identity of such assignee and the Term Loan amount being assigned
(it being understood and agreed that the failure by Agent to give such notice to
Administrative Borrower shall not affect Agent's and Lenders' rights hereunder
or Borrowers' obligations hereunder).
(d) Upon receipt by the Agent of a completed Assignment and
Acceptance and the processing and recordation fee, and subject to any consent
required from the Agent, the Agent shall accept such assignment and record the
information contained therein in the Register.
(e) A Registered Loan (and the registered note, if any,
evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each registered
note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the registered note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register,
together with the surrender of the registered note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such registered note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new registered notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the registered note, if any, evidencing the same), the
Agent shall treat the Person in whose name such Registered Loan (and the
registered note, if any, evidencing the same) is registered on the Register as
the owner thereof for the purpose of receiving all payments thereon,
notwithstanding notice to the contrary.
(f) In the event that any Lender sells participations in a
Registered Loan, such Lender shall, acting for this purpose as a non-fiduciary
agent of the Borrowers, maintain a register on which it enters the name of all
participants in the Registered Loans held by it and the principal amount (and
stated interest thereon) of the portion of the Registered Loan that is the
subject of the participation (the "PARTICIPANT REGISTER"). A Registered Loan
(and the registered note, if any, evidencing the same) may be participated in
whole or in part only by registration of such participation on the Participant
Register (and each registered note shall expressly so provide). Any
participation of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register. The Participant Register shall be
available for inspection by the Administrative Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(g) Any Non-U.S. Lender who purchases or is assigned or
participates in any portion of such Registered Loan shall comply with SECTION
16.
(h) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including, without limitation, all
or a portion of its Commitments and the portion of the Term Loan made by it);
PROVIDED, that (i) such Lender's obligations under this Agreement (including
39
without limitation, its Commitments hereunder) and the other Loan Documents
shall remain unchanged; (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, and the Borrowers,
the Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents; and (iii) a participant shall not be
entitled to require such Lender to take or omit to take any action hereunder
except (A) action directly effecting an extension of the maturity dates or
decrease in the principal amount of the Term Loan, (B) action directly effecting
an extension of the due dates or a decrease in the rate of interest payable on
the Term Loan or the fees payable under this Agreement, or (C) actions directly
effecting a release of all or a substantial portion of the Collateral or any
Loan Party (except as set forth in of this Agreement or any other Loan
Document). The Loan Parties agree that each participant shall be entitled to the
benefits of SECTION 2.11 and SECTION 15.11 of this Agreement with respect to its
participation in any portion of the Commitments and the Term Loan as if it was a
Lender.
13.2 SUCCESSORS. This Agreement shall bind and inure to the
benefit of the respective successors and assigns of each of the parties;
PROVIDED, HOWEVER, that no Loan Party may assign this Agreement or any Loan
Document or any rights or duties hereunder or thereunder without the Lenders'
prior written consent and any prohibited assignment shall be absolutely void AB
INITIO. No consent to assignment by the Lenders shall release any Loan Party
from its Obligations. A Lender may assign this Agreement and the other Loan
Documents and its rights and duties hereunder and thereunder pursuant to SECTION
13.1 hereof and no consent or approval by any Loan Party is required in
connection with any such assignment.
14. AMENDMENTS; WAIVERS.
14.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by any Loan Party therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by Agent at
the written request of the Required Lenders) and Administrative Borrower (on
behalf of all Loan Parties) and then any such waiver or consent shall be
effective, but only in the specific instance and for the specific purpose for
which given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall
do any of the following:
(a) increase the amount or extend the expiration date of any
Commitment of any Lender without the written consent of each Lender directly
affected thereby,
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby,
(c) forgive the principal of, or reduce the rate of interest
on, any loan or other extension of credit hereunder, or reduce any fees or other
amounts payable hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby,
(d) amend or modify the Pro Rata Share that is required to
take any action hereunder without the written consent of each Lender,
(e) amend or modify this Section or any provision of this
Agreement providing for consent or other action by all Lenders without the
written consent of each Lender,
(f) other than as permitted by SECTION 15.11, release
Agent's Lien in and to any of the Collateral without the written consent of each
Lender,
(g) amend or modify the definition of "Required Lenders" or
"Pro Rata Share" without the written consent of each Lender,
40
(h) contractually subordinate any of the Agent's Liens
without the written consent of each Lender,
(i) other than in connection with a merger, liquidation,
dissolution or sale of such Person expressly permitted by the terms hereof or
the other Loan Documents, release (A) a Borrower or (B) all or substantially all
of the Guarantors from any obligation for the payment of money under the Loan
Documents, in each case without the written consent of each Lender,
(j) amend any of the provisions of SECTION 2.3(B)(I) OR (II)
without the written consent of each Lender,
(k) amend or modify the definitions of Term Loan Amount, or
amend or modify SECTION 2.1 without the written consent of each Lender, or
(l) amend, modify, or waive any provision of SECTION 15
pertaining to Agent, or any other rights or duties of Agent under this Agreement
or the other Loan Documents, without the written consent of Agent.
and, PROVIDED FURTHER, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, affect the rights or duties of Agent
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of the Loan Parties, shall not require
consent by or the agreement of Parent or any Borrower.
14.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("HOLDOUT LENDER") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "REPLACEMENT LENDER"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the
Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance, subject only to the Holdout Lender being repaid its
share of the outstanding Obligations without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of SECTION 13.1.
14.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
other Loan Document, or delay by Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent's and each Lender's rights thereafter to require strict
performance by Parent and each of the Borrowers of any provision of this
Agreement. Agent's and each Lender's rights under this Agreement and the other
Loan Documents will be cumulative and not exclusive of any other right or remedy
that Agent or any Lender may have.
41
15. AGENT; THE LENDER GROUP.
15.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Ableco as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
execute and deliver each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this SECTION 15.
The provisions of this SECTION 15 are solely for the benefit of Agent and the
Lenders, and Parent and each of the Borrowers and their Subsidiaries shall have
no rights as a third party beneficiary of any of the provisions contained
herein. Any provision to the contrary contained elsewhere in this Agreement or
in any other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent; it being expressly understood and agreed that the use of the word
"Agent" is for convenience only, that Ableco is merely the representative of the
Lenders, and only has the contractual duties set forth herein. Except as
expressly otherwise provided in this Agreement, Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections of the Loan Parties and
their Subsidiaries, and related matters, (b) execute or file any and all
financing or similar statements or notices, amendments, renewals, supplements,
documents, instruments, proofs of claim, notices and other written agreements
with respect to the Loan Documents, (c) make the Term Loan, for itself or on
behalf of Lenders as provided in the Loan Documents, (d) exclusively receive,
apply, and distribute the Collections of the Loan Parties and their Subsidiaries
as provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management arrangements as Agent deems necessary and appropriate in
accordance with the Loan Documents for the foregoing purposes with respect to
the Collateral and the Collections of the Loan Parties and their Subsidiaries,
(f) perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to the Loan Parties or their Subsidiaries, the
Obligations, the Collateral, the Collections of the Loan Parties and their
Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
15.2 DELEGATION OF DUTIES. Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
15.3 LIABILITY OF AGENT. None of the Agent Related Persons shall
(a) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Loan Party or any of
its Subsidiaries or Affiliates, or any officer or director thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Loan Party or
its Subsidiaries or any other party to any Loan Document to perform its
42
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the books and records or
properties of any of the Loan Parties or their Subsidiaries.
15.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Loan Parties or counsel to
any Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
15.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders
and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Administrative Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of default." Agent
promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual knowledge. If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the
other Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its participants, if any. Subject to
SECTION 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
SECTION 8; PROVIDED, HOWEVER, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
15.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of the Loan
Parties and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties or any other Person party to a Loan
Document, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrowers. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties or any other Person party to a Loan
Document. Except for notices, reports, and other documents expressly herein
required to be furnished to the Lenders by Agent, Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
43
condition or creditworthiness of the Loan Parties or any other Person party to a
Loan Document that may come into the possession of any of the Agent Related
Persons.
15.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, attorneys
fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies,
auctioneer fees and expenses, and costs of security guards or insurance premiums
paid to maintain the Collateral, whether or not any Loan Party is obligated to
reimburse Agent or Lenders for such expenses pursuant to this Agreement or
otherwise. Agent is authorized and directed to deduct and retain sufficient
amounts from the Collections of the Loan Parties and their Subsidiaries received
by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to
the distribution of any amounts to Lenders. In the event Agent is not reimbursed
for such costs and expenses by the Loan Parties or their Subsidiaries, each
Lender hereby agrees that it is and shall be obligated to pay to Agent such
Lender's Pro Rata Share thereof. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the Loan
Parties and without limiting the obligation of the Loan Parties to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; PROVIDED, HOWEVER, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Lender in failing to make
its portion of the Term Loan or any other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender's Pro Rata Share of any costs or out of pocket expenses (including
attorneys, accountants, advisors, and consultants fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of the Loan Parties. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.
15.8 AGENT IN INDIVIDUAL CAPACITY. Ableco and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with the Loan Parties and
their Subsidiaries and Affiliates and any other Person party to any Loan
Documents as though Ableco were not Agent hereunder, and, in each case, without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, Ableco or its
Affiliates may receive information regarding the Loan Parties or their
Affiliates or any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of the Loan Parties or such other Person
and that prohibit the disclosure of such information to the Lenders, and the
Lenders acknowledge that, in such circumstances (and in the absence of a waiver
of such confidentiality obligations, which waiver Agent will use its reasonable
best efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms "Lender" and "Lenders" include Ableco in its
individual capacity.
15.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days
notice to the Lenders (unless such notice is waived by the Required Lenders). If
Agent resigns under this Agreement, the Required Lenders shall appoint a
successor Agent for the Lenders. If no successor Agent is appointed prior to the
effective date of the resignation of Agent, Agent may appoint, after consulting
with the Lenders, a successor Agent. If Agent has materially breached or failed
to perform any material provision of this Agreement or of applicable law, the
Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders. In any such event, upon the acceptance
of its appointment as successor Agent hereunder, such successor Agent shall
succeed to all the rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this SECTION 15 shall inure to
44
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Lenders appoint a successor Agent as
provided for above.
15.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates and Related Funds may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting, or other
business with the Loan Parties and their Subsidiaries and Affiliates and any
other Person party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates and Related Funds may
receive information regarding the Loan Parties or their Affiliates or any other
Person party to any Loan Documents that is subject to confidentiality
obligations in favor of the Loan Parties or such other Person and that prohibit
the disclosure of such information to the Lenders, and the Lenders acknowledge
that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them.
15.11 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon payment and satisfaction in full by Loan Parties of all Obligations, (ii)
constituting property being sold or disposed of if a release is required or
desirable in connection therewith and if Administrative Borrower certifies to
Agent that the sale or disposition is permitted under SECTION 6.4 of this
Agreement or the other Loan Documents (and Agent may rely conclusively on any
such certificate, without further inquiry), (iii) constituting property in which
no Loan Party or its Subsidiaries owned any interest at the time the Agent's
Lien was granted nor at any time thereafter, or (iv) constituting property
leased to a Loan Party or its Subsidiaries under a lease that has expired or is
terminated in a transaction permitted under this Agreement. Except as provided
above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral pursuant to
this SECTION 15.11; PROVIDED, HOWEVER, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Loan Parties in respect of)
all interests retained by Loan Parties, including, the proceeds of any sale, all
of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Loan Parties or
their Subsidiaries or is cared for, protected, or insured or has been
encumbered, or that the Agent's Liens have been properly or sufficiently or
lawfully created, perfected, protected, or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent pursuant to any of
the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, subject to the terms
and conditions contained herein, Agent may act in any manner it may deem
appropriate, in its sole discretion given Agent's own interest in the Collateral
in its capacity as one of the Lenders and that Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing, except as
otherwise provided herein.
45
15.12 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without
the express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the written request of Agent, set off against
the Obligations, any amounts owing by such Lender to any Loan Party or its
Subsidiaries or any deposit accounts of any Loan Party or its Subsidiaries now
or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so in writing by Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings to enforce any Loan Document against the Loan Parties
or Guarantors or to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's Pro Rata Share
of all such distributions by Agent, such Lender promptly shall (A) turn the same
over to Agent, in kind, and with such endorsements as may be required to
negotiate the same to Agent, or in immediately available funds, as applicable,
for the account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (B) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that to the extent that such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
15.13 AGENCY FOR PERFECTION. Agent hereby appoints each other
Lender as its agent (and each Lender hereby accepts such appointment) for the
purpose of perfecting the Agent's Liens in assets which, in accordance with
Article 8 or Article 9, as applicable, of the Code can be perfected only by
possession or control. Should any Lender obtain possession or control of any
such Collateral, such Lender shall notify Agent thereof, and, promptly upon
Agent's request therefor shall deliver possession or control of such Collateral
to Agent or in accordance with Agent's instructions.
15.14 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer of immediately
available funds pursuant to such wire transfer instructions as each party may
designate for itself by written notice to Agent. Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, fees, or interest of the Obligations.
15.15 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents. Each member of the Lender Group agrees
that any action taken by Agent in accordance with the terms of this Agreement or
the other Loan Documents relating to the Collateral and the exercise by Agent of
its powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
15.16 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report respecting Loan Parties or their Subsidiaries (each a
"REPORT" and collectively, "REPORTS") prepared by or at the request of Agent,
and Agent shall so furnish each Lender with such Reports,
46
(b) expressly agrees and acknowledges that Agent does not
(i) make any representation or warranty as to the accuracy of any Report, and
(ii) shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are
not comprehensive audits or examinations, that Agent or other party performing
any audit or examination will inspect only specific information regarding Loan
Parties or their Subsidiaries and will rely significantly upon the Loan Parties'
and their Subsidiaries' books and records, as well as on representations of the
Loan Parties' personnel,
(d) agrees to keep all Reports and other material,
non-public information regarding Loan Parties and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with SECTION 17.8, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to Loan
Parties, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of Loan Parties; and (ii) to pay and
protect, and indemnify, defend and hold Agent, and any such other Lender
preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses, and other amounts (including, attorneys fees and
costs) incurred by Agent and any such other Lender preparing a Report as the
direct or indirect result of any third parties who might obtain all or part of
any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Loan Parties or their Subsidiaries to Agent that has not
been contemporaneously provided by Loan Parties or their Subsidiaries to such
Lender, and, upon receipt of such request, Agent promptly shall provide a copy
of same to such Lender, (y) to the extent that Agent is entitled, under any
provision of the Loan Documents, to request additional reports or information
from Loan Parties or their Subsidiaries, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
15.17 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such, and not by or in favor of
the Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any participant of any other
Lender. Except as provided in SECTION 15.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to any Loan Party or any other Person for any
failure by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
47
15.18 QUEBEC SECURITY DOCUMENTS.
For greater certainty, and without limiting the powers of Agent, or
any other Person acting as an agent or mandatary for Agent hereunder or under
any other Loan Documents, each Loan Party hereby acknowledges that, for purposes
of holding any hypothecs and security granted by a Loan Party on property
pursuant to the laws of the Province of Quebec to secure obligations of a Loan
Party under any debenture or bond issued by a Loan Party, Agent shall be the
holder of an irrevocable power of attorney (FONDE DE POUVOIR) (within the
meaning of the CIVIL CODE OF QUEBEC) for the Lender Group (which includes each
Lender and Agent), including without limitation, all present and future Lenders
and any Affiliate of a Lender, and in particular for all present and future
holders of any such debenture or bond. The Lender Group hereby: (i) irrevocably
constitute, to the extent necessary, Agent as the holder of an irrevocable power
of attorney (FONDE DE POUVOIR) (within the meaning of Article 2692 of the CIVIL
CODE OF QUEBEC) in order to hold hypothecs and security granted by a Loan Party
on property pursuant to the laws of the Province of Quebec to secure the
obligations of a Loan Party under any debenture or bond issued by a Loan Party;
and (ii) appoint and agree that Agent may act as the bondholder and mandatary
(i.e. agent) with respect to any debenture or bond that may be issued by a Loan
Party and pledged in its favour from time to time. The execution by Agent,
acting as FONDE DE POUVOIR and mandatary, prior to this Agreement, of any deeds
of hypothec or other security documents is hereby ratified and confirmed.
Notwithstanding the provisions of Section 32 of AN ACT RESPECTING THE SPECIAL
POWERS OF LEGAL PERSONS (Quebec), Agent may acquire and be the holder of any
debenture or bond issued by a Loan Party (i.e. the FONDE DE POUVOIR may acquire
and hold the first debenture or bond issued under any deed of hypothec by a Loan
Party). Each Loan Party hereby acknowledges that such debenture or bond
constitutes a title of indebtedness, as such term is used in Article 2692 of the
CIVIL CODE OF QUEBEC.
The constitution of Agent as FONDE DE POUVOIR and as bondholder and mandatary
with respect to any bond that may be issued and pledged from time to time to
Agent for the benefit of the Lender Group, shall be deemed to have been ratified
and confirmed by each Person accepting an assignment of, a participation in or
an arrangement in respect of, all or any portion of an assignor's rights and
obligations under this Agreement by the execution of an assignment agreement,
including an Assignment and Acceptance or other agreement pursuant to which it
becomes such assignee or participant, and by each successor Agent by the
execution of an Assignment and Acceptance or other agreement, or by the
compliance with other formalities, as the case may be, pursuant to which it
becomes a successor Agent under this Agreement.
Agent, acting as FONDE DE POUVOIR, shall have the same rights, powers and
immunities as Agent as stipulated herein, including under this Section 15, which
shall apply MUTATIS MUTANDIS. Without limitation, the provisions of Section 15
shall apply MUTATIS MUTANDIS to the resignation and appointment of a successor
Agent acting as FONDE DE POUVOIR.
Agent, acting as bondholder, shall have the same rights, powers and immunities
as Agent as stipulated herein, including under this Section 15, which shall
apply MUTATIS MUTANDIS. Without limitation, the provisions of Section 15 shall
apply MUTATIS MUTANDIS to the resignation and appointment of a successor Agent
acting as bondholder and mandatary.
16. WITHHOLDING TAXES.
(a) Any and all payments by any Loan Party hereunder or
under any other Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, EXCLUDING
taxes imposed on the net income of Agent or any Lender (or any transferee or
assignee thereof, including a participation holder (any such entity, a
"TRANSFEREE")) by the jurisdiction in which such Person is organized or has its
principal lending office (all such nonexcluded taxes, levies, imposts,
deductions, charges withholdings and liabilities, collectively or individually,
"TAXES"). If any Loan Party shall be required to deduct any Taxes from or in
48
respect of any sum payable hereunder to Agent or any Lender (or any Transferee),
(i) the sum payable shall be increased by the amount (an "ADDITIONAL AMOUNT")
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this SECTION 16) Agent or such
Lender (or such Transferee) shall receive an amount equal to the sum it would
have received had no such deductions been made, (ii) such Loan Party shall make
such deductions and (iii) such Loan Party shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.
(b) In addition, each Loan Party agrees to pay to the
relevant Governmental Authority in accordance with applicable law any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document ("OTHER TAXES"). Each Loan Party shall
deliver to Agent and each Lender official receipts in respect of any Taxes or
Other Taxes payable hereunder promptly after payment of such Taxes or Other
Taxes.
(c) The Loan Parties hereby jointly and severally indemnify
and agree to hold Agent and each Lender harmless from and against Taxes and
Other Taxes (including, without limitation, Taxes and Other Taxes imposed on any
amounts payable under this SECTION 16) paid by such Person, whether or not such
Taxes or Other Taxes were correctly or legally asserted. Such indemnification
shall be paid within 10 days from the date on which any such Person makes
written demand therefore specifying in reasonable detail the nature and amount
of such Taxes or Other Taxes.
(d) Each Lender (or Transferee) that is organized under the
laws of a jurisdiction outside the United States (a "NON-U.S. LENDER") agrees
that it shall, no later than the Closing Date (or, in the case of a Lender which
becomes a party hereto pursuant to hereof after the Closing Date, promptly after
the date upon which such Lender becomes a party hereto) deliver to Agent one
properly completed and duly executed copy of either U.S. Internal Revenue
Service Form X-0XXX, X-0XXX or W-8IMY or any subsequent versions thereof or
successors thereto, in each case claiming complete exemption from, or reduced
rate of, U.S. Federal withholding tax and payments of interest hereunder. In
addition, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code,
such Non-U.S. Lender hereby represents to Agent and the Borrowers that such
Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Internal
Revenue Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of the Parent and is not a controlled
foreign corporation related to the Parent (within the meaning of Section
864(d)(4) of the Internal Revenue Code), and such Non-U.S. Lender agrees that it
shall promptly notify Agent in the event any such representation is no longer
accurate. Such forms shall be delivered by each Non-U.S. Lender on or before the
date it becomes a party to this Agreement (or, in the case of a Transferee that
is a participation holder, on or before the date such participation holder
becomes a Transferee hereunder) and on or before the date, if any, such Non-U.S.
Lender changes its applicable lending office by designating a different lending
office (a "NEW LENDING OFFICE"). In addition, such Non-U.S. Lender shall deliver
such forms within 20 days after receipt of a written request therefor from Agent
or the Lender granting a participation, as applicable. Notwithstanding any other
provision of this , a Non-U.S. Lender shall not be required to deliver any form
pursuant to this that such Non-U.S. Lender is not legally able to deliver.
(e) The Loan Parties shall not be required to indemnify any
Non-U.S. Lender, or pay any additional amounts to any Non-U.S. Lender, in
respect of United States Federal withholding tax pursuant to this SECTION 16 to
the extent that (i) the obligation to withhold amounts with respect to United
States Federal withholding tax existed on the date such Non-U.S. Lender became a
party to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; PROVIDED, HOWEVER,
that this clause (i) shall not apply to the extent the indemnity payment or
additional amounts any Transferee, or Lender (or Transferee) through a New
Lending Office, would be entitled to receive (without regard to this clause (i))
do not exceed the indemnity payment or additional amounts that the Person making
the assignment, participation or transfer to such Transferee, or Lender (or
49
Transferee) making the designation of such New Lending Office, would have been
entitled to receive in the absence of such assignment, participation, transfer
or designation, or (ii) the obligation to pay such additional amounts would not
have arisen but for a failure by such Non-U.S. Lender to comply with the
provisions of clause (d) above.
(f) Agent or any Lender (or Transferee) claiming any
indemnity payment or additional payment amounts payable pursuant to this SECTION
16 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document reasonably requested in
writing by the Administrative Borrower or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such indemnity payment or additional
amount that may thereafter accrue, would not require Agent or such Lender (or
Transferee) to disclose any information Agent or such Lender (or Transferee)
deems confidential and would not, in the sole determination of Agent or such
Lender, be otherwise disadvantageous to Agent or such Lender (or Transferee).
(g) The obligations of the Loan Parties under this SECTION
16 shall survive the termination of this Agreement and the payment of the Term
Loan and all other amounts payable hereunder.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Parent, Borrowers, Agent, and each Lender whose
signature is provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group, Parent, or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
17.5 DEBTOR-CREDITOR RELATIONSHIP. The relationship between the
Lenders and Agent, on the one hand, and Parent and Borrowers, on the other hand,
is solely that of creditor and debtor. No member of the Lender Group has (or
shall be deemed to have) any fiduciary relationship or duty to Parent or
Borrowers arising out of or in connection with, and there is no agency or joint
venture relationship between the members of the Lender Group, on the one hand,
and Parent and Borrowers, on the other hand, by virtue of any Loan Document or
any transaction contemplated therein.
17.6 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document MUTATIS
MUTANDIS.
50
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence
or payment of the Obligations by any Borrower or any Guarantor or the transfer
to the Lender Group of any property should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (each, a "VOIDABLE TRANSFER"), and if the
Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Loan Parties automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been made.
17.8 CONFIDENTIALITY.
(a) Agent and Lenders each individually (and not jointly or
jointly and severally) agree that material, non-public information regarding
Loan Parties and their Subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (i) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, (ii) to Subsidiaries and Affiliates of any member of the Lender
Group, provided that any such Subsidiary or Affiliate shall have agreed to
receive such information hereunder subject to the terms of this SECTION 17.8,
(iii) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation, (iv) as may be agreed to in advance by
Administrative Borrower or its Subsidiaries or as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process, (v) as
to any such information that is or becomes generally available to the public
(other than as a result of prohibited disclosure by Agent or the Lenders), (vi)
in connection with any assignment, participation or pledge of any Lender's
interest under this Agreement, provided that any such assignee, participant, or
pledgee shall have agreed in writing to receive such information hereunder
subject to the terms of this Section, and (vii) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents,
provided that Agent or applicable Lender, as the case may be, shall give the
Loan Parties five (5) Business Days notice of the production of any such
information in such litigation or other adversary proceeding to the extent
practicable under the circumstances. The provisions of this SECTION 17.8(A)
shall survive for 2 years after the payment in full of the Obligations.
(b) Anything in this Agreement to the contrary
notwithstanding, Agent may provide information concerning the terms and
conditions of this Agreement and the other Loan Documents to loan syndication
and pricing reporting services.
17.9 LENDER GROUP EXPENSES. Parent and Borrowers, jointly and
severally, agree to pay any and all Lender Group Expenses promptly after demand
therefor by Agent and agrees that their obligations contained in this SECTION
17.9 shall survive payment or satisfaction in full of all other Obligations.
17.10 USA PATRIOT ACT. Each Lender that is subject to the
requirements of the USA Patriot Act (Title 111 of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "ACT") hereby notifies Parent and Borrowers that
pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies Parent and Borrowers, which information
includes the name and address of Parent and each of the Borrowers and other
information that will allow such Lender to identify Parent and each of the
Borrowers in accordance with the Act.
17.11 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
51
17.12 PARENT AS AGENT FOR BORROWERS. Each Borrower hereby
irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all
Borrowers (the "ADMINISTRATIVE BORROWER") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices with respect to the Term Loan obtained for the benefit of
any Borrower and all other notices and instructions under this Agreement and
(ii) to take such action as the Administrative Borrower deems appropriate on its
behalf to the Term Loan and to exercise such other powers as are reasonably
incidental thereto to carry out the purposes of this Agreement. It is understood
that the handling of the Loan Account and Collateral of Borrowers in a combined
fashion, as more fully set forth herein, is done solely as an accommodation to
Borrowers in order to utilize the collective borrowing powers of Borrowers in
the most efficient and economical manner and at their request, and that Lender
Group shall not incur liability to any Borrower as a result hereof. Each
Borrower expects to derive benefit, directly or indirectly, from the handling of
the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance
of the integrated group. To induce the Lender Group to do so, and in
consideration thereof, each Borrower hereby jointly and severally agrees to
indemnify each member of the Lender Group and hold each member of the Lender
Group harmless against any and all liability, expense, loss or claim of damage
or injury, made against the Lender Group by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral of Borrowers as herein provided, (b) the Lender Group's
relying on any instructions of the Administrative Borrower, or (c) any other
action taken by the Lender Group hereunder or under the other Loan Documents,
except that Borrowers will have no liability to the relevant Agent-Related
Person or Lender-Related Person under this SECTION 17.12 with respect to any
liability that has been finally determined by a court of competent jurisdiction
to have resulted solely from the gross negligence or willful misconduct of such
Agent-Related Person or Lender-Related Person, or from such members breach of
its material obligations under the Loan Documents, as the case may be.
17.13 INTERCREDITOR AGREEMENT. Notwithstanding anything herein to
the contrary, the liens and security interests granted to the Agent pursuant to
the Loan Documents in the Collateral and the exercise of any right or remedy by
the Agent with respect to the Collateral hereunder or under any other Loan
Document are subject to the provisions of the Intercreditor Agreement. In the
event of any conflict between the terms of the Intercreditor Agreement and this
Agreement with respect to (a) the priority of liens and security interests
granted to the Agent in the Collateral pursuant to the Loan Documents or (b) the
rights of the Agent or any Lender under this Agreement, the terms of the
Intercreditor Agreement shall govern and control as between the Agent and the
Lenders, on the one hand, and the Working Capital Agent and the Working Capital
Lenders, on the other hand.
17.14 JUDGMENT CURRENCY.
(a) This is an international financial transaction in which
the specification of a currency and payment in New York City is of the essence.
Dollars shall be the currency of account in the case of all payments pursuant to
or arising under this Agreement or under any other Loan Document, and all such
payments shall be made to the Agent's Account in immediately available funds. To
the fullest extent permitted by applicable law, the Obligations of each Loan
Party to the Agent and the Lenders under this Agreement and under the other Loan
Documents shall not be discharged by any amount paid in any other currency or in
any other manner than to the Agent's Account to the extent that the amount so
paid after conversion under this Agreement and transfer to the Agent's Account
does not yield the amount of Dollars in New York City due under this Agreement
and under the other Loan Documents.
(b) If, for the purposes of obtaining or enforcing judgment
against the Loan Parties in any court in any jurisdiction in connection with
this Agreement or any other Loan Document, it becomes necessary to convert into
any other currency (such other currency being referred to as the "JUDGMENT
CURRENCY") an amount due under this Agreement or any Loan Document in Dollars
52
other than Judgment Currency, the conversion shall be made at the rate of
exchange prevailing on the Business Day immediately preceding (a) the date of
actual payment of the amount due, in the case of any proceeding in the courts of
any jurisdiction that would give effect to such conversion being made on such
date, or (b) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of
which such conversion is made pursuant to this SECTION 17.14 being hereinafter
referred to as the "JUDGMENT CONVERSION DATE").
(c) If, in the case of any proceeding in the court of any
jurisdiction referred to in subsection (a) above, there is a change in the rate
of exchange prevailing between the Judgment Conversion Date and the date of
actual receipt for value of the amount due, the Loan Parties shall pay such
additional amount (if any, and in any event not a lesser amount) as may be
necessary to ensure that the amount actually received in the Judgment Currency,
when converted at the rate of exchange prevailing on the date of payment, will
produce the amount of Dollars which could have been purchased with the amount of
the Judgment Currency stipulated in the judgment or judicial order at the rate
of exchange prevailing on the Judgment Conversion Date. The term "rate of
exchange" in this Section means the Spot Rate at which the Agent would be
prepared to sell Dollars against the Judgment Currency.
(d) Any amount due from the Loan Parties under this SECTION
17.14 shall not be affected by judgment being obtained for any other amounts due
under or in respect of this Agreement or any other Loan Document.
17.15 IMMUNITY. To the extent that any Loan Party or any of its
Subsidiaries has or hereafter may acquire any immunity (sovereign or otherwise)
from jurisdiction of any court or from set-off or from any legal process,
action, suit or proceeding (whether through service or notice, attachment prior
to judgment, attachment in aid of execution, execution of judgment or otherwise)
with respect to itself or any of its property, the Parent and each Borrower
hereby irrevocably waives (on behalf of itself and its Subsidiaries) and agrees
not to plead or claim such immunity in respect of its Obligations hereunder and
under the other Loan Documents to which it is a party to the extent permitted by
applicable law and, without limiting the generality of the foregoing, agrees
that the waivers set forth in this SECTION 17.15 shall be to the fullest extent
permitted under the Foreign Sovereign Immunities Act of 1976 of the United
States and are intended to be irrevocable for purposes of such Act.
[Signature pages to follow.]
53
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
BORROWERS: XXXXX, INC.,
a Delaware corporation
By: ___________________________________
Title:_________________________________
XXXXX VISCOR LTD.,
a Texas limited partnership
By: Xxxxx Partners, Inc.,
Its General Partner
By: ___________________________________
Title:_________________________________
XXXXX SIGNTECH, LTD.,
a Texas limited partnership
By: Xxxxx Partners, Inc.,
Its General Partner
By: ___________________________________
Title:_________________________________
KASCO CORPORATION,
a Delaware corporation
By: ___________________________________
Title:_________________________________
SOUTHERN SAW ACQUISITION CORPORATION,
a Delaware corporation
By: ___________________________________
Title:_________________________________
PARENT: BAIRNCO CORPORATION,
a Delaware corporation
By: ___________________________________
Title:_________________________________
54
AGENT AND LENDERS: ABLECO FINANCE LLC,
a Delaware limited liability company, as Agent and as a
Lender
By: ___________________________________
Title:_________________________________
55
SCHEDULE 1.1
As used in the Agreement, the following terms shall have the following
definitions:
"ABLECO" means Ableco Finance LLC, a Delaware limited
liability company.
"ACCOUNT" means an account (as that term is defined in the
Code).
"ACCOUNT DEBTOR" means any Person who is obligated on an
Account, chattel paper, or a general intangible.
"ACT" has the meaning specified therefor in SECTION 17.10.
"ACTIVATION INSTRUCTION" has the meaning specified therefor
in SECTION 2.5(B).
"ADDITIONAL DOCUMENTS" has the meaning specified therefor in
SECTION 5.17.
"ADMINISTRATIVE BORROWER" has the meaning specified therefor
in SECTION 17.12.
"AFFILIATE" means, as applied to any Person, any other Person
who controls, is controlled by, or is under common control with, such Person and
in the case of any Loan Party, the immediate family members, spouses and lineal
descendants of individuals that are Affiliates of such Loan Party. For purposes
of this definition, "control" means the possession, directly or indirectly
through one or more intermediaries, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; PROVIDED, HOWEVER, that, for purposes of SECTION 6.13 of the
Agreement: (a) any Person which owns directly or indirectly 10% or more of the
Stock having ordinary voting power for the election of directors or other
members of the governing body of a Person or 10% or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed an Affiliate of such Person, (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such
Person, and (c) each partnership in which a Person is a general partner shall be
deemed an Affiliate of such Person. Notwithstanding anything herein to the
contrary, in no event shall the Agent or any Lender be considered an "Affiliate"
of any Loan Party.
"AGENT" has the meaning specified therefor in the preamble to
the Agreement.
"AGENT-RELATED PERSONS" means Agent, together with its
Affiliates, officers, directors, employees, attorneys, and agents.
"AGENT'S ACCOUNT" means the Deposit Account of Agent
identified on SCHEDULE A-1.
"AGENT'S LIENS" means the Liens granted by any Loan Party to
Agent under the Loan Documents.
"AGREEMENT" means the Credit Agreement to which this SCHEDULE
1.1 is attached.
"APPLICATION EVENT" means the occurrence of (a) a failure by
Borrowers to repay all of the Obligations on the Maturity Date, or (b) an Event
of Default and the election by the Required Lenders to declare all or any
portion of the Obligations to be due and payable or to exercise remedies against
the Collateral.
"APPROVED ADDBACK EXPENSES" means, with respect to any period
specified on SCHEDULE A-3, the lesser of (a) the actual amount expended by the
Parent and its Subsidiaries in respect of the items specified on SCHEDULE A-3
during such period, and (b) the amount specified on SCHEDULE A-3 during such
period.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and
Acceptance Agreement substantially in the form of EXHIBIT A-1 or such other form
acceptable to Agent.
"AUTHORIZED PERSON" means any one of the individuals
identified on SCHEDULE A-2.
"BANKRUPTCY CODE" means (i) title 11 of the United States
Code, and (ii) any similar legislation in any relevant jurisdiction, in each
case, as in effect from time to time.
"BASE LIBOR RATE" means the rate per annum, determined by
Agent in accordance with its customary procedures, and utilizing such electronic
or other quotation sources as it considers appropriate, to be the rate at which
Dollar deposits (for delivery on the first day of the requested Interest Period)
are offered to major banks in the London interbank market 2 Business Days prior
to the commencement of the requested Interest Period, for a term and in an
amount comparable to the Interest Period and the amount of the LIBOR Rate Loan
requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR
Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by
Administrative Borrower in accordance with the Agreement, which determination
shall be conclusive in the absence of manifest error.
"BASE RATE" means the rate of interest publicly announced by
the Reference Bank in New York, New York from time to time as its reference
rate, base rate or prime rate. The reference rate, base rate or prime rate is
determined from time to time by the Reference Bank as a means of pricing some
loans to its borrowers and neither is tied to any external rate of interest or
index nor necessarily reflects the lowest rate of interest actually charged by
the Reference Bank to any particular class or category of customers. Each change
in the Base Rate shall be effective from and including the date such change is
publicly announced as being effective.
"BASE RATE LOAN" means each portion of the Term Loan that
bears interest at a rate determined by reference to the Base Rate.
"BASE RATE MARGIN" means 3.50 percentage points.
"BOARD OF DIRECTORS" means the board of directors (or
comparable managers) of WHX or any committee thereof duly authorized to act on
behalf of the board of directors (or comparable managers).
"BORROWER" and "BORROWERS" have the respective meanings
specified therefor in the preamble to the Agreement.
"BRIDGE FACILITY" means the facility under that certain Loan
and Security Agreement in the aggregate principal amount not to exceed
$90,000,000, dated as of April 17, 2007, by and between Steel Partners II, L.P.,
Parent and BZ Acquisition Corp., as amended and restated on the date hereof.
"BUSINESS DAY" means any day that is not a Saturday, Sunday,
or other day on which banks are authorized or required to close in the state of
New York, except that, if a determination of a Business Day shall relate to a
LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.
"CANADIAN GUARANTY" means a Guaranty executed and delivered
by the Canadian Obligor in favor of Agent, in form and substance satisfactory to
Agent.
"CANADIAN OBLIGOR" means Atlantic Service Company, Limited,
an Ontario corporation.
"CANADIAN SECURITY AGREEMENT" means a Security Agreement
executed and delivered by the Canadian Obligor in favor of Agent, in form and
substance satisfactory to Agent.
"CANADIAN SECURITY DOCUMENTS" means the Canadian Security
Agreement, the Quebec Security Documents, and such other instruments,
agreements, and documents governed by the laws of Canada or any political
subdivision thereof, as Agent may require in order to secure the obligations of
the Canadian Obligor under the Canadian Guaranty.
"CAPITAL EXPENDITURES" means, with respect to any Person for
any period, the aggregate of all expenditures by such Person and its
Subsidiaries during such period that are capital expenditures as determined in
accordance with GAAP, whether such expenditures are paid in cash or financed.
"CAPITAL LEASE OBLIGATION" means that portion of the
obligations under a Capital Lease that is required to be capitalized in
accordance with GAAP.
"CAPITAL LEASE" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"CASH EQUIVALENTS" means (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.
"CASH MANAGEMENT ACCOUNT" has the meaning specified therefor
in SECTION 2.5(A).
"CASH MANAGEMENT AGREEMENTS" means those certain cash
management agreements, in form and substance satisfactory to Agent, each of
which is among Parent or one of its Subsidiaries, Agent, Working Capital Agent
and one of the Cash Management Banks.
"CASH MANAGEMENT BANK" has the meaning specified therefor in
SECTION 2.5(A).
"CFC" means a controlled foreign corporation (as that term is
defined in the IRC).
"CHANGE OF CONTROL" means that (a) Permitted Holders fail to
beneficially own, directly or indirectly, at least 25% of the Stock of WHX or
(b) a majority of the members of WHX's Board of Directors do not constitute
Continuing Directors or (c) WHX fails to own and control, directly or
indirectly, 100% of the Stock of Parent.
"CLOSING DATE" means the date of the making of the Term Loan
hereunder.
"CLOSING DATE TRANSACTIONS" means, collectively, (a) the
funding of (i) the Term Loan, (ii) the Working Capital Term Loan, (iii) the
Working Capital Advances to be made on the Closing Date, (iv) the Equity
Contribution, and (v) the Subordinated Indebtedness, (b) the issuance of the
Working Capital Letters of Credit to be issued on the Closing Date, (c) the
repayment of the Indebtedness owing to the Existing Lender and the Indebtedness
outstanding under the Bridge Facility and the termination of such credit
facilities, and (d) the payment of all fees and expenses in connection with the
foregoing.
"CODE" means the New York Uniform Commercial Code, as in
effect from time to time.
"COLLATERAL" means all assets and interests in assets and
proceeds thereof now owned or hereafter acquired by Parent or its Subsidiaries
in or upon which a Lien is granted under any of the Loan Documents.
"COLLATERAL ACCESS AGREEMENT" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Parent's or its Subsidiaries' books and records,
Equipment, or Inventory, in each case, in form and substance satisfactory to
Agent.
"COLLECTIONS" means ALL cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds).
"COMMITMENT" means, with respect to each Lender, its
Commitment, and, with respect to all Lenders, their Commitments, in each case as
such Dollar amounts are set forth beside such Lender's name under the applicable
heading on SCHEDULE C-1 or in the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder, as such amounts may be reduced or
increased from time to time pursuant to assignments made in accordance with the
provisions of SECTION 13.1.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of EXHIBIT C-1 delivered by the chief financial officer of Parent to
Agent.
"CONTINUING DIRECTOR" means (a) any member of the Board of
Directors who was a director (or comparable manager) of WHX on the Closing Date,
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
WHX and whose initial assumption of office resulted from such contest or the
settlement thereof or (c) any individual who becomes a member of the Board of
Directors after the Closing Date if such individual was appointed or nominated
by Permitted Holder for or Permitted Holder voted in favor of such individual's
election to the Board of Directors.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement,
dated as of the Closing Date, among the Loan Parties, for the benefit of the
Agent and the Lenders.
"CONTROL AGREEMENT" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by Parent or one of its
Subsidiaries, Agent, Working Capital Agent and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a
Deposit Account).
"COPYRIGHT SECURITY AGREEMENT" has the meaning specified
therefor in the Security Agreement.
"DAILY BALANCE" means, as of any date of determination and
with respect to any Obligation, the amount of such Obligation owed at the end of
such day.
"DEFAULT" means an event, condition, or default that, with
the giving of notice, the passage of time, or both, would be an Event of
Default.
"DEPOSIT ACCOUNT" means any deposit account (as that term is
defined in the Code).
"DESIGNATED ACCOUNT" means the Deposit Account of
Administrative Borrower identified on SCHEDULE D-1.
"DESIGNATED ACCOUNT BANK" has the meaning specified therefor
in SCHEDULE D-1.
"DOLLARS" or "$" means United States dollars.
"DOMESTIC SUBSIDIARY" means a Subsidiary organized under the
laws of the United States or any jurisdiction thereof.
"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries' consolidated net earnings (or loss), MINUS extraordinary
gains, interest income, PLUS interest expense, income taxes, and depreciation
and amortization for such period, PLUS or MINUS, as the case may be, deferred
financing costs that are written off so long as such costs arise from financings
effectuated prior to the Closing Date, non cash amortization of deferred
financing costs related to the Term Loan and the Working Capital Indebtedness,
non cash gains or losses arising from the sale of capital assets, non cash gains
or losses arising from the write up or write down of assets (including the non
cash write down associated with the XX Xxxxxxx system), non-cash period pension
costs or credit related to any existing Employee Plan, and any non cash
extraordinary gains or losses (in each case, to the extent included in
determining net income) for such period, in each case, determined on a
consolidated basis in accordance with GAAP; PROVIDED, that for the calculations
contemplated in SECTION 6.16 of the Agreement, EBITDA shall be determined (A)
before any Approved Addback Expenses, (B) before Kasco Non-recurring Expenses
and (C) before actual costs and expenses related to the transactions
contemplated by this Agreement in an aggregate amount not to exceed $500,000, in
each case to the extent such items impact net income.
"EMPLOYEE PLAN" means an employee benefit plan (other than a
Multiemployer Plan) covered by Title IV of ERISA and maintained (or that was
maintained at any time during the six (6) calendar years preceding the date of
any borrowing hereunder) for employees of any Loan Party or any of its ERISA
Affiliates.
"ENVIRONMENTAL ACTIONS" means any complaint, summons,
citation, written notice, directive, order, claim, litigation, investigation,
judicial or administrative proceeding, judgment, letter, or other communication
from any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets,
properties, or businesses of any Loan Party, any Subsidiary of a Loan Party, or
any of their predecessors in interest, (b) from adjoining properties or
businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by any Loan Party, any Subsidiary of a Loan Party, or any of
their predecessors in interest.
"ENVIRONMENTAL LAW" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, in each case, to the extent
binding on any Loan Party or any Subsidiary of a Loan Party, relating to the
environment, the effect of the environment on employee health, or Hazardous
Materials, in each case as amended from time to time.
"ENVIRONMENTAL LIABILITIES" means all liabilities, monetary
obligations, losses, damages, punitive damages, consequential damages, treble
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"ENVIRONMENTAL LIEN" means any Lien in favor of any
Governmental Authority for Environmental Liabilities.
"EQUIPMENT" means equipment (as that term is defined in the
Code).
"EQUITY CONTRIBUTION" means a cash equity contribution in an
aggregate amount not less than $15,000,000 made by WHX to the Parent prior to
the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto or the non-U.S. equivalent
thereof.
"ERISA AFFILIATE" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Loan Party or a Subsidiary of a Loan Party under IRC Section 414(b), (b) any
trade or business subject to ERISA whose employees are treated as employed by
the same employer as the employees of a Loan Party or a Subsidiary of a Loan
Party under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA
and Section 412 of the IRC, any organization subject to ERISA that is a member
of an affiliated service group of which a Loan Party or a Subsidiary of a Loan
Party is a member under IRC Section 414(m), or (d) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA
that is a party to an arrangement with a Loan Party or a Subsidiary of a Loan
Party and whose employees are aggregated with the employees of a Loan Party or a
Subsidiary of a Loan Party under IRC Section 414(o).
"EVENT OF DEFAULT" has the meaning specified therefor in
SECTION 7.
"EXCESS CASH FLOW" means, with respect to any fiscal period
and with respect to Parent determined on a consolidated basis in accordance with
GAAP (a) TTM EBITDA, MINUS (b) the sum of (i) the cash portion of Interest
Expense paid during such fiscal period, (ii) the cash portion of income taxes
paid during such period, (iii) all scheduled principal payments made in respect
of the Term Loan during such period, (iv) any required cash contributions to any
Employee Plan to the extent not included in the calculation of TTM EBITDA for
such period and (v) the cash portion of Capital Expenditures (net of (y) any
proceeds reinvested in accordance with the proviso to SECTION 2.3(D)(II) of the
Agreement, and (z) any proceeds of related financings with respect to such
expenditures) made during such period.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
in effect from time to time.
"EXISTING LENDER" means Bank of America, N.A. and each of the
lenders party to the credit facilities agented by Bank of America.
"EXTRAORDINARY RECEIPTS" means any Net Cash Proceeds received
by Parent or any of its Subsidiaries not in the ordinary course of business,
including as a result of, without duplication, (a) foreign, United States, state
or local tax refunds (other than amounts automatically applied to future tax
payments or representing overpayments of estimated taxes for the current or
immediately preceding tax year), (b) pension plan reversions, (c) proceeds of
insurance (including key man life insurance and business interruption insurance,
but excluding any casualty insurance), (d) judgments, proceeds of settlements or
other consideration of any kind in connection with any cause of action, (e)
indemnity payments, and (f) any purchase price adjustment received in connection
with any purchase agreement.
"FIXED CHARGE COVERAGE RATIO" means, with respect to Parent
for any period, the ratio of (i) EBITDA for such period MINUS Capital
Expenditures made (to the extent not already incurred in a prior period) or
incurred during such period, to (ii) Fixed Charges for such period.
"FIXED CHARGES" means, with respect to any fiscal period and
with respect to Parent and its Subsidiaries determined on a consolidated basis
in accordance with GAAP, the sum, without duplication, of (a) Interest Expense
(other than payment-in-kind and non-cash financing expenses) accrued during such
period, (b) principal payments in respect of Indebtedness that are required to
be paid during such period, and (c) all federal, state, and local income taxes
accrued during such period; PROVIDED, that for each fiscal quarter ending after
the Closing Date, through and including the fiscal quarter ending June 30, 2008,
Fixed Charges shall be deemed to be an amount calculated by adding the sum of
all such Interest Expense, principal payments and accrued taxes made or accrued
during the period from the Closing Date through the date of determination,
multiplying such sum by 365, and dividing the product by the number of days
elapsed since the Closing Date.
"FUNDED INDEBTEDNESS" means, as of any date of determination,
all Indebtedness for borrowed money or letters of credit (other than letters of
credit that provide collateral support for other outstanding Funded Indebtedness
at the time of such determination) of Parent, determined on a consolidated basis
in accordance with GAAP, that by its terms matures more than one year after the
date of calculation, and any such Indebtedness maturing within one year from
such date that is renewable or extendable at the option of Parent or its
Subsidiaries, as applicable, to a date more than one year from such date,
including, in any event, but without duplication, with respect to Parent and its
Subsidiaries, the Term Loan, the Working Capital Indebtedness, any Indebtedness
under credit facilities for non-U.S. Subsidiaries of the Parent and the amount
of their Capital Lease Obligations, but excluding the Subordinated Indebtedness
and Other Subordinated Indebtedness.
"FUNDING LOSSES" has the meaning specified therefor in
SECTION 2.10(B)(II).
"FUNDS FLOW AGREEMENT" means a funds flow agreement, in form
and substance reasonably satisfactory to Agent, executed and delivered by Loan
Parties, Agent, and Working Capital Agent.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"GOVERNMENTAL AUTHORITY" means any federal, state, local,
supra-national or other governmental or administrative body, instrumentality,
board, department, or agency or any court, tribunal, administrative hearing
body, arbitration panel, commission, or other similar dispute-resolving panel or
body.
"GUARANTORS" means (a) Parent, and (b) each Subsidiary of
Parent (other than Borrowers, or any other Subsidiary that is a CFC and that is
not required to guaranty the Obligations pursuant to Section 5.16), and
"GUARANTOR" means any one of them.
"GUARANTY" means that certain general continuing guaranty
executed and delivered by each Guarantor in favor of Agent, for the benefit of
the Lender Group, in form and substance satisfactory to Agent.
"HAZARDOUS MATERIALS" means (a) substances that are defined
or listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"HEDGE AGREEMENT" means any and all agreements, or documents
now existing or hereafter entered into by Parent or any of its Subsidiaries that
provide for an interest rate, credit, commodity or equity swap, cap, floor,
collar, forward foreign exchange transaction, currency swap, cross currency rate
swap, currency option, or any combination of, or option with respect to, these
or similar transactions, for the purpose of hedging Parent's or any of its
Subsidiaries' exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security, or currency valuations or commodity prices.
"HOLDOUT LENDER" has the meaning specified therefor in
SECTION 14.2(A).
"INDEBTEDNESS" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations as a lessee under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Person or its
Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations to pay the deferred purchase price of assets (other than
trade payables incurred in the ordinary course of business, repayable in
accordance with customary trade practices), (f) all obligations owing under
Hedge Agreements, and (g) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (f) above.
"INDEMNIFIED LIABILITIES" has the meaning specified therefor
in SECTION 10.3.
"INDEMNIFIED PERSON" has the meaning specified therefor in
SECTION 10.3.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"INTERCOMPANY SUBORDINATION AGREEMENT" means a subordination
agreement executed and delivered by each Loan Party, each Subsidiary of any Loan
Party, and Agent, the form and substance of which is satisfactory to Agent.
"INTERCREDITOR AGREEMENT" means an intercreditor agreement
executed and delivered by Agent and Working Capital Agent, and acknowledged and
consented to by each Borrower and each Guarantor, as amended, supplemented,
restated or otherwise modified from time to time.
"INTEREST EXPENSE" means, for any period, the aggregate of
the interest expense of Parent and its Subsidiaries for such period, determined
on a consolidated basis in accordance with GAAP.
"INTEREST PERIOD" means, with respect to each LIBOR Rate
Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or
the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending, as selected by Borrowers, 1, 2, or 3 months
thereafter; PROVIDED, HOWEVER, that (a) if any Interest Period would end on a
day that is not a Business Day, such Interest Period shall be extended (subject
to clauses (c)-(e) below) to the next succeeding Business Day, (b) interest
shall accrue at the applicable rate based upon the LIBOR Rate from and including
the first day of each Interest Period to, but excluding, the day on which any
Interest Period expires, (c) any Interest Period that would end on a day that is
not a Business Day shall be extended to the next succeeding Business Day unless
such Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day, (d) with respect to an
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period), the Interest Period shall end on the last
Business Day of the calendar month that is 1, 2, or 3 months after the date on
which the Interest Period began, as applicable, and (e) Borrowers (or
Administrative Borrower on behalf thereof) may not elect an Interest Period
which will end after the Maturity Date.
"INVENTORY" means inventory (as that term is defined in the
Code).
"INVESTMENT" means, with respect to any Person, any
investment by such Person in any other Person (including Affiliates) in the form
of loans, guarantees, advances, capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) BONA FIDE Accounts arising in the
ordinary course of business consistent with past practice), or acquisitions of
Indebtedness, Stock, or all or substantially all of the assets of such other
Person (or of any division or business line of such other Person), and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"JUDGMENT CONVERSION DATE" has the meaning specified therefor
in SECTION 17.14.
"JUDGMENT CURRENCY" has the meaning specified therefor in
SECTION 17.14.
"KASCO" means Kasco Corporation, a Delaware corporation.
"KASCO NON-RECURRING EXPENSES" means, with respect to any
period specified on SCHEDULE K-1, the lesser of (a) the actual amount expended
by the Parent and its Subsidiaries in respect of the items specified on SCHEDULE
K-1 during such period, and (b) the amount specified on SCHEDULE K-1 during such
period.
"LENDER" and "LENDERS" have the respective meanings set forth
in the preamble to the Agreement, and shall include any other Person made a
party to the Agreement in accordance with the provisions of SECTION 13.1.
"LENDER GROUP" means, individually and collectively, each of
the Lenders and Agent.
"LENDER GROUP EXPENSES" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by a Loan Party or
its Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by any one or more members of the Lender Group, (b) fees or charges
paid or incurred by Agent in connection with the Lender Group's transactions
with Loan Parties or their Subsidiaries, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, judgment lien, litigation, and UCC searches
and including searches with the patent and trademark office, the copyright
office, or the department of motor vehicles), filing, recording, publication,
appraisal (including periodic collateral appraisals or business valuations to
the extent of the fees and charges (and up to the amount of any limitation)
contained in the Agreement), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) costs and expenses incurred by Agent
or other members of the Lender Group in the disbursement of funds to (or on
behalf of) Borrowers (by wire transfer or otherwise), (d) charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses
(including travel, meals, and lodging) of Agent related to any inspections or
audits to the extent of the fees and charges (and up to the amount of any
limitation) contained in the Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by any one or more members
of the Lender Group in enforcing or defending the Loan Documents or in
connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with any Loan Party or any Subsidiary of a Loan
Party, (h) Agent's and each Lender's reasonable costs and expenses (including
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering (including travel, meals, and lodging), syndicating (including
rating the Term Loan), or amending the Loan Documents, and (i) Agent's and each
Lender's reasonable costs and expenses (including attorneys, accountants,
consultants, and other advisors fees and expenses) incurred in terminating,
enforcing (including attorneys, accountants, consultants, and other advisors
fees and expenses incurred in connection with a "workout," a "restructuring," or
an Insolvency Proceeding concerning any Loan Party or any Subsidiary of a Loan
Party or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
"LENDER-RELATED PERSON" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, Related Funds, officers,
directors, employees, attorneys, and agents.
"LEVERAGE RATIO" means, as of any date of determination (a)
the amount of Parent's Funded Indebtedness as of such date, DIVIDED BY (b)
Parent's EBITDA for the 12 month period ended as of such date.
"LIBOR DEADLINE" has the meaning specified therefor in
SECTION 2.10(B)(I).
"LIBOR NOTICE" means a written notice in the form of EXHIBIT
L-1.
"LIBOR OPTION" has the meaning specified therefor in SECTION
2.10(A).
"LIBOR RATE" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Agent by DIVIDING (a) the Base LIBOR
Rate for such Interest Period, by (b) 100% MINUS the Reserve Percentage. The
LIBOR Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.
"LIBOR RATE LOAN" means each portion of the Term Loan that
bears interest at a rate determined by reference to the LIBOR Rate.
"LIBOR RATE MARGIN" means 6.00 percentage points.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge, deposit arrangement, encumbrance, easement,
lien (statutory or other), security interest, or other security arrangement and
any other preference, priority, or preferential arrangement of any kind or
nature whatsoever, including any conditional sale contract or other title
retention agreement, the interest of a lessor under a Capital Lease and any
synthetic or other financing lease having substantially the same economic effect
as any of the foregoing.
"LOAN ACCOUNT" has the meaning specified therefor in SECTION
2.8.
"LOAN DOCUMENTS" means the Agreement, the Canadian Guaranty,
the Canadian Security Documents, the Cash Management Agreements, the Collateral
Access Agreements, the Control Agreements, the Copyright Security Agreement, the
Guaranty, the Intercompany Subordination Agreement, the Intercreditor Agreement,
the Mortgages, the Patent Security Agreement, the Security Agreement, the
Subordination Agreement, the Trademark Security Agreement, the Post-Closing
Letter, any note or notes executed by a Borrower in connection with the
Agreement and payable to a member of the Lender Group, and any other agreement
entered into, now or in the future, by any Loan Party or any of their
Subsidiaries, and the Lender Group in connection with the Agreement.
"LOAN PARTY" means any Borrower or any Guarantor.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrowers and their
Subsidiaries, taken as a whole, (b) a material impairment of a Borrower's or any
of its Subsidiaries' ability to perform its obligations under the Loan Documents
to which it is a party or of the Lender Group's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Agent's Liens with respect to the Collateral
as a result of an action or failure to act on the part of a Borrower or a
Subsidiary of a Borrower.
"MATERIAL CONTRACT" means, with respect to any Person, (i)
each contract or agreement to which such Person or any of its Subsidiaries is a
party involving aggregate consideration payable to or by such Person or such
Subsidiary of $250,000 or more (other than purchase orders in the ordinary
course of the business of such Person or such Subsidiary and other than
contracts that by their terms may be terminated by such Person or Subsidiary in
the ordinary course of its business upon less than 60 days notice without
penalty or premium), (ii) the Related Transaction Documents, and (iii) all other
contracts or agreements material to the business, operations, condition
(financial or otherwise), performance, prospects or properties of such Person or
such Subsidiary.
"MATURITY DATE" has the meaning specified therefor in SECTION
3.2.
"XXXXX'X" has the meaning specified therefor in the
definition of Cash Equivalents.
"MORTGAGE POLICY" has the meaning specified therefor in
SCHEDULE 3.1(X).
"MORTGAGES" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Loan Party or a Subsidiary of a Loan Party in favor of Agent, in form and
substance satisfactory to Agent, that encumber the Real Property Collateral.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which any Loan Party or any of its ERISA
Affiliates has contributed to, or has been obligated to contribute, at any time
during the preceding six (6) years.
"NET CASH PROCEEDS" means:
(a) with respect to any sale or disposition by a
Loan Party or a Subsidiary of a Loan Party of property or assets, the amount of
cash proceeds received (directly or indirectly) from time to time (whether as
initial consideration or through the payment of deferred consideration) by or on
behalf of a Loan Party or a Subsidiary of a Loan Party, in connection therewith
after deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any
Lender under the Agreement or the other Loan Documents and (B) Indebtedness
assumed by the purchaser of such asset) which is required to be, and is, repaid
in connection with such sale or disposition, (ii) reasonable fees, commissions,
and expenses related thereto and required to be paid by a Loan Party or such
Subsidiary of a Loan Party in connection with such sale or disposition and (iii)
taxes paid or payable to any taxing authorities by a Loan Party or such
Subsidiary of a Loan Party in connection with such sale or disposition, in each
case to the extent, but only to the extent, that the amounts so deducted are, at
the time of receipt of such cash, actually paid or payable to a Person that is
not an Affiliate of a Loan Party or a Subsidiary of a Loan Party, and are
properly attributable to such transaction; and
(b) with respect to the issuance or incurrence of
any Indebtedness by a Loan Party or a Subsidiary of a Loan Party, or the
issuance by a Loan Party or a Subsidiary of a Loan Party of any shares of its
Stock, the aggregate amount of cash received (directly or indirectly) from time
to time (whether as initial consideration or through the payment or disposition
of deferred consideration) by or on behalf of a Loan Party or such Subsidiary in
connection with such issuance or incurrence, after deducting therefrom only (i)
reasonable fees, commissions, and expenses related thereto and required to be
paid by a Loan Party or such Subsidiary in connection with such issuance or
incurrence, (ii) taxes paid or payable to any taxing authorities by a Loan Party
or such Subsidiary in connection with such issuance or incurrence, in each case
to the extent, but only to the extent, that the amounts so deducted are, at the
time of receipt of such cash, actually paid or payable to a Person that is not
an Affiliate of a Loan Party or Subsidiary of a Loan Party, and are properly
attributable to such transaction.
"NEW LENDING OFFICE" has the meaning specified therefor in
SECTION 16(D).
"NON-US LENDER" has the meaning specified therefor in SECTION
16(D).
"OBLIGATIONS" means all loans (including the Term Loan),
debts, principal, interest (including any interest that accrues after the
commencement of an Insolvency Proceeding regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
premiums, liabilities (including all amounts charged to Borrowers' Loan Account
pursuant to the Agreement), obligations (including indemnification obligations),
fees, charges, costs, Lender Group Expenses (including any fees or expenses that
accrue after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), guaranties, covenants, and duties of any kind and description owing
by Loan Parties to the Lender Group pursuant to or evidenced by the Loan
Documents and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all other
expenses or other amounts that Loan Parties are required to pay or reimburse by
the Loan Documents or by law or otherwise in connection with the Loan Documents.
Any reference in the Agreement or in the Loan Documents to the Obligations shall
include all or any portion thereof and any extensions, modifications, renewals,
or alterations thereof, both prior and subsequent to any Insolvency Proceeding.
"OPERATING LEASE OBLIGATIONS" means all obligations for the
payment of rent for any real or personal property under leases or agreements to
lease, other than Capital Lease Obligations.
"OTHER SUBORDINATED INDEBTEDNESS" means any Indebtedness (i)
which is expressly subordinated in right of payment to all Indebtedness
evidenced by this Agreement, the Working Capital Indebtedness, and the
Subordinated Indebtedness, (ii) which does not mature prior to the date that is
six-months following the stated maturity date for each of the foregoing
Indebtedness, whichever is latest, (iii) which does not contain a cash interest
payment requirement and (iv) which has terms and conditions, and is subject to a
subordination agreement, reasonably acceptable to Agent.
"OTHER TAXES" has the meaning specified therefor in SECTION
16(B).
"PARENT" has the meaning specified therefor in the preamble
to the Agreement.
"PARTICIPANT REGISTER" has the meaning specified therefor in
SECTION 13.1(F).
"PATENT SECURITY AGREEMENT" has the meaning specified
therefor in the Security Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PERMITTED DISCRETION" means a determination made in the
exercise of reasonable (from the perspective of a secured lender) business
judgment.
"PERMITTED DISPOSITIONS" means (a) sales or other
dispositions of Equipment that is substantially worn, damaged, or obsolete in
the ordinary course of business; PROVIDED that the Net Cash Proceeds from such
sales or other dispositions do not exceed $100,000 in the aggregate during any
fiscal year, and such Equipment is sold (or otherwise disposed of) for fair
market value, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of the Agreement or the other Loan Documents, and
(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business.
"PERMITTED HOLDER" means Steel Partners II, L.P. and its
Affiliates.
"PERMITTED INVESTMENTS" means (a) Investments in cash and
Cash Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, and (d) Investments received in settlement of amounts due to
a Loan Party or any Subsidiary of a Loan Party effected in the ordinary course
of business or owing to a Loan Party or any Subsidiary of a Loan Party as a
result of Insolvency Proceedings involving an Account Debtor or upon the
foreclosure or enforcement of any Lien in favor of a Loan Party or any
Subsidiary of a Loan Party.
"PERMITTED KASCO SALE TRANSACTION" means the sale of all of
the Stock or substantially all of the assets of Kasco and its Subsidiaries
subject to satisfaction of the conditions set forth in the Permitted Kasco Sale
Letter.
"PERMITTED KASCO SALE LETTER" means that certain side letter
among Parent, Agent and Working Capital Agent, in form and substance
satisfactory to Agent, pertaining to the sale of all of the Stock or
substantially all of the assets of Kasco and its Subsidiaries.
"PERMITTED LIENS" means (a) Liens held by Agent to secure the
Obligations, (b) Liens for unpaid taxes, assessments, or other governmental
charges or levies that either (i) are not yet delinquent, or (ii) do not have
priority over the Agent's Liens and the underlying taxes, assessments, or
charges or levies are the subject of Permitted Protests, (c) judgment Liens that
do not constitute an Event of Default under SECTION 7.7 of the Agreement, (d)
Liens set forth on SCHEDULE P-2, provided that any such Lien only secures the
Indebtedness that it secures on the Closing Date and any Refinancing
Indebtedness in respect thereof, (e) the interests of lessors under operating
leases, (f) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as (i) such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, and (ii) such Lien only secures
the Indebtedness that was incurred to acquire the asset purchased or acquired or
any Refinancing Indebtedness in respect thereof, (g) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (h) Liens on
amounts deposited in connection with obtaining worker's compensation or other
unemployment insurance, (i) Liens on amounts deposited in connection with the
making or entering into of bids, tenders, or leases in the ordinary course of
business and not in connection with the borrowing of money, (j) Liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business, (k) (i) with respect to any Real
Property Collateral, any encumbrance or restriction contained in Schedule B of
the title insurance policies for such Real Property which have been approved by
Lenders, shown on the surveys listed on SCHEDULE P-3 with respect to such Real
Property, or such other encumbrances, restrictions, easements, rights of way,
and zoning restrictions that do not materially interfere with or impair the use
or operation thereof, and (ii) with respect to all other Real Property,
encumbrances, restrictions, easements, rights of way, and zoning restrictions
that do not materially interfere with or impair the use or operation thereof,
(l) Liens held by Working Capital Agent to secure the Working Capital
Indebtedness, so long as such Liens are subject to the provisions of the
Intercreditor Agreement, (m) Liens held by Subordinated Debt Lender to secure
the Subordinated Indebtedness, so long as such Liens are subject to the
provisions of the Subordination Agreement, and (n) Liens held by Steel Partners
II, L.P. to secure the obligations under the WHX Guaranty, so long as such Liens
are subject to the provisions of the Subordination Agreement. For the avoidance
of doubt and notwithstanding anything to the contrary contained herein, under no
circumstances shall Permitted Liens include any Liens imposed under the IRC or
ERISA, or otherwise, that secures any liability or obligation with respect to
any Employee Plan.
"PERMITTED MERGER" means the merger, effective as of April
24, 2007, of BZ Acquisition Corp., a Delaware corporation and an affiliate of
Steel Partners II, L.P. ("BZ"), with and into Bairnco with Bairnco continuing as
the surviving entity, pursuant to that certain Agreement and Plan of Merger,
dated as of February 23, 2007, by and among Steel Partners II, L.P., BZ and
Baimco (the "BZ MERGER AGREEMENT"), and as assigned by Steel Partners II, L.P.
to WHX pursuant to the Stock Purchase Agreement, dated as of April 12, 2007, by
and between Steel Partners II, L.P. and WHX.
"PERMITTED PRIORITY LIENS" means any Permitted Lien that has
(and is permitted to have) priority over the Liens in favor of the Agent
pursuant to any applicable law or agreement.
"PERMITTED PROTEST" means the right of Parent or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on Parent's or any of its
Subsidiaries' books and records in such amount as is required under GAAP, (b)
any such protest is instituted promptly and prosecuted diligently by Parent or
any of its Subsidiaries, as applicable, in good faith, and (c) Agent is
satisfied that, while any such protest is pending, there will be no impairment
of the enforceability, validity, or priority of any of the Agent's Liens.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate principal amount outstanding at any one time not in excess of
$1,000,000.
"PERSON" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"POST-CLOSING LETTER" means that certain Post-Closing Letter,
dated of as of the date hereof, between Parent and Agent, in form and substance
satisfactory to Agent.
"PROJECTIONS" means Parent's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"PRO RATA SHARE" means, as of any date of determination (a)
prior to the making of the Term Loan, the percentage obtained by dividing (i)
such Lender's Commitment, by (ii) the aggregate amount of all Lenders'
Commitments, and (b) from and after the making of the Term Loan, the percentage
obtained by dividing (i) the principal amount of such Lender's portion of the
Term Loan by (ii) the principal amount of the Term Loan.
"PROTECTIVE ADVANCES" has the meaning specified therefor in
SECTION 2.2(C)(I).
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness (other than
the Obligations, but including Capital Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"QUALIFIED CASH" means, as of any date of determination, the
amount of unrestricted cash and Cash Equivalents of Borrowers and their
Subsidiaries that is in Deposit Accounts or in Securities Accounts, or any
combination thereof, and which such Deposit Account or Securities Account is the
subject of a Control Agreement and is maintained by a branch office of the bank
or securities intermediary located within the United States.
"QUEBEC SECURITY DOCUMENTS" means (i) a Deed of Hypothec and
Issue of Bonds in favour of Agent, as fonde de pouvoir under Article 2692 of the
Civil Code of Quebec, to be executed before a notary of the Province of Quebec,
(ii) a bond issued by a Canadian Obligor pursuant to such Deed of Hypothec and
Issue of Bonds, and (iii) a pledge agreement to be granted by a Canadian Obligor
in respect of any bond issued under such Deed of Hypothec and Issue of Bonds.
"RATING AGENCIES" has the meaning specified therefor in
SECTION 2.14.
"REAL PROPERTY" means any estates or interests in real
property now owned or hereafter acquired by any Loan Party or a Subsidiary of
any Loan Party and the improvements thereto.
"REAL PROPERTY COLLATERAL" means the Real Property identified
on SCHEDULE R-1 and any Real Property hereafter acquired by a Loan Party or any
Subsidiary of a Loan Party.
"RECORD" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is retrievable in
perceivable form.
"REFERENCE BANK" means JPMorgan Chase Bank, its successors or
any other commercial bank designated by the Agent to the Administrative Borrower
from time to time.
"REFINANCING INDEBTEDNESS" means refinancings, renewals, or
extensions of Indebtedness so long as: (a) such refinancings, renewals, or
extensions do not result in an increase in the principal amount of the
Indebtedness so refinanced, renewed, or extended, (b) such refinancings,
renewals, or extensions do not result in an increase in the cash interest rate
with respect to the Indebtedness so refinanced, renewed, or extended, (c) such
refinancings, renewals, or extensions do not result in a shortening of the
average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions that, taken as a whole, are
materially more burdensome or restrictive to Loan Parties, (d) if the
Indebtedness that is refinanced, renewed, or extended was subordinated in right
of payment to the Obligations, then the terms and conditions of the refinancing,
renewal, or extension must include subordination terms and conditions that are
at least as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness, and (e) the Indebtedness that is
refinanced, renewed, or extended is not recourse to any Person that is liable on
account of the Obligations other than those Persons which were obligated with
respect to the Indebtedness that was refinanced, renewed, or extended.
"REGISTER" has the meaning specified therefor in SECTION
13.1(C).
"REGISTERED LOAN" has the meaning specified therefor SECTION
13.1(C).
"RELATED FUND" means a fund, money market account, investment
account or other account managed by a Lender or an Affiliate of such Lender or
its investment manager.
"RELATED TRANSACTION DOCUMENTS" means, collectively, the
Working Capital Documents and the Subordinated Debt Documents.
"REMEDIAL ACTION" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.
"REPLACEMENT LENDER" has the meaning specified therefor in
SECTION 14.2(A).
"REPORT" has the meaning specified therefor in SECTION 15.16.
"REPORTABLE EVENT" means an event in Section 4043 of ERISA
(other than an event not subject to the provision for 30-day notice to the PBGC
under the regulations promulgated under such Section).
"REQUIRED LENDERS" means, at any time, Lenders whose
aggregate Pro Rata Shares exceed 50%.
"RESERVE PERCENTAGE" means, on any day, for any Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"SECURITIES ACCOUNT" means a securities account (as that term
is defined in the Code).
"SECURITIZATION" has the meaning specified therefor in
SECTION 2.14.
"SECURITY AGREEMENT" means a security agreement, in form and
substance satisfactory to Agent, executed and delivered by Borrowers and
Guarantors to Agent.
"SENIOR LEVERAGE RATIO" means, as of any date of
determination (a) the outstanding principal amount of the Obligations and the
Working Capital Indebtedness, divided by (b) Parent's EBITDA for the 12 month
period ended as of such date.
"SOLVENT" means, with respect to any Person on a particular
date, that, at fair valuations, the sum of such Person's assets is greater than
all of such Person's debts.
"SPOT RATE" means the prevailing spot rate of exchange of the
Reference Bank (or, if such rate is not available from the Reference Bank, such
other bank as the Agent may reasonably select) for the purpose of conversion of
one currency to another, at or around 11:00 a.m. (New York City time), on the
date on which any such conversion of currency is to be made under this
Agreement.
"S&P" has the meaning specified therefor in the definition of
Cash Equivalents.
"STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"SUBORDINATED DEBT CREDIT AGREEMENT" means that certain
Amended and Restated Credit Agreement, dated as of even date herewith, by and
among Parent, Borrowers and Subordinated Debt Lender, as such is amended,
modified, supplemented, restated, replaced or refinanced from time to time in
accordance with the terms thereof, the terms of this Agreement, and the
Subordination Agreement.
"SUBORDINATED DEBT DOCUMENTS" means the "Loan Documents" as
such term is defined in the Subordinated Debt Credit Agreement and any
documents, instruments and agreements entered into in connection with any
amendment, supplement, restatement, replacement or refinancing thereof, as
amended, modified, supplemented or restated from time to time in accordance with
the terms thereof, the terms of the Agreement, and the Subordination Agreement.
"SUBORDINATED INDEBTEDNESS" means the Indebtedness incurred
by Parent under the Subordinated Debt Documents in an aggregate principal amount
of not less than $28,500,000, plus the amount of interest accrued thereon that
is paid-in-kind, minus the aggregate amount of all repayments and prepayments of
the principal of the obligations under the Subordinated Debt Credit Agreement
(other than repayments or prepayments of such term loan obligations in
connection with a Refinancing thereof).
"SUBORDINATED DEBT LENDER" means "Lender" as such term is
defined in the Subordinated Credit Agreement and any Person acting in a similar
capacity under any amendment, restatement, supplement, replacement or
refinancing thereof.
"SUBORDINATION AGREEMENT" means a subordination and
intercreditor agreement executed and delivered by Agent, Working Capital Agent,
and Subordinated Debt Lender, and acknowledged and consented to by each Borrower
and each Guarantor, as amended, supplemented, restated or otherwise modified
from time to time.
"SUBSIDIARY" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"TAX PARTY" has the meaning specified therefore in SECTION
4.28.
"TAXES" has the meaning specified therefor in SECTION 16(A).
"TERMINATION EVENT" means (i) a Reportable Event with respect
to any Employee Plan, with respect to which the reporting requirement has not
been waived, (ii) any event that causes any Loan Party or any of its ERISA
Affiliates directly to incur liability under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of
the IRC, (iii) the filing of a notice of intent to terminate an Employee Plan
(other than in connection with a standard termination) or the treatment of an
Employee Plan amendment as a termination under Section 4041 of ERISA, (iv) the
institution of proceedings by the PBGC to terminate an Employee Plan, or (v) any
other event or condition which might reasonably constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Employee Plan.
"TERM LOAN" has the meaning specified therefor in SECTION
2.1.
"TERM LOAN AMOUNT" means $48,000,000.
"TRADEMARK SECURITY AGREEMENT" has the meaning specified
therefor in the Security Agreement.
"TRANSFEREE" has the meaning specified therefor in SECTION
16(A).
"TTM EBITDA" means, as of any date of determination, EBITDA
of Parent determined on a consolidated basis in accordance with GAAP, for the 12
month period most recently ended.
"UNITED STATES" means the United States of America.
"VOIDABLE TRANSFER" has the meaning specified therefor in
SECTION 17.7.
"WHX" means WHX Corporation, a Delaware Corporation.
"WHX GUARANTY" means that certain Guarantee, Pledge and
Security Agreement, dated as of April 17, 2007, by and among Parent and certain
of Parent's Subsidiaries party thereto, as obligors, and Steel Partners II,
L.P., as secured party, as amended, modified, supplemented or restated from time
to time in accordance with the terms thereof, the terms of the Agreement, and
the Subordination Agreement.
"WHX GUARANTY DOCUMENTS" the WHX Guaranty and any other
documents, instruments and agreements entered into in connection therewith or
with any amendment, supplement, restatement, replacement or refinancing thereof,
each as amended, modified, supplemented or restated from time to time in
accordance with the terms thereof, the terms of the Agreement, and the
Subordination Agreement.
"WORKING CAPITAL ADVANCES" means "Advances" as such term is
defined in the Working Capital Credit Agreement.
"WORKING CAPITAL AGENT" means Xxxxx Fargo Foothill, Inc., a
California corporation, in its capacity as agent for the Working Capital Lenders
under the Working Capital Credit Agreement.
"WORKING CAPITAL AVAILABILITY" means "Availability" as such
term in defined in the Working Capital Credit Agreement.
"WORKING CAPITAL BORROWING BASE" means "Borrowing Base" as
such term is defined in the Working Capital Credit Agreement.
"WORKING CAPITAL BORROWING BASE CERTIFICATE" means "Borrowing
Base Certificate" as such term is defined in the Working Capital Credit
Agreement.
"WORKING CAPITAL CREDIT AGREEMENT" means that certain Credit
Agreement dated as of even date herewith by and among the Loan Parties, the
Working Capital Lenders, and the Working Capital Agent as such is amended,
modified, supplemented, restated, refinanced, renewed or replaced from time to
time in accordance with the terms thereof and the terms of this Agreement and
the Intercreditor Agreement.
"WORKING CAPITAL DOCUMENTS" means the Working Capital Credit
Agreement and each other agreement, instrument or document executed or delivered
pursuant to or in connection with the Working Capital Credit Agreement, as such
documents are amended, modified, supplemented, or restated from time to time in
accordance with the terms of this Agreement and the Intercreditor Agreement.
"WORKING CAPITAL INDEBTEDNESS" means the Indebtedness
incurred by the Loan Parties under the Working Capital Credit Agreement.
"WORKING CAPITAL LENDERS" means the lenders from time to time
party to the Working Capital Credit Agreement.
"WORKING CAPITAL LETTER OF CREDIT" means "Letter of Credit"
as such term is defined in the Working Capital Credit Agreement.
"WORKING CAPITAL LETTER OF CREDIT USAGE" means "Letter of
Credit Usage" as such term is defined in the Working Capital Credit Agreement.
"WORKING CAPITAL MAXIMUM REVOLVER AMOUNT" means "Maximum
Revolver Amount" as such term is defined in the Working Capital Credit
Agreement.
"WORKING CAPITAL REVOLVER COMMITMENTS" means "Revolver
Commitments" as such term is defined in the Working Capital Credit Agreement.
"WORKING CAPITAL TERM LOAN" means the "Term Loan" as such
term is defined in the Working Capital Credit Agreement.
SCHEDULE 3.1
The obligation of each Lender to make its portion of the Term Loan is
subject to the fulfillment, to the satisfaction of Agent and each Lender (the
making of the Term Loan being conclusively deemed to be its satisfaction or
waiver of the following), of each of the following conditions precedent:
(a) the Closing Date shall occur on or before July 17,
2007;
(b) Agent shall have received a letter duly executed by
each Borrower and each Guarantor authorizing Agent to file appropriate financing
statements in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect the security interests to be created by the Loan
Documents;
(c) Agent shall have received evidence that appropriate
financing statements have been duly filed in such office or offices as may be
necessary or, in the opinion of Agent, desirable to perfect the Agent's Liens in
and to the Collateral, and Agent shall have received searches reflecting the
filing of all such financing statements;
(d) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Cash Management Agreements,
(ii) the Control Agreements,
(iii) the Copyright Security Agreement,
(iv) a disbursement letter executed and
delivered by Borrowers to Agent and Working Capital Agent regarding the
extensions of credit to be made on the Closing Date, the form and substance of
which is satisfactory to Agent,
(v) the Guaranty,
(vi) the Intercompany Subordination Agreement,
(vii) the Mortgages,
(viii) the Patent Security Agreement,
(ix) the Canadian Security Agreement,
(x) the Canadian Guaranty,
(xi) the Hypothec,
(xii) a letter, in form and substance
satisfactory to Agent, from Bank of America, N.A. ("EXISTING LENDER") to Agent
respecting the amount necessary to repay in full all of the obligations of Loan
Parties and their Subsidiaries owing to Existing Lender and obtain a release of
all of the Liens existing in favor of Existing Lender in and to the assets of
Loan Parties and their Subsidiaries, together with termination statements and
other documentation evidencing the termination by Existing Lender of its Liens
in and to the properties and assets of Loan Parties and their Subsidiaries,
(xiii) the Security Agreement, together with
copies of all certificates representing the shares of Stock intercompany notes
pledged thereunder that are delivered to Working Capital Agent, as well as Stock
powers and allonges with respect thereto endorsed in blank,
(xiv) the Trademark Security Agreement,
(xv) the Intercreditor Agreement,
(xvi) the Subordination Agreement,
(xvii) the Collateral Assignment of each Approved
Policy with respect to Eligible Foreign Accounts (as each term is defined in the
Working Capital Credit Agreement);
(xviii) the Permitted Kasco Sale Letter; and
(xix) the Post-Closing Letter.
(e) Agent shall have received a certificate from the
Secretary of each Borrower (i) attesting to the resolutions of such Borrower's
Board of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party, (ii)
authorizing specific officers of such Borrower to execute the same, and (iii)
attesting to the incumbency and signatures of such specific officers of such
Borrower;
(f) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(g) Agent shall have received a certificate of status
with respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(h) Agent shall have received certificates of status
with respect to each Borrower, each dated within 30 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of such Borrower) in which (i) its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that such Borrower is in good standing
in such jurisdictions, and (ii) it maintains any Collateral;
(i) Agent shall have received a certificate from the
Secretary of each Guarantor (i) attesting to the resolutions of such Guarantor's
Board of Directors authorizing its execution, delivery, and performance of the
Loan Documents to which such Guarantor is a party, (ii) authorizing specific
officers of such Guarantor to execute the same and (iii) attesting to the
incumbency and signatures of such specific officers of Guarantor;
(j) Agent shall have received copies of each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor;
(k) Agent shall have received a certificate of status
with respect to each Guarantor, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor, which certificate shall indicate that such
Guarantor is in good standing in such jurisdiction;
-2-
(l) Agent shall have received certificates of status
with respect to each Guarantor, each dated within 30 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of such Guarantor) in which (i) its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that such Borrower is in good standing
in such jurisdictions, and (ii) it maintains any Collateral;
(m) Agent shall have received a certificate of
insurance, together with the endorsements thereto, as are required by SECTION
5.8, the form and substance of which shall be satisfactory to Agent;
(n) Agent shall have received Collateral Access
Agreements with respect to the following locations: Lake Mary, Florida; Dallas,
Texas (2 locations); Xxx Xxxxxxx, Xxxxx (0 xxxxxxxxx); Xxxxxxxx, Xxxxxx;
(o) Agent shall have received Collateral Access
Agreement with respect to 00000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx;
(p) Agent shall have received an opinion of Loan
Parties' counsel under New York, Delaware, Texas and Canadian laws, in form and
substance satisfactory to Agent;
(q) After giving effect to the Closing Date
Transactions, (i) Working Capital Availability shall not be less than $6,500,000
and (ii) all liabilities of the Loan Parties shall be (A) current and (B) at a
level and in a condition satisfactory to the Agent in its sole discretion. The
Administrative Borrower shall deliver to the Agent a certificate of the chief
financial officer of the Administrative Borrower certifying as to the matters
set forth in clauses (i) and (ii)(A) above and containing the calculation of
Working Capital Availability.
(r) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of Loan
Parties' and their Subsidiaries' books and records and verification of Loan
Parties' representations and warranties to the Lender Group, the results of
which shall be satisfactory to Agent, (ii) such books and records of the Parent
and its Subsidiaries as the Agent may request, (iii) an analysis of the
financial statements of the Parent and its Subsidiaries for the period from
April 1, 2006 through March 31, 2007, (iv) review of Loan Parties' material
contracts, and (v) an inspection of each of the locations where Loan Parties'
and their Subsidiaries' Inventory is located, and, in each case, the results
thereof shall be acceptable to the Agent, in its sole and absolute discretion;
(s) Agent shall have received evidence that the Canadian
Obligor has appointed an agent in New York City for the purpose of service of
process and such agent agrees in writing to give Agent notice of any resignation
of such service agent or other tsermination of agency;
(t) Agent shall have received completed reference checks
with respect to Loan Parties' senior management, the results of which are
satisfactory to Agent in its sole discretion;
(u) Agent shall have received Loan Parties' business
plan, the results of which are satisfactory to Agent in its sole discretion,
certified as true and correct by an Authorized Officer of the Administrative
Borrower;
(v) Agent shall have received a set of Projections of
the Parent for the 3 year period following the Closing Date (on a year by year
basis, and for the 1 year period following the Closing Date, on a month by month
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent, certified as true and correct by an Authorized Officer of
the Administrative Borrower;
(w) Borrowers shall have paid the Closing Fee and all
Lender Group Expenses incurred in connection with the transactions evidenced by
this Agreement;
-3-
(x) Agent shall have received (i) appraisals of the Real
Property Collateral satisfactory to Agent, and (ii) mortgagee title insurance
policies (or marked commitments to issue the same) for the Real Property
Collateral issued by a title insurance company satisfactory to Agent (each a
"MORTGAGE POLICY" and, collectively, the "MORTGAGE POLICIES") in amounts
satisfactory to Agent assuring Agent that the Mortgages on such Real Property
Collateral are valid and enforceable first priority mortgage Liens (subject to
Permitted Priority Liens) on such Real Property Collateral free and clear of all
defects and encumbrances except Permitted Liens, and the Mortgage Policies
otherwise shall be in form and substance satisfactory to Agent;
(y) Agent shall have received a phase-I environmental
report and a real estate survey with respect to each parcel composing the Real
Property Collateral; the environmental consultants and surveyors retained for
such reports or surveys, the scope of the reports or surveys, and the results
thereof shall be acceptable to Agent;
(z) Agent shall have received copies of each of the
Working Capital Documents and the Subordinated Debt Documents, together with a
certificate of the Secretary of the Parent certifying that (i) each such
document is a true, correct, and complete copy thereof, (ii) each such document
is in full force and effect, and (iii) none of the Loan Parties has breached or
defaulted in any of its obligations thereunder;
(aa) Loan Parties and each of their Subsidiaries shall
have received all licenses, approvals or evidence of other actions required by
any Governmental Authority in connection with the execution and delivery by Loan
Parties or their Subsidiaries of the Loan Documents or with the consummation of
the transactions contemplated thereby;
(bb) Agent shall have determined, in its sole judgment,
that no event or development shall have occurred since December 31, 2006, which
could reasonably be expected to have a Material Adverse Effect; provided that
the transactions contemplated by this Agreement and the transactions made in
connection with the Permitted Merger shall not constitute a Material Adverse
Effect;
(cc) All consents, authorizations and approvals of, and
filings and registrations with, and all other actions in respect of, any
Governmental Authority or other Person required in connection with the making of
the Term Loan, the consummation of any of the transactions contemplated by any
of the Related Transaction Documents, or the conduct of the Loan Parties'
business shall have been obtained and shall be in full force and effect;
(dd) Agent shall have received a certificate from an
authorized officer of Parent and WHX certifying that none of the proceeds of the
Equity Contribution were returned to WHX prior to the Closing Date.
(ee) Agent shall have received, in form and substance
satisfactory to the Agent, evidence that (i) the Working Capital Documents have
been duly executed and delivered by and to the appropriate parties thereto, (ii)
no provision of any Working Capital Document has been amended or otherwise
modified or waived without the prior written consent of the Agent, and (iii) all
of the conditions precedent to the making of the Working Capital Term Loan and
the funding of the Working Capital Advances (other than the making of the Term
Loan hereunder) have been satisfied;
(ff) Agent shall have received, in form and substance
satisfactory to the Agent, (A) a letter agreement between Parent and
Subordinated Debt Lender relating to the repayment of a portion of the
Subordinated Indebtedness on the Closing Date and (B) evidence that (i) the
Subordinated Debt Documents have been duly executed and delivered by and to the
appropriate parties thereto, (ii) the transactions contemplated under the terms
of the Subordinated Debt Documents have been consummated prior to or
contemporaneous with the execution of this Agreement and (iii) the guaranties
and liens granted by certain foreign Subsidiaries of the Parent in favor of
Subordinated Debt Lender have been released and terminated;
-4-
(gg) Agent shall have received (i) a Notice of Borrowing
pursuant to and in accordance with the terms of SECTION 2.2 hereof and (ii) a
LIBOR Notice pursuant to SECTION 2.10 hereof, if applicable; and
(hh) all other documents and legal matters in connection
with the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.
-5-
SCHEDULE 5.2
Provide Agent (and if so requested by Agent, with copies for each
Lender) with each of the documents set forth below at the following times in
form satisfactory to Agent:
================================================================================
Daily (a) an Account roll-forward with supporting details
supplied from sales journals, collection journals,
credit registers and any other records,
(b) notice of all claims, offsets, or disputes asserted
by Account Debtors with respect to Loan Parties' and
their Subsidiaries' Accounts, and
(c) copies of invoices together with corresponding
shipping and delivery documents, and credit memos
together with corresponding supporting documentation,
with respect to invoices and credit memos in excess of
an amount determined in the sole discretion of Agent,
from time to time.
--------------------------------------------------------------------------------
Weekly (d) Inventory system/perpetual reports specifying the
cost and the wholesale market value of Loan Parties'
and their Subsidiaries' Inventory, by category (i.e.,
finished goods, work-in-process or raw materials), with
additional detail showing additions to and deletions
therefrom (delivered electronically in an acceptable
format, if Loan Parties have implemented electronic
reporting); and
(e) a detailed reporting of Loan Parties' and their
Subsidiaries intercompany activity.
--------------------------------------------------------------------------------
Monthly (no later than (f) a Working Capital Borrowing Base Certificate,
the 15th day of each
month) (g) a detailed aging, by total, of Borrowers' Accounts,
together with a reconciliation and supporting
documentation for any reconciling items noted
(delivered electronically in an acceptable format, if
Borrowers have implemented electronic reporting),
(h) a detailed calculation of those Accounts that are
not eligible for the Working Capital Borrowing Base, if
Borrowers have not implemented electronic reporting,
(i) a detailed Inventory system/perpetual report
together with a reconciliation to Borrowers' general
ledger accounts (delivered electronically in an
acceptable format, if Borrowers have implemented
electronic reporting),
(j) a detailed calculation of Inventory categories that
are not eligible for the Working Capital Borrowing
Base, if Borrowers have not implemented electronic
reporting,
(k) a summary aging, by vendor, of Loan Parties' and
their Subsidiaries' accounts payable and any book
overdrafts (delivered electronically in an acceptable
format, if Borrowers have implemented electronic
reporting), an aging, by vendor, of any held checks and
detailed listing of all accrued expenses,
(l) a detailed report regarding Loan Parties' and their
Subsidiaries' cash and Cash Equivalents, including an
indication of which amounts constitute Qualified Cash,
(m) a monthly Account roll-forward, in a format
acceptable to Agent in its discretion, tied to the
beginning and ending account receivable balances of
Borrowers' general ledgers; and
(n) a detailed report of all slow moving and obsolete
Inventory.
================================================================================
-1-
================================================================================
Monthly (no later (o) a reconciliation of Accounts, trade accounts
than the 30th day payable, and Inventory of Loan Parties' general ledger
of each month) accounts to their monthly financial statements
including any book reserves related to each category;
(p) a report regarding Loan Parties' and their
Subsidiaries' accrued, but unpaid, taxes including,
without limitation, property taxes, real estate taxes,
ad valorem taxes, income taxes, payroll taxes and
withholding taxes (Canadian or otherwise); together
with proof of payment of such applicable taxes;
(q) a detailed report by customer of all deferred
revenue, together with a reconciliation of such
deferred revenue to Parent's general ledger accounts
and monthly financial statements; and
(r) a detailed reporting of any deemed dividend tax
liability.
--------------------------------------------------------------------------------
Semi-Annual (s) inventory appraisal, which shall be conducted by an
appraiser, and in form and substance satisfactory to
Agent.
--------------------------------------------------------------------------------
Annually (t) a detailed list of Borrowers' and their
Subsidiaries' customers, with address and contact
information;
(u) machinery and equipment appraisal, which shall be
conducted by an appraiser, and in form and substance
satisfactory to Agent; and
(v) real estate appraisals, which shall be conducted by
an appraiser, and in form and substance satisfactory to
Agent.
--------------------------------------------------------------------------------
Upon request by (w) copies of purchase orders and invoices for
Inventory and Equipment acquired by Borrowers or their
Agent Subsidiaries, and
(x) such other reports as to the Collateral or the
financial condition of Loan Parties and their
Subsidiaries, as Agent may reasonably request.
================================================================================
-2-
SCHEDULE 5.3
Deliver to Agent, with copies to each Lender, each of the financial
statements, reports, or other items set forth set forth below at the following
times in form satisfactory to Agent:
================================================================================
as soon as available, but in (a) an unaudited consolidated and consolidating
any event within 30 days balance sheet, income statement, and statement
(45 days in the case of a of cash flow covering Parent's and its
month that is the end of one Subsidiaries' operations during such period, and
of Parent's fiscal quarters)
after the end of each month (b) a Compliance Certificate.
during each of Parent's
fiscal years
--------------------------------------------------------------------------------
as soon as available, but in (c) audited consolidated financial statements of
any event within 120 days WHX and its Subsidiaries (such audited financial
after the end of each of statements to include balance sheets, statements
WHX's fiscal years of income and loss, statements of cash flow and
statements of shareholders' equity) and
unaudited consolidating financial statements of
WHX and its Subsidiaries (to include balance
sheets and statements of income and loss), and
the accompanying notes thereto, all in
reasonable detail, fairly presenting in all
material respects the financial position and the
results of the operations of WHX and its
Subsidiaries as of the end of and for such
fiscal year, together with the unqualified
opinion (for the avoidance of doubt, which shall
not include any qualification related to (A)
"going concern" or like qualification or
exception, (B) qualification or exception as to
the scope of such audit, or (C) qualification
which relates to the treatment or classification
of any item and which, as a condition to the
removal of such qualification, would require an
adjustment to such item, the effect of which
would be to cause any noncompliance with the
provisions of Section 6.18) with respect to the
audited consolidated financial statements, which
accountants shall be an independent accounting
firm selected by WHX and acceptable to Agent,
that such audited consolidated financial
statements have been prepared in accordance with
GAAP, and present fairly in all material
respects the results of operations and financial
condition of WHX and its Subsidiaries as of the
end of and for the fiscal year then ended, and
(d) a Compliance Certificate.
--------------------------------------------------------------------------------
as soon as available, but in (e) copies of Parent's Projections, in form and
any event within 30 days substance (including as to scope and underlying
after the start of each of assumptions) satisfactory to Agent, in its
Parent's fiscal years, Permitted Discretion, for the forthcoming 3
years, year by year, and for the forthcoming
fiscal year, month by month, certified by the
chief financial officer of Parent as being such
officer's good faith estimate of the financial
performance of Parent during the period covered
thereby.
--------------------------------------------------------------------------------
if and when filed by any (f) Form 10-Q quarterly reports, Form 10-K
Loan Party, annual reports, and Form 8-K current reports,
--------------------------------------------------------------------------------
-1-
--------------------------------------------------------------------------------
(g) any other filings made by any Loan Party
with the SEC, and
(h) any other information that is provided by
Parent to its shareholders generally.
--------------------------------------------------------------------------------
promptly, but in any event (i) notice of such event or condition and a
within 5 Business Days statement of the curative action that Borrowers
after a Loan Party has proposes to take with respect thereto.
knowledge of any event or
condition that constitutes a
Default or an Event of
Default,
--------------------------------------------------------------------------------
promptly after the (j) notice of all actions, suits, or proceedings
commencement thereof, brought by or against any Loan Party or any
but in any event within 5 Subsidiary of a Loan Party before any
Business Days after the Governmental Authority which reasonably could be
service of process with expected to result in a Material Adverse Change.
respect thereto on any Loan
Party or any Subsidiary of a
Loan Party,
--------------------------------------------------------------------------------
as soon as possible and in (k) a statement of an Authorized Officer of the
any event within 5 Business applicable Loan Party setting forth the details
Days after any Loan Party of such occurrence and the action, if any, which
or any ERISA Affiliate such Loan Party or such ERISA Affiliate proposes
thereof knows or has to take with respect thereto.
reason to know that (1) any
Reportable Event with For purposes hereof, "Reportable Event" shall
respect to any Employee mean an event described in Section 4043 of ERISA
Plan has occurred, (2) any (other than an event not subject to the
other Termination Event provision for 30-day notice to the PBGC under
with respect to any the regulations promulgated under such Section).
Employee Plan has
occurred, or (3) an
accumulated funding
deficiency has been
incurred or an application
has been made to the
Secretary of the Treasury
for a waiver or modification
of the minimum funding
standard (including
installment payments) or an
extension of any
amortization period under
Section 412 of the IRC with
respect to an Employee
Plan,
--------------------------------------------------------------------------------
-2-
--------------------------------------------------------------------------------
promptly and in any event (l) copies of each notice received by any Loan
within 5 Business Days Party or any ERISA Affiliate thereof of the
after receipt thereof by any PBGC's intention to terminate any Plan or to
Loan Party or any ERISA have a trustee appointed to administer any Plan.
Affiliate thereof from the
PBGC,
--------------------------------------------------------------------------------
promptly and in any event (m) copies of each Schedule B (Actuarial
within 10 Business Days Information) to the annual report (Form 5500
after the filing thereof Series) with respect to each Employee Plan and
with the Internal Revenue Multiemployer Plan.
Service,
--------------------------------------------------------------------------------
promptly and in any event (n) notice of such event or condition and a
within 10 Business Days statement of the curative action that Borrowers
after any Loan Party or any proposes to take with respect thereto.
ERISA Affiliate thereof
knows or has reason to
know that a required
installment within the
meaning of Section 412 of
the IRC has not been made
when due with respect to an
Employee Plan,
--------------------------------------------------------------------------------
promptly and in any event (o) a copy of each notice received by any Loan
within 3 Business Days Party or any ERISA Affiliate thereof concerning
after receipt thereof by any the imposition or amount of withdrawal liability
Loan Party or any ERISA under Section 4202 of ERISA or indicating that
Affiliate thereof from a such Multiemployer Plan may enter reorganization
sponsor of a Multiemployer status under Section 4241 of ERISA.
Plan or from the PBGC,
--------------------------------------------------------------------------------
promptly and in any event (p) copies of each such notice sent by such Loan
within 10 Business Days Party or such ERISA Affiliate thereof.
after any Loan Party or any
ERISA Affiliate thereof
sends notice of a plant
closing or mass layoff (as
defined in Worker
Adjustment and Retraining
Notification Act) to
employees,
--------------------------------------------------------------------------------
-3-
--------------------------------------------------------------------------------
promptly and in any event (q) evidence, in form and substance satisfactory
within 5 Business Days to Agent, that such payment or contribution has
after the due date for any been made.
scheduled payment or
contribution which was not
paid, but required of any
Loan Party or any ERISA
Affiliate thereof with
respect to any Employee
Plan,
--------------------------------------------------------------------------------
promptly and in any event (r) strike, labor dispute, slowdown, stoppage or
within 5 Business Days similar action or grievance against against or
after any Loan Party has involving any Loan Party if the same could
knowledge of any, reasonably be expected to result in, either
individually or in the aggregate, a Material
Adverse Change.
--------------------------------------------------------------------------------
promptly and in any event (s) amendment, termination, modification,
within 5 Business Days alteration, increase, or change to any Material
after any Loan Party has Contract if the same could reasonably be
knowledge of any, expected to result in a Material Adverse Change.
--------------------------------------------------------------------------------
upon the request of Agent, (t) any other information reasonably requested
relating to the financial condition of Borrowers
or their Subsidiaries.
================================================================================
-4-
