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EXHIBIT 10.8
CREDIT AGREEMENT
among
CECO GROUP, INC.,
CECO FILTERS, INC.,
AIR PURATOR CORPORATION,
NEW XXXXX CO., INC.,
THE XXXX & XXXX MANUFACTURING COMPANY, and
KBD/TECHNIC, INC.,
as Borrowers
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION
as Agent
Dated as of December 7, 1999
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TABLE OF CONTENTS
Page
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BACKGROUND........................................................................................................1
SECTION 1. DEFINITIONS...........................................................................................1
1.1 Defined Terms...................................................................................1
1.2 Other Definitional Provisions..................................................................20
1.3 Construction...................................................................................20
SECTION 2. THE CREDITS..........................................................................................21
2.1 Revolving Credit Loans.........................................................................21
2.2 Term Loans.....................................................................................22
2.3 General Provisions Regarding Loans.............................................................23
2.4 Letter of Credit Subfacility...................................................................24
2.5 Fees...........................................................................................27
2.6 Notes; Repayment of Loans......................................................................27
2.7 Interest on Loans..............................................................................28
2.8 Default Rate; Additional Interest; Alternate Rate of Interest..................................29
2.9 Termination, Reduction, Extension of Commitments; Additional Banks.............................29
2.10 Optional and Mandatory Prepayments of Loans....................................................31
2.11 Illegality.....................................................................................32
2.12 Requirements of Law............................................................................33
2.13 Taxes..........................................................................................34
2.14 Indemnity......................................................................................35
2.15 Pro Rata Treatment, etc........................................................................36
2.16 Payments.......................................................................................36
2.17 Borrowers' Representative......................................................................36
2.18 Conversion and Continuation Options............................................................37
SECTION 3. REPRESENTATIONS AND WARRANTIES.......................................................................38
3.1 Financial Condition............................................................................38
3.2 No Adverse Change..............................................................................38
3.3 Existence; Compliance with Law.................................................................38
3.4 Power; Authorization; Enforceable Obligations..................................................39
3.5 No Legal Bar...................................................................................39
3.6 No Material Litigation.........................................................................39
3.7 No Default.....................................................................................39
3.8 Taxes..........................................................................................40
3.9 Federal Regulations............................................................................40
3.10 ERISA..........................................................................................40
3.11 Investment Company Act; Public Utility Holding Company Act.....................................41
3.12 Purpose of Loans; Letters of Credit............................................................41
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3.13 Environmental Matters.........................................................................41
3.14 Ownership of the Borrowers.....................................................................42
3.15 Patents, Trademarks, etc.......................................................................42
3.16 Ownership of Property..........................................................................42
3.17 Licenses, etc..................................................................................43
3.18 No Burdensome Restrictions.....................................................................43
3.19 Labor Matters..................................................................................43
3.20 Partnerships...................................................................................43
3.21 No Material Misstatements......................................................................43
3.22 Affiliated Business Enterprises................................................................43
3.23 Acquisition Documents..........................................................................43
3.24 Year 2000 Compliance...........................................................................44
SECTION 4. CONDITIONS PRECEDENT.................................................................................45
4.1 Conditions to Closing..........................................................................45
4.2 Conditions to Each Loan........................................................................47
SECTION 5. AFFIRMATIVE COVENANTS................................................................................48
5.1 Financial Statements...........................................................................48
5.2 Certificates; Other Information................................................................49
5.3 Payment of Obligations.........................................................................49
5.4 Conduct of Business and Maintenance of Existence...............................................49
5.5 Maintenance of Property; Insurance.............................................................50
5.6 Inspection of Property; Books and Records; Discussions.........................................50
5.7 Notices........................................................................................51
5.8 Environmental Laws.............................................................................52
5.9 Ownership of Borrowers; Joinder of Subsidiaries................................................52
5.10 Management Changes.............................................................................53
5.12 Plans and Benefit Arrangements.................................................................53
5.13 Interest Rate Protection.......................................................................53
5.14 Further Assurances; Power of Attorney..........................................................54
SECTION 6. NEGATIVE COVENANTS...................................................................................54
6.1 Financial Covenants............................................................................54
6.2 Limitation on Debt.............................................................................56
6.3 Limitation on Liens............................................................................56
6.4 Limitations on Fundamental Changes.............................................................58
6.5 Limitation on Sale of Assets...................................................................58
6.7 Limitation on Distributions and Investments....................................................59
6.8 Transactions with Affiliates...................................................................59
6.9 Sale and Leaseback.............................................................................59
6.10 Continuation of or Change in Business..........................................................59
6.12 Changes in Organizational Documents............................................................59
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SECTION 7. EVENTS OF DEFAULT....................................................................................60
7.1 Events of Default..............................................................................60
7.2 Remedies.......................................................................................62
SECTION 8. THE AGENT............................................................................................65
8.1 Appointment....................................................................................65
8.2 Delegation of Duties...........................................................................65
8.3 Exculpatory Provisions.........................................................................65
8.4 Reliance by Agent..............................................................................65
8.5 Notice of Default..............................................................................66
8.6 Non-Reliance on Agent and Other Banks..........................................................66
8.7 Indemnification................................................................................67
8.8 Agent in its Individual Capacity...............................................................67
8.9 Successor Agent................................................................................67
8.10 Beneficiaries..................................................................................67
SECTION 9. MISCELLANEOUS........................................................................................68
9.1 Amendments and Waivers.........................................................................68
9.2 Notices........................................................................................68
9.3 No Waiver; Cumulative Remedies.................................................................70
9.4 Survival of Representations and Warranties.....................................................70
9.5 Payment of Expenses and Taxes..................................................................70
9.6 Successors and Assigns.........................................................................71
9.7 Confidentiality................................................................................74
9.8 Adjustments; Set-off...........................................................................74
9.9 Counterparts...................................................................................75
9.10 Severability...................................................................................75
9.11 Integration....................................................................................75
9.12 GOVERNING LAW..................................................................................76
9.13 Submission To Jurisdiction; Waivers............................................................76
9.14 Acknowledgments................................................................................76
9.15 WAIVERS OF JURY TRIAL..........................................................................77
9.16 Borrowers' Obligations.........................................................................77
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SCHEDULES
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SCHEDULE I Bank and Commitment Information
SCHEDULE 3.3 Compliance with Laws
SCHEDULE 3.6 Existing Litigation
SCHEDULE 3.10 ERISA Matters
SCHEDULE 3.13 Environmental Matters
SCHEDULE 3.14 Ownership of Borrowers and USFM
SCHEDULE 3.16 Real Property Interests
SCHEDULE 3.19 Labor Matters
SCHEDULE 3.20 Interests in Partnerships
SCHEDULE 6.2 Permitted Debt
SCHEDULE 6.3 Existing Liens
EXHIBITS
EXHIBIT A Form of Borrowing Request
EXHIBIT B-1 Form of Revolving Credit Note
EXHIBIT B-2 Form of Term Loan A Note
EXHIBIT B-3 Form of Term Loan B Note
EXHIBIT B-4 Form of Term Loan C Note
EXHIBIT C Form of Assignment and Acceptance
EXHIBIT D Form of Borrowing Base Certificate
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") dated as of December
7, 1999, by and among CECO GROUP, INC. (the "Parent Company"), CECO FILTERS,
INC., AIR PURATOR CORPORATION, NEW XXXXX CO., INC., THE XXXX & XXXX
MANUFACTURING COMPANY, and KBD/TECHNIC, INC. (together with the Parent Company,
the "Borrowers"), the several banks and other financial institutions from time
to time parties to this Agreement (the "Banks"), and PNC BANK, NATIONAL
ASSOCIATION, a national banking association, as administrative agent (in such
capacity, the "Agent").
BACKGROUND
The Borrowers have requested that the Banks make Loans and
issue or participate in Letters of Credit (these terms and certain other terms
are defined in Section 1.1 hereof) to the Borrowers, and the Banks severally
have agreed to make Loans and/or participate in the issuance of Letters of
Credit on the terms and conditions herein contained. Proceeds of the Loans will
be used for the purposes described herein.
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants and agreements herein set forth and for other consideration,
the receipt and sufficiency of which is hereby acknowledged and intending to be
legally bound hereby, covenant and agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Acquisition Documents": shall mean all documents, instruments
and agreements evidencing the K&B Acquisition.
"Administrative Fees": as defined in subsection 2.5(b).
"Affiliate": any Person (other than a Subsidiary, or an
officer, director or employee of any of the Borrowers who would not be
an Affiliate but for such Person's status as an officer, director
and/or employee) which, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the Borrowers, and any member, director, officer or
employee of any such Person or any Subsidiary of a Borrower. For
purposes of this definition, "control" shall mean the power, directly
or indirectly, either to (i) vote 5% or more of the securities having
ordinary voting power for the election of directors of such Person or
(ii) direct or in effect cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Applicable Commitment Fee Percentage": until the earlier of
(i) the expiration of the twelve month period commencing on the Closing
Date, and (ii) a Secondary Offering, one half of one percent (0.5%) per
annum. Thereafter, the percent per annum determined by reference to the
table set forth on Annex I hereto under the caption "Ongoing Margins",
based upon the Borrowers' compliance with the Leverage Ratio at the
levels set forth in such table as such Leverage Ratio is shown on the
Applicable Margin Certificate required pursuant to subsection 5.2(a)
for any fiscal quarter; provided, that any changes in the Applicable
Commitment Fee Percentage pursuant to the foregoing provisions shall
become effective from the fifth day following the date the Agent shall
have received the Applicable Margin Certificate in respect of such
fiscal quarter. In the event that the Applicable Margin Certificate
required pursuant to Section 5.2(a) for any fiscal quarter is not
timely delivered, then the Applicable Commitment Fee Percentage shall
be determined by reference to Compliance Level IV, commencing as of the
date such certificate was required to be delivered until the delivery
of such certificate. In the event that the actual Leverage Ratio
referred to in the table is subsequently determined to be different
than as shown on the Applicable Margin Certificate (or as determined
pursuant to the preceding sentence in the absence of delivery of an
Applicable Margin Certificate) for any fiscal quarter, the Applicable
Commitment Fee Percentage shall be recalculated for the applicable
period based on such actual Leverage Ratio.
"Applicable Margin": until the earlier of (i) the expiration
of the twelve month period commencing on the Closing Date, and (ii) a
Secondary Offering, the amount set forth on Annex I under the caption
"Initial Applicable Margin". Thereafter, the percent per annum
determined by reference to the table set forth on Annex I hereto under
the caption "Ongoing Margins", based upon the Borrowers' compliance
with the Leverage Ratio at the levels set forth in such table as such
Leverage Ratio is shown on the Applicable Margin Certificate required
pursuant to Section 5.2(a) for any fiscal quarter; provided, that any
changes in the Applicable Margin pursuant to the foregoing provisions
shall become effective from the day following the date the Agent shall
have received the Applicable Margin Certificate in respect of such
fiscal quarter. In the event that the Applicable Margin Certificate
required pursuant to Section 5.2(a) for any fiscal quarter is not
timely delivered, then the Applicable Margin shall be determined by
reference to Compliance Level IV, commencing as of the date such
certificate was required to be delivered until the delivery of such
certificate. In the event that the actual Leverage Ratio referred to in
the table is subsequently determined to be different than as shown on
the Applicable Margin Certificate (or as determined pursuant to the
preceding sentence in the absence of delivery of an Applicable Margin
Certificate) for any fiscal quarter, the Applicable Margin shall be
recalculated for the applicable period based on such actual Leverage
Ratio.
"Applicable Margin Certificate": as defined in Section 5.2(a).
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"Asset Sale": means any sale, lease, transfer or other
disposition or casualty loss of assets (each referred to for the
purposes of this definition as a "disposition") by a Borrower other
than (a) a disposition by a Borrower to another Borrower, (b)
disposition of inventory in the ordinary course of business, (c)
dispositions of surplus or obsolete inventory or equipment, waste or
by-product material in the ordinary course of business and (d)
dispositions of Permitted Investments.
"Assignment and Acceptance": an assignment and acceptance
entered into by a Bank and an assignee, and acknowledged by the Agent,
in the form of Exhibit C or such other form as shall be approved by the
Agent.
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/100th of 1%) equal to the Prime Rate in
effect on such day. Any change in the Base Rate due to a change in the
Prime Rate shall be effective on the effective date of such change in
the Prime Rate.
"Base Rate Borrowing": a Borrowing comprised of Base Rate
Loans.
"Base Rate Loans": Loans bearing interest at a rate determined
by reference to the Base Rate.
"Bonus Pool Payments": shall mean payments to Xxxxxxx X. Xxxx,
Xxxxxxxx X. Xxxx and Xxxxx Xxxx, each pursuant to Section 3(e) of an
Employment Agreement with one of the Borrowers in effect as of the date
hereof.
"Borrowers": those Persons defined as such in the preamble of
this Agreement.
"Borrowers' Representative": as defined in Section 2.17.
"Borrowing": each group of Loans of a single Type made by the
Banks on a single date, and, in the case of Eurodollar Loans, as to
which a single Interest Period is in effect.
"Borrowing Request": a request made pursuant to Section 2.1(c)
in the form of Exhibit A.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in Pittsburgh, Pennsylvania are
authorized or required by law to close; provided, however, that, when
used in connection with a Eurodollar Loan, the term "Business Day"
shall also exclude any day on which banks are not open for dealings in
dollar deposits in the London Interbank Market.
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"Capital Lease": at any time, a lease with respect to which
the lessee is required to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"CECO": CECO Environmental Corp., the parent company of the
Parent Company.
"CECO Debt Repayments": means amounts paid to CECO to permit
payments by CECO to third party creditors and subject to a
Subordination Agreement, to be immediately paid by CECO to one or more
of the creditors under such Subordination Agreement; provided, that no
such amounts may be paid to CECO if CECO would not be permitted to make
such payment to such creditors under the Subordination Agreement.
"Closing": as defined in Section 4.3.
"Closing Date": as defined in Section 4.3.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commitments": as to any Bank, the obligations of such Bank to
make Term Loans and Revolving Credit Loans to the Borrowers hereunder
in an aggregate principal amount at any one time outstanding not to
exceed the respective amounts set forth opposite such Bank's name on
Schedule I or in the Assignment and Acceptance pursuant to which such
Bank becomes a party to this Agreement, as the same may be permanently
terminated, reduced and extended from time to time pursuant to the
provisions of Section 2.9 or changed by subsequent assignments pursuant
to subsection 9.6(b).
"Commitment Fee": as defined in subsection 2.5(a).
"Commitment Percentage": as to any Bank at any time, the
proportion (expressed as a percentage) that the sum of such Bank's
Commitments bears to the Total Commitment (or, at any time after the
Commitments shall have expired or been terminated, the percentage which
the amount of such Bank's Loans constitutes of the aggregate amount of
the Loans of the Banks then outstanding).
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrowers within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrowers and which is treated as a single employer under
Section 414 of the Code.
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"Contingent Obligation": with respect to any Person (for the
purpose of this definition, the "Obligor") any obligation (except the
endorsement in the ordinary course of business of instruments for
deposit or collection) of the Obligor guaranteeing or in effect
guaranteeing any indebtedness of any other Person (for the purpose of
this definition, the "Primary Obligor") in any manner, whether directly
or indirectly, including (without limitation) indebtedness incurred
through an agreement, contingent or otherwise, by the Obligor:
(a) to purchase such indebtedness of the Primary
Obligor or any Property or assets constituting security
therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such
indebtedness (except to the extent such indebtedness
otherwise appears on Borrowers' balance sheet as
indebtedness), or
(ii) to maintain working capital or other balance
sheet condition or any income statement condition of
the Primary Obligor or otherwise to advance or make
available funds for the purchase or payment of such
indebtedness or obligation; or
(c) to lease Property or to purchase Securities or
other Property or services primarily for the purpose of
assuring the owner of such indebtedness or obligation of the
ability of the Primary Obligor to make payment of the
indebtedness or obligation.
For purposes of computing the amount of any Contingent Obligation, in
connection with any computation of indebtedness or other liability, it
shall be assumed that, without duplication, the indebtedness or other
liabilities of the Primary Obligor that are the subject of such
Contingent Obligation are direct obligations of the issuer of such
Contingent Obligation.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Debt": with respect to any Person, at any time, without
duplication, all of (i) its liabilities for borrowed money, including
any Subordinated Debt, (ii) its liabilities secured by any Lien
existing on property owned by such Person (whether or not such
liabilities have been assumed), (iii) its liabilities in respect to
Capital Leases; (iv) its liabilities under Contingent Obligations and
under Interest Rate Protection Agreements; (v) its liabilities for
amounts borrowed against cash surrender value of life insurance; and
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(vi) all other obligations which are required by GAAP to be shown as
liabilities on its balance sheet but excluding (x) deferred taxes and
other deferred or long-term liabilities and other amounts not in
respect of borrowed money and (y) the aggregate amount of accounts
receivable sold, factored or otherwise transferred for value without
recourse (other than for breach of representations).
"Default": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition precedent therein set forth, has been
satisfied.
"Distribution": in respect of any corporation, (a) dividends,
distributions or other payments on account of any capital stock of the
corporation (except distributions in common stock of such corporation);
(b) the redemption or acquisition of such stock or of warrants, rights
or other options to purchase such stock (except when solely in exchange
for common stock of such corporation); (c) all Bonus Pool Payments; and
(d) any payment on account of, or the setting apart of any assets for a
sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of any share of any class
of capital stock of such corporation or any warrants or options to
purchase any such stock.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"EBITDA": for any period, net income (or loss) of a Person for
such period, plus the amount of income taxes, interest expense,
reasonable expenses arising out of the preparation, negotiation,
execution and delivery of the Acquisition Documents and the Loan
Documents, depreciation and amortization deducted from earnings in
determining net income (or loss) of such Person , all as determined on
a consolidated basis in accordance with GAAP.
"EBITDA Threshold": for the fiscal quarter ending December 31,
1999, EBITDA of CECO Filters, Inc., prior to any management fees paid
to CECO for such period, in excess of $562,500.
"Eligible Inventory" shall mean and include raw materials,
supplies and finished goods Inventory excluding work in process, valued
at the lower of cost or market value, determined on a
first-in-first-out basis, which (i) is not, in Agent's opinion,
obsolete, slow moving or unmerchantable and (ii) Agent, in its
reasonable discretion, shall not deem ineligible Inventory, based on
such considerations as Agent may from time to time deem appropriate,
including, without limitation, whether the Inventory is subject to a
perfected, first priority security interest in favor of Agent and
whether the Inventory conforms to all standards imposed by any
governmental agency, division or department thereof which has
regulatory authority over such goods or the use or sale thereof.
Eligible Inventory shall include all Inventory in-transit for which
title has passed to a Borrower, which is insured to the full value
thereof and for which Agent shall have in its possession (a) all
negotiable bills of lading properly endorsed and (b) all non-negotiable
bills of lading issued in Agent's name.
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"Eligible Receivables" shall mean and include each Receivable
of each Borrower arising in the ordinary course of such Borrower's
business and which Agent, in its reasonable credit judgment, shall deem
to be an Eligible Receivable, based on such considerations as Agent may
from time to time deem appropriate. A Receivable shall not be deemed
eligible unless such Receivable is subject to Agent's first priority
perfected security interest and no other Lien (other than Permitted
Liens), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent. In addition, unless otherwise agreed by Agent,
no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by a Borrower to an Affiliate
of a Borrower or to a Person controlled by an Affiliate of Borrower;
(b) it is due or unpaid more than ninety (90) days after the
original invoice date, unless such Receivable (i) is due or unpaid less
than one hundred twenty days (120) after the original invoice date from
a customer having a debt rating of "BAA" or higher by Xxxxx'x or "BBB"
or higher by S&P and is not in dispute, or (ii) is otherwise acceptable
to the Banks; provided, that, the Borrowers shall provide the Agent
with a list of all customers for which the condition in clause (i)
above is applicable;
(c) fifty percent (50%) or more of the Receivables from such
customer are past due, unless such Receivable (i) is due or unpaid less
than one hundred twenty days (120) after the original invoice date from
a customer having a debt rating of "A3" or higher by Xxxxx'x or "A-" or
higher by S&P and is not in dispute, or (ii) is otherwise acceptable to
the Banks; provided, that, the Borrowers shall provide the Agent with a
list of all customers for which the condition in clause (i) above is
applicable;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached in any
material respect;
(e) the customer shall (i) apply for, suffer, or consent to
the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial
part of its property or call a meeting of its creditors, (ii) admit in
writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi)
file a petition seeking to take advantage of any other law providing
for the relief of debtors, or (vii) acquiesce to, or fail to have
dismissed within 60 days, any petition which is filed against it in any
involuntary case under such bankruptcy laws;
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(f) the sale is to a customer outside the continental United
States of America, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its reasonable
discretion; provided, that this subsection shall not cause Receivables
of any customer in Canada ("Canadian Receivables") to be ineligible
except to the extent that all such Canadian Receivables exceed $250,000
at any date of determination.
(g) the sale to the customer is on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other
repurchase or return basis or is evidenced by chattel paper, unless
Agent maintains a perfected security with respect to such Receivable or
the Receivable is otherwise satisfactory to the Banks;
(h) the customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless such
Borrower assigns its right to payment of such Receivable to Agent
pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
subsection 3727 et seq. and 41 U.S.C. subsection 15 et seq.) or has
otherwise complied with other applicable statutes or ordinances;
(i) the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the customer or the services
giving rise to such Receivable have not been performed by a Borrower
and accepted by the customer or the Receivable otherwise does not
represent a final sale;
(j) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim, the customer is also a creditor or
supplier of a Borrower or the Receivable is contingent in any respect
or for any reason;
(k) a Borrower has made any agreement with any customer for
any deduction therefrom, except for discounts or allowances which are
reflected in the calculation of the face value of each respective
invoice related thereto (which face value is used in calculating
availability under Section 2.1 hereof);
(l) any return, rejection or repossession of the merchandise
has occurred; or
(m) such Receivable is not payable to a Borrower.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees or binding requirements of any Governmental
Authority, or binding Requirement of Law (including common law)
regulating, relating to or imposing liability or standards of conduct
concerning protection of the environment, as now or may at any time
hereafter be in effect.
8
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by
a member bank of such System.
"Eurodollar Base Rate": with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/100th of 1%) equal to the rate determined
by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the
average of the London interbank offered rates of interest per annum for
Dollars set forth on Telerate display page 3750 or such other display
page on the Telerate System as may replace such page to evidence the
average of rates quoted by banks designated by the British Bankers'
Association (or appropriate successor, or if the British Bankers'
Association or its successor ceases to provide such quotes, a
comparable replacement determined by the Agent), for an amount
approximately equal in principal amount to PNC's portion of such
Eurodollar Loan.
"Eurodollar Borrowing": a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan": any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate in accordance with the
provisions of Section 2.
"Eurodollar Rate": with respect to each Eurodollar Loan, a
rate per annum determined in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any fiscal year, the excess, if any,
of (a) EBITDA before Bonus Pool Payments, less (b) principal payments
under this Agreement, interest expense (other than deferred interest in
respect of Subordinated Debt), taxes (other than deferred taxes), and
capital expenditures, all determined for CECO on a consolidated basis
in accordance with GAAP.
9
"Exposure": as to any Bank at any date, an amount equal to the
sum of (a) the aggregate principal amount of all Loans made by such
Bank then outstanding, and (b) such Bank's pro rata share of the
maximum amount available to be drawn under all Letters of Credit then
outstanding.
"Federal Funds Effective Rate": for any day, the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by it.
"Fee Letter": that certain letter from the Agent to the
Borrowers' Representative dated November 17, 1999 regarding certain
administrative fees and closing fees.
"Fees": the Commitment Fees, the Administrative Fees and the
Letter of Credit Fees.
"Fixed Charge Coverage Ratio": at the date of determination,
the ratio of (i) EBITDA less capital expenditures to (ii) the sum of
interest expense (other than deferred interest in respect of
Subordinated Debt), income taxes (other than deferred taxes),
dividends, Bonus Pool Payments (other than deferred Bonus Pool
Payments) and scheduled principal amortization deducted in determining
EBITDA, each determined for CECO on a consolidated basis and calculated
as of the end of the fiscal quarter ending on or immediately preceding
such date.
"GAAP": at any time with respect to the determination of the
character or amount of any asset or liability or item of income or
expense, or any consolidation or other accounting computation,
generally accepted accounting principles as in effect on the date of,
or at the end of the period covered by, the financial statements from
which such asset, liability, item of income, or item of expense, is
derived, or, in the case of any such computation, as in effect on the
date when such computation is required to be determined.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranty": that certain Guaranty and Suretyship Agreement
between CECO and the Agent, dated as of the date hereof, and any
Guaranty and Suretyship Agreement entered into after the Closing Date
by a newly created or acquired Subsidiary of any Borrower.
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"Initial Audit": as defined in subsection 5.6(c).
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Coverage Ratio": at the date of determination, the
ratio of (i) EBITDA less capital expenditures to (ii) interest expense
(other than deferred interest in respect of Subordinated Debt) deducted
in determining EBITDA, each determined for CECO on a consolidated basis
and calculated as of the end of the fiscal quarter ending on or
immediately preceding such date.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each calendar month, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any Eurodollar Loan having an Interest
Period longer than three months, each day which is three months, or a
whole multiple thereof, after the first day of such Interest Period and
the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrowers in their notice of borrowing or notice of conversion,
given with respect thereto; and
(ii) thereafter, each period commencing on the last day
of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrowers by irrevocable notice to the Agent not less than three
Business Days prior to the last day of the then current Interest Period
with respect thereto;
provided that, the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period would end on a day other than
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, with respect to Eurodollar Loans only,
such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next
preceding Business Day;
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(ii) with respect to Eurodollar Loans, any 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) shall end on the
last Business Day of a calendar month;
(iii) an Interest Period that otherwise would extend
beyond the Termination Date shall end on the Termination Date; and
(iv) the Borrowers shall select Interest Periods so as
not to require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Interest Rate Protection Agreements": as defined in Section
5.13.
"Inventory": has the meaning given in the Uniform Commercial
Code in effect in the Commonwealth of Pennsylvania on the date hereof.
"Investments": investments (by loan or extension of credit,
purchase, advance, guaranty, capital contribution or otherwise) made in
cash or by delivery of Property, by the Borrowers (i) in any Person,
whether by acquisition of stock or other ownership interest,
indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or (ii) in any Property or (iii) any agreement to
do any of the foregoing.
"Issuing Bank": PNC Bank, National Association, as issuer of
Letters of Credit hereunder and each other Bank as is hereafter
authorized by the Agent to issue a Letter of Credit hereunder.
"K&B Acquisition": shall mean the acquisition by the Parent
Company of 100% of the Capital Stock of each of the K&B entities.
"K&B Entities": shall mean The Xxxx & Xxxx Manufacturing
Company and kbd/Technic, Inc.
"L/C Coverage Requirement": with respect to each Letter of
Credit at any time, 100% of the maximum amount available to be drawn
thereunder at such time (determined without regard to whether any
conditions to drawing could be met at such time).
"Letter of Credit Fee": as defined in subsection 2.4(b).
"Letters of Credit": as defined in subsection 2.4(a).
"Leverage Ratio": at the date of determination, the ratio of
consolidated Debt of CECO (but excluding that certain Debt of CECO for
funds borrowed to purchase the Peerless Stock, if the market value of
the Peerless Stock then owned by CECO exceeds the amount of such Debt)
to EBITDA, each determined for CECO on a consolidated basis and
calculated as of the end of the fiscal quarter ending on or immediately
preceding such date.
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"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Capital Lease having substantially the same
economic effect as any of the foregoing).
"Life Insurance": the life insurance policies covering the
lives of Xxxxxx X. Xxxx, Xxxxxxx X. Xxxx, Xxxxxxxx X. Xxxx and Xxxxx X.
Xxxx.
"Loans": the Revolving Credit Loans and Term Loans made by the
Banks to the Borrowers pursuant to Section 2.1. Each Loan shall be (i)
either a Eurodollar Loan or a Base Rate Loan and (ii) either a
Revolving Credit Loan or a Term Loan.
"Loan Documents": this Agreement, the Notes, the Security
Documents, the Guaranty, the assignments, subordinations, guaranties
and all other agreements delivered in connection with this Agreement.
"Material Adverse Effect": a material adverse effect on (a)
the validity or enforceability of this Agreement or any other Loan
Document, (b) the business, Property, assets, financial condition,
results of operations or prospects of the Borrowers taken as a whole,
(c) the ability of the Borrowers taken as a whole duly and punctually
to pay their Debts and perform their obligations hereunder, or (d) the
ability of the Agent or any of the Banks, to the extent permitted, to
enforce their legal remedies pursuant to this Agreement or any other
Loan Document.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls, and
ureaformaldehyde insulation.
"Xxxxx'x": Xxxxx'x Investors Services, Inc.
"Mortgages": collectively, the Open-End Mortgage and Security
Agreements, dated as of the date hereof, between the Agent and one of
the Borrowers.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a) (3) of ERISA.
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"Net Sale Proceeds": with respect to any Asset Sale, the
amount equal to (i) the sum of (A) the aggregate amount received in
cash (including any cash received by way of deferred payment pursuant
to a note receivable, other non-cash consideration or otherwise, but
only as and when such cash is so received) in connection with such
Asset Sale and (B) the aggregate amount of any tax refunds received or
any reduction in tax liability realized by the Borrowers as a result of
any tax loss realized by the Borrowers in connection with such Asset
Sale minus (ii) the sum of (A) the principal amount of Debt which is
secured by the asset that is the subject of such Asset Sale (other than
Debt assumed by the purchaser of such asset) and which is required to
be, and is, repaid in connection with such Asset Sale (other than Debt
hereunder) and (B) the reasonable fees, commissions, income taxes and
other out-of-pocket expenses incurred by the Borrower in connection
with such Asset Sale.
"Note": a Revolving Credit Note, a Term Loan A Note, a Term
Loan B Note, or a Term Loan C Note.
"Parent Company": CECO Group, Inc.
"Participant": as defined in Section 9.6(f).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Peerless Stock": capital stock of Peerless Manufacturing
Company owned by CECO on the Closing Date.
"Permitted Acquisition": an acquisition by a Borrower of the
stock or assets of a Person on terms acceptable to the Agent and the
Required Banks.
"Permitted Investments": Investments in:
(a) one or more Subsidiaries thereof which are or
hereafter agree to become Borrowers hereunder or execute and
deliver a Guaranty to the Agent;
(b) Property to be used in the ordinary course of
business of the Borrowers;
(c) current assets arising from the sale or purchase
of goods and services in the ordinary course of business of
the Borrowers;
(d) direct obligations of the United States of
America, or any agency or instrumentality thereof or
obligations guaranteed by the United States of America,
provided that such obligations mature within one (1) year from
the date of acquisition thereof;
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(e) certificates of deposit, time deposits or
banker's acceptances, maturing within one (1) year from the
date of acquisition, with banks or trust companies organized
under the laws of the United States, the unsecured long-term
debt obligations of which are rated "A3" or higher by Xxxxx'x
or "A-" or higher by S&P, and issued, or in the case of
banker's acceptance, accepted, by a bank or trust company
having capital, surplus and undivided profits aggregating at
least $500,000,000;
(f) commercial paper given the highest rating by
either S&P or Xxxxx'x maturing not more than 270 days from the
date of creation thereof;
(g) mutual funds registered with the Securities and
Exchange Commission under the Investment Company Act of 1940
that hold themselves out as "money market funds;"
(h) trade credit extended on usual and customary
terms in the ordinary course of business;
(i) advances to employees to meet expenses incurred
by such employees in the ordinary course of business;
(j) loans (including loans to officers, directors or
employees), advances and investments not exceeding in the
aggregate $100,000 at any one time outstanding;
(k) ownership by a Borrower of USFM; and
(l) Permitted Acquisitions.
"Person": an individual, partnership, corporation, business
trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrowers or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledge Agreement": collectively, the Pledge Agreements, dated
as of the date hereof, between each of the Borrowers having any
Subsidiaries as of the Closing Date, and the Agent.
"PNC": PNC Bank, National Association, a national banking
association.
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"Prime Rate": the rate of interest per annum announced from
time to time by PNC as its prime rate in effect at its principal office
in Pittsburgh, Pennsylvania; each change in the Prime Rate shall be
effective on the date such change is announced as effective. This rate
of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external
rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by PNC to any particular class or
category of customers of PNC.
"Property": any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Receivable": has the meaning given for "account" in the
Uniform Commercial Code in effect in the Commonwealth of Pennsylvania
on the date hereof.
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation X": Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, except to the extent that notice thereof has been
waived by the PBGC.
"Required Banks": at any time, Banks the Exposures of which
aggregate 100% of the aggregate Exposure at such time of all Banks, or
at any time that no Loans are outstanding, Banks the Commitments of
which aggregate 100% of the Total Commitment.
"Requirement of Law": as to any Person, the Certificate of
Incorporation, By-Laws, Operating Agreement or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case binding upon such Person or any of
its property or to which such Person or any of its property is subject.
"Responsible Officer": as to any Borrower, any officer of such
Borrower.
"Responsible Reporting Officer": as to either of the K&B
Entities and CECO Filters, Inc., any officer of such party; and as to
any other Borrower, the president, chief financial officer, chief
executive officer or chief operating officer of such Borrower.
16
"Revolving Credit Commitment": means $10,000,000, as reduced
from time to time pursuant to Section 2.9.
"Revolving Credit Facility": the revolving credit facility
pursuant to which the Banks will make Revolving Credit Loans up to the
Revolving Credit Commitment.
"Revolving Credit Loan": a revolving credit loan made by the
Banks to the Borrowers pursuant to the Revolving Credit Facility.
"Revolving Credit Note": a promissory note of the Borrowers in
the form of Exhibit B-1 executed and delivered pursuant to Section 2.6.
"S&P": Standard & Poor's Rating Group, a division of
XxXxxx-Xxxx Corporation.
"Secondary Offering": an offering of equity Securities issued
by CECO, the proceeds of which are used to reduce the outstanding
principal amount of the Term Loans pursuant to Section 2.10 or for
other purposes permitted herein.
"Security": "security" as defined in Section 2(1) of the
Securities Act of 1933, as amended.
"Security Agreement": the Security Agreement, dated as of the
date hereof, among the Agent, the Borrowers and USFM.
"Security Documents": the Security Agreement, the Pledge
Agreement, the Mortgages, and all assignments, landlord waivers and
other documents or instruments related to the Agent's taking security
of any kind for the Loans.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": as to any Person, as of the time of determination,
the financial condition under which the following conditions are
satisfied:
(a) the fair market value of the assets of such
Person will exceed the debts and liabilities, subordinated,
contingent or otherwise, of such Person; and
(b) the present fair saleable value of the Property
of such Person will be greater than the amount that will be
required to pay the probable liability of such Person on its
debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute
and matured; and
17
(c) such Person will be able to pay its debts and
liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and
(d) such Person will not have unreasonably small
capital with which to conduct the businesses in which it is
engaged as such businesses are then conducted and are proposed
to be conducted after the date thereof.
"Subordinated Debt": at any time, all Debt of any Borrower
subordinated to all of the obligations of all of the Borrowers to the
Banks on terms satisfactory to the Banks.
"Subordination Agreement": an agreement entered into in
connection herewith, pursuant to which a creditor of any Borrower or
CECO agrees to subordinate amounts owed to it by such Borrower or CECO
on terms acceptable to the Agent.
"Subsidiary": as to any Person, (i) any corporation, limited
liability company, company or trust of which 50% or more (by number of
shares or number of votes) of the outstanding capital stock, interests,
shares or similar items of beneficial interest normally entitled to
vote for the election of one or more directors, members or trustees
(regardless of any contingency which does or may suspend or dilute the
voting rights) is at such time owned directly or indirectly by such
person or one or more of such Person's Subsidiaries, or any partnership
of which such Person is a general partner or of which 50% or more of
the partnership interests is at the time directly or indirectly owned
by such Person or one or more of such Person's Subsidiaries, and (ii)
any corporation, company, trust, partnership or other entity which is
controlled or capable of being controlled by such Person or one or more
of such Person's subsidiaries. Unless otherwise indicated, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement
shall refer to a Subsidiary of the Parent Company.
"Term Loan A": the term loan made by each Bank to the
Borrowers in the aggregate principal amount of $14,500,000 pursuant to
Section 2.2.
"Term Loan A Note": the promissory notes of the Borrowers in
the form of Exhibit B-2 executed and delivered pursuant to Section 2.6,
evidencing the Term Loan A of each Bank.
"Term Loan B": the term loan made by each Bank to the
Borrowers in the aggregate principal amount of $8,500,000 pursuant to
Section 2.2.
"Term Loan B Note": the promissory notes of the Borrowers in
the form of Exhibit B-3 executed and delivered pursuant to Section 2.6,
evidencing the Term Loan B of each Bank.
18
"Term Loan C": the term loan made by each Bank to the
Borrowers in the aggregate principal amount of $2,000,000 pursuant to
Section 2.2.
"Term Loan C Note": the promissory notes of the Borrowers in
the form of Exhibit B-4 executed and delivered pursuant to Section 2.6,
evidencing the Term Loan C of each Bank.
"Term Loan Commitment": the commitment, set forth on Schedule
I hereto, of each Bank to make a Term Loan A, a Term Loan B, and a Term
Loan C on the Closing Date, as applicable.
"Term Loans": collectively, the Term Loan A, Term Loan B, and
Term Loan C of each Bank.
"Termination Date": December 6, 2004.
"Total Commitment": at any time, the aggregate amount of the
Banks' Commitments, as in effect at such time.
"Total Commitment Percentage": as to any Bank at any time, the
proportion (expressed as a percentage) that such Bank's Commitments
bear to the Total Commitment.
"Tranche": the collective reference to Eurodollar Loans whose
Interest Periods begin on the same date and end on the same later date
(whether or not such Loans originally were made on the same date).
"Type": when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the
Loans comprising such Borrowing is determined. For purposes hereof,
"Rate" shall include the Eurodollar Rate and the Base Rate.
"Voting Stock": capital stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the directors (or
Persons performing similar functions) and, as applicable, any equity,
participation or ownership interests in any partnership, business
trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture or any other Person which
interests are similar by analogy to capital stock or ownership rights
giving rise to voting or governance rights.
"Wholly-Owned Subsidiary": at any time, any Subsidiary one
hundred percent (100%) of all of the equity Securities (except
directors' qualifying shares) and voting Securities of which are owned
by any one or more of the Borrowers at such time.
19
1.2 Other Definitional Provisions. Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Notes or any certificate or other document made or delivered
pursuant hereto.
1.3 Construction. (a) Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular, the
singular the plural and the part the whole, "or" has the inclusive meaning
represented by the phrase "and/or," and "including" has the meaning represented
by the phrase "including without limitation." References in this Agreement to
"determination" of or by the Agent or the Banks shall be deemed to include good
faith estimates by the Agent or the Banks (in the case of quantitative
determinations) and good faith beliefs by the Agent or the Banks (in the case of
qualitative determinations). Whenever the Agent or the Banks are granted the
right herein to act in their sole discretion or to grant or withhold consent
such right shall be exercised in good faith, except as otherwise provided
herein. Except as otherwise expressly provided, all references herein to the
"knowledge of" or "best knowledge of" a Borrower, the Borrowers or the Parent
Company shall be deemed to refer to the knowledge of a Responsible Reporting
Officer thereof. The words "hereof," "herein," "hereunder", "hereby" and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. The section and other headings contained
in this Agreement and the Table of Contents preceding this Agreement are for
reference purposes only and shall not control or affect the construction of this
Agreement or the interpretation thereof in any respect. Section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified. As used herein, the words "facsimile", "telecopy" and "fax" shall all
have the same meanings.
(b) Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement shall be made
and prepared in accordance with GAAP (including principles of consolidation
where appropriate). As used herein and in the Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Company and any Subsidiary thereof not defined in subsection 1.1 and
accounting terms partly defined in subsection 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP. In the event that
any future change in GAAP, without more, materially affects the Borrowers'
compliance with any financial covenant herein, the Borrowers, the Banks and the
Agent shall use their best efforts to modify such covenant in order to account
for such change and to secure for the Banks the intended benefits of such
covenant.
SECTION 2. THE CREDITS
2.1 Revolving Credit Loans. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set forth,
each Bank, severally and not jointly, agrees to make Revolving Credit Loans to
the Borrowers, at any time or from time to time on or after the date hereof and
until the Termination Date or until the Commitments of such Bank in respect of
the Revolving Credit Commitment shall have been terminated in accordance
20
with the terms hereof, in an aggregate principal amount at any time outstanding
not exceeding the lesser of (x) the aggregate Revolving Credit Commitment, less
(i) the amount of outstanding Letters of Credit, and (ii) $2,000,000 until Term
Loan C shall have been timely paid in full and the EBITDA Threshold shall have
been satisfied, and (y) an amount equal to the sum of the following as of any
date of determination:
(i) 75% of the Borrowers' aggregate Eligible
Receivables, plus
(ii) 50% of the Borrowers' aggregate Eligible
Inventory, plus
(iii) the net cash surrender value of Life Insurance
to the extent not then borrowed against by the Borrowers, minus
(v) the aggregate amount of outstanding Letters of
Credit, minus
(vi) such reserves as the Agent may reasonably deem
proper and necessary from time to time based on the results of an audit
performed by independent auditors selected by the Agent.
(b) Notwithstanding anything to the contrary contained
herein, at no time shall the sum of the outstanding aggregate principal amount
of all Revolving Credit Loans made by all Banks plus the aggregate undrawn face
amount of all outstanding Letters of Credit exceed (i) prior to the date Term
Loan C shall have been timely paid in full and the EBITDA Threshold shall have
been satisfied, the Revolving Credit Commitment less $2,000,000, or (ii) at all
other times, the Revolving Credit Commitment.
The Revolving Credit Commitment may be terminated or reduced from time to time
pursuant to Section 2.9(a) and (b). Within the foregoing limits, the Borrowers
may borrow, repay and reborrow under the Revolving Credit Facility on or after
the date hereof and prior to the Termination Date, subject to the terms,
provisions and limitations set forth herein.
(c) Each Revolving Credit Loan shall be made as part of a
Borrowing consisting of Revolving Credit Loans made by the Banks ratably in
accordance with their applicable Commitment Percentages with respect to
Revolving Credit Loans; provided, however, that the failure of any Bank to make
any Revolving Credit Loan shall not in itself relieve any other Bank of its
obligation to lend hereunder (it being understood, however, that no Bank shall
be responsible for the failure of any other Bank to make any Revolving Credit
Loan required to be made by such other Bank). The Revolving Credit Loans
comprising any Borrowing shall be in a minimum aggregate principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof (or an aggregate
principal amount equal to the remaining balance of the available Revolving
Credit Commitment). Each Borrowing shall be comprised entirely of Eurodollar
Loans or Base Rate Loans, as the Borrowers may request pursuant to Section 2.1.
21
(d) In order to request a Borrowing, in addition to any
other conditions to borrowing provided in this Agreement, the Borrowers shall
hand deliver or telecopy (or notify by telephone and promptly confirm by hand
delivery or facsimile) to the Agent the information requested by the form of
Borrowing Request attached as Exhibit A hereto (i) in the case of a Eurodollar
Borrowing, not later than 10:30 a.m., Pittsburgh time, three Business Days
before a proposed Borrowing and (ii) in the case of a Base Rate Borrowing, not
later than 10:30 a.m., Pittsburgh time, on the day of a proposed Borrowing. Such
notice shall be irrevocable and shall in each case specify (x) whether the
Borrowing then being requested is to be a Eurodollar Borrowing or a Base Rate
Borrowing; (y) the date of such Borrowing (which shall be a Business Day) and
the amount thereof; and (z) if such Borrowing is to be a Eurodollar Borrowing,
the Interest Period with respect thereto. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
a Base Rate Borrowing. If no Interest Period with respect to any Eurodollar
Borrowing is specified in any such notice, then the Borrowers shall be deemed to
have selected an Interest Period of one month's duration. The Agent shall
promptly advise the Banks of any notice given pursuant to this Section 2.1 and
of each Bank's portion of the requested Borrowing.
2.2 Term Loans. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Bank,
severally and not jointly, agrees to make a Term Loan A, a Term Loan B, and a
Term Loan C to the Borrowers in the amount of such Bank's applicable Term Loan
Commitments; provided, however, that the failure of any Bank to make any Term
Loan shall not in itself relieve any other Bank of its obligation to lend
hereunder (it being understood, however, that no Bank shall be responsible for
the failure of any other Bank to make any Term Loan required to be made by such
other Bank). Each Term Loan shall be comprised entirely of Eurodollar Loans or
Base Rate Loans, as the Borrowers may request pursuant to Section 2.3. The Term
Loans shall be advanced on the Closing Date. On or before the Closing Date, the
Borrowers shall have delivered to the Agent the information requested by the
form of Borrowing Request attached as Exhibit A hereto with respect to the Term
Loans.
2.3 General Provisions Regarding Loans. Subject to Section
2.3(b), each Bank shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to the
Agent in Pittsburgh, Pennsylvania, not later than 1:00 p.m., Pittsburgh time,
and the Agent shall by 3:00 p.m., Pittsburgh time, credit the amounts so
received to the general deposit account of the Borrowers with the Agent or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Banks. Loans shall be made by the Banks pro rata in accordance with
Section 2.15. Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's portion of such Borrowing, the Agent may assume that such Bank has
made such portion available to the Agent on the date of such Borrowing in
accordance with this paragraph and the Agent may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding amount.
If and to the extent that such Bank shall not have made such portion available
to the Agent, such Bank and the Borrowers severally agree to repay to the
22
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrowers until the date such amount is repaid to the Agent at (i) in the case
of the Borrowers, the interest rate applicable at the time to the Loans
comprising such Borrowing and (ii) in the case of such Bank, the Federal Funds
Effective Rate. If such Bank shall repay to the Agent such corresponding amount,
such amount shall constitute such Bank's Loan as part of such Borrowing for
purposes of this Agreement.
(b) The Borrowers may refinance all or any part of
any Borrowing under the Revolving Credit Facility with any other Borrowing under
the Revolving Credit Facility, subject to the conditions and limitations set
forth herein and elsewhere in this Agreement. Any Borrowing under the Revolving
Credit Facility or part thereof so refinanced shall be deemed to be repaid in
accordance with Section 2.6 with the proceeds of a new Borrowing under the
Revolving Credit Facility and the proceeds of the new Borrowing, to the extent
they do not exceed the principal amount of the Borrowing being refinanced, shall
not be paid by the Banks to the Agent or by the Agent to the Borrowers;
provided, however, that (i) if the principal amount extended by a Bank in a
refinancing is greater than the principal amount extended by such Bank in the
Borrowing being refinanced, then such Bank shall pay such difference to the
Agent for distribution to the Banks described in (ii) below, (ii) if the
principal amount extended by a Bank in the Borrowing being refinanced is greater
than the principal amount agreed to be extended by such Bank in the refinancing,
the Agent shall return the difference to such Bank out of amounts received
pursuant to (i) above, and (iii) to the extent any Bank fails to pay the Agent
amounts due from it pursuant to (i) above, any Revolving Credit Loan or portion
thereof being refinanced with such amounts shall not be deemed repaid in
accordance with Section 2.6 and shall be payable by the Borrowers without
prejudice to the Borrowers' rights against any such Bank.
(c) Each Bank may at its option fulfill its
commitment hereunder with respect to any Eurodollar Loan by causing any domestic
or foreign branch or Affiliate of such Bank to make such Eurodollar Loan;
provided, however, that (A) any exercise of such option shall not affect the
obligation of the Borrowers to repay such Eurodollar Loan in accordance with the
terms of the Agreement and the applicable Note and (B) the Borrowers shall not
be liable for increased costs under Sections 2.11 or 2.12 to the extent that (x)
such costs could be avoided by the use of a different branch or Affiliate to
make Eurodollar Loans and (y) such use would not, in the judgment of such Bank,
entail any significant additional expense for which such Bank shall not be
indemnified hereunder or otherwise be disadvantageous to it.
(d) All Borrowings, conversions and continuations of
Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections that, after giving effect
thereto, (A) the aggregate principal amount of the Loans comprising each Tranche
of Eurodollar Loans shall be equal to $500,000 or a whole multiple of $100,000
in excess thereof and (B) the Borrowers shall not have outstanding at any one
time more than in the aggregate five (5) separate Tranches of Eurodollar Loans.
23
(e) Notwithstanding any other provision of this
Agreement, the Borrowers shall not be entitled to request any Borrowing if the
Interest Period requested with respect thereto would end after the Termination
Date.
(f) Each Loan is made to all Borrowers and all of
Borrowers' obligations under this Agreement, the Notes and the other Loan
Documents shall be joint and several.
2.4 Letter of Credit Subfacility. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set forth,
at the request of one or more of the Borrowers and for the account of the
Borrowers, an Issuing Bank will issue on the terms and conditions hereinafter
set forth (including notifying the Agent of the proposed issuance thereof),
standby letters of credit in a form and containing such terms and conditions and
for such purposes as are consistent with this Agreement and approved by the
Agent (all such letters of credit issued hereunder being collectively referred
to as "Letters of Credit"); provided, however, that each Letter of Credit
hereafter issued shall have a maximum maturity of twelve (12) months from the
date of issuance and shall in no event expire later than one Business Day prior
to the Termination Date; provided further, however, that in no event shall (i)
the aggregate undrawn face amount of the Letters of Credit issued pursuant to
this Section 2.4 exceed, at any one time, $2,000,000; or (ii) the sum of (x) the
outstanding aggregate principal amount of all Revolving Credit Loans made by all
Banks plus (y) the aggregate undrawn face amount of the Letters of Credit issued
under this Section 2.4 exceed, at any one time, the Revolving Credit Commitment.
Each Issuing Bank shall advise the Agent of the terms of a Letter of Credit on
the date of issuance thereof and shall promptly after issuing a Letter of Credit
furnish copies thereof to the Agent for distribution to the Banks.
(b) The Borrowers shall pay to the Agent for the
ratable account of the Banks a fee (the "Letter of Credit Fee") for all Letters
of Credit equal to one percent (1.0%) per annum of the face amount of each
Letter of Credit and shall be payable quarterly in arrears on each December 31,
March 31, June 30 and September 30 following issuance of each Letter of Credit
and on the expiration date for each Letter of Credit. All Letter of Credit Fees
shall be computed on the basis of the actual number of days elapsed over a year
of 360 days. The Borrowers shall also pay to each Issuing Bank such Issuing
Bank's then in effect customary documentation fee payable with respect to each
Letter of Credit issued or renewed by it after the Closing Date as such Issuing
Bank may generally charge from time to time.
(c) Notwithstanding any other provisions of this
Agreement, unless other acceptable arrangements for the immediate reimbursement
by the Borrowers of amounts required to be advanced by an Issuing Bank pursuant
to a Letter of Credit have been made by the Borrowers and such Issuing Bank and
such reimbursement is made by the Borrowers, any and all amounts which an
Issuing Bank is required to advance pursuant to a Letter of Credit shall become,
at the time the amounts are advanced, Loans from the Banks made as a Base Rate
Borrowing. The Agent will notify the Banks of the amount required to be advanced
pursuant to the Letters of Credit. Before 10:00 A.M. (Pittsburgh time) on the
date of any advance the Agent
24
is required to make pursuant to the Letters of Credit, each Bank shall make
available to the Agent such Bank's Commitment Percentage with respect to
Revolving Credit Loans of such advance in immediately available funds.
(d) The Borrowers agree to be bound by the terms of
each Issuing Bank's application and/or agreement for a Letter of Credit, any
other agreement entered into by such Issuing Bank in connection with such Letter
of Credit, and such Issuing Bank's written regulations and customary practices
relating to Letters of Credit, although such interpretation may be different
from the Borrowers' own. If in connection with any Letter of Credit any
collateral for the reimbursement obligations in respect of such Letter of Credit
is provided to an Issuing Bank, such Issuing Bank shall, to the extent
reimbursement of amounts advanced by such Issuing Bank pursuant to such Letter
of Credit is made pursuant to subsection 2.4(c) from the proceeds of Loans, hold
such collateral and exercise any rights in respect thereof for the pro-rata
benefit of the Banks.
(e) The Borrowers hereby indemnify and hold harmless
each Issuing Bank from and against any and all claims, damages, losses,
liabilities, costs or expenses whatsoever which such Issuing Bank may incur or
which may be claimed against such Issuing Bank by any person or entity
whatsoever by reason of or in connection with the execution and delivery or
transfer of, or payment or failure to pay under, any Letter of Credit; provided
the Borrowers shall not be required to indemnify such Issuing Bank for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, caused by (i) the willful misconduct or negligence of such
Issuing Bank or (ii) such Issuing Bank's willful failure to pay under any Letter
of Credit after presentation to it by the beneficiary of a sight draft and
certificate strictly complying with the terms and conditions of such Letter of
Credit.
(f) As between the Borrowers and an Issuing Bank, the
Borrowers assume all risks of the acts or omissions of the beneficiary of a
Letter of Credit with respect to the use of such Letter of Credit. Neither an
Issuing Bank nor any of its officers or directors shall be liable or responsible
for: (i) the use which may be made of any Letter of Credit or for any acts or
omissions of the beneficiary in connection therewith; (ii) the validity or
genuineness of documents, or of any endorsement thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged;
or (iii) any other circumstances whatsoever in making or failing to make payment
under a Letter of Credit; except only that the Borrowers shall have a claim
against an Issuing Bank, and such Issuing Bank shall be liable to the Borrowers,
to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Borrowers which the Borrowers prove were
caused by (y) such Issuing Bank's willful misconduct or gross negligence or (z)
such Issuing Bank's willful failure to pay under a Letter of Credit after the
presentation to it by the beneficiary of a draft and certificate strictly
complying with the terms and conditions of such Letter of Credit. In furtherance
and not in limitation of the foregoing, an Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary; provided
that if an Issuing Bank shall receive written notification from both the
applicable beneficiary and the Borrowers that documents conforming to the terms
of a Letter of Credit to be presented to such Issuing Bank are not to be
honored, such Issuing Bank agrees that it will not honor such documents.
25
(g) Upon the occurrence and during the continuance of
an Event of Default, and in connection with any termination of the loans or
commitments contemplated in this Agreement while any Letter of Credit remains
outstanding, the Borrowers will cause cash to be deposited and maintained in an
account with the Agent, as cash collateral, in an amount equal to one hundred
and five percent (105%) of the outstanding Letters of Credit, and the Borrowers
hereby irrevocably authorize the Agent, in its discretion, on the Borrowers'
behalf and in the Borrowers' name, to open such an account and to make and
maintain deposits therein, or in an account opened by the Borrowers, in the
amounts required to be made by the Borrowers, out of the proceeds of accounts
receivable or other collateral or out of any other funds of the Borrowers coming
into the Agent's possession at any time. The Agent will invest such cash
collateral (less applicable reserves) in such short-term money-market items as
to which the Agent and the Borrowers mutually agree and the net return on such
investments shall be credited to such account and constitute additional cash
collateral. The Borrowers may not withdraw amounts credited to any such account
except upon payment and performance in full of all obligations owed by the
Borrowers to any of the Banks, expiration or surrender of all Letters of Credit
and termination of this Agreement.
2.5 Fees. (a) The Borrowers agree to pay to each Bank, through
the Agent, on the last business day of each calendar month and on the date on
which the Commitment of such Bank in respect of the Revolving Credit Commitment
shall be terminated as provided herein, a Commitment Fee (a "Commitment Fee") at
a rate per annum equal to the Applicable Commitment Fee Percentage from time to
time in effect on the average daily unused amount of the Commitment of such Bank
in respect of the Revolving Credit Commitment (giving effect to any reductions
therein), less the aggregate undrawn face amount of the Letters of Credit then
outstanding, during the preceding month (or shorter period commencing with the
date hereof or ending with the Termination Date or any date on which the
Commitment of such Bank in respect of the Revolving Credit Commitment shall be
terminated). All Commitment Fees shall be computed on the basis of the actual
number of days elapsed over a year of 360 days. The Commitment Fee due to each
Bank shall commence to accrue on the date hereof, and shall cease to accrue on
the earlier of the Termination Date and the termination of the Commitment of
such Bank in respect of the Revolving Credit Commitment as provided herein.
(b) The Borrowers agree to pay to the Agent and PNC
Capital Markets, Inc. for their respective accounts administrative, arrangement
and other fees at the times and in the amounts as are set forth in the Fee
Letter (collectively, the "Administrative Fees").
(c) All Fees shall be paid on the dates due, in
immediately available funds, to the Agent for distribution, if and as
appropriate, among the Banks. Once paid, none of the Fees shall be refundable
under any circumstances.
26
2.6 Notes; Repayment of Loans. (a) The Revolving Credit Loans
made by each Bank shall be evidenced by a single Revolving Credit Note duly
executed on behalf of the Borrowers, dated the Closing Date, in substantially
the form attached hereto as Exhibit B-1 with the blanks appropriately filled,
payable to such Bank in a principal amount equal to such Bank's pro rata share
of the Revolving Credit Commitment. The Term Loan A made by each Bank shall be
evidenced by a single Term Loan A Note, duly executed on behalf of the
Borrowers, dated the Closing Date, in substantially the form attached hereto as
Exhibit B-2 with the blanks appropriately filled, payable to such Bank in a
principal amount equal to such Bank's Term Loan A Commitment. The Term Loan B
made by each Bank shall be evidenced by a single Term Loan B Note, duly executed
on behalf of the Borrowers, dated the Closing Date, in substantially the form
attached hereto as Exhibit B-3 with the blanks appropriately filled, payable to
such Bank in a principal amount equal to such Bank's Term Loan B Commitment. The
Term Loan C made by each Bank shall be evidenced by a single Term Loan C Note,
duly executed on behalf of the Borrowers, dated the Closing Date, in
substantially the form attached hereto as Exhibit B-4 with the blanks
appropriately filled, payable to such Bank in a principal amount equal to such
Bank's Term Loan C Commitment.
(b) Each Note shall bear interest from the date
thereof on the outstanding principal balance thereof as set forth in Section
2.7. The outstanding principal balance of each Revolving Credit Loan, as
evidenced by the relevant Revolving Credit Note, shall be payable on the
Termination Date. The outstanding principal balance of each Term Loan A and Term
Loan B, as evidenced by the relevant Term Loan A Note or Term Loan B Note, shall
be payable in quarterly installments on each February 28, May 31, August 31 and
November 30 (as applicable) in the amounts and years set forth below; provided
that, the final maturity of Term Loan A shall be November 30, 2004 and the final
maturity of Term Loan B shall be May 31, 2006:
Term Loan A Term Loan B
----------- -----------
2000 $ 437,500 0
2001 $ 437,500 0
2002 $ 700,000 0
2003 $ 875,000 0
2004 $1,175,000 0
2005 0 $1,375,000
2006 0 $1,500,000*
---------------
* Only payments on February 28 and May 31, 2006.
The outstanding principal balance of each Term Loan C, as evidenced by the
relevant Term Loan C Note, shall be payable in full on the date ninety (90) days
after the Closing Date.
(c) Each Bank shall, and is hereby authorized by the
Borrowers to, endorse on the schedule attached to the relevant Note held by such
Bank (or on a continuation of
27
such schedule attached to each such Note and made a part thereof), or otherwise
to record in such Bank's internal records, an appropriate notation evidencing
the date and amount of each Loan of such Bank, each payment or prepayment of
principal of any Loan, and the other information provided for on such schedule;
provided, however, that the failure of any Bank to make such a notation or any
error therein shall not in any manner affect the obligation of the Borrowers to
repay the Loans made by such Bank in accordance with the terms of the relevant
Note.
2.7 Interest on Loans. (a) Subject to the provisions of
Section 2.8, each Base Rate Loan shall bear interest (computed on the basis of
the actual number of days elapsed over a year of 365 or 366 days, as the case
may be) at a rate per annum equal to the Base Rate plus the Applicable Margin
for that Type of Base Rate Loan.
(b) Subject to the provisions of Section 2.8, each
Eurodollar Loan shall bear interest (computed on the basis of the actual number
of days elapsed over a year of 360 days) at a rate per annum equal to the
Eurodollar Rate in effect for such Loan plus the Applicable Margin for that Type
of Eurodollar Loan.
(c) Interest on each Loan shall be payable on each
Interest Payment Date applicable to such Loan; provided that, interest accruing
on overdue amounts pursuant to Section 2.8 shall be payable on demand as
provided in the Notes. The Eurodollar Rate and the Base Rate shall be determined
by the Agent, and such determination shall be conclusive absent error.
2.8 Default Rate; Additional Interest; Alternate Rate of
Interest. (a) To the extent not contrary to any Requirement of Law, upon the
occurrence and during the continuation of an Event of Default, (i) any
principal, past due interest, fee or other amount outstanding hereunder other
than Eurodollar Loans shall bear interest for each day thereafter until paid in
full (after as well as before judgment) at a rate per annum which shall be equal
to two percent (2%) above the Base Rate plus the Applicable Margin in effect at
such time for Base Rate Loans, and (ii) Eurodollar Loans shall bear interest at
a rate per annum which is equal to two percent (2%) in excess of the Eurodollar
Rate plus the Applicable Margin in effect at such time for Eurodollar Loans. The
Borrowers acknowledge that such increased interest rate reflects, among other
things, the fact that such loans or other amounts have become a substantially
greater risk given their default status and that the Banks are entitled to
additional compensation for such risk.
(b) In the event, and on each occasion, that the
Agent shall have determined (which determination absent manifest error shall be
conclusive and binding upon the Borrowers) that, by reason of circumstances
affecting the eurodollar market generally, dollar deposits in the principal
amount of such Eurodollar Loan are not generally available in the London
Interbank Market, or that reasonable means do not exist for ascertaining the
Eurodollar Base Rate, (i) the Agent shall, as soon as practicable thereafter,
give written, or telephonic notice of such determination to the Borrowers and
the Banks, (ii) any request by the Borrowers for a Eurodollar Loan or for
conversion to or maintenance of a Eurodollar Loan pursuant to the terms of this
Agreement shall be deemed a request for a Base Rate Loan, and (iii) the interest
rate for
28
all Loans then bearing interest at the Eurodollar Rate shall be converted on the
first Business Day of the next calendar month to Base Rate Loans. After such
notice shall have been given and until the circumstances giving rise to such
notice no longer exist, each request for a Eurodollar Loan shall be deemed to be
a request for a Base Rate Loan. Each determination by the Agent hereunder shall
be conclusive absent manifest error.
2.9 Termination, Reduction, Extension of Commitments;
Additional Banks. (a) The Revolving Credit Commitment shall be automatically
terminated on the Termination Date.
(b) Subject to the last sentence of this paragraph,
upon at least three Business Days' prior irrevocable written or facsimile notice
to the Agent, the Borrowers may at any time in whole permanently terminate, or
from time to time permanently reduce, the Revolving Credit Commitment. Each
partial reduction of the Revolving Credit Commitment shall be in a minimum
principal amount of $1,000,000 or in whole multiples of $500,000 in excess
thereof, and no such termination or reduction shall be made which would reduce
the Revolving Credit Commitment to an amount less than the aggregate outstanding
principal amount of the Revolving Credit Loans and the aggregate undrawn face
amount of the Letters of Credit then outstanding.
(c) Each reduction in the Revolving Credit Commitment
hereunder shall be made ratably among the Banks in accordance with their
respective Commitment Percentages with respect to Revolving Credit Loans. The
Borrowers shall pay to the Agent for the account of the relevant Banks, on the
date of each termination or reduction, the Commitment Fees on the amount of the
Revolving Credit Commitment so terminated or reduced accrued to the date of such
termination or reduction. In connection with any reduction of the Revolving
Credit Commitment, the Borrowers shall make any prepayment required under
subsection 2.10(b).
(d) During the period beginning one hundred eighty
(180) days and ending ninety (90) days prior to the Termination Date, the
Borrowers may deliver to the Agent (which shall promptly transmit to each Bank)
a notice requesting that the Revolving Credit Commitment be extended to the
first anniversary of the Termination Date then in effect. Within forty-five days
after its receipt of any such notice, each Bank shall notify the Agent of its
willingness or unwillingness so to extend its Commitments in respect of the
Revolving Credit Commitment. Any Bank that shall fail so to notify the Agent
within such period shall be deemed to have declined to extend its Commitments in
respect of the Revolving Credit Commitment. If each (but only if each) Bank
agrees to extend its Commitments in respect of the Revolving Credit Commitment,
the Agent shall so notify the Borrowers and each Bank, whereupon (i) the
respective Commitments of the Banks in respect of the Revolving Credit
Commitment shall be extended to the first anniversary of the Termination Date
then in effect and (ii) the term "Termination Date" shall thereafter mean such
first anniversary. Any such extension shall be evidenced by a written agreement
among the Agent, the Banks and the Borrowers, such agreement to be in form and
substance acceptable to the Agent, the Banks and the Borrowers. In
29
the event that one or more Banks (each a "Non-Electing Bank") shall have
declined or been deemed to have declined to extend its or their Commitments in
respect of the Revolving Credit Commitment and Banks holding a majority in
amount of the Revolving Credit Commitment shall have notified the Agent of their
desire to extend their Commitments in respect of the Revolving Credit
Commitment, the Borrowers shall have the right, but not the obligation, at their
own expense, upon notice to each such Non-Electing Bank and the Agent, to
replace all (but not less than all) such Non-Electing Banks (in accordance with
and subject to the restrictions contained in Section 9.6) at any time before the
thirtieth (30th) day prior to the Termination Date with one or more assignees
(each a "Replacement Bank") willing to purchase the Non-Electing Banks'
interests hereunder and to agree to extend its or their Commitments in respect
of the Revolving Credit Commitment in accordance with the notice referred to in
the first sentence of this clause (g). In such event, each Non-Electing Bank
shall promptly upon request transfer and assign without recourse (in accordance
with and subject to the restrictions contained in Section 9.6) all its
interests, rights and obligations under this Agreement to the applicable
Replacement Bank; provided, however, that (i) no such assignment shall conflict
with any law or any rule, regulation or order of any Governmental Authority,
(ii) the applicable Replacement Bank shall pay to the applicable Non-Electing
Bank in immediately available funds on the date of such assignment the principal
of and interest accrued to the date of payment on the Revolving Credit Loans
made by such Non-Electing Bank hereunder and all other amounts accrued for such
Non-Electing Bank's account or owed to it hereunder (including Commitment Fees
and any unpaid costs or expenses), and (iii) a Non-Electing Bank shall not be
required to sell its interests hereunder unless the Borrowers have arranged for
one or more Replacement Banks to acquire the interests of all other Non-Electing
Banks. If, as a result of the foregoing, each Bank (including Replacement Banks,
but excluding Non-Electing Banks whose interests have been purchased as provided
above) has agreed to extend its Commitment in respect of the Revolving Credit
Commitment, the Revolving Credit Commitment shall be extended as provided in
clause (i) of the fourth sentence of this paragraph and the term Termination
Date shall have the meaning set forth in clause (ii) in such fourth sentence of
this clause (d).
(e) Any bank or financial institution becoming a
party to this Agreement in compliance with the provisions of subsection 2.9(d)
hereof shall execute and deliver to the Agent and the Banks and the Borrowers a
joinder and assumption agreement in form and substance satisfactory to the
Agent. Upon execution and delivery of such joinder such additional bank or
financial institution shall be a party hereto and one of the Banks hereunder for
all purposes, all as of the date of such joinder. Simultaneously therewith the
Borrowers shall execute and deliver to such additional Bank a Revolving Credit
Note to the order of such additional Bank in amounts equal to the Commitment
assumed by such additional Bank in respect of the Revolving Credit Commitment.
2.10 Optional and Mandatory Prepayments of Loans. (a) The
Borrowers shall have the right at any time and from time to time to prepay any
Borrowing, in whole or in part, without premium or penalty (but in any event
subject to Section 2.14), upon prior written, facsimile or telephonic notice to
the Agent given no later than 10:30 a.m., Pittsburgh time, one Business Day
before any proposed prepayment; provided, however, that each such partial
30
prepayment shall be in the principal amount of at least $500,000 or in whole
multiples of $100,000 in excess thereof.
(b) Excess Cash Flow. On or prior to April 10th of
each year, commencing on April 10, 2001, the Borrowers shall pay to the Agent an
amount equal to 50% of Excess Cash Flow for the Fiscal Year ended on the
preceding December 31, unless the Leverage Ratio with respect to such Fiscal
Year is less than 1.5 to 1.0. Any payments pursuant to this subsection shall be
applied to the repayment of the Term Loans in the inverse order of maturity,
first to Term Loan B and then to Term Loan A.
(c) Assets Sales. Simultaneously with any Asset Sale
made by a Borrower after the date hereof, the Borrowers shall pay to the Agent
an amount equal to the Net Sale Proceeds of such Asset Sale; provided that, if
at the time and as a result of an Asset Sale no Default or Event of Default
exists, no payment shall be required pursuant to this clause (c) to the extent
that (i) the Net Sale Proceeds do not exceed $100,000 for such Asset Sale or
$500,000 for all such Asset Sales in the aggregate, or (ii) to the extent the
Net Sale Proceeds exceed such $100,000 limit, if the Borrowers intend in good
faith to apply such Net Sale Proceeds to the acquisition of substitute assets
within ninety (90) days after such Asset Sale, which substitute assets are to be
pledged to the Agent as security for the Obligations pursuant to (and as defined
in) the Security Agreement; provided further, that such retained Net Sale
Proceeds shall be paid to the Agent at the end of such 90-day period to the
extent that the Borrowers have not utilized such retained Net Sale Proceeds to
purchase substitute assets that are so pledged to the Agent. Any payments
pursuant to this subsection shall be applied to the Term Loans in the inverse
order of maturity, first to Term Loan B and then to Term Loan A.
(d) Secondary Offerings. Simultaneously with any
Secondary Offering, the Borrowers shall pay to the Agent an amount equal to the
aggregate proceeds of such Secondary Offering, less reasonable fees, expenses
and other charges directly related thereto ("Net Offering Proceeds"); provided,
that the Borrowers shall not be required to pay to the Agent 25% of all Net
Offering Proceeds obtained after $10,000,000 of Net Offering Proceeds have been
paid to the Agent in the aggregate. Any payments pursuant to this subsection
shall be applied to the Term Loans in the inverse order of maturity, first to
Term Loan B and then to Term Loan A.
(e) On the date of any termination or reduction of
the Total Commitment pursuant to Section 2.9, the Borrowers shall pay or prepay
so much of the Borrowings as shall be necessary in order that the sum of the
aggregate principal amount of the Revolving Credit Loans outstanding and the
aggregate undrawn face amount of the Letters of Credit then outstanding will not
exceed the Revolving Credit Commitment after giving effect to such termination
or reduction.
(f) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Borrowing to be prepaid, shall
be irrevocable and shall commit the Borrowers to prepay such Borrowing (or
portion thereof) by the amount stated therein. All
31
prepayments under this Section on other than Base Rate Borrowings shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of prepayment.
2.11 Illegality. Notwithstanding any other provision herein,
if any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Bank to make or maintain Eurodollar Loans
as contemplated by this Agreement, (a) the commitment of such Bank hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert or
refinance Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and
(b) such Bank's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrowers shall pay to such Bank such amounts, if any, as may be
required pursuant to Section 2.14.
2.12 Requirements of Law. (a) In the event that any change in
any Requirement of Law or in the interpretation, or application thereof or
compliance by any Bank with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Bank to any tax of
any kind whatsoever with respect to this Agreement, any Note or any
Eurodollar Loan made by it, or change the basis of taxation of payments
to such Bank in respect thereof (except for taxes covered by Section
2.13 and changes in the rate of tax on the overall net income, gross
receipts or revenue of such Bank);
(ii) shall impose, modify or hold applicable
any reserve, special deposit or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Bank which is not otherwise included in
the determination of the interest rate on such Eurodollar Loan
hereunder; or
(iii) shall impose on such Bank any other
condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof then, in any such case, the Borrowers shall as
promptly as practicable pay such Bank, upon its demand, any additional amounts
necessary to compensate such Bank for such increased cost or reduced amount
receivable. If any Bank becomes entitled to claim any additional amounts
pursuant to this subsection, it shall as promptly as practicable notify the
Borrowers, through the Agent, of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Bank, through the Agent, to the Borrowers shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination
32
of this Agreement and the payment of the Notes and all other amounts payable
hereunder. If any amount is refunded to such Bank, such Bank will reimburse
Borrowers for amounts paid in respect of the refunded amount.
(b) In the event that any Bank shall have determined
that any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Bank or any
corporation controlling such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Bank's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Bank
or such corporation could have achieved but for such change or compliance
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, after submission as promptly as practicable by such Bank
to the Borrowers (with a copy to the Agent) of a written request therefor, the
Borrowers shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such reduction.
(c) Each Bank agrees that it will use reasonable
efforts in order to avoid or to minimize, as the case may be, the payment by the
Borrowers of any additional amount under subsections 2.12(a) and (b); provided,
however, that no Bank shall be obligated to incur any expense, cost or other
amount in connection with utilizing such reasonable efforts.
2.13 Taxes. (a) All payments made by the Borrowers under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding, in the case of the Agent and each Bank, net
income taxes and franchise or gross receipts taxes (imposed in lieu of net
income taxes) imposed on the Agent or such Bank, as the case may be, as a result
of a present or former connection between the jurisdiction of the government or
taxing authority imposing such tax and the Agent or such Bank or any political
subdivision or taxing authority thereof or therein (all such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions and withholdings being
hereinafter called "Taxes"). Except as provided in Section 2.13(c) and the
penultimate sentence of this Section 2.13(a), if any Taxes are required to be
withheld from any amounts payable to the Agent or any Bank hereunder or under
the Notes, the amounts so payable to the Agent or such Bank shall be increased
to the extent necessary to yield to the Agent or such Bank (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the Notes. Whenever any Taxes are
payable by the Borrowers, as promptly as possible thereafter the Borrowers shall
send to the Agent for its own account or for the account of such Bank, as the
case may be, a certified copy of an original official receipt received by the
Borrowers showing payment thereof. If the Borrowers fail to pay any Taxes when
due to the appropriate taxing authority or fail to remit to the Agent the
required receipts or other required documentary evidence, the Borrowers shall
indemnify the Agent and the Banks for any incremental taxes, interest or
penalties that may become payable by the Agent or any Bank as
33
a result of any such failure. If as a result of a payment by the Borrowers of
Taxes pursuant to this subsection a Bank receives a tax benefit or tax savings
such as by receiving a credit against, refund of, or reduction in Taxes which
such Bank would not have received but for the payment by the Borrowers of Taxes
pursuant to this subsection, then such Bank shall promptly pay to the Borrowers
the amount of such credit, refund, reduction or any other similar item. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(b) Each Bank that is not incorporated under the laws
of the United States of America or a state thereof agrees that it will deliver
to the Borrowers and the Agent (i) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the
case may be, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form. Each such Bank also agrees to deliver to the Borrowers and the
Agent two further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or other manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers, and such extensions or renewals
thereof as may reasonably be requested by the Borrowers or the Agent, unless in
any such case an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with respect
to it and such Bank so advises the Borrowers and the Agent. Such Bank shall
certify (i) in the case of a Form 1001 or 4224, that it is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes and (ii) in the case of a Form W-8 or W-9, that it
is entitled to an exemption from United States backup withholding tax. Each Bank
shall deliver to the Borrowers and the Agent, with respect to Taxes imposed by
any Governmental Authority other than the United States of America, similar
forms, if available (or the information that would be contained in similar forms
if such forms were available), to the forms which are required to be provided
under this subsection with respect to Taxes of the United States of America.
(c) The Borrowers shall not be required to pay any
additional amounts to the Agent or any Bank in respect of payments of United
States withholding tax or other Taxes made by the Borrowers which are consistent
with the forms and information delivered to the Borrowers and the Agent or if
the payment of such amounts would not have arisen but for a failure by the Agent
or such Bank to comply with the requirements of subsection 2.13(b) or the Agent
or such Bank did not timely deliver to the Borrowers the forms listed or
described in subsection 2.13(b) or did not take such other steps as reasonably
may be available to it under applicable tax laws and any applicable tax treaty
or convention to obtain an exemption from, or reduction (to the lowest
applicable rate) of, such United States withholding tax and other Taxes or, if
such steps were taken, the information was not timely and duly delivered to
Borrowers.
2.14 Indemnity. The Borrowers agree to indemnify each Bank and
to hold each Bank harmless from any loss or expense which such Bank may sustain
or incur as a consequence
34
of (a) default by the Borrowers in payment when due of the principal amount of
or interest on any Eurodollar Loan, (b) default by the Borrowers in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrowers have given a notice requesting the same in accordance with the
provisions of this Agreement, (c) default by the Borrowers in making any
prepayment after the Borrowers have given a notice thereof in accordance with
the provisions of this Agreement or (d) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto, including, without limitation, in each case, any such loss or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate the deposits from which such funds were obtained. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
2.15 Pro Rata Treatment, etc. Except as required under Section
2.11, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of Letter of Credit Fees,
each reduction of the Revolving Credit Commitment, each refinancing of any
Borrowing with a Borrowing of any Type and each conversion of Loans, shall be
made pro rata among the Banks in accordance with their respective applicable
Commitment Percentages. Except as required under Section 2.11, each payment of
the Commitment Fee shall be made pro rata among the Banks in accordance with
their respective Commitment Percentages with respect to Revolving Credit Loans.
Each Bank agrees that in computing such Bank's portion of any Borrowing to be
made hereunder, the Agent may, in its discretion, round each Bank's percentage
of such Borrowing to the next higher or lower whole dollar amount.
2.16 Payments. (a) The Borrowers shall make each payment
(including principal of or interest on any Loan or any Fees or other amounts)
hereunder not later than 12:00 (noon), Pittsburgh time, on the date when due in
Dollars to the Agent at its offices at 000 Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx, or at such other place as may be designated by the Agent, in
immediately available funds.
(b) Except as otherwise provided herein, whenever any
payment (including principal of or interest on any Loan or any Fees or other
amounts) hereunder shall become due, or otherwise would occur, on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of interest or Fees, if applicable.
2.17 Borrowers' Representative. Each of the Borrowers hereby
appoints the Parent Company as its non-exclusive representative for providing
notices and reports to and otherwise communicating with the Agent and the Banks
under this Agreement or the other Loan Documents, including without limitation
making requests for Loans and Letters of Credit hereunder, and providing
information on behalf of any one or more of the Borrowers and for receiving
communications and notices from the Agent or the Banks. (In such capacity, the
Parent Company is herein referred to as the "Borrowers' Representative"). The
Agent and the Banks shall be entitled to rely exclusively on the Borrowers'
Representative's authority so to act in each
35
instance without inquiry or investigation, and each of the Borrowers hereby
agrees to indemnify and hold harmless the Agent and the Banks for any losses,
costs, delays, errors, claims, penalties or charges arising from or out of the
Borrowers' Representative's actions pursuant to this Section 2.17 and the Agent
and the Banks reliance thereon and hereon. Notice from the Borrowers'
Representative shall be deemed to be notice from all Borrowers and notice to the
Borrowers' Representative shall be deemed to be notice to all Borrowers. Nothing
in this Section 2.17 shall vitiate or be held contrary to the Borrowers'
representations and covenants regarding the Borrowings or the net worth or
solvency of the Borrowers made herein or in any of the Loan Documents.
2.18 Conversion and Continuation Options. Except as otherwise
provided herein, the Borrowers shall have the right at any time upon prior
irrevocable notice to the Agent (i) not later than 10:30 a.m., Pittsburgh time,
on the Business Day of conversion, to convert any Eurodollar Loan to a Base Rate
Loan, (ii) not later than 10:30 a.m., Pittsburgh time, three Business Days prior
to conversion or continuation, (y) to convert any Base Rate Loan into a
Eurodollar Loan, or (z) to continue any Eurodollar Loan as a Eurodollar Loan for
any additional Interest Period and (iii) not later than 10:30 a.m., Pittsburgh
time, three Business Days prior to conversion, to convert the Interest Period
with respect to any Eurodollar Loan to another permissible Interest Period,
subject in each case to the following:
(a) a Eurodollar Loan may not be converted at a time
other than the last day of the Interest Period applicable thereto;
(b) any portion of a Loan maturing or required to be
repaid in less than one month may not be converted into or continued as a
Eurodollar Loan;
(c) no Eurodollar Loan may be continued as such and
no Base Rate Loan may be converted to a Eurodollar Loan when any Default or
Event of Default has occurred and is continuing;
(d) any portion of a Eurodollar Loan that cannot be
converted into or continued as a Eurodollar Loan by reason of paragraph 2.18(b)
or 2.18(c) automatically shall be converted at the end of the Interest Period in
effect for such Loan to a Base Rate Loan;
(e) if by the third Business Day prior to the last
day of any Interest Period for Eurodollar Loans the Borrowers have failed to
give notice of conversion or continuation as described in this subsection, the
Agent shall give notice thereof to the Banks and such Loans shall be
automatically converted to Base Rate Loans on the last day of such then expiring
Interest Period; and
(f) Each request by the Borrowers to convert or
continue a Loan shall constitute a representation and warranty that each of the
representations and warranties made by the Borrowers herein is true and correct
in all material respects on and as of such date as if made on and as of such
date.
36
Accrued interest on a Loan (or portion thereof) being converted shall be paid by
the Borrowers at the time of conversion.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement, and to make
the Loans, the Borrowers hereby represent and warrant to the Agent and each Bank
that:
3.1 Financial Condition. (a) The audited consolidated balance
sheets of CECO and its Subsidiaries (other than the K&B Entities) as at December
31, 1998 and the condensed balance sheets of CECO and its Subsidiaries (other
than the K&B Entities) as at September 30, 1999 and the related consolidated or
condensed statements of operations and of cash flows for the periods ended on
such dates, copies of which have heretofore been furnished to each Bank, present
fairly the consolidated or condensed financial condition of CECO and its
consolidated Subsidiaries as at such date, and the consolidated or condensed
results of their operations and their consolidated or condensed cash flows for
the period then ended. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved. None of the Borrowers nor any of
such Subsidiaries had, at the date of the most recent balance sheet referred to
above, any material Contingent Obligation, liability for taxes, or any long-term
lease or unusual forward or long-term commitment, including, without limitation,
any interest rate or foreign currency swap or exchange transaction, which is
required by GAAP to be but is not reflected in the foregoing statements or in
the notes thereto.
(b) The balance sheet and statement of operations of
CECO and its Subsidiaries, including the K&B Entities, on a pro forma basis as
at September 30, 1999, and for the twelve month period then ended, copies of
which have heretofore been furnished to each Bank, fairly represent the pro
forma consolidated condensed financial condition and results of operations of
such entities.
(c) (i) As of the Closing Date and after giving
effect to this Agreement and any Loans to be made on the Closing Date, the
Borrowers, taken as a whole, are Solvent.
(ii) The Borrowers do not intend to incur debts
beyond their ability to pay such debts as they mature, taking into account the
timing of and amounts of cash to be received by them and the timing of the
amounts of cash to be payable on or in respect of their Debt.
3.2 No Adverse Change. Since September 30, 1999, there has
been no Material Adverse Effect and there has been no development or event nor
any prospective development or event which has had or could reasonably be
expected individually or in the aggregate to have a Material Adverse Effect.
37
3.3 Existence; Compliance with Law. Except as set forth on
Schedule 3.3 hereto, each of the Borrowers (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate or other organizational power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign entity and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, and (d) is in compliance
with all Requirements of Law.
3.4 Power; Authorization; Enforceable Obligations. Each of the
Borrowers has the corporate power, authority, and legal right, to make, deliver
and perform this Agreement, the Notes and the other Loan Documents to which it
is a party and to borrow hereunder and has taken all necessary corporate action
to authorize the borrowings on the terms and conditions of this Agreement and
the Notes and to authorize the execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents to which it is a party. No
consent or authorization of, filing with or other act by or in respect of, any
Governmental Authority or any other Person (including stockholders and creditors
of the Borrowers) is required in connection with the borrowings hereunder or
with the execution, delivery, performance, validity or enforceability of this
Agreement, the Notes or the other Loan Documents. This Agreement has been, and
each Note and other Loan Document will be, duly executed and delivered on behalf
of the Borrowers. This Agreement constitutes, and each Note and other Loan
Document when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrowers enforceable against the Borrowers in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
3.5 No Legal Bar. The execution, delivery and performance of
this Agreement, the Notes and the other Loan Documents by the Borrowers, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or Contractual Obligation of the Borrowers or of any of the
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. Except as set forth on Schedule
3.6, no litigation, investigation or proceeding of or, before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrowers,
threatened against the Borrowers or against any of the respective properties or
revenues or against any Plan (a) with respect to this Agreement, the Notes or
the other Loan Documents or any of the transactions contemplated hereby, or (b)
as to which there is a reasonable likelihood of an adverse determination and
which, if adversely determined, would have a Material Adverse Effect.
38
3.7 No Default. None of the Borrowers is in default under or
with respect to any of its Contractual Obligations in any respect which could
have a Material Adverse Effect. No Event of Default has occurred and is
continuing.
3.8 Taxes. Each of the Borrowers has filed or caused to be
filed all tax returns which, to the knowledge of the Borrowers, are required to
be filed (or has obtained authorized extensions for such filings) and has paid
all taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
any the amount or validity of which are currently being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Borrowers, as the case may be); no
tax Lien has been filed against any of the Borrowers, and, to the knowledge of
the Borrowers, no claim is being asserted, with respect to any such tax, fee or
other charges.
3.9 Federal Regulations. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U or for any
purpose which violates the provisions of Regulation U. If requested by any Bank
or the Agent, the Borrowers will furnish to the Agent and each Bank a statement
to the foregoing effect in conformity with the requirements of Federal Reserve
Form U-l referred to in said Regulation U. No part of the proceeds of the loans
hereunder will be used for any purpose which violates, or which is inconsistent
with, the provisions of Regulation X.
3.10 ERISA. (a) Each Plan has complied in all respects with
the applicable provisions of ERISA and the Code. No prohibited transaction or
accumulated funding deficiency (each as defined in subsection 7(h)) or
Reportable Event has occurred with respect to any Single Employer Plan.
(b) Except as provided on Schedule 3.10, the present
value of all accrued benefits under each Single Employer Plan maintained by the
Borrowers or a Commonly Controlled Entity (based on those assumptions used to
fund the Plans), as calculated on a termination basis, did not, as of the last
annual valuation date, exceed the value of the assets of the Plans allocable to
such benefits.
(c) Neither any of the Borrowers nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan, and neither the Borrowers nor any Commonly Controlled Entity
would become subject under ERISA to any liability if any of the Borrowers or
such Commonly Controlled Entity were to withdraw completely from any
Multiemployer Plan as of the valuation date most closely preceding the date this
representation is made or deemed made, in each case except as is not reasonably
likely to have Material Adverse Effect. Such Multiemployer Plans are neither in
Reorganization as defined in Section 4241 of ERISA nor Insolvent.
39
(d) The present value (determined using actuarial and
other assumptions which are reasonable in respect of the benefits provided and
the employees participating) of the liability of the Borrowers and each Commonly
Controlled Entity for post-retirement benefits to be provided to their current
and former employees under Plans which are welfare benefit plans (as defined in
Section 3(1) of ERISA) does not, in the aggregate, exceed the assets under all
such Plans allocable to such benefits, except as such amounts are reflected in
accordance with GAAP on the financial statements of the Borrowers delivered to
the Banks, or as otherwise is not reasonably likely to have a Material Adverse
Effect.
3.11 Investment Company Act; Public Utility Holding Company
Act. None of the Borrowers is (a) an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended; (b) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of either a "holding company"
or a "subsidiary company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or (c) subject to any other federal or state
law or regulation which purports to restrict or regulate its ability to borrow
money.
3.12 Purpose of Loans; Letters of Credit. The proceeds of the
Loans shall be used by the Borrowers for the K&B Acquisition, the
recapitalization of the Borrowers, and the Borrowers' general business purposes.
The Letters of Credit shall be standby letters of credit required in the
ordinary course of the Borrowers' business.
3.13 Environmental Matters. To the best knowledge of the
Borrowers, each of the representations and warranties set forth in paragraphs
(a) through (e) of this subsection is true and correct with respect to each
parcel of real property owned, leased or operated by any of the Borrowers (the
"Properties"):
(a) Except for matters set forth in an environmental
report prepared by the Agent, for which matters the Borrowers have taken, or
provided the Agent with a written plan with respect to, all necessary actions to
resolve all such matters in a manner satisfactory to the Agent, the Properties
do not contain, and have not previously contained, in, on, or under, including,
without limitation, the soil and groundwater thereunder, any Materials of
Environmental Concern in concentrations which violate Environmental Laws.
(b) The Properties and all operations and facilities
at the Properties are in compliance with Environmental Laws, and there is no
Materials of Environmental Concern contamination or violation of any
Environmental Law which would interfere with the continued operation of any of
the Properties or impair the fair saleable value of any thereof.
(c) None of the Borrowers has received any written
complaint, notice of violation, alleged violation, investigation or advisory
action or of potential liability or of potential responsibility regarding a
violation of Environmental Law or permit compliance with regard to the
Properties, nor are the Borrowers aware that any Governmental Authority is
contemplating delivering to any of the Borrowers any such notice.
40
(d) Materials of Environmental Concern have not been
generated, treated, stored, disposed of, at, on or under any of the Properties,
nor have any Materials of Environmental Concern been transferred from the
Properties to any other location except in either case in the ordinary course of
business of the Borrowers and in compliance with all Environmental Laws.
(e) There are no governmental, administrative actions
or judicial proceedings pending or contemplated under any Environmental Laws to
which the Borrowers or any of its Subsidiaries is or will be named as a party
with respect to the Properties, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to any of the Properties.
(f) To the best knowledge of each Borrower after
reasonable inquiry, there has been no release or threat of release of Materials
of Environmental Concern at or from the Properties, or arising from or related
to the operation of such Borrower in connection with the Properties or otherwise
in connection with the business operated by such Borrower in violation of or in
amounts or in a manner that could reasonably be expected to give rise to
liability under any Environmental Law.
3.14 Ownership of the Borrowers. As of the Closing Date the
record ownership of each class and series of stock of each of the Borrowers and
USFM is as set forth on Schedule 3.14.
3.15 Patents, Trademarks, etc. Each of the Borrowers has
obtained and holds in full force and effects all patents, trademarks,
servicemarks, trade names, copyrights or licenses therefor and other such
rights, free from burdensome restrictions, which are necessary for the operation
of its business as presently conducted. To the Borrowers' best knowledge, no
material product, process, method, substance, part or other material presently
sold by or employed by any of the Borrowers in connection with such business
infringes any patent, trademark, service xxxx, trade name, copyright, license or
other right owned by any other Person so as to have a Material Adverse Effect.
There is not pending or, to Borrowers' knowledge, threatened any claim or
litigation against or affecting any of the Borrowers contesting its right to
sell or use any such product, process, method, substance, part or other
material.
3.16 Ownership of Property. Schedule 3.16 sets forth, as of
the Closing Date, all the real property owned or leased by any of the Borrowers
and identifies the street address, the current owner (and current record owner,
if different) and whether such property is leased or owned. The Borrowers have
good and marketable fee simple title to or valid leasehold interests in all real
property owned or leased by the Borrowers, and good title to all of their
personal property subject to no Lien of any kind except Liens permitted hereby.
The Borrowers enjoy peaceful and undisturbed possession under all of their
respective leases.
41
3.17 Licenses, etc. Each of the Borrowers has obtained and
holds in full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, easements, rights of way and other rights,
consents and approvals which are necessary for the operation of its business as
presently conducted.
3.18 No Burdensome Restrictions. None of the Borrowers is a
party to any agreement or instrument or subject to any other Contractual
Obligation or any charter or corporate restriction or any provision of any
applicable law, rule or regulation which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
3.19 Labor Matters. Except as set forth on Schedule 3.19, (a)
as of the Closing Date, there are no collective bargaining agreements or
Multiemployer Plans covering the employees of the Borrowers, and (b) none of
such Persons has suffered any strikes, walkouts, work stoppages or other
material labor difficulty within the last five years and to the best knowledge
of such Persons, there are none now threatened.
3.20 Partnerships. As of the date hereof and as of the Closing
Date, except as disclosed on Schedule 3.20, none of the Borrowers is a partner
in any partnership or in any joint venture.
3.21 No Material Misstatements. To the best of the Borrowers'
knowledge, no information, report, financial statement, exhibit or schedule
furnished by or on behalf of any of the Borrowers or the K&B Entities to the
Agent or any Bank in connection with the negotiation of this Agreement or any
Note or other Loan Document or included therein contains any misstatement of
fact, or omitted or omits to state any fact necessary to make the statements
therein not misleading, where such misstatement or omission would in Borrowers'
judgment be material to the interests of the Banks with respect to the
Borrowers' performance of their obligations hereunder. Prior to the date hereof,
the Borrowers have disclosed to the Agent in writing any and all facts which
materially and adversely affect (to the extent the Borrowers can as of the date
hereof reasonably foresee), the business, operations or financial condition of
the Borrowers taken as a whole, and the ability of the Borrowers to perform its
or their obligations under this Agreement, the Notes, the other Loan Documents
and the Acquisition Documents.
3.22 Affiliated Business Enterprises. The Borrowers and USFM
intend to operate as affiliated business enterprises. Although separate
entities, the Borrowers operate under a common business plan. Each of the
Borrowers and USFM will benefit from the financing arrangement established by
this Agreement. Each Borrower acknowledges that, but for the agreement by each
of the other Borrowers to execute and deliver this Agreement and the other Loan
Documents to which it is a party, none of the Borrowers would have qualified
separately for the total amount of the credit facilities established hereby.
3.23 Acquisition Documents. Each of the representations and
warranties contained in the Acquisition Documents are true and correct in all
material respects as of the date hereof (except to the extent the Acquisition
Documents specifically provide that any of them are
42
made only as of a different date) and each of the parties to the Acquisition
Documents has satisfied all conditions to the other parties' obligations under
such Acquisition Documents.
3.24 Year 2000 Compliance. The Borrowers have reviewed the
areas within their business and operations which could be adversely affected by,
and have developed a program to address on a timely basis, the risk that certain
computer applications used by the Borrowers may be unable to recognize and
perform properly date-sensitive functions involving dates prior to, on and after
December 31, 1999 (the "Year 2000 Problem"). The Year 2000 Problem will not
result in any Material Adverse Effect.
All of the foregoing representations and warranties shall
survive the execution and delivery of the Notes and the making by the Banks of
the Loans hereunder.
43
SECTION 4. CONDITIONS PRECEDENT; CLOSING
4.1 Conditions to Closing. The agreement of each Bank to enter
into this Agreement and make its initial Loan or, in the case of the Issuing
Bank, issue any Letter of Credit hereunder is subject to the satisfaction,
immediately prior to or concurrently with such Loans, of the following
conditions precedent:
(a) Loan Documents. The Agent shall have received (i)
this Agreement and each of the other Loan Documents, executed and delivered by a
duly authorized officer of each of the Borrowers and USFM, as applicable, with a
counterpart for each Bank and (ii) for the account of each Bank, Notes
conforming to the requirements hereof and executed by a duly authorized officer
of each of the Borrowers.
(b) Corporate Proceedings of the Borrowers. The Agent
shall have received a copy of the resolutions or other corporate proceedings or
action, in form and substance satisfactory to the Agent, taken on behalf of each
of the Borrowers authorizing (i) the execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents to which it is a party, and
(ii) the borrowings contemplated hereunder, certified by a Responsible Officer
of each of the Borrowers as of the Closing Date, which certificate shall state
that such resolutions, or other proceedings or action thereby certified have not
been amended, modified, revoked or rescinded and shall be in form and substance
satisfactory to the Agent.
(c) Representations and Warranties True; No Default.
The representations and warranties of each Borrower contained in Section 3
hereof shall be true and accurate on and as of the Closing Date in all material
respects with the same effect as though such representations and warranties had
been made on and as of such date (except representations and warranties which
relate solely to an earlier date or time, which representations and warranties
shall be true and correct on and as of the specific dates or times referred to
therein), and each Borrower shall have, and shall have caused USFM to have,
performed and complied with all covenants and conditions hereof applicable to
it; and no Event of Default or Default under this Agreement shall have occurred
and be continuing or shall exist.
(d) Corporate Documents. The Agent shall have
received, with a counterpart for each Bank, true and complete copies of (i) the
articles of incorporation, bylaws, or other organizational documents of each
Borrower, certified as of the Closing Date as complete and correct copies
thereof by a Responsible Officer of each Borrower; and (ii) good standing
certificates issued by the Secretaries of State (or the equivalent thereof) of
each state in which such Borrower has been formed or is required to be qualified
to transact business no earlier than thirty days prior to the Closing Date.
(e) Incumbency. The Agent shall have received a
written certificate dated the Closing Date by a Responsible Officer of each
Borrower as to the names and signatures of the officers of such Borrower
authorized to sign this Agreement and the other Loan
44
Documents. The Agent may conclusively rely on such certificate until it shall
receive a further certificate by a Responsible Officer of such Borrower amending
such prior certificate.
(f) Fees. The Borrowers shall have paid or caused to
be paid to the Agent (i) those fees required by the Fee Letter and (ii) all
other fees and expenses due and payable hereunder on or before the Closing Date
(if then invoiced), including without limitation the reasonable fees and
expenses of counsel to the Agent.
(g) Legal Opinions. The Agent shall have received,
with a counterpart for each Bank, the executed legal opinion of counsel to the
Borrowers, USFM and the Guarantor, addressed to the Agent and the Banks and
satisfactory in form and substance to the Agent and its counsel covering such
matters incident to the transactions contemplated by this Agreement and the
other Loan Documents as the Agent may reasonably require. The Borrowers hereby
direct such counsel to deliver such opinion, upon which the Banks and the Agent
may rely.
(h) No Material Adverse Change. There shall be no
material adverse change in the business, operations, Property, prospects or
financial or other condition of the Borrowers taken as a whole nor any material
change in the management of the Borrowers or an event which would cause or
constitute a Material Adverse Effect; and there shall be delivered to the Agent
for the benefit of each Bank a certificate dated the Closing Date and signed on
behalf of the Borrowers' Representative by a Responsible Officer to each such
effect and covering the matters described in paragraph (c) above.
(i) No Litigation. No action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body to enjoin,
restrain or prohibit, or to obtain damages in respect of this Agreement or the
consummation of the transactions contemplated hereby or which, in the Agent's
sole discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement.
(j) Evidence of Insurance. The Borrowers shall have
provided to each of the Banks copies of the evidence of insurance required by
subsection 5.5(b).
(k) Existing Indebtedness, Liens. The indebtedness
owed by one or more of the Borrowers to PNC under that certain letter agreement
dated March 16, 1999, among PNC and certain of the Borrowers, shall have been
repaid in full or arrangements satisfactory to the Agent shall exist for the
repayment thereof from the proceeds of the initial Loans hereunder. All Liens
with respect to property of the Borrowers relating to such indebtedness and all
credit support therefor shall have been released and satisfactory evidence of
the foregoing shall have been delivered to the Agent.
(l) Additional Investment. A minimum investment of
$5,000,000 shall be made in the Parent Company on terms and conditions
satisfactory to the Agent,
45
including, if such investment is a debt investment, being subordinated on terms
satisfactory to the Banks, to the obligations owed to the Agent and the Banks
under Loan Documents.
(m) K&B Acquisition; Bonus Pool Payments. The K&B
Acquisition shall have been completed and copies of all Acquisition Documents
and any documents and employment or other agreements relating to the Bonus Pool
Payments shall have been delivered to the Agent. All Bonus Pool Payments shall
be subordinated on terms satisfactory to the Banks, to the obligations owed to
the Agent and the Banks under the Loan Documents.
(n) Additional Documents. The Agent shall have
received such additional documents, landlord agreements and waivers,
certificates and information as the Agent may require pursuant to the hereof or
as the Agent may otherwise reasonably request.
4.2 Conditions to Each Loan. The agreement of each Bank to
make any Loan requested to be made by it on any date (including, without
limitation, the Term Loans and the first Revolving Credit Loan hereunder) or an
Issuing Bank to issue a Letter of Credit is subject to the satisfaction of the
following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrowers herein or which are
contained in any certificate, document or financial or other statement furnished
at any time under or in connection herewith or therewith shall be true and
correct in all material respects on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall
have occurred and be continuing on such date or after giving effect to the Loans
requested to be made or the Letter of Credit is to be issued on such date.
(c) No Contravention of Law. The making of the Loans
or the issuance of the Letter of Credit shall not contravene any Requirement of
Law applicable to the Borrowers or any of the Banks.
Each borrowing by the Borrowers hereunder or request for the issuance of a
Letter of Credit shall constitute a representation and warranty by the Borrowers
as of the date of such Loan or issuance of such Letter of Credit that the
conditions contained in this Section 4.2 have been satisfied.
4.3 Closing. The closing (the "Closing") of the transactions
contemplated hereby shall take place at the offices of Xxxxxxx Xxxxx Xxxxxxx &
Xxxxxxxxx, LLP, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000, commencing at 10:00
A.M., Philadelphia time, on December 6, 1999 or such other place or date as to
which the Agent, the Banks and the Borrowers shall agree. The date on which the
Closing shall be completed is referred to herein as the "Closing Date".
46
SECTION 5. AFFIRMATIVE COVENANTS
The Borrowers hereby agree that, so long as any Commitments
remain in effect, any Note remains outstanding and unpaid, any Letter of Credit
remains outstanding or any other amount is owing to any Bank or the Agent
hereunder, each of the Borrowers shall:
5.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event not later than
90 days after the close of each fiscal year of CECO, a copy of the annual audit
report for such year for CECO, including therein consolidated and consolidating
balance sheets of CECO as at the end of such fiscal year, and related statements
of income, shareholders' equity and cash flow of CECO for such fiscal year,
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year, all in reasonable detail, prepared in accordance with
GAAP applied on a basis consistently maintained throughout the period involved
and with the prior year with such changes therein as shall be approved by CECO's
independent certified public accountants, such consolidated and consolidating
financial statements to be certified by independent certified public accountants
selected by CECO and reasonably acceptable to the Banks, without any exception
or qualification arising out of the restricted or limited nature of the
examination made by such accountants;
(b) as soon as available, but in any event not later than
30 days after the end of each calendar month, and no later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of
CECO, unaudited consolidated and consolidating financial statements of CECO,
including therein (i) balance sheets of CECO as at the end of such period, (ii)
the related statements of income of CECO, and (iii) the related statements of
cash flow and shareholders' equity of CECO all for the period from the beginning
of such fiscal year to the end of such period, setting forth in each case in
comparative form the corresponding figures for the like period of the preceding
fiscal year; all in reasonable detail, prepared in accordance with GAAP applied
on a basis consistently maintained throughout the period involved and with prior
periods and certified on behalf of CECO and the Borrowers' Representative by a
Responsible Officer;
(c) as soon as available, but in any event no later than
15 days after the end of each calendar month, a Borrowing Base Certificate in
the form of Exhibit D attached hereto;
(d) as soon as available, but in any event not later than
15 days after the end of each of each monthly period of each fiscal year of the
Borrowers, accounts receivable agings of the Borrowers in reasonable detail
satisfactory to the Agent, and certified on behalf of the Borrowers'
Representative by a Responsible Officer.
47
5.2 Certificates; Other Information. Furnish to each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsections 5.1(a) and (b), (i) a certificate on
behalf of the Borrowers' Representative executed by a Responsible Officer,
showing in detail the calculations supporting such statements in respect of
Section 6.1 ; and (ii) a certificate (the "Applicable Margin Certificate") of
the Borrowers' Representative, executed on its behalf by a Responsible Officer,
(A) showing in detail the calculation of the Leverage Ratio as at the last day
of the preceding fiscal quarter and (B) stating that, to the best of his or her
knowledge, each of the Borrowers and CECO during such period has kept, observed,
performed and fulfilled each and every covenant and condition contained in this
Agreement and in the Notes and the other Loan Documents applicable to it and
that he or she obtained no knowledge of any Default or Event of Default except
as specifically indicated;
(b) within 30 days after request therefor by the Agent,
such detailed financial projections, forecasts and budgets as the Banks or the
Agent may from time to time (but not more frequently than once in respect of
each fiscal year) reasonably request;
(c) any reports, including management letters submitted
to any of the Borrowers by independent accountants in connection with any
annual, interim or special audit;
(d) any reports, notices or proxy statements generally
distributed by CECO or any of the Borrowers to its stockholders on a date no
later than the date supplied to the stockholders; and
(e) promptly, such additional financial and other
information as the Banks or the Agent may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except when the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the applicable Borrower; provided that, the foregoing exception
shall not apply to, and the Borrowers shall pay, any contested liability on or
prior to ten (10) days after the commencement of proceedings to foreclose any
Lien which may have attached as security therefor.
5.4 Conduct of Business and Maintenance of Existence. Subject
to Section 6.4 hereof, continue to engage in business of the same general type
as now conducted by it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges, trademarks, trade names, licenses, franchises and other
authorizations necessary or desirable in the normal conduct of its business;
comply with all Contractual Obligations and material Requirements of Law;
provided, that the Borrowers shall
48
cause USFM to not engage in any business after the date hereof, other than to
transfer certain of its assets to any of the Borrowers and otherwise wind up its
business.
5.5 Maintenance of Property; Insurance. (a) Maintain in good
repair, working order and condition (ordinary wear and tear excepted) in
accordance with the general practice of other businesses of similar character
and size, all of those properties material or necessary to its business, and
from time to time make or cause to be made all appropriate repairs, renewals or
replacements thereof.
(b) Insure its properties and assets against loss or
damage by fire and such other insurable hazards as such assets are commonly
insured (including fire, extended coverage, property damage, worker's
compensation, public liability and business interruption insurance) and against
other risks (including errors and omissions) in such amounts as similar
properties and assets are insured by prudent companies in similar circumstances
carrying on similar businesses, and with reputable and financially sound
insurers, including self-insurance to the extent customary. The Borrowers shall
deliver (i) on the Closing Date and annually thereafter an original certificate
of insurance signed by the Borrowers' independent insurance broker describing
and certifying as to the existence of the insurance on the Borrowers' properties
and assets required to be maintained by this Agreement and (ii) at the request
of the Agent from time to time a summary schedule indicating all insurance then
in force with respect to the Borrowers. Each insurance policy shall provide for
at least thirty (30) days' prior written notice to the Agent of any termination
of or proposed cancellation or nonrenewal of such policy, and name the Agent as
additional insured and loss payee.
5.6 Inspection of Property; Books and Records; Discussions.
(a) Permit any of the officers or authorized employees or representatives of the
Agent or any of the Banks to visit and inspect during normal business hours any
of its properties and to examine and make excerpts from its books and records
and discuss its business affairs, finances and accounts (including those of its
Affiliates) with its officers, all in such detail and at such times and as often
as any of the Banks may reasonably request, provided that each Bank shall
provide the Borrowers and the Agent with reasonable notice prior to any visit or
inspection. In the event Required Banks desire to conduct an audit of the
Borrowers (to which the Borrowers hereby consent), such Banks shall make a
reasonable effort to conduct such audit contemporaneously with any audit to be
performed by the Agent.
(b) Maintain and keep proper books of record and
account which enable the Borrowers to issue financial statements in accordance
with GAAP and as otherwise required by applicable Requirements of Law, and in
which full, true and correct entries shall be made in all material respects of
all its dealings and business and financial affairs.
(c) Permit (i) auditors chosen by the Agent to visit
and inspect any of its properties to conduct a collateral audit of the inventory
and other assets of the Borrowers, in such detail as the Agent may reasonably
request, during normal business hours within ninety (90) days after the Closing
Date (the "Initial Audit"), (ii) an additional collateral audit to be conducted
49
after the Initial Audit and prior to December 31, 2000, by an auditor chosen by
the Agent, and (iii) an annual collateral audit by an auditor chosen by the
Agent in each calendar year thereafter. All of the collateral audits provided
for hereunder shall be at the sole cost and expense of the Borrowers.
5.7 Notices. Promptly, upon any of the Borrowers becoming
aware, give notice to the Agent and each Bank of:
(a) the occurrence of any Default or Event of
Default;
(b) any (i) default or event of default under any
Contractual Obligation of any of the Borrowers or (ii) litigation, investigation
or proceeding which may exist at any time between any of the Borrowers and any
Governmental Authority, which in either case, if not cured or if adversely
determined, as the case may be, could have a Material Adverse Effect;
(c) any litigation or proceeding which, if adversely
determined, could have a Material Adverse Effect;
(d) the following events, as soon as possible and in
any event within 15 days after any of the Borrowers knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any Single
Employer Plan, or any withdrawal from, or the termination, Reorganization or
Insolvency of any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or any of the Borrowers or any
Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any Single
Employer Plan in a distress termination under Section 4041(c) of ERISA or
Multiemployer Plan, in each case, except as is not reasonably likely to have a
Material Adverse Effect;
(e) the occurrence or existence of a material default
by any party, including a Borrower, to any material contract to which a Borrower
is a party, or the actual or threatened termination, revocation or non-renewal
of any such material contract;
(f) any correspondence or notices from any
Governmental Authority that regulates the operations of a Borrower relating to
an actual or threatened change or development that is reasonably likely to have
a Material Adverse Effect;
(g) entry of any order, judgment, decree or decision
issued by any court, arbitrator or Governmental Authority in any proceeding to
which a Borrower is a party which is reasonably likely to have a Material
Adverse Effect;
(h) any notice from a Governmental Authority received
by a Borrower of such Governmental Authority's intention to audit any Federal,
state, local or foreign tax return (except for notices of sales, excise, use and
property tax audits, which the Borrowers shall
50
provide to the Agent upon request) of such Borrower, together with a copy of any
such notice as well as any subsequent notice with respect thereto from any such
Governmental Authority;
(i) any lapse, termination, non-renewal or reduction
in coverage of any insurance coverage required to be maintained by the Borrowers
pursuant to any Loan Document; and
(j) an event which has had a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of
the Borrowers' Representative, executed on its behalf by a Responsible Officer,
setting forth details of the occurrence referred to therein and stating what
action the Borrowers propose to take with respect thereto.
5.8 Environmental Laws. (a) Comply with, and require
compliance by all tenants and to the extent possible, all subtenants, if any,
with, all Environmental Laws and obtain and comply with and maintain, and
require that all tenants and to the extent possible, all subtenants obtain and
comply with and maintain, any and all licenses, approvals, registrations or
permits required by Environmental Laws except to the extent that failure to so
comply or obtain or maintain such documents would not have a Material Adverse
Effect.
(b) Except as set forth in Schedule 3.13, comply with
all lawful and binding orders and directives of all Governmental Authorities
respecting Environmental Laws except to the extent that failure to so comply
would not have a Material Adverse Effect.
(c) Defend, indemnify and hold harmless the Agent and
the Banks, and their respective employees, agents, officers and directors, from
and against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the violation
of or noncompliance with any Environmental Laws applicable to the real property
owned or operated by the Borrowers, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
attorneys' and consultants' fees, investigation and laboratory fees, court costs
and litigation expenses, except to the extent that any of the foregoing arise
out of the negligence or willful misconduct of any of the foregoing enumerated
parties.
5.9 Ownership of Borrowers; Joinder of Subsidiaries. (a)
Except as set forth on Schedule 3.14, each Borrower (other than the Parent
Company) shall remain a Wholly-Owned Subsidiary of the Parent Company.
(b) If any Borrower or USFM hereafter (i) acquires
(directly or indirectly) a Subsidiary, or (ii) transfers in a single transaction
or series of transactions to any Subsidiary, now existing or hereafter acquired
or created, assets (real or personal, tangible or intangible, including, without
limitation, shares of stock or indebtedness of any other Subsidiary and
51
leasehold interests), whether by capital contribution, loan, advance,
investment, sale, lease, assignment, transfer, merger, consolidation or other
disposition, the Borrowers will (x) cause such Subsidiary to become a Borrower
or a party to a Guaranty, (y) pledge all of the Capital Stock of such Subsidiary
to the Agent, and (z) cause such Subsidiary to pledge all of its assets to the
Agent, in each case, promptly after the transfer or acquisition, by execution of
a writing satisfactory to the Agent. Nothing in this Section is intended to
permit any acquisition or transfer not otherwise permitted by this Agreement.
5.10 Management Changes. Notify the Agent in writing within
fifteen (15) days after any change of any of the following officers: (a) with
respect to CECO, the Parent Company, CECO Filters, Inc. and The Xxxx & Xxxx
Manufacturing Company, the chief executive officer, chief operating officer,
chief financial officer or president; and (b) with respect to any other
Borrower, the president. In the event that any executive officer of any Borrower
or CECO after the Closing Date shall cease to be an executive officer of any of
the Borrowers or CECO, the Borrowers shall cause a qualified replacement officer
to promptly be appointed to fill such position such that no material adverse
effect shall occur with respect to any of the Borrowers.
5.11 Maintenance of Intellectual Property, Permits, Etc.
Except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect, maintain in full force and effect all intellectual
property and all licenses, franchises, permits and other authorizations
necessary for the ownership and operation of their respective properties and
business.
5.12 Plans and Benefit Arrangements. Comply and cause each
Commonly Controlled Entity to comply, with ERISA, the Code and all other
applicable Requirements of Law which are applicable to Plans, except where the
failure to do so, alone or in conjunction with any other failure, could not
reasonably be expected to have a Material Adverse Effect.
5.13 Interest Rate Protection. Within 90 days after the
Closing Date, enter into with one or more banks, the unsecured long-term debt
obligations of which are rated "A3" or higher by Xxxxx'x or "A-" by S&P, and
issued by a bank having capital, surplus and undivided profits aggregating at
least $250,000,000, such interest rate protection contracts (collectively, the
"Interest Rate Protection Agreements") as are necessary to cause an amount not
less than 50% of the Borrowers' then outstanding Term Loan A and Term Loan B
hereunder to bear interest either at a fixed rate or be subject to contracts
which shall provide for a protected fixed rate acceptable to the Agent. Such
contracts shall conform to ISDA standards, shall be subject to intercreditor and
subordination provisions as may be acceptable to the Agent and shall otherwise
be acceptable to the Agent as to structure, notional amount (subject to the 50%
standard set forth herein) and shall extend for a term of at least three years
(except that no such contracts shall be required to extend beyond the
Termination Date).
5.14 Further Assurances; Power of Attorney. At any time and
from time to time, upon the Agent's reasonable request, make, execute and
deliver, and use its best efforts to cause any other Person to make, execute and
deliver, to the Agent, and where appropriate cause
52
to be recorded or filed, and from time to time thereafter to be re-recorded and
refiled at such time and in such offices and places as shall be deemed desirable
by the Agent any and all such further certificates and other documents and
instruments as the Agent may reasonably consider necessary or desirable in order
to effectuate, complete, perfect, continue or preserve the obligations under
this Agreement and the other Loan Documents and the Liens created to secure such
obligations. Each Borrower hereby appoints the Agent, and any of its officers,
directors, employees and authorized agents, with full power of substitution,
upon any failure by such Borrower, to take or cause to be taken any action
described in the preceding sentence and to make, execute, record, file,
re-record or refile any and each such security document, instrument, certificate
and document for and in the name of such Borrower; provided, that the Agent
shall not take any action pursuant to such power unless an Event of Default
shall have occurred and be continuing. The power of attorney granted pursuant to
this subsection is coupled with an interest and shall be irrevocable until the
Notes are paid in full, no other amount is owed to the Agent or any Bank
hereunder or under the other Loan Documents and the Commitments are terminated.
SECTION 6. NEGATIVE COVENANTS
The Borrowers hereby agree that, so long as any of the
Commitments remain in effect, any Note remains outstanding and unpaid, any
Letter of Credit remains outstanding (which is not subject to a cash collateral
arrangement satisfying the provisions of Section 2.4(g)) or any other amount is
owing to any Bank or the Agent hereunder, none of the Borrowers shall, and the
Borrowers shall cause USFM not to, directly or indirectly:
6.1 Financial Covenants.
(a) Leverage Ratio. Permit the Leverage Ratio, as of the
end of any fiscal quarter ending during the periods specified below, for the
prior four consecutive fiscal quarters, to equal or exceed the amount set forth
opposite such period:
--------------------------------------------------------------------------------
Leverage Ratio
Last Day of Fiscal Quarter During Period To Be Less Than
--------------------------------------------------------------------------------
December 31, 2000 through June 29, 2001 3.75 to 1
--------------------------------------------------------------------------------
June 30, 2001 through December 30, 2001 3.50 to 1
--------------------------------------------------------------------------------
December 31, 2001 through December 30, 2002 3.00 to 1
--------------------------------------------------------------------------------
December 31, 2002 through December 30, 2003 2.50 to 1
--------------------------------------------------------------------------------
December 31, 2003 through December 30, 2004 2.25 to 1
--------------------------------------------------------------------------------
December 31, 2004 through Termination Date 2.00 to 1
--------------------------------------------------------------------------------
(b) Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio, (i) as of the end of each of the fiscal quarters ending December
31, 2000, March 31, 2001,
53
June 30, 2001 and September 30, 2001, in each case for the prior four
consecutive fiscal quarters, to be less than 1.15, and (ii) as of the end of any
fiscal quarter thereafter for the prior four consecutive fiscal quarters, to be
less than 1.20 to 1.
(c) Interest Coverage Ratio. Permit the Interest Coverage
Ratio for the period (i) beginning January 1, 2000 and ending June 30, 2000 to
be less than 1.50 to 1, or (ii) beginning January 1, 2000 and ending September
30, 2000 to be less than 2.00 to 1. Permit the Interest Coverage Ratio, as of
the end of any fiscal quarter ending during the periods specified below, for the
prior four consecutive fiscal quarters, to equal or exceed the amount set forth
opposite such period:
--------------------------------------------------------------------------------
Interest Coverage Ratio
Last Day of Fiscal Quarter During Period To Be Less Than
--------------------------------------------------------------------------------
December 31, 2000 through December 30, 2001 2.50 to 1
--------------------------------------------------------------------------------
December 31, 2001 through December 30, 2002 3.25 to 1
--------------------------------------------------------------------------------
December 31, 2002 through December 30, 2003 3.75 to 1
--------------------------------------------------------------------------------
December 31, 2003 through Termination Date 4.00 to 1
--------------------------------------------------------------------------------
(d) Capital Expenditures. Permit the amount of aggregate
capital expenditures of the Borrowers and CECO to exceed $900,000 in any fiscal
year.
(e) EBITDA. Permit the EBITDA (i) of CECO Filters, Inc.
for the fiscal period beginning October 1, 1999 and ending December 31, 1999,
prior to any management fees paid to CECO for such period to be less than
$562,500, or (ii) of CECO, for the following fiscal periods, to be less than the
amount set forth opposite such period:
--------------------------------------------------------------------------------
Period EBITDA Not to be Less Than
--------------------------------------------------------------------------------
January 1, 2000 through March 31, 2000 $1,050,000
--------------------------------------------------------------------------------
January 1, 2000 through June 30, 2000 $2,750,000
--------------------------------------------------------------------------------
January 1, 2000 through September 30, 2000 $5,100,000
--------------------------------------------------------------------------------
6.2 Limitation on Debt. At any time incur, create, assume, or
suffer to exist any Debt except:
(i) amounts outstanding hereunder as Loans;
(ii) Indebtedness of one Borrower to another Borrower;
54
(iii) Debt existing as of the date hereof described on
Schedule 6.2 (including any extensions or renewals or refinancings
thereof provided there is no increase in the amount thereof or other
significant change in the terms thereof);
(iv) Debt under Interest Rate Protection Agreements;
(v) Debt incurred (i) on or prior to the date hereof and
set forth on Schedule 6.2 and (ii) after the date hereof, for the
purchase of capital assets for which a lien on such assets is granted
to the creditor; provided that the aggregate amount of such Debt
outstanding at any time and not set forth on Schedule 6.2 shall not
exceed $500,000;
(vi) Debt owed to CECO on the Closing Date in respect of
amounts owed by CECO to various creditors and subject to a
Subordination Agreement among such creditors, CECO and the Agent; and
(vii) Subordinated Debt.
6.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, including, without
limitation, the stock of each Borrower and USFM, whether now owned or hereafter
acquired, except for Liens with respect to USFM to the extent such Liens do not
have a material adverse effect on the Borrowers and USFM, taken as a whole, and
except for:
(a) The following, (i) if the validity or amount thereof
is being contested in good faith by appropriate and lawful proceedings
diligently conducted so long as levy and execution thereon have been stayed and
continue to be stayed or (ii) if a final judgment is entered and such judgment
is discharged within thirty (30) days of entry, and in either case they do not
materially impair the ability of the Borrowers to perform their obligations
hereunder or under the other Loan Documents:
(A) Claims or Liens for taxes, assessments or charges
due and payable and subject to interest or penalty, provided that the
Borrowers maintain such reserves or other appropriate provisions as
shall be required by GAAP and pay all such taxes, assessments or
charges forthwith upon the commencement of proceedings to foreclose any
such Lien;
(B) Claims, Liens or encumbrances upon, and defects of
title to, real or personal property including any attachment of
personal or real property or other legal process prior to adjudication
of a dispute on the merits; and
(C) Claims or Liens of mechanics, materialmen,
warehousemen, carriers, or other statutory nonconsensual Liens;
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(b) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(c) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business of the Borrowers or USFM;
(d) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not interfere with the
ordinary conduct of the business of any of the Borrowers;
(e) Liens which were in existence on the date hereof and
shown on Schedule 6.3 and extensions or replacements thereof;
(f) Liens on assets of corporations which become Borrowers
after the date of this Agreement, provided that such Liens existed at the time
the respective corporations became Borrowers and were not created in
anticipation thereof and liens on assets acquired by Borrowers in acquisitions
permitted by Section 6.6 (which liens were in existence at the time of such
acquisitions);
(g) Liens upon real property, which property was acquired
after the Closing Date by the Borrowers, each of which Liens existed on such
property before the time of its acquisition or was created to finance, refinance
or refund the cost (including the cost of construction) of the respective
property; provided, however, that no such Lien shall extend to or cover any
accounts receivable or inventory under any circumstances or any property of the
Borrowers other than the respective property so acquired and improvements
thereon, and the principal amount of indebtedness secured by any such Lien shall
not exceed the fair market value of the respective property at the time it was
acquired;
(h) Capital Leases as and to the extent permitted under
this Agreement;
(i) Liens in favor of the Agent or any Bank; and
(j) Purchase money security interests on equipment
purchased in the ordinary course of business securing Debt permitted by Section
6.2.
6.4 Limitations on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets except:
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(a) any Borrower may merge with any other Borrower;
(b) any Borrower may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
one or more of the Borrowers; and
(c) a merger in connection with a Permitted Acquisition
permitted under Section 6.6, in which the surviving entity is a Borrower.
provided that, immediately after each such transaction and after giving effect
thereto, the Borrowers are in compliance with this Agreement and no Default or
Event of Default shall be in existence or result from such transaction.
6.5 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, accounts receivable and leasehold interests),
whether now owned or hereafter acquired, except:
(i) obsolete or worn out property disposed of in the
ordinary course of business;
(ii) the sale of inventory or other assets, or the
licensing of intellectual property, in each case in the ordinary course of
business;
(iii) any sale, transfer or lease of assets by any
Borrower or USFM to any Borrower; and
(iv) any Asset Sale for which the Net Sale Proceeds are
applied in accordance with Section 2.10.
6.6 Limitations on Acquisitions. Purchase, hold or acquire
beneficially any stock, other securities or evidences of indebtedness of, or
make or permit any investment or acquire any interest whatsoever in, any other
Person, except for Permitted Acquisitions and shares of common stock of The
Factory Power Company held by such Borrower on the Closing Date.
6.7 Limitation on Distributions and Investments. (a) At any
time make (or incur any liability to make) or pay any Distribution in respect of
the Borrowers (other than a Distribution payable to another Borrower or a Bonus
Pool Payment); provided, that the Borrowers shall be permitted to pay CECO for
operating expenses pursuant to a management agreement delivered to the Agent, an
amount not exceeding $600,000 in the aggregate in any fiscal year.
(b) Make any Investments other than Permitted Investments.
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Notwithstanding anything to the contrary contained herein, no Distributions or
CECO Debt Repayments may be made by any Borrower if a Default or Event of
Default shall have occurred and be continuing or shall occur as a result
thereof.
6.8 Transactions with Affiliates. Except for CECO Debt
Repayments or otherwise as expressly permitted in this Agreement or any other
Loan Document, directly or indirectly enter into any transaction or arrangement
whatsoever or make any payment to or otherwise deal with any Affiliate, except,
as to all of the foregoing in the ordinary course of and pursuant to the
reasonable requirements of the Borrowers' business and upon fair and reasonable
terms no less favorable to the Borrowers than would be obtained in a comparable
arm's length transaction with a Person not an Affiliate of the Borrowers.
6.9 Sale and Leaseback. Enter into any arrangement with any
Person providing for the leasing by any of the Borrowers of real or personal
property which has been or is to be sold or transferred by such Borrower to such
Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of such
Borrower.
6.10 Continuation of or Change in Business. Engage in any
business either directly or through any Subsidiary except for businesses in
which any of the Borrowers is engaged on the date of this Agreement and any
business activities directly related to such existing business and the Borrowers
shall cause USFM to not engage in any business other than as permitted herein.
6.11 Limitation on Negative Pledge. Enter into any agreement
with any Person other than the Agent and the Banks which prohibits or limits the
ability of any Borrower or USFM to create, incur, assume or suffer to exist any
Lien upon any of its properties, assets or revenues, whether now owned or
hereafter acquired.
6.12 Changes in Organizational Documents. Amend in any respect
its certificate of incorporation (including any provisions or resolutions
relating to capital stock), by-laws or other organizational documents without
providing at least thirty (30) calendar days' prior written notice to the Agent.
SECTION 7. EVENTS OF DEFAULT
7.1 Events of Default. If any of the following events shall
occur and be continuing:
(a) The Borrowers shall fail to pay any principal of any
Note when due in accordance with the terms thereof or hereof; or the Borrowers
shall fail to pay any interest on any Note, or any other amount payable
hereunder, within five (5) days after notice of such failure is given by the
Agent; or
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(b) Any representation or warranty made or deemed made by
the Borrowers herein or which is contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or
(c) The Borrowers shall default in the observance or
performance of any agreement contained in Section 6 or CECO shall default in the
observance or performance of any agreement contained in Section 8 of the
Guaranty; or
(d) The Borrowers or CECO shall default in the observance
or performance of any other agreement contained in this Agreement (other than as
provided in paragraphs (a) through (c) of this Section 7.1) or any other Loan
Document, and such default shall continue unremedied for a period of thirty (30)
days; or
(e) One or more judgments or decrees shall be entered
against (i) any of the Borrowers involving in the aggregate a liability (not
paid or fully covered by insurance) of $500,000 or more, or (ii) USFM which
would have a Material Adverse Effect, and all such judgments or decrees shall
not have been vacated, discharged, settled, satisfied or paid, or stayed or
bonded pending appeal, within sixty (60) days from the entry thereof; or
(f) Any of the Borrowers or USFM shall (i) default in the
payment of any amount due under any Debt of any one or more of the Borrowers in
excess of $500,000 in the aggregate (other than the Notes), beyond the period of
grace, if any, provided in the instrument or agreement under which such Debt was
created; or (ii) default in the observance or performance of any other agreement
contained in any such Debt or in any instrument or agreement evidencing,
securing or relating thereto beyond any applicable notice and grace period, or
any other event shall occur the effect of which default or other event is to
cause, or to permit the holder or holders or beneficiary or beneficiaries of
such Debt (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Debt to become due and payable prior
to its stated maturity or any such Debt is declared to be due and payable prior
to its stated maturity unless such default, event or declaration referred to in
this subparagraph (ii) is waived or cured to the satisfaction of such other
party as demonstrated to the satisfaction of the Agent by the Borrowers prior to
the Agent taking any action under Section 7.2 in respect of such occurrence; or
(g) (i) Any of the Borrowers shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or any of the Borrowers
shall make a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against any of the Borrowers any case, proceeding or other
action of a nature
59
referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of sixty (60) days; or (iii) there shall
be commenced against any of the Borrowers any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process on a claim against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within sixty (60) days
from the entry thereof; or (iv) any of the Borrowers shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any of the
Borrowers shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; or
(h) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable Event or
institution of proceedings is, in the reasonable opinion of the Required Banks,
likely to result in the termination by action of the PBGC or any court of such
Plan for purposes of Title IV of ERISA, or (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA; and in each case in clauses (i)
through (iv) above, such event or condition, together with all other such events
or conditions, if any would have a Material Adverse Effect; or
(i) Any change in control of the Borrowers or USFM shall
occur (as used herein, the term "change in control" means either (A) any change
in ownership of any class of stock or capital stock generally of the Borrowers
or USFM which would result in a change or transfer in the power to control the
election of a majority of the board of directors or in other indicia of majority
voting control to persons or entities other than those persons who have such
majority voting control on the Closing Date or (B) a decrease in such persons'
right to vote at shareholders' meetings to an aggregate level less than 51%); or
(j) Any of the Loan Documents shall cease to be legal,
valid and binding agreements enforceable against the party executing the same or
such party's successors and assigns (as permitted under the Loan Documents) in
accordance with the respective terms thereof or shall in any way be terminated
(except in accordance with its terms) or become or be declared ineffective or
inoperative or shall in any way be challenged and thereby deprive or deny the
Banks and the Agent the intended benefits thereof or they shall thereby cease
substantially to have the rights, titles, interests, remedies, powers or
privileges intended to be created thereby; or
(k) A notice of lien or assessment in excess of $500,000
is filed of record with respect to all or any part of the Borrowers' assets
having a value of at least that amount by the United States, or any department,
agency or instrumentality thereof, or by any state, county, municipal, or other
governmental agency, including, without limitation, the PBGC,
60
becomes payable and the same is not paid, vacated, bonded or stayed pending
appeal within thirty (30) days after the same becomes payable; or
(l) The Parent Company on a consolidated basis ceases to
be Solvent; or
(m) A Material Adverse Effect shall have occurred and be
continuing; or
(n) Except as otherwise permitted in this Agreement, any
of the Borrowers ceases to conduct its business as contemplated or any such
Borrower is enjoined, restrained or in any way prevented by court order from
conducting all or any material part of its business and such injunction,
restraint or other preventive order is not dismissed within thirty (60) days
after the entry thereof.
7.2 Remedies. (a) If an Event of Default specified under
subsections 7.1 (a) through (f) or (h) through (n) shall occur and be
continuing, the Banks shall be under no further obligation to make Loans
hereunder and no Issuing Bank shall be under any further obligation to issue
Letters of Credit hereunder, and the Agent upon the request of the Required
Banks shall (i) by written notice to the Borrowers, terminate the Revolving
Credit Commitment and/or declare the unpaid principal amount of the Notes then
outstanding and all interest accrued thereon, any unpaid fees and all other Debt
of the Borrowers to the Banks hereunder and thereunder to be forthwith due and
payable, and the same shall thereupon become and be immediately due and payable
to the Agent for the benefit of each Bank without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived, and
(ii) require the Borrowers to, and the Borrowers shall thereupon, deposit in a
non-interest bearing account with the Agent, as cash collateral for its
obligations under the Loan Documents, an amount equal to the maximum amount
currently or at any time thereafter available to be drawn on all outstanding
Letters of Credit, and the Borrowers hereby pledge to the Agent and the Banks,
and grant to the Agent and the Banks a security interest in, all such cash as
security for such obligations.
(b) If an Event of Default specified under subsections
7.1(g) hereof shall occur, the Revolving Credit Commitment shall immediately
terminate and the Banks shall be under no further obligations to make Loans
hereunder and no Issuing Bank shall be under any further obligation to issue
Letters of Credit hereunder, and the unpaid principal amount of the Notes then
outstanding and all interest accrued thereon, any unpaid fees and all other
obligations of the Borrowers to the Banks hereunder and thereunder shall be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived.
(c) If an Event of Default shall occur and be continuing,
any Bank to whom any obligation is owed by the Borrowers hereunder or under any
other Loan Document or any participant of such Bank which has agreed in writing
to be bound by the provisions of Section 9.6 hereof and any branch, subsidiary
or Affiliate of such Bank or Participant shall have
61
the right, in addition to all other rights and remedies available to it, without
notice to the Borrowers, to set-off against and apply to the then unpaid balance
of all the Loans and all other obligations of the Borrowers hereunder or under
any other Loan Document any debt owing to, and any other funds held in any
manner for the account of, any of the Borrowers by such Bank or participant or
by such branch, Subsidiary or Affiliate, including, without limitation, all
funds in all deposit accounts (whether time or demand, general or special,
provisionally credited or finally credited, or otherwise) now or hereafter
maintained by any of the Borrowers for its own account (but not including funds
held in custodian or trust accounts or other accounts established solely for the
benefit of parties other than the Borrowers) with such Bank or participant or
such branch, Subsidiary or Affiliate. Such right shall exist whether or not any
Bank or the Agent shall have made any demand under this Agreement or any other
Loan Document, whether or not such debt owing to or funds held for the account
of any Borrower is or are matured or unmatured and regardless of the existence
or adequacy of any collateral, guaranty or any other security, right or remedy
available to any Bank or the Agent.
(d) Notwithstanding any provision herein to the contrary
or in the other Loan Documents, any proceeds received by the Agent from any
payment made by the Borrowers or any of them under this Agreement or the other
Loan Documents after the Revolving Credit Commitment has been terminated, or
received by the Agent from the foreclosure, sale, lease, collection upon,
realization of or other disposition of any collateral which may have been
provided to the Agent or an Issuing Bank for the obligations of one or more of
the Borrowers hereunder after the Revolving Credit Commitment has been
terminated (including without limitation insurance proceeds), shall be applied
by the Agent as follows, unless otherwise agreed by all the Banks:
(i) first, to reimburse the Agent for out-of-pocket
costs, expenses and disbursements, including without limitation reasonable
attorneys' fees and legal expenses, incurred by the Agent in connection with
collection of any obligations of the Borrowers under any of the Loan Documents;
(ii) second, to accrued and unpaid interest on the
Loans and the obligations of the Borrower under the Interest Rate Protection
Agreements to the extent provided by one or more Banks (ratably according to
their respective amounts then outstanding);
(iii) third, (A) to the principal amount of the Loans
(including any Loans made to reimburse any draws under Letters of Credit) then
outstanding, (B) to the principal or similar amount then due under the Interest
Rate Protection Agreements to the extent provided by one or more Banks, and (C)
by deposit in a cash collateral account maintained by the Agent, to satisfy the
L/C Coverage Requirement with respect to all outstanding Letters of Credit
(ratably according to the respective amounts then outstanding);
(iv) fourth, to fees payable under this Agreement, any
Interest Rate Protection Agreements (to the extent provided by one or more
Banks) or any of the other Loan Documents (ratably according to the respective
amounts then outstanding);
62
(v) fifth, to the repayment of all other indebtedness
then due and unpaid of the Borrowers to the Banks incurred under this Agreement,
any Interest Rate Protection Agreements (to the extent provided by one or more
Banks) or any of the other Loan Documents, whether of principal, interest, fees,
expenses or otherwise (ratably according to the respective amounts then
outstanding); and
(vi) the balance, if any, as required by law.
(e) Each Bank agrees that (i) if at any time it shall
receive the proceeds of any collateral or any proceeds thereof or (ii) if after
the Revolving Credit Commitment has been terminated it shall receive any payment
on account of the Loans or any other amounts owing hereunder, under the other
Loan Documents, or under an Interest Rate Protection Agreement (in either case
other than through application by the Agent in accordance with subsection
7.2(d)), it shall promptly turn the same over to the Agent for application in
accordance with the terms of subsection 7.2(d).
(f) In addition to the other rights and remedies contained
in this Agreement or in the other Loan Documents, the Loans shall, at the
Required Banks' option, bear the interest rates provided in Section 2.8 hereof.
(g) In addition to all of the rights and remedies
contained in this Agreement or in any of the other Loan Documents, the Agent
shall have all of the rights and remedies under applicable Law, all of which
rights and remedies shall be cumulative and non-exclusive, to the extent
permitted by Law. The Agent may, and upon the request of the Required Banks
shall, exercise all post-default rights granted to them and the Banks under the
Loan Documents or applicable Law.
SECTION 8. THE AGENT
8.1 Appointment. Each Bank hereby irrevocably designates and
appoints PNC as the Agent of such Bank under this Agreement. Each such Bank
irrevocably authorizes the Agent, as the agent for such Bank to take such action
on its behalf under the provisions of this Agreement and to exercise such powers
and perform such duties as are expressly delegated to the Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Agent. The Agent agrees to act as the Agent on behalf of the Banks to the extent
provided in this Agreement.
8.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement by or through agents or attorneys-in-fact and shall
be entitled to engage and pay for
63
the advice and services of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible to the Banks for the negligence or
misconduct of any agents or attorneys in-fact selected by it with reasonable
care.
8.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable to any of the Banks for any action lawfully taken or omitted to be
taken by them or such Person under or in connection with this Agreement (except
for their or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Borrowers or any officer thereof
contained in this Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, the Notes or the
other Loan Documents or for any failure of the Borrowers to perform their
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or the
other Loan Documents, or to inspect the properties, books or records of the
Borrowers.
8.4 Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrowers), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Agreement unless it shall first receive such
advice or concurrence of the Required Banks as they deem appropriate or it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement, the
Notes and the other Loan Documents in accordance with a request of the Required
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks and all future holders of the Notes.
8.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless it has received notice from a Bank or the Borrowers referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give notice thereof to the Banks. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; provided that unless and until the
Agent shall have received such directions,
64
the 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 in the best interests of the Banks.
8.6 Non-Reliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrowers, shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Agent or any other Bank, 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
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers. Except for notices, reports and other documents expressly required to
be furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrowers which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Banks agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrowers and without
limiting the obligation of the Borrowers to do so), ratably according to their
respective Commitment Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement, the other Loan Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this Section 8.7 shall survive the payment of the Notes and all
other amounts payable hereunder.
8.8 Agent in its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrowers as though it was not the Agent hereunder.
With respect to its Loans made or renewed by it and
65
any Note issued to it, the Agent shall have the same rights and powers under
this Agreement as any Bank and may exercise the same as though it were not the
Agent, and the terms "Bank" and "Banks" shall include the Agent in its
individual capacity.
8.9 Successor Agent. The Agent may resign as Agent upon sixty
(60) days' notice to the Banks and the Borrowers. If such Agent shall resign as
Agent under this Agreement, then the Required Banks shall appoint from among the
Banks a successor agent for the Banks, which appointment shall be subject to the
approval of the Borrowers (which approval shall not be unreasonably withheld),
whereupon such successor agent shall succeed to the rights, powers and duties of
an Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement or any holders of the
Notes. After any retiring Agent's resignation as Agent, the provisions of this
Section 8.9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
8.10 Beneficiaries. Except as expressly provided herein, the
provisions of this Section 8 are solely for the benefit of the Agent and the
Banks, and the Borrowers shall not have any rights to rely on or enforce any of
the provisions hereof. In performing its functions and duties under this
Agreement the Agent shall act solely as agent of the Banks and does not assume
and shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for the Borrowers.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement, any Note
or any other Loan Document, nor any terms hereof of thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. With the written consent of the Required Banks, the Agent and the
Borrowers may, from time to time, enter into written amendments, supplements or
modifications hereto and to the Notes and the other Loan Documents for the
purpose of adding any provisions to this Agreement or the Notes or the other
Loan Documents or changing in any manner the rights of the Banks or of the
Borrowers hereunder or thereunder or waiving, on such terms and conditions as
the Agent may specify in such instrument, any of the requirements of this
Agreement or the Notes or the other Loan Documents or any Default or Event of
Default and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall directly or indirectly (a) reduce
the amount or extend the maturity of any Note or any installment thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
fee payable to any Bank hereunder, or change the duration or amount of any
Bank's Commitments, in each case without the consent of the Bank affected
thereby or (b) amend, modify or waive any provision of this Section 9.1 or
reduce the percentages specified in the definition of Required Banks or consent
to the assignment or transfer by the Borrowers of any of their rights and
obligations under this Agreement, the Notes and the other Loan Documents, or
release any security interest in or lien on
66
any of the collateral securing, or release any guaranty of, any of the
obligations under the Loan Documents, except as otherwise permitted in the Loan
Documents, in each case without the written consent of all the Banks, or (c)
amend, modify or waive any provision of Section 8 without the written consent of
the then Agent, or (d) amend, modify or waive any provision of Section 2.5
without the written consent of any Issuing Bank affected thereby. Any such
waiver and any such amendment, supplement or modification shall apply equally to
each of the Banks and shall be binding upon the Borrowers, the Banks, the Agent
and all future holders of the Notes. In the case of any waiver, the Borrowers,
the Banks and the Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
9.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three days after being
deposited in the mail, postage prepaid, or, in the case of facsimile notice,
when sent during normal business hours with electronic confirmation or otherwise
when received, addressed as follows in the case of the Borrowers, and the Agent,
and as set forth in Schedule I in the case of the other parties hereto, or to
such other address as may be hereafter notified by the respective parties hereto
and any future holders of the Notes:
The Borrowers: c/o CECO Group, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
67
and CECO Environmental, Corp.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxx M5G 1 X3
Attention: Xxxxxxx XxXxxxxx
Telecopy: (000) 000-0000
With a copy to: Sugar, Friedberg & Felsenthal
00 Xxxxx XxXxxxx Xxxxxx, #0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(provided that failure to send a
copy of any notice to said counsel
shall in no way affect, limit or
invalidate any notice sent to the
Borrowers or the exercise of any of
the Banks' or the Agent's rights or
remedies pursuant to a notice sent
to the Borrowers.)
The Agent: PNC Bank, National Association
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telecopy: (000) 000-0000
and
PNC Bank, National Association
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxx
Telecopy: (000) 000-0000
With a copy to: Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
provided that any notice, request or demand to or upon the Agent or the Banks
pursuant to Sections 2.1, 2.9 or 2.10 shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy,
68
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement, the Notes and the other Loan
Documents.
9.5 Payment of Expenses and Taxes. The Borrowers agree (a) to
pay or reimburse the Agent for all of its out-of-pocket costs and expenses
incurred in connection with any amendment, supplement or modification to this
Agreement, the Notes, the other Loan Documents, the Letters of Credit and any
other documents prepared in connection therewith, including, without limitation,
the reasonable fees and disbursements of counsel to the Agent (which counsel may
or may not include employees of the Agent), (b) to pay or reimburse each Bank
and the Agent for all of their costs and expenses incurred in connection with
the enforcement or preservation of any rights under this Agreement, the other
Loan Documents, the Letters of Credit and any such other documents, including,
without limitation, reasonable fees and disbursements of counsel to the Agent
(which counsel may or may not include employees of the Agent) and to the several
Banks, and (c) to pay, indemnify, and hold each Bank and the Agent harmless
from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes, if any (other than Taxes expressly excluded from the definition
of Taxes in Section 2.13 and Taxes for which the Borrowers have no liability
under subsection 2.13(c)) which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the Notes, the
other Loan Documents, and any such other documents, and (d) to pay, indemnify,
and hold each Bank and the Agent harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, and, incident to a Default or Event of
Default, the performance and administration, of this Agreement, the Notes, the
other Loan Documents, the Letters of Credit and any such other documents or the
transactions contemplated hereby or thereby or any action taken or omitted under
or in connection with any of the foregoing (all the foregoing, collectively, the
"indemnified liabilities"), provided, that the Borrowers shall have no
obligation hereunder to the Agent or any Bank with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of the Agent
or any such Bank. The Borrowers shall be given notice of any claim for
indemnified liabilities and shall be afforded a reasonable opportunity to
participate in the defense, compromise or settlement thereof. The agreements in
this subsection shall survive repayment of the Notes and all other amounts
payable hereunder.
9.6 Successors and Assigns. (a) Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns
69
of such party, and all covenants, promises and agreements by or on behalf of the
Borrowers, the Agent or the Banks that are contained in this Agreement shall
bind and inure to the benefit of their respective successors and assigns. The
Borrowers may not assign or transfer any of their rights or obligations under
this Agreement or the other Loan Documents without the prior written consent of
each Bank.
(b) Each Bank may, in accordance with applicable law,
assign all or a portion of its interests, rights and obligations under this
Agreement and the other Loan Documents (including all or a portion of its
Commitments and the Loans at the time owing to it and the Notes held by it);
provided, however, that (i) each such assignment shall be to a Bank or Affiliate
thereof, or, with the consent of the Agent and, prior to the occurrence of an
Event of Default, of the Borrowers (which consent shall not be unreasonably
withheld or delayed) to one or more banks or other financial institutions, (ii)
so long as the Revolving Credit Commitment is in effect, the amount of each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Agent) shall not be less than $5,000,000,
and (iii) the parties to each such assignment shall execute and deliver to the
Agent an Assignment and Acceptance, together with the Note or Notes subject to
such assignment and a processing and recordation fee of $3,500.00 (except in the
case of an assignment by any Bank to one of its Affiliates). Upon acceptance and
recording pursuant to paragraph (d) of this Section 9.6, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Bank under this Agreement and (B) the assigning Bank thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, 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 Bank's rights
and obligations under this Agreement, such Bank shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.12, 2.13, 2.14
and 9.5 (to the extent that such Bank's entitlement to such benefits arose out
of such Bank's position as a Bank prior to the applicable assignment), as well
as to any Commitment Fees accrued for its account and not yet paid).
Notwithstanding any provision of this subsection 9.6, after the Revolving Credit
Commitment has been terminated, any Bank may assign all or any portion of its
interests, rights and obligations under this Agreement and the other Loan
Documents to any Person (whether or not an entity described in clause (i)
above); provided, however, that any assignment of a Bank's obligations with
respect to Letters of Credit may not be so assigned without the consent of the
Issuing Bank, such consent not to be unreasonably withheld.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Bank thereunder and the assignee thereunder shall be
deemed to confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Bank warrants that it is the legal and beneficial
owner of the interest being assigned thereby, free and clear of any adverse
claim, and that its Commitments and the outstanding balances of its Loans, in
each case without giving effect to assignments thereof which have not become
effective, are as set forth in such Assignment and Acceptance, (ii) except as
set forth in (i) above, such assigning Bank makes
70
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Loan Documents, or any other instrument or document furnished pursuant hereto or
thereto, or the financial condition of the Borrowers or the performance or
observance by the Borrowers of any of their obligations under this Agreement or
any other instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently and without reliance upon the Agent, such assigning Bank or any
other Bank 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; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement are required to be
performed by it as a Bank.
(d) The Agent shall maintain at its offices in
Pennsylvania a copy of each Assignment and Acceptance and the names and
addresses of the Banks, and the Commitments of, and principal amount of the
Loans owing to, each Bank pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
error and the Borrowers, the Agent and the Banks may treat each person whose
name is recorded in the Register pursuant to the terms hereof as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrowers and any Bank, at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Bank and an assignee together with the Note
or Notes subject to such assignment, the processing and recordation fee referred
to in paragraph (b) above, the Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Banks. Within five Business Days after
receipt of notice, the Borrowers, at their own expense, shall execute and
deliver to the Agent, in exchange for each surrendered original Note, (x) a new
Note to the order of such assignee in an amount equal to the portion of the
applicable Commitments assumed by it pursuant to such Assignment and Acceptance
and, (y) if the assigning Bank has retained a Commitment, a new Note to the
order of such assigning Bank in a principal amount equal to the applicable
Commitments retained by it. Such new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Notes; such
new Notes shall be dated the date of the surrendered Notes which they replace
and shall otherwise be in substantially the form
71
of Exhibit X-0, X-0, X-0 or B-4 hereto, as applicable. Canceled Notes shall be
returned to the Borrowers.
(f) Each Bank may, without the consent of the Borrowers or
the Agent, sell participations to one or more banks or other entities (each a
"Participant") in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments and the Loans owing to
it and the Notes held by it); provided, however, that (i) such Bank's
obligations under this Agreement shall remain unchanged, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Bank shall remain the holder of any such Note for
all purposes under this Agreement, (iv) the Borrowers, the Agent and the other
Banks shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement, (v) in any
proceeding under the Bankruptcy Code such Bank shall be, to the extent permitted
by law, the sole representative with respect to the obligations held in the name
of such Bank whether for its own account or for the account of any Participant
and (vi) such Bank shall retain the sole right to enforce the obligations of the
Borrowers relating to the Loans and to approve any amendment, modification or
waiver of any provision of this Agreement or the Note or Notes held by such Bank
other than any such amendment, modification or waiver with respect to any Loan
or Commitment in which such Participant has an interest and which is described
in subsection 9.1(a) hereof.
(g) If amounts outstanding under this Agreement and the
Notes are due or unpaid, or shall have been declared or shall have become due
and payable upon the occurrence of an Event of Default, each Participant shall
be deemed to have the right of set-off in respect of its participating interest
in amounts owing under this Agreement and any Note to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement or any Note, provided that in purchasing such participation such
Participant shall be deemed to have agreed to share with the Banks the proceeds
thereof as provided in Section 9.8. The Borrowers also agree that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14, 2.15 and
9.5 with respect to its participation in the Commitments and the Loans
outstanding from time to time; provided, that no Participant shall be entitled
to receive any greater amount pursuant to such Sections than the Bank selling
the participation would have been entitled to receive in respect of the amount
of the participation transferred by such Bank to such Participant had no such
transfer occurred.
(h) If any Participant is organized under the laws of any
jurisdiction other than the United States or any state thereof, the Bank selling
the participation, concurrently with the sale of a participating interest to
such Participant, shall cause such Participant (i) to represent to the Bank
selling the participation (for the benefit of such Bank, the other Banks, the
Agent and the Borrowers) that under applicable law and treaties no taxes will be
required to be withheld by the Agent, the Borrowers or the Bank selling the
participation with respect to any payments to be made to such Participant in
respect of its participation in the Loans and (ii) to agree (for the benefit of
such Bank, the other Banks, the Agent and Borrowers) that it will deliver the
tax forms and other documents required to be delivered pursuant to Section 2.13
and comply
72
from time to time with all applicable U.S. laws and regulations with respect to
withholding tax exemptions.
(i) Any Bank may at any time assign all or any portion of
its rights under this Agreement and the Notes issued to it to a Federal Reserve
Bank; provided that no such assignment shall release a Bank from any of its
obligations hereunder.
9.7 Confidentiality. The Banks agree that they will maintain
all information and financial statements provided to them or otherwise obtained
by them with respect to the Borrowers and their Subsidiaries confidential and
that they will not disclose the same or use it for any purposes; provided that
nothing herein shall prevent any Bank from disclosing any such information (a)
to the Agent or any other Bank, (b) to any prospective assignee or participant
in connection with any assignment or participation of Loans permitted by this
Agreement, (c) to its employees, directors, agents, attorneys, accountants and
other professional advisers, provided that any such person is advised by such
Bank that such information is subject to the confidentiality limitations of this
Section, (d) upon the request or demand of any Governmental Authority having
jurisdiction over such Bank, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, provided that Borrowers have (unless prohibited by the terms
of any such order or requirement) been advised at least ten (10) days (or if
such is not possible or practicable, such lesser number of days as is possible
or practicable under the circumstances) prior to such disclosure of the
existence of such order or requirement, (f) which has been publicly disclosed
other than in breach of this Agreement, or (g) in connection with the exercise
of any remedy hereunder or under the Notes.
9.8 Adjustments; Set-off. (a) If any Bank (a "benefitted
Bank") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in subsection 7(g), or otherwise), in a greater
proportion than any such payment to or collateral received by any other Bank, if
any, in respect of such other Bank's Loans, or interest thereon, being paid in
respect of Loans being repaid simultaneously therewith or Loans required hereby
to be paid proportionately such benefitted Bank shall purchase for cash from the
other Banks such portion of each such other Bank's Loan, or shall provide such
other Banks with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Bank to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Banks;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Bank, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrowers agree that each Bank so purchasing
a portion of another Bank's Loan may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion as fully as
if such Bank were the direct holder of such portion.
73
(b) In addition to any rights and remedies of the Banks
provided by law, upon the occurrence of an Event of Default, each Bank shall
have the right, without prior notice to the Borrowers, any such notice being
expressly waived by the Borrowers to the extent permitted by applicable law,
upon any amount becoming due and payable by the Borrowers hereunder or under the
Notes (whether at the stated maturity, by acceleration or otherwise) to set-off
and appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Bank to or for the credit or the account of the Borrowers. Each
Bank agrees promptly to notify the Borrowers and the Agent after any such
set-off and application made by such Bank, that the failure to give such notice
shall not affect the validity of such set-off and application.
9.9 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrowers and each of the Banks.
9.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.11 Integration. This Agreement represents the agreement of
the Borrowers, the Agent and the Banks with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Agent or any Bank relative to subject matter hereof not expressly set
forth or referred to herein or in the Notes or the other Loan Documents. To the
extent that any of the terms of the Credit Agreement and any other Loan Document
are inconsistent, the terms of the Credit Agreement shall control.
9.12 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS HAVE BEEN EXECUTED IN THE COMMONWEALTH OF PENNSYLVANIA AND SAID
DOCUMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT, THE
NOTES AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF PENNSYLVANIA.
9.13 Submission To Jurisdiction; Waivers. Each of the
Borrowers hereby irrevocably and unconditionally:
74
(a) submits for itself and its property in any legal
action or proceeding relating to this Agreement, the Notes or the other Loan
Documents, or for recognition and enforcement of any judgement in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the
Commonwealth of Pennsylvania, the courts of the United States of America for the
Eastern District of Pennsylvania, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such
Borrower at the address set forth in Section 9.2 for the Borrowers or at such
other address of which the Agent shall have been notified pursuant thereto; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other jurisdiction.
9.14 Acknowledgments. Each of the Borrowers hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement, the Notes and the other Loan
Documents;
(b) neither the Agent nor any Bank has any fiduciary
relationship to such Borrower, and the relationship between the Agent and the
Banks, on one hand, and such Borrower, on the other hand, is solely that of
debtor and creditor; and
(c) no joint venture exists among the Banks or among the
Borrowers and the Banks.
9.15 WAIVERS OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR THE OTHER
LOAN DOCUMENTS AND FOR ANY COUNTERCLAIM THEREIN.
9.16 Borrowers' Obligations. (a) All obligations of the
Borrowers hereunder and under the other Loan Documents are joint and several.
(b) The Borrowers are interdependent for their
operational and financial needs, and they and the Banks intend that each
Borrower be jointly and severally liable for each
75
monetary obligation, warranty and covenant obligation arising under this
Agreement. The delivery of funds to any Borrower under this Agreement shall
constitute valuable consideration and reasonably equivalent value to all
Borrowers for the purpose of binding them and their assets on a joint and
several basis for the obligations of the Borrowers hereunder. The Agent may
enforce this Agreement against any Borrower without first making demand upon or
instituting collection proceedings against any other Borrower.
(c) The unconditional liability of each Borrower for all
of the obligations of the Borrowers hereunder shall not be impaired by any event
whatsoever, including, but not limited to, the merger, consolidation,
dissolution, cessation of business or liquidation of any Borrower; the financial
decline or bankruptcy of any Borrower; the failure of any other party to
guarantee the obligations of the Borrowers hereunder or to provide collateral
therefor; the Banks' compromise or settlement with or without release of any
Borrower; the Agent's release of any collateral for the obligations of the
Borrowers hereunder, with or without notice to the Borrowers; the Agent's or
Banks' failure to file suit against any Borrower (regardless of whether such
Borrower is becoming insolvent, is believed to be about to leave the state or
jurisdiction or any other circumstance); the Agent's or Banks' failure to give
any Borrower notice of default; the unenforceability of the obligations of the
Borrowers hereunder against any Borrower due to bankruptcy discharge,
counterclaim or for any other reason; the Agent's or Banks' acceleration of the
obligations of the Borrowers hereunder at any time; the extension, modification
or renewal of the obligations of the Borrowers hereunder or any Loan Document;
the Agent's or Banks' failure to undertake or exercise diligence in collection
efforts against any party or property; the termination of any relationship of
any Borrower with any other Borrower, including, but not limited to, any
relationship of commerce or ownership; any Borrower's change of name or use of
any name other than the name used to identify such Borrower in this Agreement;
or any Borrower's use of the credit extended for any purpose whatsoever.
(d) The Borrowers' respective rights of contribution,
reimbursement, subrogation and any other rights among themselves are not
impaired by this Agreement, except that each Borrower agrees not to seek payment
directly or indirectly from another Borrower through a claim of indemnity,
contribution, or otherwise with respect to the obligations of the Borrowers
hereunder, until such obligations have been repaid in full, all Letters of
Credit shall have been terminated or expired and the Commitments have
terminated.
(e) In any action or proceeding involving any state
corporate law or any state or Federal bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations
hereunder of any Borrower would otherwise be held or be determined to be void,
invalid or unenforceable on account of the amount of the obligations of the
Borrowers hereunder, then, notwithstanding any other provision hereof to the
contrary, the amount of such liability shall, without any further action by such
Borrower, any Bank, the Agent or any other Person, be automatically limited and
reduced to the highest amount which is valid and enforceable and not
subordinated to the claims of other creditors determined in such action or
proceeding.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
CECO GROUP, INC.
By: ___________________________
Name:
Title:
CECO FILTERS, INC.
By: ____________________________
Name:
Title:
AIR PURATOR CORPORATION
By: _____________________________
Name:
Title:
NEW XXXXX CO., INC.
By: ______________________________
Name:
Title:
77
THE XXXX & XXXX MANUFACTURING COMPANY
By: _______________________________
Name:
Title:
KBD/TECHNIC, INC.
By: _______________________________
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as Agent and as a Bank
By:_____________________________
Title: Vice President
FIFTH THIRD BANK,
as a Bank
By:_____________________________
Title:
BANK ONE, NA,
as a Bank
By:_____________________________
Title:
78
Annex I
Applicable Margins and Fees
Initial Applicable Margin
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Loans Applicable Margin for Applicable Margin for Base
Eurodollar Loans Rate Loans
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Revolving Loans 3.00% 1.50%
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Term Loan A 3.00% 1.50%
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Term Loan B 3.50% 2.00%
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Term Loan C 3.00% 1.50%
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Ongoing Margins
R = Revolving Credit Loans
A = Term A Loans
B = Term B Loans
79
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Compliance Levels
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Basis for I II III IV
Determination
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Leverage Ratio < 2.25 to 1 > 2.25 to 1 but > 2.75 to 1 but > 3.25 to 1
- -
< 2.75 to 1 < 3.25 to 1
- -
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Applicable Margin R, A - 0.75% R, A - 1.00% R, A - 1.25% R, A - 1.50%
for Base Rate Loans B - 1.50% B - 1.50% B - 1.75% B - 2.00%
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Applicable Margin R, A - 2.25% R, A - 2.50% R, A - 2.75% R, A - 3.00%
for Eurodollar Loans B - 3.00% B - 3.00% B - 3.25% B - 3.50%
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Applicable 0.375% 0.40% 0.45% 0.50%
Commitment Fee
Percentage
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80
Schedule I
Bank and Commitment Information
Commitments
Bank Revolving Credit Term Loan A Term Loan B Term Loan C
---- ---------------- ---------------- ----------- -----------
PNC Bank, $3,333,334.00 $4,833,334.00 $2,833,334.00 $666,667.00
National Association
Fifth Third Bank $3,333,333.00 $4,833,333.00 $2,833,333.00 $666,666.00
Bank One, NA $3,333,333.00 $4,833,333.00 $2,833,333.00 $666,666.00
81