Exhibit 10.26
BORROWERS: | ||||
A.M. CASTLE & CO. | ||||
TOTAL PLASTICS, INC. | ||||
HY-ALLOY STEELS COMPANY | ||||
KEYSTONE TUBE COMPANY, LLC | ||||
KEYSTONE SERVICE, INC. | ||||
Each By: | ||||
Name: | ||||
Title: | ||||
GUARANTORS: | ||||
A.M. CASTLE & CO. (CANADA) INC. | ||||
By: | ||||
Name: | ||||
Title: | ||||
CASTLE METALS DE MEXICO, S.A. DE C.V. | ||||
CASTLE METALS DE MEXICALI, S.A. DE C.V. | ||||
Each By: | ||||
Name: | ||||
Title: |
AGENT AND LENDERS: | |||
PNC BANK, NATIONAL ASSOCIATION, | |||
as Agent and the sole Lender | |||
By: | |||
Name: Dennis W. Cloud | |||
Title: Vice President |
A. | PNC Bank, National Association (“PNC” or “Lender”), |
B. | A.M. Castle & Co. (“AMC”) |
A. | US Counsel to Agent: |
B. | US Counsel to Borrowers and Guarantors: |
A. | Loan Documents |
1. | Amendment No. 2 to Revolving Credit and Security Agreement |
B. | 2017 Indenture Documents |
1. | Amendment No. 2 to 2017 Intercreditor Agreement |
2. | Supplemental Indenture and Amendment No. 2 to 2017 Indenture |
3. | General Collateral Termination Letter |
C. | Junior Lien Documents |
1. | Junior Lien Indenture |
2. | Pledge and Security Agreement |
3. | Intercreditor Agreement |
D. | Other Documents |
1. | Resolutions of Borrowers and US Guarantors |
HEREAFTER A PARTY HERETO
AND THE OTHER BORROWERS (AS DEFINED HEREIN)
I. | DEFINITIONS | 1 | |
1.1 | Accounting Terms | 1 | |
1.2 | General Terms | 2 | |
1.3 | Uniform Commercial Code Terms | 52 | |
1.4 | Certain Matters of Construction | 53 | |
1.5 | Currency Matters | 54 | |
1.6 | Québec Matters | 55 | |
1.7 | LIBOR Notification | 56 | |
II. | ADVANCES, PAYMENTS | 56 | |
2.1 | Revolving Advances | 56 | |
2.2 | Procedure for Borrowing Revolving Advances | 58 | |
2.3 | Disbursement of Advance Proceeds | 60 | |
2.4 | Maximum Advances | 60 | |
2.5 | Repayment of Advances | 61 | |
2.6 | Repayment of Excess Advances | 61 | |
2.7 | Statement of Account | 62 | |
2.8 | Letters of Credit and Acceptances | 62 | |
2.9 | Issuance of Letters of Credit; Creation of Acceptances | 63 | |
2.10 | Requirements For Issuance of Letters of Credit and Acceptances | 65 | |
2.11 | Disbursements, Reimbursement | 65 | |
2.12 | Repayment of Participation Advances | 67 | |
2.13 | Documentation | 67 | |
2.14 | Determination to Honor Drawing Request | 67 |
2.15 | Nature of Participation and Reimbursement Obligations | 68 | |
2.16 | Indemnity | 69 | |
2.17 | Liability for Acts and Omissions | 70 | |
2.18 | Additional Payments | 71 | |
2.19 | Manner of Borrowing and Payment | 71 | |
2.20 | Use of Proceeds | 73 | |
2.21 | Defaulting Lender | 73 | |
2.22 | Payment of Obligations | 76 | |
2.23 | Swing Loans | 77 | |
2.24 | Voluntary and Mandatory Prepayments | 78 | |
2.25 | Reserved | 79 | |
2.26 | Additional Borrowers | 79 | |
2.27 | Termination or Reduction of Commitments | 79 | |
III. | INTEREST AND FEES | 80 | |
3.1 | Interest | 80 | |
3.2 | Letter of Credit and Acceptance Fees | 81 | |
3.3 | Fees | 82 | |
3.4 | Field Examinations | 82 | |
3.5 | Inventory Appraisals | 83 | |
3.6 | Computation of Interest and Fees | 83 | |
3.7 | Maximum Charges | 83 | |
3.8 | Increased Costs | 84 | |
3.9 | Basis For Determining Interest Rate Inadequate or Unfair | 85 | |
3.10 | Capital Adequacy | 86 | |
3.11 | Gross Up for Taxes | 86 |
3.12 | Withholding Tax Exemption | 88 | |
3.13 | Replacement of Lenders | 89 | |
3.14 | Successor Eurodollar Rate | 89 | |
IV. | COLLATERAL; GENERAL TERMS | 92 | |
4.1 | Security Interest in the Collateral | 92 | |
4.2 | Perfection of Security Interest | 92 | |
4.3 | Disposition of Collateral | 93 | |
4.4 | Preservation of Collateral | 93 | |
4.5 | Ownership of Collateral | 94 | |
4.6 | Defense of Agent’s and Lenders’ Interests | 95 | |
4.7 | Books and Records | 95 | |
4.8 | Financial Disclosure | 95 | |
4.9 | Compliance with Laws | 96 | |
4.10 | Inspection of Premises | 96 | |
4.11 | Insurance | 96 | |
4.12 | Failure to Pay Insurance | 97 | |
4.13 | Appraisals | 97 | |
4.14 | Payment of Leasehold Obligations | 97 | |
4.15 | Receivables | 98 | |
4.16 | Inventory | 100 | |
4.17 | Maintenance of Equipment | 101 | |
4.18 | Exculpation of Liability | 101 | |
4.19 | Financing Statements | 101 | |
V. | REPRESENTATIONS AND WARRANTIES | 101 | |
5.1 | Organization Status | 101 |
5.2 | Power, Authority and Enforceability | 102 | |
5.3 | No Violation | 102 | |
5.4 | Approvals | 102 | |
5.5 | Financial Statements; Solvency | 102 | |
5.6 | Litigation | 103 | |
5.7 | True and Complete Disclosure | 104 | |
5.8 | Margin Regulations | 104 | |
5.9 | Tax Returns and Payments | 104 | |
5.10 | Compliance with ERISA | 104 | |
5.11 | Perfected Liens and Property Rights | 106 | |
5.12 | Properties | 106 | |
5.13 | Subsidiaries | 106 | |
5.14 | Compliance with Statutes, etc. | 107 | |
5.15 | Investment Company Act | 107 | |
5.16 | Environmental Matters | 107 | |
5.17 | Employment and Labor Relations | 108 | |
5.18 | Intellectual Property, Etc. | 108 | |
5.19 | Insurance | 108 | |
5.20 | Survival of Representations and Warranties | 108 | |
5.21 | Entity Names | 109 | |
5.22 | Swaps | 109 | |
5.23 | Junior Lien Debt | 109 | |
5.24 | Flood Insurance | 109 | |
5.25 | Confirmed Plan | 110 | |
5.26 | Commercial Tort Claims | 110 |
5.27 | Material Contracts | 110 | |
5.28 | Certificate of Beneficial Ownership/Controlling Party | 110 | |
VI. | AFFIRMATIVE COVENANTS | 110 | |
6.1 | Information Covenants | 110 | |
6.2 | Fixed Charge Coverage Ratio | 110 | |
6.3 | Reserved | 110 | |
6.4 | Existence | 110 | |
6.5 | Compliance with Statutes, etc. | 111 | |
6.6 | Compliance with Environmental Laws | 111 | |
6.7 | Business | 111 | |
6.8 | Payment of Taxes and Other Obligations | 111 | |
6.9 | Employee Benefits | 112 | |
6.10 | Additional Subsidiaries | 113 | |
6.11 | Further Assurances | 113 | |
6.12 | Unfinanced Capital Expenditures | 114 | |
6.13 | Payment of Fees | 114 | |
6.14 | Violations | 114 | |
6.15 | Standards of Financial Statements | 115 | |
6.16 | Assignment of Export Related Letters of Credit | 115 | |
6.17 | Trade Letters of Credit | 115 | |
6.18 | International Trade Compliance | 115 | |
6.19 | Keepwell | 115 | |
6.20 | Post-Closing Covenants | 116 | |
6.21 | Certificate of Beneficial Ownership/Controlling Party and Other Additional Information | 117 | |
6.22 | Advisor | 118 |
VII. | NEGATIVE COVENANTS | 118 | |
7.1 | Liens | 118 | |
7.2 | Consolidation, Merger or Sale of Assets, Etc. | 121 | |
7.3 | Restricted Payments | 123 | |
7.4 | Indebtedness | 124 | |
7.5 | Investments | 126 | |
7.6 | Transactions with Affiliates | 128 | |
7.7 | Modifications of Certain Agreements; Limitations on Voluntary Payments, etc. | 129 | |
7.8 | Limitation on Certain Restrictions on Subsidiaries | 129 | |
7.9 | Change in Nature of Business | 130 | |
7.10 | Fiscal Year and Accounting Changes | 130 | |
7.11 | Membership/Partnership Interests | 130 | |
7.12 | Other Agreements | 131 | |
7.13 | Real Estate Matters | 131 | |
VIII. | CONDITIONS PRECEDENT | 131 | |
8.1 | Conditions to Effectiveness of this Agreement | 131 | |
8.2 | Conditions to Each Advance | 135 | |
8.3 | Conditions to Addition of an Applicant Borrower | 136 | |
IX. | INFORMATION AS TO LOAN PARTIES | 138 | |
9.1 | Disclosure of Material Matters | 139 | |
9.2 | Certificates | 139 | |
9.3 | Environmental Reports | 139 | |
9.4 | Litigation | 140 | |
9.5 | Material Occurrences | 140 | |
9.6 | Government Receivables | 140 |
9.7 | Annual Financial Statements | 140 | |
9.8 | Quarterly Financial Statements | 141 | |
9.9 | Monthly Financial Statements | 141 | |
9.10 | Other Reports | 142 | |
9.11 | Additional Information | 142 | |
9.12 | Projected Operating Budget | 142 | |
9.13 | Variances From Operating Budget | 142 | |
9.14 | Notice of Suits, Adverse Events | 142 | |
9.15 | ERISA Notices and Requests | 143 | |
9.16 | Bank Statements | 143 | |
9.17 | Additional Documents | 143 | |
X. | EVENTS OF DEFAULT | 143 | |
10.1 | Payments | 143 | |
10.2 | Representations | 143 | |
10.3 | Covenants | 144 | |
10.4 | Default Under Other Agreements | 144 | |
10.5 | Bankruptcy, etc. | 144 | |
10.6 | ERISA | 145 | |
10.7 | Security Documents | 145 | |
10.8 | Guarantees | 146 | |
10.9 | Judgments | 146 | |
10.10 | Material Adverse Effect. Any Material Adverse Effect occurs; | 146 | |
10.11 | Lien Priority | 146 | |
10.12 | Invalidity of Loan Documents | 146 | |
10.13 | Breach of Guaranty or Pledge Agreement | 146 |
10.14 | Change of Control | 146 | |
XI. | LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT | 147 | |
11.1 | Rights and Remedies | 147 | |
11.2 | Agent’s Discretion | 148 | |
11.3 | Setoff | 148 | |
11.4 | Rights and Remedies not Exclusive | 148 | |
11.5 | Allocation of Payments | 149 | |
XII. | WAIVERS AND JUDICIAL PROCEEDINGS | 150 | |
12.1 | Waiver of Notice | 150 | |
12.2 | Delay | 150 | |
12.3 | Jury Waiver | 150 | |
XIII. | EFFECTIVE DATE AND TERMINATION | 151 | |
13.1 | Term | 151 | |
13.2 | Termination | 152 | |
XIV. | REGARDING AGENT | 153 | |
14.1 | Appointment | 153 | |
14.2 | Nature of Duties | 153 | |
14.3 | Lack of Reliance on Agent and Resignation | 154 | |
14.4 | Certain Rights of Agent | 155 | |
14.5 | Reliance | 155 | |
14.6 | Notice of Default | 155 | |
14.7 | Indemnification | 155 | |
14.8 | Agent in its Individual Capacity | 156 | |
14.9 | Delivery of Documents | 156 | |
14.10 | Borrowers’ Undertaking to Agent | 156 |
14.11 | No Reliance on Agent’s Customer Identification Program | 156 | |
14.12 | Other Agreements | 157 | |
14.13 | Collateral Matters | 157 | |
14.14 | Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information | 158 | |
14.15 | Several Obligations; No Liability | 160 | |
14.16 | Bank Product Providers | 160 | |
XV. | BORROWING AGENCY | 161 | |
15.1 | Borrowing Agency Provisions | 161 | |
15.2 | Waiver of Subrogation | 163 | |
XVI. | MISCELLANEOUS | 163 | |
16.1 | Governing Law | 163 | |
16.2 | Entire Understanding | 164 | |
16.3 | Successors and Assigns; Participations; New Lenders | 167 | |
16.4 | Application of Payments | 170 | |
16.5 | Indemnity | 170 | |
16.6 | Notice | 171 | |
16.7 | Survival | 173 | |
16.8 | Severability | 173 | |
16.9 | Expenses | 173 | |
16.10 | Injunctive Relief | 174 | |
16.11 | Consequential Damages | 174 | |
16.12 | Captions | 174 | |
16.13 | Counterparts; Facsimile Signatures | 174 | |
16.14 | Construction | 174 | |
16.15 | Confidentiality; Sharing Information | 175 |
16.16 | Publicity | 175 | |
16.17 | Certifications From Banks and Participants; US PATRIOT Act | 175 | |
16.18 | Canadian Anti-Money Laundering Legislation | 176 | |
16.19 | Anti-Terrorism Laws | 176 |
Annex | |
Annex A | Revolver Commitment Percentages |
Exhibits | |
Exhibit 1.2(a) | Borrowing Base Certificate |
Exhibit 1.2(c) | Compliance Certificate |
Exhibit 2.1(a) | Revolving Credit Note |
Exhibit 2.2(b) | Participation Agreement |
Exhibit 2.24(d) | Swing Note |
Exhibit 16.3 | Commitment Transfer Supplement |
Schedules | |
Schedule 1.1(b) | Mortgaged Properties |
Schedule 4.5 | Location of Equipment and Inventory |
Schedule 4.15(h) | Accounts |
Schedule 4.19 | Financing Statements |
Schedule 5.9 | Tax Identification Number |
Schedule 5.10 | ERISA |
Schedule 5.12 | Properties |
Schedule 5.13 | Subsidiaries |
Schedule 5.16 | Environmental Matters |
Schedule 5.19 | Insurance |
Schedule 5.21 | Corporate Names; Mergers |
Schedule 5.26 | Commercial Tort Claims |
Schedule 5.27 | Material Contracts |
Schedule 7.1 | Existing Liens |
Schedule 7.4(b) | Existing Indebtedness |
Schedule 7.5(c) | Existing Investments |
Schedule 7.6(f) | Existing Affiliate Transactions |
Schedule 7.8(c) | Existing Restrictive Agreements |
AND
SECURITY AGREEMENT
Tier | Average Daily Excess Availability | Applicable Eurodollar Rate Margin | Applicable Domestic Rate Margin |
I | greater than 66⅔% of the Maximum Revolving A Advance Amount | 2.00% | 1.00% |
Tier | Average Daily Excess Availability | Applicable Eurodollar Rate Margin | Applicable Domestic Rate Margin |
II | greater than 33⅓% of the Maximum Revolving A Advance Amount and less than or equal to the greater of 66⅔% of the Maximum Revolving A Advance Amount | 2.25% | 1.25% |
III | less than or equal to 33⅓% of the Maximum Revolving A Advance Amount | 2.50% | 1.50% |
Month Ending | Debt Payments | Unfinanced Capital Expenditures | Cash Income Taxes Paid |
January 31, 2017 | $250,000 | $83,000 | $0 |
February 28, 2017 | $228,000 | $428,000 | $0 |
March 31, 2017 | $264,000 | $585,000 | $0 |
April 30, 2017 | $254,000 | $315,000 | $10,000 |
May 31, 2017 | $271,000 | $293,000 | $55,000 |
June 30, 2017 | $272,000 | $560,000 | $0 |
July 31, 2017 | $271,000 | $340,000 | $0 |
“Foreign Benefit Event” shall mean, with respect to any Foreign Pension Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any Applicable Law, (b) the failure to make required contributions or payments, under any Applicable Law, on or before the due date for such contributions or payments, (c) the incurrence of any liability in excess of $500,000 by Castle or any Subsidiary under Applicable Law on account of the complete or partial termination of a Foreign Pension Plan or the complete or partial withdrawal of any participating employer therein, or (d) the occurrence of any transaction that is prohibited under any Applicable Law and that has resulted or could reasonably be expected to result in the incurrence of any liability by Castle or any of the Subsidiaries, or the imposition on Castle or any of the Subsidiaries of any fine, excise tax or penalty resulting from any noncompliance with any Applicable Law, in each case in excess of $500,000.
“Foreign Currency Hedge” shall mean any foreign exchange transaction, including spot and forward foreign currency purchases and sales, listed or over-the-counter options on foreign currencies, non-deliverable forwards and options, foreign currency swap agreements, currency exchange rate price hedging arrangements, and any other similar transaction providing for the purchase of one currency in exchange for the sale of another currency entered into by any Borrower, Guarantor and/or any of their respective Subsidiaries.
“Foreign Currency Hedge Liabilities” shall have the meaning assigned in the definition of Lender-Provided Foreign Currency Hedge.
“Foreign Pension Plan” shall mean any benefit plan that under Applicable Law other than the laws of the United States, Canada, or any political subdivision thereof, is required to be funded through a trust or other funding vehicle other than a trust or funding vehicle maintained exclusively by a Governmental Body.
“Foreign Subsidiary” of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States of America or any State or territory thereof or the District of Columbia.
“Formula Amount” shall have the meaning set forth in Section 2.1(a).
“GAAP” shall mean generally accepted accounting principles in the United States of America in effect from time to time and, as applicable to the Mexican Loan Parties, the NIFs. Notwithstanding anything to the contrary, any lease that is treated as an operating lease for purposes of GAAP as of December 14, 2018 shall not be treated as Indebtedness or as a Capitalized Lease Obligation and shall continue to be treated as an operating lease (and any future lease, if it were in effect on December 14, 2018, that would be treated as an operating lease for purposes of GAAP as of December 14, 2018 shall be treated as an operating lease), in each case for purposes of this Agreement or any documented related thereto, notwithstanding any actual or proposed change in GAAP after December 14, 2018.
“General Intangibles” shall mean and include as to each Loan Party all of such Loan Party’s general intangibles and “intangibles” (as defined in the PPSA), whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to such Loan Party to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).
“Governmental Acts” shall have the meaning set forth in Section 2.16.
“Governmental Body” shall mean any nation or government, any state, province, or other political subdivision thereof or any entity, authority, agency, division or department exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government.
“Gross Formula Amount” shall mean the Formula Amount (without giving effect to clause (iv) thereof).
“Guarantor” or “Guarantors” shall mean, singularly or collectively, as the context may require, all Persons who may hereafter guarantee payment or performance of the whole or any part of the Obligations and shall extend to all permitted successors and assigns of such Persons.
“Guaranty” shall mean any guaranty or guarantee of all or any part of the obligations of Borrowers executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders, in form and substance satisfactory to Agent, in each case together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof, and “Guarantees” means collectively, all such Guarantees.
“Hazardous Materials” shall mean (a) any petroleum products, derivatives or byproducts and all other hydrocarbons, coal ash, radon gas, lead, asbestos and asbestos-containing materials, toxic mold, urea formaldehyde foam insulation, polychlorinated biphenyls, infectious or medical wastes and chlorofluorocarbons and all other ozone-depleting substances, (b) any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material, or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics, (c) any substance, waste or material that is prohibited, limited or regulated by or pursuant to or which can form the basis for liability under any Environmental Law, and (d) Hazardous Wastes.
“Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA, RCRA, the Environmental Protection Act (Ontario) (the “EPA”), the Canadian Environmental Protection Act (“CEPA”) or applicable state or provincial law, and any other applicable Federal, state, and provincial laws now in force or hereafter enacted relating to hazardous waste disposal.
“Hedge Liabilities” shall mean collectively, the Foreign Currency Hedge Liabilities and the Interest Rate Hedge Liabilities.
“Hedging Agreement” shall mean any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement, including any interest or exchange rate exposure management agreement or arrangement in respect of Canadian dollars, U.S. dollars, or any other currency in which a Loan Party is doing business.
“Indebtedness” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services, including all earn-out obligations (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capitalized Lease Obligations of such Person, (i) net obligations of such Person under any Hedging Agreements, valued at the Agreement Value thereof, (j) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests of such Person or any other Person or any warrants, rights or options to acquire such equity interests, valued, in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (k) all obligations of such Person as an account party in respect of letters of credit and (l) all obligations of such Person in respect of banker’s acceptances. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner.
“Indemnified Taxes” shall mean all Taxes except Excluded Taxes.
“Insolvency Event” shall mean, with respect to any Person, including without limitation any Lender, such Person or such Person’s direct or indirect parent company (a) becomes the subject of a bankruptcy or insolvency proceeding (including any proceeding under Title 11 of the United States Code or other Debtor Relief Law), or regulatory restrictions, (b) has had a receiver, interim receiver, monitor, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it or has called a meeting of its creditors, (c) admits in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (d) with respect to a Lender, such Lender is unable to perform hereunder due to the application of Applicable Law, or (e) in the good faith determination of Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment of a type described in clauses (a) or (b), provided that an Insolvency Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by a Governmental Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“Intellectual Property” shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret or license or other right to use any of the foregoing.
“Intellectual Property Claim” shall mean the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that any Loan Party’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other property or asset is violative of any ownership of or right to use any Intellectual Property of such Person.
“Intercompany Debt” shall mean any Indebtedness, now existing or hereafter incurred, owed by any Loan Party or its Subsidiary to any other Loan Party or Subsidiary.
“Intercompany Loan” shall have the meaning assigned to such term in Section 7.5(h).
“Intercreditor Agreement” shall mean that certain Intercreditor and Subordination Agreement, dated as of the Second Amendment Effective Date, by and among Agent and Junior Lien Agent, as amended, supplemented, restated, or otherwise modified from time to time.
“Interest Period” shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b).
“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by any Loan Party or its Subsidiaries in order to provide protection to, or minimize the impact upon, such Loan Party and/or its Subsidiaries of increasing floating rates of interest applicable to Indebtedness.
“Interest Rate Hedge Liabilities” shall have the meaning assigned in the definition of Lender-Provided Interest Rate Hedge.
“Inventory” shall mean and include as to each Loan Party all of such Loan Party’s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Loan Party’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.
“Investment” shall mean, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or Indebtedness or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other Indebtedness or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. For purposes of compliance with Section 7.5, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment but giving effect to any returns or distributions of capital or repayment of principal actually received in cash by such Person with respect thereto, whether by disposition, return on capital, dividend or otherwise.
“Investment Property” shall mean and include as to each Loan Party, all of such Loan Party’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.
“IP Rights” shall have the meaning assigned to such term in Section 5.18.
“ISP98 Rules” shall have the meaning set forth in Section 2.9(b).
“Issuer” shall mean any Person who issues a Letter of Credit pursuant to the terms hereof and/or accepts a draft pursuant to the terms hereof.
“Joinder” shall mean a joinder by a Person as a Borrower or a Guarantor under this Agreement and the Other Documents in form and substance satisfactory to Agent in its sole and reasonable discretion.
“Junior Lien Agent” shall mean Wilmington Savings Fund Society, FSB, in its capacity as Trustee and Collateral Agent for the holders of the Junior Lien Debt.
“Junior Lien Debt” shall mean the obligations under the “Notes” as defined in the Junior Lien Indenture and any other Indebtedness incurred from time to time under the Junior Lien Documents to the extent such Indebtedness and any Liens securing such Indebtedness are incurred in accordance with the Intercreditor Agreement.
“Junior Lien Documents” shall mean the Junior Lien Indenture, the other “Notes Documents” as defined in the Junior Lien Indenture and the Intercreditor Agreement.
“Junior Lien Indenture” shall mean that certain Indenture dated as of the Second Amendment Effective Date, among Company, the guarantors party thereto, and Junior Lien Agent, as amended, supplemented, or otherwise modified from time to time.
“Lender” and “Lenders” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender. For the purpose of any provision of this Agreement or any Other Document which provides for the granting of a security interest or other Lien to the Agent for the benefit of Lenders as security for the Obligations, “Lenders” shall include any Affiliate of a Lender to which such Obligation (specifically including any Hedge Liabilities and any Cash Management Liabilities) is owed.
“Lender-Provided Foreign Currency Hedge” shall mean a Foreign Currency Hedge which is provided by any Lender and for which such Lender confirms to Agent in writing prior to the execution thereof that it: (a) is documented in a standard International Swap Dealers Association, Inc. Master Agreement or another reasonable and customary manner; (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner; and (c) is entered into for hedging (rather than speculative) purposes. The liabilities owing to the provider of any Lender-Provided Foreign Currency Hedge (the “Foreign Currency Hedge Liabilities”) by any Borrower or any Guarantor that is party to such Lender-Provided Foreign Currency Hedge shall, for purposes of this Agreement and all Other Documents be Obligations hereunder, and otherwise treated as Obligations for purposes of the Other Documents, except to the extent constituting Excluded Hedge Liabilities of such Person, but only so long as such provider (if not PNC or an Affiliate of PNC) has notified Agent in writing of such Lender-Provided Foreign Currency Hedge within ten (10) days of such agreement or arrangement.
“Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is provided by any Lender and with respect to which Agent confirms meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement or other similar agreement acceptable to Agent in its sole and reasonable discretion, (ii) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes. The liabilities of any Loan Party to the provider of any Lender-Provided Interest Rate Hedge (the “Interest Rate Hedge Liabilities”) shall be Obligations hereunder, guaranteed obligations under any Guaranty and otherwise treated as Obligations for purposes of each of the Other Documents. The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents. Notwithstanding anything to the contrary contained in the foregoing, the Hedge Liabilities shall not include any Excluded Hedge Liabilities.
“Letter of Credit Sublimit” shall mean Twenty Million Dollars ($20,000,000.00).
“Letter of Credit” and “Letters of Credit” shall have the meaning set forth in Section 2.8.
“LGTOC” shall mean the Mexican General Law of Negotiable Instruments and Credit Transactions (Ley General de Titulos y Operaciones de Crédito), including any regulations thereto or any other applicable Mexican federal or local statute pertaining to the granting, perfecting, priority or ranking of security interests, liens, hypothecs on personal property, as required, and any successor statutes, together with any regulations thereunder, in each case as in effect from time to time. References to sections of the LGTOC shall be construed to also refer to any successor sections.
“License Agreement” shall mean any agreement between any Loan Party and a Licensor pursuant to which such Loan Party is authorized to use any Intellectual Property in connection with the manufacturing, marketing, sale or other distribution of any Inventory of such Loan Party or otherwise in connection with such Loan Party’s business operations.
“Licensor” shall mean any Person from whom any Loan Party obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with such Loan Party’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with such Loan Party’s business operations.
“Licensor/Agent Agreement” shall mean an agreement between Agent and a Licensor, in form and substance satisfactory to Agent, by which Agent is given the unqualified right, vis-à-vis such Licensor, to enforce Agent’s Liens with respect to and to dispose of any Loan Party’s Inventory with the benefit of any Intellectual Property applicable thereto, irrespective of such Loan Party’s default under any License Agreement with such Licensor.
“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.
“Lien Waiver Agreement” shall mean an agreement reasonably satisfactory to Agent, which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to remove the Collateral from such premises or to use such premises to store or dispose of such Inventory on terms acceptable to such Person.
“Liquidity” shall mean the sum of (i) Unrestricted cash maintained in accounts located in the United States and Canada that are maintained with PNC or otherwise subject to Deposit Account Control Agreements in favor of Agent, plus (ii) up to $2,000,000 of Unrestricted cash maintained in accounts located in Mexico that are subject to a first priority perfected Lien in favor of Agent, plus (iii) Excess Availability.
“Loan Documents” shall mean this Agreement and each of the Other Documents.
“Loan Party” or “Loan Parties” shall mean, singularly or collectively, as the context may require, each Borrower and each Guarantor and shall extend to all permitted successors and assigns of each such Person.
“Margin Stock” shall have the meaning assigned to such term in Regulation U.
“Material Adverse Effect” shall mean any event, change or condition that, individually or in the aggregate, has had, or would reasonably be expected to have (a) a material and adverse effect on the business, assets, financial condition or results of operations of the Loan Parties, taken as a whole, (b) a material and adverse effect on the rights and remedies of the Agent and the Lenders under this Agreement or the Other Documents or (c) a material and adverse effect on the ability of any Borrower or Guarantor to perform its material obligations under this Agreement and the Other Documents, provided that the commencement and the pendency of the Cases shall not constitute a Material Adverse Effect.
“Material Contract” shall mean any contract, agreement, instrument, permit, lease or license, written or oral, of any Loan Party, which is material to any Loan Party’s business or which the failure to comply with could reasonably be expected to result in a Material Adverse Effect.
“Maximum Availability” shall mean the lesser of (i) the Gross Formula Amount or (ii) the Maximum Revolving A Advance Amount.
“Maximum Face Amount” shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.
“Maximum Revolving A Advance Amount” shall mean One Hundred Twenty Five Million Dollars and 00/100 ($125,000,000.00).
“Maximum Revolving Advance Amount” shall mean One Hundred Fifty Million Dollars and 00/100 ($150,000,000.00).
“Maximum Revolving B Advance Amount” shall mean Twenty Five Million Dollars and 00/100 ($25,000,000.00).
“Maximum Undrawn Amount” shall mean with respect to any outstanding Letter of Credit, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.
“Mexican Financed Equipment” shall mean Equipment and fixtures of a Mexican Loan Party that is financed with a third party, provided that such third party financing shall not exceed $3,000,000 and shall be subject to an intercreditor agreement reasonably satisfactory to Agent providing for, among other things, access to such Equipment and fixtures.
“Mexican Loan Party” shall mean Castle Mexico, Castle Mexicali and each other Loan Party that is organized or incorporated under the laws of the country of Mexico or any state or territory thereof, and “Mexican Loan Parties” means all such Persons, collectively.
“Mexican Priority Payables Reserve” shall mean a reserve established in Agent’s reasonable discretion for compensation and benefits payable to employees of any Mexican Loan Party as specified and required under Section N.19 of NIFS, which for purposes of this Agreement, shall be in an amount equal to the greater of (a) one month of the total payroll for all Mexican employees and (b) the accrued and unpaid employee claims under Mexican law that would reasonably be expected to have priority over Agent’s Liens.
“Mexican Security Documents” shall mean with respect to the Mexican Loan Parties (i) the applicable stock pledge agreements (contratos de prenda sobra acciones) pledging the stock of the Mexican Loan Parties in favor of the Agent dated as of the date hereof, (ii) the pledgor-in-possession pledge agreement (contrato de prenda sin transmission de posesión) between the Mexican Loan Parties in favor of the Agent dated as of the date hereof, and (iii) any other security or guarantee agreements executed by the Mexican Loan Parties, as Guarantors hereunder, each as modified, amended, restated, or supplemented from time to time.
“Modified Commitment Transfer Supplement” shall have the meaning set forth in Section 16.3(d).
“Moody’s” shall mean Moody’s Investors Service, Inc.
“Mortgages” shall mean any and all mortgages, deeds of trust, deeds to secure debt, leasehold mortgages, leasehold deeds of trust, deeds of immovable hypothec, or leasehold deeds to secure debt and other similar security documents delivered to Agent as security for the Obligations.
“Mortgaged Property” shall mean collectively, any real property subject to Agent’s Lien.
“Multiemployer Plan” shall mean any multiemployer plan as defined in Section 4001(a)(3) of ERISA, which is contributed to by (or to which there is or may be an obligation to contribute of) Castle or any Subsidiary or with respect to which Castle or any Subsidiary has any liability (including on account of an ERISA Affiliate).
“Necessary Consents” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on any Loan Party’s business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement, any Other Documents, including any Necessary Consents required under all applicable federal, state or other Applicable Law.
“Net Income” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with: (a) any disposition of Collateral outside the Ordinary Course of Business; or (b) the disposition of any securities by such Person or any of its Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss).
“NIFS” shall mean the financial accounting standards (Normas de Información Financiera) issued by the Mexican Board of Financial Accounting Standards (Consejo Mexicano de Normas de Información Financiera, A.C.).
“Non-Defaulting Lender” shall mean, at any time, any Lender that is not a Defaulting Lender at such time.
“Non-Qualifying Party” shall mean any Borrower or any Guarantor that on the Eligibility Date fails for any reason to qualify as an Eligible Contract Participant.
“Note” shall mean each Revolving Credit Note and the Swing Note, and “Notes” shall collectively mean all of the Revolving Credit Notes and the Swing Notes.
“Obligations” shall mean and include to the extent arising under or in connection with this Agreement or any Other Document, any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by any Loan Party to Lenders or Agent or to any other direct or indirect subsidiary or Affiliate of Agent or any Lender of any kind or nature, present or future (including any interest or other amounts accruing thereon after maturity, whether or not a claim for post-maturity or post-conversion interest or other amounts are allowable or allowed in any proceeding), whether or not evidenced by any note, guaranty/guarantee or other instrument, whether arising under any agreement, instrument or document, (including this Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future, option or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of Agent’s or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including, but not limited to, any and all of any Loan Party’s Indebtedness and/or liabilities under this Agreement, the Other Documents or under any other agreement between Agent or Lenders and any Loan Party and any amendments, extensions, renewals or increases and all costs and expenses of Agent and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including, but not limited to, (i) reasonable attorneys’ fees and expenses, (ii) all obligations of any Loan Party to Agent or Lenders to perform acts or refrain from taking any action and all Hedge Liabilities, and (iii) all Cash Management Liabilities. Notwithstanding anything to the contrary contained in the foregoing, the Obligations shall not include any Excluded Hedge Liabilities.
“OFAC” shall have the meaning set forth in Section 6.18.
“Order” shall have the meaning set forth in Section 2.17.
“Ordinary Course of Business” shall mean with respect to any Loan Party, the ordinary course of such Loan Party’s business as conducted on the Closing Date, taking into consideration the pendency of the Cases.
“Original Owners” shall mean the Persons holding Equity Interests in Castle as of the Closing Date, together with their Affiliates that are under common Control. For the avoidance of doubt, Original Owners shall include all Persons holding 2017 Indenture Debt or Junior Lien Debt at any time who may in the future convert such debt into Equity Interests in Castle.
“Other Connection Taxes” shall mean, with respect to the Agent, any Lender, any Issuer, Payee or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, Taxes imposed as a result of a present or former connection between any such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Advance or any Loan Document).
“Other Documents” shall mean the Notes, any Guaranty, any Lender-Provided Interest Rate Hedge, the Pledge Agreement, any Lien Waiver Agreement, any Canadian Security Documents, any Deposit Account Control Agreement, any Joinder, the Mortgages, the Intercreditor Agreement, the 2017 Intercreditor Agreement, and any and all other agreements, instruments and documents, including guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings heretofore, now or hereafter executed by any Loan Party and/or delivered to Agent or any Lender in respect of the Transactions.
“Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(b).
“Participant” shall mean each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.
“Participation Advance” shall have the meaning set forth in Section 2.11(d).
“Participation Commitment” shall mean each Lender’s obligation to buy a participation of the Letters of Credit issued hereunder.
“Payee” shall have the meaning set forth in Section 3.11(a).
“Payment Conditions” shall mean that (a) prior to and after giving effect to the relevant action as to which the satisfaction of the Payment Conditions is being determined, no Default or Event of Default shall have occurred or been continuing and (b) either (i) Excess Availability at all times during the 30 calendar days preceding such action and Excess Availability as of the date of such action, in each case, on a pro forma basis after giving effect to such action and any Advances made in connection therewith, shall be at least equal to the greater of (A) 25% of Maximum Availability then in effect and (B) $31,250,000 or (ii) (x) Excess Availability at all times during the 30 calendar days preceding such action and Excess Availability as of the date of such action, in each case, on a pro forma basis after giving effect to such action and any Advances made in connection therewith, shall be at least equal to the greater of (A) 20% of Maximum Availability then in effect and (B) $25,000,000 and (y) the Fixed Charge Coverage Ratio (whether or not then being tested) for the four fiscal quarters most recently ended for which financial statements have been delivered pursuant to Section 9.7 or 9.8, determined on a pro forma basis after giving effect to such action, shall be no less than 1.10 to 1.00.
“Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to Borrowing Agent and to each Lender to be the Payment Office.
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
“Permitted Discretion” means a determination made in good faith and in the exercise (from the perspective of a secured asset-based lender) of commercially reasonable business judgment.
“Permitted Encumbrances” shall mean with respect to any Mortgaged Property, such exceptions to title as are set forth as exceptions in the title policy delivered in connection with any Mortgage delivered with respect to such Mortgaged Property, all of which exceptions must be reasonably acceptable to the Agent in its reasonable discretion.
“Permitted Liens” shall have the meaning assigned to such term in Section 7.1.
“Permitted Priority Liens” shall mean the Permitted Liens (except those described in subsections (d), (j), and (u) of Section 7.1), to the extent that such Liens are (i) non-avoidable, valid, properly perfected and enforceable, have priority as a matter of Applicable Law and, except those described in subsections (c), (f), (g), (i), and (x) of Section 7.1, do not secure Indebtedness for borrowed money, or (ii) incurred pursuant to Section 7.1(g).
“Permitted Refinancing” shall mean, with respect to any Person, any modification, refinancing, refunding, renewal or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended except by an amount equal to any interest capitalized in connection with, any premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such modification, refinancing, refunding, renewal or extension, (b) such modification, refinancing, refunding, renewal or extension has a final maturity date equal to or later than the final maturity date of, and has a weighted average life to maturity equal to or longer than the weighted average life to maturity of, the Indebtedness being modified, refinanced, refunded, renewed or extended, (c) if the Indebtedness being modified, refinanced, refunded, renewed or extended is subordinated in right of payment to the Obligations, such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Obligations on terms, taken as a whole, that are not more favorable to the Persons providing such Indebtedness being modified, refinanced, refunded, renewed or extended, (d) at the time thereof, no Default or Event of Default shall have occurred and be continuing, (e) if such Indebtedness being modified, refinanced, refunded, renewed or extended is secured, the terms and conditions relating to collateral of any such modified, refinanced, refunded, renewed or extended Indebtedness, taken as a whole, are not more favorable to the Persons providing such Indebtedness than those applicable to the Lenders with respect to the Collateral for the Indebtedness being modified, refinanced, refunded, renewed or extended (and the Liens on any Collateral securing any such modified, refinanced, refunded, renewed or extended Indebtedness shall have the same (or lesser) priority relative to the Liens on the Collateral securing the Obligations), (f) the terms and conditions (excluding any subordination, pricing, fees, rate floors, discounts, premiums and optional prepayment or redemption terms) of any such modified, refinanced, refunded, renewed or extended Indebtedness, taken as a whole, shall not be materially less favorable to the Loan Parties than this Agreement, except for covenants or other provisions applicable only to periods after the Term, and (g) such modification, refinancing, refunding, renewal or extension is incurred and guaranteed only by the Persons who are the obligors on the Indebtedness being modified, refinanced, refunded, renewed or extended.
“Person” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, unlimited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).
“Plan” shall mean an “employee benefit plan” as defined in Section 3(3) of ERISA (other than a Multiemployer Plan) that is subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA and is maintained or contributed to by Castle or any Subsidiary or with respect to which Castle or any Subsidiary has any liability (including on account of an ERISA Affiliate).
“Plan Effective Date” has the meaning provided therefor in the Confirmed Plan.
“Pledge Agreement” shall mean (i) the Pledge Agreement dated as of the Closing Date, by and between Castle and the Agent, and (ii) any other Pledge Agreement executed and delivered by any Loan Party to Agent for the benefit of Lenders pursuant to the provisions hereof, including, without limitation, the Mexican Security Documents, in each case together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof, and “Pledge Agreements” means collectively, all such Pledge Agreements.
“PNC” shall have the meaning set forth in the preamble to this Agreement and shall extend to all of its successors and assigns.
“PPSA” shall mean the Personal Property Security Act (Ontario) (or any successor statute) or similar legislation (including, without limitation, the Civil Code (Quebec)) of any other jurisdiction the laws of which are required by such legislation to be applied in connection with the issue, perfection, enforcement, validity or effect of security interests.
“Projections” shall mean the projections, estimates or other forward looking statements of consolidated balance sheet, related statement of income and cash flow of the Loan Parties made available to the Agent and the Lenders on or prior to the Closing Date.
“Properly Contested” shall mean, in the case of any Indebtedness or Lien, as applicable, of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness or Lien, as applicable, is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in the imminent forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness or Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.
“Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.
“Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.
“Qualified ECP Loan Party” shall mean each Borrower or Guarantor that on the Eligibility Date is (a) a corporation, partnership, proprietorship, organization, trust, or other entity other than a “commodity pool” as defined in Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets exceeding $10,000,000 or (b) an Eligible Contract Participant that can cause another person to qualify as an Eligible Contract Participant on the Eligibility Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise providing a “letter of credit or keepwell, support, or other agreement” for purposes of Section 1a(18)(A)(v)(II) of the CEA.
“Qualified Equity Interests” shall mean any Equity Interests that are not Disqualified Equity Interests.
“Real Estate Collateral Requirements” shall mean the requirement that on the Closing Date, with respect to the Mortgaged Property listed on Schedule 1.1(b) and thereafter as required by Sections 4.2, 6.11 and 6.20, Agent shall have received a Mortgage for each Mortgaged Property in form and substance reasonably acceptable to Agent and suitable for recording or filing, together, with respect to each Mortgage for any property located in the United States or Canada, as the context requires, the following documents: (a) a fully paid policy of title insurance (i) in a form approved by Agent insuring the Lien of the Mortgage encumbering such property as a valid first priority Lien, subject only to exceptions to title reasonably acceptable to Agent, (ii) in an amount reasonably satisfactory to Agent, (iii) issued by First American Title Insurance Company or another nationally recognized title insurance company reasonably satisfactory to Agent (the “Title Company”) and (iv) that includes (A) such coinsurance and direct access reinsurance as Agent may deem necessary or desirable and (B) such endorsements or affirmative insurance reasonably required by Agent and available in the applicable jurisdiction (including, if applicable without limitation, endorsements on matters relating to usury, zoning, variable rate, address, separate tax lot, subdivision, tie in or cluster, contiguity, access and so-called comprehensive coverage over covenants and restrictions), (b) with respect to any property located in any jurisdiction in which a zoning endorsement is not available (or for which a zoning endorsement is not available at a premium that is not excessive), if requested by Agent, a zoning compliance letter from the applicable municipality or a zoning report from Planning and Zoning Resource Corporation (or another person acceptable to Agent), in each case satisfactory to Agent, (c) upon the request of Agent, a Survey, (d) upon the request of Agent, an appraisal complying with the requirements of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, by a third-party appraiser selected by Agent, (e) an opinion of local counsel reasonably acceptable to Agent and in form and substance satisfactory to Agent which includes, without limitation, the due execution and delivery of and enforceability of each applicable Mortgage, the corporate formation, existence and good standing of the applicable mortgagor, and such other matters as may be reasonably requested by Agent, (f) if requested by Agent, no later than three (3) Business Days prior to the delivery of the Mortgage for each Mortgaged Property, the following documents and instruments, in order to comply with all Flood Laws: (A) a completed standard flood hazard determination form and (B) if the improvement(s) to the improved real property is located in a special flood hazard area, a notification to Borrowing Agent (“Borrower Notice”) and, if applicable, notification to Borrowing Agent that flood insurance coverage under the National Flood Insurance Program (“NFIP”) is not available because the community does not participate in the NFIP, documentation evidencing Borrowing Agent’s receipt of the Borrower Notice and (C) if the Borrower Notice is required to be given and flood insurance is available in the community in which the property is located, a copy of the flood insurance policy, Borrowing Agent’s application for a flood insurance policy plus proof of premium payment, a declaration page confirming that flood insurance has been issued, or such other evidence of flood insurance satisfactory to Agent, (g) upon the reasonable request of Agent, Phase I environmental site assessment reports prepared in accordance with the current ASTM E1527 standard (“Phase Is”) (to the extent not already provided) and reliance letters for such Phase Is (which Phase Is and reliance letters shall be in form and substance reasonably acceptable to Agent) and any other environmental information, assessments or reports as Agent shall reasonably request, and, to the extent Agent determinations based on the information contained in such Phase I that additional testing is required, such other environmental assessments as reasonably requested by Agent; provided that Borrowers shall not be required to reimburse Agent for such Phase Is or other environmental assessments unless and Event of Default has occurred or Agent has a reasonable basis to believe that Hazardous Materials exist at the applicable real property location in violation of Environmental Laws, and (h) such other instruments and documents (including subordination or pari passu confirmations, consulting engineer’s reports and lien searches) as Agent shall reasonably request and with respect to each Mortgage for any property located outside the United States, equivalent documents available in the applicable jurisdiction and required by Agent.
“Real Property” shall mean all of each Loan Party’s right, title and interest in and to the owned and leased premises identified on Schedule 5.12 hereto or which is hereafter owned or leased by any Loan Party.
“Receivables” shall mean and include, as to each Loan Party, all of such Loan Party’s accounts, contract rights, instruments (including those evidencing indebtedness owed to such Loan Party by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles and intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to such Loan Party arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.
“Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i) hereof.
“Recovery Event” shall mean any event that gives rise to the receipt by any Loan Party of any cash insurance proceeds or condemnation awards payable by reason of casualty, theft, loss, physical destruction, damage, taking, condemnation or any other similar event with respect to any property or assets of any Loan Party.
“Register” shall have the meaning set forth in Section 16.3(e).
“Regulation U” shall mean 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.
“Reimbursement Obligation” shall have the meaning set forth in Section 2.11(b) hereof.
“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective officers, directors (including directors or authorized signatories of the general partner of any Person), employees, agents, advisors, representatives, controlling persons, members, partners, successors and permitted assigns of such Person and such Person’s Affiliates.
“Release” shall mean any actual or imminent release, spill, emission, leaking, dumping, injection, pouring, pumping, deposit, disposal, discharge, dispersal, leaching or migration into or through the indoor or outdoor environment, including the air, soil and ground and surface water or into, through, within or upon any building, structure, facility or fixture.
“Reorganization Documents” means the Confirmed Plan and a filing of notice of occurrence of Plan Effective Date.
“Reportable Compliance Event” shall mean that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in actual or probable violation of any Anti-Terrorism Law.
“Required Lenders” shall mean (A) if there are two (2) or fewer Lenders (not including Swing Loan Lender (in its capacity as such Swing Loan Lender) or any Defaulting Lender), all Lenders, (B) if there are Advances outstanding and more than two (2) Lenders (not including Swing Loan Lender (in its capacity as such Swing Loan Lender) or any Defaulting Lender), Lenders holding greater than fifty percent (50%) of the Advances (excluding Swing Loans and any Advances held by any Defaulting Lender); provided that if any one (1) Lender holds greater than fifty percent (50%) of the Advances (excluding Swing Loans and any Advances held by any Defaulting Lender), Lenders holding sixty-six and two-thirds of one percent (66⅔%) of the Advances (excluding Swing Loans and any Advances held by any Defaulting Lender), or (C) if there are no Advances outstanding and more than two (2) Lenders (not including Swing Loan Lender (in its capacity as such Swing Loan Lender) or any Defaulting Lender), Lenders holding greater than fifty percent (50%) of the aggregate of the Commitment Percentages of all Lenders (excluding any Defaulting Lender); provided that if any one (1) Lender holds greater than fifty percent (50%) of the Commitment Percentages, Lenders holding sixty-six and two-thirds of one percent (66⅔%) of the aggregate of the Commitment Percentages of all Lenders (excluding any Defaulting Lender).
“Required Pledge Amount” shall mean an amount not to exceed sixty-five percent (65%).
“Reserve Percentage” shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding.
“Restricted” shall mean, when referring to cash or Cash Equivalents of Borrowers or any other Loan Party, that such cash or Cash Equivalents appears (or would be required to appear) as “restricted” on a consolidated balance sheet of Borrowers or such other Loan Party.
“Restricted Payment” shall mean any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in any Loan Party, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in any Loan Party.
“Reverse Stock Split” shall mean a reverse stock split of the Equity Interests of Castle.
“Revolver A Commitment Percentage” of any Lender shall mean the percentage set forth opposite such Lender’s name on Annex A hereto under the header “Revolver A Commitment Percentage”, as same may be adjusted upon any assignment by a Lender pursuant to Section 16.3(c) or Section 16.3(d) hereof.
“Revolver Commitment Percentage” of any Lender shall mean the percentage set forth opposite such Lender’s name on Annex A hereto with respect to its Revolver A Commitment Percentage and Revolver B Commitment Percentage, as applicable, as same may be adjusted upon any assignment by a Lender pursuant to Section 16.3(c) or Section 16.3(d) hereof.
“Revolver B Commitment Percentage” of any Lender shall mean the percentage set forth opposite such Lender’s name on Annex A hereto under the header “Revolver B Commitment Percentage”, as same may be adjusted upon any assignment by a Lender pursuant to Section 16.3(c) or Section 16.3(d) hereof.
“Revolving Advances” shall mean Advances made other than Letters of Credit, Acceptances, and Swing Loans.
“Revolving A Advances” shall mean advances made under Section 2.1(a) hereof.
“Revolving A Commitment” shall mean the collective obligation of Lenders to make Revolving A Advances pursuant to the terms and conditions of this Agreement.
“Revolving A Facility Usage” shall mean at any time, the sum of (i) the outstanding Revolving A Advances plus (ii) the outstanding Obligations with respect to Letters of Credit plus (iii) the outstanding Swing Loans.
“Revolving A Interest Rate” shall mean with respect any Advances (other than Revolving B Advances), an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus the Applicable Margin for Revolving A Advances with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus the Applicable Margin for Revolving A Advances with respect to Eurodollar Rate Loans.
“Revolving B Advances” shall mean advances made under Section 2.1(b) hereof.
“Revolving B Advance Conditions” shall mean, with respect to any advance of Revolving B Advances after the First Amendment Effective Date, Agent shall have received (a) ten (10) Business Day’s prior written notice from Borrowing Agent of such request for a Revolving B Advance, (b) a participation agreement, in form and substance reasonably acceptable to Agent, executed after the First Amendment Effective Date by the applicable Lender and one or more Participants reasonably acceptable to Agent in respect of the full amount of such Revolving B Advance, with each such Participant funding the full amount of such Revolving B Advance to the applicable Lender prior to or concurrently with the making of such Revolving B Advance to Borrowers; provided that Agent acknowledges and agrees that the form of Participation Agreement attached hereto as Exhibit 2.2(b) and the Participants named therein are acceptable to Agent, and (c) with respect to each such applicable Participant for such Revolving B Advance, such information and documentation as may reasonably be requested by Agent or any Lender with a Revolving B Commitment from time to time for purposes of compliance by Agent or such Lender with the USA Patriot Act and other “know your customer” and anti-money laundering rules and regulations, and any policy or procedure implemented by Agent or such Lender, to comply therewith.
“Revolving B Commitment” shall mean the collective obligation of Lenders to make Revolving B Advances pursuant to the terms and conditions of this Agreement.
“Revolving B Interest Rate” shall mean with respect to Revolving B Advances, an interest rate per annum equal to the Applicable Margin for Revolving B Advances.
“Revolving B Payment Conditions” shall mean, with respect to any proposed payment of cash interest in respect of Revolving B Advances, (i) no Default or Event of Default exists would be caused thereby, (ii) immediately after giving effect to any such payment in cash, Liquidity is greater than $20,000,000, (iii) immediately after giving effect to any such payment, the Fixed Charge Coverage Ratio, for the twelve fiscal months most recently ended for which financial statements have been delivered pursuant to Section 9.9, calculated on a pro forma basis after giving effect to such payment, shall be greater than or equal to 1.00 to 1.00, and (iv) Borrowers have provided Agent with ten (10) Business Days’ advance written notice of their intention to make such payment in cash, together with a certificate of the President, Chief Financial Officer, Treasurer, Assistant Treasurer or Controller of Borrowing Agent certifying to the satisfaction of clause (iii) above and attaching a reasonably detailed calculation of such Fixed Charge Coverage Ratio.
“Revolving B PIK Interest” shall have the meaning set forth in Section 3.1 hereof.
“Revolving Commitment” shall mean the collective obligation of Lenders to make Revolving Advances pursuant to the terms and conditions of this Agreement.
“Revolving Commitment Amount” shall mean, as to any Lender, the “Revolving A Commitment Amount” (if any) and “Revolving B Commitment Amount” (if any) set forth opposite such Lender’s name on Annex A attached hereto (or, in the case of any Lender that became party to this Agreement after the Closing Date pursuant to Section 16.3(c) or (d) hereof, the “Revolving A Commitment Amount” (if any) and “Revolving B Commitment Amount” (if any) of such Lender as set forth in the applicable Commitment Transfer Supplement.
“Revolving Credit Note” shall mean, collectively, the promissory notes referred to in Section 2.1(a) hereof.
“Revolving Facility Usage” shall mean at any time, the sum of (i) the outstanding Revolving Advances plus (ii) the outstanding Obligations with respect to Letters of Credit plus (iii) the outstanding Swing Loans.
“Revolving Interest Rate” shall mean (i) with respect to any Advances (other than Revolving B Advances), the Revolving A Interest Rate and (ii) with respect to Revolving B Advances, the Revolving B Interest Rate.
“S&P” shall mean Standard & Poor’s Ratings Service or any successor thereto.
“Sanctioned Country” shall mean a country subject to a sanctions program maintained under any Anti-Terrorism Law or under Canadian Anti-Terrorism or Sanction Laws.
“Sanctioned Person” shall mean (i) any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person, group, regime, entity or thing, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Law, or (ii) any Canadian Blocked Person.
“Second Amendment” shall mean that certain Amendment No. 2 to Revolving Credit and Security Agreement, dated as of the Second Amendment Effective Date, by and among Borrowers, the other Loan Parties party thereto, the Lenders party thereto and Agent.
“Second Amendment Effective Date” means March [__], 2020
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Senior Representative” shall mean, with respect to any Indebtedness, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or other agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.
“Settlement Date” shall mean the Closing Date and thereafter Wednesday or Thursday of each week or more frequently if Agent deems appropriate unless such day is not a Business Day in which case it shall be the next succeeding Business Day.
“Stockholders Agreement” shall mean the Stockholders Agreement dated as even date herewith by and among Castle and the Stockholders that are party thereto, as the same may be amended, supplemented, or otherwise modified from time to time.
“Subsidiary” shall mean, with respect to any Person (herein referred to as the “parent”), any corporation, partnership, limited liability company, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, owned, Controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
“Subsidiary Stock” shall mean all of the issued and outstanding Equity Interests of any Subsidiary owned by any Loan Party (not to include Excluded Foreign Subsidiary Stock).
“Survey” shall mean a survey of any Mortgaged Property (and all improvements thereon) which is (a) (i) prepared by a surveyor or engineer licensed to perform surveys in the jurisdiction where such Mortgaged Property is located, (ii) dated (or redated) not earlier than six (6) months prior to the date of delivery thereof unless there shall have occurred within six months prior to such date of delivery any exterior construction on the site of such Mortgaged Property or any easement, right of way or other interest in the Mortgaged Property has been granted or become effective through operation of law or otherwise with respect to such Mortgaged Property which, in either case, can be depicted on a survey, in which events, as applicable, such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than twenty (20) days prior to such date of delivery, or after the grant or effectiveness of any such easement, right of way or other interest in the Mortgaged Property, (iii) certified by the surveyor (in a manner reasonably acceptable to Agent) to Agent and the Title Company, (iv) complying in all respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey, (v) sufficient for the Title Company to remove all standard survey exceptions from the Mortgage Policy relating to such Mortgaged Property and issue the endorsements of the type required by paragraph (f) of the definition of Real Estate Collateral Requirements and (vi) otherwise reasonably acceptable to Agent.
“Swap” shall mean any “swap” as defined in Section 1a(47) of the CEA and regulations thereunder other than (a) a swap entered into on, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation 32.3(a).
“Swap Obligations” shall mean any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap which is also a provided by a Lender.
“Swing Loan Commitment” shall mean PNC’s commitment to make Swing Loans to Borrowers pursuant to Section 2.23(a) hereof in an aggregate principal amount up to ten percent (10%) of the Maximum Revolving A Advance Amount.
“Swing Loan Lender” shall mean PNC, in its capacity as lender of the Swing Loans.
“Swing Loan Request” shall mean a request for Swing Loans made in accordance with Section 2.23(b) hereof.
“Swing Loans” shall mean collectively and “Swing Loan” shall mean separately all Swing Loans or any Swing Loan made by PNC to Borrowers pursuant to Section 2.23 hereof.
“Swing Note” shall mean the promissory note referred to in Section 2.23(d) hereof, together with all amendments, restatements, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Body, including any interest, additions to tax or penalties applicable thereto.
“Term” shall have the meaning set forth in Section 13.1 hereof.
“Termination Date” shall mean the earlier of (a) February 28, 2022 and (b) acceleration of any portion of the Obligations and the termination of the Commitments upon the occurrence of an Event of Default.
“Threshold Amount” shall mean $500,000.
“Trading with the Enemy Act” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto, which shall not apply to the Canadian Loan Parties in respect of any business dealings with Cuba or residents of Cuba.
“Transaction Costs” shall mean the fees, costs and expenses incurred in connection with the Transactions.
“Transactions” shall mean collectively, (a) the execution and delivery of, and the performance under, this Agreement and the Other Documents, in each case by the Loan Parties party thereto (as of the Closing Date), (b) the making of any Advances requested to be made on the Closing Date, and (c) the payment of Transaction Costs related to the foregoing.
“Transferee” shall have the meaning set forth in Section 16.3(d) hereof.
“UCP” shall have the meaning set forth in Section 2.9(b) hereof.
“Unfinanced Capital Expenditures” shall mean all Capital Expenditures of the Borrowers on a Consolidated Basis financed using (y) cash-on-hand or generated from operations and not from the proceeds of financing transactions, and (z) the proceeds of Revolving Advances.
“Uniform Commercial Code” shall have the meaning set forth in Section 1.3 hereof.
“Unrestricted” shall mean, when referring to cash or Cash Equivalents of a Loan Party or any Subsidiary, any such cash or Cash Equivalents that is not Restricted.
“U.S. Export Laws” shall mean, but not be limited to, any and all laws by which the exportation, re-exportation, diversion, shipment or transfer of merchandise is controlled as to person, destination or entity, and shall include but not be limited to the Export Administration Act; the Trading With the Enemy Act; the International Emergency Economic Powers Act; the International Security and Development Cooperation Act of 1985, together with all regulations, directives, Executive Orders and Proclamations as shall be implemented to enforce such laws, and as such laws shall added, amended or repealed, from time to time.
“U.S. Foreign Holdco” shall mean a Domestic Subsidiary substantially all of the assets of which consist of Equity Interests or debt of one or more direct or indirect Foreign Subsidiaries and assets incidental thereto.
“U.S. Loan Party” shall mean each Borrower and each other Loan Party that is organized or incorporated under the laws of the United States or any state or territory thereof or the District of Columbia, and “U.S. Loan Parties” means all such Persons, collectively.
“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“U.S. Person” shall mean any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“Voting Power” shall mean, with respect to any Person, the exclusive ability to control, through the ownership of shares of capital stock, partnership interests, membership interests or otherwise, the election of members of the board of directors or other similar governing body of such Person, and the holding of a designated percentage of Voting Power of a Person means the ownership of shares of capital stock, partnership interests, membership interests or other interests of such Person sufficient to control exclusively the election of that percentage of the members of the board of directors or other similar governing body of such Person.
“Week” shall mean the time period commencing with the opening of business on a Monday and ending on the end of business the following Sunday.
“Wholly Owned Subsidiary” of any Person shall mean a subsidiary of such Person of which securities (except for directors’ qualifying shares) or other ownership interests representing 100% of the Equity Interests are, at the time any determination is being made, owned, Controlled or held by such Person or one or more Wholly Owned subsidiaries of such Person or by such Person and one or more Wholly Owned subsidiaries of such Person.
“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
1.3 Uniform Commercial Code Terms.
(a) All terms used herein and defined in the Uniform Commercial Code as adopted in the State of New York from time to time (the “Uniform Commercial Code”) shall have the meaning given therein unless otherwise defined herein. Without limiting the foregoing, the terms “accounts”, “chattel paper”, “commercial tort claims”, “instruments”, “general intangibles”, “goods”, “payment intangibles”, “proceeds”, “supporting obligations”, “securities”, “investment property”, “documents”, “deposit accounts”, “software”, “letter of credit rights”, “inventory”, “equipment” and “fixtures”, as and when used in the description of Collateral (including in Section 4.1 hereto) shall have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code. To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.
(b) Any terms used in this Agreement that are defined in the PPSA (including, but not limited to, “accounts”, “chattel paper”, “instruments”, “intangibles”, “goods”, “proceeds”, “securities”, “investment property”, “documents of title”, “inventory”, “equipment” and “fixtures”) shall, to the extent relating to Collateral consisting of assets of Canadian Loan Parties or otherwise located in Canada, be construed and defined as set forth in the PPSA unless otherwise defined herein and any terms used in this Agreement that are defined in the UCC and relating to Collateral consisting of assets of the Loan Parties that are not Canadian Loan Parties or otherwise not located in Canada shall be construed and defined as set forth in the UCC unless otherwise defined herein.
1.4 Certain Matters of Construction.
The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. All references herein to the time of day shall mean the time in New York, New York. Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis. Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation.” A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “to the best of Loan Parties’ knowledge” or words of similar import relating to the knowledge or the awareness of any Loan Party are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of any Loan Party or (ii) the knowledge that a senior officer would have obtained if he had engaged in good faith and diligent performance of his duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of such Loan Party and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder. Any reference herein or in any Other Document to the satisfaction, repayment, or payment in full of the Obligations shall mean (a) the payment or repayment in full in immediately available funds of (i) the principal amount of, and interest accrued and unpaid with respect to, all outstanding Advances, together with the payment of any premium applicable to the repayment of the Advances, (ii) all expenses to which Agent, any Lender or Issuer is entitled to reimbursement hereunder or under any Other Document that have accrued and are unpaid regardless of whether demand has been made therefor, (iii) all fees or charges that have accrued hereunder or under any Other Document (including the Letter of Credit fees) and are unpaid, (b) in the case of contingent reimbursement obligations with respect to Letters of Credit, providing cash collateralization in an amount equal to one hundred five percent (105%) of the Letters of Credit in accordance herewith, (c) in the case of Cash Management Liabilities, providing cash collateralization in an amount equal to the credit exposure (as reasonably determined by Agent) with respect thereto; (d) the receipt by Agent of cash collateral in order to secure any other contingent Obligations for which a claim or demand for payment has been made on or prior to such time or in respect of matters or circumstances known to Agent or a Lender at such time that are reasonably expected to result in any loss, cost, damage, or expense (including attorneys’ fees and legal expenses), such cash collateral to be in such amount as Agent reasonably determines is appropriate to secure such contingent Obligations, (e) the payment or repayment in full in immediately available funds of all other outstanding Obligations (including the payment of any termination amount then applicable (or which would or could become applicable as a result of the repayment of the other Obligations) with respect to Hedge Liabilities) other than (i) unasserted contingent indemnification Obligations for which there is no reasonable basis to assume a claim will be asserted; (ii) Hedge Liabilities that, at such time, are allowed by the applicable Lender (or Affiliate) to remain outstanding without being required to be repaid; and (iii) any Cash Management Liabilities that, at such time, are allowed by the applicable Lender (or Affiliate) to remain outstanding without being required to be repaid or cash collateralized, and (f) the termination of all of the commitments of the Lenders.
1.5 Currency Matters. Unless otherwise provided for herein, all amounts and calculations set forth in Dollars in this Agreement shall be determined as of each date of measurement by the Dollar Equivalents thereof as of such date of measurement. For purposes of the foregoing, “Dollar Equivalent” means, at any time, (a) as to any amount denominated in Dollars, the amount thereof at such time, and (b) as to any currency other than Dollars, the equivalent amount in Dollars as reasonably determined by Agent at such time that such amount could be converted into Dollars by Agent according to prevailing exchange rates selected by Agent in its Permitted Discretion. Principal, interest, reimbursement obligations, fees, and all other amounts payable under this Agreement and the other Loan Documents shall be payable in Dollars. Unless stated otherwise, all calculations, comparisons, measurements or determinations under this Agreement (including without limitation, calculation of the Borrowing Base or the determination of whether a repayment is required under this Agreement), shall be made in Dollars by aggregating the Dollar Equivalent of each component thereof. For the purpose of such calculations, comparisons, measurements or determinations, amounts denominated in other currencies shall be converted to the Dollar Equivalent thereof on the date of calculation, comparison, measurement or determination. If the Agent shall receive payment in a currency other than the currency in which the Obligations are due, whether pursuant to the exercise of control under a Loan Document, or as proceeds or realization of the Collateral or otherwise, then the Agent shall be authorized to convert such amounts to Dollars according to prevailing exchange rates selected by Agent in its Permitted Discretion.
1.6 Québec Matters. For purposes of any Collateral located in the Province of Quebec or charged by any deed of hypothec (or any other Loan Document) and for all other purposes pursuant to which the interpretation or construction of a Loan Document may be subject to the laws of the Province of Quebec or a court or tribunal exercising jurisdiction in the Province of Quebec, (a) “personal property” shall be deemed to include “movable property”, (b) “real property” shall be deemed to include “immovable property”, (c) “tangible property” shall be deemed to include “corporeal property”, (d) “intangible property” shall be deemed to include “incorporeal property”, (e) “security interest”, “mortgage” and “lien” shall be deemed to include a “hypothec”, “prior claim” and a “resolutory clause”, (f) all references to filing, registering or recording under the PPSA shall be deemed to include publication under the Civil Code of Quebec, (g) all references to “perfection” of or “perfected” Liens shall be deemed to include a reference to an “opposable” or “set up” Liens as against third parties, (h) any “right of offset”, “right of setoff” or similar expression shall be deemed to include a “right of compensation”, (i) “goods” shall be deemed to include “corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, (j) an “agent” shall be deemed to include a “mandatary”, (k) “construction liens” shall be deemed to include “legal hypothecs” securing claims of persons having taken part in the construction or renovation of an immovable, (l) “joint and several” shall be deemed to include “solidary”, (m) “gross negligence or willful misconduct” shall be deemed to be “intentional or gross fault”, (n) “beneficial ownership” shall be deemed to include “ownership on behalf of another as mandatary”, (o) “easement” shall be deemed to include “servitude”, (p) “priority” shall be deemed to include “prior claim”, (q) “survey” shall be deemed to include “certificate of location and plan”, (r) a “land surveyor” shall be deemed to include an “arpenteur-géomètre”; and (r) “fee simple title” shall be deemed to include “absolute ownership”. The parties hereto confirm that it is their wish that this Agreement and any other document executed in connection with the transactions contemplated herein be drawn up in the English language only and that all other documents contemplated thereunder or relating thereto, including notices, may also be drawn up in the English language only. Les parties aux présentes confirment que c’est leur volonté que cette convention et les autres documents de crédit soient rédigés en langue anglaise seulement et que tous les documents, y compris tous avis, envisagés par cette convention et les autres documents peuvent être rédigés en la langue anglaise seulement.
1.7 LIBOR Notification. Section 3.14 of this Agreement provides a mechanism for determining an alternative rate of interest in the event that the London interbank offered rate is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “Eurodollar Rate” or with respect to any alternative or successor rate thereto, or replacement rate therefor.
II. | ADVANCES, PAYMENTS. |
2.1 Revolving Advances.
(a) Amount of Revolving A Advances. Subject to the terms and conditions set forth in this Agreement including Section 2.1(c), each Lender with a Revolving A Commitment, severally and not jointly, will make Revolving A Advances to Borrowers in aggregate amounts outstanding at any time equal to such Lender’s Revolver A Commitment Percentage of the Revolving A Commitment; provided, that after giving effect to such Revolving A Advances the Revolving A Facility Usage shall not exceed the Maximum Revolving A Advance Amount. Without limiting the foregoing, in no event shall the aggregate amount of outstanding Revolving A Advances exceed the lesser of (x) the Maximum Revolving A Advance Amount less the sum of (i) the aggregate amount of outstanding Swing Loans, plus (ii) the aggregated Maximum Undrawn Amount of all outstanding Letters of Credit, and (y) an amount equal to the sum of:
(i) subject to the provisions of Section 2.1(c) hereof, up to eighty-five percent (85%) (“Receivables Advance Rate”) of (A) Eligible Canadian Receivables, (B) Eligible U.S. Receivables, and (C) Eligible Mexican Receivables (in each case, net of any Eligible Insured Receivables included in subsection (ii) below), plus
(ii) subject to the provisions of Section 2.1(c) hereof, up to ninety percent (90%) of Eligible Insured Receivables (“Insured Receivables Advance Rate”), plus
(iii) up to the sum of (x) the lesser of (1) seventy-five percent (75%), subject to the provisions of Section 2.1(c) hereof (the “Eligible Inventory Advance Rate”), of the value of the Eligible Mexican Inventory and (2) ninety percent (90%) of the appraised net orderly liquidation value (“Eligible Inventory NOLV Advance Rate”; together with the Receivables Advance Rate, Insured Receivables Advance Rate, and Eligible Inventory Advance Rate, the “Advance Rates”) of the Eligible Mexican Inventory (as evidenced by an Inventory appraisal satisfactory to Agent in its Permitted Discretion, which will reflect a six-month liquidation process), (y) the lesser of (1) the product of the Eligible Inventory Advance Rate and the value of the Eligible Canadian Inventory and (2) the product of the Eligible Inventory NOLV Advance Rate and the Eligible Canadian Inventory (as evidenced by an Inventory appraisal satisfactory to Agent in its Permitted Discretion, which will reflect a six-month liquidation process), and (z) the lesser of (1) the product of the Eligible Inventory Advance Rate and the value of the Eligible U.S. Inventory and (2) the product of the Eligible Inventory NOLV Advance Rate and the Eligible U.S. Inventory (as evidenced by an Inventory appraisal satisfactory to Agent in its Permitted Discretion, which will reflect a six-month liquidation process), provided that up to $2,000,000 of advances after applying the Eligible Inventory NOLV Advance Rate from “Excess and Obsolete” Inventory (as defined in the most recent Inventory appraisal) may be included under this subsection (iii), minus
(iv) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus
(v) the aggregate amount of outstanding Swing Loans, minus
(vi) the Availability Block, minus
(vii) such other reserves as Agent in its Permitted Discretion may deem proper and necessary from time to time (which shall include, without limitation, all of the Mexican Priority Payables Reserve and all of the Canadian Priority Payables Reserve), whether or not of the same type or nature of those reserves in place on the Closing Date;
provided that in no event shall the aggregate amounts attributable in subsections (i), (ii) and (iii) above to (a) Eligible Canadian Receivables and Eligible Canadian Inventory (after applying the applicable Advance Rates) exceed $20,000,000, (b) Eligible Mexican Receivables and Eligible Mexican Inventory (after applying the applicable Advance Rates) exceed $15,000,000 or (c) Eligible Mexican Inventory exceed 50% of the aggregate amounts attributable to the sum of Eligible Mexican Receivables and Eligible Mexican Inventory (after applying the applicable Advance Rates).
The amount derived from (x) the sum of Sections 2.1(a)(y)(i), (ii), and (iii) minus (y) the sum of Section 2.1(a)(y)(iv), (v), (vi) and (vii), at any time and from time to time shall be referred to as the “Formula Amount”. The Revolving Advances shall, at the request of any Lender, be evidenced by one or more secured promissory notes (collectively, the “Revolving Credit Notes”) substantially in the form attached hereto as Exhibit 2.1(a).
(b) Amount of Revolving B Advances. Subject to the terms and conditions set forth in this Agreement, each Lender with a Revolving B Commitment, severally and not jointly, will make to Borrowers (1) on the First Amendment Effective Date, a one-time Revolving B Advance in the aggregate amount of $18,000,000 equal to, with respect to each Lender, such Lender’s Revolver B Commitment Percentage thereof, and (2) thereafter from time to time, in each case so long as the Revolving B Advance Conditions are satisfied, additional one-time Revolving B Advances equal to, with respect to each Lender, such Lender’s Revolver B Commitment Percentage of the requested Revolving B Advance; provided, that the outstanding Revolving B Advances shall not exceed the sum of (i) the Maximum Revolving B Advance Amount plus (ii) any Revolving B PIK Interest accrued or paid-in-kind in accordance with this Agreement.
(c) Discretionary Rights. The Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its Permitted Discretion. Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rates or increasing or imposing other reserves may limit or restrict Advances requested by Borrowing Agent. The rights of Agent under this subsection are subject to the provisions of Section 16.2(b). The Agent shall give Borrowing Agent five (5) Business Days prior notice of its intention to decrease the Advance Rates. Notwithstanding the foregoing, any change in Advance Rates shall not trigger an obligation of the Borrowers to repay any Obligations incurred based on Advance Rates as they existed prior to such change.
2.2 Procedure for Borrowing Revolving Advances.
(a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 12:00 p.m. on a Business Day of a Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder (other than Revolving B PIK Interest), or as fees or other charges under this Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation, become due, the same shall be deemed a request for a Revolving A Advance maintained as a Domestic Rate Loan as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable.
(b) Notwithstanding the provisions of subsection (a) above, in the event any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written notice by no later than 12:00 p.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which amount shall be in an aggregate principal amount that is not less than Five Hundred Thousand and 00/100 Dollars ($500,000.00) and integral multiples of Five Hundred Thousand and 00/100 Dollars ($500,000.00) in excess thereof, and (iii) the duration of the first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one (1), two (2), or three (3) months; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be made available to any Borrower during the continuance of a Default or an Event of Default. After giving effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than five (5) Eurodollar Rate Loans, in the aggregate.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term. Borrowing Agent shall elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 12:00 p.m. on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) herein below.
(d) Provided that no Event of Default shall have occurred and be continuing, Borrowing Agent may, on the last Business Day of the then current Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent written notice by no later than 12:00 p.m. (i) on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.
(e) At its option and upon written notice given prior to 12:00 p.m. at least three (3) Business Days’ prior to the date of such prepayment, any Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment. Such Borrower shall specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment. In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, such Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.
(f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by any Borrower in the payment of the principal of or interest on any Eurodollar Rate Loan, or failure by any Borrower to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if any Applicable Law, or any change therein or in the interpretation or application thereof, including without limitation any Change in Law, shall make it unlawful for Lenders or any Lender (for purposes of this subsection (g), the term “Lender” shall include any Lender and the office or branch where any Lender or any Person controlling such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders (or such affected Lender) to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrowers shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected Eurodollar Rate Loans, or convert such affected Eurodollar Rate Loans into loans of another type. If any such payment or conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts set forth in clause (f) above. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive absent manifest error.
2.3 Disbursement of Advance Proceeds.
All Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on Agent’s books. During the Term, Borrowers may use the Revolving Advances by borrowing, prepaying and re-borrowing, all in accordance with the terms and conditions hereof. The proceeds of each Revolving Advance requested by Borrowing Agent on behalf of any Borrower or, in the case of a Revolving Advance, deemed to have been requested by any Borrower under Section 2.2 hereof shall, with respect to requested Revolving Advances to the extent Lenders make such Revolving Advances, be made available to the applicable Borrower on the day so requested by way of credit to such Borrower’s operating account ending in xxx5600 maintained at Bank of America, N.A., or such other bank as Borrowing Agent may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been requested by any Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request.
2.4 Maximum Advances.
The Revolving A Facility Usage shall not exceed at any time the lesser of (a) the Maximum Revolving A Advance Amount, and (b) the Formula Amount. The amount of outstanding Revolving B Advances shall not exceed at any time the sum of (i) the Maximum Revolving B Advance Amount plus (ii) any Revolving B PIK Interest accrued or paid-in-kind in accordance with this Agreement.
2.5 Repayment of Advances.
(a) The Revolving Advances shall be due and payable in full on the last day of the Term subject to earlier prepayment as herein provided.
(b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received by Agent. Agent shall conditionally credit Borrowers’ Account for each item of payment on the next Business Day after the Business Day on which such item of payment is received by Agent (and the Business Day on which each such item of payment is so credited shall be referred to, with respect to such item, as the “Application Date”). Agent is not, however, required to credit Borrowers’ Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrowers’ Account for the amount of any item of payment which is returned, for any reason whatsoever, to Agent unpaid. Subject to the foregoing, Borrowers agree that for purposes of computing the interest charges under this Agreement, each item of payment received by Agent shall be deemed applied by Agent on account of the Obligations on its respective Application Date. Borrowers further agree that there is a monthly float charge payable to Agent for Agent’s sole benefit, in an amount equal to (y) the face amount of all items of payment received during the prior month (including items of payment received by Agent as a wire transfer or electronic depository check) multiplied by (z) the Revolving A Interest Rate with respect to Domestic Rate Loans for one (1) Business Day. All proceeds received by Agent shall be applied to the Obligations in accordance with Section 4.15.
(c) All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office not later than 1:00 P.M. on the due date therefor in Dollars in federal funds or other funds immediately available to Agent. Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrowers’ Account or by making Advances as provided in Section 2.2 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim.
2.6 Repayment of Excess Advances.
The sum of the aggregate balance of Revolving A Advances outstanding at any time in excess of the maximum amount of such Revolving A Advances permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred. Without limiting the foregoing, if at any time following one or more fluctuations in the exchange rate of the Dollar against any other currency, any part of the Obligations exceeds any limit set forth herein, Borrowers shall within three (3) Business Days of written notice of same from Agent or, if an Event of Default has occurred and is continuing, immediately (i) make the necessary payments or repayments to reduce such Obligations to an amount necessary to eliminate such excess or (ii) maintain or cause to be maintained with Agent deposits in an amount equal to or greater than the amount of such excess, such deposits to be maintained in such form and upon such terms as are acceptable to Agent; without in any way limiting the foregoing provisions, Agent shall, weekly or more frequently in Agent’s Permitted Discretion, make the necessary exchange rate calculations to determine whether any such excess exists on such date.
2.7 Statement of Account.
Agent shall maintain, in accordance with its customary procedures, a loan account (“Borrowers’ Account”) in the name of Borrowers in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to Borrowing Agent a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and Borrowers during such month. The monthly statements shall be deemed correct and binding upon Borrowers in the absence of manifest error and shall constitute an account stated between Lenders and Borrowers unless Agent receives a written statement of Borrowers’ specific exceptions thereto within thirty (30) days after such statement is received by Borrowing Agent. The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto.
2.8 Letters of Credit and Acceptances.
(a) Subject to the terms and conditions hereof, Agent shall (a) issue or cause the issuance of standby and/or trade letters of credit (such letters of credit, the “Letters of Credit” and individually a “Letter of Credit”) for the account of any Borrower or (b) accept or cause to be accepted Acceptances; provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit or accept or cause to be accepted any Acceptances to the extent that the issuance or acceptance thereof would then cause the sum of (i) the outstanding Revolving A Advances plus (ii) Maximum Undrawn Amount of outstanding Letters of Credit plus (iii) the outstanding Swing Loans plus (iv) outstanding Acceptances to exceed the lesser of (x) the Maximum Revolving A Advance Amount or (y) the Formula Amount (without giving effect to clause (iv) of the definition thereof). The Maximum Undrawn Amount of outstanding Letters of Credit plus the aggregate amount of outstanding Acceptances shall not exceed in the aggregate at any time the Letter of Credit Sublimit. All disbursements or payments related to Letters of Credit and Acceptances shall be deemed to be Eurodollar Rate Loans consisting of Revolving A Advances and shall bear interest at the Revolving A Interest Rate for Eurodollar Rate Loans; Letters of Credit that have not been drawn upon shall not bear interest.
(b) Notwithstanding any provision of this Agreement, Issuer shall not be under any obligation to issue any Letter of Credit if (i) any order, judgment or decree of any Governmental Body or arbitrator shall by its terms purport to enjoin or restrain Issuer from issuing any Letter of Credit, or any Law applicable to Issuer or any request or directive (whether or not having the force of law) from any Governmental Body with jurisdiction over Issuer shall prohibit, or request that Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which Issuer is not otherwise compensated hereunder) not in effect on the date of this Agreement, or shall impose upon Issuer any unreimbursed loss, cost or expense which was not applicable on the date of this Agreement, and which Issuer in good faith deems material to it, or (ii) the issuance of the Letter of Credit would violate one or more policies of Issuer applicable to letters of credit generally.
2.9 Issuance of Letters of Credit; Creation of Acceptances.
(a) Borrowing Agent, on behalf of Borrowers, may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent at the Payment Office, prior to 12:00 p.m., at least five (5) Business Days’ prior to the proposed date of issuance (or such shorter period as may be agreed to by Agent), Agent’s form of Letter of Credit Application (the “Letter of Credit Application”) completed to the satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request. Borrowing Agent, on behalf of Borrowers, also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts, other written demands for payment, or acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twenty-four (24) months after such Letter of Credit’s date of issuance and in no event later than the last day of the Term (except that a Letter of Credit may expire up to twelve (12) months beyond the last day of the Term if such Letter of Credit has been cash collateralized by Borrowers in an amount equal to one hundred five percent (105%) of the face amount of such Letter of Credit on terms and conditions acceptable to Agent in its Permitted Discretion, at least one (1) Business Days prior to the last day of the Term). Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit is issued (the “UCP”) or the International Standby Practices (ISP98 International Chamber of Commerce Publication Number 590) (the “ISP98 Rules”)), and any subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by Agent, and each trade Letter of Credit shall be subject to the UCP. If, as of the last day of the Term, any Letter of Credit remains outstanding for any reason and is partially or wholly undrawn, Borrowers shall immediately Cash Collateralize the then outstanding amount of all such Letters of Credit (in an amount equal to 105% of the Maximum Undrawn Amount of all outstanding Letters of Credit determined as of the last day of the Term). For the purposes hereof “Cash Collateralize’’ means to pledge and deposit with or deliver to Agent, for the benefit of the Agent and the Lenders, as collateral for the Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to Agent (which documents are hereby consented to by the Lenders). Derivatives of such term shall have corresponding meanings. Borrowers hereby grant Agent, for the benefit of the Agent and the Lenders, a security interest in all such cash and deposit account balances and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts with PNC.
(c) Agent shall use its reasonable efforts to notify Lenders of the request by Borrowing Agent for a Letter of Credit or Acceptance hereunder.
(d) Agent shall have absolute discretion whether to accept any draft to create an Acceptance. Without in any way limiting Agent’s absolute discretion whether to accept any draft, Borrowing Agent will not present for acceptance any draft, and Agent will generally not accept any drafts (i) that arise out of transactions involving the sale of goods by any Borrower not in the Ordinary Course of Business, (ii) that involve a sale to an Affiliate of any Borrower, (iii) that involve any purchase for which Agent has not received all related documents, instruments and forms requested by Agent, (iv) for which Agent is unable to locate a purchaser in the ordinary course of business on standard terms, or (v) that is not eligible for discounting with Federal Reserve Banks pursuant to paragraph 7 of Section 13 of the Federal Reserve Act, as amended.
(e) Subject to terms set by Agent from time to time in its discretion with respect to the acceptance of drafts generally, Borrowing Agent, on behalf of any Borrower, may request Acceptances on any Business Day, by delivering to Agent a request for an Acceptance in form and substance satisfactory to the Agent and, promptly upon demand, copies of all invoices, delivery receipts and related documents relating to that request that Agent might require. Provided that the request for Acceptance is received prior to 10:30 a.m. and approved by Agent, Agent shall make the net proceeds of the Acceptance available to the applicable Borrower by crediting the net amount of the Acceptance in lawful money of the United States and in immediately available funds to the Borrowers’ Account. The net amount of the Acceptance shall be calculated by discounting the Acceptance at the Banker’s Acceptance Rate for the applicable maturity period upon the creation by Agent of an Acceptance.
(f) Borrowers shall pay to Agent the amount of any Acceptance on or before its maturity date. In addition, Agent is hereby irrevocably authorized, in its sole discretion, to make Revolving A Advances from time to time, or to charge any account of Borrowers, to pay any Acceptance for which payment is due, or at any time after the occurrence of an Event of Default to fund cash collateral for any outstanding Acceptance.
(g) Each Acceptance shall be payable in Dollars and shall be in the face amount of at least One Hundred Thousand and 00/100 Dollars ($100,000.00). The maturity of each Acceptance shall be in any thirty (30) day increment equal to or greater than thirty (30) and less than or equal to ninety (90) days or, if such day is not a Business Day, on the next succeeding Business Day and, in any event, no later than the day preceding the expiration of the Term. This Section 2.9(g) will not apply to Acceptances created under Letters of Credit.
(h) Borrowers, Agent, Lenders, and Issuer hereby acknowledge and agree that all Existing Letters of Credit shall constitute Letters of Credit under this Agreement on and after the Closing Date.
2.10 Requirements For Issuance of Letters of Credit and Acceptances.
(a) Borrowing Agent shall authorize and direct any Issuer to name the applicable Borrower as the “Applicant” or “Account Party” of each Letter of Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit or any Acceptance related thereto and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor or any Acceptance therefor.
(b) In connection with all Letters of Credit issued or caused to be issued by Agent under this Agreement, each Borrower hereby appoints Agent, or its designee, as its attorney, with full power and authority if an Event of Default shall have occurred, (i) to sign and/or endorse such Borrower’s name upon any warehouse or other receipts, letter of credit applications and acceptances, (ii) to sign such Borrower’s name on bills of lading; (iii) to clear Inventory through the United States of America Customs Department (“Customs”) in the name of such Borrower or Agent or Agent’s designee, and to sign and deliver to Customs officials powers of attorney in the name of such Borrower for such purpose; and (iv) to complete in such Borrower’s name or Agent’s, or in the name of Agent’s designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof. Neither Agent nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Agent’s or its attorneys’ willful misconduct. This power, being coupled with an interest, is irrevocable as long as any Letters of Credit remain outstanding.
2.11 Disbursements, Reimbursement.
(a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Revolver A Commitment Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing, respectively.
(b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, Agent will promptly notify Borrowing Agent. Provided that Borrowing Agent shall have received such notice, Borrowers shall reimburse (such obligation to reimburse Agent shall sometimes be referred to as a “Reimbursement Obligation”) Agent prior to 12:00 p.m. on each date that an amount is paid by Agent under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the amount so paid by Agent. In the event Borrowers fail to reimburse Agent for the full amount of any drawing under any Letter of Credit by 12:00 p.m. on the Drawing Date, Agent will promptly notify each Lender thereof, and Borrowers shall be deemed to have requested that a Revolving A Advance maintained as a Domestic Rate Loan be made by Lenders to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the lesser of (i) Maximum Revolving A Advance Amount or (ii) the Formula Amount and subject to Section 8.2 hereof. Any notice given by Agent pursuant to this Section 2.11(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(c) Each Lender shall, upon any notice pursuant to Section 2.11(b), make available to Agent an amount in immediately available funds equal to its Revolver A Commitment Percentage of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.11(d)) each be deemed to have made a Revolving A Advance maintained as a Domestic Rate Loan to Borrowers in that amount. If any Lender so notified fails to make available to Agent the amount of such Lender’s Revolver A Commitment Percentage of such amount by no later than 2:00 p.m. on the Drawing Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving A Advances maintained as a Domestic Rate Loans on and after the fourth day following the Drawing Date. Agent will promptly give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.11(c), provided that such Lender shall not be obligated to pay interest as provided in Section 2.11(c)(i) and (ii) until and commencing from the date of receipt of notice from Agent of a drawing.
(d) With respect to any unreimbursed drawing that is not converted into a Revolving A Advance maintained as a Domestic Rate Loan to Borrowers in whole or in part as contemplated by Section 2.11(b), because of Loan Parties’ failure to satisfy the conditions set forth in Section 8.2 (other than any notice requirements) or for any other reason, Borrowers shall be deemed to have incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to a Revolving A Advance maintained as a Domestic Rate Loan. Each Lender’s payment to Agent pursuant to Section 2.11(c) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a “Participation Advance” from such Lender in satisfaction of its Participation Commitment under this Section 2.11.
(e) Each Lender’s Participation Commitment shall continue until the last to occur of any of the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncancelled and (z) all Persons (other than Loan Parties) have been fully reimbursed for all payments made under or relating to Letters of Credit.
2.12 Repayment of Participation Advances.
(a) Upon (and only upon) receipt by Agent for its account of immediately available funds from Borrowers (i) in reimbursement of any payment made by Agent under the Letter of Credit with respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each Lender, in the same funds as those received by Agent, the amount of such Lender’s Revolver A Commitment Percentage of such funds, except Agent shall retain the amount of the Revolver A Commitment Percentage of such funds of any Lender that did not make a Participation Advance in respect of such payment by Agent (and, to the extent that any of the other Lender(s) have funded any portion of such Defaulting Lender’s Participation Advance in accordance with the provisions of Section 2.21, Agent will pay over to such Non-Defaulting Lenders a pro rata portion of the funds so withheld from such Defaulting Lender).
(b) If Agent is required at any time to return to any Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by Borrowers to Agent pursuant to Section 2.12(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith return to Agent the amount of its Revolver A Commitment Percentage of any amounts so returned by Agent plus interest at the Federal Funds Effective Rate.
2.13 Documentation.
Each Borrower agrees to be bound by the terms of the Letter of Credit Application and by Agent’s reasonable interpretations of any Letter of Credit or Acceptance issued or created on behalf of such Borrower and by Agent’s written regulations and customary practices relating to letters of credit, though Agent’s interpretations may be different from such Borrower’s own. In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following Borrowing Agent’s or any Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
2.14 Determination to Honor Drawing Request.
In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.
2.15 Nature of Participation and Reimbursement Obligations.
Each Lender’s obligation in accordance with this Agreement to make the Revolving A Advances or Participation Advances as a result of a drawing under a Letter of Credit, and the obligations of Borrowers to reimburse Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.15 under all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Agent, any Loan Party or any other Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving A Advance, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of Lenders to make Participation Advances under Section 2.10;
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) any claim of breach of warranty that might be made by any Borrower or any Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, cross-claim, defense or other right which any Borrower or any Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any Lender or any other Person, whether in connection with this Agreement, the Transactions or any unrelated transaction (including any underlying transaction between any Borrower or any Subsidiaries of such Borrower and the beneficiary for which any Letter of Credit was procured);
(v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has been notified thereof;
(vi) payment by Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;
(vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
(viii) any failure by Agent or any of Agent’s Affiliates to issue any Letter of Credit in the form requested by Borrowing Agent, unless Agent has received written notice from Borrowing Agent of such failure within three (3) Business Days after Agent shall have furnished Borrowing Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
(ix) any Material Adverse Effect on any Loan Party;
(x) any breach of this Agreement or any Other Document by any party thereto;
(xi) the occurrence or continuance of an insolvency proceeding with respect to any Loan Party;
(xii) the fact that a Default or Event of Default shall have occurred and be continuing;
(xiii) the fact that the Term shall have expired or this Agreement or the Obligations hereunder shall have been terminated; and
(xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
2.16 Indemnity.
In addition to amounts payable as provided in Section 16.5, each Loan Party hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel) which Agent or any of Agent’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (a) the gross negligence or willful misconduct of Agent as determined by a final and non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by Agent or any of Agent’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Body (all such acts or omissions herein called “Governmental Acts”).
2.17 Liability for Acts and Omissions.
As between Loan Parties and Agent and Lenders, each Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the respective foregoing, Agent shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if Agent shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Borrower and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Agent, including any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of Agent’s rights or powers hereunder. Nothing in the preceding sentence shall relieve Agent from liability for Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall Agent or Agent’s Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, Agent and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by Agent or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment), shall not put Agent under any resulting liability to any Loan Party or any Lender.
2.18 Additional Payments.
Any sums expended by Agent or any Lender due to any Loan Party’s failure to perform or comply with its obligations under this Agreement or any Other Document including any Loan Party’s obligations under Sections 3.5, 4.2, 4.4, 4.10, 4.12, 4.13, 4.14 and 6.13 hereof, may be charged to Borrowers’ Account as a Revolving A Advance and added to the Obligations.
2.19 Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced according to the applicable Revolver Commitment Percentages of the Lenders.
(b) Each payment (including each prepayment) by any Borrower on account of the principal of and interest on the Revolving Advances shall be applied to the Revolving Advances pro rata according to the applicable Revolver Commitment Percentages of Lenders. Except as expressly provided herein, all payments (including prepayments) to be made by any Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to PNC with respect to Swing Loans and to Agent on behalf of Lenders with respect to Revolving Advances to the Payment Office, in each case on or prior to 1:00 p.m. in Dollars and in immediately available funds. Notwithstanding the foregoing, each payment (including each prepayment, but excluding for the sake of clarity any payment of Revolving B PIK Interest paid in cash or in-kind in accordance with this Agreement) by any Borrower on account of the principal on the Revolving Advances shall be applied first to the Revolving A Advances until the Revolving A Facility Usage has been reduced to zero, and thereafter to the Revolving B Advances.
(c) (i) Notwithstanding anything to the contrary contained in Sections 2.19(a) and (b) hereof, commencing with the first Business Day following the Closing Date, each borrowing of Revolving Advances shall be advanced by Agent and each payment by any Borrower on account of Revolving Advances shall be applied first to those Revolving Advances advanced by Agent. On or before 1:00 p.m. on each Settlement Date commencing with the first Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the aggregate amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Week, then each Lender shall provide Agent with funds in an amount equal to its applicable Revolver Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent shall provide each Lender with funds in an amount equal to its applicable Revolver Commitment Percentage of the difference between (y) such repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the applicable Revolving Interest Rate on outstanding Advances (other than Swing Loans) which it has funded.
(iii) Promptly following each Settlement Date, Agent shall submit to each Lender a certificate with respect to payments received and Advances (other than Swing Loans) made during the Week immediately preceding such Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Participant (a “Benefited Lender”) shall at any time receive any payment of all or part of its Advances (other than Swing Loans), or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender (except as expressly set forth herein), if any, in respect of such other Lender’s Advances (other than Swing Loans), or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such Benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Advances (other than Swing Loans), or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s Advances (other than Swing Loans) may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender that such Lender will not make the amount which would constitute its applicable Revolver Commitment Percentage of the Advances (other than Swing Loans) available to Agent, Agent may (but shall not be obligated to) assume that such Lender shall make such amount available to Agent on the next Settlement Date and, in reliance upon such assumption, make available to Borrowers a corresponding amount. Agent will promptly notify Borrowing Agent of its receipt of any such notice from a Lender. If such amount is made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent on demand an amount equal to the product of (i) the daily average Federal Funds Rate (computed on the basis of a year of three hundred sixty (360) days) during such period as quoted by Agent, times (ii) such amount, times (iii) the number of days from and including such Settlement Date to the date on which such amount becomes immediately available to Agent. A certificate of Agent submitted to any Lender with respect to any amounts owing under this paragraph (e) shall be conclusive in the absence of manifest error. If such amount is not in fact made available to Agent by such Lender within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances hereunder, on demand from Borrowers; provided, however, that Agent’s right to such recovery shall not prejudice or otherwise adversely affect Borrowers’ rights (if any) against such Lender.
2.20 Use of Proceeds.
(a) Borrowers may use the proceeds of Revolving Advances to (i) pay fees and expenses payable under this Agreement or any of the Other Documents to the Agent and Lenders, (ii) provide for Borrowers’ working capital needs and reimburse drawings under Letters of Credit, (iii) to repay the obligations under the DIP Credit Agreement and certain other existing indebtedness and (iv) provide for Borrowers’ capital expenditure needs, in accordance with the terms and conditions contained herein.
(b) Without limiting the generality of Section 2.20(a) above, neither Borrowers, the Guarantors nor any other Person which may in the future become party to this Agreement or the Other Documents as a Borrower or Guarantor intends to use or shall use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act.
(c) Further, without limiting the generality of Section 2.20(a) above, Borrowers agree that they will not, and will not permit any of their Subsidiaries to, use the proceeds of any Advances hereunder or any proceeds of Collateral to commence or support, or to pay any professional fees incurred in connection with, any adversary proceeding, motion or other action that seeks to challenge, contest or otherwise seeks to impair or object to the extent, validity, enforceability or priority of the Liens, claims or rights in favor of Agent or any Lender.
2.21 Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein, in the event any Lender is a Defaulting Lender, all rights and obligations hereunder of such Defaulting Lender and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.21 so long as such Lender is a Defaulting Lender.
(b) (i) Except as otherwise expressly provided for in this Section 2.21, Revolving Advances shall be made pro rata from Lenders which are not Defaulting Lenders based on their respective Revolver Commitment Percentages, and no Revolver Commitment Percentage of any Lender or any pro rata share of any Advances required to be advanced by any Lender shall be increased as a result of any Lender being a Defaulting Lender. Amounts received in respect of principal of any type of Advances shall be applied to reduce such type of Advances of each Lender (other than any Defaulting Lender) in accordance with their Revolver Commitment Percentages; provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, re-lend to a Borrower the amount of such payments received or retained by it for the account of such Defaulting Lender.
(ii) Fees pursuant to Section 3.3(b) hereof shall cease to accrue in favor of such Defaulting Lender.
(iii) If any Swing Loans are outstanding or any Letters of Credit (or drawings under any Letter of Credit for which Issuer has not been reimbursed) are outstanding or exist at the time any such Lender becomes a Defaulting Lender, then:
(A) such Defaulting Lender’s Participation Commitment in the outstanding Swing Loans and of the Maximum Undrawn Amount of all outstanding Letters of Credit shall be reallocated among Non-Defaulting Lenders in proportion to the respective Revolver Commitment Percentages of such Non-Defaulting Lenders to the extent (but only to the extent) that (x) such reallocation does not cause the aggregate sum of outstanding Advances made by any such Non-Defaulting Lender plus such Lender’s reallocated Participation Commitment in the outstanding Swing Loans plus such Lender’s reallocated Participation Commitment in the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the Revolver A Commitment Percentage of the Maximum Revolving A Advance Amount of any such Non-Defaulting Lender, and (y) no Default or Event of Default has occurred and is continuing at such time;
(B) if the reallocation described in clause (A) above cannot, or can only partially, be effected, Borrowers shall within three (3) Business Days following notice by Agent (x) first, prepay any outstanding Swing Loans that cannot be reallocated, and (y) second, cash collateralize for the benefit of Issuer, Borrowers’ obligations corresponding to such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit (after giving effect to any partial reallocation pursuant to clause (A) above) in accordance with Section 3.2(b) for so long as such Obligations are outstanding;
(C) if Borrowers cash collateralize any portion of such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit pursuant to clause (B) above, Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 3.2(a) with respect to such Defaulting Lender’s Revolver A Commitment Percentage of Maximum Undrawn Amount of all Letters of Credit during the period such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit are cash collateralized;
(D) if Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit is reallocated pursuant to clause (A) above, then the fees payable to Lenders pursuant to Section 3.2(a) shall be adjusted and reallocated to Non-Defaulting Lenders in accordance with such reallocation; and
(E) if all or any portion of such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit is neither reallocated nor cash collateralized pursuant to clauses (A) or (B) above, then, without prejudice to any rights or remedies of Issuer or any other Lender hereunder, all Letter of Credit Fees payable under Section 3.2(a) with respect to such Defaulting Lender’s Revolver A Commitment Percentage of the Maximum Undrawn Amount of all Letters of Credit shall be payable to the Issuer (and not to such Defaulting Lender) until (and then only to the extent that) such Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit is reallocated and/or cash collateralized; and
(iv) So long as any Lender is a Defaulting Lender, Swing Loan Lender shall not be required to fund any Swing Loans and Issuer shall not be required to issue, amend or increase any Letter of Credit, unless such Issuer is satisfied that the related exposure and Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit and all Swing Loans (after giving effect to any such issuance, amendment, increase or funding) will be fully allocated to Non-Defaulting Lenders and/or cash collateral for such Letters of Credit will be provided by Borrowers in accordance with clause (A) and (B) above, and participating interests in any newly made Swing Loan or any newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.21(b)(iii)(A) above (and such Defaulting Lender shall not participate therein).
(c) A Defaulting Lender shall not be entitled to give instructions to Agent or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents, and all amendments, waivers and other modifications of this Agreement and the Other Documents may be made without regard to a Defaulting Lender and, for purposes of the definition of “Required Lenders”, a Defaulting Lender shall not be deemed to be a Lender, to have any outstanding Advances or a Revolver Commitment Percentage; provided, that this clause (c) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification described in clauses (i) or (iii) of Section 16.2(b).
(d) Other than as expressly set forth in this Section 2.21, the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in this Section 2.21 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.
(e) In the event that Agent, Borrowers, Swing Loan Lender and Issuer agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then Agent will so notify the parties hereto, and Participation Commitments of Lenders (including such cured Defaulting Lender) of the Swing Loans and Maximum Undrawn Amount of all outstanding Letters of Credit shall be reallocated to reflect the inclusion of such Lender’s Revolver Commitment Percentage thereof, and on such date such Lender shall purchase at par such of the Advances of the other Lenders as Agent shall determine may be necessary in order for such Lender to hold such Advances in accordance with its Revolver Commitment Percentage.
(f) If Swing Loan Lender or Issuer has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, Swing Loan Lender shall not be required to fund any Swing Loans and Issuer shall not be required to issue, amend or increase any Letter of Credit, unless Swing Loan Lender or Issuer, as the case may be, shall have entered into arrangements with Borrowers or such Lender, satisfactory to Swing Loan Lender or Issuer, as the case may be, to defease any risk to it in respect of such Lender hereunder.
(g) Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto. Such Defaulting Lender shall not be entitled to receive any fees for the duration of the Default Period.
2.22 Payment of Obligations.
Agent may charge to Borrowers’ Account as a Revolving A Advance or, at the discretion of Swing Loan Lender, as a Swing Loan (i) all payments with respect to any of the Obligations required hereunder (including without limitation principal payments, payments of interest, payments of Letter of Credit Fees and all other fees provided for hereunder and payments under Sections 16.5 and 16.9) as and when each such payment shall become due and payable (whether as regularly scheduled, upon or after acceleration, upon maturity or otherwise), (ii) without limiting the generality of the foregoing clause (i), all expenses which Agent incurs in connection with the forwarding of Advance proceeds and the establishment and maintenance of any Controlled Accounts as provided for in Section 4.15(h), and (iii) any sums expended by Agent or any Lender due to any Loan Party’s failure to perform or comply with its obligations under this Agreement or any Other Document, and all amounts so charged shall be added to the Obligations and shall be secured by the Collateral. To the extent Revolving A Advances are not actually funded by the other Lenders in respect of any such amounts so charged, all such amounts so charged shall be deemed to be Revolving A Advances made by and owing to Agent and Agent shall be entitled to all rights (including accrual of interest) and remedies of a Lender under this Agreement and the Other Documents with respect to such Revolving A Advances.
2.23 Swing Loans.
(a) Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, and in order to facilitate advances and repayments between Settlement Dates, PNC may, at its option, cancel at any time for any reason whatsoever, make swing loans (the “Swing Loans”) (which shall be Domestic Rate Loans bearing interest based upon the Alternate Base Rate only) to Borrowers at any time or from time to time after the date hereof to, but not including, the last day of the Term, in an aggregate principal amount up to but not in excess of ten percent (10%) of the Maximum Revolving A Advance Amount, provided that the aggregate principal amount of PNC’s Swing Loans and the Revolving A Advances of all the Lenders shall not exceed the lesser of (x) the Maximum Revolving A Advance Amount less the aggregate Maximum Undrawn Amount of outstanding Letters of Credit or (y) the Formula Amount. Within such limits of time and amount and subject to the other provisions of this Agreement, Borrowers may borrow, repay and reborrow pursuant to this Section 2.23.
(b) Except as otherwise provided herein, Borrowing Agent may from time to time prior to the last day of the Term request PNC to make Swing Loans by delivery to PNC not later than 12:00 p.m. on the proposed borrowing date of a duly completed request therefor in writing or a request by telephone immediately confirmed in writing by letter, facsimile or telex (each, a “Swing Loan Request”), it being understood that Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Swing Loan Request shall be irrevocable and shall specify the proposed borrowing date and the principal amount of such Swing Loan.
(c) So long as PNC elects to make Swing Loans, PNC shall, after receipt by it of a Swing Loan Request pursuant to Section 2.21(b) hereof, fund such Swing Loan to Borrowers in Dollars and immediately available funds at the Payment Office or other place that PNC may designate from time to time prior to 2:00 p.m. on the borrowing date.
(d) The obligation of Borrowers to repay the aggregate unpaid principal amount of the Swing Loans made to Borrowers by PNC, together with interest thereon, shall be evidenced by a Swing Note in substantially the form attached hereto as Exhibit 2.24(d), dated the Closing Date, and payable to the order of PNC in a face amount equal to the Swing Loan Commitment.
(e) PNC may, at its option, exercisable at any time for any reason whatsoever but not less frequently than on each Settlement Date, request repayment of the Swing Loans from the Lenders with a Revolving A Commitment, and each such Lender shall make a Revolving A Advance in an amount equal to such Lender’s Revolver A Commitment Percentage of the aggregate principal amount of the outstanding Swing Loans plus, if PNC so requests, accrued interest thereon, provided that no Lender shall be obligated in any event to make Advances in excess of its commitment to make Advances. Revolving A Advances made pursuant to the preceding sentence shall bear interest at the Revolving A Interest Rate for Domestic Rate Loans and shall be deemed to have been properly requested in accordance with Section 2.2 hereof without regard to any of the requirements of that provision. PNC shall provide notice to the Lenders (which may be telephonic or written notice by letter, facsimile or telex) that such Revolving A Advances are to be made under this Section 2.23(e) and of the apportionment among the Lenders, and the Lenders with a Revolving A Commitment shall be unconditionally obligated to fund such Revolving A Advances (whether or not (i) the conditions specified in Section 8.2 hereof are then satisfied or (ii) a Default or an Event of Default has occurred and is continuing unless, prior to the time such Swing Loans were made, the Required Lenders shall have directed Agent not to make Advances to Borrowers) by the time PNC so requests, which shall not be earlier than 3:00 p.m. on the next Business Day after the date the Lenders receive such notice from PNC.
2.24 Voluntary and Mandatory Prepayments.
(a) Voluntary Prepayment. Borrowers may prepay the Obligations in whole (but not in part) at any time; provided, that no prepayment in respect of Revolving B Advances shall be made unless the Revolving A Facility Usage has been reduced to zero.
(b) Mandatory Prepayments.
(i) When any Borrower sells or otherwise disposes of any Collateral for consideration in excess of $500,000 in any individual transaction or $2,000,000 in the aggregate during any fiscal year (other than Inventory in the Ordinary Course of Business), Borrowers shall repay the Advances in an amount equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable costs of such sales or other dispositions consented to by Agent, which consent to such costs shall not be unreasonably withheld), such repayments to be made promptly but in no event more than five (5) Business Days following receipt of such net proceeds, and until the date of payment, such proceeds shall be held in trust for Agent. The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof. Such repayments shall be applied first to the Advances in such order as Agent may determine, subject to Borrowers’ ability to re-borrow Revolving Advances in accordance with the terms hereof; provided, that no such repayment shall be applied to Revolving B Advances unless the Revolving A Facility Usage has been reduced to zero.
(ii) In the event of any issuance or other incurrence of Indebtedness, other than Indebtedness permitted under Section 7.4, by Borrowers, Borrowers shall, no later than three (3) Business Days after the receipt by Borrowers of the cash proceeds from any such issuance or incurrence of Indebtedness, repay the Advances in an amount equal to 100% of such cash proceeds. Such repayments will be applied in the same manner as set forth in Section 2.24(b)(i) hereof.
(iii) No later than three (3) Business Days after any Borrower or Loan Party’s receipt of any Extraordinary Receipt in excess of $500,000 in any individual transaction or $1,000,000 in the aggregate during any fiscal year, Borrowers shall repay the Advances in an amount equal to 100% of such Extraordinary Receipt. Such repayments will be applied in the same manner as set forth in Section 2.24(b)(i) hereof.
(iv) All proceeds received by Borrowers or Agent (i) under any insurance policy on account of damage or destruction of any assets or property of any Borrowers, or (ii) as a result of any taking or condemnation of any assets or property shall be applied in accordance with Section 2.24(b)(i) hereof.
(c) Notwithstanding anything contained herein to the contrary, but subject to the terms of Section 2.27, the Revolving Commitment Amounts shall not be reduced without the prior written consent of Required Lenders.
2.25 Reserved.
2.26 Additional Borrowers. Borrowing Agent may at any time, upon not less than ten (10) Business Days’ notice from Borrowing Agent to Agent, request Agent to approve the designation of any additional Subsidiary of Borrowing Agent that is organized or incorporated under the laws of the United States or any state or territory thereof (an “Applicant Borrower”) as a Borrower hereunder by delivering to Agent (which shall promptly deliver counterparts thereof to each Lender) a duly executed notice and agreement in form and substance satisfactory to Agent (a “Designated Borrower Request and Assumption Agreement”). The parties hereto acknowledge and agree that prior to any Applicant Borrower becoming a Borrower hereunder, Agent and the Lenders shall have received each of the items required by Section 8.3 for such Applicant Borrower, as well as a counterpart of the Designated Borrower Request and Assumption Agreement executed by such Applicant Borrower. If Agent consents to an Applicant Borrower becoming a Borrower hereunder (which consent shall not be unreasonably withheld provided that the provisions of Section 8.3 are satisfied and no Default or Event of Default has occurred and is continuing or would result by the admission of such Applicant Borrower as a Borrower), then promptly following receipt of all items set forth in Section 8.3, Agent shall send a notice in form and substance satisfactory to Agent (a “Designated Borrower Notice”) to Borrowing Agent and Lenders specifying the effective date upon which the Applicant Borrower shall constitute a Borrower for purposes hereof, whereupon each of Lenders agrees to permit such Borrower to receive Advances hereunder, on the terms and conditions set forth herein, and each of the parties agrees that such Subsidiary otherwise shall be a Borrower for all purposes of this Agreement; provided that no Advances may be requested on behalf of such Subsidiary and no proceeds of Revolving Advances may be distributed to such Subsidiary until the date five Business Days after such effective date unless otherwise agreed by Agent, and further provided that such Applicant Borrower has first executed and delivered to Agent a counterpart of the Designated Borrower Request and Assumption Agreement, to the extent it has not theretofore done so.
2.27 Termination or Reduction of Commitments.
The Borrowing Agent may, upon notice to Agent, terminate the Revolving Commitment Amounts, or from time to time permanently reduce the aggregate amount of the Revolving Commitment Amounts to an amount not less than the balance of the Advances outstanding without premium or penalty; provided that (i) any such notice shall be received by Agent not later than 1:00 P.M. three (3) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) Borrowers shall not terminate or reduce the aggregate amount of the Revolving A Commitment, if after giving effect thereto and to any concurrent prepayments hereunder, the outstanding Revolving A Advances would exceed the lesser of (x) the Maximum Revolving A Advance Amount and (y) the Formula Amount, (iv) no such reduction in the aggregate amount of the Revolving B Commitment shall be permitted if there is Revolving A Facility Usage outstanding at such time, and (v) if, after giving effect to any reduction of the Revolving Commitment Amounts, the Letter of Credit Sublimit or the Swing Loan Commitment exceeds the aggregate amount of the Revolving Commitment Amounts, such sublimit shall be automatically reduced by the amount of such excess. Agent will promptly notify the Lenders of any such notice of termination or reduction of the Revolving Commitment Amounts. Any reduction of the Revolving Commitment Amounts shall be applied to the Revolving Commitment Amount of each Lender according to its applicable Revolver Commitment Percentage. All fees accrued with respect thereto until the effective date of any termination of the Revolving Commitment Amounts shall be paid on the effective date of such termination.
III. | INTEREST AND FEES. |
3.1 Interest.
(a) Interest on Advances shall be payable in arrears (i) with respect to Revolving B Advances, on the first (1st) day of each fiscal quarter, (ii) with respect to Domestic Rate Loans, on the first (1st) day of each month, and (iii) with respect to Eurodollar Rate Loans, at the end of each Interest Period, provided that all accrued and unpaid interest shall be due and payable at the end of the Term. Interest charges shall be computed on the actual principal amount of Advances outstanding during the month, Interest Period or fiscal quarter, as applicable, at a rate per annum equal to the applicable Revolving Interest Rate. Interest on Revolving A Advances and Swing Loans shall be paid in cash. Interest on Revolving B Advances shall be paid-in-kind by capitalizing such amount and adding the portion of interest that has accrued in respect of the Revolving B Advances to the outstanding principal balance of the Revolving B Advances (and, thereafter, shall bear interest as principal pursuant to this Agreement) (any such capitalized interest paid-in-kind, the “Revolving B PIK Interest”); provided, that, interest on Revolving B Advances may be paid in cash at the election of Borrowers so long as, with respect to any such payment, the Revolving B Payment Conditions are satisfied both immediately before and immediately after giving effect to any such payment.
(b) Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or decreased, the Revolving A Interest Rate for Domestic Rate Loans shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time such change or changes remain in effect. The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without notice or demand of any kind on the effective date of any change in the Reserve Percentage as of such effective date. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, Revolving Advances shall bear interest at the applicable Revolving Interest Rate plus two percent (2.0%) per annum (the “Default Rate”).
3.2 Letter of Credit and Acceptance Fees.
(a) Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter of Credit and each Acceptance for the period from and excluding the date of issuance or creation of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit and each outstanding Acceptance multiplied by the Applicable Letter of Credit and Acceptance Fee Percentage, such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable monthly in arrears on the first (1st) day of each month and on the last day of the Term, and (y) to the Issuer, a fronting fee of one quarter of one percent (0.25%) per annum, together with any and all administrative, issuance, creation, amendment, payment and negotiation charges with respect to Letters of Credit and Acceptances and all fees and expenses as agreed upon by the Issuer and Borrowing Agent in connection with any Letter of Credit and Acceptances, including in connection with the opening, amendment or renewal of any such Letter of Credit, any acceptances created thereunder and Acceptances and shall reimburse Agent for any and all fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the “Letter of Credit and Acceptance Fees”). Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer’s prevailing charges for that type of transaction. All Letter of Credit and Acceptance Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Letter of Credit and Acceptance Fees described in clause (x) of this Section 3.2(a) shall be increased by an additional two percent (2.0%) per annum.
(b) Upon the occurrence and during the continuation of an Event of Default, at the option of Agent or at the direction of Required Lenders (or, in the case of any Event of Default under Section 10.7, immediately and automatically upon the occurrence of such Event of Default, without the requirement of any affirmative action by any party), or upon the expiration of the Term or any other termination of this Agreement (and also, if applicable, in connection with any mandatory prepayment under Section 2.24), Borrowers will cause cash to be deposited and maintained in an account with Agent, as cash collateral, in an amount equal to one hundred five percent (105%) of the Maximum Undrawn Amount of all outstanding Letters of Credit and Acceptances, and each Borrower hereby irrevocably authorizes Agent, in its discretion, on such Borrower’s behalf and in such Borrower’s name, to open such an account and to make and maintain deposits therein, or in an account opened by such Borrower, in the amounts required to be made by such Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of such Borrower coming into any Lender’s possession at any time. Agent, may, in its discretion, invest such cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and such Borrower mutually agree (or, in the absence of such agreement, as Agent may reasonably select) and the net return on such investments shall be credited to such account and constitute additional cash collateral, or Agent may (notwithstanding the foregoing) establish the account provided for under this Section 3.2(b) as a non-interest bearing account, and in such case Agent shall have no obligation (and Borrowers hereby waive any claim) under Article 9 of the Uniform Commercial Code or under any other Applicable Law to pay interest on such cash collateral being held by Agent. No Borrower may withdraw amounts credited to any such account except upon the occurrence of all of the following: (x) payment and performance in full of all Obligations (other than contingent indemnification obligations for which no claim giving rise thereto has been asserted), (y) expiration of all Letters of Credit and Acceptances and (z) termination of this Agreement. Borrowers hereby assign, pledge and grant to Agent, for its benefit and the ratable benefit of Issuer, Lenders and each other Secured Party, a continuing security interest in and to and Lien on any such cash collateral and any right, title and interest of Borrowers in any deposit account, securities account or investment account into which such cash collateral may be deposited from time to time to secure the Obligations, specifically including all Obligations with respect to any Letters of Credit. Borrowers agree that upon the coming due of any Reimbursement Obligations (or any other Obligations, including Obligations for Letter of Credit Fees) with respect to the Letters of Credit, Agent may use such cash collateral to pay and satisfy such Obligations.
3.3 Fees.
(a) Borrowers shall pay the amounts required to be paid in the Fee Letter in the manner and at the times required by the Fee Letter.
(b) Borrower shall pay a monthly fee (the “Facility Fee”), payable to Agent, for the ratable benefit of Lenders, which Facility Fee will be payable in arrears on the first (1st) day of every month with respect to the previous month, if during such previous month, the average daily Revolving A Facility Usage for each day of such month did not equal the Maximum Revolving A Advance Amount (for purposes of this computation, Swing Loans shall be deemed to be borrowed amounts under its commitment to make Revolving A Advances). The Facility Fee will be in an amount equal to the product of (i) 0.25% per annum (or, if the average daily Revolving A Facility Usage is less than fifty percent (50%) of the Maximum Revolving A Advance Amount, 0.375% per annum) multiplied by (ii) the amount by which the Maximum Revolving A Advance Amount exceeds such average daily Revolving A Facility Usage for such month.
3.4 Field Examinations. Borrowers shall pay to Agent promptly at the conclusion of any collateral evaluation performed by or for the benefit of Agent (namely any field examination, collateral analysis or other business analysis, the need for which is to be determined by Agent and which evaluation is undertaken by Agent or for Agent’s benefit) a collateral evaluation fee in an amount equal to $1,250 (or such other amount customarily charged by Agent to its customers) per day for each person employed to perform such evaluation, plus a per examination manager review fee (whether such examination is performed by Agent’s employees or by a third party retained by agent) in the amount of $1,300 (or such other amount customarily charged by Agent to its customers), plus all costs and disbursements incurred by Agent in the performance of such examination or analysis, and further provided that if third parties are retained to perform such collateral evaluations, either at the request of another Lender or for extenuating reasons determined by Agent in its Permitted Discretion, then such fees charged by such third parties plus all costs and disbursements incurred by such third party, shall be the responsibility of Borrowers and shall not be subject to the foregoing limits. So long as no Event of Default exists, Borrowers shall only be obligated to pay or reimburse Agent for up to three (3) field examinations in any calendar year.
3.5 Inventory Appraisals. Borrowers shall reimburse Agent for all reasonable and documented fees and out-of-pocket costs and expenses of any Inventory appraisals obtained by Agent; provided, that so long as no Event of Default exists, Borrowers shall have no obligation to pay or reimburse Agent for more than two (2) Inventory appraisals in any calendar year.
3.6 Computation of Interest and Fees.
(a) Interest and fees hereunder shall be computed on the basis of a year of three hundred sixty (360) days and for the actual number of days elapsed. If any payment to be made hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon (other than with respect to any Revolving B Advances) shall be payable at the Revolving A Interest Rate for Domestic Rate Loans during such extension; provided that with respect to any payment on Revolving B Advances, interest thereon shall be payable at the Revolving B Interest rate during such extension.
(b) For purposes of the Interest Act (Canada): (i) whenever any interest or fee under this Agreement is calculated on the basis of a period of time other than a calendar year, such rate used in such calculation, when expressed as an annual rate, is equivalent to (x) such rate, multiplied by (y) the actual number of days in the calendar year in which the period for which such interest or fee is calculated ends, and divided by (z) the number of days in such period of time; (ii) the principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement; and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.
3.7 Maximum Charges.
(a) In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate permissible under Applicable Law. In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under Applicable Law, such excess amount shall be first applied to any unpaid principal balance owed by Borrowers, and if the then remaining excess amount is greater than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to Borrowers and the provisions hereof shall be deemed amended to provide for such permissible rate.
(b) If any provision of this Agreement or Other Documents would oblige any Loan Party to make any payment of interest or other amount payable to any Lender in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by that Lender of “interest” at a “criminal rate” (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by Applicable Law or so result in a receipt by that Lender of “interest” at a “criminal rate”, such adjustment to be effected, to the extent necessary (but only to the extent necessary), as follows: first, by reducing the amount or rate of interest, and, thereafter, by reducing any fees, commissions, costs, expenses, premiums and other amounts required to be paid to the affected Lender which would constitute interest for purposes of section 347 of the Criminal Code (Canada). Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if a Lender shall have received an amount in excess of the maximum permitted by section 347 of the Criminal Code (Canada), the applicable Loan Party shall be entitled to obtain reimbursement from such Lender in an amount equal to such excess and, pending such reimbursement, such amount shall be deemed to be an amount payable by such Lender to such Loan Party.
3.8 Increased Costs.
In the event that any Applicable Law, any Change in Law, or compliance by any Lender (for purposes of this Section 3.8, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever with respect to this Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender of principal, fees, interest or any other amount payable hereunder or under any Other Documents (except, in each case, for (A) changes in the rate of Tax on the overall net income of Agent or any Lender by the jurisdiction in which it maintains its principal office, (B) Indemnified Taxes, (C) taxes described in clauses (b) through (c) of the definition of Excluded Taxes, and (D) Connection Income Taxes);
(b) impose, modify or hold applicable any reserve, special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank Eurodollar market any other condition with respect to this Agreement or any Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any Lender of making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent or such Lender deems to be material, then, in any case Borrowers shall promptly pay Agent or such Lender, upon its demand, such additional amount as will compensate Agent or such Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the Eurodollar Rate. Agent or such Lender shall certify the amount of such additional cost or reduced amount to Borrowing Agent, and such certification shall be conclusive absent manifest error.
3.9 Basis For Determining Interest Rate Inadequate or Unfair.
In the event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar Rate for any Interest Period;
(b) Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,
(c) the making, maintenance or funding of any Eurodollar Rate Loan has been made impracticable or unlawful by compliance by Agent or such Lender in good faith with any Applicable Law or any interpretation or application thereof by any Governmental Body or with any request or directive of any such Governmental Body (whether or not having the force of law), or
(d) the Eurodollar Rate will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of any Eurodollar Rate Loan,
then Agent shall give Borrowing Agent prompt written or telephonic of such determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent shall notify Agent no later than 12:00 p.m. two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan or, if Borrowing Agent shall notify Agent no later than 12:00 p.m. two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted into a Domestic Rate Loan or, if Borrowing Agent shall notify Agent no later than 12:00 p.m. two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Eurodollar Rate Loan shall be converted into an unaffected type of Eurodollar Rate Loan on the last Business Day of the then current Interest Period for such affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.
IV. | COLLATERAL; GENERAL TERMS. |
V. | REPRESENTATIONS AND WARRANTIES. |
VI. | AFFIRMATIVE COVENANTS. |
VII. | NEGATIVE COVENANTS. |
VIII. | CONDITIONS PRECEDENT. |
IX. | INFORMATION AS TO LOAN PARTIES. |
X. | EVENTS OF DEFAULT. |
XI. | LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT. |
XII. | WAIVERS AND JUDICIAL PROCEEDINGS. |
XIII. | EFFECTIVE DATE AND TERMINATION. |
XIV. | REGARDING AGENT. |
XV. | BORROWING AGENCY. |
XVI. | MISCELLANEOUS. |
(A) | If to Agent or PNC at: PNC Bank, National Association 200 South Wacker Drive, Suite 600 Chicago, Illinois 60606 Attention: Account Manager – A.M. Castle Telephone: (312) 454-2935 Facsimile: (312) 454-2919 | |
with a copy to: Goldberg Kohn Ltd. 55 East Monroe, Suite 3300 Chicago, Illinois 60603 Attention: Jeffrey Dunlop, Esq. Telephone: (312) 201-4000 Facsimile: (312) 863-7831 | ||
(B) | If to a Lender other than Agent, as specified on the signature pages hereof. |
(C) | If to Borrowing Agent or any Loan Party: A.M. Castle & Co. 1420 Kensington Road Suite 220 Oakbrook, IL 60523 Attention: Jeremy Steele Telephone: (847) 349-2413 Facsimile: (630) 390-7417 | |
with a copy to: McDermott Will & Emery LLP 444 West Lake Street, Suite 4000 Chicago, IL 60606-0029 Attention: George M. Houhanisin, Esq. Telephone: (312) 984-3367 Facsimile: (312) 276-9539 |
BORROWERS: |
A.M. CASTLE & CO. |
By: |
Name: |
Title: |
TOTAL PLASTICS, INC. |
By: |
Name: |
Title: |
HY-ALLOY STEELS COMPANY |
By: |
Name: |
Title: |
KEYSTONE TUBE COMPANY, LLC |
By: |
Name: |
Title: |
KEYSTONE SERVICE, INC. |
By: |
Name: |
Title: |
GUARANTORS: |
A.M. CASTLE & CO. (CANADA) INC. |
By: |
Name: |
Title: |
CASTLE METALS DE MEXICO, S.A. DE C.V. |
By: |
Name: |
Title: |
CASTLE METALS DE MEXICALI, S.A. DE C.V. |
By: |
Name: |
Title: |
Agent and Lenders: |
PNC BANK, NATIONAL ASSOCIATION, as Agent and as a Lender |
By: |
Name: |
Title: |