EXECUTION COPY
Exhibit 10.40
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CREDIT AGREEMENT
DATED AS OF May 22, 2003
by and among
PENHALL INTERNATIONAL CORP.,
PENHALL COMPANY,
PENHALL LEASING, L.L.C.,
and
BOB MACK CO., INC.
as Borrowers
and
THE OTHER PERSONS PARTY HERETO THAT ARE
DESIGNATED AS CREDIT PARTIES
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent, L/C Issuer and a Lender
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
as Lenders
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TABLE OF CONTENTS
PAGE
SECTION 1. AMOUNTS AND TERMS OF LOANS..................................................................... 2
1.1. Loans......................................................................................... 2
1.2. Interest and Applicable Margins............................................................... 7
1.3. Fees.......................................................................................... 9
1.4. Payments...................................................................................... 10
1.5. Prepayments................................................................................... 10
1.6. Maturity...................................................................................... 11
1.7. Eligible Accounts............................................................................. 12
1.8.A. Eligible Short-Term Rentals................................................................... 14
1.8.B. Eligible Parts and Supplies................................................................... 15
1.8.C. Eligible Equipment............................................................................ 17
1.8.D. Eligible Real Estate.......................................................................... 18
1.9. Loan Accounts................................................................................. 18
1.10. Yield Protection; Illegality.................................................................. 19
1.11. Taxes......................................................................................... 20
1.12. Omitted....................................................................................... 22
1.13. Borrower Representative....................................................................... 22
SECTION 2. AFFIRMATIVE COVENANTS.......................................................................... 22
2.1. Compliance with Laws and Contractual Obligations.............................................. 22
2.2. Insurance; Damage to or Destruction of Collateral............................................. 23
2.3. Inspection; Lender Meeting.................................................................... 24
2.4. Organizational Existence...................................................................... 25
2.5. Environmental Matters......................................................................... 25
2.6. Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases......... 25
2.7. Conduct of Business........................................................................... 26
2.8. Further Assurances............................................................................ 26
2.9. Omitted....................................................................................... 27
2.10. Cash Management Systems....................................................................... 27
SECTION 3. NEGATIVE COVENANTS............................................................................. 27
3.1. Indebtedness.................................................................................. 27
3.2. Liens and Related Matters..................................................................... 28
3.3. Investments................................................................................... 29
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.4. Contingent Obligations........................................................................ 29
3.5. Restricted Payments........................................................................... 30
3.6. Restriction on Fundamental Changes; Permitted Acquisitions.................................... 31
3.7. Disposal of Assets or Subsidiary Stock........................................................ 33
3.8. Transactions with Affiliates.................................................................. 34
3.9. Conduct of Business........................................................................... 34
3.10. Changes Relating to Indebtedness.............................................................. 34
3.11. Change of Name or Location.................................................................... 35
3.12. Fiscal Year................................................................................... 35
3.13. Press Release; Public Offering Materials...................................................... 35
3.14. Subsidiaries.................................................................................. 35
3.15. Bank Accounts................................................................................. 35
3.16. Hazardous Materials........................................................................... 35
3.17. ERISA......................................................................................... 36
3.18. Sale-Leasebacks............................................................................... 36
3.19. Prepayments of Other Indebtedness............................................................. 36
3.20. Changes to Management Services Agreements..................................................... 36
3.21. Changes in Depreciation Schedule.............................................................. 36
SECTION 4. FINANCIAL COVENANTS/REPORTING.................................................................. 36
4.1. Parts and Property Capital Expenditure Limits................................................. 36
4.2. Lease Limits.................................................................................. 37
4.3. Omitted....................................................................................... 37
4.4. Dollar Utilization Rate of Equipment Ratio.................................................... 37
4.5. Minimum Interest Coverage Ratio............................................................... 37
4.6. Maximum Leverage Ratio........................................................................ 37
4.7. Omitted....................................................................................... 38
4.8. Minimum Borrowing Availability................................................................ 38
4.9. Financial Statements and Other Reports........................................................ 38
4.10. Accounting Terms; Utilization of GAAP for Purposes of Calculations under Agreement............ 42
SECTION 5. REPRESENTATIONS AND WARRANTIES................................................................. 42
5.1. Disclosure.................................................................................... 42
5.2. No Material Adverse Effect.................................................................... 42
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.3. No Conflict................................................................................... 42
5.4. Organization, Powers, Capitalization and Good Standing........................................ 43
5.5. Financial Statements and Projections.......................................................... 43
5.6. Intellectual Property......................................................................... 44
5.7. Investigations, Audits, Etc................................................................... 44
5.8. Employee Matters.............................................................................. 44
5.9. Solvency...................................................................................... 44
5.10. Litigation; Adverse Facts..................................................................... 44
5.11. Use of Proceeds; Margin Regulations........................................................... 44
5.12. Ownership of Property; Liens.................................................................. 45
5.13. Environmental Matters......................................................................... 45
5.14. ERISA......................................................................................... 46
5.15. Brokers....................................................................................... 47
5.16. Deposit and Disbursement Accounts............................................................. 47
5.17. Agreements and Other Documents................................................................ 47
5.18. Insurance..................................................................................... 47
5.19. Bank Credit Facility.......................................................................... 48
5.20. Asbestos Litigation........................................................................... 48
SECTION 6. DEFAULT, RIGHTS AND REMEDIES................................................................... 48
6.1. Event of Default.............................................................................. 48
6.2. Suspension or Termination of Commitments...................................................... 50
6.3. Acceleration and Other Remedies............................................................... 50
6.4. Performance by Agent.......................................................................... 50
6.5. Application of Proceeds....................................................................... 51
SECTION 7. CONDITIONS TO LOANS............................................................................ 51
7.1. Conditions to Initial Loans................................................................... 51
7.2. Conditions to All Loans....................................................................... 51
SECTION 8. ASSIGNMENT AND PARTICIPATION................................................................... 52
8.1. Assignment and Participations................................................................. 52
8.2. Agent......................................................................................... 54
8.3. Set Off and Sharing of Payments............................................................... 57
8.4. Disbursement of Funds......................................................................... 58
8.5. Disbursements of Advances; Payment............................................................ 58
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 9. MISCELLANEOUS.................................................................................. 60
9.1. Indemnities................................................................................... 60
9.2. Amendments and Waivers........................................................................ 60
9.3. Notices....................................................................................... 61
9.4. Failure or Indulgence Not Waiver; Remedies Cumulative......................................... 62
9.5. Marshaling; Payments Set Aside................................................................ 62
9.6. Severability.................................................................................. 63
9.7. Lenders' Obligations Several; Independent Nature of Lenders' Rights........................... 63
9.8. Headings...................................................................................... 63
9.9. Applicable Law................................................................................ 63
9.10. Successors and Assigns........................................................................ 63
9.11. No Fiduciary Relationship; Limited Liability.................................................. 63
9.12. Construction.................................................................................. 63
9.13. Confidentiality............................................................................... 64
9.14. CONSENT TO JURISDICTION....................................................................... 64
9.15. WAIVER OF JURY TRIAL.......................................................................... 65
9.16. Survival of Warranties and Certain Agreements................................................. 65
9.17. Entire Agreement.............................................................................. 65
9.18. Counterparts; Effectiveness................................................................... 65
9.19. Replacement of Lenders........................................................................ 65
9.20. Delivery of Termination Statements and Mortgage Releases...................................... 66
9.21. Subordination of Intercompany Debt............................................................ 67
SECTION 10. CROSS-GUARANTY................................................................................. 68
10.1. Cross-Guaranty................................................................................ 68
10.2. Waivers by Borrowers.......................................................................... 68
10.3. Benefit of Guaranty........................................................................... 68
10.4. Waiver of Subrogation, Etc.................................................................... 69
10.5. Election of Remedies.......................................................................... 69
10.6. Limitation.................................................................................... 69
10.7. Contribution with Respect to Guaranty Obligations............................................. 70
10.8. Liability Cumulative.......................................................................... 70
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INDEX OF APPENDICES
Annexes
Annex A - Definitions
Annex B - Pro Rata Shares and Commitment Amounts
Annex C - Closing Checklist
Annex D - Pro Forma
Annex E - Lenders' Bank Accounts
Exhibits
Exhibit 1.1(a)(i) - Revolving Note
Exhibit 1.1(a)(ii) - Notice of Revolving Credit Advance
Exhibit 1.1(c) - Swing Line Note
Exhibit 1.2(e) - Notice of Continuation/Conversion
Exhibit 3.1(c) - Intercompany Note
Exhibit 4.9(e)(i) - Penhall Borrowing Base Certificate
Exhibit 4.9(e)(ii) - Penhall Leasing Borrowing Base Certificate
Exhibit 4.9(e)(iii) - Bob Mack Borrowing Base Certificate
Exhibit 4.9(e)(iv) - Holdings Borrowing Base Certificate
Exhibit 4.9(l) - Compliance Certificate
Exhibit 8.1 - Assignment Agreement
Schedules
Schedule 2.7 - Corporate and Trade Names
Schedule 3.1 - Existing Indebtedness
Schedule 3.2 - Liens
Schedule 3.3(e) - Investments
Schedule 3.4 - Contingent Obligations
Schedule 3.7 - Permitted Dispositions
Schedule 3.8 - Affiliate Transactions
Schedule 3.9 - Business Description
Schedule 5.4(a) - Jurisdictions of Organization and Qualifications
Schedule 5.4(b) - Capitalization
Schedule 5.6 - Intellectual Property
Schedule 5.7 - Investigations and Audits
Schedule 5.8 - Employee Matters
Schedule 5.10 - Litigation
Schedule 5.11 - Use of Proceeds
Schedule 5.12 - Real Estate
Schedule 5.13 - Environmental Matters
Schedule 5.14 - ERISA
Schedule 5.16 - Deposit and Disbursement Accounts
Schedule 5.17 - Agreements and Other Documents
Schedule 5.18 - Insurance
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CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of May 22, 2003 and entered into by
and among PENHALL INTERNATIONAL CORP., an Arizona corporation ("Holdings"),
PENHALL COMPANY, a California corporation ("Penhall"), PENHALL LEASING, L.L.C.,
a California limited liability company ("Penhall Leasing") and BOB MACK CO.,
INC., a California corporation ("Bob Mack") (Holdings, Penhall, Penhall Leasing
and Bob Mack are sometimes referred to herein as the "Borrowers" and
individually as a "Borrower"), the other persons designated as "Credit Parties"
on the signature pages hereof, the financial institutions who are or hereafter
become parties to this Agreement as Lenders, and GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (in its individual capacity "GE Capital"),
as the initial L/C Issuer and as Agent.
R E C I T A L S:
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WHEREAS, Borrowers desire that Lenders extend a revolving credit
facility to Borrowers to fund the repayment of certain indebtedness of Holdings
(as hereinafter defined) and Borrowers, to provide working capital financing for
Borrowers and to provide funds for other general corporate purposes of
Borrowers; and
WHEREAS, Borrowers desire to secure all of their Obligations (as
hereinafter defined) under the Loan Documents (as hereinafter defined) by
granting to Agent, for the benefit of Agent and Lenders, a security interest in
and lien upon substantially all of their existing and after-acquired personal
and real property; and
WHEREAS, Borrowers are willing to pledge to Agent, for the benefit of
Agent and Lenders, all of the Stock of their wholly owned Subsidiaries to secure
the Obligations; and
WHEREAS, each Credit Party has agreed to secure all of the Obligations
by granting to Agent, for the benefit of Agent and Lenders, a security interest
in and lien upon all of their existing and after-acquired personal and real
property; and
WHEREAS, each Borrower is willing to guaranty all of the Obligations of
each other Borrower in accordance with the provisions of Section 10; and
WHEREAS, each Credit Party that is not a Borrower under this Agreement
is willing to guaranty all of the Obligations of Borrowers; and
WHEREAS, all capitalized terms herein shall have the meanings ascribed
thereto in Annex A hereto which is incorporated herein by reference.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrowers, Credit Parties, Lenders
and Agent agree as follows:
SECTION 1.
AMOUNTS AND TERMS OF LOANS
1.1. Loans. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Borrowers and the
other Credit Parties contained herein:
(a) Revolving Loans.
(i) Each Revolving Lender agrees, severally and
not jointly, to make available to Borrowers from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each a "Revolving
Credit Advance") requested by Borrower Representative on behalf of the Borrowers
hereunder. The Pro Rata Share of the Revolving Loan of any Revolving Lender
(including, without duplication, Swing Line Loans) shall not at any time exceed
its separate Revolving Loan Commitment. Revolving Credit Advances may be repaid
and reborrowed; provided, that the amount of any Revolving Credit Advance to be
made at any time shall not exceed Borrowing Availability. Borrowing Availability
may be further reduced by Reserves imposed by Agent in its reasonable credit
judgment. Moreover, the sum of the Revolving Loan and Swing Line Loan
outstanding to any Borrower shall not exceed at any time that Borrower's
separate Borrowing Base. All Revolving Loans shall be repaid in full on the
Commitment Termination Date. Each Borrower shall execute and deliver to each
Revolving Lender a note to evidence the Revolving Loan Commitment of that
Revolving Lender. Each note shall be in the maximum principal amount of the
Revolving Loan Commitment of the applicable Revolving Lender, dated the Closing
Date and substantially in the form of Exhibit 1.1(a)(i) (each as amended,
modified, extended, substituted or replaced from time to time, a "Revolving
Note" and, collectively, the "Revolving Notes"). Other than pursuant to Section
1.1(a)(ii), if at any time the outstanding Revolving Loans (including the Swing
Line Loans) exceed the Borrowing Base or the outstanding balance of the
Revolving Loan of any Borrower (including the Swing Line Loans advanced to that
Borrower) exceeds that Borrower's separate Borrowing Base (any such excess
Revolving Loans are herein referred to collectively as "Overadvances"), Lenders
shall not be obligated to make Revolving Credit Advances, no additional Letters
of Credit shall be issued and, except as provided in Section 1.1(a)(ii) below,
Revolving Loans must be repaid immediately and Letters of Credit cash
collateralized in an amount sufficient to eliminate any Overadvances.
Furthermore, if, at any time, the outstanding balance of the Revolving Loan of
any Borrower (including, without duplication, Swing Line Loans) exceeds that
Borrower's separate Borrowing Base (including, without duplication, Swing Line
Loans), the applicable Borrower shall immediately repay its Revolving Credit
Advances in the amount of such excess (and, if necessary, shall provide cash
collateral for its Letter of Credit Obligations). All Overadvances shall
constitute Index Rate Loans and shall bear interest at the Default Rate.
Revolving Credit Advances which are to be made as Index Rate Loans may be
requested in any amount with one (1) Business Day's prior written notice
required for funding requests equal to or greater than $5,000,000. For funding
requests for such Loans less than $5,000,000, written notice must be provided by
1:00 p.m. (New York time) on the Business Day on which such Revolving Credit
Advance is to be made. All requests for Revolving Credit Advances that are to be
made as LIBOR Loans require three (3) Business Days' prior written notice.
Written notices for funding requests shall be in the form attached as Exhibit
1.1(a)(ii) ("Notice of Revolving Credit Advance"). Each Revolving Credit Advance
to Penhall Leasing shall be in a minimum amount of $250,000. Each Revolving
Credit Advance to Holdings, Penhall and Bob Mack shall be in a minimum amount of
$100,000.
(ii) If Borrower Representative on behalf of
Borrowers requests that Revolving Lenders make, or permit to remain outstanding
any Overadvances, Agent may, in its sole discretion, elect to make, or permit to
remain outstanding such Overadvances; provided, however, that Agent may not
cause Revolving Lenders to make, or permit to remain outstanding, (a) aggregate
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Revolving Loans (including, without duplication, Swing Line Loans) in excess of
the Maximum Amount or (b) Overadvances in an aggregate amount in excess of
$5,000,000. If an Overadvance is made, or permitted to remain outstanding,
pursuant to the preceding sentence, then all Revolving Lenders shall be bound to
make, or permit to remain outstanding such Overadvance based upon their Pro Rata
Shares of the Revolving Loan Commitments in accordance with the terms of this
Agreement. If an Overadvance remains outstanding for more than ninety (90) days
during any one hundred eighty (180) day period, Revolving Loans must be repaid
immediately in an amount sufficient to eliminate all of such Overadvances.
Furthermore, holders of a majority of the Revolving Loan Commitment may
prospectively revoke Agent's ability to make or permit Overadvances by written
notice to Agent. Any Overadvance may be made as a Swing Line Advance.
(b) Omitted.
(c) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender
upon Agent's receipt of any Notice of Revolving Credit Advance. Subject to the
terms and conditions hereof, the Swing Line Lender may, in its discretion, make
available from time to time until the Commitment Termination Date advances
(each, a "Swing Line Advance") in accordance with any such notice. The
provisions of this Section 1.1(c) shall not relieve Revolving Lenders of their
obligations to make Revolving Credit Advances under Section 1.1(a); provided
that if the Swing Line Lender makes a Swing Line Advance pursuant to any such
notice, such Swing Line Advance shall be in lieu of any Revolving Credit Advance
that otherwise may be made by Revolving Lenders pursuant to such notice. Except
as provided in Section 1.1(a)(ii) above, no Swing Line Advance shall be made if
(A) such Swing Line Advance, when added to the other Swing Line Advances then
outstanding, shall exceed the Swing Line Commitment or (B) such Swing Line
Advance shall exceed Borrowing Availability (the lesser of (A) and (B), "Swing
Line Availability"). Moreover, except for Overadvances, the Swing Line Loan
outstanding to any Borrower shall not exceed at any time that Borrower's
separate Borrowing Base less the Revolving Loan outstanding to such Borrower.
Until the Commitment Termination Date, Borrowers may from time to time borrow,
repay and reborrow under this Section 1.1(c). Each Swing Line Advance shall be
made pursuant to a Notice of Revolving Credit Advance delivered by Borrower
Representative on behalf of the applicable Borrower to Agent in accordance with
Section 1.1(a). Unless the Swing Line Lender has received at least one (1)
Business Day's prior written notice from Requisite Lenders instructing it not to
make a Swing Line Advance, the Swing Line Lender shall, notwithstanding the
failure of any condition precedent set forth in Section 7.2, be entitled to fund
that Swing Line Advance, and to have each Revolving Lender make Revolving Credit
Advances in accordance with Section 1.1(c)(iii) or purchase participating
interests in accordance with Section 1.1(c)(iv). Notwithstanding any other
provision of this Agreement or the other Loan Documents, the Swing Line Loan
shall constitute an Index Rate Loan. Borrowers shall repay the aggregate
outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent. The entire unpaid balance of the Swing Line Loan and all other
noncontingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date if not sooner
paid in full. Each Swing Line Advance shall be in a minimum amount of $250,000.
(ii) Each Borrower shall execute and deliver to
the Swing Line Lender a promissory note to evidence the Swing Line Commitment.
Each note shall be in the principal amount of the Swing Line Commitment of the
Swing Line Lender, dated the Closing Date and substantially in the form of
Exhibit 1.1(c) (each as amended, modified, extended, substituted or replaced
from time to time, a "Swing Line Note" and, collectively the "Swing Line
Notes"). Each Swing Line Note shall represent the obligation of each Borrower to
pay the amount of the Swing Line Commitment or, if less, the aggregate unpaid
principal amount of all Swing Line Advances made to such Borrower together with
interest thereon as prescribed in Section 1.2.
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(iii) The Swing Line Lender, at any time and from
time to time in its sole and absolute discretion (but no less frequently than
weekly), may on behalf of any Borrower (and each Borrower hereby irrevocably
authorizes the Swing Line Lender to so act on its behalf) request each Revolving
Lender (including the Swing Line Lender) to make a Revolving Credit Advance to
each Borrower (which shall be an Index Rate Loan) in an amount equal to that
Revolving Lender's Pro Rata Share of the principal amount of the applicable
Borrower's Swing Line Loan (the "Refunded Swing Line Loan") outstanding on the
date such notice is given. Unless any of the events described in Sections 6.1(f)
and 6.1(g) has occurred (in which event the procedures of Section 1.1(c)(iv)
shall apply) and regardless of whether the conditions precedent set forth in
this Agreement to the making of a Revolving Credit Advance are then satisfied,
each Revolving Lender shall disburse directly to Agent, its Pro Rata Share of a
Revolving Credit Advance on behalf of the Swing Line Lender, prior to 3:00 p.m.
(New York time), in immediately available funds on the Business Day next
succeeding the date that notice is given. The proceeds of those Revolving Credit
Advances shall be immediately paid to the Swing Line Lender and applied to repay
the Refunded Swing Line Loan of the applicable Borrower.
(iv) If, prior to refunding a Swing Line Loan
with a Revolving Credit Advance pursuant to Section 1.1(c)(iii), one of the
events described in Sections 6.1(f) or 6.1(g) has occurred, then, subject to the
provisions of Section 1.1(c)(v) below, each Revolving Lender shall, on the date
such Revolving Credit Advance was to have been made for the benefit of the
applicable Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan to such Borrower in an amount
equal to its Pro Rata Share (determined with respect to Revolving Loans) of such
Swing Line Loan. Upon request, each Revolving Lender shall promptly transfer to
the Swing Line Lender, in immediately available funds, the amount of its
participation interest.
(v) Each Revolving Lender's obligation to make
Revolving Credit Advances in accordance with Section 1.1(c)(iii) and to purchase
participation interests in accordance with Section 1.1(c)(iv) shall be absolute
and unconditional and shall not be affected by any circumstance, including (A)
any setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender may have against the Swing Line Lender, any Borrower or any other Person
for any reason whatsoever; (B) the occurrence or continuance of any Default or
Event of Default; (C) any inability of any Borrower to satisfy the conditions
precedent to borrowing set forth in this Agreement at any time or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. Swing Line Lender shall be entitled to recover, on demand, from
each Revolving Lender the amounts required pursuant to Sections 1.1.(c)(iii) or
1.1(c)(iv), as the case may be. If any Revolving Lender does not make available
such amounts to Agent or the Swing Line Lender, as applicable, the Swing Line
Lender shall be entitled to recover, on demand, such amount on demand from such
Revolving Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal Funds Rate for the
first two (2) Business Days and at the Index Rate thereafter.
(d) Letters of Credit. The Revolving Loan Commitment may,
in addition to advances under the Revolving Loan, be utilized, upon the request
of Borrower Representative on behalf of the applicable Borrower, for the
issuance of Letters of Credit. Immediately upon the issuance by an L/C Issuer of
a Letter of Credit, and without further action on the part of Agent or any of
the Lenders, each Revolving Lender shall be deemed to have purchased from such
L/C Issuer a participation in such Letter of Credit (or in its obligation under
a risk participation agreement with respect thereto) equal to such Revolving
Lender's Pro Rata Share of the aggregate amount available to be drawn under such
Letter of Credit.
(i) Maximum Amount. The aggregate amount of
Letter of Credit Obligations with respect to all Letters of Credit outstanding
at any time shall not exceed $25,000,000 ("L/C Sublimit").
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(ii) Reimbursement. Borrowers shall be
irrevocably and unconditionally obligated forthwith without presentment, demand,
protest or other formalities of any kind (including for purposes of Section 10),
to reimburse any L/C Issuer on demand in immediately available funds for any
amounts paid by such L/C Issuer with respect to a Letter of Credit, including
all reimbursement payments, Fees, Charges, costs and expenses paid by such L/C
Issuer. Borrowers hereby authorize and direct Agent, at Agent's option, to debit
Borrowers' account (by increasing the outstanding principal balance of the
Revolving Credit Advances) in the amount of any payment made by an L/C Issuer
with respect to any Letter of Credit. All amounts paid by an L/C Issuer with
respect to any Letter of Credit that are not immediately repaid by Borrowers
with the proceeds of a Revolving Credit Advance or otherwise shall bear interest
at the interest rate applicable to Revolving Loans which are Index Rate Loans
plus, at the election of Agent or Requisite Lenders, an additional two percent
(2.00%) per annum. Each Revolving Lender agrees to fund its Pro Rata Share of
any Revolving Loan made pursuant to this Section 1.1(d)(ii). In the event Agent
elects not to debit Borrowers' account and Borrowers fail to reimburse the L/C
Issuer in full on the date of any payment in respect of a Letter of Credit,
Agent shall promptly notify each Revolving Lender of the amount of such
unreimbursed payment and the accrued interest thereon and each Revolving Lender,
on the next Business Day prior to 3:00 p.m. (New York time), shall deliver to
Agent an amount equal to its Pro Rata Share thereof in same day funds. Each
Revolving Lender hereby absolutely and unconditionally agrees to pay to the L/C
Issuer upon demand by the L/C Issuer such Revolving Lender's Pro Rata Share of
each payment made by the L/C Issuer in respect of a Letter of Credit and not
immediately reimbursed by Borrowers or satisfied through a debit of Borrowers'
account. Each Revolving Lender acknowledges and agrees that its obligations
pursuant to this subsection in respect of Letters of Credit are absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including setoff, counterclaim, the occurrence and continuance of a Default or
an Event of Default or any failure by Borrowers to satisfy any of the conditions
set forth in Section 7.2. If any Revolving Lender fails to make available to the
L/C Issuer the amount of such Revolving Lender's Pro Rata Share of any payments
made by the L/C Issuer in respect of a Letter of Credit as provided in this
Section 1.1(d)(ii), the L/C Issuer shall be entitled to recover such amount on
demand from such Revolving Lender together with interest at the Index Rate.
(iii) Request for Letters of Credit. Borrower
Representative shall give Agent at least three (3) Business Days' prior written
notice specifying the date a Letter of Credit is requested to be issued, the
amount and the name and address of the beneficiary, a description of the
transactions proposed to be supported thereby and the name of the Borrower for
whose account such Letter of Credit is to be issued. If Agent informs Borrower
Representative that the L/C Issuer cannot issue the requested Letter of Credit
directly, such Borrower Representative may request that L/C Issuer arrange for
the issuance of the requested Letter of Credit under a risk participation
agreement with another financial institution reasonably acceptable to Agent, L/C
Issuer and Borrower Representative. The issuance of any Letter of Credit under
this Agreement shall be subject to the conditions that the Letter of Credit (i)
supports a transaction entered into in the ordinary course of business of
Borrowers and (ii) is in a form, is for an amount and contains such terms and
conditions as are reasonably satisfactory to the L/C Issuer and, in the case of
standby letters of credit, Agent. The initial notice requesting the issuance of
a Letter of Credit shall be accompanied by the form of the Letter of Credit and
the Master Standby Agreement or Master Documentary Agreement, as applicable, and
an application for a letter of credit, if any, then required by the L/C Issuer
completed in a manner satisfactory to such L/C Issuer. If any provision of any
application or reimbursement agreement is inconsistent with the terms of this
Agreement, then the provisions of this Agreement, to the extent of such
inconsistency, shall control.
(iv) Expiration Dates of Letters of Credit. The
expiration date of each Letter of Credit shall be on a date which is not later
than the earlier of (a) one year from its date of issuance or (b) the thirtieth
(30th) day prior to the date set forth in clause (a) of the definition of the
term Commitment Termination Date. Notwithstanding the foregoing, a Letter of
Credit may provide for
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automatic extensions of its expiration date for one (1) or more successive one
(1) year periods provided that the L/C Issuer has the right to terminate such
Letter of Credit on each such annual expiration date and no renewal term may
extend the term of the Letter of Credit to a date that is later than the
thirtieth (30th) day prior to the date set forth in clause (a) of the definition
of the term Commitment Termination Date. The L/C Issuer may elect not to renew
any such Letter of Credit and, upon direction by Agent or Requisite Lenders,
shall not renew any such Letter of Credit at any time during the continuance of
an Event of Default, provided that, in the case of a direction by Agent or
Requisite Lenders, the L/C Issuer receives such directions prior to the date
notice of non-renewal is required to be given by the L/C Issuer and the L/C
Issuer has had a reasonable period of time to act on such notice.
(v) Obligations Absolute. The obligation of
Borrowers to reimburse the L/C Issuer, Agent and Lenders for payments made in
respect of Letters of Credit issued by the L/C Issuer shall be unconditional and
irrevocable and shall be paid under all circumstances strictly in accordance
with the terms of this Agreement, including the following circumstances: (a) any
lack of validity or enforceability of any Letter of Credit; (b) any amendment or
waiver of or any consent or departure from all or any of the provisions of any
Letter of Credit or any Loan Document; (c) the existence of any claim, set-off,
defense or other right which Borrowers, any of their Subsidiaries or Affiliates
or any other Person may at any time have against any beneficiary of any Letter
of Credit, Agent, any L/C Issuer, any Lender or any other Person, whether in
connection with this Agreement, any other Loan Document or any other related or
unrelated agreements or transactions; (d) any draft or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; (e) payment under any Letter of Credit against presentation of a
draft or other document that does not substantially comply with the terms of
such Letter of Credit; or (f) any other act or omission to act or delay of any
kind of any L/C Issuer, Agent, any Lender or any other Person or any other event
or circumstance whatsoever that might, but for the provisions of this Section
1.1(d)(v), constitute a legal or equitable discharge of Borrowers' obligations
hereunder.
(vi) Obligations of L/C Issuers. Each L/C Issuer
(other than GE Capital) hereby agrees that it will not issue a Letter of Credit
hereunder until it has provided Agent with written notice specifying the amount
and intended issuance date of such Letter of Credit and Agent has returned a
written acknowledgment of such notice to L/C Issuer. Each L/C Issuer (other than
GE Capital) further agrees to provide to Agent: (a) a copy of each Letter of
Credit issued by such L/C Issuer promptly after its issuance; (b) a weekly
report summarizing available amounts under Letters of Credit issued by such L/C
Issuer, the dates and amounts of any draws under such Letters of Credit, the
effective date of any increase or decrease in the face amount of any Letters of
Credit during such week and the amount of any unreimbursed draws under such
Letters of Credit; and (c) such additional information reasonably requested by
Agent from time to time with respect to the Letters of Credit issued by such L/C
Issuer. Without limiting the generality of the foregoing, it is expressly
understood and agreed by Borrowers that the absolute and unconditional
obligation of Borrowers to Agent and Lenders hereunder to reimburse payments
made under a Letter of Credit will not be excused by the gross negligence or
willful misconduct of the L/C Issuer. However, the foregoing shall not be
construed to excuse an L/C Issuer from liability to Borrowers to the extent of
any direct damages (as opposed to consequential damages, with Borrowers hereby
waiving all claims for any consequential damages to the extent permitted by
applicable law) suffered by Borrowers that are not subject to indemnification
under the Master Standby Agreement or the Master Documentary Agreement.
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(e) Funding Authorization. The proceeds of all Loans made
pursuant to this Agreement subsequent to the Closing Date are to be funded by
Agent by wire transfer to the account designated by Borrower Representative
below (the "Disbursement Account"):
Bank: Bank of America
ABA No.: 121000358
Bank Address: 675 Anton Blvd, Second floor, Costa Mesa, 92626
Account No.: 1456300539
Reference: Penhall International - Concentration Account
Borrower Representative shall provide Agent with written notice of any change in
the foregoing instructions at least three (3) Business Days before the desired
effective date of such change.
1.2. Interest and Applicable Margins.
(a) Borrowers shall pay interest to Agent, for the
ratable benefit of Lenders, in accordance with the various Loans being made by
each Lender, in arrears on each applicable Interest Payment Date, at the
following rates: (i) with respect to the Revolving Credit Advances which are
designated as Index Rate Loans (and for all other Obligations not otherwise set
forth below), the Index Rate plus the Applicable Revolver Index Margin per annum
or, with respect to Revolving Credit Advances which are designated as LIBOR
Loans, at the election of Borrower Representative, the applicable LIBOR Rate
plus the Applicable Revolver LIBOR Margin per annum; and (ii) with respect to
the Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin
per annum.
The Applicable Margins are as follows:
Applicable Revolver Index Margin 2.0%
Applicable Revolver LIBOR Margin 3.5%
Applicable L/C Margin 3.5%
(b) If any payment on any Loan becomes due and payable on
a day other than a Business Day, the maturity thereof will be extended to the
next succeeding Business Day (except as set forth in the definition of LIBOR
Period) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum
basis and interest shall be made by Agent on the basis of a 360-day year, in
each case for the actual number of days occurring in the period for which such
Fees and interest are payable. The Index Rate is a floating rate determined for
each day. Each determination by Agent of an interest rate and Fees hereunder
shall be final, binding and conclusive on Borrowers, absent manifest error.
(d) So long as an Event of Default has occurred and is
continuing under Section 6.1(a), (f) or (g) and without notice of any kind, or
so long as any other Event of Default has occurred and is continuing and at the
election of Agent (or upon the written request of Requisite Lenders) confirmed
by written notice from Agent to Borrower Representative, the interest rates
applicable to the Loans and the Letter of Credit Fee shall be increased by up to
two percentage points (2%) per annum above the rates of interest or the rate of
such Fee otherwise applicable hereunder ("Default Rate"), and all outstanding
Obligations shall bear interest at the Default Rate applicable to such
Obligations. Interest and Letter of Credit Fees at the Default Rate shall accrue
from the initial date of such Event of Default until
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that Event of Default is cured or waived and shall be payable upon demand, but
in any event, shall be payable on the next regularly scheduled payment date set
forth herein for such Obligation.
(e) Borrower Representative shall have the option to (i)
request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert
at any time all or any part of outstanding Loans (other than the Swing Line
Loan) from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an
Index Rate Loan, subject to payment of the LIBOR Breakage Fee in accordance with
Section 1.3(e) if such conversion is made prior to the expiration of the LIBOR
Period applicable thereto, or (iv) continue all or any portion of any Loan
(other than the Swing Line Loan) as a LIBOR Loan upon the expiration of the
applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan
shall commence on the first day after the last day of the LIBOR Period of the
Loan to be continued. Any Loan or group of Loans having the same proposed LIBOR
Period to be made or continued as, or converted into, a LIBOR Loan must be in a
minimum amount of $1,000,000 and integral multiples of $100,000 in excess of
such amount. Any such election must be made by 1:00 p.m. (New York time) on the
third Business Day prior to (1) the date of any proposed Revolving Credit
Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR
Period with respect to any LIBOR Loans to be continued as such, or (3) the date
on which Borrower Representative wishes to convert any Index Rate Loan (other
than the Swing Line Loan) to a LIBOR Loan for a LIBOR Period designated by
Borrower Representative in such election. If no election is received with
respect to an existing LIBOR Loan by 1:00 p.m. (New York time) on the third
Business Day prior to the end of the LIBOR Period with respect thereto, that
LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR
Period. Borrower Representative must make such election by notice to Agent in
writing, by fax or overnight courier. In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a "Notice
of Conversion/Continuation") in the form of Exhibit 1.2(e). No Loan shall be
made, converted into or continued as a LIBOR Loan, if an Event of Default has
occurred and is continuing and Agent or Requisite Lenders have determined not to
make or continue any Loan as a LIBOR Loan as a result thereof.
(f) Notwithstanding anything to the contrary set forth in
this Section 1.2, if a court of competent jurisdiction determines in a final
order that any rate of interest payable hereunder exceeds the highest rate of
interest permissible under law (the "Maximum Lawful Rate"), then so long as the
Maximum Lawful Rate would be so exceeded, such rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if
at any time thereafter such rate of interest payable hereunder is less than the
Maximum Lawful Rate, Borrowers shall continue to pay interest hereunder at the
Maximum Lawful Rate until such time as the total interest received by Agent, on
behalf of Lenders, is equal to the total interest that would have been received
had such interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, such interest hereunder shall be paid at
the rate(s) of interest and in the manner provided in Sections 1.2(a) through
(e), unless and until such rate of interest again exceeds the Maximum Lawful
Rate, and at that time this paragraph shall again apply. In no event shall the
total interest received by any Lender pursuant to the terms hereof exceed the
amount that such Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate.
If the Maximum Lawful Rate is calculated pursuant to this paragraph, such
interest shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.2(f), a court of competent
jurisdiction shall determine by a final, non-appealable order that a Lender has
received interest hereunder in excess of the Maximum Lawful Rate, Agent shall,
to the extent permitted by applicable law, promptly apply such excess as
specified in Section 1.5(e) and thereafter shall refund any excess to Borrowers
or as such court of competent jurisdiction may otherwise order.
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1.3. Fees.
(a) Fee Letter. Borrowers shall pay to GE Capital,
individually, the Fees specified in that certain fee letter dated as of April
24, 2003 among Penhall and GE Capital (the "GE Capital Fee Letter"), at the
times specified for payment therein.
(b) Unused Line Fee. As additional compensation for the
Revolving Lenders, Borrowers shall pay to Agent, jointly and severally, for the
ratable benefit of such Lenders, in arrears, on the first Business Day of each
month prior to the Commitment Termination Date and on the Commitment Termination
Date, a fee for Borrowers' non-use of available funds in an amount equal to one
half of one percent (.50%) per annum multiplied by the difference between (x)
the Maximum Amount (as it may be reduced from time to time) and (y) the average
for the period of the daily closing balances of the Revolving Loan (including,
without duplication, Swing Line Loans and Letter of Credit Obligations)
outstanding during the period for which such Fee is due.
(c) Omitted.
(d) Letter of Credit Fee. Borrowers agree, jointly and
severally, to pay to Agent for the benefit of Revolving Lenders, as compensation
to such Revolving Lenders for Letter of Credit Obligations incurred hereunder,
(i) all costs and expenses incurred by Agent or any Lender on account of such
Letter of Credit Obligations, and (ii) for each month during which any Letter of
Credit Obligation shall remain outstanding, a fee (the "Letter of Credit Fee")
in an amount per annum equal to the Applicable L/C Margin multiplied by the
maximum amount available from time to time to be drawn under the applicable
Letter of Credit. Such fee shall be paid to Agent for the benefit of the
Revolving Lenders in arrears, on the first Business Day of each month and on the
Commitment Termination Date. In addition, Borrowers shall pay to each L/C Issuer
(x) a fee in an amount equal to 0.25% per annum multiplied by the average daily
undrawn face amount of all Letters of Credit issued by such L/C Issuer, which
shall be paid to such L/C Issuer in arrears, on the first Business Day of each
month and on the Commitment Termination Date, and (y) on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) LIBOR Breakage Fee. Upon (i) any default by any
Borrower in making any borrowing of, conversion into or continuation of any
LIBOR Loan following Borrower Representative's delivery to Agent of any LIBOR
Loan request in respect thereof or (ii) any payment of a LIBOR Loan on any day
that is not the last day of the LIBOR Period applicable thereto (regardless of
the source of such prepayment and whether voluntary, by acceleration or
otherwise), Borrowers shall pay Agent, for the benefit of all Lenders that
funded or were prepared to fund any such LIBOR Loan, the LIBOR Breakage Fee.
(f) Omitted.
(g) Expenses and Attorneys' Fees. Borrowers agree to
promptly pay all fees, charges, costs and expenses (including reasonable
attorneys' fees and expenses and the allocated cost of internal legal staff)
incurred by Agent in connection with any matters contemplated by or arising out
of the Loan Documents, in connection with the examination, review, due diligence
investigation, documentation, negotiation, closing and syndication of the
transactions contemplated herein and in connection with the continued
administration of the Loan Documents including any amendments, modifications,
consents and waivers. Borrowers agree to reimburse Agent for all due and payable
out of pocket costs (including reasonable fees and expenses) as incurred by
Agent to (i) third party auditors, and
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a fee of $750 per audit day per in-house auditor, plus out of pocket expenses
incurred by any such auditors, (ii) third party parts and supplies and equipment
appraisers, plus out of pocket expenses incurred by such appraisers, and (iii)
third party real estate appraisers, plus out of pocket expenses incurred by such
appraisers; provided, that Borrowers only agree to pay such costs and expenses
in relation to (unless an Event of Default has occurred and is continuing), in
the case of clause (i), not more than four (4) audits per each twelve month
period following the Closing Date and, in the case of clause (ii), not more than
three (3) appraisals per each twelve month period following the Closing Date and
in the case of clause (iii), not more than one (1) appraisal per each twelve
month period following the Closing Date. Borrowers agree to promptly pay
reasonable documentation charges assessed by Agent for amendments, waivers,
consents and any of the documentation prepared by Agent's internal legal staff.
Borrowers agree to promptly pay all fees, charges, costs and expenses (including
fees, charges, costs and expenses of attorneys, auditors (whether internal or
external), appraisers, consultants and advisors and the allocated cost of
internal legal staff) incurred by Agent in connection with any Event of Default,
work-out or action to enforce any Loan Document or to collect any payments due
from Borrowers or any other Credit Party. In addition, in connection with any
work-out or action to enforce any Loan Document or to collect any payments due
from Borrowers or any other Credit Party, Borrowers agree to promptly pay all
fees, charges, costs and expenses incurred by Lenders for one (1) counsel acting
for all Lenders other than Agent. All fees, charges, costs and expenses for
which Borrowers are responsible under this Section 1.3(g) shall be joint and
several obligations and shall be deemed part of the Obligations when incurred,
payable upon demand or in accordance with the final sentence of Section 1.4 and
secured by the Collateral.
1.4. Payments. All payments by Borrowers of the Obligations shall
be without deduction, defense, setoff or counterclaim and shall be made in same
day funds and delivered to Agent, for the benefit of Agent and Lenders, as
applicable, by wire transfer to the following account or such other place as
Agent may from time to time designate in writing.
ABA No. 021-001-033
Account Number 502-328-54
Bankers Trust Company
New York, New York
ACCOUNT NAME: GECC/CAF DEPOSITORY
Reference: GE Capital re Penhall - CFN 5134
Borrowers shall receive credit on the day of receipt for funds received by Agent
by 2:00 p.m. (New York time). In the absence of timely receipt, such funds shall
be deemed to have been paid on the next Business Day. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest and Fees
due hereunder.
Borrowers hereby authorize Lenders to make Revolving Credit Advances or
Swing Line Advances, on the basis of their Pro Rata Shares, for the payment of
interest, Fees and expenses, Letter of Credit reimbursement obligations and any
amounts required to be deposited with respect to outstanding Letter of Credit
Obligations pursuant to Sections 1.5(g) or 6.3.
1.5. Prepayments.
(a) Voluntary Prepayments of Loans. At any time,
Borrowers may prepay the Loans, in whole or in part, without premium or penalty
subject to the payment of LIBOR Breakage Fees, if applicable.
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(b) Prepayments under Sections 1.5(c) and 1.5(f) shall be
accompanied by accrued and unpaid interest on the amount prepaid.
(c) Prepayments from Asset Dispositions. Except as
otherwise provided in Section 1.5(f) hereof, immediately upon receipt of any Net
Proceeds in excess of $250,000 for any single transaction or series of related
transactions during any Fiscal Year, Borrowers shall repay the Revolving Credit
Advances (without reduction of the Revolving Loan Commitment) by an amount equal
to the amount of such excess Net Proceeds. Borrowers or their Subsidiaries may
reinvest all remaining Net Proceeds of such Asset Disposition (other than from a
Permitted Sale-Leaseback), within one hundred and eighty (180) days, in
productive replacement assets of a kind then used or usable in the business of
Borrowers. If Borrowers do not intend to so reinvest such Net Proceeds or if the
period set forth in the immediately preceding sentence expires without Borrowers
having reinvested such Net Proceeds, Borrowers shall prepay the Revolving Credit
Advances (without reduction of the Revolving Loan Commitment) in an amount equal
to such remaining Net Proceeds of such Asset Disposition. The payments shall be
applied in accordance with Section 1.5(e).
(d) Omitted.
(e) Application of Proceeds. With respect to any
prepayments made by any Borrower pursuant to Section 1.5(a), such prepayments
shall be applied as follows: first, to reduce the outstanding principal balance
of the Swing Line Loan outstanding to that Borrower until the same has been
repaid in full; second, to the Revolving Credit Advances outstanding to that
Borrower until the same has been repaid in full but not as a permanent reduction
of the Revolving Loan Commitment; third, to the principal balances of the Swing
Line Loan outstanding to each other Borrower, pro rata, until the same have been
repaid in full; and fourth, to the principal balance of the Revolving Credit
Advances made to each other Borrower, pro rata, until the same has been repaid
in full but not as a permanent reduction of the Revolving Loan Commitment.
Considering each type of Loan being prepaid separately, any such prepayment
shall be applied first to Index Rate Loans of the type required to be prepaid
before application to LIBOR Loans of the type required to be prepaid, in each
case in a manner which minimizes any resulting LIBOR Breakage Fee.
(f) Application of Prepayments from Insurance Proceeds.
Prepayments from insurance in accordance with Section 2.2 or condemnation
proceeds shall be applied as follows: insurance proceeds from casualties or
losses to cash, Parts and Supplies, Equipment, Fixtures and Real Estate shall be
applied first, to the Swing Line Loans and second to the Revolving Credit
Advances of the Borrower that incurred such casualties with losses and then to
the Swing Line Loans and last to the Revolving Credit Advances of the other
Borrowers (pro rata in each case). Neither the Revolving Loan Commitment nor the
Swing Line Loan Commitment shall be permanently reduced by the amount of any
such prepayments.
(g) Letter of Credit Obligations. In the event any
Letters of Credit are outstanding at the time that the Revolving Loan Commitment
is terminated, Borrowers shall (1) deposit with Agent for the benefit of all
Revolving Lenders cash in an amount equal to 105% of the aggregate outstanding
Letter of Credit Obligations to be available to Agent to reimburse payments of
drafts drawn under such Letters of Credit and pay any Fees and expenses related
thereto and (2) prepay the fee payable under Section 1.3(d) with respect to such
Letters of Credit for the full remaining terms of such Letters of Credit. Upon
termination of any such Letter of Credit, the unearned portion of such prepaid
fee attributable to such Letter of Credit shall be refunded to Borrowers.
1.6. Maturity. All of the Obligations shall become due and payable
as otherwise set forth herein, but in any event all of the remaining Obligations
shall become due and payable upon termination
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of this Agreement. Until all Obligations have been fully paid and satisfied
(other than contingent indemnification obligations to the extent no unsatisfied
claim has been asserted), the Revolving Loan Commitment has been terminated and
all Letters of Credit have been terminated or otherwise secured to the
satisfaction of Agent, Agent shall be entitled to retain the security interests
in the Collateral granted under the Collateral Documents and the ability to
exercise all rights and remedies available to them under the Loan Documents and
applicable laws. Notwithstanding anything contained in this Agreement to the
contrary, upon any termination of the Revolving Loan Commitment, all of the
Obligations shall be due and payable.
1.7. Eligible Accounts. All of the Accounts owned by any Borrower
and reflected in the most recent Borrowing Base Certificate delivered by such
Borrower to Agent shall be "Eligible Accounts" for purposes of this Agreement,
except any Account to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish, modify or eliminate Reserves
against Eligible Accounts from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the Closing Date upon five (5) days' prior written notice, to adjust any of the
criteria set forth below, to establish new criteria and to adjust advance rates
with respect to Eligible Accounts, in its reasonable credit judgment, subject to
the approval of Supermajority Revolving Lenders in the case of adjustments, new
criteria or changes in advance rates which have the effect of making more credit
available. Eligible Accounts shall not include any Account of any Borrower:
(a) that does not arise from the sale of goods or the
performance of services by such Borrower in the ordinary course of its business;
(b) (i) upon which such Borrower's right to receive
payment is not absolute or is contingent upon the fulfillment of any condition
whatsoever or (ii) as to which such Borrower is not able to bring suit or
otherwise enforce its remedies against the Account Debtor through judicial
process, or (iii) if the Account represents progress billing in excess of cost
or percentage of completion of the applicable contract or is subject to the
equitable lien of a surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff
or dispute is asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, reasonably
acceptable to Agent in form and substance, has not been sent to the applicable
Account Debtor (including, without limitation, accrued but unbilled Accounts of
"Division 40");
(f) that (i) is not owned by such Borrower or (ii) is
subject to any right, claim, security interest or other interest of any other
Person, other than Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a) or (g) of the
definition of such term;
(g) that arises from a sale to any director, officer,
other employee or Affiliate of any Credit Party, or to any entity that has any
common officer or director with any Credit Party;
(h) that is the obligation of an Account Debtor that is
the United States government or a political subdivision thereof, unless Agent,
in its sole discretion, has agreed to the contrary in writing and such Borrower,
if necessary or desirable, has complied with respect to such obligation with the
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Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting the assignment thereof with respect to such
obligation;
(i) that is the obligation of an Account Debtor located
in a foreign country, other than Canada, unless payment thereof is assured by a
letter of credit assigned and delivered to Agent, satisfactory to Agent as to
form, amount and issuer;
(j) to the extent such Borrower or any Subsidiary thereof
is liable for goods sold or services rendered by the applicable Account Debtor
to such Borrower or any Subsidiary thereof but only to the extent of the
potential offset;
(k) that arises with respect to goods that are delivered
on a bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed
sale or other terms by reason of which the payment by the Account Debtor is or
may be conditional;
(l) that is in default; provided, that without limiting
the generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier
of: 60 days following its due date or 90 days following its original invoice
date;
(ii) the Account Debtor obligated upon such
Account suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
(iii) a petition is filed by or against any
Account Debtor obligated upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership, insolvency
relief or other law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if 50% or
more of the Dollar amount of all Accounts owing by that Account Debtor are
ineligible under clause (i) of paragraph (l) of this Section 1.7;
(n) as to which Agent's Lien thereon, on behalf of itself
and Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties
in the Loan Documents are untrue;
(p) to the extent such Account is evidenced by a
judgment, Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment, following five (5)
days' prior written notice of such limit by Agent to Borrower Representative;
(r) to the extent that such Account, together with all
other Accounts owing to such Account Debtor and its Affiliates as of any date of
determination exceed 15% of all Eligible Accounts of all Borrowers;
(s) that is payable in any currency other than Dollars or
Canadian Dollars;
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(t) that constitutes a "retention" Account; or
(u) that is otherwise unacceptable to Agent in its
reasonable credit judgment.
1.8.A. Eligible Short-Term Rentals. All of the Short-Term Rentals
owned by any Borrower and reflected in the most recent Borrowing Base
Certificate delivered by such Borrower to Agent shall be "Eligible Short-Term
Rentals" for purposes of this Agreement, except any Short-Term Rentals to which
any of the exclusionary criteria set forth below applies. Agent shall have the
right, following five (5) days' prior written notice by Agent to Borrower
Representative, to establish, modify, or eliminate Reserves against Eligible
Short-Term Rentals from time to time in its reasonable credit judgment. In
addition, Agent reserves the right, at any time and from time to time after the
Closing Date to adjust any of the criteria set forth below, to establish new
criteria and to adjust advance rates with respect to Eligible Short-Term Rentals
in its reasonable credit judgment, subject to the approval of Supermajority
Revolving Lenders in the case of adjustments, new criteria or changes in advance
rates which have the effect of making more credit available. Eligible Short-Term
Rentals shall not include any Short-Term Rentals of any Borrower:
(a) not subject to a written lease agreement;
(b) not subject to a first priority perfected security
interest of Agent on behalf of Lenders;
(c) any portion of such Short-Term Rental that has not
been billed or is not due within thirty (30) days of the applicable date of
determination;
(d) upon which such Borrower is not able to bring suit or
otherwise enforce its remedies against the relevant lessee through judicial
process;
(e) that (i) are not owned by such Borrower or (ii) are
subject to any right, claim, security interest or other interest of any other
Person, other than Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a) or (g) of the
definition of such term;
(f) that are the obligation of a lessee that is the
United States government or a political subdivision thereof, unless Agent, in
its sole discretion, has agreed to the contrary in writing and such Borrower, if
necessary or desirable, has complied with respect to such obligation with the
Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting the assignment thereof with respect to such
obligation;
(g) that are the obligation of a lessee located in a
foreign country, other than Canada;
(h) to the extent that such Short-Term Rental, together
with other Short-Term Rentals at such time, exceeds $500,000 in the aggregate;
(i) that are in default or due under a lease in default;
provided, that without limiting the generality of the foregoing, a Short-Term
Rental shall be deemed in default upon the occurrence of any of the following:
(i) the Short-Term Rental is not paid within the
earlier of: 60 days following its due date or 90 days following its original
invoice date;
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(ii) the lessee obligated upon such Short-Term
Rental suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
(iii) a petition is filed by or against any lessee
obligated upon such Short-Term Rental under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership, insolvency
relief or other law or laws for the relief of debtors;
(j) that are the obligation of a lessee if fifty percent
(50%) or more of the Dollar amount of all Short-Term Rental owing by that lessee
are ineligible under clause (i) of paragraph (i) of this Section 1.8(A);
(k) as to which any of the representations or warranties
in the Loan Documents are untrue;
(l) to the extent such Short-Term Rental exceeds any
credit limit established by Agent, in its reasonable credit judgment, following
five (5) days' prior written notice of such limit by Agent to Borrower
Representative;
(m) that are payable in any currency other than Dollars
or Canadian Dollars; or
(n) that are otherwise unacceptable to Agent in its
reasonable credit judgment.
1.8.B. Eligible Parts and Supplies. All of the Parts and Supplies
owned by any Borrower and reflected in the most recent Borrowing Base
Certificate delivered by such Borrower to Agent shall be "Eligible Parts and
Supplies" for purposes of this Agreement, except any Parts and Supplies to which
any of the exclusionary criteria set forth below applies. Agent shall have the
right, following five (5) days' prior written notice by Agent to Borrower
Representative, to establish, modify, or eliminate Reserves against Eligible
Parts and Supplies from time to time in its reasonable credit judgment. In
addition, Agent reserves the right, at any time and from time to time after the
Closing Date to adjust any of the criteria set forth below, to establish new
criteria and to adjust advance rates with respect to Eligible Parts and Supplies
in its reasonable credit judgment, subject to the approval of Supermajority
Revolving Lenders in the case of adjustments, new criteria or changes in advance
rates which have the effect of making more credit available. Eligible Parts and
Supplies shall not include any Parts and Supplies of any Borrower that:
(a) is not owned by such Borrower free and clear of all
Liens and rights of any other Person (including the rights of a purchaser that
has made progress payments and the rights of a surety that has issued a bond to
assure such Borrower's performance with respect to such Parts and Supplies),
except the Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a), (d), (e) or (g) of
the definition of such term;
(b) (i) is not located on premises owned, leased or
rented by such Borrower and set forth in the various subschedules to Schedule
III to the Security Agreement (excluding Parts and Supplies mounted on, affixed
to or otherwise placed in a motor vehicle owned by such Borrower and such motor
vehicle is located at the residence of the driver authorized to drive such motor
vehicle, provided that such motor vehicle (A) is covered by a certificate of
title on which the interest of the Agent has been noted, free and clear of all
Liens except those in favor of Agent and Lenders and Permitted Encumbrances of
the type described in clauses (a), (d), (e) or (g) of the definition of such
term, and (B) is equipped with a global positioning tracking device (that is
permanently affixed to such motor vehicle) that enables such Borrower to
determine at all times the movement and location of such motor vehicle or (ii)
is stored at a
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leased location, unless Agent has given its prior consent thereto and unless (x)
a reasonably satisfactory landlord waiver has been delivered to Agent within
thirty (30) days after the Closing Date, or (y) Reserves equal to three months'
rent (based upon base rent and such Borrower's pro rata share of operating
costs, utilities and taxes payable by such Borrower under the lease, but
excluding any supplemental rent or other costs, expenses or amounts or any
indemnities payable thereunder, upon default or otherwise) have been established
with respect thereto, or (iii) is stored with a bailee or warehouseman unless a
reasonably satisfactory, acknowledged bailee letter has been received by Agent
and Reserves reasonably satisfactory to Agent have been established with respect
thereto, or (iv) is located at an owned location subject to a mortgage in favor
of a lender other than Agent, unless a reasonably satisfactory mortgagee waiver
has been delivered to Agent, or (v) is located at any site if the aggregate book
value of Parts and Supplies, together with Equipment of any Borrower, at any
such location is less than $100,000;
(c) is placed on consignment or is in transit, except for
Parts and Supplies in transit between domestic locations of Credit Parties as to
which Agent's Liens have been perfected at origin and destination;
(d) is covered by (i) a negotiable document of title,
unless such document has been delivered to Agent with all necessary
endorsements, free and clear of all Liens except those in favor of Agent and
Lenders or (ii) a certificate of title unless (x) Borrower sells goods of that
kind and that Parts and Supplies is held for sale or lease or is on lease by
Borrower as lessor or (y) the Lien of Agent has been noted on such certificate
of title in accordance with applicable state law;
(e) is excess, obsolete, unsaleable, shopworn, seconds,
damaged or unfit for sale;
(f) is stored in, installed in or affixed to any property
subject to any Lien having priority over the Lien of Agent for the benefit of
Agent and the ratable benefit of Lenders (including Permitted Encumbrances) and
the holder of such Lien has not entered into an intercreditor agreement in form
and substance satisfactory to Agent as to such Lien;
(g) is not subject to a first priority lien in favor of
Agent on behalf of itself and Lenders subject to Permitted Encumbrances of the
type described in clauses (a), (d), (e) or (g) of the definition of such term;
(h) breaches any of the representations or warranties
pertaining to Parts and Supplies set forth in the Loan Documents;
(i) omitted;
(j) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(k) is not covered by casualty insurance reasonably
acceptable to Agent;
(l) omitted;
(m) is otherwise unacceptable to Agent in its reasonable
credit judgment.
Notwithstanding anything to the contrary contained in this Agreement,
until there has been a determination of Net Orderly Liquidation Value of Parts
and Supplies, none of the Parts and Supplies shall be Eligible Parts and
Supplies.
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1.8.C. Eligible Equipment. All of the Equipment owned by any Borrower
and reflected in the most recent Borrowing Base Certificate delivered by such
Borrower to Agent shall be "Eligible Equipment" for purposes of this Agreement,
except any Equipment to which any of the exclusionary criteria set forth below
applies. Agent shall have the right, following five (5) days' prior written
notice by Agent to Borrower Representative, to establish, modify, or eliminate
Reserves against Eligible Equipment from time to time in its reasonable credit
judgment. In addition, Agent reserves the right, at any time and from time to
time after the Closing Date, to adjust any of the criteria set forth below, to
establish new criteria and to adjust advance rates with respect to Eligible
Equipment in its reasonable credit judgment, subject to the approval of
Supermajority Revolving Lenders in the case of adjustments, new criteria or
changes in advance rates which have the effect of making more credit available.
Eligible Equipment shall not include any Equipment of any Borrower that:
(a) is not owned by such Borrower free and clear of all
Liens and rights of any other Person (including the rights of a purchaser that
has made progress payments and the rights of a surety that has issued a bond to
assure such Borrower's performance with respect to that Equipment), except the
Liens in favor of Agent, on behalf of itself and Lenders and Permitted
Encumbrances of the type described in clauses (a), (d), (e) or (g) of the
definition of such term;
(b) (i) is not located on premises owned, leased or
rented by such Borrower and set forth in the various subschedules to Schedule
III to the Security Agreement (unless, at any time, such Equipment is being used
at a construction or similar site or, if such Equipment is mounted on, affixed
to or otherwise placed in a motor vehicle or such Equipment is a motor vehicle
owned by such Borrower, such motor vehicle is located at the residence of the
driver authorized to drive the motor vehicle, provided that such motor vehicle
(A) is covered by a certificate of title on which the interest of the Agent has
been noted, free and clear of all Liens except those in favor of Agent and
Lenders and Permitted Encumbrances of the type described in clauses (a), (d),
(e) or (g) of the definition of such term, and (B) is equipped with a global
positioning tracking device (that is permanently affixed to such motor vehicle)
that enables such Borrower to determine at all times the movement and location
of such motor vehicle or (ii) is stored at a leased location, unless Agent has
given its prior consent thereto and unless (x) a reasonably satisfactory
landlord's waiver has been delivered to Agent within (30) days after the Closing
Date, or (y) Reserves equal to three months' rent (based upon base rent and such
Borrower's pro rata share of operating costs, utilities and taxes payable by
such Borrower under the lease, but excluding any supplemental rent or other
costs, expenses or amounts or any indemnities payable thereunder, upon default
or otherwise) have been established with respect thereto, or (iii) is stored
with a bailee or warehouseman unless a reasonably satisfactory, acknowledged
bailee letter has been received by Agent and Reserves reasonably satisfactory to
Agent have been established with respect thereto, or (iv) is located at an owned
location subject to a mortgage in favor of a lender other than Agent, unless a
reasonably satisfactory mortgagee waiver has been delivered to Agent, or (v) is
located at any site if the aggregate book value of Equipment, together with
Parts and Supplies of any Borrower, at any such location is less than $100,000;
(c) that is covered by a certificate of title unless the
interest of Agent has been noted on such certificate of title, free and clear of
all Liens except those in favor of Agent and Lenders and Permitted Encumbrances
of the type described in clauses (a), (d), (e) or (g) of the definition of such
term;
(d) is excess, obsolete, unsaleable, shopworn, seconds,
damaged or unfit for sale;
(e) is not a vehicle or a construction tool used by such
Borrower in the ordinary course of its business;
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(f) is not subject to a first priority lien in favor of
Agent on behalf of itself and Lenders subject to Permitted Encumbrances of the
type described in clauses (a), (d), (e) or (g) of the definition of such term;
(g) breaches any of the representations or warranties
pertaining to Equipment set forth in the Loan Documents;
(h) that is Parts and Supplies;
(i) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(j) is not covered by casualty insurance reasonably
acceptable to Agent; or
(k) is otherwise unacceptable to Agent in its reasonable
credit judgment.
1.8.D. Eligible Real Estate. Eligible Real Estate of any Borrower
shall be that real estate and improvements thereon that Agent has specifically
identified and approved in writing and as to which, following an independent
appraisal thereof, Agent has assigned an Appraised Forced Liquidation Value and
to which none of the criteria below applies. Agent shall have the right,
following five (5) days' prior written notice by Agent to Borrower
Representative, to establish, modify or eliminate Reserves against Eligible Real
Estate from time to time in its reasonable credit judgment. In addition, Agent
reserves the right, at any time and from time to time after the Closing Date, to
adjust any of the criteria set forth below, to establish new criteria and to
adjust advance rates with respect to Eligible Real Estate in its reasonable
credit judgment, subject to the approval of the Supermajority Revolving Lenders
in the case of adjustments, new criteria or changes in advance rates that have
the effect of making more credit available. Eligible Real Estate shall not
include any real estate:
(a) that is not owned by such Borrower free and clear of
all Liens and rights of any other Person, except the Liens in favor of Agent, on
behalf of itself and Lenders and Permitted Encumbrances of the type described in
clauses (a), (d), (e) (g), (h) or (j) of the definition of such term;
(b) as to which Agent has not received a loan policy of
title insurance in favor of Agent and in form and amount, and issued by a title
insurance company, satisfactory to Agent, in its reasonable discretion, together
with such endorsements thereto as Agent shall require, in its reasonable
discretion (provided such endorsements are available in the jurisdiction where
such Real Estate is located);
(c) as to which Agent has not received an environmental
report satisfactory to Agent, in its sole discretion;
(d) that is not subject to a first priority Lien in favor
of Agent on behalf of itself and Lenders subject only to Permitted Encumbances;
(e) that breaches any of the representations or
warranties pertaining to Real Estate set forth in the Loan Documents; or
(f) that is not covered by casualty insurance reasonably
acceptable to Agent.
1.9. Loan Accounts. Agent shall maintain a loan account (the "Loan
Account") on its books to record: all Advances, all payments made by Borrowers,
and all other debits and credits as provided in
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this Agreement with respect to the Loans or any other Obligations. All entries
in the Loan Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's most recent printout or other written statement,
shall, absent manifest error, be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrowers; provided that any failure to so record
or any error in so recording shall not limit or otherwise affect any Borrower's
duty to pay the Obligations. Agent shall render to Borrower Representative a
monthly accounting of transactions with respect to the Loans setting forth the
balance of the Loan Account as to each Borrower for the immediately preceding
month. Unless Borrower Representative notifies Agent in writing of any objection
to any such accounting (specifically describing the basis for such objection),
within forty-five (45) days after the date thereof, each and every such
accounting shall, absent manifest error, be deemed final, binding and conclusive
on Borrowers in all respects as to all matters reflected therein. Only those
items expressly objected to in such notice shall be deemed to be disputed by
Borrowers. Notwithstanding any provision herein contained to the contrary, any
Lender may elect (which election may be revoked) to dispense with the issuance
of Notes to that Lender and may rely on the Loan Account as evidence of the
amount of Obligations from time to time owing to it.
1.10. Yield Protection; Illegality.
(a) Capital Adequacy and Other Adjustments. In the event
that any Lender shall have determined that the adoption after the date hereof of
any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender or any corporation controlling such
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) from any central
bank or governmental agency or body having jurisdiction does or shall have the
effect of increasing the amount of capital, reserves or other funds required to
be maintained by such Lender or any corporation controlling such Lender and
thereby reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder, then Borrowers shall from
time to time within fifteen (15) days after notice and demand from such Lender
(together with the certificate referred to in the next sentence and with a copy
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of such cost and showing the basis of the computation of such cost
submitted by such Lender to Borrower Representative and Agent shall, absent
manifest error, be final, conclusive and binding for all purposes.
(b) Increased LIBOR Funding Costs; Illegality.
Notwithstanding anything to the contrary contained herein, if the introduction
of or any change in any law, rule, regulation, treaty or directive (or any
change in the interpretation thereof) shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for any
Lender to agree to make or to make or to continue to fund or maintain any LIBOR
Loan, then, unless that Lender is able to make or to continue to fund or to
maintain such LIBOR Loan at another branch or office of that Lender without, in
that Lender's opinion, adversely affecting it or its Loans or the income
obtained therefrom, on notice thereof and demand therefor by such Lender to
Borrower Representative through Agent, (i) the obligation of such Lender to
agree to make or to make or to continue to fund or maintain LIBOR Loans shall
terminate and (ii) each Borrower shall forthwith prepay in full all outstanding
LIBOR Loans owing by such Borrower to such Lender, together with interest
accrued thereon, unless Borrower Representative on behalf of such Borrower,
within five (5) Business Days after the delivery of such notice and demand,
converts all LIBOR Loans into Index Rate Loans. If, after the date hereof, the
introduction of, change in or interpretation of any law, rule, regulation,
treaty or directive would impose or increase reserve requirements (other than as
taken into account in the definition of LIBOR) or otherwise increase the cost
- 19 -
to any Lender of making or maintaining a LIBOR Loan, then Borrowers shall from
time to time within fifteen (15) days after notice and demand from Agent to
Borrower Representative (together with the certificate referred to in the next
sentence) pay to Agent, for the account of all such affected Lenders, additional
amounts sufficient to compensate such Lenders for such increased cost. A
certificate as to the amount of such cost and showing the basis of the
computation of such cost submitted by Agent on behalf of all such affected
Lenders to Borrower Representative shall, absent manifest error, be final,
conclusive and binding for all purposes.
1.11. Taxes.
(a) No Deductions. Subject to the immediately succeeding
sentence, any and all payments or reimbursements made hereunder (including any
payments made pursuant to Section 10) or under the Notes or other Loan Documents
shall be made free and clear of and without deduction for any and all Charges,
taxes, levies, imposts, deductions or withholdings, and all liabilities with
respect thereto of any nature whatsoever imposed by any taxing authority,
excluding such taxes to the extent imposed on Agent's or a Lender's net income
by the jurisdiction in which Agent or such Lender is organized (such
non-excluded items being referred to herein as "Taxes"). Subject to Section
1.11(c), if any Borrower shall be required by law to deduct any such Taxes from
or in respect of any sum payable hereunder or under any other Loan Document to
any Lender or Agent, then the sum payable hereunder shall be increased as may be
necessary so that, after making all required deductions, such Lender or Agent
receives an amount equal to the sum it would have received had no such
deductions been made. All required deductions shall be complied with and paid
over to the relevant taxing authority or other Governmental Authority in
accordance with applicable law.
(b) Changes in Tax Laws. In the event that, subsequent to
the Closing Date, (1) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (2) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (3) compliance by Agent or any Lender with any request or directive
(whether or not having the force of law) from any Governmental Authority:
(i) does or shall subject Agent or any Lender to
any Tax of any kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made or Letters of Credit issued hereunder, or change the
basis of taxation of payments to Agent or such Lender of principal, fees,
interest or any other amount payable hereunder (except for net income taxes, or
franchise taxes imposed in lieu of net income taxes, imposed generally by
federal, state or local taxing authorities with respect to interest or
commitment Fees or other Fees payable hereunder or changes in the rate of tax on
the overall net income of Agent or such Lender); or
(ii) does or shall impose on Agent or any Lender
any other condition or increased cost in connection with the transactions
contemplated hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Agent or any
such Lender of issuing any Letter of Credit or making or continuing any Loan
hereunder, as the case may be, or to reduce any amount receivable hereunder or
under any other Loan Document, then, in any such case, Borrowers shall promptly
pay to Agent or such Lender, upon its demand, any additional amounts necessary
to compensate Agent or such Lender, on an after-tax basis, for such additional
cost or reduced amount receivable, as determined by Agent or such Lender with
respect to this Agreement or the other Loan Documents. Agent and Lenders shall
use their best efforts to avoid or reduce such Taxes by taking any appropriate
action (including assigning their rights hereunder to a related entity or a
different office) which, as determined at such Agent or Lender's sole
discretion, would not be otherwise disadvantageous to such Agent or Lender. If
Agent or such Lender becomes entitled to claim any additional amounts pursuant
to this Section
- 20 -
1.11(b), it shall promptly notify Borrower Representative of the event by reason
of which Agent or such Lender has become so entitled. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by Agent
or such Lender to Borrower Representative (with a copy to Agent) shall, absent
manifest error, be final, conclusive and binding for all purposes.
(c) Foreign Lenders. Prior to becoming a Lender under
this Agreement and on or before a previously delivered Certificate of Exemption
(as defined below) expires or becomes inapplicable or obsolete, other than by
reason of a change in the applicable rules as in effect at the time a Lender
becomes a Lender under this Agreement, each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") shall provide to
Borrower Representative and Agent a properly completed and executed IRS Form
W-8BEN or Form W-8ECI or other applicable form, certificate or document
prescribed by the IRS of the United States certifying as to such Foreign
Lender's entitlement to an exemption from a reduction in United States federal
withholding tax under the applicable rules as in effect at the time the Lender
becomes a Lender under this Agreement with respect to payments to be made to
such Foreign Lender under this Agreement and under the Notes (a "Certificate of
Exemption"). Notwithstanding anything herein to the contrary, if a Foreign
Lender is unable to provide or does not provide a Certificate of Exemption to
Borrower Representative and Agent claiming an exemption from United States
withholding tax within the time periods set forth in the preceding sentence,
Borrowers shall withhold Taxes from payments to such Foreign Lender at the
applicable statutory and treaty rates (taking into account such Foreign Lender's
compliance with applicable certification requirements), and Borrowers shall not
be required to pay any additional amounts as a result of such withholding,
provided that all such withholding shall cease (or be reduced to the applicable
treaty rate) upon delivery by such Foreign Lender of a Certificate of Exemption
to Borrower Representative and Agent.
(d) In addition, the Borrowers agree to pay any current
or future stamp or documentary taxes or any other excise or property taxes,
charges, assessments or similar levies that arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement, the other Loan Documents or any Loans made or
Letters of Credit issued hereunder ("Other Taxes").
(e) The Borrowers shall indemnify Agent and each Lender
for the full amount of Taxes and Other Taxes paid by Agent or such Lender, as
the case may be, and any liability (including penalties, interest and expenses
other than penalties, interest and expenses resulting from the Lender's gross
negligence) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant taxing
authority or other Governmental Authority. Such indemnification shall be made
within 30 days after the date Agent or any Lender, as the case may be, makes
written demand therefor. Notwithstanding the foregoing, the Borrowers shall not
be required to provide any indemnity pursuant to the preceding sentence with
respect to taxes, deductions or withholdings (and any liability relating
thereto) for which the Borrowers would have no obligation to increase the sum
payable hereunder (or pay additional amounts) pursuant to Section 1.11(a) and
Section 1.11(c). If Lender or Agent, as the case may be, determines that it is
entitled to receive a refund or credit of such Tax or Other tax, as to which
Borrower has made an additional payment under Section 1.11(a) or if Lender or
Agent has been indemnified pursuant to this Section 1.1.(e), Lender or Agent
shall promptly notify such Borrower of the availability of such refund or
credit. Lender or Agent, as the case may be, shall apply for such refund or
credit within 30 days after receipt of instruction from Borrower to apply for
such refund and in the case of any application for refund or credit made by a
Borrower, Lender shall deliver to such Borrower such certificates, forms or
other documentation as may be reasonably necessary to assist such Borrower in
such application. If any Lender or Agent receives a refund or credit with
respect to any Tax or Other Tax as to which Borrower has made an additional
payment under Section 1.1(a) or if Lender or Agent has been indemnified pursuant
to this Section 1.11(e), Lender or Agent shall
- 21 -
promptly notify Borrower and shall, within 30 days of receipt of such refund or
the benefit of such credit, repay the amount of such refund or the benefit of
such credit to such Borrower, plus any interest received with respect thereto,
net of all reasonable out-of-pocket expenses of Agent or such Lender.
(f) Within thirty (30) days after the date of any payment
of Taxes or Other Taxes described in Section 1.11(d) above withheld by a
Borrower in respect of any payment to Agent or any Lender, the Borrower shall
furnish to Agent, at its address referred to on the signature pages hereof, the
original or a certified copy of any available receipt evidencing payment
thereof.
1.12. Omitted.
1.13. Borrower Representative. Each Borrower hereby designates
Penhall (the "Borrower Representative") as its representative and agent on its
behalf for the purposes of issuing Notices of Revolving Credit Advances and
Notices of Conversion/Continuation, giving instructions with respect to the
disbursement of the proceeds of the Loans, selecting interest rate options,
requesting Letters of Credit, giving and receiving all other notices and
consents hereunder or under any of the other Loan Documents and taking all other
actions (including in respect of compliance with covenants) on behalf of any
Borrower or Borrowers under the Loan Documents. Borrower Representative hereby
accepts such appointment. Agent and each Lender may regard any notice or other
communication pursuant to any Loan Document from Borrower Representative as a
notice or communication from all Borrowers. Each warranty, covenant, agreement
and undertaking made on its behalf by Borrower Representative shall be deemed
for all purposes to have been made by such Borrower and shall be binding upon
and enforceable against such Borrower to the same extent as it if the same had
been made directly by such Borrower.
SECTION 2.
AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof and until the
Termination Date:
2.1. Compliance with Laws and Contractual Obligations. Each Credit
Party will (a) comply with and shall cause each of its Subsidiaries to comply
with (i) the requirements of all applicable laws, rules, regulations and orders
of any Governmental Authority (including, without limitation, laws, rules,
regulations and orders relating to taxes, employer and employee contributions,
securities, employee retirement and welfare benefits and employee health and
safety) as now in effect and which may be imposed in the future in all
jurisdictions in which any Credit Party or any of its Subsidiaries is now doing
business or may hereafter be doing business; provided that this clause (i) shall
not include environmental protection matters which shall be governed by Section
2.5 and (ii) the obligations, covenants and conditions contained in all
Contractual Obligations of such Credit Party or any of its Subsidiaries other
than those laws, rules, regulations, orders and provisions of such Contractual
Obligations the noncompliance with which could not be reasonably expected to
have, either individually or in the aggregate, a Material Adverse Effect, and
(b) maintain or obtain and shall cause each of its Subsidiaries to maintain or
obtain all licenses, qualifications and permits now held or hereafter required
to be held by such Credit Party or any of its Subsidiaries, for which the loss,
suspension, revocation or failure to obtain or renew, could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect. This Section 2.1 shall not preclude any Credit Party or its Subsidiaries
from contesting any taxes or other payments, if they are being diligently
contested in good faith in a manner which stays enforcement of any Lien in
respect thereof and if appropriate expense provisions have been recorded in
conformity with GAAP, subject to Section 3.2. Each Credit Party represents and
warrants that it (i) is in
- 22 -
compliance and each of its Subsidiaries is in compliance with the requirements
of all applicable laws, rules, regulations and orders of any Governmental
Authority and the obligations, covenants and conditions contained in all
Contractual Obligations other than those laws, rules, regulations, orders and
provisions of such Contractual Obligations the noncompliance with which could
not be reasonably expected to have, either individually or in the aggregate, a
Material Adverse Effect, and (ii) maintains and each of its Subsidiaries
maintains all licenses, qualifications and permits referred to above.
2.2. Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and
expense, maintain the policies of insurance described on Schedule 5.18 as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Agent. Such policies of insurance (or the loss payable
and additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such
insurance policy. If any Credit Party at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above or to pay
all premiums relating thereto, Agent may at any time or times thereafter obtain
and maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
reasonable attorneys' fees, court costs and other charges related thereto, shall
be payable on demand by Borrowers to Agent and shall be additional Obligations
hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change
in any Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability of
such Credit Party) to require additional forms and limits of insurance to, in
Agent's reasonable opinion, adequately protect both Agent's and Lenders'
interests in all or any portion of the Collateral and to ensure that each Credit
Party is protected by insurance in amounts and with coverage customary for its
industry. If reasonably requested by Agent, each Credit Party shall deliver to
Agent from time to time a report of a reputable insurance broker, reasonably
satisfactory to Agent, with respect to its insurance policies.
(c) Each Credit Party shall deliver to Agent, in form and
substance reasonably satisfactory to Agent, endorsements to (i) all "All Risk"
and business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee, and (ii) all general liability and other liability
policies naming Agent, on behalf of itself and Lenders, as additional insured.
Each Credit Party irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent), so long as any Default or
Event of Default has occurred and is continuing or the anticipated insurance
proceeds exceed $2,000,000, as each Credit Party's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of each Credit Party
on any check or other item of payment for the proceeds of such "All Risk"
policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance; provided that Agent shall not
settle any claim without each Credit Party's consent, such consent not to be
unreasonably withheld, provided that no such consent shall be required while a
Default or Event of Default is continuing. Agent shall have no duty to exercise
any rights or powers granted to it pursuant to the foregoing power-of-attorney.
Each Borrower shall promptly notify Agent of any loss, damage, or destruction to
the Collateral in the amount of $250,000 or more, whether or not covered by
insurance. After deducting from any insurance proceeds the expenses, if any,
incurred by Agent in the collection or handling thereof, Agent may, at its
option, apply such proceeds to the reduction
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of the Obligations in accordance with Section 1.5(f), provided that in the case
of insurance proceeds pertaining to any Credit Party other than a Borrower, such
insurance proceeds shall be applied, in the case of a Credit Party that is a
Subsidiary of Borrower, as if such Borrower owned the property that generated
such proceeds and in the case of a Credit Party (other than a Borrower) that
owns the Stock of a Borrower, as if any Borrower owned the property that
generated such proceeds, or permit or require each Credit Party to use such
money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials and workmanship
of substantially the same quality as existed before the loss, damage or
destruction. Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $2,000,000 in the aggregate,
Agent shall permit the applicable Credit Party to replace, restore, repair or
rebuild the property; provided that if such Credit Party has not completed or
entered into binding agreements to complete such replacement, restoration,
repair or rebuilding within 180 days of such casualty, Agent may apply such
insurance proceeds to the Obligations in accordance with Section 1.5(f);
provided that in the case of insurance proceeds pertaining to any Credit Party
other than a Borrower, such insurance proceeds shall be applied, in the case of
a Credit Party that is a Subsidiary of Borrower, as if such Borrower owned the
property that generated such proceeds and in the case of a Credit Party (other
than a Borrower) that owns the Stock of a Borrower, as if any Borrower owned the
property that generated such proceeds, or permit or require each Credit Party to
use such money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials and workmanship
of substantially the same quality as existed before the loss, damage or
destruction. All insurance proceeds that are to be made available to such
Borrower to replace, repair, restore or rebuild the Collateral shall be applied
by Agent to reduce the outstanding principal balance of the Revolving Loan
(which application shall not result in a permanent reduction of the Revolving
Loan Commitment). All insurance proceeds made available to any Credit Party that
is not a Borrower to replace, repair, restore or rebuild Collateral shall be
deposited in a cash collateral account. Thereafter, such funds shall be made
available to such Borrower or such Credit Party, as applicable, to provide funds
to replace, repair, restore or rebuild the Collateral as follows: (i) such
Borrower shall request a Revolving Credit Advance or release from the cash
collateral account be made to such Borrower or such Credit Party, as applicable
in the amount requested to be released; (ii) so long as the conditions set forth
in Section 7.2 have been met and subject to the provisions of any Mortgage
encumbering such Collateral, Revolving Lenders shall make such Revolving Credit
Advance or Agent shall release funds from the cash collateral account; and (iii)
in the case of insurance proceeds applied against the Revolving Loan, the
Reserve established with respect to such insurance proceeds shall be reduced by
the amount of such Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with Section 1.5(f); provided that in the case of
insurance proceeds pertaining to any Credit Party other than a Borrower, such
insurance proceeds shall be applied, in the case of a Credit Party that is a
Subsidiary of Borrower, as if such Borrower owned the property that generated
such proceeds and in the case of a Credit Party (other than a Borrower) that
owns the Stock of a Borrower, as if any Borrower owned the property that
generated such proceeds.
2.3. Inspection; Lender Meeting. Each Credit Party shall permit any
authorized representatives of Agent to visit, audit and inspect any of the
properties of such Credit Party and its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and business with its
and their officers and certified public accountants, at such reasonable times
during normal business hours and as often as may be reasonably requested.
Representatives of each Lender will be permitted to accompany representatives of
Agent during each visit, inspection and discussion referred to in the
immediately preceding sentence. Without in any way limiting the foregoing, each
Credit Party will participate and will cause key management personnel of each
Credit Party and its Subsidiaries to participate in a meeting with Agent
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and Lenders at least once during each year, which meeting shall be held at such
time and such place as may be reasonably requested by Agent.
2.4. Organizational Existence. Except as otherwise permitted by
Section 3.6, each Credit Party will and will cause its Subsidiaries to at all
times preserve and keep in full force and effect its organizational existence
and all rights and franchises material to its business.
2.5. Environmental Matters. Each Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate or to
otherwise comply in all material respects with Environmental Laws and
Environmental Permits pertaining to the presence, generation, treatment,
storage, use, disposal, transportation or Release of any Hazardous Material on,
at, in, under, above, to, from or about any of its Real Estate; (c) notify Agent
promptly after such Credit Party or any Person within its control becomes aware
of any violation of Environmental Laws or Environmental Permits or any Release
on, at, in, under, above, to, from or about any Real Estate that is reasonably
likely to result in Environmental Liabilities to a Credit Party or its
Subsidiaries in excess of $100,000; and (d) promptly forward to Agent a copy of
any order, notice, request for information or any communication or report
received by such Credit Party or any Person within its control in connection
with any such violation or Release or any other matter relating to any
Environmental Laws or Environmental Permits that could reasonably be expected to
result in Environmental Liabilities in excess of $100,000, in each case whether
or not the Environmental Protection Agency or any Governmental Authority has
taken or threatened any action in connection with any such violation, Release or
other matter. If Agent at any time has a reasonable basis to believe that there
may be a violation of any Environmental Laws or Environmental Permits by any
Credit Party or any Person under its control or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate, that, in each case, could
reasonably be expected to have a Material Adverse Effect, then each Credit Party
and its Subsidiaries shall, upon Agent's written request (i) cause the
performance of such environmental audits including subsurface sampling of soil
and groundwater, and preparation of such environmental reports, at Borrowers'
expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance reasonably acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real Estate for
the purpose of conducting such environmental audits and testing as Agent deems
appropriate, including subsurface sampling of soil and groundwater. Borrowers
shall reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
2.6. Landlords' Agreements, Mortgagee Agreements, Bailee Letters
and Real Estate Purchases. Each Credit Party shall use reasonable efforts to
obtain a landlord's agreement, mortgagee agreement or bailee letter, as
applicable, from the lessor of each leased property, mortgagee of owned property
or bailee with respect to any warehouse, processor or converter facility or
other location where Collateral is stored or located, which agreement or letter
shall contain a waiver or subordination of all Liens or claims that the
landlord, mortgagee or bailee may assert against the Collateral at that
location, and shall otherwise be reasonably satisfactory in form and substance
to Agent. With respect to such locations or warehouse space leased or owned as
of the Closing Date and thereafter, if Agent has not received a landlord or
mortgagee agreement or bailee letter as of the Closing Date (or, if later, as of
the date such location is acquired or leased), the Eligible Parts and Supplies
and Eligible Equipment at that location shall, in Agent's discretion, be subject
to such Reserves as may be established by Agent in its reasonable credit
judgment. After the Closing Date, no real property or warehouse space shall be
leased by any Credit Party or its Subsidiary and no Parts and Supplies shall be
shipped to a processor or
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converter under arrangements established after the Closing Date without the
prior written consent of Agent (which consent, in Agent's discretion, may be
conditioned upon the exclusion from the Borrowing Base of Eligible Parts and
Supplies and Eligible Equipment at that location or the establishment of
Reserves acceptable to Agent) or, unless and until a satisfactory landlord
agreement or bailee letter, as appropriate, shall first have been obtained with
respect to such location. Each Credit Party shall and shall cause its
Subsidiaries to timely and fully pay and perform their obligations under all
leases and other agreements with respect to each leased location or public
warehouse where any Collateral is or may be located except for such obligations
being diligently contested in good faith and in respect of which, if
appropriate, expense provisions have been recorded in accordance with GAAP.
2.7. Conduct of Business. Each Credit Party shall at all times
maintain, preserve and protect all of its assets and properties used or useful
in the conduct of its business, and keep the same in good repair, working order
and condition in all material respects (taking into consideration ordinary wear
and tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices; continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; and transact business only in
such limited liability company, corporate and trade names as are set forth in
Schedule 2.7, which schedule may be updated by the Credit Parties from time to
time with twenty (20) days' prior written notice to Agent.
2.8. Further Assurances.
(a) Each Credit Party shall, from time to time, execute
or authorize the execution of such guaranties, financing statements, documents,
control agreements, security agreements and reports as Agent or Requisite
Lenders at any time may reasonably request to evidence, perfect or otherwise
implement the guaranties and security for repayment of the Obligations
contemplated by the Loan Documents.
(b) Promptly, and in any event within ten (10) days after
the Closing Date, for all motor vehicles owned by each Credit Party as of the
Closing Date that are covered by a certificate of title, such Credit Party shall
submit for reissuance with the appropriate state motor vehicle office such motor
vehicle title certificates with the Agent's Lien noted thereon.
(c) Each Credit Party shall, from time to time, cause all
chattel paper (excluding written lease agreements governing Short-Term Rentals)
owned by such Credit Party to be conspicuously legended to indicate that it is
subject to a lien in favor of Agent.
(d) In the event any Credit Party acquires an ownership
interest in real property after the Closing Date, such Credit Party shall
deliver to Agent a fully executed mortgage or deed of trust over such real
property in form and substance similar to the Mortgages delivered concurrently
herewith, with such variations as may be reasonably required by Agent in order
to conform to and/or take advantage of laws of the state in which such real
property is located, together with such title insurance policies, surveys,
appraisals, evidence of insurance, legal opinions, environmental assessments and
other documents and certificates as shall be reasonably required by Agent.
(e) Promptly, and in any event within 30 days after the
acquisition by Borrowers or its Subsidiaries of assets or personal property of
the type that would have constituted Collateral on the Closing Date and
investments of the type that would have constituted Collateral on the Closing
Date, Borrowers will take, or will cause their Subsidiaries to take, all
necessary action, including (i) the filing of appropriate financing statements
under the applicable provisions of the UCC, applicable foreign, domestic or
local laws, rules or regulations in each of the offices where such filing is
necessary or appropriate, (ii) the execution and delivery of Control Agreements,
and (iii) the notation of the Lien of Agent on any
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certificate of title, in each case, to create and perfect a perfected Lien in
such Collateral (or comparable interest under foreign law in the case of foreign
Collateral) pursuant to and to the full extent required by the Security
Agreements and this Agreement.
(f) Each Credit Party shall (i) cause each Person, upon
its becoming a Subsidiary of such Credit Party (provided that this shall not be
construed to constitute consent by any of the Lenders to any transaction
referred to above which is not expressly permitted by the terms of this
Agreement), promptly to guaranty the Obligations and to grant to Agent, for the
benefit of Agent and Lenders, a security interest in the real, personal and
mixed property of such Person to secure the Obligations and (ii) pledge, or
cause to be pledged, to Agent, for the benefit of Agent and Lenders, all of the
Stock of such Subsidiary to secure the Obligations. The documentation for such
guaranty, security and pledge shall be substantially similar to the Loan
Documents executed concurrently herewith with such modifications as are
reasonably requested by Agent and shall be accompanied by such legal opinions
and other documents as Agent may reasonably request. Notwithstanding the
foregoing, in the event that a Person becomes a Subsidiary of a Borrower and
such Person is a "controlled foreign corporation", as defined in Section 957(a)
of the IRC (a "CFC"), of such Borrower, then such Borrower shall (a) not be
obligated to cause such CFC to comply with clause (i) of this subsection (e) and
nothing in this Agreement shall cause any CFC to have any obligation under this
Agreement, and (b) pledge or cause to be pledged no more than sixty-five percent
(65%) of all of the Stock of such CFC, provided that, Borrower shall not be
obligated to pledge or cause to be pledged any assets owned by any CFC
(including the Stock of such CFC owned by another CFC).
2.9. Omitted.
2.10. Cash Management Systems. Credit Parties shall, and shall cause
each of their Subsidiaries to, enter into Control Agreements with respect to
each deposit account maintained by any Credit Party or any Subsidiary of any
Credit Party as of or after the Closing Date. Each such Control Agreement shall
be in form and substance satisfactory to Agent. Borrowers shall enter into
lockbox agreements in form and substance and with banks acceptable to Agent and
shall direct all Account Debtors to make payments on all Accounts into the
lockboxes established under such agreements. All payments received in the
lockboxes shall promptly, subject to Section 6.5, (i) first, be applied to the
outstanding Obligations other than Letter of Credit Obligations, until paid in
full and (ii) second, following such payment in full, be remitted to the
Borrowers.
SECTION 3.
NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof until the
Termination Date:
3.1. Indebtedness. The Credit Parties shall not and shall not cause
or permit their Subsidiaries directly or indirectly to create, incur, assume, or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness (other than pursuant to a Contingent Obligation permitted under
Section 3.4) except:
(a) the Obligations;
(b) existing Indebtedness described in Schedule 3.1 and
refinancings thereof or amendments or modifications thereto that do not have the
effect of increasing the principal amount thereof or changing the amortization
thereof (other than to extend the same) and that are otherwise on
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terms and conditions no less favorable to any Credit Party than the terms of the
Indebtedness being refinanced, amended or modified;
(c) Indebtedness consisting of intercompany loans and
advances made by any Borrower to another Borrower; provided, that: (i) such
obligor Borrower shall have executed and delivered to each such obligee
Borrower, on the Closing Date, a demand note (as amended, modified, extended,
substituted or replaced from time to time, an "Intercompany Note" and,
collectively the "Intercompany Notes") to evidence any such intercompany
Indebtedness owing at any time by such obligor Borrower to such obligee
Borrower, which Intercompany Notes shall be substantially in the form of Exhibit
3.1(c) and shall be pledged and delivered to Agent pursuant to the applicable
Pledge Agreement or Security Agreement as additional collateral security for the
Obligations; (ii) such obligee Borrower shall record all intercompany
transactions on its books and records in a manner reasonably satisfactory to
Agent; (iii) the obligations of such obligor Borrower under any such
Intercompany Notes shall be subordinated to the Obligations of such obligor
Borrower hereunder pursuant to Section 9.21; (iv) at the time any such
intercompany loan or advance is made to such obligor Borrower and after giving
effect thereto, such obligor Borrower shall be Solvent; (v) no Default or Event
of Default would occur and be continuing after giving effect to any such
proposed intercompany loan; (vi) such obligor Borrower shall have Borrowing
Availability of not less than $1.00 after giving effect to such intercompany
loan; and (vii) such obligor Borrower shall be creditworthy as determined by
Agent.
(d) Omitted;
(e) Indebtedness under the Senior Unsecured Notes not to
exceed $100,000,000 in aggregate principal amount at any time outstanding less
all payments of principal thereon;
(f) Indebtedness at any time outstanding secured by
purchase money Liens or incurred with respect to Capital Leases which together
with principal Indebtedness outstanding under the Banc of America Agreements
does not exceed $4,000,000 in the aggregate in principal (or notional principal)
at any time outstanding;
(g) any other Indebtedness not to exceed $500,000 in
aggregate principal amount at any time outstanding; or
(h) Indebtedness permitted by Section 3.6(b)(iv)(B).
3.2. Liens and Related Matters.
(a) No Liens. The Credit Parties shall not and shall not
cause or permit their Subsidiaries to directly or indirectly create, incur,
assume or permit to exist any Lien on or with respect to any property or asset
of such Credit Party or any such Subsidiary, whether now owned or hereafter
acquired, or any income or profits therefrom, except Permitted Encumbrances
(including, without limitation, those Liens constituting Permitted Encumbrances
existing on the date hereof and renewals and extensions thereof, as set forth on
Schedule 3.2).
(b) No Negative Pledges. The Credit Parties shall not and
shall not cause or permit their Subsidiaries to directly or indirectly enter
into or assume any agreement (other than the Loan Documents and (each as in
effect on the Closing Date) the Banc of America Agreements (as to the assets
covered thereby) and the Senior Unsecured Notes Indenture and other secured
Indebtedness permitted by this Agreement so long as the agreements with respect
to such other secured Indebtedness do not prohibit any Permitted Encumbrances)
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired.
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(c) No Restrictions on Subsidiary Distributions to
Borrowers. Except as provided herein and in (each as of the Closing Date) the
Senior Unsecured Notes Indenture, the Credit Parties shall not and shall not
cause or permit their Subsidiaries to directly or indirectly create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Subsidiary to: (1) pay
dividends or make any other distribution on any of such Subsidiary's Stock owned
by any Borrower or any other Subsidiary; (2) pay any Indebtedness owed to any
Borrower or any other Subsidiary; (3) make loans or advances to any Borrower or
any other Subsidiary; or (4) transfer any of its property or assets to any
Borrower or any other Subsidiary.
3.3. Investments. The Credit Parties shall not and shall not cause
or permit their Subsidiaries to directly or indirectly make or own any
Investment in any Person except:
(a) Borrowers and their Subsidiaries may make and own
Investments in Cash Equivalents subject to Control Agreements in favor of Agent;
provided that such Cash Equivalents are not subject to setoff rights;
(b) Borrowers may make intercompany loans to other
Borrowers to the extent permitted under Section 3.1;
(c) Borrowers and their Subsidiaries may make loans and
advances to employees for moving, entertainment, travel and other similar
expenses in the ordinary course of business not to exceed $100,000 in the
aggregate at any time outstanding;
(d) Borrowers and their Subsidiaries may make capital
contributions to their wholly owned domestic Subsidiaries that are Guarantors in
an amount not to exceed $250,000 in the aggregate reduced by the amount of
Investments made pursuant to Section 3.1(c);
(e) Borrowers and their Subsidiaries may own the
Investments listed on Schedule 3.3(e) and outstanding on the Closing Date;
(f) Borrowers may make investments constituting Permitted
Acquisitions; and
(g) transfers between Credit Parties permitted pursuant
to this Section 3.
3.4. Contingent Obligations. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to directly or indirectly create or
become or be liable with respect to any Contingent Obligation except:
(a) Letter of Credit Obligations;
(b) Omitted;
(c) those resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(d) those existing on the Closing Date and described in
Schedule 3.4;
(e) those arising under indemnity agreements to title
insurers to cause such title insurers to issue to Agent mortgagee title
insurance policies;
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(f) those arising with respect to customary
indemnification obligations incurred in connection with Asset Dispositions
permitted hereunder;
(g) those incurred in the ordinary course of business
with respect to surety and appeal bonds, performance and return-of-money bonds
and other similar obligations;
(h) those incurred with respect to Indebtedness permitted
by Section 3.1 and of other obligations not prohibited hereunder, provided that
any such Contingent Obligation is subordinated to the Obligations to the same
extent as the Indebtedness to which it relates is subordinated to the
Obligations;
(i) any other Contingent Obligation not expressly
permitted by clauses (a) through (h) above, so long as any such other Contingent
Obligations, in the aggregate at any time outstanding, do not exceed $1,000,000.
3.5. Restricted Payments. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to directly or indirectly declare, order,
pay, make or set apart any sum for any Restricted Payment, except that:
(a) Omitted;
(b) Omitted;
(c) Wholly owned Subsidiaries of a Borrower may make
Restricted Payments to such Borrower;
(d) Omitted;
(e) Borrowers may pay management fees and reasonable
out-of-pocket expenses payable semi-annually pursuant to the BRS Management
Services Agreement and management fees and reasonable out-of-pocket expenses
payable monthly pursuant to the Company Management Services Agreement as in
effect on the Closing Date; provided that no Default or Event of Default exists
at the time of any such Restricted Payment or would occur as a result thereof;
and
(f) So long as no Default or Event of Default is
continuing, Holdings may repurchase Stock owned by employees, officers or
directors of the Borrowers or any of their Subsidiaries or their authorized
representatives upon the death, disability or termination of employment of such
employees, officers or directors, or as otherwise required by existing
employment agreements, in an aggregate amount not to exceed (x) one million
dollars ($1,000,000) in any calendar year or (y) three million dollars
($3,000,000) during the term of this Agreement, plus, in the case of the limit
imposed by clause (x), (i) the aggregate cash proceeds actually received from
any reissuance of Stock during such calendar year by the Borrowers or any of
their Subsidiaries to employees, officers or directors of the Borrowers or their
Subsidiaries and (ii) the aggregate cash proceeds actually received in such
calendar year from any payments on life insurance policies in which the
Borrowers or any of their Subsidiaries is the beneficiary with respect to any
employees, officers or directors of the Borrowers or any of their Subsidiaries
which proceeds are used to purchase the Stock of the Borrowers or any of their
Subsidiaries held by any such employees, officers or directors, plus, in the
case of the limit imposed by clause (y) the aggregate amount received by
Borrowers under paragraphs (i) and (ii) of this Section 3.5(f) during the term
of this Agreement.
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3.6. Restriction on Fundamental Changes; Permitted Acquisitions.
(a) The Credit Parties shall not and shall not cause or
permit their Subsidiaries to directly or indirectly:
(i) amend, modify or waive any term or provision
of its organizational documents, including its articles of incorporation,
certificates of designations pertaining to preferred stock, by-laws, partnership
agreement or operating agreement in any way adversely affecting the Lenders
unless required by law;
(ii) enter into any transaction of merger or
consolidation except, upon not less than five (5) Business Days' prior written
notice to Agent, any wholly owned Subsidiary of a Borrower may be merged with or
into any other wholly owned Subsidiary of such Borrower;
(iii) liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution); or
(iv) acquire by purchase or otherwise all or any
substantial part of the business or assets of any other Person except as set
forth in paragraph (b) below.
(b) Borrowers may acquire all or substantially all of the
assets or Stock of any Person (the "Target") (in each case, a "Permitted
Acquisition") subject to the satisfaction of each of the following conditions:
(i) Agent shall receive at least thirty (30)
Business Days' prior written notice of such proposed Permitted Acquisition,
which notice shall include a reasonably detailed description of such proposed
Permitted Acquisition;
(ii) such Permitted Acquisition shall only
involve assets located in the United States or Canada and comprise a business,
or those assets of a business, of the type engaged in by Borrowers as of the
Closing Date, and which business would not subject Agent or any Lender to
regulatory or third party approvals in connection with the exercise of its
rights and remedies under this Agreement or any other Loan Documents other than
approvals applicable to the exercise of such rights and remedies with respect to
Borrowers prior to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be
consensual and shall have been approved by the Target's board of directors and
Borrower and Target (and the seller thereof) shall have received all necessary
regulatory and third-party approvals in connection with such Permitted
Acquisition;
(iv) no additional Indebtedness, Guaranteed
Indebtedness, Contingent Obligations or other liabilities shall be incurred,
assumed or otherwise be reflected on a consolidated balance sheet of Borrowers
and Target after giving effect to such Permitted Acquisition, except (A) Loans
made hereunder, (B) Indebtedness issued to seller in such Permitted Acquisition
(so long as such Indebtedness (x) is either unsecured or secured only by assets
(other than Stock) being acquired in such Permitted Acquisition and (y) together
with all other such Indebtedness issued to sellers in Permitted Acquisitions,
does not exceed $1,000,000 in aggregate principal amount) and (C) ordinary
course trade payables, accrued expenses and unsecured Indebtedness of the Target
to the extent no Default or Event of Default has occurred and is continuing or
would result after giving effect to such Permitted Acquisition;
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(v) the sum of all amounts payable in connection
with all Permitted Acquisitions during the term hereof (including all
transaction costs and all Indebtedness, liabilities and Contingent Obligations
incurred or assumed in connection therewith or otherwise reflected on a
consolidated balance sheet of Borrowers and Target) shall not exceed $2,000,000
and the portion thereof allocable to goodwill and intangible assets for all such
Permitted Acquisitions during any Fiscal Year shall not exceed $1,000,000;
(vi) the Target's EBITDA for the trailing
twelve-month period preceding the date of the Permitted Acquisition, as
determined based upon the Target's financial statements for its most recently
completed fiscal year and its most recent interim financial period completed
within sixty (60) days prior to the date of consummation of such Permitted
Acquisition shall not be negative;
(vii) the business and assets acquired in such
Permitted Acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances);
(viii) at or prior to the closing of any Permitted
Acquisition, Agent will be granted a first priority (except in those assets
acquired from a seller securing Indebtedness issued to such seller as permitted
by clause (iv)(B) above) perfected Lien (subject to Permitted Encumbrances) in
all assets acquired pursuant thereto or in the assets and Stock of the Target,
and Holdings and Borrowers and the Target shall have executed such documents and
taken such actions as may be required by Agent in connection therewith;
(ix) concurrently with delivery of the notice
referred to in clause (i) above, Borrowers shall have delivered to Agent, in
form and substance reasonably satisfactory to Agent:
(A) a pro forma consolidated balance
sheet, income statement and cash flow statement of Holdings and its Subsidiaries
(the "Acquisition Pro Forma"), based on recent financial statements, which shall
be complete and shall fairly present in all material respects the assets,
liabilities, financial condition and results of operations of Holdings and its
Subsidiaries in accordance with GAAP consistently applied, but taking into
account such Permitted Acquisition and the funding of all Loans in connection
therewith, and such Acquisition Pro Forma shall reflect that (x) on a pro forma
basis, Holdings and its Subsidiaries would have had a Leverage Ratio not in
excess of 1.2 to 1.0 for the four quarter period reflected in the Compliance
Certificate most recently delivered to Agent pursuant to Section 4.9(l) prior to
the consummation of such Permitted Acquisition (after giving effect to such
Permitted Acquisition and all Loans funded, and other Indebtedness issued,
assumed, incurred or guaranteed, in connection therewith as if made on the first
day of such period), (y) average daily Borrowing Availability for the ninety
(90) day period preceding the consummation of such Permitted Acquisition would
have exceeded $10,000,000 on a pro forma basis (after giving effect to such
Permitted Acquisition and all Loans funded in connection therewith as if made on
the first day of such period) and the Acquisition Projections (as hereinafter
defined) shall reflect that such Borrowing Availability of $10,000,000 shall
continue for at least ninety (90) days after the consummation of such Permitted
Acquisition, and (z) on a pro forma basis, no Event of Default has occurred and
is continuing or would result after giving effect to such Permitted Acquisition
and Borrowers would have been in compliance with the financial covenants set
forth in Section 4 for the four quarter period reflected in the Compliance
Certificate most recently delivered to Agent pursuant to Section 4.9(l) prior to
the consummation of such Permitted Acquisition (after giving effect to such
Permitted Acquisition and all Loans funded, and other Indebtedness issued,
assumed, incurred or guaranteed, in connection therewith as if made on the first
day of such period);
(B) updated versions of the most
recently delivered Projections covering the three (3) year period commencing on
the date of such Permitted Acquisition and otherwise
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prepared in accordance with the Projections (the "Acquisition Projections") and
based upon historical financial data of a recent date reasonably satisfactory to
Agent, taking into account such Permitted Acquisition; and
(C) a certificate of the chief
financial officer of Borrower Representative to the effect that: (w) Borrowers
(after taking into consideration all rights of contribution and indemnity
Borrower has against Holdings and each other Subsidiary of Holdings) will be
Solvent upon the consummation of the Permitted Acquisition; (x) the Acquisition
Pro Forma fairly presents the financial condition of Holdings and its
Subsidiaries (on a consolidated basis) as of the date thereof after giving
effect to the Permitted Acquisition; (y) the Acquisition Projections are
reasonable estimates of the future financial performance of Holdings and its
Subsidiaries subsequent to the date thereof based upon the historical
performance of Holdings and its Subsidiaries and the Target and show that
Holdings and its Subsidiaries shall continue to be in compliance with the
financial covenants set forth in Section 4 for the three (3) year period
thereafter; and (z) Holdings and its Subsidiaries have completed their due
diligence investigation with respect to the Target and such Permitted
Acquisition, which investigation was conducted in a manner similar to that which
would have been conducted by a prudent purchaser of a comparable business and
the results of which investigation were delivered to Agent and Lenders;
(x) on or prior to the date of such Permitted
Acquisition, Agent shall have received, in form and substance reasonably
satisfactory to Agent, copies of the acquisition agreement and related
agreements and instruments, and all opinions, certificates, lien search results
and other documents reasonably requested by Agent, including those specified in
Section 2.8(e); and
(xi) at the time of such Permitted Acquisition
and after giving effect thereto, no Default or Event of Default has occurred and
is continuing.
Notwithstanding the foregoing, the Accounts, Short-Term
Rentals, Parts and Supplies, Equipment and Real Estate of the Target shall not
be included in Eligible Accounts, Eligible Short-Term Rentals, Eligible Parts
and Supplies, Eligible Equipment and Eligible Real Estate without the prior
written consent of Agent and Requisite Lenders. Notwithstanding the foregoing,
in the event that Stock of Target is acquired in such Permitted Acquisition, no
such property shall be included in the Aggregate Borrowing Base unless (i) such
Target becomes a Borrower under this Agreement pursuant to an accession or
similar agreement in form and substance satisfactory to Agent, (ii) such Target
shall have delivered in connection therewith such documents, certificates and
legal opinions as Agent shall have reasonably requested in connection with such
agreement and (iii) this Agreement shall have been amended in a manner
satisfactory to Agent and Requisite Lenders in order to introduce into the
Aggregate Borrowing Base a separate Borrowing Base for such Target (including
applicable definitions thereof and a Borrowing Base Certificate therefor).
3.7. Disposal of Assets or Subsidiary Stock. Except as described on
Schedule 3.7, the Credit Parties shall not and shall not cause or permit their
Subsidiaries to directly or indirectly convey, sell, lease, sublease, license,
assign, transfer or otherwise dispose of, or grant any Person an option to
acquire, in one transaction or a series of related transactions, any of its
property, business or assets, whether now owned or hereafter acquired, except
for (a) sales of inventory in good faith to customers for fair value in the
ordinary course of business and dispositions of Equipment and Parts and Supplies
not used or useful in the business, (b) Asset Dispositions by Borrowers and
their Subsidiaries (excluding sales of Accounts and Stock of any of Holdings'
Subsidiaries) if all of the following conditions are met: (i) the market value
of assets sold or otherwise disposed of in any single transaction or series of
related transactions does not exceed $100,000 and the aggregate market value of
assets sold or otherwise disposed of in any Fiscal Year does not exceed
$250,000; (ii) the consideration received is at least equal to the fair market
value of such assets; (iii) the sole consideration received is cash; (iv) the
Net Proceeds of such Asset
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Disposition are applied as required by Section 1.5(c); (v) after giving effect
to the Asset Disposition and the repayment of Indebtedness with the proceeds
thereof, Borrowers are in compliance on a pro forma basis with the covenants set
forth in Section 4 recomputed for the most recently ended Fiscal Quarter for
which information is available and is in compliance with all other terms and
conditions of this Agreement; and (vi) no Default or Event of Default then
exists or would result from such Asset Disposition and (c) Permitted
Sale-Leasebacks.
3.8. Transactions with Affiliates. The Credit Parties shall not and
shall not cause or permit their Subsidiaries to directly or indirectly enter
into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any management, consulting,
investment banking, advisory or other similar services) with any Affiliate or
with any director, officer or employee of any Credit Party, except (a) as set
forth on Schedule 3.8, (b) transactions in the ordinary course of and pursuant
to the reasonable requirements of the business of any such Credit Party or any
of its Subsidiaries and upon fair and reasonable terms which are fully disclosed
to Agent and are no less favorable to any such Credit Party or any of its
Subsidiaries than would be obtained in a comparable arm's length transaction
with a Person that is not an Affiliate, (c) payment of reasonable compensation
to officers and employees for services actually rendered to any such Credit
Party or any of its Subsidiaries, (d) payment of director's fees not to exceed
$100,000 in the aggregate for any Fiscal Year of Holdings and (e) upon notice to
Agent, transfers of assets by any Borrower to any other Borrower, provided that
(i) if such assets are covered by a negotiable document of title, such document
shall be delivered to Agent with all necessary endorsements, free and clear of
all Liens except those in favor of Agent and Lenders, (ii) if such assets are
covered by a certificate of title, such certificate of title shall be re-issued
in the name of the transferee Borrower and the Lien of Agent shall be noted on
such certificate of title in accordance with applicable state law, and (iii) if
such assets constitute real property, such real property shall be free and clear
of all Liens and rights of any other Person, except the Lien in favor of Agent
and Lenders and Permitted Encumbrances of the type described in clause (a), (d),
(e), (g), (h) or (j) of the definition of such term, and Agent shall have
received a loan policy of title insurance in favor of Agent and in form and
amount, and issued by a title insurance company satisfactory to Agent in its
reasonable discretion, together with such endorsements thereto as Agent shall
require in its reasonable discretion, provided further, that in each instance,
the transfer of ownership from the transferor Borrower to the transferee
Borrower shall be recorded in accordance with applicable law. Concurrently with
any such transfer, the transferor Borrower shall repay any Revolving Credit
Advances or cash collateralize Letter of Credit Obligations necessitated by the
reduction in its Borrowing Base and, in the event any such transferred assets
include any assets included in the transferor's most recent Borrowing Base
Certificate, at least five (5) Business Days' prior to consummating such
transfer, such transferor Borrower shall deliver to Agent a pro forma Borrowing
Base Certificate taking into account such transfer.
3.9. Conduct of Business. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to directly or indirectly engage in any
business other than businesses of the type described on Schedule 3.9.
3.10. Changes Relating to Indebtedness. The Credit Parties shall not
and shall not cause or permit their Subsidiaries to directly or indirectly
change or amend the terms of any of its Indebtedness permitted by Section
3.1(b), Section 3.1(d), Section 3.1(e), Section 3.1(f) or Section 3.1(g) if the
effect of such amendment is to: (a) increase the interest rate on such
Indebtedness; (b) change the dates upon which payments of principal or interest
are due on or principal amount of such Indebtedness; (c) change any event of
default or add or make more restrictive any covenant with respect to such
Indebtedness; (d) change the redemption or prepayment provisions of such
Indebtedness; (e) change the subordination provisions thereof (or the
subordination terms of any guaranty thereof); (f) change or amend any other term
if such change or amendment would materially increase the obligations of the
obligor or confer additional material rights on the holder of such Indebtedness
in a manner adverse to any Credit Party or
- 34 -
Lenders; or (g) increase the portion of interest payable in cash with respect to
any Indebtedness for which interest is payable by the issuance of
payment-in-kind notes or is permitted to accrue.
3.11. Change of Name or Location. No Credit Party shall (a) change
its name as it appears in official filings in the state of its incorporation or
organization, (b) change its offices or warehouses or locations at which
Collateral is held or stored, or the location of its records concerning the
Collateral, (c) change the type of entity that it is, (d) change its
organization identification number, if any, issued by its state of incorporation
or organization, or (e) change its state of incorporation or organization, in
each case without at least thirty (30) days' prior written notice to Agent and
after Agent's written acknowledgment, which shall not be unreasonably delayed,
that any reasonable action requested by Agent in connection therewith, including
to continue the perfection of any Liens in favor of Agent, on behalf of Lenders,
in any Collateral, has been completed or taken; provided that any such new
location shall be in the continental United States. Without limiting the
foregoing, no Credit Party shall change its name, identity or limited liability
company (or corporate, as the case may be) structure in any manner that might
make any financing or continuation statement filed in connection herewith
seriously misleading within the meaning of Section 9-506 or 9-507 of the Code or
any other then applicable provision of the Code except upon prior written notice
to Agent and Lenders and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Lenders, in
any Collateral, has been completed or taken.
3.12. Fiscal Year. No Credit Party shall change its Fiscal Year or
permit any of its Subsidiaries to change their respective fiscal years.
3.13. Press Release; Public Offering Materials. Each Credit Party
executing this Agreement agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure, including any
prospectus, proxy statement or other materials filed with any Governmental
Authority relating to a public offering of the Stock of any Credit Party, using
the name of GE Capital or its affiliates or referring to this Agreement, the
other Loan Documents or the Related Transactions Documents without at least two
(2) Business Days' prior notice to GE Capital and without the prior written
consent of GE Capital unless (and only to the extent that) such Credit Party or
Affiliate is required to do so under law and then, in any event, such Credit
Party or Affiliate will consult with GE Capital before issuing such press
release or other public disclosure. Each Credit Party consents to the
publication by Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement.
Agent or such Lender shall provide a draft of any such tombstone or similar
advertising material to each Credit Party for review and comment prior to the
publication thereof. Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements. Notwithstanding the foregoing, the parties hereto may disclose the
United States federal tax treatment and tax structure of the transactions
contemplated by the Loan Documents as further provided in Section 9.13.
3.14. Subsidiaries. The Credit Parties shall not and shall not cause
or permit their Subsidiaries to directly or indirectly establish, create or
acquire any new Subsidiary except in connection with Permitted Acquisitions.
3.15. Bank Accounts. The Credit Parties shall not and shall not
cause or permit their Subsidiaries to establish any new bank accounts without
prior written notice to Agent and unless Agent and the bank at which the account
is to be opened enter into a Control Agreement regarding such bank account in
form and substance satisfactory to Agent.
3.16. Hazardous Materials. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to cause or permit a Release of any
Hazardous Material on, at, in, under, above, to, from or
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about any of the Real Estate where such Release would (a) violate in any
respect, or form the basis for any Environmental Liabilities by the Credit
Parties or any of their Subsidiaries under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.
3.17. ERISA. The Credit Parties shall not and shall not cause or
permit any ERISA Affiliate to, cause or permit to occur an ERISA Event to the
extent such ERISA Event could reasonably be expected to have a Material Adverse
Effect.
3.18. Sale-Leasebacks. The Credit Parties shall not and shall not
cause or permit any of their Subsidiaries to engage in any sale-leaseback,
synthetic lease or similar transaction involving any of its assets except for
Permitted Sale-Leasebacks.
3.19. Prepayments of Other Indebtedness. The Credit Parties shall
not, directly or indirectly, voluntarily purchase, redeem, defease or prepay any
principal of, premium, if any, interest or other amount payable in respect of
any Indebtedness, other than (i) the Obligations; (ii) Indebtedness secured by a
Permitted Encumbrance if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Section 3.7(b), (iii) the Banc of
America Agreements, (iv) the Bob Mack Promissory Notes and (v) intercompany
Indebtedness reflecting amounts owing to Borrowers.
3.20. Changes to Management Services Agreements. The Credit Parties
shall not and shall not cause or permit any of their Subsidiaries to change or
amend the terms of the Management Services Agreements.
3.21. Changes in Depreciation Schedule. No Credit Party shall change
or amend the schedules or methodology used to calculate depreciation on its
assets (except as required by applicable law or by a change in GAAP).
SECTION 4.
FINANCIAL COVENANTS/REPORTING
Credit Parties covenant and agree that from and after the date hereof
until the Termination Date, Credit Parties shall perform and comply with, and
shall cause each of the other Credit Parties to perform and comply with, all
covenants in this Section 4 applicable to such Person.
4.1. Parts and Property Capital Expenditure Limits. Holdings and
its Subsidiaries on a consolidated basis shall not make Parts and Property
Capital Expenditures during any of the following periods that exceed in the
aggregate the amount set forth opposite such period (the "Capex Limit"):
Period Maximum Parts and Property Capital Expenditures per Period
------ ----------------------------------------------------------
Fiscal Year ending June 30, 2003 $1,750,000
for each Fiscal Year ending thereafter $1,500,000
; provided, however, that commencing with the Fiscal Year ending June 30, 2005,
the Capex Limit referenced above will be increased in any period by the positive
amount equal to the lesser of (i) 20% of the Capex Limit for the immediately
prior period, and (ii) the amount (if any), equal to the difference
- 36 -
obtained by taking the Capex Limit minus the actual amount of any Parts and
Property Capital Expenditures expended during such prior period (the "Carry Over
Amount"), and for purposes of measuring compliance herewith, the Carry Over
Amount shall be deemed to be the last amount spent on Parts and Property Capital
Expenditures in that succeeding period.
4.2. Lease Limits. Holdings will not and will not permit any of its
Subsidiaries directly or indirectly to become or remain liable in any way,
whether directly or by assignment or as a guarantor or other surety, for the
obligations of the lessee under any operating lease, synthetic lease or similar
off-balance sheet financing with respect to equipment, if the aggregate amount
of all rents (or substantially equivalent payments) paid by Holdings and its
Subsidiaries under all such leases would exceed $1,000,000 in any Fiscal Year of
Holdings.
4.3. Omitted.
4.4. Dollar Utilization Rate of Equipment Ratio. Holdings and its
Subsidiaries on a consolidated basis shall have at the end of each Fiscal
Quarter set forth below, a Dollar Utilization Rate of Equipment Ratio for the
12-month period then ended of not less than the following:
0.48 to 1.00 for each Fiscal Quarter ending on or after
June 30, 2003.
4.5. Minimum Interest Coverage Ratio. Holdings and its Subsidiaries
on a consolidated basis shall have at the end of each Fiscal Quarter set forth
below, an Interest Coverage Ratio for the 12-month period then ended of not less
than the following:
1.25 to 1.00 for each Fiscal Quarter ending on or prior to
March 31, 2004;
1.35 to 1.00 for each Fiscal Quarter ending on or after
June 30, 2004 and on or prior to March 31,
2005; and
1.50 to 1.00 for each Fiscal Quarter ending thereafter.
4.6. Maximum Leverage Ratio. Holdings and its Subsidiaries on a
consolidated basis shall have at the end of each Fiscal Quarter set forth below,
a Leverage Ratio as of the last day of such Fiscal Quarter and for the 12-month
period then ended, of not more than the following:
2.35 to 1.00 for each Fiscal Quarter ending on or prior to
September 30, 2003;
2.40 to 1.00 for the Fiscal Quarter ending on December 31,
2003;
2.25 to 1.00 for the Fiscal Quarter ending on March 31,
2004;
1.95 to 1.00 for the Fiscal Quarter ending on June 30,
2004;
1.90 to 1.00 for each Fiscal Quarter ending on or after
September 30, 2004 and on or prior to December
31, 2004;
1.85 to 1.00 for each Fiscal Quarter ending on or after
March 31, 2005 and on or prior to June 30,
2005;
1.80 to 1.00 for each Fiscal Quarter ending on or after
September 30, 2005 and on or prior to December
30, 2005; and
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1.75 to 1.00 for each Fiscal Quarter ending thereafter.
4.7. Omitted.
4.8. Minimum Borrowing Availability. Borrowers shall maintain
Borrowing Availability in the aggregate of at least $5,000,000 at all times.
4.9. Financial Statements and Other Reports. Holdings will
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of Financial Statements in conformity with GAAP (it being
understood that monthly Financial Statements are not required to have footnote
disclosures). Borrower Representative will deliver each of the Financial
Statements and other reports described below to Agent (and each Lender in the
case of the Financial Statements and other reports described in Sections
(4.9)(a), (b), (c), (e), (g), (h), (i), and (l).
(a) Monthly Financials. As soon as available and in any
event within thirty (30) days after the end of each month (including the last
month of Borrowers' Fiscal Year), Borrower Representative will deliver (1) the
consolidated and consolidating balance sheets of Holdings and its Subsidiaries,
as at the end of such month, and the related consolidated and consolidating
statements of income, stockholders' equity and cash flow for such month and for
the period from the beginning of the then current Fiscal Year of Holdings to the
end of such month, (2) a report setting forth in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the most recent Projections for the current
Fiscal Year delivered pursuant to Section 4.9(g) and (3) a schedule of the
outstanding Indebtedness for borrowed money of Holdings and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan.
(b) Quarterly Financials. As soon as available and in any
event within forty-five (45) days after the end of each Fiscal Quarter of
Borrowers, Borrower Representative will deliver (1) the consolidated and
consolidating balance sheets of Holdings and its Subsidiaries, as at the end of
such quarter, and the related consolidated and consolidating statements of
income, stockholders' equity and cash flow for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year of Holdings to the end
of such Fiscal Quarter, (2) a report setting forth in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the most recent Projections for the current
Fiscal Year delivered pursuant to Section 4.9(g) and (3) a schedule of the
outstanding Indebtedness for borrowed money of Holdings and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan.
(c) Year-End Financials. As soon as available and in any
event within ninety (90) days after the end of each Fiscal Year of Borrowers,
Borrower Representative will deliver (1) the consolidated and consolidating
balance sheets of Holdings and its Subsidiaries, as at the end of such year, and
the related consolidated and consolidating statements of income, stockholders'
equity and cash flow for such Fiscal Year, (2) a schedule of the outstanding
Indebtedness for borrowed money of Holdings and its Subsidiaries describing in
reasonable detail each such debt issue or loan outstanding and the principal
amount and amount of accrued and unpaid interest with respect to each such debt
issue or loan and (3) a report with respect to the consolidated Financial
Statements from a firm of Certified Public Accountants selected by Borrowers and
reasonably acceptable to Agent, which report shall be prepared in accordance
with Statement of Auditing Standards No. 58 (the "Statement") "Reports on
Audited Financial Statements" and such report shall be "Unqualified" (as such
term is defined in such Statement).
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(d) Accountants' Reports. Promptly upon receipt thereof,
Borrower Representative will deliver copies of all significant reports submitted
by Borrowers' firm of certified public accountants in connection with each
annual, interim or special audit or review of any type of the Financial
Statements or related internal control systems of Holdings or its Subsidiaries
made by such accountants, including any comment letter submitted by such
accountants to management in connection with their services.
(e) Additional Deliveries.
(i) To Agent, upon its request, and in any event
no less frequently than noon New York time fifteen (15) Business Days after the
end of each Fiscal Month (together with a copy of any of the following reports
requested by any Lender in writing after the Closing Date), each of the
following reports, each of which shall be prepared by Borrowers as of the last
day of the immediately preceding Fiscal Month or the date 2 days prior to the
date of any such request:
(A) a Borrowing Base Certificate with
respect to each Borrower, accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion (in
substantially the same form as Exhibits 4.9(e)(i), 4.9(e)(ii), 4.9(e)(iii) and
Exhibits 4.9(e)(iv) (each, a "Borrowing Base Certificate");
(B) with respect to each Borrower, a
summary of Equipment and Parts and Supplies by location and type, in each case
accompanied by such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion; and
(C) a monthly trial balance showing
Accounts and Short-Term Rentals outstanding aged from invoice date as follows: 1
to 30 days, 31 to 60 days, 61 to 90 days and 91 days or more, accompanied by
such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion.
(ii) To Agent, on a weekly basis or at such more
frequent intervals as Agent may request from time to time (together with a copy
of all or any part of such delivery requested by any Lender in writing after the
Closing Date), collateral reports with respect to each Borrower, including all
additions and reductions (cash and non-cash) with respect to Accounts and
Short-Term Rentals of each Borrower, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable
discretion each of which shall be prepared by the applicable Borrower as of the
last day of the immediately preceding week or the date 2 days prior to the date
of any request;
(iii) To Agent, at the time of delivery of each of
the monthly Financial Statements delivered pursuant to this Section 4.9:
(A) a reconciliation of the accounts
receivable aging to each Borrowers' most recent Borrowing Base Certificate,
general ledger and monthly Financial Statements delivered pursuant to this
Section 4.9, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;
(B) a reconciliation of the summary of
Equipment and Parts and Supplies delivered in accordance with Section
4.9(e)(i)(B) to each Borrower's most recent Borrowing Base Certificate, general
ledger and monthly Financial Statements delivered pursuant to this Section 4.9,
in each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
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(C) an aging of accounts payable and a
reconciliation of that accounts payable aging to each Borrower's general ledger
and monthly Financial Statements delivered pursuant to this Section 4.9, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(D) a reconciliation of the outstanding
Loans as set forth in the monthly Loan Account statement provided by Agent to
each Borrower's general ledger and monthly Financial Statements delivered
pursuant to this Section 4.9, in each case accompanied by such supporting detail
and documentation as shall be requested by Agent in its reasonable discretion;
(iv) To Agent, at the time of delivery of each of
the annual Financial Statements delivered pursuant to this Section 4.9, (i) a
listing of government contracts of each Borrower subject to the Federal
Assignment of Claims Act of 1940; and (ii) a list of any applications for the
registration of any Patent, Trademark or Copyright filed by any Credit Party
with the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in the prior Fiscal Quarter;
(f) Appraisals; Inspections.
(i) From time to time, if Agent or any Lender
determines that obtaining appraisals is necessary in order for Agent or such
Lender to comply with applicable laws or regulations, Agent will, at Borrowers'
expense, obtain appraisal reports in form and substance and from appraisers
satisfactory to Agent stating the then current fair market values of all or any
portion of the Real Estate owned by Credit Parties. In addition to the
foregoing, at Borrower's expense, at any time while and so long as an Event of
Default shall have occurred and be continuing, and in the absence of a Default
or Event of Default not more than once during each calendar year, Agent may
obtain appraisal reports in form and substance and from appraisers satisfactory
to Agent stating the then current market values of all or any portion of the
Real Estate and personal property owned by any of the Credit Parties.
(ii) Borrowers, at their own expense, shall
deliver to Agent the results of each physical verification, if any, that
Borrowers or any of their Subsidiaries may in their discretion have made, or
caused any other Person to have made on their behalf, of all or any portion of
their Parts and Supplies and Equipment (and, if a Default or an Event of Default
has occurred and is continuing, Borrowers shall, upon the request of Agent,
conduct, and deliver the results of, such physical verifications as Agent may
require).
(iii) Notwithstanding the foregoing, so long as no
Event of Default has occurred and is continuing Agent and any Lender shall only
obtain an appraisal report pursuant to this Section 4.9(f) for that portion of
the Real Estate that Agent, such Lender and Borrowers have agreed will be
included in the Aggregate Borrowing Base
(g) Projections. As soon as available and in any event no
later than the 60th day following the first day of each of Holdings' Fiscal
Years, Borrower Representative will deliver Projections of Holdings and its
Subsidiaries for the forthcoming three (3) fiscal years, year by year, and for
the forthcoming fiscal year, month by month.
(h) SEC Filings and Press Releases. Promptly upon their
becoming available, Borrower Representative will deliver copies of (1) all
Financial Statements, reports, notices and proxy statements sent or made
available by Holdings or any of its Subsidiaries to their Stockholders, (2) all
regular and periodic reports and all registration statements and prospectuses,
if any, filed by Holdings or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission,
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any Governmental Authority or any private regulatory authority, and (3) all
press releases and other statements made available by Holdings or any of its
Subsidiaries to the public concerning developments in the business of any such
Person.
(i) Events of Default, Etc. Promptly upon any officer of
any Credit Party obtaining knowledge of any of the following events or
conditions, Borrower Representative shall deliver copies of all notices given or
received by such Credit Party or any of their Subsidiaries with respect to any
such event or condition and a certificate of Borrower Representative's chief
executive officer specifying the nature and period of existence of such event or
condition and what action such Credit Party or Subsidiary thereof has taken, is
taking and proposes to take with respect thereto: (1) any condition or event
that constitutes, or which could reasonably be expected to result in the
occurrence of, an Event of Default or Default; (2) any notice that any Person
has given to any Credit Party or any of their Subsidiaries or any other action
taken with respect to a claimed default or event or condition of the type
referred to in Section 6.1(b); (3) any event or condition that could reasonably
be expected to result in any Material Adverse Effect; or (4) any default or
event of default with respect to any material Indebtedness of any Credit Party
or any of its Subsidiaries.
(j) Litigation. Promptly upon any officer of any Credit
Party obtaining knowledge of (1) the institution of any action, charge, claim,
demand, suit, proceeding, petition, governmental investigation, tax audit or
arbitration now pending or, to the best knowledge of such Credit Party after due
inquiry, threatened against or affecting any Credit Party or any of its
Subsidiaries or any property of any Credit Party or any of its Subsidiaries
("Litigation") not previously disclosed by Borrower Representative to Agent or
(2) any material development in any action, suit, proceeding, governmental
investigation or arbitration at any time pending against or affecting any Credit
Party or any property of any Credit Party which, in each case, could reasonably
be expected to have a Material Adverse Effect, Borrower Representative will
promptly give notice thereof to Agent and provide such other information as may
be reasonably available to them to enable Agent and its counsel to evaluate such
matter.
(k) Notice of Corporate and other Changes. Borrower
Representative shall provide prompt written notice of (1) all jurisdictions in
which a Credit Party becomes qualified after the Closing Date to transact
business, (2) any change after the Closing Date in the authorized and issued
Stock of any Credit Party or any Subsidiary of any Credit Party or any amendment
to their articles or certificate of incorporation, by-laws, partnership
agreement or other organizational documents, (3) any Subsidiary created or
acquired by any Credit Party or any of its Subsidiaries after the Closing Date,
such notice, in each case, to identify the applicable jurisdictions, capital
structures or Subsidiaries, as applicable, and (4) any other event that occurs
after the Closing Date which would cause any of the representations and
warranties in Section 5 of this Agreement or in any other Loan Document to be
untrue or misleading in any material respect. The foregoing notice requirement
shall not be construed to constitute consent by any of the Lenders to any
transaction referred to above which is not expressly permitted by the terms of
this Agreement.
(l) Compliance Certificate. Together with each delivery
of Financial Statements of Holdings and its Subsidiaries pursuant to Section
4.9(b) and Section 4.9(c) Borrowers will deliver a fully and properly completed
Compliance Certificate (in substantially the same form as Exhibit 4.9(l) (the
"Compliance Certificate") signed by each Borrower's chief executive officer or
chief financial officer.
(m) Customer Concentration. Borrower Representative shall
provide prompt written notice if the Accounts of any customer exceed in the
aggregate an amount equal to fifteen percent (15%) of the aggregate of all
Accounts of Borrowers or any of their Subsidiaries at any time.
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(n) Other Information. With reasonable promptness,
Borrower Representative will deliver such other information and data with
respect to any Credit Party or any Subsidiary of any Credit Party as from time
to time may be reasonably requested by Agent.
(o) Taxes. Borrower Representative shall provide prompt
written notice of (i) the execution or filing with the IRS or any other
Governmental Authority of any agreement or other document extending, or having
the effect of extending, the period for assessment or collection of any Charges
by the Credit Parties which could reasonably be expected to have a Material
Adverse Effect and (ii) any agreement by the Credit Parties or request directed
to the Credit Parties to make any adjustment under IRC Section 481(a), by reason
of a change in accounting method or otherwise, which could reasonably be
expected to have a Material Adverse Effect.
4.10. Accounting Terms; Utilization of GAAP for Purposes of
Calculations under Agreement. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to Agent pursuant to Section 4.9 or any other section (unless
specifically indicated otherwise) shall be prepared in accordance with GAAP as
in effect at the time of such preparation; provided that no Accounting Change
shall affect financial covenants, standards or terms in this Agreement; provided
further that Holdings shall prepare footnotes to the Financial Statements
required to be delivered hereunder that show the differences between the
Financial Statements delivered (which reflect such Accounting Changes) and the
basis for calculating financial covenant compliance (without reflecting such
Accounting Changes). All such adjustments described in clause (c) of the
definition of the term Accounting Changes resulting from expenditures made
subsequent to the Closing Date (including capitalization of costs and expenses
or payment of pre-Closing Date liabilities) shall be treated as expenses in the
period the expenditures are made.
SECTION 5.
REPRESENTATIONS AND WARRANTIES
To induce Agent and Lenders to enter into the Loan Documents, to make
Loans and to issue or cause to be issued Letters of Credit, Borrowers and the
other Credit Parties executing this Agreement, jointly and severally, represent,
warrant and covenant to Agent and each Lender that the following statements are
and, after giving effect to the Related Transactions, will remain true, correct
and complete until the Termination Date with respect to all Credit Parties:
5.1. Disclosure. No representation or warranty of any Credit Party
contained in this Agreement, the Financial Statements referred to in Section
5.5, the other Related Transactions Documents or any other document, certificate
or written statement furnished to Agent or any Lender by or on behalf of any
such Person for use in connection with the Loan Documents or the Related
Transactions Documents contains as of the date made or deemed remade or given
any untrue statement of a material fact or omitted, omits or will omit to state
a material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made.
5.2. No Material Adverse Effect. Since June 30, 2002 there have
been no events or changes in facts or circumstances affecting any Credit Party
or any of its Subsidiaries which individually or in the aggregate have had or
could reasonably be expected to have a Material Adverse Effect and that have not
been disclosed herein or in the attached Disclosure Schedules.
5.3. No Conflict. The consummation of the Related Transactions does
not and will not violate or conflict with any laws, rules, regulations or orders
of any Governmental Authority or violate,
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conflict with, result in a breach of, or constitute a default (with due notice
or lapse of time or both) under any Contractual Obligation or organizational
documents of any Credit Party or any of its Subsidiaries except if such
violations, conflicts, breaches or defaults could not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect. None
of the Credit Parties is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.4. Organization, Powers, Capitalization and Good Standing.
(a) Organization and Powers. Each of the Credit Parties
and each of their Subsidiaries is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and qualified to do
business in all states where such qualification is required except where failure
to be so qualified could not reasonably be expected to have a Material Adverse
Effect. The jurisdiction of organization and all jurisdictions as of the Closing
Date in which each Credit Party is qualified to do business are set forth on
Schedule 5.4(a). Each of the Credit Parties and each of their Subsidiaries has
all requisite organizational power and authority to own and operate its
properties, to carry on its business as now conducted and proposed to be
conducted, to enter into each Related Transactions Document to which it is a
party and to incur the Obligations, grant liens and security interests in the
Collateral and carry out the Related Transactions.
(b) Capitalization. As of the Closing Date: (i) the
authorized Stock of each of the Credit Parties and each of their Subsidiaries is
as set forth on Schedule 5.4(b); (ii) all issued and outstanding Stock of each
of the Credit Parties and each of their Subsidiaries is duly authorized and
validly issued, fully paid, nonassessable, free and clear of all Liens other
than those in favor of Agent for the benefit of Agent and Lenders, and such
Stock was issued in compliance with all applicable state, federal and foreign
laws concerning the issuance of securities; (iii) the identity of the holders of
the Stock of each of the Credit Parties and each of their Subsidiaries and the
percentage of their fully-diluted ownership of the Stock of each of the Credit
Parties and each of their Subsidiaries is set forth on Schedule 5.4(b); and (iv)
no Stock of any Credit Party or any of their Subsidiaries, other than those
described above, are issued and outstanding. Except as provided in Schedule
5.4(b), as of the Closing Date, there are no preemptive or other outstanding
rights, options, warrants, conversion rights or similar agreements or
understandings for the purchase or acquisition from any Credit Party or any of
their Subsidiaries of any Stock of any such entity.
(c) Binding Obligation. This Agreement is, and the other
Related Transactions Documents when executed and delivered will be, the legally
valid and binding obligations of the applicable parties thereto, each
enforceable against each of such parties, as applicable, in accordance with
their respective terms.
5.5. Financial Statements and Projections. All Financial Statements
concerning Holdings and its Subsidiaries which have been or will hereafter be
furnished to Agent pursuant to this Agreement, including those listed below,
have been or will be prepared in accordance with GAAP consistently applied
(except as disclosed therein) and do or will present fairly the financial
condition of the entities covered thereby as at the dates thereof and the
results of their operations for the periods then ended, subject to, in the case
of unaudited Financial Statements, the absence of footnotes and normal year-end
adjustments.
(a) The consolidated balance sheets at June 30, 2002 and
the related statement of income of Holdings and its Subsidiaries, for the Fiscal
Year then ended, audited by KPMG LLP.
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(b) The consolidated balance sheet at December 31, 2002
and the related statement of income of Holdings and its Subsidiaries for the six
(6) months then ended.
The Projections delivered on or prior to the Closing Date and the updated
Projections delivered pursuant to Section 4.9(i) represent and will represent as
of the date thereof the good faith estimate of Borrowers and their senior
management concerning the most probable course of their business.
5.6. Intellectual Property. Each of the Credit Parties and its
Subsidiaries owns, is licensed to use or otherwise has the right to use, all
Intellectual Property used in or necessary for the conduct of its business as
currently conducted that is material to the condition (financial or other),
business or operations of such Credit Party and its Subsidiaries. All issued
Patents, registered Trademarks, registered Copyrights and pending applications
for any of the foregoing owned by a Credit Party on the Closing Date are
identified on Schedule 5.6 and fully protected and/or duly and properly
registered, filed or issued in the appropriate office and jurisdictions for such
registrations, filings or issuances. Except as disclosed in Schedule 5.6, to the
Credit Parties' knowledge the use of such Intellectual Property by the Credit
Parties and their Subsidiaries and the conduct of their businesses does not and
has not been alleged by any Person to infringe on the rights of any Person.
5.7. Investigations, Audits, Etc. As of the Closing Date, except as
set forth on Schedule 5.7, no Credit Party or any of its Subsidiaries is the
subject of any review or audit by the IRS or any governmental investigation
concerning the violation or possible violation of any law.
5.8. Employee Matters. Except as set forth on Schedule 5.8, (a) as
of the Closing Date, no Credit Party or Subsidiary of a Credit Party nor any of
their respective employees is subject to any collective bargaining agreement,
(b) as of the Closing Date, no petition for certification or union election is
pending with respect to the employees of any Credit Party or any of their
Subsidiaries and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of any Credit Party
or any of their Subsidiaries, (c) there are no strikes, slowdowns, work
stoppages or controversies pending or, to the best knowledge of any Credit Party
after due inquiry, threatened between any Credit Party or any of their
Subsidiaries and its respective employees, other than employee grievances
arising in the ordinary course of business which could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect and (d) hours worked by and payment made to employees of each Credit
Party and each of their Subsidiaries comply with the Fair Labor Standards Act
and each other federal, state, local or foreign law applicable to such matters
except where failure to comply will not have a Material Adverse Effect. Except
as set forth on Schedule 5.8, as of the Closing Date, neither Borrower nor any
of its Subsidiaries is party to an employment contract.
5.9. Solvency. Each of the Credit Parties and its Subsidiaries is
Solvent.
5.10. Litigation; Adverse Facts. Except as set forth on Schedule
5.10, there are no judgments outstanding against any Credit Party or any of its
Subsidiaries or affecting any property of any Credit Party or any of its
Subsidiaries, nor is there any Litigation pending, or to the best knowledge of
any Credit Party threatened, against any Credit Party or any of its Subsidiaries
which could reasonably be expected to result in any Material Adverse Effect.
5.11. Use of Proceeds; Margin Regulations.
(a) No part of the proceeds of any Loan will be used for
"buying" or "carrying" "margin stock" within the respective meanings of such
terms under Regulation U of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect or for any other purpose that
violates the provisions of the regulations of the Board of Governors of the
Federal
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Reserve System. If requested by Agent, each Credit Party will furnish to Agent
and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form 0-1, as applicable, referred to in
Regulation U.
(b) Borrowers shall utilize the proceeds of the Loans
solely for the Refinancing (and to pay any related transaction expenses), and
for the financing of Borrowers' ordinary working capital and general corporate
needs. Schedule 5.11 contains a description of Borrowers' sources and uses of
funds as of the Closing Date, including Loans and Letter of Credit Obligations
to be made or incurred on that date, and a funds flow memorandum detailing how
funds from each source are to be transferred for particular uses.
5.12. Ownership of Property; Liens. As of the Closing Date, the real
estate (together with any real estate acquired by any Credit Party after the
Closing Date, "Real Estate") listed in Schedule 5.12, as such Schedule may be
updated from time to time upon thirty (30) days' prior written notice to Agent,
constitutes all of the real property owned, leased, subleased, or used by any
Credit Party or any of its Subsidiaries. Each of the Credit Parties and each of
its Subsidiaries owns, subject to Permitted Encumbrances, good and marketable
fee simple title to all of its owned Real Estate, and valid and marketable
leasehold interests in all of its leased Real Estate, all as described on
Schedule 5.12, and copies of all such leases or a summary of terms thereof
reasonably satisfactory to Agent have been delivered to Agent. Schedule 5.12
further describes any Real Estate with respect to which any Credit Party or any
of its Subsidiaries is a lessor, sublessor or assignor as of the Closing Date.
As of the Closing Date, each of the Credit Parties and each of its Subsidiaries
also has good and marketable title to, or valid leasehold interests in, all of
its personal property and assets, including, without limitation, those titled
vehicles described in Schedule 5.12 (the "Titled Vehicles"). As of the Closing
Date, none of the properties and assets of any Credit Party or any of its
Subsidiaries are subject to any Liens other than Permitted Encumbrances, and
there are no facts, circumstances or conditions known to any Borrower that may
result in any Liens (including Liens arising under Environmental Laws) other
than Permitted Encumbrances against the properties or assets of any Credit Party
or any of its Subsidiaries. Each of the Credit Parties and each of its
Subsidiaries has received all deeds, certificates of title, assignments,
waivers, consents, nondisturbance and attornment or similar agreements, bills of
sale and other documents, and has duly effected all recordings, filings and
other actions necessary to establish, protect and perfect such Credit Party's or
Subsidiary's right, title and interest in and to all such Real Estate and other
properties and assets, including, without limitation, the Titled Vehicles.
Schedule 5.12 also describes any purchase options, rights of first refusal or
other similar contractual rights pertaining to any Real Estate as of the Closing
Date. As of the Closing Date, no portion of any Credit Party's or any of its
Subsidiaries' Real Estate has suffered any material damage by fire or other
casualty loss that has not heretofore been repaired and restored in all material
respects to its original condition or otherwise remedied. As of the Closing
Date, all material permits required to have been issued or appropriate to enable
the Real Estate to be lawfully occupied and used for all of the purposes for
which it is currently occupied and used have been lawfully issued and are in
full force and effect.
5.13. Environmental Matters.
(a) Except as set forth in Schedule 5.13, as of the
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that could not reasonably be expected to
adversely impact the value or marketability of such Real Estate and that could
not reasonably be expected to result in Environmental Liabilities of the Credit
Parties or their Subsidiaries in excess of $100,000 in the aggregate; (ii) no
Credit Party and no Subsidiary of a Credit Party has caused or suffered to occur
any Release of Hazardous Materials on, at, in, under, above, to, from or about
any of their Real Estate except for such Releases that could not reasonably be
expected to result in Environmental Liabilities of the Credit Parties or their
Subsidiaries in excess of $100,000 in the
- 45 -
aggregate; (iii) the Credit Parties and their Subsidiaries are and have been in
compliance with all Environmental Laws, except for such noncompliance that could
not reasonably be expected to result in Environmental Liabilities of the Credit
Parties or their Subsidiaries in excess of $100,000 in the aggregate; (iv) the
Credit Parties and their Subsidiaries have obtained, and are in compliance with,
all Environmental Permits required by Environmental Laws for the operations of
their respective businesses as presently conducted or as proposed to be
conducted, except where the failure to so obtain or comply with such
Environmental Permits could not reasonably be expected to result in
Environmental Liabilities of the Credit Parties or their Subsidiaries in excess
of $100,000 in the aggregate, and all such Environmental Permits are valid,
uncontested and in good standing; (v) no Credit Party and no Subsidiary of a
Credit Party is involved in operations or knows of any facts, circumstances or
conditions, including any Releases of Hazardous Materials, that are likely to
result in any Environmental Liabilities of such Credit Party or Subsidiary that
could reasonably be expected to be in excess of $100,000 in the aggregate, and
no Credit Party or Subsidiary of a Credit Party has permitted any current or
former tenant or occupant of the Real Estate to engage in any such operations;
(vi) there is no pending Litigation arising under or related to any
Environmental Laws, Environmental Permits or Hazardous Material that seeks
damages, penalties, fines, costs or expenses in excess of $50,000 in the
aggregate or injunctive relief against, or that alleges criminal misconduct by
any Credit Party or any Subsidiary of a Credit Party; (vii) no notice has been
received by any Credit Party or any Subsidiary of a Credit Party identifying any
of them as a "potentially responsible party" or requesting information under
CERCLA or analogous state statutes, and to the knowledge of the Credit Parties,
there are no facts, circumstances or conditions that may result in any of the
Credit Parties or their Subsidiaries being identified as a "potentially
responsible party" under CERCLA or analogous state statutes; and (viii) the
Credit Parties have provided to Agent copies of all existing environmental
reports prepared by or on behalf of any Credit Party or in the possession or
control of any Credit Party, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to any of the Credit Parties or their Subsidiaries.
(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now in control of any of the Real Estate or environmental
affairs of such Credit Party or its Subsidiaries, (ii) to the best of such
Credit Party's knowledge, before the possession or control by such Credit Party
or its Subsidiaries of such Real Estate or environmental affairs, Agent was not
in control of any such Real Estate of environmental affairs and (iii) does not
have the capacity through the provisions of the Loan Documents or otherwise to
control any Credit Party's or its Subsidiaries' conduct with respect to the
ownership, operation or management of any of their Real Estate or compliance
with Environmental Laws or Environmental Permits.
5.14. ERISA.
(a) Schedule 5.14 lists all Plans and separately
identifies all Pension Plans, including Title IV Plans, Multiemployer Plans,
ESOPs and Welfare Plans, including all Retiree Welfare Plans. Copies of all such
listed Plans, together with a copy of the latest form IRS/DOL 5500-series for
each such Plan in effect as of the Closing Date have been delivered to Agent.
Except with respect to Multiemployer Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred that could
reasonably be expected to cause the loss of such qualification or tax-exempt
status. Each Plan other than a Multiemployer Plan, is, and to the knowledge of
the Credit Parties each Multiemployer Plan is, in compliance in all material
respects, with the applicable provisions of ERISA and the IRC, including the
timely filing of all reports required under the IRC or ERISA, including the
statement required by 29 CFR Section 2520.104-23. Neither any Credit Party nor
ERISA Affiliate has failed in other than a de minimis respect, to make any
contribution or pay any amount due as required by either Section 412 of the IRC
or Section 302 of ERISA or the terms of any such Plan. Neither any Credit Party
nor ERISA Affiliate has engaged in a "prohibited transaction," as
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defined in Section 406 of ERISA and Section 4975 of the IRC, in connection with
any Plan, that would subject any Credit Party to a material tax on prohibited
transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC.
(b) Except as set forth in Schedule 5.14: (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Borrower, threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against any Plan
(other than a Multiemployer Plan) or any Person as fiduciary or sponsor of any
Plan; (iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects
to incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 404(b)(1) of ERISA, nor
has any Title IV Plan of any Credit Party or ERISA Affiliate (determined at any
time within the past five years) with Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate; (vi) except in the
case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes
up, in the aggregate, no more than 10% of fair market value of the assets of any
Plan measured on the basis of fair market value as of the latest valuation date
of any Plan; and (vii) no liability under any Title IV Plan has been satisfied
with the purchase of a contract from an insurance company that is not rated AAA
by the S&P or an equivalent rating by another nationally recognized rating
agency.
5.15. Brokers. No broker or finder acting on behalf of any Credit
Party or Affiliate thereof brought about the obtaining, making or closing of the
Loans or the Related Transactions, and no Credit Party or Affiliate thereof has
any obligation to any Person in respect of any finder's or brokerage fees in
connection therewith other than under the Management Services Agreements.
5.16. Deposit and Disbursement Accounts. Schedule 5.16 lists all
banks and other financial institutions at which any Credit Party maintains
deposit, securities or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
5.17. Agreements and Other Documents. As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which is listed in Schedule
5.17: supply agreements and purchase agreements not terminable by such Credit
Party within sixty (60) days following written notice issued by such Credit
Party and involving transactions in excess of $1,000,000 per annum; leases of
Equipment having a remaining term of one year or longer and requiring aggregate
rental and other payments in excess of $500,000 per annum; licenses and permits
held by the Credit Parties, the absence of which could reasonably be expected to
have a Material Adverse Effect; instruments and documents evidencing any
Indebtedness or Guaranteed Indebtedness of such Credit Party and any Lien
granted by such Credit Party with respect thereto; and instruments and
agreements evidencing the issuance of any equity securities, warrants, rights or
options to purchase equity securities of such Credit Party.
5.18. Insurance. Schedule 5.18 lists all insurance policies of any
nature maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the key business terms of each such policy
such as deductibles, coverage limits and term of policy.
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5.19. Bank Credit Facility. This Agreement constitutes a "Bank
Credit Facility" under and as such term is defined in the Senior Unsecured Notes
Indenture and upon satisfaction of the Prior Lender Obligations, constitutes the
sole "Bank Credit Facility" thereunder.
5.20. Asbestos Litigation. The Asbestos Litigation does not involve
products or facilities of Penhall and the relationship of Penhall to any
construction site that is the subject of the Asbestos Litigation is solely as a
contractor to such construction site.
SECTION 6.
DEFAULT, RIGHTS AND REMEDIES
6.1. Event of Default. "Event of Default" shall mean the occurrence
or existence of any one or more of the following:
(a) Payment. (1) Failure to pay any installment or other
payment of principal of any Loan when due, or to repay Revolving Loans to reduce
their balance to the maximum amount of Revolving Loans then permitted to be
outstanding or to reimburse any L/C Issuer for any payment made by such L/C
Issuer under or in respect of any Letter of Credit when due or (2) failure to
pay, within three (3) days after the due date, any interest on any Loan or any
other amount due under this Agreement or any of the other Loan Documents; or
(b) Default in Other Agreements. (1) Any Credit Party or
any of its Subsidiaries fails to pay when due or within any applicable grace
period any amount of principal of or any amount of interest on Indebtedness
(other than the Loans) or any Contingent Obligations if such Indebtedness or
Contingent Obligation is in excess of $100,000 or (2) breach or default of any
Credit Party or any of its Subsidiaries, or the occurrence of any condition or
event, with respect to any Indebtedness (other than the Loans) or any Contingent
Obligations, if the effect of such breach, default or occurrence is to cause or
to permit the holder or holders then to cause, Indebtedness and/or Contingent
Obligations having an individual principal amount in excess of $1,000,000 or
having an aggregate principal amount in excess of $1,000,000 to become or be
declared due prior to their stated maturity; or
(c) Breach of Certain Provisions; Breach of Warranty.
Failure of any Credit Party to perform or comply with any term or condition
contained in that portion of Section 2.2 relating to the Credit Parties'
obligation to maintain insurance, Section 2.3, Section 3 or Section 4; or
(d) Borrowing Base Certificate; Breach of Warranty. Any
information contained in any Borrowing Base Certificate is untrue or incorrect
in any respect (other than inadvertent, immaterial errors not exceeding
$1,000,000 in the aggregate in any Borrowing Base Certificate), or any
representation or warranty herein or in any Loan Document or in any written
statement, report, financial statement or certificate (other than a Borrowing
Base Certificate) made or delivered to Agent or any Lender by any Credit Party
is untrue or incorrect in any material respect (without duplication of
materiality qualifiers contained therein) as of the date when made or deemed
made; or
(e) Other Defaults under Loan Documents. Any Credit Party
defaults in the performance of or compliance with any term contained in this
Agreement or the other Loan Documents (other than occurrences described in other
provisions of this Section 6.1 for which a different grace or cure period is
specified, or for which no cure period is specified and which constitute
immediate Events of Default) and such default is not remedied or waived within
thirty (30) days after the earlier of (1) receipt by Borrower Representative of
notice from Agent or Requisite Lenders of such default or (2) actual knowledge
of any Borrower or any other Credit Party of such default; or
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(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(1) A court enters a decree or order for relief with respect to any Credit Party
in an involuntary case under the Bankruptcy Code, which decree or order is not
stayed or other similar relief is not granted under any applicable federal or
state law; or (2) the continuance of any of the following events for forty-five
(45) days unless dismissed, bonded or discharged: (a) an involuntary case is
commenced against any Credit Party, under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect; or (b) a decree or order of a
court for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over any Credit Party, or over
all or a substantial part of its property, is entered; or (c) a receiver,
trustee or other custodian is appointed without the consent of a Credit Party,
for all or a substantial part of the property of the Credit Party; or
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc.
(1) any Credit Party commences a voluntary case under the Bankruptcy Code, or
consents to the entry of an order for relief in an involuntary case or to the
conversion of an involuntary case to a voluntary case under any such law or
consents to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; or (2) any Credit
Party makes any assignment for the benefit of creditors; or (3) the Board of
Directors of any Credit Party adopts any resolution or otherwise authorizes
action to approve any of the actions referred to in this Section 6.1(g); or
(h) Judgment and Attachments. Any money judgment, writ or
warrant of attachment, or similar process (other than those described elsewhere
in this Section 6.1) involving (1) an amount in any individual case in excess of
$300,000 or (2) an amount in the aggregate at any time in excess of $700,000 (in
either case to the extent not adequately covered by insurance in Agent's sole
discretion as to which the insurance company has acknowledged coverage) is
entered or filed against one or more of the Credit Parties or any of their
respective assets and remains undischarged, unvacated, unbonded or unstayed for
a period of thirty (30) days or in any event later than five (5) Business Days
prior to the date of any proposed sale thereunder; or
(i) Dissolution. Any order, judgment or decree is entered
against any Credit Party decreeing the dissolution or split up of such Credit
Party and such order remains undischarged or unstayed for a period in excess of
fifteen (15) days; or
(j) Solvency. Any Credit Party ceases to be Solvent,
fails to pay its debts as they become due or admits in writing its present or
prospective inability to pay its debts as they become due; or
(k) Invalidity of Loan Documents. Any of the Loan
Documents for any reason, other than a partial or full release in accordance
with the terms thereof, ceases to be in full force and effect or is declared to
be null and void, or any Credit Party denies that it has any further liability
under any Loan Documents to which it is party, or gives notice to such effect;
or
(l) Damage; Casualty. Any event occurs, whether or not
insured or insurable, as a result of which revenue-producing activities cease or
are substantially curtailed at any facility of any Credit Party generating more
than 10% of the consolidated revenues of Holdings and its Subsidiaries for the
Fiscal Year preceding such event and such cessation or curtailment continues for
more than 30 days; or
(m) Business Activities. Holdings engages in any type of
business activity other than the ownership of Stock of Borrowers, ownership of
Real Estate, performance of its obligations under the Related Transaction
Documents to which it is a party and the Senior Unsecured Notes and Senior
Unsecured Notes Indenture.
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(n) Change of Control. A Change of Control occurs; or
(o) Subordinated Indebtedness. The failure of any Credit
Party or any creditor of any Borrower or any of its Subsidiaries to comply with
the terms of any subordination or intercreditor agreement or any subordination
provisions of any note or other document running to the benefit of Agent or
Lenders, or if any such document becomes null and void or any party denies
further liability under any such document or provides notice to that effect.
6.2. Suspension or Termination of Commitments. Upon the occurrence
of any Default or Event of Default, Agent may, and at the request of Requisite
Lenders Agent shall, without notice or demand, immediately suspend or terminate
all or any portion of Lenders' obligations to make additional Loans or issue or
cause to be issued Letters of Credit under the Revolving Loan Commitment;
provided that, in the case of a Default, if the subject condition or event is
waived by Requisite Lenders or cured within any applicable grace or cure period,
the Revolving Loan Commitment shall be reinstated.
6.3. Acceleration and Other Remedies. Upon the occurrence of any
Event of Default described in Sections 6.1(f) or 6.1(g), the Commitments shall
be immediately terminated and all of the Obligations, including the Revolving
Loans, shall automatically become immediately due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
expressly waived (including for purposes of Section 10) by Borrowers, and the
Commitments shall thereupon terminate. Upon the occurrence and during the
continuance of any other Event of Default, Agent may, and at the request of the
Requisite Lenders, Agent shall, by written notice to Borrower Representative (a)
reduce the aggregate amount of the Commitments from time to time, (b) declare
all or any portion of the Loans and all or any portion of the other Obligations
to be, and the same shall forthwith become, immediately due and payable together
with accrued interest thereon, (c) terminate all or any portion of the
obligations of Agent, L/C Issuers and Lenders to make Revolving Credit Advances
and issue Letters of Credit, (d) demand that Borrowers immediately deliver cash
to Agent for the benefit of L/C Issuers (and Borrowers shall then immediately so
deliver) in an amount equal to 105% of the aggregate outstanding Letter of
Credit Obligations and (e) exercise any other remedies which may be available
under the Loan Documents or applicable law. Borrowers hereby grant to Agent, for
the benefit of L/C Issuers and each Lender with a participation in any Letters
of Credit then outstanding, a security interest in such cash collateral to
secure all of the Letter of Credit Obligations. Any such cash collateral shall
be made available by Agent to L/C Issuers to reimburse L/C Issuers for payments
of drafts drawn under such Letters of Credit and any Fees, Charges and expenses
of L/C Issuers with respect to such Letters of Credit and the unused portion
thereof, after all such Letters of Credit shall have expired or been fully drawn
upon, shall be applied to repay any other Obligations. After all such Letters of
Credit shall have expired or been fully drawn upon and all Obligations shall
have been satisfied and paid in full, the balance, if any, of such cash
collateral shall be returned to Borrowers. Borrowers shall from time to time
execute and deliver to Agent such further documents and instruments as Agent may
request with respect to such cash collateral.
6.4. Performance by Agent. If any Credit Party shall fail to
perform any covenant, duty or agreement contained in any of the Loan Documents,
Agent may perform or attempt to perform such covenant, duty or agreement on
behalf of such Credit Party after the expiration of any cure or grace periods
set forth herein. In such event, such Credit Party shall, at the request of
Agent, promptly pay any amount reasonably expended by Agent in such performance
or attempted performance to Agent, together with interest thereon at the highest
rate of interest in effect upon the occurrence of an Event of Default as
specified in Section 1.2(d) from the date of such expenditure until paid.
Notwithstanding the foregoing, it is expressly agreed that Agent shall not have
any liability or responsibility for the performance of any obligation of any
Credit Party under this Agreement or any other Loan Document.
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6.5. Application of Proceeds. Notwithstanding anything to the
contrary contained in this Agreement, upon the occurrence and during the
continuance of an Event of Default, (a) Borrowers irrevocably waive the right to
direct the application of any and all payments at any time or times thereafter
received by Agent from or on behalf of Borrowers, and Agent shall have the
continuing and exclusive right to apply and to reapply any and all payments
received at any time or times after the occurrence and during the continuance of
an Event of Default against the Obligations in such manner as Agent may deem
advisable notwithstanding any previous application by Agent and (b) in the
absence of a specific determination by Agent with respect thereto, the proceeds
of any sale of, or other realization upon, all or any part of the Collateral
shall be applied: first, to all Fees, costs and expenses incurred by or owing to
Agent and any Lender with respect to this Agreement, the other Loan Documents or
the Collateral; second, to accrued and unpaid interest on the Obligations
(including any interest which but for the provisions of the Bankruptcy Code,
would have accrued on such amounts); third, to the principal amount of the
Obligations outstanding and fourth to any other obligations of Credit Parties
owing to Agent or any Lender under the Loan Documents. Any balance remaining
shall be delivered to Borrowers or to whomever may be lawfully entitled to
receive such balance or as a court of competent jurisdiction may direct.
SECTION 7.
CONDITIONS TO LOANS
The obligations of Lenders and L/C Issuers to make Loans and to issue
or cause to be issued Letters of Credit are subject to satisfaction of all of
the applicable conditions set forth below.
7.1. Conditions to Initial Loans. The obligations of Lenders and
L/C Issuers to make the initial Loans and to issue or cause to be issued Letters
of Credit on the Closing Date are, in addition to the conditions precedent
specified in Section 7.2, subject to the delivery of all documents listed on,
the taking of all actions set forth on and the satisfaction of all other
conditions precedent listed in the Closing Checklist attached hereto as Annex C,
all in form and substance, or in a manner, satisfactory to Agent and Lenders.
7.2. Conditions to All Loans. Except as otherwise expressly
provided herein, no Lender or L/C Issuer shall be obligated to fund any Advance
or incur any Letter of Credit Obligation, if, as of the date thereof (the
"Funding Date"):
(a) any representation or warranty by any Credit Party
contained herein or in any other Loan Document is untrue or incorrect in any
material respect (without duplication of any materiality qualifier contained
therein) as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date, and Agent or Requisite Lenders
have determined not to make such Advance or incur such Letter of Credit
Obligation as a result of the fact that such warranty or representation is
untrue or incorrect;
(b) any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligation), and Agent or Requisite Lenders shall have
determined not to make any Advance or incur any Letter of Credit Obligation as a
result of that Default or Event of Default; or
(c) after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligations), (i) the outstanding amount of the
aggregate Revolving Loan would exceed remaining Borrowing Availability (except
as provided in Section 1.1(a)(ii)) or (ii) the outstanding amount of the
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Revolving Loan of the applicable Borrower would exceed such Borrower's separate
Borrowing Base less the outstanding amount of the Swing Line Loan to that
Borrower.
The request and acceptance by any Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Credit Parties that the
conditions in this Section 7.2 have been satisfied and (ii) a reaffirmation by
Borrowers of the cross guaranty provisions set forth in Section 10 and of the
granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.
SECTION 8.
ASSIGNMENT AND PARTICIPATION
8.1. Assignment and Participations.
(a) Subject to the terms of this Section 8.1, any Lender
may make an assignment to a Qualified Assignee of, or sale of participations in,
at any time or times, the Loan Documents, Loans, Letter of Credit Obligations
and any Commitment or any portion thereof or interest therein, including any
Lender's rights, title, interests, remedies, powers or duties thereunder. Any
assignment by a Lender shall: (i) require the consent of Agent (which consent
shall not be unreasonably withheld or delayed with respect to a Qualified
Assignee) and the execution of an assignment agreement (an "Assignment
Agreement" substantially in the form attached hereto as Exhibit 8.1 and
otherwise in form and substance reasonably satisfactory to, and acknowledged by,
Agent); (ii) be conditioned on such assignee Lender representing to the
assigning Lender and Agent that it is purchasing the applicable Loans to be
assigned to it for its own account, for investment purposes and not with a view
to the distribution thereof; (iii) after giving effect to any such partial
assignment, the assignee Lender shall have Commitments in an amount at least
equal to $5,000,000 and the assigning Lender shall have retained Commitments in
an amount at least equal to $5,000,000; and (iv) require a payment to Agent of
an assignment fee of $3,500. Notwithstanding the above, Agent may in its sole
and absolute discretion permit any assignment by a Lender to a Person or Persons
that are not Qualified Assignees. In the case of an assignment by a Lender under
this Section 8.1, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as all other Lenders hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Commitments or assigned portion thereof from and after the date of such
assignment. Borrowers hereby acknowledge and agree that any assignment shall
give rise to a direct obligation of Borrowers to the assignee and that the
assignee shall be considered to be a "Lender." In all instances, each Lender's
liability to make Loans hereunder shall be several and not joint and shall be
limited to such Lender's Pro Rata Share of the applicable Commitment. In the
event Agent or any Lender assigns or otherwise transfers all or any part of the
Obligations, Agent or any such Lender shall so notify Borrowers and Borrowers
shall, upon the request of Agent or such Lender, execute new Notes in exchange
for the Notes, if any, being assigned. Notwithstanding the foregoing provisions
of this Section 8.1(a), (a) any Lender may at any time pledge the Obligations
held by it and such Lender's rights under this Agreement and the other Loan
Documents to a Federal Reserve Bank, (b) any Lender that is an investment fund
may assign the Obligations held by it and such Lender's rights under this
Agreement and the other Loan Documents to another investment fund managed by the
same investment advisor or pledge such Obligations and rights to trustee for the
benefit of its investors and (c) any Lender may assign the Obligations to an
Affiliate of such Lender or to a Person that is a Lender prior to the date of
such assignment.
(b) Any participation by a Lender of all or any part of
its Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if
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that Lender had not sold such participation, and that the holder of any such
participation shall not be entitled to require such Lender to take or omit to
take any action hereunder except actions directly affecting (i) any reduction in
the principal amount of, or interest rate or Fees payable with respect to, any
Loan in which such holder participates, (ii) any extension of the scheduled
amortization of the principal amount of any Loan in which such holder
participates or the final maturity date thereof, and (iii) any release of all or
substantially all of the Collateral (other than in accordance with the terms of
this Agreement, the Collateral Documents or the other Loan Documents). Solely
for purposes of Sections 1.10, 1.11, 8.3 and 9.1, Borrowers acknowledge and
agree that a participation shall give rise to a direct obligation of Borrowers
to the participant and the participant shall be considered to be a "Lender."
Except as set forth in the preceding sentence no Borrower or any other Credit
Party shall have any obligation or duty to any participant. Neither Agent nor
any Lender (other than the Lender selling a participation) shall have any duty
to any participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 8.1, no
Lender shall, as between Borrowers and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party shall assist each Lender permitted
to sell assignments or participations under this Section 8.1 as required to
enable the assigning or selling Lender to effect any such assignment or
participation, including the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be requested and the prompt
preparation of informational materials for, and the participation of management
in meetings with, potential assignees or participants, all on a timetable
established by Agent in its sole discretion. Each Credit Party executing this
Agreement shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their respective affairs contained in any
selling materials provided by it and all other information provided by it and
included in such materials, except that any Projections delivered by Borrowers
shall only be certified by Borrowers as having been prepared by Borrowers in
compliance with the representations contained in Section 5.5. Agent shall
maintain, on behalf of Borrowers, in its offices located at 335 Madison Avenue,
12th Floor, New York, New York 10017 a "register" for recording the name,
address, commitment and Loans owing to each Lender. The entries in such register
shall be presumptive evidence of the amounts due and owing to each Lender in the
absence of manifest error. Borrowers, Agent and each Lender may treat each
Person whose name is recorded in such register pursuant to the terms hereof as a
Lender for all purposes of this Agreement. The register described herein shall
be available for inspection by Borrower and any Lender, at any reasonable time
upon reasonable prior notice.
(e) A Lender may furnish any information concerning
Credit Parties in the possession of such Lender from time to time to assignees
and participants (including prospective assignees and participants); provided
that such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 9.13.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
eligible to demand payment in respect of capital adequacy or similar
requirements under Section 1.10(a), to demand increased costs or be entitled not
to fund LIBOR Loans under Section 1.10(b), or would subject Credit Parties to
increased costs in accordance with Section 1.11.
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8.2. Agent.
(a) Appointment. Each Lender hereby designates and
appoints GE Capital as its Agent under this Agreement and the other Loan
Documents, and each Lender hereby irrevocably authorizes Agent to execute and
deliver the Collateral Documents and to take such action or to refrain from
taking such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental thereto.
Agent is authorized and empowered to amend, modify, or waive any provisions of
this Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in this Section 8.2 and Section 9.2. The provisions of this Section 8.2
are solely for the benefit of Agent and Lenders and neither Borrowers nor any
other Credit Party shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under this
Agreement, Agent shall act solely as agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrowers or any other Credit Party. Agent may
perform any of its duties hereunder, or under the Loan Documents, by or through
its agents or employees. By signing in the spaces below, the Lenders hereby
authorize and direct GE Capital, in its capacity as Agent for the Lenders, to
execute and deliver the Collateral Documents.
(b) Nature of Duties. The duties of Agent shall be
mechanical and administrative in nature. Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender. Nothing in this
Agreement or any of the Loan Documents, express or implied, is intended to or
shall be construed to impose upon Agent any obligations in respect of this
Agreement or any of the Loan Documents except as expressly set forth herein or
therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of each Credit Party in connection with the
extension of credit hereunder and shall make its own appraisal of the
creditworthiness of each Credit Party, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto (other than as
expressly required herein). If Agent seeks the consent or approval of any
Lenders to the taking or refraining from taking any action hereunder, then Agent
shall send notice thereof to each Lender. Agent shall promptly notify each
Lender any time that the Requisite Lenders or Supermajority Revolving Lenders
have instructed Agent to act or refrain from acting pursuant hereto.
(c) Rights, Exculpation, Etc. Neither Agent nor any of
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted by them hereunder or under any of the Loan
Documents, or in connection herewith or therewith, except that Agent shall be
liable to the extent of its own gross negligence or willful misconduct as
determined by a final non-appealable order by a court of competent jurisdiction.
Agent shall not be liable for any apportionment or distribution of payments made
by it in good faith and if any such apportionment or distribution is
subsequently determined to have been made in error the sole recourse of any
Lender to whom payment was due but not made, shall be to recover from other
Lenders any payment in excess of the amount to which they are determined to be
entitled (and such other Lenders hereby agree to return to such Lender any such
erroneous payments received by them). In no event shall Agent be liable for
punitive, special, consequential, incidental, exemplary or other similar
damages. In performing its functions and duties hereunder, Agent shall exercise
the same care which it would in dealing with loans for its own account, but
neither Agent nor any of its agents or representatives shall be responsible to
any Lender for any recitals, statements, representations or warranties herein or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the Loan Documents or
the transactions contemplated thereby, or for the financial condition of any
Credit Party. Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any of the Loan Documents or the financial condition of
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any Credit Party, or the existence or possible existence of any Default or Event
of Default. Agent may at any time request instructions from Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders with respect to any
actions or approvals which by the terms of this Agreement or of any of the Loan
Documents Agent is permitted or required to take or to grant. If such
instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the Requisite Lenders, Supermajority Revolving
Lenders or such other portion of the Lenders as shall be prescribed by this
Agreement. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting under this Agreement or any of the other Loan Documents in accordance
with the instructions of Requisite Lenders, Supermajority Revolving Lenders or
all affected Lenders, as applicable; and, notwithstanding the instructions of
Requisite Lenders, Supermajority Revolving Lenders or all affected Lenders, as
applicable, Agent shall have no obligation to take any action if it believes, in
good faith, that such action is deemed to be illegal by Agent or exposes Agent
to any liability for which it has not received satisfactory indemnification in
accordance with Section 8.2(e).
(d) Reliance. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, fax or telegram) believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person, and with respect to all matters pertaining to this Agreement
or any of the Loan Documents and its duties hereunder or thereunder. Agent shall
be entitled to rely upon the advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.
(e) Indemnification. Lenders will reimburse and indemnify
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, attorneys' fees and expenses), advances or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not reimbursed by Borrowers; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements to the extent resulting from Agent's gross
negligence or willful misconduct as determined by a final non-appealable order
by a court of competent jurisdiction. If any indemnity furnished to Agent for
any purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against even if so directed by the Requisite Lenders,
Supermajority Revolving Lenders or such other portion of the Lenders as shall be
prescribed by this Agreement until such additional indemnity is furnished. The
obligations of Lenders under this Section 8.2(e) shall survive the payment in
full of the Obligations and the termination of this Agreement.
(f) GE Capital Individually. With respect to its
Commitments hereunder, GE Capital shall have and may exercise the same rights
and powers hereunder and is subject to the same obligations and liabilities as
and to the extent set forth herein for any other Lender. The terms "Lenders",
"Requisite Lenders", "Supermajority Revolving Lenders" or any similar terms
shall, unless the context clearly otherwise indicates, include GE Capital in its
individual capacity as a Lender or one of the Requisite Lenders or Supermajority
Revolving Lenders. GE Capital, either directly or through strategic
affiliations, may lend money to, acquire equity or other ownership interests in,
provide advisory services to and generally engage in any kind of banking, trust
or other business with any Credit Party as if it were not acting as Agent
pursuant hereto and without any duty to account therefor to Lenders. GE Capital,
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either directly or through strategic affiliations, may accept fees and other
consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
(g) Successor Agent.
(i) Resignation. Agent may resign from the
performance of all its agency functions and duties hereunder at any time by
giving at least thirty (30) Business Days' prior written notice to Borrower
Representative and Lenders. Such resignation shall take effect upon the
acceptance by a successor Agent of appointment pursuant to clause (ii) below or
as otherwise provided in clause (ii) below.
(ii) Appointment of Successor. Upon any such
notice of resignation pursuant to clause (i) above, Requisite Lenders shall
appoint a successor Agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrowers. If a successor Agent
shall not have been so appointed within the thirty (30) Business Day period
referred to in clause (i) above, the retiring Agent, upon notice to Borrower
Representative, shall then appoint a successor Agent who shall serve as Agent
until such time, if any, as Requisite Lenders appoint a successor Agent as
provided above.
(iii) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Agent's resignation as Agent, the provisions of
this Section 8.2 shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it in its capacity as Agent.
(h) Collateral Matters.
(i) Release of Collateral. Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to release any
Lien granted to or held by Agent upon any Collateral (x) upon the Termination
Date or (y) constituting property being sold or disposed of if Borrowers (or any
of them) certify to Agent that the sale or disposition is made in compliance
with the provisions of this Agreement (and Agent may rely in good faith
conclusively on any such certificate, without further inquiry).
(ii) Confirmation of Authority; Execution of
Releases. Without in any manner limiting Agent's authority to act without any
specific or further authorization or consent by Lenders (as set forth in Section
8.2(h)(i)), each Lender agrees to confirm in writing, upon request by Agent or
Borrower Representative, the authority to release any Collateral conferred upon
Agent under clauses (x) and (y) of Section 8.2(h)(i). Upon receipt by Agent of
any required confirmation from the Requisite Lenders of its authority to release
any particular item or types of Collateral, and upon at least ten (10) Business
Days' prior written request by Borrower Representative, Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to Agent upon such
Collateral; provided, however, that (x) Agent shall not be required to execute
any such document on terms which, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (y) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens upon
(or obligations of any Credit Party, in respect of), all interests retained by
any Credit Party, including the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
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(iii) Absence of Duty. Agent shall have no
obligation whatsoever to any Lender, L/C Issuer or any other Person to assure
that the property covered by the Collateral Documents exists or is owned by
Borrowers or any other Credit Party or is cared for, protected or insured or has
been encumbered or that the Liens granted to Agent have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent in this Section 8.2(h) or in any of the Loan Documents, it being
understood and agreed that in respect of the property covered by the Collateral
Documents or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent's own interest in
property covered by the Collateral Documents as one of the Lenders and that
Agent shall have no duty or liability whatsoever to any of the other Lenders,
provided that Agent shall exercise the same care which it would in dealing with
loans for its own account.
(i) Agency for Perfection. Agent and each Lender hereby
appoint each other Lender as agent for the purpose of perfecting Agent's
security interest in assets which, in accordance with the Code in any applicable
jurisdiction, can be perfected by possession or control. Should any Lender
(other than Agent) obtain possession or control of any such assets, such Lender
shall notify Agent thereof, and, promptly upon Agent's request therefor, shall
deliver such assets to Agent or in accordance with Agent's instructions or
transfer control to Agent in accordance with Agent's instructions. Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Collateral Document or to realize upon any collateral security for
the Loans unless instructed to do so by Agent in writing, it being understood
and agreed that such rights and remedies may be exercised only by Agent.
(j) Notice of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default except
with respect to defaults in the payment of principal, interest and Fees required
to be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or Borrower Representative referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". Agent will use reasonable efforts to notify
each Lender of its receipt of any such notice, unless such notice is with
respect to defaults in the payment of principal, interest and fees, in which
case Agent will notify each Lender of its receipt of such notice. Agent shall
take such action with respect to such Default or Event of Default as may be
requested by Requisite Lenders in accordance with Section 6. Unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interests
of Lenders.
(k) Lender Actions against Collateral. Each Lender agrees
that it will not take any action, nor institute any actions or proceedings, with
respect to the Loans, against any Borrower or any Credit Party hereunder or
under the other Loan Documents or against any of the Real Estate encumbered by
Mortgages without the consent of the Required Lenders. With respect to any
action by Agent to enforce the rights and remedies of Agent and the Lenders
under this Agreement and the other Loan Documents, each Lender hereby consents
to the jurisdiction of the court in which such action is maintained, and agrees
to deliver its Notes to Agent to the extent necessary to enforce the rights and
remedies of Agent for the benefit of the Lenders under the Mortgages in
accordance with the provisions hereof.
8.3. Set Off and Sharing of Payments. In addition to any rights now
or hereafter granted under applicable law and not by way of limitation of any
such rights, during the continuance of any Event of Default, each Lender is
hereby authorized by Borrowers at any time or from time to time, with reasonably
prompt subsequent notice to Borrower Representative (any prior or
contemporaneous notice
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being hereby expressly waived) to set off and to appropriate and to apply any
and all (A) balances held by such Lender at any of its offices for the account
of any Borrower or any of its Subsidiaries (regardless of whether such balances
are then due to Borrower or its Subsidiaries), and (B) other property at any
time held or owing by such Lender to or for the credit or for the account of any
Borrower or any of its Subsidiaries, against and on account of any of the
Obligations; except that no Lender shall exercise any such right without the
prior written consent of Agent. Any Lender exercising a right to set off shall
purchase for cash (and the other Lenders shall sell) interests in each of such
other Lender's Pro Rata Share of the Obligations as would be necessary to cause
all Lenders to share the amount so set off with each other Lender in accordance
with their respective Pro Rata Shares. Borrowers agree, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to amounts in excess of its Pro Rata Share of the Obligations and upon doing so
shall deliver such amount so set off to the Agent for the benefit of all Lenders
in accordance with their Pro Rata Shares.
8.4. Disbursement of Funds. Agent may, on behalf of Lenders,
disburse funds to Borrowers for Loans requested. Each Lender shall reimburse
Agent on demand for all funds disbursed on its behalf by Agent, or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Loan before
Agent disburses same to Borrowers. If Agent elects to require that each Lender
make funds available to Agent prior to a disbursement by Agent to Borrowers,
Agent shall advise each Lender by telephone or fax of the amount of such
Lender's Pro Rata Share of the Loan requested by Borrower Representative no
later than 1:00 p.m. (New York time) on the Funding Date applicable thereto, and
each such Lender shall pay Agent such Lender's Pro Rata Share of such requested
Loan, in same day funds, by wire transfer to Agent's account on such Funding
Date. If any Lender fails to pay the amount of its Pro Rata Share within one (1)
Business Day after Agent's demand, Agent shall promptly notify Borrower
Representative, and Borrowers shall immediately repay such amount to Agent. Any
repayment required pursuant to this Section 8.4 shall be without premium or
penalty. Nothing in this Section 8.4 or elsewhere in this Agreement or the other
Loan Documents, including the provisions of Section 8.5, shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice any
rights that Agent or Borrowers may have against any Lender as a result of any
default by such Lender hereunder.
8.5. Disbursements of Advances; Payment.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or
participate in the Swing Line Loan in accordance with clauses (iii) and (iv) of
Section 1.1(c). If the Swing Line Lender declines to make a Swing Line Loan or
if Swing Line Availability is zero, Agent shall notify Revolving Lenders,
promptly after receipt of a Notice of Revolving Credit Advance and in any event
prior to 1:00 p.m. (New York time) on the date such Notice of a Revolving Credit
Advance is received, by fax, telephone or other similar form of transmission.
Each Revolving Lender shall make the amount of such Lender's Pro Rata Share of
such Revolving Credit Advance available to Agent in same day funds by wire
transfer to Agent's account as set forth in Section 1.1(e) not later than 3:00
p.m. (New York time) on the requested Funding Date in the case of an Index Rate
Loans and not later than 11:00 a.m. (New York time) on the requested Funding
Date in the case of a LIBOR Loan. After receipt of such wire transfers (or, in
the Agent's sole discretion, before receipt of such wire transfers), subject to
the terms hereof, Agent shall make the requested Revolving Credit Advance to
Borrowers as designated by Borrower Representative in the Notice of Revolving
Credit Advance. All payments by each Revolving Lender shall be made without
setoff, counterclaim or deduction of any kind.
(ii) At least once each calendar week or more
frequently at Agent's election (each, a "Settlement Date"), Agent shall advise
each Lender by telephone or fax of the amount of such
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Lender's Pro Rata Share of principal, interest and Fees paid for the benefit of
Lenders with respect to each applicable Loan. Provided that each Lender has
funded all payments and Advances required to be made by it and purchased all
participations required to be purchased by it under this Agreement and the other
Loan Documents as of such Settlement Date, Agent shall pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid by Borrowers since
the previous Settlement Date for the benefit of such Lender on the Loans held by
it. Such payments shall be made by wire transfer to such Lender's account (as
specified by such Lender in Annex E or the applicable Assignment Agreement) not
later than 2:00 p.m. (New York time) on the next Business Day following each
Settlement Date. To the extent that any Lender (a "Non-Funding Lender") has
failed to fund all such payments and Advances or failed to fund the purchase of
all such participations, Agent shall be entitled to set off the funding
shortfall against that Non-Funding Lender's Pro Rata Share of all payments
received from Borrowers.
(b) Availability of Lender's Pro Rata Share. Agent may
assume that each Revolving Lender will make its Pro Rata Share of each Revolving
Credit Advance available to Agent on each Funding Date. If such Pro Rata Share
is not, in fact, paid to Agent by such Revolving Lender when due, Agent will be
entitled to recover such amount on demand from such Revolving Lender without
setoff, counterclaim or deduction of any kind. If any Revolving Lender fails to
pay the amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower Representative and Borrowers shall immediately repay
such amount to Agent. Nothing in this Section 8.5(b) or elsewhere in this
Agreement or the other Loan Documents shall be deemed to require Agent to
advance funds on behalf of any Revolving Lender or to relieve any Revolving
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Borrowers may have against any Revolving Lender as a result of
any default by such Revolving Lender hereunder. To the extent that Agent
advances funds to Borrowers on behalf of any Revolving Lender and is not
reimbursed therefor on the same Business Day as such Advance is made, Agent
shall be entitled to retain for its account all interest accrued on such Advance
until reimbursed by the applicable Revolving Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Agent from Borrowers and such related payment is not
received by Agent, then Agent will be entitled to recover such amount from such
Lender on demand without setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to any Borrower
or paid to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to any Borrower or such other
Person, without setoff, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding
Lender to make any Revolving Credit Advance or any payment required by it
hereunder, or to purchase any participation in any Swing Line Loan to be made or
purchased by it on the date specified therefor shall not relieve any other
Lender (each such other Revolving Lender, an "Other Lender") of its obligations
to make such Advance or purchase such participation on such date, but neither
any Other Lender nor Agent shall be responsible for the failure of any
Non-Funding Lender to make an Advance, purchase a participation or make any
other payment required hereunder. Notwithstanding anything set forth herein to
the contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Loan Document or constitute a "Lender" or a
"Revolving Lender" (or be included in the calculation of
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"Requisite Lenders" or "Supermajority Revolving Lenders" hereunder) for any
voting or consent rights under or with respect to any Loan Document.
(e) Dissemination of Information. Agent shall use
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Agent from, or delivered by Agent to, any Credit Party, with
notice of any Event of Default of which Agent has actually become aware and with
notice of any action taken by Agent following any Event of Default; provided,
that Agent shall not be liable to any Lender for any failure to do so.
(f) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent or Requisite Lenders.
SECTION 9.
MISCELLANEOUS
9.1. Indemnities. Borrowers agree, jointly and severally, to
indemnify, pay, and hold Agent, each Lender, each L/C Issuer and their
respective officers, directors, employees, agents, and attorneys (the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs and
expenses (including all reasonable fees and expenses of counsel to such
Indemnitees) of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against the Indemnitee as a result of such Indemnitees being a
party to this Agreement or the transactions consummated pursuant to this
Agreement or otherwise relating to any of the Related Transactions; provided,
that Borrowers shall have no obligation to an Indemnitee hereunder with respect
to liabilities to the extent resulting from the gross negligence or willful
misconduct of that Indemnitee as determined by a court of competent
jurisdiction. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrowers agree to make the maximum contribution
to the payment and satisfaction thereof which is permissible under applicable
law.
9.2. Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by
Agent, no amendment, modification, termination or waiver of any provision of
this Agreement or any other Loan Document, or any consent to any departure by
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Borrowers, and by Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders, as applicable. Except
as set forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of
or consent with respect to any provision of this Agreement that increases the
percentage advance rates set forth in the definition of the Holdings Borrowing
Base Certificate, Penhall Borrowing Base, the Bob Mack Borrowing Base or the
Penhall Leasing Borrowing Base, or that makes less restrictive the
nondiscretionary criteria for exclusion from Eligible Accounts, Eligible
Short-Term Rentals, Eligible Parts and Supplies and Eligible Equipment set forth
in Exhibits 4.9(e)(i), 4.9(e)(ii), and 4.9(e)(iii) and from Eligible Real Estate
set forth in Exhibit 4.9(e)(iv), shall be effective unless the same shall be in
writing and signed by Agent, Supermajority Revolving Lenders and Borrowers. No
amendment, modification, termination or waiver of or consent
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with respect to any provision of this Agreement that waives compliance with the
conditions precedent set forth in Section 7.2 to the making of any Loan or the
incurrence of any Letter of Credit Obligations shall be effective unless the
same shall be in writing and signed by Agent, Requisite Lenders and Borrowers.
(c) No amendment, modification, termination or waiver
shall, unless in writing and signed by Agent and each Lender directly affected
thereby: (i) increase the principal amount of any Lender's Commitment (which
action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date of the principal amount of any Loan of any
affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender (which action shall be deemed only to
affect those Lenders to whom such payments are made); (v) release any Guaranty
or, except as otherwise permitted in Section 3.7, release Collateral with a book
value exceeding 5% of the book value of all assets in the aggregate in any one
(1) year (which action shall be deemed to directly affect all Lenders); (vi)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Loans that shall be required for Lenders or any of them to take
any action hereunder (which action shall be deemed to directly affect all
Lenders); and (vii) amend or waive this Section 9.2 or the definitions of the
terms "Requisite Lenders" or "Supermajority Revolving Lenders" insofar as such
definitions affect the substance of this Section 9.2 (which action shall be
deemed to directly affect all Lenders). Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent or L/C Issuers
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent or L/C Issuers, as the case may be, in addition to
Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 9.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
9.3. Notices. Any notice or other communication required shall be
in writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by fax, on the date of transmission if transmitted
on a Business Day before 4:00 p.m. (New York Time); (c) if delivered by
overnight courier, one (1) Business Day after delivery to the courier properly
addressed; or (d) if delivered by U.S. mail, four (4) Business Days after
deposit with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrower Representative: PENHALL COMPANY
1801 W. Penhall Way
Anaheim, California 92801
ATTN: Chief Financial Officer
Fax: (714) 778-5638
Notice address for service of process:
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PENHALL COMPANY
933 Ransom Road
Lancaster, New York 14086
With a copy to: DECHERT LLP
4000 Bell Atlantic Tower
1717 Arch Street
Philadephia, Pennsylvania
19103-2793
ATTN: Gary Green
Fax: (215) 994-2222
If to Agent or GE Capital: GENERAL ELECTRIC
CORPORATION
335 Madison Avenue, 12th Floor
New York, New York 10017
ATTN: Penhall Account Officer
Fax: (212) 983-8767
With a copy to: GENERAL ELECTRIC CAPITAL
CORPORATION
201 High Ridge Road
Stamford, Connecticut 06927-5100
ATTN: Corporate Counsel
Corporate Financial Services -
Merchant Banking
Fax: (203) 316-7899
and
GENERAL ELECTRIC CAPITAL
CORPORATION
500 West Monroe Street
Chicago, Illinois 60661
ATTN: Corporate Counsel
Corporate Financial Services -
Merchant Banking
Fax: (312) 441-6876
If to a Lender: To the address set forth on the
signature page hereto or in the
applicable Assignment Agreement
9.4. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Agent or any Lender to exercise, nor any partial
exercise of, any power, right or privilege hereunder or under any other Loan
Documents shall impair such power, right, or privilege or be construed to be a
waiver of any Default or Event of Default. All rights and remedies existing
hereunder or under any other Loan Document are cumulative to and not exclusive
of any rights or remedies otherwise available.
9.5. Marshaling; Payments Set Aside. Neither Agent nor any Lender
shall be under any obligation to marshal any assets in payment of any or all of
the Obligations. To the extent that Borrowers make payment(s) or Agent enforces
its Liens or Agent or any Lender exercises its right of set-off, and such
payment(s) or the proceeds of such enforcement or set-off is subsequently
invalidated, declared to be
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fraudulent or preferential, set aside, or required to be repaid by anyone, then
to the extent of such recovery, the Obligations or part thereof originally
intended to be satisfied, and all Liens, rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or set-off had not occurred.
9.6. Severability. The invalidity, illegality, or unenforceability
in any jurisdiction of any provision under the Loan Documents shall not affect
or impair the remaining provisions of the Loan Documents.
9.7. Lenders' Obligations Several; Independent Nature of Lenders'
Rights. The obligation of each Lender hereunder is several and not joint and no
Lender shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8. Headings. Section and subsection headings are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purposes or be given substantive effect.
9.9. Applicable Law. THIS AGREEMENT AND EACH OF THE OTHER LOAN
DOCUMENTS WHICH DOES NOT EXPRESSLY SET FORTH APPLICABLE LAW SHALL BE GOVERNED BY
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES WHICH SHALL BE
DEEMED NOT TO INCLUDE SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
9.10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that Borrowers may not assign their rights or obligations
hereunder without the written consent of all Lenders.
9.11. No Fiduciary Relationship; Limited Liability. No provision in
the Loan Documents and no course of dealing between the parties shall be deemed
to create any fiduciary duty owing to any Credit Party by Agent or any Lender.
Each Credit Party agrees that neither Agent nor any Lender shall have liability
to such Credit Party (whether sounding in tort, contract or otherwise) for
losses suffered by such Credit Party in connection with, arising out of, or in
any way related to the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless and to the extent that it is determined that such
losses resulted from the gross negligence or willful misconduct of the party
from which recovery is sought as determined by a final non-appealable order by a
court of competent jurisdiction. Neither Agent nor any Lender shall have any
liability with respect to, and each Credit Party hereby waives, releases and
agrees not to sue for, any special, indirect or consequential damages suffered
by such Credit Party in connection with, arising out of, or in any way related
to the Loan Documents or the transactions contemplated thereby.
9.12. Construction. Agent, each Lender, Borrowers and each other
Credit Party acknowledge that each of them has had the benefit of legal counsel
of its own choice and has been afforded an opportunity to review the Loan
Documents with its legal counsel and that the Loan Documents shall be construed
as if jointly drafted by Agent, each Lender, Borrowers and each other Credit
Party.
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9.13. Confidentiality. Agent and each Lender agree to exercise their
best efforts to keep confidential any non-public information delivered pursuant
to the Loan Documents and identified as such by Borrowers and not to disclose
such information to Persons other than to potential assignees or participants or
to Persons employed by or engaged by Agent, a Lender or a Lender's assignees or
participants including attorneys, auditors, professional consultants, rating
agencies, insurance industry associations and portfolio management services. The
confidentiality provisions contained in this Section 9.13 shall not apply to
disclosures (i) required to be made by Agent or any Lender to any regulatory or
governmental agency or pursuant to legal process or (ii) consisting of general
portfolio information that does not identify Borrowers. The obligations of Agent
and Lenders under this Section 9.13 shall supersede and replace the obligations
of Agent and Lenders under any confidentiality agreement in respect of this
financing executed and delivered by Agent or any Lender prior to the date
hereof. Notwithstanding anything herein to the contrary, non-public information
shall not include, and each party (and each employee, representative or other
agent of such party) may disclose to any and all Persons, without limitation of
any kind, any information with respect to the United States federal tax
treatment and tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other United States federal tax
analyses) that are provided to such party relating to such tax treatment and tax
structure. To the extent not inconsistent with the immediately preceding
sentence, this authorization does not extend to disclosure of any other
information, including without limitation (a) the identities of participants or
potential participants in this transaction, (b) the existence or status of any
negotiations, or (c) any other term or detail, or portion of any documents or
other materials, not related to the tax treatment or tax structure of the
transaction.
9.14. CONSENT TO JURISDICTION. BORROWERS AND CREDIT PARTIES HEREBY
CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW
YORK COUNTY, STATE OF NEW YORK AND IRREVOCABLY AGREE THAT, SUBJECT TO AGENT'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
BORROWERS AND CREDIT PARTIES EXPRESSLY SUBMIT AND CONSENT TO THE JURISDICTION OF
THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON CONVENIENS. BORROWERS
AND CREDIT PARTIES HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWERS AND CREDIT
PARTIES BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
BORROWER REPRESENTATIVE, AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE
SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY
LITIGATION, TRIAL, ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS OF BORROWERS, CREDIT PARTIES OR ANY OF THEIR AFFILIATES
SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF BORROWERS OR SUCH CREDIT
PARTIES FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING THE
PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT
TRIAL OR OTHERWISE). BORROWERS AND CREDIT PARTIES AGREE THAT AGENT'S OR ANY
LENDER'S COUNSEL IN ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF
THESE INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY
DEPOSITION OF ANY OF THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN
EVIDENCE DEPOSITION. BORROWERS AND CREDIT PARTIES IN ANY EVENT WILL USE ALL
COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION
PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT OR ANY LENDER, ALL
PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM) OR OTHER
THINGS UNDER THEIR CONTROL AND RELATING TO THE DISPUTE.
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9.15. WAIVER OF JURY TRIAL. BORROWERS, CREDIT PARTIES, AGENT AND
EACH LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. BORROWERS, CREDIT PARTIES, AGENT AND EACH LENDER ACKNOWLEDGE THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. BORROWERS, CREDIT PARTIES, AGENT AND EACH LENDER WARRANT AND
REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS.
9.16. Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Letters of
Credit and the execution and delivery of the Notes. Notwithstanding anything in
this Agreement or implied by law to the contrary, the agreements of Borrowers
set forth in Sections 1.3(g), 1.9, 1.10, 1.11, 2.5 and 9.1 shall survive the
repayment of the Obligations and the termination of this Agreement.
9.17. Entire Agreement. This Agreement, the Notes and the other Loan
Documents embody the entire agreement among the parties hereto and supersede all
prior commitments, agreements, representations, and understandings, whether oral
or written, relating to the subject matter hereof, and may not be contradicted
or varied by evidence of prior, contemporaneous, or subsequent oral agreements
or discussions of the parties hereto. All Exhibits, Schedules and Annexes
referred to herein are incorporated in this Agreement by reference and
constitute a part of this Agreement.
9.18. Counterparts; Effectiveness. This Agreement and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which counterparts together shall constitute but one in the same instrument.
This Agreement shall become effective upon the execution of a counterpart hereof
by each of the parties hereto.
9.19. Replacement of Lenders.
(a) Within fifteen (15) days after receipt by Borrower
Representative of written notice and demand from any Lender for payment pursuant
to Section 1.10 or 1.11 or, as provided in this Section 9.19, in the case of
certain refusals by any Lender to consent to certain proposed amendments,
modifications, terminations or waivers with respect to this Agreement that have
been approved by Requisite Lenders, Supermajority Revolving Lenders or all
affected Lenders, as applicable (any such Lender demanding such payment or
refusing to so consent being referred to herein as an "Affected Lender"),
Borrowers may, at their option, notify Agent and such Affected Lender of its
intention to do one of the following:
(i) Borrowers may obtain, at Borrowers' expense,
a replacement Lender ("Replacement Lender") for such Affected Lender, which
Replacement Lender shall be reasonably satisfactory to Agent. In the event
Borrowers obtain a Replacement Lender that will purchase all outstanding
Obligations owed to such Affected Lender and assume its Commitments hereunder
within ninety (90) days following notice of Borrowers' intention to do so, the
Affected Lender shall sell and assign all of its rights and delegate all of its
obligations under this Agreement to such Replacement Lender in accordance with
the provisions of Section 8.1, provided that Borrowers have reimbursed such
- 65 -
Affected Lender for any administrative fee payable pursuant to Section 8.1 and,
in any case where such replacement occurs as the result of a demand for payment
pursuant to Section 1.10 or 1.11, paid all amounts required to be paid to such
Affected Lender pursuant to Section 1.10 or 1.11 through the date of such sale
and assignment; or
(ii) Borrowers may, with Agent's consent, prepay
in full all outstanding Obligations owed to such Affected Lender and terminate
such Affected Lender's Pro Rata Share of the Revolving Loan Commitment, in which
case the Revolving Loan Commitment will be reduced by the amount of such Pro
Rata Share. Borrowers shall, within ninety (90) days following notice of their
intention to do so, prepay in full all outstanding Obligations owed to such
Affected Lender (including, in any case where such prepayment occurs as the
result of a demand for payment for increased costs, such Affected Lender's
increased costs for which it is entitled to reimbursement under this Agreement
through the date of such prepayment), and terminate such Affected Lender's
obligations under the Revolving Loan Commitment.
(b) In the case of a Non-Funding Lender pursuant to
Section 8.5(a), at Borrower Representative's request, Agent or a Person
acceptable to Agent shall have the right with Agent's consent and in Agent's
sole discretion (but shall have no obligation) to purchase from any Non-Funding
Lender, and each Non-Funding Lender agrees that it shall, at Agent's request,
sell and assign to Agent or such Person, all of the Loans and Commitments of
that Non-Funding Lender for an amount equal to the principal balance of all
Loans held by such Non-Funding Lender and all accrued interest and Fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.
(c) If, in connection with any proposed amendment,
modification, waiver or termination pursuant to Section 9.2 (a "Proposed
Change"):
(i) requiring the consent of all affected
Lenders, the consent of Requisite Lenders is obtained, but the consent of other
Lenders whose consent is required is not obtained (any such Lender whose consent
is not obtained as described in this clause (i) and in clauses (ii) and (iii)
below being referred to as a "Non-Consenting Lender"),
(ii) requiring the consent of Supermajority
Revolving Lenders, the consent of Requisite Lenders is obtained, but the consent
of Supermajority Revolving Lenders is not obtained,
(iii) requiring the consent of Requisite Lenders,
the consent of Lenders holding 51% or more of the aggregate Commitments is
obtained, but the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request Agent, or a Person reasonably acceptable to Agent,
shall have the right with Agent's consent and in Agent's sole discretion (but
shall have no obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Loans and Commitments of such
Non-Consenting Lenders for an amount equal to the principal balance of all Loans
held by the Non-Consenting Lenders and all accrued interest and Fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.
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9.20. Delivery of Termination Statements and Mortgage Releases.
(a) Upon payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders, and so long
as no suits, actions proceedings, or claims are pending or threatened against
any Indemnitee asserting any damages, losses or liabilities that are indemnified
liabilities hereunder, Agent shall deliver to Borrower Representative
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
(b) Upon the disposition of any Collateral in accordance
with the terms and conditions provided herein, Agent shall deliver to Borrower
Representative termination statements, mortgage releases and other evidence
necessary or appropriate to evidence the termination of Liens on such
Collateral.
(c) In the event that any Credit Party acquires any
Equipment and in connection therewith grants a security interest in such
Equipment to any Person providing purchase money financing to such Credit Party
for such Equipment and such security interest and financing does not contravene
any provision of this Agreement and prohibits the Lien of Agent therein, Agent,
at the request of such Credit Party shall release its security interest in such
Equipment or shall subordinate such Lien (as required by such Person) and shall
at the cost and expense of such Credit Party execute such documents as may be
necessary to release such Lien of record; provided, however, that upon any such
prohibition ceasing to be binding on such Credit Party, the Lien of Agent in
such Equipment shall automatically be reinstated and such Credit Party shall
immediately notify Agent and shall take all steps as may be necessary to perfect
such Lien of Agent within 20 Business Days following such prohibition ceasing to
be effective.
9.21. Subordination of Intercompany Debt.
(a) Each Credit Party hereby agrees that any intercompany
Indebtedness or other intercompany payables or receivables, or intercompany
advances directly or indirectly made by or owed to such Credit Party by any
other Credit Party (collectively, "Intercompany Debt"), of whatever nature at
any time outstanding shall be subordinate and subject in right of payment to the
prior payment in full in cash of the Obligations. Each Credit Party hereby
agrees that it will not, while any Event of Default is continuing, accept any
payment, including by offset, on any Intercompany Debt until the Termination
Date, in each case, except with the prior written consent of Agent.
(b) In the event that any payment on any Intercomapny
Debt shall be received by a Credit Party other than as permitted by this Section
9.21 before the Termination Date, such Credit Party shall receive such payments
and hold the same in trust for, segregate the same from its own assets and shall
immediately pay over to, the Agent for the benefit of the Agent and Lenders all
such sums to the extent necessary so that Agent and the Lenders shall have been
paid in full, in cash, all Obligations owed or which may become owing.
(c) Upon any payment or distribution of any assets of any
Credit Party of any kind or character, whether in cash, property or securities
by set-off, recoupment or otherwise, to creditors in any liquidation or other
winding-up of such Credit Party or in the event of any Proceeding, Agent and
Lenders shall first be entitled to receive payment in full in cash, in
accordance with the terms of the Obligations and of this Agreement, of all
amounts payable under or in respect of such Obligations, before any payment or
distribution is made on, or in respect of, any Intercompany Debt, in any such
Proceeding, any distribution or payment, to which Agent or any Lender would be
entitled except for the provisions hereof shall be paid by such Credit Party, or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution directly to Agent (for the benefit of
Agent and the Lenders) to the extent necessary to pay all such Obligations in
full in cash, after giving effect to any concurrent payment or distribution to
Agent and Lenders (or to Agent for the benefit of Agent and Lenders).
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SECTION 10.
CROSS-GUARANTY
10.1. Cross-Guaranty. Each Borrower hereby agrees that such Borrower
is jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 10 shall not be
discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 10 shall be absolute and
unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability
or any future amendment of, or change in, this Agreement, any other Loan
Document or any other agreement, document or instrument to which any Borrower is
or may become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 10) or any other Loan Document or the waiver or consent
by Agent and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any action, or the
absence of any action, by Agent and Lenders in respect thereof (including the
release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
10.2. Waivers by Borrowers. Each Borrower expressly waives all
rights it may have now or in the future under any statute, or at common law, or
at law or in equity, or otherwise, to compel Agent or Lenders to marshal assets
or to proceed in respect of the Obligations guaranteed hereunder against any
other Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 10 and such waivers, Agent and Lenders would
decline to enter into this Agreement.
10.3. Benefit of Guaranty. Each Borrower agrees that the provisions
of this Section 10 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
- 68 -
10.4. Waiver of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 10.7, each Borrower hereby expressly and irrevocably waives
until the Termination Date any and all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification or set
off and any and all defenses available to a surety, guarantor or accommodation
co-obligor. Each Borrower acknowledges and agrees that this waiver is intended
to benefit Agent and Lenders and shall not limit or otherwise affect such
Borrower's liability hereunder or the enforceability of this Section 10, and
that Agent, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 10.4 and their rights under this Section 10.4 shall survive payment in
full of the Obligations. The foregoing waiver shall not be deemed to limit or
prohibit the payment of indebtedness or other obligations of any Borrower to any
other Borrower or other Person which is incurred in the ordinary course of
business and which is otherwise permitted under this Agreement or any other Loan
Document.
10.5. Election of Remedies. If Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving Agent or such Lender a Lien upon any Collateral, whether owned by any
Borrower or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, Agent or any Lender may, at its sole option,
determine which of its remedies or rights it may pursue without affecting any of
its rights and remedies under this Section 10. If, in the exercise of any of its
rights and remedies, Agent or any Lender shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to "election of remedies" or the like, each Borrower hereby consents to such
action by Agent or such Lender and waives any claim based upon such action, even
if such action by Agent or such Lender shall result in a full or partial loss of
any rights of subrogation that each Borrower might otherwise have had but for
such action by Agent or such Lender. Any election of remedies that results in
the denial or impairment of the right of Agent or any Lender to seek a
deficiency judgment against any Borrower shall not impair any other Borrower's
obligation to pay the full amount of the Obligations. In the event Agent or any
Lender shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or the Loan Documents, Agent or such Lender may bid all or less
than the amount of the Obligations and the amount of such bid need not be paid
by Agent or such Lender but shall be credited against the Obligations. The
amount of the successful bid at any such public sale, whether Agent, Lender or
any other party is the successful bidder, shall be conclusively deemed to be the
fair market value of the Collateral and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this Section 10, notwithstanding
that any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which Agent or any Lender
might otherwise be entitled but for such bidding at any such sale.
10.6. Limitation. Notwithstanding any provision herein contained to
the contrary, each Borrower's liability under this Section 10 (which liability
is in any event in addition to amounts for which such Borrower is primarily
liable under Section 1) shall be limited to an amount not to exceed as of any
date of determination the greater of:
(a) the net amount of all Loans advanced to any other
Borrower under this Agreement and then re-loaned or otherwise transferred to, or
for the benefit of, such Borrower; and
(b) the amount that could be claimed by Agent and Lenders
from such Borrower under this Section 10 without rendering such claim voidable
or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 10.7.
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10.7. Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Borrower shall make a payment
under this Section 10 of all or any of the Obligations (other than Loans made to
that Borrower for which it is primarily liable) (a "Guarantor Payment") that,
taking into account all other Guarantor Payments then previously or concurrently
made by any other Borrower, exceeds the amount that such Borrower would
otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payment in the same proportion that such Borrower's
"Allocable Amount" (as defined below) (as determined immediately prior to such
Guarantor Payment) bore to the aggregate Allocable Amounts of each of the
Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the Obligations
and termination of the Commitments, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable
Amount" of any Borrower shall be equal to the maximum amount of the claim that
could then be recovered from such Borrower under this Section 10 without
rendering such claim voidable or avoidable under Section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 10.7 is intended only to define the
relative rights of Borrowers and nothing set forth in this Section 10.7 is
intended to or shall impair the obligations of Borrowers, jointly and severally,
to pay any amounts as and when the same shall become due and payable in
accordance with the terms of this Agreement, including Section 10.1. Nothing
contained in this Section 10.7 shall limit the liability of any Borrower to pay
the Loans made directly or indirectly to that Borrower and accrued interest,
Fees and expenses with respect thereto for which such Borrower shall be
primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against
other Credit Parties under this Section 10.7 shall be exercisable upon the full
and indefeasible payment of the Obligations and the termination of the
Commitments.
10.8. Liability Cumulative. The liability of Borrowers under this
Section 10 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
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Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
PENHALL COMPANY,
as a Borrower
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
BOB MACK CO., INC.,
as a Borrower
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
PENHALL LEASING, L.L.C.,
as a Borrower
BY: PENHALL COMPANY, its sole member
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
PENHALL INTERNATIONAL CORP.,
as a Borrower
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
PENHALL INVESTMENTS, INC.,
as a Credit Party
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
[SIGNATURE PAGE TO PENHALL CREDIT AGREEMENT]
GENERAL ELECTRIC CAPITAL
CORPORATION,
AS AGENT, AN L/C ISSUER AND A LENDER
By: ______________________________________
Name: Paul McDonnell
Title: Vice President
Address: 335 Madison Avenue, 12th Floor
New York, New York 10017
Attn: Penhall Account Officer
Fax: (212) 983-8767
ABA No. 021-001-033
Account Number 502-328-54
Bankers Trust Company
New York, New York
ACCOUNT NAME: GECC/CAF DEPOSITORY
Reference: GE Capital re Penhall - CFN 5134
[SIGNATURE PAGE TO PENHALL CREDIT AGREEMENT]
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings and all references to Sections, Exhibits, Schedules or
Annexes in the following definitions shall refer to Sections, Exhibits,
Schedules or Annexes of or to the Agreement:
"Account Debtor" means any Person who may become obligated to
any Credit Party under, with respect to, or on account of, an Account, Chattel
Paper or General Intangibles (including a payment intangible).
"Accounting Changes" means: (a) changes in accounting
principles required by GAAP and implemented by Holdings or any of its
Subsidiaries; (b) changes in accounting principles recommended by Holdings'
certified public accountants and implemented by Holdings; and (c) changes in
carrying value of any Borrower's or any of its Subsidiaries' assets, liabilities
or equity accounts resulting from (i) the application of purchase accounting
principles (SFAS 141, A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the
Related Transactions or (ii) as the result of any other adjustments that, in
each case, were applicable to, but not included in, the Pro Forma.
"Accounts" means all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Credit Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all healthcare insurance receivables, and (f) all
collateral security of any kind, now or hereafter in existence, given by any
Account Debtor or other Person with respect to any of the foregoing.
"Acquisition Pro Forma" has the meaning ascribed to it in
Section 3.6(b)(ix).
"Acquisition Projections" has the meaning ascribed to it in
Section 3.6(b)(ix).
"Advances" means any Revolving Credit Advance or Swing Line
Advance, as the context may require.
"Affected Lender" has the meaning ascribed to it in Section
9.19(a).
A-1
"Affiliate" means, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrowers, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of any Borrower. For the purposes
of this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude Agent and each Lender.
"Agent" means GE Capital in its capacity as Agent for Lenders
or its successor appointed pursuant to Section 8.2.
"Aggregate Borrowing Base" means as of any date of
determination, an amount equal to (i) the sum of the Holdings Borrowing Base,
Penhall Borrowing Base, the Penhall Leasing Borrowing Base and the Bob Mack
Borrowing Base; less (ii) any Reserves except to the extent already deducted
therefrom.
"Agreement" means this Credit Agreement (including all
schedules, subschedules, annexes and exhibits hereto), as the same may be
amended, supplemented, restated or otherwise modified from time to time.
"Allocable Amount" has the meaning ascribed to it in Section
10.7.
"Applicable L/C Margin" means the per annum fee, from time to
time in effect, payable with respect to outstanding Letter of Credit Obligations
as determined by reference to Section 1.2(a).
"Applicable Margins" means collectively the Applicable L/C
Margin, the Applicable Revolver Index Margin and the Applicable Revolver LIBOR
Margin.
"Applicable Revolver Index Margin" means the per annum
interest rate margin from time to time in effect and payable in addition to the
Index Rate applicable to the Revolving Loan, as determined by reference to
Section 1.2(a).
"Applicable Revolver LIBOR Margin" means the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Revolving Loan, as determined by reference to Section
1.2(a).
"Appraised Forced Liquidation Value" shall mean, at any time,
as to any Real Estate owned by Holdings, the appraised forced liquidation value
determined most recently at or prior to such time in writing by an independent
real estate appraiser mutually agreed upon by Agent and the Credit Parties, such
determination to be made using the same basis and or approach to valuation
consistent with the approach used in the initial determination.
"Appraised Net Orderly Liquidation Value" "shall mean, at any
time, as to any Equipment or Parts and Supplies owned by a Borrower, the
appraised net orderly liquidation value determined most recently at or prior to
such time in writing by an independent appraiser mutually agreed upon by Agent
and the Credit Parties, such determination to be made using the same basis and
or approach to valuation consistent with the approach used in the initial
determination.
A-2
"Asbestos Litigation" means the complaint filed on January 2,
2003 against Penhall, among others, in the Superior Court of California, County
of Orange under the caption Blackford v. Amcord Inc. for personal injuries
related to the inhalation of asbestos fibers released by the handling of
asbestos containing products during the course of plaintiffs' employment over a
period of years on various construction sites.
"Asset Disposition" means the disposition whether by sale,
lease, transfer, loss, damage, destruction, casualty, condemnation or otherwise
of any of the following: (a) any of the Stock or other equity or ownership
interest of any of Holdings' Subsidiaries or (b) any or all of the assets of
Holdings or any of its Subsidiaries other than sales of Equipment and Parts and
Supplies in the ordinary course of business. Without limitation of the
foregoing, the term "Asset Disposition" shall include the sale or transfer of
property by a Credit Party or a Subsidiary thereof in a Permitted
Sale-Leaseback.
"Assignment Agreement" has the meaning ascribed to it in
Section 8.1(a).
"Banc of America Agreements" means the Note and Security
Agreement dated as of March 18, 2002 and the Note and Security Agreement dated
as of July 22, 2002, each between Banc of America Leasing & Capital Leasing LLC
and Penhall.
"Bankruptcy Code" means the provisions of Title 11 of the
United States Code, 11 U.S.C. Sections 101 et seq. or other applicable
bankruptcy, insolvency or similar laws.
"Bob Mack Borrowing Base" means, as of any date of
determination by Agent, from time to time, an amount (calculated in Dollars or,
in the case of Accounts or Short-Term Rentals denominated in Canadian Dollars,
in the U.S. Dollar Equivalent thereof) equal to the sum at such time of:
(a) up to 85% of the net amount of Bob Mack's Eligible
Accounts plus Eligible Short-Term Rentals at such time; and
(b) up to the lesser of (i) 100% of the net book value of
Bob Mack's Eligible Parts and Supplies and Bob Mack's Eligible
Equipment or (ii) 85% of the Appraised Net Orderly Liquidation Value of
Bob Mack's Eligible Parts and Supplies and Bob Mack's Eligible
Equipment; less
(c) such Reserves Agent may have applied thereto.
"Bob Mack Promissory Notes" means the non-negotiable Secured
Promissory Note dated March 1, 2002 made by Penhall to the order of Bobbie Mack
Grinding Co., Inc. in the principal amount of $384,145.23 maturing on March 1,
2004 and the non-negotiable Secured Promissory Note dated March 1, 2002 made by
Penhall to the order of Robert Z. McElree and Barbara Jean McElree, as Trustees
of the McElree Family Trust, Johnny Mac McElree and Jerry Don McElree in the
principal amount of $2,881,089.20 maturing on March 1, 2004.
"Borrower" and "Borrowers" have the respective meanings
ascribed to them in the preamble to the Agreement.
"Borrower Representative" has the meaning ascribed to it in
Section 1.13.
"Borrowing Availability" means as of any date of determination
(a) as to all Borrowers, the lesser of (i) the Maximum Amount and (ii) the
Aggregate Borrowing Base, in each case, less the sum of the aggregate Revolving
Loan (including, without duplication, the outstanding Letter of Credit
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Obligations) and Swing Line Loan then outstanding, or (b) as to an individual
Borrower, the lesser of (i) the Maximum Amount less the sum of the Revolving
Loan (including, without duplication, Letter of Credit Obligations of other
Borrowers) and Swing Line Loan outstanding to all other Borrowers and (ii) that
Borrower's separate Borrowing Base, less the sum of the Revolving Loan and Swing
Line Loan outstanding to that Borrower.
"Borrowing Base Certificate" has the meaning ascribed to it in
Section 4.9(e).
"BRS" means collectively Bruckmann, Rosser, Sherrill & Co.,
L.P., a Delaware limited partnership, BRS Partners, LP and BRSE LLP.
"BRS Management Services Agreement" means that Management
Agreement dated as of August 4, 1998 by and between BRS and Holdings as amended,
modified or supplemented from time to time in accordance with its terms.
"BRS Related Party" means (1) any stockholder having more than
5% of any class of stock of any entity that comprises BRS, any individual
controlling any such stockholder, an immediate family member of any such
stockholder (if an individual) or of any such individual and any majority owned
Subsidiary, of BRS; or (2) any trust, corporation, partnership or other entity,
the beneficiaries, stockholders, partners, owners or Persons beneficially
holding a majority interest of any of the entities that comprise BRS and/or such
other Persons referred to in the immediately preceding clause (1).
"Business Day" means any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
New York or the State of California and in reference to LIBOR Loans shall mean
any such day that is also a LIBOR Business Day.
"Canadian Dollars" means lawful currency of Canada.
"Capital Lease" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted for as
a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Carry Over Amount" has the meaning ascribed to it Section
4.1.
"Cash Equivalents" means: (i) marketable securities (A) issued
or directly and unconditionally guaranteed as to interest and principal by the
United States government or (B) issued by any agency of the United States
government the obligations of which are backed by the full faith and credit of
the United States, in each case maturing within one (1) year after acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after acquisition
thereof and having, at the time of acquisition, a rating of at least A-1 from
S&P or at least P-1 from Moody's; (iii) commercial paper maturing no more than
one year from the date of acquisition and, at the time of acquisition, having a
rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates
of deposit or bankers' acceptances issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that is at least (A) "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (B) has Tier 1 capital (as defined in such regulations) of not
less
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than $250,000,000, in each case maturing within one year after issuance or
acceptance thereof; and (v) shares of any money market mutual or similar funds
that (A) has substantially all of its assets invested continuously in the types
of investments referred to in clauses (i) through (iv) above, (B) has net assets
of not less than $500,000,000 and (C) has the highest rating obtainable from
either S&P or Moody's.
"Certificate of Exemption" has the meaning ascribed to it in
Section 1.11(c).
"CFC" has the meaning ascribed to it in Section 2.8(e).
"Change of Control" means any event, transaction or occurrence
as a result of which (a) BRS together with any BRS Related Party shall cease to
own and control directly or indirectly all of the economic and voting rights
associated with ownership of at least fifty-one percent (51%) of all classes of
the outstanding Stock of Holdings on a fully diluted basis, (b) Holdings ceases
to own and control all of the economic and voting rights associated with all of
the outstanding Stock of Penhall or (c) Penhall ceases to own and control all of
the economic and voting rights associated with all of the outstanding Stock of
any of its Subsidiaries.
"Charges" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including premiums and other amounts
owed to the PBGC at the time due and payable), levies, assessments, charges,
liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (d) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party, wherever located.
"Closing Checklist" means the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex C.
"Closing Date" means May 22, 2003.
"Code" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided, that
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"Collateral" means the property covered by the Collateral
Documents and any other property, real or personal, tangible or intangible, now
existing or hereafter acquired, that may at any time be or become subject to a
security interest or Lien in favor of Agent, on behalf of itself and Lenders, to
secure the Obligations or any portion thereof (excluding (i) the assets of any
CFC and (ii) any Stock in excess of 65% of the Stock of any CFC).
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"Collateral Documents" means the Security Agreement, the
Pledge Agreement, the Guaranties, the Mortgages, the Trademark Security
Agreements and all similar agreements entered into guaranteeing payment of, or
granting a Lien upon property as security for payment of, the Obligations or any
portion thereof.
"Commitment Termination Date" means the earliest of (a) May
22, 2006, (b) the date of termination of Lenders' obligations to make Advances
and to incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 6.3, (c) the date of (i) indefeasible prepayment
in full by Borrowers of the Loans, (ii) the cancellation and return (or stand-by
guarantee) of all Letters of Credit or the cash collateralization of all Letter
of Credit Obligations pursuant to Section 1.5(g), and (iii) the permanent
reduction of the Commitments to zero dollars ($0) and (d) the date that the
Senior Unsecured Notes become due and payable, whether at stated maturity, by
acceleration or otherwise.
"Commitments" means (a) as to any Lender, the aggregate of
such Lender's Revolving Loan Commitment as set forth on Annex B to the Agreement
or in the most recent Assignment Agreement executed by such Lender and (b) as to
all Lenders, the aggregate of all Lenders' Revolving Loan Commitments, which
aggregate commitment shall be fifty million dollars ($50,000,000) on the Closing
Date, as such Commitments may be reduced, amortized or adjusted from time to
time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in
Section 4.9(l).
"Company Management Services Agreement" means that Management
Services Agreement dated as of January 1, 2002 by and between Penhall and
Penhall Leasing, as amended, modified or supplemented from time to time in
accordance with its terms.
"Consolidated Net Income" has the meaning ascribed to it in
Section 4.3 of Schedule 1 to Exhibit 4.9(l).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability of that Person: (i) with respect to Guaranteed
Indebtedness and with respect to any Indebtedness, lease, dividend or other
obligation of another Person if the purpose or intent of the Person incurring
such liability, or the effect thereof, is to provide assurance to the obligee of
such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto; (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings; (iii) under any foreign exchange contract, currency swap agreement,
interest rate swap agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, (iv) any agreement, contract or transaction involving
commodity options or future contracts, (v) to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement, or (vi) pursuant to any agreement to purchase, repurchase or
otherwise acquire any obligation or any property constituting security therefor,
to provide funds for the payment or discharge of such obligation or to maintain
the solvency, financial condition or any balance sheet item or level of income
of another. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
"Contractual Obligations" means, as applied to any Person, any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject including
the Related Transactions Documents.
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"Control Agreements" means tri-party deposit account,
securities account or commodities account control agreements by and among the
applicable Credit Party, Agent and the depository, securities intermediary or
commodities intermediary, and each in form and substance satisfactory in all
respects to Agent and in any event providing to Agent "control" of such deposit
account, securities account or commodities account within the meaning of
Articles 8 and 9 of the Code.
"Copyright License" means any and all rights nor owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyright Security Agreements" means the Copyright Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party, in each case as amended, modified or supplemented from
time to time.
"Copyrights" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all copyrights and General
Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof; and (b) all reissues, extensions or renewals thereof.
"Credit Parties" means Holdings, Borrowers, and each of their
respective Subsidiaries and each other Person who executes this Agreement as a
"Credit Party" or a Guaranty or who grants a Lien on all or part of its assets
to secure all of part of the Obligations.
"Default" means any event that, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section
1.2(d).
"Disbursement Account" has the meaning ascribed to it in
Section 1.1(e).
"Disclosure Schedules" means the Schedules prepared by Credit
Parties and denominated as Schedules 2.7 through 5.18 in the index to the
Agreement.
"Division 40" means Penhall's Division 40 Highway Services
division, the customer base of which is comprised primarily of state departments
of transportation or general contractors performing work for state departments
of transportation.
"Documents" means any "document," as such term is defined in
the Code, including electronic documents, now owned or hereafter acquired by any
Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
America.
"Dollar Utilization of Equipment Ratio" has the meaning
ascribed to it in Schedule 1 to Exhibit 4.9(l).
"EBITDA" has the meaning ascribed to it in Section 4.3 of
Schedule 1 to Exhibit 4.9(l).
"Eligible Accounts" has the meaning ascribed to it in Schedule
1 to Exhibit 4.9(e)(i), Exhibit 4.9(e)(ii) or Exhibit 4.9(e)(iii), as
applicable.
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"Eligible Equipment" has the meaning ascribed to it in
Schedule 1 to Exhibit 4.9(e)(i), Exhibit 4.9(e)(ii) or Exhibit 4.9(e)(iii), as
applicable.
"Eligible Parts and Supplies" has the meaning ascribed to it
in Schedule 1 to Exhibit 4.9(e)(i), Exhibit 4.9(e)(ii) or Exhibit 4.9(e)(iii),
as applicable.
"Eligible Real Estate" has the meaning ascribed to it in
Schedule 1 to Exhibit 4.9(e)(iv).
"Eligible Short-Term Rentals" has the meaning ascribed to it
in Schedule 1 to Exhibit 4.9(e)(i), Exhibit 4.9(e)(ii) or Exhibit 4.9(e)(iii),
as applicable.
"Environmental Laws" means all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, enforceable
standards and regulations, now or hereafter in effect, and any applicable
judicial or administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree, order or judgment, imposing
liability or standards of conduct for or relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous
Materials Transportation Authorization Act of 1994 (49 U.S.C. Sections 5101 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Sections 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. Sections 6901 et
seq.); the Toxic Substance Control Act (15 U.S.C. Sections 2601 et seq.); the
Clean Air Act (42 U.S.C. Sections 7401 et seq.); the Federal Water Pollution
Control Act (33 U.S.C. Sections 1251 et seq.); the Occupational Safety and
Health Act (29 U.S.C.Sections 651 et seq.); and the Safe Drinking Water Act (42
U.S.C. Sections 300(f) et seq.), and any and all regulations promulgated
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes
relating to environmental matters.
"Environmental Liabilities" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" means all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all
A-8
manuals, drawings, instructions, warranties and rights with respect thereto, and
all products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any
trade or business (whether or not incorporated) that, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any
ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition that might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt
status; or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section
6.1.
"Fair Labor Standards Act" means the Fair Labor Standards Act,
29 U.S.C. Section 201 et seq.
"Federal Funds Rate" means, for any day, a floating rate equal
to the weighted average of the rates on overnight federal funds transactions
among members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"Fees" means any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"Financial Statements" means the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Holdings and its Subsidiaries delivered in accordance with Section 4.9.
"Fiscal Month" means any of the monthly accounting periods of
Holdings.
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"Fiscal Quarter" means any of the quarterly accounting periods
of Holdings, ending on March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" means any of the annual accounting periods of
Holdings ending on June 30 of each year.
"Fixtures" means all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"Foreign Lender" has the meaning ascribed to it in Section
1.11(c).
"Funded Debt" means, with respect to any Person, without
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness and that by its terms matures
more than one year from, or is directly or indirectly renewable or extendible at
such Person's option under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of more than one year from
the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and also
including, in the case of Borrowers, the Obligations (including Letter of Credit
Obligations) and, without duplication, Guaranteed Indebtedness consisting of
guaranties of Funded Debt of other Persons.
"Funding Date" has the meaning ascribed to it in Section 7.2.
"GAAP" means generally accepted accounting principles in the
United States of America, consistently applied.
"GE Capital" has the meaning ascribed to it in the Preamble.
"GE Capital Fee Letter" has the meaning ascribed to it in
Section 1.3(a).
"General Intangibles" means "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contractual Obligation, all payment intangibles,
customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications
therefor and reissues, extensions or renewals thereof, rights in Intellectual
Property, interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or under insurance
policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible rights,
all liability, life, key man and business interruption insurance, and all
unearned premiums), uncertificated securities, chooses in action, deposit,
checking and other bank accounts, rights to receive tax refunds and other
payments, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records, correspondence,
credit files, invoices and other papers, including all tapes, cards, computer
runs and other papers and documents in the possession or under the control of
such Credit Party or any computer bureau or service company from time to time
acting for such Credit Party.
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"Goods" means any "goods," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
including embedded software to the extent included in "goods" as defined in the
Code, manufactured homes, standing timber that is cut and removed for sale and
unborn young of animals.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" means, as to any Person, any
obligation of such Person guaranteeing, providing comfort or otherwise
supporting any Indebtedness, lease, dividend, or other obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof. The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of (x)
the stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum amount for which
such Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guaranties" means, collectively, the Subsidiary Guaranty and
any other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"Guarantor Payment" has the meaning ascribed to it on Section
10.7.
"Guarantors" means Holdings, and each Subsidiary of each
Borrower that is not a Borrower under this Agreement and each other Person, if
any, that executes a guaranty or other similar agreement in favor of Agent, for
itself and the ratable benefit of Lenders, in connection with the transactions
contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" means any substance, material or waste
that is regulated by, or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance that is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Holdings" has the meaning ascribed thereto in the recitals to
the Agreement.
"Holdings Borrowing Base" means, as of any date of
determination by Agent, from time to time, an amount equal to the sum at such
time of:
(a) up to 50% of the Appraised Forced Liquidation Value
of Holdings' owned Real Estate; less
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(b) such Reserves as Agent may have applied thereto.
"Indebtedness" means, with respect to any Person, without
duplication (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred six (6) months
or more, but excluding obligations to trade creditors incurred in the ordinary
course of business that are unsecured and not overdue by more than six (6)
months unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers' acceptances and surety
bonds, whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, (i) "earnouts"
and similar payment obligations, and (j) the Obligations.
"Indemnitees" has the meaning ascribed to it in Section 9.1.
"Index Rate" means, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans posted by at least 75% of the
nation's 30 largest banks" (or, if The Wall Street Journal ceases quoting a base
rate of the type described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum.
Each change in any interest rate provided for in the Agreement based upon the
Index Rate shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Instruments" means all "instruments," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located, and, in any event, including all certificated securities, all
certificates of deposit, and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Intercompany Debt" has the meaning ascribed to it in Section
9.21.
"Intercompany Notes" has the meaning ascribed to it in Section
3.1.
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"Interest Coverage Ratio" has the meaning ascribed to it in
Section 4.5 of Schedule 1 to Exhibit 4.9(l).
"Interest Expense" has the meaning ascribed to it in Section
4.4 of Schedule 1 to Exhibit 4.9(l).
"Interest Payment Date" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period;
provided, that, in addition to the foregoing, each of (x) the date upon which
all of the Commitments have been terminated and the Loans have been paid in full
and (y) the Commitment Termination Date shall be deemed to be an "Interest
Payment Date" with respect to any interest that has then accrued under the
Agreement.
"Inventory" means any "inventory," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
including inventory, merchandise, goods and other personal property that are
held by or on behalf of any Credit Party for sale or lease or are furnished or
are to be furnished under a contract of service, or that constitute raw
materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.
"Investment" means (i) any direct or indirect purchase or
other acquisition by Borrowers or any of their Subsidiaries of any Stock, or
other ownership interest in, any other Person, and (ii) any direct or indirect
loan, advance or capital contribution by Borrowers or any of their Subsidiaries
to any other Person, including all indebtedness and accounts receivable from
that other Person that are not current assets or did not arise from sales to
that other Person in the ordinary course of business.
"Investment Property" means all "investment property," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, wherever located, including: (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"L/C Issuer" means GE Capital or a Subsidiary thereof or a
bank or other legally authorized Person selected by or acceptable to Agent in
its sole discretion, in such Person's capacity as an issuer of Letters of Credit
hereunder.
"L/C Sublimit" has the meaning ascribed to it in Section
1.1(d).
"Lenders" means GE Capital, the other Lenders named on the
signature pages of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include any assignee of
such Lender.
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"Letters of Credit" means documentary or standby letters of
credit issued for the account of Borrowers by L/C Issuers, and bankers'
acceptances issued by Borrowers, for which Agent and Lenders have incurred
Letter of Credit Obligations.
"Letter of Credit Fee" has the meaning ascribed to it in
Section 1.3(d).
"Letter of Credit Obligations" means all outstanding
obligations incurred by Agent and Lenders at the request of Borrower
Representative, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance of any Letters of Credit by any L/C Issuer
or the purchase of a participation as set forth in Section 1.1(d) with respect
to any Letter of Credit. The amount of such Letter of Credit Obligations shall
equal the maximum amount that may be payable by Agent and Lenders thereupon or
pursuant thereto.
"Leverage Ratio" has the meaning ascribed to it in Section 4.6
of Schedule 1 to Exhibit 4.9(l).
"LIBOR Breakage Fee" means an amount equal to the amount of
any losses, expenses, liabilities (including, without limitation, any loss
(including interest paid) and lost opportunity cost in connection with the
re-employment of such funds) that any Lender may sustain as a result of (i) any
default by any Borrower in making any borrowing of, conversion into or
continuation of any LIBOR Loan following Borrower Representative's delivery to
Agent of any LIBOR Loan request in respect thereof or (ii) any payment of a
LIBOR Loan on any day that is not the last day of the LIBOR Period applicable
thereto (regardless of the source of such prepayment and whether voluntary, by
acceleration or otherwise). For purposes of calculating amounts payable to a
Lender under Section 1.3(e), each Lender shall be deemed to have actually funded
its relevant LIBOR Loan through the purchase of a deposit bearing interest at
LIBOR in an amount equal to the amount of that LIBOR Loan and having a maturity
and repricing characteristics comparable to the relevant LIBOR Period; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it sees
fit, and the foregoing assumption shall be utilized only for the calculation of
amounts payable under Section 1.3(e).
"LIBOR Business Day" means a Business Day on which banks in
the City of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loans" means a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each
period commencing on a LIBOR Business Day selected by Borrower Representative
pursuant to the Agreement and ending one, two or three months thereafter, as
selected by Borrower Representative's irrevocable notice to Agent as set forth
in Section 1.2(e); provided, that the foregoing provision relating to LIBOR
Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that
is not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond
the date set forth in clause (a) of the definition of "Commitment
Termination Date" shall end two (2) LIBOR Business Days prior to such
date;
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(c) any LIBOR Period that begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
LIBOR Period) shall end on the last LIBOR Business Day of a calendar
month;
(d) Borrower Representative shall select LIBOR Periods so
as not to require a payment or prepayment of any LIBOR Loan during a
LIBOR Period for such Loan; and
(e) Borrower Representative shall select LIBOR Periods so
that there shall be no more than 8 separate LIBOR Loans in existence at
any one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States
Dollars for the applicable LIBOR Period that appears on Telerate Page
3750 as of 11:00 a.m. (London time), on the second full LIBOR Business
Day next preceding the first day of such LIBOR Period (unless such date
is not a Business Day, in which event the next succeeding Business Day
will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day that is two (2) LIBOR
Business Days prior to the beginning of such LIBOR Period (including
basic, supplemental, marginal and emergency reserves under any
regulations of the Federal Reserve Board or other Governmental
Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve
Board that are required to be maintained by a member bank of the
Federal Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be available to Agent.
"License" means any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" means any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 4.9(j).
"Loan Account" as the meaning ascribed to it in Section 1.9.
"Loan Documents" means the Agreement, the Notes, the
Collateral Documents, the GE Capital Fee Letter and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to Agent or any Lender in connection with the Agreement or
the
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transactions contemplated thereby. Any reference in the Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as
the same may be in effect at any and all times such reference becomes operative.
"Loans" means the Revolving Loan.
"Management Services Agreements" means the BRS Management
Services Agreement and the Company Management Services Agreement.
"Master Documentary Agreement" has the meaning ascribed to it
in Annex C.
"Master Standby Agreement" has the meaning ascribed to it in
Annex C.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, prospects or financial or other condition
of the Credit Parties considered as a whole, (b) Borrowers' ability to pay any
of the Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and Lenders,
on the Collateral or the priority of such Liens, or (d) Agent's or any Lender's
rights and remedies under the Agreement and the other Loan Documents.
"Maximum Amount" means, as of any date of determination, an
amount equal to the Revolving Loan Commitment of all Lenders as of that date.
"Maximum Lawful Rate" has the meaning ascribed to it in
Section 1.2(f).
"Moody's" means Moody's Investor's Services, Inc.
"Mortgages" means each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by any Credit Party to Agent
on behalf of itself and Lenders with respect to the Real Estate, in each case as
amended, modified or supplemented from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate
is making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Proceeds" means (i) cash proceeds received by Credit
Parties or any of their Subsidiaries from any Asset Disposition (including
insurance proceeds, awards of condemnation, and payments under notes or other
debt securities received in connection with any Asset Disposition), and from all
sales of Equipment or Parts and Supplies, in each case, net of (a) the costs of
such Asset Disposition (including taxes attributable to such sale, lease or
transfer) and (b) amounts applied to repayment of Indebtedness (other than the
Obligations) secured by a Lien on the asset or property disposed, and (ii) cash
proceeds attributable to any working capital, earnings, balance sheet or similar
adjustment under the Acquisition Agreement.
"Non-Consenting Lender" has the meaning ascribed to it in
Section 9.19(c).
"Non-Funding Lender" has the meaning ascribed to it in Section
8.5(a).
"Notes" means, collectively, the Revolving Notes and the Swing
Line Note.
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"Notice of Conversion/Continuation" has the meaning ascribed
to it in Section 1.2(e).
"Notice of Revolving Credit Advance" has the meaning ascribed
to it in Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities
and obligations, for the performance of covenants, tasks or duties or for
payment of monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable), including
obligations pursuant to Letter of Credit Obligations, owing by any Credit Party
to Agent or any Lender, and all covenants and duties regarding such amounts, of
any kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, arising under the Agreement or any of the other
Loan Documents. This term includes all principal, interest (including all
interest that accrues after the commencement of any case or proceeding by or
against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
"Other Lender" has the meaning ascribed to it in Section
8.5(d).
"Other Taxes" has the meaning ascribed to it in Section
1.11(d).
"Overadvance" has the meaning ascribed to it in Section
1.1(a).
"Parts and Property Capital Expenditures" has the meaning
ascribed to it in Section 4.1 of Schedule 1 to Exhibit 4.9(l).
"Parts and Supplies" means as to any of Penhall, Bob Mack or
Penhall Leasing, its fuel, diamond blades and diamond grinders used by such
Borrower in conjunction with such Borrower's Equipment in the ordinary course of
business.
"Patent License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.
"Patent Security Agreements" means the Patent Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party, in each case as amended, modified or supplemented from
time to time.
"Patents" means all of the following in which any Credit Party
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Penhall Borrowing Base" means, as of any date of
determination by Agent, from time to time, an amount (calculated in Dollars or,
in the case of Accounts or Short-Term Rentals denominated in Canadian Dollars,
in the U.S. Dollar Equivalent thereof) equal to the sum at such time of:
(a) up to 85% of the net amount of Penhall's Eligible
Accounts plus Eligible Short-Term Rentals at such time; and
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(b) up to the lesser of (i) 100% of the net book value of
Penhall's Eligible Parts and Supplies and Penhall's Eligible Equipment
or (ii) 85% of the Appraised Net Orderly Liquidation Value of Penhall's
Eligible Parts and Supplies and Penhall's Eligible Equipment; less
(c) any Reserves Agent may have applied thereto.
"Penhall Leasing Borrowing Base" means, as of any date of
determination by Agent, from time to time, an amount (calculated in Dollars or,
in the case of Accounts or Short-Term Rentals denominated in Canadian Dollars,
in the U.S. Dollar Equivalent thereof) equal to the sum at such time of:
(a) up to 85% of the net amount of Penhall Leasing's
Eligible Accounts plus Eligible Short-Term Rentals at such time; and
(b) up to the lesser of (i) 100% of the net book value of
Penhall Leasings's Eligible Parts and Supplies and Penhall Leasing's
Eligible Equipment or (ii) 85% of the Appraised Net Orderly Liquidation
Value of Penhall Leasing's Eligible Parts and Supplies and Penhall
Leasing's Eligible Equipment; less
(c) such Reserves as Agent may have applied thereto.
"Pension Plan" means a Plan described in Section 3(2) of
ERISA.
"Permitted Acquisition" has the meaning ascribed to it in
Section 3.6(b).
"Permitted Encumbrances" means the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges (i) not yet due and
payable or (ii) due and payable but being contested in a manner consistent with
Section 2.1 so long as such Lien is not being enforced and does not (except in
the case of Liens on Real Estate) have priority over any Lien of Agent; (b)
pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $500,000 at any time, so long as such Liens attach only
to Equipment or Parts and Supplies; (f) deposits securing, or in lieu of,
surety, appeal or customs bonds in proceedings to which any Credit Party is a
party; (g) any attachment or judgment lien not constituting an Event of Default
under Section 6.1; (h) zoning restrictions, easements, licenses, or other
restrictions on the use of any Real Estate or other minor irregularities in
title (including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate or are declared on
the title reports delivered on behalf of the Credit Parties pursuant to the Loan
Documents; (i) presently existing or hereafter created Liens in favor of Agent,
on behalf of Lenders; (j) Liens existing on the date hereof and renewal, and
extensions thereof which Liens are set forth on Schedule 3.2; (k) Liens securing
Indebtedness permitted by Section 3.1(f) and Section 3.1(g) and Indebtedness
under the Banc of America Agreements, provided that the Liens attach only to the
assets financed by such Indebtedness and (l) Liens on assets acquired from a
seller in a Permitted Acquisition and securing Indebtedness held by such seller
and permitted by clause (b)(iv)(B) of the definition of "Permitted Acquisition".
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"Permitted Sale-Leaseback" means any sale of real property
(with or without improvements thereon) by Holdings to a Person who is not an
Affiliate of Holdings and the entering into by Holdings as lessee of a lease of
such real property (and, if included in such transfer) the improvements thereon
so long as (i) the consideration received by Holdings for such sale is at least
equal to the fair market value of such real property (and any included
improvements thereon), (ii) the sole consideration received for such sale is
cash, (iii) the Net Proceeds of such sale are applied as required by Section
1.5(c), (iv) such lease is on current market terms for the area in which such
real property is located as reasonably determined by the Borrowers, (v) after
giving effect to such sale and lease and the repayment of Indebtedness with the
proceeds of such sale, Borrowers are in compliance on a pro forma basis with the
covenants set forth in Section 4 recomputed for the most recently ended Fiscal
Quarter for which information is available and are in compliance with all other
terms and conditions of this Agreement and (vi) no Default or Event of Default
then exists or would result from such sale or lease.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" means, at any time, an "employee benefit plan," as
defined in Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any Credit Party.
"Pledge Agreement" means the Pledge Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders,
Holdings and Penhall, as amended, modified or supplemented from time to time.
"Prior Lenders" means the holders of the Prior Lender
Obligations.
"Prior Lender Obligations" means the obligations under the
Credit Agreement, dated as of August 4, 1998, among Holdings, the other persons
designated as "Credit Parties" on the signature pages thereof, Bankers Trust
Company as administrative agent, Credit Suisse First Boston as syndication agent
and the financial institutions party thereto from time to time as lenders.
"Pro Forma" means the unaudited consolidated and consolidating
balance sheets of Holdings and its Subsidiaries prepared in accordance with GAAP
as of the Closing Date after giving effect to the Related Transactions. The Pro
Forma is annexed hereto as Annex D.
"Pro Rata Share" means with respect to all matters relating to
any Lender (a) with respect to the Revolving Loans prior to the Commitment
Termination Date, the percentage obtained by dividing (i) the Revolving Loan
Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of
all Lenders, and (b) with respect to the Revolving Loans on and after the
Commitment Termination Date, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Loans held by that Lender, by
(ii) the outstanding principal balance of the Loans held by all Lenders, as such
percentages may be adjusted by assignments pursuant to Section 8.1.
"Projections" means Holdings' forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary or division-by-division basis, if applicable, and otherwise
consistent with the historical Financial Statements of Holdings, together with
appropriate supporting details and a statement of underlying assumptions.
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"Proposed Change" has the meaning ascribed to it in Section
9.19(c).
"Qualified Assignee" means (a) any Lender, any Affiliate of
any Lender and, with respect to any Lender that is an investment fund that
invests in commercial loans, any other investment fund that invests in
commercial loans and that is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act of 1933) which extends credit or buys loans as one of its
businesses, including insurance companies, mutual funds, lease financing
companies and commercial finance companies, in each case, which has a rating of
BBB or higher from S&P and a rating of Baa2 or higher from Moody's at the date
that it becomes a Lender and which, through its applicable lending office, is
capable of lending to Borrowers without the imposition of any withholding or
similar taxes; provided that no Person determined by Agent to be acting in the
capacity of a vulture fund or distressed debt purchaser shall be a Qualified
Assignee and no Person or Affiliate of such Person (other than a Person that is
already a Lender) holding Subordinated Debt or Stock issued by any Credit Party
shall be a Qualified Assignee.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Real Estate" has the meaning ascribed to it in Section 5.12.
"Refinancing" means the repayment in full by Borrowers of the
Prior Lender Obligations on the Closing Date.
"Refunded Swing Line Loan" has the meaning ascribed to it in
Section 1.1(c)(iii).
"Related Transactions" means the initial borrowing under the
Revolving Loan on the Closing Date, the Refinancing, the payment of all Fees,
costs and expenses associated with all of the foregoing and the execution and
delivery of all of the Related Transactions Documents.
"Related Transactions Documents" means the Loan Documents, the
documents evidencing, creating or governing the Refinancing, and all other
agreements or instruments executed in connection with the Related Transactions.
"Release" means any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"Replacement Lender" has the meaning ascribed to it in Section
9.19(a).
"Requisite Lenders" means Lenders having (a) more than 50% of
the Commitments of all Lenders, or (b) if the Commitments have been terminated,
more than 50% of the aggregate outstanding amount of the Loans.
"Reserves" means, with respect to each Borrowing Base (a)
reserves established by Agent from time to time against Eligible Accounts,
Eligible Short-Term Rentals, Eligible Parts and Supplies, Eligible Equipment and
Eligible Real Estate pursuant to Exhibits 4.9(e)(i), 4.9(e)(ii), 4.9(e)(iii)
and/or 4.9(e)(iv) and (b) such other reserves against Eligible Accounts,
Eligible Short-Term Rentals, Eligible Parts and Supplies, Eligible Equipment,
Eligible Real Estate or Borrowing Availability that Agent may, in its reasonable
credit judgment, establish from time to time. Without limiting the generality
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of the foregoing, Reserves established to ensure the payment of accrued Interest
Expenses or Indebtedness shall be deemed to be a reasonable exercise of Agent's
credit judgment.
"Restricted Payment" means, with respect to any Credit Party
(a) the declaration or payment of any dividend or the incurrence of any
liability to make any other payment or distribution of cash or other property or
assets in respect of Stock; (b) any payment on account of the purchase,
redemption, defeasance, sinking fund or other retirement of such Credit Party's
Stock or any other payment or distribution made in respect thereof, either
directly or indirectly; (c) any payment or prepayment of principal of, premium,
if any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to, any Subordinated Debt; (d) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire Stock
of such Credit Party now or hereafter outstanding; (e) any payment of a claim
for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Credit Party's Stock or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder of
such Credit Party other than payment of compensation in the ordinary course of
business to Stockholders who are employees of such Credit Party; and (g) any
payment of management fees (or other fees of a similar nature) or out-of-pocket
expenses in connection therewith by such Credit Party to any Stockholder of such
Credit Party or its Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a).
"Revolving Lenders" means those Lenders having a Revolving
Loan Commitment.
"Revolving Loan(s)" means, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to Borrowers
(including Swing Line Advances) plus (ii) the aggregate Letter of Credit
Obligations incurred on behalf of Borrowers. Unless the context otherwise
requires, references to the outstanding principal balance of the Revolving Loan
shall include the outstanding balance of Letter of Credit Obligations.
"Revolving Loan Commitment" means (a) as to any Lender, the
commitment of such Lender to make its Pro Rata Share of Revolving Credit
Advances or incur its Pro Rata Share of Letter of Credit Obligations (including,
in the case of the Swing Line Lender, its commitment to make Swing Line Advances
as a portion of its Revolving Loan Commitment) as set forth on Annex B or in the
most recent Assignment Agreement, if any, executed by such Lender and (b) as to
all Lenders, the aggregate commitment of all Lenders to make the Revolving
Credit Advances (including, in the case of the Swing Line Lender, Swing Line
Advances) or incur Letter of Credit Obligations, which aggregate commitment
shall be fifty million dollars ($50,000,000) on the Closing Date, as such amount
may be adjusted, if at all, from time to time in accordance with the Agreement.
"Revolving Notes" has the meaning ascribed to it in Section
1.1(a).
"S&P" means Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies, Inc.
A-21
"Security Agreement" means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto, as amended, modified or
supplemented from time to time.
"Senior Unsecured Notes" means those certain 12% Senior
Unsecured Notes due 2006 issued by Holdings pursuant to the Senior Unsecured
Notes Indenture in an aggregate original principal amount of $100,000,000.
"Senior Unsecured Notes Indenture" means the Indenture, dated
August 1, 1998, between Penhall International Corporation (as successor to
Penhall Acquisition Corp.) and United States Trust Company, as Trustee, as
supplemented through the Closing Date.
"Settlement Date" has the meaning ascribed to it in Section
8.5(a)(ii).
"Short-Term Rentals" means rental payments due to any Borrower
from the rental of tools and like property leased by such Borrower as lessor
under leases of not more than one year's duration.
"Software" means all "software" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including subordinated and
contingent liabilities, of such Person; (b) the present fair saleable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts and liabilities,
including subordinated and contingent liabilities as they become absolute and
matured; (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities (such as Litigation, guaranties and pension
plan liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount that
can be reasonably be expected to become an actual or matured liability.
"Statement" has the meaning ascribed to it in Section 4.9(c).
"Stock" means all shares, options, warrants, general or
limited partnership interests, membership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder
of Stock of such Person.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any
A-22
contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate the vote of
50% or more of such Stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than 50% or of which any such Person is a general partner
or may exercise the powers of a general partner. Unless the context otherwise
requires, each reference to a Subsidiary shall be a reference to a Subsidiary of
Holdings.
"Subsidiary Guaranty" means the Subsidiary Guaranty of even
date herewith executed by Penhall Investments in favor of Agent, on behalf of
itself and Lenders, as amended, modified or supplemented from time to time.
"Supermajority Revolving Lenders" means Lenders having (a) 80%
or more of the Revolving Loan Commitments of all Lenders, or (b) if the
Revolving Loan Commitments have been terminated, 80% or more of the aggregate
outstanding amount of the Revolving Loan (with the Swing Line Loan being
attributed to the Lender making such Loan).
"Swing Line Advance" has the meaning ascribed to it in Section
1.1(c).
"Swing Line Availability" has the meaning ascribed to it in
Section 1.1(c).
"Swing Line Commitment" means the commitment of the Swing Line
Lender to make Swing Line Advances as set forth on Annex B to the Agreement,
which commitment constitutes a subfacility of the Revolving Loan Commitment of
the Swing Line Lender.
"Swing Line Lender" means GE Capital.
"Swing Line Loan" means at any time, the aggregate amount of
Swing Line Advances outstanding to Borrowers.
"Swing Line Note" has the meaning ascribed to it in Section
1.1(c).
"Tangible Assets" means with regard to Holdings and its
consolidated Subsidiaries, all tangible assets of Holdings and its consolidated
Subsidiaries as of any date of determination calculated in accordance with GAAP.
"Target" has the meaning ascribed to it in Section 3.6(b).
"Taxes" has the meaning ascribed to it in Section 1.11(a).
"Termination Date" means the date on which (a) the Loans have
been repaid in full in cash, (b) all other Obligations under the Agreement and
the other Loan Documents have been completely discharged, (c) all Letter of
Credit Obligations have been cash collateralized in the amount set forth in
Section 1.5(g), cancelled or backed by standby letters of credit acceptable to
Agent and (d) no Borrower shall have any further right to borrow any monies
under the Agreement.
"Title IV Plan" means a Pension Plan (other than a
Multiemployer Plan), that is covered by Title IV of ERISA, and that any Credit
Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.
A-23
"Trademark Security Agreements" means the Trademark Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party, in each case, as amended, modified or supplemented from
time to time.
"Trademark License" means rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.
"Trademarks" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, internet
domain names, other source or business identifiers, prints and labels on which
any of the foregoing have appeared or appear, designs and general intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill
associated with or symbolized by any of the foregoing.
"Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of 5 years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"U.S. Dollar Equivalent" means as to Accounts and Short-Term
Rentals denominated in Canadian Dollars, the amount reflected in U.S. Dollars on
the balance sheet of Holdings and its Subsidiaries most recently delivered to
Agent in accordance with Section 4.9 for such Accounts and Short-Term Rentals on
such balance sheet.
"Welfare Plan" means a Plan described in Section 3(1) of
ERISA.
Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth or referred to
in this Annex A. All other undefined terms contained in any of the Loan
Documents shall, unless the context indicates otherwise, have the meanings
provided for by the Code to the extent the same are used or defined therein; in
the event that any term is defined differently in different Articles or
Divisions of the Code, the definition contained in Article or Division 9 shall
control. Unless otherwise specified, references in the Agreement or any of the
Appendices to a Section, subsection or clause refer to such Section, subsection
or clause as contained in the Agreement. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole,
including all Annexes, Exhibits and Schedules, as the same may from time to time
be amended, restated, modified or supplemented, and not to any particular
section, subsection or clause contained in the Agreement or any such Annex,
Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons
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succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party,
such words are intended to signify that such Credit Party has actual knowledge
or awareness of a particular fact or circumstance or that such Credit Party, if
it had exercised reasonable diligence, would have known or been aware of such
fact or circumstance.
A-25
ANNEX B (FROM ANNEX A - COMMITMENTS DEFINITION)
to
CREDIT AGREEMENT
PRO RATA SHARES AND COMMITMENT AMOUNTS
Lender(s)
Revolving Loan Commitment
(including a Swing Line
Commitment of $5,000,000) of
$50,000,000 General Electric Capital Corporation
B-1
ANNEX C
TO
CREDIT AGREEMENT
CLOSING CHECKLIST
PART 1: FINANCIAL CLOSING CHECKLIST
A. DOCUMENTS
1. Credit Agreement: This Agreement or counterparts hereof shall have been
duly executed by, and delivered to, each Credit Party, Agent and
Lenders.
2. Revolving Notes and Swing Line Notes: Duly executed originals of the
Revolving Notes and the Swing Line Notes for each applicable Lender,
dated the Closing Date, if requested by the respective Lenders shall
have been delivered to Agent.
3. Master Agreement for Documentary Letters of Credit: Duly executed
original of the Master Agreement for Documentary Letters of Credit,
dated as of the Closing Date, shall have been delivered to the Agent
(as amended, modified or supplemented from time to time, the "Master
Documentary Agreement").
4. Master Agreement for Standby Letters of Credit: Duly executed original
of the Master Agreement for Standby Letters of Credit, dated as of the
Closing Date, shall have been delivered to the Agent (as amended,
modified or supplemented from time to time, the "Master Standby
Agreement").
5. Subsidiary Guaranty: Duly executed originals of the Guaranty from each
Subsidiary of Holdings dated the Closing Date, and all documents,
instruments and agreements executed pursuant thereto shall have been
delivered to Agent.
6. Security Agreement: Duly executed originals of the Security Agreement
executed by each Credit Party, dated the Closing Date, and all
instruments, documents and agreements executed pursuant thereto shall
have been delivered to Agent.
7. Pledge Agreement: Duly executed originals of the Pledge Agreement
accompanied by (as applicable) share certificates representing all of
the outstanding Stock being pledged pursuant to the Pledge Agreement
and stock powers for such share certificates executed in blank, and
duly executed control letters from each of the Credit Parties that is a
limited partnership or a limited liability company in form and
substance satisfactory to Agent shall have been delivered to Agent.
8. Mortgages: Duly executed originals of the Mortgages executed by each
Credit Party, as applicable, shall have been delivered to Agent along
with all related documents and opinions listed in Annex C-1.
9. Insurance: Satisfactory evidence shall have been delivered to Agent
that the insurance policies required by Section 2.2 are in full force
and effect, together with appropriate evidence showing loss payable
and/or additional insured clauses or endorsements, as requested by
Agent, in favor of Agent, on behalf of Lenders.
C-1
10. Assignment of Business Interruption Insurance: A duly executed
assignment of business interruption insurance policy to Agent in form
and substance reasonably satisfactory to Agent, obtaining the insurer's
consent thereto.
11. Security Interests and Code Filings.
(a) Evidence satisfactory to Agent shall have been delivered to
Agent that Agent (for the benefit of itself and Lenders) has a
valid and perfected first priority security interest in the
Collateral, including (i) such documents duly executed by each
Credit Party (including financing statements under the Code
and other applicable documents (including submitting for
reissuance (within 10 days after the Closing Date) with the
appropriate state motor vehicle office motor vehicle title
certificates owned by such Credit Party with Agent's Lien
noted thereon) under the laws of any jurisdiction with respect
to the perfection of Liens) as Agent may request in order to
perfect its security interests in the Collateral and (ii)
copies of Code search reports listing all effective financing
statements that name any Credit Party as debtor, together with
copies of such financing statements, none of which shall cover
the Collateral, except for those relating to Permitted
Encumbrances.
(b) UCC-3 or other appropriate termination statements and payoff
letters, each in form and substance reasonably satisfactory to
Agent, releasing all liens on the Collateral of each Credit
Party shall have been delivered to Agent, as well as
termination of all blocked account agreements, bank agency
agreements or other similar agreements or arrangements or
arrangements in favor of any creditors other than Lenders.
12. Intellectual Property Security Agreements: Duly executed originals of
Trademark Security Agreements, Copyright Security Agreements and Patent
Security Agreements, each dated the Closing Date and signed by each
Credit Party that owns Trademarks, Copyrights and/or Patents as
applicable, all in form and substance reasonably satisfactory to Agent,
together will instruments, documents and agreements executed pursuant
thereto shall have been delivered to Agent.
13. Lockbox Account Agreements and Blocked Account Agreements: Duly
executed originals of tri-party lockbox account agreements and blocked
account agreements in form and substance reasonably satisfactory to
Agent shall have been delivered to Agent with respect to all bank
accounts of the Credit Parties and creating lockboxes and lockbox
accounts as required by Section 2.10.
14. Certificate of Formation and Good Standing: For each Credit Party, (a)
its articles or certificate of incorporation or certificate of
formation, as applicable, and all amendments thereto, (b) good standing
certificates (including verification of tax status) in its state of
incorporation or formation, as applicable, and (c) good standing
certificates (including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires
such qualification, each dated a recent date prior to the Closing Date
and certified by the applicable Secretary of State or other authorized
Governmental Authority shall have been delivered to Agent.
15. By-laws and Resolutions: For each Credit Party, (a) its by-laws or
operating agreement, as applicable, together with all amendments
thereto and (b) resolutions of such Person's Board of Directors or
Board of Members, as applicable, approving and authorizing the
execution, delivery and performance of the Loan Documents to which it
is a party and the transactions to be
C-2
consummated in connection therewith, each certified as of the Closing
Date by such Person's secretary or an assistant secretary as being in
full force and effect without any modification or amendment shall have
been delivered to Agent.
16. Incumbency Certificates: For each Credit Party, signature and
incumbency certificates of the officers of such Person executing any of
the Loan Documents, certified as of the Closing Date by such Person's
secretary or an assistant secretary as being true, accurate, correct
and complete shall have been delivered to Agent.
17. Opinions of Counsel: Duly executed originals of an opinion of Dechert
LLP ("Dechert"), special New York counsel for the Credit Parties, duly
executed originals of an opinion of Cox Castle & Nicholson special
California counsel for the Credit Parties and duly executed originals
of an opinion of Lewis & Roca LLP, special Arizona counsel for the
Credit Parties, each dated the Closing Date, shall have been delivered
to Agent.
18. Accountants' Letter: A letter from the Credit Parties to the
independent auditors authorizing the independent certified public
accountants of the Credit Parties to communicate with Agent and Lenders
in accordance with Section 2.3 and acknowledging Lenders' reliance on
the auditor's certification of past and future Financial Statements
shall have been delivered to Agent.
19. Fee Letter: Duly executed originals of the Fee Letter in form and
substance satisfactory to GE Capital shall have been delivered to
Agent.
20. Officer's Certificate: Duly executed originals of a certificate of an
authorized officer of each Credit Party, dated the Closing Date,
stating that, since June 30, 2002 (a) no event or condition has
occurred or is existing which could reasonably be expected to have a
Material Adverse Effect; (b) there has been no material adverse change
in the assets, liabilities, properties, prospects or condition,
financial or otherwise of any Credit party; (c) no Litigation has been
commenced against such Credit Party which, if successful, would have a
Material Adverse Effect or could challenge any of the transactions
contemplated by the Agreement and the other Loan Documents; (d) there
have been no Restricted Payments made by any Credit Party; (e) there
has been no material increase in liabilities, liquidated or contingent,
and no material decrease in assets of Holdings, Borrower or any of
their Subsidiaries and (f) Funded Debt (and letters of credit) of
Holdings and its Subsidiaries on a consolidated basis, after giving
effect to the initial fundings and issuances of Letters of Credit under
the Credit Agreement and the application of proceeds thereof, does not
exceed $135,900,000 and that the Leverage Ratio (calculated on a pro
forma basis as though the Closing Date occurred on the last day of the
most recently completed period of four Fiscal Quarters of Holdings) is
not more than 2.35:1.00.
21. Waivers: Landlord's waivers and consents, bailee letters and mortgagee
agreements in form and substance reasonably satisfactory to Agent, in
each case as required pursuant to Section 2.6 shall have been delivered
to Agent.
22. Environmental Reports: Agent shall have received such environmental
review and audit reports with respect to the Real Estate of any Credit
Party as Agent shall have requested, and Agent shall be satisfied, in
its sole discretion, with the contents of all such environmental
reports. Any environmental review and audit reports requested by Agent
shall have been prepared by a nationally recognized environmental
engineering firm acceptable to Agent and shall have been delivered to
Agent at least ten (10) days prior to the Closing Date.
C-3
23. Audited Financials; Financial Condition: The Financial Statements,
Projections and other materials set forth in Section 5.5, all certified
by an authorized officer of Holdings shall have been delivered to
Agent. Agent shall have further received a certificate of an authorized
officer of each Credit Party to the effect that (a) such Credit Party
will be Solvent upon the consummation of the transactions contemplated
herein; (b) the Projections are based upon estimates and assumptions
stated therein, all of which such Credit Party believes to be
reasonable and fair in light of current conditions and current facts
known to such Credit Party and, as of the Closing Date, reflect such
Credit Party's good faith and reasonable estimates of its future
financial performance and of the other information projected therein
for the period set forth therein; and (c) containing such other
statements with respect to the solvency of such Credit Party and
matters related thereto as Agent shall request.
24. Approvals: Copies of any third-party, Governmental Authority or other
regulatory approvals and consents necessary to consummate the Loan
Documents shall have been delivered to Agent.
25. Closing Covenants: Agent shall have received evidence satisfactory to
it that Funded Debt (and letters of credit) of Holdings and its
Subsidiaries on a consolidated basis, after giving effect to the
initial fundings and issuances of Letters of Credit under the Credit
Agreement and the application of proceeds thereof, does not exceed
$135,900,000 and that the Leverage Ratio (calculated on a pro forma
basis as though the Closing Date occurred on the last day of the most
recently completed period of four Fiscal Quarters of Holdings) is not
more than 2.35:1.00.
26. Pro Forma: Copies of the Pro Forma in form and substance satisfactory
to Agent.
27. Evidence of Retirement of Prior Lender Obligations: Agent shall have
received payoff letters from the Prior Lenders, each in form and
substance reasonably satisfactory to Agent, as to the Prior Lender
Obligations.
28. Tax Forms: Borrower Representative and Agent shall have received a
properly completed and executed IRS Form W-9, W-8BEN or W-8ECI
(whichever is applicable) or other applicable form, certificate or
document from each Lender.
29. Other Documents: Agent shall have received such other certificates,
documents and agreements respecting any Credit Party as Agent may, in
its sole discretion, request.
B. NON-DOCUMENTARY CONDITIONS
1. Payment of Fees: Borrower shall have paid the Fees required to be paid
on the Closing Date, including but not limited to such Fees specified
in the Fee Letter.
2. Capital Structure; Other Indebtedness: The organizational documents,
terms of equity interests, capital structure of each Credit Party and
the terms and conditions of all Indebtedness of each Credit Party shall
be reasonably acceptable to Agent.
3. Due Diligence: Agent shall have completed its business, legal and
environmental due diligence with results reasonably satisfactory to
Agent.
4. Borrowing Availability: The Revolving Credit Advance made, together
with all Letters of Credit issued, on the Closing Date shall not exceed
$30,000,000 and after giving effect to any Revolving Credit Advance
made, and Letters of Credit issued, on the Closing Date, Borrowers
shall have Borrowing Availability of at least $20,000,000.
C-4
5. Retirement of Prior Lender Obligations: Holdings shall have paid and
satisfied in full the Prior Lender Obligations.
6. Other Requirements: Such other requirements of any Credit Party as
Agent may, in its sole discretion, request.
C-5
PART 2: REAL ESTATE CLOSING CHECKLIST
A. CLOSING DOCUMENTS TO BE PREPARED BY AGENT'S COUNSEL
1. Deed of Trust to encumber 1801 Penhall Way, Anaheim, California.
2. Assignment of Leases and Rents to encumber 1801 Penhall Way, Anaheim,
California.
3. UCC-1 Fixture Filing relating to 1801 Penhall Way, Anaheim, California,
to be filed with Orange County.
4. Deed of Trust to encumber 5775 Eastgate Drive, San Diego, California.
5. Assignment of Leases and Rents to encumber 5775 Eastgate Drive, San
Diego, California.
6. UCC-1 Fixture Filing relating to 5775 Eastgate Drive, San Diego, CA, to
be filed with San Diego County.
7. Deed of Trust to encumber 554 Dawson Drive, Camarillo, California.
8. Assignment of Leases and Rents to encumber 554 Dawson Drive, Camarillo,
California.
9. UCC-1 Financing Statement/Fixture Filing relating to 554 Dawson Drive,
Camarillo, California, to be filed with Ventura County.
10. Deed of Trust to encumber 13750 Catalina Street, San Leandro,
California.
11. Assignment of Leases and Rents to encumber 13750 Catalina Street, San
Leandro, California.
12. UCC-1 Financing Statement/Fixture Filing relating to 13750 Catalina
Street, San Leandro, California, to be filed with Alameda County.
13. Deed of Trust to encumber 14801 South Avalon Blvd., Gardena,
California.
14. Assignment of Leases and Rents to encumber 14801 South Avalon Blvd.,
Gardena, California.
15. UCC-1 Financing Statement/Fixture Filing relating to 14801 South Avalon
Blvd., Gardena, California, to be filed with Los Angeles County.
16. Deed of Trust to encumber 255 S. Flower Street, Burbank, California.
17. Assignment of Leases and Rents to encumber 255 S. Flower Street,
Burbank, California.
18. UCC-1 Financing Statement/Fixture Filing relating to 255 S. Flower
Street, Burbank, California, to be filed with Los Angeles County.
19. Deed of Trust to encumber 8416 Specialty Circle, Sacramento,
California.
20. Assignment of Leases and Rents to encumber 8416 Specialty Circle,
Sacramento, California.
21. UCC-1 Financing Statement/Fixture Filing relating to 8416 Specialty
Circle, Sacramento, California, to be filed with Sacramento County.
C-6
22. Deed of Trust to encumber 3301 E. Woods Street, Phoenix, Arizona.
23. Assignment of Leases and Rents to encumber 3301 E. Woods Street,
Phoenix, Arizona.
24. UCC-1 Financing Statement/Fixture Filing relating to 3301 E. Woods
Street, Phoenix, Arizona, to be filed with Maricopa County.
25. Deed of Trust to encumber 4201 FelterLane, Austin, Texas.
26. Assignment of Leases and Rents to encumber 4201 FelterLane, Austin,
Texas.
27. UCC-1 Financing Statement/Fixture Filing relating to 4201 FelterLane,
Austin, Texas, to be filed with Travis County.
28. Deed of Trust to encumber 1385 Umatilla, Denver, Colorado.
29. Assignment of Leases and Rents to encumber 1385 Umatilla, Denver,
Colorado.
30. UCC-1 Financing Statement/Fixture Filing relating to 1385 Umatilla,
Denver, Colorado, to be filed with Denver County.
31. Deed of Trust to encumber 4745 W. University, Las Vegas, Nevada.
32. Assignment of Leases and Rents to encumber 4745 W. University, Las
Vegas, Nevada.
33. UCC-1 Financing Statement/Fixture Filing relating to 4745 W.
University, Las Vegas, Nevada, to be filed with Clark County.
34. Escrow Letter with Title Insurance Company.
B. CLOSING DOCUMENTS TO BE PREPARED OR DELIVERED BY DECHERT
1. Incumbency Confirmation and Board Resolutions for Trustor.
2. Certificate of Incorporation for Mortgagor.
3. By-Laws of Mortgagor.
4. Good Standing Certificate from the Secretary of State of Arizona for
Mortgagor.
5. Certificate of authorization/good standing for Mortgagor to conduct
business in California.
6. Certificate of authorization/good standing for Mortgagor to conduct
business in Colorado.
7. Certificate of authorization/good standing for Mortgagor to conduct
business in Nevada.
8. Certificate of authorization/good standing for Mortgagor to conduct
business in Texas.
9. Opinion Letters from Mortgagor's California, Arizona, Nevada, Colorado
& Texas counsel covering the following matters (to the extent not
already covered in corporate opinion):
(a) Enforceability of real estate security documents;
C-7
(b) Execution, delivery and authority;
(c) Documents in proper form for recording and filing;
(d) Perfection;
(e) No litigation;
(f) Standard governmental approvals and consents;
(g) Bank Authorization to conduct business in subject state not
required;
(h) Standard governmental approvals and consents;
(i) Usury; and
(j) Zoning - required if zoning endorsement to title policies or
other evidence of zoning compliance satisfactory to Agent are
unavailable.
C. MORTGAGOR'S PRE-CLOSING SUBMISSIONS TO AGENT'S COUNSEL
1. For each property, Loan Policy of Title Insurance to be delivered at
closing, including the following endorsements, subject to availability:
(a) Public Street Access;
(b) 3.1 Zoning*;
(c) Survey;
(d) Lender's Comprehensive (ALTA-9 or CLTA-100);
(e) Address (Location);
(f) Separate Tax Lot;
(g) Subdivision;
(h) Environmental Lien;
(i) Contiguity;
(j) Usury;
(k) Variable Rate;
(l) Revolving Credit;
(m) First Loss;
(n) Last Dollar;
C-8
(o) Tie-In;
(p) Creditor's Rights; and
(q) Mechanic's Lien;
* Zoning opinion may be substituted
2. Other Property Matters for each Property:
(a) Flood insurance for properties located in flood zone;
(b) Copies of all necessary licenses and permits to operate
property;
(c) Insurance certificate showing Agent and its successors and
assigns as loss payee;
(d) Letter from municipality confirming zoning compliance (in the
absence of zoning endorsement);
(e) Lien Waivers from Landlords of Leased Facilities; and
(f) Other property matters to be determined.
C-9
ANNEX D
TO
CREDIT AGREEMENT
PRO FORMA
SEE ATTACHED.
D-1
ANNEX E
TO
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: Bankers Trust Company
New York, New York
ABA #: 021001033
Account #: 50232854
Account Name: GECC/CAF Depository
Reference: GE Capital Re: Penhall - CFN 5134
E-1
EXHIBIT 1.1(a)(i)
to
CREDIT AGREEMENT
FORM OF REVOLVING NOTE
(Multi-Borrower)
New York, New York
$___,___,____________ __, ____
FOR VALUE RECEIVED, each of the undersigned (each individually
a "Borrower" and collectively, the "Borrowers"), jointly and severally, HEREBY
PROMISES TO PAY to the order of _______________________ ("Lender"), at the
offices of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as
Agent for Lenders ("Agent"), at its address at 335 Madison Avenue, 12th Floor
New York, New York 10017, or at such other place as Agent may designate from
time to time in writing, in lawful money of the United States of America and in
immediately available funds, the amount of _______________________ DOLLARS AND
_______ CENTS ($___,___,___) or, if less, the aggregate unpaid amount of all
Revolving Credit Advances made to the undersigned under the "Credit Agreement"
(as hereinafter defined). All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Credit Agreement or in Annex A
thereto.
This Revolving Note is one of the Revolving Notes issued
pursuant to that certain Credit Agreement dated as of May 22, 2003 by and among
Borrowers, the other Persons named therein as Credit Parties, Agent, Lender and
the other Persons signatory thereto from time to time as Lenders (including all
annexes, exhibits and schedules thereto, and as from time to time amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), and is
entitled to the benefit and security of the Credit Agreement, the Security
Agreement and all of the other Loan Documents referred to therein. Reference is
hereby made to the Credit Agreement for a statement of all of the terms and
conditions under which the Loans evidenced hereby are made and are to be repaid.
The date and amount of each Revolving Credit Advance made by Lenders to
Borrowers, the rates of interest applicable thereto and each payment made on
account of the principal thereof, shall be recorded by Agent on its books;
provided that the failure of Agent to make any such recordation shall not affect
the obligations of Borrowers to make a payment when due of any amount owing
under the Credit Agreement or this Revolving Note in respect of the Revolving
Credit Advances made by Lender to Borrowers.
The principal amount of the indebtedness evidenced hereby
shall be payable in the amounts and on the dates specified in the Credit
Agreement, the terms of which are hereby incorporated herein by reference.
Interest thereon shall be paid until such principal amount is paid in full at
such interest rates and at such times, and pursuant to such calculations, as are
specified in the Credit Agreement. The terms of the Credit Agreement are hereby
incorporated herein by reference.
If any payment on this Revolving Note becomes due and payable
on a day other than a Business Day, the payment thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
Upon and after the occurrence of any Event of Default, this
Revolving Note may, as provided in the Credit Agreement, and without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other legal requirement of any kind (all of which are hereby
expressly waived by Borrowers), be declared, and immediately shall become, due
and payable.
Time is of the essence of this Revolving Note.
Except as provided in the Credit Agreement, this Revolving
Note may not be assigned by Lender to any Person.
THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES.
PENHALL INTERNATIONAL CORP.
By: __________________________________
Name: ________________________________
Title: _______________________________
PENHALL COMPANY
By: __________________________________
Name: ________________________________
Title: _______________________________
PENHALL LEASING, L.L.C.
BY: PENHALL COMPANY, ITS SOLE MEMBER
By: __________________________________
Name: ________________________________
Title: _______________________________
BOB MACK CO., INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
2
EXHIBIT 1.1(a)(ii)
to
CREDIT AGREEMENT
FORM OF NOTICE OF REVOLVING CREDIT ADVANCE
___________,______
General Electric Capital Corporation,
for itself, as Lender, and as Agent
for Lenders
335 Madison Avenue
12th Floor
New York, New York 10017
Attention: Penhall Company
Account Manager
Ladies and Gentlemen:
The undersigned, Penhall Company ("Borrower Representative")
refers to the Credit Agreement, dated as of May 22, 2003 (the "Credit
Agreement," the terms defined therein being used herein as therein defined), by
and among the undersigned, the other persons named therein as Borrowers, the
other Credit Parties signatory thereto, General Electric Capital Corporation,
for itself, as Lender, and as Agent for Lenders, and Lenders, and hereby gives
you notice, irrevocably, pursuant to Section 1.1(a) of the Credit Agreement,
that the undersigned hereby requests a Revolving Credit Advance under the Credit
Agreement, and in that connection sets forth below the information relating to
such Revolving Credit Advance as required by Section 1.1(a) of the Credit
Agreement:
(i) The date of the requested Revolving Credit Advance is
__________, ____.
(ii) The aggregate amount of the requested Revolving
Credit Advance is $____________.
(iii) The requested Revolving Credit Advance is [an Index
Rate Loan] [a LIBOR Loan with a LIBOR Period of
________].
(iv) The requested Revolving Credit Advance is to be sent
to:
[Name of Bank]
[City of Bank]
Beneficiary:
Account No.: [number]
ABA No.: [number]
Attn: [name]
(v) The Borrower as to the Revolving Credit Advance is
__________________.
The undersigned hereby certifies that all of the statements
contained in Section 7.2 of the Credit Agreement are true and correct in all
material respects on the date hereof, and will be true in all
material respects on the date of the requested Revolving Credit Advance, before
and after giving effect thereto and to the application of the proceeds
therefrom.
PENHALL COMPANY
By: __________________________________
Name: ________________________________
Title: _______________________________
2
EXHIBIT 1.1(c)
to
CREDIT AGREEMENT
FORM OF SWING LINE NOTE
(Multi-Borrower)
New York, New York
$___,___,____________ __, ____
FOR VALUE RECEIVED, each of the undersigned (each individually
a "Borrower" and collectively, the "Borrowers"), jointly and severally, HEREBY
PROMISES TO PAY to the order of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation ("Swing Line Lender") at the offices of GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation, as Agent (in such capacity, the "Agent") at
the Agent's address at 335 Madison Avenue, 12th Floor, New York New York 10017,
or at such other place as Agent may designate from time to time in writing, in
lawful money of the United States of America and in immediately available funds,
the amount of ___________________ DOLLARS AND NO CENTS ($___,___,___) or, if
less, the aggregate unpaid amount of all Swing Line Advances made to the
undersigned under the "Credit Agreement" (as hereinafter defined). All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Credit Agreement or in Annex A thereto.
This Swing Line Note is issued pursuant to that certain Credit
Agreement dated as of May 22, 2003 by and among Borrowers, the other Persons
named therein as Credit Parties, Agent, Swing Line Lender and the other Persons
signatory thereto from time to time as Lenders (including all annexes, exhibits
and schedules thereto and as from time to time amended, restated, supplemented
or otherwise modified, the "Credit Agreement"), and is entitled to the benefit
and security of the Credit Agreement, the Security Agreement and all of the
other Loan Documents. Reference is hereby made to the Credit Agreement for a
statement of all of the terms and conditions under which the Loans evidenced
hereby are made and are to be repaid. The date and amount of each Swing Line
Advance made by Swing Line Lender to Borrowers, the rate of interest applicable
thereto and each payment made on account of the principal thereof, shall be
recorded by Agent on its books; provided that the failure of Agent to make any
such recordation shall not affect the obligations of Borrowers to make a payment
when due of any amount owing under the Credit Agreement or this Swing Line Note
in respect of the Swing Line Advances made by Swing Line Lender to Borrowers.
The principal amount of the indebtedness evidenced hereby
shall be payable in the amounts and on the dates specified in the Credit
Agreement, the terms of which are hereby incorporated herein by reference.
Interest thereon shall be paid until such principal amount is paid in full at
such interest rates and at such times, and pursuant to such calculations, as are
specified in the Credit Agreement. The terms of the Credit Agreement are hereby
incorporated herein by reference.
If any payment on this Swing Line Note becomes due and payable
on a day other than a Business Day, the payment thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
Upon and after the occurrence of any Event of Default, this
Swing Line Note may, as provided in the Credit Agreement, and without
presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other legal requirement of any kind (all
of which are hereby expressly waived by Borrowers), be declared, and immediately
shall become, due and payable.
Time is of the essence of this Swing Line Note.
Except as provided in the Credit Agreement, this Swing Line
Note may not be assigned by Lender to any Person.
THIS SWING LINE NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES.
PENHALL INTERNATIONAL CORP.
By: __________________________________
Name: ________________________________
Title: _______________________________
PENHALL COMPANY
By: __________________________________
Name: ________________________________
Title: _______________________________
PENHALL LEASING, L.L.C.
BY: PENHALL COMPANY, ITS SOLE MEMBER
By: __________________________________
Name: ________________________________
Title: _______________________________
BOB MACK CO., INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
2
EXHIBIT 1.2(e)
to
CREDIT AGREEMENT
FORM OF NOTICE OF CONVERSION/CONTINUATION
Reference is made to that certain Credit Agreement dated as of
May 22, 2003 by and among the undersigned ("Borrower Representative"), the other
Persons named therein as Borrowers, the other Persons named therein as Credit
Parties, General Electric Capital Corporation ("Agent") and the Lenders from
time to time signatory thereto (including all annexes, exhibits or schedules
thereto, and as from time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement"). Capitalized terms used herein without
definition are so used as defined in the Credit Agreement.
Borrower Representative hereby gives irrevocable notice,
pursuant to Section 1.2(e) of the Credit Agreement, of its ______________
request to:
(a) on [ date ] convert $[________]of the aggregate
outstanding principal amount of the [_______] Loan, bearing interest at the
[________] Rate, into a(n) [________] Loan [and, in the case of a LIBOR Loan,
having a LIBOR Period of [_____] month(s)];
[(b) on [ date ] continue $[________]of the aggregate
outstanding principal amount of the [_______] Loan, bearing interest at the
LIBOR Rate, as a LIBOR Loan having a LIBOR Period of [_____] month(s)].
Borrower Representative certifies that the conversion and/or
continuation of the Loans requested above is for the separate account(s) of the
following Borrowers[s] in the following [respective] amount[s]: [Name: $________
_____] and [Name: $_______________].
Borrower Representative hereby (i) certifies that all of the
statements contained in Section 7.2 of the Credit Agreement are true and correct
in all material respects on the date hereof, and will be true in all material
respects on the date of the requested conversion/continuation, before and after
giving effect thereto and (ii) reaffirms the cross-guaranty provisions set forth
in Section 10 of the Credit Agreement and the guaranty and continuance of
Agent's Liens, on behalf of itself and Lenders, pursuant to the Collateral
Documents.
PENHALL COMPANY
By: ___________________________________________
Name: _________________________________________
Title: ________________________________________
EXHIBIT 3.1(C)
to
CREDIT AGREEMENT
FORM OF INTERCOMPANY NOTE
[PENHALL COMPANY/PENHALL INTERNATIONAL CORP./PENHALL INVESTMENTS, INC./PENHALL
LEASING, L.L.C./BOB MACK CO., INC.], [a/an California/Arizona
corporation/limited liability company] ("Maker") hereby promises to pay to the
order of [PENHALL COMPANY/PENHALL INVESTMENTS, INC./PENHALL LEASING, L.L.C./BOB
MACK CO., INC.], [a California corporation/limited liability company] ("Payee")
upon demand in lawful money of the United States of America and in immediately
available funds, the amount of [ ], together with interest thereon at the [rate
to be determined by Maker and Payee].
This Note shall be governed by the laws of the State of New York.
This Note is being pledged to Agent under the Credit Agreement and such Agent
shall be entitled to exercise any and all rights of the Payee upon and during
the continuation of any Event of Default under the Credit Agreement.
IN WITNESS WHEREOF, the Maker has executed this Note on this [ ] day of [ ],
[ ].
[PENHALL COMPANY/PENHALL INTERNATIONAL CORP./PENHALL INVESTMENTS, INC./PENHALL
LEASING, L.L.C./BOB MACK CO., INC.]
By: _________________________
Name:
Title:
GRID
Exhibit 4.9(e)(i)
BORROWING BASE CERTIFICATE
PENHALL COMPANY
DATE: ___________, ______
This Certificate is given by Penhall Company ("Borrower")
pursuant to subsection 4.9(e) of that certain Credit Agreement dated as of May
22, 2003 among Borrower, the other Credit Parties party thereto, the Lenders
from time to time party thereto and General Electric Capital Corporation, as
agent for the Lenders (as such agreement may have been amended, restated,
supplemented or otherwise modified from time to time the "Credit Agreement").
Capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement.
The undersigned is duly authorized to execute and deliver this
Certificate on behalf of Borrower. By executing this Certificate such officer
hereby certifies to Agent and Lenders that:
(a) Attached hereto as Schedule 1 is a calculation of the
proposed Borrowing Base for Borrower as of the above
date;
(b) Based on such schedule, the proposed Borrowing Base
as of the above date is:
$____________________
(c) Agent shall have the right to establish or modify or
eliminate Reserves against Eligible Accounts,
Eligible Short-Term Rentals, Eligible Parts and
Supplies and Eligible Equipment from time to time in
its reasonable credit judgment. In addition, Agent
reserves the right at any time upon five (5) days'
prior written notice to adjust any of the criteria
set forth below and to establish new criteria in its
reasonable credit judgment, subject to the approval
of Supermajority Revolving Lenders in the case of
adjustments which have the effect of making more
credit available. Borrower acknowledges that the
exercise by Agent of any right pursuant to this
clause (c) shall have the effect of adjusting the
proposed Borrowing Base set forth above.
IN WITNESS WHEREOF, Borrower has caused this Certificate to be
executed by its ________________ this ____ day of ___________, ____.
PENHALL COMPANY
By:____________________________________________
Its:___________________________________________
Schedule 1
to Exhibit 4.9(e)(i)
BORROWING BASE CALCULATION
PENHALL COMPANY
("BORROWER")
Accounts of the Borrower reflected as accounts receivable on the Borrower's balance
sheet (as of the date above), but solely to the extent of the unpaid portion of the
obligations stated on the respective invoices issued to a customer of Borrower with
respect to inventory sold and shipped or services performed in the ordinary course
of business, net of any credits, rebates or offsets owed by Borrower to the
respective customer. $___________
Less: Ineligible Accounts:
Accounts that do not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of its business; ___________
Accounts (i) upon which Borrower's right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever or (ii)
as to which Borrower is not able to bring suit or otherwise enforce its
remedies against the Account Debtor through judicial process, or (iii) if
the Account represents progress billing in excess of cost or percentage of
completion of the applicable contract or is subject to the equitable lien
of a surety bond issuer; ____________
Any Account to the extent that any defense, counterclaim, setoff or dispute
is asserted as to such Account; ____________
Accounts that are not true and correct statements of bona fide indebtedness
incurred in the amount of such Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor; ____________
Accounts with respect to which an invoice, reasonably acceptable to Agent
in form and substance, has not been sent to the applicable Account Debtor
(including, without limitation, accrued but unbilled Accounts of "Division
40"); ____________
Accounts that (i) are not owned by Borrower or (ii) are subject to any
right, claim, security interest or other interest of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a) or (g) of the
definition of such term; ___________
2
Accounts that arise from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer
or director with any Credit Party; ____________
Accounts that are the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or department, agency
or instrumentality thereof unless Agent, in its sole discretion, has agreed
to the contrary in writing and Borrower, if necessary or desirable, has
complied with respect to such obligation with the Federal Assignment of
Claims Act of 1940, or any applicable state, county or municipal law
restricting the assignment thereof with respect to such obligation; ____________
Accounts that are the obligations of an Account Debtor located in a foreign
country other than Canada unless payment thereof is assured by a letter of
credit assigned and delivered to Agent, satisfactory to Agent as to form,
amount and issuer; ____________
Accounts to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to
Borrower or any Subsidiary thereof but only to the extent of the potential
offset; ____________
Accounts that arise with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed
sale or other terms by reason of which the payment by the Account Debtor is
or may be conditional; ____________
Accounts that are in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following: ____________
(i) the Account is not paid within the earlier of: sixty (60) days
following its due date or ninety (90) days following its original
invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come
due; or
(iii) a petition is filed by or against any Account Debtor obligated
upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the
relief of debtors;
3
Accounts that are the obligations of an Account Debtor if 50% or more of
the Dollar amount of all Accounts owing by that Account Debtor are
ineligible under clause (i) of the immediately preceding criterion; ____________
Accounts as to which Agent's Lien thereon, on behalf of itself and Lenders,
is not a first priority perfected Lien; ____________
Accounts as to which any of the representations or warranties in the Loan
Documents are untrue; ____________
Accounts that are evidenced by a judgment, Instrument or Chattel Paper; ____________
Accounts to the extent such Account exceeds any credit limit established by
Agent, in its reasonable credit judgment, following five (5) days' prior
written notice of such limit by Agent to Borrower; ____________
Accounts to the extent that such Account, together with all other Accounts
owing to such Account Debtor and its Affiliates as of any date of
determination exceed 15% of all Eligible Accounts; ____________
Accounts that are payable in any currency other than Dollars or Canadian
Dollars; ____________
Accounts that constitute a "retention" Account; or ____________
Accounts that are otherwise unacceptable to Agent in its reasonable credit
judgment. ____________
Total Ineligible Accounts $____________
Total Eligible Accounts (Accounts less Total Ineligible Accounts) $____________
Short-Term Rentals of the Borrower reflected on the Borrower's balance sheet (as of
the date above), but solely to the extent of the unpaid portion of the obligations
stated on the respective invoices issued to a lessee obligated upon such Short-Term
Rental with respect to tools and like property leased in the ordinary course of
business, net of any credits, rebates or offsets owed by Borrower to such lessee. $___________
Less: Ineligible Short-Term Rentals:
Short-Term Rentals not subject to a written lease agreement; ____________
Short-Term Rentals not subject to a first priority perfected security
interest of Agent on behalf of Lenders; ____________
4
Any portion of such Short-Term Rental that has not been billed or is not
due within thirty (30) days of the applicable date of determination; ____________
Short-Term Rentals upon which such Borrower is not able to bring suit or
otherwise enforce its remedies against the relevant lessee through judicial
process; ____________
Short-Term Rentals that (i) are not owned by such Borrower, (ii) are
subject to any right, claim, security interest or other interest of any
other Person, other than Liens in favor of Agent, on behalf of itself and
Lenders and Permitted Encumbrances of the type described in clauses (a) or
(g) of the definition of such term; ____________
Short-Term Rentals that are the obligation of a lessee that is the United
States government or a political subdivision thereof, unless Agent, in its
sole discretion, has agreed to the contrary in writing and such Borrower,
if necessary or desirable, has complied with respect to such obligation
with the Federal Assignment of Claims Act of 1940, or any applicable state,
county or municipal law restricting the assignment thereof with respect to
such obligation; ____________
Short-Term Rentals that are the obligation of a lessee located in a foreign
country, other than Canada; ____________
Short-Term Rentals in excess of $500,000 in the aggregate; ____________
Short-Term Rentals that are in default or due under a lease in default;
provided, that without limiting the generality of the foregoing, a
Short-Term Rental shall be deemed in default upon the occurrence of any of
the following: ____________
(i) the Short-Term Rental is not paid within the earlier of: 60 days
following its due date or 90 days following its original invoice
date; ____________
(ii) the lessee obligated upon such Short-Term Rental suspends
business, makes a general assignment for the benefit of creditors
or fails to pay its debts generally as they come due; or ____________
(iii) a petition is filed by or against any lessee obligated upon such
Short-Term Rental under any bankruptcy law or any other federal,
state or foreign (including any provincial) receivership,
insolvency relief or other law or laws for the relief of debtors; ____________
5
Short-Term Rentals that are the obligation of a lessee if fifty percent
(50%) or more of the Dollar amount of all Short-Term Rental owing by that
lessee are ineligible under clause (i) of the immediately preceding
criterion; ____________
Short-Term Rentals as to which any of the representations or warranties in
the Loan Documents are untrue; ____________
Short-Term Rentals to the extent such Short-Term Rental exceeds any credit
limit established by Agent, in its reasonable credit judgment, following
five (5) days' prior written notice of such limit by Agent to Borrower
Representative; ____________
Short-Term Rentals that are payable in any currency other than Dollars or
Canadian Dollars; or ____________
Short-Term Rentals that are otherwise unacceptable to Agent in its
reasonable credit judgment. ____________
Total Ineligible Short-Term Rentals $____________
Total Eligible Short-Term Rentals (Short-Term Rentals less Ineligible Short-Term
Rentals) $____________
Total Eligible Accounts plus Total Eligible Short-Term Rentals $____________
Advance Rate (Total Eligible Accounts plus Total Eligible Short-Term Rentals) 85%
Accounts and Short-Term Rentals Availability $____________
Parts and Supplies owned by, and in the possession of the Borrower, and located in
the United States of America, reflected on the Borrower's balance sheet (as of the
date above), valued at the lower of cost or market (including adequate reserves for
obsolete, slow moving or excess quantities), on a first-in, first-out basis $ ___________
6
Less: Ineligible Parts and Supplies:
Parts and Supplies that is not owned by Borrower free and clear of all
Liens and rights of any other Person (including the rights of a purchaser
that has made progress payments and the rights of a surety that has issued
a bond to assure Borrower's performance with respect to that Parts and
Supplies), except the Liens in favor of Agent, on behalf of itself and
Lenders and Permitted Encumbrances of the type described in clauses (a),
(d), (e) or (g) of the definition of such term; ___________
Parts and Supplies that (i) is not located on premises owned, leased or
rented by Borrower and set forth in the various subschedules to Schedule
III to the Security Agreement (excluding Parts and Supplies mounted on,
affixed to or otherwise placed in a motor vehicle owned by such Borrower
and such motor vehicle is located at the residence of the driver authorized
to drive such motor vehicle, provided that such motor vehicle (A) is
covered by a certificate of title on which the interest of the Agent has
been noted, free and clear of all Liens except those in favor of Agent and
Lenders and Permitted Encumbrances of the type described in clauses (a),
(d), (e) or (g) of the definition of such term, and (B) is equipped with a
global positioning tracking device (that is permanently affixed to such
motor vehicle) that enables such Borrower to determine at all times the
movement and location of such motor vehicle) or (ii) is stored at a leased
location, unless Agent has given its prior consent thereto and unless (x) a
reasonably satisfactory landlord waiver has been delivered to Agent within
thirty (30) days after the Closing Date, or (y) Reserves equal to three
months' rent (based upon base rent and such Borrower's pro rata share of
operating costs, utilities and taxes payable by such Borrower under the
lease, but excluding any supplemental rent or other costs, expenses or
amounts or any indemnities payable thereunder, upon default or otherwise)
have been established with respect thereto, (iii) is stored with a bailee
or warehouseman unless a reasonably satisfactory, acknowledged bailee
letter has been received by Agent and Reserves reasonably satisfactory to
Agent have been established with respect thereto, or (iv) is located at an
owned location subject to a mortgage in favor of a lender other than Agent,
unless a reasonably satisfactory mortgagee waiver has been delivered to
Agent, or (v) is located at any site if the aggregate book value of Parts
and Supplies, together with Equipment of Borrower, at any such location is
less than $100,000; ___________
Parts and Supplies that is placed on consignment or is in transit, except
for Parts and Supplies in transit between domestic locations of Credit
Parties as to which Agent's Liens have been perfected at origin and
destination; ___________
7
Parts and Supplies that is covered by (i) a negotiable document of title,
unless such document has been delivered to Agent with all necessary
endorsements, free and clear of all Liens except those in favor of Agent
and Lenders or (ii) a certificate of title unless (x) Borrower sells goods
of that kind and such Parts and Supplies is held for sale or lease or is on
lease by Borrower as lessor or (y) the Lien of Agent has been noted on such
certificate of title in accordance with applicable state law; ___________
Parts and Supplies that is excess, obsolete, unsaleable, shopworn, seconds,
damaged or unfit for sale; ___________
Parts and Supplies stored in, installed in or affixed to any property
subject to any Lien having priority over the Lien of Agent for the benefit
of Agent and the ratable benefit of Lenders (including Permitted
Encumbrances) and the holder of such Lien has not entered into an
intercreditor agreement in form and substance satisfactory to Agent as to
such Lien; ___________
Parts and Supplies that is not subject to a first priority lien in favor of
Agent on behalf of itself and Lenders subject to Permitted Encumbrances of
the type described in clauses (a), (d), (e) or (g) of the definition of
such term; ___________
Parts and Supplies that breaches any of the representations or warranties
pertaining to Parts and Supplies set forth in the Loan Documents; ___________
Parts and Supplies that consists of Hazardous Materials or goods that can
be transported or sold only with licenses that are not readily available; ___________
Parts and Supplies that is not covered by casualty insurance reasonably
acceptable to Agent; or ___________
Parts and Supplies that is otherwise unacceptable to Agent in its
reasonable credit judgment. ____________
Notwithstanding anything to the contrary contained herein, until there has been
a determination of Net Orderly Liquidation Value of Parts and Supplies, none of
the Parts and Supplies shall be Eligible Parts and Supplies.
Total Ineligible Parts and Supplies $____________
Total Eligible Parts and Supplies (Parts and Supplies less Total Ineligible Parts
and Supplies) $____________
8
Advance Rate (the lesser of (i) 100% of the net book value of Eligible Parts and
Supplies or (ii) 85% of the Appraised Net Orderly Liquidation Value of Eligible
Parts and Supplies) ___________%
Parts and Supplies Availability $____________
Equipment owned by, and in the possession of the Borrower, and located in the United
States of America, reflected as equipment on the Borrower's balance sheet (as of the
date above), valued at the lower of cost or market (including adequate reserves for
obsolete, slow moving or excess quantities), on a first-in, first-out basis $___________
Less: Ineligible Equipment:
Equipment that is not owned by Borrower free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has
made progress payments and the rights of a surety that has issued a bond to
assure Borrower's performance with respect to that Equipment), except the
Liens in favor of Agent, on behalf of itself and Lenders and Permitted
Encumbrances of the type described in clauses (a), (d), (e) or (g) of the
definition of such term; ____________
9
Equipment that (i) is not located on premises owned, leased or rented by
Borrower and set forth in the various subschedules to to Schedule III to
the Security Agreement (unless, at any time, such Equipment is being used
at a construction or similar site or, if such Equipment is mounted on,
affixed to or otherwise placed in a motor vehicle or such Equipment is a
motor vehicle owned by such Borrower, such motor vehicle is located at the
residence of the driver authorized to drive the motor vehicle, provided
that such motor vehicle (A) is covered by a certificate of title on which
the interest of the Agent has been noted, free and clear of all Liens
except those in favor of Agent and Lenders and Permitted Encumbrances of
the type described in clauses (a), (d), (e) or (g) of the definition of
such term, and (B) is equipped with a global positioning tracking device
(that is permanently affixed to such motor vehicle) that enables such
Borrower to determine at all times the movement and location of such motor
vehicle) or (ii) is stored at a leased location, unless Agent has given its
prior consent thereto and unless (x) a reasonably satisfactory landlord's
waiver has been delivered to Agent within thirty (30) days after the
Closing Date, or (y) Reserves equal to three months' rent (based upon base
rent and such Borrower's pro rata share of operating costs, utilities and
taxes payable by such Borrower under the lease, but excluding any
supplemental rent or other costs, expenses or amounts or any indemnities
payable thereunder, upon default or otherwise) have been established with
respect thereto, (iii) is stored with a bailee or warehouseman unless a
reasonably satisfactory, acknowledged bailee letter has been received by
Agent and Reserves reasonably satisfactory to Agent have been established
with respect thereto, or (iv) is located at an owned location subject to a
mortgage in favor of a lender other than Agent, unless a reasonably
satisfactory mortgagee waiver has been delivered to Agent, or (v) is
located at any site if the aggregate book value of Equipment, together with
Parts and Supplies of Borrower, at any such location is less than $100,000; ____________
Equipment that is covered by a certificate of title unless the interest of
Agent has been noted on such certificate of title, free and clear of all
Liens except those in favor of Agent and Lenders and Permitted Encumbrances
of the type described in clauses (a), (d), (e) or (g) of the definition of
such term; ____________
Equipment that is excess, obsolete, unsaleable, shopworn, seconds, damaged
or unfit for sale; ____________
Equipment that is not a vehicle or a construction tool used by such
Borrower in the ordinary course of its business; ____________
10
Equipment that is not subject to a first priority lien in favor of Agent on
behalf of itself and Lenders subject to Permitted Encumbrances of the type
described in clauses (a), (d), (e) or (g) of the definition of such term; ____________
Equipment that breaches any of the representations or warranties pertaining
to Equipment set forth in the Loan Documents; ____________
Equipment that is Parts and Supplies;
Equipment that consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available; ____________
Equipment that is not covered by casualty insurance reasonably acceptable
to Agent; or ____________
Equipment that is otherwise unacceptable to Agent in its reasonable credit
judgment. ____________
Total Ineligible Equipment $____________
Total Eligible Equipment (Equipment less Total Ineligible Equipment) $____________
Advance Rate (the lesser of (i) 100% of the net book value of Eligible Equipment or
(ii) 85% of the Appraised Net Orderly Liquidation Value of Eligible Equipment) __________%
Equipment Availability $____________
Borrowing Base (Accounts Availability plus Parts and Supplies Availability
plus Equipment Availability) ____________
11
Exhibit 4.9(e)(ii)
BORROWING BASE CERTIFICATE
PENHALL LEASING, L.L.C.
DATE: _________, _____
This Certificate is given by Penhall Leasing, L.L.C.
("Borrower") pursuant to subsection 4.9(e) of that certain Credit Agreement
dated as of May 22, 2003 among Borrower, the other Credit Parties party thereto,
the Lenders from time to time party thereto and General Electric Capital
Corporation, as agent for the Lenders (as such agreement may have been amended,
restated, supplemented or otherwise modified from time to time the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
The undersigned is duly authorized to execute and deliver this
Certificate on behalf of Borrower. By executing this Certificate such officer
hereby certifies to Agent and Lenders that:
(a) Attached hereto as Schedule 1 is a calculation of the
proposed Borrowing Base for Borrower as of the above
date;
(b) Based on such schedule, the proposed Borrowing Base
as of the above date is:
$________________
(c) Agent shall have the right to establish or modify or
eliminate Reserves against Eligible Accounts,
Eligible Short-Term Rentals, Eligible Parts and
Supplies and Eligible Equipment from time to time in
its reasonable credit judgment. In addition, Agent
reserves the right at any time upon five (5) days'
prior written notice to adjust any of the criteria
set forth below and to establish new criteria in its
reasonable credit judgment, subject to the approval
of Supermajority Revolving Lenders in the case of
adjustments which have the effect of making more
credit available. Borrower acknowledges that the
exercise by Agent of any right pursuant to this
clause (c) shall have the effect of adjusting the
proposed Borrowing Base set forth above.
IN WITNESS WHEREOF, Borrower has caused this Certificate to be
executed by its ________________ this ____ day of ___________, ____.
PENHALL LEASING, L.L.C.
By: _______________________________
Its: _______________________________
12
Schedule 1
to Exhibit 4.9(e)(ii)
BORROWING BASE CALCULATION
PENHALL LEASING, L.L.C.
("BORROWER")
Accounts of the Borrower reflected as accounts receivable on the Borrower's
balance sheet (as of the date above), but solely to the extent of the unpaid
portion of the obligations stated on the respective invoices issued to a
customer of Borrower with respect to inventory sold and shipped or services
performed in the ordinary course of business, net of any credits, rebates or
offsets owed by Borrower to the respective customer. $___________
Less: Ineligible Accounts:
Accounts that do not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of its business; ___________
Accounts (i) upon which Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition
whatsoever or (ii) as to which Borrower is not able to bring suit or
otherwise enforce its remedies against the Account Debtor through
judicial process, or (iii) if the Account represents progress billing
in excess of cost or percentage of completion of the applicable
contract or is subject to the equitable lien of a surety bond issuer; ___________
Any Account to the extent that any defense, counterclaim, setoff or
dispute is asserted as to such Account; ___________
Accounts that are not true and correct statements of bona fide
indebtedness incurred in the amount of such Account for merchandise
sold to or services rendered and accepted by the applicable Account
Debtor; ___________
Accounts with respect to which an invoice, reasonably acceptable to
Agent in form and substance, has not been sent to the applicable
Account Debtor (including, without limitation, accrued but unbilled
Accounts of "Division 40"); ___________
Accounts that (i) are not owned by Borrower or (ii) are subject to any
right, claim, security interest or other interest of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a) or (g) of
the definition of such term; ___________
Accounts that arise from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity that has
any common officer or director with any Credit Party; ___________
Accounts that are the obligation of an Account Debtor that is the
United States government or a political subdivision thereof, unless
Agent, in its sole discretion, has agreed to the contrary in writing
and Borrower, if necessary or desirable, has complied with respect to
such obligation with the Federal Assignment of Claims Act of 1940, or
any applicable state, county or municipal law restricting the
assignment thereof with respect to such obligation; ___________
Accounts that are the obligations of an Account Debtor located in a
foreign country other than Canada unless payment thereof is assured by
a letter of credit assigned and delivered to Agent, satisfactory to
Agent as to form, amount and issuer; ___________
Accounts to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to
Borrower or any Subsidiary thereof but only to the extent of the
potential offset; ___________
Accounts that arise with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the
Account Debtor is or may be conditional; ___________
Accounts that are in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon
the occurrence of any of the following: ___________
(i) the Account is not paid within the earlier of: sixty (60) days
following its due date or ninety (90) days following its
original invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come
due; or
(iii) a petition is filed by or against any Account Debtor obligated
upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the
relief of debtors;
Accounts that are the obligations of an Account Debtor if 50% or more
of the Dollar amount of all Accounts owing by that Account Debtor are
ineligible under clause (i) of the immediately preceding criterion; ___________
2
Accounts as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien; ___________
Accounts as to which any of the representations or warranties in the
Loan Documents are untrue; ___________
Accounts that are evidenced by a judgment, Instrument or Chattel Paper; ___________
Accounts to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment, following five
(5) days' prior written notice of such limit by Agent to Borrower; ___________
Accounts to the extent that such Account, together with all other
Accounts owing to such Account Debtor and its Affiliates as of any date
of determination exceed 15% of all Eligible Accounts; ___________
Accounts that are payable in any currency other than Dollars or
Canadian Dollars; or ___________
Accounts that constitute a "retention" Account; or ___________
Accounts that are otherwise unacceptable to Agent in its reasonable
credit judgment. ___________
Total Ineligible Accounts $___________
Total Eligible Accounts (Accounts less Total Ineligible Accounts) $___________
Short-Term Rentals of the Borrower reflected on the Borrower's balance sheet (as
of the date above), but solely to the extent of the unpaid portion of the
obligations stated on the respective invoices issued to a lessee obligated upon
such Short-Term Rental with respect to tools or like property leased in the
ordinary course of business, net of any credits, rebates or offsets owed by
Borrower to such lessee. $___________
Less: Ineligible Short-Term Rentals:
Short-Term Rentals not subject to a written lease agreement; ___________
Short-Term Rentals not subject to a first priority perfected security
interest of Agent on behalf of Lenders; ___________
Any portion of such Short-Term Rental that has not been billed or is
not due within thirty (30) days of the applicable date of
determination; ___________
3
Short-Term Rentals upon which such Borrower is not able to bring suit
or otherwise enforce its remedies against the relevant lessee through
judicial process; ___________
Short-Term Rentals that (i) are not owned by such Borrower, (ii) are
subject to any right, claim, security interest or other interest of any
other Person, other than Liens in favor of Agent, on behalf of itself
and Lenders and Permitted Encumbrances of the type described in clauses
(a) or (g) of the definition of such term; ___________
Short-Term Rentals that are the obligation of a lessee that is the
United States government or a political subdivision thereof, unless
Agent, in its sole discretion, has agreed to the contrary in writing
and such Borrower, if necessary or desirable, has complied with respect
to such obligation with the Federal Assignment of Claims Act of 1940,
or any applicable state, county or municipal law restricting the
assignment thereof with respect to such obligation; ___________
Short-Term Rentals that are the obligation of a lessee located in a
foreign country, other than Canada; ___________
Short-Term Rentals in excess of $500,000 in the aggregate; ___________
Short-Term Rentals that are in default or due under a lease in default;
provided, that without limiting the generality of the foregoing, a
Short-Term Rental shall be deemed in default upon the occurrence of any
of the following: ___________
(i) the Short-Term Rental is not paid within the earlier of: 60
days following its due date or 90 days following its original
invoice date; ___________
(ii) the lessee obligated upon such Short-Term Rental suspends
business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come
due; or ___________
(iii) a petition is filed by or against any lessee obligated upon
such Short-Term Rental under any bankruptcy law or any other
federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the
relief of debtors; ___________
Short-Term Rentals that are the obligation of a lessee if fifty percent
(50%) or more of the Dollar amount of all Short-Term Rental owing by
that lessee are ineligible under clause (i) of the immediately
preceding criterion; ___________
Short-Term Rentals as to which any of the representations or warranties
in the Loan Documents are untrue; ___________
4
Short-Term Rentals to the extent such Short-Term Rental exceeds any
credit limit established by Agent, in its reasonable credit judgment,
following five (5) days' prior written notice of such limit by Agent to
Borrower Representative; ___________
Short-Term Rentals that are payable in any currency other than Dollars
or Canadian Dollars; or ___________
Short-Term Rentals that are otherwise unacceptable to Agent in its
reasonable credit judgment. ___________
Total Ineligible Short-Term Rentals $___________
Total Eligible Short-Term Rentals (Short-Term Rentals less Ineligible Short-Term
Rentals) $___________
Total Eligible Accounts plus Total Eligible Short-Term Rentals $___________
Advance Rate (Total Eligible Accounts plus Total Eligible Short-Term Rentals) 85%
Accounts and Short-Term Rentals Availability $___________
Parts and Supplies owned by, and in the possession of the Borrower, and located
in the United States of America, reflected on the Borrower's balance sheet (as
of the date above), valued at the lower of cost or market (including adequate
reserves for obsolete, slow moving or excess quantities), on a first-in,
first-out basis $___________
Less: Ineligible Parts and Supplies:
Parts and Supplies that is not owned by Borrower free and clear of all
Liens and rights of any other Person (including the rights of a
purchaser that has made progress payments and the rights of a surety
that has issued a bond to assure Borrower's performance with respect to
that Parts and Supplies), except the Liens in favor of Agent, on behalf
of itself and Lenders and Permitted Encumbrances of the type described
in clauses (a), (d), (e) or (g) of the definition of such term; ___________
5
Parts and Supplies that (i) is not located on premises owned, leased or
rented by Borrower and set forth in the various subschedules to
Schedule III to the Security Agreement (excluding Parts and Supplies
mounted on, affixed to or otherwise placed in a motor vehicle owned by
such Borrower and such motor vehicle is located at the residence of the
driver authorized to drive such motor vehicle, provided that such motor
vehicle (A) is covered by a certificate of title on which the interest
of the Agent has been noted, free and clear of all Liens except those
in favor of Agent and Lenders and Permitted Encumbrances of the type
described in clauses (a), (d), (e) or (g) of the definition of such
term, and (B) is equipped with a global positioning tracking device
(that is permanently affixed to such motor vehicle) that enables such
Borrower to determine at all times the movement and location of such
motor vehicle) or (ii) is stored at a leased location, unless Agent has
given its prior consent thereto and unless (x) a reasonably
satisfactory landlord waiver has been delivered to Agent within thirty
(30) days after the Closing Date, or (y) Reserves equal to three
months' rent (based upon base rent and such Borrower's pro rata share
of operating costs, utilities and taxes payable by such Borrower under
the lease, but excluding any supplemental rent or other costs, expenses
or amounts or any indemnities payable thereunder, upon default or
otherwise) have been established with respect thereto, (iii) is stored
with a bailee or warehouseman unless a reasonably satisfactory,
acknowledged bailee letter has been received by Agent and Reserves
reasonably satisfactory to Agent have been established with respect
thereto, or (iv) is located at an owned location subject to a mortgage
in favor of a lender other than Agent, unless a reasonably satisfactory
mortgagee waiver has been delivered to Agent, or (v) is located at any
site if the aggregate book value of Parts and Supplies, together with
Equipment of Borrower, at any such location is less than $100,000; ___________
Parts and Supplies that is placed on consignment or is in transit,
except for Parts and Supplies in transit between domestic locations of
Credit Parties as to which Agent's Liens have been perfected at origin
and destination; ___________
Parts and Supplies that is covered by (i) a negotiable document of
title, unless such document has been delivered to Agent with all
necessary endorsements, free and clear of all Liens except those in
favor of Agent and Lenders or (ii) a certificate of title unless (x)
Borrower sells goods of that kind and such Parts and Supplies is held
for sale or lease or is on lease by Borrower as lessor or (y) the Lien
of Agent has been noted on such certificate of title in accordance with
applicable state law; ___________
Parts and Supplies that is excess, obsolete, unsaleable, shopworn,
seconds, damaged or unfit for sale; ___________
6
Parts and Supplies stored in, installed in or affixed to any property
subject to any Lien having priority over the Lien of Agent for the
benefit of Agent and the ratable benefit of Lenders (including
Permitted Encumbrances) and the holder of such Lien has not entered
into an intercreditor agreement in form and substance satisfactory to
Agent as to such Lien; ___________
Parts and Supplies that is not subject to a first priority lien in
favor of Agent on behalf of itself and Lenders subject to Permitted
Encumbrances of the type described in clauses (a), (d), (e) or (g) of
the definition of such term; ___________
Parts and Supplies that breaches any of the representations or
warranties pertaining to Parts and Supplies set forth in the Loan
Documents; ___________
Parts and Supplies that consists of Hazardous Materials or goods that
can be transported or sold only with licenses that are not readily
available; ___________
Parts and Supplies that is not covered by casualty insurance reasonably
acceptable to Agent; or ___________
Parts and Supplies that is otherwise unacceptable to Agent in its
reasonable credit judgment. ___________
Notwithstanding anything to the contrary contained herein, until there has been
a determination of Net Orderly Liquidation Value of Parts and Supplies, none of
the Parts and Supplies shall be Eligible Parts and Supplies.
Total Ineligible Parts and Supplies $___________
Total Eligible Parts and Supplies (Parts and Supplies less Total Ineligible
Parts and Supplies) $___________
Advance Rate (the lesser of (i) 100% of the net book value of Eligible Parts and
Supplies or (ii) 85% of the Appraised Net Orderly Liquidation Value of Eligible
Parts and Supplies) ___________%
Parts and Supplies Availability $___________
Equipment owned by, and in the possession of the Borrower, and located in the
United States of America, reflected as equipment on the Borrower's balance sheet
(as of the date above), valued at the lower of cost or market (including
adequate reserves for obsolete, slow moving or excess quantities), on a
first-in, first-out basis $___________
7
Less: Ineligible Equipment:
Equipment that is not owned by Borrower free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that
has made progress payments and the rights of a surety that has issued a
bond to assure Borrower's performance with respect to that Equipment),
except the Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a), (d), (e)
or (g) of the definition of such term; ___________
Equipment that (i) is not located on premises owned, leased or rented
by Borrower and set forth in the various subschedules to Schedule III
to the Security Agreement (unless, at any time, such Equipment is being
used at a construction or similar site or, if such Equipment is mounted
on, affixed to or otherwise placed in a motor vehicle or such Equipment
is a motor vehicle owned by such Borrower, such motor vehicle is
located at the residence of the driver authorized to drive the motor
vehicle, provided that such motor vehicle (A) is covered by a
certificate of title on which the interest of the Agent has been noted,
free and clear of all Liens except those in favor of Agent and Lenders
and Permitted Encumbrances of the type described in clauses (a), (d),
(e) or (g) of the definition of such term, and (B) is equipped with a
global positioning tracking device (that is permanently affixed to such
motor vehicle) that enables such Borrower to determine at all times the
movement and location of such motor vehicle) or (ii) is stored at a
leased location, unless Agent has given its prior consent thereto and
unless (x) a reasonably satisfactory landlord's waiver has been
delivered to Agent within thirty (30) days after the Closing Date, or
(y) Reserves equal to three months' rent (based upon base rent and such
Borrower's pro rata share of operating costs, utilities and taxes
payable by such Borrower under the lease, but excluding any
supplemental rent or other costs, expenses or amounts or any
indemnities payable thereunder, upon default or otherwise) have been
established with respect thereto, (iii) is stored with a bailee or
warehouseman unless a reasonably satisfactory, acknowledged bailee
letter has been received by Agent and Reserves reasonably satisfactory
to Agent have been established with respect thereto, or (iv) is located
at an owned location subject to a mortgage in favor of a lender other
than Agent, unless a reasonably satisfactory mortgagee waiver has been
delivered to Agent, or (v) is located at any site if the aggregate book
value of Equipment, together with Parts and Supplies of Borrower, at
any such location is less than $100,000; ___________
Equipment that is covered by a certificate of title unless the interest
of Agent has been noted on such certificate of title, free and clear of
all Liens except those in favor of Agent and Lenders and Permitted
Encumbrances of the type described in clauses (a), (d), (e) or (g) of
the definition of such term; ___________
8
Equipment that is excess, obsolete, unsaleable, shopworn, seconds,
damaged or unfit for sale; ___________
Equipment that is not a vehicle or a construction tool used by such
Borrower in the ordinary course of its business; ___________
Equipment that is not subject to a first priority lien in favor of
Agent on behalf of itself and Lenders subject to Permitted Encumbrances
of the type described in clauses (a), (d), (e) or (g) of the definition
of such term; ___________
Equipment that breaches any of the representations or warranties
pertaining to Equipment set forth in the Loan Documents; ___________
Equipment that is Parts and Supplies;
Equipment that consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available; ___________
Equipment that is not covered by casualty insurance reasonably
acceptable to Agent; or ___________
Equipment that is otherwise unacceptable to Agent in its reasonable
credit judgment. ___________
Total Ineligible Equipment $___________
Total Eligible Equipment (Equipment less Total Ineligible Equipment) $___________
Advance Rate (the lesser of (i) 100% of the net book value of Eligible Equipment
or (ii) 85% of the Appraised Net Orderly Liquidation Value of Eligible
Equipment) ___________%
Equipment Availability $___________
Borrowing Base (Accounts Availability plus Parts and Supplies Availability
plus Equipment Availability) ===========
9
Exhibit 4.9(e)(iii)
BORROWING BASE CERTIFICATE
BOB MACK CO., INC
DATE: ___________, ______
This Certificate is given by Bob Mack Co., Inc. ("Borrower")
pursuant to subsection 4.9(e) of that certain Credit Agreement dated as of May
22, 2003 among Borrower, the other Credit Parties party thereto, the Lenders
from time to time party thereto and General Electric Capital Corporation, as
agent for the Lenders (as such agreement may have been amended, restated,
supplemented or otherwise modified from time to time the "Credit Agreement").
Capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement.
The undersigned is duly authorized to execute and deliver this
Certificate on behalf of Borrower. By executing this Certificate such officer
hereby certifies to Agent and Lenders that:
(a) Attached hereto as Schedule 1 is a calculation of the
proposed Borrowing Base for Borrower as of the above
date;
(b) Based on such schedule, the proposed Borrowing Base
as of the above date is:
$_______________
(c) Agent shall have the right to establish or modify or
eliminate Reserves against Eligible Accounts,
Eligible Short-Term Rentals, Eligible Parts and
Supplies and Eligible Equipment from time to time in
its reasonable credit judgment. In addition, Agent
reserves the right at any time upon five (5) days'
prior written notice to adjust any of the criteria
set forth below and to establish new criteria in its
reasonable credit judgment, subject to the approval
of Supermajority Revolving Lenders in the case of
adjustments which have the effect of making more
credit available. Borrower acknowledges that the
exercise by Agent of any right pursuant to this
clause (c) shall have the effect of adjusting the
proposed Borrowing Base set forth above.
IN WITNESS WHEREOF, Borrower has caused this Certificate to be
executed by its ________________ this ____ day of ___________, ____.
BOB MACK CO., INC.
By: _______________________________
Its: _______________________________
10
Schedule 1
to Exhibit 4.9(e)(iii)
BORROWING BASE CALCULATION
BOB MACK CO., INC.
("BORROWER")
Accounts of the Borrower reflected as accounts receivable on the Borrower's
balance sheet (as of the date above), but solely to the extent of the unpaid
portion of the obligations stated on the respective invoices issued to a
customer of Borrower with respect to inventory sold and shipped or services
performed in the ordinary course of business, net of any credits, rebates or
offsets owed by Borrower to the respective customer. $___________
Less: Ineligible Accounts:
Accounts that do not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of its business; ___________
Accounts (i) upon which Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition
whatsoever or (ii) as to which Borrower is not able to bring suit or
otherwise enforce its remedies against the Account Debtor through
judicial process, or (iii) if the Account represents progress billing
in excess of cost or percentage of completion of the applicable
contract or is subject to the equitable lien of a surety bond issuer; ___________
Any Account to the extent that any defense, counterclaim, setoff or
dispute is asserted as to such Account; ___________
Accounts that are not true and correct statements of bona fide
indebtedness incurred in the amount of such Account for merchandise
sold to or services rendered and accepted by the applicable Account
Debtor; ___________
Accounts with respect to which an invoice, reasonably acceptable to
Agent in form and substance, has not been sent to the applicable
Account Debtor (including, without limitation, accrued but unbilled
Accounts of "Division 40"); ___________
Accounts that (i) are not owned by Borrower or (ii) are subject to any
right, claim, security interest or other interest of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a) or (g) of
the definition of such term; ___________
Accounts that arise from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity that has
any common officer or director with any Credit Party; ___________
Accounts that are the obligation of an Account Debtor that is the
United States government or a political subdivision thereof, unless
Agent, in its sole discretion, has agreed to the contrary in writing
and Borrower, if necessary or desirable, has complied with respect to
such obligation with the Federal Assignment of Claims Act of 1940, or
any applicable state, county or municipal law restricting the
assignment thereof with respect to such obligation; ___________
Accounts that are the obligations of an Account Debtor located in a
foreign country other than Canada unless payment thereof is assured by
a letter of credit assigned and delivered to Agent, satisfactory to
Agent as to form, amount and issuer; ___________
Accounts to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to
Borrower or any Subsidiary thereof but only to the extent of the
potential offset; ___________
Accounts that arise with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the
Account Debtor is or may be conditional; ___________
Accounts that are in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon
the occurrence of any of the following: ___________
(i) the Account is not paid within the earlier of: sixty (60) days
following its due date or ninety (90) days following its
original invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come
due; or
(iii) a petition is filed by or against any Account Debtor obligated
upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the
relief of debtors;
Accounts that are the obligations of an Account Debtor if 50% or more
of the Dollar amount of all Accounts owing by that Account Debtor are
ineligible under clause (i) of the immediately preceding criterion; ___________
Accounts as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien; ___________
Accounts as to which any of the representations or warranties in the
Loan Documents are untrue; ___________
Accounts that are evidenced by a judgment, Instrument or Chattel Paper; ___________
Accounts to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment, following five
(5) days' prior written notice of such limit by Agent to Borrower; ___________
Accounts to the extent that such Account, together with all other
Accounts owing to such Account Debtor and its Affiliates as of any date
of determination exceed 15% of all Eligible Accounts; ___________
Accounts that are payable in any currency other than Dollars or
Canadian Dollars; or ___________
Accounts that constitute a "retention" Account; or ___________
Accounts that are otherwise unacceptable to Agent in its reasonable
credit judgment. ___________
Total Ineligible Accounts $___________
Total Eligible Accounts (Accounts less Total Ineligible Accounts) $___________
Short-Term Rentals of the Borrower reflected on the Borrower's balance sheet (as
of the date above), but solely to the extent of the unpaid portion of the
obligations stated on the respective invoices issued to a lessee obligated upon
such Short-Term Rental with respect to tools or like property leased in the
ordinary course of business, net of any credits, rebates or offsets owed by
Borrower to such lessee. $___________
Less: Ineligible Short-Term Rentals:
Short-Term Rentals not subject to a written lease agreement; ___________
Short-Term Rentals not subject to a first priority perfected security
interest of Agent on behalf of Lenders; ___________
Any portion of such Short-Term Rental that has not been billed or is not
due within thirty (30) days of the applicable date of determination; ___________
Short-Term Rentals upon which such Borrower is not able to bring suit ___________
or otherwise enforce its remedies against the relevant lessee through
judicial process;
Short-Term Rentals that (i) are not owned by such Borrower, (ii) are ___________
subject to any right, claim, security interest or other interest of any
other Person, other than Liens in favor of Agent, on behalf of itself
and Lenders and Permitted Encumbrances of the type described in clauses
(a) or (g) of the definition of such term;
Short-Term Rentals that are the obligation of a lessee that is the ___________
United States government or a political subdivision thereof, unless
Agent, in its sole discretion, has agreed to the contrary in writing
and such Borrower, if necessary or desirable, has complied with respect
to such obligation with the Federal Assignment of Claims Act of 1940,
or any applicable state, county or municipal law restricting the
assignment thereof with respect to such obligation;
Short-Term Rentals that are the obligation of a lessee located in a ___________
foreign country, other than Canada;
Short-Term Rentals in excess of $500,000 in the aggregate; ___________
Short-Term Rentals that are in default or due under a lease in default; ___________
provided, that without limiting the generality of the foregoing, a
Short-Term Rental shall be deemed in default upon the occurrence of any
of the following:
(i) the Short-Term Rental is not paid within the earlier of: 60 ___________
days following its due date or 90 days following its original
invoice date;
(ii) the lessee obligated upon such Short-Term Rental suspends ___________
business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come
due; or
(iii) a petition is filed by or against any lessee obligated upon ___________
such Short-Term Rental under any bankruptcy law or any other
federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the
relief of debtors;
Short-Term Rentals that are the obligation of a lessee if fifty percent ___________
(50%) or more of the Dollar amount of all Short-Term Rental owing by
that lessee are ineligible under clause (i) of the immediately
preceding criterion;
Short-Term Rentals as to which any of the representations or warranties ___________
in the Loan Documents are untrue;
Short-Term Rentals to the extent such Short-Term Rental exceeds any ___________
credit limit established by Agent, in its reasonable credit judgment,
following five (5) days' prior written notice of such limit by Agent to
Borrower Representative;
Short-Term Rentals that are payable in any currency other than Dollars ___________
or Canadian Dollars; or
Short-Term Rentals that are otherwise unacceptable to Agent in its ___________
reasonable credit judgment.
Total Ineligible Short-Term Rentals $___________
Total Eligible Short-Term Rentals (Short-Term Rentals less Ineligible Short-Term $___________
Rentals)
Total Eligible Accounts plus Total Eligible Short-Term Rentals $___________
Advance Rate (Total Eligible Accounts plus Total Eligible Short-Term Rentals) 85%
Accounts and Short-Term Rentals Availability $___________
Parts and Supplies owned by, and in the possession of the Borrower, and located $___________
in the United States of America, reflected on the Borrower's balance sheet (as
of the date above), valued at the lower of cost or market (including adequate
reserves for obsolete, slow moving or excess quantities), on a first-in,
first-out basis
Less: Ineligible Parts and Supplies:
Parts and Supplies that is not owned by Borrower free and clear of all ___________
Liens and rights of any other Person (including the rights of a
purchaser that has made progress payments and the rights of a surety that
has issued a bond to assure Borrower's performance with respect to that
Parts and Supplies), except the Liens in favor of Agent, on behalf of
itself and Lenders and Permitted Encumbrances of the type described in
clauses (a), (d), (e) or (g) of the definition of such term;
Parts and Supplies that (i) is not located on premises owned, leased or
rented by Borrower and set forth in the various subschedules to
Schedule III to the Security Agreement (excluding Parts and Supplies
mounted on, affixed to or otherwise placed in a motor vehicle owned by
such Borrower and such motor vehicle is located at the residence of the
driver authorized to drive such motor vehicle, provided that such motor
vehicle (A) is covered by a certificate of title on which the interest
of the Agent has been noted, free and clear of all Liens except those
in favor of Agent and Lenders and Permitted Encumbrances of the type
described in clauses (a), (d), (e) or (g) of the definition of such
term, and (B) is equipped with a global positioning tracking device
(that is permanently affixed to such motor vehicle) that enables such
Borrower to determine at all times the movement and location of such
motor vehicle) or (ii) is stored at a leased location, unless Agent has ___________
given its prior consent thereto and unless (x) a reasonably
satisfactory landlord waiver has been delivered to Agent within thirty
(30) days after the Closing Date, or (y) Reserves equal to three
months' rent (based upon base rent and such Borrower's pro rata share
of operating costs, utilities and taxes payable by such Borrower under
the lease, but excluding any supplemental rent or other costs, expenses
or amounts or any indemnities payable thereunder, upon default or
otherwise) have been established with respect thereto, (iii) is stored
with a bailee or warehouseman unless a reasonably satisfactory,
acknowledged bailee letter has been received by Agent and Reserves
reasonably satisfactory to Agent have been established with respect
thereto, or (iv) is located at an owned location subject to a mortgage
in favor of a lender other than Agent, unless a reasonably satisfactory
mortgagee waiver has been delivered to Agent, or (v) is located at any
site if the aggregate book value of Parts and Supplies, together with
Equipment of Borrower, at any such location is less than $100,000;
Parts and Supplies that is placed on consignment or is in transit, ___________
except for Parts and Supplies in transit between domestic locations of
Credit Parties as to which Agent's Liens have been perfected at origin
and destination;
Parts and Supplies that is covered by (i) a negotiable document of ___________
title, unless such document has been delivered to Agent with all
necessary endorsements, free and clear of all Liens except those in
favor of Agent and Lenders or (ii) a certificate of title unless (x)
Borrower sells goods of that kind and such Parts and Supplies is held
for sale or lease or is on lease by Borrower as lessor or (y) the Lien
of Agent has been noted on such certificate of title in accordance with
applicable state law;
Parts and Supplies that is excess, obsolete, unsaleable, shopworn, ___________
seconds, damaged or unfit for sale;
Parts and Supplies stored in, installed in or affixed to any property ___________
subject to any Lien having priority over the Lien of Agent for the
benefit of Agent and the ratable benefit of Lenders (including
Permitted Encumbrances) and the holder of such Lien has not entered
into an intercreditor agreement in form and substance satisfactory to
Agent as to such Lien;
Parts and Supplies that is not subject to a first priority lien in ___________
favor of Agent on behalf of itself and Lenders subject to Permitted
Encumbrances of the type described in clauses (a), (d), (e) or (g) of
the definition of such term;
Parts and Supplies that breaches any of the representations or ___________
warranties pertaining to Parts and Supplies set forth in the Loan
Documents;
Parts and Supplies that consists of Hazardous Materials or goods that ___________
can be transported or sold only with licenses that are not readily
available;
Parts and Supplies that is not covered by casualty insurance reasonably ___________
acceptable to Agent; or
Parts and Supplies that is otherwise unacceptable to Agent in its ___________
reasonable credit judgment.
Notwithstanding anything to the contrary contained herein, until there has been
a determination of Net Orderly Liquidation Value of Parts and Supplies, none of
the Parts and Supplies shall be Eligible Parts and Supplies.
Total Ineligible Parts and Supplies $___________
Total Eligible Parts and Supplies (Parts and Supplies less Total Ineligible Parts
and Supplies) $___________
Advance Rate (the lesser of (i) 100% of the net book value of Eligible Parts and ___________%
Supplies or (ii) 85% of the Appraised Net Orderly Liquidation Value of Eligible
Parts and Supplies)
Parts and Supplies Availability $___________
Equipment owned by, and in the possession of the Borrower, and located in the $___________
United States of America, reflected as equipment on the Borrower's balance sheet
(as of the date above), valued at the lower of cost or market (including
adequate reserves for obsolete, slow moving or excess quantities), on a
first-in, first-out basis
Less: Ineligible Equipment:
Equipment that is not owned by Borrower free and clear of all Liens and ___________
rights of any other Person (including the rights of a purchaser that
has made progress payments and the rights of a surety that has issued a
bond to assure Borrower's performance with respect to that Equipment),
except the Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a), (d), (e)
or (g) of the definition of such term;
Equipment that (i) is not located on premises owned, leased or rented ___________
by Borrower and set forth in the various subschedules to Schedule III
to the Security Agreement (unless, at any time, such Equipment is being
used at a construction or similar site or, if such Equipment is mounted
on, affixed to or otherwise placed in a motor vehicle or such Equipment
is a motor vehicle owned by such Borrower, such motor vehicle is
located at the residence of the driver authorized to drive the motor
vehicle, provided that such motor vehicle (A) is covered by a
certificate of title on which the interest of the Agent has been noted,
free and clear of all Liens except those in favor of Agent and Lenders
and Permitted Encumbrances of the type described in clauses (a), (d),
(e) or (g) of the definition of such term, and (B) is equipped with a
global positioning tracking device (that is permanently affixed to such
motor vehicle) that enables such Borrower to determine at all times the
movement and location of such motor vehicle) or (ii) is stored at a
leased location, unless Agent has given its prior consent thereto and
unless (x) a reasonably satisfactory landlord's waiver has been
delivered to Agent within thirty (30) days after the Closing Date, or
(y) Reserves equal to three months' rent (based upon base rent and such
Borrower's pro rata share of operating costs, utilities and taxes
payable by such Borrower under the lease, but excluding any
supplemental rent or other costs, expenses or amounts or any
indemnities payable thereunder, upon default or otherwise) have been
established with respect thereto, (iii) is stored with a bailee or
warehouseman unless a reasonably satisfactory, acknowledged bailee
letter has been received by Agent and Reserves reasonably satisfactory
to Agent have been established with respect thereto, or (iv) is located
at an owned location subject to a mortgage in favor of a lender other
than Agent, unless a reasonably satisfactory mortgagee waiver has been
delivered to Agent, or (v) is located at any site if the aggregate book
value of Equipment, together with Parts and Supplies of Borrower, at
any such location is less than $100,000;
Equipment that is covered by a certificate of title unless the interest ___________
of Agent has been noted on such certificate of title, free and clear of
all Liens except those in favor of Agent and Lenders and Permitted
Encumbrances of the type described in clauses (a), (d), (e) or (g) of
the definition of such term;
Equipment that is excess, obsolete, unsaleable, shopworn, seconds,
damaged or unfit for sale; ___________
Equipment that is not a vehicle or construction tool used by such
Borrower in the ordinary course of its business; ___________
Equipment that is not subject to a first priority lien in favor of ___________
Agent on behalf of itself and Lenders subject to Permitted Encumbrances
of the type described in clauses (a), (d), (e) or (g) of the definition
of such term;
Equipment that breaches any of the representations or warranties ___________
pertaining to Equipment set forth in the Loan Documents;
Equipment that is Parts and Supplies;
Equipment that consists of Hazardous Materials or goods that can be ___________
transported or sold only with licenses that are not readily available;
Equipment that is not covered by casualty insurance reasonably
acceptable to Agent; or ___________
Equipment that is otherwise unacceptable to Agent in its reasonable ___________
credit judgment.
Total Ineligible Equipment $___________
Total Eligible Equipment (Equipment less Total Ineligible Equipment) $___________
Advance Rate (the lesser of (i) 100% of the net book value of Eligible Equipment ___________%
or (ii) 85% of the Appraised Net Orderly Liquidation Value of Eligible
Equipment)
Equipment Availability $___________
Borrowing Base (Accounts Availability plus Parts and Supplies Availability plus ___________
Equipment Availability)
Exhibit 4.9(e)(iv)
BORROWING BASE CERTIFICATE
PENHALL INTERNATIONAL CORP.
DATE: ___________, ______
This Certificate is given by Penhall International Corp.
("Borrower") pursuant to subsection 4.9(e) of that certain Credit Agreement
dated as of May 22, 2003 among Borrower, the other Credit Parties party thereto,
the Lenders from time to time party thereto and General Electric Capital
Corporation, as agent for the Lenders (as such agreement may have been amended,
restated, supplemented or otherwise modified from time to time the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
The undersigned is duly authorized to execute and deliver this
Certificate on behalf of Borrower. By executing this Certificate such officer
hereby certifies to Agent and Lenders that:
(a) Attached hereto as Schedule 1 is a calculation of the
proposed Borrowing Base for Borrower as of the above
date;
(b) Based on such schedule, the proposed Borrowing Base
as of the above date is:
$_________________
(c) Agent shall have the right to establish or modify or
eliminate Reserves against Eligible Real Estate from
time to time in its reasonable credit judgment. In
addition, Agent reserves the right upon five (5)
days' prior written notice at any time to adjust any
of the criteria set forth below and to establish new
criteria in its reasonable credit judgment, subject
to the approval of Supermajority Revolving Lenders in
the case of adjustments which have the effect of
making more credit available. Borrower acknowledges
that the exercise by Agent of any right pursuant to
this clause (c) shall have the effect of adjusting
the proposed Borrowing Base set forth above.
IN WITNESS WHEREOF, Borrower has caused this Certificate to be
executed by its ________________ this ____ day of ___________, ____.
PENHALL INTERNATIONAL CORP.
By: _______________________________
Its: _______________________________
Schedule 1
to Exhibit 4.9(e)(iv)
BORROWING BASE CALCULATION
PENHALL INTERNATIONAL CORP.
("BORROWER")
Real Estate, and improvements thereon, of the Borrower that Agent has $___________
specifically identified and approved in writing and as to which, following an
independent appraisal thereof, Agent has assigned an Appraised Forced
Liquidation Value
Less: Ineligible Real Estate
Real Estate that is not owned by such Borrower free and clear of all ___________
Liens and rights of any other Person, except the Liens in favor of
Agent, on behalf of itself and Lenders and Permitted Encumbrances and
of the type described in clauses (a), (d), (e) (g), (h) or (j) of the
definition of such term;
Real Estate as to which Agent has not received a loan policy of title ___________
insurance in favor of Agent and in form and amount and issued by a
title insurance company satisfactory to Agent, in its reasonable
discretion, together with such endorsements thereto as Agent shall
require, in its reasonable discretion (provided such endorsements are
available in the jurisdiction where such Real Estate is located);
Real Estate as to which Agent has not received an environmental report ___________
satisfactory to Agent, in its sole discretion;
Real Estate that is not subject to a first priority Lien in favor of ___________
Agent on behalf of itself and Lenders subject only to Permitted
Encumbances;
Real Estate that breaches any of the representations or warranties ___________
pertaining to Real Estate set forth in the Loan Documents; or
Real Estate that is not covered by casualty insurance reasonably ___________
acceptable to Agent.
Total Ineligible Real Estate $___________
Total Eligible Real Estate (Real Estate less Total Ineligible Real Estate) $___________
Advance Rate ___________%
Real Estate Availability $___________
Borrowing Base ___________
1
EXHIBIT 4.9(l)
COMPLIANCE CERTIFICATE
PENHALL INTERNATIONAL CORP.,
PENHALL COMPANY,
PENHALL LEASING LLC,
AND
BOB MACK COMPANY
DATE: __________, _____
This Certificate is given by PENHALL INTERNATIONAL CORP.,
PENHALL COMPANY, PENHALL LEASING, L.L.C., AND BOB MACK CO., INC. (each
individually a "Borrower" and together and jointly and severally, the
"Borrowers") pursuant to Section 4.9(l) of that certain Credit Agreement dated
as of May 22, 2003 among Borrowers, the other Credit Parties party thereto, the
Lenders from time to time party thereto and General Electric Capital
Corporation, as agent for the Lenders (as such agreement may have been amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
The undersigned is duly authorized to execute and deliver this
Certificate on behalf of Borrowers. By executing this Certificate such officer
hereby certifies to Agent and Lenders that:
(a) the financial statements delivered with this
Certificate in accordance with Section 4.9(b) and/or Section 4.9(c) of the
Credit Agreement fairly present in all material respects the results of
operations and financial condition of Holdings and its Subsidiaries as of the
dates of such financial statements;
(b) I have reviewed the terms of the Credit Agreement and
have made, or caused to be made under my supervision, a review in reasonable
detail of the transactions and conditions of the Credit Parties during the
accounting period covered by such financial statements;
(c) such review has not disclosed the existence during or
at the end of such accounting period, and I have no knowledge of the existence
as of the date hereof, of any condition or event that constitutes a Default or
an Event of Default, except as set forth on Schedule 1 hereto, which includes a
description of the nature and period of existence of such Default or an Event of
Default and what action Borrower has taken, is taking and proposes to take with
respect thereto;
(d) except as set forth on Schedule 1 hereto, Borrowers
are in compliance with the covenants contained in Sections 3.1, 3.3, 3.4, 3.5,
3.7 and 3.8 and Section 4 of the Credit Agreement, as demonstrated on Schedule 1
hereto;
(e) omitted;
(f) omitted;
(g) except as set forth on Schedule 3 hereto, subsequent
to the date of the most recent Certificate submitted by Borrowers pursuant to
Section 4.9(l) of the Credit Agreement, no Credit Party has (i) changed its name
as it appears in official filings in the jurisdiction of its organization, (ii)
changed its chief executive office, principal place of business, corporate
offices, warehouses or locations at which Collateral is held or stored, or the
location of its records concerning Collateral, (iii) changed the type of entity
that it is, (iv) changed (or has had changed) its organization identification
number, if any, issued by its jurisdiction of organization, (v) changed its
jurisdiction of organization, (vi) changed the end of its Fiscal Year, or (vii)
formed any new Subsidiary or entered into any partnership or joint venture with
any other Person; and
(h) except as set forth on Schedule 4 hereto, subsequent
to the date of the most recent Certificate submitted by Borrowers pursuant to
Section 4.9(l) of the Credit Agreement, there has been no event which would
alter any of the disclosures set forth on Schedule 5.4(b) of the Credit
Agreement.
IN WITNESS WHEREOF, Borrowers have caused this Certificate to
be executed by its __________________ this ____ day of ___________, ____.
PENHALL INTERNATIONAL CORP.,
By: ________________________________
Name: ______________________________
Title: _____________________________
PENHALL COMPANY,
By: ________________________________
Name: ______________________________
Title: _____________________________
PENHALL LEASING, L.L.C.
By: ________________________________
Name: ______________________________
Title: _____________________________
BOB MACK CO., INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
2
SCHEDULE 1
Exhibit 4.9(l)
ALL AMOUNTS IN EXHIBIT 4.9(l) ARE WITHOUT DUPLICATION AND, UNLESS OTHERWISE
INDICATED, ARE CALCULATED FOR HOLDINGS AND ITS SUBSIDIARIES ON A CONSOLIDATED
BASIS
INDEBTEDNESS
(SECTION 3.1)
Intercompany Indebtedness among Borrowers and their Subsidiaries:
Actual in the aggregate $___________
Permitted in the aggregate $___________
In Compliance Yes/No
Unsecured Senior Notes of Holdings:
Actual in the aggregate $___________
Permitted in the aggregate $___________
In Compliance Yes/No
Indebtedness secured by purchase money Liens or incurred with respect to Capital
Leases:
Actual in the aggregate $___________
Permitted in the aggregate $___________
In Compliance Yes/No
Unsecured Indebtedness:
Actual in the aggregate $___________
Permitted in the aggregate $___________
In Compliance Yes/No
3
INVESTMENTS
(SECTION 3.3)
Loans and advances to employees for moving, traveling and other similar expenses
in the ordinary course of business:
Actual in the aggregate $___________
Permitted in the aggregate $___________
In Compliance Yes/No
Capital contributions to wholly owned domestic Subsidiaries that are Guarantors:
Actual in the aggregate $___________
Permitted in the aggregate $___________
In Compliance Yes/No
4
CONTINGENT OBLIGATIONS
(SECTION 3.4)
Contingent Obligations incurred in the ordinary course of business with respect
to surety and appeal bonds, performance and return-of-money bonds and other
similar obligations:
Actual in the aggregate $___________
Permitted in the aggregate $___________
In Compliance Yes/No
Other Contingent Obligations not otherwise permitted in Sections 3.4(a) through
(h):
Actual in the aggregate $___________
Permitted in the aggregate $___________
In Compliance Yes/No
5
RESTRICTED JUNIOR PAYMENTS
(SECTION 3.5)
Management fees paid:
Actual $___________
Permitted $___________
In Compliance Yes/No
Distributions and payments made to Holdings by Borrowers:
Actual (current Fiscal Year) $___________
Permitted (current Fiscal Year) $___________
In Compliance Yes/No
Actual (term of Credit Agreement) $___________
Permitted (term of Credit Agreement) $___________
In Compliance Yes/No
6
DISPOSAL OF ASSETS
(SECTION 3.7)
Describe any Asset Dispositions (including any Permitted Sale-Leaseback) made
during the period (list each transaction by market value of assets sold, and, in
the case of a Permitted Sale-Leaseback, the principal terms of the applicable
lease):
_______________________________________________ $___________
_______________________________________________ $___________
_______________________________________________ $___________
_______________________________________________ $___________
Permitted Asset Dispositions (other than Permitted Sale-Leasebacks) in a single
transaction or series of related transactions (asset market value) $___________
In Compliance Yes/No
Aggregate market value of Asset Dispositions (other than
Permitted Sale-Leasebacks) in Fiscal Year $___________
Permitted aggregate market value of Asset Dispositions (other than
Permitted Sale-Leasebacks) in Fiscal Year $___________
In Compliance Yes/No
7
TRANSACTIONS WITH AFFILIATES
(SECTION 3.8)
Directors fees paid in current Fiscal Year:
Actual in the aggregate $___________
Permitted in the aggregate $___________
In Compliance Yes/No
8
PARTS AND PROPERTY CAPITAL EXPENDITURE LIMIT
(SECTION 4.1)
Parts and Property Capital Expenditures are defined as follows:
All expenditures (by the expenditure of cash or the incurrence of Indebtedness)
during the measuring period for any fixed assets, parts, tools, supplies or
improvements (in each case other than Equipment) or for replacements,
substitutions or additions thereto that have a useful life of more than one
year and that are required to be capitalized under GAAP $___________
Plus: deposits made during the measuring period in connection with fixed
assets, parts, tools and supplies; less deposits of a prior period
included above ___________
Less: Net Proceeds of Asset Dispositions (except Permitted Sale-Leasebacks)
which Borrowers are permitted to reinvest under Section 1.5(c) of the
Credit Agreement and are included in the expenditures above ___________
Parts and Property Capital Expenditures* $===========
Permitted Parts and Property Capital Expenditures (including Carry Over Amount
of $____________ from prior fiscal year) $===========
In Compliance Yes/No
* Credit Parties will be deemed to have made $900,000 in Parts and Property
Capital Expenditures in the aggregate for the Fiscal Quarters ending September
30, 2002, December 31, 2002 and March 31, 2003.
9
LEASE LIMITS
(SECTION 4.2)
All rents (or substantially equivalent payments) paid during the measuring
period for operating leases, synthetic leases and similar off-balance sheet
financing with respect to equipment $===========
Permitted Lease Payments $===========
In Compliance Yes/No
10
DOLLAR UTILIZATION RATE OF EQUIPMENT RATIO
(SECTION 4.4)
Dollar Utilization Rate of Equipment Ratio is defined as follows:
Total Company Standard Revenue for the measuring period divided by Total Company
Standard Available Revenue for the measuring period. ___________%
In Compliance Yes/No
Total Company Standard Revenue for the measuring period is the sum of Standard
Revenue for the measuring period for all lines of equipment.
Total Company Standard Available Revenue for the measuring period is the sum of
Standard Available Revenue for the measuring period for all lines of equipment.
Standard Revenue for the measuring period is the sum of all billed hours for the
measuring period for a specific line of equipment, multiplied by the division's
Adjusted Standard Rate for such measuring period for that line of equipment.
Standard Available Revenue for the measuring period is the number of working
hours for such measuring period multiplied by the division's Adjusted Standard
Rate for such measuring period for that line of equipment.
Adjusted Standard Rate for the measuring period is the standard rate for such
measuring period for a line of equipment adjusted for, among other things,
overtime, travel time, layout work, interdivision discounts and standby time
discounts for the measuring period.
11
MINIMUM INTEREST COVERAGE RATIO
(SECTION 4.5)
Interest Coverage Ratio is defined as follows:
Interest expense (whether cash or non-cash) deducted in the determination of
Consolidated Net Income, including interest expense with respect to any Funded
Debt and interest expense that has been capitalized $___________
Less: Amortization of capitalized fees and expenses incurred with respect to
the Related Transactions included in interest expense above ___________
Amortization of any original discount attributable to any Funded Debt
or warrants included in interest expense above ___________
Interest paid in kind and included in interest expense above ___________
Interest Expense* $___________
EBITDA (calculated in Schedule 2 of this Exhibit) $___________
Subtotal $===========
Interest Coverage Ratio (Subtotal from above, divided by Interest Expense) ===========
Required Interest Coverage Ratio ===========
In Compliance Yes/No
* For calculations as of September 30, 2002, December 31, 2002 and March 31,
2003 for the Fiscal Quarters ending on such dates (i) Interest Expense will be
$3,600,000, $3,500,000 and $3,400,000, respectively and (ii) EBITDA will be
$8,000,000, $7,100,000 and $2,150,000, respectively.
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MAXIMUM LEVERAGE RATIO
(SECTION 4.6)
Leverage Ratio is defined as follows:
Funded Debt as of the date of determination, including the average outstanding
principal of the Revolving Credit Advances as of the end of each Fiscal Quarter
included in the measuring period and the amount of Letter of Credit Obligations
as of the end of the last Fiscal Quarter in the measuring period* $===========
Less: Senior Unsecured Notes
EBITDA (calculated in Schedule 2 of this Exhibit) $___________
Leverage Ratio (Funded Debt less Senior Unsecured Notes divided by EBITDA) ===========
Required Leverage Ratio ===========
In Compliance Yes/No
* For calculations as of September 30, 2002, December 31, 2002 and March 31,
2003, the revolving loan component of Funded Debt will be $11,600,000,
$4,800,000 and $8,400,000 respectively.
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MINIMUM BORROWING AVAILABILITY
(SECTION 4.8)
Borrowing Availability ___________
Required Minimum Borrowing Availability $ 5,000,000
In Compliance Yes/No
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CONDITIONS OR EVENTS WHICH CONSTITUTE A DEFAULT OR
EVENT OF DEFAULT
IF ANY CONDITION OR EVENT EXISTS THAT CONSTITUTES A DEFAULT OR EVENT OF DEFAULT,
SPECIFY NATURE AND PERIOD OF EXISTENCE AND WHAT ACTION CREDIT PARTIES HAVE
TAKEN, IS TAKING OR PROPOSES TO TAKE WITH RESPECT THERETO; IF NO CONDITION OR
EVENT EXISTS, STATE "NONE."
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SCHEDULE 2
Exhibit 4.9(l)
CALCULATION OF EBITDA
Consolidated Net Income is defined as follows:
Consolidated net income during the measuring period excluding: $___________
the income (or deficit) of any Person accrued prior to the date it
became a Subsidiary of, or was merged or consolidated into, Holdings or
any of its Subsidiaries ___________
the income (or deficit) of any Person (other than a Subsidiary) in
which Holdings has an ownership interest, except to the extent any such
income has actually been received by Borrowers or any of their
Subsidiaries in the form of cash dividends or distributions ___________
the undistributed earnings of any Subsidiary of Holdings to the extent
that the declaration or payment of dividends or similar distributions
by such Subsidiary is not at the time permitted by the terms of any
contractual obligation or requirement of law applicable to such
Subsidiary ___________
any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of income accrued
during such period ___________
any net gain attributable to the write-up of any asset ___________
any net gain from the collection of the proceeds of life insurance
policies ___________
any net gain arising from the acquisition of any securities, or the
extinguishment of any Indebtedness, of Holdings or any of its
Subsidiaries ___________
in the case of a successor to Holdings or any of its Subsidiaries by
consolidation or merger or as a transferee of its assets, any earnings
of such successor prior to such consolidation, merger or transfer of
assets ___________
any deferred credit representing the excess of equity in any Subsidiary
of Holdings at the date of acquisition of such Subsidiary over the cost
to Holdings of the investment in such Subsidiary ___________
Consolidated Net Income $===========
EBITDA is defined as follows:
Consolidated Net Income (from above) $___________
Less: (in each case to the extent included in the calculation of Consolidated
Net Income, but without duplication):
income tax credits ___________
interest income ___________
gain from extraordinary items (net of loss from extraordinary items) ___________
any aggregate net gain (net of any loss) arising from the sale,
exchange or other disposition of capital assets (including any fixed
assets, whether tangible or intangible, all inventory sold in
conjunction with the disposition of fixed assets and all securities) ___________
any other non-cash gains ___________
expenditures pursuant to the last sentence of Section 4.10 of the
Credit Agreement applicable to, but not included on, the Pro Forma,
including expenditures made in connection with Related Transactions and
payment of liabilities on the Closing Date ___________
Plus: (in each case to the extent deducted in the calculation of Consolidated
Net Income, but without duplication):
any provision for income taxes ___________
Interest Expense (calculated in Section 4.5 of Exhibit 4.9(l)) ___________
depreciation and amortization ___________
amortized debt discount (but in the case of amortization and expenses of
Related Transactions, only to the extent included in the Pro Forma) ___________
any deduction as the result of any grant to any members of the management
of Holdings or any of its Subsidiaries of any Stock ___________
expenses of the Related Transactions, provided that such expenses were
included in the Pro Forma, or disclosed in any notes thereto ___________
EBITDA*
$===========
* For calculations as of September 30, 2002, December 31, 2002 and March 31,
2003, for the Fiscal Quarters ending on such dates, EBITDA will be $8,000,000,
$7,100,000 and $2,150,000, respectively.
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SCHEDULE 3
Exhibit 4.9(l)
ORGANIZATION/LOCATION CHANGES
IF ANY CREDIT PARTY HAS (i) CHANGED ITS NAME AS IT APPEARS IN OFFICIAL FILINGS
IN THE STATE OF ITS ORGANIZATION, (ii) CHANGED ITS CHIEF EXECUTIVE OFFICE,
PRINCIPAL PLACE OF BUSINESS, CORPORATE OFFICES, WAREHOUSES OR LOCATIONS AT WHICH
COLLATERAL IS HELD OR STORED, OR THE LOCATION OF ITS RECORDS CONCERNING
COLLATERAL, (iii) CHANGED THE TYPE OF ENTITY THAT IT IS, (iv) CHANGED (OR HAS
HAD CHANGED) ITS ORGANIZATION IDENTIFICATION NUMBER, IF ANY, ISSUED BY ITS
JURISDICTION OR ORGANIZATION, (v) CHANGED ITS JURISDICTION OF ORGANIZATION, (vi)
CHANGED THE END OF ITS FISCAL YEAR, OR (vii) FORMED ANY NEW SUBSIDIARY OR
ENTERED INTO ANY PARTNERSHIP OR JOINT VENTURE WITH ANY PERSON, SUCH CHANGE SHALL
BE SPECIFIED BELOW; IF NO SUCH CHANGE HAS BEEN MADE, STATE "NONE."
SCHEDULE 4
Exhibit 4.9(l)
CAPITALIZATION CHANGES
IF WITH RESPECT TO ANY CREDIT PARTY THERE HAS BEEN A CHANGE IN AUTHORIZED STOCK,
ISSUED AND OUTSTANDING STOCK OR THE IDENTITY OF THE HOLDERS OF ANY STOCK, OR IF
WITH RESPECT TO ANY CREDIT PARTY THERE HAS BEEN A CHANGE PERTAINING TO
PREEMPTIVE RIGHTS OR ANY OTHER OUTSTANDING RIGHTS, OPTIONS, WARRANTS, CONVERSION
RIGHTS OR SIMILAR AGREEMENTS OR UNDERSTANDINGS FOR THE PURCHASE OR ACQUISITION
OF ANY STOCK, SUCH CHANGE SHALL BE SET FORTH BELOW; IF NO SUCH CHANGE HAS
OCCURRED, STATE "NONE."
EXHIBIT 8.1
to
CREDIT AGREEMENT
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Agreement") is made as of
___________ __, ____ by and between __________________________________
("Assignor Lender") and ________________________ ("Assignee Lender") and
acknowledged and consented to by GENERAL ELECTRIC CAPITAL CORPORATION, as agent
("Agent"). All capitalized terms used in this Agreement and not otherwise
defined herein will have the respective meanings set forth in the Credit
Agreement as hereinafter defined.
RECITALS:
WHEREAS, PENHALL COMPANY, a California corporation, PENHALL
LEASING LLC, a California limited liability company, BOB MACK COMPANY, a
California corporation, PENHALL INTERNATIONAL CORP., an Arizona corporation, and
PENHALL INVESTMENTS, INC., a California corporation ("Credit Parties"), Agent,
Assignor Lender and other Persons signatory thereto as Lenders have entered into
that certain Credit Agreement dated as of May 22, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
pursuant to which Assignor Lender has agreed to make certain Loans to, and incur
certain Letter of Credit Obligations for, Borrowers;
WHEREAS, Assignor Lender desires to assign to Assignee Lender
[ALL/A PORTION] of its interest in the Loans (as described below), the Letter of
Credit Obligations and the Collateral and to delegate to Assignee Lender [ALL/A
PORTION] of its Commitments and other duties with respect to such Loans, Letter
of Credit Obligations and Collateral;
WHEREAS, Assignee Lender desires to become a Lender under the
Credit Agreement and to accept such assignment and delegation from Assignor
Lender; and
WHEREAS, Assignee Lender desires to appoint Agent to serve as
agent for Assignee Lender under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions, and covenants herein contained, Assignor Lender and
Assignee Lender agree as follows:
1. ASSIGNMENT, DELEGATION, AND ACCEPTANCE
1.1 Assignment. Assignor Lender hereby transfers and assigns to
Assignee Lender, without recourse and without representations or warranties of
any kind (except as set forth in Section 3.2), [ALL/SUCH PERCENTAGE] of Assignor
Lender's right, title, and interest in the Revolving Loan, Loan Documents and
the Collateral as will result in Assignee Lender having as of the Effective Date
(as hereinafter defined) a Pro Rata Share thereof, as follows:
Assignee Lender's Loans Principal Amount Pro Rata Share
- ----------------------- ---------------- --------------
Revolving Loan $____________ ____%
1.2 Delegation. Assignor Lender hereby irrevocably assigns and
delegates to Assignee Lender [ALL/A PORTION] of its Commitments and its other
duties and obligations as a Lender under the Loan Documents equivalent to the
Pro Rata Shares set forth above.
1.3 Acceptance by Assignee Lender. By its execution of this
Agreement, Assignee Lender irrevocably purchases, assumes and accepts such
assignment and delegation and agrees to be a Lender with respect to the
delegated interest under the Loan Documents and to be bound by the terms and
conditions thereof. By its execution of this Agreement, Assignor Lender agrees,
to the extent provided herein, to relinquish its rights and be released from its
obligations and duties under the Credit Agreement.
1.4 Effective Date. Such assignment and delegation by Assignor
Lender and acceptance by Assignee Lender will be effective and Assignee Lender
will become a Lender under the Loan Documents as of [THE DATE OF THIS
AGREEMENT][_____ __, ____] ("Effective Date") and upon payment of the Assigned
Amount and the Assignment Fee (as each term is defined below). [INTEREST AND
FEES ACCRUED PRIOR TO THE EFFECTIVE DATE ARE FOR THE ACCOUNT OF ASSIGNOR LENDER,
AND INTEREST AND FEES ACCRUED FROM AND AFTER THE EFFECTIVE DATE ARE FOR THE
ACCOUNT OF ASSIGNEE LENDER.]
2. INITIAL PAYMENT AND DELIVERY OF NOTES
2.1 Payment of the Assigned Amount. Assignee Lender will pay to
Assignor Lender, in immediately available funds, not later than 12:00 NOON NEW
YORK TIME on the Effective Date, an amount equal to its Pro Rata Share of the
then outstanding principal amount of the Loans as set forth above in Section 1.1
[TOGETHER WITH ACCRUED INTEREST, FEES AND OTHER AMOUNTS AS SET FORTH ON SCHEDULE
2.1] (the "Assigned Amount").
2.2 Payment of Assignment Fee. [Assignor Lender and/or Assignee
Lender] will pay to Agent, for its own account in immediately available funds,
not later than 12:00 NOON NEW YORK TIME on the Effective Date, the assignment
fee in the amount of $3,500 (the "Assignment Fee") as required pursuant to
Section 8.1(a) of the Credit Agreement.
2.3 Execution and Delivery of Notes. Following payment of the
Assigned Amount and the Assignment Fee, Assignor Lender will deliver to Agent
the Notes previously delivered to Assignor Lender for redelivery to Borrowers
and Agent will obtain from Borrowers for delivery to [ASSIGNOR LENDER AND]
Assignee Lender, new executed Notes evidencing Assignee Lender's [AND ASSIGNOR
LENDER'S RESPECTIVE] Pro Rata Share[s] in the Loans after giving effect to the
assignment described in Section 1. Each new Note will be issued in the aggregate
maximum principal amount of the [APPLICABLE] Commitment [OF THE LENDER TO WHOM
SUCH NOTE IS ISSUED] OR [THE ASSIGNEE LENDER].
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Assignee Lender's Representations, Warranties and Covenants.
Assignee Lender hereby represents, warrants, and covenants the following to
Assignor Lender and Agent:
(a) This Agreement is a legal, valid, and binding
agreement of Assignee Lender, enforceable according to its terms;
(b) The execution and performance by Assignee Lender of
its duties and obligations under this Agreement and the Loan Documents will not
require any registration with, notice to, or consent or approval by any
Governmental Authority;
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(c) Assignee Lender is familiar with transactions of the
kind and scope reflected in the Loan Documents and in this Agreement;
(d) Assignee Lender has made its own independent
investigation and appraisal of the financial condition and affairs of each
Credit Party, has conducted its own evaluation of the Loans and Letter of Credit
Obligations, the Loan Documents and each Credit Party's creditworthiness, has
made its decision to become a Lender to Borrowers under the Credit Agreement
independently and without reliance upon Assignor Lender or Agent, and will
continue to do so;
(e) Assignee Lender is entering into this Agreement in
the ordinary course of its business, and is acquiring its interest in the Loans
and Letter of Credit Obligations for its own account and not with a view to or
for sale in connection with any subsequent distribution; provided, however, that
at all times the distribution of Assignee Lender's property shall, subject to
the terms of the Credit Agreement, be and remain within its control;
(f) No future assignment or participation granted by
Assignee Lender pursuant to Section 8.1 of the Credit Agreement will require
Assignor Lender, Agent, or Borrower to file any registration statement with the
Securities and Exchange Commission or to apply to qualify under the blue sky
laws of any state;
(g) Assignee Lender has no loans to, written or oral
agreements with, or equity or other ownership interest in any Credit Party;
(h) Assignee Lender will not enter into any written or
oral agreement with, or acquire any equity or other ownership interest in, any
Credit Party without the prior written consent of Agent; and
(i) As of the Effective Date, Assignee Lender is entitled
to receive payments of principal and interest in respect of the Obligations
without deduction for or on account of any taxes imposed by the United States of
America or any political subdivision thereof and Assignee Lender will indemnify
Agent from and against all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, or expenses that result from Assignee Lender's
failure to fulfill its obligations under the terms of Section 1.11(c) of the
Credit Agreement [or from any other inaccuracy in the foregoing].
3.2 Assignor Lender's Representations, Warranties and Covenants.
Assignor Lender hereby represents, warrants and covenants the following to
Assignee Lender:
(a) Assignor Lender is the legal and beneficial owner of
the Assigned Amount;
(b) This Agreement is a legal, valid and binding
agreement of Assignor Lender, enforceable according to its terms;
(c) The execution and performance by Assignor Lender of
its duties and obligations under this Agreement and the Loan Documents will not
require any registration with, notice to or consent or approval by any
Governmental Authority;
(d) Assignor Lender has full power and authority, and has
taken all action necessary to execute and deliver this Agreement and to fulfill
the obligations hereunder and to consummate the transactions contemplated
hereby;
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(e) Assignor Lender is the legal and beneficial owner of
the interests being assigned hereby, free and clear of any adverse claim, lien,
encumbrance, security interest, restriction on transfer, purchase option, call
or similar right of a third party; and
(f) This Assignment by Assignor Lender to Assignee Lender
complies, in all material respects, with the terms of the Loan Documents.
4. LIMITATIONS OF LIABILITY
Neither Assignor Lender (except as provided in Section 3.2) nor Agent
makes any representations or warranties of any kind, nor assumes any
responsibility or liability whatsoever, with regard to (a) the Loan Documents or
any other document or instrument furnished pursuant thereto or the Revolving
Loans, Letter of Credit Obligations or other Obligations, (b) the creation,
validity, genuineness, enforceability, sufficiency, value or collectibility of
any of them, (c) the amount, value or existence of the Collateral, (d) the
perfection or priority of any Lien upon the Collateral, or (e) the financial
condition of any Credit Party or other obligor or the performance or observance
by any Credit Party of its obligations under any of the Loan Documents. Neither
Assignor Lender nor Agent has or will have any duty, either initially or on a
continuing basis, to make any investigation, evaluation, appraisal of, or any
responsibility or liability with respect to the accuracy or completeness of, any
information provided to Assignee Lender which has been provided to Assignor
Lender or Agent by any Credit Party. Nothing in this Agreement or in the Loan
Documents shall impose upon the Assignor Lender or Agent any fiduciary
relationship in respect of the Assignee Lender.
5. FAILURE TO ENFORCE
No failure or delay on the part of Agent or Assignor Lender in the
exercise of any power, right, or privilege hereunder or under any Loan Document
will impair such power, right, or privilege or be construed to be a waiver of
any default or acquiescence therein. No single or partial exercise of any such
power, right, or privilege will preclude further exercise thereof or of any
other right, power, or privilege. All rights and remedies existing under this
Agreement are cumulative with, and not exclusive of, any rights or remedies
otherwise available.
6. NOTICES
Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given will be in writing and addressed
to the respective party as set forth below its signature hereunder, or to such
other address as the party may designate in writing to the other.
7. AMENDMENTS AND WAIVERS
No amendment, modification, termination, or waiver of any provision of
this Agreement will be effective without the written concurrence of Assignor
Lender, Agent and Assignee Lender.
8. SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law. In the event
any provision of this Agreement is or is held to be invalid, illegal, or
unenforceable under applicable law, such provision will be ineffective only to
the extent of such invalidity, illegality, or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of the
Agreement. In addition, in the event any provision of or obligation under this
Agreement is or is held to be invalid, illegal, or unenforceable in any
jurisdiction,
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the validity, legality, and enforceability of the remaining provisions or
obligations in any other jurisdictions will not in any way be affected or
impaired thereby.
9. SECTION TITLES
Section and Subsection titles in this Agreement are included for
convenience of reference only, do not constitute a part of this Agreement for
any other purpose, and have no substantive effect.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
11. APPLICABLE LAW
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE.
12. COUNTERPARTS
This Agreement and any amendments, waivers, consents, or supplements
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when so executed and delivered, will be
deemed an original and all of which shall together constitute one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
ASSIGNEE LENDER: ASSIGNOR LENDER:
__________________________________________ __________________________________________
By: ___________________________________ By: ___________________________________
Title: ___________________________________ Title: ___________________________________
Notice Address: Notice Address:
__________________________________________ __________________________________________
__________________________________________ __________________________________________
__________________________________________ __________________________________________
ACKNOWLEDGED AND CONSENTED TO:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: ___________________________________________
Title: ___________________________________________
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