EXHIBIT 10.24
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CREDIT AGREEMENT
Dated as of April 27, 2001
among
STANDARD MOTOR PRODUCTS, INC.,
MARDEVCO CREDIT CORP., and
STANRIC, INC.,
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender,
GMAC COMMERCIAL CREDIT LLC,
As Lender and Syndication Agent,
and
BANK OF AMERICA, N.A.,
as Lender and as Documentation Agent
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TABLE OF CONTENTS
PAGE
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1. AMOUNT AND TERMS OF CREDIT ..................................6
1.1. CREDIT FACILITIES........................................6
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1.2. LETTERS OF CREDIT........................................8
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1.3. PREPAYMENTS..............................................9
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1.4. USE OF PROCEEDS.........................................10
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1.5. INTEREST AND APPLICABLE MARGINS.........................10
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1.6. ELIGIBLE ACCOUNTS.......................................14
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1.7. ELIGIBLE INVENTORY......................................16
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1.8. CASH MANAGEMENT SYSTEMS.................................17
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1.9. FEES....................................................18
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1.10. RECEIPT OF PAYMENTS.....................................18
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1.11. APPLICATION AND ALLOCATION OF PAYMENTS..................19
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1.12. LOAN ACCOUNT AND ACCOUNTING.............................19
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1.13. INDEMNITY...............................................20
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1.14. ACCESS..................................................21
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1.15. TAXES...................................................21
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1.16. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY...........22
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1.17. SINGLE LOAN.............................................24
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2. CONDITIONS PRECEDENT.............................................24
2.1. CONDITIONS TO THE INITIAL LOANS.........................24
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2.2. FURTHER CONDITIONS TO EACH LOAN.........................25
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3. REPRESENTATIONS AND WARRANTIES...................................26
3.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW................26
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3.2. EXECUTIVE OFFICES, COLLATERAL LOCATIONS, FEIN...........26
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3.3. CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS.27
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3.4. FINANCIAL STATEMENTS AND PROJECTIONS....................27
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3.5. MATERIAL ADVERSE EFFECT.................................28
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3.6. OWNERSHIP OF PROPERTY; LIENS............................28
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3.7. LABOR MATTERS...........................................29
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3.8. VENTURES, SUBSIDIARIES AND AFFILIATES;
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OUTSTANDING STOCK AND INDEBTEDNESS......................29
3.9. -----------------------------------
GOVERNMENT REGULATION...................................29
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3.10. MARGIN REGULATIONS......................................30
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3.11. TAXES...................................................30
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3.12. ERISA...................................................30
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2
3.13. NO LITIGATION...........................................31
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3.14. BROKERS.................................................31
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3.15. INTELLECTUAL PROPERTY...................................32
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3.16. FULL DISCLOSURE.........................................32
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3.17. ENVIRONMENTAL MATTERS...................................32
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3.18. INSURANCE...............................................33
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3.19. DEPOSIT AND DISBURSEMENT ACCOUNTS.......................33
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3.20. GOVERNMENT CONTRACTS....................................33
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3.21. CUSTOMER AND TRADE RELATIONS............................33
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3.22. AGREEMENTS AND OTHER DOCUMENTS..........................33
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3.23. SOLVENCY................................................34
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3.24. SUBORDINATED DEBT.......................................34
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4. FINANCIAL STATEMENTS AND INFORMATION.............................34
4.1. REPORTS AND NOTICES.....................................34
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4.2. COMMUNICATION WITH ACCOUNTANTS..........................34
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5. AFFIRMATIVE COVENANTS............................................35
5.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS........35
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5.2. PAYMENT OF CHARGES......................................35
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5.3. BOOKS AND RECORDS.......................................35
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5.4. INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL.......36
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5.5. COMPLIANCE WITH LAWS....................................37
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5.6. SUPPLEMENTAL DISCLOSURE.................................37
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5.7. INTELLECTUAL PROPERTY...................................38
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5.8. ENVIRONMENTAL MATTERS...................................38
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5.9. LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS.............38
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BAILEE LETTERS AND REAL ESTATE PURCHASES
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5.10. FURTHER ASSURANCES......................................39
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6. NEGATIVE COVENANTS...............................................39
6.1. MERGERS, SUBSIDIARIES, ETC..............................39
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6.2. INVESTMENTS; LOANS AND ADVANCES.........................41
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6.3. INDEBTEDNESS............................................42
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6.4. EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS...............43
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6.5. CAPITAL STRUCTURE AND BUSINESS..........................44
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6.6. GUARANTEED INDEBTEDNESS.................................44
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6.7. LIENS...................................................44
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6.8. SALE OF STOCK AND ASSETS................................45
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6.9. ERISA...................................................45
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3
6.10. FINANCIAL COVENANTS.....................................45
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6.11. HAZARDOUS MATERIALS.....................................45
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6.12. SALE-LEASEBACKS.........................................45
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6.13. CANCELLATION OF INDEBTEDNESS............................45
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6.14. RESTRICTED PAYMENTS.....................................46
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6.15. CHANGE OF CORPORATE NAME OR LOCATION;
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CHANGE OF FISCAL YEAR ..................................46
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6.16. NO IMPAIRMENT OF INTERCOMPANY TRANSFERS.................46
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6.17. NO SPECULATIVE TRANSACTIONS.............................46
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6.18. LEASES; REAL ESTATE PURCHASES...........................47
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6.19. CHANGES RELATING TO SUBORDINATED DEBT;
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MATERIAL CONTRACTS
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6.20. INACTIVE SUBSIDIARIES...................................47
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7. TERM.............................................................47
7.1. TERMINATION.............................................47
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7.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF
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FINANCING ARRANGEMENTS..................................47
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8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES...........................48
8.2. REMEDIES................................................50
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8.3. WAIVERS BY CREDIT PARTIES...............................50
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9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT..............50
9.1. ASSIGNMENT AND PARTICIPATIONS...........................50
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9.2. APPOINTMENT OF AGENT....................................53
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9.3. AGENT'S RELIANCE, ETC...................................54
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9.4. GE CAPITAL AND AFFILIATES...............................54
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9.5. LENDER CREDIT DECISION..................................54
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9.6. INDEMNIFICATION.........................................55
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9.7. SUCCESSOR AGENT.........................................55
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9.8. SETOFF AND SHARING OF PAYMENTS..........................56
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9.9. ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION;
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ACTIONS IN CONCERT......................................56
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9.10. SYNDICATION AND DOCUMENTATION AGENTS....................58
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10. SUCCESSORS AND ASSIGNS...........................................59
10.1. SUCCESSORS AND ASSIGNS..................................59
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11. MISCELLANEOUS....................................................59
11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT...........59
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11.2. AMENDMENTS AND WAIVERS..................................59
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11.3. FEES AND EXPENSES.......................................61
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11.4. NO WAIVER...............................................62
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11.5. REMEDIES................................................63
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11.6. SEVERABILITY............................................63
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11.7. CONFLICT OF TERMS.......................................63
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11.8. CONFIDENTIALITY.........................................63
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11.9. GOVERNING LAW...........................................63
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11.10. NOTICES.................................................64
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11.11. SECTION TITLES..........................................65
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11.12. COUNTERPARTS............................................65
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11.13. WAIVER OF JURY TRIAL....................................65
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11.14. PRESS RELEASES AND RELATED MATTERS......................65
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11.15. REINSTATEMENT...........................................65
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11.16. ADVICE OF COUNSEL.......................................66
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11.17. NO STRICT CONSTRUCTION..................................66
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12. CROSS-GUARANTY...................................................66
12.1. CROSS-GUARANTY..........................................66
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12.2. WAIVERS BY BORROWERS....................................67
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12.3. BENEFIT OF GUARANTY.....................................67
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12.4. SUBORDINATION OF SUBROGATION, ETC.......................67
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12.5. ELECTION OF REMEDIES....................................67
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12.6. LIMITATION..............................................68
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12.7. CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS.......68
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12.8. LIABILITY CUMULATIVE....................................69
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5
This CREDIT AGREEMENT (this "Agreement"), dated as of April
27, 2001 among STANDARD MOTOR PRODUCTS, INC. a New York corporation ("SMP"),
STANRIC, INC., a Delaware corporation ("SI") and MARDEVCO CREDIT CORP., a New
York corporation ("MCC") (SMP, SI and MCC are sometimes collectively referred to
herein as the "BORROWERS" and individually as a "BORROWER"); the other Credit
Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation (in its individual capacity, "GE CAPITAL"), for itself, as Lender,
and as Agent for Lenders, GMAC COMMERCIAL CREDIT LLC, for itself, as Lender, and
as Syndication Agent, BANK OF AMERICA, N.A., for itself as Lender, and as
Documentation Agent, and the other Lenders signatory hereto from time to time.
RECITALS
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WHEREAS, Borrowers have requested that Lenders extend
revolving credit facilities to Borrowers of up to Two Hundred and Twenty Five
Million Dollars ($225,000,000) in the aggregate for the purpose of refinancing
certain indebtedness of Borrowers and to provide (a) working capital financing
for Borrowers, (b) funds for other general corporate purposes of Borrowers and
(c) funds for other purposes permitted hereunder; and for these purposes,
Lenders are willing to make certain loans and other extensions of credit to
Borrowers of up to such amount upon the terms and conditions set forth herein;
and
WHEREAS, Borrowers have agreed to secure all of their
obligations under the Loan Documents 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, capitalized terms used in this Agreement shall have
the meanings ascribed to them in ANNEX A and, for purposes of this Agreement and
the other Loan Documents, the rules of construction set forth in ANNEX A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "APPENDICES") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1......CREDIT FACILITIES.
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(a)......REVOLVING CREDIT FACILITY.
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(i) Subject to the terms and conditions hereof, each
Revolving Lender agrees 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"). The Pro Rata Share of the Revolving Loan of any
Revolving Lender shall not at any time exceed its separate Revolving Loan
6
Commitment. The obligations of each Revolving Lender hereunder shall be several
and not joint. Until the Commitment Termination Date, Borrowers may borrow,
repay and reborrow under this Section 1.1(a); provided that the amount of any
Revolving Credit Advance to be made at any time shall not exceed Borrowing
Availability at such time. Borrowing Availability may be reduced by Reserves
imposed by Agent in its reasonable credit judgment. Moreover, the Revolving Loan
outstanding to any Borrower shall not exceed at any time that Borrower's
separate Borrowing Base. Each Revolving Credit Advance shall be made on notice
by Borrower Representative on behalf of the applicable Borrower to one of the
representatives of Agent identified in SCHEDULE 1.1 at the address specified
therein. Any such notice must be given no later than (1) noon (New York time) on
the Business Day of the proposed Revolving Credit Advance, in the case of an
Index Rate Loan, or (2) noon (New York time) on the date which is 3 Business
Days prior to the proposed Revolving Credit Advance, in the case of a LIBOR
Loan. Each such notice (a "NOTICE OF REVOLVING CREDIT ADVANCE") must be given in
writing (by telecopy or overnight courier) substantially in the form of EXHIBIT
1.1(A)(I), and shall include the information required in such Exhibit and such
other information as may be reasonably required by Agent. If any Borrower
desires to have the Revolving Credit Advances bear interest by reference to a
LIBOR Rate, Borrower Representative must comply with SECTION 1.5(E).
(ii) Except as provided in Section 1.12, 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
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)(II) (each a "REVOLVING NOTE" and, collectively, the "REVOLVING NOTES").
Each Revolving Note shall represent the obligation of the applicable Borrower to
pay the amount of the applicable Revolving Lender's Revolving Loan Commitment
or, if less, such Revolving Lender's Pro Rata Share of the aggregate unpaid
principal amount of all Revolving Credit Advances to such Borrower together with
interest thereon as prescribed in SECTION 1.5. The entire unpaid balance of the
aggregate Revolving Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date.
(iii) Anything in this Agreement to the contrary
notwithstanding, at the request of Borrower Representative, in its discretion
Agent may (but shall have absolutely no obligation to), make Revolving Credit
Advances to Borrowers on behalf of Revolving Lenders in amounts that cause the
outstanding balance of the aggregate Revolving Loan to exceed the Aggregate
Borrowing Base or which cause the outstanding balance of the Revolving Loan
owing by any Borrower to exceed that Borrower's separate Borrowing Base (any
such excess Revolving Credit Advances are herein referred to collectively as
"OVERADVANCES") which the Agent, in its reasonable business judgment, deems
necessary or desirable (a) to preserve or protect the Collateral, or any portion
thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment
of the Revolving Loans and other Obligations, or (c) to pay any other amount
chargeable to the Borrowers pursuant to the terms of this Agreement; PROVIDED
THAT (A) no such event or occurrence shall cause or constitute a waiver of
Agent's or Revolving Lenders' right to refuse to make any further Overadvances
7
or Revolving Credit Advances, or incur any Letter of Credit Obligations, as the
case may be, at any time that an Overadvance exists, and (B) no Overadvance
shall result in a Default or Event of Default based on Borrowers' failure to
comply with SECTION 1.3(B)(I) for so long as Agent permits such Overadvance to
be outstanding, but solely with respect to the amount of such Overadvance. In
addition, Overadvances may be made even if the conditions to lending set forth
in SECTION 2 have not been met, other than the condition set forth in Section
2.1(d) which must be met on the Closing Date. All Overadvances shall constitute
Index Rate Loans, shall bear interest at the Default Rate and shall be payable
on demand. Except as otherwise provided in SECTION 1.11(B), the authority of
Agent to make Overadvances is limited to an aggregate amount not to exceed
$10,000,000 at any time, shall not cause the aggregate Revolving Loan to exceed
the Maximum Amount, and may be revoked prospectively by a written notice to
Agent signed by Requisite Lenders.
(iv) In no event, at any time, shall (x) the Aggregate
Amortizing Availability included in determining the Aggregate Borrowing Base
exceed $50,000,000, and (y) the amount included in Aggregate Amortizing
Availability based upon the Fair Market Value of Eligible Real Estate exceed 50%
of such Aggregate Amortizing Availability.
(b) INTENTIONALLY OMITTED.
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(c) INTENTIONALLY OMITTED.
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(d) RELIANCE ON NOTICES; APPOINTMENT OF BORROWER
REPRESENTATIVE. Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Notice of Revolving Credit Advance, Notice of
Conversion/Continuation or similar notice believed by Agent to be genuine. Agent
may assume that each Person executing and delivering any notice in accordance
herewith was duly authorized, unless the responsible individual acting thereon
for Agent has actual knowledge to the contrary. Each Borrower hereby designates
SMP 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, and may
give any notice or communication required or permitted to be given to any
Borrower or Borrowers hereunder to Borrower Representative on behalf of such
Borrower or Borrowers. Each Borrower agrees that each notice, election,
representation and 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 if the same had been made directly by such
Borrower.
1.2 LETTERS OF CREDIT. Subject to and in accordance with
the terms and conditions contained herein and in ANNEX B, Borrower
Representative, on behalf of the applicable Borrower, shall have the right to
request, and Revolving Lenders agree to incur, or purchase participations in,
Letter of Credit Obligations in respect of each Borrower.
8
1.3 PREPAYMENTS.
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(a) VOLUNTARY PREPAYMENTS. Borrowers may at any time on
at least 10 days' prior written notice by Borrower Representative to Agent
terminate the Revolving Loan Commitment; PROVIDED that upon such termination,
all Loans and other Obligations shall be immediately due and payable in full and
all Letter of Credit Obligations shall be cash collateralized or otherwise
satisfied in accordance with ANNEX B. Any such termination of the Revolving Loan
Commitment must be accompanied by the payment of the Fee required by SECTION
1.9(C), if any, plus the payment of any LIBOR funding breakage costs in
accordance with SECTION 1.13(B). Upon any termination of the Revolving Loan
Commitment, each Borrower's right to request Revolving Credit Advances, or
request that Letter of Credit Obligations be incurred on its behalf shall
simultaneously be terminated.
(b) MANDATORY PREPAYMENTS.
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(i) If at any time the aggregate outstanding balances
of the Revolving Loan exceed the lesser of (A) the Maximum Amount and (B) the
Aggregate Borrowing Base, Borrowers shall immediately repay the aggregate
outstanding Revolving Credit Advances to the extent required to eliminate such
excess. If any such excess remains after repayment in full of the aggregate
outstanding Revolving Credit Advances, Borrowers shall provide cash collateral
for the Letter of Credit Obligations in the manner set forth in ANNEX B to the
extent required to eliminate such excess. Furthermore, if, at any time, the
outstanding balance of the Revolving Loan of any Borrower exceeds that
Borrower's separate Borrowing Base, 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 as
described above). Notwithstanding the foregoing, any Overadvance made pursuant
to SECTION 1.1(A)(III) shall be repaid only on demand.
(ii) Within three (3) Business Days after receipt by
any Credit Party of cash proceeds of any asset disposition (excluding proceeds
of asset dispositions permitted by SECTION 6.8 (A)) or any sale of Stock of any
Subsidiary of any Credit Party (other than a sale to any Credit Party),
Borrowers shall prepay the Loans in an amount equal to all such proceeds, net of
(A) commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by Borrowers in
connection therewith (in each case, paid to non-Affiliates), (B) transfer taxes,
(C) amounts payable to holders of senior Liens (to the extent such Liens
constitute Permitted Encumbrances hereunder), if any, and (D) an appropriate
reserve for income taxes in accordance with GAAP in connection therewith. Any
such prepayment shall be applied in accordance with SECTION 1.3(C).
(iii) If any Borrower issues Stock, no later than the
Business Day following the date of receipt of the proceeds thereof, the issuing
Borrower shall prepay the Loans in an amount equal to all such proceeds, net of
underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith. Any such prepayment shall be applied in
accordance with SECTION 1.3(C).
(c) APPLICATION OF CERTAIN MANDATORY PREPAYMENTS. Any
prepayments made by any Borrower pursuant to SECTIONS 1.3(B)(II) OR (B)(III)
above shall be applied as follows: first, to Fees and reimbursable expenses of
Agent then due and payable pursuant to any of the Loan Documents; second, to
9
interest then due and payable on Revolving Credit Advances made to that
Borrower; third, to the principal balance of Revolving Credit Advances
outstanding to that Borrower until the same has been paid in full; fourth, to
any Letter of Credit Obligations of such Borrower to provide cash collateral
therefor in the manner set forth in ANNEX B, until all such Letter of Credit
Obligations have been fully cash collateralized in the manner set forth in ANNEX
B; fifth, to interest then due and payable on the Revolving Credit Advances
outstanding to each other Borrower, pro rata; sixth, to the principal balance of
the Revolving Credit Advances made to each other Borrower, pro rata, until the
same has been paid in full; seventh, to any Letter of Credit Obligations of each
other Borrower, pro rata, to provide cash collateral therefor in the manner set
forth in ANNEX B, until all such Letter of Credit Obligations have been fully
cash collateralized; eighth, to any Rate Protection Obligations which may be due
and payable by such Borrower until the same has been paid in full; and ninth, to
any Rate Protection Obligations which may be due and payable by each other
Borrower, pro rata, until the same has been paid in full. The Revolving Loan
Commitment shall not be permanently reduced by the amount of any such
prepayments.
(d) APPLICATION OF PREPAYMENTS FROM INSURANCE AND
CONDEMNATION PROCEEDS. Prepayments from insurance or condemnation proceeds in
accordance with SECTION 5.4(C) and the Mortgage(s), respectively, shall be
applied, to the Revolving Credit Advances of the Borrower that incurred such
casualties or losses. The Revolving Loan Commitment shall not be permanently
reduced by the amount of any such prepayments. If insurance or condemnation
proceeds received by a particular Borrower exceed the outstanding principal
balances of the Loans to that Borrower, or if the precise amount of insurance or
condemnation proceeds allocable to Inventory as compared to Equipment, Fixtures
and Real Estate are not otherwise determined, the allocation and application of
those proceeds shall be determined by Agent, subject to the approval of
Requisite Lenders.
(e) NO IMPLIED CONSENT. Nothing in this SECTION 1.3 shall
be construed to constitute Agent's or any Lender's consent to any transaction
that is not permitted by other provisions of this Agreement or the other Loan
Documents.
1.4 USE OF PROCEEDS. Borrowers shall utilize the proceeds
of the Revolving Loan solely for the Refinancing (and to pay any related
transaction expenses), and for the financing of Borrowers' ordinary working
capital and general corporate needs. DISCLOSURE SCHEDULE (1.4) 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 directing the Agent how funds from each source
are to be transferred to particular uses.
1.5 INTEREST AND APPLICABLE MARGINS.
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(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: the Index Rate plus the Applicable Revolver Index Margin per
annum or, at the election of Borrower Representative, the applicable LIBOR Rate
plus the Applicable Revolver LIBOR Margin per annum, based on the aggregate
Revolving Credit Advances outstanding from time to time.
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As of the Closing Date, the Applicable Margins are as follows:
Applicable Revolver Index Margin 0.50%
Applicable Revolver LIBOR Margin 2.25%
Applicable Unused Line Fee Margin 0.375%
The Applicable Margins shall be adjusted (up or down)
prospectively on a quarterly basis as determined by Borrowers' consolidated
financial performance, commencing with the first day of the first calendar month
that occurs more than 5 days after delivery of Borrowers' quarterly Financial
Statements to Lenders for the Fiscal Quarter ending September 30, 2001, and
continuing thereafter as hereinafter provided. Adjustments in Applicable Margins
shall be determined by reference to the following grids:
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IF EXCESS FORMULA AVAILABILITY: OR LEVEL OF
APPLICABLE MARGINS:
- ---------------------------------------- ------------------------------------- -------------------------------------
>$75,000,000 As of any date of determination, Level I
(a) Borrowers and their
Subsidiaries on a consolidated
basis, with respect to the 12-month
period then ended, have EBITDA of
not less than $63,000,000 and (b)
Excess Formula Availability is
greater than $50,000,000
- ---------------------------------------- ------------------------------------- -------------------------------------
>$50,000,000, but < $75,000,000 As of any date of determination, Level II
- (a) Borrowers and their
Subsidiaries on a consolidated
basis, with respect to the 12-month
period then ended, have a minimum
EBITDA of not less than $63,000,000
and (b) Excess Formula Availability
is greater than $25,000,000
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>$25,000,000, but < $50,000,000 N/A Level III
-
- ---------------------------------------- ------------------------------------- -------------------------------------
>$10,000,000, but < $25,000,000 N/A Level IV
-
- ---------------------------------------- ------------------------------------- -------------------------------------
< $10,000,000 N/A Level V
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APPLICABLE MARGINS
- --------------------------------------- -------------- --------------- -------------- -------------- ---------------
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
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Applicable Revolver 0.0% 0.25% 0.50% 0.75% 1.00%
Index Margin
- --------------------------------------- -------------- --------------- -------------- -------------- ---------------
Applicable Revolver LIBOR Margin 1.75% 2.00% 2.25% 2.50% 2.75%
- --------------------------------------- -------------- --------------- -------------- -------------- ---------------
Applicable Unused Line Fee Margin 0.25% 0.25% 0.375% 0.50% 0.50%
- --------------------------------------- -------------- --------------- -------------- -------------- ---------------
All adjustments in the Applicable Margins after September 30,
2001 shall be implemented quarterly on a prospective basis, for each calendar
month commencing at least 5 days after the date of delivery to Lenders of the
quarterly unaudited or annual audited (as applicable) Financial Statements
evidencing the need for an adjustment. Concurrently with the delivery of those
Financial Statements, Borrower Representative shall deliver to Agent and Lenders
a certificate, signed by its chief financial officer or treasurer, setting forth
in reasonable detail the basis for the continuance of, or any change in, the
Applicable Margins. Failure to timely deliver such Financial Statements shall,
in addition to any other remedy provided for in this Agreement, result in an
increase in the Applicable Margins to the highest level set forth in the
foregoing grid, until the first day of the first calendar month following the
delivery of those Financial Statements demonstrating that such an increase is
not required. If a Default or Event of Default has occurred and is continuing at
the time any reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the first day of the first calendar month
following the date on which such Default or Event of Default is waived or cured.
(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
interest and Fees 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 8.1(A), (H) OR (I) 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 Fees shall be increased by two percentage points (2%) per annum
above the rates of interest or the rate of such Letter of Credit Fees 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 that Event of Default is cured or waived and shall
be payable upon demand.
(e) Subject to the conditions precedent set forth in
SECTION 2.2, 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 from Index Rate Loans to LIBOR Loans, (iii)
convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
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breakage costs in accordance with SECTION 1.13(B) 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 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 $500,000 in excess of
such amount. Any such election must be made by noon (New York time) on the 3rd
Business Day prior to (1) the date of any proposed 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 to a LIBOR Loan for a LIBOR
Period designated by Borrower Representative in such election. If no election is
received with respect to a LIBOR Loan by noon (New York time) on the 3rd
Business Day prior to the end of the LIBOR Period with respect thereto (or if a
Default or an Event of Default has occurred and is continuing or if the
additional conditions precedent set forth in SECTION 2.2 shall not have been
satisfied), 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 telecopy 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 1.5(E). No
Loan may be made as or converted into a LIBOR Loan until the earlier of (i) 30
days after the Closing Date or (ii) completion of primary syndication of the
Revolving Loan Commitment resulting in Lenders other than GE Capital holding no
less than One Hundred and Fifty Million Dollars ($150,000,000) in Commitments.
(f) Notwithstanding anything to the contrary set forth in
this SECTION 1.5, if a court of competent jurisdiction determines in a final
order that the 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, the rate of interest payable hereunder
shall be equal to the Maximum Lawful Rate; PROVIDED, however, that if at any
time thereafter the 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 the
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, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in SECTIONS 1.5(A) THROUGH (E), unless and
until the 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 1.5(F), a court of competent
jurisdiction shall finally determine 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 in the order specified
in SECTION 1.11 and thereafter shall refund any excess to Borrowers or as a
court of competent jurisdiction may otherwise order.
1.6 ELIGIBLE ACCOUNTS. All of the Accounts owned by each
Borrower (with Accounts owned by SMP Canada being deemed, for purposes of this
Section, to be Accounts owned by SMP) and reflected in the most recent Borrowing
Base Certificate delivered by each Borrower to Agent shall be "ELIGIBLE
ACCOUNTS" for purposes of this Agreement, except (i) to the extent Accounts
which are permitted to be paid after 90 days following their original invoice
date but within 210 days following their original invoice date exceed
$115,000,000 in the aggregate at any time or from time to time such Accounts
shall not constitute Eligible Accounts to the extent of such excess, or (ii) any
Account to which any of the exclusionary criteria set forth below applies. Agent
shall have the right to establish or 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, 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 or new criteria or changes in advance rates
or the elimination of Reserves (except no such approval shall be required with
respect to the Asbestos Reserve so long as such Reserves are calculated in the
same manner as was utilized on the Closing Date) 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 a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to such Borrower's completion
of further performance under such 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 or to the extent that any credits
which have been issued have not been applied to an Account Debtor's statement or
account, but only to the extent of such defense, counterclaim, setoff, dispute,
or credit;
(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, including
pre-billed items;
(e) with respect to which an invoice, reasonably
acceptable to Agent in form and substance, has not been sent to the applicable
Account Debtor;
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(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;
(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, or any state,
county or municipality or department, agency or instrumentality 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 assignment thereof.
(i) that is the obligation of an Account Debtor located
in a foreign country other than Canada (excluding the province of Newfoundland,
the Northwest Territories and the Territory of Nunavit) unless payment thereof
is assured by a letter of credit assigned and delivered to Agent, reasonably
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 210 days following its original invoice date,
PROVIDED, THAT, so long as such scheduled payments are being made on a timely
basis, Car Quest Long Term Accounts shall not be considered ineligible under
this criterion except to the extent of any amount thereof in excess of the next
seven (7) monthly installments which are scheduled to be paid;
(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 the other criteria set forth in this SECTION 1.6 other than
with respect to Car Quest Long Term Accounts;
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(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;
(r) to the extent that such Account, together with all other
Accounts owing by such Account Debtor and its Affiliates as of any date of
determination exceed 25% of all Eligible Accounts;
(s) that is payable in any currency other than Dollars; or
(t) that is otherwise unacceptable to Agent in its reasonable
credit judgment.
1.7 ELIGIBLE INVENTORY. All of the Inventory owned by the
Borrowers (with Inventory owned by SMP Canada being deemed, for purposes of this
Section, to be Inventory owned by SMP) and reflected in the most recent
Borrowing Base Certificate delivered by each Borrower to Agent shall be
"ELIGIBLE INVENTORY" for purposes of this Agreement, except any Inventory to
which any of the exclusionary criteria set forth below applies. Agent shall have
the right to establish or modify or eliminate Reserves against Eligible
Inventory 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 of the criteria set forth below, to establish new criteria and
to adjust advance rates with respect to Eligible Inventory, in its reasonable
credit judgment, subject to the approval of Supermajority Revolving Lenders in
the case of adjustments or new criteria or changes in advance rates or the
elimination of Reserves which have the effect of making more credit available.
Eligible Inventory shall not include any Inventory 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 Inventory), except the
Liens in favor of Agent, on behalf of itself and Lenders, and Permitted
Encumbrances in favor of landlords and bailees to the extent permitted in
SECTION 5.9 hereof (subject to Reserves established by Agent in accordance with
SECTION 5.9 hereof);
(b) (i) is not located on premises owned, leased or
rented by such Borrower and set forth in DISCLOSURE SCHEDULE (3.2) or identified
pursuant to SECTION 6.15, or (ii) is stored at a leased location, unless Agent
has given its prior consent thereto and unless either (x) a reasonably
satisfactory landlord waiver has been delivered to Agent, or (y) Reserves
reasonably satisfactory to Agent 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 or 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 Reserves reasonably satisfactory to Agent have been established with
respect thereto, or (v) other than with respect to 3 locations which Borrowers
may designate in writing to Agent from time to time, is located at any site if
the aggregate book value of Inventory at any such location is less than
$100,000; or (vi) is located outside of the United States of America, its
territories or Canada;
(c) is placed on consignment or is in transit, except for
Inventory 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 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;
(e) is excess, obsolete, unsalable, shopworn, seconds
(excluding cores), damaged or unfit for sale;
(f) consists of display items or packing or shipping
materials, manufacturing supplies, work-in-process Inventory or replacement
parts;
(g) consists of goods which have been returned by the buyer
unless such returned goods consist of (i) cores or (ii) goods which have been
restored to Inventory as first quality, saleable merchandise;
(h) is not of a type held for sale in the ordinary course of
such Borrower's business;
(i) is not subject to a first priority lien in favor of Agent
on behalf of itself and Lenders;
(j) breaches any of the representations or warranties
pertaining to Inventory set forth in the Loan Documents;
(k) consists of any costs associated with "freight-in" charges
or favorable purchase price variances;
(l) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(m) is not covered by casualty insurance reasonably acceptable
to Agent; or
(n) is otherwise unacceptable to Agent in its reasonable
credit judgment.
1.8 CASH MANAGEMENT SYSTEMS. On or prior to the Closing Date,
Borrowers will establish and will maintain until the Termination Date, the cash
management systems described in ANNEX C (the "CASH MANAGEMENT SYSTEMS").
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1.9 FEES.
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(a) Borrowers shall pay to GE Capital, individually, the Fees
specified in that certain fee letter dated as of March 28, 2001 between Borrower
Representative and GE Capital (the "GE Capital Fee Letter"), at the times
specified for payment therein.
(b) As additional compensation for the Revolving Lenders,
Borrowers shall pay to Agent, 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 the Applicable Unused Line Fee
Margin per annum (calculated on the basis of a 360 day year for actual days
elapsed) 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 aggregate Revolving Loan outstanding during the period
for which such Fee is due.
(c) If Borrowers pay after acceleration or prepay the
Revolving Loan and terminate the Revolving Loan Commitment, whether voluntarily
or involuntarily and whether before or after acceleration of the Obligations, or
if any of the Commitments are otherwise terminated, Borrowers shall pay to
Agent, for the benefit of Lenders as liquidated damages and compensation for the
costs of being prepared to make funds available hereunder an amount equal to the
Applicable Percentage (as defined below) multiplied by the amount of the
Revolving Loan Commitment. As used herein, the term "Applicable Percentage"
shall mean (x) one percent (1.00%), in the case of a prepayment on or prior to
the first anniversary of the Closing Date and (y) one-half of one percent
(0.50%), in the case of a prepayment after the first anniversary of the Closing
Date but on or prior to the second anniversary thereof. The Credit Parties agree
that the Applicable Percentages are a reasonable calculation of Lenders' lost
profits in view of the difficulties and impracticality of determining actual
damages resulting from an early termination of the Commitments. Notwithstanding
the foregoing, no prepayment fee shall be payable by Borrowers if prepayment
occurs within 6 months following (a) Agent's reduction of the Eligible Accounts
or Eligible Inventory advance rates by greater than five percentage points from
the advance rates which were in effect 6 months prior to the date of such
reduction or (b) Agent's increase of Reserves by greater than ten percentage
points of the amount of Reserves outstanding 6 months prior to the time of such
increase, or (c) any combination of reductions of the Eligible Accounts advance
rate and increases in the amount of Reserves due to any increase in dilution of
Accounts during any 6 month period by greater than ten percentage points in the
aggregate.
(d) Borrowers shall pay to Agent, for the ratable benefit of
Revolving Lenders, the Letter of Credit Fee as provided in ANNEX B.
1.10 RECEIPT OF PAYMENTS. Borrowers shall make each
payment under this Agreement not later than 2:00 p.m. (New York time) on the day
when due in immediately available funds in Dollars to the Collection Account.
For purposes of computing interest and Fees and determining Borrowing
Availability as of any date, all payments shall be deemed received on the
Business Day on which immediately available funds therefor are received in the
Collection Account prior to 2:00 p.m. New York time. Payments received after
2:00 p.m. New York time on any Business Day or on a day that is not a Business
Day shall be deemed to have been received on the following Business Day.
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1.11 APPLICATION AND ALLOCATION OF PAYMENTS.
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(a) So long as no Default or Event of Default has occurred and
is continuing, (i) payments consisting of proceeds of Accounts received in the
ordinary course of business shall be applied to, the Revolving Loan; (ii)
voluntary prepayments shall be applied as determined by Borrower Representative,
subject to the provisions of SECTION 1.3(A); and (iii) mandatory prepayments
shall be applied as set forth in SECTIONS 1.3(C) AND 1.3(D). All payments and
prepayments applied to a particular Loan shall be applied ratably to the portion
thereof held by each Lender as determined by its Pro Rata Share. As to any other
payment, and as to all payments made when a Default or Event of Default has
occurred and is continuing or following the Commitment Termination Date, each
Borrower hereby irrevocably waives the right to direct the application of any
and all payments received from or on behalf of such Borrower, and each Borrower
hereby irrevocably agrees that Agent shall have the continuing exclusive right
to apply any and all such payments against the Obligations of Borrowers as Agent
may deem advisable notwithstanding any previous entry by Agent in the Loan
Account or any other books and records. In the absence of a specific
determination by Agent with respect thereto, payments shall be applied to
amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Loans, ratably in
proportion to the interest accrued as to each Loan; (3) to principal payments on
the Loans and to provide cash collateral for Letter of Credit Obligations in the
manner described in ANNEX B, ratably to the aggregate, combined principal
balance of the Loans and outstanding Letter of Credit Obligations; and (4) to
all other Obligations, including expenses of Lenders to the extent reimbursable
under SECTION 11.3.
(b) Agent is authorized to, and at its sole election may,
charge to the Revolving Loan balance on behalf of each Borrower and cause to be
paid all Fees, expenses, Charges, costs (including insurance premiums in
accordance with SECTION 5.4(a)) and interest and principal, other than principal
of the REVOLVING Loan, owing by Borrowers under this Agreement or any of the
other Loan Documents if and to the extent Borrowers fail to pay promptly any
such amounts as and when due, even if the amount of such charges would exceed
Borrowing Availability at such time or would cause the balance of the Revolving
Loan to any Borrower to exceed such Borrower's separate Borrowing Base after
giving effect to such charges. At Agent's option and to the extent permitted by
law, any charges so made shall constitute part of the Revolving Loan hereunder.
1.12 LOAN ACCOUNT AND ACCOUNTING. 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 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 each Borrower; 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),
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within 60 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.
1.13 INDEMNITY.
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(a) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and hold harmless each of Agent, Lenders and
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) that may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, "Indemnified Liabilities"); PROVIDED, that no such
Credit Party shall be liable for any indemnification to an Indemnified Person to
the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from that Indemnified Person's gross negligence or
willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY
OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on
the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
occurs as a result of acceleration, by operation of law or otherwise); (ii) any
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) any Borrower shall refuse to accept any
borrowing of, or shall request a termination of, any borrowing of, conversion
into or continuation of, LIBOR Loans after Borrower Representative has given
notice requesting the same in accordance herewith; or (iv) any Borrower shall
fail to make any prepayment of a LIBOR Loan after Borrower Representative has
given a notice thereof in accordance herewith, then Borrowers shall jointly and
severally indemnify and hold harmless each Lender from and against all losses,
costs and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
20
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; PROVIDED, 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 this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this SECTION 1.13(B), and
(absent manifest error) such calculation shall be binding on the parties hereto
unless Borrower Representative shall object in writing within 10 Business Days
of receipt thereof, specifying the basis for such objection in detail.
1.14.....ACCESS. Each Credit Party that is a party hereto
shall, during normal business hours, from time to time upon at least two
Business Day's prior notice as frequently as Agent reasonably determines to be
appropriate: (a) provide Agent and any of its officers, employees and agents
access to its properties, facilities, advisors and employees (including
officers) of each Credit Party and to the Collateral, (b) permit Agent, and any
of its officers, employees and agents, to inspect, audit and make extracts from
any Credit Party's books and records, and (c) permit Agent, and its officers,
employees and agents, to inspect, review, evaluate and make test verifications
and counts of the Accounts, Inventory and other Collateral of any Credit Party;
provided, however, that unless a Default or Event of Default has occurred and is
continuing, Borrowers' obligation to pay for such audits shall be limited to
three per calendar year. If a Default or Event of Default has occurred and is
continuing or if access is necessary to preserve or protect the Collateral as
determined by Agent, each such Credit Party shall provide such access to Agent
and to each Lender at all times and without advance notice. Furthermore, so long
as any Event of Default has occurred and is continuing, Borrowers shall provide
Agent and each Lender with access to their suppliers and customers. Each Credit
Party shall make available to Agent and its counsel, as quickly as is possible
under the circumstances, originals or copies of all books and records that Agent
may reasonably request. Each Credit Party shall deliver any document or
instrument necessary for Agent, as it may from time to time reasonably request,
to obtain records from any service bureau or other Person that maintains records
for such Credit Party, and shall maintain duplicate records or supporting
documentation on media, including computer tapes and discs owned by such Credit
Party. Agent will give Lenders at least 5 days' prior written notice of
regularly scheduled audits. Representatives of other Lenders may accompany
Agent's representatives on regularly scheduled audits at no charge to Borrowers.
1.15 TAXES.
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(a) Any and all payments by each Borrower hereunder
(including any payments made pursuant to SECTION 12) or under the Notes shall be
made, in accordance with this SECTION 1.15, free and clear of and without
deduction for any and all present or future Taxes. If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder (including any sum payable pursuant to SECTION 12) or under the Notes,
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(i) the sum payable shall be increased as much as shall be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 1.15) Agent or Lenders, as
applicable, receive an amount equal to the sum they would have received had no
such deductions been made, (ii) such Borrower shall make such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within 30 days after the date
of any payment of Taxes, Borrower Representative shall furnish to Agent the
original or a certified copy of a receipt evidencing payment thereof. Agent and
Lenders shall not be obligated to return or refund any amounts received pursuant
to this Section.
(b) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and, within 10 days of demand therefor, pay
Agent and each Lender for the full amount of Taxes (including any Taxes imposed
by any jurisdiction on amounts payable under this SECTION 1.15) paid by Agent or
such Lender, as appropriate, and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes were correctly or legally asserted.
(c) Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower Representative and Agent a properly completed and executed IRS Form
W-8ECI or Form W-8BEN or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Lender's entitlement to such exemption (a "Certificate of Exemption"). Any
foreign Person that seeks to become a Lender under this Agreement shall provide
a Certificate of Exemption to Borrower Representative and Agent prior to
becoming a Lender hereunder. No foreign Person may become a Lender hereunder if
such Person fails to deliver a Certificate of Exemption in advance of becoming a
Lender.
1.16 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY.
---------------------------------------------
(a) If any Lender shall have determined that 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 with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrowers
shall from time to time upon demand by such Lender (with a copy of such demand
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 that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower Representative and to Agent shall, absent
manifest error, be final, conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any
change in any law or regulation (or any change in the interpretation thereof) or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
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amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower
Representative and to Agent by such Lender, shall be conclusive and binding on
Borrowers for all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred to
above which would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this SECTION 1.16(B).
(c) Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in any law or regulation (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 5 Business Days after the delivery of such notice and demand, converts
all LIBOR Loans into Index Rate Loans.
(d) Within 15 days after receipt by Borrower
Representative of written notice and demand from any Lender (an "Affected
Lender") for payment of additional amounts or increased costs as provided in
SECTIONS 1.15(A), 1.16(A) OR 1.16(B), Borrower Representative may, at its
option, notify Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Default or Event of Default has occurred and is
continuing, Borrower Representative, with the consent of Agent, may obtain, at
Borrowers' expense, a replacement Lender ("Replacement Lender") for the Affected
Lender, which Replacement Lender must be reasonably satisfactory to Agent. If
Borrowers obtain a Replacement Lender within 90 days following notice of their
intention to do so, the Affected Lender must sell and assign its Loans and
Commitments to such Replacement Lender for an amount equal to the principal
balance of all Loans held by the Affected Lender and all accrued interest and
Fees with respect thereto through the date of such sale; PROVIDED, that
Borrowers shall have reimbursed such Affected Lender for the additional amounts
or increased costs that it is entitled to receive under this Agreement through
the date of such sale and assignment. Notwithstanding the foregoing, Borrowers
shall not have the right to obtain a Replacement Lender if the Affected Lender
rescinds its demand for increased costs or additional amounts (effective
retroactively to the date of such demand) within 15 days following its receipt
of Borrowers' notice of intention to replace such Affected Lender. Furthermore,
if Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within 90 days thereafter, Borrowers' rights under this SECTION
1.16(D) with respect to the specific Lender's demand shall terminate and
Borrowers shall promptly pay all increased costs or additional amounts demanded
by such Affected Lender pursuant to SECTIONS 1.15(A), 1.16(A) AND 1.16(B).
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1.17.....SINGLE LOAN. All Loans to each Borrower and all of
the other Obligations of each Borrower arising under this Agreement and the
other Loan Documents shall constitute one general obligation of that Borrower
secured, until the Termination Date, by all of the Collateral.
2. CONDITIONS PRECEDENT
2.1 CONDITIONS TO THE INITIAL LOANS. No Lender shall be
obligated to make any Loan or incur any Letter of Credit Obligations on the
Closing Date, or to take, fulfill, or perform any other action hereunder, until
the following conditions have been satisfied or provided for in a manner
satisfactory to Agent, or waived in writing by Agent and Lenders:
(a) CREDIT AGREEMENT; LOAN DOCUMENTS. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrowers, each other Credit Party, Agent and Lenders; and Agent shall have
received such documents, instruments, agreements and legal opinions as Agent
shall reasonably request in connection with the transactions contemplated by
this Agreement and the other Loan Documents, including all those listed in the
Closing Checklist attached hereto as ANNEX D, each in form and substance
reasonably satisfactory to Agent.
(b) REPAYMENT OF PRIOR LENDER OBLIGATIONS; SATISFACTION
OF OUTSTANDING L/CS. (i) Agent shall have received a fully executed original of
a pay-off letter reasonably satisfactory to Agent confirming that all of the
Prior Lender Obligations will be repaid in full from the proceeds of the initial
Revolving Credit Advance and all Liens upon any of the property of Borrowers or
any of their Subsidiaries in favor of Prior Lender shall be terminated by Prior
Lender immediately upon such payment; and (ii) all letters of credit issued or
guaranteed by Prior Lender shall have been cash collateralized, supported by a
guaranty of Agent or supported by a Letter of Credit issued pursuant to ANNEX B,
as mutually agreed upon by Agent, Borrowers and Prior Lender.
(c) APPROVALS. Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the Related Transactions or (ii) an officer's
certificate in form and substance reasonably satisfactory to Agent affirming
that no such consents or approvals are required.
(d) OPENING AVAILABILITY. Borrowers, collectively, shall
have Borrowing Availability, as determined by Agent after giving effect to the
initial Revolving Credit Advance made to each Borrower, the incurrence of any
initial Letter of Credit Obligations and the consummation of the Related
Transactions (on a pro forma basis, with trade payables being paid consistent
with past practices, and expenses and liabilities being paid in the ordinary
course of business, without acceleration of sales and without deterioration of
working capital) of at least $22,500,000.
(e) PAYMENT OF FEES. Borrowers shall have paid the Fees
required to be paid on the Closing Date in the respective amounts specified in
SECTION 1.9 (including the Fees specified in the GE Capital Fee Letter), and
shall have reimbursed Agent for all fees, costs and expenses of closing
presented as of the Closing Date.
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(f) CAPITAL STRUCTURE: OTHER INDEBTEDNESS. The capital
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party not being repaid pursuant to the Refinancing shall be
acceptable to Agent in its reasonable discretion.
(g) DUE DILIGENCE. Agent shall have completed its
business and legal due diligence, including a roll forward of its previous
Collateral audit, with results reasonably satisfactory to Agent.
(h) CONSUMMATION OF RELATED TRANSACTIONS. Agent shall
have received fully executed copies of each of the Related Transactions
Documents, each of which shall be in form and substance reasonably satisfactory
to Agent and its counsel. The Related Transactions shall have been consummated
in accordance with the terms of the Related Transactions Documents.
(i) SUBORDINATED DEBT. No less than $90,000,000 shall be
outstanding under the Subordinated Debt Documents after giving effect to the
Related Transactions.
(j) ASBESTOS ASSESSMENTS. Agent shall have received an
assessment, in form and substance satisfactory to it, from a consulting firm
acceptable to Agent specializing in determining and assessing potential
liability arising out of asbestos claims.
2.2 FURTHER CONDITIONS TO EACH LOAN. Except as otherwise
expressly provided herein, no Lender shall be obligated to fund any Advance,
convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit
Obligation, if, as of the date thereof:
(a) any representation or warranty by any Credit Party
contained herein or in any other Loan Document is untrue or incorrect as of such
date, except to the extent that such representation or warranty expressly
relates to an earlier date and except for changes therein expressly permitted or
expressly contemplated by this Agreement and Agent or Requisite Lenders have
determined not to make such Advance, convert or continue any Loan as LIBOR Loan
or incur such Letter of Credit Obligation as a result of the fact that such
warranty or representation is untrue or incorrect;
(b) any event or circumstance having a Material Adverse
Effect has occurred since the date hereof as determined by the Requisite Lenders
and Agent or Requisite Lenders have determined not to make such Advance, convert
or continue any Loan as a LIBOR Loan or incur such Letter of Credit Obligation
as a result of the fact that such event or circumstance has occurred;
(c) 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, convert or continue any Loan as a LIBOR Loan
or incur any Letter of Credit Obligation as a result of that Default or Event of
Default; or
25
(d) after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligations), (i) the outstanding principal amount of
the aggregate Revolving Loan would exceed the lesser of the Aggregate Borrowing
Base and the Maximum Amount or (ii) the outstanding principal amount of the
Revolving Loan of the applicable Borrower would exceed such Borrower's separate
Borrowing Base.
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 Borrowers that the conditions
in this SECTION 2.2 have been satisfied and (ii) a reaffirmation by Borrowers of
the cross-guaranty provisions set forth in SECTION 12 and of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of
Credit Obligations, the Credit Parties executing this Agreement, jointly and
severally, make the following representations and warranties to Agent and each
Lender with respect to all Credit Parties, each and all of which shall survive
the execution and delivery of this Agreement.
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Credit
Party (a) is a corporation, limited liability company or limited partnership
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization set forth in DISCLOSURE
SCHEDULE (3.1); (b) is duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not result in exposure to losses, damages or
liabilities in excess of $100,000; (c) has the requisite power and authority and
the legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its
business as now, heretofore and proposed to be conducted; (d) subject to
specific representations regarding Environmental Laws and any scheduled
exceptions thereto, has all material licenses, permits, consents or approvals
from or by, and has made all material filings with, and has given all material
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (e) is in compliance with
its charter and bylaws or partnership or operating agreement, as applicable; and
(f) subject to specific representations and any scheduled exceptions thereto set
forth herein regarding ERISA, Environmental Laws, tax and other laws, is in
compliance with all applicable provisions of law, except where the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
3.2 EXECUTIVE OFFICES, COLLATERAL LOCATIONS, FEIN. As of
the Closing Date, the current location of each Credit Party's chief executive
office and the warehouses and premises at which any Collateral is located are
set forth in DISCLOSURE SCHEDULE (3.2), and, except as set forth in DISCLOSURE
SCHEDULE (3.2), none of such locations has changed within the 12 months
preceding the Closing Date. In addition, DISCLOSURE SCHEDULE (3.2) lists the
federal employer identification number of each Credit Party.
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3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE
OBLIGATIONS. The execution, delivery and performance by each Credit Party of the
Loan Documents to which it is a party and the creation of all Liens provided for
therein: (a) are within such Person's power; (b) have been duly authorized by
all necessary corporate, limited liability company or limited partnership
action; (c) do not contravene any provision of such Person's charter, bylaws or
partnership or operating agreement as applicable; (d) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Person is a party or by which such Person or any of its
property is bound; (f) do not result in the creation or imposition of any Lien
upon any of the property of such Person other than those in favor of Agent, on
behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in SECTION 2.1(C), all of which will have been
duly obtained, made or complied with prior to the Closing Date. Each of the Loan
Documents shall be duly executed and delivered by each Credit Party that is a
party thereto and each such Loan Document shall constitute a legal, valid and
binding obligation of such Credit Party enforceable against it in accordance
with its terms.
3.4 FINANCIAL STATEMENTS AND PROJECTIONS. Except for the
Projections, all Financial Statements concerning Borrowers and their respective
Subsidiaries that are referred to below have been prepared in accordance with
GAAP consistently applied throughout the periods covered (except as disclosed
therein and except, with respect to unaudited Financial Statements, for the
absence of footnotes and normal year-end audit adjustments) and present fairly
in all material respects the financial position of the Persons covered thereby
as at the dates thereof and the results of their operations and cash flows for
the periods then ended.
(a) FINANCIAL STATEMENTS. The following Financial
Statements attached hereto as DISCLOSURE SCHEDULE (3.4(A)) have been delivered
on the date hereof:
(i) The audited consolidated and consolidating
balance sheets at December 31, 2000 and the related statements of income and
cash flows of Borrowers and their Subsidiaries for the Fiscal Years then ended,
certified by KPMG LLP.
(ii) The unaudited balance sheet(s) at February 28,
2001 and the related statement(s) of income and cash flows of Borrowers and
their Subsidiaries for the two months then ended.
(b) PRO FORMA. The Pro Forma delivered on the date hereof and
attached hereto as DISCLOSURE SCHEDULE (3.4(B)) was prepared by Borrowers giving
pro forma effect to the Related Transactions, was based on the projected
consolidated and consolidating balance sheets of Borrowers and their
Subsidiaries dated March 31, 2001, and was prepared in accordance with GAAP,
with only such adjustments thereto as would be required in accordance with GAAP.
(c) PROJECTIONS. The Projections delivered on the date hereof
and attached hereto as DISCLOSURE SCHEDULE (3.4(C)) have been prepared by
Borrowers in light of the past operations of their businesses and reflect
projections for the three year period beginning on January 1, 2001 on a
month-by-month basis for the first year and on a year-by-year basis thereafter.
The Projections are based upon estimates and assumptions stated therein, all of
which Borrowers believe to be reasonable and fair in light of current conditions
and current facts known to Borrowers and, as of the Closing Date, reflect
Borrowers' good faith and reasonable estimates of the future financial
performance of Borrowers and of the other information projected therein for the
period set forth therein.
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3.5 MATERIAL ADVERSE EFFECT. Between December 31, 2000 and the
Closing Date: (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (b) no contract, lease or other agreement or instrument has been
entered into by any Credit Party or has become binding upon any Credit Party's
assets and no law or regulation applicable to any Credit Party has been adopted
that in either case has had or could reasonably be expected to have a Material
Adverse Effect, and (c) no Credit Party is in default and to the best of
Borrowers' knowledge no third party is in default under any material contract,
lease or other agreement or instrument, which defaults alone or in the aggregate
could reasonably be expected to have a Material Adverse Effect. Between December
31, 2000 and the Closing Date no event has occurred, that alone or together with
other events, could reasonably be expected to have a Material Adverse Effect.
3.6 OWNERSHIP OF PROPERTY; LIENS. As of the Closing Date, the
real estate ("REAL ESTATE") listed in DISCLOSURE SCHEDULE (3.6) constitutes all
of the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned Real
Estate, and valid leasehold interests in all of its leased Real Estate, all as
described on DISCLOSURE SCHEDULE (3.6), and copies of all such leases or a
summary of terms thereof reasonably satisfactory to Agent have been delivered to
Agent. DISCLOSURE SCHEDULE (3.6) further describes any Real Estate with respect
to which any Credit Party is a lessor, sublessor or assignor as of the Closing
Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and except as disclosed on
DISCLOSURE SCHEDULE 3.17, there are no facts, circumstances or conditions known
to any Credit Party that may result in any Liens (including Liens arising under
Environmental Laws) other than Permitted Encumbrances. Each Credit Party has
received all deeds, 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 right, title and interest in and to all
such Real Estate and other properties and assets. DISCLOSURE SCHEDULE (3.6) also
describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any Real Estate. As of the Closing Date, no
portion of any Credit Party's 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.
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3.7 LABOR MATTERS. As of the Closing Date (a) no strikes or
other material labor disputes against any Credit Party are pending or, to any
Credit Party's knowledge, threatened; (b) hours worked by and payment made to
employees of each Credit Party comply with the Fair Labor Standards Act and each
other federal, state, local or foreign law applicable to such matters; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
except as set forth in DISCLOSURE SCHEDULE (3.7), no Credit Party is a party to
or bound by any collective bargaining agreement, management agreement,
consulting agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement
or arrangement (and true and complete copies of any agreements described on
DISCLOSURE SCHEDULE (3.7) have been delivered to Agent); (e) there is no
organizing activity involving any Credit Party pending or, to any Credit Party's
knowledge, threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in DISCLOSURE SCHEDULE (3.7), there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.
3.8 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK
AND INDEBTEDNESS. Except as set forth in DISCLOSURE SCHEDULE (3.8), as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Credit Party is owned by
each of the Stockholders and in the amounts set forth in DISCLOSURE SCHEDULE
(3.8). Except as set forth in DISCLOSURE SCHEDULE (3.8), there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness and
Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for
the Obligations) is described in SECTION 6.3 (including DISCLOSURE SCHEDULE
(6.3)). None of the Credit Parties or their Subsidiaries identified on
DISCLOSURE SCHEDULE (3.8) as "inactive" has any material assets (except Stock of
their Subsidiaries) or any Indebtedness or Guaranteed Indebtedness or conducts
any trade or business.
3.9 GOVERNMENT REGULATION. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder. The making of the Loans by Lenders to
Borrowers, the incurrence of the Letter of Credit Obligations on behalf of
Borrowers, the application of the proceeds thereof and repayment thereof and the
consummation of the Related Transactions will not violate any provision of any
such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.
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3.10 MARGIN REGULATIONS. No Credit Party is engaged, nor
will it engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" as such terms are defined in Regulation U of the Federal Reserve
Board as now and from time to time hereafter in effect (such securities being
referred to herein as "MARGIN STOCK"). No Credit Party owns any Margin Stock,
and none of the proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness that was originally incurred to purchase or carry any Margin Stock
or for any other purpose that might cause any of the Loans or other extensions
of credit under this Agreement to be considered a "purpose credit" within the
meaning of Regulations T, U or X of the Federal Reserve Board. No Credit Party
will take or permit to be taken any action that might cause any Loan Document to
violate any regulation of the Federal Reserve Board.
3.11 TAXES. All tax returns, reports and statements,
including information returns, required by any Governmental Authority to be
filed by any Credit Party have been filed with the appropriate Governmental
Authority and all Charges have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof (or
any such fine, penalty, interest, late charge or loss has been paid), excluding
(a) Charges or other amounts being contested in accordance with SECTION 5.2(B)
and (b) filings relating to local qualifications to do business where the
exposure to losses, damages or liabilities is less than $25,000 in the aggregate
for all jurisdictions. Proper and accurate amounts have been withheld by each
Credit Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign laws and such
withholdings have been timely paid to the respective Governmental Authorities.
DISCLOSURE SCHEDULE (3.11) sets forth as of the Closing Date those taxable years
for which any Credit Party's tax returns are currently being audited by the IRS
or any other applicable Governmental Authority, and any assessments or
threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described in DISCLOSURE SCHEDULE (3.11), no Credit Party
has executed or filed with the IRS or any other Governmental Authority any
agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any Charges. None of the Credit Parties
and their respective predecessors are liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to each Credit Party's
knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed
or been requested to make any adjustment under IRC Section 481(a), by reason of
a change in accounting method or otherwise, which would have a Material Adverse
Effect.
3.12 ERISA.
-----
(a) DISCLOSURE SCHEDULE (3.12) lists (i) all ERISA
Affiliates and (ii) 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 IRS/DOL 5500-series form for each such Plan, have been
made available 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 would cause the loss of such qualification or tax-exempt status. Each Plan
30
is in compliance 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 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 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 DISCLOSURE SCHEDULE (3.12):
(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 Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any 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 4041(b)(1) of ERISA, nor
has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at
any time within the last 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 (determined at such
time); (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 Standard & Poor's Corporation or
an equivalent rating by another nationally recognized rating agency.
3.13 NO LITIGATION. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party, before any Governmental Authority or
before any arbitrator or panel of arbitrators (collectively, "LITIGATION"), (a)
that challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) that, excluding Asbestos Claims in an aggregate amount equal to the
Asbestos Reserve, has a reasonable risk of being determined adversely to any
Credit Party and that, if so determined, could be reasonably be expected to have
a Material Adverse Effect. Except as set forth on DISCLOSURE SCHEDULE (3.13), as
of the Closing Date there is no Litigation pending or, to any Credit Party's
knowledge, threatened, that seeks damages in excess of $100,000 or injunctive
relief against, or alleges criminal misconduct of, any Credit Party.
3.14 BROKERS. No broker or finder 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.
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3.15 INTELLECTUAL PROPERTY. As of the Closing Date, each
Credit Party owns or has rights to use all Intellectual Property necessary to
continue to conduct its business as now or heretofore conducted by it or
proposed to be conducted by it, and each Patent, Trademark, Copyright and
License is listed, together with application or registration numbers, as
applicable, in DISCLOSURE SCHEDULE (3.15). Each Credit Party uses reasonable
commercial efforts to conduct its business and affairs so as to avoid
infringement of or interference with any Intellectual Property of any other
Person in any material respect. Except as set forth in DISCLOSURE SCHEDULE
(3.15), no Credit Party is aware of any infringement claim by any other Person
with respect to any Intellectual Property.
3.16 FULL DISCLOSURE. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other written reports from time to time
delivered hereunder or any written statement furnished by or on behalf of any
Credit Party to Agent or any Lender pursuant to the terms of this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made. The Liens granted to Agent, on behalf of itself and Lenders, pursuant
to the Collateral Documents will at all times be fully perfected first priority
Liens in and to the Collateral described therein, subject, as to priority, only
to Permitted Encumbrances.
3.17 ENVIRONMENTAL MATTERS.
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(a) Except as set forth in DISCLOSURE SCHEDULE (3.17), as
of the Closing Date: (i) the Real Estate is free of contamination from any
Hazardous Material except for such contamination that would not adversely impact
the value or marketability of such Real Estate and that would not result in
Environmental Liabilities that could reasonably be expected to exceed $200,000;
(ii) no Credit Party has caused or suffered to occur any Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate in
violation of Environmental Laws and Environmental Permits; (iii) the Credit
Parties are and have been in compliance with all Environmental Laws, except for
such noncompliance that would not result in Environmental Liabilities which
could reasonably be expected to exceed $200,000; (iv) the Credit Parties 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 would not result in
Environmental Liabilities that could reasonably be expected to exceed $200,000,
and all such Environmental Permits are valid, uncontested and in good standing;
(v) no Credit Party is involved in operations or knows of any facts,
32
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $200,000, and no Credit Party has
consented to any current or former tenant or occupant of the Real Estate
engaging in any such operations; (vi) there is no 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 $200,000 or
injunctive relief against, or that alleges criminal misconduct by, any Credit
Party; (vii) no notice has been received by any Credit Party identifying it 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 Credit Party 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, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now, and has not ever been, in control of any of the Real
Estate or any Credit Party's affairs, and (ii) does not have the capacity
through the provisions of the Loan Documents or otherwise to influence any
Credit Party's conduct with respect to the ownership, operation or management of
any of its Real Estate or compliance with Environmental Laws or Environmental
Permits.
3.18 INSURANCE. DISCLOSURE SCHEDULE (3.18) 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 terms of each such
policy.
3.19 DEPOSIT AND DISBURSEMENT ACCOUNTS. DISCLOSURE
SCHEDULE (3.19) lists all banks and other financial institutions at which any
Credit Party maintains deposit 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.
3.20 GOVERNMENT CONTRACTS. Except as set forth in
DISCLOSURE SCHEDULE (3.20), as of the Closing Date, no Credit Party is a party
to any contract or agreement with any Governmental Authority and no Credit
Party's Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C.
Section 3727) or any similar state or local law.
3.21 CUSTOMER AND TRADE RELATIONS. As of the Closing Date,
there exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in: the business relationship of any Credit Party with any customer or group of
customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party; or the business
relationship of any Credit Party with any supplier material to its operations.
3.22 AGREEMENTS AND OTHER DOCUMENTS. DISCLOSURE SCHEDULE
(3.22) accurately lists each of the following agreements or documents to which
any Credit Party is subject as of the Closing Date: supply agreements and
purchase agreements not terminable by such Credit Party within 60 days following
written notice issued by such Credit Party and involving transactions in excess
of $3,000,000 with respect to vendor supply agreements and $6,000,000 with
respect to customer purchase agreements, in each case 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 be reasonably likely 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.
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3.23 SOLVENCY. Both before and after giving effect to (a)
the Loans and Letter of Credit Obligations to be made or incurred on the Closing
Date or such other date as Loans and Letter of Credit Obligations requested
hereunder are made or incurred, (b) the disbursement of the proceeds of such
Loans pursuant to the instructions of Borrower Representative; (c) the
Refinancing and the consummation of the other Related Transactions; and (d) the
payment and accrual of all transaction costs in connection with the foregoing,
each Credit Party is and will be Solvent.
3.24 SUBORDINATED DEBT. As of the Closing Date, Borrowers
have delivered to Agent a complete and correct copy of the Subordinated Debt
Documents (including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto or
in connection therewith). SMP has the corporate power and authority to incur the
Indebtedness evidenced by the Subordinated Debt Documents. The subordination
provisions of the Subordinated Debt Documents are enforceable against the
holders of the Subordinated Debt Documents by Agent and Lenders. All
Obligations, including the Letter of Credit Obligations, constitute senior
Indebtedness entitled to the benefits of the subordination provisions contained
in the Subordinated Debt Documents. Borrowers acknowledge that Agent and each
Lender are entering into this Agreement and are extending the Commitments in
reliance upon the subordination provisions of the Subordinated Debt Documents
and this SECTION 3.24.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 REPORTS AND NOTICES.
-------------------
(a) Each Credit Party executing this Agreement hereby
agrees that from and after the Closing Date and until the Termination Date, it
shall deliver to Agent or to Agent and Lenders, as required, the Financial
Statements, notices, Projections and other information at the times, to the
Persons and in the manner set forth in ANNEX E.
(b) Each Credit Party executing this Agreement hereby
agrees that, from and after the Closing Date and until the Termination Date, it
shall deliver to Agent or to Agent and Lenders, as required, the various
Collateral Reports (including Borrowing Base Certificates in the form of EXHIBIT
4.1(B)) at the times, to the Persons and in the manner set forth in ANNEX F.
4.2 COMMUNICATION WITH ACCOUNTANTS. Each Credit Party
executing this Agreement authorizes (a) Agent and (b) so long as an Event of
Default has occurred and is continuing, each Lender, to communicate directly
with its independent certified public accountants, including KPMG LLP, and
authorizes and, at Agent's request, shall instruct those accountants and
advisors to disclose and make available to Agent and each Lender any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including copies of any issued
management letters) with respect to the business, financial condition and other
affairs of any Credit Party. Unless an Event of Default has occurred which is
then continuing, Agent shall (i) notify SMP at least two (2) Business Days prior
to any such communication with its accountants, and (ii) permit Borrowers to
participate in any such discussions or meetings.
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5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:
5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS.
Each Credit Party shall: do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and its rights and
franchises; continue to conduct its business substantially as now conducted or
as otherwise permitted hereunder; 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; and
transact business only in such corporate and trade names as are set forth in
DISCLOSURE SCHEDULE (5.1) or reported in accordance with SECTION 6.15.
5.2 PAYMENT OF CHARGES.
------------------
(a) Subject to SECTION 5.2(B), each Credit Party shall
pay and discharge or cause to be paid and discharged promptly all Charges
payable by it, including (i) Charges imposed upon it, its income and profits, or
any of its property (real, personal or mixed) and all Charges with respect to
tax, social security and unemployment withholding with respect to its employees,
(ii) lawful claims for labor, materials, supplies and services or otherwise, and
(iii) all storage or rental charges payable to warehousemen or bailees, in each
case, before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges, Taxes or claims
described in SECTION 5.2(A); PROVIDED, that (i) adequate reserves with respect
to such contest are maintained on the books of such Credit Party, in accordance
with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges
(other than payments to warehousemen and/or bailees) that is superior to any of
the Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges; (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest; and (iv) such Credit Party shall
promptly pay or discharge such contested Charges, Taxes or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this SECTION 5.2(B) are no longer
met.
5.3 BOOKS AND RECORDS. Each Credit Party shall keep
adequate books and records with respect to its business activities in which
proper entries, reflecting all financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financial Statements attached as
DISCLOSURE SCHEDULE (3.4(A)).
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5.4 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 DISCLOSURE SCHEDULE
(3.18) 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 (or 10 days in the case of non-payment of premiums) 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 opinion, adequately protect both Agent's and Lender's 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 Event of
Default has occurred and is continuing or the anticipated insurance proceeds
exceed $500,000, as such 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 such 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. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower Representative 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 such 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 of the
Obligations in accordance with SECTION 1.3(D) (PROVIDED that in the case of
insurance proceeds pertaining to any Credit Party that is not a Borrower, such
36
insurance proceeds shall be applied ratably to all of the Loans owing by each
Borrower), or permit or require the applicable 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 $500,000 in the aggregate, Agent shall
permit the applicable Credit Party to replace, restore, repair or rebuild the
property; PROVIDED that if such Credit Party shall not have 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 1.3(D); PROVIDED,
further, that in the case of insurance proceeds pertaining to any Credit Party
that is not a Borrower, such insurance proceeds shall be applied ratably to all
of the Loans owing by each Borrower. All insurance proceeds that are to be made
available to any Borrower to replace, repair, restore or rebuild the Collateral
shall be applied by Agent to reduce the outstanding principal balance of the
Revolving Loan of such Borrower (which application shall not result in a
permanent reduction of the Revolving Loan Commitment) and upon such application,
Agent shall establish a Reserve against the separate Borrowing Base of the
affected Borrower in an amount equal to the amount of such proceeds so applied.
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 that
Borrower or Credit Party to provide funds to replace, repair, restore or rebuild
the Collateral as follows: (i) Borrower Representative shall request a Revolving
Credit Advance or a release from the cash collateral account be made to such
Borrower or Credit Party in the amount requested to be released; (ii) so long as
the conditions set forth in SECTION 2.2 have been met, 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 1.3(D); PROVIDED
that in the case of insurance proceeds pertaining to any Credit Party that is
not a Borrower, such insurance proceeds shall be applied ratably to all of the
Loans owing by each Borrower.
5.5 COMPLIANCE WITH LAWS. Each Credit Party shall comply
with all federal, state, local and foreign laws and regulations applicable to
it, including those relating to ERISA and labor matters and Environmental Laws
and Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.6 SUPPLEMENTAL DISCLOSURE. From time to time as may be
reasonably requested by Agent (which request will not be made more frequently
than once each year absent the occurrence and continuance of a Default or an
Event of Default), the Credit Parties shall supplement each Disclosure Schedule
hereto, or any representation herein or in any other Loan Document, with respect
to any matter hereafter arising that, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or that is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
37
appropriately marked to show the changes made therein); PROVIDED that (a) no
such supplement to any such Disclosure Schedule or representation shall amend,
supplement or otherwise modify any Disclosure Schedule or representation, or be
or be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by Agent and Requisite Lenders
in writing, and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.
5.7 INTELLECTUAL PROPERTY. Each Credit Party will conduct
its business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect.
5.8 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 comply 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
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 in excess of $25,000;
and (d) promptly forward to Agent a copy of any order, notice, request for
information or any written communication or report received by such Credit Party
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 $25,000, 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 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 shall, upon
Agent's written request, and subject to the requirements and restrictions
imposed by any Person from which such Credit Party leases the applicable Real
Estate, (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 reasonable 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.
5.9 LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS, BAILEE
LETTERS AND REAL ESTATE PURCHASES. Each Credit Party shall 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
38
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), any Borrower's Eligible Inventory at that location
shall, in Agent's discretion, be excluded from the Borrowing Base or 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 and no Inventory shall be shipped to a processor or
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 Inventory at
that location or the establishment of Reserves acceptable to Agent) or, unless
and until a reasonably satisfactory landlord agreement or bailee letter, as
appropriate, shall first have been obtained with respect to such location. Each
Credit Party shall timely and fully pay and perform its obligations under all
leases and other agreements with respect to each leased location or public
warehouse where any Collateral is or may be located. To the extent otherwise
permitted hereunder, if any Credit Party proposes to acquire a fee ownership
interest in Real Estate after the Closing Date, it shall first provide to Agent
a mortgage or deed of trust granting Agent a first priority Lien on such Real
Estate, together with environmental audits, mortgage title insurance commitment,
real property survey, local counsel opinion(s), and, if required by Agent,
supplemental casualty insurance and flood insurance, and such other documents,
instruments or agreements reasonably requested by Agent, in each case, in form
and substance reasonably satisfactory to Agent.
5.10 FURTHER ASSURANCES. Each Credit Party executing this
Agreement agrees that it shall and shall cause each other Credit Party to, at
such Credit Party's expense and upon request of Agent, duly execute and deliver,
or cause to be duly executed and delivered, to Agent such further instruments
and do and cause to be done such further acts as may be necessary or proper in
the reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document.
6. 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:
6.1 .MERGERS, SUBSIDIARIES, ETC. No Credit Party shall
directly or indirectly, by operation of law or otherwise, (a) except as
otherwise permitted in connection with a Permitted Acquisition, form any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire, any Person,
except that any Borrower may merge with another Borrower and any other Credit
Party may merge into any Borrower, PROVIDED that Borrower Representative shall
be the survivor of any such merger to which it is a party. Notwithstanding the
foregoing clause (b), any Borrower, may acquire or, subject to the last sentence
of this SECTION 6.1, form a Subsidiary to acquire, all or substantially all of
39
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 15 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 comprising a business, or those assets of a business, of the types
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;
(iv) Concurrently with delivery of the notice
referred to in CLAUSE (I) above, with respect to any ---------- Permitted
Acquisition involving a purchase price consideration (inclusive of any
assumption of liabilities) in excess of $5,000,000, 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 Borrowers and
their respective 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
Borrowers and their respective 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) average daily Borrowing Availability of all
Borrowers for the 30-day period preceding the consummation of
such Permitted Acquisition would have exceeded $11,500,000 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 (y) on a pro forma
basis, no Event of Default has occurred and is continuing or
would result after giving effect to such Permitted
Acquisition;
(B) updated versions of the most recently
delivered Projections covering the 1-year period commencing on
the date of such Permitted Acquisition and otherwise 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 or treasurer of each Borrower to the effect that: (w)
each Borrower (after taking into consideration all rights of
contribution and indemnity such Borrower has against each
other Subsidiary of each Borrower) will be Solvent upon the
consummation of the Permitted Acquisition; (x) the Acquisition
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Pro Forma fairly presents the financial condition of Borrowers
(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 Borrowers subsequent to the date thereof based
upon the historical performance of Borrowers and the Target
and show that Borrowers shall continue to be in compliance
with the financial covenants set forth in ANNEX G for the
3-year period thereafter; and (z) Borrowers 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;
(v) on or prior to the date of such Permitted
Acquisition, Agent shall have received copies of the acquisition agreement and
related agreements and instruments, and all opinions, certificates, lien search
results and other documents relating thereto; and
(vi) at the time of such Permitted Acquisition and
after giving effect thereto, (x) Borrowing Availability of all Borrowers exceeds
$11,500,000 and (y) no Default or Event of Default has occurred and is
continuing.
Notwithstanding the foregoing, (a) the Accounts, Inventory,
Equipment and Real Estate of the Target shall not be included in Eligible
Accounts, Eligible Inventory, Eligible Equipment and Eligible Real Estate until
(x) Agent determines, on the basis of any field examinations and appraisals
conducted by it in connection with such Permitted Acquisition, the appropriate
advance rates and Reserves applicable thereto and (y) such assets become subject
to the first priority perfected security interests of Agent and otherwise meet
the eligibility criteria which apply to such assets and (b) whether or not the
assets thereof become part of the Borrowing Base, if a new Subsidiary is formed
in connection with any Permitted Acquisition, or, if the Permitted Acquisition
is of Stock of a Person which, upon consummation thereof, would become a
Subsidiary, such Subsidiary shall (i) if a domestic Subsidiary, (x) become a
Credit Party hereunder, (y) enter into a guaranty and a security agreement, each
in form and substance identical to the Subsidiary Guaranty and the Security
Agreement, and (z) take such other action as may be reasonably requested by
Agent to have the assets of such Subsidiary become subject to the first priority
perfected security interests of Agent, and (ii) if a foreign Subsidiary, take
such action as may be reasonably requested by Agent to have 51% of the Stock of
such foreign Subsidiary to be pledged to Agent and subject to the first priority
perfected security interest of Agent.
6.2 INVESTMENTS; LOANS AND ADVANCES. Except as otherwise
expressly permitted by this SECTION 6, no Credit Party shall make or permit to
exist any investment in, or make, accrue or permit to exist loans or advances of
money to, any Person, through the direct or indirect lending of money, holding
of securities or otherwise, except that: (a) Borrowers may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to any Borrower pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of business,
so long as the aggregate amount of such Accounts so settled by Borrowers does
not exceed, without the prior written approval of Agent, $1,500,000, plus those
in existence on the Closing Date which are set forth on DISCLOSURE SCHEDULE
(6.2); and (b) each Credit Party may maintain its existing investments in its
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Subsidiaries, and joint ventures identified on DISCLOSURE SCHEDULE (6.2), as of
the Closing Date plus up to the sum of $5,000,000 during each Fiscal Year (with
respect to such joint ventures), so long as after giving effect thereto (x)
Borrowing Availability of all Borrowers exceeds $11,500,000 and (y) no Default
or Event of Default has occurred and is continuing; (c) SI and SMP HK may
maintain deposits of cash and investments in cash equivalents in an amount not
to exceed $10,000,000 at anytime in the case of SI and $5,000,000 in the case of
SMP HK; (d) MCC may maintain deposits of cash and investments in cash
equivalents in an amount not to exceed at any time the sum of $3,000,000; (e)
SMP may purchase the remaining shares of the Capital Stock of its Subsidiary
located in the United Kingdom, Standard Motor Products Holding Limited, not
owned as of the Closing Date so long as after giving effect thereto (x)
Borrowing Availability of all Borrowers exceeds $11,500,000 and (y) no Default
or Event of Default has occurred and is continuing; (f) overnight investments of
credit balances with respect to Index Rate Loans in Permitted Overnight
Investments; (g) Borrowers make loans to its Subsidiaries, so long as after
giving effect thereto (x) Borrowing Availability of all Borrowers exceeds
$11,500,000 and (y) no Default or Event of Default has occurred and is
continuing, up to the sum of $20,000,000 at any time outstanding in the
aggregate and (h) Borrowers may increase their investments in Subsidiaries,
and/or purchase a minority stock interest in other entities, not earlier than 15
Business Days after delivering to Agent a notice similar to that required under
SECTION 6.1(A)(I) together with financial statements substantially similar to an
Acquisition Pro Forma described in SECTION 6.1(A)(IV)(A) indicating that (x)
average daily Borrowing Availability of all Borrowers for the 30-day period
preceding the consummation of such investment would have exceeded $11,500,000 on
a pro forma basis (after giving effect to such investment and all Loans funded
in connection therewith as if made on the first day of such period) and (y) on a
pro forma basis, no Event of Default has occurred and is continuing or would
result after giving effect to such investment.
6.3 INDEBTEDNESS.
------------
(a) No Credit Party shall create, incur, assume or permit
to exist any Indebtedness, except (without duplication) (i) Indebtedness secured
by purchase money security interests and Capital Leases permitted in SECTION
6.7(C), (ii) the Loans and the other Obligations, (iii) unfunded pension fund
and other employee benefit plan obligations and liabilities to the extent they
are permitted to remain unfunded under applicable law, (iv) existing
Indebtedness described in DISCLOSURE SCHEDULE (6.3) 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 terms and conditions no less
favorable to any Credit Party, Agent or any Lender, as determined by Agent, than
the terms of the Indebtedness being refinanced, amended or modified, (v)
Indebtedness consisting of intercompany loans and advances made by SMP Canada or
any Borrower to any other Borrower or to SMP Canada as the case may be;
PROVIDED, that: (A) each Borrower and SMP Canada shall have executed and
delivered to each other Borrower or SMP Canada as the case may be, on the
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Closing Date, a demand note (collectively, the "Intercompany Notes") to evidence
any such intercompany Indebtedness owing at any time by such Borrower or SMP
Canada to such other Borrowers or SMP Canada, as the case may be, which
Intercompany Notes shall be in form and substance reasonably satisfactory to
Agent and shall be pledged and delivered to Agent pursuant to the applicable
Pledge Agreement or Security Agreement as additional collateral security for the
Obligations; (B) each Borrower and SMP Canada shall record all intercompany
transactions on its books and records in a manner reasonably satisfactory to
Agent; (C) the obligations of each Borrower and SMP Canada under any such
Intercompany Notes shall be subordinated to the Obligations of such Borrower or
SMP Canada hereunder in a manner reasonably satisfactory to Agent; (D) at the
time any such intercompany loan or advance is made by any Borrower to any other
Borrower or SMP Canada and after giving effect thereto, each such Borrower shall
be Solvent; (E) no Default or Event of Default would occur and be continuing
after giving effect to any such proposed intercompany loan; and (F) in the case
of any intercompany Indebtedness, the Borrower advancing such funds shall have
Borrowing Availability under its separate Borrowing Base of not less than (x)
$1,850,000 in the case of SMP, (y) $350,000 in the case of SI and (z) $50,000 in
the case of MCC, each after giving effect to such intercompany loan, and (vi)
Indebtedness consisting of intercompany loans and advances made by an Subsidiary
of any Credit Party which is not itself a Credit Party to any other Credit
Party.
(b) No Credit Party shall, 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 SECTIONS 6.8(B) OR (C); (iii) Indebtedness permitted by SECTION
6.3(A)(IV) upon any refinancing thereof in accordance with SECTION 6.3(A)(IV);
and (iv) as otherwise permitted in SECTION 6.14.
6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS.
-----------------------------------------
(a) Except as otherwise expressly permitted in this
SECTION 6 with respect to Affiliates, no Credit Party shall enter into or be a
party to any transaction with any other Credit Party or any Affiliate thereof
except in the ordinary course of and pursuant to the reasonable requirements of
such Credit Party's business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Credit Party. In
addition, if any such transaction or series of related transactions not
otherwise permitted under ARTICLE 6 involves payments in excess of $50,000 for
any single transaction or $250,000 in the aggregate for all Credit Parties, the
terms of these transactions must be disclosed in advance to Agent and Lenders.
All such transactions existing as of the date hereof are described in DISCLOSURE
SCHEDULE (6.4(A)).
(b) No Credit Party shall enter into any lending or
borrowing transaction with any employees of any Credit Party, except (i) loans
to its respective employees in the ordinary course of business consistent with
past practices for travel and entertainment expenses, (ii) loans to its
respective employees in an amount not to exceed for each employee 25% of the
employee's compensation to finance such employee's purchase of SMP Stock, (iii)
loans to executive officers to finance their purchase of SMP Stock in which
under Credit Parties' policies such officers are to have invested at any time an
amount equal to 50% of their current compensation, and (iv) loans to employees
who have been relocated at a Credit Party's request to assist them in financing
the purchase of a new residence and related moving expenses pending the sale of
their former residence, not to exceed, in the aggregate with respect to all such
43
employee or executive officer loans described in clauses (i), (ii), (iii) and
(iv) of this subsection (b), a maximum of $500,000 to any employee or executive
officer and up to a maximum of $2,000,000 in the aggregate at any one time
outstanding for all employees and executive officers.
6.5 CAPITAL STRUCTURE AND BUSINESS. No Credit Party shall
(a) make any changes in any of its business objectives, purposes or operations
that could reasonably be expected to have or result in a Material Adverse
Effect, (b) make any change in its capital structure as described in DISCLOSURE
SCHEDULE (3.8), including the issuance or sale of any shares of Stock, warrants
or other securities convertible into Stock or any revision of the terms of its
outstanding Stock; provided that (i) any Credit Party may issue or sell shares
of its stock to any other Credit Party and (ii) SMP may buy or sell shares of
its Stock for cash so long as (x) the proceeds thereof are applied in prepayment
of the Obligations as required by Section 1.3(b)(iii), and (y) no Change of
Control occurs after giving effect thereto, or (c) amend its charter or bylaws
in a manner that would adversely affect Agent or Lenders or such Credit Party's
duty or ability to repay the Obligations. No Credit Party shall engage in any
business other than the businesses currently engaged in by it or businesses
reasonably related thereto.
6.6 GUARANTEED INDEBTEDNESS. No Credit Party shall
create, incur, assume or permit to exist any Guaranteed Indebtedness except (a)
by endorsement of instruments or items of payment for deposit to the general
account of any Credit Party, and (b) for Guaranteed Indebtedness incurred for
the benefit of any other Credit Party if the primary obligation is expressly
permitted by this Agreement other than Indebtedness, if any, of a Target
existing at the time such Target is acquired.
6.7 LIENS. No Credit Party shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts or any of its other
properties or assets (whether now owned or hereafter acquired) except for (a)
Permitted Encumbrances; (b) Liens in existence on the date hereof and summarized
on DISCLOSURE SCHEDULE (6.7) securing the Indebtedness described on DISCLOSURE
SCHEDULE (6.3) and permitted refinancings, extensions and renewals thereof,
including extensions or renewals of any such Liens; PROVIDED that the principal
amount of the Indebtedness so secured is not increased and the Lien does not
attach to any other property; and (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment,
Fixtures and Real Estate acquired by any Credit Party in the ordinary course of
business, involving the incurrence of an aggregate amount of purchase money
Indebtedness and Capital Lease Obligations of not more than $10,000,000
outstanding at any one time for all such Liens (PROVIDED that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within 20 days following such purchase and does not exceed 100% of the
purchase price of the subject assets). In addition, no Credit Party shall become
a party to any agreement, note, indenture or instrument, or take any other
action, that would prohibit the creation of a Lien on any of its properties or
other assets in favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations, except operating leases, Capital Leases or
Licenses and purchase money security interests permitted hereunder which
prohibit Liens upon the assets that are subject thereto. Notwithstanding the
44
foregoing or any other provision hereof to the contrary, whether SMP's interest
in its Long Island City location is that of a leasehold interest or a fee
interest, such property shall not be subject to any Lien other than that
existing on the Closing Date in favor of the New York City Industrial
Development Agency.
6.8 SALE OF STOCK AND ASSETS. No Credit Party shall sell,
transfer, convey, assign or otherwise dispose of any of its properties or other
assets, including the Stock of any of its Subsidiaries (whether in a public or a
private offering or otherwise) or any of its Accounts, other than (a) the sale
of Inventory in the ordinary course of business, and (b) the sale, transfer,
conveyance or other disposition by a Credit Party of Equipment, Fixtures or Real
Estate that are obsolete or no longer used or useful in such Credit Party's
business and having a net book value, not exceeding $1,000,000 in the aggregate
in any Fiscal Year; (c) other Equipment and Fixtures having a net book value not
exceeding $5,000,000 in the aggregate in any Fiscal Year (d) the sale of
approximately 8 acres of vacant land located in Coppell, Texas and approximately
20 acres of vacant land located in Edwardsville, Kansas; and (e) licenses of
Intellectual Property for uses not pursued by Credit Parties or in geographic
markets not served by Credit Parties or in order to enable a supplier to
manufacture Inventory for a Credit Party as long as the proceeds from such
licenses are remitted to Agent for application to the Loans. With respect to any
disposition of assets or other properties permitted pursuant to CLAUSES (B), (C)
and (D) above, subject to SECTION 1.3(B), Agent agrees on reasonable prior
written notice to release its Lien on such assets or other properties in order
to permit the applicable Credit Party to effect such disposition and shall
execute and deliver to Borrowers, at Borrowers' expense, appropriate UCC-3
termination statements and other releases as reasonably requested by Borrowers.
6.9 ERISA. No Credit Party shall, or shall cause or
permit any ERISA Affiliate to, cause or permit to occur an event that could
result in the imposition of a Lien under Section 412 of the IRC or Section 302
or 4068 of ERISA or cause or permit to occur an ERISA Event to the extent such
ERISA Event could reasonably be expected to have a Material Adverse Effect.
6.10 FINANCIAL COVENANTS. Borrowers shall not breach or
fail to comply with any of the Financial Covenants.
6.11 HAZARDOUS MATERIALS. No Credit Party shall cause or
permit a Release of any Hazardous Material on, at, in, under, above, to, from or
about any of the Real Estate where such Release would (a) violate in any
respect, or form the basis for any Environmental Liabilities under, any
Environmental Laws or Environmental Permits or (b) otherwise adversely impact
the value or marketability of any of the owned 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.
6.12 SALE-LEASEBACKS. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 CANCELLATION OF INDEBTEDNESS. No Credit Party shall
cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's length basis and in the ordinary course of its business
consistent with past practices.
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6.14 RESTRICTED PAYMENTS. No Credit Party shall make any
Restricted Payment, except (a) intercompany loans and advances between Borrowers
to the extent permitted by SECTION 6.3, (b) dividends and distributions by
Subsidiaries of any Borrower paid to such Borrower, (c) employee loans permitted
under SECTION 6.4(B), (d) payments of principal and interest of Intercompany
Notes issued in accordance with SECTION 6.3; and (e) subject to the proviso
which follows, SMP may (i) pay cash dividends, (ii) make payments on account of
the purchase or redemption of its common stock, and (iii) at any date following
six (6) months from the Closing Date make payments to repurchase subordinated
debentures pursuant to the terms of the Indenture in an amount not to exceed
$20,000,000 in the aggregate during the term of this Agreement; PROVIDED, that
(i) no Default or Event of Default has occurred and is continuing or would
result after giving effect to any Restricted Payment pursuant to CLAUSE (E)
above, (ii) Borrowers collectively shall have Borrowing Availability of at least
$11,500,000 after giving effect to any Restricted Payment pursuant to CLAUSE (E)
above; and (iii) the timing of the Restricted Payments referred to in CLAUSE (E)
above shall be set at dates that permit the delivery of Financial Statements
necessary to determine current compliance with the Financial Covenants prior to
each such payment.
6.15 CHANGE OF CORPORATE NAME OR LOCATION; CHANGE OF
FISCAL YEAR. No Credit Party shall (a) change its corporate name or trade name
or (b) change its chief executive office, principal place of business, corporate
offices or warehouses or locations at which Collateral is held or stored, or the
location of its records concerning the Collateral, in each case without at least
30 days prior written notice to Agent 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, and PROVIDED that any such new
location shall be in the continental United States or, with respect to SMP
Canada, Canada (excluding the province of Newfoundland, the Northwest
Territories and the territory of Nunavit). Without limiting the foregoing, no
Credit Party shall change its name, identity or corporate structure in any
manner that might make any financing or continuation statement filed in
connection herewith seriously misleading within the meaning of Section 9-402(7)
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. No Credit Party shall change its
Fiscal Year.
6.16 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS. No Credit
Party shall directly or indirectly enter into or become bound by any agreement,
instrument, indenture or other obligation (other than this Agreement and the
other Loan Documents) that could directly or indirectly restrict, prohibit or
require the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary
of any Borrower to any Borrower or between Borrowers.
6.17 NO SPECULATIVE TRANSACTIONS. No Credit Party shall
engage in any transaction involving commodity options, futures contracts or
similar transactions, except solely to hedge against fluctuations in the prices
of commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
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6.18 LEASES. No Credit Party shall enter into any
operating lease for Equipment or Real Estate, if the aggregate of all such
operating lease payments payable in any Fiscal Year for all Credit Parties on a
consolidated basis would exceed One Hundred and Twenty percent (120%) of the
aggregate of all such payments in the prior Fiscal Year.
6.19 CHANGES RELATING TO SUBORDINATED DEBT;
---------------------------------------
MATERIAL CONTRACTS.
------------------
(a) No Credit Party shall change or amend the terms of
any Subordinated Debt (or any indenture or agreement in connection therewith) if
the effect of such amendment is to: (a) increase the interest rate on such
Subordinated Debt; (b) change the dates upon which payments of principal or
interest are due on such Subordinated Debt other than to extend such dates; (c)
change any default or event of default other than to delete or make less
restrictive any default provision therein, or add any covenant with respect to
such Subordinated Debt; (d) change the redemption or prepayment provisions of
such Subordinated Debt other than to extend the dates therefor or to reduce the
premiums payable in connection therewith; (e) grant any security or collateral
to secure payment of such Subordinated Debt; or (f) change or amend any other
term if such change or amendment would materially increase the obligations of
the Credit Party thereunder or confer additional material rights on the holder
of such Subordinated Debt in a manner adverse to any Credit Party, Agent or any
Lender.
(b) No Credit Party shall change or amend the terms of
any of purchase or sale agreement involving the acquisition or disposition of
any business of such Credit Party relating to indemnity provisions or deferred
purchase payments.
6.20 INACTIVE SUBSIDIARIES. None of the Credit Parties or
their Subsidiaries identified on DISCLOSURE SCHEDULE (3.8) as "inactive" shall
engage in any trade or business, or own any assets (other than Stock of their
Subsidiaries) or incur any Indebtedness or Guaranteed Indebtedness (other than
the Obligations).
7. TERM
7.1 TERMINATION. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the Loans
and all other Obligations shall be automatically due and payable in full on such
date.
7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated, or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
47
continue in full force and effect until the Termination Date; PROVIDED, that the
provisions of SECTION 11, the payment obligations under SECTIONS 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any one or more
of the following events (regardless of the reason therefor) shall constitute an
"EVENT OF DEFAULT" hereunder:
(a) Any Borrower (i) fails to make any payment of
principal of, or interest on, or Fees owing in respect of, the Loans or any of
the other Obligations when due and payable, or (ii) fails to pay or reimburse
Agent or Lenders for any expense reimbursable hereunder or under any other Loan
Document within 10 days following Agent's demand for such reimbursement or
payment of expenses.
(b) Any Credit Party fails or neglects to perform, keep
or observe any of the provisions of SECTIONS 1.4, 1.8, 5.4(A) OR 6, or any of
the provisions set forth in ANNEXES C OR G, respectively.
(c) Any Borrower fails or neglects to perform, keep or
observe any of the provisions of SECTION 4 or any provisions set forth in
ANNEXES E OR F, respectively, and the same shall remain unremedied for 3 days or
more.
(d) Any Credit Party fails or neglects to perform, keep
or observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this SECTION 8.1) and the same shall remain unremedied for 30 days or more.
(e) A default or breach occurs under any other agreement,
document or instrument to which any Credit Party is a party that is not cured or
waived within any applicable grace period therefor, and such default or breach
(i) involves the failure to make any payment when due in respect of any
Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any
Credit Party in excess of $500,000 in the aggregate (including (x) undrawn
committed or available amounts and (y) amounts owing to all creditors under any
combined or syndicated credit arrangements), or (ii) causes, or permits any
holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause,
Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of
$500,000 in the aggregate to become due prior to its stated maturity or prior to
its regularly scheduled dates of payment, or cash collateral in respect thereof
to be demanded, in each case, regardless of whether such default is waived
beyond any applicable cure period, or such right is exercised, by such holder or
trustee.
(f) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect (other than inadvertent,
immaterial errors not exceeding $50,000 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 as of the date
when made or deemed made.
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(g) Assets of any Credit Party with a fair market value
of $100,000 or more are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for 30 days or more.
(h) A case or proceeding is commenced against any Credit
Party seeking a decree or order in respect of such Credit Party (i) under the
Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for such Credit Party or for any
substantial part of any such Credit Party's assets, or (iii) ordering the
winding-up or liquidation of the affairs of such Credit Party, and such case or
proceeding shall remain undismissed or unstayed for 60 days or more or a decree
or order granting the relief sought in such case or proceeding shall be entered
by a court of competent jurisdiction.
(i) Any Credit Party (i) files a petition seeking relief
under the Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consents to or fails to contest in a
timely and appropriate manner the institution of proceedings thereunder or the
filing of any such petition or the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Credit Party or for any substantial part of any such Credit
Party's assets, (iii) makes an assignment for the benefit of creditors, (iv)
takes any action in furtherance of any of the foregoing; or (v) admits in
writing its inability to, or is generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of
money in excess of $500,000 in the aggregate at any time are outstanding against
one or more of the Credit Parties and the same are not, within 30 days after the
entry thereof, discharged or execution thereof stayed or bonded pending appeal,
or such judgments are not discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document for any
reason ceases to be valid, binding and enforceable in accordance with its terms
(or any Credit Party shall challenge the enforceability of any Loan Document or
shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any Lien created under any Loan Document (other than due to the gross
negligence or willful misconduct of Agent or any Lender following timely
compliance by each Credit Party with all of the requirements of each relevant
Loan Document) ceases to be a valid and perfected first priority Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby.
(l) Any Change of Control occurs.
(m) 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 Borrowers generating more than 10% of
Borrowers' consolidated revenues for the Fiscal Year preceding such event and
10% of Borrowers' EBITDA for the preceding twelve Fiscal Months and such
cessation or curtailment continues for more than 90 days.
49
(n) Borrower shall fail to dissolve SMP Credit Corp. within 90
days of the Closing Date.
8.2 REMEDIES.
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(a) If any Event of Default has occurred and is
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice, suspend the Revolving Loan facility with respect to
additional Advances and/or the incurrence of additional Letter of Credit
Obligations, whereupon any additional Advances and additional Letter of Credit
Obligations shall be made or incurred in Agent's sole discretion (or in the sole
discretion of the Requisite Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Event of Default has occurred and is continuing, Agent may (and at the written
request of Requisite Lenders shall), without notice except as otherwise
expressly provided herein, increase the rate of interest applicable to the Loans
and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default has occurred and is
continuing, Agent may (and at the written request of the Requisite Lenders
shall), upon written notice: (i) terminate the Revolving Loan facility with
respect to further Advances or the incurrence of further Letter of Credit
Obligations; (ii) declare all or any portion of the Obligations, including all
or any portion of any Loan to be forthwith due and payable, and require that the
Letter of Credit Obligations be cash collateralized as provided in ANNEX B, all
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by Borrowers and each other Credit Party; or (iii) exercise
any rights and remedies provided to Agent under the Loan Documents or at law or
equity, including all remedies provided under the Code; PROVIDED, that upon the
occurrence of an Event of Default specified in SECTIONS 8.1(H) OR (I), the
Revolving Loan facility shall be immediately terminated and all of the
Obligations, including the aggregate Revolving Loan, shall become immediately
due and payable without declaration, notice or demand by any Person.
8.3 WAIVERS BY CREDIT PARTIES. Except as otherwise
provided for in this Agreement or by applicable law, each Credit Party waives
(including for purposes of SECTION 12): (a) presentment, demand and protest and
notice of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Agent on which any Credit Party may in any way be liable, and
hereby ratifies and confirms whatever Agent may do in this regard, (b) all
rights to notice and a hearing prior to Agent's taking possession or control of,
or to Agent's replevy, attachment or levy upon, the Collateral or any bond or
security that might be required by any court prior to allowing Agent to exercise
any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling
and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 ASSIGNMENT AND PARTICIPATIONS.
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(a) Subject to the terms of this SECTION 9.1, any Lender
may make an assignment to a Qualified Assignee of, or sell 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 9.1(A) 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; (iv) include a payment to Agent of an assignment
fee of $3,500. In the case of an assignment by a Lender under this SECTION 9.1,
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. Each
Borrower hereby acknowledges and agrees 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
9.1(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, and 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; PROVIDED, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender's obligations hereunder or under any other Loan
Document.
(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 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 1.13,
1.15, 1.16 AND 9.8, each Borrower acknowledges and agrees 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"; provided, however, that a
participant shall not be entitled to receive any greater payment under Sections
51
1.13, 1.15 or 1.16 than the Lender from which such participant acquired its
participation would be entitled to receive in respect of the amount of the
participation. Except as set forth in the preceding sentence no Borrower or
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 9.1, 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 executing this Agreement shall
assist any Lender permitted to sell assignments or participations under this
SECTION 9.1 as reasonably 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, if requested by Agent, the preparation of informational
materials for, and the participation of management in meetings with, potential
assignees or participants. 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 them and all other information provided by them 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 3.4(C).
(e) Any 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 11.8.
(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
subject to capital adequacy or similar requirements under SECTION 1.16(A),
increased costs under SECTION 1.16(B), an inability to fund LIBOR Loans under
SECTION 1.16(C), or withholding taxes in accordance with SECTION 1.15(A) to an
extent greater than that applicable to the assigning or selling Lender.
(g) Notwithstanding anything to the contrary contained
herein, any Lender (a "Granting Lender"), may grant to a special purpose funding
vehicle (an "SPC"), identified as such in writing by the Granting Lender to
Agent and Borrowers, the option to provide to Borrowers all or any part of any
Loans that such Granting Lender would otherwise be obligated to make to
Borrowers pursuant to this Agreement; PROVIDED THAT (i) nothing herein shall
constitute a commitment by any SPC to make any Loan; and (ii) if an SPC elects
not to exercise such option or otherwise fails to provide all or any part of
such Loan, the Granting Lender shall be obligated to make such Loan pursuant to
the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if such Loan were
made by such Granting Lender. No SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Lender). Any SPC may (i) with notice to, but without
the prior written consent of, Borrowers and Agent and without paying any
52
processing fee therefor assign all or a portion of its interests in any Loans to
the Granting Lender or to any financial institutions (consented to by Borrowers
and Agent) providing liquidity and/or credit support to or for the account of
such SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC. This SECTION 9.1(G) may not be
amended without the prior written consent of each Granting Lender, all or any of
whose Loans are being funded by an SPC at the time of such amendment. For the
avoidance of doubt, the Granting Lender shall for all purposes, including
without limitation, the approval of any amendment or waiver of any provision of
any Loan Document or the obligation to pay any amount otherwise payable by the
Granting Lender under the Loan Documents, continue to be the Lender of record
hereunder.
9.2 APPOINTMENT OF AGENT. GE Capital is hereby appointed
to act on behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this SECTION 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an 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 any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Except as expressly set forth in this Agreement and the
other Loan Documents, Agent shall not have any duty to disclose, and shall not
be liable for failure to disclose, any information relating to any Credit Party
or any of their respective Subsidiaries or any Account Debtor that is
communicated to or obtained by GE Capital or any of its Affiliates in any
capacity. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders with respect to any act
or action (including failure to act) in connection with this Agreement or any
other Loan Document, then Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received instructions from
Requisite Lenders, Supermajority Revolving Lenders or all affected Lenders, as
the case may be, and Agent shall not incur liability to any Person by reason of
so refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
53
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
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
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Supermajority Revolving Lenders or all affected Lenders,
as applicable.
9.3 AGENT'S RELIANCE, ETC. Neither Agent nor any of its
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for
damages caused by its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, Agent: (a) may treat the payee
of any Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form reasonably
satisfactory to Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) unless specifically directed, in
writing, by the Requisite Lenders shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and records) of
any Credit Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
9.4 GE CAPITAL AND AFFILIATES. With respect to its
Commitments hereunder, GE Capital shall have the same rights and powers under
this Agreement and the other Loan Documents as any other Lender and may exercise
the same as though it were not Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include GE Capital in its individual
capacity. GE Capital and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, any Credit Party, any of their
Affiliates and any Person who may do business with or own securities of any
Credit Party or any such Affiliate, all as if GE Capital were not Agent and
without any duty to account therefor to Lenders. GE Capital and its Affiliates
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. Each Lender acknowledges the potential conflict of interest
between GE Capital as a Lender holding disproportionate interests in the Loans
and GE Capital as Agent.
9.5 LENDER CREDIT DECISION. Each Lender acknowledges that
it has, independently and without reliance upon Agent or any other Lender and
based on the Financial Statements referred to in SECTION 3.4(A) and such other
documents and information as it has deemed appropriate, made its own credit and
financial analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
54
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 INDEMNIFICATION. Lenders agree to indemnify Agent (to
the extent not reimbursed by Credit Parties and without limiting the obligations
of Credit Parties hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted to be taken by Agent in
connection therewith; PROVIDED, that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Credit Parties.
9.7 SUCCESSOR AGENT. Agent may resign at any time by
giving not less than 30 days' prior written notice thereof to Lenders and
Borrower Representative. Upon any such resignation, the Requisite Lenders shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Requisite Lenders and shall have accepted such
appointment within 30 days after the resigning Agent's giving notice of
resignation, then the resigning Agent may, on behalf of Lenders, appoint a
successor Agent, which shall be a Lender, if a Lender is willing to accept such
appointment, or otherwise shall be a commercial bank or financial institution or
a subsidiary of a commercial bank or financial institution if such commercial
bank or financial institution is organized under the laws of the United States
of America or of any State thereof and has a combined capital and surplus of at
least $300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, within 30 days after the date such notice of resignation was given by
the resigning Agent, such resignation shall become effective and the Requisite
Lenders shall thereafter perform all the duties of Agent hereunder until such
time, if any, as the Requisite Lenders appoint a successor Agent as provided
above. Any successor Agent appointed by Requisite Lenders or the resigning Agent
hereunder shall be subject to the approval of Borrower Representative, such
55
approval not to be unreasonably withheld or delayed; PROVIDED that such approval
shall not be required if a Default or an Event of Default has occurred and is
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent's resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, the provisions of this SECTION 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was acting
as Agent under this Agreement and the other Loan Documents.
9.8 SETOFF 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, upon the occurrence and during the continuance of
any Event of Default and subject to SECTION 9.9(F), each Lender is hereby
authorized at any time or from time to time, without notice to any Credit Party
or to any other Person, any such notice being hereby expressly waived, to offset
and to appropriate and to apply any and all balances held by it at any of its
offices for the account of any Borrower or Guarantor (regardless of whether such
balances are then due to such Borrower or Guarantor) and any other properties or
assets at any time held or owing by that Lender or that holder to or for the
credit or for the account of any Borrower or Guarantor against and on account of
any of the Obligations that are not paid when due. Any Lender exercising a right
of setoff or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so offset or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares (other than
offset rights exercised by any Lender with respect to SECTIONS 1.13, 1.15 OR
1.16). Each Credit Party that is a Borrower or Guarantor agrees, to the fullest
extent permitted by law, that (a) any Lender may exercise its right to offset
with respect to amounts in excess of its Pro Rata Share of the Obligations and
may sell participations in such amounts so offset to other Lenders and holders
and (b) any Lender so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of offset,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of the Loans and the
other Obligations in the amount of such participation. Notwithstanding the
foregoing, if all or any portion of the offset amount or payment otherwise
received is thereafter recovered from the Lender that has exercised the right of
offset, the purchase of participations by that Lender shall be rescinded and the
purchase price restored without interest.
9.9 ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION;
-----------------------------------------------------
ACTIONS IN CONCERT.
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(a) ADVANCES; PAYMENTS.
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(i) 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 ANNEX H
not later than 3:00 p.m. (New York time) on the requested funding date, in the
case of an Index Rate Loan, 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 the Borrower 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.
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(ii) On the 2nd Business Day of each calendar week or
more frequently at Agent's election (each, a "SETTLEMENT DATE"), Agent shall
advise each Lender by telephone, or telecopy of the amount of such 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 or Advances required to be made by it and has 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. 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 short-fall
against that Non-Funding Lender's Pro Rata Share of all payments received from
Borrowers. Such payments shall be made by wire transfer to such Lender's account
(as specified by such Lender in ANNEX H or the applicable Assignment Agreement)
not later than 2:00 p.m. (New York time) on the next Business Day following each
Settlement Date.
(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 9.9(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 any Borrower 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.
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(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 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 "Requisite Lenders" or "Supermajority Revolving Lenders"
hereunder) for any voting or consent rights under or with respect to any Loan
Document. 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 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 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.
(e) DISSEMINATION OF INFORMATION. Agent shall use
commercially 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, except to the extent that such failure is attributable to Agent's
gross negligence or willful misconduct. Lenders acknowledge that Borrowers are
required to provide Financial Statements and Collateral Reports to Lenders in
accordance with ANNEXES E AND F hereto and agree that Agent shall have no duty
to provide the same to Lenders.
(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.
9.10 SYNDICATION AND DOCUMENTATION AGENTS. The entities
identified on the cover page of this Agreement as the "Syndication Agent" and
the "Documentation Agent", respectively, shall, in each case, not have any
right, power, obligation, liability, responsibility or duty under this Agreement
(or any other Loan Document) other than those applicable to all Lenders as such.
Without limiting the foregoing, the entities so identified as the "Syndication
Agent" and the "Documentation Agent", respectively, shall not have or be deemed
to have any fiduciary relationship with any Lender. Each Lender acknowledges
that it has not relied, and will not rely, on the entities so identified as the
"Syndication Agent" and the "Documentation Agent", respectively, in deciding to
enter into this Agreement and each other Loan Document to which it is a party or
in taking or not taking action hereunder or thereunder.
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10. SUCCESSORS AND ASSIGNS
10.1.....SUCCESSORS AND ASSIGNS. This Agreement and the other
Loan Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT. The
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter thereof and may not be modified, altered or
amended except as set forth in SECTION 11.2. Any letter of interest, commitment
letter, or fee letter (other than the GE Capital Fee Letter) or confidentiality
agreement between any Credit Party and Agent or any Lender or any of their
respective Affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2 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 Agent and 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 makes less
restrictive the nondiscretionary criteria for exclusion from Eligible Accounts
and Eligible Inventory set forth in SECTIONS 1.6 AND 1.7, 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 with respect to any provision of this Agreement that waives compliance
with the conditions precedent set forth in SECTION 2.2 to the making of any Loan
or the incurrence of any Letter of Credit Obligations shall be effective unless
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the same shall be in writing and signed by Agent, Requisite Lenders and
Borrowers. Notwithstanding anything contained in this Agreement to the contrary,
no waiver or consent with respect to any Default or any Event of Default shall
be effective for purposes of the conditions precedent to the making of Loans or
the incurrence of Letter of Credit Obligations set forth in SECTION 2.2 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 (other than payment dates of mandatory prepayments under SECTION
1.3(B)(II)-(III)) 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; (v) release any Guaranty (except
in connection with a sale of the Stock of the applicable Guarantor which is not
in violation of the terms of this Agreement) or, except as otherwise permitted
herein or in the other Loan Documents, release, subordinate the Agent's Lien or
permit any Credit Party to sell or otherwise dispose of, any Collateral with a
value exceeding $5,000,000 in the aggregate (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; (vii) increase the
percentage advance rates set forth in the definition of the SMP Borrower Base or
the SI Borrowing Base, or the percentage in Section 1.1(a)(iv)(y), or the
aggregate amount of Overadvances permitted pursuant to Section 1.1(a)(iii); and
(viii) amend or waive this SECTION 11.2 or the definitions of the terms
"Requisite Lenders" or "Supermajority Revolving Lenders" insofar as such
definitions affect the substance of this SECTION 11.2. Furthermore, no
amendment, modification, termination or waiver affecting the rights or duties of
Agent or L/C Issuer under this Agreement or any other Loan Document shall be
effective unless in writing and signed by Agent or L/C Issuer, 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 11.2 shall be binding upon each Lender
at such time and each future Lender.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (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), (III) and (IV)
below being referred to as a "NON-CONSENTING LENDER"),
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(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, or
(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 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 within 180 days from the time such consent is
requested.
(e) 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 (other than
claims for gross negligence or willful misconduct), and so long as no suits,
actions, proceedings or claims are pending or threatened against any Indemnified
Person asserting any damages, losses or liabilities that are Indemnified
Liabilities, Agent shall deliver to Borrowers termination statements, mortgage
releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
11.3 FEES AND EXPENSES. Borrowers shall reimburse (i)
Agent for all fees, costs and expenses (including the reasonable fees and
expenses of all of its counsel, advisors, consultants and auditors) and (ii)
Agent (and, with respect to CLAUSES (C) and (D) below, all Lenders) for all
fees, costs and expenses, including the reasonable fees, costs and expenses of
counsel or other advisors (including environmental and management consultants
and appraisers), incurred in connection with the negotiation and preparation of
the Loan Documents and incurred in connection with:
(a) the forwarding to Borrowers or any other Person on
behalf of Borrowers by Agent of the proceeds of any Loan (including a wire
transfer fee of $10 per wire transfer);
(b) any amendment, modification or waiver of, consent
with respect to, or termination of, any of the Loan Documents or Related
Transactions Documents or advice in connection with the syndication and
administration of the Loans made pursuant hereto or its rights hereunder or
thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Borrower or any other
Person and whether as a party, witness or otherwise) in any way relating to the
Collateral, any of the Loan Documents or any other agreement to be executed or
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delivered in connection herewith or therewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
Borrowers or any other Person that may be obligated to Agent by virtue of the
Loan Documents; including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; PROVIDED that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders; PROVIDED,
further, that no Person shall be entitled to reimbursement under this clause (c)
in respect of any litigation, contest, dispute, suit, proceeding or action to
the extent any of the foregoing results from such Person's gross negligence or
willful misconduct;
(d) any attempt to enforce any remedies of Agent against
any or all of the Credit Parties or any other Person that may be obligated to
Agent or any Lender by virtue of any of the Loan Documents, including any such
attempt to enforce any such remedies in the course of any work-out or
restructuring of the Loans during the pendency of one or more Events of Default;
PROVIDED, that in the case of reimbursement of counsel for Lenders other than
Agent, such reimbursement shall be limited to one counsel for all such Lenders;
(e) any workout or restructuring of the Loans during the
pendency of one or more Events of Default; and
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all reasonable expenses,
costs, charges and other fees incurred by such counsel and others in connection
with or relating to any of the events or actions described in this SECTION 11.3,
all of which shall be payable, on demand, by Borrowers to Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4 NO WAIVER. Agent's or any Lender's failure, at any
time or times, to require strict performance by the Credit Parties of any
provision of this Agreement or any other Loan Document shall not waive, affect
or diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance herewith or therewith. Any suspension or waiver of an
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Event of Default shall not suspend, waive or affect any other Event of Default
whether the same is prior or subsequent thereto and whether the same or of a
different type. Subject to the provisions of SECTION 11.2, none of the
undertakings, agreements, warranties, covenants and representations of any
Credit Party contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Credit Party shall be deemed to have been
suspended or waived by Agent or any Lender, unless such waiver or suspension is
by an instrument in writing signed by an officer of or other authorized employee
of Agent and the applicable required Lenders, and directed to Borrowers
specifying such suspension or waiver.
11.5 REMEDIES. Agent's and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies that Agent or any Lender may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise. Recourse
to the Collateral shall not be required.
11.6 SEVERABILITY. Wherever possible, each provision of
this Agreement and the other Loan Documents shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of this Agreement or any other Loan Document shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement or such other Loan
Document.
11.7 CONFLICT OF TERMS. Except as otherwise provided in
this Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement conflicts with any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.8 CONFIDENTIALITY. Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts Agent or such Lender
applies to maintaining the confidentiality of its own confidential information)
to maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of 2 years following
receipt thereof, except that Agent and any Lender may disclose such information
(a) to Persons employed or engaged by Agent or such Lender in evaluating,
approving, structuring or administering the Loans and the Commitments; (b) to
any bona fide assignee or participant or potential assignee or participant that
has agreed to comply with the covenant contained in this SECTION 11.8 (and any
such bona fide assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as described in
CLAUSE (A) above); (c) as required or requested by any Governmental Authority or
reasonably believed by Agent or such Lender to be compelled by any court decree,
subpoena or legal or administrative order or process; (d) as, on the advice of
Agent's or such Lender's counsel, is required by law; (e) in connection with the
exercise of any right or remedy under the Loan Documents or in connection with
any Litigation to which Agent or such Lender is a party; or (f) that ceases to
be confidential through no fault of Agent or any Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
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EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT
PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND THE CREDIT
PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF NEW YORK COUNTY; PROVIDED FURTHER, THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN
ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
11.10 NOTICES. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other parties, or whenever any of the parties
desires to give or serve upon any other parties any communication with respect
to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered: (a) upon the earlier of actual
receipt and 3 Business Days after deposit in the United States Mail, registered
or certified mail, return receipt requested, with proper postage prepaid; (b)
upon transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this SECTION
11.10); (c) 1 Business Day after deposit with a reputable overnight courier with
all charges prepaid or (d) when delivered, if hand-delivered by messenger, all
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of which shall be addressed to the party to be notified and sent to the address
or facsimile number indicated in ANNEX I or to such other address (or facsimile
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower Representative or Agent) designated in ANNEX I to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 SECTION TITLES. The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
11.12 COUNTERPARTS. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT
PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 PRESS RELEASES AND RELATED MATTERS. 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 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 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.
11.15 REINSTATEMENT. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Borrower for liquidation or reorganization, should any Borrower
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Borrower's assets, and shall continue to be effective or
to be reinstated, as the case may be, if at any time payment and performance of
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the Obligations, or any part thereof, is, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by any obligee
of the Obligations, whether as a "voidable preference," "fraudulent conveyance,"
or otherwise, all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 ADVICE OF COUNSEL. Each of the parties represents to
each other party hereto that it has discussed this Agreement and, specifically,
the provisions of SECTIONS 11.9 and 11.13, with its counsel.
11.17 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
12. CROSS-GUARANTY
12.1 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 12
shall not be discharged until payment and performance, in full, of the
Obligations has occurred, and that its obligations under this SECTION 12 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 12) 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.
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Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
12.2 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 12 and such waivers, Agent and Lenders would
decline to enter into this Agreement.
12.3 BENEFIT OF GUARANTY. Each Borrower agrees that the
provisions of this SECTION 12 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.
12.4 SUBORDINATION OF SUBROGATION, ETC. Notwithstanding
anything to the contrary in this Agreement or in any other Loan Document, and
except as set forth in SECTION 12.7, each Borrower hereby expressly and
irrevocably subordinates to payment of the Obligations 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 until the Obligations are indefeasibly
paid in full in cash. Each Borrower acknowledges and agrees that this
subordination 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 12, 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 12.4.
12.5 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 12. 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
67
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 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 12, 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.
12.6 LIMITATION. Notwithstanding any provision herein
contained to the contrary, each Borrower's liability under this SECTION 12
(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 12 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 12.7.
12.7 CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS
(a) To the extent that any Borrower shall make a payment
under this SECTION 12 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 12 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.
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(c) This SECTION 12.7 is intended only to define the
relative rights of Borrowers and nothing set forth in this SECTION 12.7 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 12.1. Nothing
contained in this SECTION 12.7 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 12.7 shall be exercisable upon the full
and indefeasible payment of the Obligations and the termination of the
Commitments.
12.8 LIABILITY CUMULATIVE. The liability of Borrowers
under this SECTION 12 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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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
STANDARD MOTOR PRODUCTS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MARDEVCO CREDIT CORP.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
STANRIC, INC.
By:
---------------------------------------
Name:
--------------------------------------
Title:
------------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION,
as Agent and Lender
By:
----------------------------------------
Name:
---------------------------------------
Duly Authorized Signatory
70
GMAC COMMERCIAL CREDIT LLC,
as Syndication Agent and Lender
By:
-----------------------------------------
Name: FRANK IMPERATO
----------------------------------------
Title: SENIOR VICE PRESIDENT
--------------------------------------
BANK OF AMERICA, N.A.,
as Documentation Agent and Lender
By:
-----------------------------------------
Name: WILLIAM J. WILSON
----------------------------------------
Title: VICE PRESIDENT
--------------------------------------
HSBC BANK USA,
as Lender
By:
-----------------------------------------
Name: THOMAS J. DIONIAN
----------------------------------------
Title: VICE PRESIDENT
--------------------------------------
CONGRESS FINANCIAL CORPORATION,
as Lender
By:
-----------------------------------------
Name: LARRY FORTE
----------------------------------------
Title:
--------------------------------------
THE CHASE MANHATTAN BANK,
as Lender
By:
-----------------------------------------
Name: JOHN MAST
----------------------------------------
Title:
----------------------------------------
71
TRANSAMERICA BUSINESS CAPITAL CORPORATION,
as Lender
By:
-------------------------------------------
Name: BARRY S. FEIN
------------------------------------------
Title:
-------------------------------------------
72
The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as Borrowers.
SMP MOTOR PRODUCTS LTD.
By:
-------------------------------------
Name:
------------------------------------
Title:
----------------------------------
RENO STANDARD INCORPORATED
By:
-------------------------------------
Name:
------------------------------------
Title:
----------------------------------
73
ANNEX A (RECITALS)
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.
"ACCOUNTING CHANGES" has the meaning ascribed thereto in
ANNEX G.
"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,
Documents or Instruments), whether arising out of goods sold or services
rendered by it or from any other transaction (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 monies due or to become due
to any Credit Party, under all purchase orders and contracts for the sale of
goods or the performance of services or both 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), including the right to receive the proceeds
of said purchase orders and contracts, (e) all health care insurance receivables
and (f) all collateral security and guaranties of any kind, given by any Account
Debtor or any other Person with respect to any of the foregoing.
"ADDITIONAL MCC AMORTIZING AVAILABILITY" means (i) as to any
Eligible Real Estate purchased by MCC after the Closing Date fifty percent (50%)
of the Fair Market Value of such Eligible Real Estate and as to Eligible
Equipment purchased by MCC after the Closing Date 85% of the Net Orderly
Liquidation Value of such Eligible Equipment less (ii) one-twenty eighth of the
amount determined under clause (i) for each full Fiscal Quarter occurring after
the purchase of such Eligible Real Estate or Eligible Equipment, as the case may
be.
"ADDITIONAL SI AMORTIZING AVAILABILITY" means as to each item
of Eligible Equipment purchased by SI after the Closing Date, (i) 85% of the Net
Orderly Liquidation Value of such Eligible Equipment less (ii) one-twenty eighth
of the amount determined under clause (i) for each full Fiscal Quarter occurring
after the purchase of such Eligible Equipment.
"ADDITIONAL SMP AMORTIZING AVAILABILITY" means (i) as to any
Eligible Real Estate purchased by SMP after the Closing Date fifty percent (50%)
of the Fair Market Value of such Eligible Real Estate and as to Eligible
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Equipment purchased by SMP after the Closing Date 85% of the Net Orderly
Liquidation Value of such Eligible Equipment less (ii) one-twenty eighth of the
amount determined under clause (i) for each full Fiscal Quarter occurring after
the purchase of such Eligible Real Estate or Eligible Equipment, as the case may
be.
"ADVANCE" means any Revolving Credit Advance.
-------
"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 9.7.
"AGGREGATE AMORTIZING AVAILABILITY" means the sum of MCC
Amortizing Availability, SI Amortizing Availability and SMP Amortizing
Availability, subject to the limitation in Section 1.1(a)(iv).
"AGGREGATE BORROWING BASE" means as of any date of
determination, an amount equal to (i) the sum of the MCC Borrowing Base, the SMP
Borrowing Base and the SI Borrowing Base; LESS (ii) any Reserves except to the
extent already deducted therefrom.
"AGREEMENT" means the Credit Agreement by and among Borrowers,
the other Credit Parties party thereto, GE Capital, as Agent and Lender and the
other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"APPENDICES" has the meaning ascribed to it in the recitals to
the Agreement.
"APPLICABLE MARGINS" means collectively the Applicable Unused
Line Fee 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 1.5(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
1.5(A).
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"APPLICABLE UNUSED LINE FEE MARGIN" means the per annum fee,
from time to time in effect, payable in respect of Borrowers' non-use of
committed funds pursuant to SECTION 1.9(B), which fee is determined by reference
to SECTION 1.5(A).
"ASBESTOS CLAIMS" means claims seeking to impose liability on
SMP in connection with any alleged exposure to asbestos.
"ASBESTOS RESERVE" means, as of the date of determination by
Agent, an amount equal to (1) in the event that Borrowers have obtained an
insurance policy from an insurer, and in form and substance, acceptable to
Agent, covering Borrowers' asbestos liability claims, the sum of (A) all unpaid
premiums with respect thereto and (B) the amount of the deductible for such
policy, less, on a dollar-for-dollar basis, the amount of any payment made by
any Borrower after the Closing Date against such deductible, or (2) in the event
that Borrowers have not obtained an insurance policy as described in clause (1)
above: (i) $4,000,000 on and after the Closing Date and continuing through the
89th day after the Closing Date; (ii) $5,500,000 on and after the 90th day after
the Closing Date and continuing until 179 days after the Closing Date; and (iii)
$7,000,000 on and after the 180th day after the Closing Date and continuing
until the earlier of: (A) such time that Borrowers elect, if at all, to obtain
the insurance policy referred to in clause (1) above (in which case, the
Asbestos Reserve shall be as provided in clause (1) above) and (B) the
Commitment Termination Date; PROVIDED, that the Asbestos Reserve described in
this clause (2) shall be: (x) recalculated on each anniversary of the Closing
Date based on the results of an annual actuarial study performed by an actuary,
and reflecting results, acceptable to Agent, so that on each such anniversary,
the reserve will be adjusted, up or down, to an amount equal to the ten year
expected asbestos claims liability as determined by such actuarial study without
giving effect to any prior amount of such reserve or to any prior reductions to
such reserve and (y) reduced on a dollar-for-dollar basis by the amount of any
asbestos claims actually paid by any Borrower except that on each anniversary of
the Closing Date and thereafter, such dollar-for-dollar reduction shall only be
taken and applied to reduce the Asbestos Reserve in that particular year and
shall not be carried forward into the next year's calculation.
"ASSIGNMENT AGREEMENT" has the meaning ascribed to it in
SECTION 9.1(A).
"BANKRUPTCY CODE" means the provisions of Title 11 of the
United States Code, 11 U.S.C.ss.ss.101 ET SEQ.
"BLOCKED ACCOUNTS" has the meaning ascribed to it in ANNEX C.
"BORROWER REPRESENTATIVE" means SMP in its capacity as
Borrower Representative pursuant to the provisions of SECTION 1.1(D).
"BORROWERS" and "BORROWER" have the respective meanings
ascribed thereto in the preamble to the Agreement.
"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 aggregate Revolving Credit
Advances then outstanding, or (b) as to an individual Borrower, the lesser of
(i) the Maximum Amount LESS the Revolving Loan outstanding to all other
Borrowers and (ii) that Borrower's separate Borrowing Base, LESS the Revolving
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Credit Advances outstanding to that Borrower; PROVIDED that an Overadvance in
accordance with SECTION 1.1(A)(III) may cause the Revolving Loan to exceed the
Aggregate Borrowing Base or a Borrower's separate Borrowing Base by the amount
of such permitted Overadvance. Borrowing Availability for purposes of clauses
(a) and (b) shall be determined with trade payables being paid consistent with
past practices, with expenses and liabilities being paid in the ordinary course
of business, without acceleration of sales and without deterioration of working
capital.
"BORROWING BASE" means as the context may require, the MCC
Borrowing Base, the SMP Borrowing Base, and the SI Borrowing Base or any such
Borrowing Base. Notwithstanding anything contained herein to the contrary, for
purposes of determining any Borrowing Base, (a) the value of Eligible Inventory
acquired by any Borrower from any other Borrower shall be the lower of cost
(determined on a first-in, first-out basis) or market of either the selling
Borrower or the purchasing Borrower, whichever is lower and (b) the Net Orderly
Liquidation Value of any Eligible Equipment or Eligible Inventory and the Fair
Market Value of any Eligible Real Estate may be adjusted by Agent from time to
time to reflect the results of the most recent appraisal thereof.
"BORROWING BASE CERTIFICATE" means a certificate to be
executed and delivered from time to time by each Borrower in the form attached
to the Agreement as EXHIBIT 4.1(B).
"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 New
York and in reference to LIBOR Loans shall mean any such day that is also a
LIBOR Business Day.
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements 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.
"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.
"CAR QUEST LONG TERM ACCOUNTS" means Accounts owed by General
Parts Inc. that provide for extended dating for the initial stocking orders that
arose from such Account Debtor's acquisition of certain assets of APS, Inc.
"CASH COLLATERAL ACCOUNT" has the meaning ascribed to it
ANNEX B.
"CASH EQUIVALENTS" has the meaning ascribed to it in ANNEX B.
"CASH MANAGEMENT SYSTEMS" has the meaning ascribed to it in
SECTION 1.8.
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"CHANGE OF CONTROL" means any of the following: (a) any person
or group of persons (within the meaning of the Securities Exchange Act of 1934,)
other than the Existing Stockholder Group shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934,) of 30% or more
of the issued and outstanding shares of capital Stock of SMP having the right to
vote for the election of directors of SMP under ordinary circumstances; (b)
during any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of SMP (together
with any new directors whose election by the board of directors of SMP or whose
nomination for election by the Stockholders of SMP was approved by a vote of at
least two-thirds of the directors then still in office who either were directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office; or (c) SMP ceases to own
and control all of the economic and voting rights associated with all of the
outstanding capital Stock of any of its Subsidiaries other than as set forth on
DISCLOSURE SCHEDULE (3.8).
"CHARGES" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes 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 DATE" means April 27, 2001.
"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 D.
"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
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 Security
Agreement, the Mortgages and the other 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.
A-5
"COLLATERAL DOCUMENTS" means the Security Agreement, the
Pledge Agreements, the Guaranties, the Mortgages, the Intellectual Property
Security Agreement, and all similar agreements entered into guaranteeing payment
of, or granting a Lien upon property as security for payment of, the
Obligations.
"COLLATERAL REPORTS" means the reports with respect to the
Collateral referred to in ANNEX F.
"COLLECTION ACCOUNT" means that certain account of Agent,
account number 502-328-54 in the name of Agent at Bankers Trust Company in New
York, New York ABA No. 021 001 033, or such other account as may be specified in
writing by Agent as the "Collection Account."
"COMMITMENT TERMINATION DATE" means the earliest of (a) April
27, 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 8.2(B), and (c) the date of indefeasible
prepayment in full by Borrowers of the Loans and 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 ANNEX B, and the permanent
reduction of all Commitments to zero dollars ($0).
"COMMITMENTS" means (a) as to any Lender, the aggregate of
such Lender's Revolving Loan Commitment as set forth on ANNEX J 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 Two Hundred and Twenty Five Million Dollars
($225,000,000) on the Closing Date, as to each of clauses (a) and (b), 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
ANNEX E.
"CONCENTRATION ACCOUNT" has the meaning ascribed to it in
ANNEX C.
"CONTRACTS" means all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"CONTROL LETTER" means a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearing house, as
A-6
applicable, with respect to commodity accounts and commodity contracts held by
any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant disclaims any security interest in
the applicable financial assets, acknowledges the Lien of Agent, on behalf of
itself and Lenders, on such financial assets, and agrees to follow the
instructions or entitlement orders of Agent without further consent by the
affected Credit Party.
"COPYRIGHT LICENSE" means any and all rights now 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.
"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 each Borrower, RSI and SMP Canada.
"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
1.5(D).
"DISBURSEMENT ACCOUNTS" has the meaning ascribed to it in
ANNEX C.
"DISCLOSURE SCHEDULES" means the Schedules prepared by
Borrowers and denominated as Disclosure SCHEDULES (1.4) through (6.7) in the
Index to the Agreement.
"DOCUMENTS" means all "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"DOLLARS" or "$" means lawful currency of the United States of
America and, solely for purposes of SECTION 1.6, of Canada.
"EBITDA" means, with respect to any Person for any fiscal
period, without duplication, an amount equal to (a) consolidated net income of
such Person for such period determined in accordance with GAAP, MINUS (b) the
sum of (i) income tax credits (ii) gain from extraordinary items for such
period, (iii) any aggregate net gain (but not any aggregate net loss) during
such period arising from the sale, exchange or other disposition of capital
assets by such Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities), and (iv) any other non-operating, non-cash gains
that have been added in determining consolidated net income, in each case to the
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extent included in the calculation of consolidated net income of such Person for
such period in accordance with GAAP, but without duplication, PLUS (c) the sum
of (i) any provision for income taxes, (ii) Interest Expense, (iii) loss from
extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized debt
discount for such period, and (vi) the amount of any deduction to consolidated
net income as the result of any grant to any members of the management of such
Person of any Stock, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
but without duplication. For purposes of this definition, the following items
shall be excluded in determining consolidated net income of a Person: (1) the
income (or deficit) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of such
Person's Subsidiaries; (2) the undistributed earnings of any Subsidiary of such
Person 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;
(3) any restoration to income of any reserve established for specific
non-recurring items, except to the extent that provision for such reserve was
made out of income accrued during such period; (4) any write-up of any asset;
(5) any net gain from the collection of the proceeds of life insurance policies;
(6) any net gain arising from the acquisition of any securities, or the
extinguishment, under GAAP, of any Indebtedness, of such Person, (7) in the case
of a successor to such Person 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, and (8) any deferred credit representing the excess of
equity in any Subsidiary of such Person at the date of acquisition of such
Subsidiary over the cost to such Person of the investment in such Subsidiary.
"ELIGIBLE ACCOUNTS" has the meaning ascribed to it in SECTION
1.6.
"ELIGIBLE EQUIPMENT" means, as to any Borrower, Equipment
which is subject to a first priority Lien in favor of Agent, for its benefit and
for the ratable benefit of Lenders, and which is appraised by an appraiser
satisfactory to Agent.
"ELIGIBLE INVENTORY" has the meaning ascribed to it in SECTION
1.7.
"ELIGIBLE REAL ESTATE" means as to any Borrower, real estate
with respect to which Agent shall have received (a) Mortgages covering all of
such real estate together with (i) title insurance policies, current as-built
surveys, zoning letters and certificates of occupancy, in each case reasonably
satisfactory in form and substance to Agent, (ii) evidence that counterparts of
the Mortgages have been recorded in all places to the extent necessary or
desirable, in the judgment of Agent, to create a valid and enforceable first
priority Lien (subject to Permitted Encumbrances) on such real estate in favor
of Agent for the benefit of itself and Lenders (or in favor of such other
trustee as may be required or desired under local law); and (iii) an opinion of
counsel in each state in which any such real estate is located in form and
substance and from counsel reasonably satisfactory to Agent, (b) Phase I
Environmental Site Assessment Reports, consistent with American Society for
Testing and Materials (ASTM) Standard E 1527-94 and applicable state
requirements, on all of such real estate, dated no more than 6 months prior to
the date of purchase of such real estate, prepared by environmental engineers
reasonably satisfactory to Agent, all in form and substance reasonably
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satisfactory to Agent, in its sole discretion and Agent shall have further
received (i) such environmental review and audit reports, including Phase II
reports, with respect to such real estate as Agent may request, and Agent shall
be satisfied in its sole discretion, with the contents of all such environmental
reports, and (ii) letters executed by the environmental firms preparing such
environmental reports, in form and substance reasonably satisfactory to Agent,
authorizing Agent and Lenders to rely on such reports, and (c) appraisals of
such real estate which shall be in form and substance, and prepared by
appraisers, reasonably satisfactory to Agent.
"ENVIRONMENTAL LAWS" means all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and any legally binding 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 (i) human health or safety from exposure to Hazardous Material or
(ii) 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.ss.ss.9601 ET SEQ.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C.ss.ss.5101 ET SEQ.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.ss.136 ET SEQ.); the
Solid Waste Disposal Act (42 U.S.C.ss.ss. 6901 ET SEQ.); the Toxic Substance
Control Act (15 U.S.C.ss.ss.2601 ET SEQ.); tHE Clean Air Act (42
U.S.C.ss.ss.7401 ET SEQ.); the Federal Water Pollution Control Act (33
U.S.C.ss.ss.1251 ET SEQ.); the Occupational Safety and Health Act (29
U.S.C.ss.ss.651 ET SEQ.); and the Safe Drinking Water Act (42 U.S.C.ss.ss.
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.
"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
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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 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 8.1.
"EXCESS FORMULA AVAILABILITY" means the average daily
difference for the prior Fiscal Quarter between (a) the Aggregate Borrowing Base
and (b) the total outstanding balance of Revolving Loans (with trade payables
being paid consistent with past practices, expenses and liabilities being paid
in the ordinary course of business, without acceleration of sales and without
deterioration of working capital).
"EXISTING STOCKHOLDER GROUP" means Arthur S. Sills, Lawrence
I. Sills, Peter Sills, the Sills Family Foundation, Marilyn F. Cragin, Arthur D.
Davis, Susan F. Davis and the various Fife family trusts for which any of the
foregoing are trustees.
"FAIR LABOR STANDARDS ACT" means the Fair Labor Standards Act,
29 U.S.C.ss.201 ET SEQ.
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"FAIR MARKET VALUE" means the fair market value of the asset
being valued based upon an appraisal, in form and substance satisfactory to
Agent, by an appraiser satisfactory to Agent.
"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 COVENANTS" means the financial covenants set forth
in ANNEX G.
"FINANCIAL STATEMENTS" means the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Borrowers delivered in accordance with SECTION 3.4 and ANNEX E.
"FISCAL MONTH" means any of the monthly accounting periods of
Borrowers.
"FISCAL QUARTER" means any of the quarterly accounting periods
of Borrowers, ending on or about the last day of March, June, September and
December of each year.
"FISCAL YEAR" means any of the annual accounting periods of
Borrowers ending on or about December 31 of each year.
"FIXTURES" means all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"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 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 and, without duplication, Guaranteed
Indebtedness consisting of guaranties of Funded Debt of other Persons.
"GAAP" means generally accepted accounting principles in the
United States of America consistently applied, as such term is further defined
in ANNEX G to the Agreement.
"GE CAPITAL" means General Electric Capital Corporation, a New
York corporation.
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"GE CAPITAL FEE LETTER" means that certain letter, dated as of
March 28, 2001, between GE Capital and Borrowing Representative with respect to
certain Fees to be paid from time to time by Borrowers to GE Capital.
"GENERAL INTANGIBLES" means all "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 Contract, 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), choses 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
without limitation 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.
"GOODS" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, including embedded software.
"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
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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, each Subsidiary Guaranty and
any other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"GUARANTORS" means each Subsidiary of each Borrower, 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.
"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 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 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, and (i) the
Obligations.
"INDEMNIFIED LIABILITIES" has the meaning ascribed to it in
SECTION 1.13.
"INDEMNIFIED PERSON" has the meaning ascribed to in SECTION
1.13.
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"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 certificates of deposit, and all notes
and other, without limitation, 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 NOTES" has the meaning ascribed to it in
SECTION 6.3.
"INTEREST EXPENSE" means, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, interest expense with respect to any Funded Debt of such Person and
interest expense for the relevant period that has been capitalized on the
balance sheet of such Person.
"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 all "inventory," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and in any event 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, or
materials or supplies 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
other supplies and embedded software.
"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
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mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any 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.
"IRB RESERVE" means, as of any date of determination by Agent,
an amount equal to the sum of the principal, interest and fees then outstanding
under SMP's industrial revenue bond financing of its real estate located in Long
Island City, New York, but only to the extent that such real estate is included
in either SMP Amortizing Availability or Additional SMP Amortizing Availability.
"IRC" means the Internal Revenue Code of 1986 and all
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"L/C ISSUER" has the meaning ascribed to it in ANNEX B.
"L/C SUBLIMIT" has the meaning ascribed to it in ANNEX B.
"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.
"LETTER OF CREDIT FEE" has the meaning ascribed to it in
ANNEX B.
"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 Letters of Credit by Agent or another
L/C Issuer or the purchase of a participation as set forth in ANNEX B with
respect to any Letter of Credit. The amount of such Letter of Credit Obligations
shall equal the maximum amount that may be payable at such time or at any time
thereafter by Agent or Lenders thereupon or pursuant thereto.
"LETTERS OF CREDIT" means documentary or standby letters of
credit issued for the account of any Borrower by any L/C Issuer.
"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 LOAN" 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
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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 1.5(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 Commitment Termination Date shall end on the immediately preceding LIBOR
Business Day;
(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 12 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; 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 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 mutually acceptable to Agent
and Borrower Representative.
"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.
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"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 3.13.
"LOAN ACCOUNT" has the meaning ascribed to it in SECTION 1.12.
"LOAN DOCUMENTS" means the Agreement, the Notes, the
Collateral Documents, the Master Standby Agreement, the Master Documentary
Agreement, the Rate Protection Agreement 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 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.
"LOCK BOXES" has the meaning ascribed to it in ANNEX C.
"MARGIN STOCK" has the meaning ascribed to in SECTION 3.10.
"MASTER DOCUMENTARY AGREEMENT" means the Master Agreement for
Documentary Letters of Credit dated as of the Closing Date among Borrowers, as
Applicant(s), and GE Capital.
"MASTER STANDBY AGREEMENT" means the Master Agreement for
Standby Letters of Credit dated as of the Closing Date among Borrowers, as
Applicant(s), and GE Capital, as issuer.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, assets, operations, prospects or financial or other condition
of any Credit Party or the Credit Parties considered as a whole, (b) any
Borrower's 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. Without limiting the generality of the foregoing,
any event or occurrence adverse to one or more Credit Parties which results or
could reasonably be expected to result in costs and/or liabilities or loss of
revenues, individually or in the aggregate, to any Credit Party in any 20-day
period in excess of $20,000,000.
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"MAXIMUM AMOUNT" means, as of any date of determination, an
amount equal to the Revolving Loan Commitment of all Lenders as of that date.
"MCC" means Mardevco Credit Corp., a New York corporation.
"MCC AMORTIZING AVAILABILITY" means (A) $4,500,000 less
$160,714 per Fiscal Quarter commencing with the Fiscal Quarter ending June 30,
2001, plus (B) the Additional MCC Amortizing Availability, minus (C) an amount
equal to (i) 50% of the Fair Market Value of any Eligible Real Estate as of the
Closing Date or the date it is purchased by MCC or 85% of the Net Orderly
Liquidation Value of any Eligible Equipment as of the Closing Date or the date
it is purchased by MCC, which is the basis of MCC Amortizing Availability, and
which is subject to a loss, sale, destruction or other disposition, less (ii)
the product of one-twenty eighth of the amount determined under the preceding
clause (i) and the number of full Fiscal Quarters that have occurred since the
Closing Date or the purchase of such Eligible Real Estate or Eligible Equipment
to the date of such loss, sale, destruction or other disposition, as the case
may be.
"MCC BORROWING BASE" means, as of any date of termination by
Agent, from time to time, an amount equal to the sum, at such time of :
(a)......up to 85% of the book value of MCC's Eligible
Accounts; and
(b)......up to the lesser of (i) 60% of the book value of
MCC's Eligible Inventory valued at the lower of cost (determined on a first-in,
first-out basis) or market or (ii) 85% of the Net Orderly Liquidation Value of
MCC's Eligible Inventory as set forth in the most recent appraisal prepared by
an independent appraisal firm acceptable to Agent, in each case valued at the
lower of cost (determined on a first-in, first-out basis) or market; and
(c)......with respect to documentary Letters of Credit opened
solely for the purposes of purchasing Eligible Inventory and having an expiry
date of 90 days or less from the date of issuance, a percentage equal to
inventory advance rate in effect at the time of issuance of any such Letter of
Credit multiplied by the cost of the goods constituting Eligible Inventory being
purchased under such documentary Letters of Credit (so long as such Eligible
Inventory is (i) fully insured, (ii) is subject to a first priority security
interest in and lien upon such goods in favor of Agent and (iii) is evidenced or
deliverable pursuant to documents, notices, instruments, statements and bills of
lading that have been delivered to Agent or an agent acting on its behalf), and
(d)......MCC Amortizing Availability; less
(e)......Letter of Credit Obligations incurred on
behalf of MCC,
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in each case less any Reserves established by Agent at such time in its
reasonable credit judgment.
"MORTGAGED PROPERTIES" has the meaning assigned to it in
ANNEX D.
"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 Mortgaged Properties, all in
form and substance reasonably satisfactory to Agent.
"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 ORDERLY LIQUIDATION VALUE" means the orderly liquidation
value of the asset being valued based upon an appraisal, in form and substance
satisfactory to Agent, by an appraiser satisfactory to Agent.
"NET WORTH" means, with respect to any Person as of any date
of determination, the book value of the assets of such Person, MINUS the sum of
(a) reserves applicable thereto, and (b) all of such Person's liabilities on a
consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.
"NON-FUNDING LENDER" has the meaning ascribed to it in SECTION
9.9(A)(II).
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement
dated as of December 1, 1995 among SMP and the Purchasers set forth on Annex I
thereto relating to $73,000,000 principal amount 6.81% Senior Notes.
"NOTES" means the Revolving Note.
"NOTICE OF CONVERSION/CONTINUATION" has the meaning ascribed
to it in SECTION 1.5(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) 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 or pursuant to any cash management services provided by
any Lender to any Credit Party. 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.
"OVERADVANCE" has the meaning ascribed to it in SECTION
1.1(A)(III).
"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.
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"PATENT SECURITY AGREEMENTS" means the Patent Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"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 of 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.
"PENSION PLAN" means a Plan described in Section 3(2) of
ERISA.
"PERMITTED ENCUMBRANCES" means the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with SECTION 5.2(B); (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 $100,000 at any time, so long as such Liens attach only
to Inventory; (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 8.1(J); (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; (i) presently existing or hereafter created
Liens in favor of Agent, on behalf of Lenders; and (j) Liens expressly permitted
under CLAUSES (B) and (C) of SECTION 6.7 of the Agreement.
"PERMITTED OVERNIGHT INVESTMENTS" means investments in a money
market fund which invests in (a) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof; (b)
investments in commercial paper maturing within six months from the date of
acquisition thereof and having, at such date of acquisition, a rating of at
least "P2" or the equivalent thereof from S&P or of at least "A2" or the
equivalent thereof from Moody's; (c) investments in certificates of deposit,
banker's acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not
A-20
less than $250,000,000; and (d) repurchase agreements with a term of not more
than 90 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above.
"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 or has
maintained, contributed to or had an obligation to contribute to at any time
within the past 7 years on behalf of participants who are or were employed by
any Credit Party or ERISA Affiliate.
"PLEDGE AGREEMENTS" means, collectively, the SMP Pledge
Agreement and any pledge agreements entered into after the Closing Date by any
Credit Party (as required by the Agreement or any other Loan Document).
"PLEDGED CASH" means cash, which may at any time be pledged by
SI in favor of Agent, pursuant to documentation satisfactory to Agent, which
cash is or shall be on deposit at Banco Popular, or any other bank reasonably
acceptable to Agent, in the form of a time deposit.
"PLEDGED SECURITIES" means marketable securities, which may at
any time be pledged by SI in favor of Agent, pursuant to documentation
satisfactory to Agent.
"PRIOR LENDER" means, collectively, the lenders under the
$110,000,000 Revolver agented by Chase Manhattan Bank, the Purchasers which hold
notes of SMP under the Note Purchase Agreement, Canadian Imperial Bank of
Commerce and Clipper Receivables Corporation.
"PRIOR LENDER OBLIGATIONS" means the obligations owing to the
Prior Lenders pursuant to the applicable agreements set forth on DISCLOSURE
SCHEDULE (6.3).
"PROCEEDS" means "proceeds," as such term is defined in the
Code, including (a) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral, (e) dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts from time to time paid or payable under
or in connection with any of the Collateral, upon disposition or otherwise.
A-21
"PRO FORMA" means the unaudited consolidated and consolidating
balance sheet of Borrowers and their Subsidiaries as of December 31, 2000 after
giving PRO FORMA effect to the Related Transactions.
"PROJECTIONS" means Borrowers' 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 the Borrowers, together
with appropriate supporting details and a statement of underlying assumptions.
"PRO RATA SHARE" means with respect to all matters relating to
any Lender, (a) with respect to the Revolving Loan, 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 all 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.
"QUALIFIED PLAN" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"QUALIFIED ASSIGNEE" means (a) any Lender, any Affiliate of
any Lender or any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
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.
"RATABLE SHARE" has the meaning ascribed to it in SECTION
1.1(B).
"RATE PROTECTION AGREEMENT" means, collectively, any interest
rate, swap, cap, collar or similar agreement entered into by any Borrower or any
of its Subsidiaries under which the counterparty of such agreement is (or at the
time such agreement was entered into, was) a Lender or an Affiliate of a Lender.
A-22
"RATE PROTECTION OBLIGATIONS" means Obligations which arise
under any Rate Protection Agreement.
"REAL ESTATE" has the meaning ascribed to it in SECTION 3.6.
"REFINANCING" means the repayment in full by Borrowers of the
Prior Lender Obligations on the Closing Date.
"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
Subordinated Debt Documents 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.
"REQUISITE LENDERS" means Lenders having (a) 66 2/3% of the
Commitments of all Lenders, or (b) if the Commitments have been terminated, 66
2/3% of the aggregate outstanding amount of the Revolving Loan.
"RESERVES" means (a) reserves established by Agent from time
to time against Eligible Inventory pursuant to SECTION 5.9, (b) reserves
established pursuant to SECTION 5.4(C), and (c) the Asbestos Reserve established
by Agent from time to time, (d) the IRB Reserve established by Agent from time
to time and (e) such other reserves against Eligible Accounts, Eligible
Inventory or Borrowing Availability of any Borrower that Agent may, in its
reasonable credit judgment, establish from time to time. Without limiting the
generality 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
A-23
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 loan, contribution,
or other transfer of funds or other property to any Stockholder of such Credit
Party who has filed Form 13-G other (i) than payment of compensation in the
ordinary course of business to Stockholders who have filled a Form 13-G and who
are employees of OR CONSULTANTS to such Person and (ii) payment of trade
payables incurred in the ordinary course of such Credit Party's business; and
(g) any payment of management fees (or other fees of a similar nature) 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)(I).
"REVOLVING LENDERS" means, as of any date of determination,
Lenders having a Revolving Loan Commitment.
"REVOLVING LOAN" means, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to Borrowers 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
aggregate commitment of such Lender to make Revolving Credit Advances or incur
Letter of Credit Obligations as set forth on ANNEX J to the Agreement or in the
most recent Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances or incur Letter of Credit Obligations, which aggregate commitment shall
be Two Hundred and Twenty Five Million Dollar ($225,000,000) on the Closing
Date, as such amount may be adjusted, if at all, from time to time in accordance
with the Agreement.
"REVOLVING NOTE" has the meaning ascribed to it in SECTION
1.1(A)(II).
"RSI" means Reno Standard Incorporated, a Nevada corporation.
"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.
"SI" means Stanric, Inc., a Delaware corporation.
A-24
"SI AMORTIZING AVAILABILITY" means (A) $2,163,000 less $77,250
per Fiscal Quarter commencing with the Fiscal Quarter ending June 30, 2001, plus
(B) the Additional SI Amortizing Availability, minus (C) an amount equal to (i)
85% of the Net Orderly Liquidation Value of any Eligible Equipment, as of the
Closing Date or the date it is purchased by SI, which is the basis of SI
Amortizing Availability, and which is subject to a loss, sale, destruction or
other disposition, less (ii) the product of one-twenty eighth of the amount
determined under the preceding clause (i) and the number of full Fiscal Quarters
that have occurred since the Closing Date or the purchase of such Eligible
Equipment to the date of such loss, sale, destruction or other disposition, as
the case may be.
"SI BORROWING BASE" means, as of any date of termination by
Agent, from time to time, an amount equal to the sum, at such time of :
(a)......up to 85% of the book value of SI's Eligible
Accounts; and
(b)......up to the lesser of (i) 60% of the book value of SI's
Eligible Inventory valued at the lower of cost (determined on a first-in,
first-out basis) or market; or (ii) 85% of the Net Orderly Liquidation Value of
SI's Eligible Inventory as set forth in the most recent appraisal prepared by an
independent appraisal firm acceptable to Agent; and
(c)......up to the lesser of (i) $15,000,000 and (ii) the sum
of (A) 95% of the Pledged Cash and (B) 50% of the market value of the Pledged
Securities; and
(d)......with respect to documentary Letters of Credit opened
solely for the purposes of purchasing Eligible Inventory and having an expiry
date of 90 days or less from the date of issuance, a percentage equal to the
inventory advance rate in effect at the time of issuance of any such Letter of
Credit multiplied by the cost of the goods constituting Eligible Inventory being
purchased under such documentary Letters of Credit (so long as such Eligible
Inventory is (i) fully insured, (ii) is subject to a first priority security
interest in and lien upon such goods in favor of Agent and (iii) is evidenced or
deliverable pursuant to documents, notices, instruments, statements and bills of
lading that have been delivered to Agent or an agent acting on its behalf); and
(e)......SI Amortizing Availability; less
(f)......Letter of Credit Obligations incurred on behalf
of SI,
in each case less any Reserves established by Agent of such
time in its reasonable credit judgment.
"SMP" means Standard Motor Products, Inc., a New York
corporation.
"SMP AMORTIZING AVAILABILITY" means (A) 16,122,000 less
$575,786 per Fiscal Quarter commencing with the Fiscal Quarter ending June 30,
2001, plus (B) the Additional SMP Amortizing Availability, minus (C) an amount
equal to (i) 50% of the Fair Market Value of any Eligible Real Estate as of the
Closing Date or the date it is purchased by SMP or 85% of the Net Orderly
Liquidation Value of any Eligible Equipment as of the Closing Date or the date
it is purchased by SMP, which is the basis of SMP Amortizing Availability, and
which is subject to a loss, sale, destruction or other disposition, less (ii)
A-25
the product of one-twenty eighth of the amount determined under the preceding
clause (i) and the number of full Fiscal Quarters that have occurred since the
Closing Date or the purchase of such Eligible Real Estate or Eligible Equipment
to the date of such loss, sale, destruction or other disposition, as the case
may be.
"SMP 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 85% of the book value of SMP's Eligible
Accounts; and
(b)......up to the lesser of (i) 60% of the book value of
SMP's Eligible Inventory valued at the lower of cost (determined on a first-in,
first-out basis) or market; or (ii) 85% of the Net Orderly Liquidation Value of
SMP's Eligible Inventory as set forth in the most recent appraisal prepared by
an independent appraisal firm acceptable to Agent; and
(c)......with respect to documentary Letters of Credit opened
solely for the purposes of purchasing Eligible Inventory and having an expiry
date of 90 days or less from the date of issuance, a percentage equal to the
inventory advance rate in effect at the time of issuance of any such Letter of
Credit multiplied by the cost of the goods constituting Eligible Inventory being
purchased under such documentary Letters of Credit (so long as such Eligible
Inventory is (i) fully insured, (ii) is subject to a first priority security
interest in and lien upon such goods in favor of Agent and (iii) is evidenced or
deliverable pursuant to documents, notices, instruments, statements and bills of
lading that have been delivered to Agent or an agent acting on its behalf); and
(d)......SMP Amortizing Availability; less
(e)......Letter of Credit Obligations incurred on behalf of
SMP,
in each case less any Reserves established by Agent at such
time in its reasonable credit judgment.
"SMP CANADA" means SMP Motor Products, Ltd., a Canadian
corporation.
"SMP HK" means Standard Motor Products (Hong Kong) Limited, a
Hong Kong Corporation.
"SMP PLEDGE AGREEMENT" means the Pledge Agreement of even date
herewith executed by SMP in favor of Agent, on behalf of itself and Lenders,
pledging all Stock of its Subsidiaries (except with respect to foreign
Subsidiaries other than a "check the box" subsidiary, 51% of the capital stock
shall be pledged), if any, and all Intercompany Notes owing to or held by it.
"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 contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
A-26
of such Person on its debts 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.
"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.
"SUBORDINATED DEBT" means the Indebtedness of SMP evidenced by
the Subordinated Debt Documents and any other Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"SUBORDINATED DEBT DOCUMENTS" means that certain Indenture
dated as of July 26, 1999 between SMP and HSBC Bank USA, as trustee and any
documents, agreements or instruments executed in connection therewith.
"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 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 a Borrower.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty of even
date herewith executed by each domestic Subsidiary of each Borrower and by SMP
Canada, each in favor of Agent, on behalf of itself and Lenders.
"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 and Letter of Credit Obligations.
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"SUPPORTING OBLIGATIONS" has the meaning ascribed thereto in
the Code.
"TANGIBLE NET WORTH" means, with respect to any Person at any
date, the Net Worth of such Person at such date, EXCLUDING, HOWEVER, from the
determination of the total assets at such date, (a) all goodwill, capitalized
organizational expenses, capitalized research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other intangible items, (b) all unamortized debt
discount and expense, (c) treasury Stock, and (d) any write-up in the book value
of any asset resulting from a revaluation thereof.
"TAXES" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or any
political subdivision thereof.
"TERMINATION DATE" means the date on which (a) the Loans have
been indefeasibly repaid in full, (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, canceled or backed by standby
letters of credit in accordance with ANNEX B, and (d) none of Borrowers 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.
"TRADEMARK LICENSE" means rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.
"TRADEMARK SECURITY AGREEMENTS" means the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party.
"TRADEMARKS" means all of the following now owned or hereafter
existing or adopted or acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
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
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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.
"WELFARE PLAN" means a Plan described in Section 3(i) of
ERISA.
Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth in ANNEX G. 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 as in
effect in the State of New York to the extent the same are used or defined
therein. 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 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.
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