Exhibit 4.24
LOAN AND SECURITY AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION
(NEW ENGLAND) as Agent,
CONGRESS FINANCIAL CORPORATION (NEW ENGLAND),
And the other financial institutions party hereto
from time to time as Lenders,
and
CLEAN HARBORS, INC. AND ITS SUBSIDIARIES
as Borrowers
Dated: September 6, 2002
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS. ................................................... 1
SECTION 2. CREDIT FACILITIES. ............................................. 25
SECTION 3. INTEREST AND FEES. ............................................. 32
SECTION 4. CONDITIONS PRECEDENT. .......................................... 35
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST....................... 38
SECTION 6. COLLECTION AND ADMINISTRATION. ................................. 44
SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS. ................. 50
SECTION 8. REPRESENTATIONS AND WARRANTIES. ................................ 53
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS ............................. 60
SECTION 10. EVENTS OF DEFAULT AND REMEDIES ................................. 75
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW. ............................................................. 82
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS ............................... 86
SECTION 13. THE AGENT. ..................................................... 93
SECTION 14. JOINT AND SEVERAL LIABILITY; GUARANTEES. ....................... 99
INDEX TO EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Exhibit B Compliance Certificate
Exhibit C Permitted Holders
Exhibit D Form of Assignment and Acceptance
Schedule 1 Lenders' Pro Rata Shares and Revolving Loan Limits
Schedule 2 Inactive Subsidiaries
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated September 6, 2002 is entered into by
and among Congress Financial Corporation (New England), a Massachusetts
corporation ("Congress") as agent for itself and the other Lenders ("Agent"),
Congress Financial Corporation (New England) and the other financial
institutions from time to time party hereto (each, a "Lender" and, collectively,
"Lenders") and Clean Harbors, Inc., a Massachusetts corporation ("Parent"),
Clean Harbors Canada, Inc. (currently, Safety-Kleen Ltd.), a New Brunswick
corporation, Clean Harbors Mercier, Inc. (currently, Safety-Kleen Services
(Mercier) Ltd.), a Quebec corporation, Clean Harbors Quebec, Inc. (currently,
Safety-Kleen Services (Quebec) Ltd.), a Quebec corporation and 510127 N.B. Inc.,
a New Brunswick corporation (collectively, "Canadian Borrowers" as hereinafter
further defined) and each of the other Subsidiaries of Parent from time to time
a party hereto (each together with Parent and Canadian Borrowers, a "Borrower"
and, collectively, "Borrowers").
W I T N E S S E T H:
WHEREAS, Parent has entered into an Acquisition Agreement dated as of
February 22, 2002, as amended as of March 8, April 30 and September 6, 2002 with
Safety-Kleen Services, Inc. (the "Purchase Agreement") to acquire certain assets
and businesses of the Chemical Services Division (the "Division") of
Safety-Kleen Services, Inc. and certain of its subsidiaries ("Sellers") in a
transaction pursuant to Sections 363/365 of the United States Bankruptcy Code;
WHEREAS, Borrowers have requested that Agent and Lenders enter into
financing arrangements with Borrowers pursuant to which Agent and Lenders may
make loans and provide other financial accommodations to Borrowers;
WHEREAS, Agent and Lenders are willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein; and
WHEREAS, immediately after the consummation of the transactions
contemplated by the Purchase Agreements the name of Safety-Kleen Services
(Mercier) Ltd. will be changed to Clean Harbors Mercier, Inc., the name of
Safety-Kleen Services (Quebec) Ltd. will be changed to Clean Harbors Quebec,
Inc. and the name of Safety-Kleen Ltd. will be changed to Clean Harbors Canada,
Inc;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of each Borrower to
payment of a monetary obligation, whether or not earned by performance, which is
not evidenced by chattel paper or an instrument, (a) for Inventory that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a
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secondary obligation incurred or to be incurred, or (d) arising out of the use
of a credit or charge card or information contained on or for use with the card.
1.2 "Acquisition" means the acquisition of the Division in accordance with
the Purchase Agreements.
1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining the
reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of Reference
Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
1.4 "Adjusted Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its Subsidiaries (if any), the amount
equal to the difference between: (a) the aggregate net book value of all assets
of such Person and its Subsidiaries after deducting from such book values all
appropriate reserves in accordance with GAAP (including all reserves for
doubtful receivables, obsolescence, depreciation and amortization) and (b) the
aggregate amount of the Indebtedness and other liabilities of such Person and
its Subsidiaries (including tax and other proper accruals).
1.5 "Affiliate" shall mean, with respect to a specified Person, any other
Person (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
person; (b) which beneficially owns or holds five (5%) percent or more of any
class of the Voting Stock or other equity interest of such specified person; or
(c) of which five (5%) percent or more of the Voting Stock or other equity
interest is beneficially owned or held by such specified person or a Subsidiary
of such specified person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with") when used with respect to any specified person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of Voting Stock, by agreement or otherwise.
1.6 "Agent" shall mean Congress Financial Corporation (New England) and its
successors and assigns, as administrative and collateral agent for the Lenders
hereunder.
1.7 "Agent Payment Account" shall mean account no. ______________ of Agent
at Wachovia Bank, National Association or such other account as Agent may from
time to time designate to Borrowers as the Agent Payment Account for purposes of
this Agreement.
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1.8 "Assignment and Acceptance" means an Assignment and Acceptance between
a Lender and an Eligible Assignee (with the consent and approval of the Agent)
in the form of Exhibit D hereto.
1.9 "Bankruptcy Court" shall have the meaning set forth in Section 4.1(k)
hereof.
1.10 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.11 "Borrowers" shall mean, collectively, US Borrowers and Canadian
Borrowers; each sometimes being referred to herein individually as a "Borrower".
1.12 "Borrowing Base" shall mean, as to US Borrowers, the US Borrowing Base
and as to Canadian Borrowers, the Canadian Borrowing Base.
1.13 "Borrower Representative" shall have the meaning set forth in Section
2.5 hereof.
1.14 "Business Day" shall mean (a) in connection with any Loans or Letter
of Credit Accommodations made or provided to a Canadian Borrower, or other
matters related exclusively to a Canadian Borrower, any day (i) other than a
Saturday or Sunday or other day on which commercial banks are authorized or
required to close under the laws of the State of New York, the State of North
Carolina, or The Commonwealth of Massachusetts or the Province of Ontario, and
(ii) on which Agent's Canadian Affiliate's offices and the Bank of Montreal are
open for the transaction of business and (b) in connection with any Loans or
Letter of Credit Accommodations made or provided to any other Borrower, any day
other than a Saturday, Sunday, or other day on which commercial banks are
authorized or required to close under the laws of the State of New York, the
State of North Carolina, or The Commonwealth of Massachusetts and a day on which
the Reference Bank and Agent are open for the transaction of business, except
that if a determination of a Business Day shall relate to any Eurodollar Rate
Loans, the term Business Day shall also exclude any day on which banks are
closed for dealings in dollar deposits in the London interbank market or other
applicable Eurodollar Rate market.
1.15 "Canadian Borrowing Base" shall mean, at any time, the amount for each
Canadian Borrower equal to: (a) eighty (80%) percent of the Net Amount of
Eligible Accounts of each such Canadian Borrower (including all Municipal
Government Accounts that are Eligible Accounts), plus (b) sixty-five (65%)
percent of the Net Amount of Federal Government Accounts of each such Canadian
Borrower that are Eligible Accounts, less (c) any Reserves attributable to each
such Canadian Borrower.
1.16 "Canadian Borrowers" shall mean, collectively, the following (together
with their respective successors and assigns): Clean Harbors Canada, Inc.
(currently, Safety-Kleen Ltd.), a New Brunswick corporation, Clean Harbors
Mercier, Inc. (currently, Safety-Kleen Services (Mercier) Ltd.), a Quebec
corporation, Clean Harbors Quebec, Inc. (currently, Safety-Kleen Services
(Quebec) Ltd.), a Quebec corporation, and 510127 N.B. Inc., a New Brunswick
corporation; each being referred to sometimes herein as a "Canadian Borrower".
1.17 "Canadian Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of a Canadian Borrower pursuant to
Section 2 hereof.
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1.18 "Canadian Dollar Equivalent" shall mean at any time (a) as to any
amount denominated in Canadian Dollars, the amount thereof and (b) as to any
amount denominated in US Dollars or any other currency, the equivalent amount in
Canadian Dollars calculated by Agent at such time using the then applicable
Exchange Rate in effect on the Business Day of determination.
1.19 "Canadian Dollar Loans" shall mean any Loans or portion thereof which
are denominated in Canadian Dollars.
1.20 "Canadian Dollars" and "C$" shall each mean the lawful currency of
Canada.
1.21 "Canadian Lender" shall mean Congress Financial Corporation (Canada),
an Ontario corporation, and its successors and assigns.
1.22 "Canadian Letter of Credit Accommodations" shall mean Letter of Credit
Accommodations made by Canadian Lender under the Canadian Credit Facility.
1.23 "Canadian Payment Account" shall mean US Dollar account no.
00002-4635-886 of Canadian Lender at Bank of Montreal for US Dollars and
Canadian Dollar account no. 00002-1258-246 of Canadian Lender at Bank of
Montreal for Canadian Dollars or such other account of Canadian Lender as Agent
may from time to time designate to Parent as the Canadian Payment Account for
purposes of this Agreement and the other Financing Agreements.
1.24 "Canadian Maximum Credit" shall mean C$20,000,000.
1.25 "Canadian Overadvances" shall have the meaning set forth in Section
2.1(e).
1.26 "Canadian Pension Plan" shall mean any plan, program or arrangement
(other than the Canada/Quebec Pension Plan) that is a pension plan for the
purposes of any applicable pension benefits legislation or any tax laws of
Canada or a Province thereof, whether or not registered under any such laws,
which is maintained or contributed to by, or to which there is or may be an
obligation to contribute by, any Borrower in respect of any Person's employment
in Canada with such Borrower.
1.27 "Canadian Prime Rate" shall mean, at any time, the greater of (i) the
rate from time to time publicly announced by Bank of Montreal as its prime rate
in effect for determining interest rates on Canadian Dollar denominated
commercial loans in Canada, whether or not such announced rate is the best rate
available at such bank and (ii) the CDOR Rate at such time plus one (1%) percent
per annum.
1.28 "Canadian Prime Rate Loans" shall mean any Canadian Dollar Loans or
portion thereof on which interest is payable based on the Canadian Prime Rate in
accordance with the terms hereof.
1.29 "Canadian Revolving Loans" shall mean Revolving Loans made by Canadian
Lender under the Canadian Credit Facility.
1.30 "Capital Expenditures" shall mean with respect to any Person for any
period, the sum of (i) the aggregate of all expenditures by such Person and its
Subsidiaries during such
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period that in accordance with GAAP are or should be included in "property,
plant and equipment" or in a similar fixed asset account on its balance sheet,
whether such expenditures are paid in cash or financed and including all Capital
Leases paid or payable during such period, and (ii) to the extent not covered by
clause (i) above, the aggregate of all expenditures by such Person and its
Subsidiaries during such period to acquire by purchase or otherwise the business
or fixed assets of, or the Capital Stock of, any other Person.
1.31 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.32 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock, partnership interests or limited liability company
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
1.33 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America, Canada or any
agency or instrumentality thereof; provided, that, the full faith and credit of
the United States of America or Canada, as applicable, is pledged in support
thereof; (b) certificates of deposit or bankers' acceptances with a maturity of
ninety (90) days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than $250,000,000; (c) commercial paper (including variable rate
demand notes) with a maturity of ninety (90) days or less issued by a
corporation (except any Borrower or an Affiliate of any Borrower) organized
under the laws of any State of the United States of America or the District of
Columbia or organized under the laws of any Province of Canada, or the federal
laws applicable therein and rated at least A-1 by Standard & Poor's Ratings
Service, a division of The McGraw-Hill Companies, Inc. or at least P-1 by
Moody's Investors Service, Inc.; (d) repurchase obligations with a term of not
more than thirty (30) days for underlying securities of the types described in
clause (a) above entered into with any financial institution having combined
capital and surplus and undivided profits of not less than $250,000,000; (e)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the United States of
America, Canada or issued by any governmental agency thereof and backed by the
full faith and credit to the United States of America or Canada, as applicable,
in each case maturing within ninety (90) days or less from the date of
acquisition; provided, that, the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (f) investments in money market funds
and mutual funds which invest substantially all of their assets in securities of
the types described in clauses (a) through (e) above.
1.34 "CDOR Rate" shall mean, on any day, the annual rate of interest which
is the rate based on an average 30 day rate applicable to Canadian Dollar
bankers' acceptances appearing on the "Reuters Screen CDOR Page" (as defined in
the International Swap Dealer Association,
5
Inc. definitions, as modified and amended from time to time) as of 10:00 a.m.
Toronto, Ontario time on such day; provided that if such rate does not appear on
the Reuters Screen CDOR Page as contemplated, then the CDOR Rate on any day
shall be the 30 day rate applicable in Canadian Dollar bankers' acceptances
quoted by the Bank of Montreal as of 10:00 a.m. Toronto, Ontario time on such
day.
1.35 "Change of Control" shall mean (a) except as may be expressly
permitted under Section 9.7 hereof, the transfer (in one transaction or a series
of transactions) of all or substantially all of the assets of any Borrower to
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act); (b) except as may be expressly permitted under Section 9.7 hereof, the
liquidation or dissolution of any Borrower or the adoption of a plan by the
stockholders of any Borrower relating to the dissolution or liquidation of any
Borrower; (c) the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), except for one or more Permitted Holders,
of beneficial ownership, directly or indirectly, of fifty (50%) percent or more
of the voting power of the total outstanding Voting Stock of Parent, or the
Board of Directors of Parent; (d) during any period of two (2) consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of Parent (together with any new directors who have been appointed by
any Permitted Holder, or whose nomination for election by the stockholders of
Parent, as the case may be, was approved by a vote of at least sixty-six and
two-thirds (66 2/3%) percent of the directors then still in office who were
either 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 cessation of legal capacity) to constitute a majority of the Board of
Directors of Parent then still in office; (e) in the case of any Borrower other
than Parent, Parent or Borrowers that own beneficially and of record, Voting
Stock of other Borrowers on the date of this Agreement shall cease to own
beneficially and of record, one hundred (100%) percent of the voting power of
the total outstanding Voting Stock of each such other Borrower or shall cease to
control the appointment of the Board of Directors of each such Borrower; or (f)
the failure of the Permitted Holders to own more than twenty-five (25%) percent
of the voting power of the total outstanding Voting Stock of Parent.
1.36 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.37 "Collateral" shall have the meaning set forth in Section 5.1 hereof.
1.38 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Agent, from any lessor of premises to any
Borrower, or any other person to whom any Collateral (including Inventory,
Equipment, bills of lading or other documents of title) is consigned or who has
custody, control or possession of any such Collateral or is otherwise the owner
or operator of any premises on which any of such Collateral is located, pursuant
to which such lessor, consignee or other person, inter alia, acknowledges the
first priority security interest of Agent in such Collateral, agrees to waive
any and all claims such lessor, consignee or other person may, at any time, has
against such Collateral, whether for processing, storage or otherwise, and
agrees to permit Agent access to, and the right to remain on, the premises of
such lessor, consignee or other person so as to exercise Agent's rights and
remedies and otherwise deal with such Collateral and, in the case of any
consignee or other person who at any time has custody, control or possession of
any Collateral, acknowledges that it
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holds and will hold possession of the Collateral for the benefit of Agent and
agrees to follow all instructions of Agent with respect thereto.
1.39 "Congress" shall mean Congress Financial Corporation (New England) , a
Massachusetts corporation, and its successors and assigns.
1.40 "Consolidated Annualized EBITDA" means, as of any date of
determination, the product of (i) the aggregate amount of Consolidated EBITDA
for those fiscal quarters commencing on or after October and ending on or prior
to such date of determination , multiplied by (ii) a fraction, the numerator of
which shall be the number 12 and the denominator of which shall equal the total
number of calendar months that have elapsed since October 1, 2002.
1.41 "Consolidated EBITDA" shall mean with respect to any Person for any
period, the Consolidated Net Income of such Person and its Subsidiaries for such
period, plus (i) without duplication, the sum of the following amounts of such
Person and its Subsidiaries for such period, in each case and to the extent
deducted in determining Consolidated Net Income of such Person for such period:
(A) Consolidated Net Interest Expense, (B) income tax expense determined on a
consolidated basis in accordance with GAAP, (C) depreciation expense determined
on a consolidated basis in accordance with GAAP, and (D) amortization expense
determined on a consolidated basis in accordance with GAAP.
1.42 "Consolidated Net Income" shall mean with respect to any Person for
any period, the net income (loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis and in accordance with GAAP, but
excluding from the determination of Consolidated Net Income (without
duplication): (a) any extraordinary or non recurring gains or losses or gains or
losses from dispositions of assets of such Person and Subsidiaries (other than
Inventory in the ordinary course of business on ordinary business terms), (b)
restructuring charges, (c) effects of discontinued operations, (d) interest
income, and (e) extraordinary or non recurring costs otherwise included in the
calculation of Consolidated Net Income that were incurred during 2002 in
connection with the Acquisition and the related financing transactions.
1.43 "Consolidated Net Interest Expense" shall mean with respect to any
Person for any period, gross interest expense of such Person and its
Subsidiaries for such period determined on a consolidated basis and in
accordance with GAAP (including, without limitation, interest expense paid to
Affiliates of such Person), less (i) the sum of (A) interest income for such
period, (B) gains for such period on Hedging Agreements (to the extent not
included in interest income above and to the extent not deducted in the
calculation of gross interest expense), and (C) amortization of extraordinary or
non recurring costs otherwise included in gross interest expense that were
incurred during 2002 in connection with the Acquisition and the related
financing transactions (but only to the extent such costs would be deducted in
the determination of Consolidated Net Income without regard to the exclusion set
forth in clause (e) of the definition of "Consolidated Net Income") plus (ii)
the sum of (A) losses for such period on Hedging Agreements (to the extent not
included in gross interest expense) and (B) the upfront costs or fees for such
period associated with Hedging Agreements (to the extent not included in gross
interest expense), in each case, determined on a consolidated basis and in
accordance with GAAP.
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1.44 "Credit Facility" shall mean, collectively, the US Credit Facility and
the Canadian Credit Facility.
1.45 "Currency Due" shall have the meaning set forth in Section 11.6
hereof.
1.46 "Deed of Hypothec" means, collectively, (a) Deed of Hypothec executed
or to be executed by Clean Harbors Mercier, Inc. (currently, Safety-Kleen
Services (Mercier) Ltd.), a Quebec corporation, pursuant to which it
hypothecates its Collateral in favour of the Agent pursuant to the provisions of
Article 2692 of the Civil Code of Quebec, and (b) the Deed of Hypothec executed
or to be executed by Clean Harbors Quebec, Inc. (currently, Safety-Kleen
Services (Quebec) Ltd.), a Quebec corporation, pursuant to which it hypothecates
its Collateral in favour of the Agent pursuant to the provisions of Article 2692
of the Civil Code of Quebec.
1.47 "Default" shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.
1.48 "Default Rate" shall mean the Interest Rate specified in the proviso
to Section 1.83 hereto.
1.49 "Delinquent Lender" shall have the meaning set forth in Section
13.5(c) hereof.
1.50 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, a
Borrower, and any bank at which any deposit account of any Borrower is at any
time maintained and such Borrower which provides that such bank will comply with
instructions originated by Agent directing disposition of the funds in the
deposit account without further consent by such Borrower and such other terms
and conditions as Agent may require, including as to any such agreement with
respect to any Blocked Account, providing that all items received or deposited
in the Blocked Accounts are the property of Agent, that the bank has no lien
upon, or right to setoff against, the Blocked Accounts, the items received for
deposit therein, or the funds from time to time on deposit therein and that the
bank will wire, or otherwise transfer, in immediately available funds, on a
daily basis to the Agent Payment Account (in the case of the US Borrowers) and
to the Canadian Payment Account (in the case of the Canadian Borrowers) all
available funds received or deposited into the Blocked Accounts.
1.51 "Division" shall have the meaning set forth in the recitals.
1.52 "Eligible Accounts" shall mean Accounts created by Borrowers which are
and continue to be acceptable to Agent based on the criteria set forth below. In
general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and delivery of
Inventory by a Borrower or rendition of services by a Borrower in the
ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents
related thereto;
(b) such Accounts are not unpaid more than the ninety (90) days after the
date of the original invoice for them;
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(c) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed sale,
sale and return, sale on approval, or other terms under which payment
by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to such
Accounts is located in the United States of America, Puerto Rico or
Canada (provided, that, at any time promptly upon Agent's request,
Borrowers shall execute and deliver, or cause to be executed and
delivered, such other agreements, documents and instruments as may be
required by Agent to perfect the security interests of Agent in those
Accounts of an account debtor with its chief executive office or
principal place of business in Puerto Rico or Canada in accordance
with the applicable laws of the Commonwealth of Puerto Rico or the
Province of Canada in which such chief executive office or principal
place of business is located and take or cause to be taken such other
and further actions as Agent may request to enable Agent as secured
party with respect thereto to collect such Accounts under the
applicable laws of Puerto Rico or Federal or Provincial laws of
Canada) or, at Agent's option, if the chief executive office and
principal place of business of the account debtor with respect to such
Accounts is located other than in the United States of America, Puerto
Rico or Canada, then if: (i) the account debtor has delivered to
Borrowers an irrevocable letter of credit issued or confirmed by a
bank satisfactory to Agent and payable only in the United States of
America and in US dollars, sufficient to cover such Account, in form
and substance satisfactory to Agent and if required by Agent, the
original of such letter of credit has been delivered to Agent or
Agent's agent and Borrowers have complied with the terms of Section
5.2(f) hereof with respect to the assignment of the proceeds of such
letter of credit to Agent or naming Agent as transferee beneficiary
thereunder, as Agent may specify, (ii) such Account is subject to
credit insurance payable to Agent issued by an insurer and on terms
and in an amount acceptable to Agent, or (iii) such Account is
otherwise acceptable in all respects to Agent (subject to such lending
formula with respect thereto as Agent may determine);
(f) such Accounts do not consist of progress billings (such that the
obligation of the account debtors with respect to such Accounts is
conditioned upon a Borrower's satisfactory completion of any further
performance under the agreement giving rise thereto), bill and hold
invoices or retainage invoices, except as to bill and hold invoices,
if Agent shall have received an agreement in writing from the account
debtor, in form and substance satisfactory to Agent, confirming the
unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to any right of setoff or
recoupment against such Accounts (but the portion of the Accounts of
such account debtor in excess of the amount at any
9
time and from time to time owed by any Borrower to such account debtor
or claimed owed by such account debtor may be deemed Eligible
Accounts);
(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce
the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and perfected
security interest of Agent as to Accounts of US Borrower and first
priority, valid and perfected security interest, lien and first
ranking hypothec of Agent and, to the extent applicable, in the case
of the Hypothec, the Canadian Lender, as to Accounts of Canadian
Borrowers and any goods giving rise thereto are not, and were not at
the time of the sale thereof, subject to any claims, liens, security
interest or hypothecs except those permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the account
debtor with respect to such Accounts is an officer, employee, agent or
other Affiliate of any Borrower;
(k) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, Canada, any
Province, political subdivision, department, agency or instrumentality
thereof, unless, upon Agent's request, if (i) the account debtor is
the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, such Borrower has
assigned its rights to payment of such Account to Agent pursuant to
and in accordance with the Federal Assignment of Claims Act of 1940,
as amended, or pursuant to any similar State or local law, regulation
or requirement or (ii) the account debtor is Her Majesty in right of
Canada or any Canadian provincial or local governmental entity, or any
ministry, such Borrower has assigned its rights to payment of such
Account to Agent pursuant to and in accordance with the Financial
Administration Act, R.S.C. 185, c.F-11, as amended, or any similar
applicable provincial or local law, regulation or requirement;
(l) there are no proceedings or actions which are threatened or pending
against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's
financial condition;
(m) such Accounts are not evidenced by or arising under any instrument or
chattel paper;
(n) such Accounts of a single account debtor or its affiliates do not
constitute more than twenty (20%) percent of all otherwise Eligible
Accounts (but the portion of the Accounts not in excess of such
percentage may be deemed Eligible Accounts);
(o) such Accounts are not owed by an account debtor who has Accounts
unpaid more than ninety (90) days after the original invoice date for
them which constitute more than fifty (50%) percent of the total
Accounts of such account debtor;
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(p) the account debtor is not located in a state requiring the filing of a
Notice of Business Activities Report or similar report in order to
permit Borrowers to seek judicial enforcement in such State of payment
of such Account, unless the Borrower doing business with such account
debtor has qualified to do business in such state or has filed a
Notice of Business Activities Report or equivalent report for the then
current year or such failure to file and inability to seek judicial
enforcement is capable of being remedied without any material delay or
material cost;
(q) such Accounts are owed by account debtors whose total indebtedness to
Borrowers does not exceed the credit limit with respect to such
account debtors as determined by Borrowers from time to time and as is
reasonably acceptable to Agent (but the portion of the Accounts not in
excess of such credit limit may be deemed Eligible Accounts); and
(r) such Accounts are owed by account debtors deemed creditworthy at all
times by Agent in good faith.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from Borrowers prior to the date hereof, in either case under clause (i) or (ii)
which adversely affects or could reasonably be expected to adversely affect the
Accounts in the good faith determination of Agent. Any Accounts which are not
Eligible Accounts shall nevertheless be part of the Collateral.
1.53 "Eligible Assignee" shall mean any of the following: (i) a commercial
bank, insurance company, or finance company or a subsidiary thereof organized
under the laws of the United States, or any State thereof or the District of
Columbia, and having total assets in excess of $1,000,000,000 or, in the case of
the Canadian Credit Facility, any Affiliate thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with GAAP or, in the case of the
Canadian Credit Facility, any Affiliate thereof; (iii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; (iv) the central bank of any country which is a member of
the OECD; and (v) if, but only if, an Event of Default has occurred and is
continuing, any other bank, insurance company, finance company or other
financial institution or Affiliate thereof approved by the Agent, in good faith.
1.54 "Environmental Laws" shall mean all foreign, Federal, State,
Provincial and local laws (including common law), legislation, rules, codes,
licenses, permits (including any conditions imposed therein), authorizations,
judicial or administrative decisions, injunctions or agreements between any
Borrower and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water
vapor, surface
11
water, ground water, drinking water, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource), or to
human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, the Canadian Environmental Assessment Act, the Canadian
Environmental Protection Act, the Environmental Assessment Act (Ontario), and
the Environmental Protection Act (Ontario) and any equivalent act or statute in
Quebec or New Brunswick; (ii) applicable state or provincial counterparts to
such laws, and (iii) any common law or equitable doctrine that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Materials.
1.55 "Equipment" shall mean all of Borrowers' now owned and hereafter
acquired equipment, wherever located, including machinery, data processing and
computer equipment and computer hardware and software, whether owned or
licensed, and including embedded software, vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located.
1.56 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.57 "ERISA Affiliate" shall mean any person required to be aggregated with
any Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m) or
414(o) of the Code.
1.58 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which any Borrower or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which any Borrower or any of its Subsidiaries could otherwise be
liable; (f) a complete or partial withdrawal by any Borrower or any ERISA
Affiliate from a Multiemployer Plan or a cessation of operations which is
treated as a withdrawal or notification that a Multiemployer Plan is in
reorganization; (g) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Plan;
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(h) an event or condition which 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 Plan; (i) the imposition of any liability under
Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums
due but not delinquent under Section 4007 of ERISA, upon any Borrower or any
ERISA Affiliate; and (j) any other event or condition with respect to a Plan
including any Plan subject to Title IV of ERISA maintained, or contributed to,
by any ERISA Affiliate that could reasonably be expected to result in liability
of any Borrower in excess of $250,000.00.
1.59 "Eurodollar Rate" shall mean with respect to the Interest Period for a
Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrowers and approved by Agent) on or
about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to Borrowers in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by Borrower.
1.60 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.61 "Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.
1.62 "Excess Availability" shall mean:
(a) as to US Borrowers, the amount, as determined by Agent, calculated
at any time, equal to: (a) the lesser of: (i) the US Borrowing Base and (ii) the
US Maximum Credit, minus (b) the sum of: (i) the amount of all then outstanding
and unpaid Obligations of US Borrowers, plus (ii) the aggregate amount of all
then outstanding and unpaid trade payables and other obligations of US Borrowers
which are more than sixty (60) days past due as of such time, plus (iii) the
aggregate amount of checks issued by US Borrowers to pay trade payables and
other obligations which are more than sixty (60) days past due as of such time,
but not yet sent (but without duplication of clause (b)(ii)) and the aggregate
book overdraft of US Borrowers; and
(b) as to Canadian Borrowers, the amount, as determined by Agent,
calculated at any time, equal to: (a) the lesser of: (i) the Canadian Borrowing
Base and (ii) the Canadian Maximum Credit, minus (b) the sum of: (i) the amount
of all then outstanding and unpaid Obligations of Canadian Borrowers, plus (ii)
the aggregate amount of all then outstanding and unpaid trade payables and other
obligations of Canadian Borrowers which are more than sixty (60) days past due
as of such time, plus (iii) the aggregate amount of checks issued by Canadian
Borrowers to pay trade payables and other obligations which are more than sixty
(60) days past due as of such time, but not yet sent (but without duplication of
clause (b)(ii)) and the aggregate book overdraft of Canadian Borrowers.
1.63 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
13
1.64 "Exchange Rate" shall mean the prevailing spot rate of exchange of
Reference Bank or, in the case of the Canadian Credit Facility, Bank of Montreal
or if such rate is not available from Reference Bank or Bank of Montreal, as
applicable, such other bank as Agent may reasonably select for the purpose of
conversion of one currency to another, at or around 11:00 a.m. Boston time, on
the date on which any such conversion of currency is to be made under this
Agreement.
1.65 "Excluded Taxes" shall have the meaning set forth in Section 6.8
hereof.
1.66 "Federal Funds Rate" shall mean, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such a rate is not so
published for any day that is a Business Day, the average (rounded upward, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by Agent from three federal funds brokers of recognized
standing selected by Agent.
1.67 "Federal Government Account" shall mean an Account in which the
account debtor with respect to such Account is the United States of America or
Canada or a department, agency or instrumentality thereof.
1.68 "Final Order" shall have the meaning set forth in Section 4.1(k)
hereof.
1.69 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements, hypothecs, mortgages, deeds of
trust, deeds to secure debts, deposit account control agreements, intercreditor
agreements and all other agreements, documents and instruments now or at any
time hereafter executed and/or delivered by any Borrower or any Obligor in
connection with this Agreement.
1.70 "First Rate" shall have the meaning set forth in Section 3.1(e)
hereof.
1.71 "Fixed Charge Coverage Ratio" shall mean with respect to any Person
for any period, the ratio of (i) Consolidated EBITDA of such Person and its
Subsidiaries for such period, to (ii) the sum of (A) all principal of
Indebtedness of such Person and its Subsidiaries scheduled to be paid or prepaid
(excluding any prepayment of the Term Debt) during such period (and in the case
of this Agreement, to the extent there is an equivalent permanent reduction in
the Maximum Credit and Revolving Loan Limits hereunder), plus (B) Consolidated
Net Interest Expense of such Person and its Subsidiaries for such period, plus
(C) income taxes paid or payable by such Person and its Subsidiaries during such
period, plus (D) cash dividends or distributions paid by such Person and its
Subsidiaries (other than, in the case of any Borrower, dividends or
distributions paid by such Borrower to any other Borrower) during such period,
plus (E) Capital Expenditures made by such Person and its Subsidiaries during
such period. In determining the Fixed Charge Coverage Ratio for a particular
period (w) pro forma effect will be given to: (1) the incurrence, repayment or
retirement of any Indebtedness by such Person and its Subsidiaries since the
first day of such period as if such Indebtedness was incurred, repaid or retired
on the first day of such period and (2) the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any property or assets acquired or disposed of by such Person and its
Subsidiaries since the first day of such period, as if such acquisition or
disposition occurred on the first day of such period; (x) interest on
14
Indebtedness bearing a floating interest rate will be computed as if the rate at
the time of computation had been the applicable rate for the entire period; (y)
if such Indebtedness bears, at the option of such Person and its Subsidiaries, a
fixed or floating rate of interest, interest thereon will be computed by
applying, at the option of such Person, either the fixed or floating rate; and
(z) the amount of Indebtedness under a revolving credit facility will be
computed based upon the average daily balance of such Indebtedness during such
period.
1.72 "FRBP" shall have the meaning set forth in Section 4.1(k) hereof.
1.73 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the most recent audited financial statements
delivered to Lender prior to the date hereof.
1.74 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
1.75 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.76 "Hedging Agreements" shall mean any interest rate, foreign currency,
commodity or equity swap, collar, cap, floor or forward rate agreement, or other
agreement or arrangement designed to protect against fluctuations in interest
rates or currency, commodity or equity values (including, without limitation,
any option with respect to any of the foregoing and any combination of the
foregoing agreements or arrangements), and any confirmation executed in
connection with any such agreement or arrangement.
1.77 "Inactive Subsidiaries" shall mean the Subsidiaries of the Borrowers
listed on Schedule 2.
1.78 "Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes an
account
15
payable to a trade creditor (whether or not an Affiliate) created, incurred,
assumed or guaranteed by such Person in the ordinary course of business of such
Person in connection with obtaining goods, materials or services that is not
overdue by more than ninety (90) days, unless the trade payable is being
contested in good faith); (c) all obligations as lessee under leases which have
been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any
contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances or similar documents or instruments issued for such
Person's account; and (g) all indebtedness of such Person in respect of
indebtedness of another Person for borrowed money or indebtedness of another
Person otherwise described in this definition which is secured by any consensual
lien, security interest, collateral assignment, conditional sale, mortgage, deed
of trust, or other encumbrance on any asset of such Person, whether or not such
obligations, liabilities or indebtedness are assumed by or are a personal
liability of such Person, all as of such time.
1.79 "Information Certificate" shall mean, collectively, the Information
Certificates of Borrowers constituting Exhibit A hereto containing material
information with respect to Borrowers, their business and assets provided by or
on behalf of Borrowers to Agent in connection with the preparation of this
Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.80 "Intellectual Property" shall mean Borrowers' now owned and hereafter
arising or acquired: patents, patent rights, patent applications, copyrights,
works which are the subject matter of copyrights, copyright registrations,
trademarks, trade names, trade styles, trademark and service mark applications,
and licenses and rights to use any of the foregoing; all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the
foregoing; all rights to sue for past, present and future infringement of any of
the foregoing; inventions, trade secrets, formulae, processes, compounds,
drawings, designs, blueprints, surveys, reports, manuals, and operating
standards; goodwill (including any goodwill associated with any trademark or the
license of any trademark); customer and other lists in whatever form maintained;
and trade secret rights, copyright rights, rights in works of authorship, domain
names and domain name registrations; software and contract rights relating to
software, in whatever form created or maintained.
1.81 "Intercreditor Agreement" shall mean the Intercreditor Agreement among
Agent, Term Loan Agent, and Borrowers as such may be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.82 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), or three (3) months duration as Borrowers may
elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar
16
Rate market; provided, that, Borrowers may not elect an Interest Period which
will end after the last day of the then-current term of this Agreement.
1.83 "Interest Rate" shall mean, as to US Prime Rate Loans, a rate equal to
the US Prime Rate, as to Canadian Prime Rate Loans, a rate equal to the Canadian
Prime Rate and as to Eurodollar Rate Loans, a rate of three (3.00%) percent per
annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by Borrower as in effect three (3)
Business Days after the date of receipt by Agent of the request of Borrower for
such Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to Borrower); provided,
that, notwithstanding anything to the contrary contained herein, the Interest
Rate shall mean the rate of two and one half (2.50%) percent per annum in excess
of the rate then applicable as to Prime Rate Loans and the rate of five and one
half (5.50%) percent per annum in excess of the rate then applicable as to
Eurodollar Rate Loans, at Agent's option (or as directed by the Majority
Lenders), without notice, (a) either (i) for the period on and after the date of
termination or non-renewal hereof until such time as all Obligations are
indefeasibly paid and satisfied in full in immediately available funds, or (ii)
for the period from and after the date of the occurrence of any Event of
Default, and for so long as such Event of Default is continuing as determined by
Agent and (b) on the Revolving Loans at any time outstanding in excess of the
amounts available to Borrower under Section 2 (whether or not such excess(es)
arise or are made with or without Agent's knowledge or consent and whether made
before or after an Event of Default).
1.84 "Inventory" shall mean all of Borrowers' now owned and hereafter
existing or acquired goods, wherever located, which (a) are leased by any
Borrower as lessor; (b) are held by any Borrower for sale or lease or to be
furnished under a contract of service; (c) are furnished by any Borrower under a
contract of service; or (d) consist of raw materials, work in process, finished
goods or materials used or consumed in their business.
1.85 "Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, a
Borrower and any securities intermediary, commodity intermediary or other person
who has custody, control or possession of any investment property of such
Borrower acknowledging that such securities intermediary, commodity intermediary
or other person has custody, control or possession of such investment property
on behalf of Agent, that it will comply with entitlement orders originated by
Agent with respect to such investment property, or other instructions of Agent,
or (as the case may be) apply any value distributed on account of any commodity
contract as directed by Agent, in each case, without the further consent of such
Borrower and including such other terms and conditions as Agent may require.
1.86 "Judgment Currency" shall have the meaning set forth in Section 11.6
hereof.
1.87 "LC Participant" shall have the meaning set forth in Section 2.4(j)
hereof.
1.88 "Lender" shall have the meaning set forth in the preamble hereto and,
with respect to Letter of Credit Accommodations, any issuer of a Letter of
Credit Accommodation including, without limitation, the Reference Bank in the
case of the US Credit Facility and Bank of Montreal in the case of the Canadian
Credit Facility.
17
1.89 "Letter of Credit Accommodations" shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties which are from time
to time either: (a) issued or opened by Agent or any Lender for the account of
any Borrower or any Obligor, or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer including, without
limitation, the Reference Bank or Bank of Montreal, as applicable, the
performance by any Borrower of its obligations to such issuer: sometimes being
referred to herein individually as a "Letter of Credit Accommodation".
1.90 "License Agreements" shall have the meaning set forth in Section 8.11
hereof.
1.91 "Loans" shall mean the Revolving Loans, Overadvances and the SwingLine
Loans.
1.92 "Majority Lenders" shall mean, as of any date, Lenders whose Pro Rata
Shares aggregate 51% or more of the Credit Facilities; provided that if any
Lender breaches its obligation to fund any Loan, for so long as such breach
exists, its Pro Rata Share for the purpose of determining voting rights
hereunder shall be reduced to zero.
1.93 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of any Borrower
involving monetary liability of or to any Person in an amount in excess of
$1,000,000.00 in any fiscal year and (b) any other contract or other agreement
(other than the Financing Agreements), whether written or oral, to which any
Borrower is a party as to which the breach, non-performance, cancellation or
failure to renew by any party thereto would have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations or prospects of any Borrower or the validity or enforceability of
this Agreement, any of the other Financing Agreements, or any of the rights and
remedies of Agent or Lenders hereunder or thereunder.
1.94 "Maximum Credit" shall mean the amount of $100,000,000.
1.95 "Movable Hypothec" means, collectively, (a) the Movable Hypothec
executed or to be executed by Clean Harbors Mercier, Inc. (currently,
Safety-Kleen Services (Mercier), Ltd.), a Quebec corporation, pursuant to which
it pledges the bond issued or to be issued under the Deed of Hypothec executed
or to be executed by it in favour of the Agent, and (b) the Movable Hypothec
executed or to be executed by Clean Harbors Quebec, Inc. (currently,
Safety-Kleen Services (Quebec), Ltd.), a Quebec corporation, pursuant to which
it pledges the bond issued or to be issued under the Deed of Hypothec executed
or to be executed by it in favour of the Agent.
1.96 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by any Borrower or any
ERISA Affiliate.
1.97 "Municipal Government Account" shall mean an Account in which the
account debtor with respect to such Account is a state, province or a political
subdivision, department, agency or instrumentality thereof.
1.98 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof, and (b) returns,
18
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed with respect thereto.
1.99 "Net Amount of Federal Government Accounts" shall mean the gross
amount of Federal Government Accounts less (a) sales, excise or similar taxes
included in the amount thereof, and (b) returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed with respect thereto.
1.100 "New Lending Office" shall have the meaning set forth in Section
6.8(e) hereof.
1.101 "Non-U.S. Person" shall have the meaning set forth in Section 6.8(e)
hereof.
1.102 "Obligations" shall mean any and all Revolving Loans, Overadvances,
SwingLine Loans, Loans made by Agent pursuant to Section 6.6 hereof, Letter of
Credit Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by any Borrower to Agent and/or Lenders
and/or their respective affiliates, including principal, interest, charges,
fees, costs and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, arising under this Agreement or under the
other Financing Agreements, including, without limitation, with respect to any
Hedging Agreements, whether now existing or hereafter arising, whether arising
before, during or after the initial or any renewal term of this Agreement or
after the commencement of any case with respect to any Borrower under the United
States Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the
Companies' Creditors Arrangement Act (Canada) or any similar statute (including
the payment of interest and other amounts which would accrue and become due but
for the commencement of such case, whether or not such amounts are allowed or
allowable in whole or in part in such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, and however acquired by Agent
or any Lender.
1.103 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than a Borrower.
1.104 "Other Taxes" shall mean any present or future stamp or documentary
taxes or any other exercise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any of the
other Financing Agreements.
1.105 "Overadvances" shall have the meaning set forth in Section 2.1(e).
1.106 "Parent" shall mean Clean Harbors, Inc., a Massachusetts corporation,
and its successors and assigns.
1.107 "Permitted Holders" shall mean the persons listed on Exhibit C hereto
and their respective successors and assigns.
1.108 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint
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stock corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.109 "Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Borrower sponsors, maintains, or to which it makes, is making,
or is obligated to make contributions, or in the case of a Multiemployer Plan
has made contributions at any time during the immediately preceding six (6) plan
years.
1.110 "PPSA" shall mean the Personal Property Security Act as in effect in
the Province of Ontario, the Civil Code of Quebec as in effect in the Province
of Quebec, the Personal Property Security Act as in effect in the Province of
New Brunswick or any other Canadian Federal or Provincial statute pertaining to
the granting, perfecting, priority or ranking of security interests, liens,
hypothecs on personal property, and any successor statutes, together with any
regulations thereunder, in each case as in effect from time to time. References
to sections of the PPSA shall be construed to also refer to any successor
sections.
1.111 "Prime Rate Loans" shall mean US Prime Rate Loans and Canadian Dollar
Prime Rate Loans.
1.112 "Priority Payables" shall mean, as to any Canadian Borrower at any
time, (a) the full amount of the liabilities of such Borrower at such time which
(i) have a trust imposed to provide for payment or a security interest, pledge,
lien or charge ranking or capable of ranking senior to or pari passu with
security interests, liens or charges securing the Obligations on any of the
Eligible Accounts of such Borrower under Federal, Provincial, State, county,
district, municipal, or local law, or (ii) have a right imposed to provide for
payment ranking or capable of ranking senior to or pari passu with the
Obligations under local or national law, regulation or directive, including, but
not limited to, claims for unremitted and/or accelerated rents, taxes, wages,
withholding taxes, VAT and other amounts payable to an insolvency administrator,
employee withholdings or deductions and vacation pay, workers' compensation
obligations, government royalties or pension fund obligations in each case to
the extent such trust, or security interest, lien or charge has been or may be
imposed.
1.113 "Pro Rata Share" shall mean, with respect to a Lender at any time,
such Lender's percentage of the US Credit Facility or Canadian Credit Facility,
as applicable, as set forth on Schedule 1 thereto.
1.114 "Proportionate Share" shall have the meaning set forth in Section
14.3 hereof.
1.115 "Purchase Agreements" shall mean, individually and collectively, the
Acquisition Agreement, dated February 22, 2002, as amended as of March 8, April
30 and September 6, 2002 between Parent and Safety-Kleen Services, Inc.,
together with bills of sale, quitclaim deeds, assignment and assumption
agreements and such other instruments of transfer as are referred to therein and
all side letters with respect thereto, and all agreements, documents and
instruments executed and/or delivered in connection therewith, as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced; provided, that, the term "Purchase
Agreements" as used herein shall not include any of the "Financing Agreements"
as such term is defined herein.
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1.116 "Purchased Assets" shall mean all of the assets and properties
acquired by Borrowers from Sellers pursuant to the Purchase Agreements.
1.117 "Real Property" shall mean all now owned and hereafter acquired real
property of Borrowers, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located.
1.118 "Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of each Borrower: (a) all Accounts; (b) all amounts
at any time payable to any Borrower in respect of the sale or other disposition
by such Borrower of any Account or other obligation for the payment of money;
(c) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (d) all payment intangibles of each Borrower and other contract rights,
chattel paper, instruments, notes, and other forms of obligations owing to any
Borrower, whether from the sale and lease of goods or other property, licensing
of any property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by any Borrower or to or for the
benefit of any third person (including loans or advances to any Affiliates or
Subsidiaries of Borrowers) or otherwise associated with any Accounts, Inventory
or general intangibles of Borrowers (including, without limitation, choses in
action, causes of action, tax refunds, tax refund claims, any funds which may
become payable to any Borrower in connection with the termination of any Plan or
other employee benefit plan and any other amounts payable to any Borrower from
any Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance relating to or
arising out of Collateral and any proceeds thereof and proceeds of insurance
covering the lives of employees on which Borrower is beneficiary).
1.119 "Receiver" shall have the meaning set forth in Section 10.2(j)
hereof.
1.120 "Records" shall mean all of Borrowers' present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrowers with respect to the
foregoing maintained with or by any other person).
1.121 "Reference Bank" shall mean Wachovia Bank, National Association, and
its successors and assigns, or such other bank as Agent may from time to time
designate.
1.122 "Register" shall have the meaning set forth in Section 12.8 hereof.
1.123 "Report" shall have the meaning set forth in Section 13.13 hereof.
1.124 "Reserves" shall mean as of any date of determination, such amounts
as Agent may from time to time establish and revise in good faith reducing the
amount of Revolving Loans and Letter of Credit Accommodations which would
otherwise be available to Borrowers under the lending formula(s) provided for
herein: (a) to reflect events, conditions, contingencies
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or risks which, as determined by Agent in good faith, adversely affect, or would
have a reasonable likelihood of adversely affecting, either (i) the Collateral
or any other property which is security for the Obligations or its value, (ii)
the assets, business or prospects of any Borrower or any Obligor or (iii) the
security interests and other rights of Agent in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Agent's good
faith belief that any collateral report or financial information furnished by or
on behalf of any Borrower or any Obligor to Agent is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) to reflect
outstanding Letter of Credit Accommodations as provided in Section 2.4 hereof;
or (d) in respect of any state of facts which Agent determines in good faith
constitutes a Default or an Event of Default; or (e) to reflect the amounts of
the Priority Payables; or (f) to reflect Agent's good faith estimate of the
amount necessary to reflect changes in applicable currency exchange rates or
currency exchange markets; or (g) to reflect rent and other amounts as Agent may
determine in good faith payable to owners, lessor or licensors of Real Property
leased or used by any Borrower, which do not enter into Collateral Access
Agreements acceptable to Agent. To the extent Agent may revise the lending
formulas used to determine the Borrowing Base or establish new criteria or
revise existing criteria for Eligible Accounts so as to address any
circumstances, condition, event or contingency in a manner satisfactory to
Agent, Agent shall not establish a Reserve for the same purpose. The amount of
any Reserve established by Agent shall have a reasonable relationship to the
event, condition or other matter which is the basis for such reserve as
determined by Agent in good faith.
1.125 "Revolving Loan Limit" shall mean, with respect to each Lender at any
time, the amount set forth on Schedule 1 hereto representing the aggregate
amount such Lender has agreed to make in Revolving Loans and to participate in
Letter of Credit Accommodations under the US Credit Facility or Canadian Credit
Facility, as applicable, hereunder.
1.126 "Revolving Loan Priority Collateral" shall have the meaning given
such term in the Intercreditor Agreement.
1.127 "Revolving Loans" shall mean the loans now or hereafter made by
Lenders to or for the benefit of Borrowers on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.128 "Sale Order" shall have the meaning set forth in Section 4.1(k)
hereof.
1.129 "Sellers" shall mean Safety-Kleen Services, Inc., a Delaware
corporation, and its subsidiaries that are sellers under the Purchase
Agreements, and their successors and assigns.
1.130 "Solvent" shall mean, at any time with respect to any Person, that at
such time such Person (a) is able to pay its debts as they mature and has (and
has a reasonable basis to believe it will continue to have) sufficient capital
(and not unreasonably small capital) to carry on its business consistent with
its practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation (and including as assets for this purpose at a fair
valuation all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
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1.131 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited liability company, limited liability partnership or
other limited or general partnership, trust, association or other business
entity of which an aggregate of at least a majority of the outstanding Capital
Stock or other interests entitled to vote in the election of the board of
directors of such corporation (irrespective of whether, at the time, Capital
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), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.132 "SwingLine Loans" shall have the meaning set forth in Section 2.3
hereof.
1.133 "Taxes" shall mean any and all future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
1.134 "Termination Date" shall the meaning set forth in Section 12.1
hereof.
1.135 "Term Debt" shall mean the term loans made by the Term Loan Lenders
under the Term Loan Agreement and all indebtedness, liabilities and obligations
of every kind, nature and description owing by any Borrower to Term Loan Lenders
under the Term Loan Agreement, whether now existing or hereafter arising.
1.136 "Term Loan Agreement" shall mean the Financing Agreement dated as of
the date hereof among the Term Loan Agent, Term Lenders, and Borrowers and all
promissory notes, instruments, documents and agreements now or hereafter
executed and delivered by any Borrower or any Obligor in connection therewith,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.137 "Term Loan Agent" shall mean Ableco Finance, LLC in its capacity as
agent for the Term Loan Lenders under the Term Loan Agreement.
1.138 "Term Loan Lenders" shall mean the lenders identified in the Term
Loan Agreement to be making the Term Debt available to Borrowers and their
respective successors and assigns.
1.139 "Transferee" shall have the meaning set forth in Section 6.8 hereof.
1.140 "UCC" shall mean the Uniform Commercial Code as in effect in The
Commonwealth of Massachusetts, and any successor statute, as in effect from time
to time (except that terms used herein which are defined in the Uniform
Commercial Code as in effect in The Commonwealth of Massachusetts on the date
hereof shall continue to have the same meaning notwithstanding any replacement
or amendment of such statute except as Lender may otherwise determine).
1.141 "US Borrowers" shall mean Parent, each of its Subsidiaries (other
than Canadian Borrowers and Inactive Subsidiaries) and each of their successors
and assigns.
1.142 "US Borrowing Base" shall mean, at any time, as to US Borrowers, the
amount equal to: (a) eighty (80%) of the Net Amount of Eligible Accounts of US
Borrowers (including
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all Municipal Government Accounts of US Borrowers that are Eligible Accounts),
plus (b) sixty-five (65%) percent of the Net Amount of Federal Government
Accounts of US Borrowers that are Eligible Accounts, less (c) any Reserves
attributable to US Borrowers.
1.143 "US Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of US Borrowers pursuant to
Section 2 hereof.
1.144 "US Dollar Equivalent" shall mean at any time (a) as to any amount
denominated in US Dollars, the amount thereof at such time, and (b) as to any
amount denominated in any other currency, the equivalent amount in US Dollars
calculated by Agent in good faith at such time using the Exchange Rate in effect
on the Business Day of determination.
1.145 "US Dollar Loans" shall mean any Loans or portion thereof which are
denominated in US Dollars.
1.146 "US Dollars", "US$" and "$" shall each mean lawful currency of the
United States of America.
1.147 "US Lenders" shall mean, collectively, all Lenders other than
Canadian Lender; sometimes being referred to herein individually as a "US
Lender".
1.148 "US Letter of Credit Accommodations" shall mean Letter of Credit
Accommodations made by US Lenders under the US Credit Facility.
1.149 "US Maximum Credit" shall mean $100,000,000 less the US Dollar
Equivalent of C$20,000,000.
1.150 "US Overadvances" shall have the meaning set forth in Section 2.1(d).
1.151 "US Prime Rate" shall mean the rate from time to time publicly
announced by Reference Bank, or its successors, as its prime rate, whether or
not such announced rate is the best rate available at such bank.
1.152 "US Prime Rate Loans" shall mean any US Dollar Loans or portion
thereof on which interest is payable based on the US Prime Rate in accordance
with the terms thereof.
1.153 "US Revolving Loans" shall mean Revolving Loans made by US Lenders
under the US Credit Facility.
1.154 "Voting Stock" shall mean with respect to any Person, (a) one (1) or
more classes of Capital Stock of such Person having general voting powers to
elect at
least a majority of the board of directors, managers or trustees of such Person,
irrespective of whether at the time Capital Stock of any other class or classes
have or might have voting power by reason of the happening of any contingency,
and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.
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SECTION 2. CREDIT FACILITIES.
2.1 Revolving Loans.
(a) Subject to and upon the terms and conditions contained herein,
each of the US Lenders severally, but not jointly, agrees to make Revolving
Loans to US Borrowers from time to time in amounts requested by US Borrowers up
to the amount equal to the lesser of such Lender's (i) Pro Rata Share of the US
Borrowing Base or (ii) such US Lender's Revolving Loan Limit.
(b) Subject to and upon the terms and conditions contained herein,
Canadian Lender agrees to make Revolving Loans to each Canadian Borrower from
time to time in amounts requested by each such Canadian Borrower up to the
aggregate amount for all Canadian Borrowers equal to the lesser of (i) Canadian
Lender's Pro Rata Share of the Canadian Borrowing Base or (ii) Canadian Lender's
Revolving Loan Limit; provided that each Canadian Borrower shall only be
permitted to borrow hereunder with respect to the amount of its specific
Canadian Borrowing Base.
(c) Agent may, in its discretion (and shall, upon the direction of
the Majority Lenders), from time to time, upon not less than five (5) days prior
notice to Borrowers with respect to the US Credit Facility or Canadian Credit
Facility, as applicable, (i) reduce the lending formula with respect to Eligible
Accounts to the extent that Agent determines in good faith that: (A) the
dilution with respect to the Accounts for any period (based on the ratio of (1)
the aggregate amount of reductions in Accounts other than as a result of
payments in cash to (2) the aggregate amount of total sales) has increased or
may be reasonably anticipated to increase in any material respect above
historical levels, or (B) the general creditworthiness of account debtors has
declined in any material respect. The amount of any decrease in the lending
formulas shall have a reasonable relationship to the event, condition or
circumstance which is the basis for such decrease as determined by Agent in good
faith. In determining whether to reduce the lending formula(s), Agent and
Majority Lenders may consider events, conditions, contingencies or risks which
are also considered in determining Eligible Accounts or in establishing
Reserves.
(d) Insofar as US Borrowers may request and Agent or Majority
Lenders (as provided below) may be willing, in their sole and absolute
discretion, to make Revolving Loans to US Borrowers at a time when the unpaid
balance of the Revolving Loans and SwingLine Loans plus the amount of Letter of
Credit Accommodations, exceeds, or would exceed with the making of any such
Revolving Loan, the US Borrowing Base (and such Loan or Loans being herein
referred to individually as an "US Overadvance" and collectively, as "US
Overadvances"), Agent (unless otherwise directed by the Majority Lenders) shall
make such US Overadvances to the US Borrowers or Agent may, at its option,
charge any loan account(s) of US Borrowers for the ratable account of the US
Lenders in an aggregate outstanding principal amount not to exceed the lesser of
$10,000,000 or ten (10%) percent of the US Borrowing Base; provided that the US
Overadvances plus the US Dollar Equivalent of the Canadian Overadvances shall
not at any time exceed the lesser of $10,000,000 or ten (10%) percent of the
Borrowing Base. All US Overadvances shall be repaid on demand, shall be secured
by the Collateral and shall bear interest as provided for US Prime Rate Loans in
clause (b) of the proviso to Section 1.83, the definition of "Interest Rate";
provided, however, that US
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Overadvances to be made after the occurrence and during the continuation of an
Event of Default shall require the consent of Majority Lenders. Any US
Overadvance made pursuant to the terms hereof shall be made by all US Lenders
ratably in accordance with their respective Pro Rata Shares. The foregoing
notwithstanding, in no event, unless otherwise consented to by all US Lenders,
(i) shall any such US Overadvances be outstanding for more than sixty (60)
consecutive days, (ii) after all outstanding US Overadvances have been repaid,
shall Agent or Majority Lenders authorize the making of any additional US
Overadvances unless sixty (60) days or more have expired since the last date on
which any US Overadvances were outstanding, (iii) shall US Overadvances be
outstanding on more than ninety (90) days within any one hundred eighty day
(180) period or (iv) shall Agent make Revolving Loans on behalf of US Lenders
under this Section 2.1(d) to the extent such Revolving Loans would cause a US
Lender's share of the Revolving Loans to exceed such US Lender's Revolving Loan
Limit.
(e) Insofar as Canadian Borrowers may request and Agent or Majority
Lenders (as provided below) may be willing, in their sole and absolute
discretion, to make Revolving Loans to Canadian Borrowers at a time when the
unpaid balance of the Revolving Loans and SwingLine Loans plus the amount of
Letter of Credit Accommodations, exceeds, or would exceed with the making of any
such Revolving Loan, the Canadian Borrowing Base (and such Loan or Loans being
herein referred to individually as an "Canadian Overadvance" and collectively,
as "Canadian Overadvances", and together with US Overadvances, as
"Overadvances"), Agent (unless otherwise directed by the Majority Lenders) shall
make such Canadian Overadvances to the Borrowers or Agent may, at its option,
charge any loan account(s) of Canadian Borrowers for the ratable account of the
Lenders in an aggregate outstanding principal amount not to exceed the lesser of
C$2,000,000 or ten (10%) percent of the Canadian Borrowing Base; provided that
the US Dollar Equivalent of Canadian Overadvances plus the US Overadvances shall
not at any time exceed the lesser of $10,000,000 or ten (10%) of the Borrowing
Base. All Canadian Overadvances shall be repaid on demand, shall be secured by
the Collateral and shall bear interest as provided for Canadian Prime Rate Loans
in clause (b) of the proviso to Section 1.83, the definition of "Interest Rate";
provided, however, that Canadian Overadvances to be made after the occurrence
and during the continuation of an Event of Default shall require the consent of
Majority Lenders. Any Canadian Overadvance made pursuant to the terms hereof
shall be made by all Canadian Lenders ratably in accordance with their
respective Pro Rata Shares. The foregoing notwithstanding, in no event, unless
otherwise consented to by all Canadian Lenders, (i) shall any such Canadian
Overadvances be outstanding for more than sixty (60) consecutive days, (ii)
after all outstanding Canadian Overadvances have been repaid, shall Agent or
Majority Lenders authorize the making of any additional Canadian Overadvances
unless sixty (60) days or more have expired since the last date on which any
Canadian Overadvances were outstanding, (iii) shall Canadian Overadvances be
outstanding on more than ninety (90) days within any one hundred eighty day
(180) period or (iv) shall Agent make Revolving Loans on behalf of Canadian
Lenders under this Section 2.1(e) to the extent such Revolving Loans would cause
a Lender's share of the Revolving Loans to exceed such as Lender's Revolving
Loan Limit.
2.2 Maximum Loans. Unless consented to by all the Lenders, in Lenders'
discretion, (a) the aggregate amount of the US Revolving Loans and the US Letter
of Credit Accommodations outstanding at any time shall not exceed the US Maximum
Credit; (b) the aggregate amount of the Canadian Revolving Loans and the
Canadian Letter of Credit Accommodations shall not exceed the Canadian Maximum
Credit and (c) the aggregate US
26
Dollar Amount of the Revolving Loans and Letter of Credit Accommodations shall
not exceed the Maximum Credit. In the event that, except as provided in Section
2.1(d) or (e), the outstanding amount of any component of the US or Canadian
Loans, as applicable, or the aggregate amount of the outstanding US or Canadian
Loans, as applicable, and US or Canadian Letter of Credit Accommodations, as
applicable, exceed the amounts available pursuant to the applicable Borrowing
Base, the sublimits for US Letter of Credit Accommodations or Canadian Letter of
Credit Accommodations as applicable set forth in Section 2.4(f) or the Maximum
Credit, as applicable, such event shall not limit, waive or otherwise affect any
rights of Agent and Lenders in that circumstance or on any future occasions and
Borrower shall, upon demand by Agent, which may be made at any time or from time
to time, immediately repay to Agent for the benefit of the relevant Lenders the
entire amount of any such excess(es) for which payment is demanded.
2.3 SwingLine Loans. In order to reduce the frequency of transfers of funds
from US Lenders to Agent for making US Revolving Loans and subject to the terms
and conditions of this Agreement, Agent shall be permitted (but not required) to
make loans to US Borrowers (such loans to be designated as "SwingLine Loans");
provided, that the aggregate principal amount of SwingLine Loans outstanding at
any time will not (i) exceed $10,000,000; (ii) when added to the principal
amount of Agent's other US Revolving Loans then outstanding plus Agent's
participation in the US Letter of Credit Accommodations, exceed Agent's
Revolving Loan Limit; or (iii) when added to the principal amount of all US
Revolving Loans then outstanding plus the US Letter of Credit Accommodations,
exceed the US Borrowing Base. Within the foregoing limits, US Borrowers may
borrow, repay and reborrow SwingLine Loans. SwingLine Loans may only be borrowed
as US Prime Rate Loans. Notwithstanding the foregoing, not more than two (2)
Business Days after (a) Lenders receive notice from Agent that a SwingLine Loan
has been advanced in respect of a drawing under a US Letter of Credit
Accommodation or (b) in any other circumstance, demand is made by Agent during
the continuance of an Event of Default, each US Lender shall irrevocably and
unconditionally purchase and receive from the Agent without recourse or warranty
from Agent an undivided interest and participation in each SwingLine Loan to the
extent of such US Lender's Pro Rata Share thereof, by paying to the Agent in
immediately available funds, an amount equal to such US Lender's Pro Rata Share.
2.4 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions contained herein, at
the request of US Borrowers, Agent agrees to provide or arrange for Letter of
Credit Accommodations for the account of US Borrowers containing terms and
conditions acceptable to Agent and the issuer thereof. Any payments made by
Agent to any issuer thereof and/or related parties in connection with the US
Letter of Credit Accommodations shall constitute additional US Revolving Loans
by Lenders to Borrowers pursuant to this Section 2.
(b) Subject to and upon the terms and conditions contained herein, at
the request of Canadian Borrowers (or Parent on behalf of Canadian Borrowers),
Agent agrees to cause the Canadian Lender to arrange for Letter of Credit
Accommodations for the account of Canadian Borrowers containing terms and
conditions acceptable to Agent and the issuer thereof. Any payments made by
Agent or Canadian Lender to any issuer thereof and/or related parties in
connection with the Canadian Letter of Credit Accommodations shall constitute
additional Canadian Revolving Loans by Lenders to Canadian Borrowers pursuant to
this Section 2.
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(c) In addition to any charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations, the applicable
Borrowers shall pay to Agent for the ratable benefit of the applicable Lenders a
letter of credit fee at a rate equal to three (3%) percent per annum on the
daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month, except that Borrowers shall pay to Agent for
the ratable benefit of Lenders such letter of credit fee, at Agent's option (or
at the direction of Majority Lenders), without notice, at a rate equal to five
and one-half (5.50%) percent per annum on such daily outstanding balance for:
(i) the period from and after the date of termination or non-renewal hereof
until Agent and Lenders have received full and final payment of all Obligations
(notwithstanding entry of a judgment against any Borrower) and (ii) the period
from and after the date of the occurrence of an Event of Default for so long as
such Event of Default is continuing as determined by Agent. Such letter of
credit fee shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed and the obligation of Borrowers to pay such fee
shall survive the termination or non-renewal of this Agreement.
(d) Borrowers shall give Agent two (2) Business Days' prior written
notice of Borrowers' request for the issuance of a Letter of Credit
Accommodation. Such notice shall be irrevocable and shall specify the original
face amount of the Letter of Credit Accommodation requested, the effective date
(which date shall be a Business Day) of issuance of such requested Letter of
Credit Accommodation, whether such Letter of Credit Accommodation may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit Accommodation is to expire (which date shall be a Business Day), the
purpose for which such Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit Accommodation. Borrowers shall
attach to such notice the proposed form of the Letter of Credit Accommodation.
(e) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner satisfactory to Agent: (i) Borrowers shall have delivered to the
proposed issuer of such Letter of Credit Accommodation at such times and in such
manner as such proposed issuer may require, an application in form and substance
satisfactory to such proposed issuer and Lender for the issuance of the Letter
of Credit Accommodation and such other documents as may be required pursuant to
the terms thereof, and the form and terms of the proposed Letter of Credit
Accommodation shall be satisfactory to Agent and such proposed issuer, (ii) as
of the date of issuance, no order of any court, arbitrator or other Governmental
Authority shall purport by its terms to enjoin or restrain money center banks
generally from issuing letters of credit of the type and in the amount of the
proposed Letter of Credit Accommodation, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
the proposed issuer of such Letter of Credit Accommodation refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit Accommodation; and (iii) the applicable Excess Availability, prior to
giving effect to any Reserves with respect to such Letter of Credit
Accommodations, on the date of the proposed issuance of any Letter of Credit
Accommodations, shall be equal to or greater than an amount equal to one hundred
(100%) percent of the face amount thereof and all other commitments and
obligations made or
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incurred by Agent or Canadian Lender, as applicable, with respect thereto.
Effective on the issuance of each Letter of Credit Accommodation, a Reserve
shall be established in the amount set forth in this Section 2.4(e).
(f) Except in Agent's and Majority Lenders' discretion, the US Dollar
Equivalent of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Agent in connection therewith
shall not at any time exceed $20,000,000.
(g) Each Borrower shall indemnify and hold Agent and each Lender
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation. Each Borrower
assumes all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower
assumes all risks for, and agrees to pay, all foreign, Federal, State,
Provincial and local taxes, duties and levies relating to any goods subject to
any Letter of Credit Accommodations or any documents, drafts or acceptances
thereunder. Each Borrower hereby releases and holds Agent and each Lender
harmless from and against any acts, waivers, errors, delays or omissions,
whether caused by any Borrower, by any issuer or correspondent or otherwise with
respect to or relating to any Letter of Credit Accommodation, except for the
gross negligence or willful misconduct of Agent or Canadian Lender, as
applicable, as determined pursuant to a final, non-appealable order of a court
of competent jurisdiction. The provisions of this Section 2.4 shall survive the
payment of Obligations and the termination or non-renewal of this Agreement.
(h) Each Borrower hereby irrevocably authorizes and directs any issuer
of a Letter of Credit Accommodation to name Borrowers as the account party
therein and to deliver to Agent or Canadian Lender, as applicable, all
instruments, documents and other writings and property received by issuer
pursuant to the Letter of Credit Accommodations and to accept and rely upon
Agent's or Canadian Lender, as applicable, instructions and agreements with
respect to all matters arising in connection with the Letter of Credit
Accommodations or the applications therefor. Nothing contained herein shall be
deemed or construed to grant any Borrower any right or authority to pledge the
credit of Agent or any Lender in any manner. Neither Agent or Canadian Lender,
as applicable, shall have any liability of any kind with respect to any Letter
of Credit Accommodation provided by an issuer other than Agent or Canadian
Lender unless Agent or Canadian Lender, as applicable, has duly executed and
delivered to such issuer the application or a guarantee or indemnification in
writing with respect to such Letter of Credit Accommodation. Borrowers shall be
bound by any interpretation made in good faith by Agent or Canadian Lender, as
applicable, or any other issuer or correspondent under or in connection with any
Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of Borrowers. Agent and Canadian Lender shall have the sole and
exclusive right and authority to, and Borrowers shall not: (i) at any time an
Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any instructions
as to acceptance or rejection of any documents or goods, or (C) execute any and
all applications for steamship or airway guaranties, indemnities or delivery
orders; and (ii) at all times, (A) grant
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any extensions of the maturity of, time of payment for, or time of presentation
of, any drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letter of Credit Accommodations,
or documents, drafts or acceptances thereunder or any letters of credit included
in the Collateral. Agent or Canadian Lender, as applicable, may take such
actions either in its own name or in any Borrower's name.
(i) Any rights, remedies, duties or obligations granted or undertaken
by Borrowers to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrowers to Agent or Canadian Lender, as
applicable. Any duties or obligations undertaken by Agent or Canadian Lender to
any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent or Canadian Lender in favor of
any issuer or correspondent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrowers to Agent or Canadian
Lender, as applicable, and to apply in all respects to Borrowers.
(j) To induce Agent to issue or cause to be issued Letter of Credit
Accommodations, each Lender (an "LC Participant") under the Canadian Credit
Facility or US Credit Facility, as applicable, irrevocably agrees to accept and
purchase and hereby accepts and purchases, on the terms and conditions
hereinafter stated, for such LC Participant's own account and risk, an undivided
interest and participation equal to such LC Participant's Pro Rata Share in the
Agent's or Canadian Lender's obligations and rights under each Letter of Credit
Accommodation. Each LC Participant unconditionally and irrevocably agrees with
the Agent or Canadian Lender, that it shall be directly and unconditionally
obligated to the Agent or Canadian Lender to reimburse the Agent or Canadian
Lender upon demand and without setoff or deduction of any kind or nature, for
making any payment under any Letter of Credit Accommodation, in an amount equal
to such LC Participant's Pro Rata Share multiplied by the amount of such payment
made by the Agent or Canadian Lender, as applicable, under such Letter of Credit
Accommodation. If any amount required to be paid by any LC Participant to the
Agent pursuant hereto in respect of any payment made by the Agent or Canadian
Lender under any Letter of Credit Accommodation is not paid to Agent or Canadian
Lender on the date such payment is due from such LC Participant, such LC
Participant shall pay to the Agent or Canadian Lender, as applicable, on demand
an amount equal to the product of (i) such amount, times (ii) (A) the Federal
Funds Rate during the period from and including the date such payment is
required to and including the third day after such payment is required and (B)
thereafter, the Interest Rate applicable to Prime Rate Loans to the date on
which such payment is immediately available to the Agent or Canadian Lender, as
applicable, times (iii) a fraction the numerator of which is the number of days
that elapse during such period and the denominator of which is 360 in the case
of US Letters of Credit and the denominator of which is 365 in the case of
Canadian Letters of Credit. A certificate of the Agent or Canadian Lender, as
applicable, submitted to any LC Participant with respect to any amounts owing
under this subsection shall be conclusive in the absence of manifest error.
Whenever, at any time after the Agent or Canadian Lender, as applicable, has
made payment under any Letter of Credit Accommodation and has received from any
LC Participant its pro rata share of such payment in accordance herewith, and
the Agent or Canadian Lender, as applicable, receives any payment from the
Borrowers on account of such payment under such Letter of Credit Accommodation
(whether directly from the Borrowers or
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otherwise, including by way of set-off or proceeds of collateral applied thereto
by the Agent or Canadian Lender, as applicable), or any payment of interest on
account thereof, the Agent shall distribute to such LC Participant its pro rata
share thereof; provided, however, that in the event that any such payment
received by the Agent or Canadian Lender shall be required to be returned by the
Agent or Canadian Lender, such LC Participant shall return to the Agent the
portion thereof previously distributed by the Agent to it. The obligations of
each LC Participant to make payments to the Agent with respect to its
participation in any Letter of Credit Accommodation shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which any Lender or any Borrower may have or
have had against the Agent, the issuing bank or any beneficiary of a Letter of
Credit Accommodation.
2.5 Borrower Representative. Each Borrower hereby irrevocably
designates the Parent as its representative and agent on its behalf (the
"Borrower Representative") for the purpose of requesting on such Borrower's
behalf borrowings of US Revolving Loans or Canadian Revolving Loans, as
applicable, and the continuation and/or conversion of US Revolving Loans or
Canadian Revolving Loans, as applicable, giving instructions with respect to the
disbursement of the proceeds of US Revolving Loans or Canadian Revolving Loans,
as applicable, to be made to US Borrowers or Canadian Borrowers, as applicable,
selecting interest rate options for US Borrowers or Canadian Borrowers, as
applicable, requesting US Letter of Credit or Canadian Letter of Credit
Accommodations, as applicable, for the account of US Borrowers or Canadian
Borrowers, as applicable, giving and receiving on Borrowers' behalf all other
notices and consents hereunder or under any of the other Financing Agreements
and taking all other actions (including in respect of compliance with covenants)
on behalf of Borrowers under the Financing Agreements. The Borrower
Representative hereby accepts such appointment. The Agent and each Lender may
regard any notice or other communication pursuant to any Financing Agreement
from the Borrower Representative as a notice or communication from the US
Borrowers or Canadian Borrowers, as applicable, and may give any notice or
communication required or permitted to be given to any Borrower or Borrowers
hereunder to the 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 the 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. This
appointment of Parent as Borrower Representative may not be terminated,
rescinded or changed without the prior written consent of Agent, provided that
upon Agent's request, the Borrowers shall designate an alternative Borrower
Representative satisfactory to Agent.
2.6 Syndication. Borrowers agree to actively assist Agent in completing
the syndication of the Obligations in a manner satisfactory to Agent. In
connection with such syndication, Borrowers shall: (a) promptly prepare
financial information and projections including balance sheets and income, cash
flow and availability projections for dissemination to prospective Lenders as
Agent may request and in form and substance satisfactory to Agent, (b) make
available senior management and advisors of the Borrowers to meet with
prospective Lenders as Agent may request, and (c) assist Agent and its
representatives in the preparation of other information and materials to be used
in connection with the syndication. Borrowers agree that Agent will exclusively
manage all aspects of the syndication including decisions as to the selection
and timing of financial institutions to be approached, which financing
institutions will be selected to be Lenders and the allocation of Pro Rata
Shares and compensation to Lenders.
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Borrowers further agree, upon Agent's request, to enter into such amendments and
modifications to this Agreement and to the other Financing Agreement as Agent
may request in connection with such syndication and to respond to requests made
by prospective Lenders.
SECTION 3. INTEREST AND FEES.
3.1 Interest.
(a) US Borrowers shall pay to Agent for the ratable benefit of US
Lenders and Canadian Borrowers shall pay to Agent for the benefit of Canadian
Lender interest on the outstanding principal amount of the Loans at the
applicable Interest Rate. All interest accruing hereunder on and after the date
of any Event of Default or termination hereof shall be payable on demand.
(b) Borrower Representative may from time to time request Eurodollar
Rate Loans or may request that Prime Rate Loans be converted to Eurodollar Rate
Loans or that any existing Eurodollar Rate Loans continue for an additional
Interest Period. Such request from Borrower Representative shall be in writing
on such form or forms as Agent may require and shall specify, without
limitation, the amount of the Eurodollar Rate Loans or the amount of the Prime
Rate Loans to be converted to Eurodollar Rate Loans or the amount of the
Eurodollar Rate Loans to be continued (subject to the limits set forth below)
and the Interest Period to be applicable to such Eurodollar Rate Loans. Subject
to the terms and conditions contained herein, three (3) Business Days after
receipt by Agent of such a request from Borrower Representative, such Prime Rate
Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans
shall continue, as the case may be, provided, that, (i) no Default or Event of
Default shall exist or have occurred and be continuing, (ii) no party hereto
shall have sent any notice of termination or non-renewal of this Agreement,
(iii) Borrowers shall have complied with such customary procedures as are
established by Agent and specified by Agent to Borrowers from time to time for
requests by Borrowers for Eurodollar Rate Loans, (iv) no more than four (4)
Interest Periods may be in effect at any one time, (v) the aggregate amount of
the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, (vi) the maximum amount of
the Eurodollar Rate Loans at any time requested by Borrowers shall not exceed
the amount equal to eighty (80%) percent of the lowest principal amount of the
Revolving Loans which it is anticipated will be outstanding during the
applicable Interest Period, in each case as determined by Agent (but with no
obligation of Lenders to make such Loans), and (vii) Agent shall have determined
that the Interest Period or Adjusted Eurodollar Rate is available to Lenders and
Reference Bank and can be readily determined as of the date of the request for
such Eurodollar Rate Loan by Borrowers. Any request by Borrower Representative
for Eurodollar Rate Loans or to convert Prime Rate Loans to Eurodollar Rate
Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Lenders and Reference
Bank shall not be required to purchase United States Dollar deposits in the
London interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if
Lenders and Reference Bank had purchased such deposits to fund the Eurodollar
Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to US
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Agent has received and
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approved a request to continue such Eurodollar Rate Loans at least three (3)
Business Days prior to such last day in accordance with the terms hereof. Any
Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent to
Borrowers, convert to US Prime Rate Loans in the case of US Dollar Loans in the
event that this Agreement shall terminate or not be renewed. US Borrowers shall
pay to Agent for the benefit of US Lenders, and Canadian Borrowers shall pay to
Agent for the benefit of Canadian Lender, in each case upon demand by any Lender
(or Agent or any such Lender may, at its option, charge any loan account of
Borrower) any amounts required to compensate such Lender, the Reference Bank or
any participant with any such Lender for any loss (including loss of anticipated
profits), cost or expense incurred by such person, as a result of the conversion
of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by US Borrowers to Agent for the
account of US Lenders and by Canadian Borrowers to Agent for the account of
Canadian Lender, monthly in arrears not later than the first day of each
calendar month and shall be calculated on the basis of (i) a three hundred
sixty-five (365) day year in the case of Canadian Dollar Loans and (ii) a three
hundred sixty (360) day year in the case of US Dollar Loans and in each case
based on actual days elapsed. The interest rate on non-contingent Obligations
(other than Eurodollar Rate Loans) shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate effective on the first day of the
month after any change in such Prime Rate is announced based on the Prime Rate
in effect on the last day of the month in which any such change occurs. In no
event shall charges constituting interest payable by Borrowers to Agent or to
Lenders exceed the maximum amount or the rate permitted under any applicable law
or regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
(e) For purposes of disclosure under the Interest Act (Canada),
where interest is calculated pursuant thereto at a rate based upon a three
hundred sixty (360) day year or three hundred sixty-five (365) day year (the
"First Rate"), the rate or percentage of interest on a yearly basis is
equivalent to such First Rate multiplied by the actual number of days in the
year divided by three hundred sixty (360) or three hundred sixty-five (365), as
applicable.
(f) Notwithstanding the provisions of this Section 3 or any other
provision of this Agreement, in no event shall the aggregate "interest" (as that
term is defined in Section 347 of the Criminal Code (Canada)) with respect to
any Loans by or on behalf of Canadian Lender exceed the effective annual rate of
interest on the "credit advanced" (as defined therein) lawfully permitted under
Section 347 of the Criminal Code (Canada). The effective annual rate of interest
for such purpose shall be determined in accordance with generally accepted
actuarial practices and principles over the term of the applicable Loan by or on
behalf of Canadian Lender, and in the event of a dispute, a certificate of a
Fellow of the Canadian Institute of Actuaries appointed by Agent will be
conclusive for the purposes of such determination.
(g) A certificate of an authorized signing officer of Agent as to
each rate of interest payable hereunder from time to time absent manifest error
shall be conclusive evidence of such rate.
(h) For greater certainty, unless otherwise specified in this
Agreement or any of the other Financing Agreements, as applicable, whenever any
amount is payable under this
33
Agreement or any of the other Financing Agreements by Borrowers as interest or
as a fee which requires the calculation of an amount using a percentage per
annum, each party to this Agreement acknowledges and agrees that such amount
shall be calculated as of the date payment is due without application of the
"deemed reinvestment principle" or the "effective yield method." As an example,
when interest is calculated and payable monthly, the rate of interest payable
per month is one twelfth (1/12) of the stated rate of interest per annum.
3.2 Agent Fees. Borrowers shall pay to Agent the fees set forth in the
Agent fee letter dated as of the date hereof between Agent and Borrowers.
3.3 Lender Fees. Borrowers shall pay to Agent for the benefit of Lenders
the fees set forth in the Lender fee letter dated as of the date hereof between
Agent and Borrowers.
3.4 Unused Line Fee. Borrowers shall pay to Agent for the ratable benefit
of Lenders monthly an unused line fee at a rate equal to one quarter of one
(.25%) percent per annum calculated upon the amount by which the Revolving Loan
Limit exceeds the average daily principal balance of the outstanding Revolving
Loans and Letter of Credit Accommodations during the immediately preceding month
(or part thereof) while this Agreement is in effect and for so long thereafter
as any of the Obligations are outstanding, which fee shall be payable on the
first day of each month in arrears.
3.5 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, the
Eurodollar Rate Loans made by a Lender shall, upon notice by such Lender to
Borrowers, convert to Prime Rate Loans in the event that (i) any change in
applicable law or regulation (or the interpretation or administration thereof)
shall (A) make it unlawful for such Lender, or any participant with such Lender
or Reference Bank to make or maintain Eurodollar Rate Loans or to comply with
the terms hereof in connection with the Eurodollar Rate Loans, or (B) shall
result in the increase in the costs to such Lender or any participant with such
Lender or Reference Bank of making or maintaining any Eurodollar Rate Loans by
an amount deemed by such Lender to be material, or (C) reduce the amounts
received or receivable by such Lender in respect thereof, by an amount deemed by
such Lender to be material; or (ii) the cost to such Lender, or any participant
with such Lender or Reference Bank of making or maintaining any Eurodollar Rate
Loans shall otherwise increase by an amount deemed by such Lender to be
material. Borrowers shall pay to such Lender, upon demand by such Lender (or
such Lender may, at its option, charge any loan account of Borrowers) any
amounts required to compensate such Lender or any participant with such Lender
or Reference Bank for any loss (including loss of anticipated profits), cost or
expense incurred by such person as a result of the foregoing, including, without
limitation, any such loss, cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such person to make or
maintain the Eurodollar Rate Loans or any portion thereof. A certificate of such
Lender setting forth the basis for the determination of such amount necessary to
compensate such Lender as aforesaid shall be delivered to Borrowers and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lenders other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of
34
Collateral, Borrowers shall pay to Lenders upon demand by Agent (or Agent or any
Lender may, at their option, charge any loan account of Borrowers) any amounts
required to compensate Lenders, the Reference Bank or any participant with any
Lender for any additional loss (including loss of anticipated profits), cost or
expense incurred by such person as a result of such prepayment or payment,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
person to make or maintain such Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT.
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and each
Lender making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance satisfactory to
Agent, all releases, terminations and such other documents as Agent may request
to evidence and effectuate the termination by the existing lenders to Borrowers
of their respective financing arrangements (other than Indebtedness permitted by
Section 9.9) with Borrowers and the termination and release by it or them, as
the case may be, of any interest in and to the Purchased Assets and any assets
and properties of Borrowers and each Obligor, and such releases, terminations
and other documents shall be duly authorized, executed and delivered by it or
each of them, including, but not limited to, (i) UCC termination statements for
all UCC financing statements previously filed by it or any of them or their
predecessors, as secured party and any Borrower or any Obligor, as debtor, (ii)
PPSA terminations or hypothec discharges or acknowledgments for all PPSA
financing statements or hypothecs previously filed or registered by it or any of
them or their predecessors, or secured party and any Borrower or any Obligor, as
debtor, and (iii) satisfactions and discharges of any mortgages, deeds of trust
or deeds to secure debt by any Borrower or any Obligor in favor of such existing
lender or lenders, in form acceptable for recording with the appropriate
Governmental Authority;
(b) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to Agent, and Agent shall have received all information and copies
of all documents, including records of requisite corporate action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by appropriate
corporate officers or Governmental Authority (and including a copy of the
certificate of incorporation or formation of each Borrower certified by the
Secretary of State (or equivalent Governmental Authority) which shall set forth
the same complete corporate or limited liability company name of each Borrower
as is set forth herein and such document as shall set forth the organizational
identification number of each Borrower, if one is issued in its jurisdiction of
incorporation or formation);
(c) no material adverse change shall have occurred in the assets,
business or prospects of any Borrower or the Purchased Assets since the date of
Agent's latest field examination and no change or event shall have occurred
which would impair the ability of any Borrower or any Obligor to perform its
obligations hereunder or under any of the other Financing Agreements to which it
is a party or of Agent or Lenders to enforce the Obligations or realize upon the
Collateral;
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(d) Agent shall have completed a field review of the Records and such
other information with respect to the Collateral as Agent may require to
determine the amount of Revolving Loans available to Borrowers (including,
without limitation, current perpetual inventory records and/or roll-forwards of
Accounts and Inventory through the date of closing and test counts of the
Inventory in a manner satisfactory to Agent, together with such supporting
documentation as may be necessary or appropriate, and other documents and
information that will enable Agent to accurately identify and verify the
Collateral), the results of which each case shall be satisfactory to Agent, not
more than three (3) Business Days prior to the date hereof;
(e) Agent shall have received, in form and substance satisfactory to
Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, Collateral Access Agreements by
owners and lessors of leased premises of Borrowers and by warehouses at which
Collateral is located, and the hypothecs, the security interests and liens of
Agent upon the Collateral of the Canadian Borrowers.
(f) the combined Excess Availability of US Borrowers and Canadian
Borrowers as determined by Agent, as of the date hereof, shall be not less than
the US Dollar Equivalent of $25,000,000 after giving effect to the initial Loans
made or to be made and Letter of Credit Accommodations issued or to be issued in
connection with the initial transactions hereunder;
(g) Agent shall have received, in form and substance satisfactory to
Agent, Deposit Account Control Agreements by and among Agent, Borrowers and each
bank where any Borrower has a deposit account, in each case, duly authorized,
executed and delivered by such bank and such Borrower (or shall be the bank's
customer with respect to such deposit account as Agent may specify);
(h) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent for the benefit of itself and the Lenders and
Canadian Lender, where applicable, has a valid perfected first priority security
interest in, and first ranking hypothec on, all of the Revolving Loan Priority
Collateral and a valid perfected second priority security interest in and second
ranking hypothec on all other Collateral;
(i) Agent shall have received and reviewed lien and judgment search
results for the jurisdiction of incorporation or organization of each Borrower,
the jurisdiction of the chief executive office of each Borrower and all
jurisdictions in which assets of Borrowers are located, which search results
shall be in form and substance satisfactory to Agent;
(j) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance policies
and/or endorsements naming Lender as loss payee;
(k) The order dated June 18, 2002 of the United States Bankruptcy Court
for the District of Delaware ("Bankruptcy Court") approving the sale of the
Division of the Sellers to Parent pursuant to Sections 363/365 of the United
States Bankruptcy Code (the "Sale Order")
36
shall be in form and substance satisfactory to the Agent and shall be a Final
Order. The Sale Order shall have been signed and entered by the Bankruptcy Court
and a certified copy thereof shall have been delivered to Agent. The Sale Order
shall be in full force and effect and shall not have been reversed, stayed,
modified or amended. For purposes hereof, "Final Order" means an order of the
Bankruptcy Court with respect to which (x) no appeal has been filed within the
time period specified by Rule 8002(a) of the Federal Rules of Bankruptcy
Procedure ("FRBP"), (y) in the event a timely appeal has been filed, the
effectiveness of such order has not been stayed in accordance with Rule 8005 of
the FRBP, or (z) in the event such order was stayed pending appeal, such stay
has been terminated by a subsequent court order.
(l) Agent shall have received, in form and substance satisfactory to
Agent, evidence that the Purchase Agreements have been duly executed and
delivered by and to the appropriate parties thereto and the transactions
contemplated under the terms of the Purchase Agreements and Sales Order have
been consummated prior to or contemporaneously with the execution of this
Agreement and that, pursuant thereto, Borrowers have acquired good and
marketable title to the Purchased Assets, free and clear of all claims, liens,
pledges and encumbrances of any kind, except as permitted hereunder;
(m) Agent shall have received, in form and substance satisfactory to
Agent, a pro-forma balance sheet of Borrowers reflecting the initial
transactions contemplated hereunder, including, but not limited to, (i) the
consummation of the acquisition of the Purchased Assets by Borrowers from
Sellers and the other transactions contemplated by the Sale Order and Purchase
Agreements, and (ii) the Loans and Letter of Credit Accommodations provided by
Lenders, Term Lenders to Borrowers on the date hereof and the use of the
proceeds of the initial Loans as provided herein and the initial advances of
Term Debt, accompanied by a certificate, dated of even date herewith, of the
chief financial officer of Borrowers stating that such pro-forma balance sheet
represents the reasonable, good faith opinion of such officer as to the subject
matter thereof as of the date of such certificate;
(n) The Term Loan Agreement shall be in form and substance satisfactory
to Agent, all conditions precedent to the making of the term loans thereunder
shall have been satisfied and Borrowers shall have received not less than (i)
$100,000,000 in cash proceeds from term loans A made by the Term Loan Lenders
and (ii) $35,000,000 in cash proceeds from term loans B made by the Term Loan
Lenders under the Term Loan Agreement;
(o) Parent shall have received not less than $25,000,000 in cash
proceeds from the issuance of its Series C convertible preferred stock pursuant
to documentation in form and substance satisfactory to Agent and to investors
acceptable to Agent;
(p) Agent shall have received, in form and substance satisfactory to
Agent, such opinion letters of counsel to Borrowers with respect to the
Financing Agreements and such other matters as Agent may request; and
(q) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to Agent and Lenders
making Loans and/or
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providing Letter of Credit Accommodations to Borrowers, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto, except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loans or providing the Letter of Credit
Accommodations, or (B) the consummation of the transactions contemplated
pursuant to the terms hereof or the other Financing Agreements; or (ii) has or
could reasonably be expected to have a material adverse effect on the assets,
business or prospects of any Borrower or would impair the ability of any
Borrower to perform its obligations hereunder or under any of the other
Financing Agreements or of Agent and Lenders to enforce any Obligations or
realize upon any of the Collateral;
(c) no Default or Event of Default shall exist or have occurred and be
continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto; and
(d) In addition to the other conditions precedent to Agent and Lenders
making Loans and/or providing Letter of Credit Accommodations to Borrowers, the
conditions to Loans and Letter of Credit Accommodations by or on behalf of
Canadian Lender in favor of Canadian Borrowers shall also include that no
requirement of the Minister of National Revenue for payment pursuant to Section
224, or any successor section, of the Income Tax Act (Canada) or Section 317, or
any successor section of the Excise Act (Canada) or any comparable provision of
similar legislation shall have been received by Agent, Canadian Lender or any
other Person in respect of a Canadian Borrower or otherwise issued in respect of
a Canadian Borrower.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST.
5.1 Grant of Security Interest.
(a) To secure payment and performance of all Obligations, each
Borrower hereby grants to Agent for the benefit of itself and each Lender a
continuing security interest in, a lien upon, and a right of set off against,
and hereby assigns to Agent for the benefit of itself and each Lender as
security, and each Canadian Borrower hereby grants to Agent a continuing
security interest in, a lien upon, and a right of set off against, and hereby
assigns to Agent for the benefit of itself and each Lender as security, all
personal and real property and fixtures and interests in property and fixtures
of each Borrower, whether now owned or hereafter acquired or existing, and
wherever located (together with all other collateral security for the
Obligations at any time granted to or held or acquired by Agent for the benefit
of itself and each Lender or by any Lender, collectively, the "Collateral"),
including:
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(i) all Accounts;
(ii) all general intangibles, including, without limitation, all
Intellectual Property;
(iii) all goods, including, without limitation, Inventory and
Equipment;
(iv) all Real Property and fixtures;
(v) all chattel paper (including all tangible and electronic
chattel paper);
(vi) all instruments (including all promissory notes);
(vii) all documents;
(viii) all deposit accounts;
(ix) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
(x) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to
and in respect of Receivables and other Collateral, including
(i) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights
and remedies of an unpaid vendor, lien or secured party, (iii)
goods described in invoices, documents, contracts or
instruments with respect to, or otherwise representing or
evidencing, Receivables or other Collateral, including
returned, repossessed and reclaimed goods, and (iv) deposits by
and property of account debtors or other persons securing the
obligations of account debtors;
(xi) all investment property (including securities, whether
certificated or uncertificated, securities accounts, security
entitlements, commodity contracts or commodity accounts) and
all monies, credit balances, deposits and other property of any
Borrower now or hereafter held or received by or in transit to
Agent, any Lender or any of their Affiliates or at any other
depository or other institution from or for the account of any
Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise;
(xii) all commercial tort claims, including, without limitation,
those identified in the Information Certificates;
(xiii) to the extent not otherwise described above, all Receivables;
(xiv) all Records;
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(xv) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third
parties for loss or damage to or destruction of or other
involuntary conversion of any kind or nature of any or all of
the other Collateral; and
(xvi) as to Canadian Borrowers only, a hypothec to and in favor of
each of Agent and Canadian Lender to the extent of the sum of
C$200,000,000 in lawful money of Canada with interest thereon
at the rate of twenty-five (25%) percent, with respect to all
of its rights and interests to the Collateral.
(b) Notwithstanding anything to the contrary set forth in 5.1(a)
above, the types of collateral described in such Section shall not include the
last day of the term of any lease or agreement to which any Canadian Borrower is
a party therefor but upon enforcement of the security interest the applicable
Canadian Borrower shall stand possessed of such last day in trust to assign the
same to any person acquiring the term of the lease or agreement therefor.
5.2 Perfection of Security Interests.
(a) Each Borrower irrevocably and unconditionally authorizes Agent (or
its agent) to file at any time and from time to time such financing statements
with respect to the Collateral naming Agent or its designee as the secured party
and each such Borrower as debtor, as Agent may require, and including any other
information with respect to each such Borrower or otherwise required by part 5
of Article 9 of the Uniform Commercial Code of such jurisdiction or under the
PPSA as Agent may determine, together with any amendment and continuations with
respect thereto, which authorization shall apply to all financing statements
filed on, prior to or after the date hereof. Each Borrower hereby ratifies and
approves all financing statements naming Agent or its designee as secured party
and each such Borrower as debtor with respect to the Collateral (and any
amendments with respect to such financing statements) filed by or on behalf of
Agent prior to the date hereof and ratifies and confirms the authorization of
Agent to file such financing statements (and amendments, if any). Each Borrower
hereby authorizes Agent to adopt on behalf of each such Borrower any symbol
required for authenticating any electronic filing. In no event shall any
Borrower at any time file, or permit or cause to be filed, any correction
statement or termination statement with respect to any financing statement (or
amendment or continuation with respect thereto) naming Agent or its designee as
secured party and any Borrower as debtor.
(b) Borrowers do not have any chattel paper (whether tangible or
electronic) or instruments as of the date hereof, except as set forth in the
Information Certificates. In the event that any Borrower shall be entitled to or
shall receive any chattel paper or instrument after the date hereof, Borrowers
shall promptly notify Agent thereof in writing. Promptly upon the receipt
thereof by or on behalf of any Borrower (including by any agent or
representative), Borrowers shall deliver, or cause to be delivered to Agent, all
tangible chattel paper and instruments that any Borrower may at any time
acquire, accompanied by such instruments of transfer or assignment duly executed
in blank as Agent may from time to time specify, in each case, except as Agent
may otherwise agree. At Agent's option, Borrowers shall, or Agent may at any
time on behalf of Borrowers, cause the original of any such instrument or
chattel paper to be conspicuously marked in a form and manner acceptable to
Agent with the following legend
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referring to chattel paper or instruments as applicable: "This [chattel
paper][instrument] is subject to the security interest of Congress Financial
Corporation (New England), as agent for itself and certain other lending
institutions, and any sale, transfer, assignment or encumbrance of this [chattel
paper][instrument] violates the rights of such secured party."
(c) In the event that any Borrower shall at any time hold or acquire an
interest in any electronic chattel paper or any "transferable record" (as such
term is defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), Borrowers shall
promptly notify Agent thereof in writing. Promptly upon Agent's request,
Borrowers shall take, or cause to be taken, such actions as Agent may reasonably
request to give Agent control of such electronic chattel paper under Section
9-105 of the UCC and control of such transferable record under Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect
in such jurisdiction.
(d) Borrowers do not have any deposit accounts as of the date hereof,
except as set forth in the Information Certificates. Borrowers shall not,
directly or indirectly, after the date hereof open, establish or maintain any
deposit account unless each of the following conditions is satisfied: (i) Agent
shall have received not less than five (5) Business Days prior written notice of
the intention of any Borrower to open or establish such account which notice
shall specify in reasonable detail and specificity acceptable to Agent the name
of the account, the owner of the account, the name and address of the bank or
other financial institution at which such account is to be opened or
established, the individual at such bank or other financial institution with
whom such Borrower is dealing and the purpose of the account, (ii) the bank or
other financial institution where such account is opened or maintained shall be
acceptable to Agent, and (iii) on or before the opening of such deposit account,
such Borrower shall, as Agent may specify, either (A) deliver to Agent a Deposit
Account Control Agreement with respect to such deposit account duly authorized,
executed and delivered by such Borrower and the bank at which such deposit
account is opened and maintained, or (B) arrange for Agent to become the
customer of the bank with respect to the deposit account on terms and conditions
acceptable to Agent. The terms of this subsection (d) shall not apply to deposit
accounts specifically and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of Borrowers' salaried
employees.
(e) Borrowers do not own or hold, directly or indirectly, beneficially
or as record owner or both, any investment property, as of the date hereof, or
have any investment account, securities account, commodity account or other
similar account with any bank or other financial institution or other securities
intermediary or commodity intermediary as of the date hereof, in each case
except as set forth in the Information Certificates.
(i) In the event that any Borrower shall be entitled to or shall at any
time after the date hereof hold or acquire any certificated
securities, such Borrower shall promptly endorse, assign and
deliver the same to Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as Agent may from
time to time specify. If any securities, now or hereafter acquired
by Borrower are uncertificated and are issued to such Borrower or
its nominee directly by the issuer thereof, such Borrower
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shall immediately notify Agent thereof and shall, as Agent may
specify, either (A) cause the issuer to agree to comply with
instructions from Agent as to such securities, without further
consent of such Borrower or such nominee, or (B) arrange for Agent
to become the registered owner of the securities.
(ii) Borrowers shall not, directly or indirectly, after the date hereof
open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other
than a deposit account) with any securities intermediary or
commodity intermediary unless each of the following conditions is
satisfied: (A) Agent shall have received not less than five (5)
Business Days prior written notice of the intention of a Borrower
to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of
the account, the owner of the account, the name and address of the
securities intermediary or commodity intermediary at which such
account is to be opened or established, the individual at such
intermediary with whom such Borrower is dealing and the purpose of
the account, (B) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or
maintained shall be acceptable to Agent, and (C) on or before the
opening of such investment account, securities account or other
similar account with a securities intermediary or commodity
intermediary, such Borrower shall, as Agent may specify, either
(1) execute and deliver, and cause to be executed and delivered to
Agent, an Investment Property Control Agreement with respect
thereto duly authorized, executed and delivered by such Borrower
and such securities intermediary or commodity intermediary, or (2)
arrange for Agent to become the entitlement holder with respect to
such investment property on terms and conditions acceptable to
Agent.
(f) No Borrower is the beneficiary or otherwise entitled to any right
to payment under any letter of credit, banker's acceptance or similar instrument
as of the date hereof, except as set forth in the Information Certificates. In
the event that any Borrower shall be entitled to or shall receive any right to
payment under any letter of credit, banker's acceptance or any similar
instrument, whether as beneficiary thereof or otherwise after the date hereof,
such Borrower shall promptly notify Agent thereof in writing. Each Borrower
shall immediately, as Agent may specify, either (i) deliver, or cause to be
delivered to Agent, with respect to any such letter of credit, banker's
acceptance or similar instrument, the written agreement of the issuer and any
other nominated person obligated to make any payment in respect thereof
(including any confirming or negotiating bank), in form and substance
satisfactory to Agent, consenting to the assignment of the proceeds of the
letter of credit to Agent by such Borrower and agreeing to make all payments
thereon directly to Agent or as Agent may otherwise direct, or (ii) cause Agent
to become, at Borrowers' expense, the transferee beneficiary of the letter of
credit, banker's acceptance or similar instrument (as the case may be).
(g) No Borrower has commercial tort claims as of the date hereof,
except as set forth in the Information Certificates. In the event that any
Borrower shall at any time after the date hereof have any commercial tort
claims, such Borrower shall promptly notify Agent
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thereof in writing, which notice shall (i) set forth in reasonable detail the
basis for and nature of such commercial tort claim, and (ii) include the express
grant by such Borrower to Agent of a security interest in such commercial tort
claim (and the proceeds thereof). In the event that such notice does not include
such grant of a security interest, the sending thereof by such Borrower to Agent
shall be deemed to constitute such grant to Agent. Upon the sending of such
notice, any commercial tort claim described therein shall constitute part of the
Collateral and shall be deemed included therein. Without limiting the
authorization of Agent provided in Section 5.2(a) hereof or otherwise arising by
the execution by Borrowers of this Agreement, Agent is hereby irrevocably
authorized from time to time and at any time to file such financing statements
naming Agent or its designee as secured party and each Borrower as debtor, or
any amendments to any financing statements, covering any such commercial tort
claim as Collateral. In addition, Borrowers shall promptly upon Agent's request,
execute and deliver, or cause to be executed and delivered, to Agent such other
agreements, documents and instruments as Agent may require in connection with
such commercial tort claim.
(h) Borrowers do not have any goods, documents of title or other
Collateral in the custody, control or possession of a third party as of the date
hereof, except as set forth in the Information Certificates and except for goods
located in the United States or Canada in transit to a location of Borrowers
permitted herein or in the ordinary course of business of Borrowers in the
possession of the carrier transporting such goods. In the event that any goods,
documents of title or other Collateral are at any time after the date hereof in
the custody, control or possession of any other person not referred to in the
Information Certificates or such carriers, Borrowers shall promptly notify Agent
thereof in writing. Promptly upon Agent's request, Borrowers shall deliver to
Agent a Collateral Access Agreement duly authorized, executed and delivered by
such person and Borrower.
(i) If a Default or an Event of Default shall occur and be continuing
or if the aggregate Excess Availability of all Borrowers is less than the US
Dollar Equivalent of $10,000,000 for ten (10) consecutive days or ten (10) days
in any thirty (30) day period, upon the request of Agent, (i) Borrowers shall
cause Agent's name to be noted as secured party on each certificate of title for
titled goods of the Borrowers, if, as determined by Agent, such notation is a
condition to attachment, priority or perfection or ability of Agent to enforce,
the security interest of Agent in such Collateral, (ii) Borrowers shall execute
and deliver to Agent mortgages, charges, hypothecs, deeds of trust or deeds to
secure debt, as Agent may determine, in form and substance satisfactory to Agent
and in forms appropriate for recording in the real estate records of the
jurisdictions in which Borrowers' Real Property is located granting to Agent a
lien and mortgage on and security interest in such Real Property, fixtures or
other property and cause to be delivered to Agent, in form and substance
satisfactory to Agent, valid and effective title insurance policies issued by a
company and agent satisfactory to Agent insuring the priority, amount and
sufficiency of such mortgages, charges, hypothecs, deeds of trust or deeds to
secure debt and containing such legally available endorsements, assurances and
affirmative coverages as Agent may reasonably require, with opinions of counsel
in form and substance satisfactory to Agent as Agent may reasonably require.
(j) Borrowers shall take any other actions reasonably requested by
Agent from time to time to cause the attachment, perfection and first priority
of, and the ability of Agent to enforce, the security interest of Agent in any
and all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements
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and amendments relating thereto under the UCC, the PPSA or other applicable law,
to the extent, if any, that a Borrower's signature thereon is required therefor,
(ii) complying with any provision of any statute, regulation or treaty of the
United States or Canada as to any Collateral if compliance with such provision
is a condition to attachment, perfection or priority of, or ability of Agent to
enforce, the security interest of Agent in such Collateral, or (iii) obtaining
the consents and approvals of any Governmental Authority or third party,
including, without limitation, any consent of any licensor, lessor or other
person obligated on such Collateral, and taking all actions required by any
earlier versions of the UCC, the PPSA or by other law, as applicable in any
relevant jurisdiction.
5.3 Exclusion from Collateral of Cash Collateral Maintained at L/C Issuer
Under Cash Collateral Control Agreement. Notwithstanding anything to the
contrary contained in Section 5.1 above, the types or items of Collateral
described in such Section shall not include the cash and Cash Equivalents
deposited in the collateral account maintained at the L/C Issuer (as such term
is defined in the Term Loan Agreement) pursuant to the Cash Collateral Control
Agreement among Borrowers, Term Loan Agent and the L/C Issuer entered into under
the Term Loan Agreement that secures the letters of credit issued by the L/C
Issuer from time to time.
SECTION 6. COLLECTION AND ADMINISTRATION.
6.1 Borrowers' Loan Account. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrowers, and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Agent's customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Borrowers each month a statement
setting forth the balance in the Borrowers' loan account(s) maintained by Agent
for Borrowers pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrowers and conclusively binding
upon Borrowers as an account stated except to the extent that Agent receives a
written notice from Borrowers of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been mailed by Agent.
Until such time as Agent shall have rendered to Borrowers a written statement as
provided above, the balance in Borrowers' loan account(s) shall be presumptive
evidence of the amounts due and owing to Agent and Lenders by Borrowers.
6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at their expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Agent may specify, with such banks as are acceptable to Agent
into which Borrowers shall promptly deposit and direct their account debtors to
directly remit all payments on Receivables and all payments constituting
proceeds of other Revolving Loan Priority Collateral in the identical form in
which such payments are made, whether by cash, check or other manner. Borrowers
shall deliver, or cause to be delivered to Agent, a Depository Account Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account is maintained as provided in Section 5.2 hereof or at any time and from
time to time Agent may become bank's customer with
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respect to the Blocked Accounts and promptly upon Agent's request, Borrowers
shall execute and deliver such agreements or documents as Agent may require in
connection therewith. Borrowers agree that all payments made to such Blocked
Accounts or other funds received and collected by Agent, whether in respect of
the Receivables or other Revolving Loan Priority Collateral or otherwise shall
be treated as payments to Agent for the benefit of itself and Lenders in respect
of the Obligations and therefore shall constitute the property of Agent and
Lenders to the extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Loans available to
Borrowers, such payments will be applied (conditional upon final collection) to
the Obligations on the Business Day of receipt by Agent of immediately available
funds in the Agent Payment Account or the Canadian Payment Account (as the case
may be) provided such payments and notice thereof are received in accordance
with Agent's usual and customary practices as in effect from time to time and
within sufficient time to credit Borrowers' loan account(s) on such day, and if
not, then on the next Business Day. For the purposes of calculating interest on
the Obligations, such payments or other funds received will be applied
(conditional upon final collection) to the Obligations one (1) Business Day
following the date of receipt of immediately available funds by Agent in the
Agent Payment Account or the Canadian Payment Account (as the case may be)
provided such payments or other funds and notice thereof are received in
accordance with Agent's usual and customary practices as in effect from time to
time and within sufficient time to credit Borrowers' loan account on such day,
and if not, then on the next Business Day and such amount shall be retained by
the Agent. In the event that at any time or from time to time there are no Loans
outstanding, Borrowers shall pay an administrative charge to Agent in an amount
equivalent to the interest Borrowers would have paid for such Business Day had
there been Loans outstanding on such day which charge shall be paid to Agent.
(c) Each Borrower and its shareholders, directors, employees, agents,
Subsidiaries or other Affiliates shall, acting as trustee for Agent and Lenders,
receive, as the property of Agent and Lenders, any monies, checks, notes, drafts
or any other payment relating to and/or proceeds of Accounts or other Revolving
Loan Priority Collateral which come into their possession or under their control
and immediately upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Agent for the benefit of itself and Lenders. In no event
shall the same be commingled with any Borrower's own funds. Each Borrower agrees
to reimburse Agent and Lenders on demand for any amounts owed or paid to any
bank at which a Blocked Account is established or any other bank or person
involved in the transfer of funds to or from the Blocked Accounts arising out of
Agent's or any Lender's payments to or indemnification of such bank or person.
The obligation of Borrowers to reimburse Agent and Lenders for such amounts
pursuant to this Section 6.3 shall survive the termination or non-renewal of
this Agreement.
(d) No Borrower shall permit any payment relating to or constituting
proceeds of Collateral other than Revolving Loan Priority Collateral to be
deposited into any Blocked Account or the Agent Payment Account or the Canadian
Payment Account. All payments relating to or constituting proceeds of Collateral
other than Revolving Loan Priority Collateral shall be made to the account of
the Term Loan Agent set forth in the Term Loan Agreement or as otherwise
provided under the Term Loan Agreement. Borrowers shall immediately notify Agent
if any payment or deposit is made contrary to this provision.
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6.4 Payments.
(a) All Obligations of US Borrowers shall be payable to the Agent
Payment Account as provided in Section 6.3 and all Obligations of Canadian
Borrowers shall be payable to the Canadian Payment Account or, in each case such
other place as Agent may designate from time to time. Agent shall apply payments
received or collected from Borrowers or for the account of Borrowers (including
the monetary proceeds of collections or of realization upon any Collateral)
under the US Credit Facility or Canadian Credit Facility, as applicable, as
follows: first, to pay any fees, indemnities or expense reimbursements then due
to Agent or Lenders from Borrowers; second, to pay interest due in respect of
any Loans; third, to pay principal due on any SwingLine Loans, Overadvances and
Loans made by Agent pursuant to Section 6.6 thereof; fourth, to pay principal
due in respect of the Revolving Loans; fifth, to pay or prepay any other
Obligations whether or not then due, in such order and manner as Agent
determines. Notwithstanding anything to the contrary contained in this
Agreement, (i) unless so directed by Borrowers, or unless a Default or an Event
of Default shall exist or have occurred and be continuing, Lenders shall not
apply any payments which they receive to any Eurodollar Rate Loans, except (A)
on the expiration date of the Interest Period applicable to any such Eurodollar
Rate Loans, or (B) in the event that there are no outstanding Prime Rate Loans,
and (ii) to the extent Borrowers use any proceeds of the Loans or Letter of
Credit Accommodations to acquire rights in or the use of any Collateral or to
repay any Indebtedness used to acquire rights in or the use of any Collateral,
payments in respect of the obligations shall be deemed applied first to the
Obligations arising from Loans and Letter of Credit Accommodations that were not
used for such purposes and second to the Obligations arising from Loans and
Letter of Credit Accommodations the proceeds of which were used to acquire
rights in or the use of any Collateral in the chronological order in which
Borrowers acquired such rights or use.
(b) At Agent's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrowers.
Borrowers shall make all payments to Agent and Lenders on the Obligations free
and clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Agent or any Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and continue and this
Agreement shall continue in full force and effect as if such payment or proceeds
had not been received. Borrowers shall be liable to pay to Agent and each
Lender, and does hereby indemnify and hold Agent and each Lender harmless for
the amount of any payments or proceeds surrendered or returned. This Section 6.4
shall remain effective notwithstanding any contrary action which may be taken by
Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive
the payment of the Obligations and the termination or non-renewal of this
Agreement.
6.5 Authorization to Make Loans.
(a) Agent and Lenders are authorized to make the Loans and provide
the Letter of Credit Accommodations based upon telephonic or other instructions
received from anyone purporting to be an authorized officer of Borrower
Representative (as set forth in the
46
Information Certificate) or other authorized person or, at the discretion of
Agent, if such Loans are necessary to satisfy any Obligations. All requests for
Loans or Letter of Credit Accommodations hereunder shall be made to the Agent
and shall specify the date on which the requested advance is to be made or
Letter of Credit Accommodations established (which day shall be a Business Day)
and the amount of the requested Loan. Requests received after 11:00 a.m. Boston,
Massachusetts time on any day shall be deemed to have been made as of the
opening of business on the immediately following Business Day. All Loans and
Letter of Credit Accommodations under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of,
Borrowers when deposited to the credit of Borrowers or otherwise disbursed or
established in accordance with the instructions of Borrowers or in accordance
with the terms and conditions of this Agreement; and
(b) All Loans provided to US Borrowers shall be in or denominated in
US Dollars and shall be disbursed only to bank accounts in the United States of
America and all Loans provided to Canadian Borrowers shall be in or denominated
in either Canadian Dollars or US Dollars as Canadian Borrowers may specify,
except as Canadian Lender may otherwise specifically agree in writing and shall
be disbursed only to bank accounts in Canada. Set forth on Schedule 8.10 to the
Information Certificates are the bank accounts of each Borrower used by such
Borrower for making payments of its Indebtedness and other obligations to which,
as of the date hereof, proceeds of Loans may be disbursed.
6.6 Payment by Lenders and Settlement of Loans. Each Lender shall, not
later than 12:00 p.m. (Boston time) on such requested borrowing date, wire to a
bank designated by Agent the amount of that Lender's Pro Rata Share of the
requested Revolving Loan. The failure of any Lender to make the Revolving Loans
required to be made by it shall not release any other Lender of its obligations
hereunder to make its Revolving Loan. Neither Agent nor any other Lender shall
be responsible for the failure of any other Lender to make the Revolving Loan to
be made by such other Lender. Unless the Agent has received notice from a Lender
that such Lender does not intend to fund a Revolving Loan and the basis for such
action prior to 12:00 noon on the Business Day prior to the date any Revolving
Loan is to be made, Agent shall be entitled to assume that all Lenders will make
Revolving Loans as required hereunder and to make such Revolving Loans to the
Borrowers. The foregoing notwithstanding, Agent, in its sole discretion, may
from time to time make Revolving Loans on behalf of any or all Lenders
including, without limitation, Revolving Loans with respect to Letter of Credit
Accommodations that may be drawn. In such event, the Lenders on behalf of whom
Agent made the Revolving Loans, shall reimburse Agent for the amount of such
Revolving Loan made on its behalf, on a weekly (or more frequent, as determined
by Agent in its sole discretion) basis. Settlements shall continue to occur
during the continuance of a Default or an Event of Default and whether or not
the applicable conditions in Section 4 have been satisfied. On each such
settlement date, each such Lender shall pay to Agent, the net amount owing to
Agent in connection with such settlement, as determined by Agent, including
without limitation, amounts relating to Loans, fees, interest and other amounts
payable hereunder. If a Lender fails to pay the settlement amount due to Agent
on the settlement date specified by Agent, such Lender shall pay to Agent on
demand an amount equal to the product of (i) such amount times (ii)(A) the
Federal Funds Rate during the period from and including the third day after such
payment is required to be made, and (B) thereafter, the Interest Rate applicable
to Prime Rate Loans to the date on which such payment is immediately available
to Agent, times (iii) a fraction, the numerator of which is the number of days
that elapsed from and including such settlement date to the date such settlement
amount is
47
immediately available to Agent and the denominator is 360. In addition to the
foregoing, if the amount of any such Lender's Pro Rata Share of such Revolving
Loans is not made available to Agent on any settlement date, the Agent shall be
entitled to recover such amount from Borrowers upon demand with interest thereon
at the Interest Rate applicable to Prime Rate Loans.
6.7 Use of Proceeds.
Borrowers shall use the initial proceeds of the Loans provided by
Lenders to Borrower hereunder only for: (a) payments to each of the persons
listed in the disbursement direction letter furnished by Borrowers to Lenders on
or about the date hereof including with respect to payments to be made to the
Sellers under the Purchase Agreements, to refinance existing indebtedness of
Borrowers and pay the prepayment and defeasance costs in connection therewith
and for fees, costs and expenses relating thereto and (b) costs, expenses and
fees in connection with the preparation, negotiation, execution and delivery of
this Agreement and the other Financing Agreements. All other Loans made or
Letter of Credit Accommodations provided by Agent, Lenders and Reference Bank to
Borrower pursuant to the provisions hereof shall be used by Borrowers only for
general operating, working capital and other proper corporate purposes of
Borrowers not otherwise prohibited by the terms hereof. None of the proceeds
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
6.8 Taxes.
(a) Any and all payments by or on behalf of a Borrower hereunder and
under any other Financing Agreement shall be made, in accordance with Section
6.4, free and clear of and without deduction for any and all Taxes, excluding
the following (collectively, "Excluded Taxes"): (i) income taxes imposed on the
net income or capital of Agent or any Lender (or any transferee or assignee of
such Lender, including any Participant, any such transferee or assignee being
referred to as a "Transferee") in the jurisdiction of Agent's or such Lender's
applicable lending office or jurisdiction of organization or any political
subdivision thereof, and (ii) franchise or similar taxes imposed on or
determined by reference to the net income of Agent or any Lender (or
Transferee), in each case by the United States of America or by the jurisdiction
under the laws of which such Lender (or Transferee) (A) is organized or any
political subdivision thereof, (B) has its applicable lending office located or
(C) is otherwise doing business. In addition, Borrowers agree to pay to the
relevant Governmental Authority in accordance with applicable law any Other
Taxes.
(b) If a Borrower shall be required by law to deduct or withhold in
respect of any Taxes or Other Taxes (other than Excluded Taxes) from or in
respect of any sum payable hereunder to Agent or any Lender, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Lender (or Agent on behalf of such Lender or itself, as the case may be)
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made;
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(ii) such Borrower shall make such deductions and withholdings;
(iii) such Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) to the extent not paid to Agent and Lenders pursuant to
clause (i) above, Borrowers shall also pay to Agent or any Lender, at the time
interest is paid, all additional amounts which Agent or any Lender specifies as
necessary to preserve the after-tax yield such Lender would have received if
such Taxes or Other Taxes had not been imposed.
(c) Within thirty (30) days after the date of any payment by a
Borrower of Taxes or Other Taxes, upon Agent's request, such Borrower shall
furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment reasonably satisfactory to Agent.
(d) Borrowers any will indemnify Agent and each Lender (or
Transferee) for the full amount of Taxes and Other Taxes paid by Agent or such
Lender (or Transferee, as the case may be). If Agent or such Lender (or
Transferee) receives a refund in respect of any Taxes or Other Taxes for which
Agent or such Lender (or Transferee) has received payment from a Borrower
hereunder, so long as no Default or Event of Default shall exist or have
occurred and be continuing and Excess Availability in excess of such refund
exists, Agent or such Lender (as the case may be) shall credit to the loan
account of the applicable Borrower the amount of such refund plus any interest
received (but only to the extent of indemnity payments made, or additional
amounts paid, by or on behalf of such Borrower under this Section 6.8 with
respect to the Taxes or Other Taxes giving rise to such refund). If a Lender (or
any Transferee) claims a tax credit in respect of any Taxes for which it has
been indemnified by a Borrower pursuant to this Section 6.8, such Lender will
apply the amount of the actual dollar benefit received by such Lender as a
result thereof, as reasonably calculated by such Lender and net of all expenses
related thereto, to the Loans made by such Lender. If Taxes or Other Taxes were
not correctly or legally asserted, Agent or such Lender shall, upon Parent's
request and at the expense of Parent, provide such documents to Parent in form
and substance satisfactory to Agent, as Parent may reasonably request, to enable
such Borrower to contest such Taxes or Other Taxes pursuant to appropriate
proceedings then available to such Borrower (so long as providing such documents
shall not, in the good faith determination of Agent or the Lender, have a
reasonable likelihood of resulting in any liability of Agent or such Lender for
which Agent has not established a Reserve). The indemnity provided for herein
shall survive the payment of the Obligations and the termination of this
Agreement. A certificate as to the amount of such payment or liability and
setting forth in reasonable detail the calculation and basis for such payment or
liability delivered to Parent by a Lender or by Agent on its own behalf or on
behalf of a Lender, shall be conclusive, absent manifest error.
(e) Each Transferee of a US Lender or Agent that is not a United
States person within the meaning of Section 7701(a)(30) of the Code and that is
a US Lender or claims indemnification or additional amounts under this Section
6.8 (a "Non-U.S. Person") shall deliver to Parent two (2) copies of the
applicable United States Internal Revenue Service Form W-8 wherein such
Transferee claims entitlement to a complete exemption from U.S. federal income
withholding tax on all payments by or on behalf of Parent under this Agreement
and the other Financing Agreements. Such forms shall be delivered by any
Non-U.S. Person receiving
49
payments by or on behalf of Parent on or before the date it becomes a party to
this Agreement (or, in the case of a Transferee that is a Participant, on or
before the date such Participant becomes a Transferee hereunder) and on or
before the date, if any, such Non-U.S. Person changes its applicable lending
office by designating a different lending office (a "New Lending Office"). In
addition, a Non-U.S. Person shall upon written notice from Parent promptly
deliver such new forms as are required by the relevant Governmental Authority to
claim exemption from, or reduction in the rate of, U.S. Federal withholding tax
upon the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Person. Each Lender and Agent that is a United States Person (other
than a Lender or Agent that is a corporation or otherwise exempt from United
States backup withholding Tax) shall deliver at the time(s) and in the manner(s)
if and to the extent such delivery is required under applicable law, to Parent
and Agent (as applicable), a properly completed and duly executed United States
Internal Revenue From W-9 or any successor form, certifying that such Person is
exempt from United States backup withholding Tax on payments made by Parent
hereunder. Notwithstanding any other provision of this Section 6.8(e), no
Non-U.S. Person, Agent or any Lender shall be required to deliver any form
pursuant to this Section 6.8(e) that such Non-U.S. Person, Agent or Lender is
not legally able to deliver.
(f) Borrowers shall not be required to indemnify any Person or to
pay any additional amounts to any Person pursuant to subsections (b) or (d)
above to the extent that (i) the Tax was applicable on the date such Person
became a party to this Agreement (or, in the case of a Transferee that is a
Participant, on the date such Participant became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Person
designated such New Lending Office with respect to a Loan, provided, that, this
subsection (f) shall not apply (A) to any Transferee or New Lending Office that
becomes a Transferee or New Lending Office as a result of an assignment,
participation, transfer or designation made at the request or with the approval
of any Borrower, and (B) to the extent the indemnity payment or additional
amounts any Transferee, acting through a New Lending Office, would be entitled
to receive (without regard to this subsection (f)) do not exceed the indemnity
payment or additional amounts that the person making the assignment,
participation or transfer to such Transferee making the designation of such New
Lending Office, would have been entitled to receive in the absence of such
assignment, participation, transfer or designation; or (ii) the obligation to
pay such additional amounts would not have arisen but for a failure by such
Person to comply with the provisions of subsection (e) above or the gross
negligence or wilful misconduct of such Person as determined pursuant to a
final, non-appealable order of a court of competent jurisdiction.
(g) The provisions of this Section 6.8 shall survive the termination
of this Agreement and the repayment of the Obligations.
SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS.
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent (with, upon Agent's request,
sufficient copies for the Lenders) with the following documents in a form
satisfactory to Agent:
(i) on a regular basis as required by Agent, a schedule of sales
made, credits issued and cash received;
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(ii) as soon as possible after the end of each month (but in any
event within ten (10) days after the end thereof), on a monthly
basis or more frequently as Agent may request, (A) agings of
accounts payable (and including information indicating the
status of payments to owners and lessors of the leased premises
of Borrower) and (B) agings of accounts receivable (together
with a reconciliation to the previous month's aging and general
ledger);
(iii) upon Agent's request, (A) copies of customer statements and
credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, (B) copies of shipping and
delivery documents, (C) copies of purchase orders, invoices
and delivery documents for Inventory and Equipment acquired by
Borrowers, and (D) copies of Material Contracts entered into
after the date hereof; and
(iv) such other reports as to the Collateral as Agent or Majority
Lenders shall request from time to time.
(b) If any of Borrowers' records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, each Borrower hereby irrevocably authorizes such service, contractor,
shipper or agent to deliver such records, reports, and related documents to
Agent and to follow Agent's instructions with respect to further services at any
time that an Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Each Borrower shall notify Agent promptly of: (i) any material
delay in any Borrower's performance of any of its obligations to any account
debtor or the assertion of any claims, offsets, defenses or counterclaims by any
account debtor, or any disputes with account debtors, or any settlement,
adjustment or compromise thereof, (ii) all material adverse information relating
to the financial condition of any account debtor, and (iii) any event or
circumstance which, to any Borrower's knowledge would cause Agent to consider
any then existing Accounts as no longer constituting Eligible Accounts. No
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor without Agent's consent, except in the
ordinary course of Borrowers' business in accordance with practices and policies
previously disclosed in writing to Agent and except as set forth in the
schedules delivered to Agent pursuant to Section 7.1(a) above. So long as no
Event of Default exists or has occurred and is continuing, Borrowers shall
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has occurred and
is continuing, Agent shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Agent shall be true
and complete, (ii) no payments shall be made thereon except payments immediately
delivered to Lender pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
51
or given in the ordinary course of Borrowers' business in accordance with
practices and policies previously disclosed to Agent, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Lender in accordance with
the terms of this Agreement, and (v) none of the transactions giving rise
thereto will violate any applicable foreign, Federal, State, Provincial or local
laws or regulations, all documentation relating thereto will be legally
sufficient under such laws and regulations, and all such documentation will be
legally enforceable in accordance with its terms.
(c) Agent shall have the right at any time or times, in Agent's name
or in the name of a nominee of Agent, to verify the validity, amount or any
other matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
7.3 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Agent (and all persons designated by Agent) as such Borrower's true and
lawful attorney-in-fact, and authorizes Agent, in any Borrower's or Agent's
name, to: (a) at any time an Event of Default exists or has occurred and is
continuing (i) demand payment on Receivables or other Collateral, (ii) enforce
payment of Receivables by legal proceedings or otherwise, (iii) exercise all of
each Borrower's rights and remedies to collect any Receivable or other
Collateral, (iv) sell or assign any Receivable upon such terms, for such amount
and at such time or times as the Lender deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release any
Receivable, (vii) prepare, file and sign any Borrower's name on any proof of
claim in bankruptcy or other similar document against an account debtor or other
obligor in respect of any Receivables or other Collateral, (viii) notify the
post office authorities to change the address for delivery of remittances from
account debtors or other obligors in respect of Receivables or other proceeds of
Collateral to an address designated by Agent, and open and dispose of all mail
addressed to any Borrower and handle and store all mail relating to the
Collateral; and (ix) do all acts and things which are necessary, in Agent's
determination, to fulfill Borrowers' obligations under this Agreement and the
other Financing Agreements, and (b) at any time to (i) take control in any
manner of any item of payment in respect of Receivables or constituting
Collateral or otherwise received in or for deposit in the Blocked Accounts or
otherwise received by Agent, (ii) have access to any lockbox or postal box into
which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, (iii) endorse
any Borrower's name upon any items of payment in respect of Receivables or
constituting Collateral or otherwise received by Lender and deposit the same in
Lender's account for application to the Obligations, (iv) endorse any Borrower's
name upon any chattel paper, document, instrument, invoice, or similar document
or agreement relating to any Receivable or any goods pertaining thereto or any
other Collateral, including any warehouse or other receipts, or bills of lading
and other negotiable or non-negotiable documents, (v) clear Inventory the
purchase of which was financed with Letter of Credit Accommodations through US
Customs or foreign export control authorities in any Borrower's name, Agent's
name or the name of Agent's designee, and to sign and deliver to customs
officials powers of attorney in any Borrower's name for such purpose, and to
complete in any Borrower's or Agent's name, any order, sale or transaction,
obtain the necessary documents in connection therewith and collect the proceeds
thereof, and (vi) sign any Borrower's name on any verification of Receivables
and notices thereof to account debtors or any secondary obligors or other
obligors in respect thereof. Each Borrower hereby releases Agent and their
respective officers, employees and designees from any liabilities arising from
any act or acts under this power of attorney and in furtherance thereof, whether
of omission or commission, except as a result of Agent's own gross negligence
52
or willful misconduct as determined pursuant to a final non-appealable order of
a court of competent jurisdiction.
7.4 Right to Cure. Agent may, at its option, (a) upon notice to
Borrowers, cure any default by any Borrower under any material agreement with a
third party that affects the Collateral, their value or the ability of Agent to
collect, sell or otherwise dispose of the Collateral or the rights and remedies
of Agent therein or the ability of Borrowers to perform their obligations
hereunder or under the other Financing Agreements, (b) pay or bond on appeal any
judgment entered against any Borrower, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral, and (d) pay any amount, incur any expense or perform any act
which, in Agent's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent with respect thereto.
Agent may add any amounts so expended to the Obligations and charge Borrowers'
account(s) therefor, such amounts to be repayable by Borrowers on demand. Agent
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of any
Borrower. Any payment made or other action taken by Agent under this Section 7.4
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.
7.5 Access to Premises. From time to time as requested by Agent, at the
cost and expense of Borrowers, (a) Agent, Lenders, or their respective designees
shall have complete access to all of Borrowers' premises during normal business
hours and after notice to Borrowers, or at any time and without notice to any
Borrower if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
Borrowers' books and records, including the Records, and (b) Borrowers shall
promptly furnish to Agent and Lenders such copies of such books and records or
extracts therefrom as Agent or Lenders may request, and (c) Agent or its
designee may use during normal business hours such of Borrowers' personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Accounts and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
Each Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations by Agent and Lenders to
Borrower:
8.1 Corporate Existence; Power and Authority. Each Borrower is a
corporation, limited liability company, limited partnership or business trust
duly organized and in good standing under the laws of its jurisdiction of
incorporation or organization and is duly qualified as a foreign corporation,
limited liability company, limited partnership or business trust and in good
standing in all states, provinces or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a material adverse effect on any Borrower's financial
condition, results of operation or business or the rights of Agent and Lenders
in or to any of the Collateral. The execution, delivery and performance of this
Agreement, the other Financing Agreements and the transactions contemplated
hereunder and
53
thereunder (a) are all within each Borrower's corporate, limited liability
company, partnership or trust powers, (b) have been duly authorized, (c) are not
in contravention of law or the terms of Borrower's certificate of incorporation,
certificate of formation or certificate of limited partnership, by-laws,
operating agreement, partnership agreement or declaration of trust, or other
organizational documentation, or any indenture, agreement or undertaking to
which any Borrower is a party or by which any Borrower or its property are
bound, and (d) will not result in the creation or imposition of, or require or
give rise to any obligation to grant, any lien, security interest, charge or
other encumbrance upon any property of any Borrower. This Agreement and the
other Financing Agreements constitute legal, valid and binding obligations of
each Borrower enforceable in accordance with their respective terms.
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of each Borrower is as set forth on the
signature page of this Agreement and in the Information Certificates. No
Borrower has, during the past five years, been known by or used by any other
corporate or fictitious name or been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any Person, or acquired any
of its property or assets out of the ordinary course of business, except as set
forth in the Information Certificates.
(b) Each Borrower is an organization of the type and organized in
the jurisdiction set forth in the Information Certificate. The Information
Certificates accurately set forth the organizational identification number of
each Borrower or accurately states that a Borrower has none and accurately sets
forth the federal employer identification number of each Borrower.
(c) The chief executive office and mailing address of each
Borrower and each Borrower's Records concerning Accounts are located only at the
address identified as such in Schedule 8.2 to the appropriate Information
Certificate and its only other places of business and the only other locations
of Collateral, if any, are the addresses set forth in Schedule 8.2 to the
appropriate Information Certificate, subject to the right of Borrowers to
establish new locations in accordance with Section 9.2 below. The Information
Certificates correctly identify any of such locations which are not owned by
Borrowers and sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers which have been or may hereafter be delivered
by Borrowers to Agent and/or Lenders have been prepared in accordance with GAAP
(except as to any interim financial statements, to the extent such statements
are subject to normal year-end adjustments and do not include any notes) and
fairly present the financial condition and the results of operation of Borrowers
as at the dates and for the periods set forth therein. Except as disclosed in
any interim financial statements furnished by Borrowers to Agent and Lenders
prior to the date of this Agreement, there has been no material adverse change
in the assets, liabilities, properties and condition, financial or otherwise, of
Borrowers, since the date of the most recent audited financial statements
furnished by Borrowers to Agent and Lenders prior to the date of this Agreement.
8.4 Priority of Liens; Title to Properties. The security interests,
hypothecs and liens granted to Agent under this Agreement and the other
Financing Agreements constitute valid and
54
perfected first priority liens and security interests and first ranking
hypothecs in and upon the Revolving Loan Priority Collateral and valid and
perfected second priority liens and security interests and second ranking
hypothecs in and upon the other Collateral subject only to the liens indicated
on Schedule 8.4 to the Information Certificates and the other liens permitted
under Section 9.8 hereof. Each Borrower has good and marketable fee simple title
to or valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificates or permitted under Section 9.8
hereof.
8.5 Tax Returns. Each Borrower has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to be
filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Each Borrower has paid or caused
to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrowers and with respect to which adequate reserves have been set
aside on its books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, Provincial, county, local, foreign and other
taxes whether or not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth in Schedule 8.6 to the Information
Certificates, there is no present investigation by any Governmental Authority
pending, or to the best of any Borrower's knowledge threatened, against or
affecting any Borrower, its assets or business and there is no action, suit,
proceeding or claim by any Person pending, or to the best of any Borrower's
knowledge threatened, against any Borrower or its assets or goodwill, or against
or affecting any transactions contemplated by this Agreement, which if adversely
determined against any Borrower would result in any material adverse change in
the assets, business or prospects of any Borrower or would impair the ability of
any Borrower to perform its obligations hereunder or under any of the other
Financing Agreements to which it is a party or of Agent or Lenders to enforce
any Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws. No Borrower is
in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound and each Borrower is in compliance in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits, approvals
and orders of any foreign, Federal, State, Provincial or local Governmental
Authority.
8.8 Environmental Compliance.
Except as shown or reflected in the financial statements of Borrowers
previously furnished to Agent and Lenders and to be furnished to Agent and
Lenders under Section 9.6 or as set forth on Schedule 8.8 to the Information
Certificates, unless such matters would not have a material adverse effect upon
the business, assets or prospects of the Borrowers on a consolidated basis or on
the Collateral:
(a) No Borrower or any Subsidiary has generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in any
manner which at any time violates any
55
applicable Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of Borrowers and their
Subsidiaries comply in all material respects with all Environmental Laws and all
orders, licenses, permits, certificates, approvals and similar authorizations
thereunder.
(b) There has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any Governmental Authority or any other
person nor is any pending or to the best of Borrowers' knowledge threatened,
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by Borrowers and their Subsidiaries or the release, spill or
discharge, threatened or actual, of any Hazardous Material at any properties at
which or from which Borrowers or their Subsidiaries has transported, stored or
disposed of any Hazardous Materials, and all transportation, handling,
processing and disposal of Hazardous Materials by Borrowers and their
Subsidiaries has been conducted in compliance with all applicable Environmental
Laws, and all laws relating to health or safety matters.
(c) Borrowers and their Subsidiaries have no material liability
(contingent or otherwise) in connection with (i) a release, spill or discharge,
threatened or actual, of any Hazardous Materials, (ii) the generation, use,
storage, treatment, transportation, manufacture, handling, production,
processing or disposal of any Hazardous Materials or (iii) any service or
remediation performed by Borrowers or their Subsidiaries at any location.
(d) Borrowers and their Subsidiaries have all licenses, permits,
certificates, approvals or similar authorizations required to be obtained or
filed in connection with the operations of Borrowers and their Subsidiaries
under any Environmental Law and, to the best knowledge of Borrowers, all of such
licenses, permits, certificates, approvals or similar authorizations are valid
and in full force and effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service and to the best of Borrowers'
knowledge, nothing has occurred which would cause the loss of such
qualification. Each Borrower and its ERISA Affiliates have made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or to the best of Borrowers' knowledge,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) are not less than such Plan's liabilities under Section 4001(a)(16) of
ERISA; (iii) Borrowers and their ERISA Affiliates have not incurred and do not
reasonably expect to incur, any liability under Title IV of ERISA with respect
to any Plan (other than premiums due and not delinquent under Section 4007 of
ERISA);
56
(iv) Borrowers and their ERISA Affiliates have not incurred and do not
reasonably expect to incur, any liability (and no event has occurred which, with
the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) Borrowers and their ERISA Affiliates have not engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
(d) With respect to any Canadian Pension Plan, if and to the extent
that any such Canadian Pension Plan exists or has not been terminated, (i) the
Canadian Pension Plans are duly registered under all applicable Federal and
Provincial pension benefits legislation, (ii) all obligations of any Borrower
(including fiduciary, funding, investment and administration obligations)
required to be performed in connection with the Canadian Pension Plans or the
funding agreements therefor have been performed in a timely fashion and there
are no outstanding disputes concerning the assets held pursuant to any such
funding agreement, (iii) all contributions or premiums required to be made by
any Borrower to the Canadian Pension Plans have been made in a timely fashion in
accordance with the terms of the Canadian Pension Plans and applicable laws and
regulations, (iv) all employee contributions to the Canadian Pension Plans
required to be made by way of authorized payroll deduction have been properly
withheld by any Borrower and fully paid into the Canadian Pension Plans in a
timely fashion, (v) all reports and disclosures relating to the Canadian Pension
Plans required by any applicable laws or regulations have been filed or
distributed in a timely fashion, (vi) there have been no improper withdrawals,
or applications of, the assets of any of the Pension Plans, (vii) no amount is
owing by any of the Canadian Pension Plans under the Income Tax Act (Canada) or
any provincial taxation statute, (viii) the Canadian Pension Plans are fully
funded both on an ongoing basis and on a solvency basis (using actuarial
assumptions and methods which are consistent with the valuations last filed with
the applicable governmental authorities and which are consistent with generally
accepted actuarial principles), and (ix) to the best of the knowledge of each
Borrower none of the Canadian Pension Plans is the subject of an investigation,
any other proceeding, an action or a claim and there exists no state of facts
which after notice or lapse of time or both could reasonably be expected to give
rise to any such proceeding, action or claim.
8.10 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by any Borrower maintained at any bank or
other financial institution are set forth in Schedule 8.10 to the Information
Certificates, subject to the right of Borrower to establish new accounts in
accordance with Section 5.2 hereof.
8.11 Intellectual Property. Each Borrower owns or licenses or otherwise has
the right to use all Intellectual Property necessary for the operation of its
business as presently conducted or proposed to be conducted. As of the date
hereof, no Borrower has any Intellectual Property registered, or subject to
pending applications, in the United States Patent and Trademark Office, the
Canadian Intellectual Property Office or any similar office or agency in the
United States, or Canada, any State or Province thereof, any political
subdivision thereof or in any other country, other than those described in
Schedule 8.11 to the Information Certificates hereto and has not granted any
licenses with respect thereto other than as set forth in Schedule 8.11 to the
Information Certificates. No event has occurred which permits or would permit
after notice or passage of time or both, the revocation, suspension or
termination of such rights. To the best of Borrowers' knowledge, no slogan or
other advertising device, product, process, method, substance or other
Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by any Borrower infringes any
patent,
57
trademark, servicemark, tradename, copyright, license or other Intellectual
Property owned by any other Person presently and no claim or litigation is
pending or threatened against or affecting any Borrower contesting its right to
sell or use any such Intellectual Property. Schedule 8.11 to the Information
Certificates sets forth all of the agreements or other arrangements of Borrowers
pursuant to which any Borrower has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of any Borrower as in effect
on the date hereof (collectively, together with such agreements or other
arrangements as may be entered into by any Borrower after the date hereof,
collectively, the "License Agreements" and individually, a "License Agreement").
No trademark, servicemark or other Intellectual Property at any time used by any
Borrower which is owned by another person, or owned by any Borrower subject to
any security interest, lien, collateral assignment, pledge or other encumbrance
in favor of any person other than Lender, is affixed to any Inventory, except to
the extent permitted under the term of the License Agreements listed on Schedule
8.11 to the Information Certificates.
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) No Borrower has any direct or indirect Subsidiaries or Affiliates
and is engaged in any joint venture or partnership except as set forth in
Schedule 8.12 to the Information Certificates, subject to the right of Borrower
to form or acquire Subsidiaries in accordance with Section 9.10 hereof.
(b) Borrowers are the record and beneficial owners of all of the
issued and outstanding shares of Capital Stock of the each of the Subsidiaries
listed on Schedule 8.12 to the Information Certificates as being owned by
Borrowers and there are no proxies, irrevocable or otherwise, with respect to
such shares and no equity securities of any of the Subsidiaries are or may
become required to be issued by reason of any options, warrants, rights to
subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is or may become bound to issue additional shares of it Capital Stock or
securities convertible into or exchangeable for such shares.
(c) The issued and outstanding shares of Capital Stock of each
Borrower are directly and beneficially owned and held by the persons indicated
in the Information Certificates, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Lender.
(d) After giving effect to the Purchase Agreement, each Borrower is
Solvent and will continue to be Solvent after the creation of the Obligations,
the security interests of Agent and Lenders and the other transactions
contemplated hereunder, and after creation of the Term Debt, the security
interests and liens of Term Loan Agent, and Term Loan Lenders and other
transactions contemplated under the Term Loan Agreement.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information Certificates is a
list (including dates of termination) of all collective bargaining or similar
agreements between or
58
applicable to any Borrower and any union, labor organization or other bargaining
agent in respect of the employees of any Borrower on the date hereof.
(b) There is (i) no significant unfair labor practice complaint
pending against any Borrower or, to the best of Borrowers' knowledge, threatened
against any Borrower, before the National Labor Relations Board, (ii) no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
any Borrower or, to best of Borrowers' knowledge, threatened against any
Borrower, and (iii) no significant strike, labor dispute, slowdown or stoppage
is pending against any Borrower or, to the best of Borrowers' knowledge,
threatened against any Borrower.
8.14 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of Borrowers
permitted hereunder as in effect on the date hereof, there are no contractual or
consensual restrictions on any Borrower or any of their Subsidiaries which
prohibit or otherwise restrict (a) the transfer of cash or other assets (i)
between any Borrower and any of their Subsidiaries or (ii) between any
Subsidiaries of Borrowers or (b) the ability of any Borrower or any of their
Subsidiaries to incur Indebtedness or grant security interests to Lender in the
Collateral.
8.15 Material Contracts. Schedule 8.15 to the Information Certificates
sets forth all Material Contracts to which any Borrower is a party or is bound
as of the date hereof. Borrowers have delivered true, correct and complete
copies of such Material Contracts to Agent on or before the date hereof.
Borrowers are not in breach of or in default under any Material Contract and
have not received any notice of the intention of any other party thereto to
terminate any Material Contract.
8.16 Payable Practices. Borrowers have not made any material change in
the historical accounts payable practices from those in effect immediately prior
to the date hereof.
8.17 Acquisition of Purchased Assets.
(a) The Purchase Agreements and the transactions contemplated
thereunder have been duly executed, delivered and performed in accordance with
their terms by the respective parties thereto in all respects, including the
fulfillment (not merely the waiver, except as may be disclosed to Agent and
consented to in writing by Agent) of all conditions precedent set forth therein
and giving effect to the terms of the Purchase Agreements and Sales Order and
the assignments to be executed and delivered by Sellers (or any of their
affiliates or subsidiaries) thereunder, Borrowers acquired and have good and
marketable title to the Purchased Assets, free and clear of all claims, liens,
pledges and encumbrances of any kind, except as permitted hereunder.
(b) All actions and proceedings, required by the Purchase
Agreements, applicable law or regulation (including, but not limited to,
compliance with the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as
amended) have been taken and the transactions required thereunder have been duly
and validly taken and consummated.
(c) No court of competent jurisdiction has issued any
injunction, restraining order or other order which prohibits consummation of the
transactions described in the Purchase Agreements and no governmental or other
action or proceeding has been threatened or
59
commenced, seeking any injunction, restraining order or other order which seeks
to void or otherwise modify the transactions described in the Purchase
Agreements.
(d) The Sales Order is in full force and effect and has not
been reversed, stayed, modified, or amended, no appeal has been filed with
respect to the Sales Order within the time period specified by Rule 8002(a) of
the Federal Rules of Bankruptcy Procedure and Sellers and Borrowers have
performed their respective obligations under the Sales Order in all respects;
(e) Borrowers have delivered, or caused to be delivered, to
Agent, true, correct and complete copies of the Sales Order, all proceedings
relating thereto, the Purchase Agreements and the Series C convertible preferred
stock.
8.18 Interdependent Businesses and Operations. Each of the operations
and businesses of each Borrower is interdependent with the other Borrowers and
each Borrower substantially relies on the other Borrowers in its operations and
business. Each Borrower will derive substantial direct and indirect benefits
from the Loans and Letter of Credit Accommodations made and to be made by Agent
and Lenders hereunder. Each Borrower's access to the financing provided
hereunder significantly enhances its own financial condition and business
prospects and the Borrowers acknowledge that the financing provided hereunder
would only be available on a joint and several basis among all the US Borrowers.
8.19 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrowers in writing to Agent and/or Lenders in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificates are true and correct in all material respects on the
date as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a material adverse affect on the business, assets or prospects of any
Borrower, which has not been fully and accurately disclosed to Agent and Lenders
in writing.
8.20 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Agent and Lenders regardless of any investigation made or
information possessed by Agent or Lenders. The representations and warranties
set forth herein shall be cumulative and in addition to any other
representations or warranties which Borrowers shall now or hereafter give, or
cause to be given, to Agent.
Section 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Borrowers shall at all times preserve, renew and keep in
full, force and effect their corporate, limited liability company, partnership
or business trust, as the case may be, existence and all rights and franchises
with respect thereto and maintain in full force and effect all permits,
licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the businesses as presently or proposed to be
conducted by Borrowers.
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(b) No Borrower shall change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from a Borrower of such proposed change in
its name, which notice shall accurately set forth the new name; and (ii) prior
to the filing thereof, Agent shall have received a copy of the proposed
amendment to the Certificate of Incorporation, Certificate of Formation or
Certificate of Limited Partnership, as the case may be, of such Borrower
providing for the name change and once the filing has been made, Agent shall
receive a copy of such amendment to the Certificate of Incorporation,
Certificate of Formation or Certificate of Limited Partnership, as the case may
be, of such Borrower certified by the Secretary of State of the jurisdiction of
incorporation or organization of such Borrower as soon as it is available.
(c) No Borrower shall change its chief executive office or its
mailing address or organizational identification number (or if it does not have
one, shall not acquire one) unless Agent shall have received not less than
thirty (30) days' prior written notice from Borrowers of such proposed change,
which notice shall set forth such information with respect thereto as Agent may
require and Agent shall have received such agreements as Agent may reasonably
require in connection therewith. No Borrower shall change its type of
organization, jurisdiction of organization or other legal structure.
9.2 New Collateral Locations. Borrowers may only open any new location
within the continental United States or Canada provided Borrowers (a) give Agent
thirty (30) days prior written notice from Borrowers of the intended opening of
any such new location, and (b) execute and deliver, or causes to be executed and
delivered, to Agent such agreements, documents, and instruments as Agent may
deem necessary or desirable to protect its interests in the Collateral at such
location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrowers shall, and shall cause any Subsidiary to, at all
times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders applicable to it and duly observe all
requirements of any foreign, Federal, State, Provincial or local Governmental
Authority, including ERISA, the Code, the Occupational Safety and Health Act of
1970, as amended, the Fair Labor Standards Act of 1938, as amended, and all
statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including all of the
Environmental Laws if the failure to so comply could result in the imposition of
material fines or penalties or result in the revocation or termination of any
material license, permit, order or approval of any Governmental Authority or
could otherwise materially and adversely affect the business, assets or
prospects of Borrowers on a consolidated basis.
(b) Borrowers shall give written notice to Agent immediately
upon any Borrower's receipt of any notice of, or any Borrower's otherwise
obtaining knowledge of, any of the following which could result in the
imposition of material fines or penalties or the revocation or termination of
any material license, permit, order or approval of any Governmental Authority or
could otherwise materially and adversely affect the business, assets or
prospects of Borrowers on a consolidated basis, (i) the occurrence of any event
involving the release, spill or discharge, threatened or actual, of any
Hazardous Material or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any non-compliance
with or
61
violation of any applicable Environmental Law by any Borrower or (B) the
release, spill or discharge, threatened or actual, of any Hazardous Material
other than in the ordinary course of business and other than as permitted under
any applicable Environmental Law. Copies of all environmental surveys, audits,
assessments, feasibility studies and results of remedial investigations shall be
promptly furnished, or caused to be furnished, by Borrowers to Agent. Borrowers
shall take prompt and appropriate action to respond to any non-compliance with
any of the Environmental Laws and shall regularly report to Agent on such
response.
(c) Without limiting the generality of the foregoing, whenever
Agent reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of Borrowers in order to avoid any material
non-compliance, with any Environmental Law, Borrowers shall, at Agent's request
and Borrowers' expense: (i) cause an independent environmental engineer
acceptable to Agent to conduct such tests of the site where Borrowers'
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof, and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrowers' response
thereto or the estimated costs thereof, shall change in any material respect.
(d) Borrowers shall indemnify and hold harmless Agent, each
Lender, and each of their respective directors, officers, employees, agents,
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including attorneys'
fees and legal expenses) directly or indirectly arising out of or attributable
to the use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including the costs of any required or necessary repair, cleanup or other
remedial work with respect to any property of Borrowers and the preparation and
implementation of any closure, remedial or other required plans. All
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
9.4 Payment of Taxes and Claims. Borrowers shall, and shall cause any
Subsidiary to, duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except for
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrowers or such Subsidiary, as
the case may be, and with respect to which adequate reserves have been set aside
on its books. Borrowers shall be liable for any tax or penalties withheld from
or imposed on Agent or any Lender as a result of the financing arrangements
provided for herein and Borrowers agree to indemnify and hold Agent and each
Lender harmless with respect to the foregoing, and to repay to Agent and each
Lender on demand the amount thereof, and until paid by Borrowers such amount
shall be added and deemed part of the Loans. The foregoing indemnity shall
survive the payment of the Obligations and the termination or non-renewal of
this Agreement.
9.5 Insurance. Borrowers shall, and shall cause any Subsidiary to, at
all times, maintain with financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be satisfactory to
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Agent as to form, amount and insurer. Borrowers shall furnish certificates,
policies or endorsements to Agent as Agent shall require as proof of such
insurance, and, if Borrowers fail to do so, Agent is authorized, but not
required, to obtain such insurance at the expense of Borrowers. All policies
shall provide for at least thirty (30) days prior written notice to Agent of any
cancellation or reduction of coverage and that Agent may act as attorney for
Borrowers in obtaining, and at any time a Default or an Event of Default exists
or has occurred and is continuing, adjusting, settling, amending and canceling
such insurance. Borrowers shall cause Agent to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and Borrowers shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Agent. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Agent as its interests
may appear and further specify that Agent shall be paid regardless of any act or
omission by Borrower or any of its Affiliates. At its option, Agent may apply
any insurance proceeds received by Agent at any time to the cost of repairs or
replacement of Collateral and/or to payment of the Obligations, whether or not
then due, in any order and in such manner as Agent may determine or hold such
proceeds as cash collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Borrowers shall, and shall cause any Subsidiary to, keep
proper books and records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
Borrowers and their Subsidiaries in accordance with GAAP. Borrowers shall
promptly furnish to Agent and Lenders all such financial and other information
as Agent shall reasonably request relating to the Collateral and the assets,
business and operations of Borrowers, and to notify the auditors and accountants
of Borrower that Agent is authorized to obtain such information directly from
them. Without limiting the foregoing, Borrowers shall furnish or cause to be
furnished to Agent and each Lender, the following: (i) within thirty (30) days
after the end of each fiscal month, monthly unaudited consolidated financial
statements (including in each case balance sheets, statements of income and
loss, statements of cash flow, and statements of shareholders' equity), all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Parent and its Subsidiaries as of the end of and through such
fiscal month, certified to be correct by the chief financial officer of Parent,
subject to normal year-end adjustments and accompanied by a compliance
certificate substantially in the form of Exhibit B hereto, along with a schedule
in form reasonably satisfactory to Agent of the calculations used in
determining, as of the end of such month, whether Parent was in compliance with
the covenants set forth in Sections 9.17, and 9.18 of this Agreement for such
month, (ii) within forty-five (45) days after the end of each fiscal quarter,
quarterly unaudited consolidated financial statements (including in each case
balance sheets, statements of income and loss, statements of cash flow, and
statements of shareholders' equity), all in reasonable detail, fairly presenting
the financial position and the results of operations of Parent and its
Subsidiaries as of the end of and through such fiscal quarter, certified to be
correct by the chief financial officer of Parent, subject to normal year-end
adjustments; and (iii) within ninety (90) days after the end of each fiscal
year, audited consolidated financial statements of Parent and its Subsidiaries
(including in each case balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders' equity), and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of the operations of Parent and its
Subsidiaries as of the end of and for such fiscal year, together with
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the unqualified opinion of independent certified public accountants, which
accountants shall be an independent accounting firm selected by Parent and
reasonably acceptable to Agent, that such financial statements have been
prepared in accordance with GAAP, and present fairly the results of operations
and financial condition of Parent, and its Subsidiaries as of the end of and for
the fiscal year then ended.
(b) Borrowers shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in any
Borrower's business, properties, assets, goodwill or condition, financial or
otherwise, (ii) any Material Contract of any Borrower being terminated or
amended or any new Material Contract entered into (in which event Borrowers
shall provide Agent with a copy of such Material Contract), (iii) any order,
judgment or decree in excess of $500,000 in any one case or in the aggregate
shall have been entered against any Borrower or any of its properties or assets,
(iv) any notification of violation of laws or regulations received by any
Borrower, (v) any ERISA Event, and (vi) the occurrence of any Default or Event
of Default.
(c) Borrowers shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lender copies of all reports which
Parent sends to its stockholders generally and copies of all reports and
registration statements which Parent files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Borrowers shall furnish or cause to be furnished to Agent
and Lenders such budgets, forecasts, projections and other information
respecting the Collateral and the business of Borrowers, as Agent may, from time
to time, reasonably request. Agent and each Lender are hereby authorized to
deliver a copy of any financial statement or any other information relating to
the business of Borrowers to any court or other Governmental Authority or to any
participant or assignee or prospective participant or assignee of any Lender.
Borrowers hereby irrevocably authorize and direct all accountants or auditors to
deliver to Agent and Lenders, at Borrowers' expense, copies of the financial
statements of Borrowers and any reports or management letters prepared by such
accountants or auditors on behalf of Borrowers and to disclose to Agent and to
each Lender such information as they may have regarding the business of
Borrowers. Any documents, schedules, invoices or other papers delivered to Agent
and to each Lender may be destroyed or otherwise disposed of by Agent and
Lenders one (1) year after the same are delivered, except as otherwise
designated by Borrowers to Agent and Lenders in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrowers
shall not, and shall not permit any Subsidiary to (and Agent and Lenders do not
authorize any Borrower to), directly or indirectly,
(a) merge into or consolidate or amalgamate with any other
Person or permit any other Person to merge into or consolidate with it (except
that any Borrower (other than the Parent) may be merged into, consolidated with,
or amalgamated with any other Borrower and any wholly-owned Subsidiary of any
Borrower may be merged into such Borrower); or
(b) sell, assign, lease, transfer, abandon or otherwise dispose
of any Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person, except for (i)
64
sales of Inventory in the ordinary course of business, (ii) the disposition of
Equipment as permitted under the Term Loan Agreement, and (iii) the issuance and
sale by Parent of Capital Stock of Parent after the date hereof; provided, that,
(A) Agent shall have received not less than ten (10) Business Days prior written
notice of such issuance and sale by Parent, which notice shall specify the
parties to whom such shares are to be sold, the terms of such sale, the total
amount which it is anticipated will be realized from the issuance and sale of
such stock and the net cash proceeds which it is anticipated will be received by
Borrower from such sale, (B) Parent shall not be required to pay any cash
dividends or repurchase or redeem such Capital Stock or make any other payments
in respect thereof, (C) the terms of such Capital Stock, and the terms and
conditions of the purchase and sale thereof, shall not include any terms that
include any limitation on the right of Parent or any other Borrower to request
or receive Loans or Letter of Credit Accommodations or the right of Parent or
any other Borrower to amend or modify any of the terms and conditions of this
Agreement or any of the other Financing Agreements or otherwise in any way
relate to or affect the arrangements of Borrowers with Agent or Lenders or are
more restrictive or burdensome to Borrowers than the terms of any Capital Stock
in effect on the date hereof, and (D) as of the date of such issuance and sale
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred;
(c) wind up, liquidate or dissolve (except in the case of the
Inactive Subsidiaries); or
(d) agree to do any of the foregoing.
9.8 Encumbrances. Borrowers shall not, and shall not permit any
Subsidiary to, create, incur, assume, suffer or permit to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including the Collateral, except:
(a) the security interests, hypothecs and liens of Agent; (b) liens securing the
payment of taxes, either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrowers or any Subsidiary, as the case may be and with respect to
which adequate reserves have been set aside on its books; (c) non-consensual
statutory liens (other than liens securing the payment of taxes) arising in the
ordinary course of Borrowers' or such Subsidiary's business to the extent: (i)
such liens secure Indebtedness which is not overdue or (ii) such liens secure
Indebtedness relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk of the insurer or
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrowers or any Subsidiary, in each case prior to the commencement
of foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books; (d) zoning restrictions, easements,
licenses, covenants and other restrictions affecting the use of Real Property
which do not interfere in any material respect with the use of such Real
Property or ordinary conduct of the business of Borrowers or any Subsidiary as
presently conducted thereon or materially impair the value of the Real Property
which may be subject thereto; (e) purchase money security interests in Equipment
(including Capital Leases) and purchase money mortgages on Real Property to
secure Indebtedness permitted under Section 9.9(b) hereof; (f) security
interests and liens in favor of the Term Loan Agent under the Term Loan
Agreement, or of the L/C Issuer in the cash and Cash Equivalents maintained in a
blocked deposit account maintained at the L/C Issuer under the Cash Collateral
Control Agreement (as those terms are defined in the Term Loan Agreement as in
65
effect on the date hereof); and (g) the security interests and liens set forth
on Schedule 8.4 to the Information Certificates.
9.9 Indebtedness. Borrowers shall not, and shall not permit any
Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, suffer or permit to exist, any Indebtedness or guarantee, assume,
endorse, or otherwise become responsible for (directly or indirectly) the
performance, dividends or other obligations of any Person, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases)
arising after the date hereof to the extent secured by purchase money security
interests in Equipment (including Capital Leases) and purchase money mortgages
on Real Property not to exceed $10,000,000 in the aggregate at any time
outstanding so long as such security interests and mortgages do not apply to any
property of Borrowers other than the Equipment or Real Property so acquired, and
the Indebtedness secured thereby does not exceed the cost of the Equipment or
Real Property so acquired, as the case may be;
(c) guarantees by any Subsidiaries of Borrowers of the
Obligations in favor of Agent and Lenders;
(d) unsecured Indebtedness among the Borrowers incurred in the
ordinary course of business which Indebtedness is hereby subordinated to the
prior indefeasible payment in full in cash of the Obligations;
(e) Indebtedness of Borrowers under interest swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
exchange agreements and similar contractual agreements entered into for the
purpose of protecting a Person against fluctuations in interest rates; provided,
that, such arrangements are with banks or other financial institutions that have
combined capital and surplus and undivided profits of not less than $250,000,000
and are not for speculative purposes and such Indebtedness shall be unsecured;
(f) lease obligations or purchase money indebtedness (including
capital leases) to the extent not incurred or secured by liens (including
capital leases) in violation of any other provision of this Agreement; provided,
that, (i) Borrowers may only make regularly scheduled payments of principal and
interest in respect of such indebtedness in accordance with the terms of the
agreement or instrument evidencing or giving rise to such indebtedness as in
effect on the date hereof, (ii) Borrowers shall not, directly or indirectly, (A)
amend, modify, alter or change the terms of such indebtedness or any agreement,
document or instrument related thereto as in effect on the date hereof, or (B)
redeem, retire, defease, purchase or otherwise acquire such indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose (except as
otherwise permitted in this Agreement), and (iii) Borrowers shall furnish to
Lender all notices or demands in connection with such indebtedness either
received by any Borrower or on its behalf, promptly after the receipt thereof,
or sent by any Borrower or on its behalf, concurrently with the sending thereof,
as the case may be;
(g) the Term Debt and guaranties thereof; provided that (i)
Borrowers shall not, directly or indirectly, (A) amend, modify, alter or change
the terms of such indebtedness or any agreement, document or instrument related
thereto as in effect on the date hereof, or (B)
66
redeem, retire, defease, purchase or otherwise acquire Term Debt, or set aside
or otherwise deposit or invest any sums for such purpose, and (ii) Borrowers
shall furnish to Agent all notices or demands in connection with Term Debt
either received by any Borrower or on its behalf, promptly after the receipt
thereof, or sent by any Borrower or on its behalf, concurrently with the sending
thereof, as the case may be;
(h) unsecured Indebtedness of Borrowers arising after the date
hereof to any third person (other than Indebtedness otherwise permitted under
this Section 9.9), provided, that, each of the following conditions is satisfied
as determined by Agent: (i) such Indebtedness shall be on terms and conditions
acceptable to Agent and shall be subject and subordinate in right of payment to
the right of Agent and Lenders to receive the prior indefeasible payment and
satisfaction in full payment of all of the Obligations pursuant to the terms of
an intercreditor agreement between Agent and such third party, in form and
substance satisfactory to Agent, (ii) Agent shall have received not less than
ten (10) days prior written notice of the intention of any Borrower to incur
such Indebtedness, which notice shall set forth in reasonable detail
satisfactory to Agent the amount of such Indebtedness, the person or persons to
whom such Indebtedness will be owed, the interest rate, the schedule of
repayments and maturity date with respect hereto and such other information as
Agent may reasonably request with respect thereto, (iii) Agent shall have
received true, correct and complete copies of all agreements, documents and
instruments evidencing or otherwise related to such Indebtedness, (iv) on and
before the date of incurring such Indebtedness and after giving effect thereto,
no Default or Event of Default shall exist or have occurred, (v) Borrowers shall
not, directly or indirectly, (A) amend, modify, alter or change the terms of
such Indebtedness or any agreement, document or instrument related thereto,
except, that, Borrowers may, after prior written notice to Agent, amend, modify,
alter or change the terms thereof so as to extend the maturity thereof, or defer
the timing of any payments in respect thereof, or to forgive or cancel any
portion of such Indebtedness (other than pursuant to payments thereof), or to
reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness (except
pursuant to regularly scheduled payments permitted herein), or set aside or
otherwise deposit or invest any sums for such purpose, and (vi) Borrowers shall
furnish to Agent all notices or demands in connection with such Indebtedness
either received by any Borrower or on its behalf promptly after the receipt
thereof, or sent by any Borrower or on its behalf concurrently with the sending
thereof, as the case may be;
(i) the reimbursement obligations of the Borrowers to the L/C
Issuer under the Letter of Credit Facility, Reimbursement and Security Agreement
as in effect on the date of this Agreement between the Parent and the L/C Issuer
(as that term is defined under the Term Loan Agreement as in effect on the date
hereof), (i) provided, that, Borrowers shall provide to Agent true, correct, and
complete copies of such agreement and all other agreements, documents, and
instruments entered into in connection therewith and (ii) Borrowers shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto as in
effect on the date hereof except, that, Borrowers may, after prior written
notice to Lender, amend, modify, alter or change the terms thereof so as to
extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose; and
67
(j) the Indebtedness set forth on Schedule 9.9 to the
Information Certificates; provided, that, (i) Borrowers may only make regularly
scheduled payments of principal and interest in respect of such Indebtedness in
accordance with the terms of the agreement or instrument evidencing or giving
rise to such Indebtedness as in effect on the date hereof, (ii) Borrowers shall
not, directly or indirectly, (A) amend, modify, alter or change the terms of
such Indebtedness or any agreement, document or instrument related thereto as in
effect on the date hereof except, that, Borrowers may, after prior written
notice to Lender, amend, modify, alter or change the terms thereof so as to
extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, and (iii) Borrowers shall furnish to Agent all notices or
demands in connection with such Indebtedness either received by any Borrower or
on its behalf, promptly after the receipt thereof, or sent by any Borrower or on
its behalf, concurrently with the sending thereof, as the case may be.
9.10 Loans, Investments, Etc. Borrowers shall not, and shall not permit
any Subsidiary to, directly or indirectly, make, or suffer or permit to exist,
any loans or advance money or property to any person, or any investment in (by
capital contribution, dividend or otherwise) or purchase or repurchase the
Capital Stock or Indebtedness or all or a substantial part of the assets or
property of any person, or form or acquire any Subsidiaries, or agree to do any
of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in
the ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that,
(i) no Revolving Loans are then outstanding and (ii) the terms and conditions of
Section 5.2 hereof shall have been satisfied with respect to the deposit account
or investment account in which such cash or Cash Equivalents are held;
(c) (A) the existing equity investments of Borrowers as of the
date hereof in its Subsidiaries, provided, that, Borrowers shall have no
obligation to make any other investment in, or loans to, or other payments in
respect of, any such Subsidiaries, and (B) investments in the ordinary course of
business by the Parent or any other Borrower in or to its respective
wholly-owned Subsidiaries organized outside of the United States, or provided
that the aggregate amount of all such capital contributions, investments and
other amounts paid by any Borrower to any such Subsidiaries organized outside of
the United States (exclusive of (A) investments made as part of the Acquisition
or (B) incurred in connection with arranging financial assurances required under
applicable Environmental Laws) shall not exceed $5,000,000 in the case of
Subsidiaries organized under the laws of a Canadian province, $500,000 in the
case of any other Subsidiary organized outside of the United States, in each
case at any time outstanding;
(d) equity investments of Borrowers in any wholly-owned
Subsidiary incorporated under the laws of any State of the United States of
America formed or acquired after the date hereof, provided, that, (i) promptly
upon such formation or acquisition, Borrowers shall cause any such Subsidiary to
execute and deliver to Agent, in form and substance satisfactory to Agent, (A)
an absolute and unconditional guarantee of payment of the
68
Obligations, (B) a security agreement granting to Agent a first security
interest and lien (except as otherwise consented to in writing by Agent) upon
all of the assets of such Subsidiary, and (C) such other agreements, documents
and instruments as Agent may require, including, but not limited to, supplements
and amendments hereto and other loan agreements or instruments evidencing
Indebtedness of such new Subsidiary to Agent and Lenders, (ii) promptly upon
Agent's request: (A) Borrowers shall execute and deliver to Agent, in form and
substance satisfactory to Agent, a pledge and security agreement granting to
Agent a first pledge of and lien on all of the issued and outstanding shares of
Capital Stock of such Subsidiary, and (B) Borrowers shall deliver the original
stock certificates evidencing such shares of Capital Stock (or such other
evidence as may be issued in the case of a limited liability company or other
entity) together with stock powers with respect thereto duly executed in blank
(or the equivalent thereof in the case of a limited liability company), (iii) as
of the date of any payment in respect of such investment and after giving effect
thereto, no Default or Event of Default shall exist or have occurred, and (iv)
in no event shall the aggregate amount of all capital contributions, investments
or other amounts paid by any Borrower to any Subsidiary formed or acquired after
the date hereof or to any other person for or otherwise in connection with the
formation or acquisition thereof exceed $1,000,000;
(e) stock or obligations issued to Borrowers by any Person (or the
representative of such Person) in respect of Indebtedness of such Person owing
to Borrowers in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; provided, that, the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Agent, upon Agent's
request, together with such stock power, assignment or endorsement by Borrowers
as Agent may request;
(f) of account debtors to Borrowers arising from Accounts which are
past due evidenced by a promissory note made by such account debtor payable to
Borrowers; provided, that, promptly upon the receipt of the original of any such
promissory note by Borrowers, such promissory note shall be endorsed to the
order of Agent by Borrowers and promptly delivered to Agent as so endorsed; and
(g) the loans and advances set forth on Schedule 9.10 to the
Information Certificates; provided, that, as to such loans and advances, (i)
Borrowers shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto, and (ii) Borrowers shall furnish to Agent all notices or
demands in connection with such loans and advances either received by any
Borrower or on its behalf, promptly after the receipt thereof, or sent by any
Borrower or on its behalf, concurrently with the sending thereof, as the case
may be.
9.11 Dividends and Redemptions. Borrowers shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
Capital Stock of any Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except in any case in the form of shares of Capital Stock
consisting of common stock; provided however, that (a) any Borrower
69
may pay dividends to the Parent, (b) any Subsidiary of any Borrower may pay
dividends to such Borrower, and (c) the Parent may pay cash dividends at an
annual rate of $4.00 per share on its 112,000 currently outstanding shares of
Series B convertible preferred stock and any dividends required or permitted to
be paid in cash on the shares of its Series C convertible preferred stock
described in Section 4.1(o), provided that, in the case of dividends authorized
by clauses (a), (b) and (c) above, no such payment shall be made if an Event of
Default shall have occurred and be continuing or would result from the making of
such payment, and in the case of (d) above, no such payment shall be made if,
immediately before or after giving effect to any such payment, the Excess
Availability shall be less than $30,000,000.
9.12 Transactions with Affiliates. Borrowers shall not, directly or
indirectly, (a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, director, agent or other person
affiliated with any Borrower, except in the ordinary course of and pursuant to
the reasonable requirements of any Borrower's business and upon fair and
reasonable terms no less favorable to such Borrower than such Borrower would
obtain in a comparable arm's length transaction with an unaffiliated person, or
(b) make any payments of management, consulting or other fees for management or
similar services, or of any Indebtedness owing to any officer, employee,
shareholder, director or other Affiliate of any Borrower except reasonable
compensation to officers, employees and directors for services rendered to
Borrowers in the ordinary course of business. 9.13 Compliance with ERISA.
(a) Borrowers shall and shall cause each of their ERISA Affiliates
to: (i) maintain each Plan (other than a Multiemployer Plan) in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other Federal and State law; (ii) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (iii) not terminate
any of such Plans so as to incur any liability to the Pension Benefit Guaranty
Corporation; (iv) not allow or suffer to exist any prohibited transaction
involving any of such Plans or any trust created thereunder which would subject
Borrower or such ERISA Affiliate to a tax or penalty or other liability on
prohibited transactions imposed under Section 4975 of the Code or ERISA; (v)
make all required contributions to any Plan which it is obligated to pay under
Section 302 of ERISA, Section 412 of the Code or the terms of such Plan; (vi)
not allow or suffer to exist any accumulated funding deficiency, whether or not
waived, with respect to any such Plan; or (vii) not allow or suffer to exist any
occurrence of a reportable event or any other event or condition which presents
a material risk of termination by the Pension Benefit Guaranty Corporation of
any such Plan that is a single employer plan, which termination could result in
any liability to the Pension Benefit Guaranty Corporation.
(b) Borrowers shall cause the Canadian Pension Plan to be
administered in accordance with the requirements of the applicable pension plan
texts, funding agreements, the Income Tax Act (Canada) and applicable provincial
pension benefits legislation. Upon Agent's request, Borrowers shall use their
best efforts to deliver to Agent an undertaking of the funding agent for the
Canadian Pension Plan stating that the funding agent will notify Agent within
seven (7) days of the failure of any Borrower to make any required contribution
to the Canadian Pension Plan. Borrowers shall not accept payment of any amount
from the Canadian Pension Plan (other than amounts on account of expenses
reasonably incurred in connection with the operations of such Canadian Pension
Plan) without the prior written consent of Agent. Without
70
the prior written consent of Agent, Borrowers shall not terminate, or cause to
be terminated, the Canadian Pension Plan, if such plan would have a solvency
deficiency on termination. Borrowers shall promptly provide Agent with any
documentation relating to the Canadian Pension Plan as Agent may reasonably
request. Borrowers shall notify Agent within thirty (30) days of (i) a material
increase in the liabilities of the Canadian Pension Plan, (ii) the establishment
of a new registered pension plan, (iii) commencing payment of contributions to
the Canadian Pension Plan to which any Borrower had not previously been
contributing.
9.14 End of Fiscal Years: Fiscal Quarters. Each Borrower shall, for
financial reporting purposes, cause its, and each of its Subsidiaries' (a)
fiscal years to end on December 31st of each year and (b) fiscal quarters to end
on March 31st, June 30th, September 30th and December 31st of each year.
9.15 Change in Business. Borrowers shall not engage in any business other
than the business of Borrowers on the date hereof and any business reasonably
related, ancillary or complimentary to the business in which Borrowers are
engaged on the date hereof.
9.16 Limitation of Restrictions Affecting Subsidiaries. Borrowers shall
not, directly, or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of any Borrower to (a) pay dividends or make other distributions or
pay any Indebtedness owed to Borrowers or any Subsidiary of any Borrower; (b)
make loans or advances to any Borrower or any Subsidiary of Borrower; (c)
transfer any of its properties or assets to any Borrower or any Subsidiary of
any Borrower; or (d) create, incur, assume or suffer to exist any lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
other than encumbrances and restrictions arising under (i) applicable law, (ii)
this Agreement, (iii) customary provisions restricting subletting or assignment
of any lease governing a leasehold interest of any Borrower or any of its
Subsidiaries, (iv) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of any Borrower or its
Subsidiaries, (v) any agreement relating to permitted Indebtedness incurred by a
Subsidiary of any Borrower prior to the date on which such Subsidiary was
acquired by any Borrower and outstanding on such acquisition date, and (vi) the
extension or continuation of contractual obligations in existence on the date
hereof, provided, that, any such encumbrances or restrictions contained in such
extension or continuation are no less favorable to Agent and Lenders than those
encumbrances and restrictions under or pursuant to the contractual obligations
so extended or continued.
9.17 Consolidated EBITDA. Borrowers shall not permit (i) for any fiscal
quarter ending on or after June 30, 2003, Consolidated Annualized EBITDA of the
Parent and its Subsidiaries and (ii) for each fiscal quarter ending thereafter,
Consolidated EBITDA of the Parent and its Subsidiaries for the four fiscal
quarters ending as of the end of the applicable fiscal quarter set forth below,
to be less than the applicable amount set forth below:
Fiscal Quarter End Consolidated EBITDA
------------------ -------------------
(annualized or trailing four
quarters, as applicable)
-----------------------------------------------------------------
December 31, 2002 $56,000,000
-----------------------------------------------------------------
71
-------------------------------------------------------------------
March 31, 2003 $ 63,700,000
-------------------------------------------------------------------
June 30, 2003 $ 76,200,000
-------------------------------------------------------------------
September 30, 2003 $ 82,100,000
-------------------------------------------------------------------
December 31, 2003 $ 90,000,000
-------------------------------------------------------------------
March 31, 2004 $ 99,100,000
-------------------------------------------------------------------
June 30, 2004 $108,000,000
-------------------------------------------------------------------
September 30, 2004 $116,000,000
-------------------------------------------------------------------
December 31, 2004 $125,000,000
-------------------------------------------------------------------
March 31, 2005 $129,300,000
-------------------------------------------------------------------
June 30, 2005 $134,000,000
-------------------------------------------------------------------
September 30, 2005 $140,000,000
-------------------------------------------------------------------
December 31, 2005 $145,000,000
-------------------------------------------------------------------
March 31, 2006 $145,000,000
-------------------------------------------------------------------
June 30, 2006 $150,000,000
-------------------------------------------------------------------
September 30, 2006 $155,000,000
-------------------------------------------------------------------
December 31, 2006 $160,000,000
-------------------------------------------------------------------
March 31, 2007 $162,000,000
-------------------------------------------------------------------
June 30, 2007 $165,000,000
-------------------------------------------------------------------
September 30, 2007 $167,000,000
-------------------------------------------------------------------
December 31, 2007 $170,000,000
-------------------------------------------------------------------
9.18 Fixed Charge Coverage Ratio. Borrowers shall not permit the Fixed
Charge Coverage Ratio of the Parent and its Subsidiaries for each period of four
(4) consecutive fiscal quarters, (or, in the case of each fiscal quarter ending
on or prior to June 30, 2003, such lesser number of consecutive fiscal quarters
as shall then have been completed since the fiscal quarter commencing on October
1, 2002) of the Parent and its Subsidiaries for which the last quarter ends on a
date set forth below to be less than the amount set forth opposite such date:
Fiscal Quarter End Ratio
------------------ -----
December 31, 2002 0.65:1
-----------------------------------------------------------------
March 31, 2003 0.75:1
-----------------------------------------------------------------
June 30, 2003 0.85:1
-----------------------------------------------------------------
September 30, 2003 0.90:1
-----------------------------------------------------------------
December 31, 2003 1:1
-----------------------------------------------------------------
March 31, 2004 1.1:1
-----------------------------------------------------------------
72
--------------------------------------------------------------------
June 30, 2004 1.2:1
--------------------------------------------------------------------
September 30, 2004 1.4:1
--------------------------------------------------------------------
December 31, 2004 1.45:1
--------------------------------------------------------------------
For each fiscal quarter thereafter 1.5:1
--------------------------------------------------------------------
9.19 License Agreements.
(a) Borrowers shall (i) promptly and faithfully observe and perform
all of the material terms, covenants, conditions and provisions of the material
License Agreements to be observed and performed by it, at the times set forth
therein, if any, (ii) not do, permit, suffer or refrain from doing anything that
could reasonably be expected to result in a default under or breach of any of
the terms of any material License Agreement, (iii) not cancel, surrender,
modify, amend, waive or release any material License Agreement in any material
respect or any term, provision or right of the licensee thereunder in any
material respect, or consent to or permit to occur any of the foregoing; except,
that, subject to Section 9.19(b) below, Borrowers may cancel, surrender or
release any material License Agreement in the ordinary course of the business of
Borrower; provided, that, Borrowers shall give Agent not less than thirty (30)
days prior written notice of their intention to so cancel, surrender and release
any such material License Agreement, (iv) give Agent prompt written notice of
any material License Agreement entered into by any Borrower after the date
hereof, together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may request, (v) give Agent prompt
written notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Agent (promptly upon
the receipt thereof by Borrower in the case of a notice to any Borrower, and
concurrently with the sending thereof in the case of a notice from any Borrower)
a copy of each notice of default and every other notice and other communication
received or delivered by any Borrower in connection with any material License
Agreement which relates to the right of a Borrower to continue to use the
property subject to such License Agreement, and (vi) furnish to Agent, promptly
upon the request of Agent, such information and evidence as Agent may require
from time to time concerning the observance, performance and compliance by any
Borrower or the other party or parties thereto with the terms, covenants or
provisions of any material License Agreement.
(b) Borrowers will either exercise any option to renew or extend the
term of each material License Agreement in such manner as will cause the term of
such material License Agreement to be effectively renewed or extended for the
period provided by such option and give prompt written notice thereof to Agent
or give Agent prior written notice that Borrowers do not intend to renew or
extend the term of any such material License Agreement or that the term thereof
shall otherwise be expiring, not less than sixty (60) days prior to the date of
any such non-renewal or expiration. In the event of the failure of Borrowers to
extend or renew any material License Agreement, Agent shall have, and is hereby
granted, the irrevocable right and authority, at its option, to renew or extend
the term of such material License Agreement, whether in its own name and behalf,
or in the name and behalf of a designee or nominee of Agent or in the name and
behalf of such Borrower, as Agent shall determine at any time that an Event of
Default shall exist or have occurred and be continuing. Agent may, but shall not
be required to,
73
perform any or all of such obligations of any Borrower under any of the License
Agreements, including, but not limited to, the payment of any or all sums due
from Borrower thereunder. Any sums so paid by Agent shall constitute part of the
Obligations.
9.20 Inactive Subsidiaries. Borrowers shall not permit any Inactive
Subsidiary to (a) become an active company having operations or conduct
business, or (b) own any assets other than assets with a fair market value not
in excess of $25,000 in the aggregate for all Inactive Subsidiaries.
9.21 Costs and Expenses. Borrowers shall pay to Agent on demand all costs,
expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Agent's and
Lender's rights in the Collateral, this Agreement, the other Financing
Agreements and all other documents related hereto or thereto, including any
amendments, supplements or consents which may hereafter be contemplated (whether
or not executed) or entered into in respect hereof and thereof, including: (a)
all costs and expenses of filing or recording (including Uniform Commercial Code
financing statement filing taxes and fees, documentary taxes, intangibles taxes
and mortgage recording taxes and fees, if applicable); (b) costs and expenses
and fees for insurance premiums, environmental audits, surveys, assessments,
engineering reports and inspections, appraisal fees and search fees, costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Agent's customary charges and fees with respect thereto; (c) charges, fees or
expenses charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (d) costs and expenses of preserving and protecting the
Collateral; (e) costs and expenses paid or incurred by Agent and Lenders in
connection with obtaining payment of the Obligations, enforcing the security
interests and liens of Agent, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Agent or any Lender arising out of the transactions contemplated hereby and
thereby (including preparations for and consultations concerning any such
matters); (f) all out-of-pocket expenses and costs heretofore and from time to
time hereafter incurred by Agent during the course of periodic field
examinations of the Collateral and Borrowers' operations, plus a per diem charge
at the rate of $750 per person per day for Agent's examiners in the field and
office; and (g) the fees and disbursements of counsel (including legal
assistants) to Agent and, if an Event of Default has occurred and is continuing,
Lenders, in connection with any of the foregoing.
9.22 Further Assurances. At the request of Agent at any time and from time
to time, Borrowers shall, at their expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Agent may
at any time and from time to time request a certificate from an officer of
Borrowers representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In the
event of such request by Agent, Lenders may, at their option, cease to make any
further Loans and Agent may, at its option, cease to provide any
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further Letter of Credit Accommodations until Agent has received such
certificate and, in addition, Agent has determined that such conditions are
satisfied.
9.23 Applications under Insolvency Statutes. Each Borrower acknowledges
that its business and financial relationships with Agent and Lenders are unique
from its relationship with any other of its creditors, and agrees that it shall
not file any plan of arrangement under the Companies' Creditors Arrangement Act
(Canada) or make any proposal under the Bankruptcy and Insolvency Act (Canada)
which provides for, or would permit directly or indirectly, Agent or any Lender
to be classified with any other creditor for purposes of such plan or proposal
or otherwise.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Any Borrower fails to pay when due any of the Obligations
(other than third party fees and expenses provided under Section 9.21 of this
Agreement), (ii) any Borrower fails to pay any third party fees or expenses of
Agent or Lenders provided under Section 9.21 of this Agreement within five (5)
Business Days of the due date, or (iii) any Borrower fails to perform any of the
covenants contained in Sections 9.2, 9.3, 9.6, 9.15, 9.19 or 9.20 of this
Agreement and such failure shall continue for ten (10) days; provided, that,
such ten (10) day period shall not apply in the case of: (A) a failure to
observe such covenant which is not capable of being cured at all or within such
ten (10) day period or which has been the subject of a prior failure within a
six (6) month period, or (B) an intentional breach of any Borrower of any such
covenant, or (iv) any Borrower fails to perform any of the other terms,
covenants, conditions or provisions contained in this Agreement or any of the
other Financing Agreements;
(b) any representation, warranty or statement of fact made by any
Borrower to Agent and/or Lenders in this Agreement, the other Financing
Agreements or any other agreement, schedule, confirmatory assignment or
otherwise shall when made or deemed made be false or misleading in any material
respect;
(c) any Obligor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Agent and/or Lenders;
(d) any judgment for the payment of money is rendered against any
Borrower or any Obligor in excess of the US Dollar Equivalent of $500,000 in any
one case or in the aggregate and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against any
Borrower or any Obligor or any of their assets;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or any Borrower or any Obligor, which is a
partnership, limited liability company, limited liability partnership,
corporation or business trust, dissolves or suspends or discontinues doing
business;
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(f) Any Borrower or any Obligor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect, or a petition, case, application
or proceeding under any bankruptcy or insolvency laws of Canada (including the
Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement
Act (Canada)) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is filed
against any Borrower or any Obligor or all or any part of its properties and
such petition or application is not dismissed within thirty (30) days after the
date of its filing or any Borrower or any Obligor shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect, or a petition, case, application
or proceeding under any bankruptcy or insolvency laws of Canada (including the
Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement
Act (Canada)) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is filed by
any Borrower or any Obligor or for all or any part of its property; or
(i) any default by any Borrower or any Obligor under any agreement,
document or instrument relating to any Indebtedness for borrowed money owing to
any person other than to Agent and Lenders hereunder or under the other
Financing Agreements, or any capitalized lease obligations, contingent
Indebtedness in connection with any guarantee, letter of credit, indemnity or
similar type of instrument in favor of any person other than to Agent and
Lenders hereunder or under the other Financing Agreements, in any case in an
amount in excess of the US Dollar Equivalent of $250,000, which default
continues for more than the applicable cure period, if any, with respect
thereto, or any default by any Borrower or any Obligor under any Material
Contract, which default continues for more than the applicable cure period, if
any, with respect thereto;
(j) any bank at which any deposit account of any Borrower is
maintained shall fail to comply with any of the terms of any Deposit Account
Control Agreement to which such bank is a party or any securities intermediary,
commodity intermediary or other financial institution at any time in custody,
control or possession of any investment property of any Borrower shall fail to
comply with any of the terms of any Investment Property Control Agreement to
which such person is a party;
(k) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than as to Agent or any Lender) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in
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accordance with its terms, or any security interest provided for herein or in
any of the other Financing Agreements shall cease to be a valid and perfected
first priority security interest in any of the Collateral purported to be
subject thereto (except as otherwise permitted herein or therein);
(l) an ERISA Event shall occur which results in or could reasonably
be expected to result in liability of any Borrower in an aggregate amount in
excess of $250,000;
(m) any Change of Control;
(n) the indictment by any Governmental Authority, or as Agent may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of any Borrower of which any Borrower or Agent or any
Lender receives notice, in either case, as to which there is a reasonable
possibility of an adverse determination, in the good faith determination of
Agent, under any criminal statute, or commencement or threatened commencement of
criminal or civil proceedings against any Borrower, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
(i) any of the Collateral having a value in excess of the US Dollar Equivalent
of $250,000, or (ii) any other property of any Borrower which is necessary or
material to the conduct of its business;
(o) any default or event of default shall exist or occur and be
continuing under the Term Loan Agreement or any party to the Intercreditor
Agreement (other than Agent) shall breach the terms thereof;
(p) there shall be a material adverse change in the business, assets
or prospects of any Borrower or any Obligor after the date hereof;
(q) a requirement from the Minister of National Revenue for payment
pursuant to Section 224 or any successor section of the Income Tax Act (Canada)
or Section 317, or any successor section in respect of any Borrower of the
Excise Tax Act (Canada) or any comparable provision of similar legislation shall
have been received by Agent or any Lender or any other Person in respect of any
Borrower or otherwise issued in respect of any Borrower; or
(r) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent shall have all rights and remedies provided in this Agreement,
the other Financing Agreements, the UCC, PPSA and other applicable law, all of
which rights and remedies may be exercised without notice to or consent by any
Borrower or any Obligor, except as such notice or consent is expressly provided
for hereunder or required by applicable law. All rights, remedies and powers
granted to Lender hereunder, under any of the other Financing Agreements, the
UCC, PPSA or other applicable law, are cumulative, not exclusive and
enforceable, in Agent's discretion, alternatively, successively, or concurrently
on any one or more occasions, and shall include, without limitation, the right
to apply to a court of equity for an injunction to restrain a breach or
threatened breach by any Borrower of this Agreement or any of the other
Financing Agreements. Agent may, at any time or times, proceed directly against
any Borrower or any Obligor to collect the Obligations without prior recourse to
the Collateral.
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(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion and
shall, upon the request of the Majority Lenders, without limitation, (i)
accelerate the payment of all Obligations and demand immediate payment thereof
to Agent and Lenders (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in
which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the
Collateral, (iii) require Borrowers, at Borrowers' expense, to assemble and make
available to Agent (or Canadian Lender in the case of a Canadian Borrower) any
part or all of the Collateral at any place and time designated by Agent (or
Canadian Lender in the case of a Canadian Borrower), (iv) collect, foreclose,
receive, appropriate, setoff (even though the Obligations may be unmatured and
regardless of the adequacy of other Collateral) and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on or in
which the same may be located for the purpose of effecting the sale, foreclosure
or other disposition thereof or for any other purpose, (vi) sell, lease,
transfer, assign, deliver or otherwise dispose of any and all Collateral
(including entering into contracts with respect thereto, public or private sales
at any exchange, broker's board, at any office of Agent (or Canadian Lender in
the case of a Canadian Borrower) or elsewhere) at such prices or terms as Agent
(or Canadian Lender in the case of a Canadian Borrower) may deem reasonable, for
cash, upon credit or for future delivery, with the Agent (or Canadian Lender in
the case of a Canadian Borrower) having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of Borrowers, which right or equity of
redemption is hereby expressly waived and released by each Borrower and/or (vii)
terminate this Agreement. If any of the Collateral is sold or leased by Agent
(or Canadian Lender in the case of a Canadian Borrower) upon credit terms or for
future delivery, the Obligations shall not be reduced as a result thereof until
payment therefor is finally collected by Agent (or Canadian Lender in the case
of a Canadian Borrower). If notice of disposition of Collateral is required by
law, ten (10) days prior notice by Agent (or Canadian Lender in the case of a
Canadian Borrower) to Borrowers designating the time and place of any public
sale or the time after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice thereof and
each Borrower waives any other notice. In the event Agent (or Canadian Lender in
the case of a Canadian Borrower) institutes an action to recover any Collateral
or seeks recovery of any Collateral by way of prejudgment remedy, each Borrower
waives the posting of any bond which might otherwise be required. At any time an
Event of Default exists or has occurred and is continuing, upon Agent's request,
Borrowers will either, as Agent shall specify, furnish cash collateral to the
issuer to be used to secure and fund Agent's reimbursement obligations to the
issuer in connection with any Letter of Credit Accommodations or furnish cash
collateral to Agent for the Letter of Credit Accommodations. Such cash
collateral shall be in the amount equal to one hundred ten (110%) percent of the
amount of the Letter of Credit Accommodations plus the amount of any fees and
expenses payable in connection therewith through the end of the expiration of
such Letter of Credit Accommodations.
(c) Agent may (and shall, upon the request of the Majority Lenders),
and Canadian Lender may (in the case of a Canadian Borrower) at any time or
times that an Event of Default exists or has occurred and is continuing, enforce
Borrowers' rights against any account debtor, secondary obligor or other obligor
in respect of any of the Accounts or other Receivables. Without limiting the
generality of the foregoing, Agent may at such time or times (i) notify any
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or all account debtors, secondary obligors or other obligors in respect thereof
that the Receivables have been assigned to Agent and that Agent has a security
interest therein and Agent (or Canadian Lender in the case of a Canadian
Borrower) may direct any or all accounts debtors, secondary obligors and other
obligors to make payment of Receivables directly to Agent (or Canadian Lender in
the case of a Canadian Borrower), (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Receivables or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any secondary obligors or other obligors in respect thereof
without affecting any of the Obligations, (iii) demand, collect or enforce
payment of any Receivables or such other obligations, but without any duty to do
so, and Agent and Lenders shall not be liable for the failure to collect or
enforce the payment thereof nor for the negligence of its agents or attorneys
with respect thereto, and (iv) take whatever other action Agent (or Canadian
Lender in the case of a Canadian Borrower) may deem necessary or desirable for
the protection of its interests. At any time that an Event of Default exists or
has occurred and is continuing, at Agent's (or Canadian Lender in the case of a
Canadian Borrower) request, all invoices and statements sent to any account
debtor shall state that the Accounts and such other obligations have been
assigned to Agent (or Canadian Lender in the case of a Canadian Borrower) and
are payable directly and only to Agent, and Borrowers shall deliver to Agent
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent (or Canadian Lender
in the case of a Canadian Borrower) may require. In the event any account debtor
returns Inventory when an Event of Default exists or has occurred and is
continuing, Borrowers shall, upon Agent's (or Canadian Lender in the case of a
Canadian Borrower) request, hold the returned Inventory in trust for Agent (or
Canadian Lender in the case of a Canadian Borrower), segregate all returned
Inventory from all of its other property, dispose of the returned Inventory
solely according to Agent's instructions, and not issue any credits, discounts
or allowances with respect thereto without Agent (or Canadian Lender in the case
of a Canadian Borrower) prior written consent.
(d) To the extent that applicable law imposes duties on Agent and
Lenders to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), Borrowers acknowledge and agree that it is not
commercially unreasonable for Agent and Lenders (i) to fail to incur expenses
reasonably deemed significant by Agent or Lenders to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as Borrowers, for expressions of
interest in acquiring all or any portion of the Collateral, (vii) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (ix) to dispose of
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assets in wholesale rather than retail markets, (x) to disclaim disposition
warranties, (xi) to purchase insurance or credit enhancements to insure Agent
and Lenders against risks of loss, collection or disposition of Collateral or to
provide to Agent and Lenders a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by Agent
and Lenders, to obtain the services of other brokers, investment bankers,
consultants and other professionals to assist Lender in the collection or
disposition of any of the Collateral. Borrowers acknowledge that the purpose of
this Section is to provide non-exhaustive indications from Borrowers of what
actions or omissions by Agent or Lenders would not be commercially unreasonable
in Agent's and/or Lenders' exercise of remedies against the Collateral and that
other actions or omissions by Agent and Lenders shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation of the foregoing, nothing contained in this Section shall be
construed to grant any rights to Borrowers or to impose any duties on Agent or
Lenders that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section.
(e) For the purpose of enabling Agent or Lenders to exercise the
rights and remedies hereunder, each Borrower hereby grants to Agent and Lenders,
to the extent assignable, an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to Borrowers) to use, assign,
license or sublicense any of the trademarks, service-marks, trade names,
business names, trade styles, designs, logos and other source of business
identifiers and other Intellectual Property and general intangibles now owned or
hereafter acquired by Borrowers, wherever the same maybe located, including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer programs used for the compilation
or printout thereof.
(f) For the purpose of enabling the Agent and Lenders to exercise
their rights and remedies hereunder, Borrowers hereby grant to Agent an
irrevocable right of access, easement and license (exercisable without payment
of any fee or other compensation to Borrowers) to enter into any Real Property
of Borrowers and to use and operate any Equipment or other goods thereon and to
utilize any Inventory of the Borrower in connection with the fulfillment and
completion of any contractual or other obligations of Borrowers to their account
debtors and customers.
(g) Agent may apply the cash proceeds of Collateral actually received
by Agent from any sale, lease, foreclosure or other disposition of the
Collateral first to reimburse Agent for all costs and expenses of collection or
enforcement including attorneys' fees and legal expenses and second to payment
of the Obligations, in whole or in part and in such order as Agent may elect or
the Majority Lenders may direct, whether or not then due. Borrowers shall remain
liable to Agent for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and legal expenses.
(h) Without limiting the foregoing, upon the occurrence of a Default
or Event of Default, Agent may, at its option, and upon request of the Majority
Lenders shall, without notice, (i) cease making Loans or arranging for Letter of
Credit Accommodations or reduce the lending formulas or amounts of Revolving
Loans and Letter of Credit Accommodations available to Borrowers (provided,
that, upon the occurrence of any Event of Default described in Sections 10.1(g)
or 10.1(h), the agreements of Agent and Lenders herein to make Loans and
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arrange for Letter of Credit Accommodations shall automatically cease), and/or
(ii) terminate any provision of this Agreement providing for any future Loans or
Letter of Credit Accommodations to be made by Agent or Lenders to Borrowers.
(i) Regardless of the adequacy of any collateral, if any of the
Obligations are due and payable and have not been paid or any Event of Default
shall have occurred, any deposits or other sums credited by or due from any
Agent or Lender to any Borrower or any Obligor and any securities or other
property of any Borrower or any Obligor in the possession of Agent or such
Lender may, at any time, without demand or notice (any such notice being
expressly waived by Borrowers and Obligors), in whole or in part, be applied to
or set off by Agent and/or such Lender against the payment of Obligations and
any and all other liabilities or obligations, direct, or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, of
Borrowers or Obligors to Agent and/or such Lender. Each of the Lenders agrees
with each other Lender that (i) if an amount to be set off is to be applied to
Obligations of Borrowers or Obligors to such Lender, such amount shall be
applied ratably to all Obligations owed to such Lender, and (ii) if such Lender
shall receive from Borrowers or Obligors or any other source, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
or by enforcement of the claims evidenced by the Financing Agreements, by
proceedings against the Borrowers or Obligors at law or in equity or by proof
thereof in bankruptcy, reorganization, liquidation, receivership or similar
proceedings, or otherwise, any amount in excess of its ratable portion of the
payments received by all of the Lenders with respect to the Obligations, such
Lender will make such disposition and arrangements with the Agent and other
Lenders with respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in Agent and each
Lender receiving in respect of the Obligations owed it, its proportionate
payment as contemplated by this Agreement; provided that if all or any part of
such excess payment is thereafter recovered from such Lender, such disposition
and arrangements shall be rescinded and the amount restored to the extent of
such recovery, but without interest. ANY AND ALL RIGHTS TO REQUIRE AGENT OR ANY
LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY BORROWER OR ANY
OBLIGOR ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
(j) Agent may appoint or reappoint by instrument in writing, any
person or persons, whether an officer or officers or any employee or employees
of Agent or not, to be a receiver or receivers (hereinafter called a "Receiver",
which term when used herein shall include a receiver and manager) of any
Collateral of any Canadian Borrower (including any interest, income or profits
therefrom) and may remove any Receiver so appointed and appoint another in
his/her stead. Any such Receiver shall, so far as concerns responsibility for
his/her acts, be deemed the agent of the Canadian Borrower and not Agent, and
Agent shall not be in any way responsible for any misconduct, negligence or
non-feasance on the part of any such Receiver, his/her servants, agents or
employees. Subject to the provisions of the instrument appointing him/her, any
such Receiver shall have power to take possession of Collateral, to preserve
Collateral or its value, to carry on or concur in carrying on all or any part of
the business of the applicable Canadian Borrower and to sell, lease, license or
otherwise dispose of or concur in selling, leasing, licensing or otherwise
disposing of Collateral. To facilitate the foregoing powers, any such Receiver
may, to the exclusion of all others, including the applicable Canadian
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Borrower, enter upon, use and occupy all premises owned or occupied by the
applicable Canadian Borrower wherein Collateral may be situate, maintain
Collateral upon such premises, borrow money on a secured or unsecured basis and
use Collateral directly in carrying on the applicable Canadian Borrower's
business or as security for loans or advances to enable the Receiver to carry on
applicable Canadian Borrower's business or otherwise, as such Receiver shall, in
its discretion, determine. Except as may be otherwise directed by Agent, all
proceeds of Collateral received from time to time by such Receiver in carrying
out his/her appointment shall be received in trust for and paid over to Agent
(or upon Agent's direction to Canadian Lender). Every such Receiver may, in the
discretion of the Agent be vested with all or any of the rights and powers of
the Agent. Agent may, either directly or through its agents or nominees,
exercise any or all powers and rights given to a Receiver by virtue of the
foregoing provisions of this paragraph.
(k) On and after an Event of Default and for so long as the same is
continuing, Borrowers shall pay all costs, charges and expenses incurred by
Agent, any Lender or any Receiver or any nominee or agent of Agent, whether
directly or for services rendered (including, without limitation, solicitor's
costs on a solicitor and his own client basis, auditor's costs, other legal
expenses and Receiver remuneration) in enforcing this Agreement or any other
Financing Agreement and in enforcing or collecting Obligations and all such
expenses together with any money owing as a result of any borrowing permitted
hereby shall be a charge on the proceeds of realization and shall be secured
hereby.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW.
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements (except as otherwise expressly provided
therein) and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of The Commonwealth of Massachusetts (without giving effect to
principles of conflicts of law).
(b) Each Borrower, Agent, and each Lender irrevocably consent and
submit to the non-exclusive jurisdiction of the Suffolk County Superior Court of
The Commonwealth of Massachusetts and any court to which an appeal may be taken
therefrom and the United States District Court for the District of
Massachusetts, whichever Agent may elect, and in addition, Borrowers irrevocably
consent and submit to the non-exclusive jurisdiction of the Ontario Superior
Court of Justice, in each case, whichever Agent may elect and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Agent and Lenders shall
have the right to bring any action or proceeding against any Borrower or its
property in the courts of any other jurisdiction which Agent deems
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necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against any Borrower or its property).
(c) Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the US mails, or, at Agent's option, by
service upon Borrowers in any other manner provided under the rules of any such
courts. Within thirty (30) days after such service, Borrowers shall appear in
answer to such process, failing which Borrowers shall be deemed in default and
judgment may be entered by Lender against Borrowers for the amount of the claim
and other relief requested.
(d) EACH BORROWER, AGENT, AND EACH LENDER EACH HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i)
ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR
THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH
BORROWER, AGENT, AND EACH LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT BORROWER OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Agent nor any Lender shall have any liability to any
Borrower (whether in tort, contract, equity or otherwise) for losses suffered by
any Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by a
final and non-appealable judgment or court order binding on Agent or such
Lender, that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct of Agent or such Lender. In any such
litigation, Agent and each Lender shall be entitled to the benefit of the
rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement. Except as
prohibited by law, each Borrower waives any right which it may have to claim or
recover in any litigation with Agent and any Lender any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each Borrower: (i) certifies that neither Agent, any Lender nor
any representative, agent or attorney acting for or on behalf of Agent or any
Lender has represented, expressly or otherwise, that Agent or any Lender would
not, in the event of litigation, seek to enforce any of the waivers provided for
in this Agreement or any of the other Financing Agreements, and (ii)
acknowledges that in entering into this Agreement and the other Financing
Agreements, Agent and Lenders are relying upon, among other things, the waivers
and certifications set forth in this Section 11.1 and elsewhere herein and
therein.
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11.2 Waiver of Notices. Each Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and chattel paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on any Borrower which Agent or any Lender may elect to give shall
entitle any Borrower to any other or further notice or demand in the same,
similar or other circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any
provision hereof shall be amended, modified, waived or discharged orally or by
course of conduct, but only by a written agreement signed by authorized officers
of Agent and Majority Lenders, and as to amendments, as also signed by an
authorized officer of Borrowers; provided, that, no amendment, waiver or consent
shall be effective, unless (i) in writing and signed by each Lender, to do any
of the following:
(a) increase or decrease the Maximum Credit, the US Maximum Credit or
Canadian Maximum Credit or any Lender's Revolving Loan Limit or Pro
Rata Share;
(b) reduce the principal of, or interest on, any amount payable
hereunder, other than those payable only to Congress in its capacity
as Agent which may be reduced by Congress unilaterally;
(c) decrease any interest rate or fees payable hereunder to Lenders;
(d) postpone any date fixed for any payment of principal of, or interest
on, any amounts payable hereunder, other than those payable only to
Congress in its capacity as Agent, which may be postponed by
Congress unilaterally;
(e) increase any advance percentage contained in the definition of the
term US Borrowing Base or Canadian Borrowing Base;
(f) reduce the number of Lenders that shall be required for Lenders or
any of them to take any action hereunder;
(g) release or discharge any Person liable for the performance of any
obligations of Borrowers hereunder or under any of the Financing
Agreements;
(h) amend any provision of this Agreement that requires the consent of
all Lenders to consent to or waive any breach thereof;
(i) amend the definition of the term "Majority Lenders";
(j) amend Section 2.1(d) or (e) or this Section 11.3;
(k) release any substantial portion of the Collateral, unless otherwise
permitted pursuant to the terms of this Agreement; or
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(i) in writing and signed by the Agent and financial institution
issuing the Letter of Credit Accommodations, to amend any
provision of this Agreement or any other Financing Agreement
affecting Letter of Credit Accommodations; or
(ii) in writing and signed by Agent, in addition to the Lenders if
required above, to affect the rights or duties of Agent under
this Agreement, or any other Financing Agreement.
Agent and Lenders shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of their rights, powers and/or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Agent and the requisite Lenders. Any such waiver shall be enforceable
only to the extent specifically set forth therein. A waiver by Agent and/or
Lenders of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Agent and Lenders would otherwise have on any future occasion, whether similar
in kind or otherwise.
11.4 Waiver of Counterclaims. Each Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Each Borrower shall indemnify and hold Agent and
each Lender, and their respective directors, agents, employees and counsel,
harmless from and against any and all losses, claims, damages, liabilities,
costs or expenses imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the fees and expenses of counsel. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section 11.5 may be
unenforceable because it violates any law or public policy, each Borrower shall
pay the maximum portion which it is permitted to pay under applicable law to
Agent and Lenders in satisfaction of indemnified matters under this Section
11.5. The foregoing indemnity shall survive the payment of the Obligations and
the termination or non-renewal of this Agreement.
11.6 Currency Indemnity. If, for the purposes of obtaining judgment in
any court in any jurisdiction with respect to this Agreement or any of the other
Financing Agreements, it becomes necessary to convert into the currency of such
jurisdiction (the "Judgment Currency") any amount due under this Agreement or
under any of the other Financing Agreements in any currency other than the
Judgment Currency (the "Currency Due"), then conversion shall be made at the
rate of exchange prevailing on the Business Day before the day on which judgment
is given. For this purpose, "rate of exchange" means the rate at which Agent is
able, on the relevant date, to purchase the Currency Due with the Judgment
Currency in accordance with its normal practice. In the event that there is a
change in the rate of exchange prevailing between the Business Day before the
day on which the judgment is given and the date of receipt by Agent of the
amount due, Borrowers will, on the date of receipt by Agent, pay such additional
amounts,
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if any, or be entitled to receive reimbursement of such amount, if any, as may
be necessary to ensure that the amount received by Agent and Lenders on such
date is the amount in the Judgment Currency which when converted at the rate of
exchange prevailing on the date of receipt by Agent is the amount then due under
this Agreement or such other of the Financing Agreements in the Currency Due. If
the amount of the Currency Due which Agent is able to purchase is less than the
amount of the Currency Due originally due to it, Borrowers shall indemnify and
save Agent and Lenders harmless from and against loss or damage arising as a
result of such deficiency. The indemnity contained herein shall constitute an
obligation separate and independent from the other obligations contained in this
Agreement and the other Financing Agreements, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by Agent from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due under this Agreement or any of the other Financing Agreements or
under any judgment or order.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date three (3) years from the
date hereof (the "Termination Date"); provided, that, this Agreement and all
other Financing Agreements must be terminated simultaneously. In addition,
Borrowers may terminate this Agreement at any time upon ten (10) days prior
written notice to Agent (which notice shall be irrevocable) and Agent and
Majority Lenders may terminate this Agreement at any time on or after an Event
of Default. Upon the effective date of termination or non-renewal of this
Agreement, Borrowers shall pay to Agent for the benefit of Lenders, in full, all
outstanding and unpaid Obligations and shall furnish cash collateral to Agent
(or at Agent's option, a letter of credit issued for the account of Borrowers
and at Borrowers' expense, in form and substance satisfactory to Agent, by an
issuer acceptable to Lender and payable to Lender as beneficiary) in such
amounts as Agent determines are reasonably necessary to secure (or reimburse)
Agent and Lenders from loss, cost, damage or expense, including attorneys' fees
and legal expenses, in connection with any contingent Obligations, including
issued and outstanding Letter of Credit Accommodations and checks or other
payments provisionally credited to the Obligations and/or as to which Lender has
not yet received final and indefeasible payment. Such payments in respect of the
Obligations and cash collateral shall be remitted by wire transfer in Federal
funds to such bank account of Agent, as Agent may, in its discretion, designate
in writing to Borrowers for such purpose. Interest shall be due until and
including the next business day, if the amounts so paid by Borrowers to the bank
account designated by Agent are received in such bank account later than 12:00
noon, Boston, Massachusetts time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrowers of their respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Agent's continuing security interest in the Collateral and the rights and
remedies of Agent and Lenders hereunder, under the other Financing Agreements
and applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid. Accordingly, each Borrower waives any
rights which it may have under the UCC or the
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PPSA to demand the filing of termination statements with respect to the
Collateral, and Agent shall not be required to send such termination statements
to Borrowers, or to file them with any filing office, unless and until this
Agreement is terminated in accordance with its terms and all of the Obligations
are paid and satisfied in full in immediately available funds.
(c) If for any reason this Agreement is terminated prior to the end
of the term of this Agreement, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of Lenders' lost profits as a result thereof and
the Lenders' agreement to defer the payment of fees that would otherwise be
charged for a financing of this kind, Borrowers agree to pay to Agent for the
ratable benefit of Lenders, upon the effective date of such termination, an
early termination fee in the amount set forth below if such termination is
effective in the period indicated:
Amount Period
(i) two (2%) percent of the From the date hereof to and
Maximum Credit including the first anniversary of
the date hereof;
(ii) one (1%) percent of the From the day after the first
Maximum Credit anniversary of the date hereof to
and including the second
anniversary of the date hereof;
and
(iii) one half of one (.50%) From the day after the second
percent of the Maximum anniversary of the date hereof to
Credit and including the third
anniversary of the date of this
Agreement.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lenders as a result of such early termination and Borrowers agree
that it is reasonable under the circumstances currently existing. In addition,
Lenders shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Agent and Majority Lenders do not exercise the right to terminate this
Agreement, but elect, at their sole option, to provide financing to Borrowers or
permit the use of cash collateral under the United States Bankruptcy Code. The
early termination fee provided for in this Section 12.1 shall be deemed included
in the Obligations.
12.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1 or Article
9 of the UCC shall have the meanings given therein unless otherwise defined in
this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to Borrower and Lender pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not
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any particular provision of this Agreement and as this Agreement now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) All references to the term "good faith" used herein when
applicable to Agent or Lenders shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrower shall have the burden of proving any lack of
good faith on the part of Agent or Lenders alleged by Borrower at any time.
(g) An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 11.3 or is
cured in a manner satisfactory to Agent and Majority Lenders, if such Event of
Default is capable of being cured as determined by Agent and Majority Lenders.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrower most recently
received by Agent and Lenders prior to the date hereof.
(i) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including", the words
"to" and "until" each mean "to but excluding" and the word "through" means "to
and including".
(j) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Lender and the
other parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements shall not be construed against Agent and
Lenders merely because of Agent's involvement in their preparation.
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(n) This Agreement and the other Financing Agreements are
instruments entered into under seal.
12.3 Notices. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section 12.3):
If to Borrowers: Clean Harbors, Inc.
1501 Washington Street
Braintree, MA 02184
Attention: Chief Financial Officer
Telephone No.: (617) 849-1800
Telecopy No.: (617) 848-1632
with a copy to: Davis Malm & D'Agostine, P.C.
One Boston Place
Boston, MA 02108-4470
Attention: C. Michael Malm, Esq.
Telephone No.: 617-367-2500
Telecopy No.: 617-523-6215
If to Agent and Lenders: Congress Financial Corporation (New England)
One Post Office Square, Suite 3600
Boston, MA 02109
Attention: John Husson, First Vice President
Telephone No.: 617-338-1998
Telecopy No.: 617-338-1497
with a copy to: Brown Rudnick Berlack Israels LLC
One Financial Center
Boston, MA 02111
Attention: Jeffery L. Keffer, Esq.
Telephone No.: 617-856-8200
Telecopy No.: 17-856-8201
12.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.5 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Lenders, Borrowers, and their
respective successors and assigns, except
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that no Borrower may assign its rights under this Agreement, the other Financing
Agreements and any other document referred to herein or therein without the
prior written consent of Agent and Lenders
12.6 Assignment by Lenders. Except as provided herein, each Lender may
assign to one or more Eligible Assignees all or a portion of its interests,
rights and obligations under this Agreement (including all or a portion of its
Pro Rata Share and the same portion of the Loans at the time owing to it and its
participating interest in the risk relating to any Letters of Credit
Accommodations); provided that (i) unless such assignment is to an Affiliate of
a Lender or to a Person which is, at the time of such assignment, a Lender
hereunder, so long as no Default or Event of Default shall have occurred and be
continuing, the Agent shall have given its prior written consent to such
assignment (with such consent not to be unreasonably withheld), (ii) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Lender's rights and obligations under this Agreement, (iii) each
assignment shall be in an amount that is not less than $5,000,000 and if
greater, in whole multiples of $1,000,000, and (iv) the parties to such
assignment shall execute and deliver to the Agent, for recording in the Register
(as hereinafter defined), an Assignment and Acceptance, substantially in the
form of Exhibit D hereto (an "Assignment and Acceptance"), subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date for such assignment specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof, (i) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder, and (ii) the assigning Lender shall, to the
extent provided in such assignment and upon payment to the Agent of the
registration fee, if any, referred to in Section 12.8, be released from its
obligations under this Agreement.
12.7 Certain Representations and Warranties; Limitations; Covenants. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is legally
authorized to enter into the Assignment and Acceptance and the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, the assigning Lender makes no representation or warranty, express
or implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Financing Agreements or any other instrument
or document furnished pursuant hereto or the attachment, perfection or priority
of any security interest or mortgage;
(b) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Borrowers
and their Subsidiaries or any Obligor, or the performance or observance by
Borrowers and their Subsidiaries or any Obligor of any of their obligations
under this Agreement or any of the other Financing Agreements or any other
instrument or document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 9.6 and such
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other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Lender, the 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
credit decisions in taking or not taking action under this Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Financing Agreements as are delegated to the Agent by the terms
hereof or thereof, together with such powers as are reasonably incidental
thereto;
(g) such assignee agrees that it is bound by and will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement and other Financing Agreements are required to be performed by it as a
Lender;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance;
(i) such assignee acknowledges that it has made arrangements with
the assigning Lender satisfactory to such assignee with respect to its share of
interest, letter of credit fees and other fees payable to Lenders hereunder; and
(j) such assignee agrees that it is bound by the terms of the
Intercreditor Agreement including, without limitation, the provisions thereof
giving the Term Loan Agent the option to purchase its Revolving Loans and Pro
Rata Share of other Obligations in accordance with the terms thereof.
12.8 Register. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Lenders and the Pro Rata Share
of, and principal amount of the Loans owing to and participations in Letter of
Credit Accommodations purchased by, the Lenders from time to time. The entries
in the Register shall be conclusive, in the absence of manifest error, and
Borrowers, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Borrowers and the
Lenders at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Lender agrees to pay to the
Agent a registration fee in the sum of $3,500.
12.9 Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of such Lender's rights and
obligations under this Agreement and the other Financing Agreements; provided
that (i) each such participation shall be in an amount of not less than
$2,500,000, (ii) any such sale or participation shall not affect the rights and
duties of the selling Lender hereunder to the Borrowers, and (iii) the only
rights granted to the participant pursuant to such participation arrangements
with respect to waivers, amendments or modifications of the Financing Agreements
shall be the rights to approve waivers, amendments
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or modifications that would reduce the principal of or the interest rate on any
Loans, extend the term or increase the amount of the Pro Rata Share of such
Lender as it relates to such participant, reduce the amount of the fees payable
under this Agreement to which such participant is entitled or extend any
regularly scheduled payment date for principal or interest.
12.10 Assignee or Participant Affiliated with any Borrower. If any assignee
Lender is an Affiliate of Borrower, then any such assignee Lender shall have no
right to vote as a Lender hereunder or under any of the other Financing
Agreements for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Financing Agreements
or for purposes of making requests to the Agent pursuant to Section 10, and the
determination of the Majority Lenders shall for all purposes of this Agreement
and the other Financing Agreements be made without regard to such assignee
Lender's interest in any of the Obligations. If any Lender sells a participating
interest in any of the Obligations to a participant, and such participant is a
Borrower or an Affiliate of a Borrower, then such transferor Lender shall
promptly notify the Agent of the sale of such participation. Any such transferor
Lender shall have no right to vote as a Lender hereunder or under any of the
other Financing Agreements for purposes of granting consents or waivers or for
purposes of agreeing to amendments or modifications to any of the Financing
Agreements or for purposes of making requests to the Agent pursuant to Section
10 to the extent that such participation is beneficially owned by a Borrower or
any Affiliate of a Borrower, and the determination of the Majority Lenders shall
for all purposes of this Agreement and the other Financing Agreements be made
without regard to the interest of such transferor Lender in the Loans to the
extent of such participation.
12.11 Miscellaneous Assignment Provisions. Any assigning Lender shall
retain its rights to be indemnified pursuant to Sections 6.8, 9.4, 11.5 and 11.6
with respect to any claims or actions arising prior to the date of such
assignment. If Congress transfers all of its interest, rights and obligations
under this Agreement, the Agent shall, in consultation with the Borrowers and
with the consent of the Majority Lenders, appoint another financial institution
to act as a Reference Bank hereunder. Anything contained in this Section 12.11
to the contrary notwithstanding, any Lender may at any time pledge all or any
portion of its interest and rights under this Agreement to any of the twelve
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. (S)341. No such pledge or the enforcement thereof shall release the
pledgor Lender from its obligations hereunder or under any of the other
Financing Agreements.
12.12 Confidentiality.
(a) Agent and Lenders shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrowers pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by Borrowers to Agent and Lenders, provided, that, nothing contained
herein shall limit the disclosure of any such information: (i) to the extent
required by statute, rule, regulation, subpoena or court order, (ii) to bank
examiners and other regulators, auditors and/or accountants, (iii) in connection
with any litigation to which Agent or any such Lender is a party, (iv) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) shall have
first agreed in writing
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to treat such information as confidential in accordance with this Section 12.12,
or (v) to counsel for Agent or any Lender or any participant or assignee (or
prospective participant or assignee).
(b) In no event shall this Section 12.12 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by any Borrower or any
third party without breach of this Section 12.12 or otherwise become generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent or any Lender on a non-confidential basis from a
person other than a Borrower, (iii) require Agent or any Lender to return any
materials furnished by Borrowers to Agent or any Lenders, or (iv) prevent Agent
and Lenders from responding to routine informational requests in accordance with
the Code of Ethics for the Exchange of Credit Information promulgated by The
Robert Morris Associates or other applicable industry standards relating to the
exchange of credit information. The obligations of Agent and Lenders under this
Section 12.12 shall supersede and replace the obligations of Agent and Lenders
under any confidentiality letter signed prior to the date hereof
12.13 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
12.14 Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
12.15 Choice of Language. The parties hereto confirm that they have
requested that this Agreement and all documents related hereto be drafted in
English. Les parties aux presentes ont exige que cette convention ainsi que tout
document connexe soient rediges en anglais.
SECTION 13. THE AGENT.
13.1 Authorization.
(a) The Agent is authorized to take such action on behalf of each
of the Lenders and to exercise all such powers as are hereunder and under any of
the other Financing Agreements and any related documents delegated to the Agent,
together with such powers as are reasonably incident thereto, including the
authority, without the necessity of any notice to or further consent of the
Lenders, from time to time to take any action with respect to any Collateral
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or the Financing Agreements which may be necessary to perfect, maintain
perfected or insure the priority of the security interest in and liens upon the
Collateral granted pursuant hereto or to the other Financing Agreements, and,
provided that no duties or responsibilities not expressly assumed herein or
therein shall be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Lenders is
that of an independent contractor. The use of the term "Agent" is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agent and each of the Lenders.
Nothing contained in this Agreement nor the other Financing Agreements shall be
construed to create an agency, trust or other fiduciary relationship between the
Agent and any of the Lenders.
(c) As an independent contractor empowered by the Lenders to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Financing Agreements, the Agent is nevertheless a
"representative" of the Lenders, as that term is defined in Article 1 of the
Uniform Commercial Code, for purposes of actions for the benefit of the Lenders
and the Agent with respect to all collateral security and guaranties
contemplated by the Financing Agreements. Such actions include the designation
of the Agent as "secured party", "mortgagee" or the like on all financing
statements and other documents and instruments, whether recorded or otherwise,
relating to the attachment, perfection, priority or enforcement of any security
interests, mortgages or deeds of trust in collateral security intended to secure
the payment or performance of any of the Obligations, all for the benefit of the
Lenders and the Agent.
13.2 Employees and Agents. The Agent may exercise its powers and execute
its duties by or through employees or agents and shall be entitled to take, and
to rely on, advice of counsel concerning all matters pertaining to its rights
and duties under this Agreement and the other Financing Agreements. The Agent
may utilize the services of such Persons as the Agent in its sole discretion may
determine, and all reasonable fees and expenses of any such Persons shall be
paid by the Borrower.
13.3 No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Financing Agreements, or
in connection herewith or therewith, or be responsible for the consequences of
any oversight or error of judgment whatsoever, unless it is determined by a
final and non-appealable judgment or court order binding on Agent, that the acts
or omissions of such Agent or such other Person constituted willful misconduct
or gross negligence.
13.4 No Representations.
(a) The Agent shall not be responsible for the execution or
validity or enforceability of this Agreement, the Letter of Credit
Accommodations, any of the other Financing Agreements or any instrument at any
time constituting, or intended to constitute, collateral security for any of the
Financing Agreements, or for the value of any such collateral security or for
the validity, enforceability, or collectability of any such amounts owing with
respect to any of the Financing Agreements, or for any recitals or statements,
warranties or representations made herein or in any of the other Financing
Agreements or in any certificate or
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instrument hereafter furnished to it by or on behalf of Borrowers or any of
their Subsidiaries, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or in
any instrument at any time constituting, or intended to constitute, collateral
security for any of the Financing Agreements or to inspect any of the
properties, books or records of Borrowers or any of their Subsidiaries. The
Agent shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by Borrowers shall have been duly authorized or is true,
accurate and complete. The Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Lenders, with respect to the credit worthiness or financial
conditions of Borrowers or any of its Subsidiaries. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.
(b) For purposes of determining compliance with the conditions set
forth in Section 4, each Lender that has executed this Agreement shall be deemed
to have consented to, approved or accepted, or to be satisfied with, each
document and matter either sent, or made available, by the Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
to be consent to or approved by or acceptable or satisfactory to such Lender,
unless an officer of the Agent active upon the Borrower's account shall have
received notice from such Lender not less than one (1) Business Day prior to the
date of the closing hereunder specifying such Lender's objection thereto and
such objection shall not have been withdrawn by notice to the Agent to such
effect on or prior to such date.
13.5 Payments.
(a) A payment by Borrowers to the Agent hereunder or under any of
the other Financing Agreements for the account of any Lender shall constitute a
payment to such Lender. The Agent agrees promptly to distribute to each Lender
such Lender's pro rata share of payments received by the Agent for the account
of the Lenders except as otherwise expressly provided herein or in any of the
other Financing Agreements.
(b) If in the opinion of the Agent the distribution of any amount
received by it in such capacity hereunder or under any of the other Financing
Agreements might involve it in liability, it may refrain from making
distribution until its right to make distribution shall have been adjudicated by
a court of competent jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to be repaid,
each Person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to be
repaid or shall pay over the same in such manner and to such Persons as shall be
determined by such court.
(c) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, any Lender that fails (i) to
make available to the Agent its pro rata share of any Loan or to purchase any
participation in a Letter of Credit Accommodation, or (ii) to comply with the
provisions of Section 10.2(i) with respect to making dispositions and
arrangements with the other Lenders, where such Lender's share of any payment
received, whether by setoff or otherwise, is in excess of its pro rata share of
such payments due and payable to all of the Lenders, in each case as, when and
to the full extent required by the
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provisions of this Agreement, shall be deemed delinquent (a "Delinquent Lender")
and shall be deemed a Delinquent Lender until such time as such delinquency is
satisfied. A Delinquent Lender shall be deemed to have assigned any and all
payments due to it from Borrowers and other Obligors, whether on account of
outstanding Revolving Loans, Term Loans, interest, fees or otherwise, to the
remaining non-delinquent Lenders for application to, and reduction of, their
respective pro rata shares of all outstanding Revolving Loans and other
Obligations. The Delinquent Lender hereby authorizes the Agent to distribute
such payments to the non-delinquent Lenders in proportion to their respective
pro rata shares of all outstanding Revolving Loans and other Obligations. A
Delinquent Lender shall be deemed to have satisfied in full a delinquency when
and if, as a result of application of the assigned payments to all outstanding
Revolving Loans and other Obligations of the non-delinquent Lenders, the
Lenders' respective pro rata shares of all outstanding Revolving Loans and other
Obligations have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing such
delinquency.
(d) At the Borrowers' request, the Agent or an Eligible Assignee
reasonably acceptable to the Agent shall have the right (but not the obligation)
to purchase from any Delinquent Lender, and each Delinquent Lender shall, upon
such request, sell and assign to the Agent or such Eligible Assignee, all of the
Delinquent Lender's outstanding Revolving Loans and participations in Letter of
Credit Accommodations hereunder. Such sale shall be consummated promptly after
the Agent has arranged for a purchase by the Agent or an Eligible Assignee
pursuant to an Assignment and Acceptance, and at a price equal to the
outstanding principal balance of the Delinquent Lender's Revolving Loans plus
accrued interest and fees, without premium or discount.
13.6 Holders of Letter of Credit Accommodation Participations. The Agent
may deem and treat the purchaser of any participation in Letter of Credit
Accommodations as the absolute owner or purchaser thereof for all purposes
hereof until it shall have been furnished in writing with a different name by
such payee or by a subsequent holder, assignee or transferee.
13.7 Indemnity. The Lenders ratably agree hereby to indemnify and hold
harmless the Agent and the Reference Bank from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent and/or the Reference Bank
has not been reimbursed by the Borrowers as required by Section 11.5), and
liabilities of every nature and character arising out of or related to this
Agreement or any of the other Financing Agreements or the transactions
contemplated or evidenced hereby or thereby, or the Agent's or the Reference
Bank's actions taken hereunder or thereunder, unless it is determined by a court
of competent jurisdiction by a final and non-appealable judgment or court order
binding on Agent or Reference Bank, as the case may be, that such loss was the
result of acts or omissions of the Agent or the Reference Bank, as the case may
be, constituting willful misconduct or gross negligence.
13.8 Agent as Lender. In its individual capacity, Congress shall have the
same obligations and the same rights, powers and privileges in respect to the
Loans made by it and as the purchaser of a participation in any Letter of Credit
Accommodation, as it would have were it not also the Agent.
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13.9 Resignation; Removal. The Agent may resign at any time by giving
sixty (60) days prior written notice thereof to the Lenders and Borrowers. Upon
any such resignation, the Majority Lenders shall have the right to appoint a
successor Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the
Borrowers. If no successor Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which shall be a
financial institution having a rating of not less than A or its equivalent by
Standard & Poor's Corporation. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation, the provisions of
this Agreement and the other Financing Agreements shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as Agent.
13.10 Notification of Defaults and Events of Default. Agent shall not be
deemed to have notice of a Default or an Event of Default unless it is notified
thereof by a Borrower or a Lender with reference to this Agreement. Each Lender
hereby agrees that, upon learning of the existence of a Default or Event of
Default, it shall promptly notify the Agent thereof. The Agent hereby agrees
that upon receipt of any notice under this Section 13.10 it shall promptly
notify the other Lenders of the existence of such Default or Event of Default.
13.11 Duties in the Case of Enforcement. Each Lender agrees that, except as
set forth in Section 10.1(h), no Lender shall have the right individually (i) to
realize upon the security created under this Agreement or the other Financing
Agreements, (ii) to enforce any provision of this Agreement or the other
Financing Agreements or to exercise any remedy hereunder or thereunder, or (iii)
to make demand under this Agreement or any other Financing Agreement. In case
one or more Events of Default have occurred and shall be continuing, and whether
or not acceleration of the Obligations shall have occurred, the Agent shall, if
(a) so requested by the Majority Lenders and (b) the Lenders have provided to
the Agent such additional indemnities and assurances against expenses and
liabilities as the Agent may reasonably request, proceed to enforce the
provisions hereof, the Financing Agreements authorizing the sale or other
disposition of all or any part of the Collateral, and exercise all or any such
other legal and equitable and other rights or remedies as it may have in respect
of such Collateral. The Majority Lenders may direct the Agent in writing as to
the method and the extent of any such sale or other disposition, the Lenders
hereby agreeing to indemnify and hold the Agent, harmless from all liabilities
incurred in respect of all actions taken or omitted in accordance with such
directions, provided that the Agent need not comply with any such direction to
the extent that the Agent reasonably believes the Agent's compliance with such
direction to be unlawful or commercially unreasonable in any applicable
jurisdiction.
13.12 Agency for Perfection. Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefore shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
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13.13 Field Audit and Examination Reports; Disclaimer by Lenders. In the
event that the Agent provides to Lenders copies of field audits or examination
reports (each a "Report" and collectively, "Reports"), in Agent's discretion,
each Lender:
(a) expressly agrees and acknowledges that the Agent (i) makes no
representation or warranty as to the accuracy of any Report; or (ii) shall be
liable for any information contained in any Report;
(b) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or examination will inspect only specific information regarding the
Borrowers and will rely significantly upon each Borrowers' books and records, as
well as on representations of each Borrower's personnel;
(c) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(d) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to any of the Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of any of the Borrowers; and (ii) to pay and protect, and
indemnify, defend and hold the Agent and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses and other amounts (including attorney's fees and expenses)
incurred by the Agent and any such other Lender preparing a Report as the direct
or indirect result of any third parties who might obtain all or part of any
Report through the indemnifying Lender.
13.14 Agent as fonde de pouvoir. Without prejudice to the provisions of
this Agreement, each Lender hereby designates and appoints the Agent as the
person holding the power of attorney (fonde de pouvoir) of the Lenders as
contemplated under Article 2692 of the Civil Code of Quebec, to enter into, to
take and to hold on their behalf, and for their benefit, the Deed of Hypothec,
and to exercise such powers and duties which are conferred upon the Agent under
the Deed of Hypothec. Any Person who becomes a Lender shall be deemed to have
consented to and confirmed the Agent as the person holding the power of attorney
(fonde de pouvoir) as aforesaid and to have ratified, as of the date it becomes
a Lender, all actions taken by the Agent in such capacity. As the person holding
the power of attorney (fonde de pouvoir), the Agent shall be entitled to
delegate from time to time any of its powers or duties under the Deed of
Hypothec to any Person and on such terms and conditions as the Agent may
determine from time to time.
Without prejudice to the designations and appointment of the Agent as the
person holding the power of attorney (fonde de pouvoir) as aforesaid, each
Lender hereby additionally designates and appoints the Agent as agent and
custodian for and on behalf of each of them to hold and to be the sole
registered holder of any bond issued under the Deed of Hypothec, notwithstanding
Section 32 of An Act respecting the special powers of legal persons (Quebec) or
any other requirement of law. In this respect, (i) the Agent, as agent and
custodian of the
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Lenders, shall keep a record indicating the names and addresses of, and the pro
rata portion of the obligations and indebtedness secured by the Movable
Hypothec, owing to the persons for and on behalf of whom the aforesaid bond is
so held from time to time and (ii) each Lender will be entitled to the benefits
of any Collateral subject to the Deed of Hypothec and will participate in the
proceeds of realization of any such collateral, the whole in accordance with the
terms hereof. The Agent, in such capacity as agent and custodian shall, (x) have
the sole and exclusive right and authority to exercise, except as may be
otherwise specifically restricted by the terms hereof, all rights and remedies
given to the Agent with respect to the Collateral under the Deed of Hypothec and
Movable Hypothec, applicable law or otherwise, and (y) benefit from and be
subject to all provisions hereof with respect to the Agent mutatis mutandis,
including, without limitation, all such provisions with respect to the liability
or responsibility to and indemnification by the Lenders. Any Person who becomes
a Lender shall be deemed to have consented to and confirmed the Agent as the
agent and custodian as aforesaid and to have ratified, as of the date it becomes
a Lender, all actions taken by the Agent in such capacity. As agent and
custodian, the Agent shall be entitled to delegate from time to time any of its
powers or duties hereunder to any Person and on such terms and conditions as the
Agent may determine from time to time.
SECTION 14. JOINT AND SEVERAL LIABILITY; GUARANTEES.
14.1 Joint and Several Liability. All Loans made and Letter of Credit
Accommodations issued hereunder are made to or for the mutual benefit, directly
and indirectly, of each of the Borrowers and in consideration of the agreement
of the other Borrowers to accept joint and several liability for the
Obligations. Each Borrower jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several and direct and primary liability for the full and indefeasible
payment when due and performance of all Obligations and for the prompt and full
payment and performance of all of the promises, covenants, representations, and
warranties made or undertaken by each Borrower under the Financing Agreements
and Borrowers agree that such liability is independent of the duties,
obligations, and liabilities of each of the joint and several Borrowers. In
furtherance of the foregoing, each Borrower jointly and severally, absolutely
and unconditionally guarantees to Agent and Lenders the full and indefeasible
payment and performance when due of all the Obligations.
14.2 Suretyship Waivers and Consents.
(a) Each Borrower acknowledges that the obligations of such
Borrower undertaken herein might be construed to consist, at least in part, of
the guarantee of obligations of persons other than such Borrower (including the
other Borrowers) and, in full recognition of that fact and in full recognition
of the joint and several and direct and primary liability of each Borrower
hereunder, each Borrower consents and agrees that Agent and Lenders may, at any
time and from time to time, without notice or demand (except as provided in and
in accordance with the terms of this Agreement), whether before or after any
actual or purported termination, repudiation or revocation of this Agreement by
any Borrower, and without affecting the enforceability or continuing
effectiveness hereof as to each Borrower: (i) increase, extend, or otherwise
change the time for payment or the terms of the Obligations or any part thereof;
(ii) supplement, restate, modify, amend, increase, decrease, or waive, or enter
into or give any agreement, approval or consent with respect to, the Obligations
or any part thereof, or any of the Financing Agreements or any additional
security or guarantees, or any condition, covenant,
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default, remedy, right, representation, or term thereof or thereunder; (iii)
accept new or additional instruments, documents, or agreements in exchange for
or relative to any of the Financing Agreements or the Obligations or any part
thereof; (iv) accept partial payments on the Obligations; (v) receive and hold
additional security or guarantees for the Obligations or any part thereof; (vi)
release, reconvey, terminate, waive, abandon, fail to perfect, subordinate,
exchange, substitute, transfer, or enforce any security or guarantees, and apply
any security and direct the order or manner of sale thereof as Agent in its sole
and absolute discretion may determine; (vii) release any person from any
personal liability with respect to the Obligations or any part thereof; (viii)
settle, release on terms satisfactory to Agent or by operation of applicable
laws or otherwise liquidate or enforce any Obligations and any security therefor
or guaranty thereof in any manner, consent to the transfer of any security and
bid and purchase at any sale; or (ix) consent to the merger, change, or any
other restructuring or termination of the corporate or partnership existence of
any Borrower, and correspondingly restructure the Obligations, and any such
merger, change, restructuring, or termination shall not affect the liability of
any Borrower or the continuing effectiveness hereof, or the enforceability
hereof with respect to all or any part of the Obligations.
(b) Agent and Lenders may enforce this Agreement independently as
to each Borrower and independently of any other remedy or security Agent and
Lenders at any time may have or hold in connection with the Obligations, and it
shall not be necessary for Agent and Lenders to marshal assets in favor of any
Borrower or any Obligor or to proceed upon or against or exhaust any security or
remedy before proceeding to enforce this Agreement. Each Borrower expressly
waives any right to require Agent to marshal assets in favor of any Borrower or
any guarantor of the Obligations or to proceed against any other Borrower, and
agrees that Agent may proceed against Borrowers or any Collateral in such order
as Agent shall determine in its sole and absolute discretion.
(c) Agent and Lenders may file a separate action or actions against
any Borrower, whether such action is brought or prosecuted with respect to any
security or against any guarantor of the Obligations, or whether any other
person is joined in any such action or actions. Each Borrower agrees that Agent
and Lenders and each Borrower and any affiliate of any Borrower may deal with
each other in connection with the Obligations or otherwise, or alter any
contracts or agreements now or hereafter existing between any of them, in any
manner whatsoever, all without in any way altering or affecting the continuing
efficacy of this Agreement. Each Borrower, as a joint and several Borrower and
guarantor hereunder, expressly waives the benefit of any statute of limitations
affecting its joint and several liability and guarantee hereunder (but not its
primary liability) or the enforcement of the Obligations or any rights of Agent
and Lender created or granted herein.
(d) Agent's and Lender's rights hereunder shall be reinstated and
revived, and the enforceability of this Agreement shall continue, with respect
to any amount at any time paid on account of the Obligations which thereafter
shall be required to be restored or returned by Agent and Lenders, all as though
such amount had not been paid. The rights of Agent and Lenders created or
granted herein and the enforceability of this Agreement at all times shall
remain effective to cover the full amount of all the Obligations even though the
Obligations, including any part thereof or any other security or guaranty
therefor, may be or hereafter may become invalid or otherwise unenforceable as
against any Borrower and whether or not any Borrower shall have any personal
liability with respect thereto.
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(e) Each Borrower expressly waives any and all defenses now or
hereafter arising or asserted by reason of (i) any disability or other defense
of the other Borrowers with respect to the Obligations; (ii) the
unenforceability or invalidity of any security or guaranty for the Obligations
or the lack of perfection or continuing perfection or failure of priority of any
security for the Obligations; (iii) the cessation for any cause whatsoever of
the liability of any Borrower (other than by reason of the full payment and
performance of all Obligations); (iv) any failure of Lender to marshal assets in
favor of any Borrower; (v) any failure of Agent or Lenders to give notice to any
Borrower of sale or other disposition of Collateral of another Borrower or any
defect in any notice that may be given in connection with any such sale or
disposition of Collateral of any Borrower securing the Obligations; (vi) any
failure of Agent or Lenders to comply with applicable law in connection with the
sale or other disposition of any Collateral or other security of any Borrower,
for any Obligation, including any failure of Agent or Lenders to conduct a
commercially reasonable sale or other disposition of any Collateral or other
security of the other Borrowers for any Obligation; (vii) any act or omission of
Agent or Lenders or others that directly or indirectly results in or aids the
discharge or release of the other Borrowers or the Obligations of the other
Borrowers or any security or guaranty therefor by operation of law or otherwise;
(viii) any law which provides that the obligation of a surety or guarantor must
neither be larger in amount nor in other respects more burdensome than that of
the principal or which reduces a surety's or guarantor's obligation in
proportion to the principal obligation; (ix) any failure of Agent or Lenders to
file or enforce a claim in any bankruptcy or other proceeding with respect to
any Borrower; (x) the avoidance of any lien or security interest in assets of
the other Borrowers in favor of Agent or Lenders for any reason; or (xi) any
action taken by Agent or Lenders that is authorized by this section or any other
provision of any Loan Document. Until such time, if any, as all of the
Obligations have been indefeasibly paid and performed in full and no portion of
any commitment of Agent or Lenders to Borrowers under any Financing Agreement
remains in effect, Borrowers' rights of subrogation, contribution,
reimbursement, or indemnity against the other shall be fully and completely
subordinated to the indefeasible repayment in full of the Obligations, and each
Borrower expressly waives any right to enforce any remedy that it now has or
hereafter may have against any other Person and waives the benefit of, or any
right to participate in, any Collateral now or hereafter held by Agent or
Lenders.
(f) To the fullest extent permitted by applicable law, each
Borrower expressly waives and agrees not to assert, any and all defenses in its
favor based upon an election of remedies by Agent or Lenders which destroys,
diminishes, or affects such Borrower's subrogation rights against the other
Borrowers, or against any Obligor, and/or (except as explicitly provided for
herein) any rights to proceed against each other Borrower, or any other party
liable to Agent or Lenders, for reimbursement, contribution, indemnity, or
otherwise.
(g) Borrowers and each of them warrant and agree that each of the
waivers and consents set forth herein are made after consultation with legal
counsel and with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy, or otherwise adversely affect rights which Borrowers
otherwise may have against each other, Agent or Lenders, or others, or against
Collateral, and that, under the circumstances, the waivers and consents herein
given are reasonable and not contrary to public policy or law. If any of the
waivers or consents herein are determined to be contrary to any applicable law
or public policy, such waivers and consents shall be effective to the maximum
extent permitted by law.
101
(h) Notwithstanding any provision herein to the contrary, the joint
and several liability and guarantees of the Canadian Borrowers shall be limited
to the maximum amount permitted under any laws to which a Canadian Borrower is
subject.
14.3 Contribution Agreement. As an inducement to Agent and Lenders to
enter into the Financing Agreements and to make the loans and extend credit to
the Borrowers, each Borrower and each Obligor agrees to indemnify and hold the
other harmless from and each shall have a continuing right of contribution
against the other Borrowers and any Obligors, if and to the extent that a
Borrower makes or is caused to make disproportionate payments in excess of that
Borrower's Proportionate Share of the Loans or contributions (from dispositions
of its assets or otherwise) to the repayment and satisfaction of the
Obligations. These indemnification and contribution obligations shall be
unconditional and continuing obligations of the Borrowers and Obligors and shall
not be waived, rescinded, modified, limited or terminated in any way whatsoever
without the prior written consent of Agent, in its sole discretion. For purposes
hereof, the "Proportionate Share" of a Borrower shall mean the Adjusted Net
Worth of such Borrower divided by the Adjusted Net Worth of all the Borrowers in
the aggregate on the date of this Agreement.
14.4 PREJUDGMENT REMEDIES. EACH BORROWER HEREBY WAIVES SUCH RIGHTS AS IT
MAY HAVE TO NOTICE AND/OR HEARING UNDER ANY APPLICABLE FEDERAL OR STATE LAWS
INCLUDING, WITHOUT LIMITATION, CONNECTICUT GENERAL STATUTES SECTIONS 52-278A,
ET-SEQ., AS AMENDED, PERTAINING TO THE EXERCISE BY AGENT OR LENDERS OF SUCH
RIGHTS AS THE AGENT AND LENDERS MAY HAVE INCLUDING, BUT NOT LIMITED TO, THE
RIGHT TO SEEK PREJUDGMENT REMEDIES AND/OR DEPRIVE ANY BORROWER OF OR AFFECT THE
USE OF OR POSSESSION OR ENJOYMENT OF A BORROWER'S PROPERTY PRIOR TO THE
RENDITION OF A FINAL JUDGMENT AGAINST A BORROWER. EACH BORROWER FURTHER WAIVES
ANY RIGHT IT MAY HAVE TO REQUIRE AGENT OR LENDERS TO PROVIDE A BOND OR OTHER
SECURITY AS A PRECONDITION TO OR IN CONNECTION WITH ANY PREJUDGMENT REMEDY
SOUGHT BY LENDER.
[Remainder of Page Intentionally Left Blank]
102
Signature Page to Loan and Security Agreement
IN WITNESS WHEREOF, Lender and Borrower have caused these presents to be
duly executed as of the day and year first above written.
AGENT BORROWERS
- ----- ---------
CONGRESS FINANCIAL CORPORATION (NEW ENGLAND) CLEAN HARBORS, INC.
ALTAIR DISPOSAL SERVICES, LLC
By: /s/ George J. Psomas BATON ROUGE DISPOSAL, LLC
-------------------------------------------
BRIDGEPORT DISPOSAL, LLC
Title: Senior Vice President CLEAN HARBORS ANDOVER, LLC
----------------------------------------
CLEAN HARBORS ANTIOCH, LLC
US LENDER: CLEAN HARBORS ARAGONITE, LLC
- ---------- CLEAN HARBORS ARIZONA, LLC
CLEAN HARBORS OF BALTIMORE, INC.
CONGRESS FINANCIAL CORPORATION CLEAN HARBORS BATON ROUGE, LLC
(NEW ENGLAND) CLEAN HARBORS BDT, LLC
CLEAN HARBORS BUTTONWILLOW, LLC
By: /s/ George J. Psomas CLEAN HARBORS CHATTANOOGA, LLC
-------------------------------------------
CHEMICAL SALES, LLC
Title: Senior Vice President CLEAN HARBORS COFFEYVILLE, LLC
----------------------------------------
CLEAN HARBORS COLFAX, LLC
CLEAN HARBORS DEER PARK, L.P.
Address: CLEAN HARBORS DEER TRAIL, LLC
- -------- CLEAN HARBORS DISPOSAL SERVICES, INC.
CLEAN HARBORS FINANCIAL SERVICES COMPANY
One Post Office Square, Suite 3600 CLEAN HARBORS FLORIDA, LLC
Boston, MA 02109 CLEAN HARBORS GRASSY MOUNTAIN, LLC
CLEAN HARBORS KANSAS, LLC
CLEAN HARBORS LAPORTE, L.P.
CANADIAN LENDER: CLEAN HARBORS LAUREL, LLC
CLEAN HARBORS LONE MOUNTAIN, LLC
CONGRESS FINANCIAL CORPORATION (CANADA) CLEAN HARBOR LOAN STAR CORP.
CLEAN HARBORS LOS ANGELES, LLC
CLEAN HARBORS OF TEXAS, LLC
By: /s/ H. Rosenfeld CLEAN HARBORS PECATONICA, LLC
-------------------------------------------
CLEAN HARBORS PLAQUEMINE, LLC
Title: Senior Vice President CLEAN HARBORS PPM, LLC
----------------------------------------
Address: _____________________________________
141 Adelaide Street West, Suite 1500
Toronto, Ontario M5H 3L9
CLEAN HARBORS REIDSVILLE, LLC
CLEAN HARBORS SAN JOSE, LLC
CLEAN HARBORS TENNESSEE, LLC
CLEAN HARBORS WESTMORLAND, LLC
CLEAN HARBORS WHITE CASTLE, LLC
CROWLEY DISPOSAL, LLC
DISPOSAL PROPERTIES, LLC
GSX DISPOSAL, LLC
HARBOR MANAGEMENT CONSULTANTS, INC.
HARBOR INDUSTRIAL SERVICES TEXAS, L.P.
HILLIARD DISPOSAL, LLC
ROEBUCK DISPOSAL, LLC
SAWYER DISPOSAL SERVICES, LLC
TULSA DISPOSAL, LLC
CLEAN HARBORS ENVIRONMENTAL SERVICES, INC
CLEAN HARBORS OF BRAINTREE, INC.
CLEAN HARBORS OF NATICK, INC.
CLEAN HARBORS SERVICES, INC.
MURPHY'S WASTE OIL SERVICE INC.
CLEAN HARBORS KINGSTON FACILITY CORPORATION
CLEAN HARBORS OF CONNECTICUT,INC.
SPRING GROVE RESOURCE RECOVERY, INC.
CLEAN HARBORS CANADA, INC. (CURRENTLY SAFETY-KLEEN,
LTD.)
CLEAN HARBORS QUEBEC, INC. (CURRENTLY SAFETY-KLEEN
SERVICES (QUEBEC) LTD.)
CLEAN HARBORS MERCIER, INC. (CURRENTLY SAFETY-KLEEN
SERVICES (MERCIER) LTD.)
510127 N.B. INC.
By: /s/ Stephen Moynihan
-------------------------------------------------
Title: Senior Vice President
----------------------------------------------
Chief Executive Office:
----------------------
1501 Washington Street
Braintree, MA 02184
EXHIBIT A
Information Certificates
EXHIBIT B
Compliance Certificate
[Letterhead of Borrower]
________________________, 200_
Congress Financial Corporation (New England)
One Post Office Square, Suite 3600
Boston, MA 02109
The undersigned, the chief financial officer of Clean Harbors, Inc. and its
Subsidiaries (the "Borrowers") certifies, represents, and warrants to Congress
Financial Corporation (New England) (the "Agent") and to the other Lenders under
the Loan Agreement (as hereinafter defined) in accordance with the requirements
of Section 9.6(a) of that certain Loan and Security Agreement dated September 6,
2002, among the Agent, Lenders, and Borrowers (the "Loan Agreement").
Capitalized terms used in this Compliance Certificate, unless otherwise defined
herein, shall have the meanings ascribed to them in the Loan Agreement.
1. The attached financial statements for Parent for the period(s) ending
__________ are correct and fairly present the financial position and results of
the operations of Parent and its Subsidiaries as of the end of and through the
specified period(s).
2. Based upon my review of the attached financial statements of Parent
and its Subsidiaries for the [Fiscal Year] [monthly period] ending
_____________, 200_, I hereby certify that:
(a) Parent's EBITDA is _______________ which [is not less than] [is less
than] the minimum amount of $____________ required under Section 9.17
of the Loan Agreement
(b) Parent's Fixed Charge Coverage Ratio is ____ to 1:00 which [is not
less than] [is less than] the minimum ratio of ___ to 1:00 required
under 9.18 of the Loan Agreement.
3. No Default exists on the date hereof, other than: ___________ [if
none, so state]; and
4. No Event of Default exists on the date hereof, other than ____________
[if none, so state].
Very truly yours,
CLEAN HARBORS, INC., as Borrower
Representative
By: _________________________________
Name: _________________________________
Title: Chief Financial Officer
EXHIBIT C
Permitted Holders
Name Type of Securities No. of Shares Percent of Total
- ---- ------------------ ------------- ----------------
Alan S. McKim Common Stock 4,231,762 32.7%
EXHIBIT D
Form of Assignment and Acceptance
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Loan and Security Agreement, dated as of September 6,
2002 (as amended, supplemented, waived or otherwise modified from time to time,
the "Loan Agreement"), among Clean Harbors, Inc. and its Subsidiaries
(collectively, "Borrowers"), Congress Financial Corporation (New England)
("Agent"), as agent for the financial institutions parties thereto as Lenders
("Lenders"). Unless otherwise defined herein, capitalized terms defined in the
Loan Agreement are used herein as defined therein.
________________________ (the "Assignor") and ______________________ (the
"Assignee") agree as follows:
1. Subject to the conditions of this Assignment and Acceptance, the
Assignor hereby irrevocably sells and assigns to the Assignee without recourse
to the Assignor except with respect to the representations of Assignor set forth
herein, and the Assignee hereby irrevocably purchases and assumes from the
Assignor without recourse to the Assignor, except with respect to the
representations of Assignor set forth herein, as of the Effective Date (as
defined below), an interest (the "Assigned Interest") in and to the Assignor's
rights, benefits, indemnities, and obligations of the Assignor under the Loan
Agreement, the Financing Agreements, and the Collateral with respect to those
credit facilities provided for in the Loan Agreement as are set forth on
Schedule 1 (individually, an "Assigned Facility"; collectively, the "Assigned
Facilities") in a principal amount for each Assigned Facility as set forth on
Schedule 1 together with an Pro Rata Share and Revolving Loan Limit, as set
forth in Schedule 1, in all unpaid interest and fees accrued from the Effective
Date, subject to the terms of the Loan Agreement. The Assigned Interest is equal
to Assignee's Pro Rata Share, as reflected on Schedule 1, of each of the credit
facilities provided for in the Loan Agreement.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Agreement, any other Financing Agreement or any other instrument or document
furnished pursuant thereto, or the perfection or priority of any security
interest purported to be created by any Financing Agreement, except that
Assignor represents to Assignee as follows: (i) that it is legally authorized to
enter into this Assignment and Acceptance, (ii) that it is the legal and
beneficial owner of the Assigned Interests, (iii) that it has not created any
lien or adverse claim upon the Assigned Interest, (iv) the Assigned Interest is
free and clear of any such adverse claim and any other lien or encumbrance and
(v) as of the Effective Date (but calculated prior to the assignment
contemplated hereby), Assignor's records reflect that to the best of Assignor's
knowledge the aggregate outstanding principal balance of each of the Loans and
LC Participation in the Letter of Credit Accommodations held by Assignor is as
set forth on Schedule 1 hereto; and (b) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers, and their Subsidiaries or any Obligor or the performance or
observance by Borrowers of any of their
respective obligations under the Loan Agreement or any other Financing Agreement
or any other instrument or document furnished pursuant hereto or thereto.
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance and that it is an
Eligible Assignee; (b) confirms that it has received a copy of the Loan
Agreement, together with copies of the financial statements delivered pursuant
thereto and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it has and that it will, independently and without
reliance upon the Assignor, the Agent or any other Lender and based on such
documents and information as it has deemed and shall deem appropriate at the
time, make and continue to make its own credit decisions in taking or not taking
action under the Loan Agreement, the other Financing Agreements or any other
instrument or document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Agreement, the other Financing
Agreements or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Agent by the terms thereof, together with such
powers as are incidental thereto; (e) agrees that it will be bound by the
provisions of the Loan Agreement, and other Financing Agreements and will
perform in accordance with its terms all the obligations which by the terms of
the Loan Agreement and other Financing Agreements are required to be performed
by it as a Lender; and (f) agrees that it is bound by the terms of the
Intercreditor Agreement including, without limitation, the terms thereof giving
the Term Loan Agent the option to purchase its Revolving Loans and Pro Rata
Share of other Obligations in accordance with the terms thereof.
4. The effective date of this Assignment and Acceptance shall be
_________ __, 200_ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, each party hereto shall deliver its duly executed
counterpart hereof to the Agent for acceptance by Agent and recording in the
Register by the Agent. Upon each such recordation, the Assignor agrees to pay to
the Agent a registration fee of $3,500.
5. From and after the Effective Date, the Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignee whether such amounts have
accrued prior to the Effective Date or accrued subsequent to the Effective Date.
The Assignor and the Assignee shall make all appropriate adjustments in payments
by the Agent for periods prior to the Effective Date or with respect to the
making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Loan Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Financing Agreements and shall be bound by the provisions thereof and (b)
the Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Loan
Agreement (provided, that any right of the Assignor to the payment of expenses
and indemnities under the Loan Agreement in respect of the period preceding the
Effective Date shall continue in full force and effect notwithstanding the
provisions of this Assignment and Acceptance).
7. This Assignment and Acceptance is intended to take effect as an
instrument under seal and shall be governed by, and construed and interpreted in
accordance with, the laws of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
SCHEDULE 1 to the
Assignment and Acceptance
Re: Loan and Security Agreement, dated as of
September 6, 2002, as amended, among
CLEAN HARBORS, INC. AND ITS SUBSIDIARIES
(as "Borrowers")
the Lenders from time to time parties thereto and
CONGRESS FINANCIAL CORPORATION
(NEW ENGLAND), as Agent
Name of Assignor: ______________________
Name of Assignee: ______________________________
Effective Date of Assignment: ____________, 200_
1. Assignor's Interests (prior to given effect to assignment)
Type of Loan/Credit Principal Amount
Facility Assigned Pro Rata Share Revolving Loan Limit
- ---------------------- ------------------- ---------------- -----------------------
Revolving Loans $ %
LC Participation $ %
2. Assigned Facilities
Type of Loan/Credit Principal Amount
Facility Assigned Pro Rata Share Revolving Loan Limit
- ---------------------- ------------------- ---------------- -----------------------
Revolving Loans $ %
LC Participation $ %
- ------------------------------------------------------------------------------------------
ASSIGNOR: ASSIGNEE:
- ------------------------------------------------------------------------------------------
By: _______________________________________ By: __________________________________
Name: _______________________________________ Name: __________________________________
Title:______________________________________ Title:__________________________________
Address:________________________________
___________________________________
Facsimile No.:
- ------------------------------------------------------------------------------------------
Wire Transfer Instructions
ABA No. ___________________________
Account No. ___________________________
Attention: ___________________________
Consented to:
Congress Financial Corporation (New England), as Agent
By:____________________________
SCHEDULE 1
Lenders' Pro Rata Shares,
And Revolving Loan Limits
Pro Rata Share Revolving
US Credit Facility of US Credit Facility Loan Limit
- ------------------ --------------------- ----------
Congress Financial Corporation
(New England) 100% US Maximum Credit
Pro Rata Share of Revolving
Canadian Credit Facility Canadian Credit Facility Loan Limit
- ------------------------ ------------------------ ----------
Congress Financial Corporation
(Canada) 100% Canadian Maximum Credit
SCHEDULE 2
Inactive Subsidiaries
Mr. Frank, Inc.
SK D'Incineration Inc.
Northeast Casualty Real Property LLC