EXHIBIT 10.4
CREDIT AGREEMENT, dated as of December 10, 1996, among GENCOR
INDUSTRIES, INC., a Delaware corporation (the "Borrower"), the several banks and
other financial institutions from time to time parties to this Agreement
(collectively, the "Lenders"), CREDIT LYONNAIS NEW YORK BRANCH, as Issuing Bank
with respect to the Letters of Credit, and CREDIT LYONNAIS NEW YORK BRANCH, as
agent for the Lenders and the Issuing Bank hereunder.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Account": has the meaning given to that term in Section 9-106
of the Uniform Commercial Code of the State of New York.
"Account Debtor": the party who is obligated on an Account.
"Acquisition": the acquisition of the Process Equipment Division
of Ingersoll-Rand Company pursuant to the Purchase Agreement.
"Acquisition Documents": the Purchase Agreement, and any other
agreements, instruments and other documents delivered in connection
therewith, as amended, supplemented or otherwise modified in
accordance with the terms of this Agreement.
"Adjusted Capital Expenditures": with respect to any Person for
any period, the sum of (i) all expenditures of such Person in respect
of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal
replacement and maintenance programs properly charged to current
operations) that are paid or due and payable in cash during such
period and (ii) all Financing Lease expenses of such Person that are
paid or (without duplication) due and payable in cash during such
period.
"Affiliate": as to any Person, any other Person (other than, in
the case of the Borrower, a wholly-owned Domestic Subsidiary) which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or
indirectly, either to (a) vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or
(b) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.
"Agent": Credit Lyonnais New York Branch, together with its
affiliates, as the arranger of the Commitments and as the agent for
the Lenders under this Agreement and the other Loan Documents or its
successor appointed pursuant to subsection 11.9.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Margin": (a) for Tranche B Term Loans, 1.75% if such
Loans are Base Rate Loans and 3.00% if such Loans are Eurodollar Loans
and (b) for all Loans other than Tranche B Term Loans, (i) if Level I
applies, 0.25% if such Loans are Base
Rate Loans and 1.50% if such Loans are Eurodollar Loans; (ii) if Level
II applies, 0.50% if such Loans are Base Rate Loans and 1.75% if such
Loans are Eurodollar Loans; (iii) if Level III applies, 0.75% if such
Loans are Base Rate Loans and 2.00% if such Loans are Eurodollar
Loans, (iv) if Level IV applies, 1.00% if such Loans are Base Rate
Loans and 2.25% if such Loans are Eurodollar Loans, (v) if Level V
applies, 1.25% if such Loans are Base Rate Loans and 2.50% if such
Loans are Eurodollar Loans; and (vi) if Level VI applies, 1.50% if
such Loans are Base Rate Loans and 2.75% if such Loans are Eurodollar
Loans; provided that, notwithstanding the foregoing, (A) during the
period commencing on the Closing Date and ending on the six month
anniversary of the Closing Date, the Applicable Margin (for Loans
other than Tranche B Term Loans) shall be 1.25% if such Loans are Base
Rate Loans and 2.50% if such Loans are Eurodollar Loans, (B) during
any period in which an Event of Default shall have occurred and be
continuing, the Applicable Margin (for Loans other than Tranche B Term
Loans) shall be 1.50% if such Loans are Base Rate Loans and 2.75% if
such Loans are Eurodollar Loans, and (C) if the Borrower shall have
failed to deliver the financial statements required by subsection 8.1
when due (without giving effect to any grace period or notice
requirement), the Applicable Margins (for Loans other than Tranche B
Term Loans) shall be as set forth in clause (B) above until such time
as such delivery shall have been made.
"Asset Sale": as defined in clause (a) of the definition of
Covered Sale.
"Assignee": as defined in subsection 12.6(c).
"Authorized Foreign Currency": the currency of any of the
following countries: Ireland, Sweden, France, The Netherlands,
England and Singapore.
"Available Excess Cash Flow": as defined in subsection 5.1(b).
"Available Revolving Credit Commitment": with respect to each
Revolving Credit Lender at any time, an amount not to exceed the
lesser of (a) the Unused Revolving Credit Commitment of such Revolving
Credit Lender at such time or (b) such Revolving Credit Lender's Pro
Rata Share of the Borrowing Base at such time minus such Revolving
Credit Lender's Pro Rata Share of the Letter of Credit Outstanding at
such time, less, in the case of clauses (a) and (b), the Reserved
Amount during the Reduced Availability Period.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day or (b) the Federal Funds Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
shall mean the rate of interest per annum publicly announced from time
to time by Credit Lyonnais New York Branch as its prime rate in effect
at its principal office in New York City (the Prime Rate is not
intended to be the lowest rate of interest charged by Credit Lyonnais
in connection with extensions of credit to debtors); and "Federal
Funds Rate" shall mean, for any day, the weighted average of the per
annum 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 rates are not so published for any day
which is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three federal funds
brokers of recognized standing selected by it. Any change in the Base
Rate due to a change in the Prime Rate or the Federal Funds Rate shall
be effective as of the opening of business on the effective day of
such change in the Prime Rate or the Federal Funds Rate.
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"Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Base Rate.
"Board of Governors": the Board of Governors of the Federal
Reserve System or any successor to the functions and powers thereof.
"Borrower Pro Forma Financial Statements": as defined in
subsection 6.1(c).
"Borrower Security Agreement": collectively, the Security
Agreement to be executed and delivered by the Borrower, substantially
in the form of Exhibit A-1, as the same may be amended, supplemented
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or otherwise modified from time to time, and the Trademark Security
Agreement, Patent Security Agreement and Copyright Security Agreement
to be executed and delivered by the Borrower, substantially in the
forms of Exhibit A-2(a), (b) and (c), as the same may be amended,
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supplemented or otherwise modified from time to time.
"Borrower Security Documents": the collective reference to the
Borrower Security Agreement and the Borrower Pledge Agreement.
"Borrower Pledge Agreement": the Pledge Agreement to be executed
and delivered by the Borrower, substantially in the form of Exhibit B,
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as the same may be amended, supplemented or otherwise modified from
time to time.
"Borrowing Base": the Domestic Borrowing Base and the Foreign
Borrowing Base for all Foreign Subsidiaries, collectively.
"Borrowing Base Certificate": as defined in subsection 8.2(f).
"Borrowing Date": any Business Day specified in or in a notice
pursuant to subsection 2.2, 3.2 or 4.1 as a date on which the Borrower
requests the Lenders to make Loans hereunder or the Issuing Bank to
issue a Letter of Credit hereunder.
"Brazilian Company": CPM Industria e Commercio Ltda, a
corporation incorporated under the laws of Brazil.
"Business": as defined in subsection 6.16.
"Business Day": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City, or the city in which the
principal account maintained with the Cash Management Bank is held,
are authorized or required by law to close, provided, however, that,
when used in connection with a Eurodollar Loan, the term "Business
Day" shall also exclude any day on which banks are not open for
dealings in the London interbank market.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"Cash Equivalents": (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of
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not more than one year from the date of acquisition, (ii) time
deposits and certificates of deposit having maturities of not more
than 180 days from the date of acquisition of any Lender or of any
domestic commercial bank the long-term debt of which is rated at the
date of acquisition thereof at least A or the equivalent thereof by
Standard & Poor's Ratings Group or A-2 or the equivalent thereof by
Moody's Investors Service, Inc. and having capital and surplus in
excess of $500,000,000, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types
described in clauses (i) and (ii) entered into with any bank meeting
the qualifications specified in clause (ii) above and (iv) commercial
paper rated at the date of acquisition thereof at least A-2 or the
equivalent thereof by Standard & Poor's Ratings Group or P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in either
case maturing within 180 days after the date of acquisition.
"Cash Infusion": the receipt by the Borrower at the time
specified below from one or more members of operating management of
the Borrower of (a) a cash capital contribution or any other cash
equity infusion or (b) cash proceeds of an unsecured loan that is
fully subordinated to the Loans to the full extent required by the
Agent (the "Subordinated Loan") pursuant to documentation satisfactory
in form and substance to the Agent (such documentation, as in effect
on the Closing Date, the "Subordinated Loan Agreement") or (c) a
combination of (a) and (b), in an aggregate amount equal to (A)
$3,000,000 to be received by the Borrower (i) with respect to
$2,000,000 of said $3,000,000, on or prior to the Closing Date, and
(ii) with respect to $1,000,000 of said $3,000,000, within ten (10)
days of the Closing Date, and to be applied toward the payment of a
portion of the purchase price payable by the Borrower to the Seller
under the Purchase Agreement and/or the Special Tax Payment plus (B)
if the sum of the aggregate purchase price payable by the Borrower to
the Seller under the Purchase Agreement (after giving affect to any
upward post-closing adjustment to said purchase price under the
Purchase Agreement) plus the amount of the Special Tax Payment exceeds
$66,000,000, an amount equal to such excess over $66,000,000, said
amount to be received by the Borrower on or prior to the Closing Date
and/or upon such upward post-closing adjustment to the purchase price
becoming effective, as applicable, and such amounts to be applied
toward the payment of a portion of said purchase price at closing,
and/or to the payment of the amount by which the purchase price is
increased pursuant to such adjustment, as applicable; the amount
payable under this clause (B) to be reduced dollar for dollar by cash
on hand and cash equivalents (within the meaning of generally accepted
accounting principles) in PED which are a part of the assets being
purchased from the Seller on the Closing Date; provided that the Cash
Infusion may only be made by means of a Subordinated Loan to the
extent that a cash infusion of the nature contemplated by clause (a)
above would result in the common stock of the Borrower ceasing to meet
the requirements for listing on the American Stock Exchange.
"Cash Management Bank": until such time as a Lender shall be
willing to act as cash management bank for the Borrower and its
Subsidiaries, SouthTrust Bank; and thereafter, upon written notice by
the Agent to the Borrower that a Lender is willing to act as such cash
management bank, such Lender; provided that the Cash Management Bank
may be changed at the request of the Borrower if the Agent and the
Required Lenders consent in writing to such change.
"Casualty Loss": with respect to any asset owned or used by the
Borrower or any of its Subsidiaries: (a) any damage to or loss or
destruction of such asset; or (b) any actual condemnation or taking,
by exercise of the power of eminent domain or otherwise.
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"CERCLA": the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended
from time to time, 42 U.S.C. (S) 9601 et seq.
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"Change of Control": shall occur if (a) at any time neither E.J.
Elliott nor John E. Elliott shall serve as a Responsible Officer and a
director of the Borrower or (b) at any time E.J. Elliott, John E.
Elliott and members of their immediate family collectively shall own
less than fifty percent (50%) of the Voting Stock of the Borrower
owned by them on the Closing Date (assuming for such purpose that all
Class B Stock held by them on the date hereof has been converted into
Common Stock) or (c) at any time E.J. Elliott, John E. Elliott and
members of their immediate family collectively shall cease to own such
number of shares of the Class B Stock of the Borrower as is necessary
for such Persons to elect not less than 75% of the whole Board of
Directors.
"Chinese Assets": any or all of the equipment and machinery
owned by the Chinese Joint Venture.
"Chinese Joint Venture": the joint venture named CPM-Zhengchang
Liyang Machinery Company Limited created by the Joint Venture
Agreement between Ingersoll-Rand China Limited and Liyang Zhengchang
Grain, Oil & Feed Machinery Head Company, dated January 5, 1994.
"Chinese Assets Purchase Price": if the Borrower purchases the
Chinese Assets, the actual amount paid by the Borrower to the Seller
for the Chinese Assets provided that such amount, in the aggregate
with all related shipping, installation, improvements (including real
estate improvements) and other costs, shall not exceed $3,500,000..
"Closing Date": the date (which may be no later than January 31,
1997) on which the conditions precedent set forth in subsection 7.1
shall be satisfied.
"Closing Letter": that certain letter dated of even date with
this Agreement executed by the Borrower in favor of the Agent with
respect to certain post-closing matters.
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral": all assets of the Loan Parties, whether now owned
or hereafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Commitment": with respect to any Lender, the collective
reference to such Lender's Tranche A Term Loan Commitment, Tranche B
Term Loan Commitment, and/or Revolving Credit Commitment;
collectively, as to all the Lenders, the "Commitments".
"Commitment Percentage": as to any Lender at any time, the
percentage which (i) the sum of (a) such Lender's then unused
Commitments plus (b) such Lender's Loans then outstanding (assuming,
in the case of each Revolving Credit Lender, that such Lender has made
a Loan in an amount equal to its Pro Rata Share of the Letter of
Credit Outstanding) then constitutes of (ii) the sum of (x) the
aggregate outstanding then unused Commitments of all the Lenders plus
(y) the aggregate principal amount of Loans of all the Lenders then
outstanding (assuming, in the case of the Revolving Credit Lenders,
that such Lenders have made Loans in an aggregate principal amount
equal to the Letter of Credit Outstanding).
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"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Consolidated Current Assets": with respect to any Person at any
date of determination, all assets which would, in accordance with
GAAP, be classified on a consolidated balance sheet of such Person and
its Subsidiaries as current assets at such date of determination,
"Consolidated Current Liabilities": with respect to any Person
at any date of determination, all liabilities which would, in
accordance with GAAP, be classified on a consolidated balance sheet of
such Person and its Subsidiaries as current liabilities at such date
of determination.
"Consolidated Interest Expense": with respect to any Person for
any period, interest and fees paid or (without duplication) due and
payable (whether or not paid) in cash by such Person and its
Subsidiaries during such period in respect of Total Debt determined on
a consolidated basis in accordance with GAAP.
"Consolidated Lease Expense": with respect to any Person for any
period, the aggregate amount of any payments made or accrued by such
Person and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, for such period with respect to leases other
than Financing Leases.
"Consolidated Net Worth": as of any date, the total stockholder
equity of the Borrower plus retained earnings as determined in
accordance with GAAP.
"Consolidated Working Capital": with respect to any Person at
any date of determination, Consolidated Current Assets (exclusive of
cash and Cash Equivalents) of such Person at such date of
determination minus Consolidated Current Liabilities (excluding the
current portion of any long term debt) of such Person at such date of
determination.
"Covered Sale": as to the Borrower or any of its Subsidiaries,
subject to the provisions of Section 9, any (a) sale or other
disposition (including any sale and leaseback of assets, and any
mortgage or lease of real property) (other than a Permitted Asset
Sale) subsequent to the Closing Date of any property of the Borrower
or any of its Subsidiaries (an "Asset Sale") or (b) issuance of equity
or debt securities of the Borrower or any of its Subsidiaries
subsequent to the Closing Date (other than (i) issuances of its own
equity securities by the Borrower pursuant to (y) stock options
granted prior to the Closing Date and (z) any stock option plan
maintained by the Borrower for the purchase of up to 10% of the
outstanding Voting Stock of the Borrower, (ii) issuances of equity
securities by any Subsidiary of the Borrower to the Borrower, (iii)
issuances of debt securities by any Subsidiary of the Borrower in
favor of the Borrower, (iv) equity or debt securities of the Borrower
issued in consideration for the Cash Infusion in accordance with the
terms of the definition of such term and (v) increases in the
aggregate amount of Indebtedness that may be incurred under this
Agreement).
"Debt Service": with respect to any Person for any period, the
sum of (a) Consolidated Interest Expense of such Person for such
period plus (b) scheduled principal amortization of Total Debt of such
Person for such period (whether or not such payments are made).
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"Default": any of the events specified in Section 10, whether or
not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Bank Accounts": as defined in subsection 6.25.
"Domestic Borrowing Base": at any time, a dollar amount equal to
the sum of the following amounts as they exist at that time:
(a) Eighty percent (80%) of Domestic Eligible Receivables,
(b) Sixty-five percent (65%) of Domestic Eligible Inventory, and
(c) Thirty-five percent (35%) of Domestic Qualified Inventory;
provided that (i) all Inventory is valued on a FIFO basis and
otherwise in accordance with GAAP; and (ii) such Domestic Borrowing
Base formulas may change from time to time hereunder based upon the
reasonable judgment of the Required Lenders and the Agent after
consultation with the Borrower. All the foregoing as determined by
the Required Lenders and the Agent in accordance with the Agent's
customary practices and standards for Loans of this type.
"Domestic Eligible Inventory": Inventory of the Borrower or any
of its Domestic Subsidiaries which is a Guarantor which meets all of
the following criteria:
(a) the Inventory consists of either raw materials or finished
goods (and does not include any work in process) and, in the case of
finished goods, has not been held by any of the Borrower and its
Subsidiaries for more than one (1) year;
(b) no account receivable or document of title in favor of a
purchaser thereof has been created or issued with respect to it;
(c) the Inventory is readily saleable in a bona fide arm's
length transaction, or is usable, in the ordinary course of the
business of the Borrower and its Domestic Subsidiaries and no portion
of it represents returned, rejected, lost, obsolete or damaged goods;
(d) if the Inventory is located on leased premises, a Landlord
Waiver in the form of Exhibit L, satisfactory in form and substance to
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the Agent shall have been delivered to the Agent for such premises;
(e) the Inventory is subject to a perfected security interest of
first priority in favor of the Agent for the benefit of the Lenders
and the Issuing Bank;
(f) no covenant, representation or warranty contained in any of
the Loan Documents with respect to such Inventory has been breached;
and
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(g) the amount of the Inventory shall be net of excess shrinkage
and excess Inventory reserve, and Inventory shall not be Domestic
Eligible Inventory if it is Inventory on consignment or Inventory in
public warehouse.
"Domestic Eligible Receivables": Accounts of the Borrower or any
of the Domestic Subsidiaries of the Borrower which is a Guarantor
which arose in the ordinary course of the Borrower's or any such
Subsidiary's business and which meet the following conditions:
(a) the Account is subject to a perfected security interest of
first priority in favor of the Agent for the benefit of the Lenders
and the Issuing Bank and to no other Lien;
(b) the Account is based on an enforceable order or contract for
goods shipped or services rendered which contains selling terms of not
more than one hundred and twenty (120) days from invoice dates and the
Account is not yet ninety (90) days past due;
(c) the Account is unconditionally owned by the Borrower or a
Domestic Subsidiary which is a Guarantor, has been validly assigned
and strictly complies with all of the Borrower's and the Domestic
Subsidiaries' warranties, representations and covenants contained in
the Loan Documents;
(d) the property giving rise to such Account shall have been
shipped to the Account Debtor or delivered to the agent of the Account
Debtor for shipment to the Account Debtor, provided that any property
returned or refused by the Account Debtor shall not give rise to a
Domestic Eligible Receivable from and after the date thereof;
(e) the Account arises from the sale of goods which are not
placed on consignment, bill and hold, sale-and-return, sale on
approval, or other terms by reason of which the payment by the Account
Debtor may be conditional;
(f) the Account is denominated in U.S. Dollars and if such
Account, when added to all outstanding Accounts of the related Account
Debtor, its wholly owned Domestic Subsidiaries and its Affiliates,
would cause the outstanding Accounts of such Account Debtor, its
wholly owned Domestic Subsidiaries and its Affiliates to exceed ten
percent (10%) of the sum of (i) the then Domestic Eligible Receivables
and (ii) the then Foreign Eligible Receivables for the Borrower and
its Subsidiaries collectively, then such excess over 10% shall not
qualify as an Eligible Account;
(g) the Account Debtor is not any government or any department,
agency or instrumentality of any government, any state, city, town or
municipality or division thereof;
(h) the Account Debtor is not a direct or indirect Subsidiary or
Affiliate of the Borrower;
(i) the Borrower and its Subsidiaries are not now, and have no
reason to believe they will become liable to the Account Debtor,
provided that any claim for reduction, counterclaim, set-off,
recoupment or any claim for credits or allowances against the Borrower
or any Subsidiary by an Account Debtor other than customer discounts
allowed for prompt payment in the ordinary course of the Borrower's
and its Subsidiaries' business shall serve to reduce the amount of
Domestic Eligible Receivables;
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(j) the amount of the Account is net of all trade discounts,
allowances and other deductions which the Account Debtor is or may be
entitled to take;
(k) the aggregate amount of Domestic Eligible Receivables shall
be reduced by any note, trade acceptance, finance charges, unapplied
cash, unauthorized deductions or chargebacks, draft or other
instrument or chattel paper with respect to or in payment for the
Account, and if any such instrument is received, the Borrower will
immediately notify the Agent and, at the Agent's request, endorse,
assign and deliver the same to the Agent on behalf of the Lenders;
(l) the amount of the Account shown on the books of the Borrower
or any Domestic Subsidiary and on any invoice or statement delivered
to the Agent as owing to the Borrower or such Subsidiary shall be
reduced by any partial payment that has been made thereon by any
Person;
(m) neither the Borrower nor any of its Subsidiaries has
knowledge of the death of the Account Debtor or of the dissolution,
termination of existence, insolvency, business failure or cessation,
filing of a petition in bankruptcy or reorganization for, or
appointment of a receiver or custodian for, or similar event with
respect to, the Account Debtor; and
(n) the Agent has not otherwise deemed the Account
uncreditworthy.
"Domestic Letter of Credit": a standby letter of credit issued
by, and subject to terms and conditions acceptable to, the Issuing
Bank on behalf of the Borrower pursuant to Section 4, which letter of
credit (a) is issued with respect to worker's compensation insurance
or similar purpose and (b) shall have an expiration date no later than
the earlier of (i) one year after its date of issuance or (ii) 30 days
prior to the Tranche A and Revolver Termination Date.
"Domestic Qualified Inventory": Inventory of the Borrower or any
of its Domestic Subsidiaries which is a Guarantor which meets all of
the following criteria: (a) the Inventory consists of work in
process; and (b) but for the provisions of clause (a) above, such
Inventory would constitute Domestic Eligible Inventory.
"Domestic Subsidiary": any Subsidiary of the Borrower which is
incorporated in any state or other jurisdiction of the United States
of America.
"EBITDA": with respect to any Person for any period, the sum of
(a) the consolidated net income of such Person and its Subsidiaries
for such period plus (b) to the extent deducted in computing such
consolidated net income, the sum of (i) income tax expense (including
the Special Tax Payment), (ii) interest expense, (iii) depreciation
and amortization expense, (iv) any extraordinary losses and (v) any
loss which did not result in a cash payment, and minus, to the extent
added in computing such consolidated net income, (i) any interest
income, (ii) any extraordinary gains and (iii) any gain which did not
result from a cash payment, all as determined on a consolidated basis
with respect to such Person and its Subsidiaries in accordance with
GAAP.
"Environmental Claims": any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations
or proceedings relating in any way to any Environmental Law or any
permit
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issued, or any approval given, under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all
Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, (b) any and all Claims
by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief in connection with
alleged injury or threat of injury to health, safety or the
environment due to the presence of Materials of Environmental Concern,
(c) any fact, circumstance, condition or occurrence forming the basis
of any violation, or alleged violation, of any Environmental Law and
(d) any alleged injury or threat of injury to health, safety or the
environment due to the presence of Materials of Environmental Concern.
"Environmental Laws": any and all foreign, federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances,
codes or decrees of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning Materials of
Environmental Concern or protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors or
other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D
of the Board of Governors) maintained by a member bank of the Federal
Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate (using the offered rate which appears on telerate
page 3750) at which Credit Lyonnais New York Branch is offered Dollar
deposits in the London interbank market at or about 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period
for delivery in immediately available funds on the first day of such
Interest Period for the number of days comprised therein and in an
amount comparable to the amount of its Eurodollar Loan to be
outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined
for such day in accordance with the following formula (rounded upward
to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 10,
provided that any requirement for the giving of notice, the lapse of
time, or both has been satisfied.
10
"Excess Cash Flow": with respect to any Person on a consolidated
basis for any fiscal year, EBITDA of such Person on a consolidated
basis for such fiscal year minus (a) Debt Service of such Person on a
consolidated basis for such fiscal year, (b) any voluntary prepayments
of Term Loans during such fiscal year, (c) permitted Adjusted Capital
Expenditures by such Person on a consolidated basis during such fiscal
year, (d) taxes paid in cash by such Person on a consolidated basis
during such fiscal year (including the Special Tax Payment) and (e) an
amount equal to any increase in Consolidated Working Capital of such
Person during such fiscal year, plus an amount equal to any decrease
in Consolidated Working Capital during such fiscal year.
"FDIC": the Federal Deposit Insurance Corporation or any
successor to the functions and powers thereof.
"Fee Letter": that certain letter dated October 22, 1996 (and
executed by the Borrower on October 25, 1996) between the Borrower and
Credit Lyonnais New York Branch, as the same may be amended by written
agreement duly executed by each of the parties thereto, pursuant to
which the Borrower has agreed to pay certain fees to Credit Lyonnais
New York Branch.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"Fixed Charges": with respect to any Person for any fiscal
period, the sum of (a) Debt Service of such Person for such period,
(b) Adjusted Capital Expenditures (including the Chinese Assets
Purchase Price) by such Person and its Subsidiaries during such
period, (c) income taxes (and other taxes of a similar nature or
imposed in lieu thereof) paid in cash by such Person and its
Subsidiaries during such period (excluding the Special Tax Payment)
and (d) Restricted Payments declared or paid during such period.
"Foreign Borrowing Base": at any time, a dollar amount equal to
(A) with reference to any Foreign Subsidiary, the sum of the following
as they exist at that time with respect to such Foreign Subsidiary,
and (B) with respect to all of the Foreign Subsidiaries, the sum of
the following as they exist at that time for all Foreign Subsidiaries
in the aggregate:
(a) Eighty percent (80%) of Foreign Eligible Receivables,
(b) Sixty-five percent (65%) of Foreign Eligible Inventory, and
(c) Thirty-five percent (35%) of Foreign Qualified Inventory;
provided that (i) all Inventory is valued on a FIFO basis and
otherwise in accordance with GAAP; (ii) if a Foreign Borrowing Base is
denominated in a currency other than the U.S. dollar, the amount
thereof shall be translated into U.S. dollars (by such method as the
Agent shall determine in its sole discretion) as of the last Business
Day of each month in connection with the delivery of a Borrowing Base
Certificate, on any day on which a Letter of Credit is issued, on any
day on which a Loan is requested to be made and at such other times as
the Agent shall determine and (iii) such Foreign Borrowing Base
formulas may change from time to time hereunder based upon the
reasonable judgment of the Required Lenders and the Agent after
11
consultation with the Borrower. All the foregoing as determined by
the Required Lenders and the Agent in accordance with the Agent's
customary practices and standards for loans of this type.
"Foreign Eligible Inventory": Inventory of any Foreign
Subsidiary (other than the Brazilian Company) that meets all of the
following criteria:
(a) the Inventory consists of either raw materials or finished
goods (and does not include any work in process) and, in the case of
finished goods, has not been held by any of the Borrower and its
Subsidiaries for more than one (1) year;
(b) no account receivable or document of title in favor of a
purchaser thereof has been created or issued with respect to it;
(c) the Inventory is readily saleable in a bona fide arm's length
transaction, or is usable, in the ordinary course of the business of
such Foreign Subsidiary and no portion of it represents returned,
rejected, lost, obsolete or damaged goods;
(d) the Inventory is subject to a perfected security interest of
first priority in favor of the Agent for the benefit of the Lenders
and the Issuing Bank;
(e) no covenant, representation or warranty contained in any of
the Loan Documents with respect to such Inventory has been breached;
and
(f) the amount of the Inventory shall be net of excess shrinkage
and excess Inventory reserve, and Inventory shall not be Foreign
Eligible Inventory if it is Inventory on consignment or Inventory in
public warehouse.
"Foreign Eligible Receivables": Accounts of any Foreign
Subsidiary (other than the Brazilian Company) that arose in the
ordinary course of such Subsidiary's business and which meet the
following conditions:
(a) the Account is subject to a perfected security interest of
first priority in favor of the Agent for the benefit of the Lenders
and the Issuing Bank and to no other Lien;
(b) the Account is based on an enforceable order or contract for
goods shipped or services rendered which contains selling terms of not
more than one hundred and twenty (120) days from invoice dates (one
hundred and eighty (180) days from invoice dates in the case of the
Borrower's indirect wholly owned subsidiary in Sweden) and the Account
is not yet ninety (90) days past due;
(c) the Account is unconditionally owned by such Foreign
Subsidiary;
(d) the property giving rise to such Account shall have been
shipped to the Account Debtor or delivered to the agent of the Account
Debtor for shipment to the Account Debtor, provided that any property
returned or refused by the Account Debtor shall not give rise to a
Foreign Eligible Receivable from and after the date thereof;
12
(e) the Account arises from the sale of goods which are not
placed on consignment, bill and hold, sale-and-return, sale on
approval, or other terms by reason of which the payment by the Account
Debtor may be conditional;
(f) the Account is denominated in U.S. dollars or an Authorized
Foreign Currency and if such Account, when added to all outstanding
Accounts of the related Account Debtor, its wholly owned Domestic
Subsidiaries and its Affiliates, would cause the outstanding Accounts
of such Account Debtor, its wholly owned Domestic Subsidiaries and its
Affiliates to exceed ten percent (10%) of the sum of (i) the then
Domestic Eligible Receivables and (ii) the then Foreign Eligible
Receivables for the Borrower and its Subsidiaries collectively, then
such excess over 10% shall not qualify as an Eligible Account;
(g) the Account Debtor is not any government or any department,
agency or instrumentality of any government, any state, city, town or
municipality or division thereof;
(h) the Account Debtor is not a direct or indirect Subsidiary or
Affiliate of the Borrower;
(i) the Borrower and its Subsidiaries are not now, and have no
reason to believe they will become liable to the Account Debtor,
provided that any claim for reduction, counterclaim, set-off,
recoupment or any claim for credits or allowances against the Borrower
or any Subsidiary by an Account Debtor other than customer discounts
allowed for prompt payment in the ordinary course of the Borrower's
and its Subsidiaries' business shall serve to reduce the amount of
Foreign Eligible Receivables;
(j) the amount of the Account is net of all trade discounts,
allowances and other deductions which the Account Debtor is or may be
entitled to take;
(k) the aggregate amount of Foreign Eligible Receivables shall
be reduced by any note, trade acceptance, finance charges, unapplied
cash, unauthorized deductions or chargebacks, draft or other
instrument or chattel paper with respect to or in payment for the
Account, and if any such instrument is received, the Borrower will
immediately notify the Agent and, at the Agent's request, endorse,
assign and deliver the same to the Agent on behalf of the Lenders;
(l) the amount of the Account shown on the books of such Foreign
Subsidiary and on any invoice or statement delivered to the Agent as
owing to such Foreign Subsidiary shall be reduced by any partial
payment that has been made thereon by any Person;
(m) such Foreign Subsidiary has no knowledge of the death of the
Account Debtor or of the dissolution, termination of existence,
insolvency, business failure or cessation, filing of a petition in
bankruptcy or reorganization for, or appointment of a receiver or
custodian for, or similar event with respect to, the Account Debtor;
and
(n) the Agent has not otherwise deemed the Account
uncreditworthy.
"Foreign Qualified Inventory": Inventory of any Foreign
Subsidiary (other than the Brazilian Company) that meets all of the
following criteria: (a) the Inventory consists of work in process;
and (b) but for the provisions of clause (a) above, such Inventory
would constitute Foreign Eligible Inventory.
13
"Foreign Letter of Credit": with respect to any Foreign
Subsidiary, a standby letter of credit issued by, and subject to terms
and conditions acceptable to, the Issuing Bank pursuant to Section 4,
which letter of credit (a) may only have as its beneficiary a foreign
lender to, and be issued as security for Indebtedness to such lender
permitted to be incurred by, such Foreign Subsidiary under subsection
9.2(g), (b) is payable in U.S. dollars, (c) is the subject of a
reimbursement agreement (in the form contemplated by the Letter of
Credit Request, with such modifications as the Issuing Bank may
request) duly executed by such Foreign Subsidiary and the Borrower in
favor of, and delivered to, the Agent for the benefit of the Issuing
Bank and the Revolving Credit Lenders, and (d) shall have an
expiration date no later than the expiration of (i) one year after its
date of issuance or (ii) 30 days prior to the Tranche A and Revolver
Termination Date.
"Foreign Subsidiary": any Subsidiary of the Borrower which is not
a Domestic Subsidiary. A Foreign Subsidiary shall be deemed wholly
owned by the Borrower if (a) not more than one percent (1%) of its
Capital Stock is owned by a third party and (b) the laws of the
jurisdiction in which such Foreign Subsidiary is incorporated require
that a corporation have not less than two stockholders.
"Foreign Subsidiary Obligations": with respect to any Foreign
Subsidiary, the collective reference to the obligations and
liabilities of such Foreign Subsidiary which may arise under, out of
or in connection with the issuance of any Foreign Letter of Credit on
behalf of such Foreign Subsidiary, together with any and all
obligations and liabilities of such Foreign Subsidiary under the Loan
Documents to which such Foreign Subsidiary is a party, whether for
principal, interest, fees or otherwise, and whether direct or
indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including, without limitation,
interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to such Foreign Subsidiary whether or not a claim for post-
filing or post-petition interest is allowed in such proceeding).
"Free Excess Cash Flow": at any time, (a) 25% of the aggregate
amount of Excess Cash Flow of the Borrower and its Subsidiaries during
the period commencing on the Closing Date and ending on the last day
of the then most recently completed fiscal year for which the Borrower
shall have delivered audited financial statements pursuant to
subsection 8.1(a) minus (b) the sum of (i) the aggregate amount of
Restricted Payments theretofore made pursuant to Section 9.8 and (ii)
the aggregate amount of such Excess Cash Flow which shall theretofore
have been utilized for the purposes described in subsections
9.9(i)(b), 9.10(d) and 9.10(f). For the purposes of determining at
any time whether any Free Excess Cash Flow shall have theretofore been
utilized to make any capital expenditures permitted under subsection
9.9, capital expenditures during any fiscal year of the Borrower shall
be assumed to have been made from the sources described in clauses
(i)(a) and (i)(b) of such subsection in the designated alphabetical
order of such clauses.
"GAAP": generally accepted accounting principles in the United
States of America in effect on the Closing Date.
"Governmental Authority": any foreign, federal, state or other
court or governmental agency, authority, instrumentality or regulatory
body.
14
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counter indemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "preliminary obligations")
of any other third Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i)
to purchase any such primary obligation or any property constituting
direct or indirect security therefor, (ii) to advance or supply funds
(1) for the purchase or payment of any such primary obligation or (2)
to maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business; and provided, further, that the term Guarantee
Obligation shall not include customary and reasonable indemnity
obligations of the Borrower and its Subsidiaries (x) under any
agreement or document in existence as of the Closing Date and (y)
under Acquisition Documents pursuant to which, in any such case
described in clauses (x) and (y), the Borrower or a Subsidiary thereof
may indemnify a party to any such agreement or document with respect
to losses incurred by such party as a result of the failure of a
representation or warranty of the Borrower or such Subsidiary to be
true or as a result of an event occurring after the effective date of
such agreement or document or acquisition by the Borrower or such
Subsidiary, as the case may be. The amount of any Guarantee Obligation
of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and
(b) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
"Guarantees": the Subsidiaries' Guarantees.
"Guarantor": any Person executing and delivering a Guarantee
pursuant to this Agreement.
"Inactive Subsidiaries": as of the Closing Date, each of the
following wholly owned Domestic Subsidiaries of the Borrower: The
Davis Line, Inc. Gencor Sellers Inc., Gencor Systems, Inc., Midwest
Construction Co. and Midwest Tank & Construction Holding Company.
"Indebtedness": of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than unsecured
current liabilities not the result of the borrowing of money or the
obtaining of credit or the leasing of property for accounts payable
and expense accruals incurred or assumed in the ordinary course of
business for current purposes and not represented by a note or other
evidence of indebtedness and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is
evidenced by a note, bond, debenture or similar
15
instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or
created for the account of such Person, (e) all liabilities secured by
any Lien (other than Permitted Liens) on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment thereof and (f) all Interest Rate Agreements.
"Indianapolis Property": the real property owned by the Borrower
and located at 1875 Kentucky Avenue, Indianapolis, Indiana 46221,
together with all structures erected thereon and in existence on the
Closing Date.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any Base Rate Loan, the last
day of each March, June, September and December to occur while such
Loan is outstanding, and, in the case of Term Loans, on each scheduled
payment date of principal thereof, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of
such Interest Period, and (c) as to any Eurodollar Loan having an
Interest Period longer than three months, the day which is three
months after the first day of such Interest Period and the last day of
such Interest Period.
"Interest Period": with respect to any Eurodollar Loan: (a)
initially, the period commencing on the borrowing or conversion date,
as the case may be, with respect to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by the Borrower
in its notice of borrowing or notice of conversion, as the case may
be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the immediately preceding Interest
Period applicable to such Eurodollar Loan and ending one, two, three
or six months thereafter, as selected by the Borrower by irrevocable
notice to the Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided, that (A) the Interest Period may be only of a one month
duration during the Transition Period and (B) all of the foregoing
provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business
Day;
(ii) any Interest Period that would otherwise extend (A) in
the case of Revolving Credit Loans which are Eurodollar Loans,
beyond the Tranche A and Revolver Termination Date or (B) in the
case of Term Loans which are Eurodollar Loans, beyond the date
final payment is due on such Term Loans, shall end on the Tranche
A and Revolver Termination Date or such date of final payment, as
the case may be;
(iii) any Interest Period pertaining to a Eurodollar Loan
that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically
16
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar
month; and
(iv) the Borrower shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan during
an Interest Period for such Loan.
"Interest Rate Agreement": any interest rate protection
agreement, interest rate future, interest rate option, interest rate
swap or other interest rate hedge arrangement, including any such
agreement or arrangement with respect to foreign exchange or any
foreign currency, selected by the Borrower with a counterparty
acceptable to the Agent, to or under which the Borrower is a party or
a beneficiary on the date hereof or becomes a party or a beneficiary
after the date hereof, and, subject to subsection 8.12, which is in
form and substance reasonably satisfactory to the Agent.
"Inventory": as defined in Section 9-109(4) of the Uniform
Commercial Code of the State of New York, provided (a) the same is
located in the United States of America and is held by the Borrower or
a wholly owned Domestic Subsidiary (in the case of Inventory that is
to be reported as Domestic Eligible Inventory or Domestic Qualified
Inventory) or (b) in the case of a Foreign Subsidiary, the same is
located in the country in which such Foreign Subsidiary is
incorporated and is held by a wholly owned Foreign Subsidiary (in the
case of Inventory that is to be reported as Foreign Eligible Inventory
or Foreign Qualified Inventory).
"IRB Consents": any and all consents required under the IRB
Documents in connection with this Agreement and the transactions
contemplated thereby, including the consent of the Authority.
"IRB Indebtedness": Indebtedness of the Borrower incurred on
December 1, 1984 in the original principal amount of $5,000,000
($2,924,341 at November 30, 1996) under certain industrial revenue
bonds issued by the Borrower pursuant to a Loan Agreement between the
Borrower (formerly Mechtron International Corporation) and the Orange
County Industrial Development Authority ("Authority") dated as of
December 1, 1984, secured pursuant to a Mortgage Deed and Security
Agreement made by the Borrower in favor of the Authority dated
December 1, 1984 by a first priority lien on the real property and
personal property identified on Exhibits A and B to said Loan
Agreement and guaranteed by Subsidiaries of the Borrower pursuant to a
Guarantee Agreement dated December 1, 1984 (such agreements being
referred to herein as the "IRB Documents").
"Issuing Bank": Credit Lyonnais New York Branch.
"Leasehold Mortgage": each Leasehold Mortgage to be executed and
delivered by a Subsidiary, substantially in the form of Exhibit C and
---------
covering the leased property listed on Schedule III for which the
------------
Agent requests a Leasehold Mortgage as indicated on such Schedule,
--------
subject to the receipt of all required consents, including Landlord
Waivers, and any leases of real property acquired by the Borrower or
any Subsidiary of the Borrower pursuant to any subsequent acquisition
for which the Agent requests a Leasehold Mortgage, in each case as the
same may be amended, supplemented or otherwise modified from time to
time.
17
"Lenders": as defined in the first paragraph of this Agreement.
When used with reference to the Security Documents and the Collateral,
the Term "Lender" includes the Issuing Bank.
"Letters of Credit": the Domestic Letters of Credit and the
Foreign Letters of Credit, collectively.
"Letter of Credit Outstanding": any time, the sum of (a) the
aggregate stated amount of all outstanding Letters of Credit plus (b)
the aggregate amount of all drawings made under any Letter of Credit
for which the Issuing Bank has not received reimbursement from the
Borrower by means of a borrowing of Revolving Credit Loans pursuant to
Section 3 or otherwise from the Borrower or the applicable Foreign
Subsidiary.
"Letter of Credit Request": as defined in subsection 4.1.
"Level I": a Leverage Ratio which is smaller than 2.0; "Level
II": a Leverage Ratio which is equal to or greater than 2.0 but
smaller than 2.5; "Level III": a Leverage Ratio which is equal to or
greater than 2.5 but smaller than 3.0; "Level IV": a Leverage Ratio
which is equal to or greater than 3.0 but smaller than 3.5; "Level V":
a Leverage Ratio which is equal to or greater than 3.5 but smaller
than 4.5; and Level VI": a Leverage Ratio which is equal to or
greater than 4.5.
"Leverage Ratio": as of any date of determination, the ratio of
Total Debt of the Borrower and its consolidated Subsidiaries as of the
last day of the most recent fiscal quarter of the Borrower prior to
such date with respect to which the Borrower has delivered to the
Agent financial statements of the Borrower and its consolidated
Subsidiaries in conformity with the requirements of subsection 8.1, to
EBITDA of the Borrower and its consolidated Subsidiaries for the most
recent four fiscal quarters of the Borrower prior to such date;
provided, however, that EBITDA for the Borrower and its consolidated
Subsidiaries for any date of determination prior to January 1, 1998
shall be calculated as follows: (i) for any date of determination in
the fiscal quarter ending June 30, 1997, EBITDA shall be equal to the
product of four (4) and EBITDA of the Borrower and its consolidated
Subsidiaries for the fiscal quarter ending March 31, 1997; (ii) for
any date of determination in the fiscal quarter ending September 30,
1997, EBITDA shall be equal to the product of two (2) and EBITDA of
the Borrower and its consolidated Subsidiaries for the six (6) months
ending June 30, 1997; and (iii) for any date of determination in the
fiscal quarter ending December 31, 1997, EBITDA shall be equal to the
product of one and one-third (1.333) and EBITDA of the Borrower and
its consolidated Subsidiaries for the nine (9) months ending September
30, 1997.
"Lien": with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on
such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement
relating to such asset and (c) in addition, in the case of securities,
any purchase option, call or similar right of a third party with
respect to such securities.
"Loan": any Revolving Credit Loan or Term Loan made by any
Lender pursuant to this Agreement.
18
"Loan Documents": this Agreement, the Notes, the Letters of
Credit, the Letter of Credit Requests (including the related
reimbursement agreements), the Guarantees, the Security Documents, the
Closing Letter and the Interest Rate Agreement (if entered into with a
Lender).
"Loan Parties": the Borrower, and each Subsidiary of the
Borrower (after giving effect to the Acquisition) which is a party to
a Loan Document.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, assets, liabilities, property, performance or
condition (financial or otherwise) or prospects of the Borrower or any
of its Subsidiaries or (b) the enforceability of this Agreement, any
Note or any of the other Loan Documents or the rights or remedies of
the Agent, the Issuing Bank or the Lenders hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or wastes, defined or
regulated as such in or under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls, urea-
formaldehyde insulation, lead-based paint, radiation, radioactive
materials and electromagnetic fields.
"Mortgage": each Mortgage or Deed of Trust to be executed and
delivered by the Borrower or a Subsidiary, substantially in the form
of Exhibit D-1, Exhibit D-2, Exhibit D-3, Exhibit D-4, Exhibit D-5 or
----------- ----------- ----------- -----------
Exhibit D-6, as applicable, and each other mortgage or deed of trust
to be executed and delivered by a Subsidiary in such other form as
shall be reasonably satisfactory to Agent (with respect to Mortgaged
Property located in any other state or foreign country), and covering
the interests in real property listed on Schedule II for which the
-----------
Agent requests a Mortgage as indicated on such Schedule and any
--------
interests in real property acquired by the Borrower or any Subsidiary
of the Borrower pursuant to any subsequent acquisition for which the
Agent requests a Mortgage, in each case as the same may be amended,
supplemented or otherwise modified from time to time.
"Mortgaged Properties": all of the interests in real estate in
which Liens are purported to be granted to the Agent pursuant to the
Mortgages.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 3(37) or 4001(a)(3) of ERISA.
"Net Proceeds": (a) 100% of the cash proceeds of any Covered
Sale by the Borrower or any of its Subsidiaries (including any cash
payments received by way of deferred payment of principal pursuant to
a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such
Covered Sale net of (i) attorneys' fees, accountants' fees, investment
banking fees, survey costs, title insurance premiums, and related
search and recording charges, transfer taxes, deed or mortgage
recording taxes, required debt payments (other than pursuant hereto),
other customary expenses and brokerage, consultant and other customary
fees actually incurred in connection therewith and (ii) taxes paid or
payable as a result thereof; (b) 100% of Qualifying Insurance and
Other Proceeds; and (c) 100% of all Pension Plan Reversion Proceeds.
19
"New Subsidiary": each Subsidiary of the Borrower organized,
formed or acquired after the Closing Date and any Inactive Subsidiary
which desires to engage in any prohibited activities (as defined in
subsection 9.20).
"Non-Excluded Taxes": as defined in subsection 5.10(a).
"Notes": the collective reference to the Revolving Credit Notes
and the Term Notes.
"Other Taxes": as defined in subsection 5.10(a).
"Participant": as defined in subsection 12.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PED": the Process Equipment Division of Ingersoll-Rand Company.
"Pension Plan Reversion Proceeds": the amount of the cash and
the fair market value of any and all other property received (directly
or indirectly) by the Borrower or any Commonly Controlled Entity after
the Closing Date from any stock bonus, pension or profit-sharing plan
(or trust thereunder) which was treated by the Borrower or such
Commonly Controlled Entity as a plan qualified under Code Section
401(a) which shall not have been applied by the Borrower or such
Commonly Controlled Entity to payment of tax, if any, imposed under
Code Section 4980(a) with respect to the receipt of such cash or other
property.
"Permitted Asset Sale": a sale permitted by any of subsections
9.5(b), 9.6(a), 9.6(b), 9.6(e) and 9.6(f).
"Permitted Liens": as defined in subsection 9.3.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledge Agreements": collectively, the Borrower Pledge Agreement
and the Subsidiary Pledge Agreements.
"Pro Rata Revolving Share of Letter of Credit Outstanding": with
respect to any Revolving Credit Lender at any time, that percentage of
the Letter of Credit Outstanding at such time which is equal to the
Revolving Credit Commitment Percentage of such Revolving Credit Lender
at such time.
20
"Pro Rata Share of Borrowing Base": with respect to any
Revolving Credit Lender at any time, that percentage of the Borrowing
Base at such time which is equal to the Revolving Credit Commitment
Percentage of such Revolving Credit Lender at such time.
"Purchase Agreement": the Purchase Agreement, dated as of August
12, 1996, by and between Ingersoll-Rand Company, a New Jersey
corporation, and the Borrower, as amended, supplemented or otherwise
modified in accordance with the terms of this Agreement.
"Qualifying Insurance and Other Proceeds": any (a) insurance
proceeds payable to the Borrower or any of its Subsidiaries after the
Closing Date on account of a Casualty Loss which shall not have been
applied by the Borrower or such Subsidiary to the payment of the cost
of repair or replacement of the property subject to such Casualty Loss
within six months of the date such insurance proceeds are actually
received by the Borrower or such Subsidiary, (b) payments made by the
Seller to the Borrower pursuant to the Purchase Agreement after the
Closing Date (other than payments made by the Seller to the Borrower
on account of a liability incurred by the Borrower or any of its
Subsidiaries vis-a-vis a third party), including any payment
receivable by the Borrower from the Seller as a result of a downward
adjustment to the purchase price under the Purchase Agreement.
"Reduced Availability Period": the period commencing on the date
hereof and ending on the earlier to occur of (i) the date on which all
of the IRB Consents have been received, in form and substance
satisfactory to the Agent, and are in full force and effect, or (ii)
the date on which the IRB Indebtedness is required to be repaid
pursuant to subsection 8.18, provided that clause (ii) shall apply if
the IRB Indebtedness is repaid in full on such date, but not
otherwise.
"Refinancing": as defined in subsection 7.1(d).
"Register": as defined in subsection 12.6(d).
"Regulation U": Regulation U of the Board of Governors as in
effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA,
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14,.16,.18,.19 or.20
of PBGC Reg. (S) 2615.
"Required Lenders": at any time, Lenders the Commitment
Percentages of which aggregate in excess of 50%.
"Required Revolving Credit Lenders": at any time, Revolving
Credit Lenders the Revolving Credit Commitment Percentages of which
aggregate in excess of 50%.
"Required Tranche A Lenders": at any time, Tranche A Lenders the
Tranche A Commitment Percentages of which aggregate in excess of 50%.
21
"Required Tranche B Lenders": at any time, Tranche B Lenders the
Tranche B Commitment Percentages of which aggregate in excess of 50%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Reserved Amount": the sum of $3,000,000.
"Responsible Officer": with respect to the Borrower or any
Subsidiary, any one of the chairman of the board, the chief executive
officer, the president and the executive vice president of the
Borrower or such Subsidiary or, with respect to financial matters, the
chief financial officer or treasurer of the Borrower or such
Subsidiary.
"Restricted Payment": as defined in subsection 9.8.
"Revolving Credit Commitment": with respect to each Revolving
Credit Lender, the amount set forth opposite such Revolving Credit
Lender's name on Schedule I under the heading "Revolving Credit
----------
Commitment", as such amount may be reduced from time to time pursuant
to this Agreement; collectively, as to all the Revolving Credit
Lenders, the "Revolving Credit Commitments".
"Revolving Credit Commitment Percentage": as to any Revolving
Credit Lender at any time, the percentage which (i) the sum of (a)
such Revolving Credit Lender's then unused Revolving Credit Commitment
plus (b) such Revolving Credit Lender's Revolving Credit Loans then
outstanding then constitutes of (ii) the sum of (x) the aggregate
outstanding then unused Revolving Credit Commitments of all the
Revolving Credit Lenders plus (y) the aggregate principal amount of
Revolving Credit Loans of all the Revolving Credit Lenders then
outstanding.
"Revolving Credit Commitment Period": the period from and
including the Closing Date to but not including the Tranche A and
Revolver Termination Date or such earlier date on which the Revolving
Credit Commitments shall terminate as provided herein.
"Revolving Credit Lender": any Lender with an unused Revolving
Credit Commitment hereunder and/or any Revolving Credit Loans
outstanding hereunder; collectively, the "Revolving Credit Lenders".
"Revolving Credit Loans": as defined in subsection 3.1(a).
"Revolving Credit Note": as defined in subsection 3.3(e).
"SEC": the United States Securities and Exchange Commission or
any successor thereto.
"Security Agreements": collectively, the Borrower Security
Agreement and the Subsidiary Security Agreements.
22
"Security Documents": collectively, the Leasehold Mortgages, the
Mortgages, the Security Agreements, the Pledge Agreements, and all
other security documents hereafter delivered to the Agent granting or
purporting to grant a Lien on any asset or assets of any Person to
secure the obligations and liabilities of the Borrower and/or the
Foreign Subsidiaries hereunder and/or under any of the other Loan
Documents or to secure any guarantee of any such obligations and
liabilities.
"Seller": with respect to the Acquisition, Ingersoll-Rand
Company.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as
of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date,
exceed the amount that will be required to pay all "liabilities of
such Person, contingent or otherwise", as of such date (as such quoted
terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors) as such
debts become absolute and matured, (b) such Person will not have, as
of such date, an unreasonably small amount of capital with which to
conduct its business, and (c) such Person will be able to pay its
debts as they mature, taking into account the timing of and amounts of
cash to be received by such Person and the timing of and amounts of
cash to be payable on or in respect of indebtedness of such Person; in
each case after giving effect to (A) as of the Closing Date the making
of the Loans to be made on the Closing Date and to the application of
the proceeds of such Loans, and (B) on any date after the Closing
Date, the making of any Revolving Credit Loan to be made on such date,
and to the application of the proceeds of such Revolving Credit Loan.
For purposes of this definition, (i) "debt" means liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or
not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal
equitable, secured or unsecured or (y) right to an equitable remedy
for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Special Tax Payment": up to an amount not to exceed $1,500,000
in the aggregate, payable by the Borrower to the Seller on or after
the Closing Date on account of income taxes payable with respect to
PED for the period from October 1, 1996 through the Closing Date.
"Sublimit": as defined in subsection 4.1.
"Subordinated Loan": as defined in the definition of Cash
Infusion.
"Subordinated Loan Agreement": as defined in the definition of
Cash Infusion.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power to elect a majority of the board of
directors or other managers of such corporation, partnership or other
entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. Unless otherwise qualified, all references
to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary
23
or Subsidiaries of the Borrower, include all Domestic Subsidiaries and
Foreign Subsidiaries of the Borrower after giving effect to the
Acquisition.
"Subsidiaries' Guarantee": the Guarantee to be executed and
delivered by each Subsidiary of the Borrower (other than the Brazilian
Company, the Texas Company, the Inactive Subsidiaries and any Foreign
Subsidiary with respect to which the making of such Guarantee is
prohibited under the laws of the jurisdiction in which such Foreign
Subsidiary is organized), substantially in the form of Exhibit E, in
---------
the case of the Domestic Subsidiaries, and in form and substance
satisfactory to the Agent in the case of the Foreign Subsidiaries, in
each case as the same may be amended, supplemented or otherwise
modified from time to time.
"Subsidiary Pledge Agreement": each Pledge Agreement to be
executed and delivered by each Subsidiary (other than the Inactive
Subsidiaries, the Brazilian Company and the Texas Company) which owns
a Subsidiary or an equity interest in the Texas Company, substantially
in the form of Exhibit G, in the case of the Domestic Subsidiaries,
---------
and in form and substance satisfactory to the Agent in the case of the
Foreign Subsidiaries, in each case as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary Security Agreement": collectively, (a) each Security
Agreement to be executed and delivered by each Subsidiary of the
Borrower (other than the Inactive Subsidiaries, the Brazilian Company
and the Texas Company) in favor of the Agent, substantially in the
form of Exhibit F-1, in the case of the Domestic Subsidiaries, and in
-----------
form and substance satisfactory to the Agent in the case of the
Foreign Subsidiaries, in each case as the same may be amended,
supplemented or otherwise modified from time to time and (b) each
Trademark Security Agreement, Patent Security Agreement and Copyright
Security Agreement to be executed by each Subsidiary in favor of the
Agent, substantially in the forms of Exhibit F-2(a), (b) and (c) in
-------------- --- ---
the case of the Domestic Subsidiaries, and in form and substance
satisfactory to the Agent in the case of the Foreign Subsidiaries, in
each case as the same may be amended, supplemented or otherwise
modified from time to time.
"Subsidiary Security Documents": collectively, the Subsidiary
Security Agreements and the Subsidiary Pledge Agreements.
"Suspension Period": the period commencing on February 1, 1997
and ending when each and every action (including the execution,
delivery, filing, recordation or registration of documents) required
to be taken pursuant to the Closing Letter shall have been taken, in
each case in form and substance satisfactory to the Agent.
"Term Loan": a Tranche A Term Loan or a Tranche B Term Loan, as
the context shall require; collectively, the "Term Loans".
"Term Loan Commitments": the collective reference to the Tranche
A Commitments and the Tranche B Commitments; individually, a "Term
Loan Commitment".
"Term Loan Commitment Percentage": as to any Term Loan Lender at
any time, the percentage of the Term Loan Commitments then constituted
by such Term Loan Lender's Term Loan Commitments (or, after the Term
Loans are made, the percentage of the aggregate Term Loans then
constituted by such Term Loan Lender's Term Loans).
24
"Term Loan Lender": any Lender with an unused Term Loan
Commitment hereunder and/or any Term Loans outstanding hereunder;
collectively, the "Term Loan Lenders".
"Term Note": a Tranche A Term Note or a Tranche B Term Note, as
the context shall require; collectively, the "Term Notes".
"Texas Company": Zeig Sheet Metals, a corporation incorporated
under the laws of Texas.
"Total Debt": with respect to any Person at any time, all
Indebtedness of such Person and its Subsidiaries as determined on a
consolidated basis in accordance with GAAP pursuant to clauses (a),
(b), (c) and (e) of the definition of Indebtedness, including (without
duplication), if such Person is the Borrower, the aggregate principal
amount of all outstanding Loans.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day).
"Tranche A and Revolver Termination Date": the fifth
anniversary of the Closing Date.
"Tranche A Commitment": as to any Tranche A Lender, its
obligation to make a Tranche A Term Loan to the Borrower in an amount
equal to the amount set forth opposite such Tranche A Lender's name in
Schedule I under the heading "Tranche A Commitment", as such amount
----------
may be reduced from time to time pursuant to this Agreement;
collectively, as to all the Tranche A Lenders, the "Tranche A
Commitments".
"Tranche A Commitment Percentage": as to any Tranche A Lender at
any time, the percentage of the Tranche A Commitments then constituted
by such Tranche A Lender's Tranche A Commitment (or, after the Tranche
A Term Loans are made, the percentage of the aggregate Tranche A Term
Loans then constituted by such Tranche A Lender's Tranche A Term
Loan).
"Tranche A Lender": any Lender with an unused Tranche A
Commitment hereunder and/or any Tranche A Term Loans outstanding
hereunder, collectively, the "Tranche A Lenders".
"Tranche A Term Loan": as defined in subsection 2.1(a).
"Tranche A Term Note": as defined in subsection 2.5(d)(i).
"Tranche B Commitment": as to any Tranche B Lender, its
obligation to make a Tranche B Term Loan to the Borrower in an amount
equal to the amount set forth opposite such Tranche B Lender's name in
Schedule I under the heading "Tranche B Commitment", as such amount
----------
may be reduced from time to time pursuant to this Agreement;
collectively, as to all the Tranche B Lenders, the "Tranche B
Commitments".
"Tranche B Commitment Percentage": as to any Tranche B Lender at
any time, the percentage of the Tranche B Commitments then constituted
by such Tranche B Lender's
25
Tranche B Commitment (or, after the Tranche B Term Loans are made, the
percentage of the aggregate Tranche B Term Loans then constituted by
such Tranche B Lender's Tranche B Term Loan).
"Tranche B Lender": any Lender with an unused Tranche B
Commitment hereunder and/or any Tranche B Term Loans outstanding
hereunder; collectively, the "Tranche B Lenders".
"Tranche B Maturity Date": the seventh anniversary of the
Closing Date.
"Tranche B Term Loan": as defined in subsection 2.1(b).
"Tranche B Term Note": as defined in subsection 2.5(d)(ii).
"Transferee": as defined in subsection 12.6(f).
"Transition Period": the period commencing on the Closing Date
and ending on the earlier to occur of (a) the date on which the Agent
determines, in the exercise of its sole judgment, that syndication of
the Loans has been completed or (b) the ninety-first day next
following the Closing Date.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Unused Revolving Credit Commitment": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) the
amount of such Revolving Credit Lender's Revolving Credit Commitment
at such time over (b) the aggregate principal amount of all Revolving
Credit Loans made by such Lender then outstanding plus such Lender's
Pro Rata Share of the Letter of Credit Outstanding at such time.
"Voting Stock": as to any Person, the Capital Stock of such
Person normally entitled to vote in the election of directors of such
Person. With respect to the Borrower, the term "Voting Stock"
includes both the Common Stock and the Class B Stock of the Borrower
(unless otherwise specified).
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Loan Document or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Loan Document and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower and its Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1. 1, to the extent not defined, shall have
the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
26
(e) Sections and subsections headings in this Agreement are included
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or in any way affect the meaning or construction
of any provision of this Agreement.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 Term Loans. Subject to the terms and conditions hereof, (a) each
Tranche A Lender severally agrees (a) to make a term loan (a "Tranche A Term
Loan") to the Borrower on the Closing Date in an amount equal to the Tranche A
Commitment of such Tranche A Lender and (b) each Tranche B Lender severally
agrees to make a term loan (a "Tranche B Term Loan") to the Borrower on the
Closing Date in an amount equal to the Tranche B Commitment of such Tranche B
Lender. The Term Loans may from time to time be (a) Eurodollar Loans, (b) Base
Rate Loans or (c) a combination thereof, as determined by the Borrower and
notified to the Agent in accordance with subsections 2.2 and 5.2. No portion of
the Tranche A Loan Commitments which has not been borrowed on the Closing Date
may be borrowed thereafter.
2.2 Procedure for Term Loan Borrowing. The Borrower hereby requests
a Tranche A Term Loan borrowing on the Closing Date in an amount equal to the
aggregate amount of the Tranche A Commitments of the Tranche A Lenders and a
Tranche B Term Loan borrowing on the Closing Date in an amount equal to the
aggregate amount of the Tranche B Commitments of the Tranche B Lenders. The
Borrower shall give the Agent irrevocable notice prior to 10:00 A.M., New York
City time, at least three Business Days prior to the Closing Date, if all or any
part of the Term Loans are to be initially Eurodollar Loans, specifying the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Periods therefor; provided that, (a) during the Suspension
Period, all Term Loans shall be Base Rate Loans and (b) during the Transition
Period, the Borrower may only select a one month Interest Period. If no such
notice is given by the Borrower, the Term Loans shall initially be Base Rate
Loans. Upon receipt of such notice the Agent shall promptly notify the Term
Loan Lenders thereof. Each Term Loan Lender will make the amount of its pro
rata share of each borrowing of Term Loans available to the Agent for the
account of the Borrower at the office of the Agent specified in subsection 12.2
prior to 10:00 A.M., New York City time, on the Closing Date in Dollars and in
funds immediately available to the Agent. The Agent shall, by 12:00 noon, New
York City time, on the Closing Date credit the account of the Borrower on the
books of such office of the Agent or such other account as specified by the
Borrower with the aggregate of the amounts made available to the Agent by the
Term Loan Lenders and in like funds as received by the Agent.
2.3 Repayment of Tranche A Term Loans. The Borrower hereby
unconditionally promises to pay to the Agent for the account of the Tranche A
Lenders in repayment of the principal amount of the Tranche A Term Loans made by
such Tranche A Lenders the amounts set forth below on the last Business Day of
each month and year set forth below; provided that, notwithstanding the
foregoing, the aggregate then unpaid principal amount of the Tranche A Term
Loans shall be payable on the Tranche A and Revolver Termination Date (or such
earlier date on which the Tranche A Term Loans become due and payable pursuant
to Section 5 or 10):
Month, Year Amount
----------- ------
March, 1997 $ 500,000
June, 1997 $ 500,000
September, 1997 $ 500,000
December, 1997 $ 500,000
March, 1998 $ 750,000
June, 1998 $ 750,000
September, 1998 $ 750,000
27
Month, Year Amount
----------- ------
December, 1998 $ 750,000
March, 1999 $1,500,000
June, 1999 $1,500,000
September, 1999 $1,500,000
December, 1999 $1,500,000
March, 2000 $2,000,000
June, 2000 $2,000,000
September, 2000 $2,000,000
December, 2000 $2,000,000
March, 2001 $2,750,000
June, 2001 $2,750,000
September, 2001 $2,750,000
Tranche A and Revolver
Termination Date $2,750,000
The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Tranche A Term Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in subsection 5.4.
2.4 Repayment of Tranche B Term Loans. The Borrower hereby
unconditionally promises to pay to the Agent for the account of the Tranche B
Lenders in repayment of the principal amount of the Tranche B Term Loans made by
such Tranche B Lenders the amounts set forth below on the last Business Day of
each month and year set forth below provided that, notwithstanding the
foregoing, the aggregate then unpaid principal amount of the Tranche B Term
Loans shall be payable on the Tranche B Maturity Date (or such earlier date on
which the Tranche B Term Loans become due and payable pursuant to Section 5 or
10):
Month, Year Amount
----------- ------
March, 1997 $ 250,000
June, 1997 $ 250,000
September, 1997 $ 250,000
December, 1997 $ 250,000
March, 1998 $ 250,000
June, 1998 $ 250,000
September, 1998 $ 250,000
December, 1998 $ 250,000
March, 1999 $ 250,000
June, 1999 $ 250,000
September, 1999 $ 250,000
December, 1999 $ 250,000
March, 2000 $ 250,000
June, 2000 $ 250,000
September, 2000 $ 250,000
December, 2000 $ 250,000
March, 2001 $ 250,000
June, 2001 $ 250,000
September, 2001 $ 250,000
28
Month,year Amount
---------- ------
December, 2001 $ 250,000
March, 2002 $3,125,000
June, 2002 $3,125,000
September, 2002 $3,125,000
December, 2002 $3,125,000
March, 2003 $3,125,000
June, 2003 $3,125,000
September, 2003 $3,125,000
Tranche B Maturity Date $3,125,000
The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Tranche B Term Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in subsection 5.4.
2.5 Evidence of Term Loan Debt. (a) Each Term Loan Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Term Loan Lender resulting from the Tranche
A Term Loans and/or Tranche B Term Loans made by such Term Loan Lender from time
to time, including the amounts of principal and interest payable and paid to
such Term Loan Lender from time to time under this Agreement.
(b) The Agent shall maintain the Register pursuant to subsection
12.6(d), and a subaccount therein for each Term Loan Lender, in which shall be
recorded (i) the amount of each Tranche A Term Loan and Tranche B Term Loan made
hereunder, the Type thereof and, in the case of Eurodollar Loans, each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Term Loan Lender
hereunder and (iii) both the amount of any sum received by the Agent hereunder
from the Borrower and each Term Loan Lender's share thereof, if any.
(c) The entries made in the Register and the accounts of each Term
Loan Lender maintained by the Agent pursuant to subsection 2.5(b) shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Term Loan Lender or the Agent to maintain the Register
or any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Tranche A
Term Loans and/or Tranche B Term Loans made to the Borrower by such Term Loan
Lender in accordance with the terms of this Agreement.
(d) The Borrower agrees that at the closing on the Closing Date the
Borrower will execute and deliver to such Term Loan Lender (i) a promissory note
of the Borrower evidencing the Tranche A Term Loans made by such Tranche A
Lender, substantially in the form of Exhibit H-1 (a "Tranche A Term Note"),
-----------
payable to the order of such Tranche A Lender and in a principal amount equal
to, the lesser of (A) the initial Tranche A Commitment of such Tranche A Lender
or (B) the aggregate unpaid principal amount of all Tranche A Term Loans made by
such Tranche A Lender, and/or (ii) a promissory note of the Borrower evidencing
the Tranche B Term Loan made by such Tranche B Lender, substantially in the form
of Exhibit H-2 (a "Tranche B Term Note"), payable to the order of such Tranche B
-----------
Lender and in a principal amount equal to the lesser of (A) the initial Tranche
B Commitment of such Tranche B Lender or (B) the aggregate unpaid principal
amount of all Tranche B Term Loans made by such Tranche B Lender. Each Term
Loan Lender is hereby authorized to record the date, Type and amount of each
Tranche A Term Loan or Tranche B Term Loan, as the case may be, made by such
Term Loan Lender, the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period and Eurodollar Rate with respect thereto, on the schedule
annexed to
29
and constituting a part of its Tranche A Term Note or Tranche B Term Note, as
the case may be; provided, however, that the failure to make any such
recordation (or any error therein) shall not in any manner affect the obligation
of the Borrower to repay (with applicable interest) the Tranche A Term Loans
and/or Tranche B Term Loans made to the Borrower in accordance with the terms of
this Agreement.
2.6 Use of Proceeds of Term Loans. The proceeds of the Term Loans
shall be used by the Borrower on the Closing Date to (a) finance the prepayment
of certain outstanding indebtedness pursuant to the Refinancing and to pay
related fees and expenses and (b) to finance a portion of the Acquisition and/or
to pay related fees and expenses.
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding not to exceed the amount of such Revolving
Credit Lender's Available Revolving Credit Commitment. Subject to the
foregoing, during the Revolving Credit Commitment Period the Borrower may use
the Available Revolving Credit Commitments within the limits set forth herein by
borrowing and prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to the Agent in accordance with
subsections 3.2 and 5.2, provided that no Revolving Credit Loan shall be made as
a Eurodollar Loan after the day that is one month prior to the Tranche A and
Revolver Termination Date.
3.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Agent irrevocable notice (which notice must be received by the Agent (a) prior
to 10:00 A.M., New York City time, three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Revolving Credit Loans are
to be initially Eurodollar Loans or (b) prior to 12:00 noon New York City time,
one Business Day prior to the requested Borrowing Date, otherwise), specifying
(i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether
the borrowing is to be of Eurodollar Loans, Base Rate Loans or a combination
thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar
Loans, the respective amounts of such Type of Loan and the respective lengths of
the initial Interest Periods therefor; provided, however, that (y) during the
Transition Period, Revolving Credit Loans may only be (A) Base Rate Loans or (B)
Eurodollar Loans with a one month Interest Period or (C) a combination thereof
and (z) during the Suspension Period, Revolving Credit Loans may only be Base
Rate Loans. Each borrowing under the Revolving Credit Commitments shall be in
an amount equal to (x) in the case of Base Rate Loans, $100,000 or a whole
multiple thereof (or, if the then Revolving Credit Commitments are less than
$100,000, such lesser amount) and (y) in the case of Eurodollar Loans, $
1,000,000 or a whole multiple of $100,000 in excess thereof. Upon receipt of
any such notice from the Borrower, the Agent shall promptly notify each
Revolving Credit Lender thereof. Each Revolving Credit Lender will make the
amount of its pro rata share of each borrowing available to the Agent for the
account of the Borrower at the office of the Agent specified in subsection 12.2
prior to 11:00 A.M., New York City time, on the Borrowing Date requested by the
Borrower and in funds immediately available to the Agent. Such borrowing will
then be made available by 1:00 P.M., New York City time to the Borrower by the
Agent crediting the account of the Borrower on the books of such office or such
other account as specified by the
30
Borrower with the aggregate of the amounts made available to the Agent by the
Revolving Credit Lenders and in like funds as received by the Agent.
3.3 Repayment of Revolving Credit Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay to the Agent for the account of
each Revolving Credit Lender the then unpaid principal amount of each Revolving
Credit Loan made by such Lender on the Tranche A and Revolver Termination Date
(or such earlier date on which the Revolving Credit Loans become due and payable
pursuant to Section 5 or 10). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Revolving Credit Loans from time
to time outstanding from the date hereof until payment in full thereof at the
rates per annum, and on the dates, set forth in subsection 5.4.
(b) Each Revolving Credit Lender shall maintain in accordance with
its usual practice an account or accounts evidencing indebtedness of the
Borrower to such Revolving Credit Lender resulting from each Revolving Credit
Loan made by such Revolving Credit Lender from time to time, including the
amounts of principal and interest payable and paid to such Revolving Credit
Lender from time to time under this Agreement.
(c) The Agent shall maintain the Register pursuant to subsection
12.6(d), and a subaccount therein for each Revolving Credit Lender, in which
shall be recorded (i) the amount of each Revolving Credit Loan made hereunder,
the Type thereof and, in the case of Eurodollar Loans, each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Revolving Credit Lender
hereunder and (iii) both the amount of any sum received by the Agent hereunder
from the Borrower and each Revolving Credit Lender's share thereof, if any.
(d) The entries made in the Register and the accounts of each
Revolving Credit Lender maintained by the Agent pursuant to subsection 3.3(c)
shall, to the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Revolving Credit Lender or the Agent
to maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Borrower to repay (with applicable
interest) the Revolving Credit Loans made to the Borrower by such Revolving
Credit Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that at the closing on the Closing Date, the
Borrower will execute and deliver to such Revolving Credit Lender a promissory
note of the Borrower evidencing the Revolving Credit Loans made by such
Revolving Credit Lender, substantially in the form of Exhibit I (a "Revolving
---------
Credit Note"), dated the Closing Date and payable to the order of such Revolving
Credit Lender and in a principal amount equal to the amount of the Revolving
Credit Commitment of such Revolving Credit Lender. Each Revolving Credit Lender
is hereby authorized to record the date, Type and amount of each Revolving
Credit Loan made by such Revolving Credit Lender, each continuation thereof,
each conversion of all or a portion thereof to another Type, the date and amount
of each payment or prepayment of principal thereof and, in the case of
Eurodollar Loans, the length of each Interest Period and Eurodollar Rate with
respect thereto, on the schedule annexed to and constituting a part of its
Revolving Credit Note; provided, however, that the failure to make any such
recordation (or any error therein) shall not in any manner affect the obligation
of the Borrower to repay (with applicable interest) the Revolving Credit Loans
made to the Borrower in accordance with the term of this Agreement.
3.4 Commitment Fee. The Borrower agrees to pay to the Agent for the
account of each Revolving Credit Lender during the Revolving Credit Commitment
Period a commitment fee payable quarterly in arrears on the last day of each
March, June, September and December and on the Tranche A and Revolver
Termination Date or such earlier date as the Revolving Credit Commitments shall
terminate as provided herein, commencing on the first of such dates to occur
after the date hereof; such fee to be computed at the rate of (a)
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0.375% per annum when Level I is in effect during the period immediately
preceding the period for which payment is made and (b) 0.500% when any one of
Level II, Level III, Level IV, Level V and Level VI is in effect during the
period immediately preceding the period for which payment is made, on the
average daily amount of the Unused Revolving Credit Commitment of such Revolving
Credit Lender during the period for which payment is made; provided that Level V
shall be deemed in effect in the circumstances contemplated by clause (A) of the
proviso to the definition of Applicable Margin and Level VI shall be deemed in
effect in the circumstances contemplated by clause (B) or (C) of said proviso.
3.5 Termination or Reduction of Revolving Credit Commitments. The
Borrower shall have the right, upon not less than five Business Days' notice to
the Agent, to terminate the Revolving Credit Commitments or, from time to time,
to reduce the amount of the Revolving Credit Commitments. Any such reduction
shall be in a minimum amount equal to $500,000 or an integral multiple of
$100,000 in excess thereof or, if less, the entire remaining balance of the
Revolving Credit Commitments and shall reduce permanently the Revolving Credit
Commitments then in effect; provided, that no such termination or reduction
shall be permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans made on the effective date thereof, the aggregate
principal amount of the Revolving Credit Loans then outstanding would exceed the
Revolving Credit Commitments then in effect.
3.6 Borrowing Base Reduction. The Borrower agrees that if at any
time the sum of (a) the Revolving Credit Loans and (b) the Letter of Credit
Outstanding (excluding all outstanding and undrawn Domestic Letters of Credit so
long as no drawing thereon shall have been threatened in writing) exceeds the
Borrowing Base at such time (after giving effect to the proviso to subsection
8.2(f)), the Borrower shall immediately prepay upon demand by the Agent the
Revolving Credit Loans in an amount equal to or greater than that of such
excess, together with accrued but unpaid interest on the amount prepaid through
the date of prepayment and any amounts payable pursuant to subsection 5.11.
3.7 Use of Proceeds of Revolving Credit Loans. The proceeds of the
Revolving Credit Loans shall be used by the Borrower to finance a portion of the
Acquisition and/or to pay related fees and expenses, for working capital and
general corporate purposes (including capital expenditures) in the ordinary
course of the Borrower's and its Subsidiaries' business.
3.8 Agency Fee. The Borrower agrees to pay to the Agent, for the
Agent's own account, the agency fees specified in the Fee Letter when due and
payable thereunder.
SECTION 4. LETTERS OF CREDIT
4.1 Issuance. On the terms and conditions hereinafter set forth, the
Issuing Bank on behalf of the Revolving Credit Lenders agrees to issue any
Letter of Credit (or amendments thereof) requested by the Borrower during the
period from the Closing Date until the date 60 days prior to the Tranche A and
Revolver Termination Date; provided, however, that the Issuing Bank shall have
no obligation to issue any such Letter of Credit (or amendments thereof) if (a)
the Closing Date shall not have previously occurred, (b) such issuance would
cause the aggregate amount outstanding at any time of (i) all Letter of Credit
Outstanding to exceed $18,500,000, (ii) all Domestic Letters of Credit
Outstanding to exceed $3,500,000, (iii) all Foreign Letters of Credit
Outstanding to exceed $15,000,000, or (iv) all Letters of Credit Outstanding
that are issued for the benefit of any Foreign Subsidiary to exceed at any time
the lower of (A) the Foreign Borrowing Base for such Foreign Subsidiary or (B)
66 2/3% of the dollar amount equivalent of the amount of indebtedness in an
Authorized Currency which has been recorded as secured by the assets of such
Foreign Subsidiary pursuant to any Security Document to which the laws of the
jurisdiction of incorporation of such Foreign Subsidiary apply (the
32
"Sublimit"); provided that any Foreign Letter of Credit issued in favor of
CPM/Europe Limited, an Irish corporation, may exceed the Foreign Borrowing Base
of CPM/Europe Limited by an amount equal to eighty percent (80%) of its trade
receivable from C.P.M./Europe B.V., a Netherlands corporation, if, but only if,
and to the extent that (y) such trade receivable would constitute a Foreign
Eligible Receivable but for the provisions of clause (h) of the definition of
Foreign Eligible Receivable and (z) the Foreign Borrowing Base of C.P.M./Europe
B.V. shall have been reduced by an amount equal to the amount by which the face
amount of the Foreign Letter of Credit issued in favor of CPM/Europe Limited
exceeds its Foreign Borrowing Base, or (c) the stated amount of such Letter of
Credit exceeds the aggregate Available Revolving Credit Commitments of all of
the Revolving Credit Lenders at the time of such proposed issuance, (d) the term
of such Letter of Credit is less than 30 days; and provided, further, that no
Letter of Credit may be requested by, and the Issuing Branch shall have no
obligation to issue any Letter of Credit for the benefit of or to secure the
obligations of, the Brazilian Company or the Texas Company or any Subsidiary
which is not a wholly owned Foreign Subsidiary. Each Letter of Credit shall be
issued pursuant to a request, given not later than 12:00 P.M. (New York City
time) on the fourth Business Day prior to the date of any proposed issuance, by
the Borrower (in the case of a Domestic Letter of Credit) or by the Borrower and
the applicable Foreign Subsidiary (in the case of a Foreign Letter of Credit) to
the Agent, which shall give to the Issuing Bank and each Revolving Credit Lender
prompt notice thereof by telecopy, telex or cable. Such request by the Borrower
and a Foreign Subsidiary, if applicable, for the issuance of a Letter of Credit
(or amendments thereof) shall be made by telephone, telecopy, telex or cable,
confirmed immediately in writing if by telephone, in substantially the form of
Exhibit J, together with a signed letter of credit application (including the
- ---------
related reimbursement agreement) on the Issuing Bank's then-standard form (or
other form acceptable to the Issuing Bank and appropriate, in the sole opinion
of the Issuing Bank, in the circumstances) (a "Letter of Credit Request") duly
executed by the Borrower and, in the case of a Foreign Letter of Credit, the
applicable Foreign Subsidiary, and may be cancelled by notice thereof prior to
issuance of such Letter of Credit by telephone, telecopy, telex or cable,
confirmed immediately in writing if by telephone, to the Issuing Bank and the
Agent. Within the limits of each Revolving Credit Lender's Available Revolving
Credit Commitment and the other restrictions set forth herein, the Borrower's
ability to request the issuance of Letters of Credit shall be fully revolving.
4.2 Participation by Revolving Credit Lenders. Immediately upon
issuance or amendment by the Issuing Bank of any Letter of Credit in accordance
with the procedures set forth in this Section 4, each Revolving Credit Lender
shall be deemed to have irrevocably and unconditionally purchased and received
from the Issuing Bank, without recourse or warranty, an undivided interest and
participation to the extent of such Revolving Credit Lender's Pro Rata Revolving
Share of such Letter of Credit (including, without limitation, all obligations
of the Company with respect thereto) other than amounts owing to the Issuing
Bank under subsection 4.8 and any security therefor or guaranty pertaining
thereto.
4.3 Drawings. (a) In the event that any drawing shall be made under
a Letter of Credit, by demand or claim (including, without limitation, any
draft), the Issuing Bank shall notify the Borrower via telephone, telecopy or
telex of such drawing and the Borrower shall (whether or not the Issuing Bank
has notified the Borrower of such drawing) reimburse and/or cause the applicable
Foreign Subsidiary to reimburse the Issuing Bank in immediately available funds
for any amount paid or to be paid by the Issuing Bank under such Letter of
Credit on the date of such payment. In the event that any drawing under a
Letter of Credit is not reimbursed by the Borrower or the applicable Foreign
Subsidiary on the date of payment by the Issuing Bank, and, pursuant to Section
3, the Borrower is then permitted to obtain Revolving Credit Loans hereunder
(without regard to the dollar limitation set forth in subsection 3.2 on the
minimum amount of any borrowing), the Borrower shall be deemed to have requested
a borrowing of Revolving Credit Loans consisting of Base Rate Loans in an
aggregate amount equal to such unreimbursed payment. The Revolving Credit
Lenders shall make the requested Revolving Credit Loans as of the date of such
payment by the Issuing Bank, and the proceeds of such Revolving Credit Loans
shall automatically be applied to repay the Issuing Bank for such drawing in
full. In the event that any
33
drawing under a Letter of Credit is not reimbursed by the Borrower or the
applicable Foreign Subsidiary on the date of payment by the Issuing Bank and
such Revolving Credit Loans are not made hereunder for any reason, a default
specified in subsection 10(a) shall have occurred and the Issuing Bank shall
promptly notify the Agent thereof, and the Agent shall promptly notify each
Lender. Immediately upon receipt of such notice, the Revolving Credit Lenders
will pay to the Issuing Bank the amount of their respective participations in
the Letter of Credit. In the event that any Revolving Credit Lender fails timely
to make the Revolving Credit Loan or pay the amount of its participation as
required by this subsection 4.3, interest shall accrue thereon at the Federal
Funds Rate for the first three Business Days following the date of payment by
the Issuing Bank and the Federal Funds Rate plus 1% for the period thereafter to
the date of payment thereof by such Revolving Credit Lender. The Issuing Bank
shall distribute to each Revolving Credit Lender which has paid all amounts
payable by it under this subsection 4.3 with respect to any Letter of Credit
such Revolving Credit Lender's Pro Rata Revolving Share of all payments received
by the Issuing Bank in reimbursement of drawings honored by the Issuing Bank
under such Letter of Credit when such payments are received.
(b) In the event that any drawing shall be made under a Foreign
Letter of Credit and the applicable Foreign Subsidiary fails to reimburse the
Issuing Bank as provided in subsection 4.3, or the Borrower, if the Borrower
shall effect such reimbursement under subsection 4.3, the Issuing Bank shall
have no obligation to issue any Foreign Letter of Credit on behalf of such
Foreign Subsidiary until such time as such Foreign Subsidiary shall have
reimbursed the Issuing Bank or the Borrower in full (if the Borrower shall have
effected such reimbursement). Any such unpaid Indebtedness of a Foreign
Subsidiary to the Borrower shall be evidenced by a Note (as defined in the
Pledge Agreements) and pledged to the Agent pursuant to the applicable Pledge
Agreement.
4.4 Obligations Absolute. The obligations of the Borrower, any
Foreign Subsidiary with respect to Foreign Letters of Credit issued on its
behalf, and the Revolving Credit Lenders under subsection 4.3 shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms hereof, under all circumstances whatsoever, including, without
limitation, the circumstances listed below:
(a) any lack of validity or enforceability of this Agreement, any of
the other Loan Documents, any Letter of Credit, any drawings thereunder or any
related contract;
(b) any amendment or waiver of or any consent to any departure from
all or any of this Agreement or any of the other Loan Documents;
(c) the existence of any claim, set-off, defense or other right which
the Borrower or such Foreign Subsidiary at any time may have against the Issuing
Bank, the Agent, any of the Lenders, any beneficiary or transferee of any Letter
of Credit, or any other Person, whether in connection with this Agreement, the
other Loan Documents, any Letter of Credit or any unrelated transactions;
(d) any statement or any other document presented under any Letter of
Credit that proves to be forged, fraudulent or invalid or insufficient in any
respect or any statement therein that proves to be untrue or inaccurate in any
respect whatsoever;
(e) payment by the Issuing Bank under any Letter of Credit against
presentation of a draft or certificate or other document that does not comply
with the terms of such Letter of Credit; or
(f) any other circumstances or happening whatsoever whether or not
similar to any of the foregoing;
34
provided, however, that neither the Borrower nor such Foreign Subsidiary nor the
Revolving Credit Lenders shall have any obligation to the Issuing Bank pursuant
to subsection 4.3 if, but for the willful misconduct or gross negligence of the
Issuing Bank (as determined in a final, non-appealable judgment by a court of
competent jurisdiction), the obligations for which the Issuing Bank seeks
reimbursement or payment would not have arisen.
4.5 Other Lenders. Any action taken or omitted to be taken by the
Issuing Bank under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not put
the Issuing Bank under any resulting liability to any Lender or relieve any
Revolving Credit Lender of its obligations hereunder to the Issuing Bank. In
determining whether to pay under any Letter of Credit, the Issuing Bank shall
have no obligation to the Lenders other than to confirm that any documents
required to be delivered under such Letter of Credit appear to have been
delivered and that they appear to comply on their face with the requirements of
such Letter of Credit.
4.6 Indemnification. Each of the Borrower and each Foreign
Subsidiary (but as to each Foreign Subsidiary, only with respect to Foreign
Letters of Credit issued on its behalf), jointly and severally, shall indemnify
and hold harmless the Issuing Bank from and against any and all claims, damages,
losses, liabilities, reasonable costs and expenses of any kind whatsoever,
including reasonable fees and expenses of attorneys and paralegals that the
Issuing Bank may incur (or that may be claimed against the Issuing Bank by any
Person), together with all reasonable costs and expenses resulting from the
compromise or defense of any claims or liabilities hereinafter described, by
reason of or in connection with (a) the execution and delivery or transfer of,
or payment or failure to pay under, any Letter of Credit (Foreign Letter of
Credit, in the case of such Foreign Subsidiary), (b) any suit, action or
proceeding brought by any person to require or prevent payment under any Letter
of Credit (Foreign Letter of Credit, in the case of such Foreign Subsidiary), or
(c) any breach by the Borrower or such Foreign Subsidiary of any warranty,
covenant, term or condition in, or the occurrence of any default under, any of
the Loan Documents (to the extent related to Letters of Credit (or any such
Foreign Letters of Credit in the case of such Foreign Subsidiary)), any Letter
of Credit (or any such Foreign Letter of Credit in the case of such Foreign
Subsidiary) or any related contract, together with all reasonable expenses
resulting from the compromise or defense of any claims or liabilities arising as
a result of any such breach or default and defense against any legal action
commenced to challenge the validity of any of such documents; provided, however,
that neither the Borrower nor such Foreign Subsidiary shall be required to
indemnify the Issuing Bank for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, caused by (i) the gross
negligence or willful misconduct (as determined in a final, non-appealable
judgment in a court of competent jurisdiction) of the Issuing Bank in
determining whether a draft, certificate or other documents presented under any
Letter of Credit complied with the terms of such Letter of Credit, or (ii) the
Issuing Bank's willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary thereof of a draft, certificate or other
document strictly complying with the terms and conditions of such Letter of
Credit. Nothing in this subsection 4.6 is intended to limit or modify in any
way the reimbursement obligations of the Borrower and each Foreign Subsidiary
set forth in subsection 4.3. In case any action or proceeding is brought
against the Issuing Bank in respect of which indemnity may be sought under this
Agreement, the Issuing Bank shall promptly give notice of any such action or
proceeding to the Borrower and may require the Borrower, upon such notice, to
assume the defense of the action or proceeding, provided that failure of the
Issuing Bank to give such notice shall not relieve the Borrower nor the
applicable Foreign Subsidiary of any of its obligations under this subsection
4.6. Upon receipt of such notice from the Issuing Bank requesting that the
Borrower assume such defense, the Borrower shall resist and defend such action
or proceeding at the Borrower's sole cost and expense. The obligations of the
Borrower and the Foreign Subsidiaries under this subsection 4.6 shall survive
the termination of the Letters of Credit and this Agreement.
4.7 Liability of the Issuing Bank. Each of the Borrower and each
Foreign Subsidiary (but as to each Foreign Subsidiary, only with respect to
Foreign Letters of Credit issued on its behalf), assumes all
35
risks of the acts or omissions of the users of any Letter of Credit (any such
Foreign Letter of Credit in the case of such Foreign Subsidiary) and all risks
of the misuse of any Letter of Credit (any such Foreign Letter of Credit in the
case of such Foreign Subsidiary). Neither the Issuing Bank, nor any of its
officers, directors, employees or agents shall be liable or responsible for: (a)
the use which may be made of any Letter of Credit or for any acts or omissions
of any Person and any transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement or endorsements
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment against
presentation of documents which do not comply with the terms of the applicable
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to such Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit,
except only that the Borrower or such Foreign Subsidiary shall have a claim
against the Issuing Bank, and the Issuing Bank shall be liable to the Borrower
or such Foreign Subsidiary to the extent, but only to the extent, of damages
suffered by the Borrower or such Foreign Subsidiary which were caused by (i) the
Issuing Bank's gross negligence or willful misconduct (as determined in a final,
non-appealable judgment by a court of competent jurisdiction) in determining
whether documents presented under any Letter of Credit comply with the terms of
such Letter of Credit (it being understood that any such noncompliance in any
immaterial respect shall not be deemed gross negligence or willful misconduct of
the Issuing Bank) or (ii) the Issuing Bank's willful failure to pay under any
Letter of Credit after the presentation to it by the beneficiary thereof of a
draft, certificate or other document strictly complying with the terms and
conditions of such Letter of Credit. In furtherance and not in limitation of the
foregoing, the Issuing Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary unless the Issuing Bank shall have been
ordered not to accept such documents by a court of competent jurisdiction.
4.8 Letter of Credit Fee. The Borrower agrees to pay to the Agent a
non-refundable letter of credit fee, to be distributed by the Agent to each
Revolving Credit Lender according to its Revolving Credit Commitment Percentage,
equal to the L/C Rate (as defined below) on the daily amount of outstanding
issued Letters of Credit, payable quarterly on the last day of December, March,
June and September, commencing December 31, 1996, and on the Tranche A and
Revolver Termination Date. With respect to each Letter of Credit, the Borrower
agrees to pay to the Issuing Bank, solely for the account of the Issuing Bank,
(a) a non-refundable issuing fee of 1/4% of 1% per annum on the face amount of
such Letter of Credit for the term of such Letter of Credit, payable in advance
on the date of issuance thereof for the three-month period following the date of
issuance and on each date occurring every three-months after the date of
issuance; and (b) the Issuing Bank's customary administrative fee. "L/C Rate",
as used above, means an interest rate per annum equal to the Applicable Margin
for Eurodollar Loans in effect on the last day of the fiscal quarter immediately
preceding the payment date, after giving effect to the proviso to the definition
of Applicable Margin.
4.9 Letter of Credit Security. Except for the Foreign Letters of
Credit to be issued at the closing on the Closing Date in favor of CPM/Pacific
(Private) Limited, no Foreign Letter of Credit will be issued for the benefit of
any Foreign Subsidiary unless, prior to such issuance, the Agent has obtained
for the benefit of the Issuing Bank a valid and fully perfected security
interest of first priority in such of the property and assets of such Foreign
Subsidiary as the Agent or the Issuing Bank may specify pursuant to
documentation that is in form and substance satisfactory to the Agent and the
Issuing Bank.
4.10 Guarantee. (a) The Borrower (the Borrower, in its capacity as
guarantor in this subsection 4.10, being sometimes referred to as the "Parent
Guarantor") hereby unconditionally and irrevocably guarantees to the Agent for
the benefit of the Issuing Bank and for the ratable benefit of the Revolving
Credit Lenders the due, punctual and complete payment and performance by each
Foreign Subsidiary when and as due (whether at stated maturity, by acceleration
or otherwise) of its Foreign Subsidiary Obligations.
36
(b) The Parent Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Agent, the Issuing Bank or any Revolving Credit
Lender in enforcing, or obtaining advice of counsel in respect of, any rights
with respect to, or collecting any or all of the Foreign Subsidiary Obligations
and/or enforcing any rights with respect to, or collecting against, the Parent
Guarantor under the guarantee in this subsection 4.10 ("Parent Guarantee"). This
Parent Guarantee shall remain in full force and effect until all Foreign
Subsidiary Obligations are paid in full, no Foreign Letters of Credit are
outstanding and the Commitments are terminated, notwithstanding that from time
to time prior thereto while the Commitments are in effect any or all of the
Foreign Subsidiaries may be free from any Foreign Subsidiary Obligations.
(c) The Parent Guarantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against the Parent
Guarantor, and without notice to or further assent by the Parent Guarantor, any
demand for payment of any of the Foreign Subsidiary Obligations made by the
Agent or any Revolving Credit Lender or the Issuing Bank may be rescinded by the
Agent or such Lender or the Issuing Bank, and any of the Foreign Subsidiary
Obligations continued, and the Foreign Subsidiary Obligations, or the liability
of any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed extended, amended modified. accelerated,
compromised, waived, surrendered or released by the Agent or any Lender or the
Issuing Bank, and the Credit Agreement, any other Loan Document, any Interest
Rate Agreement entered into by the Borrower with any Lender and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Agent (or the
Required Lenders, as the case may be) or the relevant Lender (in the case of any
Interest Rate Agreement) or the Issuing Bank (in the case of any Letter of
Credit) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Agent, the Issuing Bank or
any Lender for the payment of the Foreign Subsidiary Obligations may be sold,
exchanged waived, surrendered or released. Neither the Agent nor any Lender nor
the Issuing Bank shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Foreign Subsidiary
Obligations or for this Parent Guarantee or any property subject thereto. When
making any demand hereunder against the Parent Guarantor whether pursuant to
subsection 4.3 or otherwise, the Agent or any Lender or the Issuing Bank may,
but shall be under no obligation to, make a similar demand on the applicable
Foreign Subsidiary or any other guarantor, and any failure by the Agent or any
Lender or the Issuing Bank to make any such demand or to collect any payments
from the applicable Foreign Subsidiary or any such other guarantor or any
release of the applicable Foreign Subsidiary or such other guarantor shall not
relieve the Parent Guarantor of its obligations or liabilities hereunder, and
shall not impair or affect the rights and remedies, express or implied, or as a
matter of law, of the Agent or any Lender or the Issuing Bank against the Parent
Guarantor.
(d) The Parent Guarantor waives any and all notices of the creation,
renewal, extension or accrual of any of the Foreign Subsidiary Obligations and
notice of or proof of reliance by the Agent or any Lender or the Issuing Bank
upon this Parent Guarantee or acceptance of this Parent Guarantee; the Foreign
Subsidiary Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred or renewed, extended, amended or waived, in
reliance upon this Parent Guarantee; and all dealings between any Foreign
Subsidiary or the Parent Guarantor, on the one hand, and the Agent, the Issuing
Bank and the Lenders, on the other, shall likewise be conclusively presumed to
have been had or consummated in reliance upon this Parent Guarantee. The Parent
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Parent Guarantor or any Foreign
Subsidiary with respect to the Foreign Subsidiary Obligations. This Parent
Guarantee shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (i) the validity, regularity or
enforceability of this Agreement, any Note, any other Loan Document, any
Interest Rate Agreement entered into by the Borrower with any Lender, any of the
Foreign Subsidiary Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Agent or any Lender or the Issuing Bank, (ii) any
37
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by any Foreign
Subsidiary against the Agent or any Lender or the Issuing Bank, or (iii) any
other circumstance whatsoever (with or without notice to or knowledge of the
Parent Guarantor or any Foreign Subsidiary) which constitutes, or might be
construed to constitute, an equitable or legal discharge of any Foreign
Subsidiary for the Foreign Subsidiary Obligations, or of the Parent Guarantor
under this Parent Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against the Parent Guarantor, the
Agent, the Issuing Bank and any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against any Foreign Subsidiary or
any other Person or against any collateral security or guarantee for the Foreign
Subsidiary Obligations or any right of offset with respect thereto, and any
failure by the Agent, the Issuing Bank or any Lender to pursue such other rights
or remedies or to collect any payments from any Foreign Subsidiary or any such
other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of any Foreign Subsidiary or
any such other Person or of any such collateral security, guarantee or right of
offset, shall not relieve the Parent Guarantor of any liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Agent, the Issuing Bank or any Lender
against the Parent Guarantor. This Parent Guarantee shall remain in full force
and effect and be binding in accordance with and to the extent of its terms upon
the Parent Guarantor and shall inure to the benefit of the Agent, the Issuing
Bank and the Lenders until all the Foreign Subsidiary Obligations and the
obligations of the Parent Guarantor under this Parent Guarantee shall have been
satisfied by payment in full and the Commitments shall have been terminated,
notwithstanding that from time to time while the Commitments are in effect
during the term of this Agreement any Foreign Subsidiary may be free from any
Foreign Subsidiary Obligations.
(e) This Parent Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payments, or any part thereof, of
any of the Foreign Subsidiary Obligations are rescinded or must otherwise be
restored or returned by the Agent or any Lender or the Issuing Bank upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
related Foreign Subsidiary or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, such
Foreign Subsidiary or any substantial part of its property, or otherwise, all as
though such payments had not been made.
SECTION 5. GENERAL PROVISIONS APPLICABLE TO COMMITMENTS AND LOANS
5.1 Prepayments. (a) The Borrower may on the last day of any Interest
Period with respect thereto, in the case of Eurodollar Loans, or at any time and
from time to time, in the case of Base Rate Loans, prepay the Loans, in whole or
in part, without premium or penalty, upon at least three Business Days'
irrevocable notice to the Agent, specifying the date and amount of prepayment
and whether the prepayment is of Eurodollar Loans, Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Agent shall promptly notify each
affected Lender thereof. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with any amounts payable pursuant to subsection 5.11, if any, and, in the case
of prepayments of the Term Loans, accrued interest to such date on the amount
prepaid. Subject to the provisions of subsection 5.1(d), partial prepayments of
the Term Loans shall be applied on a pro rata basis between the Term Loans and
shall be applied to the remaining installments of principal thereof in the
scheduled order of their maturities. Amounts prepaid on account of the Term
Loans may not be reborrowed. Such partial prepayments shall be in an aggregate
principal amount of $500,000 or a whole multiple thereof.
(b) If with respect to any of its fiscal years, commencing with its
fiscal year ending September 30, 1997, the Borrower shall have Excess Cash Flow
for such fiscal year, the Loans shall be prepaid and/or the
38
Commitments shall be reduced in an aggregate amount equal to 75% of such Excess
Cash Flow ("Available Excess Cash Flow") as set forth in the second succeeding
sentence, provided that, with respect to the period ending September 30, 1997,
Excess Cash Flow shall, notwithstanding anything to the contrary herein, be
determined with respect to the period beginning on the Closing Date and ending
on September 30, 1997. Each such prepayment shall be made on or before the date
which is 90 days after the end of such fiscal year. All amounts used to prepay
Loans and/or reduce Commitments pursuant to this subsection 5. l(b) shall be
applied (in the case of prepayments) and/or used (in the case of Commitment
reductions) as follows:
First, subject to subsection 5.1(d), to the prepayment in full of
all outstanding Term Loans, pro rata,
Second, to the prepayment in full of all outstanding Revolving
Credit Loans, and
Third, to a cash collateral account maintained with the Agent in
respect of the Letter of Credit Outstanding.
To the extent of any remaining Available Excess Cash Flow, after
application as provided above, the Revolving Credit Commitments as then in
effect shall be automatically and permanently reduced by an amount equal to the
balance, if any. Each prepayment of Term Loans pursuant to this subsection
5.1(b) shall be applied to the remaining installments of principal thereof pro
rata and may not be reborrowed.
(c) The Net Proceeds of any Covered Sale, Qualifying Insurance and
Other Proceeds and Pension Plan Reversion Proceeds shall be applied toward the
prepayment of the Loans, deposit in the cash collateral account and/or reduction
of the Commitments in the order specified in subsection 5.1(b), and prepayments
of Term Loans pursuant to this subsection 5.1(c) shall be applied to the
remaining installments of principal thereof pro rata and may not be reborrowed.
(d) Any Tranche B Lender may (i) so long as any Tranche A Term Loans
are outstanding, elect not to have any optional prepayment made pursuant to
subsection 5.1(a) applied to such Lender's Tranche B Term Loan until all such
Tranche A Term Loans have been paid in full, in which case the amount not so
applied shall be utilized to prepay the Tranche A Term Loans in the manner
specified in subsection 5.1(a); and (ii) so long as any Tranche A Term Loans are
outstanding, elect not to have any mandatory prepayment made pursuant to
subsection 5.1(b) or subsection 5.1(c) applied to such Lender's Tranche B Term
Loan until all such Tranche A Term Loans have been paid in full, in which case
the amount not so applied shall be utilized to prepay the Tranche A Term Loans
in the manner specified in subsection 5.1(b) or subsection 5.1(c), as the case
may be.
5.2 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Agent at least two Business Days' prior irrevocable notice of such election,
provided that any such conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert Base Rate Loans to Eurodollar Loans by giving the Agent
at least three Business Days' prior irrevocable notice of such election;
provided, that during the Suspension Period, no Base Rate Loan may be converted
into a Eurodollar Loan. Any such notice of conversion to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods therefor;
provided, however, that during the Transition Period, the Interest Period
therefor may be only one month. Upon receipt of any such notice the Agent shall
promptly notify each affected Lender thereof. All or any part of outstanding
Eurodollar Loans and Base Rate Loans may be converted as provided herein,
provided that (i) no Loan may be converted into a Eurodollar Loan when any Event
of Default has occurred and is continuing and the Agent has or the Required
Revolving Credit Lenders (in the case of conversions of Revolving Credit Loans),
Required Tranche A Lenders (in the case of conversions of Tranche A Term Loans)
or Required
39
Tranche B Lenders (in the case of conversions of Tranche B Term Loans) have
determined that such a conversion is not appropriate, (ii) no Loan may be
converted into a Eurodollar Loan after the date that is one month prior to the
Tranche A and Revolver Termination Date (in the case of conversions of Revolving
Credit Loans) or the date of the final installment of principal of the Term
Loans (in the case of conversions of Term Loans) and (iii) no Loan may be
converted into a Eurodollar Loan during the Suspension Period.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
notice to the Agent, in accordance with the applicable provisions of the
definition of the term "Interest Period" set forth in subsection 1.1, of the
length of the next Interest Period to be applicable to such Loans, provided
that, during the Transition Period, such Interest Period may be only of a one
month duration, provided, further, that no Eurodollar Loan may be continued as
such (i) when any Event of Default has occurred and is continuing and the Agent
has or the Required Revolving Credit Lenders (in the case of continuations of
Revolving Credit Loans), Required Tranche A Lenders (in the case of
continuations of Tranche A Term Loans) and Required Tranche B Lenders (in the
case of continuations of Tranche B Term Loans) have determined that such a
continuation is not appropriate or (ii) after the date that is one month prior
to the Tranche A and Revolver Termination Date (in the case of continuations of
Revolving Credit Loans) or the date of the final installment of principal of the
Term Loans (in the case of continuations of Term Loans) or (iii) during the
Suspension Period, and provided, still further, that if the Borrower shall fail
to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans shall
be automatically converted to Base Rate Loans on the last day of such then
expiring Interest Period.
5.3 Minimum Amounts of Tranches. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto (a) the aggregate principal amount of the
Loans comprising each Tranche shall be equal to $1,000,000 or a whole multiple
of $100,000 in excess thereof and (b) no more than seven separate Tranches shall
be outstanding at any time.
5.4 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any Loan, (ii)
any interest payable thereon or (iii) any commitment fee or other amount payable
hereunder or under any other Loan Document shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise), such overdue amount shall
bear interest at a rate per annum which is 2% over the rate otherwise applicable
thereto, in each case from the date of such non-payment until such amount is
paid in full (before as well as after the applicable judgment, if any).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
5.5 Computation of Interest and Fees. (a) Commitment fees, Letter of
Credit fees and interest shall be calculated on the basis of a 360-day year for
the actual days elapsed, except that whenever interest is calculated on the
basis of the Prime Rate, interest shall be calculated on the basis of a 365- (or
366-, as the case may be) day year for the actual days elapsed. The Agent shall
as soon as practicable notify the Borrower and the affected Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate
40
on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Agent shall as soon as practicable
notify the Borrower and the affected Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the affected Lenders in the absence of manifest error.
5.6 Inability to Determine Interest Rate. If on the day which is two
Business Days prior to the first day of any Interest Period:
(a) the Agent shall have determined that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate with respect to any Eurodollar Loan to
be outstanding during such Interest Period, or
(b) the Agent shall have determined that the Eurodollar Rate with
respect to any Eurodollar Loan to be outstanding during such Interest
Period will not adequately and fairly reflect the cost to the Lenders of
making or maintaining their affected Eurodollar Loans during such Interest
Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x) any
affected Eurodollar Loans requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans, (y) any affected Loans that were to
have been converted on the first day of such Interest Period to Eurodollar
Loans, shall be continued as Base Rate Loans and (z) any affected outstanding
Eurodollar Loans that were to have been continued as such shall be converted on
the first day of such Interest Period to Base Rate Loans. Until such time as
the Agent shall have advised the Borrower and the Lenders that the circumstances
giving rise to such notice no longer exist, no further Eurodollar Loans shall be
made or continued as such, nor shall the Borrower have the right to convert Base
Rate Loans to Eurodollar Loans. Each determination by the Agent hereunder shall
be conclusive absent manifest error.
5.7 Pro Rata Treatment and Payments. (a) All payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without set-off or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Agent, for the account of the Revolving Credit Lenders,
the Term Loan Lenders, the Issuing Bank or the Agent, as the case may be, at the
Agent's office specified in subsection 12.2, in Dollars and in immediately
available funds. Payments received by the Agent after such time shall be deemed
to have been received on the next Business Day. The Agent shall distribute such
payments to the Lenders entitled to receive the same promptly upon receipt in
like funds as received. If any payment hereunder (other than payments on the
Eurodollar Loans) becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day, and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a Eurodollar Loan
becomes due and payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day (and, with respect to
payments of principal, interest shall be payable thereon at the then applicable
rate during such extension) unless the result of such extension would be to
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day.
(b) Unless the Agent shall have been notified in writing by any
Revolving Credit Lender or Term Loan Lender prior to a Borrowing Date for
Revolving Credit Loans or Term Loans, as the case may be, that such Lender will
not make the amount that would constitute its share of such borrowing on such
Borrowing
41
Date available to the Agent, the Agent may assume that such Lender is making
such amount available to the Agent, and the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Rate for the
period until such Lender makes such amount immediately available to the Agent. A
certificate of the Agent submitted to any Lender with respect to any amounts
owing under this subsection shall be conclusive in the absence of manifest
error. If such Lender's share of such borrowing is not made available to the
Agent by such Lender within three Business Days of such Borrowing Date, the
Agent shall also be entitled to recover such amount with interest thereon at the
rate per annum applicable to Base Rate Loans hereunder, on demand, from the
Borrower.
(c) Each borrowing by the Borrower of Tranche A Term Loans, Tranche B
Term Loans, and Revolving Credit Loans shall be made ratably from the Tranche A
Lenders, Tranche B Lenders, and Revolving Credit Lenders, respectively, in
accordance with their respective Term Loan Commitment Percentages and Revolving
Credit Commitment Percentages. Any reduction of the Revolving Credit
Commitments shall be made ratably among the Revolving Credit Lenders, in
accordance with their respective Revolving Credit Commitment Percentages.
5.8 Illegality. (a) Notwithstanding any other provision herein, if
the adoption of or any change in any law or regulation or in the interpretation
thereof by any Governmental Authority charged with the administration or
interpretation thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by
such Lender hereunder, whereupon any request by the Borrower for a
Eurodollar Loan shall, as to such Lender only, be deemed a request for a
Base Rate Loan unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by such
Lender be converted to Base Rate Loans, in which event all such Eurodollar
Loans shall be automatically converted to Base Rate Loans as of the
effective date of such notice as provided if paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
Base Rate Loans made by such Lender in lieu of, or resulting from the conversion
of, such Eurodollar Loans.
(b) For purposes of this subsection 5.8, a notice to the Borrower by
any Lender shall be effective, if lawful, on the last day of the then current
Interest Period; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
5.9 Requirements of Law. (a) If after the date of this Agreement the
adoption of or any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the administration or interpretation thereof (whether or not having the
force of law):
(i) shall change the basis of taxation of payments to any Lender in
respect of the principal of or interest on any Eurodollar Loan made by such
Lender or any fees or other amounts payable hereunder (other than taxes
imposed on or measured by the overall net income of such Lender by the
jurisdiction
42
in which such Lender has its principal office (or lending office) or by any
political subdivision or taxing authority therein);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or other similar requirement against assets of,
deposits with or for the account of, or other extensions of credit by, any
office of such Lender (which requirement is not otherwise included in the
determination of the Eurodollar Rate); or
(iii) shall impose on such Lender any other condition affecting this
Agreement or Eurodollar Loans made by such Lender;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans, or to reduce any amount receivable
hereunder in respect thereof by an amount deemed by such Lender to be material,
then, in any such case, the Borrower shall pay to such Lender, any additional
amounts necessary to compensate such Lender for such increased cost incurred or
reduction suffered. If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower,
through the Agent, of the event by reason of which it has become so entitled.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
(b) If any Lender shall have determined that the applicability of any
law, rule, regulation or guideline adopted after the date hereof pursuant to or
arising out of the July 1988 report of the Basic Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after the date
hereof of any other law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender or any Lender's holding company with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such Governmental Authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on such Lender's or
such holding company's capital as a consequence of its obligations hereunder to
a level below that which such Lender or such holding company could have achieved
but for such adoption, change or compliance (taking into consideration such
Lender's or such holding company's policies with respect to capital adequacy) by
an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Agent) of a
written request therefor, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for any such reduction
suffered.
(c) A certificate of each Lender setting forth such amount or amounts
as shall be necessary to compensate such Lender or its holding company as
specified in paragraph (a) or (b) above, as the case may be, shall be delivered
to the Borrower (with a copy to the Agent) and shall be conclusive absent
manifest error. The Borrower shall pay each Lender the amount shown as due on
any such certificate delivered by it within 10 Business Days after its receipt
of the same.
5.10 Taxes. (a) All payments made by the Borrower under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future taxes, levies,
imposts, charges, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding (i) net
income taxes, franchise taxes, or any other taxes imposed on or measured by the
net income or profits of the Agent or such Lender, in each case by the
jurisdiction under the laws of which the Agent or such Lender is organized or
any political
43
subdivision thereof or by the jurisdiction in which the applicable lending or
issuing office of the Agent or such Lender is located or any political
subdivision thereof and (ii) U.S. withholding taxes payable with respect to
payments hereunder under laws (including any treaty, ruling, determination or
regulation) in effect on the date hereof, but not any increase in U.S.
withholding tax resulting from any subsequent change in such laws occurring (x)
after the date hereof in the case of the Agent and any Lender as of the date of
this Agreement, and (y) in the case of any other Lender, the date of Assignment
and Acceptance pursuant to which it became a Lender (all such non-excluded
taxes, levies, imposts, charges, deductions and withholdings the "Non-Excluded
Taxes"). In addition, the Borrower agrees to pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
("Other Taxes"). If any Non-Excluded Taxes or Other Taxes are required by law to
be withheld from any amounts payable to the Agent or any Lender hereunder or
under the Notes, the amounts so payable to the Agent or such Lender shall be
increased to the extent necessary to yield to the Agent or such Lender interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement and the Notes. Whenever any Non-Excluded Taxes or
Other Taxes are payable by the Borrower, upon receipt thereof the Borrower shall
send to the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of any original official receipt received by the
Borrower showing payment thereof. The Borrower shall indemnify the Agent and the
Lenders for the full amount of Non-Excluded Taxes, Other Taxes and any taxes
imposed by any jurisdiction on amounts payable under this subsection 5.10(a)
that are paid by such Lender or Agent, (including penalties, interest and
expenses arising therefrom or with respect thereto). If the Borrower determines
in good faith that a reasonable basis exists for contesting any Non-Excluded
Taxes or Other Taxes, such Lender or the Agent shall cooperate with the Borrower
in challenging such Non-Excluded Taxes or Other Taxes at the Borrower's expense
if requested by the Borrower (it being understood and agreed that the Agent or
such Lender shall have no obligation to contest or responsibility for contesting
such Non-Excluded Taxes or Other Taxes). If any Lender receives a refund in
respect of any Non-Excluded Taxes or Other Taxes for which such Lender has
received payment from this Borrower hereunder, such Lender shall, within 30 days
of receipt by such Lender, repay such refund to the Borrower, provided that the
Borrower, upon the request of such Lender, agrees to return such refund (plus
any penalties, interest or other charges) to the Lender in the event such Lender
is required to repay such refund. The agreements in this subsection shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) in the case of a Lender that is a "bank" under Section
881(c)(3)(A) of the Code;
(A) on or before the date of the first payment to such Lender
pursuant to this Agreement following the Closing Date or on or before
the effective date of the Assignment and Acceptance, deliver to the
Borrower and the Agent (x) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable
form, as the case may be, and (y) an Internal Revenue Service Form W-8
or W-9, or successor applicable form, as the case may be;
(B) deliver to the Borrower and the Agent two further copies of
any such form or certification on or before the date that any such
form or certification expires or becomes obsolete and promptly upon
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower
or the Agent; or
44
(ii) in the case of a Lender that is not a "bank" under Section
881(c)(3)(A) of the Code:
(A) deliver to the Borrower and the Agent (1) a statement under
penalties of perjury that such Lender (x) is not a "bank" under
Section 881(c)(3)(A) of the Code, is not subject to regulatory or
other legal requirements as a bank in any jurisdiction, and has not
been treated as a bank for purposes of any tax, securities law or
other filing or submission made to any Governmental Authority, any
application made to a rating agency or qualification for any exemption
from tax, securities law or other legal requirements, (y) is not a 10-
percent shareholder within the meaning of Section 881(c)(3)(B) of the
Code and (z) is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section
881(c)(3)(C) of the Code and (11) an Internal Revenue Service Form W-
8;
(B) deliver to the Borrower and the Agent a further copy of said
Form W-8, or any successor applicable form or other manner of
certification on or before the date that any such Form W-8 expires or
becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by such Lender;
and
(C) obtain such extensions of time for filing and complete such
forms or certifications as may be reasonably requested by the Borrower
or the Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders any such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Participant pursuant to
subsection 12.6 shall, upon the effectiveness of the related transfer, be
required to provide all of the forms and statements required pursuant to this
subsection to the Lender from which the related participation shall have been
purchased.
5.11 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or reasonable expense which such Lender
may sustain or incur as a consequence of (a) default by the Borrower for any
reason in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (b) default by the Borrower for any
reason in making any prepayment after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement, or (c) the making of a
prepayment (whether voluntary or mandatory) of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto for any reason.
Such loss or reasonable expense may include any loss, including loss of
anticipated profits, costs or expense incurred by reason of the liquidation or
reemployment of deposits or other funds in order to fund or maintain such Loans.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
5.12 Change of Lending Office. Each Lender agrees that it will use
all reasonable efforts (so long as such designation would not be adverse to it,
as determined in its sole judgment) to designate a lending office or a different
lending office if the making of such a designation would reduce or obviate the
need for the Borrower to make payments under subsection 5.9 or 5.10(a), or would
eliminate or reduce the effect of any adoption or change described in subsection
5.8.
45
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Agent, the Issuing Bank and the Lenders to enter into
this Agreement, to make the Loans and to issue Letters of Credit, the Borrower
hereby represents and warrants to the Agent, the Issuing Bank and each Lender
(after giving effect to the Acquisition except as otherwise noted below), that:
6.1 Financial Condition. (a)(i) The audited consolidated balance
sheets of the Borrower and its consolidated Subsidiaries (without giving effect
to the Acquisition), as of September 30, 1994 and 1995 and the related audited
consolidated statements of income, shareholders' equity and cash flows for the
two years then ended and/or the nine month period ended September 30, 1993,
copies of which have heretofore been furnished to each Lender, have been
certified by Deloitte & Touche LLP present fairly the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such dates and
the consolidated results of their operations and their cash flows for the two
years then ended and the nine month period ended September 30, 1993, in
conformity with GAAP.
(ii) The unaudited consolidated balance sheets of PED and its
consolidated Subsidiaries as of December 31, 1994 and December 31, 1995,
and the related unaudited consolidated statements of income, shareholders'
equity and cash flows for the two years then ended, copies of which have
heretofore been furnished to each Lender, present fairly the consolidated
financial condition of PED and its consolidated Subsidiaries as at such
dates and the consolidated results of their operations and their cash flows
for the two years then ended, in conformity GAAP except as provided in the
agreed upon procedures letter of Deloitte & Touche LLP, which letter shall
be in form and substance satisfactory to the Agent and a copy of which
shall have heretofore been furnished to each Lender.
(b)(i) The unaudited consolidated balance sheets of the Borrower and
its consolidated Subsidiaries (without giving effect to the Acquisition), for
(i) each of the fiscal quarters ended December 31, 1995, March 31, 1996, and
June 30, 1996 and (ii) the fiscal year ended September 30, 1996 and the related
unaudited consolidated statements of income for each such fiscal quarter and
such fiscal year, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, present fairly the consolidated
financial condition of the Borrower and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations for the period then ended
(subject to normal year-end audit adjustments and the absence of certain notes
thereto). All such financial statements, including the related schedules and
notes thereto, have been prepared on a basis consistent with the September 30,
1995 financial statements of the Borrower. Neither the Borrower nor any of its
consolidated Subsidiaries had, at October 31, 1996 any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
Interest Rate Agreement or foreign currency swap or exchange transaction, which
is not reflected in the foregoing statements or in the notes thereto or
disclosed on Schedule 6.1(b)(1). Except as set forth on Schedule 6.1(b)(2),
------------------ ------------------
during the period from September 30, 1995 to and including the date hereof there
has been no sale, transfer or other disposition by the Borrower or any of its
consolidated Subsidiaries of any material part of its business or property and
no purchase or other acquisition of any business or property (including any
capital stock of any other Person) material in relation to the consolidated
financial condition of the Borrower and its consolidated Subsidiaries at
September 30, 1995.
(ii) The unaudited consolidated balance sheets of PED and its
consolidated Subsidiaries for each of the fiscal quarters ended March 31,
1996, June 30, 1996 and September 30, 1996, and the related unaudited
consolidated statements of income for each such fiscal quarter, certified
by a Responsible Officer of PED, copies of which have heretofore been
furnished to each Lender, present fairly the consolidated financial
condition of PED and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations for the period then ended (subject
to normal year-end audit
46
adjustments and the absence of certain notes thereto). All such financial
statements, including the related schedules and notes thereto, have been
prepared on a basis consistent with the December 31, 1995 financial
statements of PED.
(c) The pro forma balance sheet of the Borrower and its consolidated
Subsidiaries as at September 30, 1996, and the pro forma statements of income of
the Borrower and its consolidated Subsidiaries for the twelve-month period ended
on September 30, 1996 (all such pro forma financial statements, the "Borrower
Pro Forma Financial Statements"), certified by a Responsible Officer of the
Borrower, copies of which have been heretofore furnished to each Lender,
adjusted to give effect to (as if such events had occurred on such date) (i) in
the case of the pro forma balance sheet, the Refinancing, (ii) in the case of
the pro forma balance sheet, the initial borrowings (including borrowings in
connection with the Acquisition) by the Borrower hereunder, and (iii) in the
case of the pro forma balance sheet and the pro forma statement of income, the
Acquisition, were prepared based on good faith assumptions and on the best
information available to the Borrower as of the date of delivery thereof and
fairly presents on a pro forma basis the consolidated financial position of the
Borrower and its consolidated Subsidiaries as at September 30, 1996, as
adjusted, as described above, assuming such events had occurred at such date.
6.2 No Change. Since (a) September 30, 1995 there has been no
material adverse change in the business, operations, properties, assets,
liabilities, performance or condition (financial or otherwise) or prospects of
the Borrower or any of its Subsidiaries, and (b) November 22, 1996 (on which
date a dividend was declared payable January 4, 1997), no dividends or other
distributions have been declared, paid or made upon the Capital Stock of the
Borrower nor has any of the Capital Stock of the Borrower been redeemed,
retired, purchased or otherwise acquired for value by the Borrower or any of its
Subsidiaries except as permitted by subsection 9.8.
6.3 Corporate Existence; Compliance with Law. Each Loan Party (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification except where the failure to so qualify
would not have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, have a Material Adverse Effect.
6.4 Corporate Power, Authorization; Enforceable Obligations. Each
Loan Party has the corporate power and authority to make, deliver and perform
the Loan Documents and Acquisition Documents to which it is a party, in the case
of the Borrower, to borrow hereunder and, in the case of the Foreign
Subsidiaries, to enter into Letter of Credit Requests, and has taken all
necessary corporate action to authorize the borrowings on the terms and
conditions of this Agreement and any Notes, to consummate the Refinancing and to
authorize the execution, delivery and performance of the Loan Documents and
Acquisition Documents to which it is a party. No consent, approval or
authorization of, filing with, notice to or other act by any Governmental
Authority or any other Person is required in connection with the borrowings
hereunder, the Refinancing or with the execution, delivery and performance of
the Loan Documents or Acquisition Documents to which any Loan Party is a party
or in connection with the transactions contemplated thereby, other than (a) with
respect to (i) the Acquisition, the filings listed on Schedule 6.4, and (ii)
------------
with respect to the Refinancing, the filings listed on Schedule 6.4.B in order
--------------
to release all outstanding Liens on the properties and assets of the Borrower
and the Loan parties (other than Liens permitted by subsection 9.3), (b) filings
and recordings in order to perfect the Liens in favor of the Agent for the
benefit of the Lenders created by the Mortgages and the recording of the
Mortgages in the appropriate recording office, (c) such orders, consents,
approvals and authorizations of, and all notices and
47
all written assumptions of obligations to, Governmental Authorities and any
other Persons which have been heretofore obtained, made or given and are in full
force and effect, and complete and correct copies of which have heretofore been
furnished to the Agent, (d) any consent, approval, authorization, filing or
notice, the failure of which to obtain would not have a Material Adverse Effect,
(e) filings of Uniform Commercial Code financing statements listed in Schedule
6.18 in the appropriate filing offices in the appropriate jurisdictions in favor
- ----
of the Agent for the benefit of the Lenders in order to perfect the Liens of the
Agent for the benefit of the Lenders created by the Security Documents and (f)
filings related to any trademarks of the Borrower or its Subsidiaries to perfect
the Liens of the Agent for the benefit of the Lenders created by any Subsidiary
Trademark Security Agreement. This Agreement and the Purchase Agreement each has
been, and each other Loan Document and Acquisition Document to which any Loan
Party is or will be a party will be, duly executed and delivered on behalf of
such Loan Party that is a party thereto. This Agreement and the Purchase
Agreement each constitutes, and each other Loan Document and Acquisition
Document to which any Loan Party is or will be a party when executed and
delivered will constitute, a legal, valid and binding obligation of each Loan
Party thereto enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
6.5 No Legal Bar. The execution, delivery and performance of the
Loan Documents and Acquisition Documents to which any Loan Party is a party, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any indenture, agreement or other instrument to which any
Loan Party is a party or by which it or any of its Property is bound and will
not result in, or require, the creation or imposition of any Lien on any of
their respective properties or revenues pursuant to any such Requirement of Law
or any such indenture, agreement or other instrument.
6.6 No Material Litigation. Except as set forth on Schedule 6.6, no
------------
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against any Loan Party or against any of their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby or (b) with respect to the
Acquisition or the Refinancing or (c) which could reasonably be expected to have
a Material Adverse Effect.
6.7 No Default. No Loan Party is in default under or with respect to
any indenture, agreement or other instrument to which such Loan Party is a party
or by which it or any of its property is bound in any respect which could
reasonably be expected to have a Material Adverse Effect except for any such
indenture, agreement or other instrument related to Indebtedness that will be
satisfied and from which the relevant Loan Party will be released on the Closing
Date. No default or event of default has occurred and is continuing under the
IRB Documents. No Default or Event of Default has occurred and is continuing.
6.8 Ownership of Property; Liens. Each Loan Party has good record
and marketable title (except for such encumbrance or restriction arising in the
ordinary course of business which do not materially restrict the intended use of
such property) in fee simple to, or a valid leasehold interest in, all its real
property, and good title to, or a valid leasehold interest in, all its other
material property except for such minor defects in title that do not affect the
ability to use such property in the conduct of its business, and none of such
property is subject to any Lien except as set forth on Schedule 6.8 or as
---------------
permitted by subsection 9.3.
6.9 Intellectual Property. Each Loan Party owns, or is licensed to
use, all trademarks, tradenames, copyrights, technology, know-how and processes
necessary for the conduct of its business as currently conducted except for
those the failure to own or license which could not reasonably be expected to
have a Material Adverse Effect (the "Intellectual Property"). To the best of
the Borrower's knowledge, except as set
48
forth in Schedule 3.12(c) to the Purchase Agreement, no claim has been asserted
or is pending by any Person challenging or questioning the use of any such
Intellectual Property by any Loan Party or the validity or effectiveness of any
such Intellectual Property except for such claims which even if successful could
not reasonably be expected to have a Material Adverse Effect, nor does the
Borrower know of any valid basis for any such claim. The use of such
Intellectual Property by any Loan Party does not infringe on the rights of any
Person, except for such claims and infringements that, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
6.10 No Burdensome Restrictions. After giving effect to the
Refinancing, no indenture, agreement or other instrument to which any Loan Party
is a party or by which it or any of its property is bound could reasonably be
expected to have a Material Adverse Effect.
6.11 Taxes. Each Loan Party has filed or caused to be filed all
federal, state and local tax returns which, to the knowledge of the Borrower,
are required to be filed and has paid all taxes shown to be due and payable on
said returns or on any assessments made against it or any of its property and
all other material taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of such Loan Party).
6.12 Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors. If requested by any Lender
or the Agent, the Borrower will furnish to the Agent and each Lender a statement
to the foregoing effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U.
6.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA and whether or not waived) has occurred during the five-year period prior
to the date on which this representation is made or deemed made with respect to
any Plan that remains outstanding in any respect and that could reasonably be
expected to have a Material Adverse Effect, and each Plan has complied in all
material respects with the applicable provisions of ERISA and the Code. No
termination of a Single Employer Plan has occurred, and no Lien in favor of the
PBGC or a Plan has arisen, during such five-year period that has resulted in any
material liability. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this representation
is made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Neither the Borrower nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither the Borrower nor any Commonly Controlled Entity would become subject to
any liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made and no such Multiemployer Plan is in Reorganization or Insolvent,
except in each instance where such liability, reorganization or insolvency could
not reasonably be expected to have a Material Adverse Effect. The present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the Borrower for post retirement benefits to be provided to its
current and former employees under Plans which are welfare benefit plans (as
defined in Section 3(l) of ERISA) does not, in the aggregate, exceed the assets
under all such Plans allocable to such benefits by an amount which could
reasonably be expected to have a Material Adverse Effect. Each Commonly
Controlled Entity that has liability for post-retirement benefits has adopted
Financial Accounting Standard No. 106.
49
6.14 Investment Company Act; Other Regulations. The Borrower is not
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940 as amended. The
Borrower is not subject to regulation under any federal or state statute or
regulation which limits its ability to incur Indebtedness.
6.15 Subsidiaries. The Persons listed on Schedule 6.15 constitute
-------------
all the Subsidiaries of the Borrower at the date hereof after giving effect to
the Acquisition. Such Schedule identifies the state or country of incorporation
of each such Subsidiary and, if such Subsidiary is not a direct wholly owned
Subsidiary of the Borrower, the percentage ownership of such Subsidiary directly
or indirectly owned by the Borrower and the ownership chain for such Subsidiary.
6.16 Environmental Matters. (a) Except as disclosed on Schedule 6.16,
-------------
no real estate currently or formerly owned or leased by the Borrower or any or
its Subsidiaries (after giving effect to the Acquisition) contains, and, to the
best of the Borrower's knowledge, has previously contained, any Materials of
Environmental Concern in amounts or concentrations which could reasonably be
expected to give rise to a material liability under any Environmental Law.
(b) Except as disclosed in Schedule 6.16, all real estate currently
-------------
or formerly owned or leased by the Borrower and its Subsidiaries (after giving
effect to the Acquisition) and all operations thereon are in material compliance
with all applicable Environmental Laws, and there is no contamination at, under
or about such real estate or violation of any Environmental Law with respect to
such real estate or the business operated by any Loan Party (the "Business")
which could reasonably be expected to have a Material Adverse Effect or
interfere with the continued operation of such real estate.
(c) Except as disclosed in Schedule 6.16, there are no existing or
-------------
potential Environmental Claims against the Borrower or any of its Subsidiaries,
and neither the Borrower nor any of its Subsidiaries has received any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the real estate currently or formerly owned, leased or operated
by the Borrower or any of its Subsidiaries (after giving effect to the
Acquisition) or the Business which could reasonably be expected to have a
Material Adverse Effect.
(d) Materials of Environmental Concern have not been transported or
disposed of from the real estate currently or formerly owned, leased or operated
by the Borrower or any of its Subsidiaries (after giving effect to the
Acquisition) by the Borrower or any of such Subsidiaries in violation of, or in
a manner or to a location which could give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, released, stored or disposed of at, on or under any of such
real estate in violation of, or in a manner that could reasonably be expected to
give rise to liability under, any applicable Environmental Law which could
reasonably be expected to have a Material Adverse Effect.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which any Loan Party is or will be named as a party with
respect to any real estate currently or formerly owned, leased or operated by
the Borrower or any of its Subsidiaries (after giving effect to the Acquisition)
or the Business which could reasonably be expected to have a Material Adverse
Effect, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to such real
estate or the Business which could reasonably be expected to have a Material
Adverse Effect.
50
(f) No matter disclosed on Schedule 6.16 nor any aggregation of such
matters could reasonably be expected to have a Material Adverse Effect (after
giving effect to the indemnification obligations of the Seller under the
Purchase Agreement).
6.17 Regulation H. No Mortgage encumbers improved real property which
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.
6.18 Security Documents. (a) After giving effect to the Acquisition
and the Refinancing and the release of the related Liens, the security interest
created by the Pledge Agreements will be effective to create in favor of the
Agent, for the ratable benefit of the Lenders, a legal, valid and enforceable
security interest in accordance with their respective terms in the pledged
securities described therein and proceeds thereof and shall constitute a
perfected first lien on, and security interest in, all right, title and interest
of the pledgor party thereto in the pledged securities described therein.
(b) After giving effect to the Acquisition and the Refinancing and
the release of the related Liens, the security interest created by the Mortgages
will be effective to grant to the Agent, for the ratable benefit of the Lenders,
legal, valid and enforceable mortgage liens in accordance with their respective
terms on all of the right, title and interest of each Loan Party thereto in the
mortgaged property described therein. Such Mortgages, when recorded in the
appropriate recording office, will constitute perfected first liens on, and
security interest in, such mortgaged property, subject to no other Liens, other
than Permitted Liens; provided that, so long as the IRB Indebtedness shall
remain outstanding, the Lien of the Mortgage on the real property securing the
IRB Indebtedness pursuant to the IRB Documents shall be a second Lien, junior
only to the Lien of the trustee for the IRB Indebtedness, and upon the IRB
Indebtedness being repaid, shall be a first Lien on such real property.
(c) After giving effect to the Acquisition and the Refinancing and
the release of the related Liens, the security interest created by the Security
Agreements will be effective to create in favor of the Agent, for the ratable
benefit of the Lenders, a legal, valid and enforceable fully perfected security
interest of first priority in accordance with their respective terms in all
right, title and interest of the Borrower and each of the Borrower's
Subsidiaries in the Collateral described therein, subject to no other Liens,
other than Permitted Liens.
(d) The Agent, for the ratable benefit of the Lenders, has a legal,
valid and enforceable fully perfected security interest of first priority in the
Domestic Bank Accounts of the Borrower and its Domestic Subsidiaries.
6.19 Acquisition Approvals. Each Loan Party has duly and timely filed
all filings which are required to be filed by it in connection with the
Acquisition and all approvals and consents required to consummate the
Acquisition have been received, and all waiting periods have expired.
6.20 Accuracy of Information. Each of (a) the written information
relating to the Borrower and its Subsidiaries, the Refinancing and the
Acquisition which has been given to the Agent or any Lender and (b) the
information contained in any and all filings made by the Borrower with the SEC
(collectively, the "Information") was, as of the date such Information was given
or filed or the dates otherwise specified therein, accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading.
6.21 Insurance. Schedule 6.21 lists all insurance maintained by the
-------------
Loan Parties as of the Closing Date.
51
6.22 Solvency. As of the Closing Date each Loan Party is Solvent and
on each date on which a Revolving Credit Loan will be made or Letter of Credit
issued (after giving effect to the transactions being consummated on such day)
will be Solvent.
6.23 Labor Relations. Neither the Borrower nor any of its
Subsidiaries (after giving effect to the Acquisition) is engaged in any unfair
labor practice that could reasonably be expected to have a Material Adverse
Effect and there is (i) no unfair labor practice complaint pending against the
Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower,
threatened against any of them, before the National Labor Relations Board, and
no material grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against any
of them, (ii) no strike, labor dispute, slow down or stoppage pending against
the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries and (iii)
to the best knowledge of the Borrower, no union representation proceeding is
pending with respect to the employees of the Borrower or any of its
Subsidiaries, except (with respect to any matter specified in clause (i), (ii)
or (iii) above, either individually or in the aggregate) such as could not
reasonably be expected to have a Material Adverse Effect.
6.24 Indebtedness. Schedule 6.24 sets forth a true and complete list
-------------
of all Indebtedness (excluding the Term Loans, the Revolving Credit Loans and
the Letter of Credit Outstanding) of the Borrower and its respective
Subsidiaries as of the initial Borrowing Date and which is to remain outstanding
after giving effect to the Acquisition and the Refinancing, in each case showing
the aggregate principal amount thereof and the name of the respective borrower
and any other entity which directly or indirectly guaranteed such debt.
6.25 Bank Accounts. Schedule 6.25 (as the same may be updated
-------------
pursuant to the provisions of subsection 8.15 after the Closing Date) sets forth
a true and complete list of all accounts of whatever nature maintained with a
bank or other financial institution by each of the Borrower and its Domestic
Subsidiaries (the "Domestic Bank Accounts") and by each of its Foreign
Subsidiaries, after giving effect to the Acquisition and the Refinancing.
6.26 Inactive Subsidiaries. None of the Inactive Subsidiaries
conducts any business or owns any property or assets.
SECTION 7. CONDITIONS PRECEDENT
7.1 Conditions to Initial Loans. The agreement of each Lender to
make the initial Loans requested to be made by it and of the Issuing Bank to
issue the initial Letters of Credit requested to be issued hereunder are subject
to the satisfaction, immediately prior to or concurrently with the making of any
such Loan on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender, (ii) for the account of each
Revolving Credit Lender, a Revolving Credit Note conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower, (iii) for the account of each Tranche A Lender, a Tranche A Term
Note conforming to the requirements hereof and executed by a duly
authorized officer of the Borrower, (iv) for the account of each Tranche B
Lender, a Tranche B Term Note conforming to the requirements hereof and
executed by a duly authorized officer of the Borrower, (v) each of the
Pledge Agreements, each executed and delivered by a duly authorized officer
of each Loan Party thereto, with
52
a counterpart for the Agent and a counterpart or a conformed copy for each
Lender, (vi) each of the Guarantees, each executed and delivered by a duly
authorized officer of each Loan Party thereto, with a counterpart for the
Agent and a counterpart or a conformed copy for each Lender, (vii) each of
the Security Agreements, each executed and delivered by a duly authorized
officer of each Loan Party parry thereto, with a counterpart for the Agent
and a counterpart or a conformed copy for each Lender, (viii) each of the
Mortgages covering the Mortgaged Properties listed on Schedule II, each
-----------
executed and delivered by a duly authorized officer of each Loan Party
party thereto, with a counterpart for the Agent and a counterpart or a
conformed copy for each Lender, (ix) each of the Leasehold Mortgages
covering the leased properties listed on Schedule III, each executed and
------------
delivered by a duly authorized officer of each Loan Party party thereto,
with a counterpart for the Agent and a counterpart or a conformed copy for
each Lender and (x) the Closing Letter. In the event that any Letters of
Credit are to be issued on the Closing Date, the Agent shall have received
a Letter of Credit Request from the Borrower with respect to each such
Letter of Credit as provided in Section 4.1.
(b) Acquisition Documents. The Agent shall have received, with a
copy for each Lender, true and correct copies, certified as to authenticity
by the Borrower, of the Purchase Agreement and the other Acquisition
Documents, and such other documents or instruments as may be reasonably
requested by the Agent, including, without limitation, a copy of any debt
instrument, security agreement or other material contract to which the
Borrower or its Subsidiaries may be a party upon the consummation of the
Acquisition. No material term of any Acquisition Document shall have been
amended, waived, or otherwise modified without the consent of the Agent and
the Required Lenders; provided that the Purchase Agreement shall have been
amended to permit the assignment by the Borrower to the Agent for the
benefit of the Lenders, the Issuing Bank and the Agent of all of the rights
(but not the obligations) of the Borrower thereunder.
(c) Acquisition Closing. The Agent shall have received, with a copy
for each Lender, a certificate of a Responsible Officer of the Borrower
attaching a true and correct copy of each governmental and third-party
approval (including landlords' and other consents) necessary for the
Acquisition and certifying that such approvals have not been rescinded,
amended or modified in any manner. Each approval necessary in connection
with Acquisition shall have been obtained, be in full force and effect and
no longer subject to appeal or challenge, and all applicable waiting
periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the Acquisition. The Acquisition shall have been (or
shall contemporaneously be) consummated for a purchase price (excluding
fees and expenses) which, together with the Special Tax Payment, shall not
exceed $63,000,000 in the aggregate, and that portion of the Cash Infusion
payable on or prior to the Closing Date shall have been made.
(d) Refinancing. The Agent shall have received evidence satisfactory
to it that all of the indebtedness of the Borrower and its Subsidiaries
(other than the Indebtedness described in Schedule 6.24) in an aggregate
-------------
amount in respect of principal and accrued interest of not more than
$16,100,000 (including the Indebtedness identified in Schedule 7.1(d) as
----------- ---------------
Indebtedness to be repaid) shall contemporaneously be prepaid with the
proceeds of Term Loans and Revolving Credit Loans (the "Refinancing"). The
Agent shall have received, with a copy for each Lender, executed copies of
all payout or assignment letters, lien releases or assignments, termination
or assignment statements, satisfactions, agreements, certificates and other
documents entered into in connection with the Refinancing, all of which
payout letters, lien releases or assignments, termination or assignment
statements, satisfactions, agreements, certificates and other documents
shall be in form and substance reasonably satisfactory to the Agent.
(e) Closing Certificate. The Agent shall have received, with a
counterpart for each Lender, a certificate of the Borrower, dated the
Closing Date, substantially in the form of Exhibit O, with
---------
53
appropriate insertions and attachments, reasonably satisfactory in form and
substance to the Agent, executed by a Responsible Officer and the Secretary
or any Assistant Secretary of the Borrower.
(f) Corporate Proceedings of the Borrower. The Agent shall have
received, with a counterpart for each Lender, a copy of the resolutions, in
form and substance reasonably satisfactory to the Agent, of the Board of
Directors of the Borrower authorizing (i) the execution, delivery and
performance of (w) this Agreement and the other Loan Documents to which it
is a party, (x) the execution, delivery and performance of the Acquisition
Documents and the consummation of the Acquisition, (y) the Refinancing and
the execution, delivery and performance of all related agreements and other
documents and (z) the execution, delivery and performance of the documents,
and the taking of the actions, necessary to receive the Cash Infusion, (ii)
the borrowings contemplated hereunder and (iii) the granting by it of the
Liens created pursuant to the Borrower Security Documents, certified by the
Secretary or an Assistant Secretary of the Borrower as of the Closing Date,
which certificate shall be in form and substance reasonably satisfactory to
the Agent and shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded.
(g) Borrower Incumbency Certificate. The Agent shall have received,
with a counterpart for each Lender, a certificate of the Borrower, dated
the Closing Date, as to the incumbency and signature of the officers of the
Borrower executing any Loan Document, reasonably satisfactory in form and
substance to the Agent, executed by a Responsible Officer and the Secretary
or any Assistant Secretary of the Borrower.
(h) Corporate Proceedings of Subsidiaries. The Agent shall have
received, with a counterpart for each Lender, a copy of the resolutions, in
form and substance reasonably satisfactory to the Agent, of the Board of
Directors of each Subsidiary of the Borrower which is a party to a Loan
Document authorizing (i) the execution, delivery and performance of the
Loan Documents to which it is a party and (ii) the granting by it of the
Liens created pursuant to the Subsidiary Security Documents to which it is
a party, certified by the Secretary or an Assistant Secretary of each such
Subsidiary as of the Closing Date, which certificate shall be in form and
substance reasonably satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(i) Subsidiary Incumbency Certificates. The Agent shall have
received, with a counterpart for each Lender, a certificate of each
Subsidiary of the Borrower which is a Loan Party, dated the Closing Date,
as to the incumbency and signature of the officers of such Subsidiaries
executing any Loan Document, reasonably satisfactory in form and substance
to the Agent, executed by a Responsible Officer and the Secretary or any
Assistant Secretary of each such Subsidiary.
(j) Corporate Documents. The Agent shall have received, with a copy
for each Lender, true and complete copies of the certificate of
incorporation and by-laws of each Loan Party, certified as of the Closing
Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of such Loan Party.
(k) PED Financial Statements. The Lenders have received a copy of
each financial statement, including the Balance Sheet (as defined in the
Purchase Agreement) of PED, to be delivered by the Seller to the Borrower
on or prior to the Closing Date pursuant to the Purchase Agreement.
(l) Borrower Financial Statements. The Lenders shall have received
copies of the unaudited consolidated financial statements of the Borrower
for the fiscal year ended September 30, 1996 and the unaudited consolidated
financial statements of the Borrower for the fiscal month ended October 31,
1996
54
(other than cash flow statements), in each case without giving effect to
the Acquisition, which financial statements shall have been prepared in
accordance with generally accepted accounting principles and shall not
reflect any material adverse change in the consolidated financial condition
of the Borrower as reflected in the financial statements or projections
previously delivered to the Lenders.
(m) Closing Financial Certificate. The Agent shall have received,
with a copy for each Lender, a certificate of a Responsible Officer,
substantially in the form of Exhibit P, based upon the Borrower Pro Forma
---------
Financial Statements, (i) certifying that pro forma EBITDA of the Borrower
for the twelve-month period ended September 30, 1996 equals at least
$19,000,000 and (ii) evidencing pro forma compliance with the covenants set
forth in subsection 9.1, to the extent applicable.
(n) Corporate and Capital Structure. The corporate and capital
structure of the Borrower and each of its Subsidiaries after giving effect
to the Refinancing, the Acquisition and other transactions contemplated
hereby shall be as specified on Schedule 7.1 (n) or otherwise as shall be
----------------
reasonably satisfactory to the Required Lenders.
(o) Consents, Approvals, etc. The Agent shall have received, with a
copy for each Lender, a certificate of a Responsible Officer of the
Borrower attaching a true and correct copy of each governmental and third
party approval (including landlords' and other consents) necessary in
connection with the Refinancing and the transactions contemplated by the
Loan Documents (other than as set forth on Schedule 7.1(o)), or certifying
----------------
that true and correct copies of all such approvals have been delivered by
the Borrower to the Agent, with a copy for each of the Lenders, and that
such approvals have not been rescinded, amended or modified in any manner.
Without limiting the generality of the foregoing, the Agent shall have
received, with a copy for each Lender, a certificate of a Responsible
Officer of the Borrower certifying that (i) the execution, delivery and
performance of the Loan Documents by the Loan Parties in accordance with
their respective terms do not violate any provision of any of the IRB
Documents, after giving effect to all such consents as have been received
and are expected to be received under the IRB Documents, (ii) all such
consents are in full force and effect and (iii), after giving effect to the
Acquisition and the transactions contemplated hereby, there is no default
or event of default under any IRB Documents, subject to the receipt of all
consents expected to be received. Each such approval shall have been
obtained, be in full force and effect and no action shall have been taken
or threatened by any competent authority which would restrain, prevent or
otherwise impose materially adverse conditions on the Refinancing or the
transactions contemplated by the Loan Documents.
(p) Fees and Expenses. The Agent shall have received reasonably
satisfactory evidence that the fees and expenses to be incurred by the
Borrower and its Subsidiaries in connection with the Refinancing and the
Acquisition will not exceed an aggregate amount reasonably acceptable to
the Agent.
(q) Filings. All filings and other actions required to create and
perfect a first priority security interest in favor of the Agent for the
benefit of the Lenders on all Collateral owned or to be owned by the
Borrower and its Subsidiaries shall have been duly made or taken, and all
such Collateral shall be free and clear of other Liens except Liens
permitted under the Loan Documents. To the extent that all filings and
other actions required to create and perfect a first priority security
interest in the Collateral are not made or taken on or prior to the Closing
Date, the Agent and the Lenders shall be reasonably satisfied that the
filings or other actions made or taken on or prior to the Closing Date are
sufficient to give the Lenders the practical benefit of the Collateral and
that all other filings and other actions which have not been made or taken
on or prior to the Closing Date will be completed as soon as practicable
after the Closing Date.
55
(r) Lien Searches. The Agent shall have received the results of a
recent search by a Person satisfactory to the Agent, of the Uniform
Commercial Code, judgement and tax lien filings (or equivalent searches
with respect to Foreign Subsidiaries) which may have been filed with
respect to personal property of each Loan Party, and the results of such
search shall reveal no Liens on any of the assets of the Borrower or its
Subsidiaries except for Liens permitted under the Loan Documents.
(s) Pledged Stock; Stock Powers. The Agent shall have received the
certificates representing the shares pledged pursuant to each of the Pledge
Agreements, together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof (or,
in the case of the Foreign Subsidiaries, the applicable action required to
perfect the Agent's pledge shall have been taken).
(t) Title Insurance Policy. The Agent shall have received in respect
of each parcel covered by each Mortgage to be delivered on the Closing Date
a mortgagee's title policy (or policies) or marked up unconditional binder
for such insurance dated the Closing Date. Each such policy shall (i) be
in an amount set forth on Schedule 7.1(t), not to exceed the fair market
---------------
value of such parcel; (ii) be issued at ordinary rates; (iii) insure that
the Mortgage insured thereby creates a valid first Lien on such parcel free
and clear of all defects and encumbrances, except as set forth in Schedule
-----------
6.8; (iv) name the Agent for the benefit of the Lenders as the insured
----
thereunder; (v) be in the form of ALTA Loan Policy - 1990 (Amended
10/17/92); (vi) contain such endorsements and affirmative coverage as the
Agent may request and (vii) be issued by title companies reasonably
satisfactory to the Agent (including any such title companies acting as co-
insurers or reinsurers, at the option of the Agent). The Agent shall have
received evidence reasonably satisfactory to it that all premiums in
respect of each such policy, and all charges for mortgage recording tax, if
any, have been paid.
(u) Flood Insurance. If requested by the Agent for property located
in a flood zone, the Agent shall have received (i) a policy of flood
insurance which (A) covers any parcel of improved real property which is
encumbered by any Mortgage to be delivered on the Closing Date, (B) is
written in an amount not more than the fair market value of the property
subject to such Mortgage or the maximum limit of coverage made available
with respect to the particular type of property under the Act, whichever is
less, and (C) has a term ending not earlier than the maturity of the
indebtedness secured by such Mortgage and (ii) confirmation that the
Borrower has received the notice required pursuant to Section 208(e)(3) of
Regulation H of the Board of Governors.
(v) Copies of Documents. The Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in subsection 7.1(t) and listed on
Schedule 6.8 and a copy, certified by such parties as the Agent may
------------
reasonably deem appropriate, of all other documents affecting the property
covered by each Mortgage to be delivered on the Closing Date.
(w) Insurance. The Agent shall have received evidence in form and
substance reasonably satisfactory to it that all of the requirements of
subsection 8.5, Section 4.1 of each of the Security Agreements and Section
1.3 or paragraphs 2 and 10 of each of the Mortgages shall have been
satisfied.
(x) Legal Opinions. The Agent shall have received, with a
counterpart for each Lender, the following executed legal opinions:
56
(i) the executed legal opinion of Greenberg Traurig Hoffman
Lipoff Rosen & Quentel, P.A. counsel to the Borrower and the other
Loan Parties, substantially in the form of Exhibit Q-1;
-----------
(ii) the executed legal opinion of such special local counsel to
the Borrower and the other Loan Parties as the Agent shall request,
substantially in the form of Exhibit Q-2;
-----------
(iii) the executed legal opinion of foreign counsel to the
Borrower and the other Loan Parties with respect to such matters as
the Agent may request; and
(iv) the executed legal opinion of counsel to the Agent with
respect to such matters as the Agent may request.
(y) Agent's Fees. The Agent shall have received all fees, expenses
and other consideration required to be paid or delivered on or prior to the
Closing Date pursuant to the Fee Letter.
(z) Outstanding Indebtedness. The Agent shall have received, with a
counterpart for each Lender, a certificate of a Responsible Officer of the
Borrower, in form and substance reasonably satisfactory to the Agent,
certifying that none of the Borrower or any of its Subsidiaries shall have
any outstanding Indebtedness after giving effect to the Refinancing, other
than as permitted by subsection 9.2.
(aa) Environmental Audits. The Borrower shall have provided to the
Agent, with a copy for each Lender, copies of the results of the Phase I
and Phase II environmental audits of such of the properties and operations
of the Borrower and its Subsidiaries as the Agent shall specify (including
properties to be acquired in the Acquisition as specified by the Agent)
(for purposes of this clause, the "Reports"), and, if further investigation
is indicated by such Reports, the results of such further audits or
inquiries reasonably required by the Agent and by a Person or Persons
reasonably acceptable to the Agent.
(bb) Debt Conversion. The Agent shall have received evidence
satisfactory to it that the $1,325,000 aggregate outstanding principal
indebtedness (plus accrued interest thereon) owed by the Borrower to the
C.A. Elliott Trust Fund shall have been converted to equity; it being
understood that the principal amount so converted shall qualify as part of
the Cash Infusion.
7.2 Conditions to Each Loan. The agreement of each Lender to make
any Loan (that increases the amount of principal outstanding) requested to be
made by it on any date (including, without limitation, its initial Loan, but
excluding at all times Loans made pursuant to subsection 4.3), and of the
Issuing Bank to issue any Letter of Credit, is subject to (i) the making of such
Loans complying in all respects with the margin regulations of the Board of
Governors and (ii) the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower or any of its Subsidiaries in or pursuant
to the Loan Documents shall be true and correct in all material respects on
and as of such date as if made on and as of such date (except that any such
representation or warranty that is expressly stated as being made only as
of a specified earlier date shall be true and correct in all material
respects as of such earlier date).
57
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Loans
requested to be made on such date or to the issuance of the Letter of
Credit to be issued on such date.
(c) Additional Matters. The timely receipt of (i) a notice of
borrowing and (ii) the Borrowing Base Certificates called for by subsection
8.1(f).
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such Loan that the conditions
contained in this subsection 7.2 have been satisfied. Each Lender agrees to
make Loans in the circumstances contemplated by subsection 4.3 whether or not
the conditions contained in this subsection 7.2 have been satisfied.
SECTION 8. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, from and after the Closing Date, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding, any Loan remains outstanding and unpaid or any other amount is
owing to any Lender, the Issuing Bank or the Agent hereunder unless the Required
Lenders, and the Issuing Bank if any Letter of Credit shall be outstanding,
shall have otherwise consented in writing, the Borrower shall and (except in the
case of delivery of financial information, reports and notices) shall cause each
of its Subsidiaries to:
8.1 Financial Statements. Furnish to the Agent, with a copy for each
Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated and
consolidating balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related consolidated and
consolidating statements of income and retained earnings and of cash flows
for such year, setting forth in each case in comparative form the figures
for the previous year, reported on (other than with respect to
consolidating statements) without a "going concern" or like qualification
or exception, or qualification arising out of the scope of the audit, by
Deloitte & Touche or other independent certified public accountants of
nationally recognized standing acceptable to the Agent;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated and consolidating balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such quarter and the related unaudited consolidated and consolidating
statements of income and retained earnings and of cash flows of the
Borrower and its consolidated Subsidiaries for such quarter and the portion
of the fiscal year through the end of such quarter, setting forth in each
case in comparative form the figures for the previous year, certified by a
Responsible Officer as fairly presenting the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries
(subject to normal year-end audit adjustments and the absence of certain
notes); and
(c) as soon as available, but in any event not later than 30 days
after the end of each month, the unaudited consolidated and consolidating
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such month and the related unaudited consolidated and consolidating
statements of income of the Borrower and its consolidated Subsidiaries for
such month and the portion of the year through the end of such month,
setting forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as fairly presenting the financial
condition and
58
results of operations of the Borrower and its consolidated Subsidiaries
(subject to normal year-end audit adjustments and the absence of notes);
all such financial statements shall be prepared in accordance with generally
accepted accounting principles (subject, in the case of interim financial
statements, to normal year-end audit adjustments and the absence of certain
notes) applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the case
may be, and disclosed therein).
8.2 Certificates; Other Information. Furnish to the Agent, with a
copy for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 8.1(a), a written statement of the independent
certified public accountants reporting on such financial statements (unless
such accountants are prohibited by law or the Financial Accounting
Standards Board (or any successor) from providing such statement) to the
effect that in the course of the audit upon which their certification of
such financial statements was based (but without any special or additional
audit procedures for the purpose) they obtained knowledge of no condition
or event relating to financial matters which constitutes a Default or an
Event of Default or, if such accountants shall have obtained in the course
of such audit knowledge of any Default or Event of Default, disclosing in
such written statement the nature and period of existence thereof, it being
understood that such accountants shall be under no liability, directly or
indirectly, to the Lenders for failure to obtain knowledge of any such
condition or event;
(b) concurrently with the delivery of the financial statements
referred to in subsections 8.1(a) and 8.1(b), a certificate of a
Responsible Officer certifying that, to the best of such Officer's
knowledge, each of the Borrower and its Subsidiaries during such period has
observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or satisfied by
it, and that such Officer has no knowledge of any Default or Event of
Default except as specified in such certificate;
(c) concurrently with the delivery of the financial statements
referred to in subsections 8.1(a) and 8.1 (b), a certificate of a
Responsible Officer, substantially in the form of Exhibit R hereto (the
---------
"Compliance Certificate"), showing in detail satisfactory to the Agent
(including, where applicable, differences in the application of generally
accepted accounting principles used in such financial statements and the
application of GAAP) compliance by the Borrower with the covenants
contained in subsection 9.1, 9.6, 9.8 and 9.9 hereof and, to the extent not
otherwise required to be delivered pursuant to subsection 8.1 and 8.2,
statements of the Borrower's and its Subsidiaries' cash flows for the
periods covered by such covenants with respect to which compliance is to be
demonstrated in such Compliance Certificate, and a computation of the
amount of the Borrower's and its Subsidiaries' capital expenditures made
during such period and during the portion of the fiscal year through the
end of the period covered by such Compliance Certificate;
(d) not later than 30 days after the end of each fiscal year of the
Borrower, subject to the provisions of subsection 12.16, a copy of the
projections by the Borrower of the operating budget and cash flow budget of
the Borrower and its Subsidiaries for the succeeding fiscal year, such
projections to be accompanied by a certificate of a Responsible Officer to
the effect that such projections have been prepared in good faith and based
upon reasonable assumptions and that such Officer has no reason to believe
they are incorrect or misleading in any material respect;
59
(e) within ten days after the same are sent, copies of all financial
statements and other financial information, proxy materials and other
information and reports which the Borrower files with the SEC or any
securities exchange on which the Borrower's common stock is traded or
delivers to its stockholders or to holders of its Indebtedness (or any
trustee, agent or other representative therefor);
(f) within (i) twenty (20) Business Days next following the last
business day of each month, a borrowing base certificate in the form
attached hereto as Exhibit K executed by the chief financial officer of the
---------
Borrower (the "Borrowing Base Certificate") prepared in relation to such
immediately preceding month, together with such underlying data as the
Agent may request, and (ii) promptly upon request by the Agent from time to
time, such other information as the Agent may request with respect to the
Borrower's and its Subsidiaries' receivables and inventory, including an
audit thereof on an annual basis and at such other times as the Agent may
determine; provided that if the Borrowing Base Certificate is not timely
delivered to the Agent or is incomplete, then the Borrowing Base shall be
$0 until such time as a properly completed Borrowing Base Certificate shall
have been delivered to the Agent, together with all necessary underlying
data;
(g) promptly upon receipt, copy of (i) each financial statement
required to be delivered by the Seller pursuant to the Purchase Agreement,
(ii) all correspondence regarding any post-closing adjustment to the
purchase price payable by the Borrower under the Purchase Agreement, (iii)
all correspondence regarding any indemnification claim made by the Borrower
or the Seller pursuant to the Purchase Agreement, and (iv) notice of
receipt of any payment made by the Seller pursuant to the Purchase
Agreement;
(h) promptly after the receipt thereof by the Borrower or any of its
Subsidiaries, subject to the provisions of subsection 12.16, a copy of any
"management letter" received by any such Person from its certified public
accountants and the management's responses thereto;
(i) promptly upon, and in any event within ten Business Days after,
an officer of the Borrower or any of its Subsidiaries obtains knowledge
thereof, notice of one or more of the following environmental matters,
unless such officer reasonably concludes that such environmental matters
would not, individually or when aggregated with all other such
environmental matters, have a Material Adverse Effect:
(i) any pending or threatened Environmental Claim against the
Borrower or any of its Subsidiaries or any real property owned or
operated by the Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any real
property currently or formerly owned or operated by the Borrower or
any of its Subsidiaries that (a) results in noncompliance by the
Borrower or any of its Subsidiaries with any applicable Environmental
Law or (b) could reasonably be expected to form the basis of an
Environmental Claim against the Borrower or any of its Subsidiaries or
any such real property;
(iii) any condition or occurrence on any real property currently
or formerly owned or operated by the Borrower or any of its
Subsidiaries that could reasonably be expected to cause such real
property to be subject to any restrictions on the ownership,
occupancy, use or transferability by the Borrower or any of its
Subsidiaries of such real property under any Environmental Laws; and
60
(iv) the taking of any removal or remedial action in response to
the actual or alleged presence of any Material of Environmental
Concern on any real property currently or formerly owned or operated
by the Borrower or any of its Subsidiaries as required by any
Environmental Law or any governmental or other administrative agency;
provided that in any event the Borrower shall deliver to each Lender
all notices received by it or any of its Subsidiaries from any
government or governmental agency under, or pursuant to, CERCLA;
all such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and the Borrower's or such Subsidiary's response thereto. In addition, the
Borrower will provide the Lenders with copies of all material
communications with any government or governmental agency relating to
Environmental Laws, all communications with any Person (other than its
attorneys) relating to any Environmental Claim of which notice is required
to be given pursuant to this Section 8.1(h), and such detailed reports (not
subject to attorney-client or attorney work product privileges) of any such
Environmental Claim as may reasonably be requested by the Lenders; and
(i) promptly, such additional financial and other information which
is in the Borrower's possession as any Lender may from time to time
reasonably request through the Agent.
8.3 Payment of Taxes and Other Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all of its taxes and other obligations of whatever nature, except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with generally accepted
accounting principles with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
8.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries (after giving effect to the Acquisition) and preserve, renew
and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to subsection 9.5; comply with all Requirements of Law and any
indenture, agreement or other instrument to which any Loan Party is a party or
by which it or any of its property is bound which is material to the Borrower
and its Domestic Subsidiaries taken as a whole, except to the extent that
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
8.5 Maintenance of Property Insurance. Keep all property useful and
necessary in its business in good working order and condition, normal wear and
tear excepted; maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks (but including in any event public liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to each Lender which so requests, upon
reasonable written request, full information as to the insurance carried.
8.6 Inspection of Property, Books and Records; Discussions. Keep
proper books of records and account in conformity with generally accepted
accounting principles and applicable regulatory standards; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time upon reasonable prior notice and as often as may be reasonably required and
to discuss the business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers of the Borrower and
its Subsidiaries.
61
8.7 Notices. Promptly give written notice to the Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any indenture, agreement
or other instrument to which any Loan Party is a party or by which it or
any of its property is bound which is material to the Borrower and its
Domestic Subsidiaries taken as a whole, or (ii) litigation, investigation
or proceeding which may exist at any time between any Loan Party and any
Governmental Authority, which in either case of clauses (i) or (ii) of this
paragraph (b), if not cured or if adversely determined, as the case may be,
could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Loan Party in which the
amount involved is $250,000 or more and not covered by insurance or in
which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any lien (within the meaning of Section 4068 of ERISA) in favor
of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan;
(e) any development or event which in the reasonable judgment of the
Borrower has had or could reasonably be expected to have a Material Adverse
Effect or a material adverse effect on the prospects of the Borrower and
its Domestic Subsidiaries taken as a whole;
(f) any Environmental Claim asserted by any Governmental Authority or
third party or any discovery by Borrower or any Subsidiary of any
occurrence or condition with respect to any Material of Environmental
Concern that is reasonably likely to involve remediation costs or liability
greater than $250,000; and
(g) on the second business day next following the date on which the
same occurs and in any event within five Business Days of the Closing Date,
the change of the name of California Pellet Mill Company to Consolidated
Process Machinery Inc., together with a copy of the amendment to the
Articles of Incorporation of California Pellet Mill Company effecting such
name change, duly stamped by the California Secretary of State.
Each notice pursuant to the foregoing paragraphs of this subsection (other than
paragraph (g)) shall be accompanied by a statement of a Responsible Officer
setting forth details of the occurrence referred to therein and stating what
action the Borrower proposes to take with respect thereto.
8.8 Environmental Law. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
62
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws (the "Remedial Work") and promptly comply in all
material respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the same
are being contested in good faith and with due diligence by appropriate
proceedings and the pendency of such proceedings could not reasonably be
expected to have a Material Adverse Effect and reserves in conformity with
generally accepted accounting principles with respect thereto have been
provided on the books of the Borrower or the applicable Subsidiary, as the
case may be.
(c) If the Borrower or any of its Subsidiaries does not timely
commence and diligently prosecute to completion the Remedial Work, and is
not contesting the need to perform Remedial Work as provided in Section
8.8(b) above, the Agent may (but shall not be obligated to), upon 30 days
prior written notice to the Borrower of its intention to do so, cause such
Remedial Work to be performed. The Borrower shall pay or reimburse the
Agent on demand for all expenses (including attorneys' fees and
disbursements), reasonably relating to or incurred by the Agent in
connection with monitoring, reviewing or performing any Remedial Work.
8.9 Maintenance of Liens of the Security Documents. Promptly, upon
the reasonable request of the Agent, at the Borrower's expense, execute,
acknowledge and deliver, or cause the execution, acknowledgement and delivery
of, and thereafter register, file or record, or cause to be registered, filed or
recorded, in an appropriate governmental office, any document or instrument
supplemental to or confirmatory of the Security Documents or otherwise
reasonably deemed by the Agent necessary or desirable for the continued
validity, perfection and priority of the Liens on the Collateral covered
thereby.
8.10 Pledge of After Acquired Property. If at any time following the
Closing Date the Borrower or any of its Subsidiaries shall acquire at any time
property of any nature whatsoever which is intended to be by the terms of the
applicable Security Document and is not otherwise subject to the Lien created by
each Security Document as soon as possible and in no event later than 30 days
after the relevant acquisition date and, to the extent permitted by applicable
law, grant to the Agent for the ratable benefit of the Lenders a first priority
Lien on such property as collateral security for the Obligations (as defined in
the Borrower Security Agreement) pursuant to documentation reasonably
satisfactory in form and substance to the Agent. The Borrower, at its own
expense, shall execute, acknowledge and deliver, or cause the execution,
acknowledgement and delivery of, and thereafter register, file or record in an
appropriate governmental office, any document or instrument (including legal
opinions, title insurance, consents and corporate documents) and take all such
actions reasonably deemed by the Agent to be necessary or desirable to ensure
the creation, priority and perfection of such Lien. The Borrower shall cause
each New Subsidiary of the Borrower created or acquired after the date hereof,
immediately upon such creation or acquisition, to execute a Subsidiary Security
Agreement and an instrument in form and substance reasonably satisfactory to the
Agent pursuant to which such New Subsidiary shall become a party to the
Subsidiaries' Guarantee as a guarantor thereunder, and the Borrower shall
execute and deliver a Supplement to the Borrower Pledge Agreement in form and
substance reasonably satisfactory to the Agent, or shall cause the Subsidiary of
the Borrower which holds the Capital Stock of such New Subsidiary to execute and
deliver a Subsidiary Pledge Agreement or a Supplement to the Subsidiary Pledge
Agreement to which it is a party, providing for the pledge of 100% of the issued
and outstanding Capital Stock of such New Subsidiary to the Agent for the
benefit of the Lenders (65% in the case of a New Foreign Subsidiary), and the
Borrower shall deliver to the Agent the stock certificates evidencing such
Capital Stock together with undated stock powers for each such certificate, duly
executed in blank (or, in the case of a New Foreign Subsidiary, take such other
action as has the same substantive effect under applicable law).
63
8.11 Pledge During Event of Default. At any time after the occurrence
and during the continuance of an Event of Default, upon the request of the
Agent, promptly deliver such security agreements, mortgages, pledges, guarantees
and other security documents as the Agent may reasonably request to grant to the
Agent for the ratable benefit of the Lenders, to the extent permitted by
applicable law, a fully perfected first Lien on all right, title and interest of
any Loan Party in any unencumbered property of any Loan Party of any nature
whatsoever, as collateral security for the Obligations, pursuant to
documentation reasonably satisfactory to the Agent and take all such actions
(including obtaining releases of existing Liens) and deliver all such other
documents (including, legal opinions, title insurance, consents and corporate
documents) as the Agent shall reasonably require to ensure the priority and
perfection of such Lien.
8.12 Interest Rate Protection. Within 60 days following the Closing
Date, enter into an Interest Rate Agreement or Agreements providing to the
Borrower interest rate protection reasonably satisfactory to the Agent with
respect to not less than 50% of the aggregate outstanding principal amount of
the Term Loans, and having an expiry date from the Closing Date acceptable to
the Agent, and the Borrower agrees and confirms that the Borrower Security
Agreement grants to the Agent, for the benefit of the Lenders, a first priority
perfected security interest in its rights under any such Interest Rate
Agreements.
8.13 Foreign Subsidiaries Security. If following a change in the
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower reasonably acceptable to the Agent and the Required Lenders does not
within 30 days after a request from the Agent or the Required Banks deliver
evidence, in form and substance reasonably satisfactory to the Agent and the
Required Lenders, with respect to any Foreign Subsidiary which has not already
had all of its stock pledged pursuant to the applicable Pledge Agreement that a
pledge of 66-2/3% or more of the total combined voting power of all classes of
capital stock of such Foreign Subsidiary entitled to vote, would cause the
undistributed earnings of such Foreign Subsidiary as determined for federal
income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for federal income tax purposes, then that
portion of such Foreign Subsidiary's outstanding capital stock not theretofore
pledged pursuant to such Pledge Agreement shall be pledged to the Agent for the
benefit of the Lenders pursuant to a pledge agreement in form and substance
reasonably satisfactory to the Agent and the Required Lenders, to the extent
that the entering into such pledge agreement is permitted by the laws of the
respective foreign jurisdiction, and with all other related documents to be
delivered pursuant to this Section 8.13 to be in form and substance reasonably
satisfactory to the Agent and the Required Lenders.
8.14 Collateral Account. In the event that the Borrower or any of
its Subsidiaries (a) receives any insurance proceeds on account of Casualty
Losses in excess of $250,000 in the aggregate in any fiscal year (provided that
such first $250,000 shall be used solely to repair or replace the asset subject
to such Casualty Loss within six months of the date received or be deposited in
the Collateral Account and provided further that such first $250,000 shall be
paid to the Agent if an Event of Default shall have occurred and be continuing),
or (b) receives any payments made by the Seller to the Borrower pursuant to the
Purchase Agreement or (c) is required to deposit cash in a cash collateral
account on account of the Letters of Credit as contemplated herein, all such
proceeds and payments shall promptly be deposited in a bank account or accounts
(the "Collateral Account") maintained by, and under the control of, the Agent
all as provided in the Security Agreement. The amounts deposited into the
Collateral Account pursuant to clause (a) or (b) shall be released to the
Borrower upon receipt by the Agent of a certificate from the Borrower certifying
that (i) such amounts under clause (a) shall be used immediately upon receipt to
repair or replace property subject to a Casualty Loss or (ii) such amounts under
clause (b) shall be used immediately upon receipt to satisfy obligations to any
third parties that resulted in a payment by the Seller pursuant to the Purchase
Agreement, as applicable. Any Qualifying Insurance and Other Proceeds in the
Collateral Account shall be applied in accordance with Section 5.1(c).
64
8.15 Bank Accounts. The Borrower and its Subsidiaries shall, at their
expense, take all such actions, or cause such actions to be taken, as are
necessary or desirable in the judgment of the Agent to cause the Agent for the
benefit of the Lenders to have a legal, valid and enforceable fully perfected
security interest of first priority in all of the Domestic Bank Accounts of the
Borrower and its Domestic Subsidiaries, including the Collateral Account. If
under the laws of any state, the Agent shall not be able to take such a security
interest in a checking or similar account, then the Borrower shall not permit
the account balance in any such account to exceed $50,000 at any time (after
payment of all checks payable on such date) or the account balances in all such
accounts collectively to exceed $250,000 in the aggregate at any time.
8.16 Cash Management System and Cash Management Bank. The Borrower
shall at all times maintain a cash management system acceptable to the Agent
with the Cash Management Bank.
8.17 Cash Infusion. The Borrower shall take and cause to be taken any
and all actions necessary for a $1,000,000 portion of the Cash Infusion to be
made to and received by the Borrower within ten (10 ) days of the Closing Date.
In the event that there is a post-closing upward adjustment to the purchase
price payable by the Borrower to the Seller under the Purchase Agreement, the
Borrower shall take and cause to be taken any and all actions necessary for the
Cash Infusion contemplated by the definition of such term to be made to and
received by the Borrower immediately upon such adjustment becoming effective.
8.18 IRB Consents. Unless all of the IRB Consents shall have been
received by the Agent prior to March 1, 1997, the Borrower shall pay the IRB
Indebtedness in full on March 3, 1997 and provide the Agent with full releases,
in form and substance satisfactory to the Agent, of all Liens securing the IRB
Indebtedness; provided that in the event the IRB Indebtedness is accelerated
prior to such date for any reason, then such repayment and releases of Liens
shall be made immediately upon such acceleration.
SECTION 9. NEGATIVE COVENANTS
The Borrower hereby agrees that, from and after the Closing Date, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding, any Loan remains outstanding and unpaid or any other amount is
owing to any Lender, the Issuing Bank or the Agent hereunder, unless the
Required Lenders, and the Issuing Bank if any Letter of Credit is outstanding,
shall have otherwise consented in writing the Borrower shall not, and (except
with respect to subsection 9.1) shall not permit any of the Borrower's
Subsidiaries to, directly or indirectly:
9.1 Financial Condition Covenants.
(a) EBITDA Maintenance. Permit EBITDA of the Borrower and its
consolidated Subsidiaries (i) (A) for the period commencing on January 1,
1997 and ending March 31, 1997 (the "First Period"); (B) for the period
commencing January 1, 1997 and ending June 30, 1997 (the "Second Period");
and (C) for the period commencing January 1, 1997 and ending September 30,
1997 (the "Third Period"); and (ii) thereafter, for any period of four
consecutive fiscal quarters ending on a date specified below to be less
than the amount set forth opposite such period below:
Period Ending EBITDA
------------- ------
First Period $4.0 Million
Second Period $9.0 Million
Third Period $14.5 Million
December 31, 1997 $20.5 Million
65
Period Ending EBITDA
------------- ------
March 31, 1998 $20.5 Million
June 30, 1998 $21.0 Million
September 30, 1998 $21.0 Million
December 31, 1998 $22.0 Million
March 31, 1999 $22.0 Million
June 30, 1999 $22.0 Million
September 30, 1999 $22.0 Million
December 31, 1999 $23.0 Million
March 31, 2000 $23.0 Million
June 30, 2000 $23.0 Million
September 30, 2000 $23.0 Million
December 31, 2000 $24.0 Million
March 31, 2001 $24.0 Million
June 30, 2001 $24.0 Million
September 30, 2001 $24.0 Million
December 31, 2001 $25.0 Million
March 31, 2002 $25.0 Million
June 30, 2002 $25.0 Million
September 30, 2002 $25.0 Million
December 31, 2002 and $26.0 Million
each fiscal quarter
thereafter
(b) Total Debt Ratio. Permit the ratio of Total Debt of the Borrower
and its consolidated Subsidiaries outstanding as of the last day of each
fiscal quarter during any period set forth below to EBITDA of the Borrower
and its consolidated Subsidiaries for the period of four consecutive fiscal
quarters of the Borrower and its consolidated Subsidiaries ended on such
date to exceed the ratio set forth opposite such period below:
Period Ending Ratio
------------- -----
March 31, 1997 N/A
June 30, 1997 4.50
September 30, 1997 4.25
December 31, 1997 4.00
March 31, 1998 4.00
June 30, 1998 4.00
September 30, 1998 4.00
December 31, 1998 3.50
March 31, 1999 3.50
66
Period Ending Ratio
------------- -----
June 30, 1999 3.50
September 30, 1999 3.50
December 31, 1999 3.25
March 31, 2000 3.25
June 30, 2000 3.25
September 30, 2000 3.25
December 31, 2000 and each
fiscal quarter thereafter 3.00
Notwithstanding the foregoing, for purposes of this subsection 9.1(b),
EBITDA for the Borrower and its consolidated Subsidiaries as of (i) June
30, 1997 shall be equal to the product of two (2) and the EBITDA of the
Borrower and its consolidated Subsidiaries for the six (6) months ending
June 30, 1997; and (ii) September 30, 1997 shall be equal to the product of
one and one-third (1.333) and the EBITDA of the Borrower and its
consolidated Subsidiaries for the nine (9) months ending September 30,
1997.
(c) Interest Expense Ratio. Permit the ratio of EBITDA of the
Borrower and its consolidated Subsidiaries (i)(A) for the First Period; (B)
for the Second Period; and (C) for the Third Period; and (ii) thereafter,
for any period of four consecutive fiscal quarters ending on a date
specified below of the Borrower and its consolidated Subsidiaries to
Consolidated Interest Expense of the Borrower and its consolidated
Subsidiaries for such period to be less than the ratio set forth opposite
the applicable period below:
Period Ending Ratio
------------- -----
First Period 2.50
Second Period 2.50
Third Period 2.50
December 31, 1997 2.75
March 31, 1998 2.75
June 30, 1998 2.75
September 30, 1998 2.75
December 31, 1998 3.00
March 31, 1999 3.00
June 30, 1999 3.00
September 30, 1999 3.00
December 31, 1999 3.25
March 31, 2000 3.25
June 30, 2000 3.25
September 30, 2000 3.50
December 31, 2000 3.50
March 31, 2001 3.50
67
Period Ending Ratio
------------- -----
June 30, 2001 3.50
September 30, 2001 3.50
December 31, 2001 3.75
March 31, 2002 3.75
June 30, 2002 3.75
September 30, 2002 3.75
December 31, 2002 and 4.00
each fiscal quarter thereafter
(d) Fixed Charge Ratio. Permit the ratio of EBITDA of the Borrower
and its consolidated Subsidiaries (i) (A) for the First Period; (B) for the
Second Period; and (C) for the Third Period; and (ii) thereafter, for any
period of four consecutive fiscal quarters ending on the last day of such
quarter, to Fixed Charges of the Borrower and its consolidated Subsidiaries
for such period to be less than 1.00.
(e) Net Worth. Permit the Consolidated Net Worth at any time to be
less than (i) $13,000,000 plus (ii) 75% of the cumulative positive net
income of the Borrower and its Subsidiaries on a consolidated basis
(computed in accordance with generally accepted accounting principles) from
the Closing Date through the date of determination.
9.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness (i) of the Borrower to any Subsidiary and (ii) of
any wholly-owned Domestic Subsidiary of the Borrower to the Borrower or any
other Subsidiary, provided that any such Indebtedness referred to in clause
(i) of this subsection 9.2(b) or of any such wholly owned Domestic
Subsidiary to any other Subsidiary shall be expressly subordinated to the
Loans and the Guarantees on terms and conditions reasonably satisfactory to
the Agent and (iii) of any wholly-owned Foreign Subsidiary of the Borrower
to the Borrower not to exceed $50,000 in the case of any Foreign Subsidiary
and not to exceed $250,000 in the aggregate for all Foreign Subsidiaries,
except that General Combustion Limited may borrow from the Borrower an
amount not to exceed an aggregate of U.S.$440,000 in order for General
Combustion Limited to repay its Indebtedness to Lloyds Bank plc in full at
closing on the Closing Date, to provide Lloyds Bank plc with cash security
for certain bonding liabilities (not to exceed U.K.(Pounds)56,000) and for
working capital purposes, so long as such Indebtedness of General
Combustion Limited to the Borrower shall have been repaid to the Borrower
on or before March 15, 1997 to the full extent necessary for the Borrower
and its Subsidiaries to be in compliance with clause (iii) of this
paragraph (b) (without giving effect to this exception) by no later than
March 15, 1997; provided that each such Domestic or Foreign Subsidiary
shall have executed a Note (as defined in the Pledge Agreements) in favor
of the Borrower or such other Subsidiary evidencing such Indebtedness and
such Note has been pledged to the Agent (for the ratable benefit of the
Lenders) pursuant to the applicable Pledge Agreement.
(c) Indebtedness of the Borrower and any of its wholly owned
Subsidiaries incured to finance the acquision of fixed of capiral assets
(whether pursuant to loan, a Financing Lease or
68
otherwise) in an aggregate principal amount not exceeding as to the
Borrower and its Subsidiaries $3,000,000 at any time outstanding
(d) Indetedness under Interest Rate Agreements required under
subsection 8.12;
(e) Indebtedness of a Person which becomes owned subsiddiary or which
which is assumed in connection with the purchase of assets from any Person
by the Borrower or any wholly owned Subsidiary after the date hereof (other
than as a result of the Acquisition), provided that (i) such Indebtedness
existed at the time such Person became a wholly owned Subsidiary or such
assets were purchased as the case may be, and was not created in
anticipation thereof, except that Indebtedness created to provide a portion
of the consideration payable to such Person (commonly called "seller
paper") which contains terms of subordination to the Loans and other
obligations and liabilities and other terms and conditions satisfactory to
the Agent and the Required Lenders shall be permitted and (ii) immediately
after giving effect to the acquisition of such Person by the Borrower no
Default or Event of Default shall have occurred and be continuing;
(f) The IRB Indebtedness, subject to the provisions of subsection
8.18;
(g) With respect to each Foreign Subsidiary, Indebtedness of such
Foreign Subsidiary in an Authorized Foreign Currency to a lender located in
such Foreign Subsidiary's country of incorporation under a revolving credit
line entered into for working capital purposes, provided that such
Indebtedness may not at any time (i) exceed the lower of (A) 100% of such
Foreign Subsidiary's Foreign Borrowing Base (except as otherwise
specifically provided, and subject to the conditions set forth, in the
proviso to clause (iv) of subsection 4.1) or (B) the applicable Sublimit
for such Foreign Subsidiary or (ii) be secured by any assets (real,
personal or mixed) of such Foreign Subsidiary or of any other Person, other
than any Foreign Letter of Credit issued by the Issuing Bank to such lender
as beneficiary for the account of such Foreign Subsidiary.
(h) The Subordinated Loan, if any.
9.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for the following (collectively, the "Permitted
Liens"):
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with generally accepted
accounting principles;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, lessors', landlords' or other like Liens arising in the
ordinary course of business which are not overdue for a period of more than
60 days or which are being contested in good faith by appropriate
proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
69
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens securing Indebtedness of the Borrower and its wholly owned
Subsidiaries permitted by subsection 9.2(c) incurred to finance the
acquisition of fixed or capital assets, provided that (i) such Liens shall
be created substantially simultaneously with the acquisition of such fixed
or capital assets, (ii) such Liens do not at any time encumber any property
other than the property financed by such Indebtedness, (iii) the amount of
Indebtedness secured thereby is not increased and (iv) the principal amount
of Indebtedness secured by any such Lien shall at no time exceed 100% of
the original purchase price of such property;
(g) Liens on the property or assets of a corporation which becomes a
wholly owned Subsidiary or on assets purchased from any Person after the
date hereof securing Indebtedness permitted by subsection 9.2(e), provided
that (i) such Liens existed at the time such corporation became a wholly
owned Subsidiary and were not created in anticipation thereof, (ii) any
such Lien is not spread to cover any property or assets of such corporation
after the time such corporation becomes a wholly owned Subsidiary, and
(iii) the amount of Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) Liens existing on the Closing Date securing Indebtedness
permitted by subsection 9.2(f), all as set forth on Schedule 9.3(i), and
---------------
not otherwise required to be released by reason of the Refinancing; and
(j) any Lien arising by operation of law pursuant to Section 107(l)
of the Comprehensive Environmental Response, Compensation and Liability
Act, or pursuant to analogous state law, for costs or damages (i) which are
not yet due (by virtue of a written demand for payment by a Governmental
Authority) or (ii) which are being contested in good faith by appropriate
proceedings or (iii) which are on property that the Borrower or one of its
Subsidiaries has determined to abandon if the sole recourse for such costs
or damages is such property, provided, in any case, that the liability of
the Borrower (or the Subsidiary of the Borrower that directly owns or
operates the affected property) with respect to the matter giving rise to
such Lien shall not, in the reasonable estimate of the Agent (in light of
all attendant circumstances, including the likelihood of contribution by
third parties), exceed $500,000 for all such Liens.
9.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) the Guarantees, including any Guarantee Obligations arising under
any rights of contribution thereunder;
70
(b) guarantees made in the ordinary course of its business by the
Borrower of Indebtedness or liabilities of any wholly owned Domestic
Subsidiary or wholly owned Foreign Subsidiary which Indebtedness and
liabilities are otherwise permitted hereunder; and
(c) guarantees existing on the Closing Date by the Borrower's
Subsidiaries, of the IRB Indebtedness permitted by subsection 9.2(f).
9.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any wholly owned Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be
the continuing or surviving corporation) or with or into any one or more
wholly owned Subsidiaries of the Borrower provided that in each case, after
giving effect to such merger or consolidation, the continuing or surviving
corporation's net worth shall not be less than that of either of the
corporations so consolidated or merged immediately prior to such merger or
consolidation;
(b) any wholly owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to the Borrower or any other wholly owned Domestic Subsidiary
of the Borrower that is a Guarantor;
(c) C.P.M./Europe S.A. [France] may transfer all but not less than
all of its personal property and other assets (other than real property and
other than personal property needed for the maintenance of a sales office)
to C.P.M./Europe B.V. [Netherlands] if all of the following conditions are
met: (i) any Foreign Letter of Credit issued by the Issuing Bank on behalf
of C.P.M./Europe S.A. shall have been cancelled and surrendered to the
Issuing Bank, and (ii) such of the personal property and other assets so
transferred to C.P.M./Europe B.V. as the Agent shall have specified shall
be subject to a fully perfected security interest of first priority in
favor of the Agent for the ratable benefit of the Revolving Credit Lenders.
Upon any such transfer, the Issuing Bank shall have no further obligation
to issue Foreign Letters of Credit on behalf of C.P.M./Europe S.A. or any
other Subsidiary incorporated in France; and
(d) Any Inactive Subsidiary may be dissolved.
9.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person other than the
Borrower or any wholly owned Domestic Subsidiary that is a Guarantor, except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(c) as permitted by subsection 9.5(b);
71
(d) Asset Sales, provided that (w) the consideration received for
such Asset Sale is in an amount at least equal to the fair market value of
the property, business or assets sold in connection therewith (as
determined in good faith by the Board of Directors of Parent), (x) at least
75% of the value of such consideration consists of cash and the remainder
consists of promissory notes, provided that for the purposes of this clause
--------
(x) consideration consisting of shares of Capital Stock listed on a
national securities exchange or on NASDAQ that are subject to no
restrictions upon sale shall be treated as if they were cash having a value
equal to the fair market value thereof, (y) the Net Proceeds of such Asset
Sales are applied in accordance with subsection 5.1(c) and (z) after giving
effect to such any such Asset Sale, the cumulative EBITDA of the Borrower
and its Subsidiaries on a consolidated basis for the period commencing on
the date of this Agreement and ending on the date of determination thereof
attributable to all such property sold or disposed of in all such Asset
Sales during such period (including any such property sold or disposed of
on such date) does not constitute more than $1,000,000; and provided,
further, that neither the Borrower nor any of its Subsidiaries may sell
equity securities issued by any of their respective Subsidiaries unless, as
a result of such sale, neither the Borrower nor any of its Subsidiaries
shall own, directly or indirectly, any interest whatsoever in the
Subsidiary whose equity securities are being sold;
(e) sales of equipment and other property, including leasehold
interests, in the ordinary course of business in an aggregate amount not
exceeding $250,000 in any fiscal year, commencing with the fiscal year
commencing October 1, 1996, and $1,000,000 in the aggregate from and after
the Closing Date for all such sales (other than the sale of the
Indianapolis Property) and the sale of the Indianapolis Property; and
(f) the sale, transfer or other disposition of any asset in the
ordinary course of business which is obsolete for its intended use.
9.7 Limitation on Leases. Permit Consolidated Lease Expense (not
including payments in respect of leases in effect on the Closing Date and
renewals and replacements thereof) for any fiscal year of the Borrower to exceed
$2,500,000.
9.8 Restricted Payments. Declare or pay any dividend (other than
dividends payable solely in common stock of the Borrower and other than
dividends payable by any Subsidiary to the Borrower, directly or indirectly) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary, except that so long as no Default or Event of Default has
occurred and is continuing or would result from the making of such payment the
Borrower may declare and pay cash dividends on its Voting Stock not to exceed
$150,000 in the aggregate in any fiscal year, commencing with the fiscal year
commencing October 1, 1996; or repay, in whole or in part, the Subordinated
Loan, if any, except, that the Borrower may pay interest on the outstanding
principal amount of the Subordinated Loan in subordinated debt securities of the
Borrower to the extent permitted by the Subordinated Loan Agreement (all such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called "Restricted
Payments").
9.9 Limitation on Capital Expenditures. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any Adjusted
Capital Expenditures, except for (i) expenditures in the ordinary course of
business not exceeding, in the aggregate for the Borrower and its consolidated
Subsidiaries, during any fiscal year of the Borrower an amount equal to (a) $
4,000,000 (exclusive of the Chinese
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Assets Purchase Price) plus (b) any Free Excess Cash Flow, provided, that up to
100% of any such amount if not so expended in the fiscal year for which it is
permitted above, may be carried over for expenditure in the next and succeeding
fiscal years and (ii) the incurrence of the Chinese Assets Purchase Price,
provided that such purchase price is paid prior to December 31, 1997 and the
Borrower shall not have acquired the joint venture interest of Ingersoll-Rand
China Limited in the Chinese Joint Venture prior to the payment of such purchase
price.
9.10 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person (collectively,
"Investments"), except:
(a) extensions of trade credit and accounts receivable generated in
the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) the Acquisition (including the purchase, if any, of the joint
venture interest of Ingersoll-Rand China Limited in the Chinese Joint
Venture or, in the alternative, of the Chinese Assets);
(d) Investments by the Borrower in its wholly-owned Domestic
Subsidiaries and Investments by such Subsidiaries in the Borrower and in
other wholly-owned Domestic Subsidiaries (but only to the extent that all
such Investments in Subsidiaries are evidenced by a Note or Notes);
provided that no Investment may be made by the Borrower and its
Subsidiaries in any Foreign Subsidiary (other than the purchase of Notes
evidencing Indebtedness permitted to be incurred under subsection
9.2(b)(iii)), the Texas Company or the Brazilian Company;
(e) advances on sales commissions made in the ordinary course of
business in an aggregate amount not to exceed $200,000 at anytime
outstanding;
(f) acquisitions of promissory notes and shares of Capital Stock in
consideration for Asset Sales permitted by subsection 9.6(d); and
(g) securities received from insolvent Account Debtors (other than
any wholly owned Domestic Subsidiary or any Affiliate of the Borrower) in
settlement of Accounts arising in the ordinary course of business in an
aggregate amount not in excess of $100,000 at any time outstanding.
9.11 Limitation on Optional Payments and Modifications of Debt
Instruments and Capital Stock. (a) Make any optional payment or prepayment or
any purchase or redemption of any Indebtedness for borrowed money (other than
the Loans) or (b) amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms of any such Indebtedness for borrowed
money (other than any such amendment, modification or change which would extend
the maturity or reduce the amount of any payment of principal thereof or which
would reduce the rate or extend the date for payment of interest thereon) or (c)
amend the Certificate of Incorporation of the Borrower.
9.12 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the
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Borrower or such Subsidiary, as the case may be, than it would obtain in a
comparable arm's-length transaction with a Person which is not an Affiliate,
provided that the foregoing restriction shall not apply to the indemnification
of directors of the Borrower and its Subsidiaries in accordance with customary
practice.
9.13 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.
9.14 Limitation on Changes in Fiscal Year. Permit the fiscal year of
the Borrower to end on a day other than September 30.
9.15 Limitation on Negative Pledge Clauses. Enter into with any
Person any agreement after the Closing Date, other than (a) this Agreement, (b)
operating leases with respect to any leased asset leased, (c) the IRB Documents,
purchase money mortgages or Financing Leases permitted by this Agreement (in
which cases, any prohibition or limitation shall only be effective against the
assets financed thereby), which prohibits or limits the ability of the Borrower
or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired or of any of the Subsidiaries to declare or pay dividends or to make
loans or other advances to the Borrower, directly or indirectly.
9.16 Limitation on Lines of Business. Enter into any business either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement, after
giving effect to the Acquisition, and other similar businesses involving the
manufacture of industrial or capital goods, or which are directly related
thereto.
9.17 Limitation on Entering into any Interest Rate Swaps. Enter into
interest rate swap which would cause the aggregate notional amount of all
interest rate swaps to which the Borrower and its Subsidiaries are parties to
exceed 100% of the aggregate original outstanding principal amount of the Term
Loans.
9.18 Limitation on New Bank Accounts. Open (a) any new Domestic Bank
Account without the prior written consent of the Agent or (b) any new bank
account for any Foreign Subsidiary without at least thirty (30) days' prior
written notice to the Agent; or change the Cash Management Bank without the
prior written consent of the Agent.
9.19 Limitation on Issuance of Capital Stock by Subsidiaries. Permit
any direct or indirect Subsidiary of the Borrower to issue or grant any Capital
Stock of such Subsidiary to any Person, other than the Borrower or a wholly
owned Domestic Subsidiary of the Borrower.
9.20 Inactive Subsidiaries. Permit any Inactive Subsidiary to
conduct any business, acquire or hold any property or assets or incur or suffer
to exist any obligation or other liability ("prohibited activities"); provided
that any Inactive Subsidiary may engage in prohibited activities if it shall
have first executed and delivered to the Agent a Subsidiary Guarantee, a
Subsidiary Pledge Agreement and a Subsidiary Security Agreement and the Agent
shall have received, for the ratable benefit of the Lenders, a valid,
enforceable and perfected security interest of first priority in the property
and assets of such Inactive Subsidiary. In such event, such Inactive Subsidiary
shall cease to be an Inactive Subsidiary and shall be treated as a Domestic
Subsidiary for all purposes hereof and of the other Loan Documents.
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SECTION 10. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing ("Event
of Default"):
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms thereof or hereof; or the Borrower or the
applicable Foreign Subsidiary shall fail (i) to reimburse any drawing on
any Letter of Credit when due in accordance with the terms hereof or (ii)
to provide any or all of the cash collateral required to be deposited with
the Issuing Bank pursuant to a Letter of Credit Request strictly in
accordance with the terms thereof; or the Borrower shall fail to pay any
interest on any Loan, or any fee or other amount payable hereunder, within
three Business Days after any such interest, fees or other amount becomes
due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document or
which is contained in any certificate, document or financial or other
statement furnished by it pursuant to the Loan Documents shall prove to
have been false or misleading in any material respect on or as of the date
made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in subsection 8.7(a),
subsections 8.16, 8.17 and 8.18, Section 9 (other than subsection 9.10(a),
(b) or (e) or subsection 9.12), Section 5 of each of the Stock Pledge
Agreements or Sections 4.1 and 4.5 of each of the Security Agreements; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) and paragraph (n) of this Section), and such default shall
continue unremedied for a period of 30 days after notice thereof from the
Agent or any Lender to the Borrower; or
(e) Any Loan Party shall (i) default in any payment of principal of
or interest on any Indebtedness (other than the Loans) or in the payment of
any Guarantee Obligation, beyond the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness or Guarantee
Obligation was created, if the aggregate amount of the Indebtedness and/or
Guarantee Obligations in respect of which such default or defaults shall
have occurred is at least $1,000,000 in the aggregate; or (ii) default in
the observance or performance of any other agreement or condition relating
to any such Indebtedness or Guarantee Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or any
other event (including, without limitation, any mandatory prepayment event)
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due (whether by acceleration, mandatory prepayment
or otherwise) prior to its stated maturity or such Guarantee Obligation to
become payable; or
(f)(i) Any Loan Party shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any
75
substantial part of its assets, or any Loan Party shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Loan Party any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against any Loan Party any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) any Loan Party shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) any Loan Party shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
or
(g)(i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other similar event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vi) above, such
event or condition, together with all other such events or conditions, if
any, could reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against any
Loan Party involving in the aggregate a liability (to the extent not paid
or covered by insurance) of $500,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 60 days from the entry thereof; or
(i) (i) Except in connection with an Asset Sale permitted under
subsection 9.6, any of the Security Documents shall cease, for any reason,
to be in full force and effect, or the Borrower or any other Loan Party
which is a party to any of the Security Documents shall so assert or (ii)
the Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created
thereby (except as expressly provided by such Security Document); or
(j) Any Guarantee shall cease, for any reason (except as expressly
provided in such Guarantee), to be in full force and effect or any
Guarantor shall so assert; or
(k) A Change of Control shall have occurred; or
(l) The Borrower's Voting Stock shall cease to be traded on a
principal securities exchange or Borrower shall fail to make a material
filing with the SEC when due (after giving effect to any extension granted
by the SEC in the ordinary course); or
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(m) The Cash Infusion or any part thereof shall not be made when due;
or
(n) The Borrower or any other Loan Party shall fail timely to comply
with any of its agreements and covenants in the Closing Letter and the
Agent shall have delivered to the Borrower written notice that such failure
constitutes an "Event of Default" under this paragraph (n);
then, and in any such event and at any time thereafter during the continuation
of such an Event of Default, (A) if such event is an Event of Default specified
in paragraph (f) above with respect to the Borrower, automatically the
Commitments shall immediately terminate and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Required Lenders, the Agent may, or upon the request of the
Required Lenders, the Agent shall, by written notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Agent may, or upon the request of the Required Lenders, the Agent shall, by
written notice to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived.
In addition, upon demand by the Issuing Bank, the Agent or the
Required Revolving Credit Lenders after the occurrence of any Event of Default,
the Borrower shall deposit with the Agent for the benefit of the Revolving
Credit Lenders with respect to each Letter of Credit then outstanding, promptly
upon such demand, cash or Cash Equivalents in an amount equal to the greatest
amount for which such Letter of Credit may be drawn. Such deposit shall be held
by the Agent for the benefit of the Issuing Bank and the Revolving Credit
Lenders as security for, and to provide for the payment of, the Letter of Credit
Outstanding.
SECTION 11. THE AGENT
11.1 Appointment. Each Lender hereby irrevocably designates and
appoints Credit Lyonnais New York Branch as the Agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes Credit Lyonnais New York Branch, as the Agent for such Lender, to
take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
11.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
11.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in
77
this Agreement or any other Loan Document or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
the Borrower to perform its obligations hereunder or thereunder. The Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower.
11.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent shall treat the payee of any Note as the owner
thereof for all purposes unless the assignment or transfer shall have been
recorded in the Register. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
11.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders; provided
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
11.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon 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 analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
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11.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Commitment Percentages in effect on the date on which indemnification
is sought under this subsection (or, if indemnification is sought after the date
upon which the Commitments shall have terminated and the Loans shall have been
paid in full, ratably in accordance with their Commitment Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct (as
determined in a final, non-appealable judgment by a court of competent
jurisdiction). The agreements in this subsection shall survive the payment of
the Notes and all other amounts payable hereunder.
11.8 Agent in Its Individual Capacity. The Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower as though the Agent were not the Agent hereunder and
under the other Loan Documents. With respect to its Loans made or renewed by it,
the Agent shall have the same rights and powers under this Agreement and the
other Loan Documents as any Lender and may exercise the same as though it were
not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in
its individual capacity.
11.9 Successor Agent. The Agent may resign as Agent upon 30 days'
written notice to the Lenders. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent, and
the term "Agent" shall mean such successor agent effective upon such appointment
and approval, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Notes.
After any retiring Agent's resignation as Agent, the provisions of this
subsection shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the other Loan
Documents.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. Neither this Agreement, any Note or any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, with the consent of the Agent, or, with
the written consent of the Required Lenders, the Agent may, from time to time,
(a) enter into with the Borrower written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Borrower hereunder or thereunder or
(b) waive, on such terms and conditions as the Required Lenders or the Agent, as
the case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) reduce the amount or extend the scheduled
date of maturity of any Loan or of any installment thereof, or reduce the stated
rate of any interest or fee payable hereunder or extend the scheduled date of
any payment thereof or increase the aggregate amount or extend the expiration
date of any Lender's Commitments, in each case without the consent
79
of each Lender affected thereby, (ii) amend, modify or waive any provision of
subsection 2.2, 2.3, 2.4, 3.3, 3.4 or 12.1 or reduce the percentage specified in
the definition of Required Lenders, or consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement and the
other Loan Documents or release all or substantially all of the Collateral in
each case without the written consent of all the Lenders and the Issuing Bank,
(iii) amend, modify or waive any provision of Section 2 or the order of
application of prepayments in subsection 5.1 without the written consent of the
Required Tranche A Lenders or reduce the percentage in the definition of
Required Tranche A Lenders without the consent of all the Tranche A Lenders,
(iv) amend, modify or waive any provision of Section 2 or the order of
application of prepayments in subsection 5.1 without the written consent of the
Required Tranche B Lenders or reduce the percentage in the definition of
Required Tranche B Lenders without the consent of all the Tranche B Lenders, (v)
amend, modify or waive any provision of Section 3 or the order of application of
prepayments in subsection 5.1 without the prior written consent of the Required
Revolving Credit Lenders or reduce the percentage in the definition of Required
Revolving Credit Lenders without the consent of all the Revolving Credit
Lenders, (vi) amend, modify or waive any provision of Section 4 without the
prior written consent of both the Issuing Bank and the Required Revolving Credit
Lenders or (vii) amend, modify or waive any provision of Section 11 without the
written consent of the then Agent (provided that the rights of any prior Agent
or Agents shall not be adversely affected thereby). Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and the Issuing Bank, and shall be binding upon the Borrower, the Lenders, the
Issuing Bank and the Agent. In the case of any waiver, the Borrower, the
Lenders, the Issuing Bank and the Agent shall be restored to their former
position and rights hereunder and under the outstanding Notes and any other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.
12.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or five Business Days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of the Borrower and the
Agent, and as set forth in Schedule I in the case of the other parties hereto,
----------
or to such other address as may be hereafter notified by the respective parties
hereto and any future holders of the Notes:
The Borrower: Gencor Industries, Inc.
5201 North Orange Blossom Trail
Orlando, Florida 32810
Attention: John E. Elliott
Telecopy: (407) 299-8241
Telephone: (407) 290-6000
The Agent: Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attention: Leveraged Finance (Robert H. Dial)
Telecopy: (212) 459-3176
Telephone: (212) 261-7869
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 3.2, 3.5, 4.1, 4.5, 5.1, 5.2 or 5.7 shall not be
effective until received.
12.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan
80
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
12.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Agent for all its out-of-pocket costs and expenses incurred in
connection with the preparation and execution of, and any amendment, supplement,
modification or waiver to, this Agreement and the other Loan Documents and any
other documents prepared in connection herewith or therewith, including, without
limitation, the fees and disbursements of Latham & Watkins, special counsel to
the Agent, as well as local and foreign counsel to the Agent, (b) to pay or
reimburse each Lender, the Issuing Bank and the Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
to the Agent and to each Lender, and (c) to pay, indemnify, and hold each
Lender, the Issuing Bank and the Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, documentary stamp, excise and other taxes, if any, which may be
payable or determined to be payable by reason of the execution and delivery of
this Agreement and the other Loan Documents and any such other documents, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect thereof and (d) to indemnify, and hold each Lender, the Issuing Bank and
the Agent and their respective affiliates, officers, directors, employees,
agents and advisors (each, an "Indemnified Party") harmless from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including legal fees and other charges) with respect to the
execution, delivery, performance and consummation of this Agreement, the other
Loan Documents and any such other documents, including, without limitation, any
of the foregoing relating to, or arising out of (i) the preparation for a
defense of, or participation in, any investigation, litigation, proceeding or
other action related to or arising out of the Loan Documents or any other such
documents, the Acquisition or the Refinancing (whether or not such Indemnified
Party is a party to such proceeding or other action and whether any such
investigation, litigation or proceeding or other action is brought by the
Borrower, its stockholders or creditors or by any other Person) or (ii) the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the Borrower, any of its Subsidiaries or any of the Mortgaged
Properties (all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that the Borrower shall have no obligation hereunder to
an Indemnified Party with respect to indemnified liabilities arising from the
gross negligence or willful misconduct of such Indemnified Party (as determined
in a final non-appealable judgment by a court of competent jurisdiction). The
agreements in this subsection shall survive repayment of the Loans and all other
amounts payable hereunder.
12.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Issuing Bank, the Agent and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of each
Lender and the Issuing Bank.
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder
81
and under the other Loan Documents. In the event of any such sale by a Lender
of a participating interest to a Participant, such Lender's obligations under
this Agreement to the other parties to this Agreement shall remain unchanged,
such Lender shall remain solely responsible to the other parties for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. The Borrower also agrees that each Participant shall
be entitled to the benefits of subsections 5.9, 5.10 and 5.11 with respect to
its participation in the Commitments and the Loans outstanding from time to time
as if it was a Lender.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
Lender or any affiliate thereof or, with the consent of the Agent (which shall
not be unreasonably withheld), to another Person ("an Assignee") all or any part
of its rights and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
-------
S, executed by such Assignee, such assigning Lender (and, in the case of an
- -
Assignee that is not then a Lender or an affiliate thereof, by the Agent) and
delivered to the Agent for its acceptance and recording in the Register,
provided that, in the case of any such assignment to an additional Assignee, the
sum of the aggregate principal amount of the Loans and the aggregate amount of
the unused Commitments being assigned and, if such assignment is of less than
all of the rights and obligations of the assigning Lender, the sum of the
aggregate principal amount of the Loans and the aggregate amount of the unused
Commitments remaining with the assigning Lender are each not less than
$5,000,000. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) 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 with a Commitment as set forth therein, and (y) the assigning Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto). Notwithstanding any provision of paragraph
(e) of this subsection, unless requested by the Assignee and/or the assigning
Lender, Notes shall not be required to be executed and delivered by the
Borrower, for any assignment which occurs at any time when any of the events
described in Section 10(f) shall have occurred and be continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at the
address of the Agent referred to in subsection 12.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amounts of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Lenders shall treat each Person whose name
is recorded in the Register as the owner of a Loan or other obligation hereunder
as the owner thereof for all purposes of this Agreement and the other Loan
Documents, notwithstanding any notice to the contrary. Any assignment of any
Loan or other obligation hereunder shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Agent) together with payment by
the Assignee or the assigning Lender to the Agent of a registration and
processing fee of $3,500, the Agent shall (i) promptly accept such Assignment
and Acceptance and (ii) on the effective date determined pursuant thereto record
the information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower.
82
(f) Subject to the provisions of subsection 12.16, the Borrower
authorizes each Lender to disclose to any Participant or Assignee (each, a
Transferee") and any prospective Transferee any and all financial information in
such Lender's possession concerning the Borrower, its wholly owned Domestic
Subsidiaries and its Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Agreement or which has been delivered to
such Lender by or on behalf of the Borrower in connection with such Lender's
credit evaluation of the Borrower, its wholly owned Domestic Subsidiaries and
its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law, provided that no such assignment shall
release a Lender from any of its obligations hereunder.
12.7 Adjustments; Set-off. (a) If any Lender (a "Benefited Lender")
shall at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 10(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to set-
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify
the Borrower and the Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
12.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the Agent.
12.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 Integration. This Agreement and the other Loan Documents
together with the Fee Letter represent the agreement of the Borrower and the
Subsidiaries, the Agent, the Issuing Bank and the Lenders
83
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties any party hereto relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents or in such Fee Letter. Any previous agreement with respect to the
subject matter hereof is superseded by this Agreement and the other Loan
Documents.
12.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
12.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to it at its
address set forth in subsection 12.2 or at such other address of which the
Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may -have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential
damages.
12.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor the Issuing Bank nor any Lender has any
fiduciary relationship with or duty to it arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between Agent, Issuing Bank and Lenders, on one hand, and it,
on the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and
84
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders (including the Issuing Bank) or among it and the
Lenders (including the Issuing Bank).
12.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT, THE ISSUING
BANK AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
12.15 Interest Rate Limitation. Notwithstanding anything herein or
in the Notes to the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as interest under
applicable law (collectively, the "Charges"), as provided for herein or in any
other document executed in connection herewith, or otherwise contracted for,
charged, received, taken or reserved by any Lender, shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by such Lender in accordance with applicable law, the rate
of interest payable under the Note held by such Lender, together with all
Charges payable to such Lender, shall be limited to the Maximum Rate.
12.16 Confidentiality. The Lenders shall hold in confidence all non-
public information obtained pursuant to the requirements of this Agreement which
has been identified as such in writing by the Borrower, provided that any Lender
may make disclosure (i) reasonably required by any Transferee or prospective
Transferee pursuant to subsection 12.6 (subject to the execution by such
Transferee or prospective Transferee of a confidentiality letter of the same
scope as this subsection 12.16) or (ii) as required or requested by any
governmental agency or representative thereof or required by law, rule or
regulation or (iii) pursuant to legal process; provided, further, that in no
event shall any Lender be obligated or required to return any materials
furnished by the Borrower.
[ Balance of this page intentionally left blank]
85
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
GENCOR INDUSTRIES, INC.
By: /s/ John Elliott
-----------------------------
Name: John E. Elliott
Title: Exec. Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
as Agent, as a Lender and as Issuing Bank
By: /s/ Robert H. Dial
-----------------------------
Name: Robert H. Dial
Title: Vice President
CREDIT LYONNAIS ATLANTA AGENCY,
as Lender
By: /s/ Robert S. Ivosevich
-----------------------------
Name: Robert S. Ivosevich
Title: Senior Vice President
86
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS....................................... 1
1.1 Defined Terms............................................ 1
1.2 Other Definitional Provisions............................ 28
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS.. ...... 28
2.1 Term Loans............................................... 28
2.2 Procedure for Term Loan Borrowing........................ 28
2.3 Repayment of Tranche A Term Loans........................ 29
2.4 Repayment of Tranche B Term Loans........................ 29
2.5 Evidence of Term Loan Debt............................... 30
2.6 Use of Proceeds of Term Loans............................ 31
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS.. 31
3.1 Revolving Credit Commitments............................. 31
3.2 Procedure for Revolving Credit Borrowing................. 32
3.3 Repayment of Revolving Credit Loans; Evidence of Debt.... 32
3.4 Commitment Fee........................................... 33
3.5 Termination or Reduction of Revolving Credit
Commitments.............................................. 33
3.6 Borrowing Base Reduction................................. 34
3.7 Use of Proceeds of Revolving Credit Loans................ 34
3.8 Agency Fee............................................... 34
SECTION 4. LETTERS OF CREDIT................................. 34
4.1 Issuance................................................. 34
4.2 Participation by Revolving Credit Lenders................ 35
4.3 Drawings................................................. 35
4.4 Obligations Absolute..................................... 36
4.5 Other Lenders............................................ 36
4.6 Indemnification.......................................... 37
4.7 Liability of the Issuing Bank............................ 37
4.8 Letter of Credit Fee..................................... 38
4.9 Letter of Credit Security................................ 38
4.10 Guarantee................................................ 38
SECTION 5. GENERAL PROVISIONS APPLICABLE TO COMMITMENTS
AND LOANS......................................... 40
5.1 Prepayments.............................................. 40
5.2 Conversion and Continuation Options...................... 41
5.3 Minimum Amounts of Tranches.............................. 42
5.4 Interest Rates and Payment Dates......................... 42
5.5 Computation of Interest and Fees......................... 43
5.6 Inability to Determine Interest Rate..................... 43
5.7 Pro Rata Treatment and Payments.......................... 44
i
5.8 Illegality............................................... 44
5.9 Requirements of Law...................................... 45
5.10 Taxes.................................................... 46
5.11 Indemnity................................................ 48
5.12 Change of Lending Office................................. 48
SECTION 6. REPRESENTATIONS AND WARRANTIES.................... 48
6.1 Financial Condition...................................... 48
6.2 No Change................................................ 50
6.3 Corporate Existence; Compliance with Law................. 50
6.4 Corporate Power, Authorization; Enforceable
Obligations.............................................. 50
6.5 No Legal Bar............................................. 51
6.6 No Material Litigation................................... 51
6.7 No Default............................................... 51
6.8 Ownership of Property; Liens............................. 51
6.9 Intellectual Property.................................... 51
6.10 No Burdensome Restrictions............................... 52
6.11 Taxes.................................................... 52
6.12 Federal Regulations...................................... 52
6.13 ERISA.................................................... 52
6.14 Investment Company Act; Other Regulations................ 52
6.15 Subsidiaries............................................. 53
6.16 Environmental Matters.................................... 53
6.17 Regulation H............................................. 54
6.18 Security Documents....................................... 54
6.19 Acquisition Approvals.................................... 54
6.20 Accuracy of Information.................................. 54
6.21 Insurance................................................ 54
6.22 Solvency................................................. 55
6.23 Labor Relations.......................................... 55
6.24 Indebtedness............................................. 55
6.25 Bank Accounts............................................ 55
6.26 Inactive Subsidiaries.................................... 55
SECTION 7. CONDITIONS PRECEDENT.............................. 55
7.1 Conditions to Initial Loans.............................. 55
7.2 Conditions to Each Loan.................................. 61
SECTION 8. AFFIRMATIVE COVENANTS............................. 61
8.1 Financial Statements..................................... 61
8.2 Certificates; Other Information.......................... 62
8.3 Payment of Taxes and Other Obligations................... 65
8.4 Conduct of Business and Maintenance of Existence......... 65
8.5 Maintenance of Property Insurance........................ 65
8.6 Inspection of Property, Books and Records; Discussions... 65
8.7 Notices.................................................. 65
8.8 Environmental Law........................................ 66
8.9 Maintenance of Liens of the Security Documents........... 67
ii
8.10 Pledge of After Acquired Property........................ 67
8.11 Pledge During Event of Default........................... 67
8.12 Interest Rate Protection................................. 68
8.13 Foreign Subsidiaries Security............................ 68
8.14 Collateral Account....................................... 68
8.15 Bank Accounts............................................ 68
8.16 Cash Management System and Cash Management Bank.......... 69
8.17 Cash Infusion............................................ 69
8.18 IRB Consents............................................. 69
SECTION 9. NEGATIVE COVENANTS................................. 69
9.1 Financial Condition Covenants............................ 69
9.2 Limitation on Indebtedness............................... 72
9.3 Limitation on Liens...................................... 73
9.4 Limitation on Guarantee Obligations...................... 74
9.5 Limitation on Fundamental Changes........................ 75
9.6 Limitation on Sale of Assets............................. 75
9.7 Limitation on Leases..................................... 76
9.8 Restricted Payments...................................... 76
9.9 Limitation on Capital Expenditures....................... 77
9.10 Limitation on Investments, Loans and Advances............ 77
9.11 Limitation on Optional Payments and Modifications
of Debt Instruments and Capital Stock.................... 77
9.12 Limitation on Transactions with Affiliates............... 78
9.13 Limitation on Sales and Leasebacks....................... 78
9.14 Limitation on Changes in Fiscal Year..................... 78
9.15 Limitation on Negative Pledge Clauses.................... 78
9.16 Limitation on Lines of Business.......................... 78
9.17 Limitation on Entering into any Interest Rate Swaps...... 78
9.18 Limitation on New Bank Accounts.......................... 78
9.19 Limitation on Issuance of Capital Stock by
Subsidiaries............................................. 78
9.20 Inactive Subsidiaries.................................... 79
SECTION 10. EVENTS OF DEFAULT.................................. 79
SECTION 11. THE AGENT.......................................... 81
11.1 Appointment.............................................. 81
11.2 Delegation of Duties..................................... 82
11.3 Exculpatory Provisions................................... 82
11.4 Reliance by Agent........................................ 82
11.5 Notice of Default........................................ 82
11.6 Non-Reliance on Agent and Other Lenders.................. 83
11.7 Indemnification.......................................... 83
11.8 Agent in Its Individual Capacity......................... 83
11.9 Successor Agent.......................................... 84
SECTION 12. MISCELLANEOUS...................................... 84
12.1 Amendments and Waivers................................... 84
iii
12.2 Notices.................................................. 85
12.3 No Waiver; Cumulative Remedies........................... 85
12.4 Survival of Representations and Warranties............... 85
12.5 Payment of Expenses and Taxes............................ 85
12.6 Successors and Assigns; Participations and Assignments... 86
12.7 Adjustments; Set-off..................................... 88
12.8 Counterparts............................................. 88
12.9 Severability............................................. 88
12.10 Integration.............................................. 88
12.11 Governing Law............................................ 89
12.12 Submission To Jurisdiction; Waivers...................... 89
12.13 Acknowledgements......................................... 89
12.14 Waivers of Jury Trial.................................... 89
12.15 Interest Rate Limitation................................. 90
12.16 Confidentiality.......................................... 90
iv
SCHEDULES:
Schedule I Lenders, Notice Addresses, Commitments, Commitment
Percentages
Schedule II Closing Date Mortgaged Property
Schedule III Leasehold Mortgages
Schedule 6.1(b)(1) Guaranteed Obligations
Schedule 6.1(b)(2) Sales or Transfers
Schedule 6.4 Filing Offices
Schedule 6.6 Litigation
Schedule 6.8 Exceptions to Title
Schedule 6.15 Subsidiaries
Schedule 6.16 Environmental Matters
Schedule 6.18 Filing Offices
Schedule 6.21 Insurance
Schedule 6.24 Indebtedness to Remain Outstanding
Schedule 6.25 Bank Accounts
Schedule 7.1(d) Indebtedness to be Repaid
Schedule 7.1(n) Acquisition Corporate and Capital Structure
Schedule 7.1(o) Consents and Approvals
Schedule 7.1(e) Title Insurance Policies
Schedule 9.3(i) Existing Liens
EXHIBITS:
Exhibit A-1 Form of Borrower Security Agreement
Exhibit A-2 Forms of Borrower Trademark Security Agreement,
Patent Security Agreement and Copyright Security
Agreement
Exhibit B Form of Borrower Pledge Agreement
Exhibit C Form of Leasehold Mortgage
Exhibit D-1 Form of Mortgage/Deed of Trust (Ohio)
Exhibit D-2 Form of Mortgage/Deed of Trust (Florida)
Exhibit D-3 Form of Mortgage/Deed of Trust (Iowa)
Exhibit D-4 Form of Mortgage/Deed of Trust (Indiana)
Exhibit D-5 Form of Mortgage/Deed of Trust (Missouri)
Exhibit D-6 Form of Mortgage/Deed of Trust (Colorado)
Exhibit E Form of Subsidiaries Guarantee
Exhibit F-1 Form of Subsidiary Security Agreement
Exhibit F-2 Forms of Subsidiary Trademark Security Agreement,
Patent Security Agreement and Copyright Security
Agreement
Exhibit G Form of Subsidiary Pledge Agreement
Exhibit H-1 Form of Tranche A Term Note
Exhibit H-2 Form of Tranche B Term Note
Exhibit I Form of Revolving Credit Note
Exhibit J Form of Letter of Credit Request
Exhibit K Form of Borrowing Base Certificate
Exhibit L Form of Landlord Waiver
Exhibit O Form of Closing Certificate
Exhibit P Form of Closing Financial Certificate
Exhibit Q-1 Form of Opinion of Counsel to Borrower
Exhibit Q-2 Form of Opinion of Local Counsel to Borrower
v
Exhibit R Form of Compliance Certificate
Exhibit S Form of Assignment and Acceptance
vi
________________________________________________________________________________
GENCOR INDUSTRIES, INC.
______________________________________
$95,000,000
SENIOR SECURED CREDIT AGREEMENT
DATED AS OF DECEMBER 10, 1996
______________________________________
CREDIT LYONNAIS NEW YORK BRANCH,
AS AGENT
________________________________________________________________________________