REVOLVING CREDIT, TERM LOAN, GUARANTY
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
AND
THE OTHER LENDERS A PARTY HERETO
WITH
HARDING GLASS, INC.
KAR PRODUCTS INC.
SUNSOURCE INC.
SUNSOURCE TECHNOLOGY SERVICES INC.
THE HILLMAN GROUP, INC.
AND
A. & H. BOLT & NUT COMPANY LIMITED
A & H HOLDING COMPANY, INC.
J.N. FAUVER (CANADA) LIMITED
SUNSOURCE CANADA INVESTMENT COMPANY
SUNSOURCE CORPORATE GROUP, INC.
SUNSOURCE INDUSTRIAL SERVICES COMPANY, INC.
SUNSOURCE INVENTORY MANAGEMENT COMPANY, INC.
SUNSOURCE INVESTMENT COMPANY, INC.
SUNSUB A INC.
(CREDIT PARTIES AND GUARANTORS)
December 15, 1999
REVOLVING CREDIT, TERM LOAN, GUARANTY
AND
SECURITY AGREEMENT
Revolving Credit, Term Loan, Guaranty and Security Agreement dated
December 15, 1999 among SUNSOURCE INC., a Delaware corporation ("SunSource"),
SUNSOURCE TECHNOLOGY SERVICES INC., a Delaware corporation ("SunSource
Technology"), KAR PRODUCTS INC., a Delaware corporation ("Kar"), THE HILLMAN
GROUP, INC., a Delaware corporation ("Hillman"), HARDING GLASS, INC., a Delaware
corporation ("Harding") (SunSource, SunSource Technology, Kar, Hillman and
Harding, each a "Borrower" and collectively "Borrowers"), the other Credit
Parties (as defined herein) which are now or which hereafter become a party
hereto, the financial institutions which are now or which hereafter become a
party hereto (collectively, the "Lenders" and individually a "Lender") and PNC
BANK, NATIONAL ASSOCIATION ("PNC"), as agent for Lenders (PNC, in such capacity,
the "Agent").
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IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Credit Parties, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
1.1. Accounting Terms. As used in this Agreement, the Note, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrowers for the fiscal year ended December 31,
1998.
1.2. General Terms. For purposes of this Agreement the following terms
shall have the following meanings:
"Accountants" shall have the meaning set forth in Section 9.7
hereof.
"Advances" shall mean and include the Revolving Advances,
Letters of Credit, as well as the Term Loan.
"Advance Rates" shall have the meaning set forth in Section
2.1(a) hereof.
"Affiliate" of any Person shall mean (a) any Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person, or (b) any Person who is a director or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition, control of a
Person shall mean the power, direct or indirect, (x) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person, or (y) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to
this Agreement and shall include its successors and assigns.
"A. & H. Bolt" shall mean A. & H. Bolt & Nut Company Limited,
a corporation subsisting under the laws of the Province of Ontario.
"A & H Holding" shall mean A & H Holding Company, Inc., a
Michigan corporation.
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"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the higher of (i) the Base Rate in effect on such day and (ii)
the Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Authority" shall have the meaning set forth in Section
4.19(d).
"Base Rate" shall mean the base commercial lending rate of PNC
as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by PNC as a
means of pricing some loans to its customers and is neither tied to any external
rate of interest or index nor does it necessarily reflect the lowest rate of
interest actually charged by PNC to any particular class or category of
customers of PNC.
"Blocked Accounts" shall have the meaning set forth in Section
4.15(h).
"Borrower" or "Borrowers" shall have the meaning set forth in
the preamble to this Agreement and shall extend to all permitted successors and
assigns of such Persons.
"Borrowing Base Certificate" shall mean a certificate duly
executed by an officer of Borrowing Agent appropriately completed and in
substantially the form of Exhibit A hereto.
"Borrowers on a consolidated basis" shall mean the
consolidation in accordance with GAAP of the accounts or other items of
SunSource and its Subsidiaries.
"Borrowers' Account" shall have the meaning set forth in
Section 2.8.
"Borrowing Agent" shall mean SunSource.
"Business Day" shall mean any day other than Saturday or
Sunday or a legal holiday on which commercial banks are authorized or required
by law to be closed for business in East Brunswick, New Jersey and, if the
applicable Business Day relates to any Eurodollar Rate Loans, such day must also
be a day on which dealings are carried on in the London interbank market.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.ss.9601 et seq.
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"Change of Control" shall mean with respect to all Credit
Parties (other than SunSource) (a) the occurrence of any event (whether in one
or more transactions) which results in a transfer of control of such Credit
Party to a Person who is not an Original Owner or (b) any merger or
consolidation of or with any Credit Party or sale of all or substantially all of
the property or assets of such Credit Party. For purposes of this definition,
"control of Credit Party" shall mean the power, direct or indirect (x) to vote
50% or more of the securities having ordinary voting power for the election of
directors of such Credit Party or (y) to direct or cause the direction of the
management and policies of such Credit Party by contract or otherwise, but shall
not include a merger, consolidation or sale of all or substantially all assets
or properties involving only one or more Credit Parties; provided, that, with
respect to any such merger, consolidation or sale, to the extent such
transaction involves a Borrower, Borrower shall be the surviving entity or shall
be the purchaser of the assets or properties.
"Change of Ownership" shall mean the occurrence of one or more
of the following events:
(a) with respect to all Credit Parties (other than SunSource):
(i) 50% or more of the common stock of such Credit
Party is no longer owned or controlled by (including for the purposes of the
calculation of percentage ownership, any shares of common stock into which any
capital stock of such Credit Party held by any of the Original Owners is
convertible or for which any such shares of the capital stock of such Credit
Party or of any other Person may be exchanged and any shares of common stock
issuable to such Original Owners upon exercise of any warrants, options or
similar rights which may at the time of calculation be held by such Original
Owners) a Person who is an Original Owner or
(ii) any merger, consolidation or sale of substantially all of the property or
assets of such Credit Party except for any such transaction only involving
another Credit Party; provided, that, with respect to any such merger,
consolidation or sale, to the extent such transaction involves a Borrower,
Borrower shall be the surviving entity or shall be the purchaser of the assets
or properties.
(b) with respect to SunSource the direct or indirect sale,
lease, exchange or other transfer of all or substantially all of the assets of
SunSource to any Person or entity or group of Persons or entities acting in
concert as a partnership or other group, other than any Borrower (a "Group of
Persons");
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(c) the consummation of any consolidation or merger of
SunSource with or into another Person (other than another Borrower) with the
effect that the stockholders of SunSource immediately prior to the date of the
consolidation or merger hold immediately after such merger or consolidation less
than 51% of the combined voting power of the outstanding voting securities of
the surviving entity of such merger, or the corporation resulting from such
consolidation, ordinarily having the right to vote in the election of directors
(apart from rights accruing under special circumstances) immediately after such
merger or consolidation;
(d) the stockholders of SunSource shall approve any plan or
proposal for the liquidation or dissolution of SunSource;
(e) a Person or Group of Persons acting in concert as a
partnership, limited partnership, syndicate or other group shall, as a result of
a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become the direct or indirect beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act of 1934, as amended) of
securities of Sunsource representing 30% or more of the combined voting power of
the then outstanding securities of SunSource ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of the directors; and
(f) a Person or Group of Persons, together with any Affiliates
thereof, shall succeed in having a sufficient number of its nominees elected to
the Board of Directors of SunSource such that such nominees, when added to any
existing directors remaining on the Board of Directors of SunSource after such
election who are Affiliates of such Person or Group of Persons, will constitute
a majority of the Board of Directors of Sunsource.
"Charges" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation
and property taxes, custom duties, fees, assessments, liens, claims and charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts, imposed by any taxing or other authority, domestic
or foreign (including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral, any
Credit Party or any of its Affiliates.
"Closing Date" shall mean December 15, 1999 or such other date
as may be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated thereunder.
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"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all Real Property;
(g) all Subsidiary Stock;
(h) all of each Credit Party's right, title and
interest in and to (i) its respective goods and other property including, but
not limited to, all merchandise returned or rejected by Customers, relating to
or securing any of the Receivables; (ii) all of each Credit Party's rights as a
consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due to any Credit Party from any
Customer relating to the Receivables; (iv) other property, including warranty
claims, relating to any goods securing this Agreement; (v) all of each Credit
Party's contract rights, rights of payment which have been earned under a
contract right, instruments, documents, chattel paper, warehouse receipts,
deposit accounts and money; (vi) if and when obtained by any Credit Party, all
real and personal property of third parties in which such Credit Party has been
granted a lien or security interest as security for the payment or enforcement
of Receivables; and (vii) any other goods, personal property or real property
now owned or hereafter acquired in which any Credit Party has expressly granted
a security interest or may in the future grant a security interest to Agent
hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Credit Party;
(i) all of each Credit Party's ledger sheets, ledger
cards, files, correspondence, records, books of account, business papers,
computers, computer software (owned by any Credit Party or in which it has an
interest), computer programs, tapes, disks and documents relating to (a), (b),
(c), (d), (e), (f), (g) or (h) of this Paragraph; and
(j) all proceeds and products of (a), (b), (c), (d),
(e), (f), (g), (h) and (i) in whatever form, including, but not limited to:
cash, deposit accounts (whether or not comprised solely of proceeds),
certificates of deposit, insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the payment of
money, chattel paper, security agreements, documents, eminent domain proceeds,
condemnation proceeds and tort claim proceeds.
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"Commitment Percentage" of any Lender shall mean the
percentage set forth below such Lender's name on the signature page hereof as
same may be adjusted upon any assignment by a Lender pursuant to Section 17.3(b)
hereof.
"Commitment Transfer Supplement" shall mean a document in the
form of Exhibit 17.3 hereto, properly completed and otherwise in form and
substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Advances under this
Agreement.
"Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
any Credit Party's business, including, without limitation, any Consents
required under all applicable federal, provincial, state or other applicable
law.
"Contract Rate" shall mean, as applicable, the Revolving
Interest Rate or the Term Loan Rate.
"Controlled Group" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with any Credit Party, are treated as a
single employer under Section 414 of the Code.
"Credit Party" shall mean each Borrower and each Guarantor and
"Credit Parties" shall mean, collectively, Borrowers and Guarantors.
"Customer" shall mean and include the account debtor with
respect to any Receivable and/or the prospective purchaser of goods, services or
both with respect to any contract or contract right, and/or any party who enters
into or proposes to enter into any contract or other arrangement with any Credit
Party, pursuant to which such Credit Party is to deliver any personal property
or perform any services.
"Default" shall mean an event which, with the giving of notice
or passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1
hereof.
"Defaulting Lender" shall have the meaning set forth in
Section 2.16(a) hereof.
"Depository Accounts" shall have the meaning set forth in
Section 4.15(h) hereof.
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"Documents" shall have the meaning set forth in Section 8.1(c)
hereof.
"Dollar" and the sign "$" shall mean lawful money of the
United States of America.
"Domestic Rate Loan" shall mean any Advance that bears
interest based upon the Alternate Base Rate.
"Early Termination Date" shall have the meaning set forth in
Section 13.1 hereof.
"Earnings Before Interest and Taxes" shall mean for any period
the sum of (i) net income (or loss) of Borrowers on a consolidated basis for
such period (excluding extraordinary gains, plus (ii) all interest expense of
Borrowers on a consolidated basis for such period, plus (iii) all charges
against income of Borrowers on a consolidated basis for such period for federal,
provincial, state and local taxes actually paid.
"EBITDA" shall mean for any period the sum of (i) Earnings
Before Interest and Taxes for such period plus (ii) depreciation expenses for
such period, plus (iii) amortization expenses for such period.
"Eligible Inventory" shall mean and include Inventory
(excluding work in process), with respect to each Borrower valued at the lower
of cost or market value, determined on a first-in-first-out basis, which is not,
in Agent's reasonable opinion, obsolete, slow moving or unmerchantable and which
Agent, in its reasonable discretion, shall not deem ineligible Inventory, based
on such considerations as Agent may from time to time deem appropriate
including, without limitation, whether the Inventory is subject to a perfected,
first priority security interest in favor of Agent and no other Lien (other than
Permitted Encumbrances) as confirmed by Uniform Commercial Code, tax lien and
pending suit and judgment searches reasonably satisfactory to Agent, whether
Agent has received an executed landlord or warehouse agreement in favor of
Agent, in form and substance satisfactory to Agent, with respect to such
Inventory and whether the Inventory conforms to all standards imposed by any
governmental agency, division or department thereof which has regulatory
authority over such goods or the use or sale thereof. Inventory (excluding work
in process and unpaid finished goods and raw materials received from suppliers
within the immediately preceding thirty (30) day period) of A. & H. Bolt and
J.N. Fauver shall be deemed to constitute Eligible Inventory to the extent it
would constitute Eligible Inventory based upon the criteria set forth above. The
value of Inventory of A. & H. Bolt and J.N. Fauver shall be converted to Dollars
by Credit Parties (subject to review and revision by Agent in its reasonable
discretion) based upon the exchange rate on the date of computation.
"Eligible Receivables" shall mean and include with respect to
each Borrower, each Receivable of such Borrower arising in the ordinary course
of such Borrower's business and which Agent, in its reasonable credit judgment,
shall deem to be an Eligible Receivable, based on such considerations as Agent
may from time to time deem appropriate. A Receivable shall not be deemed
eligible unless such Receivable is subject to Agent's first priority perfected
security interest and no other Lien (other than Permitted Encumbrances) as
confirmed by Uniform Commercial Code, tax lien and pending suit and judgment
searches reasonably satisfactory to Agent, and is evidenced by an invoice or
other documentary evidence satisfactory to Agent. In addition, no Receivable
shall be an Eligible Receivable if:
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(a) it arises out of a sale made by any Borrower to an
Affiliate of any Borrower or to a Person controlled by an Affiliate of any
Borrower;
(b) it is due or unpaid more than (i) ninety (90) days after
the original invoice date with respect to Receivables due to any Borrower other
than SunSource Technology and Hillman, and (ii) sixty (60) days after the
original due date but not more than one hundred fifty (150) days after the
original invoice date with respect to Receivables due to SunSource Technology
and Hillman;
(c) fifty percent (50%) or more of the Receivables from such
Customer are not deemed Eligible Receivables hereunder. Such percentage may, in
Agent's sole discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property
or call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business, (iii) make a general assignment for the benefit of creditors,
(iv) commence a voluntary case under any state, provincial or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, any petition which is filed against it in any involuntary case under
such bankruptcy laws, or (viii) take any action for the purpose of effecting any
of the foregoing;
(f) the sale is to a Customer outside the continental United
States of America or Canada, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its reasonable discretion;
(g) the sale to the Customer is on a bill-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(h) Agent believes, in its reasonable judgment, that
collection of such Receivable is insecure or that such Receivable may not be
paid by reason of the Customer's financial inability to pay;
(i) the Customer is the United States of America, Canada, any
province, any state or any department, agency or instrumentality of any of them,
unless the applicable Borrower assigns its right to payment of such Receivable
to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise
complied with other applicable statutes or ordinances;
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(j) the goods giving rise to such Receivable have not been
shipped to the Customer or the services giving rise to such Receivable have not
been performed by the applicable Borrower or the Receivable otherwise does not
represent a final sale (other than with respect to a Harding Progress Billing);
(k) the Receivables of the Customer exceed a credit limit
determined by Agent, in its reasonable discretion, to the extent such Receivable
exceeds such limit;
(l) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim, the Customer is also a creditor or supplier
of a Borrower or the Receivable is contingent in any respect or for any reason
but only the portion of such Receivable subject to such offset, deduction,
defense, dispute or counterclaim shall be deemed ineligible;
(m) the applicable Borrower has made any agreement with any
Customer for any deduction therefrom, except for discounts or allowances made in
the ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;
(n) any return, rejection or repossession of the merchandise
has occurred or the rendition of services has been disputed;
(o) such Receivable is not payable to a Borrower; or
(p) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
Receivables of A. & H. Bolt and J.N. Fauver shall be deemed to
constitute Eligible Receivables to the extent they would constitute Eligible
Receivables based upon the criteria set forth above. The value of Receivables of
A. & H. Bolt and J.N. Fauver shall be converted by Credit Parties (subject to
review and revision by Agent in its reasonable discretion) to Dollars based upon
the exchange rate on the date of computation.
"Environmental Complaint" shall have the meaning set forth in
Section 4.19(d) hereof.
"Environmental Laws" shall mean all federal, provincial, state
and local environmental, land use, zoning, health, chemical use, safety and
sanitation laws, statutes, ordinances and codes relating to the protection of
the environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, provincial, state and local
governmental agencies and authorities with respect thereto.
"Equipment" shall mean and include as to each Credit Party all
of such Credit Party's goods (other than Inventory) whether now owned or
hereafter acquired and wherever located including, without limitation, all
equipment, machinery, apparatus, motor vehicles, fittings, furniture,
furnishings, fixtures, parts, accessories and all replacements and substitutions
therefor or accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for
the then current Interest Period relating thereto the interest rate per annum
determined by PNC by dividing (the resulting quotient rounded upwards, if
necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest
determined by PNC in accordance with its usual procedures (which determination
shall be conclusive absent manifest error) to be the average of the London
interbank offered rates for U.S. Dollars quoted by the British Bankers'
Association as set forth on Dow Jones Markets Service (formerly known as
Telerate) (or appropriate successor or, if British Banker's Association or its
successor ceases to provide such quotes, a comparable replacement determined by
PNC) display page 3750 (or such other display page on the Dow Jones Markets
Service system as may replace display page 3750) two (2) Business Days prior to
the first day of such Interest Period for an amount comparable to such
Eurodollar Rate Loan and having a borrowing date and a maturity comparable to
such Interest Period by (ii) a number equal to 1.00 minus the Reserve
Percentage. The Eurodollar Rate may also be expressed by the following formula:
Average of London interbank offered rates quoted by
BBA as shown on Eurodollar Rate =Dow Jones Markets Service display page
3750 or appropriate successor
1.00 - Reserve Percentage
"Eurodollar Rate Loan" shall mean an Advance at any time that
bears interest based on the Eurodollar Rate.
"Event of Default" shall mean the occurrence of any of the
events set forth in Article X hereof.
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"Excess Cash Flow" for any fiscal period shall mean (i) EBITDA
of Borrowers on a consolidated basis for such fiscal period minus (ii)
non-financed capital expenditures made by Borrowers on a consolidated basis
during such fiscal period minus (iii) taxes paid in cash by Borrowers on a
consolidated basis during such fiscal period minus (iv) interest paid in cash by
Borrowers on a consolidated basis during such fiscal period minus (v) Senior
Debt Payments (excluding payments of Revolving Advances) paid by Borrowers on a
consolidated basis during such fiscal period.
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three Federal funds brokers of recognized
standing selected by PNC.
"Fee Letter" shall mean the fee letter dated as of the Closing
Date among Borrowers and PNC.
"First Union Loan Agreement" shall mean the Second Amended and
Restated Credit Agreement among SunSource Inc., its Subsidiaries as set forth on
Schedule 1 as Borrowers and its Subsidiaries as set forth on Schedule 2 as
Guarantors, First Union National Bank, The Bank of Nova Scotia and the other
Banks dated December 31, 1998, as amended.
"Fixed Charge Coverage Ratio" shall mean and include, with
respect to any fiscal period, the ratio of (a) EBITDA minus non-financed
capitalized expenditures made by Borrowers on a consolidated basis during such
period minus taxes paid in cash by Borrowers on a consolidated basis during such
period to (b) all Senior Debt Payments plus, solely for purposes of Section 6.8
hereof, all Subordinated Debt Payments during such period.
"Formula Amount" shall have the meaning set forth in Section
2.1(a).
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"General Intangibles" shall mean and include as to each Credit
Party all of such Credit Party's general intangibles, whether now owned or
hereafter acquired including, without limitation, all choses in action, causes
of action, corporate or other business records, inventions, designs, patents,
patent applications, equipment formulations, manufacturing procedures, quality
control procedures, trademarks, service marks, trade secrets, goodwill,
copyrights, design rights, registrations, licenses, franchises, customer lists,
tax refunds, tax refund claims, computer programs, all claims under guaranties,
security interests or other security held by or granted to such Credit Party to
secure payment of any of the Receivables by a Customer all rights of
indemnification and all other intangible property of every kind and nature
(other than Receivables).
"Governmental Body" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.
"Guarantor" shall mean A. & H. Bolt, A & H Holding, J.N.
Fauver, SunSource Canada, SunSource Corporate, SunSource Industrial, SunSource
Inventory, SunSource Investment, SunSub A and any other Person who may hereafter
guarantee payment or performance of the whole or any part of the Obligations and
"Guarantors" means collectively all such Persons.
"Guaranty" shall mean any guaranty of the obligations of
Borrowers executed by a Guarantor in favor of Agent for its benefit and for the
ratable benefit of Lenders including, without limitation, pursuant to Section 16
of this Agreement.
"Harding" shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Person.
"Harding Divestiture" shall mean the sale by SunSource of all
or substantially all of the stock and/or assets of Harding and its Subsidiaries
for a purchase price of at least $30,000,000.
"Harding Division" shall mean Harding.
"Harding Progress Billings" shall mean a Receivable of Harding
arising under an installment contract with a general contractor which is due and
payable within sixty (60) days from the date of the initial invoice sent under
such contract.
"Hazardous Discharge" shall have the meaning set forth in
Section 4.19(d) hereof.
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"Hazardous Substance" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
federal, provincial and state laws now in force or hereafter enacted relating to
hazardous waste disposal.
"Hillman" shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Person.
"Hillman Division" shall mean Hillman.
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness of
such Person resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
"Individual Formula Amount" shall mean at the date of
determination thereof, with respect to each Operating Division an amount equal
to: (a) up to the Receivables Advance Rate of Eligible Receivables of such
Operating Division, plus (b) up to the Inventory Advance Rate of the value of
Eligible Inventory of such Operating Division, minus (c) such reserves as Agent
may reasonably deem proper and necessary from time to time.
"Individual Maximum Revolving Advance Amount" shall mean
$20,000,000 with respect to the Harding Division, $45,000,000 with respect to
the Hillman Division, $30,000,000 with respect to the Kar Division (it being
understood and agreed that no Advances shall be made by Agent or Lenders to A. &
H. Bolt or J.N. Fauver; rather A. & H. Bolt is part of the Kar Division for
purposes of calculating the Advances which can be made solely to Kar) and
$50,000,000 and with respect to the SunSource Division, it being understood and
agreed that no Advances shall be made by Agent or Lenders to J. N. Fauver;
rather J. N. Fauver is part of the SunSource Division for purposes of
calculating Advances which can be made solely to SunSource Technology.
"Ineligible Security" shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
"Interest Period" shall mean the period provided for any
Eurodollar Rate Loan pursuant to Section 2.2(b).
"Inventory" shall mean and include as to each Credit Party all
of such Credit Party's now owned or hereafter acquired goods, merchandise and
other personal property, wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or consumed in such Credit Party's business or used in selling or
furnishing such goods, merchandise and other personal property, and all
documents of title or other documents representing them.
"Inventory Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(ii) hereof.
"Investment Property" shall mean and include as to each Credit
Party, all of such Credit Party's now owned or hereafter acquired securities
(whether certificated or uncertificated), securities entitlements, securities
accounts, commodities contracts and commodities accounts.
"Issuer" shall mean any Person who issues a Letter of Credit
and/or accepts a draft pursuant to the terms hereof.
"J.N. Fauver" shall mean J.N. Fauver (Canada) Limited, a
corporation subsisting under the laws of the Province of Ontario.
13
"Junior Subordinated Debentures" shall mean, collectively, (a)
Amended and Restated Declaration of Trust of SunSource Capital Trust dated and
effective as of September 5, 1997 by the trustees a party thereto ("SunSource
Capital Declaration of Trust"), as amended by the First Amendment to the
SunSource Capital Declaration of Trust dated and effective as of October 16,
1997, (b) Indenture dated as of September 5, 1997 between SunSource Inc. and The
Bank of New York, as Trustee, as amended by the First Supplemental Indenture
dated as of October 16, 1997, (c) the Guarantee Agreement dated as of September
5, 1997 by SunSource Inc. for the benefit of the holders of the Preferred
Securities of SunSource Capital Trust, (d) Contribution Agreement dated as of
July 31, 1997 between SunSource. and Lehman Brothers Holdings Inc., (e) No. 1
SunSource 11.6% Junior Subordinated Debenture due 2027, (f) No. 2 SunSource
11.6% Junior Subordinated Debenture due 2027, (g) 130,449 common securities of
SunSource Capital Trust representing common individual beneficial interests in
the assets of the SunSource Capital Trust designated the 11.6% Trust Common
Securities and (h) 4,217,837 preferred securities of SunSource Capital Trust
representing preferred undivided beneficial interests in the assets of the
SunSource Capital Trust designated the 11.6% Trust Preferred Securities, each as
in effect on the Closing Date.
"Kar" shall have the meaning set forth in the preamble to this
Agreement and shall extend to all permitted successors and assigns of such
Person.
"Kar Division" shall mean, collectively, Kar and A. & H. Bolt.
"Lender" and "Lenders" shall have the meaning ascribed to such
term in the preamble to this Agreement and shall include each Person which
becomes a transferee, successor or assign of any Lender.
"Letter of Credit Fees" shall have the meaning set forth in
Section 3.2.
"Letters of Credit" shall have the meaning set forth in
Section 2.9.
"LIBOR Margin" shall mean (i) two and one-half percent (2.50%)
at any time after the repayment of the principal balance of the Term Loan in
full in cash and (ii) three percent (3.0%) at all other times.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction.
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"Material Adverse Effect" shall mean, as determined in Agent's
reasonable discretion, a material adverse effect on (a) the condition,
operations, assets, business or prospects of the applicable Person or Persons,
(b) any Credit Party's ability to pay the Obligations in accordance with the
terms hereof, or (c) the value of the Collateral, or Agent's Liens on the
Collateral or the priority of any such Lien.
"Maximum Loan Amount" shall mean $155,000,000 (subject to
adjustment pursuant to Section 2.14(c)) less repayments of the Term Loan.
"Maximum Revolving Advance Amount" shall mean $130,000,000
(subject to adjustment pursuant to Section 2.14(c)).
"Mortgage" shall mean collectively: (i) the Mortgage,
Assignment of Rents and Security Agreement dated as of even date herewith, with
Kar as mortgagor and Agent as mortgagee, encumbering a property located in Des
Plains, Illinois; (ii) the Deed of Trust, Assignment of Rents and Security
Agreement dated as of even date herewith, with SunSource Technology as grantor
and Agent as beneficiary, encumbering a property located in Arlington, Texas;
and (iii) the Mortgage, Assignment of Rents and Security Agreement dated as of
even date herewith with A. & H. Bolt as mortgagor and Agent as mortgagee,
encumbering a property located in Windsor, Ontario, Canada.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Sections 3(37) and 4001(a)(3) of ERISA.
"Net Worth" at a particular date, shall mean all amounts which
would be included under shareholders' equity on a balance sheet of the Borrowers
on a consolidated basis determined in accordance with GAAP as at such date.
"Note" shall mean collectively, the Term Note and the
Revolving Credit Note.
"Obligations" " shall mean and include any and all loans,
advances, debts, liabilities, obligations, covenants and duties owing by Credit
Parties under this Agreement and the Other Documents to Lenders or Agent or to
any other direct or indirect subsidiary or affiliate of Agent or any Lender of
any kind or nature, present or future (including, without limitation, any
interest accruing thereon after maturity, or after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to any Credit Party, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding), whether or not
evidenced by any note, guaranty or other instrument, whether arising under any
agreement, instrument or document, (including, without limitation, this
Agreement and the Other Documents) whether or not for the payment of money,
whether arising by reason of an extension of credit, opening of a letter of
credit, loan, equipment lease or guarantee, under any interest or currency swap,
future, option or other similar agreement, or in any other manner, whether
arising out of overdrafts or deposit or other accounts or electronic funds
transfers (whether through automated clearing houses or otherwise) or out of the
Agent's or any Lenders non-receipt of or inability to collect funds or otherwise
not being made whole in connection with depository transfer check or other
similar arrangements, whether direct or indirect (including those acquired by
assignment or participation), absolute or contingent, joint or several, due or
to become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated arising under this Agreement, the Other Documents and
any amendments, extensions, renewals or increases and all costs and expenses of
Agent and any Lender incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of the foregoing,
including but not limited to reasonable attorneys' fees and expenses and all
obligations of any Credit Party to Agent or Lenders to perform acts or refrain
from taking any action.
"Operating Division " shall mean as applicable, the Harding
Division, Hillman Division, Kar Division or SunSource Division.
"Original Owners" shall mean, with respect to each Credit
Party, the Person(s) set forth on Schedule 1.2B hereto, and shall also be deemed
to include each other Credit Party.
"Other Documents" shall mean the Note, the Pledge Agreement,
the Questionnaire, any Guaranty, and any and all other agreements, instruments
and documents, including, without limitation, guaranties, pledges, powers of
attorney, consents, and all other writings heretofore, now or hereafter executed
by any Credit Party and/or delivered to Agent or any Lender in respect of the
transactions contemplated by this Agreement.
"Parent" of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"Participant" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
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"Payment Office" shall mean initially Two Tower Center
Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of
Agent, if any, which it may designate by notice to Borrowing Agent and to each
Lender to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any Plan subject to Title IV of
ERISA (other than a Multiemployer Plan), the funding requirements of which under
ERISA Section 302 or Code Section 412 are the responsibility of any Credit Party
or any member of the Controlled Group.
"Permitted Encumbrances" shall mean (a) Liens in favor of
Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or
other governmental charges not delinquent or being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have been
taken by Credit Parties; provided, that, the Lien shall have no effect on the
priority of the Liens in favor of Agent or the value of the assets in which
Agent has such a Lien and a stay of enforcement of any such Lien shall be in
effect; (c) Liens securing Indebtedness disclosed in the financial statements
referred to in Section 5.5, the existence of which Agent has consented to in
writing; (d) deposits or pledges to secure obligations under worker's
compensation, social security or similar laws, or under unemployment insurance;
(e) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature arising in the ordinary course of any
Credit Party's business; (f) judgment Liens that have been stayed or bonded and
mechanics', workers', materialmen's or other like Liens arising in the ordinary
course of any Credit Party's business with respect to obligations which are not
due or which are being contested in good faith by the applicable Credit Party;
(g) Liens placed upon fixed assets hereafter acquired to secure a portion of the
purchase price thereof, provided that (x) any such lien shall not encumber any
other property of the Credit Parties and (y) the aggregate amount of
Indebtedness secured by such Liens incurred as a result of such purchases during
any fiscal year shall not exceed the amount provided for in Section 7.6; and (h)
Liens disclosed on Schedule 1.2.
"Person" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company,
institution, public benefit corporation, joint venture, entity or government
(whether federal, provincial, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, maintained for employees of Credit Parties or any
member of the Controlled Group or any such Plan to which any Credit Party or any
member of the Controlled Group is required to contribute on behalf of any of its
employees.
"Pledge Agreement" shall mean, collectively, the Pledge
Agreements each dated as of the Closing Date made by each of SunSource,
SunSource Investment, SunSub A, SunSource Industrial, Kar and SunSource Canada
in favor of Agent.
"Pro Forma Balance Sheet" shall have the meaning set forth in
Section 5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set
forth in Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section
5.5(b) hereof.
"Purchasing Lender" shall have the meaning set forth in
Section 16.3 hereof.
"Questionnaire" shall mean the Documentation Information
Questionnaire and the responses thereto provided by Credit Parties and delivered
to Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act,
42 U.S.C.ss.ss.6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of each Credit Party's right,
title and interest in and to the owned and leased premises identified on
Schedule 4.19 hereto.
"Receivables" shall mean and include, as to each Credit Party,
all of such Credit Party's accounts, contract rights, instruments (including
those evidencing indebtedness owed to Credit Parties by their Affiliates),
documents, chattel paper, general intangibles relating to accounts, drafts and
acceptances, and all other forms of obligations owing to such Credit Party
arising out of or in connection with the sale or lease of Inventory or the
rendition of services, all guarantees and other security therefor, whether
secured or unsecured, now existing or hereafter created, and whether or not
specifically sold or assigned to Agent hereunder.
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"Receivables Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.
"Release" shall have the meaning set forth in Section
5.7(c)(i) hereof.
"Reportable Event" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder, other than a
reportable event as to which the provision of 30 days' notice to the PBGC is
waived under applicable regulations.
"Required Lenders" shall mean Lenders holding at least
sixty-six and two-thirds percent (66 2/3%) of the Advances and, if no Advances
are outstanding, shall mean Lenders holding sixty-six and two-thirds percent (66
2/3%) of the Commitment Percentages.
"Reserve Percentage" shall mean the maximum effective
percentage in effect on any day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding.
"Revolving Advances" shall mean Advances made other than
Letters of Credit and the Term Loan.
"Revolving Credit Note" shall mean, collectively, the
promissory notes referred to in Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate per
annum equal to (a) the Alternate Base Rate with respect to Domestic Rate Loans,
and (b) the sum of the Eurodollar Rate plus the LIBOR Margin with respect to
Eurodollar Rate Loans.
"Section 20 Subsidiary" shall mean the Subsidiary of the bank
holding company controlling PNC, which Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and deal in certain Ineligible
Securities.
"Senior Debt Payments" shall mean and include all cash
actually expended by Borrowers on a consolidated basis to make (a) interest
payments on any Advances hereunder, plus, (b) scheduled principal payments on
the Term Loan, plus (c) payments for all fees, commissions and charges set forth
herein and with respect to any Advances, plus (d) capitalized lease payments,
plus (e) payments with respect to any other Indebtedness for borrowed money
including, without limitation, the Indebtedness under the Junior Subordinated
Debentures.
"Senior Notes" shall mean, collectively, (a) the Amended and
Restated Note Purchase Agreement dated as of December 31, 1998 by and among
SunSource and its Subsidiaries set forth on schedule 1 thereto, as obligors, and
its Subsidiaries set forth on schedule 2 thereto, as Guarantors and (b) all
notes, agreements, documents and instruments executed in connection therewith,
each as in effect on the Closing Date.
"Settlement Date" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"Subordinated Debt Payments" shall mean and include all cash
actually expended to make payments of principal and interest on the Junior
Subordinated Note.
"Subsidiary" shall mean a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean all of the issued and
outstanding shares of stock owned by any Borrower or Guarantor of any Subsidiary
of such Borrower or Guarantor, as set forth on Schedule 1.2A hereto.
"SunSource" shall have the meaning set forth in the preamble
to this Agreement and shall extend to all permitted successors and assigns of
such Person.
"SunSource Canada" shall mean SunSource Canada Investment
Company, an unlimited liability company subsisting under the laws of the
Province of Nova Scotia.
"SunSource Capital Trust" shall mean SunSource Capital Trust,
a Delaware statutory business trust.
"SunSource Corporate" shall mean SunSource Corporate Group,
Inc.
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"SunSource Division" shall mean, collectively, SunSource, J.N.
Fauver and SunSource Technology.
"SunSource Industrial" shall mean SunSource Industrial
Services Company, Inc., a Delaware
corporation.
"SunSource Inventory" shall mean SunSource Inventory
Management Company, Inc. a Delaware corporation.
"SunSource Investment" shall mean SunSource Investment
Company, Inc., a Delaware corporation.
"SunSource Technology" shall have the meaning set forth in the
preamble to this Agreement and shall extend to all permitted successors and
assigns of such Person.
"SunSub A" shall mean SunSub A Inc., a Delaware corporation.
"Tangible Net Worth" shall mean, at a particular date, (a) the
aggregate amount of all assets of Borrowers on a consolidated basis as may be
properly classified as such in accordance with GAAP consistently applied
excluding such other assets as are properly classified as intangible assets
under GAAP, less (b) the aggregate amount of all liabilities of the Borrowers on
a consolidated basis.
"Term" shall have the meaning set forth in Section 13.1
hereof.
"Term Loan" shall mean the Advances made pursuant to Section
2.4 hereof.
"Term Loan Rate" shall mean an interest rate per annum equal
to (a) the Alternate Base Rate with respect to Domestic Rate Loans, (b) the sum
of the Eurodollar Rate plus the LIBOR Margin with respect to Eurodollar Rate
Loans.
"Term Note" shall mean, collectively, the promissory notes
described in Section 2.4 hereof.
"Termination Event" shall mean (i) a Reportable Event with
respect to any Pension Plan or Multiemployer Plan; (ii) the withdrawal of any
Credit Party or any member of the Controlled Group from a Pension Plan or
Multiemployer Plan during a plan year in which such entity was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; (iii) the providing of
notice of intent to terminate a Pension Plan in a distress termination described
in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Plan or notice of same regarding a Multiemployer Plan; (v) any event
or condition (a) which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan, or (b) that may reasonably be expected to result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi)
the partial or complete withdrawal within the meaning of Sections 4203 and 4205
of ERISA, of any Credit Party or any member of the Controlled Group from a
Multiemployer Plan.
"Toxic Substance" shall mean and include any material present
on the Real Property which has been shown to have significant adverse effect on
human health or which is subject to regulation under the Toxic Substances
Control Act (TSCA), 15 U.S.C. ss.ss. 2601 et seq., applicable state law, or any
other applicable federal, provincial or state laws now in force or hereafter
enacted relating to toxic substances. "Toxic Substance" includes but is not
limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
"Transactions" shall have the meaning set forth in Section 5.5
hereof.
"Transferee" shall have the meaning set forth in Section
16.3(b) hereof.
"Undrawn Availability" at a particular date shall mean an
amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum
Revolving Advance Amount, minus (b) the sum of (i) the outstanding amount of
Advances (other than the Term Loan) plus (ii) all amounts due and owing to
Borrowers' trade creditors which are outstanding beyond normal trade terms, plus
(iii) fees and expenses for which Borrowers are liable but which have not been
paid or charged to Borrowers' Account.
"Week" shall mean the time period commencing with the opening
of business on a Wednesday and ending on the end of business the following
Tuesday.
1.3. Uniform Commercial Code Terms. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of New York shall have
the meaning given therein unless otherwise defined herein.
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1.4. Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which Agent is a party,
including, without limitation, references to any of the Other Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
II. ADVANCES, PAYMENTS.
------------------
2.1. (a) Revolving Advances. Subject to the terms and conditions set
forth in this Agreement including, without limitation, Section 2.1(b), each
Lender, severally and not jointly, will make Revolving Advances to Borrowers in
aggregate amounts outstanding at any time equal to such Lender's Commitment
Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the
aggregate amount of outstanding Letters of Credit or (y) an amount equal to the
sum of:
(i) up to 85%, subject to the provisions of
Section 2.1(c) hereof ("Receivables Advance Rate"),
of Eligible Receivables (the amount to be advanced
against Eligible Receivables consisting of Harding
Progress Billings shall not exceed $5,000,000 at any
time and from time to time), plus
(ii) up to the lesser of (A) 60%, subject to
the provisions of Section 2.1(c) hereof ("Inventory
Advance Rate"), of the value of the Eligible
Inventory (the Receivables Advance Rate and the
Inventory Advance Rate shall be referred to
collectively, as the "Advance Rates") or (B)
$65,000,000 in the aggregate at any one time, minus
(iii) an amount equal to the sum of (x) the
aggregate amount of outstanding standby Letters of
Credit plus, (y) the product of (I) the aggregate
amount of outstanding documentary Letters of Credit
multiplied by (II) 1 minus the Inventory Advance
Rate, minus
(iv) such reserves as Agent may reasonably
deem proper and necessary from time to time.
The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii)
minus (y) Section 2.1 (a)(y)(iv) at any time and from time to time shall be
referred to as the "Formula Amount". The Revolving Advances shall be evidenced
by one or more secured promissory notes (collectively, the "Revolving Credit
Note") substantially in the form attached hereto as Exhibit 2.1(a).
(b) Individual Revolving Advances. Each Lender, severally and
not jointly, will make Revolving Advances to each Operating Division in
aggregate amounts outstanding at any time not greater than such Lender's
Commitment Percentage of the lesser of (x) such Operating Division's Individual
Maximum Revolving Advance Amount less the aggregate amount of outstanding
Letters of Credit applicable to such Operating Division or (y) such Operating
Division's Individual Formula Amount less the aggregate amount of outstanding
Letters of Credit applicable to such Operating Division.
(c) Discretionary Rights. The Advance Rates may be increased
or decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion. Each Borrower consents to any such increases or decreases
and acknowledges that decreasing the Advance Rates or increasing the reserves
may limit or restrict Advances requested by Borrowing Agent.
2.2. Procedure for Borrowing Advances.
(a) Borrowing Agent on behalf of any Borrower may notify Agent
prior to 11:00 a.m. on a Business Day of a Borrower's request to incur, on that
day, a Revolving Advance hereunder. Should any amount required to be paid as
interest hereunder, or as fees or other charges under this Agreement or any
other agreement with Agent or Lenders, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance as of the
date such payment is due, in the amount required to pay in full such interest,
fee, charge or Obligation under this Agreement or any other agreement with Agent
or Lenders, and such request shall be irrevocable.
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(b) Notwithstanding the provisions of (a) above, in the event
any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall
give Agent at least three (3) Business Days' prior written notice, specifying
(i) the date of the proposed borrowing (which shall be a Business Day), (ii) the
type of borrowing and the amount on the date of such Advance to be borrowed,
which amount shall be in a minimum amount of $1,000,000 and in integral
multiples of $1,000,000 thereafter, and (iii) the duration of the first Interest
Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one,
two, three or six months; provided, if an Interest Period would end on a day
that is not a Business Day, it shall end on the next succeeding Business Day
unless such day falls in the next succeeding calendar month in which case the
Interest Period shall end on the next preceding Business Day. No Eurodollar Rate
Loan shall be made available to Borrower during the continuance of a Default or
an Event of Default.
(c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate Loan is made and shall end on such
date as Borrowing Agent may elect as set forth in subsection (b)(iii) above
provided that the exact length of each Interest Period shall be determined in
accordance with the practice of the interbank market for offshore Dollar
deposits and no Interest Period shall end after the last day of the Term.
Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d), as the case may be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest Period elected by Borrowing Agent,
Borrowers shall be deemed to have elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and
be continuing, any Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any
Business Day with respect to Domestic Rate Loans, convert any such loan into a
loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such Eurodollar Rate Loan. If
a Borrower desires to convert a loan, Borrowing Agent shall give Agent not less
than three (3) Business Days' prior written notice to convert from a Domestic
Rate Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written
notice to convert from a Eurodollar Rate Loan to a Domestic Rate Loan,
specifying the date of such conversion, the loans to be converted and if the
conversion is from a Domestic Rate Loan to any other type of loan, the duration
of the first Interest Period therefor. After giving effect to each such
conversion, there shall not be outstanding more than eight (8) Eurodollar Rate
Loans, in the aggregate.
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(e) At its option and upon three (3) Business Days' prior
written notice, any Borrower may prepay the Eurodollar Rate Loans in whole at
any time or in part from time to time, without premium or penalty, but with
accrued interest on the principal being prepaid to the date of such repayment.
Such Borrower shall specify the date of prepayment of Advances which are
Eurodollar Rate Loans and the amount of such prepayment. In the event that any
prepayment of a Eurodollar Rate Loan is required or permitted on a date other
than the last Business Day of the then current Interest Period with respect
thereto, such Borrower shall indemnify Agent and Lenders therefor in accordance
with Section 2.2(f) hereof.
(f) Each Borrower shall indemnify Agent and Lenders and hold
Agent and Lenders harmless from and against any and all losses or expenses that
Agent and Lenders may sustain or incur as a consequence of any prepayment,
conversion of or any default by any Borrower in the payment of the principal of
or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a
borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan
after notice thereof has been given, including, but not limited to, any interest
payable by Agent or Lenders to lenders of funds obtained by it in order to make
or maintain its Eurodollar Rate Loans hereunder. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by Agent
or any Lender to Borrowing Agent shall be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if any
applicable law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain
its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate
Loans hereunder shall forthwith be cancelled and Borrowers shall, if any
affected Eurodollar Rate Loans are then outstanding, promptly upon request from
Agent, either pay all such affected Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into loans of another type. If any such payment
or conversion of any Eurodollar Rate Loan is made on a day that is not the last
day of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers
shall pay Agent, upon Agent's request, such amount or amounts as may be
necessary to compensate Lenders for any loss or expense sustained or incurred by
Lenders in respect of such Eurodollar Rate Loan as a result of such payment or
conversion, including (but not limited to) any interest or other amounts payable
by Lenders to lenders of funds obtained by Lenders in order to make or maintain
such Eurodollar Rate Loan. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall
be conclusive absent manifest error.
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2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or Lenders,
shall be charged to Borrowers' Account on Agent's books. During the Term,
Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrowers or deemed to have been
requested by Borrowers under Section 2.2(a) hereof shall, with respect to
requested Revolving Advances to the extent Lenders make such Revolving Advances,
be made available to the applicable Borrower on the day so requested by way of
credit to such Borrower's operating account at PNC, or such other bank as
Borrowing Agent may designate following notification to Agent, in immediately
available federal funds or other immediately available funds or, with respect to
Revolving Advances deemed to have been requested by any Borrower, be disbursed
to Agent to be applied to the outstanding Obligations giving rise to such deemed
request.
2.4. Term Loan. Subject to the terms and conditions of this Agreement,
each Lender, severally and not jointly, will make a Term Loan to Borrowers in
the sum equal to such Lender's Commitment Percentage of $25,000,000. The Term
Loan shall be advanced on the Closing Date and shall be, with respect to
principal, payable as follows, subject to acceleration upon the occurrence of an
Event of Default under this Agreement or termination of this Agreement: equal
quarterly installments of $1,250,000 each commencing on April 1, 2000 and on the
first day of each July, October, January and April thereafter until December 14,
2004 when the entire unpaid principal balance of the Term Loan shall be due and
payable. The Term Loan shall be evidenced by one or more secured promissory
notes (collectively, the "Term Note") in substantially the form attached hereto
as Exhibit 2.4.
2.5. Maximum Advances. The aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) Maximum Revolving
Advance Amount or (b) the Formula Amount.
2.6. Repayment of Advances.
(a) The Revolving Advances shall be due and payable in full on
the last day of the Term subject to earlier prepayment as herein provided. The
Term Loan shall be due and payable as provided in Section 2.4 hereof and in the
Term Note.
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(b) Each Borrower recognizes that the amounts evidenced by
checks, notes, drafts or any other items of payment relating to and/or proceeds
of Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after the Business Day Agent receives such payments via wire
transfer or electronic depository check. Agent is not, however, required to
credit Borrowers' Account for the amount of any item of payment which is not a
wire transfer or electric depository check and unsatisfactory to Agent until
such item of payment has cleared and become good funds. Agent may charge
Borrowers' Account for the amount of any item of payment which is returned to
Agent unpaid.
(c) All payments of principal, interest and other amounts
payable hereunder, or under any of the Other Documents shall be made to Agent at
the Payment Office not later than 1:00 P.M. (New York Time) on the due date
therefor in lawful money of the United States of America in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment on any and all Obligations due and owing hereunder by
charging Borrowers' Account or by making Advances as provided in Section 2.2
hereof.
(d) Credit Parties shall pay principal, interest, and all
other amounts payable hereunder, or under any related agreement, without any
deduction whatsoever, including, but not limited to, any deduction for any
setoff or counterclaim.
2.7. Repayment of Excess Advances. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.8. Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account ("Borrowers' Account") in the name of
Borrowers on a collective basis in which shall be recorded the date and amount
of each Advance made by Agent and the date and amount of each payment in respect
thereof; provided, however, the failure by Agent to record the date and amount
of any Advance shall not adversely affect Agent or any Lender. Each month, Agent
shall send to Borrowing Agent a statement showing the accounting for the
Advances made, payments made or credited in respect thereof, and other
transactions between Agent and Borrowers, during such month. The monthly
statements shall be deemed correct and binding upon Borrowers in the absence of
manifest error and shall constitute an account stated between Lenders and
Borrowers unless Agent receives a written statement of Borrowers' specific
exceptions thereto within thirty (30) days after such statement is received by
Borrowing Agent. The records of Agent with respect to the loan account shall be
conclusive evidence absent manifest error of the amounts of Advances and other
charges thereto and of payments applicable thereto.
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2.9. Letters of Credit. Subject to the terms and conditions hereof,
Agent shall issue or cause the issuance of Letters of Credit ("Letters of
Credit") on behalf of any Borrower; provided, however, that Agent will not be
required to issue or cause to be issued any Letters of Credit to the extent that
the face amount of such Letters of Credit would then cause the sum of (i) the
outstanding Revolving Advances plus (ii) outstanding Letters of Credit to exceed
the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula
Amount; provided, further, however, that Agent will not be required to issue or
cause to be issued any Letters of Credit to the extent that the face amount of
such Letters of Credit issued for an Operating Division of such Borrower would
then cause the sum of (i) the outstanding Revolving Advances to the Operating
Division of such Borrower plus (ii) the outstanding Letters of Credit issued or
caused to be issued on behalf of the Operating Division of such Borrower to
exceed the lesser of (x) such Borrower's Operating Division's Individual Maximum
Revolving Advance Amount or (y) such Borrower's Operating Division's Individual
Formula Amount. The maximum undrawn amount of outstanding Letters of Credit
shall not exceed $15,000,000 in the aggregate at any time. All disbursements or
payments related to Letters of Credit shall be deemed to be Domestic Rate Loans
consisting of Revolving Advances and shall bear interest at the Revolving
Interest Rate for Domestic Rate Loans; Letters of Credit that have not been
drawn upon shall not bear interest.
2.10. Issuance of Letters of Credit.
(a) Borrowing Agent, on behalf of Borrowers, may request Agent
to issue or cause the issuance of a Letter of Credit by delivering to Agent at
the Payment Office, Agent's form of Letter of Credit Application (the "Letter of
Credit Application") completed to the satisfaction of Agent; and, such other
certificates, documents and other papers and information as Agent may reasonably
request. Borrowing Agent, on behalf of Borrowers, also has the right to give
instructions and make agreements with respect to any application, any applicable
letter of credit and security agreement, any applicable letter of credit
reimbursement agreement and/or any other applicable agreement, any letter of
credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.
(b) Each Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts or acceptances of usance drafts when
presented for honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) have an expiry date not
later than six (6) months after such Letter of Credit's date of issuance and in
no event later than the last day of the Term. Each Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, and any
amendments or revision thereof adhered to by the Issuer and, to the extent not
inconsistent therewith, the laws of the State of New York.
(c) Agent shall use its reasonable efforts to notify Lenders
of the request by Borrowing Agent for a Letter of Credit hereunder.
2.11. Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of Credit
Borrowers shall indemnify, save and hold Agent, each Lender and each Issuer
harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Lender or any Issuer and expenses and
reasonable attorneys' fees incurred by Agent, any Lender or Issuer arising out
of, or in connection with, any Letter of Credit to be issued or created for any
Borrower. Borrowers shall be bound by Agent's or any Issuer's regulations and
good faith interpretations of any Letter of Credit issued or created for
Borrowers' Account, although this interpretation may be different from its own;
and, neither Agent, nor any Lender, nor any Issuer nor any of their
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following Borrowing Agent's or any Borrower's
instructions or those contained in any Letter of Credit or of any modifications,
amendments or supplements thereto or in issuing or paying any Letter of Credit,
except for Agent's, any Lender's, any Issuer's or such correspondents' willful
misconduct or gross (not mere) negligence.
(b) Borrowing Agent shall authorize and direct any Issuer to
name the applicable Borrower as the "Applicant" or "Account Party" of each
Letter of Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing
Agent shall authorize and direct the Issuer to deliver to Agent all instruments,
documents, and other writings and property received by the Issuer pursuant to
the Letter of Credit and to accept and rely upon Agent's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit, the application therefor or any acceptance therefor.
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(c) In connection with all Letters of Credit issued or caused
to be issued by Agent under this Agreement, each Borrower hereby appoints Agent,
or its designee, as its attorney, with full power and authority following an
Event of Default and while such Event of Default is continuing, (i) to sign
and/or endorse such Borrower's name upon any warehouse or other receipts, letter
of credit applications and acceptances; (ii) to sign such Borrower's name on
bills of lading; (iii) to clear Inventory through the United States of America
Customs Department ("Customs") in the name of such Borrower or Agent or Agent's
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose; and (iv) to complete in such Borrower's
name or Agent's, or in the name of Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Agent nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's willful misconduct. This power, being
coupled with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.
(d) Each Lender shall to the extent of the percentage amount
equal to the product of such Lender's Commitment Percentage times the aggregate
amount of all unreimbursed reimbursement obligations arising from disbursements
made or obligations incurred with respect to the Letters of Credit be deemed to
have irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the lesser of the Maximum Revolving Advance Amount
or the Formula Amount, and such disbursement is not reimbursed by Borrowers
within two (2) Business Days, Agent shall promptly notify each Lender and upon
Agent's demand each Lender shall pay to Agent such Lender's proportionate share
of such unreimbursed disbursement together with such Lender's proportionate
share of Agent's unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment from any Borrower of any
amount disbursed by Agent for which Agent had already been reimbursed by
Lenders, Agent shall deliver to each Lender that Lender's pro rata share of such
repayment. Each Lender's participation commitment shall continue until the last
to occur of any of the following events: (A) Agent ceases to be obligated to
issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit
issued hereunder remains outstanding and uncancelled or (C) all Persons (other
than the applicable Borrower) have been fully reimbursed for all payments made
under or relating to Letters of Credit.
2.12. Additional Payments. Any sums expended by Agent or any Lender due
to any Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, any Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrowers' Account as a Revolving Advance and added to the
Obligations.
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2.13. Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced
according to the applicable Commitment Percentages of Lenders. The Term Loan
shall be advanced according to the Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Each payment (including each prepayment) by
Borrowers on account of the principal of and interest on the Term Note, shall be
made from or to, or applied to that portion of the Term Loan evidenced by the
Term Note pro rata according to the Commitment Percentages of Lenders. Except as
expressly provided herein, all payments (including prepayments) to be made by
any Borrower on account of principal, interest and fees shall be made without
set off or counterclaim and shall be made to Agent on behalf of the Lenders to
the Payment Office, in each case on or prior to 1:00 P.M., New York time, in
Dollars and in immediately available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.13(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by any Borrower on account of Revolving
Advances shall be applied first to those Revolving Advances advanced by Agent.
On or before 1:00 P.M., New York time, on each Settlement Date commencing with
the first Settlement Date following the Closing Date, Agent and Lenders shall
make certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week (if any) exceeds the aggregate
amount of repayments applied to outstanding Revolving Advances during such
preceding Week, then each Lender shall provide Agent with funds in an amount
equal to its applicable Commitment Percentage of the difference between (w) such
Revolving Advances and (x) such repayments and (II) if the aggregate amount of
repayments applied to outstanding Revolving Advances during such Week exceeds
the aggregate amount of new Revolving Advances made during such Week, then Agent
shall provide each Lender with funds in an amount equal to its applicable
Commitment Percentage of the difference between (y) such repayments and (z) such
Revolving Advances.
(ii) Each Lender shall be entitled to earn interest
at the applicable Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent
shall submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
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(d) If any Lender or Participant (a "benefited Lender") shall
at any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefited
Lender shall purchase for cash from the other Lenders a participation in such
portion of each such other Lender's Advances, or shall provide such other Lender
with the benefits of any such Collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its applicable Commitment Percentage of the Advances
available to Agent, Agent may (but shall not be obligated to) assume that such
Lender shall make such amount available to Agent on the next Settlement Date
and, in reliance upon such assumption, make available to Borrowers a
corresponding amount. Agent will promptly notify Borrowers of its receipt of any
such notice from a Lender. If such amount is made available to Agent on a date
after such next Settlement Date, such Lender shall pay to Agent on demand an
amount equal to the product of (i) the daily average Federal Funds Rate
(computed on the basis of a year of 360 days) during such period as quoted by
Agent, times (ii) such amount, times (iii) the number of days from and including
such Settlement Date to the date on which such amount becomes immediately
available to Agent. A certificate of Agent submitted to any Lender with respect
to any amounts owing under this paragraph (e) shall be conclusive, in the
absence of manifest error. If such amount is not in fact made available to Agent
by such Lender within three (3) Business Days after such Settlement Date, Agent
shall be entitled to recover such an amount, with interest thereon at the rate
per annum then applicable to such Revolving Advances hereunder, on demand from
Borrowers; provided, however, that Agent's right to such recovery shall not
prejudice or otherwise adversely affect Borrowers' rights (if any) against such
Lender.
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2.14. Mandatory Prepayments.
(a) Subject to Section 4.3 hereof, when any Borrower sells or
otherwise disposes of any Collateral other than Inventory in the ordinary course
of business, Borrowers shall repay the Advances in an amount equal to the net
proceeds of such sale (i.e., gross proceeds less the reasonable costs of such
sales or other dispositions), such repayments to be made promptly but in no
event more than two (2) Business Day following receipt of such net proceeds, and
until the date of payment, such proceeds shall be held in trust for Agent. The
foregoing shall not be deemed to be implied consent to any such sale otherwise
prohibited by the terms and conditions hereof. Such repayments shall be applied
first to the outstanding principal installments of the Term Loan in the inverse
order of the maturities thereof and second, to the remaining Advances in such
order as Agent may determine, subject to Borrowers' ability to reborrow
Revolving Advances in accordance with the terms hereof.
(b) Borrowers shall prepay the outstanding amount of the
Advances in an amount equal to 75% of Excess Cash Flow for each fiscal year
commencing on or after January 1, 2000, payable upon delivery of the financial
statements to Agent referred to in and required by Section 9.7 for such fiscal
year but in any event not later than ninety (90) days after the end of each such
fiscal year, which amount shall be applied first, to the outstanding principal
installments of the Term Loan in the inverse order of the maturities thereof
and, second, to the remaining Advances in such order as Agent may determine
subject to Borrowers' ability to reborrow Revolving Advances in accordance with
the terms hereof. In the event that the financial statement is not so delivered,
then a calculation based upon estimated amounts shall be made by Agent upon
which calculation Borrowers shall make the prepayment required by this Section
2.14(b), subject to adjustment when the financial statement is delivered to
Agent as required hereby. The calculation made by Agent shall not be deemed a
waiver of any rights Agent or Lenders may have as a result of the failure by
Borrowers to deliver such financial statement.
(c) Upon the consummation of the Harding Divestiture, the
Borrowers shall repay the Revolving Advances in an amount (the "Harding
Divestiture Revolving Amount") equal to the applicable Advance Rate multiplied
by the amount of Eligible Receivables and Eligible Inventory at Harding, such
repayments to be made concurrently with the consummation of the Harding
Divestiture. In addition, Borrowers shall repay the Advances in an amount equal
to net proceeds (i.e., gross proceeds less reasonable transaction costs) from
the Harding Divestiture in excess of the Harding Divestiture Revolving Amount,
such repayments to be made within one (1) Business Day of receipt of such net
proceeds, and until paid, such proceeds shall be held in trust for Agent. Such
repayments shall be applied first, to the outstanding principal installments of
the Term Loan in the inverse order of the maturities thereof and, second, to the
remaining Advances in such order as Agent may determine, subject to Borrowers'
ability to reborrow Revolving Advances in accordance with the terms hereof.
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2.15. Use of Proceeds. Borrowers shall apply the proceeds of Advances
to (i) repay existing indebtedness owed to (x) First Union and the other lenders
pursuant to the First Union Loan Agreement and (y) the holders of the Senior
Notes pursuant to the Senior Notes, (ii) pay fees and expenses relating to this
transaction, and (iii) to provide for their working capital needs.
2.16. Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
portion of any Advance or (y) notifies either Agent or Borrowing Agent that it
does not intend to make available its portion of any Advance (if the actual
refusal would constitute a breach by such Lender of its obligations under this
Agreement) (each, a "Lender Default"), all rights and obligations hereunder of
such Lender (a "Defaulting Lender") as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.16 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition
of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender
and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section 2.16,
the rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.16 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
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(e) In the event a Defaulting Lender retroactively cures to
the satisfaction of Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
3.1. Interest. Interest on Advances shall be payable in arrears on the
first day of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar Rate Loans, at the end of each Interest Period or, for Eurodollar
Rate Loans with an Interest Period in excess of three months, (a) three months
from the commencement of such Eurodollar Rate Loan and (b) the end of the
Interest Period. Interest charges shall be computed on the actual principal
amount of Advances outstanding during the month at a rate per annum equal to (i)
with respect to Revolving Advances, the applicable Revolving Interest Rate and
(ii) with respect to the Term Loan, the applicable Term Loan Rate. Whenever,
subsequent to the date of this Agreement, the Alternate Base Rate is increased
or decreased, the applicable Contract Rate shall be similarly changed without
notice or demand of any kind by an amount equal to the amount of such change in
the Alternate Base Rate during the time such change or changes remain in effect.
The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans
without notice or demand of any kind on the effective date of any change in the
Reserve Percentage as of such effective date. Upon and after the occurrence of
an Event of Default, and during the continuation thereof, at the option of Agent
or at the direction of Required Lenders, the Obligations shall bear interest at
the applicable Contract Rate plus two percent (2%) per annum (as applicable, the
"Default Rate").
3.2. Letter of Credit Fees.
(a) Borrowers shall pay (x) to Agent, for the benefit of
Lenders, fees for each Letter of Credit for the period from and excluding the
date of issuance of same to and including the date of expiration or termination,
equal to the average daily face amount of each outstanding Letter of Credit
multiplied by one and one-half percent (1.50%) per annum, such fees to be
calculated on the basis of a 360-day year for the actual number of days elapsed
and to be payable monthly in arrears on the first day of each month and on the
last day of the Term and (y) to the Issuer, any and all fees and expenses as
agreed upon by the Issuer and the Borrowing Agent in connection with any Letter
of Credit, including, without limitation, in connection with the opening,
amendment or renewal of any such Letter of Credit and any acceptances created
thereunder and shall reimburse Agent for any and all fees and expenses, if any,
paid by Agent to the Issuer (all of the foregoing fees, the "Letter of Credit
Fees"). All such charges shall be deemed earned in full on the date when the
same are due and payable hereunder and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason. Any such charge
in effect at the time of a particular transaction shall be the charge for that
transaction, notwithstanding any subsequent change in the Issuer's prevailing
charges for that type of transaction. All Letter of Credit Fees payable
hereunder shall be deemed earned in full on the date when the same are due and
payable hereunder and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
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Following the occurrence and during the continuance of an
Event of Default, on demand, Borrowers will cause cash to be deposited and
maintained in an account with Agent, as cash collateral, in an amount equal to
one hundred and five percent (105%) of the outstanding Letters of Credit, and
each Borrower hereby irrevocably authorizes Agent, in its discretion, on such
Borrower's behalf and in such Borrower's name, to open such an account and to
make and maintain deposits therein, or in an account opened by such Borrower, in
the amounts required to be made by such Borrower, out of the proceeds of
Receivables or other Collateral or out of any other funds of such Borrower
coming into any Lender's possession at any time. Agent will invest such cash
collateral (less applicable reserves) in such short-term money-market items as
to which Agent and such Borrower mutually agree and the net return on such
investments shall be credited to such account and constitute additional cash
collateral. No Borrower may withdraw amounts credited to any such account except
upon payment and performance in full of all Obligations and termination of this
Agreement.
3.3. Facility Fee. If, for any quarter during the Term, the average
daily unpaid balance of the Revolving Advances for each day of such quarter does
not equal the Maximum Revolving Advance Amount, then Borrowers shall pay to
Agent for the ratable benefit of Lenders a fee at a rate equal to one-half of
one percent (.50%) per annum on the amount by which the Maximum Revolving
Advance Amount exceeds such average daily unpaid balance. Such fee shall be
payable to Agent in arrears on the first day of each quarter.
3.4. Fee Letter. Borrowers shall pay Agent the amounts set forth in the
Fee Letter at the times set forth therein.
3.5. Computation of Interest and Fees. Interest and fees
hereunder shall be computed on the basis of a year of 360 days and for the
actual number of days elapsed. If any payment to be made hereunder becomes due
and payable on a day other than a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and interest thereon shall be
payable at the applicable Contract Rate during such extension. For the purposes
of the Interest Act (Canada), whenever interest is calculated on the basis of a
year of 360 days, each rate of interest determined pursuant to such calculation
expressed as an annual rate is equivalent to such rate as so determined
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by 360.
3.6. Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrowers, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrowers and the provisions hereof
shall be deemed amended to provide for such permissible rate.
3.7. Increased Costs. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Other Document or change the
basis of taxation of payments to Agent or any Lender of principal, fees,
interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income of Agent or any
Lender by the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement or any
Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrowers shall promptly pay Agent or such Lender, upon its demand,
such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the
Eurodollar Rate. Agent or such Lender shall certify the amount of such
additional cost or reduced amount to Borrowers, and such certification shall be
conclusive absent manifest error.
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3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the
event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the
Eurodollar Rate applicable pursuant to Section 2.2 hereof for any Interest
Period; or
(b) Dollar deposits in the relevant amount and for the
relevant maturity are not available in the London interbank Eurodollar market,
with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate
Loan,
then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be cancelled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans
shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period
applicable to such affected Eurodollar Rate Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on the last Business Day of the then
current Interest Period for such affected Eurodollar Rate Loans. Until such
notice has been withdrawn, Lenders shall have no obligation to make an affected
type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate
Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.
3.9. Capital Adequacy.
(a) In the event that Agent or any Lender shall have
determined that any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.9, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Agent or any Lender's capital as a
consequence of its obligations hereunder to a level below that which Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration Agent's and each Lender's policies with respect to
capital adequacy) by an amount deemed by Agent or any Lender to be material,
then, from time to time, Borrowers shall pay upon demand to Agent or such Lender
such additional amount or amounts as will compensate Agent or such Lender for
such reduction. In determining such amount or amounts, Agent or such Lender may
use any reasonable averaging or attribution methods. The protection of this
Section 3.9 shall be available to Agent and each Lender regardless of any
possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to Borrowers shall be conclusive
absent manifest error.
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IV. COLLATERAL: GENERAL TERMS
4.1. Security Interest in the Collateral. To secure the prompt payment
and performance to Agent and each Lender of the Obligations, each Credit Party
hereby assigns, pledges and grants to Agent for its benefit and for the ratable
benefit of each Lender a continuing security interest in and to all of its
Collateral, whether now owned or existing or hereafter acquired or arising and
wheresoever located. Each Credit Party shall mark its books and records as may
be necessary or appropriate to evidence, protect and perfect Agent's security
interest and shall cause its financial statements to reflect such security
interest.
4.2. Perfection of Security Interest. Each Credit Party shall take all
action that may be necessary or desirable, or that Agent may request, so as at
all times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering financing statements, instruments of
pledge, mortgages, notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent's security interest under the Uniform
Commercial Code or other applicable law. Agent is hereby authorized to file
financing statements signed by Agent instead of Credit Party in accordance with
Section 9-402(2) of Uniform Commercial Code as adopted in the State of New York.
All charges, expenses and fees Agent may incur in doing any of the foregoing,
and any local taxes relating thereto, shall be charged to Borrowers' Account as
a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at
Agent's option, shall be paid to Agent for the ratable benefit of Lenders
immediately upon demand.
4.3. Disposition of Collateral. Each Credit Party will safeguard and
protect all Collateral for Agent's general account and make no disposition
thereof whether by sale, lease or otherwise except (a) the sale of Inventory in
the ordinary course of business and (b) the disposition or transfer of obsolete
and worn-out Equipment in the ordinary course of business during any fiscal year
having an aggregate fair market value for all Credit Parties of not more than
$250,000 and only to the extent that (i) the proceeds of any such disposition
are used to acquire replacement Equipment which is subject to Agent's first
priority security interest or (ii) the proceeds of which are remitted to Agent
to be applied pursuant to Section 2.14.
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4.4. Preservation of Collateral. Following the demand by Agent for
payment of all Obligations due and owing in accordance with Section 11.1 hereof,
in addition to the rights and remedies set forth in Section 11.1 hereof, Agent:
(a) may at any time take such steps as Agent deems necessary to protect Agent's
interest in and to preserve the Collateral, including the hiring of such
security guards or the placing of other security protection measures as Agent
may deem appropriate; (b) may employ and maintain at any of any Credit Party's
premises a custodian who shall have full authority to do all acts necessary to
protect Agent's interests in the Collateral; (c) may lease warehouse facilities
to which Agent may move all or part of the Collateral; (d) may use any Credit
Party's owned or leased lifts, hoists, trucks and other facilities or equipment
for handling or removing the Collateral; and (e) shall have, and is hereby
granted, a right of ingress and egress to the places where the Collateral is
located, and may proceed over and through any of Credit Party's owned or leased
property. Each Credit Party shall cooperate fully with all of Agent's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Agent may direct. All of Agent's expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be charged
to Borrowers' Account as a Revolving Advance of a Domestic Rate Loan and added
to the Obligations.
4.5. Ownership of Collateral. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) each
Credit Party shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of the its respective Collateral to Agent; and, except for Permitted
Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by each Credit
Party or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all material respects; (c) all signatures and
endorsements of each Credit Party that appear on such documents and agreements
shall be genuine and each Credit Party shall have full capacity to execute same;
and (d) each Credit Party's Equipment and Inventory shall be located as set
forth on Schedule 4.5 and shall not be removed from such location(s) without the
prior written consent of Agent except with respect to the sale of Inventory in
the ordinary course of business and Equipment to the extent permitted in Section
4.3 hereof.
4.6. Defense of Agent's and Lenders' Interests. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period no Credit Party shall, without Agent's prior written
consent, pledge, sell (except Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3 hereof), assign, transfer,
create or suffer to exist a Lien upon or encumber or allow or suffer to be
encumbered in any way except for Permitted Encumbrances, any part of the
Collateral. Each Credit Party shall defend Agent's interests in the Collateral
against any and all Persons whatsoever. At any time following demand by Agent
for payment of all Obligations, Agent shall have the right to take possession of
the indicia of the Collateral and the Collateral in whatever physical form
contained, including without limitation: labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right to take
possession of the Collateral, Credit Parties shall, upon demand, assemble it in
the best manner possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral, Agent and
Lenders shall be entitled to all of the rights and remedies set forth herein and
further provided by the Uniform Commercial Code or other applicable law. Each
Credit Party shall, and Agent may, at its option, instruct all suppliers,
carriers, forwarders, warehousers or others receiving or holding cash, checks,
Inventory, documents or instruments in which Agent holds a security interest to
deliver same to Agent and/or subject to Agent's order and if they shall come
into any Credit Party's possession, they, and each of them, shall be held by
such Credit Party in trust as Agent's trustee, and such Credit Party will
immediately deliver them to Agent in their original form together with any
necessary endorsement.
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4.7. Books and Records. Each Credit Party shall (a) keep proper books
of record and account in which full, true and correct entries will be made of
all dealings or transactions of or in relation to its business and affairs; (b)
set up on its books accruals with respect to all taxes, assessments, charges,
levies and claims; and (c) on a reasonably current basis set up on its books,
from its earnings, allowances against doubtful Receivables, advances and
investments and all other proper accruals (including without limitation by
reason of enumeration, accruals for premiums, if any, due on required payments
and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business.
All determinations pursuant to this subsection shall be made in accordance with,
or as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Credit Parties.
4.8. Financial Disclosure. Each Credit Party hereby irrevocably
authorizes and directs all accountants and auditors employed by such Credit
Party at any time during the Term to exhibit and deliver to Agent and each
Lender copies of any of any Credit Party's financial statements, trial balances
or other accounting records of any sort in the accountant's or auditor's
possession, and to disclose to Agent and each Lender any information such
accountants may have concerning such Credit Party's financial status and
business operations. Each Credit Party hereby authorizes all federal,
provincial, state and municipal authorities to furnish to Agent and each Lender
copies of reports or examinations relating to such Credit Party, whether made by
such Credit Party or otherwise; however, Agent and each Lender will attempt to
obtain such information or materials directly from such Credit Party prior to
obtaining such information or materials from such accountants or such
authorities.
4.9. Compliance with Laws. Each Credit Party shall comply in all
material respects with all acts, rules, regulations and orders of any
legislative, administrative or judicial body or official applicable to its
respective Collateral or any part thereof or to the operation of such Credit
Party's business the non-compliance with which could reasonably be expected to
have a Material Adverse Effect on such Credit Party. Each Credit Party may,
however, contest or dispute any acts, rules, regulations, orders and directions
of those bodies or officials in any reasonable manner, provided that any related
Lien is inchoate or stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent's Lien on or security interest
in the Collateral. The Collateral at all times shall be maintained in accordance
with the requirements of all insurance carriers which provide insurance with
respect to the Collateral so that such insurance shall remain in full force and
effect.
4.10. Inspection of Premises. At all reasonable times and so long as
(a) no Event of Default has occurred and is then continuing and (b) Agent, in
its reasonable discretion, does not believe that any Credit Party has or is
committing fraud, upon reasonable prior notice, Agent and each Lender shall have
full access to and the right to audit, check, inspect and make abstracts and
copies from each Credit Party's books, records, audits, correspondence and all
other papers relating to the Collateral and the operation of each Credit Party's
business. Agent, any Lender and their agents may enter upon any of each Credit
Party's premises at any time during business hours and at any other reasonable
time, and from time to time, for the purpose of inspecting the Collateral and
any and all records pertaining thereto and the operation of such Credit Party's
business. So long as no Event of Default has occurred and is then continuing,
Credit Parties shall only be liable to pay Agent's and each Lender's costs and
expenses in connection with four (4) inspections during any twelve (12) month
period of each Credit Party's premises.
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4.11. Insurance. Each Credit Party shall bear the full risk of any loss
of any nature whatsoever with respect to the Collateral. At each Credit Party's
own cost and expense in amounts and with carriers acceptable to Agent, each
Credit Party shall (a) keep all its insurable properties and properties in which
each Credit Party has an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by extended coverage insurance and such
other hazards, and for such amounts, as is customary in the case of companies
engaged in businesses similar to such Credit Party's including, without
limitation, business interruption insurance; (b) maintain a bond in such amounts
as is customary in the case of companies engaged in businesses similar to such
Borrower insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of such
Credit Party either directly or through authority to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which such Credit Party is engaged in business; (e) furnish Agent with (i)
copies of all policies and evidence of the maintenance of such policies by the
renewal thereof at least thirty (30) days before any expiration date, and (ii)
appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as a co-insured and loss payee as its interests may appear
with respect to all insurance coverage referred to in clauses (a) and (c) above,
and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no
such insurance shall be affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) that such policy and loss
payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days' prior written notice is given to Agent. In the event of any
loss thereunder, the carriers named therein hereby are directed by Agent and the
applicable Credit Party to make payment for such loss to Agent and not to such
Credit Party and Agent jointly. If any insurance losses are paid by check, draft
or other instrument payable to any Credit Party and Agent jointly, Agent may
endorse such Credit Party's name thereon and do such other things as Agent may
deem advisable to reduce the same to cash. Agent is hereby authorized to adjust
and compromise claims under insurance coverage referred to in clauses (a) and
(b) above. All loss recoveries received by Agent upon any such insurance may be
applied to the Obligations, in such order as Agent in its sole discretion shall
determine. Any surplus shall be paid by Agent to Credit Parties or applied as
may be otherwise required by law. Any deficiency thereon shall be paid by Credit
Parties to Agent, on demand. Anything hereinabove to the contrary
notwithstanding, and subject to the fulfillment of the conditions set forth
below, Agent shall remit to Credit Parties insurance proceeds received by Agent
during any calendar year under insurance policies procured and maintained by
Credit Parties which insure Credit Parties insurable properties to the extent
such insurance proceeds do not exceed $500,000 in the aggregate during such
calendar year or $500,000 per occurrence. In the event the amount of insurance
proceeds received by Agent for any occurrence exceeds $500,000 then Agent shall
not be obligated to remit the insurance proceeds to Credit Parties unless Credit
Parties shall provide Agent with evidence reasonably satisfactory to Agent that
the insurance proceeds will be used by Credit Parties to repair, replace or
restore the insured property which was the subject of the insurable loss subject
to Borrowers' ability to reborrow such amounts as Revolving Advances to be used
for such purpose. In the event Credit Parties have previously received (or,
after giving effect to any proposed remittance by Agent to Credit Parties would
receive) insurance proceeds which equal or exceed $500,000 in the aggregate
during any calendar year, then Agent may, in its sole discretion, either remit
the insurance proceeds to Credit Parties upon Credit Parties providing Agent
with evidence reasonably satisfactory to Agent that the insurance proceeds will
be used by Credit Parties to repair, replace or restore the insured property
which was the subject of the insurable loss, or apply the proceeds to the
Obligations, as aforesaid. The agreement of Agent to remit insurance proceeds in
the manner above provided shall be subject in each instance to satisfaction of
each of the following conditions: (x) No Event of Default shall then have
occurred and be continuing, and (y) Credit Parties shall use such insurance
proceeds to repair, replace or restore the insurable property which was the
subject of the insurable loss and for no other purpose.
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4.12. Failure to Pay Insurance. If any Credit Party fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor on behalf of
such Credit Party, and charge Borrowers' Account therefor as a Revolving Advance
of a Domestic Rate Loan and such expenses so paid shall be part of the
Obligations.
4.13. Payment of Taxes. Each Credit Party will pay, when due, all
taxes, assessments and other Charges lawfully levied or assessed upon such
Credit Party or any of the Collateral including, without limitation, real and
personal property taxes, assessments and charges and all franchise, income,
employment, social security benefits, withholding, and sales taxes. If any tax
by any governmental authority is or may be imposed on or as a result of any
transaction between any Credit Party and Agent or any Lender which Agent or any
Lender may be required to withhold or pay or if any taxes, assessments, or other
Charges remain unpaid after the date fixed for their payment, or if any claim
shall be made which, in Agent's or any Lender's opinion, may possibly create a
valid Lien on the Collateral, Agent may without notice to Credit Parties pay the
taxes, assessments or other Charges and each Credit Party hereby indemnifies and
holds Agent and each Lender harmless in respect thereof. Agent will not pay any
taxes, assessments or Charges to the extent that any Credit Party has contested
or disputed those taxes, assessments or Charges in good faith, by expeditious
protest, administrative or judicial appeal or similar proceeding provided that
any related tax lien is stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent's security interest in or Lien
on the Collateral. The amount of any payment by Agent under this Section 4.13
shall be charged to Borrowers' Account as a Revolving Advance of a Domestic Rate
Loan and added to the Obligations and, until Credit Parties shall furnish Agent
with an indemnity therefor (or supply Agent with evidence satisfactory to Agent
that due provision for the payment thereof has been made), Agent may hold
without interest any balance standing to Credit Parties' credit and Agent shall
retain its security interest in any and all Collateral held by Agent.
4.14. Payment of Leasehold Obligations. Each Credit Party shall at all
times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at
Agent's request will provide evidence of having done so.
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4.15. Receivables.
(a) Nature of Receivables. Each of the Receivables which
constitute "accounts" under the Uniform Commercial Code shall be a bona fide and
valid account representing a bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto
(provided immaterial or unintentional invoice errors shall not be deemed to be a
breach hereof) with respect to an absolute sale or lease and delivery of goods
upon stated terms of a Credit Party, or work, labor or services theretofore
rendered by a Credit Party as of the date each Receivable is created. Same shall
be due and owing in accordance with the applicable Credit Party's standard terms
of sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Credit Parties to Agent.
(b) Solvency of Customers. Each Customer, to the best of each
Credit Party's knowledge, as of the date each Receivable is created, is and will
be solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Credit Party who are not
solvent such Credit Party has set up on its books and in its financial records
bad debt reserves adequate to cover such Receivables.
(c) Locations of Credit Party . Each Credit Party's chief
executive office is located at the addresses set forth on Schedule 4.15(c)
hereto. Until written notice is given to Agent by Borrowing Agent of any other
office at which any Credit Party keeps its records pertaining to Receivables,
all such records shall be kept at such executive office.
(d) Collection of Receivables. Until any Credit Party's
authority to do so is terminated by Agent (which notice Agent may give at any
time following the occurrence of an Event of Default or a Default or when Agent
in its sole discretion deems it to be in Lenders' best interest to do so), each
Credit Party will, at such Credit Party's sole cost and expense, but on Agent's
behalf and for Agent's account, collect as Agent's property and in trust for
Agent all amounts received on Receivables, and shall not commingle such
collections with any Credit Party's funds or use the same except to pay
Obligations. Each Credit Party shall, upon request, deliver to Agent, or deposit
in the Blocked Account, in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.
(e) Notification of Assignment of Receivables. At any time
following the occurrence of an Event of Default and while such Event of Default
is continuing, Agent shall have the right to send notice of the assignment of,
and Agent's security interest in, the Receivables to any and all Customers or
any third party holding or otherwise concerned with any of the Collateral.
Thereafter, Agent shall have the sole right to collect the Receivables, take
possession of the Collateral, or both. Agent's actual collection expenses,
including, but not limited to, stationery and postage, telephone and telegraph,
secretarial and clerical expenses and the salaries of any collection personnel
used for collection, may be charged to Borrowers' Account and added to the
Obligations.
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(f) Power of Agent to Act on Credit Parties Behalf. Agent
shall have the right to receive, endorse, assign and/or deliver in the name of
Agent or any Credit Party any and all checks, drafts and other instruments for
the payment of money relating to the Receivables, and each Credit Party hereby
waives notice of presentment, protest and non-payment of any instrument so
endorsed. Each Credit Party hereby constitutes Agent or Agent's designee as such
Credit Party's attorney with power (i) to endorse such Credit Party's name upon
any notes, acceptances, checks, drafts, money orders or other evidences of
payment or Collateral; (ii) to sign such Credit Party's name on any invoice or
bill of lading relating to any of the Receivables, drafts against Customers,
assignments and verifications of Receivables; (iii) to send verifications of
Receivables to any Customer; (iv) to sign such Credit Party's name on all
financing statements or any other documents or instruments deemed necessary or
appropriate by Agent to preserve, protect, or perfect Agent's interest in the
Collateral and to file same; (v) to demand payment of the Receivables; (vi) to
enforce payment of the Receivables by legal proceedings or otherwise; (vii) to
exercise all of Credit Party s' rights and remedies with respect to the
collection of the Receivables and any other Collateral; (viii) to settle,
adjust, compromise, extend or renew the Receivables; (ix) to settle, adjust or
compromise any legal proceedings brought to collect Receivables; (x) to prepare,
file and sign such Credit Party's name on a proof of claim in bankruptcy or
similar document against any Customer; (xi) to prepare, file and sign such
Credit Party's name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables; and (xii) to do all other
acts and things necessary to carry out this Agreement. Agent shall only exercise
such power of attorney with respect to (v), (vi), (vii), (viii), (ix), (x) and
(xi) following the occurrence and during the continuation of an Event of
Default. All acts of said attorney or designee are hereby ratified and approved,
and said attorney or designee shall not be liable for any acts of omission or
commission nor for any error of judgment or mistake of fact or of law, unless
done maliciously or with gross (not mere) negligence; this power being coupled
with an interest is irrevocable while any of the Obligations remain unpaid.
Agent shall have the right at any time following the occurrence and during the
continuation of an Event of Default, to change the address for delivery of mail
addressed to any Credit Party to such address as Agent may designate and to
receive, open and dispose of all mail addressed to any Credit Party.
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(g) No Liability. Neither Agent nor any Lender shall, under
any circumstances or in any event whatsoever, have any liability for any error
or omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment thereof,
or for any damage resulting therefrom. Following the occurrence of an Event of
Default and while such Event of Default is continuing Agent may, without notice
or consent from any Credit Party, sue upon or otherwise collect, extend the time
of payment of, compromise or settle for cash, credit or upon any terms any of
the Receivables or any other securities, instruments or insurance applicable
thereto and/or release any obligor thereof. Agent is authorized and empowered to
accept following the occurrence of an Event of Default and during the
continuation thereof the return of the goods represented by any of the
Receivables, without notice to or consent by any Credit Party, all without
discharging or in any way affecting any Credit Party's liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. All
proceeds of Collateral shall, at the direction of Agent, be deposited by Credit
Parties into a lockbox account, dominion account or such other "blocked account"
("Blocked Accounts") as Agent may require pursuant to an arrangement with such
bank as may be selected by Credit Parties and be acceptable to Agent. Credit
Parties shall issue to any such bank, an irrevocable letter of instruction
directing said bank to transfer such funds so deposited to Agent, either to any
account maintained by Agent at said bank or by wire transfer to appropriate
account(s) of Agent. All funds deposited in such Blocked Account shall
immediately become the property of Agent and Credit Parties shall obtain the
agreement by such bank to waive any offset rights against the funds so
deposited. Neither Agent nor any Lender assumes any responsibility for such
blocked account arrangement, including without limitation, any claim of accord
and satisfaction or release with respect to deposits accepted by any bank
thereunder. Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and Credit Parties shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the Blocked Accounts.
(i) Adjustments. No Credit Party will, without Agent's
consent, compromise or adjust any material amount of the Receivables (or extend
the time for payment thereof) or accept any material returns of merchandise or
grant any additional discounts, allowances or credits thereon except for those
compromises, adjustments, returns, discounts, credits and allowances as have
been heretofore customary in the business of such Credit Party.
4.16. Inventory. To the extent Inventory held for sale or lease has
been produced by any Credit Party, it has been and will be produced by such
Credit Party in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations and orders thereunder.
4.17. Maintenance of Equipment. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved. No
Credit Party shall use or operate the Equipment in violation of any law,
statute, ordinance, code, rule or regulation. Each Credit Party shall have the
right to sell Equipment to the extent set forth in Section 4.3 hereof.
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4.18. Exculpation of Liability. Nothing herein contained shall be
construed to constitute Agent or any Lender as any Credit Party's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof.
Neither Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of any Credit Party's obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Credit Party of any
of the terms and conditions thereof.
4.19. Environmental Matters. (a) Credit Parties shall ensure that the
Real Property remains in compliance with all Environmental Laws and they shall
not place or permit to be placed any Hazardous Substances on any Real Property
except as permitted by applicable law or appropriate governmental authorities.
(b) Credit Parties shall establish and maintain a system to
assure and monitor continued compliance with all applicable Environmental Laws
which system shall include periodic reviews of such compliance.
(c) Credit Parties shall (i) employ in connection with the use
of the Real Property appropriate technology necessary to maintain compliance
with any applicable Environmental Laws and (ii) dispose of any and all Hazardous
Waste generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Credit Parties shall use their best efforts to obtain certificates of disposal,
such as hazardous waste manifest receipts, from all treatment, transport,
storage or disposal facilities or operators employed by Credit Parties in
connection with the transport or disposal of any Hazardous Waste generated at
the Real Property.
(d) In the event any Credit Party obtains, gives or receives
notice of any Release or threat of Release of a reportable quantity of any
Hazardous Substances at the Real Property (any such event being hereinafter
referred to as a "Hazardous Discharge") or receives any notice of violation,
request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property,
demand letter or complaint, order, citation, or other written notice with regard
to any Hazardous Discharge or violation of Environmental Laws affecting the Real
Property or any Credit Party's interest therein (any of the foregoing is
referred to herein as an "Environmental Complaint") from any Person, including
any state agency responsible in whole or in part for environmental matters in
the state in which the Real Property is located or the United States
Environmental Protection Agency (any such person or entity hereinafter the
"Authority"), then Borrowing Agent shall, within five (5) Business Days, give
written notice of same to Agent detailing facts and circumstances of which any
Credit Party is aware giving rise to the Hazardous Discharge or Environmental
Complaint. Such information is to be provided to allow Agent to protect its
security interest in the Real Property and the Collateral and is not intended to
create nor shall it create any obligation upon Agent or any Lender with respect
thereto.
(e) Credit Parties shall promptly forward to Agent copies of
any request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by any
Credit Party to dispose of Hazardous Substances and shall continue to forward
copies of material correspondence between any Credit Party and the Authority
regarding such claims to Agent until the claim is settled. Credit Parties shall
promptly forward to Agent copies of all documents and reports concerning a
Hazardous Discharge at the Real Property that any Credit Party is required to
file under any Environmental Laws. Such information is to be provided solely to
allow Agent to protect Agent's security interest in the Real Property and the
Collateral.
(f) Credit Parties shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
Real Property to any Lien. If any Credit Party shall fail to respond promptly to
any Hazardous Discharge or Environmental Complaint or any Credit Party shall
fail to comply with any of the requirements of any Environmental Laws, Agent on
behalf of Lenders may, but without the obligation to do so, for the sole purpose
of protecting Agent's interest in Collateral: (A) give such notices or (B) enter
onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by
Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or
otherwise deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Borrowers, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and any Credit Party.
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(g) Promptly upon the written request of Agent from time to
time which request shall only be made if Agent, in its reasonable discretion,
believes that Hazardous Substances may be found on, under, at or within the
applicable Real Property, Credit Parties shall provide Agent, at Credit Parties'
expense, with an environmental site assessment or environmental audit report
prepared by an environmental engineering firm acceptable in the reasonable
opinion of Agent, to assess with a reasonable degree of certainty the existence
of a Hazardous Discharge and the potential costs in connection with abatement,
cleanup and removal of any Hazardous Substances found on, under, at or within
the Real Property. Any report or investigation of such Hazardous Discharge
proposed and acceptable to an appropriate Authority that is charged to oversee
the clean-up of such Hazardous Discharge shall be acceptable to Agent. If such
estimates, individually or in the aggregate, exceed $100,000, Agent shall have
the right to require Credit Parties to post a bond, letter of credit or other
security reasonably satisfactory to Agent to secure payment of these costs and
expenses.
(h) Credit Parties shall defend and indemnify Agent and
Lenders and hold Agent, Lenders and their respective employees, agents,
directors and officers harmless from and against all loss, liability, damage and
expense, claims, costs, fines and penalties, including attorney's fees, suffered
or incurred by Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any Lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the Real Property, whether or not the same originates or emerges from
the Real Property or any contiguous real estate, including any loss of value of
the Real Property as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. Credit Parties'
obligations under this Section 4.19 shall arise upon the discovery of the
presence of any Hazardous Substances at the Real Property, whether or not any
federal, provincial, state, or local environmental agency has taken or
threatened any action in connection with the presence of any Hazardous
Substances. Credit Parties' obligation and the indemnifications hereunder shall
survive the termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to
Real Property shall be deemed to include all of Credit Parties' right, title and
interest in and to its owned and leased premises.
4.20. Financing Statements. Except as respects the financing statements
filed by Agent and the financing statements described on Schedule 1.2, no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
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4.21. Amalgamation. Each Credit Party acknowledges that if it
amalgamates with any other corporation, then (i) the Agent's security interest
attaches to the Collateral which will extend to and include all of the personal
property of each of the amalgamating corporations and all of the personal
property of the amalgamated corporation owned on the amalgamation becoming
effective and thereafter owned or acquired, (ii) the term "Credit Party", where
used in this Agreement, will extend to and include the amalgamating corporations
and the amalgamated corporation, and (iii) the term "Obligations" where used in
this Agreement will extend to and included "Obligations" of the amalgamating
corporations and the Obligations of the amalgamated corporation.
V. REPRESENTATIONS AND WARRANTIES.
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Each Credit Party represents and warrants as follows:
5.1. Authority. Each Credit Party has full power, authority and legal
right to enter into this Agreement and the Other Documents and to perform all
its respective Obligations hereunder and thereunder. This Agreement and the
Other Documents constitute the legal, valid and binding obligation of such
Credit Party enforceable in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally. The execution,
delivery and performance of this Agreement and of the Other Documents (a) are
within such Credit Party's corporate powers, have been duly authorized, are not
in contravention of law or the terms of such Credit Party's by-laws, certificate
of incorporation or other applicable documents relating to such Credit Party's
formation or to the conduct of such Credit Party's business or of any material
agreement or undertaking to which such Credit Party is a party or by which such
Credit Party is bound, and (b) will not conflict with nor result in any breach
in any of the provisions of or constitute a default under or result in the
creation of any Lien except Permitted Encumbrances upon any asset of such Credit
Party under the provisions of any agreement, charter document, instrument,
by-law, or other instrument to which such Credit Party is a party or by which it
or its property may be bound.
5.2. Formation and Qualification. (a) Each Credit Party is duly
incorporated and in good standing under the laws of the jurisdictions listed on
Schedule 5.2(a) and is qualified to do business and is in good standing in the
jurisdictions listed on Schedule 5.2(a) which constitute all jurisdictions in
which qualification and good standing are necessary for such Credit Party to
conduct its business and own its property and where the failure to so qualify
could reasonably be expected to have a Material Adverse Effect on such Credit
Party. Each Credit Party has delivered to Agent true and complete copies of its
organizational documents and will promptly notify Agent of any amendment or
changes thereto.
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(b) The only Subsidiaries of each Credit Party are listed on
Schedule 5.2(b).
5.3. Survival of Representations and Warranties. All representations
and warranties of such Credit Party contained in this Agreement and the Other
Documents shall be true at the time of such Credit Party's execution of this
Agreement and the Other Documents, and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
5.4. Tax Returns. Each Credit Party's federal tax identification number
is set forth on Schedule 5.4. Each Credit Party has filed all federal,
provincial, state and local tax returns and other reports each is required by
law to file and has paid all taxes, assessments, fees and other governmental
charges that are due and payable. Federal, provincial, state and local income
tax returns of each Credit Party have been examined and reported upon by the
appropriate taxing authority or closed by applicable statute and satisfied for
all fiscal years prior to and including the fiscal year ending December 31,
1998. The provision for taxes on the books of each Credit Party are adequate for
all years not closed by applicable statutes, and for its current fiscal year,
and no Credit Party has any knowledge of any deficiency or additional assessment
in connection therewith not provided for on its books.
5.5. Financial Statements.
(a) The pro forma balance sheet of Borrowers on a consolidated
basis (the "Pro Forma Balance Sheet") furnished to Agent on the Closing Date
reflects the consummation of the transactions contemplated under this Agreement
(the "Transactions") and is accurate, complete and correct and fairly reflects
the financial condition of Borrowers in all material respects on a consolidated
basis as of the Closing Date after giving effect to the Transactions, and has
been prepared in accordance with GAAP, consistently applied. The Pro Forma
Balance Sheet has been certified as accurate, complete and correct in all
material respects by the President and Chief Financial Officer of SunSource. All
financial statements referred to in this subsection 5.5(a), including the
related schedules and notes thereto, have been prepared, in accordance with
GAAP, except as may be disclosed in such financial statements.
(b) The twelve-month cash flow projections of the Borrowers on
a consolidated basis and their projected balance sheets as of the Closing Date,
copies of which are annexed hereto as Exhibit 5.5(b) (the "Projections") were
prepared by the Chief Financial Officer of SunSource, are based on underlying
assumptions which provide a reasonable basis for the projections contained
therein and reflect Borrowers' judgment based on present circumstances of the
most likely set of conditions and course of action for the projected period. The
cash flow Projections together with the Pro Forma Balance Sheet, are referred to
as the "Pro Forma Financial Statements".
(c) The consolidated and consolidating balance sheets of the
Borrowers, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of September 30, 1999 and the
related statements of income, changes in stockholder's equity, and changes in
cash flow for the period ended on such date, all accompanied by reports thereon
containing opinions without qualification by independent certified public
accountants, copies of which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (except for changes in application in
which such accountants concur and present fairly the financial position of the
Borrowers and their Subsidiaries at such date and the results of their
operations for such period. Since September 30, 1999 there has been no change in
the condition, financial or otherwise, of Borrowers or their Subsidiaries as
shown on the consolidated balance sheet as of such date and no change in the
aggregate value of machinery, equipment and Real Property owned by Borrowers and
their respective Subsidiaries, except changes in the ordinary course of
business, none of which individually or in the aggregate has been materially
adverse.
5.6. Corporate Name. No Credit Party has been known by any other
corporate name or any French version of its name in the past five years and does
not sell Inventory under any other name except as set forth on Schedule 5.6, nor
has any Credit Party been the surviving corporation of a merger or consolidation
or acquired all or substantially all of the assets of any Person during the
preceding five (5) years.
5.7. O.S.H.A. and Environmental Compliance.
(a) Each Credit Party has duly complied with, and its
facilities, business, assets, property, leaseholds and Equipment are in
compliance in all material respects with, the provisions of the Federal
Occupational Safety and Health Act, the Environmental Protection Act, RCRA and
all other Environmental Laws; there have been no outstanding citations, notices
or orders of non-compliance issued to any Credit Party or relating to its
business, assets, property, leaseholds or Equipment under any such laws, rules
or regulations.
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(b) Each Credit Party has been issued all required federal,
provincial, state and local licenses, certificates or permits relating to all
applicable Environmental Laws.
(c) (i) There are no visible signs of releases, spills,
discharges, leaks or disposal (collectively referred to as "Releases") of
Hazardous Substances at, upon, under or within any Real Property; (ii) there are
no underground storage tanks or polychlorinated biphenyls on the Real Property;
(iii) none of the Real Property has ever been used as a treatment, storage or
disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are
present on the Real Property, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary for the
operation of the commercial business of any Credit Party or of its tenants.
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.
(a) After giving effect to the Transactions, Credit Parties
will be solvent, able to pay their debts as they mature, have capital sufficient
to carry on their business and all businesses in which they are about to engage,
and (i) as of the Closing Date, the fair present saleable value of their assets,
calculated on a going concern basis, is in excess of the amount of their
liabilities and (ii) subsequent to the Closing Date, the fair saleable value of
their assets (calculated on a going concern basis) will be in excess of the
amount of their liabilities.
(b) Except as disclosed in Schedule 5.8(b), no Credit Party
has (i) any pending or threatened litigation, arbitration, actions or
proceedings which involve the possibility of having a Material Adverse Effect on
such Credit Party, and (ii) any liabilities nor indebtedness for borrowed money
other than the Obligations.
(c) No Credit Party is in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect on such Credit Party, nor is any Credit Party in
material violation of any order of any court, governmental authority or
arbitration board or tribunal.
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(d) As of the Closing Date and on the last day of each fiscal
quarter, no Credit Party nor any member of the Controlled Group maintains or
contributes to any Plan other than those listed on Schedule 5.8(d) hereto.
Credit Parties shall be required to add any new Plans not listed on Schedule
5.8(d) on the last day of each fiscal quarter to reflect Plans entered into
during such fiscal quarter. Except where the failure to be true would not
reasonably be expected to have a Material Adverse Effect on any Credit Party or
any member of the Controlled Group, or except as set forth in Schedule 5.8(d),
(i) no Pension Plan has incurred any "accumulated funding deficiency," as
defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or
not waived, and each Credit Party and each member of the Controlled Group has
met all applicable minimum funding requirements under Section 302 of ERISA in
respect of each Pension Plan, (ii) each Plan which is intended to be a qualified
plan under Section 401(a) of the Code as currently in effect has been determined
by the Internal Revenue Service to be qualified under Section 401(a) of the Code
and the trust related thereto is exempt from federal income tax under Section
501(a) of the Code, (iii) with respect to each Pension Plan, no Credit Party nor
any member of the Controlled Group has incurred any material liability to the
PBGC other than for the payment of premiums, and there are no premium payments
which have become due which are unpaid, (iv) no Pension Plan has been terminated
by the plan administrator thereof nor by the PBGC, and to the knowledge of the
Credit Parties there is no occurrence which would cause the PBGC to institute
proceedings under Title IV of ERISA to terminate any Pension Plan, (v) at this
time, the current value of the assets of each Pension Plan equals or exceeds the
present value of the accrued benefits and other liabilities of such Pension Plan
and no Credit Party nor any member of the Controlled Group knows of any facts or
circumstances which would materially change the value of such assets and accrued
benefits and other liabilities, (vi) no Credit Party nor any member of the
Controlled Group has breached any of the responsibilities, obligations or duties
imposed on it by ERISA with respect to any Plan, (vii) no Credit Party nor any
member of a Controlled Group has incurred any material liability for any excise
tax arising under Section 4972 or 4980B of the Code, and to the knowledge of the
Credit Party no fact exists which could give rise to any such liability, (viii)
no Credit Party nor any member of the Controlled Group nor any fiduciary of, nor
any trustee to, any Plan, has engaged in a non-exempt "prohibited transaction"
described in Section 406 of the ERISA or Section 4975 of the Code nor taken any
action which would constitute or result in a Termination Event with respect to
any such Plan which is subject to ERISA, (ix) each Credit Party and each member
of the Controlled Group has made all contributions due and payable with respect
to each Plan, (x) there exists no event described in Section 4043(b) of ERISA,
for which the thirty (30) day notice period contained in 29 CFR ss.2615.3 has
not been waived, (xi) no Credit Party nor any member of the Controlled Group has
any fiduciary responsibility for investments with respect to any plan existing
for the benefit of persons other than employees or former employees of any
Credit Party and any member of the Controlled Group, and (xii) no Credit Party
nor any member of the Controlled Group has withdrawn, completely or partially,
from any Multiemployer Plan so as to incur liability under the Multiemployer
Pension Plan Amendments Act of 1980.
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5.9. Patents, Trademarks, Copyrights and Licenses. All patents, patent
applications, trademarks, trademark applications, service marks, service mark
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by any Credit Party
are set forth on Schedule 5.9, are valid and have been duly registered or filed
with all appropriate governmental authorities and constitute all of the
intellectual property rights which are necessary for the operation of its
business; there is no objection to or pending challenge to the validity of any
such patent, trademark, copyright, design right, tradename, trade secret or
license and no Credit Party is aware of any grounds for any challenge, except as
set forth in Schedule 5.9 hereto. Each patent, patent application, patent
license, trademark, trademark application, trademark license, service mark,
service mark application, service mark license, design right, copyright,
copyright application and copyright license owned or held by any Credit Party
and all trade secrets used by any Credit Party consist of original material or
property developed by such Credit Party or was lawfully acquired by such Credit
Party from the proper and lawful owner thereof. Each of such items has been
maintained so as to preserve the value thereof from the date of creation or
acquisition thereof. With respect to all software used by any Credit Party, such
Credit Party is in possession of all source and object codes related to each
piece of software.
5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each
Credit Party (a) is in compliance with and (b) has procured and is now in
possession of, all material licenses or permits required by any applicable
federal, provincial, state, or local law or regulation for the operation of its
business in each jurisdiction wherein it is now conducting or proposes to
conduct business and where the failure to be in such compliance or to procure
such licenses or permits could have a Material Adverse Effect on such Credit
Party.
5.11. Default of Indebtedness. No Credit Party is in default in the
payment of the principal of or interest on any Indebtedness in excess of $50,000
or under any instrument or agreement under or subject to which any Indebtedness
in excess of $50,000 has been issued and no event has occurred under the
provisions of any such instrument or agreement which with or without the lapse
of time or the giving of notice, or both, constitutes or would constitute an
event of default thereunder.
5.12. No Default. No Credit Party is in default in the payment or
performance of any of its contractual obligations and no Default has occurred.
5.13. No Burdensome Restrictions. No Credit Party is party to any
contract or agreement the performance of which could have a Material Adverse
Effect on such Credit Party. No Credit Party has agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
its property, whether now owned or hereafter acquired, to be subject to a Lien
which is not a Permitted Encumbrance.
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5.14. No Labor Disputes. No Credit Party is involved in any labor
dispute; there are no strikes or walkouts or union organization of any Credit
Party's employees threatened or in existence and no labor contract is scheduled
to expire during the Term other than as set forth on Schedule 5.14 hereto.
5.15. Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any Advance
will be used for "purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.
5.16. Investment Company Act. No Credit Party is an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, nor is it controlled by such a company.
5.17. Disclosure. No representation or warranty made by any Credit
Party in this Agreement or in any financial statement, report, certificate or
any other document furnished in connection herewith contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
Credit Parties or which reasonably should be known to Borrowers which Credit
Parties have not disclosed to Agent in writing with respect to the transactions
contemplated by this Agreement which could reasonably be expected to have a
Material Adverse Effect on any Credit Party.
5.18. Delivery of Junior Subordinated Debentures. Agent has received
complete copies of the Junior Subordinated Debentures (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof. None of such documents
and agreements has been amended or supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written agreement or instrument which
has heretofore been delivered to Agent.
5.19. Swaps. No Credit Party is a party to, nor will it be a party to,
any swap agreement whereby such Credit Party has agreed or will agree to swap
interest rates or currencies unless same provides that damages upon termination
following an event of default thereunder are payable on an unlimited "two-way
basis" without regard to fault on the part of either party.
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5.20. Conflicting Agreements. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on any Credit Party or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.21. Application of Certain Laws and Regulations. No Credit Party nor
any Affiliate of any Credit Party is subject to any statute, rule or regulation
which regulates the incurrence of any Indebtedness, including without
limitation, statutes or regulations relative to common or interstate carriers or
to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.
5.22. Business and Property of Credit Parties . Upon and after the
Closing Date, Credit Parties do not propose to engage in any business other than
as set forth on Schedule 5.22 hereto and activities necessary to conduct the
foregoing. On the Closing Date, each Credit Party will own all the property and
possess all of the rights and Consents necessary for the conduct of the business
of such Credit Party.
5.23. Year 2000. Credit Parties and their respective Subsidiaries have
reviewed the areas within their business and operations which could reasonably
be expected to be adversely affected by, and have developed a program to address
on a timely basis, the risk that certain computer applications used by Credit
Parties or their respective Subsidiaries (or any of their respective material
suppliers, customers or vendors) may be unable to recognize and perform properly
date-sensitive functions involving dates prior to and after December 31, 1999
(the "Year 2000 Problem"). The Year 2000 Problem is not expected to have a
Material Adverse Effect on Credit Parties.
5.24. Section 20 Subsidiaries. Credit Parties do not intend to use and
shall not use any portion of the proceeds of the Advances, directly or
indirectly, to purchase during the underwriting period, or for 30 days
thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.
VI. AFFIRMATIVE COVENANTS.
---------------------
Each Credit Party shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. Payment of Fees. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge Borrowers' Account for all such fees and expenses.
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6.2. Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with the laws and regulations
governing the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect on such Credit Party;
and (c) make all such reports and pay all such franchise and other taxes and
license fees and do all such other acts and things as may be lawfully required
to maintain its rights, licenses, leases, powers and franchises under the laws
of the United States, Canada or any political subdivision thereof where the
failure to do so could reasonably be expected to have a Material Adverse Effect
on such Credit Party.
6.3. Violations. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Credit Party which could reasonably be
expected to have a Material Adverse Effect on any Credit Party.
6.4. Government Receivables. At the Agent's request, take all steps
necessary to protect Agent's interest in the Collateral under the Federal
Assignment of Claims Act or other applicable federal, provincial, state or local
statutes or ordinances and deliver to Agent appropriately endorsed, any
instrument or chattel paper connected with any Receivable arising out of
contracts between any Credit Party and the United States, Canada, any province,
any state or any department, agency or instrumentality of any of them.
6.5. Minimum EBITDA. Maintain, with respect to Borrowers on a
consolidated basis, EBITDA of not less than $6,000,000 for the three months
ending March 31, 2000.
6.6. Fixed Charge Coverage Ratio. Maintain, with respect to Borrowers
on a consolidated basis, a Fixed Charge Coverage Ratio of not less than 1.35 to
1 for the three months ending June 30, 2000, the six months ending September 30,
2000, the nine months ending December 31, 2000 and thereafter on the last day of
each March, June, September and December for the twelve months period ending on
such last day.
6.7. Undrawn Availability. Maintain, with respect to Borrowers on a
consolidated basis, at all times at least $5,000,000 of Undrawn Availability (as
calculated under Section 2.1(a)(y)) including, without limitation, after giving
effect to any payments made under the Junior Subordinated Debentures.
6.8. Deferred Interest. In the event (a) at December 31, 1999, January
31, 2000 and February 29, 2000, Undrawn Availability with respect to Borrowers
on a consolidated basis, is less than $8,000,000, (b) at March 31, 2000, April
30, 2000, May 31, 2000 and June 30, 2000, Undrawn Availability with respect to
Borrowers on a consolidated basis is less than $10,000,000 or (c) commencing on
June 30, 2000, the Fixed Charge Coverage Ratio for the most recently completed
fiscal quarter (for the three month, six month, nine month or rolling twelve
month period described in Section 6.6 hereof) is less than 1.25 to 1, Credit
Parties shall exercise their right to defer interest due under the Junior
Subordinated Debentures and prior to paying any such deferred interest under the
Junior Subordinated Debentures prior to the end of such deferral period, Credit
Parties shall obtain the written consent of Required Lenders to make such
payment.
6.9. Execution of Supplemental Instruments. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.
6.10. Payment of Indebtedness. Pay, discharge or otherwise satisfy at
or before maturity (subject, where applicable, to specified grace periods and,
in the case of the trade payables, to normal payment practices) all its
obligations and liabilities of whatever nature, except when the failure to do so
could not reasonably be expected to have a Material Adverse Effect or when the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and each Credit Party shall have provided for such
reserves as Agent may reasonably deem proper and necessary, subject at all times
to any applicable subordination arrangement in favor of Lenders.
6.11. Standards of Financial Statements. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to
which GAAP is applicable to be complete and correct in all material respects
(subject, in the case of interim financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).
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6.12. Harding Mortgages. If the Harding Divestiture is not consummated
on or before March 31, 2000, Harding shall, at the request of Agent, execute and
deliver to Agent a Mortgage, in form and substance satisfactory to Agent, on
each of its owned Real Property having a fair market value of $100,000 or more
along with such other instruments, agreements or documents reasonably requested
by Agent in connection therewith including, without limitation, title
commitments, surveys and environmental reports, all of which shall be in form
and substance satisfactory to Agent.
6.13. Net Worth. On or before March 31, 2000, Borrowers and Required
Lenders shall in good faith negotiate the establishment of minimum Net Worth
requirements to be tested at the end of each fiscal quarter commencing with the
fiscal quarter ending March 31, 2000.
VII. NEGATIVE COVENANTS.
No Credit Party shall, until satisfaction in full of the Obligations
and termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, amalgamation, consolidation or
other reorganization with or into any other Person or acquire all or a
substantial portion of the assets or stock of any Person or permit any other
Person to consolidate with or merge with it.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except in the ordinary course of its business and except
(i) as provided in Section 4.3 or (ii) the Harding Divestiture.
7.2. Creation of Liens. Create or suffer to exist or permit any of its
Subsidiaries to create or suffer to exist any Lien or transfer upon or against
any of its property or assets (including, without limitation, any life insurance
policies) now owned or hereafter acquired, except Permitted Encumbrances.
7.3. Guarantees. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (a) as disclosed on Schedule 7.3, (b) the endorsement of checks in the
ordinary course of business and (c) SunSource may guaranty, in the ordinary
course of business, obligations of any other Credit Party under such Credit
Party's real property leases.
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7.4. Investments. Purchase or acquire obligations or stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, and (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof.
7.5. Loans. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate except with
respect to the extension of commercial trade credit in connection with the sale
of Inventory in the ordinary course of its business except loans to employees
which shall not exceed $500,000 in the aggregate at any time.
7.6. Capital Expenditures. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including capitalized
leases) in any fiscal year in an aggregate amount for all Credit Parties in
excess of $8,000,000.
7.7. Dividends. Declare, pay or make any dividend or distribution on
any shares of the common stock or preferred stock of any Credit Party (other
than dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any common or preferred stock,
or of any options to purchase or acquire any such shares of common or preferred
stock of any Credit Party except that so long as (a) a notice of termination
with regard to this Agreement shall not be outstanding, (b) no Event of Default
shall have occurred and then be continuing, and (c) the purpose for such
purchase, redemption or dividend shall be as set forth in writing to Agent at
least ten (10) days prior to such purchase, redemption or dividend and such
purchase, redemption or dividend shall in fact be used for such purpose, Credit
Parties shall be permitted to pay dividends to any other Credit Party, to pay
professional fees, franchise taxes and other ordinary course of business
operating expenses (excluding salaries and other employee compensation) incurred
by such Credit Party.
7.8. Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to
Agent or to Lenders; (ii) Indebtedness incurred for capital expenditures
permitted under Section 7.6 hereof; (iii) Indebtedness due under the Junior
Subordinated Debentures as in effect on the date hereof, and (iv) Indebtedness
set forth in the financial statements delivered pursuant to Section 5.5 hereof.
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7.9. Nature of Business. Substantially change the nature of the
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10. Transactions with Affiliates. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions in the ordinary
course of business, on an arm's-length basis on terms no less favorable than
terms which would have been obtainable from a Person other than an Affiliate.
7.11. Leases. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $15,000,000 in any one fiscal year in the aggregate for
all Credit Parties.
7.12. Subsidiaries.
(a) Form any Subsidiary.
(b) Enter into any partnership, joint venture or similar
arrangement.
7.13. Fiscal Year and Accounting Changes. Change its fiscal year from
December 31 or make any significant change (i) in accounting treatment and
reporting practices except as required by GAAP or (ii) in tax reporting
treatment except as required by law.
7.14. Pledge of Credit. Now or hereafter pledge Agent's or any Lender's
credit on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than such Credit Party's business as
conducted on the date of this Agreement.
7.15. Amendment of Articles of Incorporation, By-Laws. Amend, modify or
waive any term or material provision of its Articles of Incorporation, By-Laws,
or any of its organizational documents unless required by law.
7.16. Compliance with ERISA. Except where the failure to comply would
reasonably be expected to have a Material Adverse Effect on any Credit Party or
member of the Controlled Group (i) (x) without prior notice to Agent, maintain,
or permit any member of the Controlled Group to maintain, or (y) become
obligated to contribute, or permit any member of the Controlled Group to become
obligated to contribute, to any Plan, other than those Plans disclosed on
Schedule 5.8(d), (ii) engage, or permit any member of the Controlled Group to
engage, in any non-exempt "prohibited transaction", as that term is defined in
section 406 of ERISA and Section 4975 of the Code, (iii) incur, or permit any
member of the Controlled Group to incur, any material "accumulated funding
deficiency", as that term is defined in Section 302 of ERISA or Section 412 of
the Code, (iv) terminate, or permit any member of the Controlled Group to
terminate, any Plan where such event could result in any material liability of
any Credit Party or any member of the Controlled Group or the imposition of a
lien on the property of any Credit Party or any member of the Controlled Group
pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the
Controlled Group to assume, any obligation to contribute to any Multiemployer
Plan not disclosed on Schedule 5.8(d), without prior written consent of Agent
(vi) incur, or permit any member of the Controlled Group to incur, any
withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify
Agent of the occurrence of any Termination Event, (viii) fail to materially
comply, or permit a member of the Controlled Group to fail to materially comply,
with the requirements of ERISA or the Code or other applicable laws in respect
of any Plan, (ix) fail to meet, or permit any member of the Controlled Group to
fail to meet, all minimum funding requirements under ERISA or the Code or
postpone or delay or allow any member of the Controlled Group to postpone or
delay any funding requirement with respect of any Plan.
7.17. Prepayment of Indebtedness. At any time, directly or indirectly,
prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire
or otherwise acquire any Indebtedness of any Credit Party.
7.18. Junior Subordinated Debentures. At any time, directly or
indirectly, pay, prepay, repurchase, redeem, retire or otherwise acquire, or
make any payment on account of any principal of, interest on or premium payable
in connection with the repayment or redemption of the Junior Subordinated
Debentures, except for payments of interest (subject to Section 6.8 hereof)
required by the terms of the Junior Subordinated Debentures as in effect on the
Closing Date.
7.19. Other Agreements. Enter into any material amendment, waiver or
modification of the Junior Subordinated Debentures, or any related agreements.
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VIII. CONDITIONS PRECEDENT.
8.1. Conditions to Initial Advances. The agreement of Lenders to make
the initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) Note. Agent shall have received the Notes duly executed
and delivered by an authorized officer of each Borrower;
(b) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to create,
in favor of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested, and Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;
(c) Corporate Proceedings of Credit Parties . Agent shall have
received a copy of the resolutions in form and substance reasonably satisfactory
to Agent, of the Board of Directors of each Credit Party authorizing (i) the
execution, delivery and performance of this Agreement, the Notes, the Mortgage
and any related agreements, (collectively the "Documents") and (ii) the granting
by each Credit Party of the security interests in and liens upon the Collateral
in each case certified by the Secretary or an Assistant Secretary of each Credit
Party as of the Closing Date; and, such certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate;
(d) Incumbency Certificates of Credit Parties . Agent shall
have received a certificate of the Secretary or an Assistant Secretary of each
Credit Party, dated the Closing Date, as to the incumbency and signature of the
officers of each Credit Party executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
(e) Certificates. Agent shall have received a copy of the
Articles or Certificate of Incorporation of each Borrower and each Guarantor,
and all amendments thereto, certified by the Secretary of State or other
appropriate official of its jurisdiction of incorporation together with copies
of the By-Laws of each Borrower and each Guarantor and all agreements of each
Borrower's and each Guarantor's shareholders certified as accurate and complete
by the Secretary of each Borrower and such Guarantor;
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(f) Good Standing Certificates. Agent shall have received good
standing certificates for each Borrower and each Guarantor dated not more than
thirty (30) days prior to the Closing Date, issued by the Secretary of State or
other appropriate official of each Borrower's and each Guarantor's jurisdiction
of incorporation and each jurisdiction where the conduct of each Borrower's and
each Guarantor's business activities or the ownership of its properties
necessitates qualification;
(g) Legal Opinion. Agent shall have received the executed
legal opinion of Morgan, Lewis & Bockius, LLP, Cowles Thompson, a Professional
Corporation, Katz Randall Weinberg Richmond, Wilson Walker Hochberg Slopen and
supporting opinions issued in connection with the foregoing, in form and
substance satisfactory to Agent which shall cover such matters incident to the
transactions contemplated by this Agreement, the Notes, and related agreements
as Agent may reasonably require and each Borrower and each Guarantor hereby
authorizes and directs such counsel to deliver such opinions to Agent and
Lenders;
(h) No Litigation. (i) No litigation, investigation or
proceeding before or by any arbitrator or Governmental Body shall be continuing
or threatened against any Borrower or any Guarantor or against the officers or
directors of any Borrower or any Guarantor (A) in connection with the Other
Documents or any of the transactions contemplated thereby and which, in the
reasonable opinion of Agent, is deemed material or (B) which could, in the
reasonable opinion of Agent, have a Material Adverse Effect on any Borrower or
any Guarantor; and (ii) no injunction, writ, restraining order or other order of
any nature materially adverse to any Borrower or any Guarantor or the conduct of
its business or inconsistent with the due consummation of the Transactions shall
have been issued by any Governmental Body;
(i) Financial Condition Certificates. Agent shall have
received an executed Financial Condition Certificate in the form of Exhibit
8.1(k). \
(j) Collateral Examination. Agent shall have completed
Collateral examinations and received appraisals, the results of which shall be
satisfactory in form and substance to Lenders, of the Receivables, Inventory,
General Intangibles and Equipment of each Borrower and Guarantor and all books
and records in connection therewith;
(k) Fees. Agent shall have received all fees payable to Agent
and Lenders on or prior to the Closing Date pursuant to Article III hereof;
(l) Pro Forma Financial Statements. Agent shall have received
a copy of the Pro Forma Financial Statements which shall be satisfactory in all
respects to Agent;
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(m) Junior Subordinated Debentures. Agent shall have received
final executed copies of the Junior Subordinated Debentures, and all related
agreements, documents and instruments as in effect on the Closing Date which
shall be satisfactory in all respects to Agent;
(n) Insurance. Agent shall have received in form and substance
satisfactory to Agent, certified copies of Borrower s' and Guarantor's casualty
insurance policies, together with loss payable endorsements on Agent's standard
form of loss payee endorsement naming Agent as loss payee, and certified copies
of Credit Parties' and Guarantor's liability insurance policies, together with
endorsements naming Agent as a co-insured;
(o) Title Insurance. Agent shall have received fully paid
mortgagee title insurance policies (or binding commitments to issue title
insurance policies, marked to Agent's satisfaction to evidence the form of such
policies to be delivered with respect to the Mortgage), in standard ALTA form,
issued by a title insurance company satisfactory to Agent, each in an amount
equal to not less than the fair market value of the Real Property subject to the
Mortgage, insuring the Mortgage to create a valid Lien on the Real Property with
no exceptions which Agent shall not have approved in writing and no survey
exceptions;
(p) Environmental Reports. Agent shall have received all
environmental studies and reports prepared by independent environmental
engineering firms with respect to all Real Property owned or leased by Credit
Parties or any Guarantor;
(q) Payment Instructions. Agent shall have received written
instructions from SunSource directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(r) Blocked Accounts. Agent shall have received duly executed
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable to Agent for the collection or servicing of
the Receivables and proceeds of the Collateral;
(s) Consents. Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;
(t) No Adverse Material Change. (i) since September 30, 1999,
there shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect on any Borrower or any
Guarantor and (ii) no representations made or information supplied to Agent
shall have been proven to be inaccurate or misleading in any material respect;
(u) Leasehold Agreements. Agent shall have received landlord,
mortgagee or warehouseman agreements satisfactory to Agent with respect to all
premises leased by Borrowers or any Guarantor at which Inventory is located;
(v) October Financial Statements. Agent shall have received
the financial statements of Borrowers on a consolidated basis for the month of
October, 1999 which shall be satisfactory in all respects to Agent;
(w) Pledge Agreement and Other Documents. Agent shall have
received (i) the Pledge Agreement and (ii) the executed Other Documents, all in
form and substance satisfactory to Agent;
(x) Net Worth. Agent shall have received the Pro Forma Balance
Sheet reflecting a Net Worth after giving effect to the Indebtedness under the
Junior Subordinated Debentures and after giving effect to the Transactions of at
least $123,800,000;
(y) Contract Review. Agent shall have reviewed all material
contracts of Credit Parties and Guarantors including, without limitation,
leases, union contracts, labor contracts, vendor supply contracts, license
agreements and distributorship agreements and such contracts and agreements
shall be satisfactory in all respects to Agent;
(z) Closing Certificate. Agent shall have received a closing
certificate signed by the Chief Financial Officer of SunSource dated as of the
date hereof, stating that (i) all representations and warranties set forth in
this Agreement and the Other Documents are true and correct on and as of such
date, (ii) Credit Parties and Guarantors are on such date in compliance with all
the terms and provisions set forth in this Agreement and the Other Documents and
(iii) on such date no Default or Event of Default has occurred or is continuing;
(aa) Borrowing Base. Agent shall have received evidence from
SunSource that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support Advances in the amount
requested by Credit Parties on the Closing Date;
(bb) Undrawn Availability. After giving effect to the initial
Advances hereunder, Credit Parties shall have Undrawn Availability of at least
$15,000,000;
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(cc) Mortgage. Agent shall have received in form and substance
satisfactory to Lenders (i) an executed Mortgage and (ii) surveys; and
(dd) Other. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
Transactions shall be satisfactory in form and substance to Agent and its
counsel.
8.2. Conditions to Each Advance. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the
representations and warranties made by any Credit Party in or pursuant to this
Agreement and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date;
(b) No Default. No Event of Default or Default shall have
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date; provided, however that Lenders,
in their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and
(c) Maximum Advances. In the case of any Advances requested to
be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum amount of Advances permitted under Section 2.1 hereof.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Credit Party as of the date of such Advance
that the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO CREDIT PARTIES.
Each Credit Party shall, until satisfaction in full of the Obligations
and the termination of this Agreement:
9.1. Disclosure of Material Matters. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
any Credit Party's reclamation or repossession of, or the return to any Credit
Party of, a material amount of goods or claims or disputes asserted by any
Customer or other obligor.
9.2. Schedules. Deliver to Agent on or before the twentieth (20th) day
of each month as and for the prior month (a) accounts receivable agings, (b)
accounts payable schedules and (c) Inventory reports and (d) a Borrowing Base
Certificate (which shall be calculated as of the last day of the prior month and
which shall not be binding upon Agent or restrictive of Agent's rights under
this Agreement). In addition, each Borrower will deliver to Agent at such
intervals as Agent may require: (i) confirmatory assignment schedules, (ii)
copies of Customer's invoices, (iii) evidence of shipment or delivery, (iv)
monthly reconciliations of the above reports, and (v) such further schedules,
documents and/or information regarding the Collateral as Agent may require
including, without limitation, trial balances and test verifications. Agent
shall have the right to confirm and verify all Receivables by any manner and
through any medium it considers advisable and do whatever it may deem reasonably
necessary to protect its interests hereunder. The items to be provided under
this Section are to be in form satisfactory to Agent and executed by each
Borrower and delivered to Agent from time to time solely for Agent's convenience
in maintaining records of the Collateral, and any Borrower's failure to deliver
any of such items to Agent shall not affect, terminate, modify or otherwise
limit Agent's Lien with respect to the Collateral.
9.3. Environmental Reports. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed by the Chief Financial Officer of SunSource, on behalf of
each Borrower stating, to the best of his knowledge, that each Borrower is in
compliance in all material respects with all federal, provincial, state and
local laws relating to environmental protection and control and occupational
safety and health. To the extent any Credit Party is not in compliance with the
foregoing laws, the certificate shall set forth with specificity all areas of
non-compliance and the proposed action such Credit Party will implement in order
to achieve full compliance.
9.4. Litigation. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting any Credit Party, whether or not the
claim is covered by insurance, and of any suit or administrative proceeding,
which in any such case could reasonably be expected to have a Material Adverse
Effect on any Credit Party.
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9.5. Material Occurrences. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event of default
under the Junior Subordinated Debentures; (c) any event which with the giving of
notice or lapse of time, or both, would constitute an event of default under the
Junior Subordinated Debentures; (d) any event, development or circumstance
whereby any financial statements or other reports furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results of any Credit Party as of
the date of such statements; (e) any accumulated retirement plan funding
deficiency which, if such deficiency continued for two plan years and was not
corrected as provided in Section 4971 of the Code, could subject any Credit
Party to a tax imposed by Section 4971 of the Code; (f) each and every default
by any Credit Party which might result in the acceleration of the maturity of
any Indebtedness in excess of $50,000, including the names and addresses of the
holders of such Indebtedness with respect to which there is a default existing
or with respect to which the maturity has been or could be accelerated, and the
amount of such Indebtedness; and (g) any other development in the business or
affairs of any Credit Party which could reasonably be expected to have a
Material Adverse Effect on such Credit Party; in each case describing the nature
thereof and the action Credit Parties propose to take with respect thereto.
9.6. Government Receivables. Notify Agent immediately if any of its
Receivables arise out of contracts between any Credit Party and the United
States, Canada, any province, any state, or any department, agency or
instrumentality of any of them.
9.7. Annual Financial Statements. Furnish Agent and Lenders within
ninety (90) days after the end of each fiscal year of Borrowers, financial
statements of Borrowers on a consolidating and consolidated basis including, but
not limited to, statements of income and stockholders' equity and cash flow from
the beginning of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification by an independent certified
public accounting firm selected by Borrowers and satisfactory to Agent (the
"Accountants"). The report of the Accountants shall be accompanied by a
statement of the Accountants certifying that (i) they have caused the Loan
Agreement to be reviewed, (ii) in making the examination upon which such report
was based either no information came to their attention which to their knowledge
constituted an Event of Default or a Default under this Agreement or any related
agreement or, if such information came to their attention, specifying any such
Default or Event of Default, its nature, when it occurred and whether it is
continuing, and such report shall contain or have appended thereto calculations
which set forth Credit Parties' compliance with the requirements or restrictions
imposed by Sections 6.5, 6.6, 6.7, 7.6 and 7.11 hereof. In addition, the reports
shall be accompanied by a certificate of the Chief Financial Officer of
SunSource, on behalf of each Credit Party, which shall state that, based on an
examination sufficient to permit him to make an informed statement, no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by the affected Credit Party with respect to such event,
and such certificate shall have appended thereto calculations which set forth
Credit Party's compliance with the requirements or restrictions imposed by
Sections 6.5, 6.6, 6.7, 7.6 and 7.11 hereof.
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9.8. Quarterly Financial Statements. Furnish Agent and Lenders within
forty-five (45) days after the end of each fiscal quarter, an unaudited balance
sheet of Borrowers on a consolidated and consolidating basis and unaudited
statements of income on a consolidated and consolidating basis and stockholders'
equity and cash flow of Borrowers on a consolidated basis reflecting results of
operations from the beginning of the fiscal year to the end of such quarter and
for such quarter, prepared on a basis consistent with prior practices and
complete and correct in all material respects, subject to normal and recurring
year end adjustments that individually and in the aggregate are not material to
the business of Credit Parties. The reports shall be accompanied by a
certificate signed by the Chief Financial Officer of SunSource, on behalf of
each Credit Party, which shall state that, based on an examination sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
the affected Credit Parties with respect to such default and, such certificate
shall have appended thereto calculations which set forth the affected Credit
Parties' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 6.7, 7.6 and 7.11 hereof.
9.9. Monthly Financial Statements. Furnish Agent and Lenders within
forty (40) days after the end of each month, an unaudited balance sheet of
Borrowers on a consolidated and consolidating basis and unaudited statements of
income of Borrowers on a consolidated and consolidating basis reflecting results
of operations from the beginning of the fiscal year to the end of such month and
for such month, prepared on a basis consistent with prior practices and complete
and correct in all material respects, subject to normal and recurring year end
adjustments that individually and in the aggregate are not material to the
business of Credit Parties. The reports shall be accompanied by a certificate of
the Chief Financial Officer of SunSource, on behalf of each Credit Party, which
shall state that, based on an examination sufficient to permit him to make an
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by Credit Parties
with respect to such event and, such certificate shall have appended thereto
calculations which set forth Credit Parties' compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 6.7, 7.6 and 7.11 hereof.
9.10. Other Reports. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as each Borrower shall send to its
stockholders and (ii) copies of all notices sent pursuant to the Junior
Subordinated Debentures.
9.11. Additional Information. Furnish Agent with such additional
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Notes have been complied with by Borrowers including, without
limitation and without the necessity of any request by Agent, (a) copies of all
environmental audits and reviews, (b) at least thirty (30) days prior thereto,
notice of any Borrower's opening of any new office or place of business or any
Borrower's closing of any existing office or place of business, and (c) promptly
upon any Borrower's learning thereof, notice of any labor dispute to which any
Borrower may become a party, any strikes or walkouts relating to any of its
plants or other facilities, and the expiration of any labor contract to which
any Borrower is a party or by which any Borrower is bound.
9.12. Projected Operating Budget. Furnish Agent, no later than fifteen
(15) days prior to the beginning of each of SunSource's fiscal years commencing
with fiscal year 2001, a month by month projected operating budget and cash flow
of Borrowers on a consolidated and consolidating basis for such fiscal year
(including an income statement for each month and a balance sheet as at the end
of the last month in each fiscal quarter), such projections to be accompanied by
a certificate signed by the President or Chief Financial Officer of SunSource to
the effect that such projections have been prepared on the basis of sound
financial planning practice consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness of
any material assumptions on which such projections were prepared.
9.13. Variances From Operating Budget. Furnish Agent, concurrently with
the delivery of the financial statements referred to in Section 9.7 and each
quarterly and monthly report, a written report summarizing all material
variances from budgets submitted by Borrowers pursuant to Section 9.12 and a
discussion and analysis by management with respect to such variances.
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9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt notice
of (i) any lapse or other termination of any Consent issued to any Borrower by
any Governmental Body or any other Person that is material to the operation of
any Borrower's business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of any periodic or
special reports filed by any Borrower with any Governmental Body or Person, if
such reports indicate any material change in the business, operations, affairs
or condition of any Borrower, or if copies thereof are requested by Lender, and
(iv) copies of any material notices and other communications from any
Governmental Body or Person which specifically relate to any Borrower.
9.15. ERISA Notices and Requests. Furnish Agent with prompt written
notice in the event that (i) any Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which such Borrower or any member of the Controlled Group has taken, is taking,
or proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) any Borrower or any member of the Controlled Group knows
or has reason to know that a non-exempt prohibited transaction (as defined in
Sections 406 of ERISA and 4975 of the Code) has occurred together with a written
statement describing such transaction and the action which such Borrower or any
member of the Controlled Group has taken, is taking or proposes to take with
respect thereto, (iii) a funding waiver request has been filed with respect to
any Pension Plan together with all communications received by any Borrower or
any member of the Controlled Group with respect to such request, (iv) any
material increase in the benefits of any existing Plan or the establishment of
any new Plan or the commencement of contributions to any Plan to which any
Borrower or any member of the Controlled Group was not previously contributing
shall occur, (v) any Borrower or any member of the Controlled Group shall
receive from the PBGC a notice of intention to terminate a Pension Plan or to
have a trustee appointed to administer a Pension Plan, together with copies of
each such notice, (vi) any Borrower or any member of the Controlled Group shall
receive any unfavorable determination letter from the Internal Revenue Service
regarding the qualification of a Plan under Section 401(a) of the Code, together
with copies of each such letter; (vii) any Borrower or any member of the
Controlled Group shall receive a notice regarding the imposition of withdrawal
liability, together with copies of each such notice; (viii) any Borrower or any
member of the Controlled Group shall fail to make a required installment or any
other required payment under Section 412 of the Code on or before the due date
for such installment or payment; (ix) any Borrower or any member of the
Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b)
the administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multiemployer Plan.
9.16. Additional Documents. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
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X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. failure by any Credit Party to pay any principal or interest on
the Obligations when due, whether at maturity or by reason of acceleration
pursuant to the terms of this Agreement or by notice of intention to prepay, or
by required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;
10.2. any representation or warranty made or deemed made by any Credit
Party in this Agreement or any related agreement or in any certificate, document
or financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;
10.3. failure by any Credit Party to (i) furnish financial information
when due or when requested, or (ii) permit the inspection of its books or
records in accordance with Section 4.10 hereof;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Credit Party's property which is
not stayed or lifted within thirty (30) days;
10.5. except as otherwise provided for in Sections 10.1 and 10.3,
failure or neglect of any Credit Party to perform, keep or observe any term,
provision, condition, covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between any Credit Party
and Agent or any Lender except for a failure or neglect of any Credit Party to
perform, keep or observe any term, provision, condition or covenant, contained
in Sections 4.7, 4.9, 4.11, 6.1, 6.3, 6.4, 9.4, 9.6 or 9.15 hereof which is
cured within thirty (30) days from the occurrence of such failure or neglect;
10.6. any judgment or judgments are rendered or judgment liens filed
against any Credit Party or any execution, sequestration or other process of any
court becomes enforceable against a Credit Party or if a distress or an
analogous process is levied on all or part of its assets which, when aggregated
with judgements and other process of any court for all Credit Parties are in
aggregate amount in excess of $500,000 which within forty (40) days of such
rendering or filing is not either satisfied, stayed or discharged of record;
10.7. any Credit Party shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state, provincial or federal bankruptcy laws
(as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent,
(v) file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vi) acquiesce to, or fail to have dismissed, within
forty-five (45) days, any petition filed against it in any involuntary case
under such bankruptcy laws, or (vii) take any action for the purpose of
effecting any of the foregoing;
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10.8. any Credit Party shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business or institute or be subject to any formal or informal proceeding
for its dissolution, liquidation or winding up, or agree to make a bulk sale of
assets without the consent of Agent or Lenders;
10.9. any Affiliate or any Subsidiary of any Credit Party, or any
Guarantor, shall (i) apply for, consent to or suffer the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or similar
fiduciary of itself or of all or a substantial part of its property, (ii) admit
in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (iii) make a general
assignment for the benefit of creditors, (iv) commence a voluntary case under
any state, provincial or federal bankruptcy laws (as now or hereafter in
effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, within forty-five (45) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;
10.10. any change in any Credit Party's condition or affairs (financial
or otherwise) which in Agent's reasonable opinion has a Material Adverse Effect
on such Credit Party including, without limitation, as a result of the Year 2000
Problem;
10.11. any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12. an event of default has occurred and been declared under the
Junior Subordinated Debentures which default shall not have been cured or waived
within any applicable grace period;
10.13. a default of the obligations of any Credit Party under any other
agreement to which it is a party shall occur which adversely affects its
condition, affairs or prospects (financial or otherwise) which default is not
cured within any applicable grace period;
10.14. termination or breach of any Guaranty or similar agreement
executed and delivered to Agent in connection with the Obligations of any
Borrower, or if any Guarantor attempts to terminate, challenges the validity of,
or its liability under, any such Guaranty or similar agreement;
10.15. any Change of Ownership or Change of Control shall occur;
10.16. any material provision of this Agreement shall, for any reason,
cease to be valid and binding on any Credit Party, or any Credit Party shall so
claim in writing to Agent;
10.17. (i) any Governmental Body shall (A) revoke, terminate, suspend
or adversely modify any license, permit, patent trademark or tradename of any
Credit Party, the continuation of which is material to the continuation of any
Credit Party's business, or (B) commence proceedings to suspend, revoke,
terminate or adversely modify any such license, permit, trademark, tradename or
patent and such proceedings shall not be dismissed or discharged within sixty
(60) days, or (c) schedule or conduct a hearing on the renewal of any license,
permit, trademark, tradename or patent necessary for the continuation of any
Credit Party's business and the staff of such Governmental Body issues a report
recommending the termination, revocation, suspension or material, adverse
modification of such license, permit, trademark, tradename or patent; (ii) any
agreement which is necessary or material to the operation of any Credit Party's
business shall be revoked or terminated and not replaced by a substitute
acceptable to Agent within thirty (30) days after the date of such revocation or
termination, and such revocation or termination and non-replacement would
reasonably be expected to have a Material Adverse Effect on any Credit Party;
10.18. any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Credit Party or the title and rights of any Credit
Party or any Original Owner which is the owner of any material portion of the
Collateral shall have become the subject matter of litigation which might, in
the opinion of Agent, upon final determination, result in impairment or loss of
the security provided by this Agreement or the Other Documents; or
10.19. an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Credit Party
or any member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect on any
Credit Party.
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XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. Rights and Remedies. Upon the occurrence of (i) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated, and (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Agent or at the direction of Required Lenders all Obligations shall be
immediately due and payable and Lenders shall have the right to terminate this
Agreement and to terminate the obligation of Lenders to make Advances and (iii)
a filing of a petition against Credit Party in any involuntary case under any
state, provincial or federal bankruptcy laws, the obligation of Lenders to make
Advances hereunder shall be terminated other than as may be required by an
appropriate order of the bankruptcy court having jurisdiction over any Credit
Party. Upon the occurrence of any Event of Default and while such Event of
Default is continuing, Agent shall have the right to exercise any and all other
rights and remedies provided for herein, under the Uniform Commercial Code or
under any other applicable law and at law or equity generally, including,
without limitation, the right to foreclose the security interests granted herein
and to realize upon any Collateral by any available judicial procedure and/or to
take possession of and sell any or all of the Collateral with or without
judicial process. Agent may enter any of any Credit Party's premises or other
premises without legal process and without incurring liability to any Credit
Party therefor, and Agent may thereupon, or at any time thereafter, in its
discretion without notice or demand, take the Collateral and remove the same to
such place as Agent may deem advisable and Agent may require Credit Parties to
make the Collateral available to Agent at a convenient place. With or without
having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may elect. Except as to
that part of the Collateral which is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Agent shall
give Credit Parties reasonable notification of such sale or sales, it being
agreed that in all events written notice mailed to Credit Parties at least five
(5) days or such other period that may be required by any law of Canada or any
province thereof prior to such sale or sales is reasonable notification. At any
public sale Agent or any Lender may bid for and become the purchaser, and Agent,
any Lender or any other purchaser at any such sale thereafter shall hold the
Collateral sold absolutely free from any claim or right of whatsoever kind,
including any equity of redemption and such right and equity are hereby
expressly waived and released by each Credit Party. In connection with the
exercise of the foregoing remedies, Agent is granted permission to use all of
each Credit Party's trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and other proprietary rights which are used
in connection with (a) Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods. The proceeds realized from the sale of any Collateral shall be applied in
accordance with Section 11.5 hereof. If any deficiency shall arise, Credit
Parties shall remain liable to Agent and Lenders therefor.
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11.2. Agent's Discretion. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3. Setoff. In addition to any other rights which Agent or any Lender
may have under applicable law, upon the occurrence of an Event of Default and
while such Event of Default is continuing hereunder, Agent and such Lender shall
have a right to apply any Credit Party's property held by Agent and such Lender
to reduce the Obligations.
11.4. Rights and Remedies not Exclusive. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
11.5. Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Agent on account of the Obligations or any other amounts outstanding
under any of the Other Documents or in respect of the Collateral may, at Agent's
discretion, be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of the Agent
in connection with enforcing the rights of the Lenders under this Agreement and
the Other Documents and any protective advances made by the Agent with respect
to the Collateral under or pursuant to the terms of this Document;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of each of
the Lenders in connection with enforcing its rights under this Agreement and the
Other Documents or otherwise with respect to the Obligations owing to such
Lender;
FOURTH, to the payment of all of the Obligations consisting of accrued
fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Obligations (including the payment or cash collateralization of the outstanding
Letters of Credit);
SIXTH, to all other Obligations and other obligations which shall have
become due and payable under the Other Documents or otherwise and not repaid
pursuant to clauses "FIRST" through "FIFTH" above;
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent
that any amounts available for distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses "FIFTH" and
"SIXTH" above in the manner provided in this Section 11.5.
11.6. Canadian Remedies. Upon the occurrence of an Event of Default and
during the continuation thereof, solely with respect to Credit Parties organized
under the laws of Canada or any province thereof,
(a) Agent may, by instrument in writing, appoint a receiver
("Receiver" which term shall include a receiver and a manager) of all or any
part of Collateral and remove any Receiver appointed and appoint another
Receiver in its stead or may institute proceedings in any court of competent
jurisdiction for the appointment of a Receiver in respect of any Credit Party or
the Collateral;
(b) subject to the provisions of the document appointing it,
any Receiver appointed shall have all the powers of Agent pursuant to this
Agreement;
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(c) Agent shall have the power to carry on the business of any
Credit Party in whole or in part, the power to purchase on credit, the power to
borrow in any Credit Party's name or in Agent's name with or without security
and to advance its own money to any Credit Party at such rates of interest as it
may deem reasonable, the power to take possession of Collateral and to preserve
Collateral or its value and to sell, lease or otherwise dispose of Collateral,
the power to enter upon, use and occupy all premises owned or occupied by any
Credit Party where Collateral is situated and maintain Collateral on such
premises and generally to deal with Collateral in the same manner and to the
same extent as any Credit Party. A Receiver appointed under this Agreement shall
only borrow money with the prior consent of Agent;
(d) to facilitate the realization of Collateral, Agent may
carry on or concur in the carrying on of all or any part of the business of any
Credit Party and may to the exclusion of all others, including any Credit Party,
enter upon, occupy and use all or any of the premises of any Credit Party and
use free of charge all or any of the tools, machinery and equipment of any
Credit Party for such time as Agent sees fit to manufacture or complete the
manufacture of any Inventory and to pack and ship the finished products and
Agent shall not be liable to any Credit Party for any act, omission or neglect
in so doing or liable to any Credit Party for any rent, charges, depreciation or
damages in connection with such actions;
(e) Agent may seize, collect, realize, borrow money on the
security of, release to third parties or otherwise deal with Collateral in such
manner, upon such terms and conditions and at such times as Agent may deem
advisable and without notice to any Credit Party (except as required by any
applicable law), and may charge on its own behalf and pay to others reasonable
amounts of costs and expenses incurred and for services rendered (including
without limitation the fees of any Receiver and fees and disbursements of
Agent's and Receiver's legal and accounting advisors) in connection with the
enforcement of its security interest or the exercise of any rights of Agent
under this Agreement, including, without limitation, the operations of Debtor's
accounts and business, retaking, holding, repairing, processing, preparing for
disposition, collecting, realizing, borrowing on the security of, disposing of
or obtaining payment for Collateral or advice or direction with respect to any
of the above. When in possession of Collateral, Agent shall not have any
obligation to keep Collateral identifiable;
Each Credit Party agrees with Agent that:
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(a) the Receiver shall be the agent of the respective Credit
Party for the purpose of:
(i) carrying on and managing the business and
affairs of Credit Party, and,
(ii) establishing liability for all of the acts,
omissions or neglect of the Receiver and
those for whom it is in law responsible and
Agent shall not be liable for such acts,
omissions or neglect; and,
(b) Agent is hereby irrevocably authorized to give
instructions to the Receiver relating to the performance of its duties.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. Waiver of Notice. Each Credit Party hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
12.2. Delay. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Credit Party, Agent and each Lender, shall become effective on the date hereof
and shall continue in full force and effect until December 14, 2004 (the "Term")
unless sooner terminated as herein provided. Borrowers may terminate this
Agreement at any time upon ninety (90) days' prior written notice upon payment
in full of the Obligations.
13.2. Termination. The termination of the Agreement shall not affect
any Credit Party's, Agent's or any Lender's rights, or any of the Obligations
having their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrowers' Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of each Credit Party have been paid or performed in full after the
termination of this Agreement or each Credit Party has furnished Agent and
Lenders with an indemnification satisfactory to Agent and Lenders with respect
thereto. Accordingly, each Credit Party waives any rights which it may have
under Section 9-404(1) of the Uniform Commercial Code or any similar right under
any other statute to demand the filing of termination statements with respect to
the Collateral, and Agent shall not be required to send such termination
statements to each Credit Party, or to file them with any filing office, unless
and until this Agreement shall have been terminated in accordance with its terms
and all Obligations paid in full in immediately available funds. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until all Obligations are paid or performed in
full.
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XIV. REGARDING AGENT.
14.1. Appointment. Each Lender hereby designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in the Fee
Letter), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of Lenders. Agent
may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement (including
without limitation, collection of the Note) Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2. Nature of Duties. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Credit Party or any
officer thereof contained in this Agreement, or in any of the Other Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
of the Other Documents or for the value, validity, effectiveness, genuineness,
due execution, enforceability or sufficiency of this Agreement, or any of the
Other Documents or for any failure of any Credit Party to perform its
obligations hereunder. 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 of the Other
Documents, or to inspect the properties, books or records of any Credit Party.
The duties of Agent as respects the Advances to Borrowers shall be mechanical
and administrative in nature; Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in this Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Agreement except as expressly set forth
herein.
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14.3. Lack of Reliance on Agent and Resignation. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of each Credit Party in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
each Credit Party. Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before
making of the Advances or at any time or times thereafter except as shall be
provided by any Credit Party pursuant to the terms hereof. Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Credit
Party, or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, the
Note, the Other Documents or the financial condition of any Credit Party, or the
existence of any Event of Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrowing Agent and upon such resignation, the Required Lenders will
promptly designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, 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. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
14.4. Certain Rights of Agent. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5. Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
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14.6. Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or a Credit
Party referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. 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 Agent shall have received such
directions, 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 Lenders.
14.7. Indemnification. To the extent Agent is not reimbursed and
indemnified by Credit Parties, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; provided that, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.
14.8. Agent in its Individual Capacity. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Credit Party as if it were not performing the duties specified herein, and
may accept fees and other consideration from any Credit Party for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.
14.9. Credit Parties' Undertaking to Agent. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
each Credit Party hereby undertakes with Agent to pay to Agent from time to time
on demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Credit Party's obligations to make payments for the account
of Lenders or the relevant one or more of them pursuant to this Agreement.
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XV. BORROWING AGENCY.
15.1. Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably designates Borrowing
Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and
further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all
loan proceeds hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Neither Agent nor
any Lender shall incur liability to Borrowers as a result thereof. To induce
Agent and Lenders to do so and in consideration thereof, each Borrower hereby
indemnifies Agent and each Lender and holds Agent and each Lender harmless from
and against any and all liabilities, expenses, losses, damages and claims of
damage or injury asserted against Agent or any Lender by any Person arising from
or incurred by reason of the handling of the financing arrangements of Borrowers
as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by Agent or any
Lender with respect to this Section 15.1 except due to willful misconduct or
gross (not mere) negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
to Agent or any Lender to any Borrower, failure of Agent or any Lender to give
any Borrower notice of borrowing or any other notice, any failure of Agent or
any Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof.
15.2. Waiver of Subrogation. Each Credit Party expressly waives any and
all rights of subrogation, reimbursement, indemnity, exoneration, contribution
of any other claim which such Credit Party may now or hereafter have against the
other Credit Parties or other Person directly or contingently liable for the
Obligations hereunder, or against or with respect to the other Credit Parties'
property (including, without limitation, any property which is Collateral for
the Obligations), arising from the existence or performance of this Agreement,
until termination of this Agreement and repayment in full of the Obligations.
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XVI. GUARANTEE.
16.1. Each Guarantor unconditionally guarantees, as a primary obligor
and not merely as a surety, jointly and severally with each other Guarantor when
and as due, whether at maturity, by acceleration, by notice of prepayment or
otherwise, the due and punctual performance of all Obligations, including,
without limitation, the due and punctual payment of the principal of and all
interest on each Revolving Credit Note and each Term Note. Each payment made by
any Guarantor pursuant to this Guarantee shall be made in lawful money of the
United States in immediately available funds.
16.2. Each Guarantor hereby absolutely, unconditionally and irrevocably
waives (i) promptness, diligence, notice of acceptance, notice of presentment
for payment and any other notice with respect to this Guarantee, (ii) demand of
payment, protest, notice of protest, notice of dishonor or nonpayment, notice of
the present and future amount of the Obligations and any other notice with
respect to the Obligations, (iii) any requirement that the Agent or any other
Lender protect, secure, perfect or insure any security interest or Lien or any
property subject thereto or exhaust any right or take any action against any
other Credit Party, or any Person or any Collateral, (iv) any other action,
event or precondition to the enforcement of this Guarantee or the performance by
each such Guarantor of the Obligations and (v) any defense arising by any lack
of capacity or authority or any other defense of any Borrower or any notice,
demand or defense by reason of the cessation from any cause of Obligations other
than payment and performance in full by the Obligations by the Borrowers and any
defense that any other guarantee or security was or was to be obtained by Agent.
16.3. No invalidity, irregularity, voidableness, voidness or
unenforceability of this Agreement, any Revolving Credit Note, any Term Note, or
any other Document or any other agreement or instrument relating thereto, or of
all or any part of the Obligations or of any collateral security therefor shall
affect, impair or be a defense to this Guarantee.
16.4. This Guarantee is one of payment and performance, not collection,
and the obligations of each Guarantor under this Guarantee are independent of
the Obligations of the other Loan Parties, and a separate action or actions may
be brought and prosecuted against any Guarantor to enforce this Guarantee,
irrespective of whether any action is brought against any other Credit Party or
other Persons or whether any other Credit Party or other Persons are joined in
any such action or actions. Each Guarantor waives any right to require that any
resort be had by Agent or any Lender to any security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
any Agent or any Lender in favor of any Credit Party or any other Person. No
election to proceed in one form of action or proceedings, or against any Person,
or on any Obligations, shall constitute a waiver of Agent's right to proceed in
any other form of action or proceeding or against any other Person unless Agent
has expressed any such waiver in writing. Without limiting the generality of the
foregoing, no action or proceeding by Agent against any Borrower under any
document evidencing or securing indebtedness of such Borrowers to Agent shall
diminish the liability of any Guarantor under this Guarantee, except to the
extent Agent receives actual payment on account of Obligations by such action or
proceeding, notwithstanding the effect of any such election, action or
proceeding upon the right of subrogation of any Guarantor in respect of
Borrowers.
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16.5. The liability of each Guarantor under this Guarantee shall be
absolute, unlimited and unconditional irrespective and shall not be subject to
any reduction, limitation, impairment, discharge or termination for any reason,
including, without limitation, any claim of waiver, release, surrender
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any other Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of each Guarantor
shall not be discharged or impaired or released or limited or otherwise affected
by:
(i) any change in the manner, place or terms of
payment or performance, and/or any change or extension of the
time of payment or performance of, release, renewal or
alteration of, or any new agreements relating to any
Obligation, any security therefor, or any liability incurred
directly or indirectly in respect thereof, or any rescission
of, or amendment, waiver or other modification of, or any
consent to departure from, this Agreement, the Revolving
Credit Notes, the Term Notes or any Other Document, including
any increase in the Obligations resulting from the extension
of additional credit to Borrower or otherwise;
(ii) any sale, exchange, release, surrender, loss,
abandonment, realization upon any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever
securing, all or any of the Obligations, and/or any offset
there against, or failure to register, to perfect, or continue
the perfection of, any Lien in any such property, or delay in
the perfection or the registration of any such Lien, or any
amendment or waiver of or consent to departure from any other
guaranty for all or any of the Obligations;
(iii) the failure of the Agent or any Lender to
assert any claim or demand or to enforce any right or remedy
against any Borrower or any other Credit Party or any other
Person under the provisions of this Agreement, the Revolving
Credit Notes, the Term Notes, any Letter of Credit or any
other document or instrument executed and delivered in
connection herewith or therewith;
(iv) any settlement or compromise of any Obligation,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof
or hereof, and any subordination of the payment of all or any
part thereof to the payment of any obligation (whether due or
not) of any Credit Party to creditors of any Credit Party
other than any other Credit Party;
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(v) any manner of application of Collateral, or
proceeds thereof, to all or any of the Obligations, or any
manner of sale or other disposition of any Collateral for all
or any of the Obligations or any other assets of any Credit
Party;
(vi) any other agreements or circumstance of any
nature whatsoever that may or might in any manner or to any
extent vary the risk of any Guarantor, or that might otherwise
at law or in equity constitute a defense available to, or a
discharge of, this Guarantee and/or the obligations of
Guarantor, or a defense to, or discharge of, any Credit Party
or any other Person or party relating to this Guarantee or the
Obligations or otherwise with respect to the Advances, Letters
of Credit or other financial accommodations to Borrower
pursuant to the Other Documents;
(vii) the loss or diminution of authority,
liquidation, dissolution, winding-up, winding-down,
amalgamation, any arrangement under corporate legislation, any
change in the name, business, membership, directorate, powers,
objects, or organization or management, or other change in the
corporate form, winding up proceedings, proceedings under the
Bankruptcy and Insolvency Act R.S.C. 1985 c. B-3 as amended
from time to time or any successor legislation thereto,
proceedings in the Companies' Creditors Arrangement Act R.S.C.
1985 c. C-36 as amended from time to time or any successor
legislation thereto, liquidation, receivership proceedings,
appointment of a receiver, manager or receiver and manager or
other insolvency proceedings occurring in respect of any
Borrower, or any other Credit Party or the assumption by any
Person of the obligation to pay or perform Obligations;
(viii) the Agent shall have the right to do any of
the above without notice to or the consent of any Guarantor
and each Guarantor expressly waives any right to notice of,
consent to, knowledge of and participation in any agreements
relating to any of the above or any other present or future
event relating to Obligations whether under this Agreement or
otherwise or any right to challenge or question any of the
above and waives any defenses of such Guarantor which might
arise as a result of such dealings.
16.6. Agent may at any time and from time to time (whether or not after
revocation or termination of this Guarantee) without the consent of, or notice
(except as shall be required by applicable statute and cannot be waived) to, any
Guarantor, and without incurring responsibility to any Guarantor or impairing or
releasing the Obligations, apply any sums by whomsoever paid or howsoever
realized to any Obligations regardless of what Obligations remain unpaid.
16.7. (a) This Guarantee shall continue to be effective or be
reinstated, as the case may be, if claim is ever made upon the Agent or any
Lender for repayment or recovery of any amount or amounts received by such
Person in payment or on account of any of the Obligations and such Person repays
all or part of said amount for any reason whatsoever, including, without
limitation, by reason of any judgment, decree or order of any court or
administrative body having jurisdiction over such Person or the respective
property of each, or any settlement or compromise of any claim effected by such
Person with any such claimant (including any Borrower); and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
or other circumstances shall be binding upon such Guarantor, notwithstanding any
revocation hereof or the cancellation of any note (including the Term Notes
and/or the Revolving Credit Notes) or other instrument evidencing any
Obligation, and each Guarantor shall be and remain liable to the Agent and/or
Lenders for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by such Person(s).
(b) Agent shall not be required to marshal any assets in favor of any
Guarantor, or against or in payment of Obligations.
(c) No Guarantor shall have the right to be reimbursed, indemnified or
subrogated to any of Agent's rights until Agent has received payment and
performance in full of all Obligations (whether or not guaranteed hereby) and
all reasonable costs and expenses incurred by Agent in obtaining payment and
performance of Obligations and this Agreement has been irrevocably terminated.
No Guarantor shall be entitled to claim against any present or future security
held by Agent from any person for Obligations in priority to or equally with any
claim of Agent, or assert any claim for any liability of any Borrower to any
Guarantor in priority to or equally with claims of Agent for Obligations, and no
Guarantor shall be entitled to compete with Agent with respect to, or to advance
any equal or prior claim to any security held by Agent for Obligations.
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(d) If any Borrower makes any payment to Agent, which payment is wholly
or partly subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to any person under any federal, state or
provincial statute or at common law or under equitable principles, then to the
extent of such payment the Obligation intended to be paid shall be revived and
continued in full force and effect as if the payment had not been made, and the
resulting revived Obligation shall continue to be guaranteed, uninterrupted, by
each Guarantor under this Guarantee.
(e) All present and future monies payable by any Borrower to each
Guarantor are assigned to Agent as security for such Guarantor's liability to
Agent under this Guarantee and are postponed and subordinated to Agent's prior
right to payment in full of Obligations. All monies received by any Guarantor
from any Borrower shall be held by such Guarantor as agent and trustee for
Agent. This provision shall remain in effect notwithstanding any termination by
any Guarantor of this Guarantee. This assignment, postponement and subordination
shall only terminate when Obligations are paid in full and the Agreement is
irrevocably terminated.
(f) Each Borrower acknowledges this assignment, postponement and
subordination and, except as permitted hereunder, agrees to make no payments to
any Guarantor without the prior written consent of Agent. Each Borrower agrees
to give full effect to the provisions of this Guarantee.
16.8. Upon the occurrence and during the continuance of any Event of
Default, the Agent may and upon written request of the Lenders shall, without
notice to or demand upon any Credit Party or any other Person, declare any
obligations of each Guarantor hereunder immediately due and payable, and shall
be entitled to enforce the obligations of each Guarantor. Upon such declaration
by the Agent, the Agent and Lenders are hereby authorized at any time and from
time to time to set off and apply any and all deposits (general or special, time
or demand, provisions or final) at any time held and other indebtedness at any
time owing by the Agent or Lenders to or for the credit or the account of any
Guarantor against any and all of the obligations of each Guarantor now or
hereafter existing under this Guarantee, whether or not the Agent or Lenders
shall have made any demand under this Guarantee and although such obligations
may be contingent and unmatured. The rights of the Agent and Lenders hereunder
are in addition to other rights and remedies (including other rights of set-off)
which the Agent and Lenders may have. Upon such declaration by the Agent, with
respect to any claims (other than those claims referred to in the immediately
preceding paragraph) of any Guarantor against any Credit Party (the "Claims"),
the Agent shall have the full right on the part of the Agent in its own name or
in the name of such Guarantor to collect and enforce such Claims by legal
action, proof of debt or claim in bankruptcy or liquidation or other similar
proceedings, vote in any proceeding for the arrangement or reorganization of
debts at any time proposed, or otherwise, the Agent and each of its officers
being hereby irrevocably constituted attorneys-in-fact for each Guarantor for
the purpose of such enforcement and for the purpose of endorsing in the name of
each Guarantor any instrument for the payment of money. Each Guarantor will
receive as trustee for the Agent and will pay to the Agent forthwith upon
receipt thereof any amounts which such Guarantor may receive from any Credit
Party on account of the Claims. Each Guarantor agrees that at no time hereafter
will any of the Claims be represented by any notes, other negotiable instruments
or writings, except and in such event they shall either be made payable to the
Agent, or if payable to any Guarantor, shall forthwith be endorsed by such
Guarantor to the Agent. Each Guarantor agrees that no payment on account of the
Claims or any security interest therein shall be created, received, accepted or
retained during the continuance of an Event of Default nor shall any financing
statement be filed with respect thereto by any Guarantor.
16.9. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by any Credit Party or others
(including any Lenders) with respect to any of the Obligations shall, if the
statute of limitations in favor of any Guarantor against the Agent or Lenders
shall have commenced to run, toll the running of such statute of limitations
and, if the period of such statute of limitations shall have expired, prevent
the operation of such statute of limitations.
16.10. (a) All amounts payable from time to time by any Guarantor
hereunder shall bear interest at the interest rate per annum then chargeable
with respect to Revolving Credit Advances.
(b) If, with respect to any payment under this Guarantee, the
application, introduction or adoption of any law, regulation, treaty,
convention, guideline, request or directive of any governmental authority or
similar agency or any change therein, to Guarantor, or to Agent, or
interpretation, or administration thereof, or any compliance by Agent therewith,
shall impose or require any reserve, or tax (excluding taxes measured with
reference to the net income of Agent), or shall impose any other requirement or
condition which results in an increased cost to Agent or reduces the amount
received or receivable by Agent with respect with any amount due under this
Guarantee or causes Agent to make or to forego any payment, then upon
notification to Guarantor by Agent, Guarantor shall immediately pay to Agent
such amounts as shall fully compensate Agent and Lenders for all such increased
costs, reductions, payments or foregone payments which accrue up to and
including the date of receipt by Guarantor of such notice and thereafter, upon
demand from time to time, Guarantor shall pay such additional amounts as shall
fully compensate Agent for any increased cost, imposed costs, reductions,
payments or foregone payments.
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16.11. Each Guarantor acknowledges receipt of a copy of each of the
Other Documents. Each Guarantor has made an independent investigation of the
Loan Parties and of the financial condition of the Loan Parties. Neither Agent
nor any Lender has made and neither Agent nor any Lender does make any
representations or warranties as to the income, expense, operation, finances or
any other matter or thing affecting any Credit Party nor has Agent or any Lender
made any representations or warranties as to the amount or nature of the
Obligations of any Credit Party to which this Guarantee applies as specifically
herein set forth, nor has Agent or any Lender or any officer, agent or employee
of Agent or any Lender or any representative thereof, made any other oral
representations, agreements or commitments of any kind or nature, and each
Guarantor hereby expressly acknowledges that no such representations or
warranties have been made and such Guarantor expressly disclaims reliance on any
such representations or warranties.
16.12. The provisions of this Section 16 shall remain in effect until
indefeasible payment in full in cash of all Obligations and the irrevocable
termination of this Agreement.
16.13. If any Obligations remain outstanding following the exercise of
any of Agent's rights and/or remedies pursuant to any Mortgage, each Guarantor
hereby agrees that the Guaranty made by such Guarantor under this Section 16
shall continue in full force and effect with respect to such Obligations and any
future Obligations not withstanding any applicable law, statute or regulation.
Further, each Guarantor hereby agrees to execute any instruments, agreements
and/or documents reasonably requested by Agent to reflect any of the foregoing.
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XVII. MISCELLANEOUS.
17.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against any Credit Party with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of New York, United States of America, and, by
execution and delivery of this Agreement, each Credit Party accepts for itself
and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Credit Party hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrowing Agent at its address set forth in
Section 17.6 and service so made shall be deemed completed five (5) days after
the same shall have been so deposited in the mails of the United States of
America, or, at the Agent's and/or any Lender's option, by service upon
Borrowing Agent which each Credit Party irrevocably appoints as such Credit
Party's Agent for the purpose of accepting service within the State of New York.
Nothing herein shall affect the right to serve process in any manner permitted
by law or shall limit the right of Agent or any Lender to bring proceedings
against any Credit Party in the courts of any other jurisdiction. Each Credit
Party waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. Any judicial proceeding by any Credit
Party against Agent or any Lender involving, directly or indirectly, any matter
or claim in any way arising out of, related to or connected with this Agreement
or any related agreement, shall be brought only in a federal or state court
located in the County of New York, State of New York.
17.2. Entire Understanding. (a) This Agreement and the documents
executed concurrently herewith contain the entire understanding among each
Credit Party, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each Credit
Party's, Agent's and each Lender's respective officers. Neither this Agreement
nor any portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged. Each Credit Party acknowledges that it has been advised by
counsel in connection with the execution of this Agreement and Other Documents
and is not relying upon oral representations or statements inconsistent with the
terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Credit Parties may, subject to the provisions of this
Section 17.2 (b), from time to time enter into written supplemental agreements
to this Agreement or the Other Documents executed by Credit Parties, for the
purpose of adding or deleting any provisions or otherwise changing, varying or
waiving in any manner the rights of Lenders, Agent or Credit Parties thereunder
or the conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:
77
(i) increase the Commitment Percentage or maximum
dollar commitment of any Lender.
(ii) extend the maturity of any Note or the due date
for any amount payable hereunder, or decrease the rate of interest or reduce any
fee payable by Borrowers to Lenders pursuant to this Agreement.
(iii) alter the definition of the term Required
Lenders or alter, amend or modify this Section 17.2(b).
(iv) release any Collateral during any calendar year
(other than in accordance with the provisions of this Agreement) having an
aggregate value in excess of $1,000,000.
(v) change the rights and duties of Agent.
(vi) permit any Revolving Advance to be made if after
giving effect thereto the total of Revolving Advances outstanding hereunder
would exceed the Formula Amount for more than thirty (30) consecutive Business
Days or exceed one hundred and ten percent (110%) of the Formula Amount.
(vii) increase the Advance Rates above the Advance
Rates in effect on the Closing Date.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Credit Parties, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Credit Parties, Agent and Lenders shall
be restored to their former positions and rights, and any Event of Default
waived shall be deemed to be cured and not continuing, but no waiver of a
specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to
this Section 17.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed to
have consented to matter that was the subject of the request. In the event that
Agent requests the consent of a Lender pursuant to this Section 17.2 and such
consent is denied, then PNC may, at its option, require such Lender to assign
its interest in the Advances to PNC or to another Lender or to any other Person
designated by the Agent (the "Designated Lender"), for a price equal to the then
outstanding principal amount thereof plus accrued and unpaid interest and fees
due such Lender, which interest and fees shall be paid when collected from
Borrowers. In the event PNC elects to require any Lender to assign its interest
to PNC or to the Designated Lender, PNC will so notify such Lender in writing
within forty five (45) days following such Lender's denial, and such Lender will
assign its interest to PNC or the Designated Lender no later than five (5) days
following receipt of such notice pursuant to a Commitment Transfer Supplement
executed by such Lender, PNC or the Designated Lender, as appropriate, and
Agent.
78
Notwithstanding the foregoing, Agent may at its discretion and without
the consent of the Required Lenders, voluntarily permit the outstanding
Revolving Advances at any time to exceed the Formula Amount by up to one hundred
and ten percent (110%) of the Formula Amount for up to thirty (30) consecutive
Business Days. For purposes of the preceding sentence, the discretion granted to
Agent hereunder shall not preclude involuntary overadvances that may result from
time to time due to the fact that the Formula Amount was unintentionally
exceeded for any reason, including, but not limited to, Collateral previously
deemed to be either "Eligible Receivables" or "Eligible Inventory", as
applicable, becomes ineligible, collections of Receivables applied to reduce
outstanding Revolving Advances are thereafter returned for insufficient funds or
overadvances are made to protect or preserve the Collateral. In the event Agent
involuntarily permits the outstanding Revolving Advances to exceed the Formula
Amount by more than ten percent (10%), Agent shall use its efforts to have the
Borrowers decrease such excess in as expeditious a manner as is practicable
under the circumstances and not inconsistent with the reason for such excess.
Revolving Advances made after Agent has determined the existence of involuntary
overadvances shall be deemed to be involuntary overadvances and shall be
decreased in accordance with the preceding sentence.
17.3. Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the
benefit of Credit Parties, Agent, each Lender, all future holders of the
Obligations and their respective successors and assigns, except that no Credit
Party may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of Agent and each Lender.
(b) Each Credit Party acknowledges that in the regular course
of commercial banking business one or more Lenders may at any time and from time
to time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Credit Parties shall not
be required to pay to any Transferee more than the amount which it would have
been required to pay to Lender which granted an interest in its Advances or
other Obligations payable hereunder to such Transferee had such Lender retained
such interest in the Advances hereunder or other Obligations payable hereunder
and in no event shall Credit Parties be required to pay any such amount arising
from the same circumstances and with respect to the same Advances or other
Obligations payable hereunder to both such Lender and such Transferee. Each
Credit Party hereby grants to any Transferee a continuing security interest in
any deposits, moneys or other property actually or constructively held by such
Transferee as security for the Transferee's interest in the Advances.
79
(c) Any Lender may with the consent of Agent which shall not
be unreasonably withheld or delayed sell, assign or transfer all or any part of
its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000 pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Credit Parties hereby consent to the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Credit Parties shall execute and deliver such further documents
and do such further acts and things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Credit Parties, Agent and Lenders may treat
each Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Credit Parties or any Lender at any reasonable time
and from time to time upon reasonable prior notice. Agent shall receive a fee in
the amount of $3,500 payable by the applicable Purchasing Lender upon the
effective date of each transfer or assignment to such Purchasing Lender
provided, that, if PNC makes such transfer or assignment within sixty (60) days
of the Closing Date to such Purchasing Lender, such Purchasing Lender shall not
be obligated to pay such fee to Agent.
(e) Each Credit Party authorizes each Lender to disclose to
any Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
such Credit Party which has been delivered to such Lender by or on behalf of
such Credit Party pursuant to this Agreement or in connection with such Lender's
credit evaluation of such Credit Party.
80
17.4. Application of Payments. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Credit Party makes a payment or Agent or any Lender receives any payment or
proceeds of the Collateral for any Credit Party's benefit, which are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver, custodian
or any other party under any bankruptcy law, common law or equitable cause,
then, to such extent, the Obligations or part thereof intended to be satisfied
shall be revived and continue as if such payment or proceeds had not been
received by Agent or such Lender.
17.5. Indemnity. Each Credit Party shall indemnify Agent, each Lender
and each of their respective officers, directors, Affiliates, employees and
agents from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, fees and disbursements
of counsel) which may be imposed on, incurred by, or asserted against Agent or
any Lender in any litigation, proceeding or investigation instituted or
conducted by any governmental agency or instrumentality or any other Person with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the Other Documents, whether or not
Agent or any Lender is a party thereto, except to the extent that any of the
foregoing arises out of the gross (not mere) negligence or willful misconduct of
the party being indemnified.
17.6. Notice. Any notice or request hereunder may be given to Borrowing
Agent or any Credit Party or to Agent or any Lender at their respective
addresses set forth below or at such other address as may hereafter be specified
in a notice designated as a notice of change of address under this Section. Any
notice or request hereunder shall be given by (a) hand delivery, (b) overnight
courier, (c) registered or certified mail, return receipt requested, (d) telex
or telegram, subsequently confirmed by registered or certified mail, or (e)
telecopy to the number set out below (or such other number as may hereafter be
specified in a notice designated as a notice of change of address) with
electronic confirmation of its receipt. Any notice or other communication
required or permitted pursuant to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to whom it is addressed, (b) on
the earlier of actual receipt thereof or three (3) days following posting
thereof by certified or registered mail, postage prepaid, or (c) upon actual
receipt thereof when sent by a recognized overnight delivery service or (d) upon
actual receipt thereof when sent by telecopier to the number set forth below
with electronic confirmation of its receipt, in each case addressed to each
party at its address set forth below or at such other address as has been
furnished in writing by a party to the other by like notice:
81
(A) If to Agent or PNC Bank, National Association
PNC at: Two Tower Center
East Brunswick, New Jersey 08816
Attention: Ryan Peak
Telephone: (732) 220-4315
Telecopier: (732) 220-4393
with a copy to: PNC Bank, National Association
PNC Agency Services
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222
Attention: Arlene Ohler
Telephone: (412) 762-3627
Telecopier: (412) 762-8672
and a copy to: Hahn & Hessen LLP
350 Fifth Avenue
New York, New York 10118-0075
Attention: Steven J. Seif, Esq.
Telephone: (212) 946-0294
Telecopier: (212) 594-7167
(B) If to a Lender other than Agent, as specified on the signature
pages hereof
(C) If to Borrowing Agent
or any Credit Party,
at: SunSource Inc.
3000 One Logan Square, 30th Floor
Philadelphia, Pennsylvania 19103
Attention: Joseph M. Corvino
Telephone: (215) 282-1290
Telecopier: (215) 282-1309
with a copy to: Morgan, Lewis & Bockius, LLP
1701 Market Street
Philadelphia, Pennsylvania
Attention: Andrew Hamilton, Esq.
Telephone: (215) 963-4837
Telecopier: (215) 963-5299
17.7. Survival. The obligations of Credit Parties under Sections
2.2(f), 3.7, 3.8, 3.9, 4.19(h), 14.7 and 17.5 shall survive termination of this
Agreement and the Other Documents and payment in full of the Obligations.
17.8. Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
17.9. Expenses. All costs and expenses including, without limitation,
reasonable attorneys' fees (including the allocated costs of in house counsel)
and disbursements incurred by Agent, Agent on behalf of Lenders and Lenders (a)
in all efforts made to enforce payment of any Obligation or effect collection of
any Collateral, or (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements, documents and instruments, or (c)
in instituting, maintaining, preserving, enforcing and foreclosing on Agent's
security interest in or Lien on any of the Collateral, whether through judicial
proceedings or otherwise, or (d) in defending or prosecuting any actions or
proceedings arising out of or relating to Agent's or any Lender's transactions
with any Credit Party, or (e) in connection with any advice given to Agent or
any Lender with respect to its rights and obligations under this Agreement and
all related agreements, may be charged to Borrowers' Account and shall be part
of the Obligations.
82
17.10. Injunctive Relief. Each Credit Party recognizes that, in the
event any Credit Party fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy at law may prove to
be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving that actual damages are not an adequate remedy.
17.11. Consequential Damages. Neither Agent nor any Lender, nor any
agent or attorney for any of them, shall be liable to any Credit Party for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.
17.12. Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
17.13. Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
17.14. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
17.15. Confidentiality; Sharing Information. (a) Agent, each Lender and
each Transferee shall hold all non-public information obtained by Agent, such
Lender or such Transferee pursuant to the requirements of this Agreement in
accordance with Agent's, such Lender's and such Transferee's customary
procedures for handling confidential information of this nature; provided,
however, Agent, each Lender and each Transferee may disclose such confidential
information (a) to its examiners, affiliates, outside auditors, counsel and
other professional advisors, (b) to Agent, any Lender or to any prospective
Transferees and Purchasing Lenders, and (c) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process;
provided, further that (i) unless specifically prohibited by applicable law or
court order, Agent, each Lender and each Transferee shall use its best efforts
prior to disclosure thereof, to notify the applicable Credit Party of the
applicable request for disclosure of such non-public information (A) by a
Governmental Body or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a
Transferee by such Governmental Body) or (B) pursuant to legal process and (ii)
in no event shall Agent, any Lender or any Transferee be obligated to return any
materials furnished by any Credit Party other than those documents and
instruments in possession of Agent or any Lender in order to perfect its Lien on
the Collateral once the Obligations have been paid in full and this Agreement
has been terminated.
83
(b) Each Credit Party acknowledges that from time to time
financial advisory, investment banking and other services may be offered or
provided to such Credit Party or one or more of its Affiliates (in connection
with this Agreement or otherwise) by any Lender or by one or more Subsidiaries
or Affiliates of such Lender and each Credit Party hereby authorizes each Lender
to share any information delivered to such Lender by such Credit Party and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of
such Lender, it being understood that any such Subsidiary or Affiliate of any
Lender receiving such information shall be bound by the provision of Section
17.15 as if it were a Lender hereunder. Such authorization shall survive the
repayment of the other Obligations and the termination of the Loan Agreement.
17.16. Publicity. Each Credit Party and each Lender hereby authorizes
Agent to make appropriate announcements of the financial arrangement entered
into among Credit Parties, Agent and Lenders, including, without limitation,
announcements which are commonly known as tombstones, in such publications and
to such selected parties as Agent shall in its sole and absolute discretion deem
appropriate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Each of the parties has signed this Agreement as of the day and year
first above written.
HARDING GLASS, INC., as a Borrower
KAR PRODUCTS INC., as a Borrower
SUNSOURCE INC., as a Borrower
SUNSOURCE TECHNOLOGY SERVICES INC., as a Borrower
THE HILLMAN GROUP, INC., as a Borrower
A & H HOLDING COMPANY, INC., as a Guarantor
SUNSOURCE CORPORATE GROUP, INC., as a Guarantor
SUNSOURCE INDUSTRIAL SERVICES, COMPANY, INC., as a Guarantor
SUNSOURCE INVENTORY MANAGEMENT COMPANY, INC., as a Guarantor
SUNSOURCE INVESTMENT COMPANY, INC., as a Guarantor
SUNSUB A INC., as a Guarantor
By:_______________________________
Name: Joseph M. Corvino
Title: Vice President of each of the foregoing corporations
A. & H. BOLT & NUT COMPANY LIMITED, as a Guarantor
By:_______________________________
Name: Joseph M. Corvino
Title:____________________________
J.N. FAUVER (CANADA) LIMITED, as a Guarantor
By:_______________________________
Name: Joseph M. Corvino
Title:____________________________
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
SUNSOURCE CANADA INVESTMENT COMPANY as a Guarantor
By:_______________________________
Name: Joseph M. Corvino
Title:____________________________
PNC BANK, NATIONAL ASSOCIATION, as Lender and as Agent
By:_______________________________
Name:_____________________________
Title:____________________________
Address: Two Tower Center Boulevard
East Brunswick, New Jersey 08816
Commitment Percentage: 100%
STATE OF ______________)
) ss.
COUNTY OF ____________)
On this _____ day of December, 1999, before me personally came Joseph
M. Corvino, to me known, who, being by me duly sworn, did depose and say that he
is the Vice President of each of Harding Glass, Inc., Kar Products Inc.,
SunSource Inc., SunSource Technology Services Inc., The Hillman Group, Inc., A &
H Holding Company, Inc., SunSource Corporate Group, Inc., SunSource Industrial
Services Company, Inc., SunSource Inventory Management Company, Inc., SunSource
Investment Company, Inc. and SunSub A Inc. the corporations described in and
which executed the foregoing instrument; and that he signed his name thereto by
order of the board of directors of each of the said corporations.
-------------------------
Notary Public
STATE OF ______________)
) ss.
COUNTY OF ____________)
On this _____ day of December, 1999, before me personally came Joseph
M. Corvino, to me known, who, being by me duly sworn, did depose and say that he
is the __________________ of A. & H. Bolt & Nut Company Limited, the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
-------------------------
Notary Public
STATE OF ______________)
) ss.
COUNTY OF ____________)
On this _____ day of December, 1999, before me personally came Joseph
M. Corvino, to me known, who, being by me duly sworn, did depose and say that he
is the __________________ of J.N. Fauver (Canada) Limited, the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
-------------------------
Notary Public
STATE OF ______________)
) ss.
COUNTY OF ____________)
On this _____ day of December, 1999, before me personally came Joseph
M. Corvino, to me known, who, being by me duly sworn, did depose and say that he
is the __________________ of SunSource Canada Investment Company, the unlimited
liability company described in and which executed the foregoing instrument; and
that he signed his name thereto by order of said company.
-------------------------
Notary Public
STATE OF ______________)
) ss.
COUNTY OF ____________)
On this _____ day of December, 1999, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is the __________________ of PNC Bank, National Association, the
association described in and which executed the foregoing instrument; and that
he signed his name thereto by order of said association.
-------------------------
Notary Public
List of Exhibits and Schedules
Exhibits
Exhibit 2.1(a) Revolving Credit Note
Exhibit 2.4 Term Note
Exhibit 5.5(b) Financial Projections
Exhibit 8.1(k) Financial Condition Certificate
Exhibit 17.3 Commitment Transfer Supplement
Exhibit A Borrowing Base Certificate
Schedules
Schedule 1.2 Permitted Encumbrances
Schedule 1.2A Subsidiary Stock
Schedule 1.2B Original Owners
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(c) Location of Executive Offices
Schedule 4.19 Real Property
Schedule 5.2(a) Jurisdictions of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.4 Federal Tax Identification Number
Schedule 5.6 Prior Names
Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property, Source Code Escrow Agreements
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 5.22 Business of Credit Parties
Schedule 7.3 Guarantees
TABLE OF CONTENTS
I. DEFINITIONS 2
1.1. Accounting Terms.........................................2
1.2. General Terms............................................2
1.3. Uniform Commercial Code Terms...........................21
1.4. Certain Matters of Construction.........................22
II. ADVANCES, PAYMENTS 22
2.1. (a) Revolving Advances..................................22
(b) Individual Revolving Advances................23
-
(c) Discretionary Rights.........................23
2.2. Procedure for Borrowing Advances........................23
2.3. Disbursement of Advance Proceeds........................25
2.4. Term Loan 25
2.5. Maximum Advances........................................25
2.6. Repayment of Advances...................................25
2.7. Repayment of Excess Advances............................26
2.8. Statement of Account....................................26
2.9. Letters of Credit.......................................27
2.10. Issuance of Letters of Credit...........................27
2.11. Requirements For Issuance of Letters of Credit..........28
2.12. Additional Payments.....................................29
2.13. Manner of Borrowing and Payment.........................29
2.14. Mandatory Prepayments...................................31
2.15. Use of Proceeds.........................................32
2.16. Defaulting Lender.......................................32
III. INTEREST AND FEES 33
3.1. Interest .............................................33
3.2. Letter of Credit Fees...................................33
3.3. Facility Fee............................................34
3.4. Fee Letter 34
3.5. Computation of Interest and Fees........................34
3.6. Maximum Charges.........................................34
3.7. Increased Costs.........................................34
3.8. Basis For Determining Interest Rate Inadequate or
Unfair.............................................35
3.9. Capital Adequacy........................................35
IV. COLLATERAL: GENERAL TERMS 35
4.1. Security Interest in the Collateral.....................35
4.2. Perfection of Security Interest.........................35
4.3. Disposition of Collateral...............................35
4.4. Preservation of Collateral..............................35
4.5. Ownership of Collateral.................................35
4.6. Defense of Agent's and Lenders' Interests...............35
4.7. Books and Records.......................................35
4.8. Financial Disclosure....................................35
4.9. Compliance with Laws....................................35
4.10. Inspection of Premises..................................35
4.11. Insurance 35
4.12. Failure to Pay Insurance................................35
4.13. Payment of Taxes........................................35
4.14. Payment of Leasehold Obligations........................35
4.15. Receivables.............................................35
(a) Nature of Receivables.............................35
(b) Solvency of Customers.............................35
(c) Locations of Credit Party.........................35
(d) Collection of Receivables.........................35
(e) Notification of Assignment of Receivables.........35
(f) Power of Agent to Act on Credit Parties Behalf....35
(g) No Liability......................................35
(h) Establishment of a Lockbox Account, Dominion
Account........................................35
(i) Adjustments.......................................35
4.16. Inventory.............................................. 35
4.17. Maintenance of Equipment................................35
4.18. Exculpation of Liability................................35
4.19. Environmental Matters...................................35
4.20. Financing Statements....................................35
4.21. Amalgamation............................................35
V. REPRESENTATIONS AND WARRANTIES 35
5.1. Authority 35
5.2. Formation and Qualification.............................35
5.3. Survival of Representations and Warranties..............35
5.4. Tax Returns.............................................35
5.5. Financial Statements....................................35
5.6. Corporate Name..........................................35
5.7. O.S.H.A. and Environmental Compliance...................35
5.8. Solvency; No Litigation, Violation, Indebtedness or
Default.............................................35
5.9. Patents, Trademarks, Copyrights and Licenses............35
5.10. Licenses and Permits....................................35
5.11. Default of Indebtedness.................................35
5.12. No Default 35
5.13. No Burdensome Restrictions..............................35
5.14. No Labor Disputes.......................................35
5.15. Margin Regulations......................................35
5.16. Investment Company Act..................................35
5.17. Disclosure 35
5.18. Delivery of Junior Subordinated Debentures..............35
5.19. Swaps .............................................35
5.20. Conflicting Agreements..................................35
5.21. Application of Certain Laws and Regulations.............35
5.22. Business and Property of Credit Parties.................35
5.23. Year 2000 35
5.24. Section 20 Subsidiaries.................................35
VI. AFFIRMATIVE COVENANTS 35
6.1. Payment of Fees.........................................35
6.2. Conduct of Business and Maintenance of Existence
and Assets.........................................35
6.3. Violations 35
6.4. Government Receivables..................................35
6.5. Minimum EBITDA..........................................35
6.6. Fixed Charge Coverage Ratio.............................35
6.7. Undrawn Availability....................................35
6.8. Deferred Interest.......................................35
6.9. Execution of Supplemental Instruments...................35
6.10. Payment of Indebtedness.................................35
6.11. Standards of Financial Statements.......................35
6.12. Harding Mortgages.......................................35
6.13. Net Worth 35
VII. NEGATIVE COVENANTS. 35
7.1. Merger, Consolidation, Acquisition and Sale of Assets...35
7.2. Creation of Liens.......................................35
7.3. Guarantees 35
7.4. Investments.............................................35
7.5. Loans .............................................35
7.6. Capital Expenditures....................................35
7.7. Dividends 35
7.8. Indebtedness............................................35
7.9. Nature of Business......................................35
7.10. Transactions with Affiliates............................35
7.11. Leases .............................................35
7.12. Subsidiaries............................................35
7.13. Fiscal Year and Accounting Changes......................35
-
7.14. Pledge of Credit........................................35
7.15. Amendment of Articles of Incorporation, By-Laws.........35
7.16. Compliance with ERISA...................................35
7.17. Prepayment of Indebtedness..............................35
7.18. Junior Subordinated Debentures..........................35
7.19. Other Agreements........................................35
VIII. CONDITIONS PRECEDENT. 35
8.1. Conditions to Initial Advances..........................35
(a) Note.........................................35
(b) Filings, Registrations and Recordings........35
(c) Corporate Proceedings of Credit Parties......35
(d) Incumbency Certificates of Credit Parties....35
(e) Certificates.................................35
(f) Good Standing Certificates...................35
(g) Legal Opinion................................35
(h) No Litigation................................35
(i) Financial Condition Certificates.............35
(j) Collateral Examination.......................35
(k) Fees.........................................35
(l) Pro Forma Financial Statements...............35
(m) Junior Subordinated Debentures...............35
(n) Insurance....................................35
(o) Title Insurance..............................35
(p) Environmental Reports........................35
(q) Payment Instructions.........................35
(r) Blocked Accounts35
(s) Consents.....................................35
(t) No Adverse Material Change...................35
(u) Leasehold Agreements.........................35
(v) October Financial Statements.................35
(w) Pledge Agreements and Other Documents........35
(x) Net Worth....................................35
(y) Contract Review35
(z) Closing Certificate..........................35
(aa) Borrowing Base.35
(bb) Undrawn Availability.........................35
(cc) Mortgage.....................................35
(dd) Other........................................35
8.2. Conditions to Each Advance..........................35
(a) Representations and Warranties...........35
(b) No Default...............................35
(c) Maximum Advances35
IX. INFORMATION AS TO CREDIT PARTIES 35
9.1. Disclosure of Material Matters......................35
9.2. Schedules 35
9.3. Environmental Reports...............................35
9.4. Litigation 35
9.5. Material Occurrences................................35
9.6. Government Receivables..............................35
9.7. Annual Financial Statements.........................35
9.8. Quarterly Financial Statements......................35
9.9. Monthly Financial Statements........................35
9.10. Other Reports.......................................35
9.11. Additional Information..............................35
9.12. Projected Operating Budget..........................35
9.13. Variances From Operating Budget.....................35
9.14. Notice of Suits, Adverse Events.....................35
9.15. ERISA Notices and Requests..........................35
9.16. Additional Documents................................35
X. EVENTS OF DEFAULT 35
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT 35
11.1. Rights and Remedies.................................35
11.2. Agent's Discretion..................................35
11.3. Setoff .........................................35
11.4. Rights and Remedies not Exclusive...................35
11.5. Allocation of Payments After Event of Default.......35
11.6. Canadian Remedies...................................35
XII. WAIVERS AND JUDICIAL PROCEEDINGS 35
12.1. Waiver of Notice....................................35
12.2. Delay .........................................35
12.3. Jury Waiver.........................................35
XIII. EFFECTIVE DATE AND TERMINATION 35
13.1. Term .........................................35
13.2. Termination.........................................35
XIV. REGARDING AGENT 35
14.1. Appointment.........................................35
14.2. Nature of Duties....................................35
14.3. Lack of Reliance on Agent and Resignation...........35
14.4. Certain Rights of Agent.............................35
14.5. Reliance .........................................35
14.6. Notice of Default...................................35
14.7. Indemnification.....................................35
14.8. Agent in its Individual Capacity....................35
14.10. Credit Parties' Undertaking to Agent................35
XV. BORROWING AGENCY 35
15.1. Borrowing Agency Provisions.........................35
15.2. Waiver of Subrogation...............................35
XVI. GUARANTEE 35
XVII. MISCELLANEOUS 35
17.1. Governing Law.......................................35
17.2. Entire Understanding................................35
17.3. Successors and Assigns; Participations;
New Lenders...................................35
17.4. Application of Payments.............................35
17.5. Indemnity 35
17.6. Notice .........................................35
17.7. Survival .........................................35
17.8. Severability........................................35
17.9. Expenses 35
17.10. Injunctive Relief...................................35
17.11. Consequential Damages...............................35
17.12. Captions .........................................35
17.13. Counterparts; Telecopied Signatures.................35
17.14. Construction........................................35
17.15. Confidentiality; Sharing Information................35
17.16. Publicity .........................................35