EXHIBIT 10.1
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
SUNSOURCE, INC.,
ITS SUBSIDIARIES AS SET FORTH
ON SCHEDULE 1 ATTACHED HERETO
("BORROWERS"),
AND ITS SUBSIDIARIES AS SET FORTH
ON SCHEDULE 2 ATTACHED HERETO
("GUARANTORS"),
FIRST UNION NATIONAL BANK
for itself and as Agent,
THE BANK OF NOVA SCOTIA
for itself and as Documentation Agent
and
THE BANKS AS SET FORTH ON SCHEDULE 3 ATTACHED HERETO
("BANKS")
December 31, 1998
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TABLE OF CONTENTS
Page
SECTION ONE - DEFINITIONS.........................................................................................3
1.1. Definitions........................................................................................3
1.2. Rules of Construction.............................................................................12
SECTION TWO - REVOLVING CREDIT LOAN..............................................................................13
2.1. (a) The Facility..........................................................................13
(b) Amendment and Restatement.............................................................13
(c) Authority of the Company..............................................................13
(d) Potential Increase of Commitment. ...................................................13
2.2. Promissory Notes..................................................................................14
2.3. Banks' Participation..............................................................................14
2.4. Use of Proceeds...................................................................................14
2.5. Repayment.........................................................................................14
2.6. Interest..........................................................................................14
2.7. Advances..........................................................................................19
2.8. Reduction and Termination of Commitment; Voluntary and Mandatory
Prepayment.....................................................................................21
2.9. Prepayment........................................................................................22
2.10. Funding Costs; Loss of Earnings...................................................................22
2.11. Payments..........................................................................................22
2.12. Commitment Fee....................................................................................22
2.13. Swing Line Loans..................................................................................23
2.14. Regulatory Changes in Capital Requirements........................................................25
2.15. Taxes.............................................................................................26
SECTION THREE - LETTERS OF CREDIT................................................................................27
3.1. (a) Availability of Letters of Credit.....................................................27
(b) Evergreen Letters of Credit...........................................................28
(c) Existing Letters of Credit............................................................28
3.2. Commitment Availability...........................................................................28
3.3. Approval and Issuance.............................................................................28
3.4. Obligations of the Borrowers......................................................................29
3.5. Payment by Banks on Letters of Credit.............................................................30
3.6. Collateral........................................................................................30
3.7. General Terms of Credits..........................................................................31
SECTION FOUR - REPRESENTATIONS AND WARRANTIES....................................................................33
4.1. Organization and Good Standing....................................................................33
4.2. Power and Authority; Validity of Agreement........................................................33
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4.3. No Violation of Laws or Agreements................................................................33
4.4. Material Contracts................................................................................33
4.5. Compliance........................................................................................34
4.6. Litigation........................................................................................34
4.7. Title to Assets...................................................................................34
4.8. Capital Stock.....................................................................................34
4.9. Accuracy of Information; Full Disclosure..........................................................34
4.10. Taxes and Assessments.............................................................................35
4.11. Indebtedness......................................................................................35
4.12. Management Agreements.............................................................................36
4.13. Subsidiaries and Investments......................................................................36
4.14. ERISA.............................................................................................36
4.15. Fees and Commissions..............................................................................37
4.16. No Extension of Credit for Securities.............................................................37
4.17. Hazardous Wastes, Substances and Petroleum Products...............................................37
4.18. Solvency..........................................................................................37
4.19. Year 2000 Compliance..............................................................................38
4.20. Foreign Assets Control Regulations................................................................38
4.21. Investment Company Act............................................................................38
SECTION FIVE - CONDITIONS........................................................................................39
5.1. First Advance.....................................................................................39
5.2. Subsequent Advances...............................................................................40
5.3. Additional Condition to Banks' Obligations........................................................40
SECTION SIX - AFFIRMATIVE COVENANTS..............................................................................41
6.1. Existence and Good Standing.......................................................................41
6.2. Quarterly Financial Statements....................................................................41
6.3. Annual Financial Statements.......................................................................41
6.4. Annual Budget.....................................................................................41
6.5. Public Information................................................................................42
6.6. Books and Records.................................................................................42
6.7. Properties; Insurance.............................................................................42
6.8. Notices to Banks..................................................................................42
6.9. Taxes.............................................................................................42
6.10. Costs and Expenses................................................................................42
6.11. Compliance; Notification..........................................................................43
6.12. ERISA.............................................................................................44
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6.13. Capitalization Ratio..............................................................................44
6.14. Fixed Charge Coverage Ratio.......................................................................44
6.15. Leverage Ratio....................................................................................44
6.16. Management Changes................................................................................44
6.17. Subsequent Credit Terms...........................................................................45
6.18. Use of Proceeds...................................................................................45
6.19. Successor Agent...................................................................................45
6.20. Transactions Among Affiliates.....................................................................45
6.21. Joinder of Subsidiaries...........................................................................45
6.22. Year 2000 Compliance..............................................................................45
6.23. Supporting Information............................................................................46
6.24. Other Information.................................................................................46
SECTION SEVEN - NEGATIVE COVENANTS...............................................................................46
7.1. Indebtedness......................................................................................46
7.2. Guaranties........................................................................................47
7.3. Loans.............................................................................................47
7.4. Liens and Encumbrances............................................................................47
7.5. Additional Negative Pledge........................................................................47
7.6. Restricted Payments...............................................................................48
7.7. Transfer of Assets................................................................................48
7.8. Acquisitions and Investments......................................................................48
7.9. Use of Proceeds...................................................................................49
7.10. Amendment of Documents............................................................................49
7.11. Payment of Senior Notes...........................................................................49
SECTION EIGHT - RIGHT OF SETOFF..................................................................................49
SECTION NINE - DEFAULT...........................................................................................50
9.1. Events of Default.................................................................................50
9.2. Remedies..........................................................................................51
SECTION TEN - THE BANKS..........................................................................................52
10.1. Application of Payments...........................................................................52
10.2. Setoff............................................................................................52
10.3. Modifications and Waivers.........................................................................52
10.4. Obligations Several...............................................................................53
10.5. Banks' Representations............................................................................53
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10.6. Investigation.....................................................................................53
10.7. Powers of Agent; Rights and Duties of Documentation Agent.........................................53
10.8. General Duties of Agent, Immunity and Indemnity...................................................53
10.9. Responsibility for Representations or Validity, etc...............................................53
10.10. Action on Instruction of Banks; Right to Indemnity................................................54
10.11. Employment of Agents..............................................................................54
10.12. Reliance on Documents.............................................................................54
10.13. Agent's Rights as a Bank..........................................................................54
10.14. Expenses..........................................................................................54
10.15. Resignation of Agent..............................................................................54
10.16. Successor Agent...................................................................................55
10.17. Collateral Security...............................................................................55
10.18. Enforcement by Agent..............................................................................55
SECTION ELEVEN - GUARANTY........................................................................................55
11.1. Guaranty..........................................................................................55
11.2. Bankruptcy........................................................................................55
11.3. Nature and Term of Guaranty.......................................................................56
11.4. Rights and Remedies of Agent......................................................................56
11.5. Actions by Agent Not Affecting Guaranty...........................................................56
11.6. Payment in Accordance with Promissory Notes and Credit Agreement..................................56
11.7. Payments Under Guaranty...........................................................................57
11.8. Waivers and Modifications.........................................................................57
11.9. Waiver............................................................................................57
11.10. Subordination of Rights of Subrogation............................................................57
11.11. No Setoff by Guarantors...........................................................................58
11.12. Continuing Guaranty; Transfer of Promissory Note..................................................58
11.13. Representations and Warranties; Covenants.........................................................58
SECTION TWELVE - MISCELLANEOUS...................................................................................58
12.1. Indemnification...................................................................................58
12.2. Participations and Assignments....................................................................59
12.3. Binding and Governing Law.........................................................................59
12.4. Survival..........................................................................................59
12.5. No Waiver; Delay..................................................................................60
12.6. Modification......................................................................................60
12.7. Headings..........................................................................................60
12.8. Notices...........................................................................................60
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12.9. Payment on Non-Business Days......................................................................60
12.10. Time of Day.......................................................................................60
12.11. Severability......................................................................................60
12.12. Counterparts......................................................................................60
12.13. Consent to Jurisdiction and Service of Process....................................................61
12.14. WAIVER OF JURY TRIAL..............................................................................61
12.15. ACKNOWLEDGMENTS...................................................................................61
12.16. Complete Agreement................................................................................61
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LIST OF EXHIBITS
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Schedule 1: The Subsidiaries that are Borrowers under this Agreement
Schedule 2: The Subsidiaries that are Guarantors under this Agreement
Schedule 3: The Lenders, their respective addresses and Maximum Principal
Amounts
Exhibit A: Advance/Credit Request Form
Exhibit B: Form of Promissory Note(s)
Exhibit C: Funding Costs and Loss of Earnings Calculation
Exhibit D: Agent's Letter of Credit Application
Exhibit E: Disclosure Pursuant to Representations and Warranties
Exhibit F: Form of Covenant Compliance Certificate
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
----------------
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
"Agreement") is made this 31st day of December, 1998, by and among SUNSOURCE
INC. (the "Company"), a Delaware corporation with offices at 3000 One Logan
Square, Philadelphia, Pennsylvania 19103, the subsidiaries of the Company
identified on Schedule 1 attached hereto on a joint and several basis
(individually and collectively with the Company, the "Borrowers") and the
subsidiaries of the Company identified on Schedule 2 attached hereto
(individually and collectively, the "Guarantors"); and FIRST UNION NATIONAL
BANK, a national banking association and successor by merger to CoreStates Bank,
N.A. with offices at 1339 Chestnut Street, Philadelphia, Pennsylvania 19107, for
itself and as administrative agent for the Banks identified below ("Agent"); THE
BANK OF NOVA SCOTIA, a Canadian chartered bank, with offices at 1 Liberty Plaza,
New York, New York 10006 (the "Documentation Agent"), and the banks identified
on Schedule 3 attached hereto (the Agent, the Documentation Agent and the banks
identified on Schedule 3, each individually a "Bank" and collectively the
"Banks").
W I T N E S S E T H:
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WHEREAS, the Company is a Delaware corporation, and each
Borrower (other than the Company) is either a direct or indirect subsidiary of
the Company;
WHEREAS, the Company, the Agent, the Documentation Agent, Fuji
Bank, Limited, New York Branch ("Fuji") and the Banks (the "Existing Banks") are
parties to that certain Amended and Restated Credit Agreement dated September
30, 1997 (the "Existing Credit Agreement"), and SunSub A Inc. ("SunSub A") and
SunSub B Inc. ("SunSub B") are guarantors under the Existing Credit Agreement;
WHEREAS, the Company issued Sixty Million Dollars
($60,000,000) in privately-placed notes pursuant to a Note Purchase Agreement
dated September 30, 1997 (as amended, the "Existing Note Purchase Agreement");
WHEREAS, Junior Subordinated Debentures (as defined herein)
issued by the Company pursuant to the 1997 Conversion (as defined herein) are
the assets of SunSource Capital Trust (the "Trust"), a Delaware statutory
business trust, and the subject of a Reassignment and Reassumption Agreement as
part of the 1998 Conversion (as defined herein);
WHEREAS, payments of interest and principal on the Junior
Subordinated Debentures to the Trust are used to make distributions on the Trust
Preferred Securities and Trust Common Securities in accordance with the terms
set forth in the Declaration of Trust of the Trust and the "Terms of Common
Securities" for the Trust and "Terms of Preferred Securities" for the Trust;
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WHEREAS, SunSource Investment Company, Inc. ("SSICI") is a
newly-formed, wholly-owned holding company of the Company;
WHEREAS, SunSub A will become a direct wholly-owned subsidiary
of SSICI, which is a direct subsidiary of the Company in the 1998 Conversion;
WHEREAS, SunSub B has agreed to merge with and into SunSub A,
which will cause the existence of SDI Operating Partners, L.P., a Delaware
limited partnership and a borrower under the Existing Credit Agreement ("SDI"),
and its general partner, SDI Partners I, L.P., a Delaware limited partnership
and a guarantor under the Existing Credit Agreement ("SDIPI"), to cease and the
assets and liabilities of SDI to be owned by SunSub A;
WHEREAS, SunSub A is forming four wholly-owned subsidiaries
and contribute the assets and liabilities of SDI to them (the "1998
Conversion");
WHEREAS, the Company is a wholesale distributor of industrial
products and services in the United States; and it is organized in three
businesses: industrial services, hardware merchandising and glass merchandising;
WHEREAS, pursuant to the 1998 Conversion, various operating
divisions within the Company will be formed into separate legal entities, which
will be direct and indirect wholly-owned subsidiaries of SunSub A;
WHEREAS, on the Effective Date, Sun Trust Bank, Atlanta is
purchasing Three Million Dollars ($3,000,000) of the interest of Fuji, which was
a Bank under the Existing Credit Agreement and, the Commitment, which was Ninety
Million Dollars ($90,000,000) under the Existing Credit Agreement will decrease
to Seventy-Five Million Dollars ($75,000,000);
WHEREAS, PNC Bank, National Association ("PNC"), may, upon the
terms and conditions set forth herein, join in this Agreement as a Bank, and the
Commitment will thereupon increase by up to an additional FIFTEEN MILLION
DOLLARS ($15,000,000);
WHEREAS, in connection with the 1998 Conversion, Borrowers
desire to amend and restate the terms of the revolving credit facility under the
Existing Credit Agreement, which as of the Effective Date will be in the amount
of SEVENTY-FIVE MILLION DOLLARS ($75,000,000), and which may be increased by up
to an additional FIFTEEN MILLION DOLLARS ($15,000,000) upon the joinder of PNC
and the fulfillment of the terms and conditions set forth herein; and
WHEREAS, the Banks are willing to amend and restate the terms
of the Existing Credit Agreement, which as of the Effective Date will be in the
amount of SEVENTY-FIVE MILLION DOLLARS ($75,000,000), and which may be increased
by up to an additional
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FIFTEEN MILLION DOLLARS ($15,000,000) upon the joinder of PNC and the
fulfillment of the terms and conditions set forth herein, subject to the terms
and conditions hereof.
NOW THEREFORE, in consideration of the foregoing background
and the promises and the agreements hereinafter set forth, and intending to be
legally bound hereby, the parties hereto agree as follows:
SECTION ONE
DEFINITIONS
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1.1. Definitions. When used in this Agreement, the following terms shall have
the respective meanings set forth below. Certain terms relating to interest
rates are defined in Paragraph 2.6 and shall have the respective meanings set
forth therein.
"1997 Conversion" means the conversion of SunSource L.P., a
Delaware limited partnership, to the corporate form of SunSource Inc., a
Delaware corporation, as set forth in SunSource Inc.'s Registration Statement on
Form S-4, filed with the Securities and Exchange Commission on December 31,
1996, as amended.
"1998 Conversion" has the meaning set forth in the recitals of
this Agreement.
"Accumulated Funding Deficiency" has the meaning ascribed to
that term in Section 302 of ERISA.
"Adjusted EBITDAR" means, for any fiscal period of SunSource
Inc. and its Consolidated Subsidiaries, EBITDA plus rent expense (as determined
in accordance with GAAP) minus Capital Expenditures.
"Advance/Credit Request Form" means the certificate in the
form attached hereto as Exhibit A to be delivered by the Company to Agent as a
condition of each Advance and the issuance of each Letter of Credit.
"Advance" means a borrowing under the Commitment pursuant to
Paragraph 2.7 hereof.
"Affiliate" means: (i) any person who or entity which directly
or indirectly owns, controls or holds ten percent (10%) or more of the
outstanding common stock in the Company; (ii) any entity of which ten percent
(10%) or more of the outstanding common stock or beneficial interest is directly
or indirectly owned, controlled, or held by the Company or an Affiliate; (iii)
any entity which directly or indirectly is under common control with the Company
or any Affiliate; (iv) any officer, director or partner of the Company or any
Affiliate; or (v) any immediate family member of any person who is an Affiliate.
For purposes of this definition, the
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term "control" means the possession, directly or indirectly of the power to
direct or cause the direction of the management and policies of an entity,
whether through the ownership of voting securities, by contract, or otherwise.
"Agent" means First Union National Bank, successor by merger
to CoreStates Bank, N.A., in its capacity as administrative agent for the Banks
hereunder, and its successors and assigns in such capacity.
"Agreement" means this Second Amended and Restated Credit
Agreement and all exhibits and schedules hereto, as each may be amended,
modified or supplemented from time to time.
"Bank" means individually, and "Banks" means collectively, the
banks identified on Schedule 3 attached hereto as such Schedule may be amended
from time to time, their respective successors and assigns and any additional
banks which become parties to this Agreement after the date hereof in accordance
with Paragraph 2.1(d)(i) or 12.2 hereof, but shall not include any such Bank
which is replaced pursuant to the terms hereof after the date hereof.
"Banks' Applicable Share" means, as of any date of
determination, with respect to any Net Cash Proceeds which are required or
permitted to be used by Borrowers to reduce the Commitment pursuant to this
Agreement, (i) the portion of such Net Cash Proceeds which bears the same
relationship to the entire amount of such Net Cash Proceeds as the amount of the
Commitment on the date of determination bears to the sum of the outstanding
principal amount of the Senior Notes plus the amount of the Commitment on the
date of determination, plus (ii) such amount of the Net Cash Proceeds which has
been offered to the holders of the Senior Notes pursuant to Paragraph 4.8 of the
Note Purchase Agreement as a prepayment, but as to which such offer has not been
accepted.
"Borrowers" means, jointly and severally, SunSource Inc., a
Delaware corporation, and its Subsidiaries as set forth on Schedule 1 hereto.
"Business Day" means any day not a Saturday, Sunday or a day
on which banks are required or permitted to be closed under the laws of the
Commonwealth of Pennsylvania.
"Capital Expenditures" means, for any period, amounts accrued
or incurred for fixed assets or improvements, replacements, substitutions or
additions thereto, which have a useful life of more than one (1) year, including
direct or indirect acquisition costs of such assets.
"Capital Leases" means capital leases and subleases, as
defined in Statement 13 of the Financial Accounting Standards Board dated
November 1976, as amended and updated from time to time.
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"Capitalization Ratio" means, as of any date of determination,
the ratio of Funded Debt to Total Capital.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendment
and Reauthorization Act of 1986, as amended from time to time.
"Change of Control" means if at any time after the date of
this Agreement: (i) any person or group within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "1934 Act") and the
rules and regulations promulgated thereunder shall have beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act), directly or indirectly, of
securities of the Company (or other securities convertible into such securities)
representing twenty percent (20%) or more of the combined voting power of all
securities of the Company entitled to vote in the election of directors, other
than the management group of Norman V. Edmonson, Donald T. Marshall, John P.
McDonnell, Harold J. Cornelius, Max W. Hillman and Joseph M. Corvino
(hereinafter called a "Controlling Person"); or (ii) a majority of the Board of
Directors of the Company shall cease for any reason to consist of (1)
individuals who on the date hereof are serving as directors of the Company or
(2) individuals who subsequently become members of the Board if such
individuals' nomination for election or election to the board is recommended or
approved by a majority of the Board of Directors of the Company. For purposes of
clause (i) above, a person or group shall not be a Controlling Person if such
person or group holds voting power in good faith and not for the purpose of
circumventing Paragraph 9.1(f) as an agent, bank, broker, nominee, trustee, or
holder of revocable proxies given in response to a solicitation pursuant to the
1934 Act, for one or more beneficial owners who do not individually, or, if they
are a group acting in concert, as a group, have the voting power specified in
clause (b)(i) above.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time and regulations in effect from time to time.
"Commitment" means the sum of (i) the maximum aggregate
principal amount which Banks, on a several basis, have agreed to advance under
Section Two hereof, including the Swing Line Commitment (subject to the
$5,000,000 sublimit set forth therein) and (ii) the available amount under
Letters of Credit issued pursuant to Section Three hereof (subject to the
$20,000,000 sublimit set forth therein) in which Banks have agreed to
participate, such Commitment being in the aggregate, on the Effective Date,
Seventy-Five Million Dollars ($75,000,000), subject to increase by up to an
additional Fifteen Million Dollars ($15,000,000) pursuant to the terms of
Paragraph 2.1(d) hereof.
"Default" means an event or circumstance which, with the
giving of notice or the passage of time or both, would constitute an Event of
Default.
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"Distributions Paid on Trust Securities" means all amounts
payable by the Trust to the holders of the Trust Preferred Securities and Trust
Common Securities.
"Documentation Agent" shall mean The Bank of Nova Scotia.
"EBITDA" means, for any fiscal period of SunSource Inc. and
its Consolidated Subsidiaries, Net Income plus (i) Interest Expense (including
all interest paid on the Junior Subordinated Debentures (whether paid in cash or
in kind)), (ii) all provisions for income taxes, (iii) depreciation and
amortization expense, and (iv) extraordinary losses, minus extraordinary gains,
as each such item is determined in accordance with GAAP.
"Effective Date" means the date that all of the conditions set
forth in Paragraph 5.1 hereof have been satisfied which is 11:59 p.m. on
December 31, 1998.
"Environmental Control Statutes" means any federal, state or
local laws governing control, storage, removal, spill, release or discharge of
Hazardous Substances including without limitation CERCLA, the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and the Hazardous and Solid Waste Amendments of 1984, the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1976, the Hazardous
Materials Transportation Act, the Emergency Planning and Community Right to Know
Act of 1986, the National Environmental Policy Act of 1975, the Oil Pollution
Act of 1990, any similar or implementing state law, in each case, including all
amendments thereto and all rules and regulations promulgated thereunder and
permits issued in connection therewith.
"Environmental Material Adverse Effect" means a material
adverse effect on the business, financial condition or prospects of Borrowers,
taken as a whole, greater than or equal to $1,000,000 per single event or
$5,000,000 in the aggregate for all such environmental events as a result of any
condition, circumstance or contingency.
"EPA" means the United States Environmental Protection Agency,
or any successor thereto.
"ERISA Affiliate" means, when used with respect to an Employee
Benefit Plan, ERISA, the PBGC or a provision of the Code pertaining to employee
benefit plans, any Person that is a member of any group of organization within
the meaning of Code Section 414(b), (c), (m) or (o) of which any Borrower or
Guarantor is a member.
"ERISA" means the Employee Retirement Income Security Act of
1974, all amendments thereto and all rules and regulations in effect at any
time.
"Event of Default" means an event described in Paragraph 9.1
hereof.
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"Existing Credit Agreement" means that certain Amended and
Restated Credit Agreement among the Company, the Agent, the Banks and SunSub A
and SunSub B, as guarantors, dated September 30, 1997.
"Existing Note Purchase Agreement" means that Note Purchase
Agreement dated September 30, 1997, as amended, issued by SDI and its
Subsidiaries set forth on Schedule I thereto for Sixty Million Dollars
($60,000,000) in privately-placed notes.
"Financial Standby Letter of Credit" means a Letter of Credit
pursuant to which the beneficiary may draw following a default under an
obligation to pay money to the beneficiary.
"Fixed Charges" means, at any date of determination for the
most recently ended Rolling Period of SunSource Inc. and its Consolidated
Subsidiaries, the sum of (i) Interest Expense (including interest paid on the
Junior Subordinated Debentures to the extent paid in cash); (ii) rent expense;
(iii) scheduled maturities paid on Funded Debt (excluding the Loan); and (iv)
cash dividends paid by the Company, all as determined in accordance with GAAP.
"Fixed Charge Coverage Ratio" means, at any date of
determination, the ratio of Adjusted EBITDAR to Fixed Charges for the most
recently ended Rolling Period.
"Funded Debt" means, at any date of determination of SunSource
Inc. and its Consolidated Subsidiaries, the sum of the following in such period,
without duplication: (i) Indebtedness for borrowed money; (ii) Indebtedness
evidenced by notes, debentures or similar instruments; (iii) Capital Leases;
(iv) guarantees of Indebtedness or Capital Leases; and (v) Letters of Credit and
letter of credit reimbursement obligations. For purposes of this definition,
Funded Debt does not include the Junior Subordinated Debentures.
"GAAP" shall mean generally accepted accounting principles,
which shall be (i) applied in accordance with the Statement on Auditing
Standards No. 69 "The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles in the Independent Auditor's Report,"(SAS 69) or
superseding pronouncements, issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants and (ii) in the form and
content of any requirements for financial statements filed with the Securities
and Exchange Commission, in all cases applied on a consistent basis. The
requirement that such principles be applied on a consistent basis shall mean
that the accounting principles observed in a current period are comparable in
all material respects to those applied in a preceding period except such changes
in accounting principles approved by the Company's outside auditors.
"Guarantors" means, individually, and individually and
collectively, those Subsidiaries set forth on Schedule 2 attached hereto.
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"Hazardous Substance" means petroleum products and items
defined in the Environmental Control Statutes as "hazardous substances",
"hazardous wastes", "pollutants" or "contaminants" and any other toxic,
reactive, corrosive, carcinogenic, flammable or hazardous substance or other
pollutants.
"Indebtedness" of any person means and includes all
obligations of such person which, in accordance with GAAP, shall be classified
on a balance sheet of such person as liabilities of such person and in any event
shall include, without duplication, all (i) obligations of such person for
borrowed money or which have been incurred in connection with acquisition of
property or assets, (ii) obligations secured by any lien upon property or assets
owned by such person, notwithstanding that such person has not assumed or become
liable for the payment of such obligations, (iii) obligations created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such person, notwithstanding the fact that the rights and
remedies of the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property, (iv) Capital Leases,
(v) guarantees and (vi) letters of credit and letter of credit reimbursement
obligations.
"Interest Expense" means for any fiscal period, the interest
expense of SunSource Inc. and its Consolidated Subsidiaries, as determined in
accordance with GAAP for such period.
"Indenture" means the Indenture dated as of September 5, 1997
between the Company and Bank of New York, as trustee, providing for the issuance
of the Junior Subordinated Debentures.
"Junior Subordinated Debentures" means the unsecured
subordinated obligations of the Company deposited in the Trust as trust assets
upon the 1997 Conversion, the terms of which are included in the Indenture.
"Letters of Credit" means each Performance Standby Letter of
Credit and each Financial Standby Letter of Credit, issued pursuant to Section
Three of this Agreement by the Agent and in which the Banks shall participate,
with such terms as may be agreed by Borrowers, the applicable beneficiary and
Agent at the time of issuance thereof.
"Leverage Ratio" means as of any date of determination of
SunSource Inc. and its Consolidated Subsidiaries, the ratio of Funded Debt as of
such date to EBITDA for the most recently ended Rolling Period.
"Loan" or "Loans" means the outstanding principal balance of
Indebtedness for Advances, plus the outstanding principal balance of
Indebtedness for Advances on Swing Line Loans under Paragraph 2.13 of this
Agreement, plus the unreimbursed amount of any draws on Letters of Credit, in
each case, together with interest accrued thereon and fees and expenses incurred
in connection therewith.
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"Local Authorities" means individually and collectively the
state and local governmental authorities and administrative agencies which
govern the commercial or industrial facilities or businesses owned or operated
by Borrowers.
"Material Adverse Change" means a material adverse change in
the business, financial condition or prospects of Borrowers taken as a whole as
a result of any condition, circumstance or contingency, either singly or in the
aggregate.
"Material Adverse Effect" means a material adverse effect on
the business, financial condition or prospects of Borrowers taken as a whole as
a result of any condition, circumstance or contingency, either singly or in the
aggregate.
"Material Subsidiary" means any Subsidiary which either: (i)
comprised five percent (5%) or more of the assets of SunSource Inc. and its
Consolidated Subsidiaries as of the most recent date for which a balance sheet
has been delivered (or is required to have been delivered) hereunder, or (ii)
was responsible for five percent (5%) or more of EBITDA for the most recent
Rolling Period.
"Maximum Principal Amount" means the maximum principal amount
of the Commitment which each Bank has agreed to lend or to participate in the
issuance of Letters of Credit as set forth on Schedule 3 attached hereto.
"Net Cash Proceeds" of (A) any sale of assets shall mean the
cash proceeds received by the seller in such a transaction less (i) the
reasonable costs of the transaction, (ii) indebtedness secured by any lien on
such assets which is paid from such proceeds and (iii) any tax payment required
to be made as a result of the gain (if any) on such sale; and (B) any other
prepayment of the Loan and Senior Notes shall mean the total amount of such
payment to the Banks and the holder of the Senior Notes.
"Net Income" means, for any period, SunSource Inc. and its
Consolidated Subsidiaries' gross revenue for such period (excluding
extraordinary gains and losses) less all expenses and other proper charges
(including taxes on income), in each case as determined in accordance with GAAP.
"Net Worth" means, as of any date of determination, Total
Assets minus Total Liabilities in SunSource Inc. and its Consolidated
Subsidiaries, as stated on the financial statements most recently delivered to
Banks pursuant to Paragraphs 6.2 and 6.3 hereof, as applicable.
"Note Purchase Agreement" means the Amended and Restated Note
Purchase Agreement dated as of the date hereof between Borrowers and Teachers
Insurance and Annuity Association of America providing for the issuance of the
Senior Notes, as amended, modified or supplemented from time to time pursuant to
the terms thereof and hereof.
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"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Performance Standby Letter of Credit" means a Letter of
Credit pursuant to which the beneficiary may draw following a default by
Borrowers under an obligation, other than an obligation to pay money, owed to
the beneficiary.
"Permitted Investments" means (i) investments in commercial
paper maturing in 180 days or less from the date of issuance which is rated Al
or better by Standard & Poor's Corporation or Pl or better by Moody's Investors
Services, Inc.; (ii) investments in direct obligations of the United States of
America or obligations of any agency thereof which are guaranteed by the United
States of America, provided that such obligations mature within twelve (12)
months of the date of acquisition thereof; (iii) investments in certificates of
deposit maturing within one (1) year from the date of acquisition thereof issued
by a bank or trust company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits aggregating at
least $1,000,000,000 and the long-term deposits of which are rated Al or better
by Moody's Investors Services, Inc. or equivalent by Standard & Poor's
Corporation; (iv) money market funds invested in vehicles of the types set forth
in subsections (i) through (iii); and (v) other investments not to exceed
$500,000 in the aggregate made from the date hereof to the Termination Date.
"Plan" means any pension benefit or welfare benefit plan as
defined in section 3(1), (2) or (3) of ERISA covering employees of Borrowers or
any ERISA Affiliate.
"Pro Rata Share" means as to a Bank the ratio which the
outstanding principal balance of its portion of the Loan hereunder bears to the
aggregate outstanding principal balance of the Loan at any time; or if no
Indebtedness is outstanding hereunder, its percentage share of the Commitment.
"Promissory Notes" means collectively the Promissory Notes in
the form of Exhibit B attached hereto to be delivered by Borrowers to Banks
pursuant to Paragraph 5.1(a) hereof, as the same may be amended or modified or
extended or restated from time to time.
"Required Banks" means those Banks (which may include Agent)
holding sixty-six and two-thirds percent (66-2/3%) or more of the amount of the
Commitment or, if Indebtedness is outstanding hereunder, sixty-six and
two-thirds percent (66-2/3%) or more of the Loan.
"Restricted Payments" means (i) any dividend or distribution
on, or the purchase, redemption, prepayment or other retirement of the common
securities of the Company; and (ii) the payment of principal or interest on or
the purchase, redemption, prepayment or other retirement of the Junior
Subordinated Debentures.
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"Rolling Period" means, as of any date, the most recent four
(4) consecutive fiscal quarters of SunSource Inc. and its Consolidated
Subsidiaries completed on or before such date.
"Sale of Material Assets" means any sale, transfer or other
disposition of any Borrower's or any Subsidiary's assets in transactions (not
related to the 1998 Conversion) in which the total consideration paid or payable
to Borrowers (including without limitation all cash, liabilities assumed and the
fair market value of any stock provided in such transaction) is, in the
aggregate, as to all such transactions after the date of this Agreement, greater
than Fifteen Million Dollars ($15,000,000).
"SDIPI" means SDI Partners I, L.P., the general partner of SDI
Operating Partners, L.P.
"Senior Notes" means the Company's 7.66% Senior Notes due 2002
issued in an original aggregate principal amount of Sixty Million Dollars
($60,000,000) pursuant to the Note Purchase Agreement.
"Subsidiary" or "Subsidiaries" means any corporation of which
the Company, directly or indirectly, owns more than fifty percent (50%) of any
class or classes of securities. Those Subsidiaries of the Company set forth on
Schedule 1 attached hereto are, collectively with the Company, the Borrowers,
and those Subsidiaries of the Company set forth on Schedule 2 attached hereto
are the Guarantors.
"SunSource Inc. and its Consolidated Subsidiaries" means the
Company and its consolidated subsidiaries as defined in accordance with GAAP.
"Swing Line Commitment" means the obligation of the Agent to
make the Swing Line Loan pursuant to Paragraph 2.13 hereof in the aggregate
principal amount of Five Million Dollars ($5,000,000).
"Swing Line Loan" means an Advance under the Swing Line
Commitment made by the Agent on behalf of the Banks pursuant to Paragraph 2.13
hereof.
"Termination Date" means the earlier of (i) September 30, 2002
or (ii) the date on which the Commitment is terminated pursuant to Paragraphs
2.8 and 9.2 hereof.
"Total Assets" means, as of any date of determination, all
assets of SunSource Inc. and its Consolidated Subsidiaries, as set forth on
SunSource Inc. and its Consolidated Subsidiaries' financial statements most
recently delivered to Banks pursuant to Paragraphs 5.1, 6.2 and 6.3 hereof, as
defined in accordance with GAAP.
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"Total Capital" means, at any date of determination of
SunSource Inc. and its Consolidated Subsidiaries, the sum of the following: (i)
Funded Debt; (ii) the outstanding principal amount of Junior Subordinated
Debentures; and (iii) Net Worth.
"Total Liabilities" means, as of any date of determination,
all liabilities and deferred items of SunSource Inc. and its Consolidated
Subsidiaries, as set forth on SunSource Inc. and its Consolidated Subsidiaries'
financial statements most recently delivered to Banks pursuant to Paragraphs
5.1, 6.2 and 6.3 hereof, as defined in accordance with GAAP.
"Trade Notes" means Indebtedness of the Company secured by the
Company's inventory of glass and window products pursuant to financing plans in
the normal course of business for value received.
"Trust" shall mean SunSource Capital Trust, a Delaware
statutory business trust, which is the issuer of the Trust Preferred Securities
to the former holders of the A interests in SunSource L.P. and the Trust Common
Securities to SunSource Inc.
"Trust Preferred Securities" means the preferred securities
issued by the Trust pursuant to the 1997 Conversion.
"Trust Common Securities" means the common securities issued
by the Trust pursuant to the 1997 Conversion.
"Year 2000 Compliant" means, as to any computer system or
application or micro-processor dependent good or equipment, that it is designed
and intended to be used prior to, during and after the calendar year 2000 AD and
that it will operate as designed and intended during each such time period
without error relating to date data or date information, specifically including
any error relating to, or the product of, date data or date information that
represents or references different centuries or more than one century.
1.2. Rules of Construction.
(a) GAAP. Except as otherwise provided herein,
financial and accounting terms used in the foregoing definitions or elsewhere in
this Agreement shall be defined in accordance with GAAP. If Borrowers or
Required Banks determine that a change in GAAP from that in effect on the date
hereof has altered the treatment of certain financial data to their detriment
under this Agreement, such party may, by written notice to the other within
thirty (30) days after the effective date of such change in GAAP, request
renegotiation and the parties agree to negotiate in good faith to modify such
financial covenants affected by such change to reflect equitably such change. If
Borrowers and Required Banks have not agreed on revised covenants within thirty
(30) days after the delivery of such notice, then, for purposes of this
Agreement, GAAP will mean generally accepted accounting principles on the date
just prior to the date on which the change occurred that gave rise to the
notice.
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(b) Use of Term "Consolidated". Any term defined in
Paragraph 1.1 hereof, when modified by the word "Consolidated," shall have the
meaning given to such term herein as to the Company on a consolidated basis with
its Subsidiaries and all other entities whose accounts, financial results or
position, for either federal income tax or financial accounting purposes, are
consolidated with those of the Company in accordance with GAAP.
SECTION TWO
REVOLVING CREDIT LOAN
---------------------
2.1. (a) The Facility. From time to time prior to the
Termination Date, subject to the provisions below, each Bank on a several basis
up to its Maximum Principal Amount shall make Advances to Borrowers on a joint
and several basis and Borrowers may repay and reborrow under the Commitment an
aggregate principal amount not to exceed at any time outstanding the aggregate
Commitment as from time to time in effect less (i) outstanding Advances, (ii)
the amount of any Swing Line advances outstanding under Paragraph 2.13 hereof;
and (iii) the aggregate amount of all amounts available under and unreimbursed
draws with respect to Letters of Credit.
(b) Amendment and Restatement. This Agreement amends and
restates, replaces and supersedes the Existing Credit Agreement; provided,
however, that the execution and delivery of this Agreement shall not in any
circumstance be deemed to have terminated, extinguished, or discharged the
Company's Indebtedness under the Existing Credit Agreement, all of which
Indebtedness and the guaranties therefor shall continue under and be governed by
this Agreement and the other Loan Documents. This Agreement IS NOT A NOVATION.
Subject to receipt by Agent of an appropriately completed Advance/Credit Request
Form, all amounts outstanding under the Existing Credit Agreement are and shall
be deemed to be outstanding under this Agreement as of the Effective Date.
(c) Authority of the Company. Each of the Borrowers
hereby irrevocably authorizes and requests that the Company execute all
Advance/Credit Request Forms, make all elections as to interest rates and take
any other actions required or permitted of Borrowers hereunder, on its
respective behalf, in each case with the same force and effect as if such
Borrower had executed such Advance/Credit Request Form, made such election or
taken such other action itself.
(d) Potential Increase of Commitment.
(i) For a period of up to thirty (30) days after the
Effective Date, upon the consent of Agent and Borrowers, PNC may join in and
become a Bank under this Agreement. Upon such joinder, the Commitment shall be
increased by up to an additional Fifteen Million Dollars ($15,000,000) (the
"Additional Commitment"). Upon such joinder, PNC
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and Borrowers shall execute appropriate joinder documentation (including without
limitation, promissory notes, resolutions, certificates and opinions) in form
and substance acceptable to Agent.
(ii) Banks (excluding PNC), shall have no obligation
to increase their Pro Rata Share of the Commitment upon the joinder of PNC
pursuant to clause (i) above. Banks hereby acknowledge that the Commitment may
be increased by the Additional Commitment, and that no approval of any Bank
(other than Agent) is required for such increase.
2.2. Promissory Notes. The Indebtedness of Borrowers to each
Bank under the Loan will be evidenced by a Promissory Note executed by Borrowers
in favor of such Bank in the form of Exhibit B hereto. The original principal
amount of each Bank's Promissory Note will be the amount identified in Schedule
3 attached hereto as its respective Maximum Principal Amount; provided, however,
that notwithstanding the face amount of each such Promissory Note, Borrowers'
liability under each such Promissory Note shall be limited at all times to its
actual Indebtedness, principal, interest and fees, then outstanding hereunder.
2.3. Banks' Participation. Banks shall participate in the Loan
in the Maximum Principal Amounts and percentages set forth in Schedule 3
attached hereto.
2.4. Use of Proceeds. Funds advanced under the Loan shall be
used by the Borrowers solely for general corporate purposes, including working
capital, acquisition financing and related reasonable transaction expenses.
2.5. Repayment. The aggregate outstanding principal balance
under the Loan on the Termination Date shall be due and payable in full on the
Termination Date, subject to earlier payments required pursuant to Paragraph
2.8(c) and (d) hereof in connection with reductions of the amount of the
Commitment (including voluntary reductions, reductions by Banks following an
Event of Default and reductions required in connection with certain sales of
assets). Notwithstanding the immediately preceding sentence, the aggregate
outstanding balance of the Promissory Notes shall be due and payable on the date
of Banks' notice to Borrowers of the occurrence of an Event of Default,
termination of the Commitment and acceleration of the Loan.
2.6. Interest. Portions of the Loan shall bear interest on the
outstanding principal amount thereof in accordance with the following
provisions:
Definitions. As used in this Paragraph 2.6, the following
words and terms shall have the meanings specified below:
"Adjusted Libor Rate" shall mean, for any Interest Period, as
applied to a Portion, the rate per annum (rounded upwards, if necessary to the
next 1/100 of 1%) determined pursuant to the following formula:
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Adjusted Libor Rate = Libor Rate
--------------------------
1 - Reserve Percentage
For purposes hereof, "Libor Rate" shall mean, as applied to a Portion, the rate
which appears on the Telerate page 3750 at approximately 9:00 a.m. Philadelphia
time two (2) London Business Days prior to the commencement of such Interest
Period for the offering to leading banks in the London Interbank Market of
deposits in United States Dollars or alternate currency ("Eurodollars") or, if
such rate does not appear on the Telerate page 3750, the rate which appears (or,
if two or more such rates appear, the average rounded up to the nearest 1/100 of
1% of the rates which appear) on the Reuters Screen LIBO Page as of 11:00 a.m.
London time two (2) London Business Days prior to the commencement of the
Interest Period in amounts substantially equal to such Portion as to which
Borrowers may elect the Adjusted Libor Rate to be applicable with a maturity of
comparable duration to the Interest Period selected by Borrowers.
"Applicable Margin" shall mean, with respect to each Portion
bearing interest at the Adjusted Libor Rate, the percentage per annum set forth
in the appropriate column below that corresponds to the Leverage Ratio.
Level Leverage Ratio Applicable Margin
- ----- -------------- -----------------
I less than 3.25 to 1 1.50%
but greater than
or equal to 2.75 to 1
II less than 2.75 to 1 1.25%
but greater than
or equal to 2.25 to 1
III less than 2.25 to 1 1.00%
The Applicable Margin shall adjust automatically, as
appropriate, on the day following delivery of a quarterly Compliance Certificate
in accordance with Paragraph 6.2 or 6.3 hereof, provided, that in the event that
a quarterly compliance certificate has not been delivered within ten (10) days
after the date required by Paragraph 6.2 or 6.3, then the Applicable Margin
shall adjust to Level I as of the latest date of required delivery; provided,
further, however, that the Applicable Margin shall readjust retroactively to the
date such certificate was required to be delivered by Paragraph 6.2 or 6.3 if
the Applicable Margin shall increase based on such Compliance Certificate and
shall readjust on the day after delivery of such delinquent Compliance
Certificate if the Applicable Margin shall decrease or remain the same based on
the ratio set forth in such Compliance Certificate.
"Base Rate" shall mean the highest of (i) the Federal Funds
Rate plus one half of one percent (1/2%) per annum, or (ii) the Prime Rate.
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"Federal Funds Rate" means for any day the effective rate of
interest for such day, as announced from time to time by the Board of Governors
of the Federal Reserve System as shown in publication H.15 as the "Federal Funds
Rate."
"Interest Period" means a period of one (l), two (2), three
(3) or six (6) months' duration, as Borrowers may elect, during which the
Adjusted Libor Rate is applicable; provided, however, that (a) interest shall
accrue from and including the first day of each Interest Period to, but
excluding, the day on which any Interest Period expires; (b) any Interest Period
which would otherwise end on a day which is not a London Business Day shall be
extended to the next succeeding London Business Day unless such London Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding London Business Day; and (c) with respect to an
Interest Period which begins on the last London Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last London Business Day of a calendar month.
"London Business Day" shall mean any Business Day on which
banks in London, England are open for business.
"Portion" shall mean a portion of a Loan as to which Borrowers
have elected a specific interest rate and, in the case of a Portion bearing
interest at a rate based upon the Adjusted Libor Rate, an Interest Period.
"Prime Rate" shall mean the rate of interest announced by
Agent from time to time as its prime rate.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, comprising Part 204 of Title 12, Code
of Federal Regulations, as amended and as may be amended from time to time, and
any successor thereto.
"Reserve" shall mean, for any day, that reserve (expressed as
a decimal) which is in effect (whether or not actually incurred) with respect to
a Bank on such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor or any other banking authority to which a Bank
is subject including any board or governmental or administrative agency of the
United States or any other jurisdiction to which a Bank is subject), for
determining the maximum reserve requirement (including without limitation any
basic, supplemental, marginal or emergency reserves) for Eurocurrency
liabilities as defined in Regulation D.
"Reserve Percentage" shall mean, for a Bank on any day, that
percentage (expressed as a decimal) prescribed by the Board of Governors of the
Federal Reserve System (or any successor or any other banking authority to which
a Bank is subject, including any board or governmental or administrative agency
of the United States or any other jurisdiction to which a Bank is subject), for
determining the reserve requirement (including without limitation any basic,
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supplemental, marginal or emergency reserves) for deposits of United States
Dollars in a nonUnited States or an international banking office of a Bank used
to fund a Portion bearing interest based on the Adjusted Libor Rate or any loan
made with the proceeds of such deposit. The Adjusted Libor Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
(a) Interest on Loan.
(i) At the Company's election in accordance with
the provisions of Paragraph 2.6(c) below, in the absence of an Event of Default
or Default hereunder, and prior to maturity, any Portion of the Loan shall bear
interest at any one of the following rates:
(A) Base Rate. The Base Rate, such rate to
change when and as the Base Rate changes.
(B) Adjusted Libor-Based Rate. The Adjusted
Libor Rate plus the Applicable Margin.
(ii) Notwithstanding the foregoing, upon the
occurrence and during the continuance of an Event of Default or Default
hereunder, including after maturity and before and after judgment, Borrowers
hereby agree to pay to Banks interest on the outstanding principal balance of
the Loan at the rate of two percent (2%) per annum in excess of the rates then
available to and elected by the Company for each Portion then outstanding, and
with respect to Portions bearing interest based on the Adjusted Libor Rate, at
the end of the applicable Interest Periods and thereafter, such Portions shall
bear interest at the rate of two percent (2%) per annum in excess of the Base
Rate, such rate to change when and as the Base Rate changes.
(b) Procedure for Determining Interest Periods and
Rates of Interest.
(i) If the Company elects the Base Rate to be
applicable to a Portion, the Company must notify Agent of such election prior to
one o'clock (1:00) p.m. Philadelphia time one (1) Business Day prior to the date
of the proposed application of such rate. If the Company elects the Adjusted
Libor Rate to be applicable to a Portion, the Company must notify Agent of (A)
such election and (B) the Interest Period selected prior to one o'clock (1:00)
p.m. Philadelphia time at least three (3) London Business Days prior to such
Advance or the commencement of the proposed Interest Period. If Company does not
provide the applicable notice for the Adjusted Libor Rate, then the Borrowers
shall be deemed to have requested that the Base Rate apply to any Portion as to
which the Interest Period is expiring and to any new Advance of the Loan until
Borrowers shall have given proper notice of a change in or determination of the
rate of interest in accordance with this Paragraph 2.6(b).
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(ii) Borrowers shall not elect more than
five (5) different Portions (other than Portions bearing interest at the Base
Rate) to be applicable to the Loan at one time.
(c) Payment and Calculation of Interest. Interest
shall be due and payable on the last day of each Interest Period for each
Portion bearing interest based on the Adjusted Libor Rate; provided, however,
that with respect to Portions which bear interest at the Adjusted Libor Rate
having Interest Periods in excess of three (3) months, the Borrowers shall pay
interest on the ninetieth (90th) day of the Interest Period and on the last day
of the Interest Period. With respect to Portions which bear interest at the Base
Rate, the Borrowers shall pay interest on the last Business Day of each month
commencing on the first such date after the first Advance which bears interest
at the Base Rate. Interest shall be calculated in accordance with the provisions
of Paragraph 2.6(a) hereof; interest based on the Base Rate shall be calculated
on the basis of the actual number of days elapsed over a year of three hundred
sixty-five (365) or three hundred sixty-six (366) days, as the case may be, and
interest based on the Adjusted Libor Rate shall be calculated on the basis of
the actual number of days elapsed over a year of three hundred sixty (360) days.
(d) Reserves. If at any time when a Portion is
subject to the Adjusted Libor Rate, and a Bank is subject to and incurs a
Reserve, Borrowers hereby agree to pay within five (5) Business Days of demand
thereof from time to time, as billed by Agent on behalf of itself or a Bank,
such additional amount as is necessary to reimburse such Bank for its costs in
maintaining such Reserve to the extent such costs are not reflected in the
Reserve Percentage used to determine the Adjusted Libor Rate. Such amount shall
be computed by taking into account the cost incurred by the Bank in maintaining
such Reserve in an amount equal to such Bank's ratable share of the Portion on
which such Reserve is incurred. The determination by Agent on behalf of any Bank
of such costs incurred and the allocation, if any, of such costs among Borrowers
and other customers which have similar arrangements with such Bank shall be
prima facie evidence of the correctness of the fact and the amount of such
additional costs. Upon notification to Borrowers of any payment required
pursuant to this Paragraph 2.6(d), Borrowers may, subject to the payment of all
amounts due under this provision as of such date and the provisions of Paragraph
2.10, repay the Portion with respect to which such payment is required.
(e) Special Provisions Applicable to Adjusted Libor
Rate. The following special provisions shall apply to the Adjusted Libor Rate:
(i) Change of Adjusted Libor Rate. The Adjusted
Libor Rate may be automatically adjusted by Agent on a prospective basis to take
into account the additional or increased cost of maintaining any necessary
reserves for Eurodollar deposits or increased costs due to changes in applicable
law or regulation or the interpretation thereof occurring subsequent to the
commencement of the then applicable Interest Period, including but not limited
to changes in tax laws (except changes of general applicability in corporate
income tax laws) and changes in the reserve requirements imposed by the Board of
Governors of the Federal Reserve
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System (or any successor), excluding the Reserve Percentage, and any Reserve
which has resulted in a payment pursuant to Paragraph 2.6(d), that increase the
cost to Banks of funding the Loan or a Portion thereof bearing interest at the
Adjusted Libor Rate. Agent shall give the Borrowers notice of such a
determination and adjustment, which determination shall be prima facie evidence
of the correctness of the fact and the amount of such adjustment. Borrowers may,
by notice to Agent, (A) request Agent to furnish to Borrowers a statement
setting forth the basis for adjusting such Adjusted Libor Rate and the method
for determining the amount of such adjustment; and/or (B) repay the Portion of
the Loan with respect to which such adjustment is made, subject to the
requirements of Paragraph 2.10 hereof.
(ii) Unavailability of Eurodollar Funds. In
the event that Borrowers shall have requested the rate based on the Adjusted
Libor Rate in accordance with Paragraph 2.6(b) hereof and any Bank shall have
reasonably determined that Eurodollar deposits equal to the amount of the
principal of the Portion and for the Interest Period specified are unavailable,
or that the rate based on the Adjusted Libor Rate will not adequately and fairly
reflect the cost of making or maintaining the principal amount of the Portion
specified by the Borrowers during the Interest Period specified or that by
reason of circumstances affecting Eurodollar markets, adequate and reasonable
means do not exist for ascertaining the Adjusted Libor Rate applicable to the
specified Interest Period, Agent shall promptly give notice of such
determination to the Borrowers that the rate based on the Adjusted Libor Rate is
not available. A determination by such Bank hereunder shall be prima facie
evidence of the correctness of the fact and amount of such additional costs or
unavailability. Upon such a determination, the Banks' obligation to advance or
maintain Portions at the Adjusted Libor Rate shall be suspended until Agent
shall have notified the Borrowers and Banks that such conditions shall have
ceased to exist, and the Base Rate shall be applicable to all Portions.
(iii) Illegality. In the event that it
becomes unlawful for a Bank to maintain Eurodollar liabilities sufficient to
fund any Portion of the Loan bearing interest at the rate based on the Adjusted
Libor Rate, then such Bank shall immediately notify the Borrowers thereof (with
a copy to Agent) and such Bank's obligations hereunder to make or maintain
Advances bearing interest based on the Adjusted Libor Rate shall be suspended
until such time as such Bank may again cause the rate based on the Adjusted
Libor Rate to be applicable to its share of any Portion of the outstanding
principal balance of the Loan and such Bank's share of any Portion shall then be
subject to the Base Rate.
2.7. Advances.
(a) At the time the Company provides the requisite
notices set forth in Paragraph 2.6(b) hereof relating to the election of
interest rates, the Company shall give Agent written notice of each requested
Advance under the Commitment, specifying the date, amount and purpose thereof.
The Company shall give Agent three (3) London Business Days notice of an Advance
for an Adjusted Libor Rate Loan, one (1) Business Day notice of an Advance for a
Base Rate Loan, and same day notice of an Advance for a Swing Line Loan. Such
notices shall
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be in the form of the Advance/Credit Request Form attached hereto as Exhibit A,
shall be certified by the chief financial officer or controller of the Company
and shall contain the following information and representations, which shall be
deemed affirmed and true and correct as of the date of the requested Advance:
(i) the aggregate amount of the requested
Advance, which for Base Rate Loans and Adjusted Libor Rate Loans shall be in
multiples of $100,000 but not less than the lesser of $2,000,000 or the
unborrowed balance of the Commitment;
(ii) confirmation of the interest rate(s)
the Borrowers have elected to apply to the above Advance and, if more than one
interest rate has been elected, the amount of the Portion as to which each
interest rate shall apply;
(iii) confirmation of Borrowers' compliance
with Paragraphs 6.13 through 6.15 and Section Seven hereof after giving effect
to such Advance of the Loan;
(iv) statements that the representations and
warranties set forth in Section Four hereof are true and correct in all material
respects as of the date thereof; no Event of Default or Default has occurred and
is then continuing; and there has been no Material Adverse Change since the date
of the quarterly and audited annual financial statements most recently delivered
by Borrowers to Banks pursuant to Paragraphs 5.1(e), 6.2 and 6.3 of this
Agreement; and
(b) (i) Upon receiving a request for an Advance
in accordance with subparagraph (a) above, Agent shall request by written notice
to Banks that each Bank advance funds to Agent so that each Bank participates in
the requested Advance in the same percentage as it participates in the
Commitment. Each Bank shall advance its applicable percentage of the requested
Advance to Agent by delivering federal funds immediately available at Agent's
offices prior to twelve o'clock (12:00) noon Philadelphia time on the date of
the Advance. Subject to the satisfaction of the terms and conditions hereof,
Agent shall make the requested Advance available to the Borrowers by crediting
such amount to the Company's or applicable Borrowers' deposit account with Agent
not later than two o'clock (2:00) p.m. Philadelphia time on the day of the
requested Advance; provided, however, that in the event Agent does not receive a
Bank's share of the requested Advance by such time as provided above, Agent
shall not be obligated to advance such Bank's share.
(ii) Unless Agent shall have been notified
by a Bank prior to the date such Bank's share of any such Advance is to be made
by such Bank that such Bank does not intend to make its share of such requested
Advance available to Agent, Agent may assume that such Bank has made such
proceeds available to Agent on such date, and Agent may, in reliance upon such
assumption (but shall not be obligated to), make available to the Borrowers a
corresponding amount. If such corresponding amount is not in fact made available
to Agent by such Bank on the date the Advance is made, Agent shall be entitled
to recover such amount on
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demand from such Bank together with interest thereon in respect of each day
during the period commencing on the date such amount was made available to the
Borrowers and ending on (but excluding) the date Agent recovers such amount, at
a rate per annum, equal to the effective rate for overnight federal funds in New
York as reported by the Federal Reserve Bank of New York for such day (or, if
such day is not a Business Day, for the next preceding Business Day). If such
Bank fails to pay such amount to Agent upon demand, Agent may demand repayment
thereof from Borrowers, together with interest accrued thereon at the rate per
annum applicable to the Advance which such Bank failed to fund.
(c) Each request for an Advance pursuant to this
Paragraph 2.7 shall be irrevocable and binding on the Borrowers. In the case of
any requested Advance which is to be based upon the Adjusted Libor Rate, the
Borrowers shall indemnify each Bank against any loss, cost or expense incurred
by such Bank as a result of any failure to fulfill on or before the date of the
requested Advance the applicable conditions thereto set forth in Section Five
hereof, including, without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or redeployment
of deposits or other funds acquired by such Bank to fund the requested Advance
when such Advance, as a result of such failure, is not made on such date, as
calculated by Agent in accordance with Exhibit C attached hereto.
2.8. Reduction and Termination of Commitment; Voluntary and
Mandatory Prepayment.
(a) Voluntary. Borrowers shall have the right at any
time and from time to time, upon three (3) Business Days prior written notice to
Agent, to reduce the Commitment in whole or in part to be shared among the Banks
based on each Bank's respective Pro Rata Share in increments of Five Million
Dollars ($5,000,000) without penalty or premium.
(b) Default. Pursuant to Paragraph 9.2 hereof, upon
the occurrence of any Event of Default hereunder, Required Banks shall have the
right to terminate the Commitment at any time in their discretion and upon
notice to Borrowers (and the Commitment shall terminate automatically without
notice if an Event of Default described in Paragraph 9.1(h) shall occur).
(c) Mandatory Prepayments; Sale of Material Assets.
In connection with any Sale of Material Assets, the Commitment shall be
automatically and permanently reduced by the Banks' Applicable Share of the
amount by which the Net Cash Proceeds thereof exceed the amounts permitted to be
sold pursuant to Paragraph 7.7 hereof; provided that in connection with any
amounts due under this provision, the holder of the Senior Notes is
simultaneously offered a prepayment so that the amount paid to the Banks equals
the Banks' Applicable Share of the Net Cash Proceeds required to be paid as set
forth above.
(d) Payments. On the effective date of each reduction
permitted or required by clauses (a) and (c) of this Paragraph 2.8, Borrowers
shall make a payment of the
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Loan in an amount, if any, by which the aggregate outstanding principal balance
of the Loan plus the undrawn amount of all Letters of Credit exceeds the amount
of the Commitment as then so reduced, together in all cases with accrued
interest on the amount so paid, and if a Portion is paid prior to the last day
of an Interest Period, Borrowers shall also pay any funding costs and loss of
earnings and anticipated profits which may arise in connection with such
prepayment or repayment, as required by Paragraph 2.10 hereof.
(e) Reductions Permanent. Any termination or
reduction of the Commitment shall be permanent, and the Commitment cannot
thereafter be restored or increased without the written consent of all Banks.
2.9. Prepayment. Borrowers may prepay the outstanding Advances
at any time without premium or penalty and may reborrow under the Commitment
upon the terms and conditions set forth therein; provided, however, that (i)
Borrowers shall give Agent one (1) Business Day's notice of a payment on a
Portion bearing interest at the Base Rate; and (ii) Portions bearing interest at
the Adjusted Libor Rate may only be paid on the last day of the applicable
Interest Period.
2.10. Funding Costs; Loss of Earnings. In connection with any
prepayment or repayment of a Portion bearing interest based on the Adjusted
Libor Rate made on other than the last day of the applicable Interest Period,
whether such prepayment or repayment is voluntary, mandatory, by demand,
acceleration or otherwise, Borrowers shall pay to Banks all funding costs and
loss of earnings and anticipated profits which may arise in connection with such
prepayment or repayment, as calculated by Agent in accordance with Exhibit C
attached hereto.
2.11. Payments. All payments of principal, interest, fees and
other amounts due hereunder, including any prepayments thereof, shall be made by
Borrowers to Agent in immediately available funds before twelve o'clock (12:00)
noon Philadelphia time on any Business Day at the principal office of Agent set
forth at the beginning of this Agreement. Borrowers hereby authorize Agent to
charge Borrowers' accounts with Agent for all payments of principal, interest
and fees when due hereunder.
2.12. Commitment Fee. Borrowers shall pay to Agent for the
benefit of Banks a commitment fee on the average daily amount of the unused
portion of the Commitment at the rate of .375 percent per annum. Such fee shall
be paid from the date hereof through the Termination Date, which fee shall be
payable at the offices of Agent quarterly in arrears on the last day of each
January, April, July and October, as billed by Agent. Banks shall share in such
commitment fee in the same proportion as they participate in the Commitment. The
commitment fee shall be calculated on the basis of the actual number of days
elapsed over a year of three hundred sixty (360) days.
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2.13. Swing Line Loans.
(a) Swing Line Commitment. Subject to the terms and
conditions hereof, Agent, on behalf of the Banks, may, in Agent's discretion,
from the date hereof through and including the Termination Date, make Swing Line
Loans to Borrowers on a joint and several basis from time to time in an
aggregate principal amount at any one time outstanding not to exceed Five
Million Dollars ($5,000,000); provided, however, that no Swing Line Loan shall
be made if after giving effect to the making of such Loan and the simultaneous
application of the proceeds thereof, such Swing Line Loan shall exceed the
aggregate Commitment as from time to time in effect less (i) outstanding
Advances, (ii) the amount of any prior Swing Line advances outstanding under
this Paragraph, and (iii) the aggregate amount of all amounts available under
and unreimbursed draws with respect to Letters of Credit. Except as otherwise
may be agreed upon from time to time between the Company and the Agent,
Borrowers shall give Agent written notice of each requested Advance of a Swing
Line Loan. Such notice of a requested Advance of a Swing Line Loan shall be
certified by the chief financial officer or controller of the Company and shall
be in the form of the Advance/Credit Request Form attached hereto as Exhibit A.
Within the foregoing limits, the Borrowers may repay and reborrow under the
Swing Line Commitment prior to the Termination Date, subject to and in
accordance with the terms and limitations hereof.
(b) Interest. The interest rate applicable to a Swing
Line Loan shall be the Base Rate and shall be paid to the Agent for its own
account on the last day of each month.
(c) Payment. Each Swing Line Loan shall be due and
payable on the earlier of: (i) the Termination Date and (ii) one (1) Business
Day after the date on which Agent shall have demanded payment thereof; provided,
however, that the Borrowers may pay the Swing Line Advance on any date in their
discretion with same day notice to the Agent without premium or penalty.
(d) Procedure for Swing Line Loans. Subject to the terms
and conditions hereof, the Borrowers may borrow under the Swing Line Commitment
on any Business Day prior to the Termination Date. Except as otherwise may be
agreed upon from time to time between the Company and the Agent, the Borrowers
shall give Agent irrevocable notice, which notice must be received by the Agent
prior to one o'clock (1:00) p.m., Philadelphia time, on the requested date,
specifying in the notice (a) the amount requested to be borrowed and (b) the
requested borrowing date. The proceeds of each Swing Line Loan will be made
available by the Agent to the Borrowers by the Agent crediting the account of
the Borrowers with such proceeds on the requested borrowing date.
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(e) Allocating Swing Line Loans; Swing Line Loan
Participation.
(i) The Agent may, in its sole and absolute
discretion, direct that all Swing Line Loans owing to it be refunded by
delivering a notice (a "Notice of Swing Line Refunding") to each Bank and,
unless an Event of Default described in Paragraph 9.1(h) (an "Insolvency Event
of Default") in respect of a Borrower has occurred, to the Borrowers, and each
such Notice of Swing Line Refunding shall be deemed to constitute delivery by
the Company of an Advance/Credit Request Form for an Advance to bear interest at
the Base Rate in an amount equal to the amount of the Swing Line Loans
outstanding on such date. Unless an Insolvency Event of Default shall have
occurred (in which case the procedures of Paragraph 2.13(e)(ii) shall apply),
each Bank (including the Agent in its capacity as a Bank) shall (i) make a Loan
to Borrowers in an amount equal to such Bank's percentage share of the
Commitment of the aggregate principal amount of the Swing Line Loans outstanding
on the date of delivery of the applicable Notice of Swing Line Refunding and
(ii) make the proceeds of its Loan available to the Agent for the account of the
Agent at the office of the Agent prior to twelve o'clock (12:00) noon,
Philadelphia time, in funds immediately available to the Agent on the Business
Day next succeeding the date such notice is given. The proceeds of such Loans
shall be immediately applied to repay the outstanding Swing Line Loans.
(ii) If an Insolvency Event of Default occurs prior
to an Advance pursuant to a Notice of Swing Line Refunding, each Bank (other
than the Agent) shall, on the date a Loan would have been made pursuant to such
Notice of Swing Line Refunding (the "Refunding Date"), purchase an undivided
participating interest in the outstanding Swing Line Loans in an amount equal to
(i) such Bank's Pro Rata Share times (ii) the aggregate principal amount of the
Swing Line Loans then outstanding which were to have been repaid with Loans (the
"Swing Line Participation Amount"). On the Refunding Date, each Bank shall
transfer to the Agent, in immediately available funds, such Bank's Swing Line
Participation Amount.
(iii) Whenever, at any time after the Agent has
received from any Bank such Bank's Swing Line Participation Amount, the Agent
receives any payment on account thereof, the Agent will distribute to such Bank
its participating interest in such amount (appropriately adjusted, in the case
of interest payments, to reflect the period of time during which such Bank's
participating interest was outstanding and funded) in like funds as received;
provided, however, that in the event such payment received by the Agent is
required to be returned, such Bank will return to the Agent any portion thereof
previously distributed by the Agent to it in like funds as such payment is
required to be returned by the Agent.
(iv) Each Bank's obligation to make Loans pursuant
to Paragraph 2.13(a) and to purchase participating interests shall be absolute
and unconditional and shall not be affected by any circumstances including,
without limitation, (i) any setoff counterclaim, recoupment, defense or other
right which such Bank may have against any other Bank or any Borrower, or any
Borrower may have against any Bank or any other person, as the case may be, for
any reason whatsoever; (ii) the occurrence or continuance of a Default or Event
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of Default; (iii) any adverse change in the condition (financial or otherwise)
of the Borrowers or the Guarantors; (iv) any breach of this Agreement by any
party hereto; (v) the failure to satisfy any condition to the making of any Loan
hereunder; or (vi) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
2.14. Regulatory Changes in Capital Requirements. If any Bank
shall have determined that the adoption or the effectiveness after the date
hereof of any law, rule, regulation or guideline regarding capital adequacy, or
any change in any of the foregoing or in the interpretation or administration of
any of the foregoing by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank (or any lending office of such Bank) or such Bank's holding company
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 such Bank's capital
or on the capital of such Bank's holding company if any, as a consequence of
this Agreement, the Commitment, Advances, Letters of Credit or the Loan made by
such Bank pursuant hereto to a level below that which such Bank or its holding
company would have achieved but for such adoption, change or compliance (taking
into consideration such Bank's policies and the policies of such Bank's holding
company with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time the Borrowers shall pay to such Bank, within
five (5) Business Days after receiving such Bank's demand therefor and the
certificate referred to below, such additional amount or amounts as will
compensate such Bank or its holding company for any such reduction suffered,
which amount, if not paid within such period of five (5) Business Days, shall
bear interest from the date due until payment in full thereof at the rate
provided in Paragraph 2.6(a)(ii) hereof. Such Bank will notify the Borrowers of
any event occurring after the date of this Agreement that will entitle such Bank
to compensation pursuant to this Paragraph 2.14 as promptly as practicable after
it obtains knowledge thereof.
A certificate of such Bank setting forth in detail such amount
or amounts as shall be necessary to compensate such Bank or its holding company
as specified above and describing the calculation of such amount shall be
delivered to the Borrowers and shall be conclusive absent manifest error. For
purposes of the application of this Paragraph 2.14 to Borrowers and in
calculating any amount that may be necessary to compensate a Bank under this
Paragraph 2.14, such Bank shall determine the applicability of this provision to
Borrowers and calculate the amount payable to such Bank hereunder in a manner
consistent with the manner in which it shall apply and calculate similar
compensation payable to it by other borrowers having provisions in their credit
agreements comparable to this Paragraph 2.14.
Failure on the part of any Bank to demand compensation for
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Bank's right to demand compensation with respect to any other period.
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2.15. Taxes.
(a) Net Payment by Borrowers. Except as provided below,
all payments by Borrowers hereunder shall be made without deduction for and free
and clear of all taxes, levies, imposts, or charges and all liabilities
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto.
(i) U. S. Withholding Taxes. Borrowers and Agent
shall be entitled to deduct and withhold United States withholding taxes with
respect to all payments to be made hereunder to a Bank as may be required by
United States law. Within thirty (30) days after the date of any payment of
withheld taxes by Borrowers to the applicable taxing authority, Borrowers will
furnish to Agent the original or a certified copy of a receipt or other
documents reasonably acceptable to Agent evidencing such payment. Any Bank that
is (or that has granted an assignment or participation to any lender that is
organized under the laws of a jurisdiction other than the United States (or any
political subdivision thereof) shall provide on the date of this Agreement and
from time to time thereafter if requested by Borrowers or Agent or required by
the Internal Revenue Service of the United States: (i) a facially complete
Internal Revenue Service Form 4224 (or any successor form) certifying that all
payments made to such Bank are effectively connected with its conduct of a trade
or business in the United States and will be includible in its gross income,
(ii) a facially complete Internal Revenue Service Form 1001 (or any successor
form) certifying as to its status for purposes of determining the applicability
of a reduced rate of United States withholding taxes with respect to all
payments to be made hereunder to such Bank pursuant to a double tax treaty
obligation of the United States, or (iii) other facially complete documents
satisfactory to Agent and Borrowers indicating that all payments that will be
made to such Bank are exempt from or subject to a reduced rate of United States
withholding tax. Unless the Borrowers and Agent have received such forms or such
documents validly indicating that payments hereunder are not subject to United
States withholding tax or are subject to such withholding tax at a reduced rate,
Borrowers or Agent shall withhold taxes from such payments to such Bank at the
applicable statutory rate.
(ii) Other Taxes. The general prohibition against
reduction of payments contained in this Paragraph 2.15(a) shall exclude any tax
imposed on or measured by the net income of a Bank pursuant to the laws of the
jurisdiction in which the principal office or applicable lending office of such
Bank is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the principal office or applicable
lending office of such Bank is located (all such non-excluded taxes, levies,
imposts, charges and liabilities being hereinafter referred to as "Taxes"). If
any Taxes shall be required by law to be deducted or paid from or in respect of
any sum payable hereunder or under any Promissory Note to any Bank, then
Borrowers shall be required to pay an additional amount such that after making
all required deductions or payments for such Taxes (including deductions and
payments applicable to additional sums payable under this Paragraph
2.15(a)(ii)), but taking into account any credit, deduction or offset available
in any other jurisdiction as a result of such payment (as determined and
certified by such Bank's tax or accounting department to Borrowers in good
faith), such
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Bank receives an amount equal to the sum it would have received had no such
deductions or payments been made. Payment of any additional amounts required by
this Paragraph 2.15(a)(ii) shall be made at the time of payment of the amounts
otherwise required to be paid by Borrowers if the Taxes have been withheld by
Borrowers, or otherwise within thirty (30) days from the date such Bank makes
written demand therefor.
(b) Participants and Assignees. Any Bank that enters
into any participation or assignment permitted by Paragraph 12.2 hereof shall
give Borrowers and Agent immediate notice of such assignment or participation,
describing the terms thereof and indicating the identity and country of
residence of each of the participants or assignees. Notwithstanding any other
provision contained herein to the contrary, the Borrowers and the Agent shall be
entitled to deduct and withhold United States withholding taxes with respect to
all payments to be made hereunder to or for such Bank or Assignee as may be
required by United States law due to such assignment or participation. Each Bank
hereby indemnifies and holds harmless Borrowers and Agent from and against any
tax, interest, penalty or other expense that Borrowers or Agent may incur as a
consequence of any failure to withhold United States taxes applicable because of
any participation or assignment that is not fully disclosed to them as required
hereunder.
SECTION THREE
LETTERS OF CREDIT
-----------------
3.1. (a) Availability of Letters of Credit. Subject to the
terms and conditions set forth herein, Banks shall from time to time prior to
the Termination Date participate in the issuance by Agent of Letters of Credit
for the account of Borrowers on the following terms and conditions:
(i) at the time of the issuance of each Letter of
Credit, the face amount of such Letter of Credit together with the undrawn
amount of any outstanding Letters of Credit and the amount of any unreimbursed
draws under Letters of Credit shall not exceed Twenty Million Dollars
($20,000,000);
(ii) at the time of the issuance of each Letter of
Credit, the face amount of such Letter of Credit shall not exceed the aggregate
Commitment as from time to time in effect less (i) outstanding Advances, (ii)
the amount of any Swing Line advances outstanding under Paragraph 2.13 hereof,
and (iii) the aggregate amount of all amounts available under and unreimbursed
draws with respect to Letters of Credit.
(iii) the final expiration date of each Letter of
Credit shall be on or before the earlier of (A) the date one (1) year from the
date of its issuance or (B) the Termination Date;
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(iv) there shall not exist at the time of
issuance of the Letter of Credit, or as a result thereof, any Default or Event
of Default; and
(v) each Letter of Credit issued under this
Section Three shall be required by Borrowers in their ordinary course of
business.
(b) Evergreen Letters of Credit. Notwithstanding the
provisions of Paragraph 3.1(a)(iii) which requires that the final expiration of
each Letter of Credit be within one year of issuance, Banks hereby agree that
Agent may issue, upon the Borrowers' request if required by a proposed
beneficiary, a Letter of Credit which by its terms may be extended for
additional periods of up to one year each provided that (x) the final expiration
date of each such Letter of Credit is on or before the Termination Date and (y)
extensions of such Letters of Credit shall be available upon request from
Borrowers to Agent at least forty-five (45) days before the then-effective
expiration date.
(c) Existing Letters of Credit. Reference is made to
certain letters of credit issued by CoreStates Bank, N.A. or First Union
National Bank prior to the date of execution hereof, as identified on the
Advance/Credit Request Form delivered on the date of this Agreement (the
"Existing Letters of Credit"). Borrowers and Banks agree that as of the
Effective Date, subject to receipt by Agent of an appropriately completed
Advance/Credit Request Form, all such Existing Letters of Credit shall hereafter
be Letters of Credit under this Agreement, as if originally issued hereunder.
3.2. Commitment Availability. The Commitment as from time to
time in effect shall be reduced by the undrawn amount of all outstanding Letters
of Credit. Such Commitment amount shall be restored but simultaneously reduced
by the amount of any Advances under Paragraph 2.7 which are made to Borrowers to
reimburse Agent for draws under the Letters of Credit as required pursuant to
Paragraph 3.4 hereof.
3.3. Approval and Issuance.
(a) Borrowers shall provide Agent not less than five (5)
Business Days' prior written notice of each request for the issuance of a
Financial Standby Letter of Credit or a Performance Standby Letter of Credit by
delivery of an Advance/Credit Request Form and Agent's Letter of Credit
Application in the form attached hereto as Exhibit D ("Letter of Credit
Application"). Each Advance/Credit Request Form submitted by Borrowers to Agent
requesting the issuance of a Performance or Financial Standby Letter of Credit
shall be certified by the chief financial officer or controller of the Company
and represent as to the matters set forth in Paragraph 2.7(a) hereof.
(b) Agent will promptly provide to Banks written or
telephonic notice of Agent's receipt of the Advance/Credit Request Form and the
Letter of Credit Application
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which shall state (i) the amount of the Performance or Financial Standby Letter
of Credit requested and (ii) the expiration date of the Performance or Financial
Standby Letter of Credit.
3.4. Obligations of the Borrowers.
(a) Borrowers agree to pay to Agent in connection
with each Letter of Credit issued hereunder: (i) immediately upon the demand of
Agent on behalf of all Banks, the amount paid by each Bank with respect to such
Letter of Credit; (ii) immediately upon demand of Agent, the amount of any draft
presented purporting to be drawn under such Letter of Credit provided that the
draft and accompanying documents conform to the terms of the Letter of Credit
but subject to the terms of Paragraph 3.7 hereof (whether or not Agent has at
such time honored such draft) and any other amounts paid thereunder (it being
understood that Agent is not required to make demand upon or proceed against any
Bank or other party or to resort to any collateral before obtaining payment from
Borrowers); (iii) on the date of issuance thereof and quarterly thereafter in
advance, a fee for the benefit of Banks, in accordance with each Bank's Pro Rata
Share, of a rate equal to the then Applicable Margin under Paragraph 2.6 hereof,
on the face amount of each Financial Standby Letter of Credit and each
Performance Standby Letter of Credit, provided, however, that if a Letter of
Credit is canceled, the Agent shall rebate to Borrowers any portion of the
applicable LC Fee (as defined below) paid on account of any quarter after the
quarter in which the Letter of Credit is terminated; (iv) on the date of
issuance of each Letter of Credit a fee (the "LC Fee") to the Agent on its own
behalf equal to one-eighth of one percent (1/8%) per annum of the face amount of
such Letter of Credit; and (v) interest on any Indebtedness outstanding with
respect to such Letter of Credit, whether for funds paid on drafts on such
Letter of Credit, or otherwise (but such indebtedness shall not include undrawn
balances of such Letter of Credit issued hereunder) calculated at the rate and
paid at the times and in the manner set forth for the calculation of interest
and payment thereof on the Loan in Paragraph 2.6(a)(i)(A) hereof based on the
Base Rate. Interest under clause (v) above shall accrue on amounts paid on a
Letter of Credit (if not reimbursed by Borrowers on the same day) from the date
of payment by Agent, whether or not demand is made, until such amounts are
reimbursed by Borrowers whether before, at or after demand.
(b) In the absence of a Default or an Event of
Default and subject to the provisions of Paragraph 2.7 hereof, Banks hereby
agree to make Advances to Borrowers under the Commitment to fund the payments
required under Paragraphs 3.4(a)(i) and (ii) hereof. If any payment by the Agent
of a draft drawn under a Letter of Credit is for any reason (including without
limitation the occurrence or continuation of a Default or an Event of Default
hereunder) not reimbursed prior to or on the date such payment is made, the
Agent in its sole and absolute discretion may direct that all amounts due under
drafts drawn under a Letter of Credit be refunded by delivery of a notice (a
"Drawing Refunding") to each Bank and to Borrowers and such Drawing Refunding
shall constitute delivery by the Company of an Advance/Credit Request Form in an
amount equal to the drawings to be refunded, which shall bear interest at the
rate set forth in Paragraph 2.6(a)(i)(A) for Advances bearing interest based on
the Base Rate until paid in full.
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3.5. Payment by Banks on Letters of Credit.
(a) With respect to each Letter of Credit issued
hereunder, each Bank agrees that it is irrevocably obligated to pay to Agent,
for each such Letter of Credit, such Bank's Pro Rata Share of each and every
payment made or to be made by Agent under such Letter of Credit (each such
payment to be made, a "LOC Contribution"). Each Bank's LOC Contribution shall be
due from such Bank immediately upon, and in any event no later than the same day
as, receipt of written notice (which may be sent by telex) from Agent that (i)
it has made a payment or (ii) a draft has been presented purporting to be drawn
on a Letter of Credit issued hereunder. Such payment shall be made at Agent's
offices in immediately available federal funds.
(b) The obligation of each Bank to make its LOC
Contribution hereunder is absolute, continuing and unconditional, and Agent
shall not be required first to make demand upon or proceed against Borrowers or
any guarantor or surety, or any others liable with respect to the applicable
Letter of Credit and shall not be required first to resort to any collateral.
LOC Contributions shall be made without regard to termination of this Agreement
or the Commitment, the existence of a Default or an Event of Default, the
acceleration of indebtedness hereunder or any other event or circumstance.
3.6. Collateral.
(a) If Borrowers shall have deposited with Agent cash
collateral or U.S. Treasury securities with maturities no more than ninety (90)
days from the date of deposit ("U.S. Treasury Bills") (discounted in accordance
with customary banking practice to present value to determine amount) in an
amount equal at all times to one hundred three percent (103%) of the outstanding
undrawn amount of all Letters of Credit, such cash or U.S. Treasury Bills and
all interest earned thereon to constitute cash collateral for all such Letters
of Credit, on or before the Termination Date and shall have irrevocably paid in
full the Loan and all other Indebtedness, liabilities and obligations of
Borrowers to Banks under this Agreement (including all Indebtedness and fees due
and owing under this Section Three other than for undrawn balances of Letters of
Credit and other fees and liabilities not yet accrued thereunder), Borrowers
shall be entitled upon the termination of the Commitment to the termination of
all covenants of Borrowers under this Agreement (except under this Section
Three).
(b) On the Termination Date, the termination of the
Commitment (other than voluntary termination of the Commitment by Borrowers in
compliance with subparagraph (a) above) or the occurrence of an Event of
Default, the Agent may require (and in the case of an Event of Default occurring
under Paragraph 9.1(h) it shall be required automatically) that Borrowers
deliver to Agent, unless previously delivered to Agent under subparagraph (a)
above, cash or U.S. Treasury Bills with maturities of not more than ninety (90)
days from the date of delivery (discounted in accordance with customary banking
practice to present value to determine amount) in an amount equal at all times
to one hundred three percent (103%) of the outstanding undrawn amount of all
Letters of Credit, such cash or U.S. Treasury
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Bills and all interest earned thereon to constitute cash collateral for all such
Letters of Credit. At such time as such cash collateral or U.S. Treasury Bills
is required to be and has not been deposited, Agent in its sole and absolute
discretion on behalf of Banks shall be entitled to (x) liquidate such collateral
it may hold at such time as is necessary or appropriate in its sole judgment so
as to create such cash collateral, and (y) direct by delivery of a notice (a
"Cash Collateral Notice") to each Bank and to Borrowers and such Cash Collateral
Notice shall constitute delivery by the Company of an Advance/Credit Request
Form in an amount equal to the Cash Collateral due under this Paragraph 3.6(b)
which shall bear interest at the rate set forth in Paragraph 2.6(a)(ii) for
Advances bearing interest based on the Base Rate.
(c) Any cash collateral deposited under subparagraphs
(a) and (b) above, and all interest earned thereon, shall be held by Agent and
invested and reinvested at the expense and the written direction of Borrowers,
in U.S. Treasury Bills with maturities of no more than thirty (30) days from the
date of investment.
3.7. General Terms of Credits. The following terms and
conditions apply with respect to each Letter of Credit (a "Credit")
notwithstanding anything to the contrary contained herein:
(a) Borrowers assume all risks of the acts or
omissions of the beneficiary of each Credit with respect to the use of the
Credit or with respect to the beneficiary's obligations to Borrowers. None of
the Banks nor any of their officers or directors shall be liable or responsible
for (and the Banks hereby agree to indemnify and hold the Agent and any issuer
of a Credit harmless (subject to Paragraph 10.8 hereof) with respect to): (i)
the use which may be made of the Credit or for any acts or omissions of the
beneficiary in connection therewith; (ii) the accuracy, truth, validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should in fact prove to be in any or all respects false,
misleading, inaccurate, invalid, insufficient, fraudulent or forged; (iii) any
other circumstances whatsoever in making or failing to make payment under a
Credit; or (iv) any inaccuracy, interruption, error or delay in transmission or
delivery of correspondence or documents by post, telegraph or otherwise. In
furtherance and not in limitation of the foregoing, Agent may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
(b) To the extent any failure to comply with the
provisions of this Section 3.7(b) could have a Material Adverse Effect,
Borrowers agree to procure or to cause the beneficiaries of each Letter of
Credit to procure promptly any necessary import and export or other licenses for
the import or export or shipping of any goods referred to in or pursuant to a
Credit and to comply and to cause the beneficiaries to comply with all foreign
and domestic governmental regulations with respect to the shipment and
warehousing of such goods or otherwise relating to or affecting such Credit,
including governmental regulations pertaining to transactions involving
designated foreign countries or their nationals, and to furnish such
certificates in that respect as Agent may at any time reasonably require, and to
keep such goods
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adequately covered by insurance in amounts, with carriers and for such risks as
shall be customary in the industry and to cause Banks' interest to be endorsed
on such insurance and to furnish Agent at its request with reasonable evidence
thereof. Should such insurance (or lack thereof) upon said goods for any reason
not be reasonably satisfactory to Agent, Agent may (but is not obligated to)
obtain, at Borrowers' expense, insurance satisfactory to Agent.
(c) In connection with each Credit, neither any Bank
nor any of their correspondents shall be responsible for: (i) the existence,
character, quality, quantity, condition, packing, value or delivery of the
property purporting to be represented by documents; (ii) any difference in
character, quality, quantity, condition or value of the property from that
expressed in documents; (iii) the time, place, manner or order in which shipment
of the property is made; (iv) partial or incomplete shipment referred to in such
Credit; (v) the character, adequacy or responsibility of any insurer, or any
other risk connected with insurance; (vi) any deviation from instructions,
delay, default or fraud by the beneficiary or any one else in connection with
the property or the shipping thereof; (vii) the solvency, responsibility or
relationship to the property of any party issuing any documents in connection
with the property; (viii) delay in arrival or failure to arrive of either the
property or any of the documents relating thereto; (ix) delay in giving or
failure to give notice of arrival or any other notice; (x) any breach of
contract between the Letter of Credit beneficiaries and Borrowers; (xi) any
laws, customs, and regulations which may be effective in any jurisdiction where
any negotiation and/or payment of such Credit occurs; (xii) failure of documents
(other than documents required by the terms of the Credit) to accompany any
draft at negotiation; or (xiii) failure of any person to note the amount of any
document or draft on the reverse of such Credit or to surrender or to take up
such Credit or to forward documents other than documents required by the terms
of the Credit. In connection with each Credit, no Bank shall be responsible for
any error, neglect or default of any of their correspondents. None of the above
shall affect, impair or prevent the vesting of any of the Banks' rights or
powers hereunder. If a Credit provides that payment is to be made by the issuing
Bank's correspondent, neither the issuing Bank nor such correspondent shall be
responsible for the failure of any of the documents specified in such Credit to
come into the Agent's hands, or for any delay in connection therewith, and
Borrowers' obligation to make reimbursements shall not be affected by such
failure or delay in the receipt of any such documents.
(d) Notwithstanding but without limiting any of the
foregoing, with respect to any Credit, Borrowers shall have a claim against
Agent, and Agent shall be liable to Borrowers, to the extent, but only to the
extent, of any direct, as opposed to indirect or consequential, damages suffered
by Borrowers caused by the Agent's willful misconduct or gross negligence.
(e) To the extent not inconsistent with this
Agreement, the Uniform Customs and Practices for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, are hereby
made a part of this Agreement with respect to obligations in connection with
each Credit.
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SECTION FOUR
REPRESENTATIONS AND WARRANTIES
------------------------------
Each Borrower represents and warrants as to itself and each of
its Subsidiaries party hereto, and each Subsidiary party hereto represents and
warrants as to itself, as follows:
4.1. Organization and Good Standing. Each Borrower and each
Subsidiary is a corporation duly formed and validly existing under the laws of
its state of formation and has the power and authority to carry on its business
as now conducted. Each Borrower and each Subsidiary is qualified to do business
in all other states in which the failure to qualify would have a Material
Adverse Effect.
4.2. Power and Authority; Validity of Agreement. Each Borrower
and each Subsidiary has the power and authority under Delaware law (or the law
of its state of formation) and under its organizational documents to enter into
and perform this Agreement, the Promissory Notes and all other agreements,
documents and actions required hereunder, to the extent each is a party thereto;
and all actions necessary or appropriate for each Borrower's and each
Subsidiary's execution and performance of this Agreement, the Promissory Notes,
and all other agreements, documents and actions required hereunder, to the
extent each is a party hereto, have been taken, and, upon their execution, the
same will constitute the valid and binding obligations of each Borrower and each
Subsidiary, to the extent each is a party thereto, enforceable in accordance
with their terms.
4.3. No Violation of Laws or Agreements. The making and
performance of this Agreement, the Promissory Notes, and the other documents,
agreements and actions required of each Borrower and each Subsidiary hereunder,
to the extent it is a party thereto, will not violate any provisions of any law
or regulation, federal, state or local, or the respective organizational
documents of any Borrower or Subsidiary or result in any breach or violation of,
or constitute a default under, any agreement or instrument by which any
Borrower, Subsidiary or its respective property may be bound, including without
limitation the Note Purchase Agreement and the Indenture.
4.4. Material Contracts. No Borrower or Subsidiary is a party
to or in any manner obligated under any contracts material to its respective
business except this Agreement, its organizational documents, the Senior Notes
and the Note Purchase Agreement pursuant to which they were issued, the
Indenture, and the agreements identified on Exhibit E hereto, and there exists
no material default under any of such contracts.
4.5. Compliance. Each Borrower and each Subsidiary is in
compliance in all material respects with all applicable laws and regulations,
federal, state and local (including without limitation those administered by the
Local Authorities) material to the conduct of its business and operations; each
Borrower and each Subsidiary possesses all the material franchises,
authorizations, patents, copyrights, trademarks, permits and licenses necessary
or
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required in the conduct of its respective business, and, except as may be
described on Exhibit E, the same are valid, binding, enforceable and subsisting
without any material defaults thereunder; and, except as described on Exhibit E,
no authorization, consent, approval, waiver, license or exemptions from, nor any
filing, declaration or registration with, any court, governmental agency or
regulatory authority (federal, state or local) or non-governmental entity, under
the terms of contracts or otherwise, is required by reason of or in connection
with any Borrower's or Subsidiary's execution and performance of this Agreement,
the Promissory Notes and all other agreements, documents and actions required
hereunder to the extent each is a party hereto and thereto.
4.6. Litigation. Except as set forth on Exhibit E hereto,
there are no actions, suits, proceedings or claims which are pending or, to the
best of Borrowers' and Subsidiaries' knowledge or information, threatened
against any Borrower or Subsidiary which, if adversely resolved, would be
reasonably likely to have a Material Adverse Effect.
4.7. Title to Assets. Except as set forth on Exhibit E hereto,
each Borrower and each Subsidiary has good and marketable title to substantially
all of its properties and assets as reflected in the financial statements of
SunSource Inc. and its Consolidated Subsidiaries most recently delivered to
Banks pursuant to Paragraphs 5.1(e), 6.2 and 6.3 hereof, free and clear of any
liens and encumbrances, except the security interests permitted pursuant to
Paragraph 7.4 hereof, and all such assets are in good order and repair and fully
covered by the insurance required pursuant to Paragraph 6.7 hereof.
4.8. Capital Stock. The number of shares and classes of the
capital stock of each Borrower and each Subsidiary and the ownership thereof,
effective upon the 1998 Conversion, are accurately set forth on Exhibit E
attached hereto; all such shares are validly existing, fully paid and
non-assessable, and the issuance and sale thereof are in compliance with all
applicable federal and state securities and other applicable laws; and the
shareholders' ownership thereof is free and clear of any liens or encumbrances
or other contractual restrictions.
4.9. Accuracy of Information; Full Disclosure.
(a) All information furnished to Banks concerning the
financial condition of SunSource Inc. and its Consolidated Subsidiaries,
including their annual audited financial statements for the period ending
December 31, 1997 and their unaudited financial statements for the period ending
September 30, 1998, copies of which have been furnished to Banks, have been
prepared in accordance with GAAP and fairly present the financial condition of
SunSource Inc. and its Consolidated Subsidiaries as of the dates and for the
periods covered and discloses liabilities of SunSource Inc. and its Consolidated
Subsidiaries required to be disclosed under GAAP and, except on the date hereof
for the effect of the 1998 Conversion, there has been no Material Adverse Change
from the date of such statements to the date hereof; and
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(b) All financial statements and other documents
furnished by SunSource Inc. and its Consolidated Subsidiaries to the Banks in
connection with this Agreement and the Promissory Notes do not and will not
contain any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading. Each
Borrower and each Subsidiary has disclosed to the Banks in writing any and all
facts which materially and adversely affect the business, properties, operations
or condition, financial or otherwise, of any Borrower or Subsidiary or any
Borrower's or Subsidiary's ability to perform its respective obligations under
this Agreement and the Promissory Notes.
4.10. Taxes and Assessments.
(a) Each Borrower and each Subsidiary has duly and
timely filed all information and tax returns and reports with all federal,
state, local or foreign governmental taxing authorities, bodies or agencies; and
all taxes, including without limitation income, gross receipt, sales, use,
excise and any other taxes, and any governmental charges, penalties, interest or
fines with respect thereto, due and payable by any Borrower or Subsidiary have
been paid, withheld or reserved for in accordance with GAAP or, to the extent
they relate to periods on or prior to the date of the financial statements
delivered from time to time pursuant to Paragraphs 5.1(e), 6.2 and 6.3 hereof
(the "Financial Statements"), are reflected as a liability on the Financial
Statements in accordance with GAAP.
(b) Each Borrower and each Subsidiary has properly
withheld all amounts determined by it to be required by law to be withheld for
income taxes and unemployment taxes, including without limitation all amounts
required with respect to social security and unemployment compensation, relating
to its employees, and has remitted such withheld amounts in a timely manner to
the appropriate taxing authority, agency or body.
(c) As of the date of this Agreement, none of the
federal income tax information returns of SDI or SDIPI have been audited. Except
as set forth on Exhibit E hereto, no Borrower or Subsidiary has entered into any
agreement for the extension of time for the assessment of any tax or tax
delinquency, nor has any of them received outstanding and unresolved notices
from the Internal Revenue Service or any other state, local or foreign taxing
authority, agency or body of any proposed examination or of any proposed change
in reported information which may result in a deficiency or assessment against
any Borrower or Subsidiary, and there are no suits, actions, claims,
investigations, inquiries or proceedings now pending against any Borrower or
Subsidiary in respect of taxes, governmental charges or assessments.
4.11. Indebtedness. No Borrower or Subsidiary has any
presently outstanding Indebtedness or obligations, including contingent
obligations and obligations under leases of property from others which presents
a liability in excess of One Million Dollars ($1,000,000), except the Senior
Notes, the Junior Subordinated Debentures and the Indebtedness and obligations
described either on Exhibit E hereto or in the financial statements of
SunSource, Inc. and its Consolidated Subsidiaries which have been furnished to
Banks, and Indebtedness
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permitted to be incurred pursuant to Paragraph 7.1 hereof. There exists no
default with respect to the payment of principal or interest under any such
outstanding Indebtedness. The Indebtedness under the Senior Notes ranks pari
passu and equal to the Indebtedness to Banks hereunder, without any priority.
The Junior Subordinated Debentures rank junior and are subordinated to the
Indebtedness to Banks, and all other Indebtedness of any Borrower or Subsidiary
ranks either pari passu or junior to the Indebtedness to the Banks.
4.12. Management Agreements. The Company is a party to no
other material management or consulting agreements for the provision of services
to the Company, except as described in Exhibit E hereto.
4.13. Subsidiaries and Investments. No Borrower or Subsidiary
has any Subsidiaries or Affiliates, or investments in or loans to any other
individuals or business entities, except as described in Exhibit E hereto and
except as are permitted to be acquired or created pursuant to Paragraph 7.8
hereof.
4.14. ERISA. Each Plan maintained by any Borrower, Subsidiary
or ERISA Affiliate is, as of its most recently completed annual report, in
compliance in all material respects with all applicable provisions of ERISA and
the regulations promulgated thereunder; and, except as set forth in Exhibit E
hereto:
(a) No Borrower, Subsidiary or ERISA Affiliate
maintains or contributes to or has maintained or contributed to any
multiemployer plan (as defined in Section 4001 of ERISA) under which any
Borrower, Subsidiary or ERISA affiliate could have any withdrawal liability;
(b) No Borrower, Subsidiary or ERISA Affiliate
sponsors or maintains any Plan under which there is an Accumulated Funding
Deficiency, whether or not waived;
(c) The aggregate liability for accrued benefits and
other ancillary benefits under each Plan that is or will be sponsored or
maintained by any Borrower, Subsidiary or ERISA Affiliate (determined on the
basis of the actuarial assumptions prescribed for valuing benefits under
terminating single-employer defined benefit plans under Title IV of ERISA) does
not exceed the aggregate fair market value of the assets under each such defined
benefit pension Plan;
(d) No Borrower, Subsidiary or ERISA Affiliate has
liability arising out of or relating to a failure of any Plan to comply with the
provisions of ERISA or the Code;
(e) There does not exist any unfunded liability
(determined on the basis of actuarial assumptions utilized by the actuary for
the Plan in preparing the most recent Annual Report) of any Borrower, Subsidiary
or ERISA Affiliate under any plan, program or arrangement providing
post-retirement life or health benefits; and
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(f) The matters described on Exhibit E attached
hereto referencing clauses (a) through (e) of this Paragraph 4.14, would not,
either singly or in the aggregate, have a Material Adverse Effect.
4.15. Fees and Commissions. No Borrower or Subsidiary owes any
fees or commissions of any kind, or knows of any claim for any fees or
commissions, in connection with Borrowers' obtaining the Commitment or the Loan
from Banks, except those provided herein and fees payable to the Banks as may be
agreed upon from time to time.
4.16. No Extension of Credit for Securities. No Borrower or
Subsidiary is now, nor at any time has it been, engaged principally, or as one
of its important activities, in the business of extending or arranging for the
extension of credit, for the purpose of purchasing or carrying any margin stock
or margin securities; nor will the proceeds of the Loan be used by any Borrower
directly or indirectly, for such purposes.
4.17. Hazardous Wastes, Substances and Petroleum Products.
Except as set forth in Exhibit E hereto:
(a) Each Borrower and each Subsidiary: (i) has received
all permits and filed all notifications necessary to carry on its respective
business(es); and (ii) is in compliance in all respects with all Environmental
Control Statutes, except with respect to immaterial instances of noncompliance
of which it has no knowledge.
(b) No Borrower or Subsidiary has given any written or
oral notice, nor has it failed to give required notice, to the Environmental
Protection Agency ("EPA") or any state or local agency with regard to any actual
or imminently threatened removal, spill, release or discharge of Hazardous
Substances on properties owned, leased or operated by a Borrower or Subsidiary
or used in connection with the conduct of its business and operations.
(c) No Borrower or Subsidiary has received notice that
it is potentially responsible for the performance of or payment of costs
relating to clean-up or remediation of any actual or imminently threatened
spill, release or discharge of Hazardous Substances pursuant to any
Environmental Control Statute.
4.18. Solvency. SunSource Inc. and its Consolidated
Subsidiaries are, on a consolidated basis, upon the 1998 Conversion, solvent
such that (i) the fair value of their assets (including without limitation the
fair salable value of the goodwill and other intangible property of SunSource
Inc. and its Consolidated Subsidiaries) is greater than the total amount of
their liabilities, including without limitation, contingent liabilities, (ii)
the present fair salable value of their assets (including without limitation the
fair salable value of the goodwill and other intangible property of SunSource
Inc. and its Consolidated Subsidiaries) is not less than the amount that will be
required to pay the probable liability on their debts as they become absolute
and matured, and (iii) they are able to realize upon their assets and pay their
debts and other
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liabilities, contingent obligations and other commitments as they mature in the
normal course of business. SunSource Inc. and its Consolidated Subsidiaries (i)
do not intend to, and do not believe that they will, incur debts or liabilities
beyond their ability to pay as such debts and liabilities mature, or (ii) are
not engaged in a business or transaction, or about to engage in a business or
transaction, for which their property would constitute unreasonably small
capital after giving due consideration to the prevailing practice and industry
in which they are engaged. No creditor of the Company, any Subsidiary, SDI,
SDIPI, SunSub A or SunSub B would have a reasonable likelihood of prevailing
with respect to any claim to set aside payments to the Banks based on applicable
fraudulent conveyance principles. For purposes of this Paragraph 4.18, in
computing the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light of all the facts
and circumstances existing at such time, represents the amount that reasonably
can be expected to become an actual matured liability.
4.19. Year 2000 Compliance. Borrowers and Subsidiaries have
conducted a comprehensive review and assessment of their computer systems and
applications, microprocessor based goods and equipment owned or used by them in
their business and are making inquiry of their material suppliers, vendors and
customers, with respect to functionality before, during and after the year 2000
(the "Year 2000 Problem"). Borrowers and Subsidiaries have prepared a plan
designed to ensure that all such systems, goods, equipment and products owned or
used by them and material to the conduct of their business will be Year 2000
Compliant in a timely manner. The Company's report on Form 10-Q for the quarter
ended September 30, 1998 describes such plan in all material respects. Borrowers
reasonably believe, based on the foregoing review, assessment and inquiry that
the Year 2000 Problem will not result in a Material Adverse Effect.
4.20. Foreign Assets Control Regulations. Neither the
borrowing by the Borrowers of the Loan nor their use of the proceeds of any
Advance thereof will violate the Foreign Assets Regulations, the Foreign Funds
Control Regulations, the Transactions Control Regulations, the Cuban Assets
Control Regulations, the Iranian Transaction Regulations, or the Iraqi Sanctions
Regulations of the United States Treasury Department (31 C.F.R. Subtitle B,
Chapter V, as amended).
4.21. Investment Company Act. No Borrower or Subsidiary is
directly or indirectly controlled by or acting on behalf of any person which is
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
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SECTION FIVE
CONDITIONS
----------
5.1. First Advance. The obligation of Banks to make the first
Advance under the Loan or issue a Letter of Credit shall be subject to Banks'
receipt of the following documents, each in form and substance satisfactory to
Banks:
(a) Promissory Notes. The Promissory Notes duly
executed by Borrowers in favor of Banks.
(b) Authorization Documents. A certificate of the
secretary of each Borrower, attaching and certifying as to (i) the certificate
or articles of incorporation and bylaws of such entity; (ii) resolutions or
other evidence of authorization by the board of directors of such entity,
authorizing its execution and full performance of this Agreement, the Promissory
Notes, and all other documents and actions required hereunder; and (iii) an
incumbency certificate setting forth the name, titles and specimen signature of
each officer of such entity who is authorized to execute the Loan Documents on
behalf of such entity.
(c) Opinion of Counsel. An opinion letter from
counsel for Borrowers in form and substance reasonably satisfactory to Banks.
(d) Insurance. Certificates of insurance with respect
to all of Borrowers' fire, casualty, liability and other insurance covering
their respective property and business.
(e) Financial Information. A certificate signed by
the chief financial officer or controller of the Company attaching: (i) cash
flow projections for SunSource Inc. and its Consolidated Subsidiaries on a
consolidated basis, for the two (2) year period immediately following the date
hereof, satisfactory to Agent and certified as reasonable by the chief financial
officer or controller of SunSource Inc. (such cash flow projections shall take
into account the transactions contemplated by this Agreement and shall identify
the sources of cash the Company intends to use to meet its cash needs during
such two year period); and (ii) financial projections for SunSource Inc. and its
Consolidated Subsidiaries for the period from closing through December 31, 2001
on a consolidated basis satisfactory to Agent; and with respect to the matters
set forth in Paragraph 4.18 hereof.
(f) Advance Request. A completed Advance/Credit
Request Form required under Paragraphs 2.1(b), 2.7 and 3.1(c) hereof, and any
other documents or information reasonably required by Banks in connection
therewith.
(g) Fees. Payment of the fees required by Section 2
hereof.
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(h) Officer's Certificate. A certificate signed by
the chief financial officer or controller of the Company stating: (i) that there
exists no Default or Event of Default hereunder, (ii) except for the 1998
Conversion, that there has been no Material Adverse Change in the financial
condition, assets, nature of the assets, operations or prospects of the
Borrowers and Subsidiaries since September 30, 1998, (iii) that there exists no
default under any Indebtedness of any Borrower or Subsidiary and (iv) that the
1998 Conversion, as outlined in the letter from the Company to the Agent dated
December 9, 1998, will be completed simultaneously with the effectiveness of
this Agreement.
(i) Senior Notes. Borrowers shall, simultaneously
with the 1998 Conversion, have amended and restated the Existing Note Purchase
Agreement and provided copies of the Note Purchase Agreement, as amended, to
Banks.
(j) Tax Forms. A facially complete Internal Revenue
Service Form 4224 from each of The Bank of Nova Scotia and each other non-U.S.
Bank certifying as to such Bank's entitlement to exemption from, or reduction
of, United States withholding tax on payments to be made hereunder or under the
Promissory Notes.
(k) Junior Subordinated Debentures. (i) Evidence
satisfactory to Agent that: (a) the Junior Subordinated Debentures shall, after
the Effective Date, remain outstanding under terms of subordination satisfactory
to the Required Banks and (b) all required consents under the Indenture or
otherwise in connection with the Junior Subordinated Debentures have been
obtained and delivered and (ii) a duly executed copy of the Reassignment and
Reassumption Agreement executed in connection with the 1998 Conversion.
(l) Other Documents. Such additional documents as
Banks reasonably may request.
5.2. Subsequent Advances. The obligation of Banks to make
additional Advances under the Loan shall be subject to Banks' receipt of a
completed Advance/Credit Request Form.
5.3. Additional Condition to Banks' Obligations. It shall be a
condition to Banks' obligation hereunder to make any Advance that the
representations and warranties set forth herein shall be true and correct as if
made on the date of such Advance, that no Event of Default or Default shall have
occurred and be continuing on the date of such Advance or be caused by such
Advance, that all fees required hereunder have been paid as and when due, and
there shall have been no Material Adverse Change since the date hereof.
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SECTION SIX
AFFIRMATIVE COVENANTS
---------------------
Each Borrower and each Subsidiary covenants and agrees that so
long as the Commitment of Banks to Borrowers or any Indebtedness of Borrowers to
Banks is outstanding hereunder, each Borrower and each Subsidiary will (and with
respect to Paragraph 6.12, Borrowers will cause each ERISA Affiliate to):
6.1. Existence and Good Standing. Preserve and maintain its
existence as a corporation and its good standing in all states in which it
conducts business and the validity of all its material franchises, licenses and
permits required in the conduct of its business.
6.2. Quarterly Financial Statements. Furnish Banks within
forty-five (45) days of the end of each quarterly fiscal period hereafter, other
than the last quarterly fiscal period in the fiscal year, with unaudited
quarterly consolidated financial statements of SunSource Inc. and its
Consolidated Subsidiaries, in form and substance as required by GAAP, including
for each such quarter (i) a consolidated balance sheet, (ii) a consolidated
statement of income, (iii) a consolidated statement of cash flow and (iv) a
certificate in the form of Exhibit F attached hereto executed by the chief
financial officer or controller of the Company showing the calculation of the
covenants set forth in Paragraphs 6.13 through 6.15 and Section Seven hereof
prepared in accordance with GAAP consistently applied and stating that the
financial statements fairly present the financial condition of SunSource Inc.
and its Consolidated Subsidiaries as of the date and for the periods covered and
that as of the date of such certificate there exists no violation of any
provision of this Agreement or the happening of any Event of Default or Default.
6.3. Annual Financial Statements. Furnish Banks within ninety
(90) days after the close of each fiscal year commencing with fiscal 1998 with
audited consolidated annual financial statements of SunSource Inc. and its
Consolidated Subsidiaries, including the financial statements, certificate in
the form of Exhibit F attached hereto and information required under Paragraph
6.2 hereof, which consolidated financial statements shall be prepared in
accordance with GAAP. The financial statements delivered pursuant to the
preceding sentence shall be certified without qualification (except with respect
to changes in GAAP as to which the Company's independent certified public
accountants have concurred) by an independent certified public accounting firm
satisfactory to Banks; and the Company shall cause Banks to be furnished, at the
time of the completion of the annual audit, with a certificate signed by such
accountants showing the calculation of the covenants set forth in Paragraphs
6.13 through 6.15 hereof and stating that to the best of their knowledge there
exists no violations of any provisions of this Agreement or the happening of any
Event of Default or Default hereunder.
6.4. Annual Budget. Furnish to Banks, on or before March 31 of
each year, commencing with fiscal year 1999, an annual budget of SunSource Inc.
and its Consolidated Subsidiaries, showing net income and cash flows of
SunSource Inc. and its Consolidated
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Subsidiaries on a consolidated basis for the twelve (12) month period ending on
December 31 of such year.
6.5. Public Information. Deliver to Banks, promptly upon
transmission thereof, copies of all such financial statements, proxy statements,
notices and reports as the Company shall send to its shareholders or to the
holders of the Senior Notes or the Junior Subordinated Debentures, copies of all
registration statements (without exhibits), and all annual, quarterly or other
reports which the Company files with the Securities and Exchange Commission (or
any governmental body or agency succeeding to the functions of the Securities
and Exchange Commission) including without limitation, Form 10Q and Form 10K;
and copies of all auditors' annual management letters delivered to the Company.
6.6. Books and Records. Keep and maintain satisfactory and
adequate books and records of account in accordance with GAAP and make or cause
the same to be made available to Banks or their agents or nominees at any
reasonable time during normal business hours upon reasonable notice for
inspection and to make extracts thereof and permit Agent or any Bank to discuss
contents of same with senior officers of any Borrower or Subsidiary and also
with outside auditors and accountants of any Borrower or Subsidiary.
6.7. Properties; Insurance. Keep and maintain all of its
property and assets in good order and repair and materially covered by insurance
with reputable and financially sound insurance companies against such hazards
and in such amounts as is customary in the industry, under policies requiring
the insurer to furnish reasonable notice to Banks and opportunity to cure any
non-payment of premiums prior to termination of coverage; and, as required
above, furnish Banks with certificates of such insurance.
6.8. Notices to Banks. Notify Banks in writing immediately of
(i) the institution of any litigation, the commencement of any administrative
proceedings, the happening of any event or the assertion or threat of any claim
which might reasonably be expected to have a Material Adverse Effect, (ii) the
occurrence of any Event of Default or Default hereunder or (iii) any notice
delivered to the Trustee (as defined in the Indenture) from the Company or the
holder of any Senior Indebtedness (as defined in the Indenture) in respect of
Section 14.06 of the Indenture.
6.9. Taxes. Pay and discharge all taxes, assessments or other
governmental charges or levies imposed on it or any of its property or assets
prior to the date on which any penalty for non-payment or late payment is
incurred, unless the same are (a) being contested in good faith by appropriate
proceedings and (b) are covered by appropriate reserves maintained in cash or
cash equivalents in accordance with GAAP.
6.10. Costs and Expenses. Pay or reimburse Agent for all
reasonable out-of-pocket costs and expenses (including but not limited to
reasonable attorneys' fees and disbursements) Agent may pay or incur in
connection with the preparation and review of this
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Agreement and all waivers, consents and amendments in connection therewith and
all other documentation related thereto and the making of the Loan hereunder;
and pay or reimburse Banks for all reasonable out-of-pocket costs and expenses
(including but not limited to reasonable attorneys' fees and disbursements)
Banks may pay or incur in connection with the collection or enforcement of the
same, including without limitation any fees and disbursements incurred in
defense of or to retain amounts of principal, interest or fees paid. All
obligations provided for in this Paragraph 6.10 shall survive any termination of
this Agreement or the Commitment and the repayment of the Loan.
6.11. Compliance; Notification.
(a) Except to the extent that noncompliance would not
have a Material Adverse Effect, comply in all respects with all local, state and
federal laws and regulations applicable to its business, including without
limitation the Environmental Control Statutes, the Securities Act, and all laws
and regulations of the Local Authorities, and the provisions and requirements of
all franchises, permits, licenses and other like grants of authority held by any
Borrower or Subsidiary; and notify Banks immediately in detail of any actual or
alleged failure to comply with, failure to perform, breach, violation or default
under any such laws or regulations or under the terms of any of such franchises,
permits, certificates, licenses or grants of authority, or of the occurrence or
existence of any facts or circumstances which with the passage of time, the
giving of notice or otherwise could create such a failure, breach, violation or
default or could occasion the termination of any of such franchises, permits,
certificates, licenses or grants of authority, except to the extent that such
matter would not have a Material Adverse Effect.
(b) With respect to the Environmental Control
Statutes, promptly notify Agent when, in connection with the conduct of any
Borrower's or Subsidiary's business(es) or operation(s), any person (including,
without limitation, EPA or any state or local agency) provides oral or written
notification to any Borrower or Subsidiary or any Borrower or Subsidiary
otherwise becomes aware of a condition with regard to an actual or imminently
threatened removal, spill, release or discharge of hazardous or toxic wastes,
substances or petroleum products that requires notification to the applicable
governmental authority under an Environmental Control Statute and would have an
Environmental Material Adverse Effect; and notify Banks in detail promptly upon
the receipt by any Borrower or Subsidiary of an assertion of liability under the
Environmental Control Statutes, of any actual or alleged failure to comply with
or perform, breach, violation or default under any such statutes or regulations
or of the occurrence or existence of any facts, events or circumstances which
with the passage of time, the giving of notice, or both, could create such a
breach, violation or default and would have an Environmental Material Adverse
Effect.
(c) With respect to each disclosure previously made
to Agent pursuant to Exhibit E attached hereto or Paragraph 6.11(b) hereof
regarding alleged or actual liability under Environmental Control Statutes, not
later than twenty (20) days after the last day of each fiscal quarter, deliver
to Agent a report describing (i) the estimated dollar amount, when initially
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determined, of any such liability (including costs of investigation and
remediation) and if any such initial estimate with respect to a disclosed matter
shall be modified thereafter by more than $1,000,000, the modified dollar
amount; and (ii) any information or change in circumstances regarding actual or
alleged liability under Environmental Control Statutes of any Borrower or
Subsidiary, if the effect thereof would be to increase liability in connection
with the investigation or remediation with respect thereto by more than
$1,000,000.
6.12. ERISA. (a) Comply, and cause any Plan maintained for the
employees of any Borrower or Subsidiary to comply, in all material respects with
the provisions of ERISA; (b) not incur any material Accumulated Funding
Deficiency or any material liability to the PBGC (as established by ERISA); (c)
permit any event to occur (i) as described in Section 4042 of ERISA or (ii)
which may result in the imposition of a lien on its properties or assets; and
(d) notify Banks in writing promptly after it has come to the attention of
senior management of any Borrower or Subsidiary of the assertion or threat of
any "reportable event" or other event described in Section 4042 of ERISA
(relating to the soundness of a Plan), except those with respect to which the
PBGC has waived the 30 day notice rule, or the PBGC's ability to assert a
material liability against it) or impose a lien on any Borrower's or
Subsidiary's properties or assets.
6.13. Capitalization Ratio. Maintain a Capitalization Ratio
not to exceed: (i) with respect to the last day of each of the first two fiscal
quarters in each fiscal year, sixty-two percent (62%) and (ii) with respect to
the last day of each of the last two fiscal quarters of each fiscal year, sixty
percent (60%).
6.14. Fixed Charge Coverage Ratio. Maintain as of the last day
of each fiscal quarter set forth in the left hand column, for the Rolling Period
ending on such date, a Fixed Charge Coverage Ratio for SunSource Inc. and its
Consolidated Subsidiaries of not less than the amount set forth in the right
hand column:
Period Minimum Ratio
------ -------------
Date of Agreement through 12/31/98 1.25
3/31/99 through 9/30/99 1.40
12/31/99 and the last day of each fiscal quarter thereafter 1.50
6.15. Leverage Ratio. Maintain on the last day of each fiscal
quarter a Leverage Ratio of not greater than 3.25:1.
6.16. Management Changes. Notify Banks in writing within
thirty (30) days after any change of its management group as described in the
"Change of Control" definition.
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6.17. Subsequent Credit Terms.
(a) Notify Bank in writing not less than five (5)
Business Days prior to its entering into any amendment or modification of any
credit arrangement, whether now in effect or hereafter incurred, pursuant to
which any Borrower or Subsidiary agrees to financial covenants which are more
restrictive to such Borrower or Subsidiary than those contained in sections Six
and Seven hereof. Upon entering into any such amendment or modification, and
with respect to the covenants in the Note Purchase Agreements, the corresponding
covenants, terms and conditions of this Agreement are and shall be deemed to be
automatically and immediately amended to conform with and to include the
applicable covenants, terms and/or conditions of such other agreement; provided,
however, that the foregoing shall not be applicable to or be deemed to affect
any provision of this Agreement to the extent that any amendment or modification
is less restrictive than the corresponding provisions of this Agreement.
(b) Each Borrower and each Subsidiary hereby agrees
promptly to execute and deliver any and all such documents and instruments and
to take all such further actions as Agent may, in its sole discretion, deem
necessary or appropriate to effectuate the provisions of this Paragraph 6.17.
6.18. Use of Proceeds. Use the proceeds of the Loan only for
the purposes set forth in Paragraph 2.4 hereof.
6.19. Successor Agent. In the event of the appointment of any
successor Agent pursuant to Paragraph 10.15 hereof, execute and deliver any
documents reasonably requested by Banks to effectuate and confirm the transfer
to such successor Agent of all rights, powers, duties, obligations and property
vested in its predecessor Agent hereunder.
6.20. Transactions Among Affiliates. Cause all transactions
between and among Affiliates to be on an arms-length basis and on such terms and
conditions as are customary in the applicable industry between and among
unrelated entities.
6.21. Joinder of Subsidiaries. If any Subsidiary or any newly
created or acquired Subsidiary: (i) is or becomes a Material Subsidiary and (ii)
is not at such time of determination a Borrower or Guarantor, promptly notify
Agent of the same and cause such Material Subsidiary to execute joinder
documents in form and substance satisfactory to Agent, joining such Subsidiary
under this Agreement as either a Borrower or a Guarantor, which determination
shall be made in the discretion of Agent, and cause to be delivered such
opinions and certificates as Agent shall reasonably request.
6.22. Year 2000 Compliance. Take all action necessary to
assure that a Material Adverse Effect shall not result from any failure of
Borrowers' computer systems and applications, micro-processor based goods and
equipment owned or used by them in their business to be Year 2000 Compliant; and
use reasonable best efforts to assure the Year 2000
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Compliance of their material vendors and suppliers or to assure that failures to
be Year 2000 Compliant by such vendors and suppliers will not have a Material
Adverse Effect to the extent that any such information shall not be included in
the Company's periodic reports filed with the Securities and Exchange Commission
from time to time. Borrowers shall provide to Bank any material updates or
revisions to its plan for Year 2000 Compliance referred to in Paragraph 4.19 and
notice of any material increase in the estimated costs to Borrowers of achieving
Year 2000 Compliance in accordance with such plan; and, at the request of Bank,
Borrowers shall provide Bank assurances acceptable to Bank regarding the Year
2000 Compliance and/or contingency plans related thereto, of Borrowers and their
material vendors and suppliers.
6.23. Supporting Information. Use reasonable efforts to obtain
from the Company's accountants such supporting opinions or information with
respect to the matters set forth in Paragraph 4.18 hereof as the Banks shall
reasonably request.
6.24. Other Information. Provide Banks with any other
documents and information, financial or otherwise, reasonably requested by Banks
from time to time.
SECTION SEVEN
NEGATIVE COVENANTS
------------------
So long as the Commitment or any Indebtedness of Borrowers to
Banks remains outstanding hereunder, each Borrower and each Subsidiary covenants
and agrees that it will not:
7.1. Indebtedness. Borrow any monies or create any
Indebtedness except (i) borrowings from Banks hereunder; (ii) Indebtedness
evidenced by the Senior Notes not to exceed Sixty Million Dollars ($60,000,000)
aggregate principal amount outstanding at any time, which shall rank equally and
are pari passu with the obligations to the Banks hereunder; (iii) Indebtedness
under the Junior Subordinated Debentures, not to exceed One Hundred Five Million
Five Hundred Thousand Dollars ($105,500,000) principal amount outstanding at any
time (but not including any amounts which constitute Compounded Interest, as
defined in the Indenture), which shall be subordinate and junior to the
obligations to the Banks hereunder; (iv) trade Indebtedness in the normal and
ordinary course of business for value received, of which no more than Five
Million Dollars ($5,000,000) shall be outstanding at any time under Trade Notes;
(v) Indebtedness and obligations incurred or assumed to purchase or lease fixed
or capital assets, provided, however, that the total principal amount of such
Indebtedness and obligations incurred in any calendar year shall not exceed in
the aggregate Seven Million Five Hundred Thousand Dollars ($7,500,000); (vi)
borrowings from any Borrower by any Borrower; (vii) borrowings from any Borrower
by a Subsidiary which is not a Borrower to the extent Borrowers are permitted to
make such loans pursuant to Paragraph 7.3(ii) hereof; (viii) Indebtedness
outstanding on the date hereof and disclosed on Exhibit E hereto, but without
any increase in the outstanding principal amount thereof; (ix) Indebtedness of
non-Borrower, non-Guarantor Subsidiaries incorporated in a jurisdiction in the
United States, up to Ten Million Dollars ($10,000,000) aggregate principal
amount outstanding at any time; (x) Indebtedness of non-
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Borrower, non-Guarantor Subsidiaries incorporated in a jurisdiction outside of
the United States, up to Ten Million Dollars ($10,000,000) aggregate principal
amount outstanding at any time (which shall include the revolving credit
facility with the Bank of Nova Scotia); and (xi) unsecured promissory notes in
favor of sellers of assets or stock in acquisitions otherwise permitted pursuant
to Paragraph 7.8 hereof not to exceed Ten Million Dollars ($10,000,000);
provided, however, that Indebtedness of non-Borrower, non-Guarantor Subsidiaries
under clauses (v), (ix) and (x) hereof shall in no event exceed in the aggregate
outstanding at any time Ten Million Dollars ($10,000,000).
7.2. Guaranties. Guarantee or assume or agree to become liable
in any way, either directly or indirectly, for any additional Indebtedness or
liability of others (except hereunder and with respect to the Senior Notes and
to endorse checks or drafts in the ordinary course of business), except that (i)
Borrowers may guarantee Indebtedness which in the aggregate shall not exceed
Five Million Dollars ($5,000,000) outstanding at any time, and (ii) any entity
may guarantee debt of another entity otherwise permitted hereunder.
7.3. Loans. Make any loans or advances to others, provided
that any Borrower may make loans and advances to (i) any other Borrower; (ii)
non-Borrower, non-Guarantor Subsidiaries incorporated in a jurisdiction in the
United States or (iii) non-Borrower, non- Guarantor Subsidiaries incorporated in
a jurisdiction outside of the United States, such that loans or advances from
all Borrowers to all such non-Borrower, non-Guarantor Subsidiaries shall not
exceed Ten Million Dollars ($10,000,000) in aggregate outstanding principal
amount at any time, and (iv) its sales personnel in the ordinary course of
business.
7.4. Liens and Encumbrances. Create, permit or suffer the
creation of any liens, security interests, or any other encumbrances on any of
its property, real or personal, except (i) liens arising in favor of sellers or
lessors for indebtedness and obligations incurred to purchase or lease fixed or
capital assets permitted under Paragraph 7.1(v) hereof, provided, however, that
such liens secure only the Indebtedness and obligations created thereunder and
are limited to the assets purchased or leased pursuant thereto; (ii) liens for
taxes, assessments or other governmental charges, federal, state or local, which
are then being currently contested in good faith by appropriate proceedings and
are covered by appropriate reserves maintained in cash or cash equivalents and
in accordance with GAAP; (iii) pledges or deposits to secure obligations under
workmen's compensation, unemployment insurance or social security laws or
similar legislation; (iv) deposits to secure performance or payment bonds, bids,
tenders, contracts, leases, franchises or public and statutory obligations
required in the ordinary course of business; (v) deposits to secure surety,
appeal or custom bonds required in the ordinary course of business and (vi)
liens and security interests securing up to Five Million Dollars ($5,000,000) of
Indebtedness outstanding under Trade Notes.
7.5. Additional Negative Pledge. Agree or covenant with or
promise any person or entity other than Banks and the holders of the Senior
Notes that it will not pledge its assets or
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properties or otherwise grant any liens, security interests or encumbrances on
its property on terms similar to those set forth in Paragraph 7.4 hereof.
7.6. Restricted Payments. Make any Restricted Payments;
provided, however that so long as there exists no Event of Default or Default
under this Agreement and no Event of Default or Default will result therefrom:
(i) the Company may pay dividends on its common stock; and (ii) the Company may
make regularly scheduled interest payments on the Junior Subordinated Debentures
as in effect on the date hereof; provided further that if the Leverage Ratio
immediately prior to and after giving effect to such purchase is less than 2.25
to 1, as set forth in a certificate of the chief financial officer or controller
of the Company and delivered to Agent, then the Company may purchase or redeem
its common stock or purchase Trust Preferred Securities, provided a like amount
of the Junior Subordinated Debentures are simultaneously purchased.
7.7. Transfer of Assets. Sell, lease, transfer or otherwise
dispose of all or any portion of its assets, real or personal, other than such
transactions made on an arm's length basis in the normal and ordinary course of
business for value received; provided, however, that in the absence of a Default
or an Event of Default, and, if a Default or Event of Default would not result
therefrom, Borrowers may (i) consummate a Sale of Material Assets, provided that
the Commitment shall be permanently reduced and the Loan shall be repaid in
connection therewith pursuant to Paragraphs 2.8(c) and (d) hereof by an amount
equal to the Banks' Applicable Share received by Borrowers on account of such
sale(s), to the extent such sale(s), in the aggregate, exceed Fifteen Million
Dollars ($15,000,000) and (ii) consummate the 1998 Conversion.
7.8. Acquisitions and Investments. (a) Purchase or otherwise
acquire any part or amount of the capital stock or assets of, or make any
investments in, any other entity or corporation, except Permitted Investments;
(b) create, acquire or maintain any Material Subsidiary not listed on Schedule 1
or 2 hereto, except if the Subsidiary executes a joinder to this Agreement and
the Promissory Notes to become a joint and several obligor hereunder or a
Guarantor hereunder, in each case pursuant to Paragraph 6.21 hereof; (c) enter
into any new business activities or ventures not directly related to its present
business; or (d) merge or consolidate with or into any other entity or
corporation, except that any Subsidiary may be merged into the Company if the
Company is the surviving entity and any Subsidiary may merge into any other
Subsidiary; provided, however, that in the absence of a Default or an Event of
Default hereunder, and if a Default or Event of Default would not result
therefrom, Borrowers may make acquisitions (by merger or purchase) of
substantially all but not less than substantially all of other entities or
corporations in the same or substantially the same business as Borrowers.
Borrowers shall provide to Agent a financial projection, including an income
statement and cash flow, from the date of any proposed acquisition with a
purchase price exceeding Ten Million Dollars ($10,000,000), showing prospective
compliance with Paragraphs 6.13 through 6.15 and Section Seven of this Agreement
through the Termination Date and a pro forma combined historical balance sheet
as of the end of the most recent fiscal quarter for the Company and the target.
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7.9. Use of Proceeds. Use any of the proceeds of the Loan,
directly or indirectly, to purchase or carry margin securities within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System;
or engage as its principal business in the extension of credit for purchasing or
carrying such securities.
7.10. Amendment of Documents. (a) Without the consent of
Agent, which consent shall not be withheld unreasonably, amend or permit any
amendments to: any Borrower's or any Subsidiary's organizational documents; the
Declaration of Trust; the Indenture; the Terms of Common Securities of the
Trust; the Terms of Preferred Securities of the Trust; the Preferred Securities
Guaranty; and (b) with respect to those provisions of the Note Purchase
Agreement relating to financial covenants (Paragraph 5.12 through 5.14), events
of default (Section 8), mandatory or voluntary prepayments (Paragraphs 4.2, 4.3,
4.4, 4.7 and 4.8) and all definitions related thereto, any amendment, waiver or
consent thereto shall require the simultaneous amendment, waiver or consent of
the Banks or Required Banks, as applicable, to the corresponding provision in
this Agreement.
7.11. Payment of Senior Notes. Make any payment of principal
on the Senior Notes except if simultaneously with such payment a reduction of
Commitment and prepayment to the extent of Bank's Applicable Share of such
payment is made pursuant to Paragraph 2.8 hereof.
SECTION EIGHT
RIGHT OF SETOFF
---------------
After and during the continuation of any Event of Default
hereunder, each Bank is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to setoff and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other Indebtedness at any time owing by such Bank to or for the credit or the
account of the Borrowers against any and all of the obligations of the Borrowers
now or hereafter existing under this Agreement and the Promissory Note held by
such Bank; provided, that to the extent not prohibited by applicable law or
affecting the Banks' or the holders of the Senior Notes' right to retain such
funds, Banks shall retain Banks' Applicable Share of the Net Cash Proceeds of
any amount so recovered and the remainder shall be shared with the holder of the
Senior Notes. Each Bank agrees promptly to notify the Borrowers and Agent after
any such setoff and application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Bank under this Section Eight are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which such Bank may have.
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SECTION NINE
DEFAULT
-------
9.1. Events of Default. Each of the following events shall be
an Event of Default hereunder:
(a) If any Borrower or Subsidiary shall fail to pay
(i) any installment of principal, or interest when due or (ii) fees, costs,
expenses or any other sum payable to Banks hereunder or otherwise within 5 days
after notice from Agent it is due;
(b) If any representation or warranty made herein or
in connection herewith or in any statement, certificate or other document
furnished hereunder is incorrect, false or misleading in any material respect
when made;
(c) If any Borrower or Subsidiary shall default in
the payment or performance of any obligation or Indebtedness to another, either
singly or in the aggregate in excess of $1,000,000, whether now or hereafter
incurred;
(d) If there shall be a default in or failure to
observe at any test date the covenants set forth in Paragraphs 6.13 through 6.15
or Section Seven hereof;
(e) If any Borrower or Subsidiary shall default in
the performance of any other agreement or covenant contained herein (other than
as provided in subparagraphs (a), (b) or (d) above) or in any document executed
or delivered in connection herewith, and such default shall continue uncured for
twenty (20) days after the earlier of (i) any Borrower having actual knowledge
of such default, and (ii) notice thereof to Borrowers given by Agent pursuant to
the direction of Required Banks;
(f) If a Change of Control shall occur;
(g) If custody or control of any substantial part of
the property of any Borrower or Subsidiary shall be assumed by any governmental
agency or any court of competent jurisdiction at the instance of any
governmental agency; if any material license or franchise shall be suspended,
revoked or otherwise terminated; if any governmental regulatory authority or
judicial body shall make any other final non-appealable determination the effect
of which would be to affect materially and adversely the operations of any
Borrower or Subsidiary as now conducted;
(h) If any Borrower or Subsidiary: becomes insolvent,
bankrupt or generally fails to pay its debts as such debts become due; is
adjudicated insolvent or bankrupt; admits in writing its inability to pay its
debts; or shall suffer a custodian, receiver or trustee for it or substantially
all of its property to be appointed and if appointed without its consent, not be
discharged within thirty (30) days; makes an assignment for the benefit of
creditors; or suffers
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proceedings under any law related to bankruptcy, insolvency, liquidation or the
reorganization, readjustment or the release of debtors to be instituted against
it and if contested by it not dismissed or stayed within thirty (30) days; if
proceedings under any law related to bankruptcy, insolvency, liquidation, or the
reorganization, readjustment or the release of debtors is instituted or
commenced by any Borrower; if any order for relief is entered relating to any of
the foregoing proceedings; if any Borrower or Subsidiary shall call a meeting of
its creditors with a view to arranging a composition or adjustment of its debts;
or if any Borrower or Subsidiary shall by any act or failure to act indicate its
consent to, approval of or acquiescence in any of the foregoing;
(i) any event or condition shall occur or exist with
respect to any activity or substance regulated under the Environmental Control
Statutes and as a result of such event or condition, any Borrower or Subsidiary
has incurred or in the opinion of such Borrower or Subsidiary is reasonably
likely to incur a liability in excess of $1,000,000 during any consecutive
twelve (12) month period;
(j) if any judgment, writ, warrant or attachment or
execution or similar process which calls for payment or presents liability in
excess of $1,000,000 shall be rendered, issued or levied against any Borrower or
Subsidiary or its respective property and such process shall not be paid,
waived, stayed, vacated, discharged, settled, satisfied or fully bonded within
sixty (60) days after its issuance or levy; provided, however that if a
judgment, writ, warrant or attachment or execution or similar process relates to
federal or state taxation, then an Event of Default shall occur if the same
shall not be paid, waived, stayed, vacated, discharged, settled, satisfied or
fully bonded within one hundred twenty (120) days after its issuance or levy; or
(k) If the Company makes a payment of principal or
interest on or purchases or redeems the Junior Subordinated Debentures and the
Trust does not immediately use such funds to make Distributions Paid on Trust
Securities.
9.2. Remedies. Upon the happening and during the continuation
of any Event of Default, at the election of Required Lenders, and by notice by
Agent to Borrowers (except if an Event of Default described in Paragraph 9.1(h)
shall occur in which case acceleration shall occur automatically without
notice), Required Lenders may declare the entire unpaid balance, principal,
interest and fees, of all Indebtedness of Borrowers to Banks, hereunder or
otherwise, to be immediately due and payable. Upon such declaration, the
Commitment shall immediately and automatically terminate and Banks shall have no
further obligation to make any Advances and the immediate right to enforce or
realize on any collateral security granted therefor in any manner or order they
deem expedient without regard to any equitable principles of marshaling or
otherwise. In addition to any rights granted hereunder or in any documents
delivered in connection herewith, Banks shall have all the rights and remedies
granted by any applicable law, all of which shall be cumulative in nature.
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SECTION TEN
THE BANKS
---------
This Section sets forth the relative rights and duties of
Agent, Documentation Agent and Banks respecting the Loan and does not confer any
enforceable rights on Borrowers against Banks or create on the part of Banks any
duties or obligations to the Borrowers.
10.1. Application of Payments. Agent shall apply all payments
of principal, interest, commitment fee or other amounts hereunder made to Agent
by or on behalf of Borrowers, to Banks on the basis of their Pro Rata Shares of
the outstanding principal balance of the Loan hereunder, and shall apply the
fees paid to the Agent on its own behalf upon the issuance of each Letter of
Credit in Paragraph 3.4 hereof.
10.2. Setoff. In the event a Bank, by exercise of its right of
setoff, or otherwise, receives any payment of the Indebtedness owing to it
hereunder in an amount greater than its Pro Rata Share of such payment based
upon the Banks' respective shares of the Loan outstanding immediately before
such payment, such Bank shall purchase a portion of the Loan hereunder owing to
each other Bank so that after such purchase each Bank shall hold its Pro Rata
Share of Loan then outstanding hereunder, provided that if all or any portion of
such excess payment is thereafter recovered from such Bank, such purchase shall
be rescinded and the purchase price restored to the extent of any such recovery,
but without interest.
10.3. Modifications and Waivers. No modification or amendment
hereof, consent hereunder or waiver of Event of Default shall be effective
except by written consent of the Required Banks, provided, however, (A) that the
written consent of all Banks shall be required to: (i) decrease the rate of
interest or fees due hereunder, (ii) increase or, other than in the case of pro
rata reductions pursuant to Paragraph 2.8 hereof, decrease the amount of the
Commitment or the Banks' respective Pro Rata Shares thereof, (iii) modify, amend
or waive compliance with the dates of payment of principal, interest or fees
hereunder, (iv) modify, amend or waive compliance with the commitment fee, (v)
modify, amend, waive or release any Guarantor from the provisions of Section
Eleven hereof; or (vi) amend or modify the provisions of the definition of
Required Banks or this Paragraph 10.3; (B) with respect to: (i) Paragraphs 6.13,
6.14 and 6.15 and Section Seven hereof; (ii) any of the Events of Default set
forth in Paragraph 9.1 hereof; (iii) the mandatory and voluntary prepayment
provisions of Paragraph 2.8 hereof; and (iv) any of the definitions relating to
the matters described in clauses (i) through (iii) above, the holders of the
Senior Notes shall have simultaneously amended, waived or modified the
corresponding provision to the Note Purchase Agreement; and (C) that any
increase in the Commitment pursuant to Paragraph 2.1(d) shall not require the
consent of any Bank (except Agent) and each Bank hereby agrees to execute such
documentation as is requested by Agent to implement the Additional Commitment.
The Borrowers hereby agree to execute such further documents, including without
limitation certificates and amendments to this Agreement and the Promissory
Note(s), and deliver such opinions as the Agent and its counsel shall so request
to implement any termination or replacement contemplated hereby. Any amendment
or waiver
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made pursuant to this Section 10.3 shall apply to and bind all of the Banks and
any future holder of any Promissory Notes. No modification or waiver of any
provision of this Agreement or any Promissory Note, nor any consent to any
departure by the Borrowers herefrom or therefrom, shall in any case be effective
unless the same be in writing, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on the Borrowers in any case shall entitle the
Borrowers to any other or further notice or demand in any similar or other
circumstances.
10.4. Obligations Several. The obligations of the Banks
hereunder are several, and each Bank hereunder shall not be responsible for the
obligations of the other Banks hereunder, nor will the failure of one Bank to
perform any of its obligations hereunder relieve the other Banks from the
performance of their respective obligations hereunder.
10.5. Banks' Representations. Each Bank represents and
warrants to the other Banks that (i) it has been furnished all information it
has requested for the purpose of evaluating its proposed participation under
this Agreement; and (ii) it has decided to enter into this Agreement on the
basis of its independent review and credit analysis of Borrowers, this Agreement
and the documentation in connection therewith and has not relied for such
analysis on any information or analysis provided by any other Bank.
10.6. Investigation. No Bank shall have any obligation to the
others to investigate the condition of the Borrowers or any other matter
concerning the Loan.
10.7. Powers of Agent; Rights and Duties of Documentation
Agent. Agent shall have and may exercise those powers specifically delegated to
Agent herein, together with such powers as are reasonably incidental thereto.
The parties hereby agree that Documentation Agent, in its capacity as
Documentation Agent hereunder, shall not have any obligations, rights or duties
hereunder.
10.8. General Duties of Agent, Immunity and Indemnity. In
performing its duties as Agent hereunder, Agent will take the same care as it
takes in connection with loans in which it alone is interested, subject to the
limitations on liabilities contained herein; provided that Agent shall not be
obligated to ascertain or inquire as to the performance of any of the terms,
covenants or conditions hereof by Borrowers. Neither Agent nor any of its
directors, officers, agents or employees shall be liable for any action or
omission by any of them hereunder or in connection herewith except for gross
negligence or willful misconduct. Subject to such exception, each of the Banks
hereby indemnifies Agent on the basis of such Bank's Pro Rata Share, against any
such liability, claim, loss or expense.
10.9. No Responsibility for Representations or Validity, etc.
Each Bank agrees that Agent shall not be responsible to any Bank for any
representations, statements, or warranties of Borrowers herein. Agent will
promptly deliver to Banks such reports, notices and material information which
it receives from Borrowers. Neither Agent nor any of its directors, officers,
-53-
employees or agents shall be responsible for the validity, effectiveness,
sufficiency, perfection or enforceability of this Agreement or any documents
relating thereto.
10.10. Action on Instruction of Banks; Right to Indemnity.
Agent shall in all cases be fully protected in acting or refraining from acting
hereunder in accordance with written instructions to it signed by Required Banks
unless the consent of all the Banks is expressly required hereunder in which
case Agent shall be so protected when acting in accordance with such
instructions from all the Banks. Such instructions and any action taken or
failure to act pursuant thereto shall be binding on all the Banks, provided that
except as otherwise provided herein, Agent may act hereunder in its own
discretion without requesting such instructions. Agent shall be fully justified
in failing or refusing to take any action hereunder unless it shall first be
specifically indemnified to its satisfaction by the other Banks on the basis of
their respective Pro Rata Shares, against any and all liability and expense
which it may incur by reason of taking or continuing to take any such action.
10.11. Employment of Agents. In connection with its activities
hereunder, Agent may employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it or its authorized
agents, for the default or misconduct of agents or attorneys-in-fact selected
with reasonable care.
10.12. Reliance on Documents. Agent shall be entitled to rely
upon any paper or document believed by it to be genuine and correct and to have
been signed or sent by the proper person or persons and upon the opinion of its
counsel with respect to legal matters.
10.13. Agent's Rights as a Bank. With respect to its share of
the Indebtedness hereunder, Agent shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not
Agent. Each of the Banks may accept deposits from, lend money to, and generally
engage in any kind of banking or trust business with Borrowers as if it were not
Agent or a Bank hereunder.
10.14. Expenses. Each of the Banks shall reimburse Agent, from
time to time at the request of Agent, for its Pro Rata Share of any expenses
incurred by Agent in connection with the performance of its functions hereunder,
provided however that in the event Banks shall reimburse Agent for expenses for
which Borrowers subsequently reimburse Agent, Agent shall remit to each Bank the
respective amount received from such Bank against such expenses.
10.15. Resignation of Agent. Agent may at any time resign its
position as Agent, without affecting its position as a Bank, by giving written
notice to Banks and Borrowers. Such resignation shall take effect upon the
appointment of a successor Agent in accordance with this Paragraph. In the event
Agent shall resign, Banks shall appoint a bank as successor Agent. If within
thirty (30) days of the Agent's notice of resignation no successor Agent shall
have been appointed by Banks and accepted such appointment, then Agent, in its
discretion may appoint any other bank as a successor Agent.
-54-
10.16. Successor Agent. The successor Agent appointed pursuant
to Paragraph 10.15 shall execute and deliver to its predecessor and Banks an
instrument in writing accepting such appointment, and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested with all
the properties, rights, duties and obligations of its predecessor Agent. The
predecessor Agent shall deliver to its successor Agent forthwith all collateral
security, documents and moneys held by it as Agent, if any, whereupon such
predecessor Agent shall be discharged from its duties and obligations as Agent
under this Agreement.
10.17. Collateral Security. Agent will hold, administer and
manage any collateral security pledged from time to time hereunder either in its
own name or as Agent, but each Bank shall hold a direct, undivided pro-rata
beneficial interest therein, on the basis of its Pro Rata Share, by reason of
and as evidenced by this Agreement.
10.18. Enforcement by Agent. All rights of action under this
Agreement and under the Promissory Notes and all rights to the collateral
security, if any, hereunder may be enforced by Agent and any suit or proceeding
instituted by Agent in furtherance of such enforcement shall be brought in its
name as Agent without the necessity of joining as plaintiffs or defendants any
other Banks, and the recovery of any judgment shall be for the benefit of Banks
subject to the expenses of Agent.
SECTION ELEVEN
GUARANTY
--------
11.1. Guaranty. Each Guarantor hereby irrevocably, absolutely
and unconditionally guarantees and becomes surety for the full, prompt and
punctual payment to Banks, as and when due, whether at maturity, by acceleration
or otherwise, of any and all Indebtedness, liabilities and obligations of the
Borrowers to Banks created at any time under, or pursuant to the terms of, this
Agreement and of the Promissory Notes, whether for principal, interest,
premiums, fees, expenses or otherwise (all such indebtedness, liabilities and
obligations being called in this Section Eleven collectively the "Obligations"),
together with any and all reasonable expenses, including attorneys' fees and
disbursements, which may be incurred by Agent in enforcing any and all rights
against Guarantors under this Agreement (herein the "Expenses").
11.2. Bankruptcy. Without limiting Guarantors' obligations
hereunder and notwithstanding any purported termination of this Section Eleven
or this Agreement, if any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation, dissolution, assignment for the benefit
of creditors, or similar event with respect to the Borrowers or any additional
guarantor or endorser of all or any of the Obligations and Expenses shall occur,
and such occurrence shall result in the return of (or if in such event a Bank
shall be requested to return) any payment or performance of any of the
Obligations or Expenses, then the obligations of each Guarantor hereunder shall
be reinstated with respect to such payment or performance
-55-
returned or requested to be returned and with respect to all further obligations
arising as a result of such return or request, and each Guarantor shall
thereupon be liable therefor, without any obligation on the part of any Bank to
contest or resist any such return.
11.3. Nature and Term of Guaranty. The obligations of each
Guarantor under this Section Eleven shall be independent, absolute, irrevocable
and unconditional and shall remain in full force and effect until the
Obligations and all other amounts payable hereunder shall have been paid in full
(subject, however, to reinstatement under Paragraph 11.2 hereof).
11.4. Rights and Remedies of Agent. Agent, acting on behalf of
Banks, may proceed to exercise any right or remedy which it may have under this
Section Eleven against Guarantors without first pursuing or exhausting any
rights or remedies which it may have against the Borrowers, any additional
guarantor or against any other person or entity or any collateral security, and
may proceed to exercise any right or remedy which it may have under this Section
Eleven without regard to any actions or omissions of any other person or entity,
in any manner or order, without any obligation to marshal in favor of Guarantors
or other persons or entities and without releasing any of Guarantors'
obligations hereunder with respect to any unpaid Obligations and Expenses. No
remedy herein conferred upon or reserved to Agent is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Section Eleven or now or hereafter existing at law or in equity.
11.5. Actions by Agent Not Affecting Guaranty. Agent, acting
on behalf of Banks, or Banks, in accordance with Paragraph 10.3 of this
Agreement, may, at any time or from time to time, in such manner and upon such
terms as Banks may deem proper, extend or change the time of payment or the
manner or place of payment of, or otherwise modify or waive any of the terms of,
or release, exchange, settle or compromise any or all of the Obligations and
Expenses or any collateral security therefor, or subordinate payment of the
same, or any part thereof, to the payment of any other indebtedness, liabilities
or obligations of Borrowers which may at any time be due or owing to Banks or
anyone, or elect not to enforce any of Banks' rights with respect to any or all
of the Obligations and Expenses or any collateral security therefor, all without
notice to, or further assent of, Guarantors and without releasing or affecting
Guarantors' obligations under this Section Eleven.
11.6. Payment in Accordance with Promissory Notes and Credit
Agreement. This Section Eleven shall be construed as guaranteeing that the
Obligations and Expenses shall be paid strictly in accordance with the terms of
the Promissory Notes and this Agreement, regardless of any non-perfection of any
collateral security for the Obligations; any invalidity or unenforceability of
this Agreement, the Promissory Notes or any of the Obligations; the voluntary or
involuntary liquidation, dissolution, sale or other disposition of all, or
substantially all of the assets, marshaling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with creditors or readjustment of, or
other similar proceedings affecting Borrowers, Guarantors or any
-56-
additional guarantor or endorser of any or all of the Obligations and Expenses
or any of the assets of any of them, or any contest of the validity of this
Section Eleven in any such proceeding; or any law, regulation or decree now or
hereafter in effect in any jurisdiction which might in any manner affect any of
such terms or provisions or any of the rights of Agent with respect thereto or
which might cause or permit Borrowers or any additional guarantor or endorser of
the Obligations and Expenses to invoke any defense to, or any alteration in the
time, amount or manner of payment of any or all of the Obligations and Expenses
or performance of this Section Eleven.
11.7. Payments Under Guaranty. All payments by Guarantors
hereunder shall be made in immediately available funds and in lawful money of
the United States of America to Agent at its office at 1339 Chestnut Street,
Philadelphia, PA 19107 or at such other location as Agent shall specify by
notice to Guarantors.
11.8. Waivers and Modifications. No failure or delay on the
part of Agent in exercising any power or right under this Section Eleven against
Guarantors shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power preclude any other or further exercise
thereof or the exercise of any other right or power under this Section Eleven.
No modification or waiver of any provision of this Section Eleven, nor consent
to any departure therefrom, shall, in any event, be effective unless the same is
in writing signed by Agent and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice to,
or demand on Guarantors, in any case, shall entitle the Guarantors to any other
or further notice or demand in similar or other circumstances.
11.9. Waiver. Each Guarantor hereby waives promptness,
diligence, presentment, demand, notice of acceptance and any other notice with
respect to any of the Obligations and this Section Eleven, except notice of
demand for payment hereunder.
11.10. Subordination of Rights of Subrogation. Guarantors
shall not exercise any rights which Guarantors may acquire by way of subrogation
under this Section Eleven, applicable law or otherwise, by any payment made
hereunder or otherwise, until all of the Obligations and Expenses and all other
amounts payable hereunder (including amounts which may become due following a
reinstatement hereof under Paragraph 11.2 hereof) shall have been paid in full
in cash. If any amount shall be paid to any Guarantor on account of such rights
at any time when all the Obligations and Expenses shall not have been paid in
full (including amounts which may become due following a reinstatement hereof
under Paragraph 11.2 hereof), such amount paid to such Guarantor shall be held
in trust for the benefit of Banks and shall forthwith be paid to Agent to be
credited and applied against the Obligations and Expenses, whether matured or
unmatured, in accordance with the terms of the Promissory Notes and this
Agreement; provided, however, that to the extent not prohibited by applicable
law or affecting the Banks' or holder of the Senior Notes right to retain such
funds, Banks shall retain Banks' Applicable Share of the Net Cash Proceeds of
any amount so recovered and the remainder shall be shared with the holder of the
Senior Notes. If any Guarantor shall make payment to Agent of all or any part of
the Obligations
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and Expenses and all of the Obligations and Expenses shall be paid in full,
Agent shall, at such Guarantor's request, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer, by subrogation, to Guarantor of an interest
in the Obligations resulting from such payment by Guarantor.
11.11. No Setoff by Guarantors. No setoff, counterclaim,
reduction, or diminution of any obligation, or any defense of any kind or nature
which Guarantors have or may have against Borrowers or any Bank shall be
available hereunder to Guarantors.
11.12. Continuing Guaranty; Transfer of Promissory Note.
Except as provided in Paragraph 11.2. hereof, this Section Eleven is a
continuing guaranty and shall (i) remain in full force and effect until the
Obligations and Expenses and all other amounts payable under this Section Eleven
shall have been paid in full (subject, however, to reinstatement under Paragraph
11.2 hereof), (ii) be binding upon Guarantors and the successors and assigns of
Guarantors, and (iii) inure to the benefit of Banks, and be enforceable by Agent
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (iii), any Bank may, to the extent permitted in this
Agreement endorse, assign or otherwise transfer its Promissory Notes to any
other person or entity, including the Federal Reserve, and such other person or
entity shall thereupon become vested with all the rights in respect thereof
granted to such Bank herein or otherwise.
11.13. Representations and Warranties; Covenants. By signing
in the place provided below, each Guarantor hereby makes the representations and
warranties set forth in this Agreement and hereby agrees to the covenants and
other agreements of the Guarantors to the extent set forth in this Agreement.
SECTION TWELVE
MISCELLANEOUS
-------------
12.1. Indemnification. Each Borrower and each Guarantor hereby
agrees to defend Agent and each Bank and its directors, officers, agents,
employees and counsel (each an "Indemnified Party") from, and hold each of them
harmless against, any and all losses, liabilities (including without limitation
settlement costs and amounts, transfer taxes, documentary taxes, or assessments
or charges made by any governmental authority other than taxes imposed on the
net income of a Bank), claims, damages, interests, judgments, costs, or
expenses, including without limitation reasonable fees and disbursements of
counsel, incurred by any of them arising out of or in connection with or by
reason of this Agreement, the Commitment or the making of the Loan, including
without limitation, any and all losses, liabilities, claims, damages, interests,
judgments, costs or expenses relating to or arising under any Environmental
Control Statute or the application of any such Statute to any Borrower's or
Subsidiary's properties or assets, provided, that no Borrower or Subsidiary
shall be liable for any portion of such losses, liabilities, claims,
-58-
damages, interests, judgments, costs and expenses resulting from the gross
negligence or willful misconduct of an Indemnified Party. All obligations
provided for in this Paragraph 12.1 shall survive any termination of this
Agreement or the Commitment and the repayment of the Loan.
12.2. Participations and Assignments. Each Borrower hereby
acknowledges and agrees that a Bank may at any time: (a) grant Participations in
its right, title and interest therein or in or to this Agreement (collectively,
"Participations") to any other lending office or to any other bank, lending
institution or other entity which has the requisite sophistication to evaluate
the merits and risks of investments in Participations (collectively,
"Participants"); provided, however, that: (i) all amounts payable by Borrowers
hereunder shall be determined as if such Bank had not granted such
Participation; and (ii) any agreement pursuant to which any Bank may grant a
Participation: (x) shall provide that such Bank shall retain the sole right and
responsibility to enforce the obligations of Borrowers hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provisions of this Agreement; (y) such participation agreement may
provide that such Bank will not agree to any modification, amendment or waiver
of this Agreement without the consent of the Participant if such amendment,
modification or waiver would reduce the principal of or rate of interest on the
Loan or postpone the date fixed for any payment of principal of or interest on
the Loan or release the guaranty provided for herein; and (z) shall not relieve
such Bank from its obligations, which shall remain absolute, to make Advances
hereunder and (b) assign its right, title and interest therein or in and to this
Agreement in an aggregate amount of at least the lesser of (i) Five Million
Dollars ($5,000,000) or (ii) its remaining interest in the Loan, to a third
party with the prior written consent of the Agent and in the absence of a
Default or an Event of Default, the Company, which consent of the Company shall
not be unreasonably withheld (provided, however, that a Bank may assign up to
one hundred percent (100%) of its interests and consent shall not be required in
connection with (i) an assignment from a Bank to its affiliate or another Bank
or (ii) a pledge by a Bank to its Federal Reserve Bank) and upon payment to
Agent of a transfer fee in the amount of $3,500.
12.3. Binding and Governing Law. This Agreement and all
documents executed hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that Borrowers may not assign this Agreement without the
prior written consent of Banks, and shall be governed as to their validity,
interpretation and effect by the laws of the Commonwealth of Pennsylvania.
12.4. Survival. All agreements, representations, warranties
and covenants of Borrowers contained herein or in any documentation required
hereunder shall survive the execution of this Agreement and the making of the
Loan hereunder and except for Paragraphs 6.10 and 12.1 which provide otherwise
and any amounts which may arise under Paragraphs 2.6(d), 2.7(c) and 2.10 hereof,
will continue in full force and effect as long as any indebtedness or other
obligation of Borrowers to any Bank remains outstanding.
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12.5. No Waiver; Delay. If Banks or any of them shall waive
any power, right or remedy arising hereunder or under any applicable law, such
waiver shall not be deemed to be a waiver upon any other Bank or the later
occurrence or recurrence of any of said events with respect to any Bank. No
delay by Banks in the exercise of any power, right or remedy shall, under any
circumstances, constitute or be deemed to be a waiver, express or implied, of
the same and no course of dealing between the parties hereto shall constitute a
waiver of Banks' powers, rights or remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
12.6. Modification/Waiver. Except as otherwise provided in
this Agreement, no modification or amendment hereof, or waiver or consent
hereunder, shall be effective unless made in a writing signed by appropriate
officers of the parties hereto.
12.7. Headings. The various headings in this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provision hereof.
12.8. Notices. Any notice, request or consent required
hereunder or in connection herewith shall be deemed satisfactorily given if in
writing (including by facsimile transmissions) and delivered by hand or mailed
(registered or certified mail) to the Banks to the attention of the individuals
and at the respective addresses or telecopier numbers set forth in Schedule 3 to
this Agreement and to Borrowers and Guarantors to the attention of the Chief
Financial Officer, SunSource Inc. at the address of Borrowers set forth on page
1 hereof and at telecopy number 215-282-1309 or such other addresses or
telecopier numbers as may be given by any party to the others in writing.
12.9. Payment on Non-Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day other than a Business Day,
such payment may be made on the next succeeding Business Day, provided however
that such extension of time shall be included in the computation of interest due
in conjunction with such payment or other fees due hereunder, as the case may
be.
12.10. Time of Day. All time of day restrictions imposed
herein shall be calculated using Agent's local time.
12.11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
12.12. Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all the signatures on such
counterparts appeared on one document, and each such counterpart shall be deemed
to be an original.
12.13. Consent to Jurisdiction and Service of Process. Each
Borrower and each Subsidiary irrevocably appoints each and every officer of the
Company as its attorney
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upon whom may be served any notice, process or pleading in any action or
proceeding against it arising out of or in connection with this Agreement, the
Promissory Notes or any document executed or action taken in connection
therewith; and each Borrower hereby consents that any action or proceeding
against it be commenced and maintained in any court within the Commonwealth of
Pennsylvania or in the United States District Court for the Eastern District of
Pennsylvania by service of process on any such officer; and each Borrower agrees
that the courts of the Commonwealth of Pennsylvania and the United States
District Court for the Eastern District of Pennsylvania shall have jurisdiction
with respect to the subject matter hereof and the person of each Borrower.
Notwithstanding the foregoing, a Bank, in its absolute any discretion may also
initiate proceedings in the courts of any other jurisdiction in which each
Borrower may be found or in which any of its properties may be located.
12.14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE PROMISSORY NOTE OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
ANY BANK OR AGENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH BANK'S
ENTERING INTO THIS AGREEMENT.
12.15. ACKNOWLEDGMENTS. EACH BORROWER AND EACH SUBSIDIARY
ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF COUNSEL IN THE REVIEW AND
EXECUTION OF THIS AGREEMENT AND, SPECIFICALLY, PARAGRAPH 12.14 HEREOF, AND
FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE FOREGOING WAIVER OF JURY
TRIAL HAVE BEEN FULLY EXPLAINED TO EACH BORROWER AND EACH SUBSIDIARY BY SUCH
COUNSEL.
12.16. Complete Agreement. This Agreement sets forth the
complete agreement of the parties hereto with respect to the matters addressed
herein, and supersedes any prior
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written agreement or any prior or simultaneous oral agreements between the
parties with respect to the same subject matter.
IN WITNESS WHEREOF, the undersigned, by their duly authorized
partners or officers, as applicable, have executed this Agreement the day and
year first above written.
SUNSOURCE INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
SUNSOURCE INVESTMENT COMPANY,
INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
SUNSUB A INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
THE HILLMAN GROUP, INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
[EXECUTIONS CONTINUED]
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HARDING GLASS, INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
SUNSOURCE INDUSTRIAL SERVICES
COMPANY, INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
SUNSOURCE CORPORATE GROUP, INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
KAR PRODUCTS INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
SUNSOURCE INVENTORY
MANAGEMENT COMPANY, INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
[EXECUTIONS CONTINUED]
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SUNSOURCE TECHNOLOGY SERVICES
INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
FIRST UNION NATIONAL BANK, successor
by merger to CoreStates Bank, N.A.,
individually and in its capacity as
Agent hereunder
By: ________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By: ________________________________
Name:
Title:
FIFTH THIRD BANK
By: ________________________________
Name:
Title:
SUNTRUST BANK, ATLANTA
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
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SCHEDULE I
SUBSIDIARIES OF SUNSOURCE INC.
THAT ARE BORROWERS UNDER THE CREDIT AGREEMENT
SunSource Investment Company, Inc.
SunSub A Inc.
The Hillman Group, Inc.
Harding Glass, Inc.
SunSource Industrial Services Company, Inc.
SunSource Corporate Group, Inc.
SunSource Inventory Management Company, Inc.
SunSource Technology Services Inc.
Kar Products Inc.
SCHEDULE II
SUBSIDIARIES OF SUNSOURCE INC.
THAT ARE GUARANTORS UNDER THE CREDIT AGREEMENT
None
Superseded by Exhibit B to Joinder
SCHEDULE 3
----------
Maximum
Principal Percentage of
Banks Amount Commitment
----- --------- -------------
First Union National Bank
1339 Chestnut Street
Philadelphia, Pennsylvania 19101 $23,000,000 30.67%
Attention: Robert Brown
Telecopy No.: (215) 786-2877
The Bank of Nova Scotia
26th Floor
One Liberty Plaza $23,000,000 30.67%
New York, New York 10006
Attention: Philip N. Adsetts
Telecopy No.: (212) 225-5091
Fifth Third Bank
38 Fountain Square Plaza
MD 109054 $13,000,000 17.33%
Cincinnati, Ohio 45263
Attention: Thomas G. Welch, Jr.
Telecopy No.: (513) 579-5226
SunTrust Banks, Inc.
711 Fifth Avenue, 16th Floor $16,000,000 21.33%
New York, New York 10022
Attention: Maria Mamilovich
Telecopy No.: (212) 371-9386
----------- --------
Total $75,000,000 100%
EXHIBIT A
ADVANCE/CREDIT REQUEST FORM
---------------------------
In accordance with Paragraph 2.7, 2.13 or 3.3 (as applicable)
of the Second Amended and Restated Credit Agreement (as amended, the
"Agreement") dated December 31, 1998 among First Union National Bank, for itself
and as Agent, The Bank of Nova Scotia, for itself and as Documentation Agent,
and the Banks set forth on Schedule 3 to the Agreement (collectively referred to
herein as the "Banks"); SunSource, Inc. and its Subsidiaries as set forth on
Schedule 1 to the Agreement (the "Borrowers"); and the Subsidiaries as set forth
on Schedule 2 to the Agreement (the "Guarantors"), Borrowers hereby request an
Advance and/or a Letter of Credit under the Commitment.
The undersigned hereby requests, represents and certifies that
as of the date hereof and the date of the requested Advance and/or Letter(s) of
Credit (receipt of such Advance and/or issuance of such Letter(s) of Credit, as
applicable, being deemed an affirmation of paragraphs (a) through (i) below):
(a) The aggregate amount of the requested Advance is
$____________(1) and/or the aggregate face amount of the requested Letter(s) of
Credit is ________________(2);
(b) The interest rate options which the Borrowers elect to
apply to the Advance are the Adjusted Libor Rate for a Portion of
$_______________ with an Interest Period of ____ month(s); and the Base Rate for
a Portion of $_______________;
(c) The Advance is to be used for purposes permitted by
Paragraph 2.4 of the Agreement;
(d) The date on which the requested Advance is to be made
and/or Letter(s) of Credit is (are) to be issued is ____________.
- --------
(1) Advances for Base Rate Loans and Adjusted Libor Rate Loans must be in
multiples of $100,000, but not less than the lesser of $2,000,000 or the
unborrowed balance of the Commitment.
(2) If a Letter of Credit is requested, a completed Letter of Credit
Application shall accompany this Advance Request Form.
(e) The Borrowers are in compliance and will be in compliance
following receipt of the requested Advance or the issuance of the Letter of
Credit, as applicable, with Paragraphs 6.13 through 6.15 and Section Seven of
the Agreement;
(f) The representations and warranties set forth in Section
Four of the Agreement are true and correct;
(g) No Default or Event of Default under the Agreement has
occurred and is continuing or will be caused by the requested Advance and/or
Letter of Credit; and
(h) There has been no Material Adverse Change since the date
of the quarterly and audited annual financial statements most recently delivered
to Banks pursuant to Paragraph 5.1(e), 6.2 or 6.3 of the Agreement (as
applicable).
Capitalized terms used herein and not defined shall have the
respective meanings set forth in the Agreement.
IN WITNESS WHEREOF, the undersigned, being the Chief Financial
Officer or Controller of SunSource Inc., has executed this Advance/Credit
Request Form this ____ day of _______________, ____.
SUNSOURCE INC., for itself and on behalf of
the other Borrowers
By: _______________________________________
Name:
Title:
EXHIBIT B
FORM OF PROMISSORY NOTE
$____________________ December __, 1998
FOR VALUE RECEIVED, the undersigned, SUNSOURCE, INC., a
Delaware corporation, and its Subsidiaries set forth on Schedule 1 to the Credit
Agreement referenced below (the "Borrowers"), promise on a joint and several
basis to pay to the order of ____________________, a _______________________
(herein "Bank") at the office designated below of First Union National Bank (the
"Agent") the principal sum of __________________________________ ($_________)
(the "Loan") or such lesser amount as set forth below, payable on the
Termination Date (as defined in accordance with the Credit Agreement); together
with interest on the unpaid balance hereof in accordance with Paragraphs 2.6 and
2.13 of the Credit Agreement.
This Promissory Note arises out of a certain Second Amended
and Restated Credit Agreement dated the date hereof among Bank, First Union
National Bank, for itself and as Agent, The Bank of Nova Scotia, for itself and
as Documentation Agent, and the Banks set forth on Schedule 3 attached thereto
(collectively, the "Banks"), Borrowers, and the Subsidiaries of SunSource, Inc.
set forth on Schedule 2 thereof ("Guarantors") (as amended and as may be further
amended from time to time, the "Credit Agreement"). Reference is made to the
Credit Agreement for a statement of the respective rights and obligations of the
parties and the terms and conditions therein provided under which all or any
part of the principal hereof, accrued interest thereon, and other amounts
payable under the Credit Agreement may become immediately due and payable.
Capitalized terms used, but not otherwise defined, in this Promissory Note shall
have the meanings given to them in the Credit Agreement.
Notwithstanding the face amount of this Promissory Note, the
Borrowers' liability hereunder shall be limited to their actual outstanding
principal indebtedness to the Bank under the Credit Agreement comprising the
aggregate outstanding principal amount of the Bank's Pro Rata Share of all
Advances of the Loan, reimbursement obligations with respect to Letters of
Credit and all interest, fees and expenses in connection with the foregoing.
All principal and interest shall be payable in lawful money of
the United States of America in immediately available funds at the office of
1339 Chestnut Street, Philadelphia, Pennsylvania 19101, as Agent.
The occurrence of an Event of Default under the Credit
Agreement constitutes an Event of Default under this Promissory Note and
entitles the Banks, in accordance with the Credit Agreement, to declare this
Promissory Note immediately due and payable.
The Borrowers hereby waive presentment, demand for payment,
notice of dishonor or acceleration, protest and notice of protest, and any and
all other notices or demands in connection with the delivery, acceptance,
performance, default or enforcement of this Promissory Note, except any notice
requirements set forth in the Credit Agreement.
This Promissory Note shall be binding upon the Borrowers and
their successors and assigns and shall inure to the benefit of the Bank and its
successors and assigns. This Promissory Note shall be governed as to validity,
interpretation and effect by the laws of the Commonwealth of Pennsylvania.
In the event any interest rate applicable hereto is in excess
of the highest rate allowable under applicable law, then the rate of such
interest will be reduced to the highest rate not in excess of such maximum
allowable interest and any excess previously paid by the Borrowers shall be
deemed to have been applied against the principal of the Loan.
THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS PROMISSORY NOTE
OR THE CREDIT AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY BANK OR AGENT. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR BANKS' ENTERING INTO THE CREDIT AGREEMENT.
THE BORROWERS ACKNOWLEDGE THAT THEY HAVE HAD THE ASSISTANCE OF
COUNSEL IN THE REVIEW AND EXECUTION OF THIS PROMISSORY NOTE AND THAT THE MEANING
AND EFFECT OF THE FOREGOING WAIVER OF JURY TRIAL HAS BEEN FULLY EXPLAINED TO THE
BORROWERS BY SUCH COUNSEL.
IN WITNESS WHEREOF, the undersigned have executed this
Promissory Note under seal the day and year first above written.
SUNSOURCE INC.
By: ___________________________
Name:
Title:
SUNSOURCE INVESTMENT COMPANY,
INC.
By: ___________________________
Name:
Title:
SUNSUB A INC.
By: ___________________________
Name:
Title:
THE HILLMAN GROUP, INC.
By: ___________________________
Name:
Title:
[EXECUTIONS CONTINUED]
HARDING GLASS, INC.
By: ___________________________
Name:
Title:
SUNSOURCE INDUSTRIAL SERVICES
COMPANY, INC.
By: ___________________________
Name:
Title:
SUNSOURCE CORPORATE GROUP, INC.
By: ___________________________
Name:
Title:
KAR PRODUCTS INC.
By: ___________________________
Name:
Title:
SUNSOURCE INVENTORY MANAGEMENT
COMPANY, INC.
By: ___________________________
Name:
Title:
SUNSOURCE TECHNOLOGY SERVICES
INC.
By: ___________________________
Name:
Title:
EXHIBIT C
FUNDING COSTS CALCULATION
-------------------------
If a Borrower is liable to a Bank for funding costs pursuant
to Paragraph 2.6(d), 2.7(c) or 2.10 of the Credit Agreement, then on (i) the
date of failure to meet the conditions to an Advance for which the Libor-Based
Rate has been selected or (ii) the repayment or prepayment date, as the case may
be, such Borrower shall pay such Bank an amount, not less than zero, as
calculated by Agent in accordance with the following formula:
(Libor-Based Rate, applicable to the Portion not funded or
being repaid or prepaid minus one and one-fourth percent (1 1/4%) per annum) -
(the Applicable Libor Rate)
X
(the principal amount of the Portion not funded or being repaid or prepaid)
X
(the number of days in the Interest Period selected for any
Portion not funded or the number of days to but excluding the last day in the
Interest Period for any Portion being repaid or prepaid) divided by 365
The "Applicable Libor Rate" shall mean the Adjusted Libor Rate
as defined in the Credit Agreement, determined at or about 11:00 a.m. London
time on the first Business Day in London following the date of failure to meet
the conditions to an Advance or of repayment or prepayment for deposits of
United States Dollars in amount or amounts substantially equal in the aggregate
to the amount not funded or being repaid or prepaid and with a maturity or
maturities substantially equal to the period or periods of time between the date
of failure to fund or date of repayment or prepayment and the date or dates such
amount would otherwise have matured and become repayable under the Credit
Agreement.
EXHIBIT E Page 1 of 4
DISCLOSURE PURSUANT TO REPRESENTATIONS AND WARRANTIES
4.4 Material Contracts
- ----------------------
None
4.5 Compliance
- --------------
None
4.6 Litigation
- --------------
On February 27, 1996, a lawsuit was filed against the Company by the buyer of
its Dorman Products division, R&B, Inc. ("R&B") for alleged misrepresentation of
certain facts by the Company upon which R&B allegedly based its offer to
purchase Dorman. The complaint seeks damages of approximately $21,000,000,
although the Company believes that any recovery by R&B will be substantially
lower. In 1998, the Company and R&B agreed to an arbitration process with
respect to certain unresolved post-closing adjustments. In the third quarter the
Company recorded a pre-tax charge of $1,300,000 which management estimates is
the Company's maximum exposure related to these post-closing issues. On December
4, 1998 a hearing was held by the arbitrator on these matters and his decision
is expected by January 7, 1998. It is unclear what impact the arbitration
decision will have on the ultimate resolution of this litigation. R&B has
offered to settle the arbitration and litigation for the amount of $10,000,000.
The Company is in the process of determining its response to this settlement
offer but would not expect to exceed the amount of the reserve indicated above.
4.7 Title to Assets
- -------------------
See the Attached Schedule of Indebtedness and Obligations for Secured
Assets and Lease Obligations as of November 30, 1998 also as described
in Notes 9, 10 and 11 to Consolidated Financial Statements of the
Company and Subsidiaries as of and for the period ended December 31,
1997, previously furnished to the Banks.
Page 2 of 4
4.8 Capital Stock
- ------------------
The number of shares and classes of capital stock of each Borrower and
each Subsidiary and the ownership thereof effective upon the 1998
Conversion are as follows:
Ownership of the Company
- ------------------------
Authorized Shares: 1,000 shares of Preferred Stock, $.01 par value per share
20,000,000 shares of Common Stock , $.01 par vaule per share
Outstanding: Preferred stock: none
Common stock: 6,756,129 shares (directors and executive
officers ownership is approximately 21% of shares
outstanding).
Treasury: 461,100 common shares.
Ownership of SunSource Investment Company, Inc.
- -----------------------------------------------
Authorized Shares: 100 shares of Common Stock, $.01 par value per share
Outstanding: 100 shares issued to SunSource, Inc.
Ownership of SunSub A Inc.
- --------------------------
Authorized Shares: 100 shares of Common Stock, $.01 par value per share
Outstanding: 100 shares issued to SunSource Investment Company, Inc.
Ownership of The Hillman Group, Inc.
- ------------------------------------
Authorized Shares: 100 shares of Common Stock, $.01 par value per share
Outstanding: 100 shares issued to SunSub A Inc.
Ownership of Harding Glass, Inc.
- --------------------------------
Authorized Shares: 100 shares of Common Stock, $.01 par value per share
Outstanding: 100 shares issued to SunSub A Inc.
Ownership of SunSource Industrial Services Company, Inc.
- --------------------------------------------------------
Authorized Shares: 100 shares of Common Stock, $.01 par value per share
Outstanding: 100 shares issued to SunSub A Inc.
Ownership of SunSource Corporate Group, Inc.
- --------------------------------------------
Authorized Shares: 100 shares of Common Stock, $.01 par value per share
Outstanding: 100 shares issued to SunSub A Inc.
Ownership of SunSource Inventory Management Company, Inc.
- ---------------------------------------------------------
Authorized Shares: 100 shares of Common Stock, $.01 par value per share
Outstanding: 100 shares issued to SunSource Industrial Services Company,
Inc.
Page 3 of 4
4.8 Capital Stock, continued
- -----------------------------
Ownership of SunSource Technology Services Inc.
- -----------------------------------------------
Authorized Shares: 100 shares of Common Stock, $.01 par value per share
Outstanding: 100 shares issued to SunSource Industrial Services Company,
Inc.
Ownership of Kar Products, Inc.
- -------------------------------
Authorized Shares: 100 shares of Common Stock, $.01 par value per share
Outstanding: 100 shares issued to SunSource Industrial Services Company,
Inc.
Ownership of A & H Holding Co., Inc.
- ------------------------------------
Outstanding: 100 shares issued to Kar Products Inc.
Ownership of Hydra Power de Mexico
- ----------------------------------
Outstanding 49,998 shares of Common Stock issued to A&H Holding Co., Inc.
Ownership of SIMCO de Mexico
- ----------------------------
Outstanding 98 shares of Common Stock issued to A&H Holding Co., Inc.
Ownership of SunSource Canada Investment company LLC
- ----------------------------------------------------
Outstanding 100 shares of Common Stock issued to A&H Holding Co., Inc.
Ownership of J. N. Fauver (Canada), Ltd.
- ---------------------------------------
Outstanding: 5 shares of Common Stock issued to SunSource Canada
Investment Company LLC.
Ownership of A & H Bolt & Nut Company, Ltd.
- -------------------------------------------
Outstanding: 306 Class B special shares issued to SunSource Canada
Investment Company LLC
4.10 (c) Taxes and Assessments
- ------------------------------
The Internal Revenue Service and/or various State Taxing Authorities have in
progress income tax audits of records for the years 1982 through 1984. The
Company has assumed the agreements of Sun Distributors, Inc., to extend the time
for assessment of tax for tax periods 1985, 1986 and January 1, 1987 through
February 11, 1987. There have been no tax audits by the Internal Revenue Service
of records of the Company, SDI, SDIPI, SunSub A and SunSub B to date nor have
agreements to extend the time for assessment been executed to date. Various
State taxing authorities have in progress tax audits of records of the Company.
Page 4 of 4
4.11 Indebtedness
- -----------------
- - See the Attached Schedule of Indebtedness and Obligations
- - Lease Obligations as described in Note 11 to Consolidated Financial
Statements of SunSource Inc. and Subsidiaries as of and for the period ended
December 31, 1997, furnished to the Banks.
4.12 Management Agreements
- --------------------------
Arthur Anderson -- Restructuring Consulting
PricewaterhouseCoopers -- Annual Audit and Tax Compliance
Registrar & Transfer Co. -- Transfer Agent
Frank Russell Trust Co. -- Investment Manager, Retirement Plans
4.13 Subsidiaries and Investments
- ---------------------------------
Employee advances aggregating $ 20,000 as of September 30, 1998.
4.14 ERISA
- ----------
Unfunded liabilities for post-retirement life or health benefits are estimated
for the following Operating Division: J. N. Fauver Company $452,000
The Company is a party to multi-employer pension plans of which there was no
withdrawal liability as of December 31, 1997, but which could have withdrawal
liability in the future. The multi-employer pension plans are as follows:
Harding Glass Industries - International Brotherhood of Painters and Allied
Trades Pension Trust--Glaziers, Architectural
Metal and Glassworkers Local #930 and Glaziers
Local #911
- Glaziers Local #930 Pension Trust
- Western Conference of Teamsters Pension Trust
4.17 Hazardous Wastes, Substances and Petroleum Products
- --------------------------------------------------------
Philips & Company
- -----------------
Mid-MO Superfund Site --Limited Liability Expected
Downey Glass Company
- --------------------
Operating Industries, Inc. Landfill Superfund Site
Liability not expected to exceed $300,000 recorded on the books of SunSource
Inc. as of September 30, 1998.
SDI OPERATING PARTNERS, L.P.
SCHEDULE OF INDEBTEDNESS
AS OF 11/30/98
(in thousands)
TOTAL
OUTSTANDING
PRINCIPAL
OBLIGOR HOLDER BALANCE SECURITY
=============================================== ============================================ =================== ============
s
SDI Operating Partners, L.P. Teachers Insurance Co. $ 60,000 Unsecured
Senior Debt
SDI Operating Partners, L.P. Cananwell Finance Co. 884 Unsecured
Debt
SDI Operating Partners, L.P. First Union National Bank - Revolving Credit 11,440 Unsecured
Senior Debt
The Bank of Nova Scotia - Revolving Credit 11,440 Unsecured
Senior Debt
Fifth Third Bank - Revolving Credit 6,160 Unsecured
Senior Debt
SunTrust Banks, Inc. - Revolving Credit 6,160 Unsecured
Senior Debt
The Fuji Bank, Limited - Revolving Credit 8,800 Unsecured
----------------- Senior Debt
Total Revolving Credit 44,000
-----------------
A&H Bolt - A division of SDI Operating Partners, L.P. Bank of Nova Scotia - Unsecured
line of
credit
Harding Glass - A division of SDI Operating Partners, L.P. L.O.F. Trade Notes 974 Glass
Inventory
Hillman Fastener - A division of SDI Operating Partners, L.P. Fifth Third 862 Capital
Leases -
Packaging
Equipment
------------------
Total $ 106,720
==================
SDI OPERATING PARTNERS, L.P.
EXISTING LETTERS OF CREDIT
AS OF 11/30/98
(in thousands)
DIVISION ISSUING BANK BENEFICIARY AMOUNT
=============================== ==================== =================================================== ===============
Stand-By Letters of Credit:
Business Insurance - Loss Casualty Program:
SunSource Headquarters First Union Legion Ins. Co. - 5th/6th Policy Years $ 1,750
SunSource Headquarters First Union Mutual Indemnity - 1st - 4th Policy Years(1) 1,300
---------------
Total Stand-By Letters of Credit $ 3,050
---------------
................................................................................................................... ...............
Documentary or Trade Letters of Credit:
Hillman Fastener First Union 467
Kar Products First Union 23
---------------
Total Documentary Letters of Credit $ 490
===============
---------------
Grand Total - All LOC's $ 3,540
===============
(1) Issued on December 15, 1998
EXHIBIT F
Form of Compliance Certificate
------------------------------
To: The Banks, as defined in the Second Amended and Restated Credit
Agreement dated December 31, 1998 (as may be further amended,
the "Agreement")
Attached hereto are the financial statements and other items required to
be delivered to Banks pursuant to Paragraph 6.2 or 6.3 of the Agreement. All
capitalized terms used but not defined in this certificate shall have the
meanings set forth in the Agreement.
The undersigned hereby certify that:
1. The attached financial statements were prepared in accordance with
GAAP consistently applied and fairly present the financial condition
of SunSource Inc. and its Consolidated Subsidiaries as of the date
made and for the period covered.
2. As of the date of such financial statements, there exists no
violation of any provision of the Agreement and there has not been an
Event of Default or a Default, except as described in Item 3 below.
3. The following event or circumstance, is, or with the passage of time
or giving of notice will be, an Event of
Default:________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
4. The following actions are being taken with respect to the matter(s)
identified in Item 3
above:_______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
5. Attached hereto as Schedule 1 are the calculations of the covenants
set forth in Paragraphs 6.13 through 6.15 and certain paragraphs in
Section Seven of the Agreement.
IN WITNESS WHEREOF, the undersigned, being the chief financial officer
or controller of SunSource Inc., has executed and delivered this certificate
this ____ day of ____________________, ____.
SUNSOURCE INC., for itself and on behalf
of the other Borrowers
By: _______________________________
Name:
Title:
SCHEDULE 1
I. CAPITALIZATION RATIO (Paragraph 6.13 of the Credit Agreement)
A. Funded Debt
Indebtedness for borrowed money $__________
Indebtedness evidenced by notes, debentures $__________
or similar instruments
Capital Leases $__________
Guarantees of Indebtedness or Capital Leases $__________
Letters of Credit and letter of credit $__________
reimbursement obligations
(A) $__________
B. Net Worth
Total Assets $__________
Minus Total Liabilities $__________
(B) $__________
C. Total Capital
Funded Debt (Line A above) $__________
Outstanding principal amount of Junior $__________
Subordinated Debentures
Net Worth (Line B Above) $__________
(C) $__________
Capitalization Ratio (ratio of (A) to (C)): ________
Covenant:
(i) last day of each of the first two fiscal quarters of each
fiscal year: 62%
(ii) last day of each of the last two fiscal quarters of each
fiscal year: 60%
Compliance: ____YES ____NO
II. FIXED CHARGE COVERAGE RATIO (Paragraph 6.14 of the Credit Agreement)
A. Adjusted EBITDAR for the most recent Rolling
Period
1. EBITDA
a. Net Income
Gross revenue (excluding $__________
extraordinary gains and
losses)
minus all expenses and other proper $__________
charges (including taxes on
income)
$__________
b. Interest Expense (including all $__________
interest paid on the Junior
Subordinated Debentures
(whether paid in cash or in
kind))
c. All provisions for income taxes $__________
d. Depreciation and amortization $__________
expense
e. Extraordinary losses minus $__________
extraordinary gains
(A) $__________
2. Adjusted EBITDAR
a. EBITDA (Total (A) above) $__________
b. Rent expense
$----------
c. minus Capital Expenditures $__________
(B) $__________
3. Fixed Charges
a. Interest Expense (including $__________
interest paid on the
Junior Subordinated
Debentures to the extent
paid in cash)
b. Rent expense $__________
c. Scheduled maturities paid on $__________
Funded Debt (excluding
the Loan)
d. Cash dividends paid by $__________
SunSource Inc.
(C) $__________
Fixed Charge Coverage Ratio (ratio of (B) to (C)): __________
Covenant: As of the last day of each fiscal quarter set forth
in the left hand column, for the Rolling Period ending on such
date, the ratio must not be less than the amount set forth in
the right hand column:
Period Minimum Ratio
------ -------------
Date of Agreement through 12/31/98 1.25
3/31/99 through 9/30/99 1.40
12/31/99 and the last day of each fiscal 1.50
quarter thereafter
Compliance: ____YES ____NO
III. LEVERAGE RATIO (Paragraph 6.15 of the Credit Agreement)
A. Funded Debt (as calculated above) (A) $__________
B. EBITDA (as calculated above) (B) $__________
Leverage Ratio (ratio of (A) to (B)): __________
Covenant: ratio must not be greater than 3.25:1.
Compliance: ____YES ____NO
IV. INDEBTEDNESS (Paragraph 7.1 of the Credit Agreement)
A. Trade Indebtedness (7.1(iv)) $__________
B. Indebtedness for purchase or lease of fixed assets (7.1(v)) $__________
C. Additional principal amounts outstanding of domestic
non-Borrower, non-Guarantor Subsidiaries (7.1(ix)) $__________
D. Additional principal amounts outstanding of foreign
non-Borrower, non-Guarantor Subsidiaries (7.1(x)) $__________
E. Purchase money indebtedness (7.1(xi)) $__________
Compliance ____ YES ____ NO
V. GUARANTIES (Paragraph 7.2 of the Credit Agreement)
A. Guaranties (7.2(i)) $__________
Compliance ____ YES ____ NO
VI. LOANS (Paragraph 7.3 of the Credit Agreement)
A. Loans to domestic non-Borrower, non-Guarantor
Subsidiaries (7.3(ii)) $__________
B. Loans to foreign non-Borrower, non-Guarantor
Subsidiaries (7.3(iii)) $__________
Compliance ____ YES ____ NO
JOINDER
-------
THIS JOINDER is made this __ day of January, 1999 by and among
SUNSOURCE INC. (the "Company"), a Delaware corporation with offices at 3000 One
Logan Square, Philadelphia, Pennsylvania 19103, the subsidiaries of the Company
identified on Schedule 1 attached to the Credit Agreement (as defined below)
(individually and collectively with the Company, the "Borrowers") and the
subsidiaries of the Company identified on Schedule 2 attached to the Credit
Agreement (individually and collectively, the "Guarantors"); FIRST UNION
NATIONAL BANK, a national banking association and successor by merger to
CoreStates Bank, N.A. with offices at 1339 Chestnut Street, Philadelphia,
Pennsylvania 19107, for itself and as administrative agent for the Banks
identified below ("Agent"); THE BANK OF NOVA SCOTIA, a Canadian chartered bank,
with offices at 1 Liberty Plaza, New York, New York 10006 (the "Documentation
Agent"), and the banks identified on Schedule 3 to the Credit Agreement (the
Agent, the Documentation Agent and the banks identified on Schedule 3, each
individually an "Existing Bank" and collectively the "Existing Banks") and PNC
BANK, NATIONAL ASSOCIATION ("PNC"), a national banking association with offices
at 1600 Market Street, Philadelphia, Pennsylvania 19103.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Agent, the Documentation Agent, the Borrowers,
Guarantors and Existing Banks are party to that Second Amended and Restated
Credit Agreement dated December 31, 1998 (as may be amended, the "Credit
Agreement");
WHEREAS, PNC wishes to join in and become a Bank pursuant to
Paragraph 2.1(d) of the Credit Agreement; and
WHEREAS, pursuant to Paragraph 2.1(d) of the Credit Agreement
and this Joinder, the Commitment is being increased by the Additional Commitment
for a total commitment of Ninety Million Dollars ($90,000,000), and the Banks'
respective Maximum Principal Amounts are being amended and restated as set forth
on Exhibit B attached to this Joinder.
NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the undersigned
hereby agree as follows:
1. PNC is hereby made a Bank under the Credit Agreement
pursuant to the terms of Paragraph 2.1(d) thereof, and in
furtherance thereof:
a.. PNC hereby expressly agrees that it shall be
bound by all the terms and conditions of the Credit Agreement,
and shall have the same rights and obligations as the Existing
Banks thereunder.
b. Borrowers shall execute and deliver a Promissory
Note in favor of PNC (the "PNC Note") in the form of Exhibit A
attached hereto.
c.. Banks and Borrowers hereby acknowledge and agree
that the Commitment under the Credit Agreement (which was
Seventy-Five Million Dollars ($75,000,000) on the Effective
Date) is hereby increased by the amount of the Additional
Commitment to a Commitment of Ninety Million Dollars
($90,000,000), and all references in the Credit Agreement to
the term "Commitment" shall hereafter include the Additional
Commitment.
d. Schedule 3 to the Credit Agreement (Banks and
their Maximum Principal Amounts) is hereby amended and
restated in its entirety as set forth on Exhibit B attached
hereto.
2. Representations and Warranties. Borrowers hereby represent
and warrant to Banks as follows:
a. Representations. The representations and
warranties set forth in the Credit Agreement
are true and correct in all respects as of
the date hereof; there is no Event of
Default or Default under the Credit
Agreement; and there has been no Material
Adverse Change since the date of the Credit
Agreement.
b. Power and Authority. Each Borrower has the
power and authority under the law of the
jurisdiction of its incorporation and under
its certificate of incorporation and bylaws
to enter into and perform this Joinder, the
PNC Note and all other agreements, documents
and actions required hereunder to which it
is a party (hereinafter collectively
referred to as the "Joinder Documents"); and
all actions (corporate or otherwise)
necessary or appropriate for the execution
and performance by each Borrower of the
Joinder Documents have been taken and, upon
their execution, the Joinder Documents will
constitute the valid and binding obligations
of each Borrower, enforceable in accordance
with their respective terms.
c. No Violations of Law or Agreements. The
making and performance of the Joinder
Documents by each Borrower will not violate
any provisions of any law or regulation,
foreign, federal, state or local, or the
certificate of incorporation or bylaws of
any Borrower, or result in any breach or
violation of, or constitute a default or
require the obtaining of any consent under,
any agreement or instrument by which any
Borrower or its property may be bound.
3. Miscellaneous.
-------------
a. This Joinder and the Joinder Documents shall
be governed by and construed in accordance
with the laws of the Commonwealth of
Pennsylvania.
b. All terms and provisions of this Joinder and
the Joinder Documents shall be for the
benefit of and be binding upon and
enforceable by the respective successors and
assigns of the parties hereto.
c. This Joinder may be executed in any number
of counterparts with the same effect as if
all the signatures on such counterparts
appeared on one document and each such
counterpart shall be deemed an original.
d. The execution, delivery and performance of
this Joinder and the Joinder Documents shall
not operate as a waiver of any right, power
or remedy of Banks under the Credit
Agreement and the agreements and documents
executed in connection therewith or
constitute a waiver of any provision
thereof.
e. Capitalized terms used and not otherwise
defined herein shall have the meanings
assigned to them in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Joinder
under seal the day and year first above written.
PNC BANK, NATIONAL ASSOCIATION
By: ________________________________
Name:
Title:
SUNSOURCE INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
SUNSOURCE INVESTMENT COMPANY, INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
SUNSUB A INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
THE HILLMAN GROUP, INC.
By: ________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
[EXECUTIONS CONTINUED]
HARDING GLASS, INC.
By: _________________________________
Joseph M. Corvino
Title: Vice President - Finance
SUNSOURCE INDUSTRIAL SERVICES
COMPANY, INC.
By: _________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
SUNSOURCE CORPORATE GROUP, INC.
By: _________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
KAR PRODUCTS INC.
By: _________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
SUNSOURCE INVENTORY MANAGEMENT
COMPANY, INC.
By: _________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
[EXECUTIONS CONTINUED]
SUNSOURCE TECHNOLOGY SERVICES INC.
By: ___________________________________
Name: Joseph M. Corvino
Title: Vice President - Finance
FIRST UNION NATIONAL BANK, successor by
merger to CoreStates Bank, N.A.,
individually and in its capacity as Agent
hereunder
By: ___________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By: ___________________________________
Name:
Title:
FIFTH THIRD BANK
By: ___________________________________
Name:
Title:
SUNTRUST BANK, ATLANTA
By: ___________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
EXHIBIT A
ADVANCE/CREDIT REQUEST FORM
---------------------------
In accordance with Paragraph 2.7, 2.13 or 3.3 (as applicable)
of the Second Amended and Restated Credit Agreement (as amended, the
"Agreement") dated December 31, 1998 among First Union National Bank, for itself
and as Agent, The Bank of Nova Scotia, for itself and as Documentation Agent,
and the Banks set forth on Schedule 3 to the Agreement (collectively referred to
herein as the "Banks"); SunSource, Inc. and its Subsidiaries as set forth on
Schedule 1 to the Agreement (the "Borrowers"); and the Subsidiaries as set forth
on Schedule 2 to the Agreement (the "Guarantors"), Borrowers hereby request an
Advance and/or a Letter of Credit under the Commitment.
The undersigned hereby requests, represents and certifies that
as of the date hereof and the date of the requested Advance and/or Letter(s) of
Credit (receipt of such Advance and/or issuance of such Letter(s) of Credit, as
applicable, being deemed an affirmation of paragraphs (a) through (i) below):
(a) The aggregate amount of the requested Advance is
$____________(3) and/or the aggregate face amount of the requested Letter(s) of
Credit is ________________(4);
(b) The interest rate options which the Borrowers elect to
apply to the Advance are the Adjusted Libor Rate for a Portion of
$_______________ with an Interest Period of ____ month(s); and the Base Rate for
a Portion of $_______________;
(c) The Advance is to be used for purposes permitted by
Paragraph 2.4 of the Agreement;
(d) The date on which the requested Advance is to be made
and/or Letter(s) of Credit is (are) to be issued is ____________.
(e) The Borrowers are in compliance and will be in compliance
following receipt of the requested Advance or the issuance of the Letter of
Credit, as applicable, with Paragraphs 6.13 through 6.15 and Section Seven of
the Agreement;
(f) The representations and warranties set forth in Section
Four of the Agreement are true and correct;
(g) No Default or Event of Default under the Agreement has
occurred and is continuing or will be caused by the requested Advance and/or
Letter of Credit; and
_________________________
(3) Advances for Base Rate Loans and Adjusted Libor Rate Loans must be in
multiples of $100,000, but not less than the lesser of $2,000,000 or the
unborrowed balance of the Commitment.
(4) If a Letter of Credit is requested, a completed Letter of Credit
Application shall accompany this Advance Request Form.
(h) There has been no Material Adverse Change since the date
of the quarterly and audited annual financial statements most recently delivered
to Banks pursuant to Paragraph 5.1(e), 6.2 or 6.3 of the Agreement (as
applicable).
Capitalized terms used herein and not defined shall have the
respective meanings set forth in the Agreement.
IN WITNESS WHEREOF, the undersigned, being the Chief Financial
Officer or Controller of SunSource Inc., has executed this Advance/Credit
Request Form this ____ day of __________________, ____.
SUNSOURCE INC., for itself and on
behalf of the other Borrowers
By: ____________________________
Name:
Title: