Exhibit 10.3
EXECUTION COPY
CREDIT AGREEMENT
Dated as of December 20, 2002
among
ALION SCIENCE AND TECHNOLOGY CORPORATION,
AS THE BORROWER,
THE INSTITUTIONS FROM TIME TO TIME
PARTIES HERETO AS LENDERS,
and
LASALLE BANK NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
================================================================================
LASALLE BANK NATIONAL ASSOCIATION
AS ARRANGER
================================================================================
SIDLEY AUSTIN BROWN & WOOD
Bank One Plaza
10 South Dearborn Street
Chicago, Illinois 60603
TABLE OF CONTENTS
Page
----
ARTICLE I: DEFINITIONS......................................................................1
1.1 Certain Defined Terms; Plural Terms...........................................1
1.2 References...................................................................30
1.3 Supplemental Disclosure......................................................30
1.4 Knowledge With Respect to Representations and Warranties.....................31
ARTICLE II: THE TERM LOAN AND REVOLVING LOAN FACILITIES....................................31
2.1 Term Loans...................................................................31
2.2 Revolving Loans..............................................................33
2.3 Swing Line Loans.............................................................34
2.4 Rate Options for all Advances; Maximum Interest Periods......................36
2.5 Optional Payments; Mandatory Prepayments.....................................36
2.6 Reduction of Commitments.....................................................38
2.7 Method of Borrowing..........................................................38
2.8 Method of Selecting Types and Interest Periods for Advances..................39
2.9 Minimum Amount of Each Advance...............................................39
2.10 Method of Selecting Types and Interest Periods for Conversion and
Continuation of Advances.....................................................39
2.11 Default Rate.................................................................40
2.12 Method of Payment; Collection Account Arrangements...........................40
2.13 Evidence of Debt.............................................................41
2.14 Telephonic Notices...........................................................42
2.15 Promise to Pay; Interest and Commitment Fees; Interest Payment Dates;
Interest and Fee Basis; Taxes; Loan and Control Accounts.....................42
2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate
Revolving Loan Commitment Reductions.........................................47
2.17 Lending Installations........................................................48
2.18 Non-Receipt of Funds by the Administrative Agent.............................48
2.19 Termination Conditions.......................................................48
2.20 Replacement of Certain Lenders...............................................48
ARTICLE III: THE LETTER OF CREDIT FACILITY.................................................49
3.1 Obligation to Issue Letters of Credit........................................49
3.2 Transitional Provision.......................................................49
3.3 Types and Amounts............................................................49
3.4 Conditions...................................................................50
3.5 Procedure for Issuance of Letters of Credit..................................50
3.6 Letter of Credit Participation...............................................51
3.7 Reimbursement Obligation.....................................................51
3.8 Letter of Credit Fees........................................................52
3.9 Issuing Bank Reporting Requirements..........................................52
3.10 Indemnification; Exoneration.................................................53
i
3.11 Cash Collateral..............................................................54
ARTICLE IV: CHANGE IN CIRCUMSTANCES........................................................54
4.1 Yield Protection.............................................................54
4.2 Changes in Capital Adequacy Regulations......................................55
4.3 Availability of Types of Advances............................................56
4.4 Funding Indemnification......................................................56
4.5 Lender Statements; Survival of Indemnity.....................................56
ARTICLE V: CONDITIONS PRECEDENT............................................................57
5.1 Initial Advances and Letters of Credit.......................................57
5.2 Each Advance and Letter of Credit............................................62
ARTICLE VI: REPRESENTATIONS AND WARRANTIES.................................................62
6.1 Organization; Powers.........................................................62
6.2 Authority, Execution and Delivery; Transaction Documents.....................62
6.3 No Conflict; Governmental Consents...........................................63
6.4 Financial Statements.........................................................64
6.5 No Material Adverse Change...................................................64
6.6 Taxes........................................................................65
6.7 Litigation; Loss Contingencies and Violations................................65
6.8 Subsidiaries.................................................................66
6.9 ERISA........................................................................68
6.10 Accuracy of Information......................................................69
6.11 Securities Activities........................................................70
6.12 Material Agreements..........................................................70
6.13 Compliance with Laws.........................................................70
6.14 Assets and Properties........................................................70
6.15 Statutory Indebtedness Restrictions..........................................70
6.16 Insurance....................................................................71
6.17 Labor Matters................................................................71
6.18 IITRI Acquisition and ESOT Transaction.......................................71
6.19 Environmental Matters........................................................71
6.20 Solvency.....................................................................72
6.21 Additional ESOP Provisions...................................................72
6.22 Subordinated Indebtedness....................................................74
6.23 No Exercise of Set-Off.......................................................74
ARTICLE VII: COVENANTS.....................................................................75
7.1 Reporting....................................................................75
7.2 Affirmative Covenants........................................................82
7.3 Negative Covenants...........................................................86
7.4 Financial Covenants..........................................................98
ARTICLE VIII: DEFAULTS....................................................................101
8.1 Defaults....................................................................101
8.2 Termination of Commitments; Acceleration....................................105
ii
ARTICLE IX: AMENDMENTS, WAIVERS AND REMEDIES..............................................105
9.1 Amendments..................................................................105
9.2 Preservation of Rights......................................................106
ARTICLE X: GENERAL PROVISIONS.............................................................106
10.1 Survival of Representations.................................................106
10.2 Governmental Regulation.....................................................107
10.3 Performance of Obligations..................................................107
10.4 Headings....................................................................107
10.5 Entire Agreement............................................................107
10.6 Several Obligations; Benefits of this Agreement.............................108
10.7 Expenses; Indemnification...................................................108
10.8 Numbers of Documents........................................................110
10.9 Accounting..................................................................110
10.10 Severability of Provisions..................................................110
10.11 Nonliability of Lenders.....................................................110
10.12 GOVERNING LAW...............................................................110
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.....................111
10.14 Other Transactions..........................................................112
10.15 Subordination of Intercompany Indebtedness..................................112
10.16 Lender's Not Utilizing Plan Assets..........................................114
ARTICLE XI: THE ADMINISTRATIVE AGENT......................................................114
11.1 Appointment; Nature of Relationship.........................................114
11.2 Powers......................................................................114
11.3 General Immunity............................................................114
11.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc................115
11.5 Action on Instructions of Lenders; Actions with Respect to Defaults.........115
11.6 Employment of Agents and Counsel............................................115
11.7 Reliance on Documents; Counsel..............................................116
11.8 The Administrative Agent's Reimbursement and Indemnification................116
11.9 Rights as a Lender..........................................................116
11.10 Lender Credit Decision......................................................116
11.11 Successor Administrative Agent..............................................117
11.12 Collateral Documents; Subordination Agreements; Collateral..................117
11.13 Arranger....................................................................118
ARTICLE XII: SETOFF; RATABLE PAYMENTS.....................................................119
12.1 Setoff......................................................................119
12.2 Ratable Payments............................................................119
12.3 Application of Payments.....................................................119
12.4 Relations Among Lenders.....................................................120
ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS...........................121
13.1 Successors and Assigns......................................................121
13.2 Participations..............................................................121
iii
13.3 Assignments.................................................................122
13.4 Confidentiality.............................................................125
13.5 Dissemination of Information................................................125
ARTICLE XIV: NOTICES......................................................................125
14.1 Giving Notice...............................................................125
14.2 Change of Address...........................................................126
ARTICLE XV: COUNTERPARTS..................................................................126
iv
EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT A -- Commitments (Definitions)
EXHIBIT B -- Form of Borrowing/Election Notice (Section 2.3 and Section 2.8 and Section 2.10)
EXHIBIT C -- Form of Request for Letter of Credit (Section 3.4)
EXHIBIT D -- Form of Assignment and Acceptance Agreement (Sections 2.20 and 13.3)
EXHIBIT E -- Form of Borrower's Counsel's Opinion (Section 5.1)
EXHIBIT F -- List of Closing Documents (Section 5.1)
EXHIBIT G -- Form of Officer's Certificate (Sections 5.2 and 7.1(A)(iv))
EXHIBIT H -- Form of Compliance Certificate (Sections 5.2 and 7.1(A)(iv))
EXHIBIT I-1 -- Form of Guaranty (Definitions)
EXHIBIT I-2 -- Form of Pledge Agreement (Borrower) (Definitions; Section 7.2(K))
EXHIBIT I-3 -- Form of Security Agreement (Definitions)
EXHIBIT J -- Form of Borrowing Base Certificate (Definitions)
EXHIBIT K-1 -- Form of Revolving Loan Note (If Requested)
EXHIBIT K-2 -- Form of Term Loan Note (If Requested)
EXHIBIT L -- Form of L/C Master Agreement (Definitions)
v
SCHEDULES
Schedule 1.1.1 -- Permitted Existing Indebtedness (Definitions)
Schedule 1.1.2 -- Permitted Existing Investments (Definitions)
Schedule 1.1.3 -- Permitted Existing Liens (Definitions)
Schedule 1.1.4 -- Permitted Existing Contingent Obligations (Definitions)
Schedule 1.1.5 -- ESOP Plan Documents (Definitions)
Schedule 1.1.6 -- ESOT Transaction Documents (Definitions)
Schedule 3.2 -- Transitional Letters of Credit (Section 3.2)
Schedule 6.3 -- Conflicts; Governmental Consents (Section 6.3)
Schedule 6.4 -- Pro Forma Financial Statements (Section 6.4(A))
Schedule 6.7 -- Disclosed Litigation (Section 6.7)
Schedule 6.8 -- Subsidiaries (Section 6.8)
Schedule 6.9 -- ERISA (Section 6.9)
Schedule 6.12 -- Material Agreements (Section 6.12)
Schedule 6.16 -- Insurance (Sections 6.16 and 7.2(E))
Schedule 6.18 -- IITRI Acquisition and ESOT Transaction Conditions (Section 6.18)
Schedule 6.19 -- Environmental Matters (Section 6.19)
vi
CREDIT AGREEMENT
This Credit Agreement dated as of December 20, 2002 is entered
into among Alion Science and Technology Corporation, a Delaware corporation, the
institutions from time to time parties hereto as Lenders, whether by execution
of this Agreement or an Assignment Agreement pursuant to Section 13.3, and
LaSalle Bank National Association, in its capacity as contractual representative
for itself and the other Lenders (the "ADMINISTRATIVE AGENT"). The parties
hereto agree as follows:
ARTICLE I: DEFINITIONS
1.1 Certain Defined Terms; Plural Terms.
(A) Certain Defined Terms. In addition to the terms defined
above, the following terms used in this Agreement shall have the
following meanings:
"ACCOUNTING CHANGE" is defined in Section 10.9.
"ACCOUNT DEBTOR" means the account debtor or obligor with
respect to any of the Receivables and/or the prospective purchaser with respect
to any contract right, and/or any party who enters into or proposes to enter
into any contract or other arrangement with the Borrower or any Guarantor.
"ACQUISITION" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any Person, firm, corporation or division
thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage of voting
power) of the outstanding Equity Interests of another Person.
"ADMINISTRATIVE AGENT" means LaSalle in its capacity as
contractual representative for itself and the Lenders pursuant to Article XI
hereof and any successor Administrative Agent appointed pursuant to Article XI
hereof.
"ADVANCE" means a borrowing hereunder consisting of the
aggregate amount of the several Loans made by some or all of the Lenders to the
Borrower of the same Type and, in the case of Eurodollar Rate Advances, for the
same Interest Period.
"AFFECTED LENDER" is defined in Section 2.20.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person if the
controlling Person is the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of greater than fifty percent (50%) or more of
the Voting Stock of the controlled Person or possesses, directly or indirectly,
the power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of Capital Stock, by contract or
otherwise.
"AGGREGATE REVOLVING LOAN COMMITMENT" means the aggregate of the
Revolving Loan Commitments of all the Lenders, as may be adjusted from time to
time pursuant to the terms hereof. The initial Aggregate Revolving Loan
Commitment is Twenty-Five Million and 00/100 Dollars ($25,000,000).
"AGREEMENT" means this Credit Agreement, as it may be amended,
restated or otherwise modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted
accounting principles as in effect in the United States from time to time,
applied in a manner consistent with that used in preparing the financial
statements of the Borrower referred to in Section 5.1(B)(xix)(c), as the same
may be adjusted from time to time in accordance with the provisions of Section
10.9.
"ALTERNATE BASE RATE" means, for any day, a fluctuating rate of
interest per annum equal to the higher of (i) the Prime Rate for such day and
(ii) the sum of (a) the Federal Funds Effective Rate for such day and (b)
one-half of one percent (0.5%) per annum.
"APPLICABLE COMMITMENT FEE PERCENTAGE" means, as at any date of
determination, the rate per annum then applicable in the determination of the
amount payable under Section 2.15(C)(i) hereof determined in accordance with the
provisions of Section 2.15(D)(ii) hereof.
"APPLICABLE EURODOLLAR MARGINS" means, as at any date of
determination, the rate per annum then applicable to Eurodollar Rate Loans which
are Revolving Loans or Term Loans, as applicable, determined in accordance with
the provisions of Section 2.15(D)(ii) hereof.
"APPLICABLE FLOATING RATE MARGINS" means, as at any date of
determination, the rate per annum then applicable to Floating Rate Loans which
are Revolving Loans or Term Loans, as applicable, determined in accordance with
the provisions of Section 2.15(D)(ii) hereof.
"APPLICABLE L/C FEE PERCENTAGE" means, as at any date of
determination, a rate per annum equal to the Applicable Eurodollar Margin in
effect on such date.
"APPROVED FUND" means, with respect to any Lender that is a fund
or commingled investment vehicle that invests in commercial loans, any other
fund that invests in commercial loans and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.
"ARRANGER" means LaSalle Bank National Association, in its
capacity as arranger.
"ASSET PURCHASE AGREEMENT" means that certain Fourth Amended and
Restated Asset Purchase Agreement, dated as of November 18, 2002, with effect as
of June 4, 2002, by
2
and between the Borrower, as the purchaser, and IITRI, as the seller, as in
effect on the Closing Date and without giving effect to any subsequent amendment
or modification thereto.
"ASSET SALE" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction, and including the sale or
other transfer of any of the Equity Interests of any Subsidiary of such Person,
but not the Equity Interests of such Person) to any Person (other than the
Borrower or any of its wholly-owned Subsidiaries) other than (i) the licensing
of the Borrower's and its Subsidiaries' intellectual property in the ordinary
course of business and (ii) the sale of products manufactured by or on behalf of
the Borrower and its Subsidiaries in the ordinary course of business.
"ASSIGNMENT AGREEMENT" means an assignment and acceptance
agreement entered into in connection with an assignment pursuant to Section 13.3
hereof in substantially the form of Exhibit D.
"AUTHORIZED OFFICER" means any of the president, chief financial
officer, controller, treasurer or assistant treasurer of the Borrower, acting
singly.
"BENEFIT PLAN" means a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) which is intended to be
qualified under Section 401(a) of the Code in respect of which the Borrower or
any other member of the Controlled Group is, or within the immediately preceding
six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"BORROWER" means Alion Science and Technology Corporation, a
Delaware corporation, together with its permitted successors and assigns,
including a debtor-in-possession on behalf of Alion Science and Technology
Corporation.
"BORROWER PLEDGE AGREEMENT" means that certain Pledge Agreement
of even date herewith executed by the Borrower in favor of the Administrative
Agent for the benefit of the Holders of Secured Obligations, as amended,
restated or otherwise modified from time to time, pledging 100% of the Capital
Stock of each Subsidiary, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"BORROWING BASE (MONTHLY)" means, as of any date of calculation,
an amount, as set forth on the most current Borrowing Base Certificate delivered
to the Administrative Agent, equal to the sum of (i) eighty-five percent (85%)
of the Net Amount of Eligible Receivables that are Eligible Billed Government
Accounts Receivable as of such date, plus (ii) eighty percent (80%) of the Net
Amount of Eligible Receivables that are Eligible Billed Commercial Accounts
Receivable as of such date, plus (iii) fifty percent (50%) of the gross amount
of Eligible Unbilled Government Receivables as of such date, provided that
amounts under this clause (iii) shall not exceed twenty-five percent (25%) of
the Borrowing Base (Monthly) as of such date.
"BORROWING BASE (SENIOR DEBT)" means, (i) for the fiscal year
ending September 30, 2003, an amount, as set forth on the most current Borrowing
Base Certificate delivered to the Administrative Agent, equal to the sum of (a)
ninety percent (90%) of all billed Receivables from any Account Debtor (other
than the Borrower, any Guarantor or an Affiliate of the
3
Borrower or any Guarantor) ("TOTAL BILLED RECEIVABLES") which are outstanding
less than one hundred twenty-one (121) days from the date of original invoice as
of such date, plus (b) sixty percent (60%) of Total Billed Receivables which are
outstanding one hundred twenty-one (121) days or more from the date of original
invoice, plus (c) seventy-five percent (75%) of all unbilled Receivables which
may in accordance with Agreement Accounting Principles be included as current
assets of the Borrower or any of its Subsidiaries notwithstanding that such
amounts have not yet been billed, plus (d) fifty percent (50%) of net property,
plants and equipment of the Borrower and its consolidated Subsidiaries as of
such date determined in accordance with Agreement Accounting Principles, (ii)
for the fiscal periods ending December 19, 2003, March 12, 2004, July 2, 2004,
September 30, 2004, an amount, as set forth on the most current Borrowing Base
Certificate delivered to the Administrative Agent, equal to the sum of (a)
ninety percent (90%) of the Net Amount of Eligible Receivables that are Eligible
Billed Government Accounts Receivable as of such date, plus (b) eighty-five
percent (85%) of the Net Amount of Eligible Receivables that are Eligible Billed
Commercial Accounts Receivable as of such date, plus (c) sixty-five percent
(65%) of the gross amount of Eligible Unbilled Government Receivables as of such
date, and (iii) as of any date of determination thereafter, the Borrowing Base
(Monthly).
"BORROWING BASE CERTIFICATE" means a certificate, in
substantially the form of Exhibit J attached hereto and made a part hereof,
setting forth the Borrowing Base (Monthly) and, with respect to the Borrowing
Base Certificate delivered for the periods ending September 30, 2003, December
19, 2003, March 12, 2004, July 2, 2004, September 30, 2004 and each four-week
period thereafter, the Borrowing Base (Senior Debt), and in each case the
component calculations thereof.
"BORROWING DATE" means a date on which an Advance or Swing Line
Loan is made hereunder.
"BORROWING/ELECTION NOTICE" is defined in Section 2.8.
"BORROWING REPRESENTATIVE" means any Authorized Officer or any
duly authorized employee of the Borrower; provided that the Administrative Agent
shall have received a manually signed certificate of the Secretary of the
Borrower as to the incumbency of, and bearing a specimen signature of, such duly
authorized person or employee.
"BUSINESS DAY" means (i) with respect to any borrowing, payment
or rate selection of Loans bearing interest at the Eurodollar Rate, a day (other
than a Saturday or Sunday) on which banks are open for business in Chicago,
Illinois and on which dealings in Dollars are carried on in the London interbank
market and (ii) for all other purposes a day (other than a Saturday or Sunday)
on which banks are open for business in Chicago, Illinois.
"CAPITAL EXPENDITURES" means, for any period, the aggregate of
all expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Lease Obligations and Permitted Purchase Money Indebtedness) by the
Borrower and its consolidated Subsidiaries during that period that, in
conformity with Agreement Accounting Principles, are required to be included in
or reflected by the property, plant, equipment or similar fixed asset accounts
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries.
4
"CAPITALIZED LEASE" means, with respect to any Person, any lease
of property by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with Agreement Accounting
Principles.
"CAPITALIZED LEASE OBLIGATIONS" means, with respect to any
Person, the amount of the obligations of such Person under Capitalized Leases
which would be capitalized on a balance sheet of such Person prepared in
accordance with Agreement Accounting Principles.
"CAPITAL STOCK" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) marketable direct obligations
issued or unconditionally guaranteed by the United States government and backed
by the full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies, the long-term
indebtedness of which institution at the time of acquisition is rated A- (or
better) by S&P or A3 (or better) by Moody's, and which certificates of deposit
and time deposits are fully protected against currency fluctuations for any such
deposits with a term of more than ninety (90) days; (iii) shares of money
market, mutual or similar funds having assets in excess of $100,000,000 and the
investments of which are limited to (a) investment grade securities (i.e.,
securities rated at least Baa by Moody's or at least BBB by S&P) and (b)
commercial paper of United States and foreign banks and bank holding companies
and their subsidiaries and United States and foreign finance, commercial
industrial or utility companies which, at the time of acquisition, are rated A-1
(or better) by S&P or P-1 (or better) by Moody's (all such institutions being,
"QUALIFIED INSTITUTIONS"); and (iv) commercial paper of Qualified Institutions;
provided that the maturities of such Cash Equivalents shall not exceed three
hundred sixty-five (365) days from the date of acquisition thereof.
"CASH INTEREST EXPENSE" means, for any period, the total
interest expense of the Borrower and its consolidated Subsidiaries, whether paid
or accrued (including the interest component of Capitalized Leases), but
excluding interest expense not payable in cash (including amortization of
discount and financing fees), in each case, as determined in conformity with
Agreement Accounting Principles.
"CASH MANAGEMENT AGREEMENT" means that certain Cash Management
Agreement dated as of even date herewith, by and between the Borrower and
LaSalle, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"CHANGE" is defined in Section 4.2.
"CHANGE OF CONTROL" means an event or series of events by which:
5
(i) Any Person (other than IITRI (or any of its direct assignees
or transferees) or the ESOT, together with their "affiliates" within the
meaning of Rule 12b2 of the Commission under the Exchange Act) shall
acquire beneficial ownership (including beneficial ownership resulting
from the formation of a "group" within the meaning of Rule13d-5 of the
Commission under the Exchange Act) of fifty percent (50%) or more of the
combined voting power of the outstanding Capital Stock of the Borrower,
ordinarily having the right to vote at any election of directors; or
(ii) The ESOT ceases to be the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 of the Commission under the Exchange Act),
directly or indirectly, of more than fifty percent (50%) (on a fully
diluted, as if converted, basis) of the combined voting power of the
outstanding Capital Stock of the Borrower ordinarily having the right to
vote at any election of directors; or
(iii) the majority of the board of directors of the Borrower
fails to consist of Continuing Directors; or
(iv) except as expressly permitted under the terms of this
Agreement, the Borrower consolidates with or merges into another Person
or conveys, transfers or leases all or substantially all of its property
to any Person in one or a series of transactions, or any Person
consolidates with or merges into the Borrower, in either event pursuant
to a transaction in which the outstanding Capital Stock of the Borrower
is reclassified or changed into or exchanged for cash, securities or
other property; or
(v) except as otherwise expressly permitted under the terms of
this Agreement, the Borrower shall cease to own and control, directly or
indirectly, at least eighty percent (80%) of the economic and voting
rights associated with all of the outstanding Capital Stock of each of
the Borrower's Material Subsidiaries; or
(vi) any "Change of Control" (as such term is defined in any of
the Securities Purchase Agreements, the Seller Warrants or the Rights
Agreement) shall have occurred.
"CLOSING DATE" means December 20, 2002.
"CODE" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"COLLATERAL" means all property and interests in property now
owned or hereafter acquired by the Borrower or any of its Subsidiaries in or
upon which a security interest, lien or mortgage is granted to the
Administrative Agent, for the benefit of the Holders of Secured Obligations, or
to the Administrative Agent, for the benefit of the Lenders, whether under the
Security Agreement, under any of the other Collateral Documents or under any of
the other Loan Documents.
"COLLATERAL DOCUMENTS" means all agreements, instruments and
documents executed in connection with this Agreement, including, without
limitation, the Security
6
Agreement, the Pledge Agreements, the Intellectual Property Security Agreements,
the Guaranties, and all other security agreements, mortgages, loan agreements,
notes, guarantees, subordination agreements, pledges, lockbox agreements, powers
of attorney, consents, assignments, contracts, fee letters, notices, leases,
financing statements and all other written matter whether heretofore, now, or
hereafter executed by or on behalf of the Borrower or any of its Subsidiaries
and delivered to the Administrative Agent or any of the Lenders, together with
all agreements and documents referred to therein or contemplated thereby.
"COMMISSION" means the Securities and Exchange Commission of
the United States of America and any Person succeeding to the functions thereof.
"COMMITMENT" means, for each Lender, collectively, such Lender's
Revolving Loan Commitment and Term Loan Commitment.
"COMMITMENT TERMINATION DATE" means the earlier of (i) the
Revolving Loan Termination Date, and (ii) the date of termination in whole of
the Aggregate Revolving Loan Commitment pursuant to Section 2.6 hereof or the
Commitments pursuant to Section 8.2 hereof.
"CONSOLIDATED TOTAL INDEBTEDNESS" means, as of any date of
determination, the total amount of that portion of the Indebtedness of the
Borrower and its Subsidiaries which is interest bearing or with respect to which
interest expense accrues or is attributable under Agreement Accounting
Principles, including, without limitation, interest bearing accounts payable not
payable in the ordinary course of business, notes payable, Contingent
Obligations, Capitalized Lease Obligations, reimbursement obligations in respect
of commercial letters of credit, and Off-Balance Sheet Liabilities.
"CONSTITUENT DOCUMENTS" means, as applied to any Person, the
certificate of incorporation, articles of incorporation or certificate of
formation, by-laws or operating agreement and any other applicable
organizational document of such Person.
"CONTAMINANT" means any waste, pollutant, hazardous material,
hazardous substance, toxic substance, hazardous waste, special waste, petroleum
or petroleum-derived substance or waste, asbestos, polychlorinated biphenyls
("PCBS"), or any constituent of any such substance or waste, and includes, but
is not limited to, these terms as defined in Environmental, Health or Safety
Requirements of Law and any other substance or material defined as regulated by
any other Environmental, Health or Safety Requirements of Law.
"CONTINGENT OBLIGATION" means, as applied to any Person, any
Contractual Obligation, contingent or otherwise, of that Person with respect to
any indebtedness of another or other obligation or liability of another,
including, without limitation, any such indebtedness, obligation or liability of
another directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable, including Contractual Obligations
(contingent or otherwise) arising through any agreement to purchase, repurchase,
or otherwise acquire such indebtedness, obligation or liability or any security
therefor, or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain
7
solvency, assets, level of income, or other financial condition, or to make
payment other than for value received. The amount of any Contingent Obligation
shall be equal to the present value of the portion of the obligation so
guaranteed or otherwise supported, in the case of known recurring obligations,
and the reasonably anticipated liability in respect of the portion of the
obligation so guaranteed or otherwise supported assuming such Person is required
to perform thereunder, in all other cases.
"CONTINUING DIRECTOR" means, with respect to any person as of
any date of determination, any member of the board of directors of such Person
who (i) was a member of such board of directors on the Closing Date, or (ii) was
nominated for election or elected to such board of directors with the approval
of the required majority of the Continuing Directors who were members of such
board at the time of such nomination or election; provided that an individual
who is so elected or nominated in connection with a merger, consolidation,
acquisition or similar transaction shall not be a Continuing Director unless
such individual was a Continuing Director prior thereto.
"CONTRACTUAL OBLIGATION" means, as applied to any Person, any
provision of any equity or debt securities issued by that Person or any
indenture, mortgage, deed of trust, security agreement, pledge agreement,
guaranty, contract, undertaking, agreement or instrument, in any case in
writing, to which that Person is a party or by which it or any of its properties
is bound, or to which it or any of its properties is subject.
"CONTROLLED GROUP" means the group consisting of (i) any
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as the Borrower; (ii) a
partnership or other trade or business (whether or not incorporated) which is
under common control (within the meaning of Section 414(c) of the Code) with the
Borrower; and (iii) a member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as the Borrower, any corporation
described in clause (i) above or any partnership or trade or business described
in clause (ii) above.
"CUSTOMARY PERMITTED LIENS" means:
(i) Liens (other than Environmental Liens and Liens in
favor of the IRS or the PBGC) with respect to the payment of
taxes, assessments or governmental charges in all cases which
are not yet due or (if foreclosure, distraint, sale or other
similar proceedings shall not have been commenced or any such
proceeding after being commenced is stayed) which are being
contested in good faith by appropriate proceedings properly
instituted and diligently conducted and with respect to which
adequate reserves or other appropriate provisions are being
maintained in accordance with Agreement Accounting Principles;
(ii) statutory Liens of landlords and Liens of
suppliers, mechanics, carriers, materialmen, warehousemen,
service providers or workmen and other similar Liens imposed by
law created in the ordinary course of business for amounts not
yet due or which are being contested in good faith by
appropriate proceedings properly instituted and diligently
conducted and with respect to
8
which adequate reserves or other appropriate provisions are
being maintained in accordance with Agreement Accounting
Principles;
(iii) Liens (other than Environmental Liens and Liens in
favor of the IRS or the PBGC) incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders,
sales, contracts (other than for the repayment of borrowed
money), surety, appeal and performance bonds; provided that (A)
all such Liens do not in the aggregate materially detract from
the value of the Borrower's or its Subsidiary's assets or
property taken as a whole or materially impair the use thereof
in the operation of the businesses taken as a whole, and (B) all
Liens securing bonds to stay judgments or in connection with
appeals that do not secure at any time an aggregate amount
exceeding $100,000;
(iv) Liens arising with respect to zoning restrictions,
easements, encroachments, licenses, reservations, covenants,
rights-of-way, utility easements, building restrictions and
other similar charges, restrictions or encumbrances on the use
of real property which do not in any case materially detract
from the value of the property subject thereto or interfere with
the ordinary conduct of the business of the Borrower or any of
its Subsidiaries;
(v) Liens of attachment or judgment with respect to
judgments, writs or warrants of attachment, or similar process
against the Borrower or any of its Subsidiaries which do not
constitute a Default under Section 8.1(H) hereof; and
(vi) any interest or title of the lessor in the property
subject to any operating lease entered into by the Borrower or
any of its Subsidiaries in the ordinary course of business.
"DEFAULT" means an event described in Article VIII hereof.
"DESIGNATED PREPAYMENT" is defined in Section 2.5(B)(i)(e).
"DISCLOSED LITIGATION" is defined in Section 6.7.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is ninety-one (91) days after the latest of (i) the Revolving Loan
Termination Date, and (ii) the Term Loan Final Maturity Date.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"DOLLARS" and "$" means dollars in the lawful currency of the
United States of America.
9
"DOMESTIC SUBSIDIARY" means a Subsidiary of the Borrower
organized under the laws of a jurisdiction located in the United States of
America.
"EBITDAE" means, for any period, on a consolidated basis for the
Borrower and its Subsidiaries, the sum of the amounts for such period, without
duplication, calculated in each case in accordance with Agreement Accounting
Principles, of (i) Net Income, plus (ii) Interest Expense to the extent deducted
in computing Net Income, plus (iii) charges against income for foreign, federal,
state and local taxes to the extent deducted in computing Net Income, plus (iv)
depreciation expense to the extent deducted in computing Net Income, plus (v)
amortization expense, including, without limitation, amortization of goodwill
and other intangible assets to the extent deducted in computing Net Income, plus
(vi) cash contributions to the ESOP in respect of the repurchase liability of
the Borrower under the ESOP Plan Documents to the extent deducted in computing
Net Income, plus (vii) non-cash ESOP Compensation Expense to the extent deducted
in computing Net Income, plus (viii) other extraordinary and nonrecurring
non-cash charges to the extent deducted in computing Net Income up to an amount
not to exceed $1,000,000, minus (ix) other extraordinary and nonrecurring
non-cash credits to the extent added in computing Net Income up to an amount not
to exceed $1,000,000, plus (x) non-cash charges classified as minority interest
to the extent deducted in computing Net Income, plus (xi) other nonrecurring
adjustments and charges to the extent deducted in computing Net Income for
periods prior to the Closing Date, plus (xii) non-cash expenses associated with
the recognition of the difference between the fair market value of the Seller
Warrants and the exercise price of the Seller Warrants to the extent deducted in
computing Net Income, plus (xiii) non-cash Management Compensation Expense to
the extent deducted in computing Net Income.
"ELIGIBLE BILLED GOVERNMENT ACCOUNTS RECEIVABLE" means all
Receivables arising from Government Contracts, or written contracts as a first-
or second-tier subcontractor to a Government Contract, which (i) are outstanding
less than one hundred twenty-one (121) days from the date of original invoice;
(ii) represent amounts due and owing for products actually delivered or services
actually performed or rendered by or on behalf of, or contractually billable
amounts due to, the Borrower or any Guarantor pursuant to a Government Contract;
(iii) have been properly billed; (iv) arise in the ordinary course of the
Borrower's or any Guarantor's business; (v) are due, owing and not subject to
any defense, set-off or counterclaim; and (vi) are not otherwise Ineligible
Receivables.
"ELIGIBLE BILLED COMMERCIAL ACCOUNTS RECEIVABLE" means all
domestic Receivables (other than Receivables arising from Government Contracts)
from any Account Debtor (other than the Borrower, any Guarantor or an Affiliate
of the Borrower or any Guarantor) which (i) are outstanding less than ninety-one
(91) days from the date of original invoice; (ii) represent amounts due and
owing for products actually delivered or services actually performed or rendered
by or on behalf of, or contractually billable amounts due to, the Borrower or
any Guarantor to or for the benefit of any Account Debtor (other than the
Borrower, any Guarantor or an Affiliate of the Borrower or any Guarantor, or any
Governmental Authority); (iii) have been properly billed; (iv) arise in the
ordinary course of the Borrower's or any Guarantor's business; (v) are due,
owing and not subject to any defense, set-off or counterclaim; and (vi) are not
otherwise Ineligible Receivables.
10
"ELIGIBLE UNBILLED GOVERNMENT RECEIVABLES" means all costs
actually incurred and arising out of work actually performed by the Borrower or
any Guarantor under Government Contracts which (i) are properly billable to the
Government in accordance with the applicable Government Contract within thirty
(30) days of the certification date of the related Borrowing Base Certificate;
(ii) may, in accordance with the Agreement Accounting Principles, be included as
current assets of the Borrower or any Guarantor, even though such amounts have
not been billed to the applicable Governmental Authority; (iii) satisfy all
requirements of the definition of "Eligible Billed Government Receivables" other
than clause (iii) thereof (and are therefore not yet due and payable); and (iv)
are not (a) cost or profit retentions, (b) variances from approved government
reimbursement rates, (c) final invoices or (d) would, if billed, be deemed
Ineligible Receivables.
"ELIGIBLE DESIGNEE" means a special purpose corporation,
partnership, limited partnership or limited liability company that is
administered by a Lender or an Affiliate of a Lender and (i) is organized under
the laws of the United States of America or any state thereof, (ii) is engaged
primarily in making, purchasing or otherwise investing in commercial loans in
the ordinary course of its business and (iii) issues (or the parent of which
issues) commercial paper rated at least A-1 or the equivalent thereof by S&P or
the equivalent thereof by Moody's.
"ELIGIBLE RECEIVABLES" means, as applicable, Eligible Billed
Government Accounts Receivable and Eligible Billed Commercial Accounts
Receivable, which Receivables are and at all times shall continue to meet
standards of eligibility hereunder.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
Requirements of Law derived from or relating to foreign, federal, state and
local laws, statutes, codes, ordinances, rules, regulations, permits, orders or
determinations (including administrative orders and consent decrees) of any
Governmental Authority regulating, relating to or addressing pollution or
protection of the environment, or protection of worker health or safety,
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., the Occupational
Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq., and the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., in each
case including any amendments thereto, any successor statutes, and any
regulations or guidance promulgated thereunder, and any state or local
equivalent thereof.
"ENVIRONMENTAL LIEN" means a lien in favor of any Governmental
Authority for (i) any liability under Environmental, Health or Safety
Requirements of Law, or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable
requirement of law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any property or the
transfer, sale or lease of any property or deed or title for any property for
environmental reasons, including, but not limited to, any so-called "Industrial
Site Recovery Act" or "Responsible Property Transfer Act."
"EQUITY INTERESTS" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or
11
exchangeable for, Capital Stock). Equity Interests will not include any
Incentive Arrangements or obligations or payments thereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
"ESOP" means the employee benefit plan titled "The Alion Science
and Technology Corporation Employee Ownership, Savings and Investment Plan" and
adopted and maintained by the Borrower pursuant to the applicable ESOP Plan
Documents.
"ESOP COMPENSATION EXPENSE" means, for any period, expenses
charged with respect to the ESOP to Net Income for such period in accordance
with Agreement Accounting Principles.
"ESOP FIDUCIARY" means the named fiduciary under ERISA of the
ESOP. As of the Closing Date, the ESOP Fiduciary is the ESOP Committee of the
Borrower.
"ESOP PLAN DOCUMENTS" means, collectively, the documents
identified in Schedule 1.1.5 to this Agreement, each as may be amended,
supplemented or modified as provided herein.
"ESOT" means the trust titled "The Alion Science and Technology
Corporation Employee Ownership, Savings and Investment Trust" and adopted and
maintained by the Borrower pursuant to the applicable ESOP Plan Documents.
"ESOT STOCK" means all Capital Stock of the Borrower held by the
ESOT other than Capital Stock of the Borrower which has been allocated to the
accounts of participants in the ESOP pursuant to the ESOP Plan Documents.
"ESOT STOCK PURCHASE AGREEMENT" means that certain Stock
Purchase Agreement dated as of December 20, 2002, by and between the Borrower
and the ESOT Trustee, as in effect on the Closing Date.
"ESOT TRANSACTION" means the series of transactions contemplated
by and described in the ESOT Transaction Documents, including but not limited to
the ESOT's purchase of up to 100% of the Capital Stock of the Borrower pursuant
to the ESOT Stock Purchase Agreement.
"ESOT TRANSACTION DOCUMENTS" means, collectively, the ESOT Stock
Purchase Agreement and the other documents identified on Schedule 1.1.6 to this
Agreement, as each may be amended, supplemented or modified as provided herein.
"ESOT TRUSTEE" means the trustee of the ESOT. As of the Closing
Date the ESOT Trustee is State Street Bank and Trust Company.
"EURODOLLAR BASE RATE" means, with respect to a Eurodollar Rate
Loan for the relevant Interest Period, a rate of interest equal to the per annum
rate of interest at which United
12
States dollar deposits in an amount comparable to the principal balance of such
Eurodollar Rate Loan and for a period equal to the relevant Interest Period are
offered in the London Interbank Eurodollar market at 11:00 a.m. (London time)
two (2) Business Days prior to the commencement of such Interest Period, as
displayed in Bloomberg Financial Markets system, or other authoritative source
selected by the Administrative Agent in its sole discretion, divided by a number
determined by subtracting from 1.00 the maximum reserve percentage for
determining reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency liabilities, such rate to remain fixed for such Interest
Period. The Administrative Agent's determination of the Eurodollar Base Rate
shall be conclusive, absent manifest error.
"EURODOLLAR RATE" means, with respect to a Eurodollar Rate Loan
for the relevant Interest Period, the Eurodollar Base Rate applicable to such
Interest Period plus the then Applicable Eurodollar Margin, changing as and when
the Applicable Eurodollar Margin changes.
"EURODOLLAR RATE ADVANCE" means an Advance, the several Loans in
respect of which bear interest at the Eurodollar Rate.
"EURODOLLAR RATE LOAN" means a Loan made on a fully syndicated
basis pursuant to Section 2.2, which bears interest at the Eurodollar Rate.
"EXCESS CASH FLOW" means, without duplication, an amount, for
the Borrower and its consolidated Subsidiaries, equal to:
(i) EBITDAE for such period,
minus (ii) Cash Interest Expense for such period,
minus (iii) charges against income for foreign,
federal, state and local taxes paid in cash for such period,
minus (iv) scheduled amortization of the principal
portion of the Term Loans, prepayments of the Term Loans and scheduled
amortization of the principal portion of all other Indebtedness of the Borrower
and its Subsidiaries during such period;
minus (v) permitted cash Capital Expenditures paid
during such period, commencing with the fiscal year ending September 30, 2002,
minus (vi) the net repurchase liability of the
Borrower under the ESOP Plan Documents;
minus (vii) the Purchase Price of all Permitted
Acquisitions paid in cash during such period;
plus (minus) (viii) reductions (additions) to Working Capital
for such fiscal year exclusive of any change to Working Capital attributable to
assets acquired in any Acquisition as determined by the Administrative Agent in
its reasonable judgment,
13
in each case as calculated in accordance with Agreement
Accounting Principles. All such amounts shall be calculated assuming that the
Borrower and its Subsidiaries have conducted their business in the ordinary
course and in accordance with past practices.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXISTING CREDIT AGREEMENT" means that certain Business Loan and
Security Agreement, dated as of December 22, 1999, by and among IITRI, Human
Factors Applications, Inc., and the other borrower parties from time to time
parties thereto, and First Union National Bank, as the lender, as amended,
restated, supplemented or otherwise modified as of the Closing Date.
"FACILITY TERMINATION DATE" means the date on which all of the
Termination Conditions have been satisfied.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest
rate per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for such day (or, if such day is
not a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations at approximately 10:00 a.m.
(Chicago, Illinois time) on such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by the Administrative Agent in its sole discretion.
"FINANCING" means, with respect to any Person, the issuance or
sale by such Person of any Disqualified Stock, Equity Interests of such Person
or any Indebtedness consisting of debt securities of such Person.
"FIRREA" means the Financial Institutions Reform, Recovery, and
Enforcement Act of 1983, as amended, modified or supplemented from time to time.
"FIXED CHARGE COVERAGE RATIO" is defined in Section 7.4(C).
"FLOATING RATE" means, for any day for any Loan, a rate per
annum equal to the Alternate Base Rate for such day, changing when and as the
Alternate Base Rate changes, plus the then Applicable Floating Rate Margin.
"FLOATING RATE ADVANCE" means an Advance, the several Loans in
respect of which bear interest at the Floating Rate.
"FLOATING RATE LOAN" means a Loan, or portion thereof, which
bears interest at the Floating Rate.
"FOREIGN SUBSIDIARY" means a Subsidiary of the Borrower which is
not a Domestic Subsidiary.
"GOVERNMENTAL ACTS" is defined in Section 3.10(A).
14
"GOVERNMENTAL AUTHORITY" means any nation or government, any
federal, state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
authority or functions of or pertaining to government, including any authority
or other quasi-governmental entity established to perform any of such functions.
"GOVERNMENT CONTRACT" means any written prime contracts of the
Borrower or any Guarantor with a Governmental Authority.
"GROSS NEGLIGENCE" means recklessness, or actions taken or
omitted with conscious indifference to or the complete disregard of consequences
or rights of others affected. Gross Negligence does not mean the absence of
ordinary care or diligence, or an inadvertent act or inadvertent failure to act.
If the term "gross negligence" is used with respect to the Administrative Agent
or any Lender or any indemnitee in any of the other Loan Documents, it shall
have the meaning set forth herein.
"GUARANTOR(s)" means (i) each of the Borrower's Material
Subsidiaries; and (ii) all other Material Subsidiaries which become Guarantors
in satisfaction of the provisions of Section 7.2(K), in each case, and together
with their respective successors and assigns.
"GUARANTY" means each of that certain Guaranty (and any and all
supplements thereto) executed from time to time by each Guarantor in favor of
the Administrative Agent for the benefit of itself and the Holders of Secured
Obligations, in substantially the form of Exhibit I-1 attached hereto, as
amended, restated, supplemented or otherwise modified from time to time.
"HEDGING AGREEMENTS" is defined in Section 7.3(P).
"HEDGING ARRANGEMENTS" is defined in the definition of Hedging
Obligations below.
"HEDGING OBLIGATIONS" means, with respect to any Person, any and
all obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (i) any
and all agreements, devices or arrangements designed to protect at least one of
the parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap, swap or collar protection agreements, forward
rate currency or interest rate options, puts and warrants or any similar
derivative transactions ("HEDGING ARRANGEMENTS"), and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"HOLDERS OF SECURED OBLIGATIONS" means the holders of the
Secured Obligations from time to time and shall include (i) each Lender in
respect of its Loans, (ii) each Issuing Bank in respect of Reimbursement
Obligations owed to it, (iii) the Administrative Agent, the Lenders and the
Issuing Banks in respect of all other present and future obligations and
liabilities of the Borrower or any of its Subsidiaries of every type and
description arising under or in connection with this Agreement or any other Loan
Document, (iv) each Indemnitee in respect of the
15
obligations and liabilities of the Borrower or any of its Subsidiaries to such
Person hereunder or under the other Loan Documents, (v) each Lender (or
affiliate thereof), in respect of all Hedging Obligations of the Borrower and
its Subsidiaries to such Lender (or such affiliate) as exchange party or
counterparty under any Hedging Agreements, and (vi) their respective successors,
transferees and assigns.
"IITRI" means IIT Research Institute, a not-for-profit Illinois
corporation ("IITRI") controlled by the Illinois Institute of Technology, a
not-for-profit Illinois corporation ("IIT").
"IITRI ACQUISITION" means the purchase by the Borrower of the
"Transferred Assets" and "Transferred Business" of IITRI pursuant to the terms
and conditions set forth in the Asset Purchase Agreement as in effect on the
Closing Date and without giving effect to any subsequent amendment or
modification thereto.
"INCENTIVE ARRANGEMENTS" means any stock ownership, restricted
stock, warrants, stock option, or stock appreciation rights plans, "phantom"
stock plans, deferred compensation arrangements, employment agreements,
non-competition agreements, subscription and stockholders agreements and other
incentive and bonus plans and similar arrangements made in connection with the
retention of directors, executives, officers or employees of the Borrower and
its Subsidiaries.
"INDEBTEDNESS" means, with respect to any Person, without
duplication, such Person's (i) obligations for borrowed money, including,
without limitation, subordinated indebtedness, (ii) obligations representing the
deferred purchase price of property or services rendered, including, without
limitation earn-outs and other similar forms of contingent purchase prices (but
excluding accounts payable arising in the ordinary course of such Person's
business payable on terms customary in the trade), (iii) obligations, whether or
not assumed, secured by Liens or payable out of the proceeds or production from
property or assets now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, other instruments,
letters of credit or letter of credit reimbursement arrangements, (v)
Capitalized Lease Obligations, (vi) Contingent Obligations, (vii) obligations
with respect to letters of credit, (viii) the Net Mark-To-Market Exposure under
all Hedging Arrangements, (ix) Off-Balance Sheet Liabilities, and (x)
Disqualified Stock. The amount of Indebtedness of any Person at any date shall
be, without duplication, (a) the outstanding balance at such date of all
unconditional obligations as described above and the reasonably anticipated
liability of any such Contingent Obligations at such date and (b) in the case of
Indebtedness of others secured by a Lien to which the property or assets owned
or held by such Person is subject, the lesser of the fair market value at such
date of any asset subject to a Lien securing the Indebtedness of others and the
amount of the Indebtedness secured.
"INDEMNIFIED MATTERS" is defined in Section 10.7(B).
"INDEMNITEES" is defined in Section 10.7(B).
"INELIGIBLE RECEIVABLES" means Receivables which are (i)
evidenced by a promissory note or similar instrument; (ii) owed or payable by an
Account Debtor pursuant to a
16
Commercial Contract, if such Account Debtor is more than ninety (90) days past
due from the date of original invoice in the payment of fifty percent (50%) or
more of the aggregate balance due from such Account Debtor to the Borrower or
any Guarantor, as applicable; (iii) owed or payable by an Account Debtor
pursuant to a Government Contract, if such Account Debtor is more than one
hundred twenty (120) days past due from the date of original invoice in the
payment of fifty percent (50%) or more of the aggregate balance due under such
Government Contract; (iv) owing from any person that is the subject of any (a)
suit, lien, levy or judgment which could reasonably be expected to affect the
collectibility of said account(s), or (b) bankruptcy, insolvency or a similar
process or proceeding; (v) owing from foreign Account Debtors; (vi) unbilled as
a result of rate variances or retainage provisions; (vii) bonded Receivables;
(viii) final invoices more than ninety (90) days past due; (ix) not subject to a
valid and enforceable first-priority, perfected security interest in favor of
the Administrative Agent; (x) subject to any other lien or other encumbrance;
(xi) consigned or otherwise assigned to any other Person for collection or
otherwise; (xii) arising under a Government Contract that expressly prohibits
assignment of claims under the Assignment of Claims Act of 1940, as amended.
"INTELLECTUAL PROPERTY SECURITY AGREEMENTS" means each
trademark, patent, copyright or other intellectual property security agreement
executed from time to time by the Borrower or any of the Subsidiaries of the
Borrower in favor of the Administrative Agent for the benefit of the Holders of
Secured Obligations in satisfaction of the provisions of Section 7.2(L), in each
case as amended, restated, supplemented or otherwise modified from time to time.
"INTEREST EXPENSE" means, for any period, the total interest
expense of the Borrower and its consolidated Subsidiaries, whether paid or
accrued (including the interest component of Capitalized Leases, commitment and
letter of credit fees and the discount or implied interest component (or other
fees or charges in securitization transactions) of Off-Balance Sheet
Liabilities), and net payments (if any) pursuant to Hedging Arrangements
relating to interest rate protection, all as determined in conformity with
Agreement Accounting Principles.
"INTEREST PERIOD" means, with respect to a Eurodollar Rate Loan,
a period of one (1), two (2), three (3) months or six (6) months commencing on a
Business Day selected by the Borrower on which a Eurodollar Rate Advance is made
to the Borrower pursuant to this Agreement; provided, however, notwithstanding
anything in this Agreement to the contrary for the period from the Closing Date
to the earlier of (y) the date that is 60 days after the Closing Date and (z)
the date upon which the Arranger confirms that the loan syndication process has
been complete (the "SYNDICATION PERIOD"), "Interest Period" means, with respect
to a Eurodollar Rate Advance, a period of not more than fourteen (14) days
selected by the Borrower. Other than during the Syndication Period, such
Interest Period shall end on (but exclude) the day which corresponds numerically
to such date one, two, three or six months thereafter; provided, however, that
if there is no such numerically corresponding day in such next, second, third or
sixth succeeding month, such Interest Period shall end on the last Business Day
of such next, second, third or sixth succeeding month. If an Interest Period
would otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day, provided, however, that if said
next succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.
17
"INVESTMENT" means, with respect to any Person, (i) any purchase
or other acquisition by that Person of any Indebtedness, Equity Interests or
other securities, or of a beneficial interest in any Indebtedness, Equity
Interests or other securities, issued by any other Person, (ii) any purchase by
that Person of all or substantially all of the assets of a business (whether of
a division, branch, unit operation, or otherwise) conducted by another Person,
and (iii) any loan, advance (other than deposits with financial institutions
available for withdrawal on demand, prepaid expenses, accounts receivable,
advances to employees and similar items made or incurred in the ordinary course
of business) or capital contribution by that Person to any other Person,
including all Indebtedness owing to such Person arising from a sale of property
by such other Person other than in the ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person
succeeding to the functions thereof.
"ISSUING BANKS" means LaSalle or any of the other Lenders, or
any of their respective Affiliates in its separate capacity as an issuer of
Letters of Credit pursuant to Section 3.1. The designation of any Lender as an
Issuing Bank after the date hereof shall be subject to the prior written consent
of the Administrative Agent.
"JUNIOR SUBORDINATED NOTES" means those certain notes due 2010,
issued by the Borrower to IITRI in the aggregate principal amount of $39,900,000
pursuant to the Junior Subordinated Securities Purchase Agreement, as amended,
supplemented or modified in accordance with Section 7.3(BB) hereof.
"JUNIOR SUBORDINATED SECURITIES PURCHASE AGREEMENT" means that
certain Seller Note Securities Purchase Agreement by and between the Borrower
and IITRI of even date herewith, as in effect on the date hereof and as the same
may be amended, supplemented, and modified in accordance with Section 7.3(BB)
hereof.
"LASALLE" means LaSalle Bank National Association, in its
individual capacity, and its successors.
"L/C DOCUMENTS" is defined in Section 3.4.
"L/C DRAFT" means a draft drawn on an Issuing Bank pursuant to a
Letter of Credit.
"L/C INTEREST" is defined in Section 3.6.
"L/C MASTER AGREEMENT (LASALLE)" means that certain Master
Letter of Credit Agreement, dated as of even date herewith, by and between the
Borrower and LaSalle, in its capacity as an Issuing Bank, in substantially the
form of Exhibit L hereto, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"L/C OBLIGATIONS" means, without duplication, an amount equal to
the sum of (i) the aggregate of the amount then available for drawing under each
of the Letters of Credit, (ii) the amount equal to the stated amount of all
outstanding L/C Drafts corresponding to the Letters of Credit, which L/C Drafts
have been accepted by the applicable Issuing Bank, (iii) the
18
aggregate outstanding amount of all Reimbursement Obligations at such time and
(iv) the aggregate amount equal to the stated amount of all Letters of Credit
requested by the Borrower but not yet issued (unless the request for an unissued
Letter of Credit has been denied).
"LENDERS" means the lending institutions listed on the signature
pages of this Agreement and their respective successors and assigns.
"LENDING INSTALLATION" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such Lender
or the Administrative Agent selected by such Lender or the Administrative Agent
pursuant to Section 2.17.
"LETTER OF CREDIT" means the letters of credit to be (a) issued
by the Issuing Banks pursuant to Section 3.1 hereof or (b) deemed issued by the
Issuing Banks pursuant to Section 3.2 hereof.
"LEVERAGE RATIO" is defined in Section 7.4(B).
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor or lessor
under any conditional sale, Capitalized Lease or other title retention
agreement).
"LOAN(s)" means, with respect to a Lender, such Lender's portion
of any Advance made pursuant to Section 2.1 or Section 2.2 hereof, and in the
case of the Swing Line Bank, any Swing Line Loan made pursuant to Section 2.3
hereof, and collectively, all Term Loans, Revolving Loans and Swing Line Loans,
whether made or continued as or converted to Floating Rate Loans or Eurodollar
Rate Loans.
"LOAN ACCOUNT" is defined in Section 2.13(A).
"LOAN DOCUMENTS" means this Agreement, the Guaranty, the L/C
Master Agreement, the Cash Management Agreement, the Collateral Documents, and
all other documents, instruments, notes and agreements executed in connection
therewith or contemplated thereby, as the same may be amended, restated or
otherwise modified and in effect from time to time.
"LOAN PARTIES" is defined in Section 5.1(B)(i).
"MANAGEMENT COMPENSATION EXPENSES" means, for any period,
expenses charged to Net Income for such period with respect to stock
appreciation rights plans, "phantom" stock plans, the Junior Subordinated Notes
and accretion of the Seller Warrants, in each case in connection with the
retention of directors, executives, officers or employees of the Borrower and
its Subsidiaries, in accordance with Agreement Accounting Principles.
"MARGIN STOCK" shall have the meaning ascribed to such term in
Regulation U.
19
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon
(i) the business, assets, condition (financial or otherwise), operations,
performance, properties, results of operations or prospects of the Borrower, any
Guarantor, or the Borrower and its Subsidiaries in each case taken as a whole,
(ii) the ability of the Borrower, any Guarantor or the Borrower and its
Subsidiaries to perform their respective obligations under the Loan Documents,
(iii) the ability of the Lenders or the Administrative Agent to enforce the
Obligations, (iv) the validity or enforceability of this Agreement, the Loan
Documents to which the Borrower or any Guarantor is a party, or the rights or
remedies of the Administrative Agent and Lenders hereunder and thereunder, (v)
the value of a Substantial Portion of the Collateral, or (vi) the perfection or
priority of the Administrative Agent's Liens with respect to a Substantial
Portion of the Collateral.
"MATERIAL SUBSIDIARY" shall mean, in respect of the Borrower,
any Subsidiary that (i) has total assets (determined as of the last day of the
most recently completed fiscal quarter in accordance with Agreement Accounting
Principles) which constitute ten percent (10%) or more of the total assets of
the Borrower and its consolidated Subsidiaries as of such date of determination,
or (ii) has revenue (determined as of the last day of the most recently
completed fiscal quarter for the four-quarter period then ending in accordance
with Agreement Accounting Principles) which constitutes five percent (5%) or
more of the revenue of the Borrower and its consolidated Subsidiaries for such
period, or (iii) has EBITDAE (determined as of the last day of the most recently
completed fiscal quarter for the four-quarter period then ending in accordance
with Agreement Accounting Principles) which constitutes five percent (5%) or
more of the EBITDAE of the Borrower and its consolidated Subsidiaries for such
period; provided that if (a) a Material Subsidiary no longer satisfies any
condition set forth above and (b) the Board of Directors of the Borrower
determines that such Subsidiary is not material to the consolidated financial
condition or operations of the Borrower and its Subsidiaries and the
Administrative Agent shall have received written notice of such determination
from the Borrower, and (c) no Default shall be continuing, then for so long as
such Subsidiary satisfies none of the conditions in clauses (i) through (iii)
above, such Subsidiary shall not be a Material Subsidiary.
"MAXIMUM REVOLVING CREDIT AMOUNT" means, at any particular time,
the lesser of (i) the Aggregate Revolving Loan Commitment at such time and (ii)
the Borrowing Base (Monthly) at such time.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either the Borrower or any member of the
Controlled Group.
"NET AMOUNT OF ELIGIBLE RECEIVABLES" means the outstanding face
amount of Eligible Receivables of the Borrower and the Guarantors, determined in
accordance with Agreement Accounting Principles, consistently applied, less (i)
all finance charges, late fees and other fees that are unearned in respect of
such Eligible Receivables and (ii) the value of any accrual which has been
recorded by the Borrower or any Guarantor with respect to downward price
adjustments in respect of such Eligible Receivables.
20
"NET CASH PROCEEDS" means, with respect to any Asset Sale or
Financing by any Person, cash or Cash Equivalents (freely convertible into
Dollars) received by such Person or any Subsidiary of such Person from such
Asset Sale (including cash received as consideration for the assumption or
incurrence of liabilities incurred in connection with or in anticipation of such
Asset Sale) or Financing, after (i) provision for all income or other taxes
measured by or resulting from such Asset Sale or Financing, (ii) payment of all
brokerage commissions and other fees and expenses and commissions related to
such Asset Sale or Financing, and (iii) deduction of all amounts used to repay
Indebtedness (and any premium or penalty thereon) secured by a Lien on any asset
disposed of in such Asset Sale or which is or may be required (by the express
terms of the instrument governing such Indebtedness or by applicable law) to be
repaid in connection with such Asset Sale (including payments made to obtain or
avoid the need for the consent of any holder of such Indebtedness).
"NET INCOME" means, for any period, an amount equal to the net
earnings (or loss) after taxes of the Borrower and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined in conformity with Agreement Accounting Principles.
"NET MARK-TO-MARKET EXPOSURE" of a Person means, as of any date
of determination, the excess (if any) of all unrealized losses over all
unrealized profits of such Person arising from Hedging Arrangements. "Unrealized
losses" means the fair market value of the cost to such Person of replacing such
Hedging Arrangement as of the date of determination (assuming the Hedging
Arrangement to be terminated as of that date), and "unrealized profits" means
the fair market value of the gain to such Person of replacing such Hedging
Arrangement as of the date of determination (assuming such Hedging Arrangement
were to be terminated as of that date).
"NON-ERISA COMMITMENTS" means
(i) each pension, medical, dental, life, accident
insurance, disability, group insurance, sick leave, profit
sharing, deferred compensation, bonus, stock option, stock
purchase, retirement, savings, severance, stock ownership,
performance, incentive, hospitalization or other insurance, or
other welfare, benefit or fringe benefit plan, policy or trust;
and
(ii) each employee collective bargaining agreement and
each agreement, understanding or arrangement of any kind, with
or for the benefit of any present or prior officer, director or
employee (including, without limitation, each employment,
compensation, deferred compensation or severance or arrangement
and any agreement or arrangement associated with a change in
control of the Borrower or any member of the Controlled Group);
to which the Borrower or any member of the Controlled Group is a
party or with respect to which the Borrower or any member of the Controlled
Group is or will be required to make any payment, other than any Plans.
"NOTICE OF ASSIGNMENT" is defined in Section 13.3(B).
21
"OBLIGATIONS" means all Loans, L/C Obligations, advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower or any of
its Subsidiaries to the Administrative Agent, any Lender, the Swing Line Bank,
the Arranger, any Affiliate of the Administrative Agent or any Lender, any
Issuing Bank or any Indemnitee, of any kind or nature, present or future,
arising under this Agreement, the L/C Documents or any other Loan Document,
whether or not evidenced by any note, guaranty or other instrument, whether or
not for the payment of money, whether arising by reason of an extension of
credit, loan, foreign exchange risk, guaranty, indemnification, or in any other
manner, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired. The term includes, without limitation, all interest,
charges, expenses, fees, attorneys' fees and disbursements, paralegals' fees (in
each case whether or not allowed), and any other sum chargeable to the Borrower
or any of its Subsidiaries under this Agreement or any other Loan Document.
"OFF-BALANCE SHEET LIABILITIES" means, with respect to any
Person, (i) any repurchase obligation or liability of such Person or any of its
Subsidiaries with respect to Receivables sold by such Person or any of its
Subsidiaries, (ii) any liability of such Person or any of its Subsidiaries under
any sale and leaseback transaction which does not create a liability on the
consolidated balance sheet of such Person (iii) any liability of such Person or
any of its Subsidiaries under any financing lease or so-called "synthetic lease"
or "tax ownership operating lease" transaction, or (iv) any obligations of such
Person or any of its Subsidiaries arising with respect to any other transaction
which is the functional equivalent of or takes the place of borrowing but which
does not constitute a liability on the consolidated balance sheet of such Person
and its Subsidiaries.
"OTHER TAXES" is defined in Section 2.15(E)(ii).
"PARTICIPANTS" is defined in Section 13.2(A).
"PAYMENT DATE" means each of (i) the last Business Day of each
fiscal quarter of the Borrower, (ii) the Commitment Termination Date and (iii)
the Facility Termination Date.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PERMITTED ACQUISITION" is defined in Section 7.3(G).
"PERMITTED EXISTING CONTINGENT OBLIGATIONS" means the Contingent
Obligations of the Borrower and its Subsidiaries identified as such on Schedule
1.1.4 to this Agreement.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the
Borrower and its Subsidiaries identified as such on Schedule 1.1.1 to this
Agreement.
"PERMITTED EXISTING INVESTMENTS" means the Investments of the
Borrower and its Subsidiaries identified as such on Schedule 1.1.2 to this
Agreement.
22
"PERMITTED EXISTING LIENS" means the Liens on assets of the
Borrower and its Subsidiaries identified as such on Schedule 1.1.3 to this
Agreement.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" is defined in Section
7.3(A)(vii).
"PERMITTED REFINANCING INDEBTEDNESS" means any replacement,
renewal, refinancing or extension of any Indebtedness permitted under Section
7.3(A)(ii) that (i) does not exceed the aggregate principal amount (plus accrued
interest and any applicable premium and associated fees and expenses) of the
Indebtedness being replaced, renewed, refinanced or extended, (ii) does not have
a Weighted Average Life to Maturity at the time of such replacement, renewal,
refinancing or extension that is less than the Weighted Average Life to Maturity
of the Indebtedness being replaced, renewed, refinanced or extended, (iii) does
not rank at the time of such replacement, renewal, refinancing or extension
senior to the Indebtedness being replaced, renewed, refinanced or extended, and
(iv) does not contain terms (including, without limitation, terms relating to
security, amortization, interest rate, premiums, fees, covenants, subordination,
events of default and remedies), taken as a whole, materially less favorable to
the Borrower, its Subsidiaries or the Lenders than those applicable to the
Indebtedness being replaced, renewed, refinanced or extended.
"PERSON" means any individual, corporation, firm, enterprise,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company or other entity of any kind, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" means an employee benefit plan defined in Section 3(3) of
ERISA, other than a Multiemployer Plan, in respect of which the Borrower or any
member of the Controlled Group is, or within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.
"PLEDGE AGREEMENTS" means (i) the Borrower Pledge Agreement, and
(ii) one or more Pledge Agreements substantially in the form of Exhibit I-2
hereto, duly executed and delivered by the applicable Subsidiary of the Borrower
from time to time pursuant to the terms of clause (i) of Section 7.2(K) in favor
of the Administrative Agent for the benefit of the Holders of Secured
Obligations, in each case, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"PRIME RATE" means the prime rate of interest announced by
LaSalle or its parent from time to time (which is not necessarily the lowest
rate charged to any customer), changing when and as said prime rate changes.
"PRO RATA SHARE" means, with respect to any Lender, (i) at any
time prior to the Closing Date, the percentage obtained by dividing (a) such
Lender's Commitments at such time (in each case, as adjusted from time to time
in accordance with the provisions of this Agreement) by (b) the sum of the Term
Loan Commitments and the Aggregate Revolving Loan Commitment at such time and
(ii) at any time after the Closing Date, the percentage obtained by dividing (a)
the sum of such Lender's Term Loans and Revolving Loan Commitment at such time
(in each case, as adjusted from time to time in accordance with the provisions
of this Agreement) by (b)
23
the sum of the aggregate amount of all of the Term Loans and the Aggregate
Revolving Loan Commitment at such time; provided, however, if all of the
Commitments are terminated pursuant to the terms of this Agreement, then "Pro
Rata Share" means the percentage obtained by dividing (x) the sum of (A) such
Lender's Term Loans and Revolving Loans, plus (B) such Lender's share of the
obligations to purchase participations in Swing Line Loans and Letters of
Credit, by (y) the sum of (A) the aggregate outstanding amount of all Term Loans
and Revolving Loans, plus (B) the aggregate outstanding amount of all Swing Line
Loans and all Letters of Credit.
"PURCHASE PRICE" means the total consideration and other amounts
payable in connection with any Acquisition, including, without limitation, any
portion of the consideration payable in cash, the value of any Capital Stock or
other equity interests of the Borrower or any Subsidiary of the Borrower issued
as consideration for such Acquisition, all Indebtedness, liabilities and
Contingent Obligations incurred or assumed in connection with such Acquisition
and all transaction costs and expenses (including all investment banking and
other consultant fees and expenses) incurred in connection with such
Acquisition.
"PURCHASERS" is defined in Section 13.3(A)(i).
"RATE OPTION" means the Eurodollar Rate or the Floating Rate, as
applicable.
"RECEIVABLE(s)" means and includes all of the Borrower's and the
Guarantors' presently existing and hereafter arising or acquired accounts,
accounts receivable, and all present and future rights of the Borrower or any
Guarantor to payment for goods sold or leased or for services rendered (except
those evidenced by instruments or chattel paper), whether or not they have been
earned by performance, and all rights in any merchandise or goods which any of
the same may represent, and all rights, title, security and guaranties with
respect to each of the foregoing, including, without limitation, any right of
stoppage in transit.
"REGISTER" is defined in Section 13.3(C).
"REGULATION T" means Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by and to brokers and dealers of securities for the
purpose of purchasing or carrying margin stock (as defined therein).
"REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks, non-banks and non-broker lenders for the
purpose of purchasing or carrying Margin Stock applicable to member banks of the
Federal Reserve System.
"REGULATION X" means Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by foreign lenders for the purpose of purchasing or
carrying margin stock (as defined therein).
"REIMBURSEMENT OBLIGATION" is defined in Section 3.7.
24
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water or groundwater.
"REPLACEMENT LENDER" is defined in Section 2.20.
"REPORTABLE EVENT" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such section, with
respect to a Plan, excluding, however, such events as to which the PBGC by
regulation or otherwise waived the requirement of Section 4043(a) of ERISA that
it be notified within thirty (30) days after such event occurs, provided,
however, that a failure to meet the minimum funding standards of Section 412 of
the Code and of Section 302 of ERISA shall be a Reportable Event regardless of
the issuance of any such waiver of the notice requirement in accordance with
either Section 4043(a) of ERISA or Section 412(d) of the Code.
"REQUIRED LENDERS" means Lenders whose Pro Rata Shares, in the
aggregate, are sixty-six and two-thirds percent (66 2/3%) or more; provided,
however, that, if any of the Lenders shall have failed to fund its Revolving
Loan Pro Rata Share of (i) any Revolving Loan requested by the Borrower, (ii)
any Revolving Loan required to be made in connection with reimbursement for any
L/C Obligations, or (iii) any participation in any Swing Line Loan as requested
by the Administrative Agent, which such Lenders are obligated to fund under the
terms of this Agreement and any such failure has not been cured, then for so
long as such failure continues, "Required Lenders" means Lenders (excluding all
Lenders whose failure to fund their respective Revolving Loan Pro Rata Shares of
such Revolving Loans or any participation in Swing Line Loans has not been so
cured) whose Pro Rata Shares represent sixty-six and two-thirds percent (66
2/3%) or more of the aggregate Pro Rata Shares of such Lenders; provided,
further, however, that, if the Commitments have been terminated pursuant to the
terms of this Agreement, "Required Lenders" means Lenders (without regard to
such Lenders' performance of their respective obligations hereunder) whose
aggregate Pro Rata Shares of the aggregate outstanding principal balance of all
Loans and L/C Obligations are sixty-six and two-thirds percent (66 2/3%) or
more.
"REQUIREMENTS OF LAW" means, as to any Person, the Constituent
Documents of such Person, and any law, rule or regulation, or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject including, without limitation, the
Securities Act of 1933, the Securities Exchange Act of 1934, Regulations T, U
and X, ERISA, the Fair Labor Standards Act, the Worker Adjustment and Retraining
Notification Act, Americans with Disabilities Act of 1990, and any certificate
of occupancy, zoning ordinance, building, environmental or land use requirement
or permit or environmental, labor, employment, occupational safety or health
law, rule or regulation, including Environmental, Health or Safety Requirements
of Law.
"RESTRICTED PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any Equity Interests of the
Borrower now or hereafter outstanding, except a dividend payable solely in the
Borrower's Capital Stock (other than Disqualified Stock) or in
25
options, warrants or other rights to purchase such Capital Stock, (ii) any
redemption, retirement, purchase or other acquisition for value, direct or
indirect, of any Equity Interests of the Borrower or any of its Subsidiaries now
or hereafter outstanding, other than in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Subsidiary of the Borrower)
of other Equity Interests of the Borrower (other than Disqualified Stock), (iii)
any redemption, purchase, retirement, defeasance, prepayment (by setoff or
otherwise) or other acquisition for value, direct or indirect, of any
Indebtedness other than the Obligations, and (iv) any payment of a claim for the
rescission of the purchase or sale of, or for material damages arising from the
purchase or sale of, any Indebtedness (other than the Obligations) or any Equity
Interests of the Borrower or any of its Subsidiaries, or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission, (v) any payment of management fees owing
to any holder of Capital Stock of the Borrower or any of its Subsidiaries or
investment banking fees (or other fees of a similar nature) other than pursuant
to a Permitted Acquisition, (vi) any payment in respect of a purchase price
adjustment, earn-out or other similar form of contingent purchase price (by
setoff or otherwise), (vii) any payment or prepayment (whether consisting of
principal, interest, premium or otherwise) with respect to the Subordinated
Notes or any other subordinated Indebtedness permitted under Section 7.3(A), and
(viii) any contribution or other payment (other than in Capital Stock) of any
type by the Borrower or any of its Subsidiaries to the ESOT.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time,
the amount by which (i) the Maximum Revolving Credit Amount at such time exceeds
(ii) the amount of the Revolving Credit Obligations outstanding at such time.
"REVOLVING CREDIT OBLIGATIONS" means, at any particular time,
the sum of (i) the outstanding principal amount of the Revolving Loans at such
time, plus (ii) the outstanding principal amount of the Swing Line Loans at such
time, plus (iii) the outstanding L/C Obligations at such time.
"REVOLVING LOAN" is defined in Section 2.2.
"REVOLVING LOAN COMMITMENT" means, for each Lender, the
obligation of such Lender to make Revolving Loans and to purchase participations
in Letters of Credit and to participate in Swing Line Loans not exceeding the
amount set forth on Exhibit A to this Agreement opposite its name thereon under
the heading "Revolving Loan Commitment" or in the Assignment Agreement by which
it became a Lender, as such amount may be modified from time to time pursuant to
the terms of this Agreement or to give effect to any applicable Assignment
Agreement.
"REVOLVING LOAN PRO RATA SHARE" means, with respect to any
Lender, the percentage obtained by dividing (i) the then aggregate amount of
such Lender's Revolving Loan Commitment (as adjusted from time to time in
accordance with the provisions of this Agreement) by (ii) the Aggregate
Revolving Loan Commitment at such time; provided, however, if all of the
Commitments are terminated pursuant to the terms of this Agreement, then
"Revolving Loan Pro Rata Share" means the percentage obtained by dividing (a)
the sum of (x) such Lender's Revolving Loans, plus (y) such Lender's share of
the obligations to purchase participations in Swing Line Loans and Letters of
Credit, L/C Drafts and unreimbursed drawings
26
under Letters of Credit, by (b) the sum of (x) the aggregate outstanding amount
of all Revolving Loans, plus (y) the aggregate outstanding amount of all Swing
Line Loans and all Letters of Credit, L/C Drafts and unreimbursed drawings under
Letters of Credit.
"REVOLVING LOAN TERMINATION DATE" means December 20, 2007.
"RIGHTS AGREEMENT" means that certain Rights Agreement, dated as
of December 20, 2002, by and among the Borrower, the ESOT and each other holder
of any shares (or warrants or options therefor) issued by the Borrower.
"RISK-BASED CAPITAL GUIDELINES" is defined in Section 4.2.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
"SECURED OBLIGATIONS" means, collectively, (i) the Obligations
and (ii) all Hedging Obligations owing under Hedging Agreements to any Lender or
any Affiliate of any Lender, which Hedging Obligations are required pursuant to
the terms of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SECURITIES PURCHASE AGREEMENTS" means the Senior Subordinated
Securities Purchase Agreement and the Junior Subordinated Securities Purchase
Agreement.
"SECURITY AGREEMENT" means that certain Security Agreement of
even date herewith executed by the Borrower and each of the Subsidiaries of the
Borrower listed on Schedule 6.8 in favor of the Administrative Agent for the
benefit of the Holders of Secured Obligations, as amended, restated,
supplemented or otherwise modified from time to time.
"SELLER WARRANTS" shall mean the Mezzanine Warrant and the
Seller Note Warrant, each as defined in and issued by the Borrower to IITRI
pursuant to the Asset Purchase Agreement as of the Closing Date.
"SENIOR LEVERAGE RATIO" is defined in Section 7.4(A).
"SENIOR SUBORDINATED NOTES" means those certain notes due 2008,
issued by the Borrower in the aggregate principal amount of $20,343,435.37 and
purchased by IITRI pursuant to the Senior Subordinated Securities Purchase
Agreement, as amended, supplemented or modified in accordance with Section
7.3(BB) hereof.
"SENIOR SUBORDINATED SECURITIES PURCHASE AGREEMENT" means that
certain Mezzanine Note Securities Purchase Agreement by and between the Borrower
and IITRI of even date herewith, as in effect on the date hereof and as the same
may be amended, supplemented, and modified in accordance with Section 7.3(BB)
hereof.
"SOLVENT" means, when used with respect to any Person, that at
the time of determination:
27
(i) the fair value of its assets (both at fair valuation and at
present fair saleable value) is equal to or in excess of the total
amount of its liabilities, including, without limitation, contingent
liabilities; and
(ii) it is then able and expects to be able to pay its debts as
they mature; and
(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
With respect to contingent liabilities (such as litigation, guarantees
and pension plan liabilities), such liabilities shall be computed at the present
value of the amount which, in light of all the facts and circumstances existing
at the time, represent the amount which can be reasonably be expected to become
an actual or matured liability.
"SUBORDINATED NOTES" means, collectively, the Senior
Subordinated Notes and the Junior Subordinated Notes
"SUBSIDIARY" means, with respect to any Person, (i) any
corporation more than fifty percent (50%) of the outstanding securities having
ordinary voting power of which shall at the time be owned or controlled,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, or (ii) any partnership,
limited liability company, association, joint venture or similar business
organization more than fifty percent (50%) of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
means a Subsidiary of the Borrower.
"SUBSTANTIAL PORTION OF THE COLLATERAL" means, as of any date of
determination, Collateral having a book value (calculated in accordance with
Agreement Accounting Principles) greater than $1,000,000 in the aggregate.
"SWING LINE BANK" means LaSalle or any other Lender as a
successor Swing Line Bank pursuant to the terms hereof.
"SWING LINE COMMITMENT" means the commitment of the Swing Line
Bank, in its sole discretion, to make Swing Line Loans up to a maximum principal
amount of $5,000,000 at any one time outstanding.
"SWING LINE LOAN" means a Loan made available to the Borrower by
the Swing Line Bank pursuant to Section 2.3 hereof.
"SYNDICATION PERIOD" shall have the meaning set forth in the
definition of "Interest Period" above.
"TAXES" is defined in Section 2.15(E)(i).
"TERMINATION CONDITIONS" is defined in Section 2.19.
28
"TERMINATION EVENT" means (i) a Reportable Event with respect to
any Benefit Plan; (ii) the withdrawal of the Borrower or any member of the
Controlled Group from a Benefit Plan during a plan year in which the Borrower or
such Controlled Group member was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of the Borrower or any member of the Controlled Group which,
in either event, could reasonably be expected to have a Material Adverse Effect
or otherwise result in liability to the Borrower or any of its Subsidiaries that
are members of the Controlled Group in an amount in excess of $1,000,000; (iii)
the imposition of an obligation on the Borrower or any member of the Controlled
Group under Section 4041 of ERISA to provide affected parties written notice of
intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC or any similar
foreign governmental authority of proceedings to terminate a Benefit Plan; (v)
any event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Benefit
Plan; or (vi) the partial or complete withdrawal of the Borrower or any member
of the Controlled Group from a Multiemployer Plan which could reasonably be
expected to have a Material Adverse Effect or otherwise result in liability to
the Borrower or any of its Subsidiaries that are members of the Controlled Group
in an amount in excess of $1,000,000.
"TERM LOAN" is defined in Section 2.1(A).
"TERM LOAN COMMITMENT" means, for each Lender, the obligation of
such Lender to make its Term Loan pursuant to the terms and conditions of this
Agreement, and which shall not exceed the principal amount set forth on Exhibit
A to this Agreement opposite its name thereon under the heading "Term Loan
Commitment", as such amount may be modified from time to time pursuant to the
terms hereof.
"TERM LOAN FINAL MATURITY DATE" means December 20, 2007.
"TERM LOAN LENDER" means any Lender with a Term Loan Commitment.
"TERM LOAN PRO RATA SHARE" means, (i) at any particular time
prior to making of the Term Loans and with respect to any Lender, a fraction
(expressed as a percentage), the numerator of which shall be the then aggregate
amount of such Lender's Term Loan Commitment and the denominator of which shall
be the then aggregate amount of all Term Loan Commitments, and (ii) at any time
after the Term Loans are made and with respect to any Lender, a fraction
(expressed as a percentage) the numerator of which shall be the outstanding
principal balance of such Lender's Term Loans and the denominator of which shall
be the then outstanding principal balance of the Term Loans.
"TRANSACTION DOCUMENTS" means the Loan Documents and the
documents executed and delivered, or adopted, by the Borrower or any of its
Subsidiaries or the ESOT Trustee or the ESOP Fiduciary in connection with the
IITRI Acquisition, the ESOT Transaction and the issuance of the Subordinated
Notes, including, without limitation, the Asset Purchase Agreement, the Seller
Warrants, the Rights Agreement, the ESOT Transaction Documents, the
29
Subordinated Notes and the Securities Purchase Agreements, but excluding the
ESOP Plan Documents.
"TRANSFEREE" is defined in Section 13.5.
"TYPE" means, with respect to any Advance or Loan, its nature as
a Floating Rate Advance or Floating Rate Loan, as applicable, or a Eurodollar
Rate Advance or Eurodollar Rate Loan.
"UNMATURED DEFAULT" means an event which, but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"U.S. QUALIFIED PERSON" shall mean any Person that is (i) a
"U.S. person", within the meaning of Section 7701(a)(30) of the Code and (ii) a
United States citizen or United States entity not owned, controlled or
influenced, directly or indirectly, by any foreign person (or any term of like
meaning) under the National Industrial Security Program Operating Manual (or any
successor document) as amended from time to time.
"WEIGHTED AVERAGE LIFE TO MATURITY" means when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WORKING CAPITAL" means, as at any date of determination and in
conformity with Agreement Accounting Principles, the excess, if any, of (i)
Borrower's consolidated current assets, except cash and Cash Equivalents, over
(ii) the Borrower's consolidated current liabilities, except current maturities
of long-term Indebtedness and Revolving Credit Obligations as of such date and
all accrued interest as of such date.
(B) Singular and Plural Forms; Accounting Terms. The foregoing
definitions shall be equally applicable to both the singular and plural
forms of the defined terms. Any accounting terms used in this Agreement
which are not specifically defined herein shall have the meanings
customarily given them in accordance with Agreement Accounting
Principles.
1.2 References. Any references to the Borrower's Subsidiaries
shall not in any way be construed as consent by the Administrative Agent or any
Lender to the establishment, maintenance or acquisition of any Subsidiary,
except as may otherwise be permitted hereunder.
1.3 Supplemental Disclosure. At any time at the reasonable
request of the Administrative Agent and at such additional times as the Borrower
determines in its discretion, the Borrower shall supplement each schedule or
representation herein or in the other Loan Documents with respect to any matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such schedule or as
30
an exception to such representation or which is necessary to correct any
information in such schedule or representation which has been rendered
inaccurate thereby. Notwithstanding that any such supplement to such schedule or
representation may disclose the existence or occurrence of events, facts or
circumstances which are either prohibited by the terms of this Agreement or any
other Loan Documents or which result in the breach of any representation or
warranty, such supplement to such schedule or representation shall not be deemed
either an amendment thereof or a waiver of such breach unless expressly
consented to in writing by Administrative Agent and the Required Lenders, and no
such amendments, except as the same may be consented to in a writing which
expressly includes a waiver, shall be or be deemed a waiver by the
Administrative Agent or any Lender of any Default disclosed therein. Any items
disclosed in any such supplemental disclosures shall be included in the
calculation of any limits, baskets or similar restrictions contained in this
Agreement or any of the other Loan Documents.
1.4 Knowledge With Respect to Representations and Warranties.
Each of the representations and warranties made herein and in each of the other
Loan Documents (including, without limitation any certificates delivered
thereunder) are made to the Knowledge of the Borrower. "Knowledge" means, at any
time and relative to any matter, knowledge that the chairman of the Board of
Directors of the Borrower, any Authorized Officer, any Senior Vice President,
any legal officer or the secretary of the Borrower or any Material Subsidiary
would reasonably be expected to have obtained in the ordinary course exercise of
his or her duties and responsibilities regarding such matter.
ARTICLE II: THE TERM LOAN AND REVOLVING LOAN FACILITIES
2.1 Term Loans.
(A) Amounts of Term Loans. Subject to the terms and conditions
set forth in this Agreement, each Term Loan Lender on the Closing Date
severally and not jointly agrees to make on the Closing Date, a term
loan, in Dollars, to the Borrower in an aggregate amount equal to such
Lender's Term Loan Commitment (each individually, a "TERM LOAN" and,
collectively, the "TERM LOANS"). All Term Loans shall be made by the
Lenders on the Closing Date simultaneously and proportionately to their
respective Term Loan Pro Rata Shares, it being understood that no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Term Loan hereunder nor shall the Term Loan
Commitment of any Lender be increased or decreased as a result of any
such failure.
(B) Borrowing/Election Notice. The Borrower shall deliver to the
Administrative Agent a Borrowing/Election Notice, signed by it, on the
Closing Date. Such Borrowing/Election Notice shall specify (i) the
aggregate amount of the Term Loans being requested and (ii) instructions
for the disbursement of proceeds of such Term Loans. The Term Loans
shall initially be Floating Rate Loans and thereafter may be continued
as Floating Rate Loans or converted into Eurodollar Rate Loans in the
manner provided in Section 2.10 and subject to the other conditions and
limitations therein set forth and set forth in this Article II. Any
Borrowing/Election Notice given pursuant to this Section 2.1(B) shall be
irrevocable.
31
(C) Making of Term Loans. Promptly after receipt of the
Borrowing/Election Notice under Section 2.1(B) in respect of the Term
Loans, the Administrative Agent shall notify each Lender by telecopy, or
other similar form of transmission, of the proposed Advance. Each Lender
shall deposit an amount equal to its Term Loan Pro Rata Share of the
Term Loans with the Administrative Agent at its office in Chicago,
Illinois, in immediately available funds, on the Closing Date, as
specified in the Borrowing/Election Notice. Subject to the fulfillment
of the conditions precedent set forth in Sections 5.1 and 5.2, as
applicable, the Administrative Agent shall make the proceeds of such
amounts received by it available to the Borrower at the Administrative
Agent's office in Chicago, Illinois on such date and shall disburse such
proceeds in accordance with the Borrower's disbursement instructions set
forth in such Borrowing/Election Notice. The failure of any Lender to
deposit the amount described above with the Administrative Agent on such
date shall not relieve any other Lender of its obligations hereunder to
make its Term Loan on such date.
(D) Repayment of the Term Loans.
(i) The Term Loans shall be repaid in twenty (20) consecutive
quarterly installments, payable on the last Business Day of each fiscal
quarter of the Borrower, commencing on March 14, 2003 and continuing
thereafter until the Term Loan Final Maturity Date, and the Term Loans
shall be permanently reduced by the amount of each installment on the
date payment thereof is made hereunder. The installments shall be in the
aggregate amounts set forth below:
Installment Date Term Loan Installment Amount
---------------- ----------------------------
March 14, 2003 $ 1,250,000
July 4, 2003 $ 1,250,000
September 30, 2003 $ 1,250,000
December 19, 2003 $ 1,250,000
March 12, 2004 $ 1,250,000
July 2, 2004 $ 1,250,000
September 30, 2004 $ 1,250,000
December 17, 2004 $ 1,250,000
March 11, 2005 $ 1,875,000
July 1, 2005 $ 1,875,000
September 30, 2005 $ 1,875,000
December 16, 2005 $ 1,875,000
March 10, 2006 $ 2,125,000
June 30, 2006 $ 2,125,000
September 30, 2006 $ 2,125,000
December 15, 2006 $ 2,125,000
March 9, 2007 $ 2,250,000
32
Installment Date Term Loan Installment Amount
---------------- ----------------------------
June 29, 2007 $ 2,250,000
September 30, 2007 $ 2,250,000
Term Loan Final Maturity Date $ 2,250,000
(ii) Notwithstanding the foregoing, the final installment shall
be in the amount of the then outstanding principal balance of the Term
Loans. No installment of any Term Loan may be reborrowed once repaid.
(E) Voluntary Prepayments. In addition to the scheduled payments
on the Term Loans, the Borrower (i) may make the voluntary prepayments
described in Section 2.5(A) for credit against the scheduled payments on
the Term Loans pursuant to Section 2.5(A) and (ii) shall make the
mandatory prepayments prescribed in Section 2.5(B) for credit against
the scheduled payments on the Term Loans pursuant to Section 2.5(B).
2.2 Revolving Loans.
(A) Amount of Revolving Loans. Upon the satisfaction of the
conditions precedent set forth in Sections 5.1 and 5.2, as applicable,
from and including the Closing Date and prior to the Commitment
Termination Date, each Lender severally and not jointly agrees, on the
terms and conditions set forth in this Agreement, to make revolving
loans to the Borrower from time to time, in Dollars, in an aggregate
amount with respect to any such Loan not to exceed such Lender's
Revolving Loan Pro Rata Share of Revolving Credit Availability at such
time (each individually, a "REVOLVING LOAN" and, collectively, the
"REVOLVING LOANS"); provided, however, at no time shall the Revolving
Credit Obligations exceed the Maximum Revolving Credit Amount. Subject
to the terms of this Agreement, the Borrower may borrow, repay and
reborrow Revolving Loans at any time prior to the Commitment Termination
Date. The Revolving Loans made on the Closing Date or on or before the
third (3rd) Business Day thereafter shall initially be Floating Rate
Loans and thereafter may be continued as Floating Rate Loans or
converted into Eurodollar Rate Loans in the manner provided in Section
2.10 and subject to the other conditions and limitations therein set
forth and set forth in this Article II and set forth in the definition
of Interest Period. Revolving Loans made after the third (3rd) Business
Day after the Closing Date shall be, at the option of the Borrower,
selected in accordance with Section 2.10, either Floating Rate Loans or
Eurodollar Rate Loans. On the Commitment Termination Date, the Borrower
shall repay in full the outstanding principal balance of the Revolving
Loans. Each Advance under this Section 2.2 shall consist of Revolving
Loans made by each Lender ratably in proportion to such Lender's
respective Revolving Loan Pro Rata Share.
(B) Borrowing/Election Notice. In connection with each Revolving
Loan request, the Borrower shall deliver to the Administrative Agent a
Borrowing/Election Notice, signed by it, in accordance with the terms of
Section 2.8.
(C) Making of Revolving Loans. Promptly after receipt of the
Borrowing/Election Notice under Section 2.8 in respect of Revolving
Loans, the
33
Administrative Agent shall notify each Lender with a Revolving Loan
Commitment greater than zero by telecopy, or other similar form of
transmission, of the requested Revolving Loan. Each Lender with a
Revolving Loan Commitment greater than zero shall make available its
Revolving Loan in accordance with the terms of Section 2.7. The
Administrative Agent will promptly make the funds so received from the
Lenders available to the Borrower at the Administrative Agent's office
in Chicago, Illinois on the applicable Borrowing Date and shall disburse
such proceeds in accordance with the Borrower's disbursement
instructions set forth in such Borrowing/Election Notice. The failure of
any Lender to deposit the amount described above with the Administrative
Agent on the applicable Borrowing Date shall not relieve any other
Lender of its obligations hereunder to make its Revolving Loan on such
Borrowing Date.
2.3 Swing Line Loans.
(A) Amount of Swing Line Loans. Upon the satisfaction of the
conditions precedent set forth in Section 5.1 and 5.2, as applicable,
from and including the Closing Date and prior to the Commitment
Termination Date, the Swing Line Bank agrees, on the terms and
conditions set forth in this Agreement, to make swing line loans to the
Borrower from time to time, in Dollars, in an amount not to exceed the
Swing Line Commitment (each, individually, a "SWING LINE LOAN" and
collectively, the "SWING LINE LOANS"); provided, however, at no time
shall the amount of the Revolving Credit Obligations exceed the Maximum
Revolving Credit Amount; and provided, further, that at no time shall
the sum of (a) the Swing Line Bank's Revolving Loan Pro Rata Share of
the Swing Line Loans, plus (b) the outstanding amount of Revolving Loans
made by the Swing Line Bank pursuant to Section 2.2, exceed the Swing
Line Bank's Revolving Loan Commitment at such time. Subject to the terms
of this Agreement, the Borrower may borrow, repay and reborrow Swing
Line Loans at any time prior to the Commitment Termination Date.
(B) Borrowing/Election Notice. The Borrower shall deliver to the
Administrative Agent and the Swing Line Bank a Borrowing/Election
Notice, signed by it, not later than 2:00 p.m. (Chicago, Illinois time)
on the Borrowing Date of each Swing Line Loan, specifying (i) the
applicable Borrowing Date (which date shall be a Business Day and which
may be the same date as the date the Borrowing/Election Notice is
given), and (ii) the aggregate amount of the requested Swing Line Loan
which shall be an amount not less than $50,000 (and increments of
$50,000 if in excess thereof). The Swing Line Loans shall at all times
be Floating Rate Loans.
(C) Making of Swing Line Loans. Promptly after receipt of the
Borrowing/Election Notice under Section 2.3(B) in respect of Swing Line
Loans, the Administrative Agent shall notify each Lender by telex or
telecopy, or other similar form of transmission, of the requested Swing
Line Loan, provided that the Administrative Agent shall use commercially
reasonable efforts to deliver such notice to the Lenders within two (2)
hours after receipt of such Borrowing/Election Notice. Not later than
4:00 p.m. (Chicago, Illinois time) on the applicable Borrowing Date, the
Swing Line Bank shall make available its Swing Line Loan, in funds
immediately available in Chicago to the Administrative Agent at its
address specified pursuant to Article XIV. The
34
Administrative Agent will promptly make the funds so received from the
Swing Line Bank available to the Borrower on the Borrowing Date at the
Administrative Agent's aforesaid address.
(D) Repayment of Swing Line Loans. Each Swing Line Loan shall be
paid in full by the Borrower on or before the fifth (5th) Business Day
after the Borrowing Date for such Swing Line Loan. The Borrower may at
any time pay, without penalty or premium, all outstanding Swing Line
Loans or, in a minimum amount of $50,000 and increments of $10,000 in
excess thereof, any portion of the outstanding Swing Line Loans, upon
notice to the Administrative Agent and the Swing Line Bank. In addition,
the Administrative Agent (i) may at any time in its sole discretion with
respect to any outstanding Swing Line Loan, or (ii) shall on the fifth
(5th) Business Day after the Borrowing Date of any Swing Line Loan,
require each Lender (including the Swing Line Bank) to make a Revolving
Loan in the amount of such Lender's Revolving Loan Pro Rata Share of
such Swing Line Loan, for the purpose of repaying such Swing Line Loan.
Not later than 2:00 p.m. (Chicago, Illinois time) on the date of any
notice received pursuant to this Section 2.3(D), each Lender shall make
available its required Revolving Loan or Revolving Loans, in funds
immediately available in Chicago to the Administrative Agent at its
address specified pursuant to Article XIV. Revolving Loans made pursuant
to this Section 2.3(D) shall initially be Floating Rate Loans and
thereafter may be continued as Floating Rate Loans or converted into
Eurodollar Rate Loans in the manner provided in Section 2.10 and subject
to the other conditions and limitations therein set forth and set forth
in this Article II. Unless a Lender shall have notified the Swing Line
Bank, prior to its making any Swing Line Loan, that any applicable
condition precedent set forth in Sections 5.1 and 5.2, as applicable,
had not then been satisfied, such Lender's obligation to make Revolving
Loans pursuant to this Section 2.3(D) to repay Swing Line Loans shall be
unconditional, continuing, irrevocable and absolute and shall not be
affected by any circumstances, including, without limitation, (a) any
set-off, counterclaim, recoupment, defense or other right which such
Lender may have against the Administrative Agent, the Swing Line Bank,
the Borrower or any other Person for any reason whatsoever; (b) the
occurrence or continuance of any Default or Unmatured Default; (c) any
adverse change in the condition (financial or otherwise) of the Borrower
or any of its Subsidiaries or any other Person; (d) any breach of this
Agreement by the Borrower or its Subsidiaries or any other Person; (e)
any inability of the Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement on the date upon which such
Advance is to be made or such participating interest is to be purchased;
(f) the termination of the Commitments hereunder; or (g) any other
circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing. In the event that any Lender fails to make payment
to the Administrative Agent of any amount due under this Section 2.3(D),
the Administrative Agent shall be entitled to receive, retain and apply
against such obligation the principal and interest otherwise payable to
such Lender hereunder until the Administrative Agent receives such
payment from such Lender or such obligation is otherwise fully
satisfied. In addition to the foregoing, if for any reason any Lender
fails to make payment to the Administrative Agent of any amount due
under this Section 2.3(D), such Lender shall be deemed, at the option of
the Administrative Agent, to have unconditionally and irrevocably
purchased from the Swing Line Bank, without recourse or warranty, an
undivided interest and participation in the applicable
35
Swing Line Loan in the amount of such Revolving Loan, and such interest
and participation may be recovered from such Lender together with
interest thereon at the Federal Funds Effective Rate for each day during
the period commencing on the date of demand and ending on the date such
amount is received. On the Commitment Termination Date, the Borrower
shall repay in full the outstanding principal balance of the Swing Line
Loans.
2.4 Rate Options for all Advances; Maximum Interest Periods. The
Swing Line Loans shall be Floating Rate Advances at all times. The Revolving
Loans and Term Loans may be Floating Rate Advances or Eurodollar Rate Advances,
or a combination thereof, selected by the Borrower in accordance with Section
2.10; provided, however, notwithstanding anything herein to the contrary, the
Borrower may not select Interest Periods for Eurodollar Rate Advances made
during the Syndication Period which exceed fourteen (14) days and the Interest
Periods with respect to all such Eurodollar Rate Advances made during the
Syndication Period shall be required to expire on the same date. The Borrower
may select, in accordance with Section 2.10, Rate Options and Interest Periods
applicable to portions of the Revolving Loans and the Term Loans; provided that
there shall be no more than five (5) Interest Periods in effect with respect to
all Eurodollar Rate Loans at any time.
2.5 Optional Payments; Mandatory Prepayments.
(A) Optional Payments. The Borrower may from time to time and at
any time after notice delivered to the Administrative Agent no later
than 2:00 p.m. (Chicago, Illinois time) on such date of repayment or
prepayment, repay or prepay, without penalty or premium, all or any part
of outstanding Floating Rate Advances in an aggregate minimum amount of
$500,000 and in integral multiples of $100,000 in excess thereof.
Eurodollar Rate Advances may be voluntarily repaid or prepaid prior to
the last day of the applicable Interest Period, subject to the
indemnification provisions contained in Section 4.4, in an aggregate
minimum amount of $100,000 and in integral multiples of $100,000 in
excess thereof (unless such Eurodollar Rate Advance is repaid or prepaid
in whole); provided, that the Borrower may not so prepay Eurodollar Rate
Advances unless it shall have provided at least three (3) Business Days'
prior written notice to the Administrative Agent of such prepayment.
(B) Mandatory Prepayments.
(i) Mandatory Prepayments of Term Loans.
(a) Asset Sales and Loss Proceeds. Upon (1) the
consummation of any Asset Sale (other than any Asset Sale
permitted under clauses (i) through (iii) of Section 7.3(b)) by
the Borrower or any Subsidiary of the Borrower, except to the
extent that the Net Cash Proceeds of such Asset Sale, when
combined with the Net Cash Proceeds of all such Asset Sales
during the immediately preceding twelve-month period, do not
exceed $1,000,000, for any such Asset Sale or series of related
Asset Sales or (2) the receipt by Borrower or any of its
Subsidiaries of proceeds from insurance in connection with any
property loss or casualty (other than proceeds received in
respect of business interruption insurance) ("LOSS
36
PROCEEDS"), except to the extent that such Loss Proceeds, when
combined with all other Loss Proceeds received during the then
current fiscal year, do not exceed $500,000, and, in each case,
except as provided in the second sentence of this Section
2.5(B)(i)(a), within thirty-five (35) days after the Borrower's
or any of its Subsidiaries' (x) receipt of any Net Cash Proceeds
from any such Asset Sale or any such Loss Proceeds, or (y)
conversion to cash or Cash Equivalents of non-cash proceeds
(whether principal or interest and including securities, release
of escrow arrangements or lease payments) received from any
Asset Sale, the Borrower shall make a mandatory prepayment of
the Obligations in an amount equal to one hundred percent (100%)
of such Net Cash Proceeds or such Loss Proceeds or such proceeds
converted from non-cash to cash or Cash Equivalents. In the
event that the Borrower shall have given the Administrative
Agent written notice within thirty (30) days after an Asset Sale
or event giving rise to such Loss Proceeds of its intention to
replace the assets or use such Net Cash Proceeds or Loss
Proceeds, as applicable, to acquire other like-kind assets
(which shall include, without limitation, assets acquired
pursuant to a Permitted Acquisition) within six (6) months
following such Asset Sale or the receipt of such Loss Proceeds,
as applicable, then such Net Cash Proceeds or Loss Proceeds
shall not be subject to the provisions of the first sentence of
this Section 2.5(B)(i)(a) unless and to the extent that such
applicable period shall have expired without such replacement
having been made.
(b) Excess Cash Flow. Simultaneously with the delivery
of the annual audited financial statements required to be
delivered pursuant to Section 7.1(A)(iii) for each fiscal year
beginning with the fiscal year ending September 30, 2003, the
Borrower shall calculate Excess Cash Flow for such fiscal year
and shall make a mandatory prepayment of the Obligations,
payable not later than thirty (30) days after the date such
financial statements are required to be delivered pursuant to
Section 7.1(A)(iii), in an amount equal to seventy-five percent
(75%) of such Excess Cash Flow.
(c) Financings. With the exception of the issuance of
Capital Stock in connection with any Incentive Arrangement, or
the refinancing of the Subordinated Notes to the extent
otherwise permitted hereunder, upon the consummation of any
Financing by the Borrower or any Subsidiary of the Borrower,
within three (3) Business Days after the Borrower's or any of
its Subsidiaries' receipt of any Net Cash Proceeds from such
Financing, the Borrower shall make a mandatory prepayment of the
Obligations in an amount equal to one hundred percent (100%) of
such Net Cash Proceeds.
(d) No Consent. Nothing in this Section 2.5(B)(i) shall
be construed to constitute the Lenders' consent to any
transaction referred to in clause (a) or (c) above which is
expressly prohibited by the terms of this Agreement.
(e) Application of Designated Prepayments. Each
mandatory prepayment required by clauses (a), (b) and (c) of
this Section 2.5(B)(i) shall be
37
referred to herein as a "Designated Prepayment." Designated
Prepayments shall be allocated and applied to the Obligations as
follows:
(1) the amount of each Designated Prepayment
shall be applied to outstanding accrued interest and
then ratably to each of the then remaining installments
payable under the Term Loans; and
(2) following the payment in full of the Term
Loans, the amount of each Designated Prepayment shall be
applied to repay Revolving Loans (and may, if requested
by the Borrower, reduce the Revolving Loan Commitments)
and following the payment in full of the Revolving
Loans, the amount of each Designated Prepayment shall be
applied first to interest on the Reimbursement
Obligations, then to principal on the Reimbursement
Obligations, then to fees on account of Letters of
Credit and then, to the extent any L/C Obligations are
contingent, deposited with the Administrative Agent as
cash collateral in respect of such L/C Obligations.
(ii) Mandatory Prepayments of Obligations. In addition to
repayments under Section 2.5(B)(i)(e)(2), if at any time and for any
reason (x) the amount of the Revolving Credit Obligations are greater
than the Maximum Revolving Credit Amount or (b) the amount of the
Revolving Credit Obligations plus the aggregate outstanding principal
amount of the Term Loans are greater than the Borrowing Base (Senior
Debt) as in effect at such time, the Borrower shall immediately make a
mandatory prepayment of the Obligations in an amount equal to such
excess.
(iii) Application of Prepayments. On the date any Designated
Prepayments or any prepayment under clause (ii) above is received by the
Administrative Agent, such prepayment shall be applied first to Floating
Rate Loans and to any Eurodollar Rate Loans maturing on such date and
then to subsequently maturing Eurodollar Rate Loans in order of
maturity.
2.6 Reduction of Commitments. The Borrower may permanently
reduce the Aggregate Revolving Loan Commitment in whole, or in part ratably
among the Lenders, in an aggregate minimum amount of $1,000,000 with respect to
each such Commitment and integral multiples of $500,000 in excess of that amount
with respect to each such Commitment (unless the Aggregate Revolving Loan
Commitment is reduced in whole), upon at least five (5) Business Days' prior
written notice to the Administrative Agent, which notice shall specify the
amount of any such reduction; provided, however, that the amount of the
Aggregate Revolving Loan Commitment may not be reduced below the aggregate
principal amount of the outstanding Revolving Credit Obligations. All accrued
commitment fees shall be payable on the effective date of any termination of all
or any part of the obligations of the Lenders to make Loans hereunder.
2.7 Method of Borrowing. Not later than 2:00 p.m. (Chicago,
Illinois time) on each Borrowing Date, each Lender shall make available its
Revolving Loan or Term Loan, in immediately available funds in Dollars to the
Administrative Agent at its address specified
38
pursuant to Article XIV. The Administrative Agent will promptly make the funds
so received from the Lenders available to the Borrower at the Administrative
Agent's aforesaid address.
2.8 Method of Selecting Types and Interest Periods for Advances.
The Borrower shall select the Type of Advance and, in the case of each
Eurodollar Rate Advance and the Interest Period applicable to each Advance from
time to time. The Borrower shall give the Administrative Agent irrevocable
notice in substantially the form of Exhibit B hereto (a "BORROWING/ELECTION
NOTICE") not later than 12:00 noon (Chicago, Illinois time) (A) on or before the
Borrowing Date of each Floating Rate Advance, and (B) three (3) Business Days
before the Borrowing Date for each Eurodollar Rate Advance, specifying: (i) the
Borrowing Date (which shall be a Business Day) of such Advance; (ii) the
aggregate amount of such Advance; (iii) the Type of Advance selected; and (iv)
in the case of each Eurodollar Rate Advance, the Interest Period applicable
thereto. The Borrower shall select Interest Periods so that, to the best of its
knowledge, it will not be necessary to prepay all or any portion of any
Eurodollar Rate Loan prior to the last day of the applicable Interest Period in
order to make mandatory prepayments as required pursuant to the terms hereof.
With respect to the Term Loans, the Borrower may not select an Interest Period
that ends after the Term Loan Final Maturity Date. With respect to the Revolving
Loans, the Borrower may not select an Interest Period that ends after the
Revolving Loan Termination Date. Each Floating Rate Advance and all Obligations
other than Loans shall bear interest from and including the date of the making
of such Advance, in the case of Loans, and the date such Obligation is due and
owing in the case of such other Obligations, to (but not including) the date of
repayment thereof at the Floating Rate, changing when and as such Floating Rate
changes. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Loan will take effect simultaneously with each
change in the Alternate Base Rate. Each Eurodollar Rate Advance shall bear
interest from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest Period at the
interest rate determined as applicable to such Eurodollar Rate Advance and shall
change as and when the Applicable Eurodollar Margin changes.
2.9 Minimum Amount of Each Advance. Each Floating Rate Advance
(other than an Advance to repay Swing Line Loans or a Reimbursement Obligation)
shall be in the minimum amount of $1,000,000 and in multiples of $500,000 if in
excess thereof, provided, however, that any Floating Rate Advance may be in the
amount of the unused Aggregate Revolving Loan Commitment. Each Eurodollar Rate
Advance shall be in the minimum amount of $2,500,000 and in multiples of
$500,000 if in excess thereof.
2.10 Method of Selecting Types and Interest Periods for
Conversion and Continuation of Advances.
(A) Right to Convert. The Borrower may elect from time to time,
subject to the provisions of Section 2.4 and this Section 2.10, to
convert all or any part of a Loan of any Type into any other Type or
Types of Loans; provided that any conversion of any Eurodollar Rate
Advance shall be made on, and only on, the last day of the Interest
Period applicable thereto.
(B) Automatic Conversion and Continuation. Floating Rate Loans
shall continue as Floating Rate Loans unless and until such Floating
Rate Loans are converted
39
into Eurodollar Rate Loans. Eurodollar Rate Loans shall continue as
Eurodollar Rate Loans until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Rate Loans shall be
automatically converted into Floating Rate Loans unless the Borrower
shall have given the Administrative Agent notice in accordance with
Section 2.10(D) requesting that, at the end of such Interest Period,
such Eurodollar Rate Loans continue as a Eurodollar Rate Loan.
(C) No Conversion Post-Default or Post-Unmatured Default.
Notwithstanding anything to the contrary contained in Section 2.10(A) or
Section 2.10(B), no Loan may be converted into or continued as a
Eurodollar Rate Loan when any Default or Unmatured Default has occurred
and is continuing, except with the consent of the Required Lenders.
(D) Borrowing/Election Notice. The Borrower shall give the
Administrative Agent irrevocable notice (a "BORROWING/ELECTION NOTICE")
of each conversion of a Floating Rate Loan into a Eurodollar Rate Loan
or continuation of a Eurodollar Rate Loan not later than 12:00 noon
(Chicago, Illinois time) three (3) Business Days prior to the date of
the requested conversion or continuation, specifying: (1) the requested
date (which shall be a Business Day) of such conversion or continuation;
(2) the amount and Type of the Loan to be converted or continued; and
(3) the amount of Eurodollar Rate Loan(s) into which such Loan is to be
converted or continued and the duration of the Interest Period
applicable thereto.
2.11 Default Rate. After the occurrence and during the
continuance of a Default, at the option of the Administrative Agent or at the
direction of the Required Lenders, and in any event automatically upon the
occurrence of a Default under Section 8.1(F), (G) or (I), the interest rate(s)
applicable to (i) all Eurodollar Rate Advances shall be calculated based on the
highest Applicable Eurodollar Margin under the pricing grid set forth in Section
2.15(D)(ii) plus two percent (2.00%) per annum, (ii) all Floating Rate Advances
and all other Obligations and all other fees (including the fees payable under
Section 3.8 with respect to Letters of Credit) shall be calculated based on the
highest Applicable Floating Rate Margins under the pricing grid set forth in
Section 2.15(D)(ii) plus two percent (2.00%) per annum.
2.12 Method of Payment; Collection Account Arrangements.
(A) Method of Payment. All payments of principal, interest,
fees, reimbursements, commissions, L/C Obligations and other Obligations
hereunder shall be made, without setoff, deduction or counterclaim
(unless indicated otherwise in Section 2.15(E)), in immediately
available funds to the Administrative Agent at the Administrative
Agent's address specified pursuant to Article XIV, or at any other
Lending Installation of the Administrative Agent specified in writing by
the Administrative Agent to the Borrower, by 1:00 p.m. (Chicago,
Illinois time) on the date when due and shall be made ratably among the
Lenders (unless such amount is not to be shared ratably in accordance
with the terms hereof). Each payment delivered to the Administrative
Agent for the account of any Lender shall be delivered promptly by the
Administrative Agent to such Lender in the same type of funds that the
Administrative Agent received at its address specified pursuant to
Article XIV or at any Lending
40
Installation specified in a notice received by the Administrative Agent
from such Lender. The Borrower authorizes the Administrative Agent to
charge the account of the Borrower maintained with LaSalle for each
payment of principal, interest, fees, commissions and L/C Obligations as
it becomes due hereunder. Each reference to the Administrative Agent in
this Section 2.12 shall also be deemed to refer, and shall apply
equally, to each Issuing Bank, in the case of payments required to be
made by the Borrower to any Issuing Bank pursuant to Article III.
(B) Cash Management Arrangements. On or prior to the Closing
Date, the Borrower shall have entered into and shall thereafter maintain
cash management arrangements acceptable to the Administrative Agent and
the Borrower.
2.13 Evidence of Debt.
(A) Loan Account. Each Lender shall maintain in accordance with
its usual practice an account or accounts (a "LOAN ACCOUNT") evidencing
the indebtedness of the Borrower to such Lender owing to such Lender
from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(B) Register. The Register maintained by the Administrative
Agent pursuant to Section 13.3(C) shall include a control account, and a
subsidiary account for each Lender, in which accounts (taken together)
shall be recorded (i) the date and the amount of each Loan made
hereunder, the Type thereof and the Interest Period, if any, applicable
thereto, (ii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder,
(iii) the effective date and amount of each Assignment Agreement
delivered to and accepted by it and the parties thereto pursuant to
Section 13.3, (iv) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share
thereof, and (v) all other appropriate debits and credits as provided in
this Agreement, including, without limitation, all fees, charges,
expenses and interest.
(C) Entries in Loan Account and Register. The entries made in
the Loan Account, the Register and the other accounts maintained
pursuant to clauses (A) or (B) of this Section shall be conclusive and
binding for all purposes, absent manifest error, unless the Borrower
objects to information contained in the Loan Accounts, the Register or
the other accounts within thirty (30) days of the Borrower's receipt of
such information; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein
shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(D) Notes Issued Upon Request. Any Lender may request that the
Revolving Loans or Term Loans made, or to be made, by it each be
evidenced by a promissory note in substantially the forms of Exhibit K-1
or K-2, respectively, to evidence such Lender's Revolving Loans or Term
Loans, as applicable. In such event, the Borrower shall prepare, execute
and deliver to such Lender a promissory note for such Loans payable to
the order of such Lender and in a form approved by the Administrative
Agent and consistent with the terms of this Agreement. Thereafter, the
Loans evidenced by such
41
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 13.3) be represented by one or more
promissory notes in such form payable to the order of the payee named
therein.
2.14 Telephonic Notices. The Borrower authorizes the Lenders and
the Administrative Agent to extend, convert or continue Advances, effect
selections of Types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Administrative Agent or any Lender in
good faith believes to be a Borrower Representative. The Borrower agrees to
deliver promptly to the Administrative Agent a written confirmation, signed by
an Authorized Officer, if such confirmation is requested by the Administrative
Agent or any Lender, of each telephonic notice. In case of disagreement
concerning such notices, if the Administrative Agent has recorded telephonic
borrowing notices, such recordings will be made available to the Borrower upon
its request therefor.
2.15 Promise to Pay; Interest and Commitment Fees; Interest
Payment Dates; Interest and Fee Basis; Taxes; Loan and Control Accounts.
(A) Promise to Pay. All Revolving Loans shall be paid in full by
the Borrower on the earlier of (i) the Commitment Termination Date and
(ii) the Facility Termination Date. All Term Loans shall be paid in full
by the Borrower on the earlier of the (i) Term Loan Final Maturity Date
and (ii) the Facility Termination Date. The Borrower unconditionally
promises to pay when due the principal amount of each Loan and all other
Obligations incurred by it, and to pay all unpaid interest accrued
thereon, in accordance with the terms of this Agreement and the other
Loan Documents.
(B) Interest Payment Dates. Interest accrued on each Floating
Rate Loan shall be payable on each Payment Date, commencing with the
first such date to occur after the date hereof, upon any prepayment
whether by acceleration or otherwise, and at maturity (whether by
acceleration or otherwise). Interest accrued on each Eurodollar Rate
Loan shall be payable on the last day of its applicable Interest Period,
on any date on which the Eurodollar Rate Loan is prepaid, whether by
acceleration or otherwise, and at maturity. Interest accrued on each
Eurodollar Rate Loan having an Interest Period longer than three months
shall also be payable on the last day of each three-month interval
during such Interest Period. Interest accrued on the principal balance
of all other Obligations shall be payable in arrears (i) on each Payment
Date, commencing on the first such day following the incurrence of such
Obligation, (ii) upon repayment thereof in full or in part, and (iii) if
not theretofore paid in full, at the time such other Obligation becomes
due and payable (whether by acceleration or otherwise).
(C) Commitment Fees; Fee Letter.
(i) The Borrower shall pay to the Administrative Agent, for the
account of the Lenders in accordance with their Revolving Loan Pro Rata
Shares, from and after the Closing Date until the date on which the
Aggregate Revolving Loan Commitment shall be terminated in whole, a
commitment fee accruing at the rate of the then Applicable Commitment
Fee Percentage, multiplied by the average daily amount by which (A) the
Aggregate Revolving Loan Commitment exceeds (B) the Revolving
42
Credit Obligations (excluding the outstanding principal amount of the
Swing Line Loans). All such commitment fees payable under this clause
(C) shall be payable quarterly in arrears on each Payment Date occurring
after the Closing Date (with the first such payment being calculated for
the period from the Closing Date and ending on the first Payment Date
thereafter), and, in addition, on any date on which the Aggregate
Revolving Loan Commitment shall be terminated in whole.
(ii) The Borrower agrees to pay to the Administrative Agent for
the sole account of the Administrative Agent and the Arranger (unless
otherwise agreed between the Administrative Agent and the Arranger and
any Lender) the fees set forth in the letter agreement between the
Administrative Agent and the Borrower, dated May 23, 2002, payable at
the times and in the amounts set forth therein.
(D) Interest and Fee Basis; Applicable Floating Rate Margins,
Applicable Eurodollar Margins and Applicable Commitment Fee Percentage.
(i) Interest on all Eurodollar Rate Loans and on all fees shall
be calculated for actual days elapsed on the basis of a 360-day year.
Interest on all Floating Rate Loans shall be calculated for actual days
elapsed on the basis of a 365-, or when appropriate 366-, day year.
Interest shall be payable for the day an Obligation is incurred but not
for the day of any payment on the amount paid if payment is received
prior to 2:00 p.m. (Chicago, Illinois time) at the place of payment. If
any payment of principal of or interest on a Loan or any payment of any
other Obligations shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and, in
the case of a principal payment, such extension of time shall be
included in computing interest, fees and commissions in connection with
such payment.
(ii) The Applicable Floating Rate Margins, Applicable Eurodollar
Margins and Applicable Commitment Fee Percentage shall be determined
from time to time by reference to the tables set forth below, (a) in the
case of the Applicable Floating Rate Margins and Applicable Eurodollar
Margins, on the basis of the then applicable Leverage Ratio as described
in this Section 2.15(D)(ii), and (b) in the case of the Applicable
Commitment Fee Percentage, on the basis of the then outstanding amount
of the Revolving Credit Obligations as a percentage of the Aggregate
Revolving Loan Commitment in effect at such time:
- -----------------------------------------------------------------------------------------------
LEVERAGE RATIO APPLICABLE FLOATING RATE APPLICABLE EURODOLLAR MARGINS
MARGINS
- -----------------------------------------------------------------------------------------------
Greater than or equal to 3.00 2.00% 3.50%
to 1.00
- -----------------------------------------------------------------------------------------------
Greater than or equal to 2.50
to 1.0 and less than 3.00 to 1.75% 3.25%
1.00
- -----------------------------------------------------------------------------------------------
Greater than or equal to 2.00
to 1.0 and less than 2.50 to 1.50% 3.00%
1.00
- -----------------------------------------------------------------------------------------------
43
- -----------------------------------------------------------------------------------------------
Less than 2.00 to 1.00 1.25% 2.75%
- -----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------
USAGE APPLICABLE COMMITMENT FEE
PERCENTAGE
- ----------------------------------------------------------------
Revolving Credit Obligations
are greater than or equal to
forty percent (40%) of the 0.50%
Aggregate Revolving Loan
Commitment at such time
- ----------------------------------------------------------------
Revolving Credit Obligations
are less than forty percent
(40%) of the Aggregate 1.00%
Revolving Loan Commitment at
such time
- ----------------------------------------------------------------
For purposes of this Section 2.15(D)(ii), the Leverage Ratio
shall be calculated as provided in Section 7.4(B). Upon receipt of the financial
statements delivered pursuant to Sections 7.1(A)(ii) and (iii), as applicable,
the Applicable Floating Rate Margins and Applicable Eurodollar Margins shall be
adjusted, such adjustment being effective five (5) Business Days following the
Administrative Agent's receipt of such financial statements and the compliance
certificate required to be delivered in connection therewith pursuant to Section
7.1(A)(iv); provided, that if the Borrower shall not have timely delivered its
financial statements in accordance with Section 7.1(A)(ii) or (iii), as
applicable, then commencing on the date upon which such financial statements
should have been delivered and continuing until five (5) Business Days following
the date such financial statements are actually delivered, the Applicable
Floating Rate Margins and Applicable Eurodollar Margins shall be the Applicable
Floating Rate Margins and Applicable Eurodollar Margins, as applicable, under
the pricing grid set forth in this Section 2.15(D)(ii) in effect on the date
such financial statements were required to be delivered under Section 7.1(A)(ii)
or (iii), as applicable; provided that if upon delivery of such financial
statements any increase of the Applicable Floating Rate Margins or the
Applicable Eurodollar Rate Margins shall be required under this Section 2.15(D),
such adjustment shall be made retroactively to the date such financial
statements were initially required to be delivered under Section 7.1(a)(ii) or
(iii), as applicable. The Applicable Commitment Fee Percentage shall be adjusted
on a daily basis based upon the average outstanding daily balance of the
Revolving Credit Obligations of such date.
(iii) Notwithstanding anything herein to the contrary, from the
Closing Date to but not including the fifth (5th) Business Day following
receipt of the Borrower's financial statements delivered pursuant to
Section 7.1(A)(ii) for the fiscal year ending on or about September 30,
2003, the Applicable Floating Rate Margins and the Applicable Eurodollar
Margins shall be determined based upon a Leverage Ratio greater than or
equal to 3.0 to 1.0.
44
(E) Taxes.
(i) Any and all payments by the Borrower hereunder (whether in
respect of principal, interest, fees or otherwise) shall be made free
and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings or any
interest, penalties and liabilities with respect thereto, including,
without duplication of amounts otherwise reimbursable under Section
4.1(A), those arising after the date hereof as a result of the adoption
of or any change in any law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the
interpretation or application thereof by a Governmental Authority, but
excluding, in the case of each Lender and the Administrative Agent, such
taxes (including income taxes, franchise taxes and branch profit taxes)
as are imposed on or measured by such Lender's or the Administrative
Agent's, as the case may be, net income by the United States of America
or any Governmental Authority of the jurisdiction under the laws of
which such Lender or the Administrative Agent, as the case may be, is
organized (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings, and liabilities which the Administrative Agent or
a Lender determines to be applicable to this Agreement, the other Loan
Documents, the Revolving Loan Commitments, the Loans or the Letters of
Credit being hereinafter referred to as "TAXES"). If the Borrower shall
be required by law to deduct or withhold any Taxes from or in respect of
any sum payable hereunder or under the other Loan Documents to any
Lender or the Administrative Agent, (a) the sum payable shall be
increased as may be necessary so that after making all required
deductions or withholdings (including deductions applicable to
additional sums payable under this Section 2.15(E)) such Lender or the
Administrative Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions or withholdings
been made, (b) the Borrower shall make such deductions or withholdings,
and (c) the Borrower shall pay the full amount deducted or withheld to
the relevant taxation authority or other authority in accordance with
applicable law. If a withholding tax of the United States of America or
any other Governmental Authority shall be or become applicable (y) after
the date of this Agreement, to such payments by the Borrower made to the
Lending Installation or any other office that a Lender may claim as its
Lending Installation, or (z) after such Lender's selection and
designation of any other Lending Installation, to such payments made to
such other Lending Installation, such Lender shall use reasonable
efforts to make, fund and maintain the affected Loans through another
Lending Installation of such Lender in another jurisdiction so as to
reduce the Borrower's liability hereunder, if the making, funding or
maintenance of such Loans through such other Lending Installation of
such Lender does not, in the judgment of such Lender, otherwise
adversely affect such Loans, or obligations under the Revolving Loan
Commitments of such Lender.
(ii) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges, or similar levies which arise from any payment made hereunder,
from the issuance of Letters of Credit hereunder, or from the execution,
delivery or registration of, or otherwise with respect
45
to, this Agreement, the other Loan Documents, the Revolving Loan
Commitments, the Loans or the Letters of Credit (hereinafter referred to
as "OTHER Taxes").
(iii) The Borrower indemnifies each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
Governmental Authority on amounts payable under this Section 2.15(E))
paid by such Lender or the Administrative Agent (as the case may be) and
any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall be
made within thirty (30) days after the date such Lender or the
Administrative Agent (as the case may be) makes written demand therefor.
If the Taxes or Other Taxes with respect to which the Borrower or any
Subsidiary has made either a direct payment to the taxation or other
authority or an indemnification payment hereunder are subsequently
refunded to any Lender, such Lender will return to the Borrower, if no
Default has occurred and is continuing, an amount equal to the lesser of
the indemnification payment or the refunded amount. And if a Default
shall have occurred, such refunded amount shall be applied in the same
manner as Designated Prepayments set forth in Section 2.5(B)(i)(e)
hereof. A certificate as to any additional amount payable to any Lender
or the Administrative Agent under this Section 2.15(E) submitted to the
Borrower and the Administrative Agent (if a Lender is so submitting) by
such Lender or the Administrative Agent shall show in reasonable detail
the amount payable and the calculations used to determine such amount
and shall, absent manifest error, be final, conclusive and binding upon
all parties hereto. With respect to such deduction or withholding for or
on account of any Taxes and to confirm that all such Taxes have been
paid to the appropriate Governmental Authorities, the Borrower shall
promptly (and in any event not later than thirty (30) days after
receipt) furnish to each Lender and the Administrative Agent such
certificates, receipts and other documents as may be required (in the
reasonable judgment of such Lender or the Administrative Agent) to
establish any tax credit to which such Lender or the Administrative
Agent may be entitled.
(iv) Within thirty (30) days after the date of any payment of
Taxes or Other Taxes by the Borrower, the Borrower shall furnish to the
Administrative Agent the original or a certified copy of a receipt
evidencing payment thereof.
(v) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.15(E) shall survive the payment in full of
all Obligations, the termination of the Letters of Credit and the
termination of this Agreement.
(vi) Each Lender shall promptly furnish to the Borrower and the
Administrative Agent such additional documents as may be reasonably
required by the Borrower or the Administrative Agent to establish any
exemption from or reduction of any Taxes or Other Taxes required to be
deducted or withheld and which may be obtained without undue expense to
such Lender (collectively, the "EXEMPTION DOCUMENTS"). Notwithstanding
any other provision of this Section 2.15(E), the Borrower shall not be
obligated to gross up any payments to any Lender
46
pursuant to Section 2.15(E)(i), or to indemnify any Lender pursuant to
Section 2.15(E)(iii), in respect of United States federal withholding
taxes to the extent imposed as a result of (x) the failure of such
Lender to deliver to the Borrower the Exemption Documents, or (y) the
Lender designating a successor Lending Installation at which it
maintains its Loans which has the effect of causing such Lender to
become obligated for tax payments in excess of those in effect
immediately prior to such designation; provided, however, that the
Borrower shall be obligated to gross up any payments to any such Lender
pursuant to Section 2.15(E)(i), and to indemnify any such Lender
pursuant to Section 2.15(E)(iii), in respect of United States federal
withholding taxes if (x) any such failure to deliver any Exemption
Documents or the failure of such Exemption Documents to establish a
complete exemption from U.S. federal withholding tax or inaccuracy or
untruth contained therein resulted from a change in any applicable
statute, treaty, regulation or other applicable law or any
interpretation of any of the foregoing occurring after the date hereof,
which change rendered such Lender no longer legally entitled to deliver
such Exemption Documents or otherwise ineligible for a complete
exemption from U.S. federal withholding tax, or rendered the information
or the certifications made in such Exemption Documents untrue or
inaccurate in any material respect, (y) the redesignation of the
Lender's Lending Installation was made at the request of the Borrower or
(z) the obligation to gross up payments to any such Lender pursuant to
Section 2.15(E)(i), or to indemnify any such Lender pursuant to Section
2.15(E)(iii), is with respect to a Purchaser that becomes a Purchaser as
a result of an assignment made at the request of the Borrower.
(vii) Upon the request, and at the expense of the Borrower, each
Lender to which the Borrower is required to pay any additional amount
pursuant to this Section 2.15(E), shall reasonably afford the Borrower
the opportunity to contest, and shall reasonably cooperate with the
Borrower in contesting, the imposition of any Tax giving rise to such
payment; provided, that (a) such Lender shall not be required to afford
the Borrower the opportunity to so contest unless the Borrower shall
have confirmed in writing to such Lender its obligation to pay such
amounts pursuant to this Agreement; and (b) the Borrower shall reimburse
such Lender for its reasonable attorneys' and accountants' fees and
disbursements incurred in so cooperating with the Borrower in contesting
the imposition of such Tax; provided, however, that notwithstanding the
foregoing, no Lender shall be required to afford the Borrower the
opportunity to contest, or cooperate with the Borrower in contesting,
the imposition of any Taxes, if such Lender reasonably and in good faith
determines that to do so would have an adverse effect on it.
2.16 Notification of Advances, Interest Rates, Prepayments and
Aggregate Revolving Loan Commitment Reductions. Promptly after receipt thereof,
the Administrative Agent will notify each Lender of the contents of each
Aggregate Revolving Loan Commitment reduction notice, Borrowing/Election Notice,
and repayment notice received by it hereunder. The Administrative Agent will
notify the Borrower and each Lender of the interest rate applicable to each
Eurodollar Rate Loan promptly upon determination of such interest rate and will
give each Lender prompt notice of each change in the Alternate Base Rate.
]
47
2.17 Lending Installations. Subject to the provisions of Section
2.15(E)(i) hereto, each Lender may book its Loans or Letters of Credit at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation. Each Lender may, by written or facsimile notice to
the Administrative Agent and the Borrower, designate a Lending Installation
through which Loans will be made by it and for whose account Loan payments
and/or payments of L/C Obligations are to be made.
2.18 Non-Receipt of Funds by the Administrative Agent. Unless
the Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the Administrative
Agent of (A) in the case of a Lender, the proceeds of a Loan or (B) in the case
of the Borrower, a payment of principal, interest or fees to the Administrative
Agent for the account of the Lenders, that it does not intend to make such
payment, the Administrative Agent may assume that such payment has been made.
The Administrative Agent may, but shall not be obligated to, make the amount of
such payment available to the intended recipient in reliance upon such
assumption. If such Lender or the Borrower, as the case may be, has not in fact
made such payment to the Administrative Agent, the recipient of such payment
shall, on demand by the Administrative Agent, repay to the Administrative Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Administrative Agent until the date the Administrative Agent recovers
such amount at a rate per annum equal to (i) in the case of payment by a Lender,
the Federal Funds Effective Rate for such day or (ii) in the case of payment by
the Borrower, the interest rate applicable to the relevant Loan.
2.19 Termination Conditions. All of the rights and remedies
under this Agreement and the other Loan Documents shall survive until (A) all of
the Secured Obligations (other than contingent indemnity obligations) shall have
been fully and indefeasibly paid and satisfied in cash, (B) the Commitments and
all financing arrangements among the Borrower and the Lenders shall have been
terminated (including under Hedging Agreements or other agreements with respect
to Hedging Obligations) and (C) all of the Letters of Credit shall have expired,
been cancelled or terminated, or cash collateralized pursuant to the terms of
this Agreement or supported by a letter of credit acceptable to the
Administrative Agent (collectively, the "TERMINATION CONDITIONS").
2.20 Replacement of Certain Lenders. In the event a Lender
("AFFECTED LENDER") shall have: (A) failed to fund its Pro Rata Share of any
Advance requested by the Borrower, or to fund a Revolving Loan in order to repay
Swing Line Loans pursuant to Section 2.3(D), which such Lender is obligated to
fund under the terms of this Agreement and which failure has not been cured, (B)
requested compensation from the Borrower under Sections 2.15(E), 4.1 or 4.2 to
recover Taxes, Other Taxes or other additional costs incurred by such Lender
which are not being incurred generally by the other Lenders, (C) delivered a
notice pursuant to Section 4.3 claiming that such Lender is unable to extend
Eurodollar Rate Loans to the Borrower for reasons not generally applicable to
the other Lenders or (D) has invoked Section 10.2; then, in any such case, after
engagement of one or more "Replacement Lenders" (as defined below) by the
Borrower and/or the Administrative Agent, the Borrower or the Administrative
Agent may (but shall not be obligated to) make written demand on such Affected
48
Lender (with a copy to the Administrative Agent in the case of a demand by the
Borrower and a copy to the Borrower in the case of a demand by the
Administrative Agent) for the Affected Lender to assign, and such Affected
Lender shall use commercially reasonable efforts to assign pursuant to one or
more duly executed Assignment Agreements five (5) Business Days after the date
of such demand, to one or more financial institutions that comply with the
provisions of Section 13.3(A) which the Borrower or the Administrative Agent, as
the case may be, shall have engaged for such purpose ("REPLACEMENT LENDER"), all
of such Affected Lender's rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, its Revolving Loan
Commitment, all Loans owing to it, all of its participation interests in
existing Letters of Credit, L/C Drafts and unreimbursed drawings under Letters
of Credit, and its obligation to participate in additional Letters of Credit and
Swing Line Loans hereunder) in accordance with Section 13.3. The Administrative
Agent is authorized (but not required) to execute one or more of such assignment
agreements as attorney-in-fact for any Affected Lender failing to execute and
deliver the same within five (5) Business Days after the date of such demand.
Further, with respect to such assignment the Affected Lender shall have
concurrently received, in cash, all amounts due and owing to the Affected Lender
hereunder or under any other Loan Document, including, without limitation, the
aggregate outstanding principal amount of the Loans owed to such Lender,
together with accrued interest thereon through the date of such assignment,
amounts payable under Sections 2.15(E), 4.1, and 4.2 with respect to such
Affected Lender and compensation payable under Section 2.15(C) in the event of
any replacement of any Affected Lender under clause (B) or clause (C) of this
Section 2.20; provided that upon such Affected Lender's replacement, such
Affected Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.15(E), 4.1, 4.2, 4.4, and 10.7 (with
respect to all amounts arising under such Sections while such Lender was a party
hereto), as well as to any fees accrued for its account hereunder and not yet
paid, and shall continue to be obligated under Section 11.8.
ARTICLE III: THE LETTER OF CREDIT FACILITY
3.1 Obligation to Issue Letters of Credit. Subject to the terms
and conditions of this Agreement and in reliance upon the representations,
warranties and covenants of the Borrower herein set forth, each Issuing Bank
hereby agrees to issue for the account of the Borrower through such Issuing
Bank's branches as it and the Borrower may jointly agree, one or more Letters of
Credit denominated in Dollars in accordance with this Article III, from time to
time during the period, commencing on the Closing Date and ending on the sixth
(6th) Business Day prior to the Commitment Termination Date.
3.2 Transitional Provision. Schedule 3.2 contains a schedule of
certain letters of credit issued for the account of the Borrower and its
Subsidiaries by any of the Lenders prior to the Closing Date. Subject to the
satisfaction of the conditions contained in Sections 5.1 and 5.2, from and after
the Closing Date such letters of credit shall be deemed to be Letters of Credit
issued pursuant to this Article III.
3.3 Types and Amounts. No Issuing Bank shall have any obligation
to and no Issuing Bank shall:
49
(A) issue (or amend) any Letter of Credit if on the date of
issuance (or amendment), before or after giving effect to the Letter of
Credit requested hereunder, (i) the amount of the Revolving Credit
Obligations at such time would exceed the Maximum Revolving Credit
Amount at such time, or (ii) the aggregate outstanding amount of the L/C
Obligations would exceed $3,000,000 calculated as of the date of
issuance of any Letter of Credit; or
(B) issue (or amend) any Letter of Credit which has an
expiration date later than the date which is the earlier of (i) one (1)
year after the date of issuance thereof or (ii) five (5) Business Days
immediately preceding the Commitment Termination Date; provided, that
any Letter of Credit with a one year tenor may provide for the renewal
thereof for additional one year periods (which in no event shall extend
beyond the date referred to in clause (ii) above).
3.4 Conditions. In addition to being subject to the satisfaction
of the conditions contained in Sections 5.1 and 5.2, the obligation of an
Issuing Bank to issue any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(A) the Borrower shall have delivered to the applicable Issuing
Bank (at such times and in such manner as such Issuing Bank may
reasonably prescribe) and the Administrative Agent, a request for
issuance of such Letter of Credit in substantially the form of Exhibit C
hereto (each such request a "REQUEST FOR LETTER OF CREDIT"), duly
executed applications for such Letter of Credit, and such other
documents, instructions and agreements as may be required pursuant to
the terms thereof (all such applications, documents, instructions, and
agreements being referred to herein as the "L/C DOCUMENTS"), and the
proposed Letter of Credit shall be reasonably satisfactory to such
Issuing Bank as to form and content; and
(B) as of the date of issuance no order, judgment or decree of
any court, arbitrator or Governmental Authority shall purport by its
terms to enjoin or restrain the applicable Issuing Bank from issuing
such Letter of Credit and no law, rule or regulation applicable to such
Issuing Bank and no request or directive (whether or not having the
force of law) from a Governmental Authority with jurisdiction over such
Issuing Bank shall prohibit or request that such Issuing Bank refrain
from the issuance of Letters of Credit generally or the issuance of that
Letter of Credit; and
(C) in the case of LaSalle acting in its capacity as Issuing
Bank, the Borrower shall have duly executed and delivered to LaSalle the
L/C Master Agreement and the Borrower shall be in compliance therewith;
provided that in the event that the terms and conditions of the L/C
Master Agreement (or any similar agreement entered into with any other
Issuing Bank) shall conflict with the terms and conditions of this
Agreement, the terms and conditions of this Agreement shall govern and
control to the extent of such conflict.
3.5 Procedure for Issuance of Letters of Credit.
50
(A) Issuance. Subject to the terms and conditions of this
Article III and provided that the applicable conditions set forth in
Sections 5.1 and 5.2 hereof have been satisfied, the applicable Issuing
Bank shall, on the requested date, issue a Letter of Credit on behalf of
the Borrower in accordance with such Issuing Bank's usual and customary
business practices and, in this connection, such Issuing Bank may assume
that the applicable conditions set forth in Section 5.2 hereof have been
satisfied unless it shall have received notice to the contrary from the
Administrative Agent or a Lender or has knowledge that the applicable
conditions have not been met.
(B) Notice. The applicable Issuing Bank shall give the
Administrative Agent written notice and or telephonic notice confirmed
promptly thereafter in writing, of the issuance of a Letter of Credit,
provided, however, that the failure to provide such notice shall not
result in any liability on the part of such Issuing Bank.
(C) No Amendment. No Issuing Bank shall extend or amend any
Letter of Credit unless the requirements of this Section 3.5 are met as
though a new Letter of Credit was being requested and issued.
3.6 Letter of Credit Participation. On the date of this
Agreement, with respect to the Letters of Credit identified on Schedule 3.2, and
immediately upon the issuance of each Letter of Credit hereunder, each Lender
with a Revolving Loan Pro Rata Share shall be deemed to have automatically,
irrevocably and unconditionally purchased and received from the applicable
Issuing Bank an undivided interest and participation in and to such Letter of
Credit, the obligations of the Borrower in respect thereof, and the liability of
such Issuing Bank thereunder (collectively, an "L/C INTEREST") in an amount
equal to the amount available for drawing under such Letter of Credit multiplied
by such Lender's Revolving Loan Pro Rata Share. Each Issuing Bank will notify
each Lender promptly upon presentation to it of an L/C Draft or upon any other
draw under a Letter of Credit. On or before the Business Day on which an Issuing
Bank makes payment of each such L/C Draft or, in the case of any other draw on a
Letter of Credit, on demand by the Administrative Agent or the applicable
Issuing Bank, each Lender shall make payment to the Administrative Agent, for
the account of the applicable Issuing Bank, in immediately available funds in
Dollars in an amount equal to such Lender's Revolving Loan Pro Rata Share of the
amount of such payment or draw. The obligation of each Lender to reimburse the
Issuing Banks under this Section 3.6 shall be unconditional, continuing,
irrevocable and absolute. In the event that any Lender fails to make payment to
the Administrative Agent of any amount due under this Section 3.6, the
Administrative Agent shall be entitled to receive, retain and apply against such
obligation the principal and interest otherwise payable to such Lender hereunder
until the Administrative Agent receives such payment from such Lender or such
obligation is otherwise fully satisfied; provided, however, that nothing
contained in this sentence shall relieve such Lender of its obligation to
reimburse the applicable Issuing Bank for such amount in accordance with this
Section 3.6.
3.7 Reimbursement Obligation. The Borrower agrees
unconditionally, irrevocably and absolutely to pay immediately to the
Administrative Agent, for the account of the Lenders, the amount of each advance
drawn under or pursuant to a Letter of Credit or an L/C Draft related thereto
(such obligation of the Borrower to reimburse the Administrative Agent for an
advance made under a Letter of Credit or L/C Draft being hereinafter referred to
as a
51
"Reimbursement Obligation" with respect to such Letter of Credit or L/C Draft),
each such reimbursement to be made by the Borrower no later than the Business
Day on which the applicable Issuing Bank makes payment of each such L/C Draft
or, if the Borrower shall have received notice of a Reimbursement Obligation
later than 12:00 noon (Chicago, Illinois time), on any Business Day or on a day
which is not a Business Day, no later than 12:00 noon (Chicago, Illinois time),
on the immediately following Business Day or, in the case of any other draw on a
Letter of Credit, the date specified in the demand of such Issuing Bank. If the
Borrower at any time fails to repay a Reimbursement Obligation pursuant to this
Section 3.7, the Borrower shall be deemed to have elected to borrow Revolving
Loans from the Lenders, as of the date of the advance giving rise to the
Reimbursement Obligation, equal in amount to the amount of the unpaid
Reimbursement Obligation. Such Revolving Loans shall be made as of the date of
the payment giving rise to such Reimbursement Obligation, automatically, without
notice and without any requirement to satisfy the conditions precedent otherwise
applicable to an Advance of Revolving Loans. Such Revolving Loans shall
constitute a Floating Rate Advance, the proceeds of which Advance shall be used
to repay such Reimbursement Obligation. If, for any reason, the Borrower fails
to repay a Reimbursement Obligation on the day such Reimbursement Obligation
arises and, for any reason, the Lenders are unable to make or have no obligation
to make Revolving Loans, then such Reimbursement Obligation shall bear interest
from and after such day, until paid in full, at the interest rate applicable to
a Floating Rate Advance.
3.8 Letter of Credit Fees. The Borrower agrees to pay:
(A) on each Payment Date, in arrears, to the Administrative
Agent for the ratable benefit of the Lenders, a letter of credit fee at
a rate per annum equal to the Applicable L/C Fee Percentage on the
average daily outstanding amount available for drawing under all standby
Letters of Credit;
(B) on the date of issuance of each standby Letter of Credit, to
the applicable Issuing Bank, a letter of credit fronting fee equal to
0.25% of the stated amount available for drawing under such Letter of
Credit; and
(C) to the applicable Issuing Bank, all customary fees and other
issuance, amendment, cancellation, document examination, negotiation,
transfer and presentment expenses and related charges in connection with
the issuance, amendment, cancellation, presentation of L/C Drafts,
negotiation, transfer and the like customarily charged by such Issuing
Banks with respect to standby and commercial Letters of Credit,
including, without limitation, standard commissions with respect to
commercial Letters of Credit, payable at the time of invoice of such
amounts.
3.9 Issuing Bank Reporting Requirements. In addition to the
notices required by Section 3.5(B), each Issuing Bank shall, no later than the
tenth Business Day following the last day of each month, provide to the
Administrative Agent, upon the Administrative Agent's request, schedules, in
form and substance reasonably satisfactory to the Administrative Agent, showing
the date of issue, account party and amount in Dollars, expiration date and the
reference number of each Letter of Credit issued by it outstanding at any time
during such month and the aggregate amount payable by the Borrower during such
month. In addition, upon the request of
52
the Administrative Agent, each Issuing Bank shall furnish to the Administrative
Agent copies of any Letter of Credit and any application for or reimbursement
agreement with respect to a Letter of Credit to which the Issuing Bank is party
and such other documentation as may reasonably be requested by the
Administrative Agent. Upon the request of any Lender, the Administrative Agent
will provide to such Lender information concerning such Letters of Credit.
3.10 Indemnification; Exoneration.
(A) Indemnification. In addition to amounts payable as elsewhere
provided in this Article III, the Borrower hereby agrees to protect,
indemnify and pay the Administrative Agent, each Issuing Bank and each
Lender from and against any and all liabilities and costs which the
Administrative Agent, such Issuing Bank or such Lender may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of
any Letter of Credit other than, in the case of the applicable Issuing
Bank, as a result of its Gross Negligence or willful misconduct, as
determined by the final judgment of a court of competent jurisdiction,
or (ii) the failure of the applicable Issuing Bank to honor a drawing
under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future Governmental Authority
(all such acts or omissions herein called "GOVERNMENTAL ACTS").
(B) Risk Assumption. As among the Borrower, the Lenders, the
Administrative Agent and the Issuing Banks, the Borrower assumes all
risks of the acts and omissions of, or misuse of such Letter of Credit
by, the beneficiary of any Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the Letter of
Credit applications and Letter of Credit reimbursement agreements
executed by the Borrower at the time of request for any Letter of
Credit, neither the Administrative Agent, any Issuing Bank nor any
Lender shall be responsible (in the absence of Gross Negligence or
willful misconduct in connection therewith, as determined by the final
judgment of a court of competent jurisdiction): (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for
and issuance of the Letters of Credit, even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign
a Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of a
Letter of Credit to comply duly with conditions required in order to
draw upon such Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by
mail, cable or other similar form of teletransmission or otherwise; (v)
for errors in interpretation of technical trade terms; (vi) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (vii) for any
consequences arising from causes beyond the control of the
Administrative Agent, the Issuing Banks and the Lenders, including,
without limitation, any Governmental Acts. None of the above shall
affect, impair, or prevent the vesting of any Issuing Bank's rights or
powers under this Section 3.10.
53
(C) No Liability. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any action
taken or omitted by any Issuing Bank under or in connection with the
Letters of Credit or any related certificates shall not, in the absence
of negligence in the Issuing Bank's performance or non-performance of
the express terms of this Agreement or willful misconduct, as determined
by the final judgment of a court of competent jurisdiction, put the
applicable Issuing Bank, the Administrative Agent or any Lender under
any resulting liability to the Borrower or relieve the Borrower of any
of its obligations hereunder to any such Person.
(D) Survival of Agreements and Obligations. Without prejudice to
the survival of any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in this Section
3.10 shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination
of this Agreement.
3.11 Cash Collateral. Notwithstanding anything to the contrary
herein or in any application for a Letter of Credit, after the occurrence and
during the continuance of a Default, the Borrower shall, on the Business Day
that it receives Administrative Agent's demand, deliver to the Administrative
Agent for the benefit of the Lenders and the Issuing Banks, cash, or other
collateral of a type satisfactory to the Required Lenders, having a value, as
determined by such Lenders, equal to one hundred and five percent (105%) of the
aggregate amount of the outstanding L/C Obligations. Any such collateral shall
be held by the Administrative Agent in a separate account appropriately
designated as a cash collateral account in relation to this Agreement and the
Letters of Credit and retained by the Administrative Agent for the benefit of
the Lenders and the Issuing Banks as collateral security for the Borrower's
obligations in respect of this Agreement and each of the Letters of Credit and
L/C Drafts. Such amounts shall be applied to reimburse the Issuing Banks for
drawings or payments under or pursuant to Letters of Credit or L/C Drafts, or if
no such reimbursement is required, to payment of such of the other Obligations
as the Administrative Agent shall determine. If no Default shall be continuing,
amounts remaining in any cash collateral account established pursuant to this
Section 3.11 which are not to be applied to reimburse an Issuing Bank for
amounts actually paid or to be paid by such Issuing Bank in respect of a Letter
of Credit or L/C Draft, shall be promptly returned to the Borrower, after
deduction of the Administrative Agent's expenses incurred in connection with
such cash collateral account.
ARTICLE IV: CHANGE IN CIRCUMSTANCES
4.1 Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and having
general applicability to all banks within the jurisdiction in which such Lender
operates (excluding, for the avoidance of doubt, the effect of and phasing in of
capital requirements or other regulations or guidelines passed prior to the date
of this Agreement), or any interpretation or application thereof by any
Governmental Authority charged with the interpretation or application thereof,
or the compliance of any Lender therewith,
(A) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due from the
Borrower (other than
54
taxation of the overall net income of any Lender or taxation of a
similar basis, which are governed by Section 2.15(E)), or changes the
basis of taxation of payments to any Lender in respect of its Revolving
Loan Commitment, Loans, its L/C Interests, the Letters of Credit or
other amounts due it hereunder, or
(B) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Rate Loans) with respect to its
Revolving Loan Commitment, Loans, L/C Interests or the Letters of
Credit, or
(C) imposes any other condition the result of which is to
increase the cost to any Lender (other than the cost of funding or
borrowing) or any applicable Lending Installation of making, funding or
maintaining its Revolving Loan Commitment, the Loans, the L/C Interests
or the Letters of Credit or reduces any amount receivable by any Lender
or any applicable Lending Installation in connection with its Revolving
Loan Commitment, Loans or Letters of Credit, or requires any Lender or
any applicable Lending Installation to make any payment calculated by
reference to the amount of Revolving Loan Commitment, Loans or L/C
Interests held or interest received by it or by reference to the Letters
of Credit, by an amount deemed material by such Lender;
and the result of any of the foregoing is to increase the cost
to that Lender of making, renewing or maintaining its Revolving Loan Commitment,
Loans, L/C Interests, or Letters of Credit or to reduce any amount received
under this Agreement, then, within fifteen (15) days after receipt by the
Borrower of written demand by such Lender pursuant to Section 4.5, the Borrower
shall pay such Lender that portion of such increased expense incurred or
reduction in an amount received which such Lender determines is attributable to
making, funding and maintaining its Loans, L/C Interests, Letters of Credit and
its Revolving Loan Commitment; provided that the Borrower shall be responsible
for any such of the foregoing amounts that has accrued or been assessed to any
Lender not more than 180 days prior to such written demand (or, if longer, such
period during which because of the retroactive application of such law, rule,
regulation, policy, guideline or directive such Lender did not know in good
faith that such amount would arise or accrue).
4.2 Changes in Capital Adequacy Regulations. If a Lender
reasonably determines (A) the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such Lender or any
corporation controlling such Lender is increased as a result of a "Change" (as
defined below), and (B) such increase in capital will result in an increase in
the cost to such Lender of maintaining its Revolving Loan Commitment, Loans, L/C
Interests, the Letters of Credit or its obligation to make Loans hereunder,
then, within fifteen (15) days after receipt by the Borrower of written demand
by such Lender pursuant to Section 4.5, the Borrower shall pay such Lender the
amount necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines is attributable
to this Agreement, its Revolving Loan Commitment, its Loans, its L/C Interests,
the Letters of Credit or its obligation to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy). "Change" means (i)
any change after the date of this Agreement
55
in the "Risk-Based Capital Guidelines" (as defined below) excluding, for the
avoidance of doubt, the effect of any phasing in of such Risk-Based Capital
Guidelines or any other capital requirements passed prior to the date hereof, or
(ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
4.3 Availability of Types of Advances. If (A) any Lender
reasonably determines that maintenance of its Eurodollar Rate Loans at a
suitable Lending Installation would violate any applicable law, rule, regulation
or directive of any Governmental Authority, whether or not having the force of
law, or (B) the Required Lenders reasonably determine that, other than during
the Syndication Period, deposits of a type or maturity appropriate to match fund
Eurodollar Rate Loans are not available, then the Administrative Agent shall
suspend the availability of the affected Type of Advance and, in the case of any
occurrence set forth in clause (A), require any Advances of the affected Type to
be repaid or converted into another Type, provided that such repayment or
conversion shall entitle the Lenders to funding indemnification contained in
Section 4.4 with respect to any Eurodollar Rate Advance only upon the occurrence
of a change in a law, rule or regulation occurring after the Borrowing Date of
such Eurodollar Rate Advance.
4.4 Funding Indemnification. If any payment of a Eurodollar Rate
Loan occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment, or otherwise, or a
Eurodollar Rate Loan is not made on the date specified by the Borrower for any
reason other than default by the Lenders, or a Eurodollar Rate Loan is not
prepaid on the date specified by the Borrower for any reason, the Borrower
indemnifies each Lender for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Eurodollar Rate Loan. In connection
with any assignment by any Lender of any portion of the Loans made pursuant to
Section 13.3 and made during the Syndication Period, and if, notwithstanding the
provisions of Section 2.4, the Borrower has requested and the Administrative
Agent has consented to the use of the Eurodollar Rate, the Borrower shall be
deemed to have repaid all outstanding Eurodollar Rate Advances as of the
effective date of such assignment and reborrowed such amount as a Floating Rate
Advance and/or Eurodollar Rate Advance (chosen in accordance with the provisions
of Section 2.4) and the indemnification provisions under this Section 4.4 shall
apply.
4.5 Lender Statements; Survival of Indemnity. If reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Rate Loan to reduce any liability of the Borrower to
such Lender under Sections 4.1 and 4.2 or to avoid the unavailability of a Type
of Advance under Section 4.3, so long as such designation is not, in the
56
reasonable judgment of the Lender, disadvantageous to such Lender. Each Lender
shall deliver a written statement of such Lender to the Borrower (with a copy to
the Administrative Agent) as to the amount due, if any, under Section 2.15(E),
4.1, 4.2 or 4.4 and shall set forth in reasonable detail the calculations upon
which such Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of demonstrable error. Determination of
amounts payable under such Sections in connection with a Eurodollar Rate Loan
shall be calculated as though each Lender funded its Eurodollar Rate Loan
through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the Eurodollar Rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Lender shall be
payable on demand after receipt by the Borrower of such statement. The
obligations of the Borrower under Sections 2.15(E), 4.1, 4.2 and 4.4 shall
survive payment of the Obligations and termination of this Agreement.
ARTICLE V: CONDITIONS PRECEDENT
5.1 Initial Advances and Letters of Credit. The Lenders shall
not be required to make the initial Loans or issue any Letters of Credit unless
(A) such initial Loans are made not later than December 31, 2002; and (B) the
Borrower has furnished to the Administrative Agent each of the following, with
sufficient copies for the Lenders, all in form and substance satisfactory to the
Administrative Agent and the Lenders in their sole and absolute discretion:
(i) Copies of the Certificate of Incorporation or Articles of
Incorporation or other applicable organizational document of the
Borrower and each of the Guarantors as of the Closing Date
(collectively, the "LOAN PARTIES"), together with all amendments and a
certificate of good standing, both certified as of a recent date by the
appropriate governmental officer in its jurisdiction of organization;
(ii) Copies, certified by the Secretary or Assistant Secretary
of each of the Loan Parties of their respective by-laws or operating
agreement and of their respective Board of Directors' resolutions (and
resolutions of other bodies, if any are deemed necessary by counsel for
any Lender) authorizing the execution of the Loan Documents entered into
by it;
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of each of the Loan Parties, which shall identify by
name and title and bear the signature of the officers of the applicable
Loan Party authorized to sign the Loan Documents entered into by it and,
of the Borrower to make borrowings hereunder, upon which certificate the
Lenders shall be entitled to rely until informed of any change in
writing by the Borrower;
(iv) A certificate, in form and substance satisfactory to the
Administrative Agent and the Arranger, signed by the Chief Financial
Officer of the Borrower, certifying that on the Closing Date (a) all the
representations in this Agreement are true and correct in all material
respects (unless such representation and warranty is made as of a
specific date, in which case, such representation and warranty shall be
true and correct as of such date), (b) no Default or Unmatured Default
has occurred
57
and is continuing, and (c) since September 30, 2001 no material adverse
change in the business, financial condition, operations or results of
operations of the Borrower, any Guarantor, the Borrower and its
Subsidiaries, in each case taken as a whole, or the assets acquired
pursuant to the terms of the Asset Purchase Agreement shall have
occurred;
(v) The written opinion of the Loan Parties' counsel, addressed
to the Administrative Agent, the Arranger and the Lenders, in
substantially the form attached hereto as Exhibit E;
(vi) A copy of (a) an opinion of Duff & Phelps, LLC, including
to the effect that (1) the consideration to be paid by the ESOT for the
"Shares" under (and as defined in) the ESOT Stock Purchase Agreement is
not in excess of "adequate consideration," within the meaning of Section
3(18) of ERISA and (2) the transactions contemplated in connection with
the ESOT Transaction Documents are fair to the ESOT from a financial
point of view, which opinion shall be in full force and effect and not
withdrawn as of the Closing Date, and (b) the stock repurchase liability
forecasts and stock and cash allocations in respect of the ESOP prepared
by Benefits Consulting, Inc.;
(vii) Evidence satisfactory to the Administrative Agent and the
Arranger that (a) all conditions precedent to the consummation of the
IITRI Acquisition and the ESOT Transaction have been satisfied or waived
with the approval of the Administrative Agent and the Arranger (which
approval shall not be unreasonably withheld), (b) the IITRI Acquisition
and the ESOT Transaction have been approved by all necessary action of
the Borrower's Board of Directors and shareholders and of the ESOT
Trustee, and the ESOP Plan Documents (including all amendments, waivers
and other modifications thereto as of the Closing Date) are reasonably
acceptable to the Administrative Agent and the Arranger, (c) the IITRI
Acquisition has been approved by the members of IITRI, (d) the
representations and warranties in the Asset Purchase Agreement and the
ESOT Transaction Documents shall be accurate in all material respects as
of the Closing Date, and (e) the ESOT shall own not less than one
hundred percent (100%) of the Capital Stock of the Borrower as of the
Closing Date; and the Administrative Agent, the Arranger and the Lenders
shall have received an opinion of counsel satisfactory to them as to the
enforceability of the Asset Purchase Agreement and the ESOT Transaction
Documents and the Borrower's, the ESOT Trustee's and the ESOT's
compliance with law in respect thereof;
(viii) Evidence reasonably satisfactory to the Administrative
Agent that the Borrower shall have (x) issued Senior Subordinated Notes
to IITRI pursuant to the Securities Purchase Agreements in partial
satisfaction of the "Purchase Price" under (and as defined in) the Asset
Purchase Agreement in an aggregate amount not to exceed $20,400,000, (y)
issued Junior Subordinated Notes to IITRI in partial satisfaction of the
"Purchase Price" under (and as defined in) the Asset Purchase Agreement
in an amount not to exceed $39,900,000 plus the amount of any
adjustments under the Asset Purchase Agreement, and (z) received not
less than
58
$25,000,000 in proceeds from the issuance of Capital Stock to the ESOT,
which amount is received by the ESOT from the rollover pension and
tax-sheltered annuity plans of employees of IITRI as of the Closing
Date, on the terms and conditions set forth in the ESOT Transaction
Documents;
(ix) Evidence satisfactory to the Administrative Agent,
including, without limitation, opinion letters from the ESOT Trustee's
counsel addressed to the Administrative Agent and the Lenders, to the
effect that (a) the ESOT has been duly organized and is a validly
existing trust and has all the requisite powers and authority to execute
and deliver the Transaction Documents and the ESOP Plan Documents which
have been or are to be executed by it and to perform its obligations
under and the transactions contemplated by the Transaction Documents and
the ESOP Plan Documents, (b) the execution and delivery by the ESOT of
the Transaction Documents and the ESOP Plan Documents have been duly
authorized and completed by all necessary actions of it and such
executions and deliveries and the performance by it of its obligations
under and the transactions contemplated by the Transaction Documents and
the ESOP Plan Documents do not contravene any provision of law and the
Transaction Documents and the ESOP Plan Documents which have been or are
to be executed by it are legal, valid and binding obligations of it
enforceable against it in accordance with the terms thereof, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, or moratorium or other similar laws relating to the
enforcement of creditors' rights generally and by general equitable
principles other than general equitable principles as may be applicable
to any prohibited transactions described in Section 406 of ERISA or
Section 4975 of the Code; (c) the ESOT Transaction does not constitute,
nor will it constitute a prohibited transaction described in Section 406
of ERISA or Section 4975 of the Code, (d) the ESOP is qualified under
Section 401(a) of the Code, (e) the ESOP is an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code, and (f) neither the
Borrower nor any of its Subsidiaries shall be subject to the tax imposed
by Section 4978 of the Code with respect to any "disposition" by the
ESOT of any Capital Stock of the Borrower occurring as a result of the
ESOT Transaction;
(x) Evidence reasonably satisfactory to the Administrative Agent
(which satisfaction may come through the opinions referenced in other
clauses of this Section 5.1(B)) that as of the Closing Date and
effective for the tax year ending September 30 2002, the Borrower shall
be an "S corporation" as such term is defined in Section 1361 of the
Code and the ESOT shall not be subject to tax imposed under the Code
with respect to any item of income or loss of the Borrower or any
Subsidiary of the Borrower;
(xi) Copies of the Asset Purchase Agreement, the ESOP Plan
Documents and the ESOT Transaction Documents that will be in effect on
and after the date of this Agreement all in form and substance
satisfactory to the Administrative Agent and their counsel in their
reasonable discretion, and which documents and agreements shall be in
material compliance with ERISA and any applicable rules and regulations
of the United States Treasury Department;
59
(xii) Evidence reasonably satisfactory to the Administrative
Agent that all necessary governmental and third party approvals and
consents, if any, related to the Asset Purchase Agreement and the ESOT
Transaction have been obtained and all related filings made and any
applicable waiting periods shall have expired or been terminated;
(xiii) Evidence reasonably satisfactory to the Administrative
Agent and the Arranger that there exists no injunction or temporary
restraining order which, in the reasonable judgment of the
Administrative Agent and the Arranger, would prohibit the making of the
Loans or the consummation of the IITRI Acquisition or the ESOT
Transaction and the other transactions contemplated by the Transaction
Documents and the ESOP Plan Documents or any litigation seeking such an
injunction or restraining order or which could reasonably be expected to
result in a Material Adverse Effect;
(xiv) The ESOP Plan Documents together with the Borrower's most
recently filed information return Form 5500 Series and all schedules and
attachments thereto (if available) for the ESOP, the ESOT Transaction
Documents and such other documents as the Administrative Agent shall
reasonably require in connection therewith, all in form and substance
satisfactory to the Administrative Agent in its reasonable discretion;
(xv) A field examination conducted by the Administrative Agent's
internal auditors (or similar outside auditors), including satisfactory
reviews of Receivables, contracts, contract collection and reimbursement
provisions, and pension and tax-sheltered annuity add-backs,
satisfactory to the Administrative Agent and the Lenders;
(xvi) Evidence reasonably satisfactory to the Administrative
Agent that there exists no action, suit, investigation, litigation, or
proceeding pending or threatened in any court or before any arbitrator
or governmental instrumentality that in Administrative Agent's
reasonable judgment could reasonably be expected to have a Material
Adverse Effect;
(xvii) Such other documents as the Administrative Agent or any
Lender or its counsel may have reasonably requested, including, without
limitation, all of the documents reflected on the List of Closing
Documents attached as Exhibit F to this Agreement;
(xviii) (a) The audited financial statements of IITRI and its
consolidated Subsidiaries for the 12-month period ending as of September
30, 2001, (b) the unaudited quarterly financial statements of IITRI and
its consolidated Subsidiaries for the fiscal quarter ending as of
September 30, 2002 certified by the chief financial officer of the
Borrower, (c) the audited financial statements of the business and
assets of IITRI to be acquired by the Borrower pursuant to the Asset
Purchase Agreement for the 12-month period ending as of September 30,
2001, (d) the unaudited quarterly financial statements of the business
and assets of IITRI to be acquired by the
60
Borrower pursuant to the Asset Purchase Agreement for the fiscal quarter
ending as of September 30, 2002 certified by the chief financial officer
of the Borrower, and (e) the pro forma opening consolidated financial
statements of the Borrower and its Subsidiaries, based on the September
30, 2002 financial statements described in clause (d) above after giving
effect to the transactions contemplated by the Transaction Documents,
which financial statements shall demonstrate, in the reasonable
judgement of the Administrative Agent and the Arranger, together with
all other information then available to the Administrative Agent and the
Arranger, the ability of the Borrower and its Subsidiaries to repay
their debts and satisfy their respective other obligations as and when
due, and to comply with the financial covenants set forth in Section 7.4
hereof;
(xix) Evidence reasonably satisfactory to the Administrative
Agent and the Arranger of (i) the payment of all principal, interest,
fees and premiums, if any, on all Indebtedness under the Existing Credit
Agreement, and the agreement to release all Liens and the termination of
the applicable agreements relating thereto and (ii) the payment of all
principal, interest, fees and premiums, if any, on all Indebtedness
under that certain Business Loan Agreement, dated as of September 30,
2002, by and between the Borrower and LaSalle Bank National Association,
and related Promissory Note dated as of September 30, 2002 issued by the
Borrower thereunder, and the agreement to terminate the applicable
agreements relating thereto, in each case taking effect concurrently
with the effectiveness of this Agreement and the consummation of the
IITRI Acquisition and the ESOT Transaction;
(xx) An initial executed Borrowing Base Certificate dated as of
the Closing Date, reflecting the calculation of the Borrowing Base
(Monthly) as of November 22, 2002, together with an initial compliance
certificate, substantially in the form of Exhibit H attached hereto,
signed by an Authorized Officer, setting forth calculations for the
period ending November 22, 2002 for (a) the Senior Leverage Ratio, which
Senior Leverage Ratio shall be not more than 2.50 to 1.00 and (b)
EBITDAE attributable to the business and assets of IITRI acquired by the
Borrower pursuant to the Asset Purchase Agreement, but exclusive of
non-recurring costs and expenses associated with this Agreement, the
ESOT Transaction Documents and the Asset Acquisition Agreement, which
EBITDAE shall be not less than $17,000,000;
(xxi) A financial condition certificate, together with
appropriate supporting factual information, in form and substance
reasonably satisfactory to it from the Chief Financial Officer of the
Borrower supporting the conclusions that after giving effect to the ESOT
Transaction, the Borrower and its Subsidiaries on a consolidated basis
are Solvent and will be Solvent subsequent to incurring the Indebtedness
contemplated under the Transaction Documents, would reasonably be
expected to be able to pay its debts and liabilities as they become due
and will not be left with unreasonably small capital with which to
engage in its business;
(xxii) Evidence satisfactory to the Administrative Agent and the
Arranger that the Borrower has paid to the Administrative Agent and the
Arranger the fees agreed
61
to in the fee letter dated May 23, 2002, between the Administrative
Agent and the Borrower.
5.2 Each Advance and Letter of Credit. The Lenders shall not be
required to make any Advance, or convert or continue any Advance, or issue any
Letter of Credit and no Swing Line Bank shall be required to make any Swing Line
Loans hereunder, unless on the applicable Borrowing Date, or in the case of a
Letter of Credit, the date on which the Letter of Credit is to be issued:
(A) No Defaults. There exists no Default or Unmatured Default;
(B) Representations and Warranties. All of the representations
and warranties contained in Article VI are true and correct as of such
Borrowing Date (unless such representation and warranty is made as of a
specific date, in which case, such representation and warranty shall be
true and correct as of such date) except for changes in the Schedules to
this Agreement reflecting transactions permitted by or not in violation
of this Agreement; and
(C) Maximum Revolving Credit Amount. The Revolving Credit
Obligations do not, and after making such proposed Advance or issuing
such Letter of Credit would not, exceed the Maximum Revolving Credit
Amount.
Each Borrowing/Election Notice with respect to each such Advance
and the letter of credit application with respect to each Letter of Credit shall
constitute a representation and warranty by the Borrower that the conditions
contained in Sections 5.2(A), (B) and (C) have been satisfied.
ARTICLE VI: REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent and the Lenders to
enter into this Agreement and to make the Loans and the other financial
accommodations to the Borrower and to issue the Letters of Credit described
herein, the Borrower represents and warrants as follows to each Lender and the
Administrative Agent as of the Closing Date, giving effect to the consummation
of the transactions contemplated by the Transaction Documents on the Closing
Date, and thereafter on each date as required by Section 5.2:
6.1 Organization; Powers. The Borrower and each of its
Subsidiaries (A) is a corporation, limited liability company, or partnership
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (B) is duly qualified to do business as a
foreign entity and is in good standing under the laws of each jurisdiction in
which failure to be so qualified and in good standing could reasonably be
expected to have a Material Adverse Effect, and (C) has all requisite power and
authority to own, operate and encumber its property and to conduct its business
as presently conducted and as proposed to be conducted.
6.2 Authority, Execution and Delivery; Transaction Documents.
(A) Power and Authority. The Borrower and each of its
Subsidiaries has the requisite power and authority to execute, deliver
and perform each of the Transaction
62
Documents which are to be executed by it in connection with the IITRI
Acquisition and the ESOT Transaction or which have been executed by it
as required by this Agreement and the other Loan Documents and (ii) to
file the Transaction Documents which must be filed by it in connection
with IITRI Acquisition or the ESOT Transaction or which have been filed
by it as required by this Agreement, the other Loan Documents or
otherwise with any Governmental Authority.
(B) Execution and Delivery. The execution, delivery, performance
and filing, as the case may be, of each of the Transaction Documents
which must be executed or filed by the Borrower or any of its
Subsidiaries in connection with the IITRI Acquisition or the ESOT
Transaction or which have been executed or filed as required by this
Agreement, the other Loan Documents or otherwise and to which the
Borrower or any of its Subsidiaries is party, and the consummation of
the transactions contemplated thereby, have been duly approved by the
respective boards of directors and, if necessary, the stockholders or
unitholders of the Borrower and its Subsidiaries, and such approvals
have not been rescinded. No other action or proceedings on the part of
the Borrower or its Subsidiaries are necessary to consummate such
transactions.
(C) Transaction Documents. Each of the Transaction Documents to
which the Borrower or any of its Subsidiaries is a party has been duly
executed, delivered or filed, as the case may be, by it and constitutes
its legal, valid and binding obligation, enforceable against it in
accordance with its terms (except as enforceability may be limited by
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally), is in full force and effect, and no
material term or condition thereof has been amended, modified or waived
from the terms and conditions contained in the Transaction Documents
delivered to the Administrative Agent pursuant to Section 5.1 without
the prior written consent of the Administrative Agent, and the Borrower
and its Subsidiaries have, and, to the best of the Borrower's and its
Subsidiaries' knowledge, all other parties thereto have, performed and
complied with all the terms, provisions, agreements and conditions set
forth therein and required to be performed or complied with in all
material respects by such parties, and no unmatured default, default or
breach of any covenant by any such party exists thereunder.
6.3 No Conflict; Governmental Consents. The execution, delivery
and performance of each of the Loan Documents and other Transaction Documents to
which the Borrower or any of its Subsidiaries is a party do not and will not (A)
conflict with the Constituent Documents of the Borrower or any such Subsidiary,
(B) (i) constitute a tortious interference with any Contractual Obligation of
any Person or (ii) conflict with, result in a breach of or constitute (with or
without notice or lapse of time or both) a default under any Requirement of Law
(including, without limitation, any Environmental Property Transfer Act) or
Contractual Obligation of the Borrower or any such Subsidiary, or require
termination of any Contractual Obligation of the Borrower or any such Subsidiary
which, in the case of this clause (ii), could be reasonably anticipated to
result in a Material Adverse Effect, (C) result in or require the creation or
imposition of any Lien whatsoever upon any of the property or assets of the
Borrower or any such Subsidiary, other than Liens permitted or created by the
Transaction Documents, or (D) require any approval of the Borrower's or any such
Subsidiary's Board of Directors or shareholders or unitholders except such as
have been obtained. Except as set forth on Schedule
63
6.3 to this Agreement, the execution, delivery and performance of each of the
Transaction Documents to which the Borrower or any of its Subsidiaries is a
party do not and will not require any registration with, consent or approval of,
or notice to, or other action to, with or by any Governmental Authority,
including under any Environmental Property Transfer Act, except filings,
consents or notices which have been made, obtained or given, or which, if not
made, obtained or given, individually or in the aggregate could not reasonably
be expected to have a Material Adverse Effect.
6.4 Financial Statements.
(A) Pro Forma Financials. The combined, projected pro forma
balance sheet, income statements and statements of cash flow of the
Borrower and its Subsidiaries, copies of which are attached hereto as
Schedule 6.4 to this Agreement, present on a pro forma basis the
financial condition of the Borrower and such Subsidiaries as of such
date, and reflect on a pro forma basis those liabilities reflected in the
notes thereto and resulting from consummation of the IITRI Acquisition,
the ESOT Transaction, the issuance of the Subordinated Notes and the
other transactions contemplated by this Agreement, and the payment or
accrual of all transaction costs payable on the Closing Date with respect
to any of the foregoing. The projections and assumptions expressed in the
pro forma financials referenced in this Section 6.4(A) were prepared in
good faith and represent management's opinion based on the information
available to the Borrower at the time so furnished and, since the
preparation thereof and up to the Closing Date, there has occurred no
change in the business, financial condition, operations, or prospects of
the Borrower or any of its Subsidiaries, or the Borrower and its
Subsidiaries taken as a whole which has had or could reasonably be
expected to have a Material Adverse Effect.
(B) Audited Financial Statements. Complete and accurate copies of
the audited financial statements and the audit reports related thereto of
IITRI and its consolidated Subsidiaries as at September 30, 2001 and of
the business and assets of IITRI to be acquired by the Borrower pursuant
to the Asset Purchase Agreement as at September 30, 2001, and (ii) the
unaudited financial statements of IITRI and its consolidated Subsidiaries
as of September 30, 2002 and of the business and assets of IITRI to be
acquired by the Borrower pursuant to the Asset Purchase Agreement as of
September 30, 2002, have been delivered to the Administrative Agent.
6.5 No Material Adverse Change.
(A) Prior to Closing Date. Since September 30, 2001 up to the
Closing Date, there has occurred no change in the business, properties,
condition (financial or otherwise), performance, results of operations or
prospects of IITRI and its consolidated Subsidiaries, the Borrower, any
Guarantor, or the Borrower and its Subsidiaries, in each case, taken as a
whole or any other event which has had or could reasonably be expected to
have a Material Adverse Effect.
(B) From and After Closing Date. Since the Closing Date, there has
occurred no change in the business, properties, condition (financial or
otherwise), performance, results of operations or prospects of the
Borrower, any Guarantor or the Borrower and its
64
Subsidiaries, in each case, taken as a whole or any other event which has
had or could reasonably be expected to have a Material Adverse Effect.
6.6 Taxes.
(A) Tax Examinations. All deficiencies which have been asserted
against the Borrower or any of the Borrower's Subsidiaries as a result of
any federal, state, local or foreign tax examination for each taxable
year in respect of which an examination has been conducted have been
fully paid or finally settled or are being contested in good faith, and
no issue has been raised by any taxing authority in any such examination
which, by application of similar principles, could reasonably be expected
to result in assertion by such taxing authority of a material deficiency
for any other year not so examined which has not been reserved for in the
Borrower's consolidated financial statements to the extent, if any,
required by Agreement Accounting Principles. Except as permitted pursuant
to Section 7.2(D), neither the Borrower nor any of the Borrower's
Subsidiaries anticipates any tax liability with respect to the years
which have not been closed pursuant to applicable law.
(B) Payment of Taxes. All tax returns and reports of the Borrower
and its Subsidiaries required to be filed have been timely filed, and all
taxes, assessments, fees and other governmental charges thereupon and
upon their respective property, assets, income and franchises which are
shown in such returns or reports to be due and payable have been paid
except those items which are being contested in good faith and have been
reserved for in accordance with Agreement Accounting Principles. The
Borrower has no knowledge of any proposed tax assessment against the
Borrower or any of its Subsidiaries that will have or could reasonably be
expected to have a Material Adverse Effect.
(C) Subchapter S Status; ESOT Tax-Exempt Status. As of the Closing
Date, the Borrower will have executed the applicable election forms or
other filings required to be made for purposes of the Borrower's election
to be taxed as an "S corporation" as such term is defined in Section 1361
of the Code. Beginning with the Borrower's taxable year ending September
30, 2002, the Borrower is taxable as an S corporation. The ESOT is not
subject to tax imposed under the Code with respect to any item of income
or loss of the Borrower or any Subsidiary of the Borrower.
6.7 Litigation; Loss Contingencies and Violations.
(A) Litigation. Except as set forth in Schedule 6.7 (the
"DISCLOSED LITIGATION"), there is no action, suit, proceeding,
arbitration or, to the Borrower's knowledge, investigation before or by
any Governmental Authority or private arbitrator pending or, to the
Borrower's knowledge, threatened against or affecting the Borrower or any
of its Subsidiaries or any property of any of them. Neither any of the
Disclosed Litigation nor any action, suit, proceeding, arbitration or
investigation which has commenced since the Closing Date (or the most
recent update of the Disclosed Litigation) (i) challenges the validity or
the enforceability of any material provision of the Transaction Documents
or (ii) has or could reasonably be expected to have a Material
65
Adverse Effect. Neither the Borrower nor any of its Subsidiaries is (x)
in violation of any applicable Requirements of Law which violation will
have or could reasonably be expected to have a Material Adverse Effect,
or (y) subject to or in default with respect to any final judgment, writ,
injunction, restraining order or order of any nature, decree, rule or
regulation of any court or Governmental Authority which will have or
could reasonably be expected to have a Material Adverse Effect. To the
Borrower's knowledge, neither the ESOP Fiduciary nor the ESOT Trustee has
made any assertion with respect to the ESOP or ESOT contrary to or
inconsistent with the accuracy of any representation or warranty set
forth at Section 6.6(C) or Section 6.20 that could reasonably be expected
to result in a Material Adverse Effect.
(B) Loss Contingencies. There is no material loss contingency
within the meaning of Agreement Accounting Principles which has not been
reflected in the consolidated financial statements of the Borrower
prepared and delivered pursuant to Section 7.1(A) for the fiscal period
during which such material loss contingency was incurred.
6.8 Subsidiaries.
(A) Subsidiaries and Redemption Rights. Schedule 6.8(A) to this
Agreement (i) contains a description of the corporate structure of the
Borrower and its Subsidiaries; and (ii) accurately sets forth (a) the
correct legal name, the jurisdiction of incorporation and the
jurisdictions in which each of the Borrower and the direct and indirect
Subsidiaries of the Borrower are qualified to transact business as a
foreign corporation, (b) the authorized, issued and outstanding shares of
each class of Capital Stock of the Borrower and each of its Subsidiaries
and the owners of such shares, and (c) a summary of the direct and
indirect partnership, joint venture, or other Equity Interests, if any,
of the Borrower and each of its Subsidiaries in any Person. None of the
Borrower's Subsidiaries is a Foreign Subsidiary. Except for (a) mandatory
redemption or repurchase of Capital Stock of the Borrower as a result of
distributions by the ESOT to participants of the ESOP pursuant to the
ESOP Plan Documents subsequent to their termination of employment with
the Borrower or any Controlled Group member, (b) the requirements of
Section 401(a)(28) of the Code or any substantially similar Requirement
of Law or as otherwise permitted by Section 7.3(F) hereto, (c) the
vesting provisions of the ESOP, (d) the Incentive Arrangements, (e) the
put and call rights contained in the Seller Warrants and (f) agreements
otherwise disclosed on Schedule 6.8(A), none of the issued and
outstanding Capital Stock of the Borrower or any of the Borrower's
Subsidiaries is subject to any vesting, redemption, or repurchase
agreement, and there are no warrants or options outstanding with respect
to such Capital Stock, except for the Seller Warrants and except as may
be in effect from time to time with respect to Incentive Arrangements.
The outstanding Capital Stock of the Borrower and each of its
Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and is not Margin Stock.
(B) As of the Closing Date:
(i) except as provided in the Rights Agreement and the Seller
Warrants, the Borrower's Capital Stock is not subject to any preemptive
right, right of first refusal
66
or offer or similar right on the part of any other Person, and all of
such Capital Stock has been (or will have been) offered and issued in
accordance with all applicable laws; and, except as set forth on Schedule
6.8(B)(i) and except to the extent Persons may be deemed beneficial
owners by virtue of familial relationships with a holder of Capital Stock
or in connection with a trust established for the benefit of family
members by a holder of Capital Stock, the owners of the Capital Stock
indicated on Schedule 6.8(B)(i) own the Capital Stock indicated on such
exhibit free of any Lien, proxy, voting agreement, voting trust,
stockholders agreement (other than the Rights Agreement) or similar
agreement or restriction; and, except as set forth on Schedule 6.8(B)(i),
neither the Constituent Documents nor any other agreement, document or
instrument binding on or applicable to the Borrower or any of its
Subsidiaries or any of its stockholders contains any provision requiring
a higher voting requirement with respect to action taken (and/or to be
taken) by its board of directors or stockholders than that which would
apply in the absence of such provision;
(ii) except as provided in the Rights Agreement and the Seller
Warrants and except as set forth on Schedule 6.8(B)(ii) attached hereto
(after giving effect to the consummation of the transactions consummated
on the Closing Date under the Transaction Documents), (a) there are no
outstanding securities convertible into or exercisable or exchangeable
for any Capital Stock of the Borrower or any of its Subsidiaries and no
outstanding agreements for the purchase from, or sale or issuance by, the
Borrower or any of its Subsidiaries of any of their respective Capital
Stock or any securities convertible into or exercisable or exchangeable
for such Capital Stock; (b) there are no agreements on the part of the
Borrower or any of its Subsidiaries to issue, sell or distribute any of
their respective Capital Stock, other securities or assets; (c) neither
the Borrower nor any of its Subsidiaries has any obligation (contingent
or otherwise) to purchase, redeem or otherwise acquire any of their
respective Capital Stock or other securities or any interest therein or
to pay any dividend or make any distribution in respect thereof; and (d)
no Person is entitled to any rights with respect to the registration of
any Capital Stock or other securities of the Borrower or any of its
Subsidiaries under the Securities Act (or the securities laws of any
other jurisdiction); and
(iii) the aggregate number of shares of common stock of the
Borrower issuable upon exercise in full of the Seller Warrants issued
pursuant to the terms of the Senior Subordinated Securities Purchase
Agreement immediately after the Closing is approximately 523,871, which,
if then issued, would constitute approximately twelve and fifty-four
one-hundredths of one percent (12.54%) of the common stock of the
Borrower (calculated assuming the conversion, exercise and exchange of
all outstanding securities convertible into and exercisable or
exchangeable for shares of common stock of the Borrower, including,
without limitation, the Seller Warrants). The Borrower has reserved
approximately 523,871 shares of common stock of the Borrower solely for
issuance upon exercise of the Seller Warrants issued pursuant to the
terms of the Senior Subordinated Securities Purchase Agreement. The
Borrower has adopted a stock appreciation rights plan. The Borrower has
not reserved any shares of common stock of the Borrower pursuant to the
Borrower's stock appreciation rights plan.
67
6.9 ERISA.
(A) List of Plans. Set forth in Schedule 6.9(A) is a true and
complete list of each material Plan that, as of the date of this
Agreement, is or was an "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA). Set forth in Schedule 6.9(A) is a true
and complete list of each material Plan that, as of the date of this
Agreement, is or was an "employee welfare benefit plan" (as such term is
defined in Section 3(1) of ERISA).
(B) List of Non-ERISA Commitments. Set forth in Schedule 6.9(B) is
a true and complete list of each material Non-ERISA Commitment adopted by
the Borrower or any of its Subsidiaries and in effect as of the date of
this Agreement. Upon the Request of the Administrative Agent, the
Borrower will deliver to the Administrative Agent true and complete
copies in existence as of the date of this Agreement of (i) all written
Non-ERISA Commitments disclosed on Schedule 6.9(B) and (ii) all insurance
and annuity policies and contracts and other funding arrangements and
other documents relevant to any Non-ERISA Commitment disclosed on
Schedule 6.9(B).
(C) Plan Documents. The ESOP Plan Documents identified in Schedule
1.1.5 (each as may be amended from time to time as provided herein) are
all of the material documents pursuant to which the ESOP and ESOT are
maintained by the Borrower, or concerning the Borrower's obligations with
respect to the ESOP and ESOT. The ESOT Transaction Documents identified
in Schedule 1.1.6 (without any modifications or amendments thereto),
together with the ESOP Plan Documents identified in Schedule 1.1.5
(without any modifications or amendments thereto), are all duly adopted
by the Borrower to the extent intended to be so adopted.
(D) Plan Events. The representations and warranties in this
Section 6.9(D) are subject to the disclosures made on Schedule 6.9 (D).
No Benefit Plan has incurred any material accumulated funding deficiency
(as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code)
whether or not waived. Neither the Borrower nor any member of the
Controlled Group has incurred any material liability to the PBGC which
remains outstanding other than the payment of premiums, and there are no
premium payments which have become due which are unpaid. With respect to
each Benefit Plan, Schedule B to the most recent annual report filed with
the IRS with respect to such plan is complete and accurate in all
material respects. Since the date of each such Schedule B, there has been
no material adverse change in the funding status or financial condition
of the Benefit Plan relating to such Schedule B. As of the last day of
the most recent prior plan year, the market value of assets under each
Benefit Plan, other than any Multiemployer Plan, was not by a material
amount less than the present value of benefit liabilities thereunder
(determined in accordance with the actuarial valuation assumptions
described therein). Neither the Borrower nor any member of the Controlled
Group has (i) failed to make a required contribution or payment to a
Multiemployer Plan of a material amount or (ii) incurred a material
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from
a Multiemployer Plan. Neither the Borrower nor any member of the
Controlled Group has failed to make a required installment or any other
required payment under Section 412 of the Code on or before the due date
for such installment or
68
other payment. Neither the Borrower nor any member of the Controlled
Group is required to provide security of a material amount to a Benefit
Plan pursuant to Section 401(a)(29) of the Code due to a Plan amendment
that results in an increase in current liability for the plan year.
Except as set forth on Schedule 6.9, neither the Borrower nor any of its
Subsidiaries maintains or contributes to any employee welfare benefit
plan within the meaning of Section 3(1) of ERISA or any other arrangement
which provides benefits to one or more employees, officers, directors, or
consultants after termination of employment other than as required by
Section 601 of ERISA or Section 4980(B) of the Code or applicable law and
other than any such plan or arrangement with respect to which the
Borrower and its Subsidiaries do not have any liability of a material
amount. Each Plan which is intended to be qualified under Section 401(a)
of the Code as currently in effect is designed to be qualified, and each
trust related to any such Plan is designed to be exempt from federal
income tax under Section 501(a) of the Code as currently in effect. With
respect to each Plan, the Borrower and each of its Subsidiaries and the
ESOP Fiduciary and, to the best knowledge of the Borrower, the ESOT
Trustee are in compliance in all material respects with the
responsibilities, obligations and duties, if any, imposed on them by
ERISA and the Code. Each Plan and Non-ERISA Commitment complies in all
material respects in form, and has been administered in all material
respects in accordance with its terms and, in accordance with all
applicable laws and regulations, including but not limited to ERISA and
the Code. On the Closing Date and, to the best knowledge of the Borrower,
at all times thereafter, there is no material action, suit or claim
pending or threatened with respect to any Plan other than routine claims
for benefits. On the Closing Date and, to the best knowledge of the
Borrower, at all times thereafter, there have been no and there is no
non-exempt prohibited transaction described in Sections 406 of ERISA or
4975 of the Code which could reasonably be expected to subject the
Borrower to material liability. Neither the Borrower nor any member of
the Controlled Group has taken or failed to take any action which would
constitute or result in a Termination Event, which action or inaction
could reasonably be expected to subject the Borrower or any of its
Subsidiaries to liability, individually or in the aggregate, in excess of
$1,000,000. Neither the Borrower nor any Subsidiary is subject to any
material liability under, or to the best of Borrower's knowledge, has any
potential material liability under, Sections 4063, 4064, 4069, 4204 or
4212(c) of ERISA and no other member of the Controlled Group is subject
to any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of
ERISA. Except as set forth on Schedule 6.9(D), neither the Borrower nor
any of its Subsidiaries has, by reason of the ESOT Transaction or the
making of any Advances hereunder, any obligation to make any payment to
any current or former employee, director, officer or consultant pursuant
to any Plan or Non-ERISA Commitment or any obligation to make any such
payment at a time earlier than when it would be otherwise payable except
for any payment to be made upon termination of employment. For purposes
of this Section 6.9(D), "material" means any amount, noncompliance or
basis for liability which could reasonably be expected to subject the
Borrower or any of its Subsidiaries to liability, individually or in the
aggregate, in excess of $1,000,000.
6.10 Accuracy of Information. The information, exhibits and
reports (i) prepared by the Borrower and (ii) prepared by any other Person, in
each case, furnished by or on behalf of the Borrower and any of its Subsidiaries
to the Administrative Agent or to any Lender
69
in connection with the negotiation of, or compliance with, the Loan Documents,
the representations and warranties of the Borrower and its Subsidiaries
contained in the Loan Documents, and all certificates and documents delivered to
the Administrative Agent and the Lenders pursuant to the terms thereof, taken as
a whole, do not contain, and with respect to the information, exhibits and
reports identified in clause (ii) above, to the best of the Borrower's knowledge
do not contain, as of the date furnished any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
6.11 Securities Activities. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock. Margin Stock constitutes less than 25% of
the value of those assets of the Borrower and its Subsidiaries which are subject
to any limitation on sale, pledge, or other restriction hereunder.
6.12 Material Agreements. Neither the Borrower nor any of its
Subsidiaries is a party to any Contractual Obligation or subject to any charter
or other corporate restriction which individually or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect. Except as set
forth on Schedule 6.12, neither the Borrower nor any of its Subsidiaries has
received notice or has knowledge that (A) it is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation applicable to it, or (B) any condition
exists which, with the giving of notice or the lapse of time or both, would
constitute a default with respect to any such Contractual Obligation, in each
case, except where such default or defaults, if any, individually or in the
aggregate will not have or could not reasonably be expected to have a Material
Adverse Effect.
6.13 Compliance with Laws. The Borrower and its Subsidiaries are
in compliance with all Requirements of Law applicable to them and their
respective businesses, in each case where the failure to so comply individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect.
6.14 Assets and Properties. The Borrower and each of its
Subsidiaries has good and marketable title to all of its assets and properties
(tangible and intangible, real or personal) owned by it and a valid leasehold
interest in all of its leased assets (except insofar as marketability may be
limited by any laws or regulations of any Governmental Authority affecting such
assets), and all such assets and property are free and clear of all Liens,
except Liens permitted under Section 7.3(C). Substantially all of the assets and
properties owned by, leased to or used by the Borrower and/or each such
Subsidiary of the Borrower are in adequate operating condition and repair,
ordinary wear and tear excepted. Neither this Agreement nor any other
Transaction Document, nor any transaction contemplated under any such agreement,
will affect any right, title or interest of the Borrower or such Subsidiary in
and to any of such assets in a manner that would have or could reasonably be
expected to have a Material Adverse Effect.
6.15 Statutory Indebtedness Restrictions. Neither the Borrower nor
any of its Subsidiaries is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
or the Investment Company Act of 1940, or
70
any other foreign, federal or state statute or regulation which limits its
ability to incur indebtedness or its ability to consummate the transactions
contemplated hereby.
6.16 Insurance. Schedule 6.16 to this Agreement accurately sets
forth as of the Closing Date all insurance policies and programs currently in
effect with respect to the respective properties and assets and business of the
Borrower and its Subsidiaries, specifying, for each such policy and program, (A)
the amount thereof, (B) the risks insured against thereby, (C) the name of the
insurer and each insured party thereunder, (D) the policy or other
identification number thereof, (E) the expiration date thereof, and (F) any
reserves relating to any self-insurance program that is in effect. Such
insurance policies and programs reflect coverage that is reasonably consistent
with prudent industry practice, and shall include, without limitation, property
and liability (and, if appropriate, business interruption) insurance.
6.17 Labor Matters. As of the Closing Date, no attempt to organize
the employees of the Borrower or any of its Subsidiaries, and no labor disputes,
strikes or walkouts affecting the operations of the Borrower or any of its
Subsidiaries, is pending, or, to the Borrower's knowledge, threatened, planned
or contemplated.
6.18 IITRI Acquisition and ESOT Transaction. As of the Closing
Date and immediately prior to the making of the initial Loans:
(A) The Asset Purchase Agreement and the ESOT Transaction
Documents are in full force and effect, no material breach, default or
waiver of any term or provision thereof by the Borrower or any of its
Subsidiaries, which are parties thereto, or, to the best of the
Borrower's knowledge, the other parties thereto, has occurred (except for
such breaches, defaults and waivers, if any, consented to in writing by
the Administrative Agent) and no action has been taken by any competent
authority which restrains, prevents or imposes any material adverse
condition upon, or seeks to restrain, prevent or impose any material
adverse condition upon, the IITRI Acquisition or the ESOT Transaction;
(B) The representations and warranties of the Borrower contained
in the ESOT Stock Purchase Agreement are true and correct in all material
respects; and
(C) Except as set forth in Schedule 6.18 to this Agreement, all
conditions precedent to, and all consents necessary to permit, the
funding of the IITRI Acquisition and the ESOT Transaction have been
satisfied or waived with the approval of the Administrative Agent (such
approval not to be unreasonably withheld).
6.19 Environmental Matters.
(A) Environmental Representations. Except as disclosed on Schedule
6.19 to this Agreement:
(i) the operations of the Borrower and its Subsidiaries comply in
all material respects with Environmental, Health or Safety Requirements
of Law;
71
(ii) the Borrower and its Subsidiaries have all material permits,
licenses or other authorizations required under Environmental, Health or
Safety Requirements of Law and are in material compliance with such
permits;
(iii) neither the Borrower, any of its Subsidiaries nor any of
their respective present property or operations, or, to the Borrower's or
any of its Subsidiaries' knowledge, any of their respective past property
or operations, are subject to or the subject of, any investigation known
to the Borrower or any of its Subsidiaries, any judicial, administrative
or regulatory proceeding (including enforcement proceeding), order,
judgment, decree, settlement or other agreement respecting: (a) any
alleged or actual material violation of Environmental, Health or Safety
Requirements of Law; (b) any material remedial action; or (c) any
material claims or liabilities arising from the Release or threatened
Release of a Contaminant into the environment;
(iv) there is not now, nor to the Borrower's or any of its
Subsidiaries' knowledge has there ever been, on or in the property of the
Borrower or any of its Subsidiaries any landfill, waste pile, underground
storage tanks, aboveground storage tanks, surface impoundment or
hazardous waste or hazardous material storage facility of any kind, any
polychlorinated biphenyls (PCBs) used in hydraulic oils, electric
transformers or other equipment, or any asbestos containing material nor
any improperly stored, handled or disposed of contaminant of any kind not
maintained or operated in compliance with Environmental, Health or Safety
Requirements of Law; and
(v) neither the Borrower nor any of its Subsidiaries has any
material Contingent Obligation in connection with any Release or
threatened Release of a Contaminant into the environment.
(B) Materiality. For purposes of this Section 6.19 "material"
means any noncompliance or basis for liability which could reasonably be
likely to subject the Borrower or any of its Subsidiaries to liability,
individually or in the aggregate, in excess of $1,000,000.
6.20 Solvency. After giving effect to (A) the Loans to be made on
the Closing Date or such other date as Loans requested hereunder are made, (B)
the other transactions contemplated by this Agreement and the other Transaction
Documents, including the consummation of the ESOT Transaction and (C) the
payment and accrual of all transaction costs with respect to the foregoing, the
Borrower and its Subsidiaries taken as a whole are Solvent.
6.21 Additional ESOP Provisions.
(A) Organization and Powers. As of the Closing Date and, to the
best of Borrower's knowledge at all times thereafter, the ESOT has been
duly organized and is a validly existing trust and has all the requisite
powers and authority to execute and deliver the Transaction Documents and
the ESOP Plan Documents which have been or are to be executed by it and
to perform its obligations under and the transactions contemplated by the
Transaction Documents and the ESOP Plan Documents. As of the Closing Date
and,
72
to the best of Borrower's knowledge at all times thereafter, the
execution and delivery by the ESOT of the Transaction Documents and the
ESOP Plan Documents have been duly authorized and completed by all
necessary actions of it and such executions and deliveries and the
performance by it of its obligations under and the transactions
contemplated by the Transaction Documents and the ESOP Plan Documents do
not contravene any provision of law and the Transaction Documents and the
ESOP Plan Documents which have been or are to be executed by it are
legal, valid and binding obligations of it enforceable against it in
accordance with the terms thereof, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, or moratorium
or other similar laws relating to the enforcement of creditors' rights
generally and by general equitable principles other than general
equitable principles as may be applicable to any non-exempt prohibited
transactions described in Section 406 of ERISA or Section 4975 of the
Code. Each of such Transaction Documents and the ESOP Plan Documents is
in full force and effect and no term or condition thereof has been
amended, modified or waived from the terms and conditions contained in
the Transaction Documents and the ESOP Plan Documents delivered to the
Administrative Agent pursuant to Section 5.1 without the consent of the
Administrative Agent (which consent shall not be unreasonably withheld),
except to the extent such amendment, modification or waiver could not
reasonably be anticipated to have a material adverse effect upon the
Administrative Agent or any of the Lenders or otherwise have a Material
Adverse Effect. As of the Closing Date and, to the best of Borrower's
knowledge at all times thereafter, the ESOT has performed and complied
with all the material terms, provisions, agreements and conditions set
forth therein and required to be performed or complied with by the ESOT,
and no unmatured default, default or breach of any covenant by any such
party exists thereunder.
(B) No Conflicts. As of the Closing Date and, to the best of
Borrower's knowledge at all times thereafter, the execution, delivery and
performance of each of the Transaction Documents and the ESOP Plan
Documents to which the ESOT is a party do not (i) conflict with the ESOP
Plan Documents, (ii) conflict with any Requirement of Law, or (iii)
require a registration with, consent or approval of, or notices to, or
other action to, with or by any Governmental Authority, other than
filings as required by Section 7.2(M).
(C) Assets of ESOP and ESOT. As of the Closing Date and, to the
best of the Borrower's knowledge, at all times thereafter, none of the
assets of the Borrower constitute, for any purpose of ERISA or Section
4975 of the Code, assets of the ESOP or any other "plan" as defined in
Section 3(3) of ERISA or Section 4975 of the Code.
(D) No Prohibited Transaction. As of the Closing Date and, to the
best knowledge of the Borrower, at all times thereafter, no non-exempt
prohibited transaction described in Section 406 of ERISA or Section 4975
of the Code has occurred with respect to the ESOP, and neither any Loan
hereunder nor the ESOT Transaction constitute or shall constitute or give
rise to any such non-exempt prohibited transaction.
73
(E) Qualification. The ESOP is qualified under Section 401(a) of
the Code, and the ESOP is an employee stock ownership plan as defined in
Section 4975(e)(7) of the Code.
(F) ESOP Documents. The Borrower has provided the Administrative
Agent a complete and true copy of the ESOP Plan Documents pursuant to
which the ESOP and ESOT are maintained by the Borrower, or which concern
the Borrower's obligations with respect to the ESOP and ESOT, as of the
Closing Date and the ESOT Transaction Documents and has not subsequently
amended or in any other way modified or replaced such ESOP Plan Documents
or ESOT Transaction Documents in any manner adverse to the interests of
the Lenders without the prior written consent of the Administrative Agent
except for any amendment, modification or replacement required by the IRS
or by applicable law (and the Borrower shall use its best efforts to
deliver a copy of any such amendment, modification or replacement to the
Agent prior to the execution thereof).
(G) Exempt Loan. To the Borrower's knowledge, no Loan hereunder is
for any purpose of Section 406 of ERISA or Section 4975 of the Code a
direct or indirect loan or other transaction between the Administrative
Agent or any of the Lenders and the ESOT which, if it is assumed that the
Administrative Agent and Lenders are "parties in interest" and
"disqualified persons" (as defined in Section 3(14) of ERISA and Section
4975 of the Code), is a non-exempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code.
(H) No Taxable Event. Neither the Borrower nor any of its
Subsidiaries is or shall be subject to the tax imposed by Section 4978 of
the Code with respect to any "disposition" by the ESOT of any shares of
Capital Stock of the Borrower.
(I) No Investigations. To the Borrower's knowledge, there is no
investigation or review by any Governmental Agency, or action, suit,
proceeding or arbitration, pending or concluded, concerning any matter
with respect to the ESOP or ESOT relevant as to whether any
representation set forth at Section 6.6(C) or this Section 6.21 was, or
has or will at anytime become, inaccurate or breached or, if were to be
made at any time prior to the satisfaction of all Obligations, would be
inaccurate when made (other than in respect of (i) periodic requests to
the IRS to issue a favorable determination letter to the effect that the
ESOP is and continues to be a qualified plan and employee stock ownership
plan and (ii) Annual Reports (IRS Form 5500 Series) for the ESOP), and
neither the ESOP Fiduciary nor, to the best knowledge of the Borrower,
the ESOT Trustee has made any assertion with respect to the ESOP or ESOT
contrary to or inconsistent with the accuracy of any such representation
which assertion could reasonably be expected to have a Material Adverse
Effect.
6.22 Subordinated Indebtedness. The subordination provisions of
the Subordinated Notes are enforceable against the holders of the Subordinated
Notes.
6.23 No Exercise of Set-Off. No Account Debtor with respect to any
Government Contract has exercised any right of set-off against any Receivable
owing to the
74
Borrower or any Guarantor under any such Government Contract that, individually
or in the aggregate with all other Account Debtors, exceeds $1,000,000.
ARTICLE VII: COVENANTS
The Borrower covenants and agrees that so long as any Commitments
are outstanding and thereafter until all of the Termination Conditions have been
satisfied, unless the Required Lenders shall otherwise give prior written
consent:
7.1 Reporting. The Borrower shall:
(A) Financial Reporting. Furnish to the Administrative Agent (with
sufficient copies for each of the Lenders):
(i) Monthly Reports. As soon as practicable, and in any event
within thirty (30) days after the end of each four-week fiscal period
(other than the end of a fiscal quarter), the consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as at
the end of such period and the related consolidated and consolidating
statements of income and statement of cash flow of the Borrower and its
Subsidiaries for such fiscal period and cumulatively for the period from
the beginning of the then current fiscal year to the end of such fiscal
period, certified by the chief financial officer of the Borrower on
behalf of the Borrower as fairly presenting the consolidated and
consolidating financial position of the Borrower and its Subsidiaries as
at the dates indicated and the results of their operations and cash flow
for the fiscal periods indicated in accordance with Agreement Accounting
Principles, subject to normal year end adjustments, and in comparative
form (a) the corresponding figures as set forth in the budget delivered
pursuant to clause (v) of this Section 7.1(A) for such period, and (b)
the actual financial position of the Borrower and its Subsidiaries for
the period ending on the corresponding fiscal period in the previous
fiscal year.
(ii) Quarterly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of each fiscal quarter, the
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such period and the related consolidated
and consolidating statements of income, stockholder's equity and cash
flows of the Borrower and its Subsidiaries for such fiscal quarter and
cumulatively for the period from the beginning of the then current fiscal
year to the end of such fiscal quarter, certified by the chief financial
officer of the Borrower on behalf of the Borrower as fairly presenting
the consolidated and consolidating financial position of the Borrower and
its Subsidiaries as at the dates indicated and the results of their
operations and cash flows for the periods indicated in accordance with
Agreement Accounting Principles, subject to normal year-end audit
adjustments, together with (x) in comparative form (a) the corresponding
figures as set forth in the budget, if any, delivered pursuant to clause
(v) of this Section 7.1(A) for such period, and (b) the corresponding
figures of the Borrower and its Subsidiaries for the period ending on the
corresponding calendar quarter in the previous fiscal year if such
corresponding calendar quarter began after the Closing Date, and (y) any
75
management discussion and analysis of such financial statements prepared
for presentation to the Board of Directors of the Borrower.
(iii) Annual Reports. As soon as practicable, and in any event
within ninety (90) days after the end of each fiscal year, (a) the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
end of such fiscal year and the related consolidated statements of
income, stockholders' equity and cash flows of the Borrower and its
Subsidiaries for such fiscal year, and in comparative form the
corresponding figures for the previous fiscal year along with
consolidating schedules in form and substance sufficient to calculate the
financial covenants set forth in Section 7.4, (b) a schedule from the
Borrower setting forth for each item in clause (a) hereof, the
corresponding figures from the consolidated financial budget for the
current fiscal year most recently delivered pursuant to Section
7.1(A)(v), and (c) an audit report on the items listed in clause (a)
hereof (other than the consolidating schedules) of KPMG LLP or any other
independent certified public accountants of recognized national standing,
which audit report shall be unqualified and shall state that such
financial statements fairly present the consolidated and consolidating
financial position of the Borrower and its Subsidiaries as at the dates
indicated and the results of their operations and cash flows for the
periods indicated in conformity with Agreement Accounting Principles and
that the examination by such accountants in connection with such
consolidated and consolidating financial statements has been made in
accordance with generally accepted auditing standards. The deliveries
made pursuant to this clause (iii) shall be accompanied by (x) any
management letter prepared by the above-referenced accountants, and (y) a
copy of a certificate of such accountants that, in the course of their
examination necessary for their certification of the foregoing, they have
obtained no knowledge of any Default in respect of the financial
covenants set forth in Section 7.4, or if, in the opinion of such
accountants, any such Default shall exist, stating the nature and status
thereof.
(iv) Officer's Certificate. Together with each delivery of any
financial statement (a) pursuant to clauses (i), (ii) and (iii) of this
Section 7.1(A), an Officer's Certificate of the Borrower, substantially
in the form of Exhibit G attached hereto and made a part hereof, stating
that (1) the representations and warranties of the Borrower contained in
Article VI hereof shall have been true and correct (unless such
representation or warranty is made as of a specific date, in which case,
such representation and warranty shall be true and correct as of such
date) at all times during the period covered by such financial statements
and as of the date of such Officer's Certificate and (2) as of the date
of such Officer's Certificate no Default or Unmatured Default exists, or
if any Default or Unmatured Default exists, stating the nature and status
thereof and (b) pursuant to clauses (ii) and (iii) of this Section
7.1(A), a compliance certificate, substantially in the form of Exhibit H
attached hereto and made a part hereof, signed by an Authorized Officer,
setting forth calculations for the period then ended for purposes of
compliance with Section 2.5(B), if applicable, which demonstrate
compliance, when applicable, with the provisions of Sections 7.3(A)
through (G) and Section 7.4, and which calculates the Leverage Ratio for
purposes of determining the then Applicable Floating Rate Margin,
Applicable Eurodollar Margin and Applicable Commitment Fee Percentage.
76
(v) Budgets; Business Plans; Financial Projections. As soon as
practicable and in any event not later than (a) sixty (60) days after the
beginning of each fiscal year commencing with the fiscal year beginning
on or about October 1, 2003, a copy of the Borrower's fiscal year
operating budget for such fiscal year, and (b) ninety (90) days after the
beginning of each fiscal year commencing with the fiscal year beginning
on or about October 1, 2003, a copy of the plan and forecast (including a
projected balance sheet, income statement, a statement of cash flow and
related footnotes) of the Borrower and its Subsidiaries for the upcoming
five (5) fiscal years, in each case prepared in such detail as shall be
reasonably satisfactory to the Administrative Agent.
(vi) Borrowing Base Certificate. As soon as practicable, and in
any event within twenty-five (25) days after the close of each four-week
period, commencing with the four-week period ending on December 20, 2002
(and, during the continuation of any Default, more often if reasonably
requested by the Administrative Agent or the Required Lenders), the
Borrower shall provide the Administrative Agent and the Lenders with a
Borrowing Base Certificate substantially in the form of Exhibit J hereto,
together with such supporting documents as the Administrative Agent
reasonably deems desirable, all certified as being true and correct by an
Authorized Officer of the Borrower. The Borrower may update the Borrowing
Base Certificate and supporting documents more frequently than required
under this clause (vi) and the most recently delivered Borrowing Base
Certificate shall be the applicable Borrowing Base Certificate for
purposes of determining the Borrowing Base (Monthly) and Borrowing Base
(Senior Debt) at any time.
(B) Notices of Default, Set-Off and Other Events. Promptly upon
any of the chief executive officer, chief financial officer, controller,
chief legal officer or general counsel of the Borrower obtaining
knowledge (i) of any condition or event which constitutes a Default or
Unmatured Default, or becoming aware that any Lender or Administrative
Agent has given any written notice with respect to a claimed Default or
Unmatured Default under this Agreement, or (ii) that any Person has given
any written notice to the Borrower or any Subsidiary of the Borrower or
taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 8.1(E), or (iii) any Account
Debtor with respect to any Government Contract exercising any right of
set-off against any Receivable owing to the Borrower or any Guarantor
under any such Government Contract, or (iv) that any other development,
financial or otherwise, which could reasonably be expected to have a
Material Adverse Effect has occurred, the Borrower shall deliver to the
Administrative Agent (with sufficient copies for each of the Lenders) an
Officer's Certificate specifying (a) the nature and period of existence
of any such claimed default, Default, Unmatured Default, condition or
event, (b) the notice given or action taken by such Person in connection
therewith, and (c) what action the Borrower has taken, is taking and
proposes to take with respect thereto.
(C) Lawsuits.
(i) Promptly upon the Borrower obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or
77
arbitration, by or before any Governmental Authority, against or
affecting the Borrower or any of its Subsidiaries or any property of the
Borrower or any of its Subsidiaries not previously disclosed pursuant to
Section 6.7, which action, suit, proceeding, governmental investigation
or arbitration exposes, or in the case of multiple actions, suits,
proceedings, governmental investigations or arbitrations arising out of
the same general allegations or circumstances which, in the Borrower's
reasonable judgment, will result in liability to the Borrower or any of
its Subsidiaries in an amount aggregating $1,000,000 or more (exclusive
of claims covered by insurance policies of the Borrower or any of its
Subsidiaries unless the insurers of such claims have disclaimed coverage
or reserved the right to disclaim coverage on such claims and exclusive
of claims covered by the indemnity of a financially responsible
indemnitor in favor of the Borrower or any of its Subsidiaries unless the
indemnitor has disclaimed or reserved the right to disclaim coverage
thereof), give written notice thereof to the Administrative Agent (with
sufficient copies for each of the Lenders), and, subject to preservation
of the attorney-client privilege and to the extent not prejudicial to the
Borrower or any of its Subsidiaries, provide such other information as
may be reasonably available to enable each Lender and the Administrative
Agent and its counsel to evaluate such matters; and
(ii) Within five (5) days of the Borrower or any of its
Subsidiaries obtaining knowledge of any material adverse developments
with respect to any of the Disclosed Litigation, give written notice
thereof to the Administrative Agent (with sufficient copies for each of
the Lenders) and provide such other information as may be reasonably
available to enable each Lender and the Administrative Agent and its
counsel to evaluate such matters; and
(iii) In addition to the requirements set forth in clauses (i) and
(ii) of this Section 7.1(C), upon written request of the Administrative
Agent or the Required Lenders, promptly give written notice of the status
of any Disclosed Litigation or any action, suit, proceeding, governmental
investigation or arbitration covered by a report delivered pursuant to
clause (i) above and provide such other information as may be reasonably
available to it that would not jeopardize any attorney-client privilege
or otherwise be prejudicial to the Borrower or its Subsidiaries, by
disclosure to the Lenders to enable each Lender and the Administrative
Agent and its counsel to evaluate such matters.
(D) ERISA Notices. Deliver or cause to be delivered to the
Administrative Agent (with sufficient copies for each of the Lenders), at
the Borrower's expense, the following information and notices as soon as
reasonably possible, and in any event:
(i) (a) within ten (10) Business Days after the Borrower obtains
knowledge that a Termination Event has occurred, a written statement of
the chief financial officer of the Borrower describing such Termination
Event and the action, if any, which the Borrower has taken, is taking or
proposes to take with respect thereto, and when known, any action taken
or threatened by the IRS, DOL or PBGC with respect thereto and (b) within
ten (10) Business Days after any member of the Controlled Group obtains
knowledge that a Termination Event has occurred which could
78
reasonably be expected to subject the Borrower to liability in excess of
$250,000, a written statement of the chief financial officer, treasurer
or designee of the Borrower describing such Termination Event and the
action, if any, which the member of the Controlled Group has taken, is
taking or proposes to take with respect thereto, and when known, any
action taken or threatened by the IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Borrower or any of
its Subsidiaries obtains knowledge that a material non-exempt prohibited
transaction (defined in Section 406 of ERISA and Section 4975 of the
Code) has occurred with respect to the ESOP or to any other Plan, or that
the IRS or DOL or any other Governmental Authority is investigating
whether any such material non-exempt prohibited transaction might have
occurred, a statement of the chief financial officer, treasurer or
designee of the Borrower describing such transaction and the action which
the Borrower or such Subsidiary has taken, is taking or proposes to take
with respect thereto;
(iii) within ten (10) Business Days after the material increase in
the benefits of any Benefit Plan or Non-ERISA Commitment in existence on
the date of this Agreement or the establishment of any new material
Benefit Plan or Non-ERISA Commitment or the commencement of, or
obligation to commence, material contributions to any Benefit Plan or
Multiemployer Plan to which the Borrower or any member of the Controlled
Group was not previously contributing, notification of such increase,
establishment, commencement or obligation to commence and the amount of
such contributions;
(iv) within ten (10) Business Days after the Borrower or any of
its Subsidiaries receives written notice (whether preliminary, final or
otherwise but excluding any notice of any proposed amendments) of any
unfavorable determination letter from the IRS regarding the qualification
of a Plan under Section 401(a) of the Code or status of the ESOP as an
employee stock ownership plan (as defined in Section 4975(e)(7) of the
Code), copies of each such letter;
(v) within ten (10) Business Days after the filing thereof with
the DOL, IRS or PBGC, copies of each annual report (Form 5500 series),
including Schedule B thereto, filed with respect to each Benefit Plan;
(vi) within ten (10) Business Days after receipt by the Borrower
or any member of the Controlled Group of each actuarial report for any
Benefit Plan or Multiemployer Plan and each annual report for any
Multiemployer Plan, copies of each such report;
(vii) within ten (10) Business Days after the filing thereof with
the IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by the Borrower or a member
of the Controlled Group with respect to such request;
79
(viii) within ten (10) Business Days after receipt by the Borrower
or any member of the Controlled Group of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to administer a
Benefit Plan, copies of each such notice;
(ix) within ten (10) Business Days after receipt by the Borrower
or any member of the Controlled Group of a notice from a Multiemployer
Plan regarding the imposition of material withdrawal liability, copies of
each such notice;
(x) within ten (10) Business Days after the Borrower or any member
of the Controlled Group fails to make a required installment or any other
required payment under Section 412 of the Code on or before the due date
for such installment or payment to a Benefit Plan, a notification of such
failure;
(xi) within ten (10) Business Days after the Borrower or any
member of the Controlled Group knows that (a) a material Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a material Multiemployer Plan, or
(c) the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a material Multiemployer Plan;
(xii) within ten (10) Business Days after receipt by the Borrower
or any of its Subsidiaries of notice of any audit, investigation,
litigation or inquiry by the DOL or IRS relating to the ESOP or the ESOT,
which would reasonably be expected to subject the Borrower or any of its
Subsidiaries to liability, individually or in the aggregate, in excess of
$1,000,000, copies of such notice and copies of all subsequent
correspondence relating thereto within ten (10) Business Days of receipt
of such correspondence;
(xiii) together with the financial statements delivered pursuant
to Section 7.1(A)(iii) or upon the written request of the Administrative
Agent, any amendment to any of the ESOP Plan Documents or ESOT
Transaction Documents; and
(xiv) within ten (10) Business Days after an Authorized Officer of
the Borrower obtains knowledge that at any time on or after the Closing
Date the Borrower is not taxable as an "S corporation" as such item is
defined in Section 1361 of the Code or that the ESOT is subject to tax
imposed under the Code with respect to any item of income or loss of the
Borrower or any Subsidiary of the Borrower, written notice of such
knowledge.
For purposes of this Section 7.1(D), the Borrower, any of its
Subsidiaries and any member of the Controlled Group shall be deemed to know all
facts known by the administrator of any Plan of which the Borrower or any member
of the Controlled Group or such Subsidiary is the plan sponsor. In addition, for
purposes of this Section 7.1(D), "material" means any noncompliance or basis for
liability which could reasonably be likely to subject the Borrower or any of its
Subsidiaries to liability, individually or in the aggregate, in excess of
$1,000,000.
(E) Labor Matters. Notify the Administrative Agent in writing
(with sufficient copies for each of the Lenders), promptly upon an
Authorized Officer learning
80
of (i) any material labor dispute to which the Borrower or any of its
Subsidiaries may become a party, including, without limitation, any
strikes, lockouts or other disputes relating to such Persons' plants and
other facilities and (ii) any material Worker Adjustment and Retraining
Notification Act liability incurred with respect to the closing of any
plant or other facility of the Borrower or any of its Subsidiaries.
(F) Other Reports. Deliver or cause to be delivered to the
Administrative Agent (with sufficient copies for each of the Lenders)
copies of (i) all financial statements, reports and notices, if any, sent
or made available generally by the Borrower to its securities holders or
filed with the Commission by the Borrower, and (ii) all press releases,
if any, made available generally by the Borrower or any of the Borrower's
Subsidiaries to the public concerning material developments in the
business of the Borrower or any such Subsidiary.
(G) Environmental Notices. As soon as possible and in any event
within ten (10) days after receipt by the Borrower, provide written
notice to the Administrative Agent (with sufficient copies for each of
the Lenders) of, and which notice shall describe in reasonable detail,
(i) any notice or claim to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of the Release
by the Borrower, any of its Subsidiaries, or any other Person of any
Contaminant into the environment, and (ii) any notice alleging any
violation of any Environmental, Health or Safety Requirements of Law by
the Borrower or any of its Subsidiaries if, in either case, such notice
or claim relates to an event which could reasonably be expected to
subject the Borrower and each of its Subsidiaries to liability
individually or in the aggregate in excess of $1,000,000.
(H) Other Information. Promptly upon receiving a written request
therefor from the Administrative Agent, prepare and deliver to the
Administrative Agent such other information with respect to the Borrower,
any of its Subsidiaries, or the Collateral, including, without
limitation, schedules identifying and describing the Collateral and any
dispositions thereof or any Asset Sale or Financing (and the use of the
Net Cash Proceeds thereof), as from time to time twice during any fiscal
year (unless a Default shall be continuing or in the event of an Asset
Sale) may be reasonably requested by the Administrative Agent.
(I) ESOP Valuation, Audit and Repurchase Liability Study. As soon
as practicable and in any event (i) within one hundred eighty (180) days
after the end of each fiscal year of the Borrower, commencing with the
fiscal year ending September 30, 2003, deliver to the Administrative
Agent copies of the annual valuation report and audit prepared for the
ESOP for such fiscal year and (ii) on the date that is the earlier of (a)
one hundred eighty (180) days after the date of any Permitted Acquisition
with a Purchase Price in excess of $10,000,000 or the target of which
shall employ 100 or more employees, and (b) the second anniversary of the
delivery of the most recent repurchase liability study of the Borrower
prepared for the ESOP, deliver to the Administrative Agent (with
sufficient copies for each of the Lenders) copies of a repurchase
liability study of the Borrower prepared for the ESOP as of a recent
date, in each case in form and substance reasonably acceptable to the
Administrative Agent.
81
7.2 Affirmative Covenants.
(A) Existence, Etc. Except as permitted pursuant to Section
7.3(I), the Borrower shall, and shall cause each of its Material
Subsidiaries to, at all times maintain its existence and preserve and
keep, or cause to be preserved and kept, in full force and effect its
rights and franchises material to its businesses.
(B) Powers; Conduct of Business. The Borrower shall, and shall
cause each of its Material Subsidiaries to, qualify and remain qualified
to do business in each jurisdiction in which the nature of its business
requires it to be so qualified and where the failure to be so qualified
will have or could reasonably be expected to have a Material Adverse
Effect. The Borrower will, and will cause each Material Subsidiary to,
carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted
and logical extensions thereof.
(C) Compliance with Laws, Etc. The Borrower shall, and shall cause
its Material Subsidiaries to, (a) comply with all Requirements of Law and
all restrictive covenants affecting such Person or the business,
properties, assets or operations of such Person, and (b) obtain as needed
all permits necessary for its operations and maintain such permits in
good standing unless failure to comply or obtain such permits could not
reasonably be expected to have a Material Adverse Effect.
(D) Payment of Taxes and Claims; Tax Consolidation. The Borrower
shall pay, and cause each of its Material Subsidiaries to pay when due,
(i) all taxes, assessments and other governmental charges imposed upon it
or on any of its properties or assets or in respect of any of its
franchises, business, income or property before any penalty or interest
accrues thereon, and (ii) all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums which have
become due and payable and which by law have or may become a Lien (other
than a Lien permitted by Section 7.3(C)) upon any of the Borrower's or
such Material Subsidiary's property or assets, prior to the time when any
penalty or fine shall be incurred with respect thereto; provided,
however, that no such taxes, assessments and governmental charges
referred to in clause (i) above or claims referred to in clause (ii)
above (and interest, penalties or fines relating thereto) need be paid if
being contested in good faith by appropriate proceedings diligently
instituted and conducted and if such reserve or other appropriate
provision, if any, as shall be required in conformity with Agreement
Accounting Principles shall have been made therefor.
(E) Insurance. The Borrower shall maintain for itself and its
Material Subsidiaries, or shall cause each of its Material Subsidiaries
to maintain in full force and effect, the insurance policies and programs
listed on Schedule 6.16 to this Agreement or substantially similar
policies and programs or other policies and programs as reflect coverage
that is reasonably consistent with prudent industry practice. Subject to
the provisions of Section 2.5(B)(i)(a) above, the Borrower shall deliver
to the Administrative Agent certificates evidencing (a) all "All Risk"
physical damage insurance policies on all of the Borrower's tangible real
and personal property and assets (and, if appropriate, business
interruption insurance), policies naming the Administrative Agent
lender's loss
82
payee, and (b) all general liability and other liability policies naming
the Administrative Agent an additional insured. In the event the Borrower
or any of its Subsidiaries at any time or times hereafter shall fail to
obtain or maintain any of the policies or insurance required herein or to
pay any premium in whole or in part relating thereto, then the
Administrative Agent, without waiving or releasing any obligations or
resulting Default hereunder, may at any time or times thereafter (but
shall be under no obligation to do so) obtain and maintain such policies
of insurance and pay such premiums and take any other action with respect
thereto which the Administrative Agent deems advisable. All sums so
disbursed by the Administrative Agent shall constitute part of the
Obligations, payable as provided in this Agreement.
(F) Inspection of Property; Books and Records; Discussions. The
Borrower shall permit and cause each of the Borrower's Material
Subsidiaries to permit, any authorized representative(s) designated by
either the Administrative Agent or any Lender to visit and inspect any of
the properties of the Borrower or any of its Material Subsidiaries, to
examine, audit, check and make copies of their respective financial and
accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or
the transactions contemplated hereby (including, without limitation, in
connection with environmental compliance, hazard or liability, subject to
preservation of the attorney-client privilege), and to discuss their
affairs, finances and accounts with their officers and their independent
certified public accountants (and such accountants are hereby authorized
to disclose to the Administrative Agent any and all financial statements
and other supporting financial documents with respect to the business,
financial conditions and other affairs of the Borrower and its Material
Subsidiaries), all upon reasonable notice and at such reasonable times
during normal business hours. Such inspections and audits described in
the preceding sentence (i) by or on behalf of any Lender shall, unless
occurring at a time when a Default shall be continuing, be at such
Lender's expense and (ii) by or on behalf of the Administrative Agent,
other than the first such inspection or audit occurring during any
calendar year or any inspections and audits occurring at a time when a
Default be continuing, shall be at the Administrative Agent's expense;
all other such inspections and visitations shall be at the Borrower's
expense. The Borrower shall keep and maintain, and cause each of the
Borrower's Material Subsidiaries to keep and maintain, in all material
respects, proper books of record and account in which entries in
conformity with Agreement Accounting Principles shall be made of all
dealings and transactions in relation to their respective businesses and
activities. If a Default has occurred and is continuing, the Borrower,
upon the Administrative Agent's request, shall provide copies of such
records to the Administrative Agent or its representatives.
(G) ERISA Compliance. The Borrower shall, and shall cause each of
the Borrower's Material Subsidiaries to, establish, maintain and operate
all Plans and Non-ERISA Commitments to comply in all material respects
with the applicable provisions of ERISA, the Code, all other applicable
laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans and
Non-ERISA Commitments.
83
(H) Maintenance of Property. The Borrower shall cause all property
reasonably deemed by the Borrower as necessary to the conduct of its
business or the business of any Material Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times.
(I) Environmental Compliance. The Borrower and its Subsidiaries
shall comply with all Environmental, Health or Safety Requirements of
Law, except where noncompliance will not have or is not reasonably likely
to subject the Borrower or any of its Subsidiaries to liability,
individually or in the aggregate, in excess of $1,000,000.
(J) Use of Proceeds. The Borrower shall use the proceeds of the
Term Loans made on the Closing Date to fund the Asset Acquisition and to
refinance the Indebtedness under the Existing Credit Agreement. The
Borrower shall use the proceeds of Revolving Loans made on and after the
Closing Date to fund the Asset Acquisition, to pay fees and expenses
incurred in connection with this Agreement, the Asset Acquisition and the
ESOT Transaction, for Capital Expenditures, and for the additional
working capital needs and other general corporate purposes of the
Borrower and its Material Subsidiaries, including, without limitation,
the financing of Permitted Acquisitions. The Borrower will not, nor will
it permit any Material Subsidiary to, use any of the proceeds of the
Loans to purchase or carry any Margin Stock or to make any Acquisition,
other than a Permitted Acquisition pursuant to Section 7.3(G).
(K) Material Subsidiary Collateral Documents; Pledge Agreements;
Guarantors. The Borrower shall execute or cause to be executed:
(i) within ten (10) Business Days of the date any Subsidiary
becomes a Subsidiary of the Borrower, a Pledge Agreement (or supplement
thereto) in favor of the Administrative Agent for the benefit of the
Holders of Secured Obligations with respect to all of the Capital Stock
of such Material Subsidiary owned by the Borrower and its Material
Subsidiaries in the form of Exhibit I-2 hereto;
(ii) within ten (10) Business Days after an Authorized Officer or
legal officer of the Borrower has knowledge that any Subsidiary has
become a Material Subsidiary, an executed Guaranty in the form of Exhibit
I-1 hereto (or a supplement thereto) pursuant to which such Material
Subsidiary shall become a Guarantor;
(iii) within ten (10) Business Days after an Authorized Officer or
legal officer of the Borrower has knowledge that any Subsidiary has
become a Material Subsidiary, a supplement to the Security Agreement in
the form of Annex I thereto and the other documents required thereby; and
(iv) within thirty (30) days after the Administrative Agent's
request, obtain waivers in respect of landlord's Liens on the Collateral,
owned by such Material
84
Subsidiary from each of the lessors of real property at which the
Material Subsidiary shall maintain Collateral with a book value of
$1,000,000 or more;
and the Borrower shall deliver to the Administrative Agent all such Pledge
Agreements, Guarantees, supplements to the Security Agreement and other
Collateral Documents, together with appropriate corporate resolutions and other
documentation (including opinions, UCC financing statements, the stock
certificates representing the Capital Stock subject to such pledge, stock powers
with respect thereto executed in blank, and such other documents as shall be
reasonably requested to perfect the Lien of such pledge) in each case in form
and substance reasonably satisfactory to the Administrative Agent, and the
Administrative Agent shall be reasonably satisfied that it has a first priority
perfected pledge of or charge over the Collateral related thereto.
(L) Borrower and Other Collateral Documents; Intellectual Property
Security Agreements. The Borrower shall, within thirty (30) Business Days
of the Administrative Agent's request, use reasonable efforts to obtain
waivers in respect of landlord's Liens on the Collateral from each of the
lessors of real property at which the Borrower shall maintain Collateral.
Within ten (10) Business Days after an Authorized Officer or legal
officer of the Borrower has knowledge that the net book value of the
Borrower's and its Subsidiaries' patents, trademarks, copyrights and
other intellectual property rights shall equal or exceed $1,000,000 in
the aggregate, the Borrower shall execute, and shall cause each
applicable Subsidiary to execute, such Intellectual Property Security
Agreements as shall reasonably be requested by the Administrative Agent
to perfect a first-priority Lien in favor of the Administrative Agent,
for the benefit of the Holders of Secured Obligations, in all such
intellectual property.
(M) Determination Letter. The Borrower shall promptly submit a
request to the IRS to issue a favorable determination letter to the
effect that the ESOP is a qualified plan and employee stock ownership
plan within the meanings of Section 401(a) and 4975(e)(7), respectively,
of the Code.
(N) Hedging Agreements. Within one hundred twenty days after the
Closing Date, the Borrower shall enter into, and shall thereafter
maintain, Hedging Agreements on terms determined by the Borrower and
reasonably acceptable to the Administrative Agent by which the Borrower
is protected, by means of an interest rate swap, cap or collar, during
the three-year period beginning on the Closing Date against increases in
interest rates from and after the date of such contracts as to a notional
amount of at least $17,500,000. In the event a Lender elects to enter
into any Hedging Agreement with the Borrower, the obligations of the
Borrower with respect to such Hedging Agreement shall be Secured
Obligations secured by the Collateral.
(O) Perfection Matters; Federal Assignment of Claims Act
Compliance; Proceeds of Eligible Government Contracts. The Borrower and
each Guarantor shall execute and deliver and pay the costs of recording
and filing financing statements, continuation statements, termination
statements, assignments and other documents, as the Administrative Agent
may from time to time deem necessary or appropriate for the perfection of
any Liens granted to the Administrative Agent for the benefit of the
Holders
85
of Secured Obligations pursuant hereto or pursuant to any other Loan
Document. The Borrower and each Guarantor shall execute and deliver, or
cause to be executed and delivered, to the Administrative Agent all
documents or materials necessary or appropriate in order to comply with
the Assignment of Claims Act of 1940, as amended (the "GOVERNMENT
CONTRACT ASSIGNMENTS") in connection with the assignment of payments due
under each Government Contract, which Government Contract Assignments
shall satisfy such requirement when executed and delivered by the
Borrower to the Administrative Agent (and which shall not be delivered to
any relevant Governmental Authority unless a Default shall be
continuing); it being understood and agreed that no Government Contract
Assignment is being required for any Government Contract which (a)(i) has
a remaining value of less than $1,000,000 and (ii) has a remaining term
of less than twelve (12) months or (b) expressly prohibits assignment of
claims under the Assignment of Claims Act of 1940, as amended. The
Borrower shall not assign payments due under any Government Contract to
any Person other than the Administrative Agent as Collateral hereunder.
All costs and expenses incurred in connection with the Government
Contract Assignments shall be borne solely by the Borrower. The Borrower
shall use its best efforts to cause all Receivables of Government
Contracts to be received into an account subject to the terms of the Cash
Management Agreement or otherwise subject to control in favor of the
Administrative Agent on terms and conditions reasonably acceptable to the
Administrative Agent.
7.3 Negative Covenants.
(A) Indebtedness. Neither the Borrower nor any of its Subsidiaries
shall directly or indirectly create, incur, assume or otherwise become or
remain directly or indirectly liable with respect to any Indebtedness,
except:
(i) the Secured Obligations;
(ii) Permitted Existing Indebtedness and Permitted Refinancing
Indebtedness in respect thereof;
(iii) Indebtedness in respect of obligations secured by Customary
Permitted Liens;
(iv) Indebtedness constituting Contingent Obligations permitted by
Section 7.3(E);
(v) subject to the terms of Section 7.3(Q), Indebtedness arising
from intercompany loans and advances (a) from any Subsidiary to the
Borrower or any wholly-owned Subsidiary or (b) from the Borrower to any
wholly-owned Subsidiary; provided, that such Indebtedness shall be
expressly subordinate to the payment in full in cash of the Secured
Obligations on terms satisfactory to the Administrative Agent;
(vi) Indebtedness in respect of Hedging Obligations permitted
under Section 7.3(P);
86
(vii) secured or unsecured purchase money Indebtedness (including
Capitalized Leases) incurred by the Borrower or any of its Subsidiaries
after the Closing Date to finance the acquisition of fixed assets, if (a)
at the time of such incurrence, no Default or Unmatured Default has
occurred and is continuing or would result from such incurrence, (b) such
Indebtedness has a scheduled maturity and is not due on demand, (c) such
Indebtedness does not exceed the lower of the fair market value or the
cost of the applicable fixed assets on the date acquired, (d) such
Indebtedness does not exceed $1,000,000 in the aggregate principal amount
outstanding at any time, and (e) any Lien securing such Indebtedness is
permitted under Section 7.3(C) (such Indebtedness being referred to
herein as "PERMITTED PURCHASE MONEY INDEBTEDNESS");
(viii) Indebtedness with respect to surety, appeal and performance
bonds obtained by the Borrower or any of its Subsidiaries in the ordinary
course of business;
(ix) Indebtedness incurred by the Borrower or any of its
Subsidiaries (whether assumed by the Borrower or such Subsidiary or
issued to the seller) in any Permitted Acquisition as part of the
consideration therefor, provided that such Indebtedness is unsecured and
is subordinated to the Obligations on terms reasonably acceptable to the
Administrative Agent (including, without limitation those with respect to
amount, maturity (which shall not be prior to six (6) months after the
Commitment Termination Date), amortization, interest rate, premiums,
fees, covenants, subordination, events of default and remedies);
(x) Indebtedness evidenced by the Subordinated Notes and Permitted
Refinancing Indebtedness in respect thereof;
(xi) guaranties by the Borrower of Indebtedness permitted to be
incurred by any Subsidiary;
(xii) Indebtedness arising in connection with the Borrower's or
any of its Subsidiaries' credit card programs maintained with any of the
Lenders; and
(xiii) additional unsecured Indebtedness in an aggregate amount at
any time outstanding not exceeding $1,000,000.
(B) Sales of Assets. Neither the Borrower nor any of its Material
Subsidiaries shall consummate any Asset Sale, except:
(i) subject to the limitations set forth in the Intellectual
Property Security Agreements, licenses or sublicenses (but not the sale
of any licensing rights) by the Borrower or its Material Subsidiaries of
software, customer lists, trademarks, service marks, patents, trade names
and copyrights and other intellectual property in the ordinary course of
business; provided, that such licenses or sublicenses shall not interfere
in any respect with the business of the Borrower or any such Material
Subsidiary;
87
(ii) the disposition in the ordinary course of business of
equipment that is obsolete, excess or no longer used or useful in the
Borrower's or its Material Subsidiaries' businesses;
(iii) transfers of assets between the Borrower and any
wholly-owned Material Subsidiary of the Borrower or between wholly-owned
Material Subsidiaries of the Borrower not otherwise prohibited by this
Agreement, provided, that the security interests granted pursuant to the
Security Agreement in the assets so transferred shall remain in full
force and effect and perfected (to at least the same extent as in effect
immediately prior to such transfer); and
(iv) sales, assignments, transfers, leases, conveyances or other
dispositions of other assets if such transaction (a) is for consideration
consisting at least seventy-five percent (75%) of cash, (b) is for not
less than fair market value (as determined in good faith by the
Borrower's board of directors), and (c) when combined with all such other
transactions (each such transaction being valued at net book value) (i)
during the immediately preceding twelve-month period, represents the
disposition of not greater than $1,000,000, and (ii) during the period
from the Closing Date to the date of such proposed transaction,
represents the disposition of not greater than $2,000,000.
(C) Liens. Neither the Borrower nor any of its Material
Subsidiaries shall directly or indirectly create, incur, assume or permit
to exist any Lien on or with respect to any of their respective property
or assets except:
(i) Liens created by the Loan Documents or otherwise securing the
Secured Obligations;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens; and
(iv) purchase money Liens (including the interest of a lessor
under a Capitalized Lease and Liens to which any property is subject at
the time of acquisition thereof) securing Permitted Purchase Money
Indebtedness; provided that such Liens shall not apply to any property of
the Borrower or its Material Subsidiaries other than that purchased or
subject to such Capitalized Lease;
(v) Liens with respect to property acquired by the Borrower or any
of its Material Subsidiaries after the Closing Date (and not created in
contemplation of such acquisition) pursuant to a Permitted Acquisition;
provided, that such Liens shall extend only to the property so acquired,
shall not secure any working capital financing of the business acquired
and shall secure Indebtedness permitted pursuant to the terms of Section
7.3(A);
(vi) Liens incurred in connection with sale leaseback transactions
permitted under Section 7.3(J);
88
(vii) Environmental Liens securing obligations not to exceed
$1,000,000 in the aggregate; and
(viii) other Liens securing Indebtedness (other than subordinated
Indebtedness) not to exceed $250,000 in the aggregate.
In addition, neither the Borrower nor any of its Material
Subsidiaries shall become a party to any agreement, note, indenture or
other instrument, or take any other action, which would prohibit the
creation of a first priority Lien on any of its properties or other
assets in favor of the Administrative Agent for the benefit of itself and
the Holders of Secured Obligations, as collateral for the Obligations;
provided that any agreement, note, indenture or other instrument in
connection with Permitted Purchase Money Indebtedness (including
Capitalized Leases) incurred in compliance with the terms of this
Agreement may prohibit the creation of a Lien in favor of the
Administrative Agent for the benefit of itself and the Holders of Secured
Obligations on the items of property obtained with the proceeds of such
Permitted Purchase Money Indebtedness.
(D) Investments. Except to the extent permitted pursuant to
Section 7.3(G), neither the Borrower nor any of its Material Subsidiaries
shall directly or indirectly make or own any Investment except:
(i) Investments in cash and Cash Equivalents;
(ii) Permitted Existing Investments in an amount not greater than
the amount thereof on the Closing Date;
(iii) Investments consisting of trade receivables or received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business;
(iv) Investments consisting of deposit accounts maintained by the
Borrower and its Material Subsidiaries in the ordinary course of business
in connection with its cash management system;
(v) Investments consisting of non-cash consideration from a sale,
assignment, transfer, lease, conveyance or other disposition of property
permitted by Section 7.3(B);
(vi) Investments consisting of (a) intercompany loans from any
Material Subsidiary of the Borrower to the Borrower or any other Material
Subsidiary permitted by Section 7.3(A)(v), (b) intercompany loans from
the Borrower to its Material Subsidiaries permitted under Section 7.3(Q)
and (c) Equity Interests in Material Subsidiaries;
(vii) Investments constituting Permitted Acquisitions;
89
(viii) Investments constituting Indebtedness permitted by Section
7.3(A) or Contingent Obligations permitted by Section 7.3(E) or
Restricted Payments permitted by Section 7.3(F);
(ix) Investments consisting of loans or advances made by any party
to the Loan Documents to employees and officers of the Borrower or any of
the Borrower's wholly-owned Material Subsidiaries for travel,
entertainment and relocation expenses in the ordinary course of business
in an aggregate principal amount outstanding at any one time not to
exceed $500,000;
(x) Investments in addition to those permitted elsewhere in this
Section 7.3(D) in an amount not to exceed $500,000 in the aggregate at
any time outstanding;
provided, however, that the Investments described in clauses (vii) or (x) above
shall not be permitted to be made at a time when a Default shall have occurred
and be continuing or would result therefrom.
(E) Contingent Obligations. Neither the Borrower nor any of its
Material Subsidiaries shall directly or indirectly create or become or be
liable with respect to any Contingent Obligation, except: (i) recourse
obligations resulting from endorsement of negotiable instruments for
collection in the ordinary course of business; (ii) Permitted Existing
Contingent Obligations; (iii) obligations, warranties, guaranties,
reserves and indemnities, not relating to Indebtedness of any Person,
which have been or are undertaken or made in the ordinary course of
business and not in favor of an Affiliate of the Borrower or such
Material Subsidiary (unless entered into on terms substantially similar
to those applicable to a third party transaction at arm's length); (iv)
obligations, warranties, and indemnities of Borrower to IITRI arising out
of the Asset Purchase Agreement and the Exhibits thereto; (v) Contingent
Obligations with respect to surety, appeal and performance bonds obtained
by the Borrower or any Material Subsidiary in the ordinary course of
business, (vi) Contingent Obligations of the Subsidiaries of the Borrower
under the Guaranty and the other Collateral Documents to which they are a
party, (vii) Contingent Obligations in connection with (x) the redemption
or repurchase of any Capital Stock of the Borrower as a result of
distributions by the ESOT to participants in the ESOP pursuant to the
ESOP Plan Documents subsequent to their termination of employment with
the Borrower or any Controlled Group member or (y) the requirements of
Section 401(a)(28) of the Code or any substantially similar Requirement
of Law, and (viii) guarantees of Indebtedness permitted by Section
7.3(A), provided, that to the extent such Indebtedness shall be
subordinated to the Obligations, each such guarantee shall be
subordinated to the Obligations on terms reasonably acceptable to the
Administrative Agent.
(F) Restricted Payments. The Borrower shall not declare or make
any Restricted Payment, except:
(i) Restricted Payments made in connection with the defeasance,
redemption or repurchase of any Indebtedness with the Net Cash Proceeds
of Permitted Refinancing Indebtedness; and
90
(ii) Restricted Payments of any Subsidiary of the Borrower to the
Borrower or to another wholly-owned Subsidiary of the Borrower; and
(iii) Restricted Payments made in connection with claims for
reimbursement, indemnification or contribution arising out of or related
to the Asset Purchase Agreement; and
(iv) any Restricted Payment that constitutes a payment in respect
of a purchase price adjustment, earn-out or other similar form of
contingent purchase price in connection with any Acquisition (including
the IITRI Acquisition) consummated on or before the Closing Date and any
Permitted Acquisition; and
(v) Restricted Payments that constitute mandatory payments of
interest due on the Senior Subordinated Notes pursuant to the Senior
Subordinated Securities Purchase Agreement and the Senior Subordinated
Notes, unless such payments are prohibited by the terms of such
Indebtedness (or any subordination agreement applicable thereto);
(vi) Restricted Payments made (v) in connection with the
redemption or repurchase for value of any Capital Stock of the Borrower
as a result of distributions by the ESOT of such Capital Stock to
participants in the ESOP pursuant to the ESOP Plan Documents subsequent
to their termination of employment with the Borrower or any Controlled
Group member, (w) as required by Section 401(a)(28) of the Code or any
substantially similar Requirement of Law, (x) in good faith and believed
by the Borrower to be made with respect to the payments described in the
preceding clauses (v) or (w) but which do not so qualify for the status
described in the preceding clause (v) or (w), as applicable,on account of
administrative error or mistake, provided that such payment would not
otherwise result in a Default or Unmatured Default and either (1) such
payments do not collectively exceed $250,000 during the period from the
Closing Date through the date of such payment or (2) such payment is
recovered by the Borrower within thirty (30) days thereof and the
Borrower's books and records are accordingly adjusted to reflect such
recovery and such payment, together with all other such payments under
this subclause (2), do not collectively exceed $1,000,000 during the
period from the Closing Date through the date of such payment, or (y) in
the form of administrative fees or expenses of the ESOP or the ESOT
including, without limitation, the fees of the ESOT Trustee; or (z) as
contributions to the ESOT as required under the ESOP Plan Documents;
(vii) Restricted Payments made in connection with stock
appreciation rights plans, phantom stock plans and other equity-based
incentive compensation arrangements or plans to the extent such payments
would not be in violation of the terms of this Agreement or any other
Loan Document;
provided, however, that in no event shall any Restricted Payments (other than
(1) to the Borrower, (2) as permitted by clause (ii) above, and (3) Restricted
Payments resulting from distributions by the ESOT to participants in the ESOP
pursuant to the ESOP Plan Documents (x) subsequent to the termination by
participants in the ESOP of employment with the Borrower or
91
any Controlled Group member or (y) as required by Section 401(a)(28) of the Code
or any substantially similar Requirement of Law, and (4) Restricted Payments
resulting from contributions to the ESOT as required under the ESOP Plan
Documents) be declared or made if either a Default or an Unmatured Default shall
have occurred and be continuing at the date of declaration or payment thereof or
would result therefrom; provided, further, that in no event shall any Restricted
Payment be permitted under clause (v) above unless the Borrower shall have
delivered to the Administrative Agent a compliance certificate in substantially
the form of Exhibit H hereto for the most recently completed fiscal quarter
calculated giving effect to such Restricted Payment as of the last day of such
prior fiscal quarter and certifying that the Borrower is in compliance with the
financial covenants in Section 7.4 as of the last day of such prior fiscal
quarter.
(G) Conduct of Business; Subsidiaries; Acquisitions. Neither the
Borrower nor any of its Material Subsidiaries shall engage in any
business other than the businesses engaged in by the Borrower and its
Material Subsidiaries on the Closing Date and any business or activities
which are substantially similar, related or incidental thereto or logical
extensions thereof. The Borrower shall not create, acquire or capitalize
any Material Subsidiary after the Closing Date unless (i) no Default
shall have occurred and be continuing or would result therefrom; (ii)
after such creation, acquisition or capitalization, all of the
representations and warranties contained herein shall be true and correct
(unless such representation and warranty is made as of a specific date,
in which case, such representation or warranty shall be true and correct
as of such date); and (iii) after such creation, acquisition or
capitalization the Borrower and such Material Subsidiary shall comply
with the terms of Section 7.2(K). Neither the Borrower nor its
Subsidiaries shall make any Acquisitions, other than (a) the IITRI
Acquisition and (b) Acquisitions meeting the following requirements or
otherwise approved by the Required Lenders (each such Acquisition
constituting a "PERMITTED ACQUISITION"):
(i) no Default or Unmatured Default shall have occurred and be
continuing or would result from such Acquisition or the incurrence of any
Indebtedness in connection therewith;
(ii) in the case of an Acquisition of Equity Interests of an
entity, (x) if such Acquisition shall be consummated pursuant to a
merger, the acquired entity shall be merged with and into the Borrower or
any wholly-owned Subsidiary of the Borrower immediately following such
Acquisition, with the Borrower or such wholly-owned Subsidiary being the
surviving corporation following such merger and (y) the results of
operations of such entity shall be reported on a consolidated basis with
the Borrower and its consolidated Subsidiaries;
(iii) the purchase is consummated on a non-hostile basis and
approved by the target company's board of directors (and shareholders, if
necessary) prior to the consummation of the Acquisition; and the
acquisition documents in respect of which are satisfactory to the
Administrative Agent (including, without limitation, in respect of
representations, indemnities and opinions) and the results of due
diligence in respect of such purchase are satisfactory to the
Administrative Agent;
92
(iv) the Purchase Price for the Acquisition shall not exceed
without the prior written consent of the Required Lenders an amount equal
to $5,000,000 (including the incurrence or assumption of any Indebtedness
in connection therewith), and in any event shall not exceed, together
with all other Permitted Acquisitions permitted under this Section
7.3(G), $10,000,000 (including the incurrence or assumption of any
Indebtedness in connection therewith) in the aggregate during the term of
this Agreement, and the Borrower shall have complied with all of the
requirements of the Collateral Documents in respect thereof;
(v) the businesses being acquired shall be substantially similar,
related or incidental to the businesses or activities engaged in by the
Borrower and its Subsidiaries on the Closing Date;
(vi) effective as of the date of each such Acquisition (taking
into account the effect of such purchase and any Indebtedness incurred in
connection therewith), the Borrower shall deliver to the Administrative
Agent a Borrowing Base Certificate, which Borrowing Base Certificate
shall demonstrate that Revolving Credit Availability shall not be less
than $7,000,000; and
(vii) prior to each such Acquisition the Purchase Price of which
(including the incurrence or assumption of any Indebtedness in connection
therewith) shall be $1,000,000 or more, the Borrower shall deliver to the
Administrative Agent and the Lenders a certificate from one of the
Authorized Officers, demonstrating to the satisfaction of the
Administrative Agent that after giving effect to such Acquisition and the
incurrence of any Indebtedness permitted by Section 7.3(A) in connection
therewith, on a pro forma basis using historical audited
or reviewed unaudited financial statements obtained from the seller(s) in
respect of each such Acquisition as if the Acquisition and such
incurrence of Indebtedness had occurred on the first day of the
twelve-month period ending on the last day of the Borrower's most
recently completed fiscal quarter, the Borrower would have been in
compliance with the financial covenants in Section 7.4 and not otherwise
in Default.
(H) Transactions with Shareholders and Affiliates. Neither the
Borrower nor any of its Subsidiaries shall directly or indirectly enter
into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of
any service) with, or make loans or advances to any holder or holders of
any of the Equity Interests of the Borrower, or with any Affiliate of the
Borrower or any other Person controlling or controlled by any Person that
is the "beneficial owner" (as defined in Rule 13d-3 of the Commission
under the Exchange Act) of greater than five percent (5%) or more of any
class of voting securities (or other voting interests) of the Borrower or
any of its Subsidiaries, in either case which is not a Subsidiary of the
Borrower, on terms that are less favorable to the Borrower or any of its
Subsidiaries, as applicable, than those that could reasonably be obtained
in an arm's length transaction at the time from Persons who are not such
a holder or Affiliate, except for (a) Restricted Payments permitted by
Section 7.3(F) and Investments permitted by Section 7.3(D) (b) the
transactions contemplated under the Asset Purchase Agreement, the ESOT
Transaction Documents and the ESOP Plan Documents, (c) the incurrence of
93
Indebtedness described in Section 7.3(A)(v) hereof, (d) sales of assets
described in Section 7.3(B)(iii) hereof, (e) any Investment permitted by
Section 7.3(D)(vi) hereof, and (f) any deferred compensation plans or
arrangements, employment contracts, employee benefits, Incentive
Arrangements and other, similar contracts or arrangements with or for the
benefit of officers or directors of the Borrower or Subsidiaries of the
Borrower to the extent the terms thereof are in violation of the terms of
this Agreement or any other Loan Document.
(I) Restriction on Fundamental Changes. Neither the Borrower nor
any of its Subsidiaries shall enter into any merger or consolidation, or
liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), or convey, lease, sell, transfer or otherwise dispose of,
in one transaction or series of transactions, all or substantially all of
the Borrower's consolidated business or property (each such transaction a
"FUNDAMENTAL CHANGE"), whether now or hereafter acquired, except (i)
Fundamental Changes permitted under Sections 7.3(B), 7.3(D) or 7.3(G),
(ii) a Subsidiary of the Borrower may be merged into or consolidated with
the Borrower (in which case the Borrower shall be the surviving
corporation) or any wholly-owned Subsidiary of the Borrower provided the
Borrower owns, directly or indirectly, a percentage of the equity of the
merged entity not less than the percentage it owned of the Subsidiary
prior to such Fundamental Change and if the predecessor Subsidiary was a
Guarantor, the surviving Subsidiary shall be a Guarantor hereunder, (iii)
any liquidation of any Subsidiary of the Borrower, into the Borrower or
another Subsidiary of the Borrower, as applicable, and (iv) upon not less
than thirty (30) days' prior written notice to the Administrative Agent,
any merger or reincorporation of the Borrower or any Subsidiary solely
for purposes of reincorporation in a different jurisdiction.
(J) Sales and Leasebacks. Neither the Borrower nor any of its
Subsidiaries shall become liable, directly, by assumption or by
Contingent Obligation, with respect to any lease, whether an operating
lease or a Capitalized Lease, of any property (whether real or personal
or mixed), (i) which it or one of its Subsidiaries sold or transferred or
is to sell or transfer to any other Person, or (ii) which it or one of
its Subsidiaries intends to use for substantially the same purposes as
any other property which has been or is to be sold or transferred by it
or one of its Subsidiaries to any other Person in connection with such
lease, unless in either case the sale involved is not prohibited under
Section 7.3(B) and the lease involved is not prohibited under Section
7.3(A) and any related Investment is not prohibited under Section 7.3(D).
(K) Margin Regulations. Neither the Borrower nor any of its
Subsidiaries, shall use all or any portion of the proceeds of any credit
extended under this Agreement to purchase or carry Margin Stock.
(L) ERISA. (i) The Borrower shall not
(a) engage, or permit any of its Subsidiaries to engage, in
any material prohibited transaction described in Sections 406 of
ERISA or 4975 of the Code for which a statutory or class exemption
is not available or a private exemption has not been previously
obtained from the DOL;
94
(b) permit to exist any material accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the
Code), with respect to any Benefit Plan, whether or not waived;
(c) fail, or permit any Controlled Group member to fail, to
pay timely required material contributions or annual installments
due with respect to any waived funding deficiency to any Benefit
Plan;
(d) terminate, or permit any Controlled Group member to
terminate, any Benefit Plan which would result in any material
liability of the Borrower or any Controlled Group member under
Title IV of ERISA;
(e) fail to make any material contribution or payment to
any Multiemployer Plan which the Borrower or any Controlled Group
member may be required to make under any agreement relating to
such Multiemployer Plan, or any law pertaining thereto;
(f) fail, or permit any Controlled Group member to fail, to
pay to any Benefit Plan any required material installment or any
other payment required under Section 412 of the Code on or before
the due date for such installment or other payment; or
(g) amend, or permit any Controlled Group member to amend,
a Benefit Plan resulting in a material increase in current
liability for the plan year such that the Borrower or any
Controlled Group member is required to provide security to such
Benefit Plan under Section 401(a)(29) of the Code.
(ii) For purposes of this Section 7.3(L), "material" means any
noncompliance or basis for liability which could reasonably be likely to
subject the Borrower or any of its Subsidiaries to liability,
individually or in the aggregate, in excess of $1,000,000.
(M) Constituent Documents. Neither the Borrower nor any of its
Subsidiaries shall amend, modify or otherwise change any of the terms or
provisions in any of their respective Constituent Documents as in effect
on the Closing Date in any manner adverse to the interests of the
Lenders, without the prior written consent of the Required Lenders other
than to accommodate or facilitate transactions and changes otherwise
expressly permitted by this Agreement.
(N) Fiscal Year. Neither the Borrower nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes
from a period consisting of a 52/53 calendar week year ending on
September 30 of each year without the prior written consent of the
Administrative Agent.
(O) Subsidiary Covenants. The Borrower will not, and will not
permit any Subsidiary to, create or otherwise cause to become effective
or suffer to exist any consensual encumbrance (other than Permitted
Liens) or restriction of any kind on the ability of any Subsidiary to pay
dividends or make any other distribution on its stock, or
95
make any other Restricted Payment, pay any Indebtedness or other
Obligation owed to the Borrower or any other Subsidiary, make loans or
advances or other Investments in the Borrower or any other Subsidiary, or
sell, transfer or otherwise convey any of its property to the Borrower or
any other Subsidiary, or merge, consolidate with or liquidate into the
Borrower or any other Subsidiary.
(P) Hedging Obligations. The Borrower shall not and shall not
permit any of its Subsidiaries to enter into any Hedging Arrangements
evidencing Hedging Obligations, other than Hedging Arrangements entered
into by the Borrower or its Subsidiaries pursuant to which the Borrower
or its Subsidiaries has hedged its actual or anticipated interest rate,
foreign currency or commodity exposure, and which are non-speculative in
nature. The agreements in respect of such permitted Hedging Arrangements
entered into by the Borrower or its Subsidiaries and any Lender or any
affiliate of any Lender including, without limitation, to hedge floating
interest rate risk in an aggregate notional amount not to exceed at any
time an amount equal to the outstanding balance of the Term Loans at such
time are sometimes referred to herein as "Hedging Agreements." In the
event a Lender or any of its Affiliates elects to enter into any Hedging
Agreement with the Borrower or any of its Subsidiaries, the obligations
of the Borrower and such Subsidiary with respect to such Hedging
Agreement shall be Secured Obligations secured by the Collateral.
(Q) Intercompany Loans. Neither the Borrower nor any of its
Subsidiaries shall make any loans to any other Subsidiary of the Borrower
except to the extent any such loans shall be evidenced by promissory
notes which provide that (i) if any acceleration of the Obligations under
this Agreement shall occur, the obligations under such promissory note
shall immediately become due and payable without any election or action
on the part of such Person, and (ii) such promissory notes shall be
pledged to the Administrative Agent pursuant to the terms of the
Collateral Documents.
(R) Issuance of Disqualified Stock. From and after the Closing
Date, neither the Borrower, nor any of its Subsidiaries shall issue any
Disqualified Stock. All issued and outstanding Disqualified Stock shall
be treated as Consolidated Total Indebtedness for all purposes of this
Agreement (and as funded Indebtedness for purposes of Section 7.1(F)),
and the amount of such deemed Indebtedness shall be the aggregate amount
of the liquidation preference of such Disqualified Stock.
(S) Loss of S Corporation Status. The Borrower shall not fail to
be qualified as an "S corporation" as defined in Section 1361 of the Code
at all times on or after the Closing Date.
(T) Imposition of UBIT on ESOT. The ESOT shall not be subject to
tax imposed under the Code with respect to any item of income or loss of
the Borrower or any Subsidiary of the Borrower at any time on or after
the Closing Date that could reasonably be anticipated to result in tax
liability to the ESOT, the Borrower or any of its Subsidiaries in an
amount in excess of $1,000,000.
96
(U) ESOP Conflict. The Borrower shall not permit the performance
of any of the Transaction Documents to which the ESOT is a party to
conflict with the ESOP Plan Documents, conflict with any Requirement of
Law, or require the registration with, consent or approval of, or notice
to, or other action to, with or by any Governmental Authority other than
(i) filings that are made regarding the status of the Borrower as an "S
Corporation" as such term is defined in Section 1361 of the Code, which
filings shall have been made on or prior to the Closing Date, (ii)
filings as required by Section 7.2(M) and subsequent requests to the IRS
to issue a favorable determination letter to the effect that the ESOP is
and continues to be such a qualified plan and employee stock ownership
plan, and (iii) Annual Reports (IRS Form 5500 series) for the ESOP.
(V) Assets as Plan Assets. The Borrower shall not permit any of
the assets of the Borrower to constitute, for any purpose of ERISA or
Section 4975 of the Code, assets of the ESOP or any other "plan" as
defined in Section 3(3) of ERISA or Section 4975 of the Code.
(W) Prohibited Transaction. The Borrower shall not permit any
material non-exempt prohibited transaction described in Section 406 of
ERISA or Section 4975 of the Code to occur with respect to the ESOP.
(X) Non-Qualification of ESOP. The Borrower shall not take any
action, nor fail to take any action, the result of which action or
inaction is that the ESOP shall fail to be qualified under Section 401(a)
of the Code. The Borrower shall not permit the ESOP to fail to be an
employee stock ownership plan as defined in Section 4975(e)(7) of the
Code.
(Y) Excise Tax. The Borrower and its Subsidiaries shall not be
subject to the tax imposed by Section 4978 of the Code with respect to
any "disposition" by the ESOT of any shares of Capital Stock of the
Borrower occurring as a result of the ESOT Transaction.
(Z) Lender/ESOT Transactions. No Loan hereunder shall for any
purpose of Section 406 of ERISA or Section 4975 of the Code be a direct
or indirect loan or other transaction between the Administrative Agent or
any of the Lenders and the ESOT which, if it is assumed that the
Administrative Agent and Lenders are "parties in interest" and
"disqualified persons" (as defined in Section 3(14) of ERISA and Section
4975 of the Code), is a non-exempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code.
(AA) ERISA Judgments and Determinations. There shall be no
finding, holding, ruling or other determination not subject to cure made
by any court or Governmental Authority, and there shall be no assertion
by the ESOP Fiduciary or, to the best knowledge of the Borrower, the ESOT
Trustee, concerning any matter with respect to the ESOP or ESOT contrary
to or inconsistent with any covenant set forth in Section 7.3(S) through
(Z) which assertion could reasonably be expected to have a Material
Adverse Effect.
97
(BB) Subordinated Indebtedness. The Borrower shall not and shall
not permit any of its Subsidiaries to amend, supplement or modify the
terms of the Subordinated Notes or the Securities Purchase Agreements, or
make any payment required as a result of an amendment or change thereto,
other than amendments, supplements or modifications which (i) (a)
decrease the rate of interest payable on the Subordinated Notes, (b)
provide for the payment in kind in lieu of cash of any portion of the
interest on the Subordinated Notes, (c) provide for the extension of the
maturity date with respect to any principal or interest payment to be
made under the Subordinated Notes, (d) provide more flexibility to the
Borrower or its Subsidiaries in connection with any covenants or (e)
waive any defaults existing in connection with the Subordinated Notes or
the Securities Purchase Agreements and (ii) do not adversely affect in
any material respect the interests of the Administrative Agent or any
Lender.
7.4 Financial Covenants. The Borrower shall comply with the
following (provided that for purposes of calculating the following financial
covenants, EBITDAE shall be deemed to be equal to (i) $3,707,773 for the fiscal
quarter ending March 15, 2002, (ii) $6,013,561 for the fiscal quarter ending
July 5, 2002, and (iii) $5,487,256 for the fiscal quarter ending September 30,
2002):
(A) Maximum Senior Leverage Ratio. The Borrower shall not permit
the ratio (the "SENIOR LEVERAGE RATIO") of (i) the sum of the aggregate
outstanding principal amount of all Term Loans and Revolving Credit
Obligations to (ii) EBITDAE to be greater than:
(i) 2.75 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 20, 2002
through the fiscal quarter ending September 30, 2003;
(ii) 2.50 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 19, 2003
through the fiscal quarter ending September 30, 2004;
(iii) 2.00 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 17, 2004
through the fiscal quarter ending September 30, 2005;
(iv) 1.75 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 16, 2005
through the fiscal quarter ending September 30, 2006;
(v) 1.30 to 1.00 as of the end of each fiscal quarter thereafter.
The Senior Leverage Ratio shall be calculated, in each case, as of the last day
of each fiscal quarter based upon (a) for Term Loans and Revolving Credit
Obligations, the principal amount of Term Loans and Revolving Credit Obligations
as of the last day of each such fiscal quarter; and (b) for EBITDAE, the actual
amount for the four-quarter period ending on such last day of such fiscal
quarter, taking into account Permitted Acquisitions and calculated, with respect
to Permitted Acquisitions, on a pro forma basis using historical audited and
reviewed unaudited
98
financial statements obtained from the seller(s) in such Permitted Acquisitions
(adjusted for non-recurring seller expenses and other add-backs to EBITDAE, in
each case, agreed upon by the Borrower and the Administrative Agent) and
reasonably acceptable to the Administrative Agent, broken down by fiscal quarter
in the Borrower's reasonable judgment and satisfactory to the Administrative
Agent.
(B) Maximum Leverage Ratio. The Borrower shall not permit the
ratio (the "LEVERAGE RATIO") of (i) the principal amount of Consolidated
Total Indebtedness (other than the Junior Subordinated Notes) to (ii)
EBITDAE to be greater than:
(i) 4.00 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 20, 2002
through the fiscal quarter ending September 30, 2003;
(ii) 3.60 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 19, 2003
through the fiscal quarter ending September 30, 2004;
(iii) 3.25 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 17, 2004
through the fiscal quarter ending September 30, 2005;
(iv) 3.00 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 16, 2005
through the fiscal quarter ending September 30, 2006;
(v) 2.50 to 1.00 as of the end of each fiscal quarter thereafter.
The Leverage Ratio shall be calculated, in each case, as of the last day of each
fiscal quarter based upon (a) for Consolidated Total Indebtedness, the principal
amount of Consolidated Total Indebtedness as of the last day of each such fiscal
quarter; and (b) for EBITDAE, the actual amount for the four-quarter period
ending on such last day of such fiscal quarter, taking into account Permitted
Acquisitions and calculated, with respect to Permitted Acquisitions, on a pro
forma basis using historical audited and reviewed unaudited financial statements
obtained from the seller(s) in such Permitted Acquisitions (adjusted for
non-recurring seller expenses and other add-backs to EBITDAE, in each case,
agreed upon by the Borrower and the Administrative Agent) and reasonably
acceptable to the Administrative Agent, broken down by fiscal quarter in the
Borrower's reasonable judgment and satisfactory to the Administrative Agent.
(C) Minimum Fixed Charge Coverage Ratio. The Borrower and its
consolidated Subsidiaries shall maintain a ratio ("FIXED CHARGE COVERAGE
RATIO") of (i) EBITDAE for such period minus Capital Expenditures for
such period, to (ii) the sum of the amounts of (a) scheduled amortization
during such period of the principal portion of the Term Loans and
scheduled amortization during such period of the principal portion of all
other Consolidated Total Indebtedness, plus (b) Restricted Payments paid
in cash and, if positive, net ESOP repurchase obligations during such
period, plus (c) all charges for foreign, federal, state and local income
taxes paid in cash by the Borrower and its consolidated Subsidiaries
during such period, plus (d) Cash Interest Expense during such
99
period plus (e) cash payments in respect of purchase price adjustments,
earn-outs or other similar forms of contingent purchase price during such
period (exclusive of cash purchase price adjustments related to the IITRI
Acquisition paid on the Closing Date), of at least (1) 1.20 to 1.00 as of
the end of each fiscal quarter for the period commencing with the fiscal
quarter ending on December 20, 2002 through the fiscal quarter ending
September 30, 2003; (2) 1.25 to 1.00 as of the end of each fiscal quarter
for the period commencing with the fiscal quarter ending on December 19,
2003 through the fiscal quarter ending March 10, 2006; and (3) 1.35 to
1.00 as of the end of each fiscal quarter thereafter.
In each case, the Fixed Charge Coverage Ratio shall be determined
as of the last day of each fiscal quarter for the four fiscal quarter
period ending on such last day of such fiscal quarter, taking into
account Permitted Acquisitions and calculated, with respect to Permitted
Acquisitions, on a pro forma basis using historical audited and reviewed
unaudited financial statements obtained from the seller(s) in such
Permitted Acquisitions (adjusted for non-recurring seller expenses and
other add-backs to EBITDAE, in each case, agreed upon by the Borrower and
the Administrative Agent) and reasonably acceptable to the Administrative
Agent, broken down by fiscal quarter in the Borrower's reasonable
judgment and satisfactory to the Administrative Agent.
(D) Minimum EBITDAE. The Borrower shall not permit EBITDAE to be
less than the amounts set forth below for the fiscal periods ending on
the dates set forth below:
Fiscal Quarter Ending On or About
---------------------------------
the Date Set Forth Below Minimum EBITDAE
------------------------ ---------------
December 20, 2002 $17,000,000
March 14, 2003 $17,000,000
July 4, 2003 $17,000,000
September 30, 2003 $17,000,000
December 19, 2003 $17,000,000
March 12, 2004 $17,500,000
July 2, 2004 $18,000,000
September 30, 2004 $18,000,000
December 17, 2004 $18,500,000
March 11, 2005 $18,500,000
July 1, 2005 $18,500,000
September 30, 2005 $18,500,000
December 16, 2005 $19,000,000
March 10, 2006 $19,000,000
June 30, 2006 $19,000,000
September 30, 2006 $19,000,000
December 15, 2006 and each fiscal quarter
thereafter $20,000,000
100
In each case EBITDAE shall be determined as of the last day of
each fiscal quarter for the four-quarter period ending on such last day
of such fiscal quarter, taking into account Permitted Acquisitions and
calculated, with respect to Permitted Acquisitions, on a pro forma basis
using historical audited and reviewed unaudited financial statements
obtained from the seller(s) in such Permitted Acquisitions (adjusted for
non-recurring seller expenses and other add-backs to EBITDAE, in each
case, agreed upon by the Borrower and the Administrative Agent) and
reasonably acceptable to the Administrative Agent, broken down by fiscal
quarter in the Borrower's reasonable judgment and satisfactory to the
Administrative Agent.
(E) Capital Expenditures. The Borrower will not, nor will it
permit any Subsidiary to expend, for Capital Expenditures in the
acquisition of fixed assets in any fiscal year, on a non-cumulative
basis, in the aggregate for the Borrower and its Subsidiaries, in excess
of:
(i) $3,000,000 for the fiscal year ending September 30, 2003;
(ii) $3,000,000 for the fiscal year ending September 30, 2004,
plus any amount permitted to be expended in the immediately preceding
fiscal year (pursuant to the absolute dollar limitation for such
preceding fiscal year and not pursuant to any carryover provision from a
prior fiscal year) but not expended;
(iii) $3,500,000 for the fiscal year ending September 30, 2005,
plus any amount permitted to be expended in the immediately preceding
fiscal year (pursuant to the absolute dollar limitation for such
preceding fiscal year and not pursuant to any carryover provision from a
prior fiscal year) but not expended;
(iv) $4,000,000 for the fiscal year ending September 30, 2006,
plus any amount permitted to be expended in the immediately preceding
fiscal year (pursuant to the absolute dollar limitation for such
preceding fiscal year and not pursuant to any carryover provision from a
prior fiscal year) but not expended; and
(v) $4,500,000 for the fiscal year ending September 30, 2007, plus
any amount permitted to be expended in the immediately preceding fiscal
year (pursuant to the absolute dollar limitation for such preceding
fiscal year and not pursuant to any carryover provision from a prior
fiscal year) but not expended.
ARTICLE VIII: DEFAULTS
8.1 Defaults. Each of the following occurrences shall constitute a
Default under this Agreement:
(A) Failure to Make Payments When Due. The Borrower shall (i) fail
to pay when due any of the Obligations consisting of principal with
respect to the Loans or (ii) fail to pay within two (2) Business Days of
the date when due any interest with respect to
101
the Loans or any fees due under Sections 2.15(C) or 3.8 or (iii) fail to
pay within thirty (30) days any other Obligations under this Agreement or
the other Loan Documents.
(B) Breach of Certain Covenants. The Borrower shall fail duly and
punctually to perform or observe any agreement, covenant or obligation
binding on the Borrower under:
(i) Sections 7.1 or 7.2 and such failure shall continue unremedied
for ten (10) Business Days after the occurrence thereof; or
(ii) Sections 7.3 or 7.4.
(C) Breach of Representation or Warranty. Any representation or
warranty made or deemed made by the Borrower (i) to the Administrative
Agent or any Lender herein or by the Borrower or any of its Material
Subsidiaries in any of the other Loan Documents shall be false or
misleading in any material respect as of the date as of which made (or
deemed made) or (ii) in any other statement or certificate or information
at any time given by any such Person pursuant to the Loan Documents shall
be false or misleading in any material respect as of the date as of which
made (or deemed made) if such misrepresentation would be reasonably
anticipated to result in a Material Adverse Effect.
(D) Other Defaults. The Borrower shall default in the performance
of or compliance with any term contained in this Agreement (other than as
covered by paragraphs (A) or (B) or (C) of this Section 8.1), or the
Borrower or any of its Subsidiaries shall default in the performance of
or compliance with any term contained in any of the other Loan Documents,
and such default shall continue for thirty (30) days after the occurrence
thereof.
(E) Default as to Other Indebtedness. The Borrower or any of its
Subsidiaries shall fail to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) with respect to any Indebtedness (other than Indebtedness
hereunder, but including, without limitation, Disqualified Stock), beyond
any period of grace provided with respect thereto, which individually or
together with other such Indebtedness as to which any such failure exists
has an aggregate outstanding principal amount in excess of $5,000,000; or
any breach, default or event of default (including any amortization event
or event of like import in connection with any Off-Balance Sheet
Liability) shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness
having such aggregate outstanding principal amount, beyond any period of
grace, if any, provided with respect thereto, if the effect thereof is to
cause an acceleration, mandatory redemption, a requirement that the
Borrower offer to purchase such Indebtedness or other required repurchase
or early amortization of such Indebtedness, or permit the holder(s) of
such Indebtedness to accelerate the maturity of any such Indebtedness or
require a redemption, early amortization or repurchase of such
Indebtedness; or any such Indebtedness having such aggregate outstanding
principal amount shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid,
102
redeemed, amortized or otherwise repurchased by the Borrower or any of
its Subsidiaries (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof.
(F) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case shall be commenced against the Borrower or
any of the Borrower's Material Subsidiaries and the petition shall not be
dismissed, stayed, bonded or discharged within sixty (60) days after
commencement of the case; or a court having jurisdiction in the premises
shall enter a decree or order for relief in respect of the Borrower or
any of the Borrower's Material Subsidiaries in an involuntary case, under
any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted under
any applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over the
Borrower or any of the Borrower's Subsidiaries or over all or a
substantial part of the property of the Borrower or any of the Borrower's
Subsidiaries shall be entered; or an interim receiver, trustee or other
custodian of the Borrower or any of the Borrower's Subsidiaries or of all
or a substantial part of the property of the Borrower or any of the
Borrower's Subsidiaries shall be appointed or a warrant of attachment,
execution or similar process against any substantial part of the property
of the Borrower or any of the Borrower's Subsidiaries shall be issued and
any such event shall not be stayed, dismissed, bonded or discharged
within sixty (60) days after entry, appointment or issuance.
(G) Voluntary Bankruptcy; Appointment of Receiver, Etc. The
Borrower or any of the Borrower's Subsidiaries shall (i) commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (ii) consent to the entry of an
order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, (iii) consent
to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property, (iv) make
any assignment for the benefit of creditors or (v) take any corporate
action to authorize any of the foregoing.
(H) Judgments and Attachments. Any money judgment(s), writ or
warrant of attachment, or similar process against the Borrower or any of
its Subsidiaries or any of their respective assets involving in any
single case or in the aggregate an amount in excess of $1,000,000 is or
are entered and shall remain undischarged, unvacated, uninsured, unbonded
or unstayed for a period of thirty (30) days or in any event later than
fifteen (15) days prior to the date of any proposed sale thereunder.
(I) Dissolution. Any order, judgment or decree shall be entered
against the Borrower or any Subsidiary decreeing its involuntary
dissolution or split up and such order shall remain undischarged and
unstayed for a period in excess of sixty (60) days; or
103
the Borrower or any Material Subsidiary shall otherwise dissolve or cease
to exist except as specifically permitted by this Agreement.
(J) Loan Documents. At any time, for any reason, any Loan Document
as a whole that materially affects the ability of the Administrative
Agent, or any of the Lenders to enforce the Obligations or enforce their
rights against the Collateral ceases to be in full force and effect or
the Borrower or any of the Borrower's Subsidiaries party thereto seeks to
repudiate its obligations thereunder.
(K) Termination Event. Any Termination Event occurs.
(L) Waiver of Minimum Funding Standard. If the plan administrator
of any Benefit Plan applies under Section 412(d) of the Code for a waiver
of the minimum funding standards of Section 412(a) of the Code and any
Lender believes the substantial business hardship upon which the
application for the waiver is based could reasonably be expected to
subject either the Borrower or any Controlled Group member to liability
in excess of $1,000,000.
(M) Change of Control. A Change of Control shall occur.
(N) Environmental Matters. The Borrower or any of its Subsidiaries
shall be the subject of any proceeding or investigation pertaining to (i)
the Release by the Borrower or any of its Subsidiaries of any Contaminant
into the environment, (ii) the liability of the Borrower or any of its
Subsidiaries arising from the Release by any other Person of any
Contaminant into the environment, or (iii) any violation of any
Environmental, Health or Safety Requirements of Law which by the Borrower
or any of its Subsidiaries, which, in any case, has or is reasonably
likely to subject the Borrower to liability individually or in the
aggregate in excess of $1,000,000.
(O) Guarantor Revocation. Any guarantor of the Obligations shall
terminate or revoke, or take any action to revoke, any of its duties or
obligations under the applicable Guaranty or breach any of the material
terms of such Guaranty.
(P) Collateral Documents. Any of the following shall occur: (i)
any Collateral Document shall for any reason fail to create a valid and
perfected first priority security interest in any Substantial Portion of
the Collateral purported to be covered thereby, except as permitted by
the terms of any Collateral Document or any other Loan Document, (ii) any
Collateral Document shall fail to remain in full force or effect, except
with respect to any Collateral released pursuant to the express terms of
the applicable Collateral Documents or any other Loan Document, or (iii)
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document.
(Q) Negative Determination by IRS. The IRS shall notify the
Borrower in writing that it has made a final determination not subject to
cure that the ESOP is not a qualified plan and employee stock ownership
plan within the meanings of Section 401(a) and 4975(e)(7), respectively,
of the Code.
104
A Default shall be deemed "continuing" until cured or until waived in writing in
accordance with Section 9.1.
8.2 Termination of Commitments; Acceleration. If any Default
described in Section 8.1(F) or 8.1(G) occurs with respect to the Borrower or any
Material Subsidiary, the obligations of the Lenders to make Loans hereunder and
the obligation of any Issuing Banks to issue Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Administrative Agent
or any Lender. If any other Default occurs, the Required Lenders may terminate
or suspend the obligations of the Lenders to make Loans hereunder and the
obligation of the Issuing Banks to issue Letters of Credit hereunder, or declare
the Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower expressly waives.
ARTICLE IX: AMENDMENTS, WAIVERS AND REMEDIES
9.1 Amendments. The Required Lenders (or the Administrative Agent
with the consent in writing of the Required Lenders) and the Borrower may enter
into agreements supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the rights of the
Lenders or the Borrower hereunder or waiving any Default hereunder; provided,
however, that no such supplemental agreement shall, without the consent of each
Lender affected thereby:
(A) Postpone or extend the Revolving Loan Termination Date or the
Term Loan Final Maturity Date or any other date fixed for any payment of
principal of, or interest on, the Loans, the Reimbursement Obligations
or any fees or other amounts payable to such Lender (except with respect
to (i) any modifications of the provisions relating to amounts, timing
or application of prepayments of Loans and other Obligations, which
modification shall require only the approval of the Required Lenders
(other than the provisions relating to the amounts, timing or
application of prepayments of the Term Loans which modifications shall
also require the approval of Term Loan Lenders with sixty-six and
two-thirds percent (66 2/3%) or more of the then outstanding Term Loans)
and (ii) a waiver of the application of the default rate of interest
pursuant to Section 2.11 hereof which waiver shall require only the
approval of the Required Lenders).
(B) Reduce the principal amount of any Loans or L/C Obligations,
or reduce the rate or extend the time of payment of interest or fees
thereon (other than (i) a waiver of the application of the default rate
of interest pursuant to Section 2.11 hereof, and (ii) as a result of a
change in the definition of Leverage Ratio or any of the components
thereof or the method of calculation thereof).
(C) Reduce the percentage specified in the definition of Required
Lenders or any other percentage of Lenders specified to be the
applicable percentage in this Agreement to act on specified matters or
amend the definitions of "Required Lenders", "Revolving Loan Pro Rata
Share", "Term Loan Pro Rata Share," or "Pro Rata Share".
105
(D) Increase the amount of the Revolving Loan Commitment or Term
Loan Commitment of any Lender hereunder or increase any Lender's
Revolving Loan Pro Rata Share, Term Loan Pro Rata Share or Pro Rata
Share (except with respect to an increase in the amount, or other
modification to the terms or components, of the Borrowing Base (Monthly)
or Borrowing Base (Senior Debt)).
(E) Permit the Borrower to assign its rights under this
Agreement.
(F) Other than pursuant to a transaction permitted by the terms
of this Agreement, release all or substantially all of the Collateral
which is subject to any Loan Document.
(G) Other than pursuant to a transaction permitted by the terms
of this Agreement, release any guarantor from its obligations under the
Guaranty.
(H) Amend Section 7.2(K), Section 12.2, Section 12.3 or this
Section 9.1.
No amendment of any provision of this Agreement relating to (i) the
Administrative Agent shall be effective without the written consent of the
Administrative Agent, (ii) Swing Line Loans shall be effective without the
written consent of the Swing Line Bank and (iii) any Issuing Bank shall be
effective without the written consent of such Issuing Bank. The Administrative
Agent may waive payment of the fee required under Section 13.3(B) without
obtaining the consent of any of the Lenders. The Administrative Agent shall not
enter into any amendment or other modification of any subordination agreement in
respect of the Subordinated Notes without the prior consent of the Required
Lenders.
9.2 Preservation of Rights. No delay or omission of the Lenders
or the Administrative Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan or the issuance of a Letter of
Credit notwithstanding the existence of a Default or the inability of the
Borrower to satisfy the conditions precedent to such Loan or issuance of such
Letter of Credit shall not constitute any waiver or acquiescence. Any single or
partial exercise of any such right shall not preclude other or further exercise
thereof or the exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the requisite number of
Lenders required pursuant to Section 9.1, and then only to the extent in such
writing specifically set forth. All remedies contained in the Loan Documents or
by law afforded shall be cumulative and all shall be available to the
Administrative Agent and the Lenders until all of the Termination Conditions
shall have been satisfied.
ARTICLE X: GENERAL PROVISIONS
10.1 Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive delivery of
this Agreement and the making of the Loans herein contemplated so long as any
principal, accrued interest, fees, or any other amount due and payable under any
Loan Document is outstanding and unpaid (other than contingent reimbursement and
indemnification obligations) and so long as the Commitments have not been
terminated.
106
10.2 Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
10.3 Performance of Obligations. The Borrower agrees that the
Administrative Agent may, but shall have no obligation to (i) at any time, pay
or discharge taxes, liens, security interests or other encumbrances levied or
placed on or threatened against any property of the Borrower (including, without
limitation, the Collateral) to the extent the Borrower is required by the terms
hereof to pay any such amount, but has not done so (other than such taxes,
liens, security interests or other encumbrances as shall be actively and in good
faith contested by the Borrower and in respect of which the Borrower shall have
established reserves in accordance with Agreement Accounting Principles to the
extent such taxes, liens, security interests or other encumbrances would
otherwise be permitted hereunder) and (ii), after the occurrence and during the
continuance of a Default, to make any other payment or perform any act required
of the Borrower under any Loan Document or take any other action which the
Administrative Agent in its discretion deems necessary or desirable to protect
or preserve such property of the Borrower. The Administrative Agent shall use
its reasonable efforts to give the Borrower notice of any action taken under
this Section 10.3 prior to the taking of such action or promptly thereafter
provided the failure to give such notice shall not affect the Borrower's
obligations in respect thereof. The Borrower agrees to pay the Administrative
Agent, upon demand, the principal amount of all funds advanced by the
Administrative Agent under this Section 10.3, together with interest thereon at
the rate from time to time applicable to Floating Rate Loans from the date of
such advance until the outstanding principal balance thereof is paid in full. If
the Borrower fails to make payment in respect of any such advance under this
Section 10.3 within one (1) Business Day after the date the Borrower receives
written demand therefor from the Administrative Agent, the Administrative Agent
shall promptly notify each Lender and each Lender agrees that it shall thereupon
make available to the Administrative Agent, in Dollars in immediately available
funds, the amount equal to such Lender's Pro Rata Share of such advance. If such
funds are not made available to the Administrative Agent by such Lender within
one (1) Business Day after the Administrative Agent's demand therefor, the
Administrative Agent will be entitled to recover any such amount from such
Lender together with interest thereon at the Federal Funds Effective Rate for
each day during the period commencing on the date of such demand and ending on
the date such amount is received. The failure of any Lender to make available to
the Administrative Agent its Pro Rata Share of any such unreimbursed advance
under this Section 10.3 shall neither relieve any other Lender of its obligation
hereunder to make available to the Administrative Agent such other Lender's Pro
Rata Share of such advance on the date such payment is to be made nor increase
the obligation of any other Lender to make such payment to the Administrative
Agent. All outstanding principal of, and interest on, advances made under this
Section 10.3 shall constitute Obligations secured by the Collateral until paid
in full by the Borrower.
10.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
10.5 Entire Agreement. The Loan Documents and the letter agreement
between the Administrative Agent and the Borrower dated May 23, 2002 embody the
entire
107
agreement and understanding among the Borrower, the Administrative Agent and the
Lenders and supersede all prior agreements and understandings among the
Borrower, the Administrative Agent and the Lenders relating to the subject
matter thereof.
10.6 Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other Lender (except to the extent
to which the Administrative Agent is authorized to act as such). The failure of
any Lender to perform any of its obligations hereunder shall not relieve any
other Lender from any of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
10.7 Expenses; Indemnification.
(A) Expenses. The Borrower shall reimburse the Administrative
Agent and the Arranger for any reasonable costs, and out-of-pocket
expenses (including reasonable attorneys' and paralegals' fees and time
charges of attorneys and paralegals for the Administrative Agent, paid
or incurred by the Administrative Agent or the Arranger in connection
with the preparation, negotiation, execution, delivery, syndication,
distribution (including, via the internet), review, amendment,
modification, and administration of the Loan Documents. The Borrower
also agrees to reimburse the Administrative Agent and the Arranger and
the Lenders for any costs, and out-of-pocket expenses (including
reasonable attorneys' and paralegals' fees and time charges of attorneys
and paralegals for the Administrative Agent and the Arranger and the
Lenders) paid or incurred by the Administrative Agent or the Arranger or
any Lender in connection with the collection of the Obligations and
enforcement of their rights and remedies under the Loan Documents. In
addition to expenses set forth above, the Borrower agrees to reimburse
the Administrative Agent, promptly after the Administrative Agent's
request therefor, for each audit, or other business analysis conducted
in accordance with the terms hereof and performed by or for the benefit
of the Lenders in connection with this Agreement or the other Loan
Documents in an amount equal to the Administrative Agent's then
customary charges for each person employed to perform such audit or
analysis, plus all reasonable costs and expenses (including without
limitation, travel expenses) incurred by the Administrative Agent in the
performance of such audits or analysis. Administrative Agent shall
provide the Borrower with a detailed statement of all reimbursements
requested under this Section 10.7(A).
(B) Indemnity. The Borrower further agrees to defend, protect and
indemnify the Administrative Agent, the Arranger and each and all of the
Lenders and each of their respective Affiliates extending financial
accommodations pursuant to any of the Loan Documents, and each of such
Administrative Agent's, Arranger's, Lender's, or Affiliate's respective
officers, directors, trustees, investment advisors, employees, attorneys
and agents (including, without limitation, those retained in connection
with the satisfaction or attempted satisfaction of any of the conditions
set forth in Article V) (collectively, the "INDEMNITEES") from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses of any
kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of
108
counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding), imposed on, incurred by, or
asserted against such Indemnitees in any manner relating to or arising
out of:
(i) this Agreement or any of the other Loan Documents or any of
the Transaction Documents, or any act, event or transaction related
or attendant thereto or to the IITRI Acquisition, the ESOT
Transaction, the making of the Loans, and the issuance of and
participation in Letters of Credit hereunder, the management of such
Loans or Letters of Credit, the use or intended use of the proceeds
of the Loans or Letters of Credit hereunder, or any of the other
transactions contemplated by the Transaction Documents; or
(ii) any costs, liabilities, obligations, responsibilities,
losses, damages, personal injury, death, punitive damages, economic
damages, consequential damages, treble damages, intentional, willful
or wanton injury, damage or threat to the environment, natural
resources or public health or welfare, costs and expenses (including,
without limitation, reasonable attorney, expert and consulting fees
and costs of investigation, feasibility or remedial action studies),
fines, penalties and monetary sanctions, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or
future relating to the violation or alleged violation of any
Environmental, Health or Safety Requirements of Law arising from or
in connection with the past, present or future operations of the
Borrower, its Subsidiaries or any of their respective predecessors in
interest, or, the past, present or future environmental, health or
safety condition of any respective property of the Borrower or its
Subsidiaries, the presence of asbestos-containing materials at any
respective property of the Borrower or its Subsidiaries or the
Release or threatened Release of any Contaminant into the environment
(collectively, the "INDEMNIFIED MATTERS");
provided, however, the Borrower shall have no obligation to an Indemnitee
hereunder (i) with respect to Indemnified Matters caused solely by or resulting
solely from the willful misconduct or Gross Negligence of such Indemnitee with
respect to the Loan Documents, as determined by the final non-appealed judgment
of a court of competent jurisdiction, or (ii) for reimbursement of amounts
asserted against any Indemnitee by the Borrower, any of its Subsidiaries or any
other Indemnitee (each a "Claimant") and paid by such Indemnitee on any final,
non-appealable judgement in the Claimant's favor against such Indemnitee by a
court of competent jurisdiction. If the undertaking to indemnify and pay set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Borrower shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law, to the payment
and satisfaction of all Indemnified Matters incurred by the Indemnitees.
(C) Waiver of Certain Claims; Settlement of Claims. The Borrower
further agrees to assert no claim against any of the Indemnitees on any
theory of liability seeking consequential, special, indirect, exemplary
or punitive damages. No settlement shall be entered into by the Borrower
or any of its Subsidiaries with respect to any claim, litigation,
arbitration or other proceeding relating to the Indemnified Matters
(whether or not the Administrative Agent or any Lender or any Indemnitee
is a party thereto) unless such settlement releases all Indemnitees from
any and all liability with respect thereto.
109
(D) Survival of Agreements. The obligations and agreements of the
Borrower under this Section 10.7 shall survive the termination of this
Agreement.
10.8 Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Administrative Agent
with sufficient counterparts so that the Administrative Agent may furnish one to
each of the Lenders.
10.9 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
If any changes in generally accepted accounting principles are
hereafter required or permitted and are adopted by the Borrower or any of its
Subsidiaries with the agreement of its independent certified public accountants
and such changes result in a change in the method of calculation of any of the
financial covenants, tests, restrictions or standards herein or in the related
definitions or terms used therein ("Accounting Changes"), the parties hereto
agree, at the Borrower's request, to enter into negotiations, in good faith, in
order to amend such provisions in a credit neutral manner so as to reflect
equitably such changes with the desired result that the criteria for evaluating
the Borrower's and its Subsidiaries' financial condition shall be the same in
all material respects after such changes as if such changes had not been made;
provided, however, that no accounting change shall be given effect in such
calculations until such provisions are amended in a manner reasonably
satisfactory to the Required Lenders. In the event such amendment is entered
into, all references in this Agreement to Agreement Accounting Principles means
generally accepted accounting principles as of the date of such amendment. After
the occurrence of any such accounting change but until such time as such
amendment has been entered into, all financial statements and other financial
reports required to be delivered under this Agreement shall be prepared and
delivered in accordance with Agreement Accounting Principles.
10.10 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
10.11 Nonliability of Lenders. The relationship between the
Borrower and the Lenders and the Administrative Agent shall be solely that of
borrower and lender. Neither the Administrative Agent nor any Lender shall have
any fiduciary responsibilities to the Borrower. Neither the Administrative Agent
nor any Lender undertakes any responsibility to the Borrower to review or inform
the Borrower of any matter in connection with any phase of the Borrower's
business or operations.
10.12 GOVERNING LAW. ANY DISPUTE BETWEEN THE BORROWER AND ANY
AGENT, ANY LENDER OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN
110
DOCUMENTS, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING
Section 735 ILCS 105/5-1 ET SEQ., BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS
OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. THE PARTIES TO THIS AGREEMENT HAVE
VOLUNTARILY ELECTED THAT THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL LOANS
BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WHICH IS THE PRINCIPAL PLACE
OF BUSINESS OF THE ADMINISTRATIVE AGENT.
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) NON-EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION
(B), EACH OF THE PARTIES HERETO AGREES AND ACCEPTS FOR ALL DISPUTES
AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS THE NON-EXCLUSIVE
JURISDICTION OF THE STATE OR FEDERAL COURTS LOCATED IN CHICAGO,
ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO,
ILLINOIS. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT
PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE
ADMINISTRATIVE AGENT, ANY LENDER OR ANY OTHER HOLDER OF SECURED
OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS
RESPECTIVE PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO
(1) OBTAIN PERSONAL JURISDICTION OVER THE BORROWER OR (2) REALIZE ON THE
COLLATERAL, OR (3) IN ORDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF SUCH PERSON. THE BORROWER AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING THAT IS SEPARATE
FROM ANY PROCEEDING BROUGHT UNDER CLAUSE (A) ABOVE AND THAT IS BROUGHT
BY SUCH PERSON SOLELY TO REALIZE ON ANY SECURITY FOR THE OBLIGATIONS OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. THE
BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
(C) SERVICE OF PROCESS. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED
TO LIMIT THE ABILITY OF ANY AGENT OR THE HOLDERS OF THE OBLIGATIONS TO
SERVE ANY WRITS, SERVICE OF PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR
PROCEEDING ISSUED BY ANY
111
COURT REFERRED TO IN THIS SECTION 10.13 IN ANY MANNER PERMITTED BY
APPLICABLE LAW.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
(E) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH
OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND,
SPECIFICALLY, THE PROVISIONS OF SECTION 10.7 AND THIS SECTION 10.13,
WITH ITS COUNSEL.
10.14 Other Transactions. Each of the Administrative Agent, the
Arranger, the Lenders, the Swing Line Bank, the Issuing Banks and the Borrower
acknowledge that the Lenders (or Affiliates of the Lenders) may, from time to
time, effect transactions for their own accounts or the accounts of customers,
and hold positions in loans or options on loans of the Borrower, the Borrower's
Subsidiaries and other companies that may be the subject of this credit
arrangement and nothing in this Agreement shall impair the right of any such
Person to enter into any such transaction (to the extent it is not expressly
prohibited by the terms of this Agreement) or give any other Person any claim or
right of action hereunder as a result of the existence of the credit
arrangements hereunder, all of which are hereby waived. In addition, certain
Affiliates of one or more of the Lenders are or may be securities firms and as
such may effect, from time to time, transactions for their own accounts or for
the accounts of customers and hold positions in securities or options on
securities of the Borrower, the Borrower's Subsidiaries and other companies that
may be the subject of this credit arrangement and nothing in this Agreement
shall impair the right of any such Person to enter into any such transaction (to
the extent it is not expressly prohibited by the terms of this Agreement) or
give any other Person any claim or right of action hereunder as a result of the
existence of the credit arrangements hereunder, all of which are hereby waived.
Each of the Administrative Agent, the Arranger, the Lenders, the Swing Line
Bank, the Issuing Banks and the Borrower acknowledges and consents to these
multiple roles, and further acknowledges that the fact that any such unit or
Affiliate is providing another service or product or proposal therefor to the
Borrower or any of its Subsidiaries does not mean that such service, product, or
proposal is or will be acceptable to any of the Administrative Agent, the
Arranger, the Lenders, the Swing Line Bank or the Issuing Banks.
10.15 Subordination of Intercompany Indebtedness. The Borrower
agrees that any and all claims of the Borrower against any of its Subsidiaries
that is a Guarantor with respect to any "Intercompany Indebtedness" (as
hereinafter defined), any endorser, obligor or any other
112
guarantor of all or any part of the Obligations, or against any of its
properties shall be subordinate and subject in right of payment to the prior
payment, in full and in cash, of all Obligations and Hedging Obligations under
Hedging Arrangements entered into with the Lenders or any of their Affiliates
("DESIGNATED HEDGING AGREEMENTS"); provided that, and not in contravention of
the foregoing, so long as no Default has occurred and is continuing the Borrower
may make loans to and receive payments in the ordinary course with respect to
such Intercompany Indebtedness from each such Guarantor to the extent not
prohibited by the terms of this Agreement and the other Loan Documents.
Notwithstanding any right of the Borrower to ask, demand, sue for, take or
receive any payment from any Guarantor, all rights, liens and security interests
of the Borrower, whether now or hereafter arising and howsoever existing, in any
assets of any Guarantor shall be and are subordinated to the rights of the
holders of the Obligations and the Administrative Agent in those assets. The
Borrower shall have no right to possession of any such asset or to foreclose
upon any such asset, whether by judicial action or otherwise, unless and until
all of the Obligations (other than contingent indemnity obligations) and the
Hedging Obligations under Designated Hedging Agreements shall have been fully
paid and satisfied (in cash) and all financing arrangements pursuant to any Loan
Document or Designated Hedging Agreement have been terminated. If all or any
part of the assets of any Guarantor, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Guarantor,
whether partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding, or if the business of any such
Guarantor is dissolved or if substantially all of the assets of any such
Guarantor are sold, then, and in any such event (such events being herein
referred to as an "INSOLVENCY EVENT"), any payment or distribution of any kind
or character, either in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any indebtedness of any Guarantor
to the Borrower ("INTERCOMPANY INDEBTEDNESS") shall be paid or delivered
directly to the Administrative Agent for application on any of the Obligations
and the Hedging Obligations under Designated Hedging Agreements, due or to
become due, until such Obligations or Hedging Obligations (other than contingent
indemnity obligations) shall have first been fully paid and satisfied (in cash).
Should any payment, distribution, security or instrument or proceeds thereof be
received by the Borrower upon or with respect to the Intercompany Indebtedness
after an Insolvency Event prior to the satisfaction of all of the Obligations
(other than contingent indemnity obligations) and the Hedging Obligations under
Designated Hedging Agreements and the termination of all financing arrangements
pursuant to any Loan Document and/or Designated Hedging Agreement, the Borrower
shall receive and hold the same in trust, as trustee, for the benefit of the
holders of the Obligations and such Hedging Obligations and shall forthwith
deliver the same to the Administrative Agent, for the benefit of such Persons,
in precisely the form received (except for the endorsement or assignment of the
Borrower where necessary), for application to any of the Obligations and such
Hedging Obligations, due or not due, and, until so delivered, the same shall be
held in trust by the Borrower as the property of the holders of the Obligations
and such Hedging Obligations. If the Borrower fails to make any such endorsement
or assignment to the Administrative Agent, the Administrative Agent or any of
its officers or employees are irrevocably authorized to make the same. The
Borrower agrees that until the Obligations (other than the contingent indemnity
obligations) and such Hedging Obligations have been paid in full (in cash) and
satisfied and all financing arrangements pursuant to any Loan Document and all
Designated Hedging Agreements have been terminated, the Borrower will not
113
assign or transfer to any Person (other than the Administrative Agent) any claim
the Borrower has or may have against any Guarantor.
10.16 Lender's Not Utilizing Plan Assets. Each Lender represents
and warrants to the Borrower and the Administrative Agent that none of the
consideration used by such Lender to make or fund its Loans constitutes for any
purpose of ERISA or Section 4975 of the Code assets of any "plan" as defined in
Section 3(3) of ERISA or Section 4975 of the Code and the rights and interests
of such Lender in and under the Loan Documents shall not constitute such "plan
assets" under ERISA.
ARTICLE XI: THE ADMINISTRATIVE AGENT
11.1 Appointment; Nature of Relationship. LaSalle is appointed by
the Holders of Secured Obligations as the Administrative Agent hereunder and
under each other Loan Document, and each of the Holders of Secured Obligations
irrevocably authorizes the Administrative Agent to act as the contractual
representative of such Holder of Secured Obligations with the rights and duties
expressly set forth herein and in the other Loan Documents. The Administrative
Agent agrees to act as such contractual representative upon the express
conditions contained in this Article XI. Notwithstanding the use of the defined
term "Administrative Agent," it is expressly understood and agreed that the
Administrative Agent shall not have any fiduciary responsibilities to any Holder
of Secured Obligations by reason of this Agreement and that the Administrative
Agent is merely acting as the representative of the Holders of Secured
Obligations with only those duties as are expressly set forth in this Agreement
and the other Loan Documents. In its capacity as the Holders of Secured
Obligations' contractual representative, the Administrative Agent (A) does not
assume any fiduciary duties to any of the Holders of Secured Obligations, (B) is
a "representative" of the Holders of Secured Obligations within the meaning of
Section 9-102 of the Uniform Commercial Code and (C) is acting as an independent
contractor, the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents. Each of the Holders of
Secured Obligations, for itself and on behalf of its affiliates as Holders of
Secured Obligations, agrees to assert no claim against the Administrative Agent
on any agency theory or any other theory of liability for breach of fiduciary
duty, all of which claims each Holder of Secured Obligations waives.
11.2 Powers. The Administrative Agent shall have and may exercise
such powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent shall have no
implied duties or fiduciary duties or responsibilities to the Holders of Secured
Obligations, or any obligation to the Holders of Secured Obligations, to take
any action hereunder or under any of the other Loan Documents except any action
specifically provided by the Loan Documents required to be taken by the
Administrative Agent.
11.3 General Immunity. Neither the Administrative Agent nor any of
its directors, officers, agents, employees or legal counsel shall be liable to
the Borrower, the Holders of Secured Obligations or any Holder of Secured
Obligations for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is found in a final judgment by a court of
114
competent jurisdiction to have arisen solely from the Gross Negligence or
willful misconduct of such Person.
11.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc.
Neither the Administrative Agent nor any of its directors, officers, agents,
employees or legal counsel shall be responsible for or have any duty to
ascertain, inquire into, or verify (A) any statement, warranty or representation
made in connection with any Loan Document or any borrowing hereunder; (B) the
performance or observance of any of the covenants or agreements of any obligor
under any Loan Document; (C) the satisfaction of any condition specified in
Article V, except receipt of items required to be delivered solely to the
Administrative Agent; (D) the existence or possible existence of any Default or
Unmatured Default or (E) the validity, effectiveness or genuineness of any Loan
Document or any other instrument or writing furnished in connection therewith.
The Administrative Agent shall not be responsible to any Holder of Secured
Obligations for any recitals, statements, representations or warranties herein
or any of the other Loan Documents, for the perfection or priority of the Liens
on any of the Collateral, or for the execution, effectiveness, genuineness,
validity, legality, enforceability, collectibility, or sufficiency of this
Agreement or any of the other Loan Documents or the transactions contemplated
thereby, or for the financial condition of any guarantor of any or all of the
Obligations, the Borrower or any of its Subsidiaries.
11.5 Action on Instructions of Lenders; Actions with Respect to
Defaults. The Administrative Agent shall have the right to request instructions
from the Lenders at any time. If the Administrative Agent shall request
instructions from the Lenders with respect to any act or action (including the
failure to act) in connection with this Agreement or any other Loan Document,
the Administrative Agent shall be entitled to refrain from such act or taking
such action unless and until the Administrative Agent shall have received
instructions signed by the Required Lenders (or all of the Lenders in the event
that and to the extent that this Agreement or any other Loan Document expressly
requires such), and the Administrative Agent shall not incur liability to any
Person by reason of so refraining, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Holders of
Secured Obligations and on all owners of Loans and on all Holders of Secured
Obligations. Without limiting the foregoing, no Holder of Secured Obligation
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting hereunder in
accordance with the instructions of all of the Lenders. The Administrative Agent
shall be fully justified in failing or refusing to take any action hereunder and
under any other Loan Document unless it shall first be indemnified to its
satisfaction by the Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action. In addition to the Administrative Agent's right to take actions on its
own accord as permitted under this Agreement, the Administrative Agent shall
take such action with respect to an Unmatured Default or Default as shall be
directed by the Required Lenders; provided, that until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Unmatured Default or Default as it shall deem advisable and in
the best interests of the Holders of Secured Obligations.
11.6 Employment of Agents and Counsel. The Administrative Agent
may execute any of its duties as the Administrative Agent hereunder and under
any other Loan
115
Document by or through employees, agents, and attorneys-in-fact and shall not be
liable to the Holders of Secured Obligations, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The
Administrative Agent shall be entitled to advice of counsel concerning the
contractual arrangement between the Administrative Agent and the Holders of
Secured Obligations and all matters pertaining to the Administrative Agent's
duties hereunder and under any other Loan Document.
11.7 Reliance on Documents; Counsel. The Administrative Agent
shall be entitled to rely upon any notice, consent, certificate, affidavit,
letter, telegram, statement, 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, in
respect to legal matters, upon the opinion of counsel selected by the
Administrative Agent, which counsel may be employees of the Administrative
Agent.
11.8 The Administrative Agent's Reimbursement and Indemnification.
The Holders of Secured Obligations agree to reimburse and indemnify the
Administrative Agent ratably in proportion to its Pro Rata Share (A) for any
amounts not reimbursed by the Borrower for which the Administrative Agent is
entitled to reimbursement by the Borrower under the Loan Documents, (B) for any
other expenses incurred by the Administrative Agent on behalf of the Holders of
Secured Obligations, in connection with the enforcement of the Loan Documents
and (C) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan Documents
or any other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents, provided that no Holder of Secured Obligations shall be
liable for any of the foregoing to the extent any of the foregoing is found in a
final non-appealable judgment by a court of competent jurisdiction to have
arisen solely from the Gross Negligence or willful misconduct of the
Administrative Agent.
11.9 Rights as a Lender. With respect to its Revolving Loan
Commitment, its Term Loan Commitment, Loans made by it, and Letters of Credit
issued by it, the Administrative Agent shall have the same rights and powers
hereunder and under any other Loan Document as any Lender or Issuing Bank and
may exercise the same as though it were not the Administrative Agent, and the
term "Lender" or "Lenders", "Issuing Bank" or "Issuing Banks" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which such Person is not
prohibited hereby from engaging with any other Person.
11.10 Lender Credit Decision. Each Holder of Secured Obligations
acknowledges that it has, independently and without reliance upon the
Administrative Agent, the Arranger or any other Holder of Secured Obligations
and based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan Documents.
Each Holder of Secured Obligations also acknowledges that it will,
116
independently and without reliance upon the Administrative Agent, the Arranger
or any other Holder of Secured Obligations and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
11.11 Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right
(with, so long as no Default is continuing, the Borrower's consent (which
consent shall not be unreasonably withheld or delayed)) to appoint, on behalf of
the Borrower and the Holders of Secured Obligations, a successor Administrative
Agent. If no successor Administrative Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within thirty days
after the retiring Administrative Agent's giving notice of resignation, then the
retiring Administrative Agent may appoint (with, so long as no Default or
Unmatured Default is continuing, the Borrower's consent), on behalf of the
Borrower and the Holders of Secured Obligations, a successor Administrative
Agent. Notwithstanding anything herein to the contrary, so long as no Default
has occurred and is continuing, each such successor Administrative Agent shall
be subject to approval by the Borrower, which approval shall not be unreasonably
withheld or delayed. Such successor Administrative Agent shall be a commercial
bank or other financial institution having capital and retained earnings of at
least $500,000,000. Upon the acceptance of any appointment as the Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article XI shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Administrative Agent hereunder and under the other Loan Documents.
11.12 Collateral Documents; Subordination Agreements; Collateral.
(A) Authority to Take Action. Each Holder of Secured Obligations
authorizes the Administrative Agent to enter into each of the Collateral
Documents and the subordination agreements in respect of the
Subordinated Notes to which it is a party and to take all action
contemplated by such documents. Each Holder of Secured Obligations
agrees that no Holder of Secured Obligations (other than the
Administrative Agent) shall have the right individually to seek to
realize upon the security granted by any Collateral Document, it being
understood and agreed that such rights and remedies may be exercised
solely by the Administrative Agent for the benefit of the Holders of
Secured Obligations upon the terms of the Collateral Documents.
(B) Authority to Execute and Deliver. In the event that any
Collateral is hereafter pledged by any Person as collateral security for
the Obligations, the Administrative Agent is hereby authorized to
execute and deliver on behalf of the Holders of Secured Obligations any
Loan Documents necessary or appropriate to grant and perfect a Lien on
such Collateral in favor of the Administrative Agent on behalf of the
Holders of Secured Obligations.
117
(C) Authority to Release Liens. The Holders of Secured Obligations
hereby authorize the Administrative Agent, at its option and in its
discretion, to release any Lien granted to or held by the Administrative
Agent upon any Collateral (i) upon termination of the Commitments and
payment in cash and satisfaction of all of the Obligations at any time
arising under or in respect of this Agreement or the Loan Documents or
the transactions contemplated hereby or thereby; (ii) as permitted by,
but only in accordance with, the terms of the applicable Loan Document;
or (iii) if approved, authorized or ratified in writing by the Required
Lenders, unless such release is required to be approved by all of the
Lenders hereunder. Upon request by the Administrative Agent at any time,
the Lenders will confirm in writing the Administrative Agent's authority
to release particular types or items of Collateral pursuant to this
Section 11.12(C).
(D) Additional Authority. Upon any sale or transfer of assets
constituting Collateral which is expressly permitted pursuant to the
terms of any Loan Document, or consented to in writing by the Required
Lenders or all of the Lenders, as applicable, and upon at least five (5)
Business Days' prior written request by the Borrower, the Administrative
Agent shall (and is hereby irrevocably authorized by the Holders of
Secured Obligations to) execute such documents as may be necessary to
evidence the release of the Liens granted to the Administrative Agent
for the benefit of the Holders of Secured Obligations herein or pursuant
hereto upon the Collateral that was sold or transferred; provided,
however, that (i) the Administrative Agent shall not be required to
execute any such document on terms which, in the Administrative Agent's
opinion, would expose the Administrative Agent to liability or create
any obligation or entail any consequence other than the release of such
Liens without recourse or warranty, and (ii) such release shall not in
any manner discharge, affect or impair the Secured Obligations or any
Liens upon (or obligations of the Borrower or any Subsidiary in respect
of) all interests retained by the Borrower or any Subsidiary, including
(without limitation) the proceeds of the sale, all of which shall
continue to constitute part of the Collateral.
(E) No Obligation to Monitor Collateral. The Administrative Agent
shall have no obligation whatsoever to the Holders of Secured
Obligations or to any other Person to assure that the Collateral exists
or is owned by the Borrower or any of its Subsidiaries or is cared for,
protected or insured or that the Liens granted to the Administrative
Agent under the Loan Documents have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to
any particular priority, or to exercise or to continue exercising at all
or in any manner or under any duty of care, disclosure or fidelity any
of the rights, authorities and powers granted or available to the
Administrative Agent in this Article XI or in any of the Loan Documents,
it being understood and agreed that in respect of the Collateral, or any
act, omission or event related thereto, the Administrative Agent may act
in any manner it may deem appropriate, in its sole discretion, given the
Administrative Agent's own interest in the Collateral as one of the
Holders of Secured Obligations and that the Administrative Agent shall
have no duty or liability whatsoever to the Holders of Secured
Obligations, except for its Gross Negligence or willful misconduct.
11.13 Arranger. The Arranger shall have no right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such.
118
Without limiting the foregoing, the Arranger shall not have or be deemed to have
a fiduciary relationship with any Holder of Secured Obligations. Each Holder of
Secured Obligations hereby makes the same acknowledgements with respect to the
Arranger as it makes with respect to the Administrative Agent in Section 11.10.
ARTICLE XII: SETOFF; RATABLE PAYMENTS
12.1 Setoff. In addition to, and without limitation of, any rights
of the Lenders under applicable law, if any Default occurs and is continuing,
any Indebtedness from any Lender to the Borrower (including all account
balances, whether provisional or final and whether or not collected or
available) may be offset and applied toward the payment of the Obligations owing
to such Lender, whether or not the Obligations, or any part hereof, shall then
be due. Such Lender shall give prompt notice to the Borrower and the
Administrative Agent of any such offset.
12.2 Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments received
pursuant to Sections 4.1, 4.2 or 4.4) in a greater proportion than that received
by any other Lender, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligation or such amounts which
may be subject to setoff, such Lender agrees, promptly upon demand, to take such
action necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to the obligations owing to them. In case any such payment
is disturbed by legal process, or otherwise, appropriate further adjustments
shall be made.
12.3 Application of Payments. The Administrative Agent shall,
unless otherwise specified at the direction of the Required Lenders which
direction shall be consistent with the last two sentences of this Section 12.3,
apply all payments and prepayments in respect of any Obligations and all
proceeds of the Collateral in the following order:
(i) first, to pay interest on and then principal of any portion of
the Loans which the Administrative Agent may have advanced on behalf of
any Lender for which the Administrative Agent has not then been
reimbursed by such Lender or the Borrower;
(ii) second, to pay interest on and then principal of any advance
made under Section 10.3 for which the Administrative Agent has not then
been paid by the Borrower or reimbursed by the Lenders;
(iii) third, to the ratable payment of the Obligations in respect
of any fees, expenses, reimbursements or indemnities then due to the
Administrative Agent;
(iv) fourth, to pay Obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Lenders and the issuer(s)
of Letters of Credit;
(v) fifth, to pay interest due in respect of Swing Line Loans;
119
(vi) sixth, to pay interest due in respect of Loans.
(vii) seventh, to the ratable payment or prepayment of principal
outstanding on Swing Line Loans;
(viii) eighth, to the ratable payment or prepayment of principal
outstanding on the Term Loans;
(ix) ninth, to the ratable payment or prepayment of principal
outstanding on Loans (other than Swing Line Loans and Term Loans) and
Reimbursement Obligations in such order as the Administrative Agent may
determine;
(x) tenth, to the ratable payment or prepayment of Hedging
Obligations under Hedging Agreements in such order as the Administrative
Agent may determine in its sole discretion;
(xi) eleventh, to provide required cash collateral, if required
pursuant to Section 3.11 and
(xii) twelfth, to the ratable payment of all other Obligations.
Unless otherwise required by the terms of this Agreement, all principal payments
in respect of Loans (other than Swing Line Loans) shall be applied first, to
repay outstanding Floating Rate Loans, and then to repay outstanding Eurodollar
Rate Loans with those Eurodollar Rate Loans which have earlier expiring Interest
Periods being repaid prior to those which have later expiring Interest Periods.
The order of priority set forth in this Section 12.3 and the related provisions
of this Agreement are set forth solely to determine the rights and priorities of
the Administrative Agent, the Lenders, the Swing Line Bank and the issuer(s) of
Letters of Credit as among themselves. The order of priority set forth in
clauses (iv) through (x) of this Section 12.3 may at any time and from time to
time be changed at the direction of the Lenders without necessity of notice to
or consent of or approval by the Borrower, or any other Person; provided, that
the order of priority of payments in respect of Swing Line Loans may be changed
only with the prior written consent of the Swing Line Bank. The order of
priority set forth in clauses (i) through (iii) of this Section 12.3 may be
changed only with the prior written consent of the Administrative Agent, and, in
the case of clause (iii), with the prior written consent of the Arranger.
12.4 Relations Among Lenders.
(A) No Action Without Consent. Except with respect to the exercise
of set-off rights of any Lender in accordance with Section 12.1, the
proceeds of which are applied in accordance with this Agreement, each
Lender agrees that it will not take any action, nor institute any
actions or proceedings, against the Borrower or any other obligor
hereunder or with respect to any Loan Document, without the prior
written consent of the Required Lenders or, as may be provided in this
Agreement or the other Loan Documents, with the consent of the
Administrative Agent.
(B) Not Partners; No Liability. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions
of, or (except as otherwise set forth
120
herein in case of the Administrative Agent) authorized to act for, any
other Lender. The Administrative Agent shall have the exclusive right on
behalf of the Lenders to enforce the payment of the principal of and
interest on any Loan after the date such principal or interest has
become due and payable pursuant to the terms of this Agreement.
ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
13.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (A) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents without the consent of all of the Lenders, and any such
assignment in violation of this Section 13.1(A) shall be null and void, and (B)
any assignment by any Lender must be made in compliance with Section 13.3
hereof. Notwithstanding clause (B) of this Section 13.1 or Section 13.3, (i) any
Lender may at any time, without the consent of the Borrower or the
Administrative Agent, assign all or any portion of its rights under this
Agreement to a Federal Reserve Bank and (ii) any Lender which is a fund or
commingled investment vehicle that invests in commercial loans in the ordinary
course of its business may at any time, without the consent of the Borrower or
the Administrative Agent, pledge or assign all or any part of its rights under
this Agreement to a trustee or other representative of holders of obligations
owed or securities issued by such Lender as collateral to secure such
obligations or securities; provided, however, that no such assignment or pledge
shall release the transferor Lender from its obligations hereunder, unless and
until the parties thereto have complied with the provisions of Section 13.3. The
Administrative Agent may treat each Lender as the owner of the Loans made by
such Lender hereunder for all purposes hereof unless and until such Lender
complies with Section 13.3 hereof in the case of an assignment thereof or, in
the case of any other transfer, a written notice of the transfer is filed with
the Administrative Agent. Any assignee or transferee of a Loan, Commitment, L/C
Interest or any other interest of a Lender under the Loan Documents agrees by
acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the owner of any
Loan, shall be conclusive and binding on any subsequent owner, transferee or
assignee of such Loan.
13.2 Participations.
(A) Permitted Participants; Effect. Subject to the terms set forth
in this Section 13.2, any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time sell to one or more banks or
other entities that are U.S. Qualified Persons ("PARTICIPANTS") participating
interests in any Loan owing to such Lender, any Revolving Loan Commitment of
such Lender, any L/C Interest of such Lender or any other interest of such
Lender under the Loan Documents on a pro rata or non-pro rata basis. Notice of
such participation to the Borrower and the Administrative Agent shall be
required prior to any participation becoming effective with respect to a
Participant which is not a Lender or an Affiliate thereof. Upon receiving said
notice, the Administrative Agent shall record the participation in the Register
it maintains. Moreover, notwithstanding such recordation, such participation
shall not be considered an assignment under Section 13.3 of this Agreement and
such Participant shall not be considered a Lender. In the event of any such sale
by a Lender of participating interests
121
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the owner of all Loans made by it for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under the Loan Documents
except that, for purposes of Article IV hereof, the Participants shall be
entitled to the same rights as if they were Lenders.
(B) Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than any
amendment, modification or waiver with respect to any Loan, Letter of Credit or
Revolving Loan Commitment in which such Participant has an interest which
forgives principal, interest or Letter of Credit or commitment fees or reduces
the interest rate or Letter of Credit or commitment fees payable pursuant to the
terms of this Agreement with respect to any such Loan or Revolving Loan
Commitment, or postpones any date fixed for any regularly-scheduled payment (but
not any prepayment) of principal of, or interest or Letter of Credit or
commitment fees on, any such Loan or Revolving Loan Commitment, or releases all
or substantially all of the Collateral, if any, securing any such Loan or Letter
of Credit.
(C) Benefit of Setoff. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 12.1 hereof in
respect to its participating interest in amounts owing under the Loan Documents
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under the Loan Documents, provided that each Lender
shall retain the right of setoff provided in Section 12.1 hereof with respect to
the amount of participating interests sold to each Participant except to the
extent such Participant exercises its right of setoff. The Lenders agree to
share with each Participant, and each Participant, by exercising the right of
setoff provided in Section 12.1 hereof, agrees to share with each Lender, any
amount received pursuant to the exercise of its right of setoff, such amounts to
be shared in accordance with Section 12.2 as if each Participant were a Lender.
13.3 Assignments.
(A) Permitted Assignments.
(i) Any Lender (each such assigning Lender under this Section 13.3
being a "SELLER") may, in accordance with applicable law, at any time
assign to one or more banks or other entities (other than the
Borrower or any of its Affiliates) that are U.S. Qualified Persons
("PURCHASERS") all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including, without
limitation, its Revolving Loan Commitment, all Loans owing to it, all
of its participation interests in existing Letters of Credit and
Swing Line Loans, and its obligation to participate in additional
Letters of Credit and Swing Line Loans hereunder) in accordance with
the provisions of this Section 13.3. Each assignment shall be of a
constant, and not a
122
varying, ratable percentage of all of the Seller's rights and
obligations under this Agreement. Such assignment shall be
substantially in the form of Exhibit D hereto and shall not be
permitted hereunder unless such assignment is either for all of such
Seller's rights and obligations under the Loan Documents or, without
the prior written consent of the Administrative Agent, involves loans
and commitments in an aggregate amount of at least $5,000,000 (or, if
less, all of such Lender's rights and obligations under the Loan
Documents, and which minimum amount shall not apply to any assignment
between Lenders. The written consent of the Administrative Agent,
and, prior to the occurrence of a Default, and only with respect to
any assignment other than to another Lender, the Borrower (which
consent, in each such case, shall not be unreasonably withheld or
delayed), shall be required prior to an assignment becoming effective
with respect to a Purchaser which is not a Lender, an Affiliate of
such assigning Lender or Approved Fund of such assigning Lender;
provided, no consent of the Borrower shall be required in connection
with any assignment by any Lender consummated after consultation with
the Borrower during the Syndication Period.
(ii) Notwithstanding anything to the contrary contained herein,
any Lender (each such Lender, a "GRANTING Bank") may grant to a
special purpose funding vehicle (each such special purpose funding
vehicle, a "SPC"), identified as such in writing from time to time by
the applicable Granting Bank to the Administrative Agent and the
Borrower, the option to provide to the Borrower all or any part of
any Advance that such Granting Bank would otherwise be obligated to
make to the Borrower pursuant to this Agreement; provided, that (i)
nothing herein shall constitute a commitment by any SPC to make any
Advance, (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Advance, the
applicable Granting Bank shall be obligated to make such Advance
pursuant to the terms hereof. The making of an Advance by any SPC
hereunder shall utilize the Revolving Loan Commitment of the
applicable Granting Bank to the same extent, and as if, such Advance
were made by such Granting Bank. Each party hereto hereby agrees that
no SPC shall be liable for any indemnity or other similar payment
obligation under this Agreement (all liability for which shall remain
with the applicable Granting Bank). All notices hereunder to any
Granting Bank or the related SPC, and all payments in respect of the
Obligations due to such Granting Bank or the related SPC, shall be
made to such Granting Bank. In addition, each Granting Bank shall
vote as a Lender hereunder without giving effect to any assignment
under this Section 13.3(A)(ii), and no SPC shall have any vote as a
Lender under this Agreement for any purpose. In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall
survive the termination of this Agreement) that, prior to the date
that is one year and one day after the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPC,
it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of
the United States or any State thereof in relation to matters arising
under this Agreement. In addition, notwithstanding anything to the
contrary contained in this Section 13.3, any SPC may (i) with notice
to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing or
123
administrative fee therefor, assign all or a portion of its interests
in any Advances to the Granting Bank or to any financial institutions
(consented to by the Borrower and the Administrative Agent in
accordance with the terms of Section 13.3(A)(i)) providing liquidity
and/or credit support to or for the account of such SPC to support
the funding or maintenance of Advances and (ii) disclose on a
confidential basis any non-public information relating to its
Advances to any rating agency, commercial paper dealer or provider of
any surety, guarantee or credit or liquidity enhancement to such SPC.
This Section 13.3(A)(ii) may not be amended without the written
consent of each SPC affected thereby.
(B) Effect; Effective Date. Upon (i) delivery to the
Administrative Agent of a notice of assignment, substantially in the
form attached as Appendix I to Exhibit D hereto (a "NOTICE OF
ASSIGNMENT"), together with any consent required by Section 13.3(A)
hereof, (ii) payment of a $3,500 fee by the assignor to the
Administrative Agent for processing such assignment, and (iii) the
completion of the recording requirements in Section 13.3(C), such
assignment shall become effective on the later of such date when the
requirements in clauses (i), (ii), and (iii) are met or the effective
date specified in such Notice of Assignment. The Notice of Assignment
shall contain a representation by the Purchaser to the effect that none
of the consideration used to make the purchase of the Commitment, Loans
and L/C Obligations under the applicable assignment agreement are "plan
assets" as defined under ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be "plan assets"
under ERISA. On and after the effective date of such assignment, such
Purchaser, if not already a Lender, shall for all purposes be a Lender
party to this Agreement and any other Loan Documents executed by the
Lenders and shall have all the rights and obligations of a Lender under
the Loan Documents, to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the Lenders or
the Administrative Agent shall be required to release the Seller with
respect to the percentage of the Aggregate Revolving Loan Commitment,
Loans and Letter of Credit and Swing Line Loan participations assigned
to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 13.3(B), the Seller, the
Administrative Agent and the Borrower shall make appropriate
arrangements so that, to the extent notes have been issued to evidence
any of the transferred Loans, replacement notes are issued to such
Seller and new notes or, as appropriate, replacement notes, are issued
to such Purchaser, in each case in principal amounts reflecting their
Revolving Loan Commitment and their Term Loans, as adjusted pursuant to
such assignment. Notwithstanding anything to the contrary herein, the
Borrower shall not, at any time, be obligated to pay under Section
2.15(E) to any Lender that is a Purchaser, assignee or transferee any
sum in excess of the sum which the Borrower would have been obligated to
pay in respect of such transferred Loan to the Lender that was the
Seller, assignor or transferor had such assignment or transfer not been
effected.
(C) The Register. Notwithstanding anything to the contrary in this
Agreement, the Borrower hereby designates the Administrative Agent, and
the Administrative Agent, hereby accepts such designation, to serve as
the Borrower's contractual representative solely for purposes of this
Section 13.3(C). In this connection, the Administrative Agent shall
maintain at its address referred to in Section 14.1 a copy
124
of each assignment delivered to and accepted by it pursuant to this
Section 13.3 and a register (the "REGISTER") for the recordation of the
names and addresses of the Lenders and the Revolving Loan Commitment of,
principal amount of and interest on the Loans owing to, each Lender from
time to time and whether such Lender is an original Lender or the
assignee of another Lender pursuant to an assignment under this Section
13.3. The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrower and each of its
Subsidiaries, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
13.4 Confidentiality. Subject to Section 13.5, the Administrative
Agent and the Lenders and their respective representatives, consultants and
advisors shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement and identified as such by the Borrower in
accordance with such Person's customary procedures for handling confidential
information of this nature and in accordance with safe and sound commercial
lending or investment practices and in any event may make disclosure reasonably
required by a prospective Transferee in connection with the contemplated
participation or assignment or as required or requested by any Governmental
Authority or any securities exchange or similar self-regulatory organization or
representative thereof or pursuant to a regulatory examination or legal process,
or to any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor, and shall require any such
Transferee to agree (and require any of its Transferees to agree) to comply with
this Section 13.4. In no event shall the Administrative Agent or any Lender be
obligated or required to return any materials furnished by the Borrower;
provided, however, each prospective Transferee shall be required to agree that
if it does not become a participant or assignee it shall return all materials
furnished to it by or on behalf of the Borrower in connection with this
Agreement.
13.5 Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the Borrower and its Subsidiaries; provided that prior to any such
disclosure, such prospective Transferee shall agree to preserve in accordance
with Section 13.4 the confidentiality of any confidential information described
therein.
ARTICLE XIV: NOTICES
14.1 Giving Notice. Except as otherwise permitted by Section 2.14
with respect to Borrowing/Election Notices, all notices and other communications
provided to any party hereto under this Agreement or any other Loan Documents
shall be in writing or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. For all purposes
under this Agreement and the other Loan Documents, notice to any party hereto
from any other party hereto shall not be deemed to be effective until actually
received.
125
14.2 Change of Address. The Borrower, the Administrative Agent and
any Lender may each change the address for service of notice upon it by a notice
in writing to the other parties hereto.
ARTICLE XV: COUNTERPARTS
This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Administrative Agent and the Lenders and each party has notified the
Administrative Agent by telephone, that it has taken such action.
[Remainder of This Page Intentionally Blank]
[EXHIBIT 10.3]
IN WITNESS WHEREOF, the Borrower, the Lenders and the
Administrative Agent have executed this Agreement as of the date first above
written.
ALION SCIENCE AND TECHNOLOGY
CORPORATION, as the Borrower
By: /s/ BAHMAN ATEFI
--------------------------------------------
Name: Bahman Atefi
Title: Chief Executive Officer and President
Address: 1750 Tysons Boulevard
Suite 1300
McLean, VA 22102
------------------------------------------------
------------------------------------------------
------------------------------------------------
Attention: Chief Financial Officer
Telephone No.: (703) 918-4491
----------------------------------
Facsimile No.: (703) 714-6508
----------------------------------
SIGNATURE PAGE TO CREDIT AGREEMENT DATED DECEMBER, 2002
[EXHIBIT 10.3]
LASALLE BANK NATIONAL ASSOCIATION,
as Administrative Agent and as a Lender
By: /s/ ROBERT W. BOLT
---------------------------------------------
Name: Robert W. Bolt
Title: Senior Vice President
Address:
135 South LaSalle Street
------------------------------------------------
Chicago, IL 60603
------------------------------------------------
------------------------------------------------
Attention: Anne Colgan
Telephone No.: (312) 904-8939
---------------------------------
Facsimile No.: (312) 904-0553
---------------------------------
SIGNATURE PAGE TO CREDIT AGREEMENT DATED DECEMBER, 2002
[Exhibit 10.3]
U.S. BANK, N.A., as a Lender
By: /s/ Timothy A. Fossa
--------------------------------------------
Name: Timothy A. Fossa
Title: Vice President
Address:
30 North Michigan Avenue
-----------------------------------------------
Chicago, IL 60602
-----------------------------------------------
-----------------------------------------------
Attention: T. Fossa, Vice President
Telephone No.: (312) 696-1347
---------------------------------
Facsimile No.: (312) 696-1397
---------------------------------
E-mail: Timothy.Fossa@usbank.com
SIGNATURE PAGE TO CREDIT AGREEMENT DATED DECEMBER, 2002
[Exhibit 10.3]
ORIX FINANCIAL SERVICES, INC., as a Lender
By: /s/ Christopher W. Coulomb
----------------------------------------------
Name: Christopher W. Coulomb
Title: Vice President
Address:
846 E. Algonquin Road
-------------------------------------------------
Suite 101
-------------------------------------------------
Schaumburg, IL 60173-3854
-------------------------------------------------
-------------------------------------------------
Attention: Christopher Coulomb
Telephone No.: (770) 970-8006
-----------------------------------
Facsimile No.: (770) 970-8056
-----------------------------------
E-mail: CCOULOMB@ORIXFIN.COM
SIGNATURE PAGE TO CREDIT AGREEMENT DATED DECEMBER, 2002
[Exhibit 10.3]
NCB CAPITAL CORPORATION, as a Lender
By: /s/ Meg Shrum
---------------------------------------------
Name: Meg Shrum
Title: Vice President
Address:
1725 Eye Street, NW
-------------------------------------------------
Suite 600
-------------------------------------------------
Washington, D.C. 20006
-------------------------------------------------
-------------------------------------------------
Attention: Meg Shrum, Vice President
Telephone No.: (202) 336-7785
-----------------------------------
Facsimile No.: (202) 336-7659
-----------------------------------
E-mail: mshrum@ncb.com
SIGNATURE PAGE TO CREDIT AGREEMENT DATED DECEMBER, 2002
[Exhibit 10.3]
BRANCH BANKING & TRUST COMPANY, as a Lender
By: /s/ Roberts A. Bass
----------------------------------------------
Name: Roberts A. Bass
Title: Senior Vice President
Address:
BB&T Corporate Banking Division
--------------------------------------------------
200 W. 2nd Street, 16th Floor
--------------------------------------------------
Winston-Salem, NC 27104
--------------------------------------------------
--------------------------------------------------
Attention: Roberts A. Bass, Senior Vice President
Telephone No.: (336) 733-2734
------------------------------------
Facsimile No.: (336) 733-2740
------------------------------------
E-mail: rbass@bbandt.com
SIGNATURE PAGE TO CREDIT AGREEMENT DATED DECEMBER, 2002