EXHIBIT 4
================================================================================
CREDIT AGREEMENT
AMONG
APPLIED INDUSTRIAL TECHNOLOGIES, INC.,
AND
THE CANADIAN BORROWERS NAMED HEREIN,
AS BORROWERS,
THE LENDERS NAMED HEREIN,
AS LENDERS,
KEYBANK NATIONAL ASSOCIATION,
AS LEAD ARRANGER, BOOK RUNNER AND ADMINISTRATIVE AGENT,
AND
U.S. BANK NATIONAL ASSOCIATION,
AS SYNDICATION AGENT
---------------------
DATED AS OF
JUNE 3, 2005
---------------------
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I. DEFINITIONS........................................................................................... 1
Section 1.1. Definitions.................................................................................... 1
Section 1.2. Accounting Terms............................................................................... 22
Section 1.3. Terms Generally................................................................................ 22
ARTICLE II. AMOUNT AND TERMS OF CREDIT........................................................................... 22
Section 2.1. Amount and Nature of Credit.................................................................... 22
Section 2.2. US Revolving Credit............................................................................ 23
Section 2.3. CAD Revolving Loans............................................................................ 27
Section 2.4. Interest....................................................................................... 28
Section 2.5. Evidence of Indebtedness....................................................................... 30
Section 2.6. Notice of Credit Event; Funding of Loans....................................................... 30
Section 2.7. Payment on Loans and Other Obligations......................................................... 32
Section 2.8. Prepayment..................................................................................... 33
Section 2.9. Facility and Other Fees........................................................................ 34
Section 2.10. Modification of Commitment..................................................................... 34
Section 2.11. Computation of Interest and Fees............................................................... 36
Section 2.12. Mandatory Payment.............................................................................. 36
Section 2.13. Canadian Borrowers............................................................................. 37
Section 2.14. Waivers of Borrowers........................................................................... 38
Section 2.15. Extension of Commitment........................................................................ 38
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO FIXED RATE LOANS; INCREASED CAPITAL; TAXES........................ 38
Section 3.1. Requirements of Law............................................................................ 38
Section 3.2. Taxes.......................................................................................... 40
Section 3.3. Funding Losses................................................................................. 41
Section 3.4. Eurodollar Rate or CAD Fixed Rate Lending Unlawful; Inability to Determine Rate................ 42
ARTICLE IV. CONDITIONS PRECEDENT................................................................................. 42
Section 4.1. Conditions to Each Credit Event................................................................ 42
Section 4.2. Conditions to the First Credit Event........................................................... 43
ARTICLE V. COVENANTS............................................................................................. 44
Section 5.1. Insurance...................................................................................... 44
Section 5.2. Money Obligations.............................................................................. 44
Section 5.3. Financial Statements and Information........................................................... 45
Section 5.4. Financial Records.............................................................................. 46
Section 5.5. Franchises; Change in Business................................................................. 46
Section 5.6. ERISA Compliance............................................................................... 46
Section 5.7. Financial Covenants............................................................................ 47
Section 5.8. Borrowing...................................................................................... 47
Section 5.9. Liens.......................................................................................... 47
Section 5.10. Regulations U and X............................................................................ 48
Section 5.11. Investments, Loans and Guaranties.............................................................. 48
Section 5.12. Merger and Sale of Assets...................................................................... 49
i
TABLE OF CONTENTS
PAGE
----
Section 5.13. Acquisitions................................................................................... 50
Section 5.14. Notice......................................................................................... 51
Section 5.15. Environmental Compliance....................................................................... 51
Section 5.16. Affiliate Transactions......................................................................... 51
Section 5.17. Use of Proceeds................................................................................ 52
Section 5.18. Corporate Names................................................................................ 52
Section 5.19. Subsidiary Guaranties.......................................................................... 52
Section 5.20. Other Covenants................................................................................ 53
Section 5.21. Guaranties Under the Note Purchase Agreement................................................... 53
Section 5.22. Pari Passu Ranking............................................................................. 53
ARTICLE VI. REPRESENTATIONS AND WARRANTIES....................................................................... 53
Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification....................................... 53
Section 6.2. Corporate Authority............................................................................ 54
Section 6.3. Compliance with Laws and Contracts............................................................. 54
Section 6.4. Litigation and Administrative Proceedings...................................................... 54
Section 6.5. Title to Assets................................................................................ 55
Section 6.6. Liens and Security Interests................................................................... 55
Section 6.7. Tax Returns.................................................................................... 55
Section 6.8. Environmental Laws............................................................................. 55
Section 6.9. Continued Business............................................................................. 55
Section 6.10. Employee Benefits Plans........................................................................ 56
Section 6.11. Consents or Approvals.......................................................................... 56
Section 6.12. Solvency....................................................................................... 56
Section 6.13. Financial Statements........................................................................... 57
Section 6.14. Regulations.................................................................................... 57
Section 6.15. Material Agreements............................................................................ 57
Section 6.16. Intellectual Property.......................................................................... 57
Section 6.17. Insurance...................................................................................... 57
Section 6.18. Accurate and Complete Statements............................................................... 58
Section 6.19. Note Purchase Agreement........................................................................ 58
Section 6.20. Defaults....................................................................................... 58
ARTICLE VII. EVENTS OF DEFAULT................................................................................... 58
Section 7.1. Payments....................................................................................... 58
Section 7.2. Special Covenants.............................................................................. 58
Section 7.3. Other Covenants................................................................................ 58
Section 7.4. Representations and Warranties................................................................. 58
Section 7.5. Cross Default.................................................................................. 59
Section 7.6. ERISA Default.................................................................................. 59
Section 7.7. Change in Control.............................................................................. 59
Section 7.8. Money Judgment................................................................................. 59
Section 7.9. Validity of Loan Documents..................................................................... 59
Section 7.10. Note Purchase Agreement........................................................................ 59
Section 7.11. Solvency....................................................................................... 59
ii
TABLE OF CONTENTS
PAGE
----
ARTICLE VIII. REMEDIES UPON DEFAULT.............................................................................. 60
Section 8.1. Optional Defaults.............................................................................. 60
Section 8.2. Automatic Defaults............................................................................. 61
Section 8.3. Letters of Credit.............................................................................. 61
Section 8.4. Offsets........................................................................................ 61
Section 8.5. Equalization Provision......................................................................... 61
Section 8.6. Other Remedies................................................................................. 62
ARTICLE IX. THE AGENT............................................................................................ 62
Section 9.1. Appointment and Authorization.................................................................. 62
Section 9.2. Note Holders................................................................................... 63
Section 9.3. Consultation With Counsel...................................................................... 63
Section 9.4. Documents...................................................................................... 63
Section 9.5. Agent and Affiliates........................................................................... 63
Section 9.6. Knowledge of Default........................................................................... 63
Section 9.7. Action by Agent................................................................................ 63
Section 9.8. Release of Guarantor of Payment................................................................ 64
Section 9.9. Notice of Default.............................................................................. 64
Section 9.10. Delegation of Duties........................................................................... 64
Section 9.11. Indemnification of Agent....................................................................... 64
Section 9.12. Successor Agent................................................................................ 64
Section 9.13. Other Agents................................................................................... 65
Section 9.14. Designated Lending Office...................................................................... 65
ARTICLE X. MISCELLANEOUS......................................................................................... 65
Section 10.1. Lenders' Independent Investigation............................................................. 65
Section 10.2. No Waiver; Cumulative Remedies................................................................. 65
Section 10.3. Amendments, Consents........................................................................... 66
Section 10.4. Notices........................................................................................ 66
Section 10.5. Costs, Expenses and Taxes...................................................................... 66
Section 10.6. Indemnification................................................................................ 67
Section 10.7. Obligations Several; No Fiduciary Obligations.................................................. 68
Section 10.8. Execution in Counterparts...................................................................... 68
Section 10.9. Binding Effect; Borrowers' Assignment.......................................................... 68
Section 10.10. Lender Assignments............................................................................. 68
Section 10.11. Sale of Participations......................................................................... 70
Section 10.12. Patriot Act Notice............................................................................. 71
Section 10.13. Severability of Provisions; Captions; Attachments.............................................. 71
Section 10.14. Investment Purpose............................................................................. 71
Section 10.15. Confidentiality................................................................................ 71
Section 10.16. Entire Agreement............................................................................... 72
Section 10.17. Legal Representation of Parties................................................................ 72
Section 10.18. Currency....................................................................................... 72
Section 10.19. Governing Law; Submission to Jurisdiction...................................................... 73
Section 10.20. Jury Trial Waiver................................................................. Signature Page 1
iii
TABLE OF CONTENTS
PAGE
----
Exhibit A Form of US Revolving Credit Note
Exhibit B Form of Swing Line Note
Exhibit C Form of CAD Revolving Credit Note
Exhibit D Form of Notice of Loan
Exhibit E Form of Compliance Certificate
Exhibit F Form of Assignment and Acceptance Agreement
Exhibit G Form of Request for Extension
Exhibit H US Borrower Investment Policy
Schedule 1 Lenders and Commitments
Schedule 2 Canadian Borrowers
Schedule 2.2 Existing Letters of Credit
Schedule 3 Guarantors of Payment
Schedule 5.9 Liens
Schedule 6.1 Subsidiaries
Schedule 6.4 Litigation and Administrative Proceedings
Schedule 6.10 ERISA Plans
Schedule 6.15 Material Agreements
iv
This CREDIT AGREEMENT (as the same may from time to time be amended,
restated or otherwise modified, this "Agreement") is made effective as of the
3rd day of June, 2005 among:
(a) APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio corporation ("US
Borrower");
(b) each Canadian Borrower, as hereinafter defined (each such Canadian
Borrower, together with US Borrower, collectively, "Borrowers" and,
individually, each a "Borrower");
(c) the lenders listed on Schedule 1 hereto and each other Eligible
Transferee, as hereinafter defined, that becomes a party hereto pursuant to
Section 2.10(b) or 10.10 hereof (collectively, the "Lenders" and, individually,
each a "Lender");
(d) KEYBANK NATIONAL ASSOCIATION, as lead arranger, book runner and
administrative agent for the Lenders under this Agreement ("Agent"); and
(e) U.S. BANK NATIONAL ASSOCIATION, as syndication agent under this
Agreement (the "Syndication Agent").
WITNESSETH:
WHEREAS, Borrowers, Agent and the Lenders desire to contract for the
establishment of credits in the aggregate principal amounts hereinafter set
forth, to be made available to Borrowers upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I. DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Acquisition" shall mean any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of any Person (other than a Company),
or any business or division of any Person (other than a Company), (b) the
acquisition of in excess of fifty percent (50%) of the stock (or other equity
interest) of any Person (other than a Company), or (c) the acquisition of
another Person (other than a Company) by a merger, amalgamation or consolidation
or any other combination with such Person.
"Additional Commitment" shall mean that term as defined in Section 2.10(b)
hereof.
"Additional Lender" shall mean a financial institution that shall become a
Lender during the Commitment Increase Period pursuant to Section 2.10(b) hereof.
"Additional Lender Assumption Agreement" shall mean an additional lender
assumption agreement, in form and substance satisfactory to Agent, wherein an
Additional Lender shall become a US Lender.
"Additional Lender Assumption Effective Date" shall mean that term as
defined in Section 2.10(b) hereof.
"Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Lender in respect of the Applicable Debt, if such payment
results in that Lender having less than its pro rata share (based upon its
Applicable Commitment Percentage) of the Applicable Debt then outstanding.
"Affiliate" shall mean any Person, directly or indirectly, controlling,
controlled by or under common control with a Company and "control" (including
the correlative meanings, the terms "controlling", "controlled by" and "under
common control with") shall mean the power, directly or indirectly, to direct or
cause the direction of the management and policies of a Company, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" shall mean that term as defined in the first paragraph hereof.
"Agent Fee Letter" shall mean the Agent Fee Letter between US Borrower and
Agent, dated as of the Closing Date, as the same may from time to time be
amended, restated or otherwise modified.
"Agreement" shall mean that term as defined in the first paragraph hereof.
"Applicable Commitment Percentage" shall mean, for each Lender:
(a) with respect to the US Revolving Credit Commitment, the
percentage, if any, set forth opposite such Lender's name under the column
headed "US Revolving Credit Commitment Percentage" as listed in Schedule 1
hereto; and
(b) with respect to the CAD Revolving Credit Commitment, the
percentage, if any, set forth opposite such Lender's name under the column
headed "CAD Revolving Credit Commitment Percentage" as listed in Schedule
1 hereto.
"Applicable Debt" shall mean:
(a) with respect to the Canadian Commitment, collectively, (i) all
Indebtedness incurred by Canadian Borrowers to the Canadian Lenders
pursuant to this Agreement and the other Loan Documents, and includes,
without limitation, the principal of and interest on the Loans payable by
Canadian Borrowers to the Canadian Lenders, (ii) each extension, renewal
or refinancing of the foregoing, in whole or in part, and (iii) the
2
facility, prepayment and other fees and amounts payable hereunder in
connection with the Canadian Commitment; and
(b) with respect to the US Commitment, collectively, (i) all
Indebtedness incurred by US Borrower to the US Lenders pursuant to this
Agreement and the other Loan Documents, and includes, without limitation,
the principal of and interest on the Loans payable by US Borrower to such
US Lenders in connection with the US Commitment, and all obligations with
respect to the Swing Line Commitment and the Letter of Credit Commitment,
(ii) each extension, renewal or refinancing of the foregoing, in whole or
in part, and (iii) the facility, prepayment and other fees and amounts
payable hereunder in connection with the US Commitment.
"Applicable Facility Fee Rate" shall mean:
(a) for the period from the Closing Date through October 31, 2005,
ten (10) basis points; and
(b) commencing with the Consolidated financial statements of US
Borrower for the fiscal quarter ending June 30, 2005, the number of basis
points set forth in the following matrix, based upon the result of the
computation of the Leverage Ratio, shall be used to establish the number
of basis points that will go into effect on November 1, 2005 and
thereafter:
LEVERAGE RATIO APPLICABLE FACILITY FEE RATE
- ------------------------------------------ ----------------------------
Greater than or equal to 2.50 to 1.00 20.00 basis points
Less than 2.50 to 1.00 but greater than or 17.50 basis points
equal to 2.00 to 1.00
Less than 2.00 to 1.00 but greater than or 15.00 basis points
equal to 1.50 to 1.00
Less than 1.50 to 1.00 but greater than or 12.50 basis points
equal to 1.00 to 1.00
Less than 1.00 to 1.00 10.00 basis points
After November 1, 2005, changes to the Applicable Facility Fee Rate shall be
effective on the first day of each month following the date upon which Agent
received, or, if earlier, Agent should have received, pursuant to Section 5.3(a)
and (b) hereof, the Consolidated financial statements of the Companies. The
above matrix does not modify or waive, in any respect, the requirements of
Section 5.7 hereof, the rights of Agent and the Lenders to charge the Default
Rate, or the rights and remedies of Agent and the Lenders pursuant to Articles
VII and VIII hereof.
"Applicable Lender" shall mean, (a) US Lenders with respect to the US
Commitment, and (b) Canadian Lenders with respect to the Canadian Commitment.
3
"Applicable Margin" shall mean:
(a) for the period from the Closing Date through October 31, 2005,
thirty (30) basis points; and
(b) commencing with the Consolidated financial statements of US
Borrower for the fiscal quarter ending June 30, 2005, the number of basis
points set forth in the following matrix, based upon the result of the
computation of the Leverage Ratio, shall be used to establish the number
of basis points that will go into effect on November 1, 2005 and
thereafter:
LEVERAGE RATIO APPLICABLE MARGIN
- ------------------------------------------ ----------------------------
Greater than or equal to 2.50 to 1.00 55.00 basis points
Less than 2.50 to 1.00 but greater than or 47.50 basis points
equal to 2.00 to 1.00
Less than 2.00 to 1.00 but greater than or 40.00 basis points
equal to 1.50 to 1.00
Less than 1.50 to 1.00 but greater than or 32.50 basis points
equal to 1.00 to 1.00
Less than to 1.00 to 1.00 30.00 basis points
After November 1, 2005, changes to the Applicable Margin shall be effective on
the first day of each month following the date upon which Agent received, or, if
earlier, Agent should have received, pursuant to Section 5.3(a) and (b) hereof,
the Consolidated financial statements of the Companies. The above matrix does
not modify or waive, in any respect, the requirements of Section 5.7 hereof, the
rights of Agent and the Lenders to charge the Default Rate, or the rights and
remedies of Agent and the Lenders pursuant to Articles VII and VIII hereof.
"Assignment Agreement" shall mean an Assignment and Acceptance Agreement
in the form of the attached Exhibit F.
"Authorized Officer" shall mean a Financial Officer or other individual
authorized by a Financial Officer in writing (with a copy to Agent) to handle
certain administrative matters in connection with this Agreement.
"Base Rate" shall mean a rate per annum equal to the greater of (a) the
Prime Rate or (b) one-half of one percent (0.50%) in excess of the Federal Funds
Effective Rate. Any change in the Base Rate shall be effective immediately from
and after such change in the Base Rate.
"Base Rate Loan" shall mean a US Revolving Loan described in Section
2.2(a) hereof on which US Borrower shall pay interest at a rate based on the
Base Rate.
"Borrower" shall mean that term as defined in the first paragraph hereof.
"Business Day" shall mean (a) a day of the year on which banks are not
authorized or required to close in Cleveland, Ohio, (b) if the applicable
Business Day shall relate to any
4
Eurodollar Loan, a day of the year on which dealings in deposits are carried on
in the London interbank Eurodollar market, or (c) if the applicable Business Day
shall relate to any CAD Revolving Loan, a day of the year on which dealings in
deposits are carried on in Canada.
"CAD Base Rate" shall mean the per annum interest rate established from
time to time by JPMorgan Canada as JPMorgan Canada's "prime rate" or similar
index, whether or not such rate is publicly announced, applicable to commercial
loans made by JPMorgan Canada in Canada in CAD; provided that the CAD Base Rate
may not be the lowest interest rate charged by JPMorgan Canada for such
commercial loans. Each change in the CAD Base Rate shall be effective
immediately from and after such change.
"CAD Base Rate Loan" shall mean a CAD Revolving Loan described in Section
2.3 hereof on which Canadian Borrowers shall pay interest at a rate based on the
CAD Base Rate.
"CAD" or "Canadian Dollar" shall mean lawful money of Canada.
"CAD Equivalent" shall mean the amount denominated in CAD, as of any date
of determination, that could be purchased with the applicable amount of Dollars
at the most favorable spot exchange rate quoted by Agent at approximately 11:00
A.M. (Eastern time) on such date.
"CAD Fixed Rate" shall mean, in respect of any Interest Period applicable
to a CAD Fixed Rate Loan, the rate per annum determined by Agent by reference to
the average rate quoted on the Reuters Monitor Screen (Page CDOR, or such other
page as may replace such page on such screen for the purpose of displaying
Canadian interbank bid rates for Canadian Dollar bankers' acceptances)
applicable to Canadian Dollar bankers' acceptances (on a three hundred
sixty-five (365) day basis) with a term comparable to such Interest Period as of
10:00 A.M. (Eastern time) on the first day of such Interest Period. If for any
reason the Reuters Monitor Screen rates are unavailable, CAD Fixed Rate means
the rate of interest determined by Agent that is equal to the rate (rounded
upwards to the nearest basis point) quoted by JPMorgan Canada in respect of
Canadian Dollar bankers' acceptances (on a three hundred sixty-five (365) day
basis) with a term comparable to such Interest Period. No adjustment shall be
made to account for the difference between the number of days in a year on which
the rates referred to in this definition are based and the number of days in a
year on the basis of which interest is calculated in this Agreement.
"CAD Fixed Rate Loan" shall mean a CAD Revolving Loan described in Section
2.3 hereof on which Canadian Borrowers shall pay interest at a rate based on the
Derived CAD Fixed Rate.
"CAD Revolving Credit Commitment" shall mean the obligation hereunder,
during the Commitment Period, of each Canadian Lender to make CAD Revolving
Loans up to the Maximum Amount for such Canadian Lender.
"CAD Revolving Credit Note" shall mean a CAD Revolving Credit Note
executed and delivered pursuant to Section 2.5(c) hereof.
5
"CAD Revolving Exposure" shall mean the Dollar Equivalent of the aggregate
principal amount of all CAD Revolving Loans.
"CAD Revolving Loan" shall mean a CAD Base Rate Loan or a CAD Fixed Rate
Loan granted to a Canadian Borrower in accordance with Section 2.3 hereof.
"Canadian Borrower" shall mean each of the Foreign Subsidiaries of US
Borrower set forth on Schedule 2 hereto.
"Canadian Commitment" shall mean the obligation hereunder of the Canadian
Lenders, during the Commitment Period, to make CAD Revolving Loans pursuant to
the CAD Revolving Credit Commitment, up to the Maximum CAD Revolving Amount.
"Canadian Guarantor of Payment" shall mean each Foreign Subsidiary that
shall execute and deliver a Guaranty of Payment to Agent, pursuant to Section
5.19 hereof, subsequent to the Closing Date.
"Canadian Lender" shall mean each Lender that is designated as a Canadian
Lender on Schedule 1 hereto.
"Capitalized Lease Obligations" shall mean obligations of the Companies
for the payment of rent for any real or personal property under leases or
agreements to lease that, in accordance with GAAP, have been or should be
capitalized on the books of the lessee and, for purposes hereof, the amount of
any such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Change in Control" shall mean:
(a) the acquisition of, or, if earlier, the shareholder or director
approval of the acquisition of, ownership or voting control, directly or
indirectly, beneficially or of record, on or after the Closing Date, by
any Person or group (within the meaning of Rule 13d-3 of the SEC under the
Securities Exchange Act of 1934, as then in effect), of shares
representing more than thirty-three percent (33%) of the aggregate
ordinary Voting Power represented by the issued and outstanding capital
stock of US Borrower;
(b) the occupation of a majority of the seats (other than vacant
seats) on the board of directors of US Borrower by Persons who were
neither (i) nominated by the board of directors of US Borrower nor (ii)
appointed by directors so nominated; or
(c) the occurrence of a change in control, or other similar
provision, as defined in any Material Indebtedness Agreement.
"Closing Commitment Amount" shall mean the Dollar Equivalent of One
Hundred Million Dollars ($100,000,000).
6
"Closing Date" shall mean the effective date of this Agreement as set
forth in the first paragraph of this Agreement.
"Closing Fee Letter" shall mean the Closing Fee Letter among US Borrower,
Agent and the Lenders, dated as of the Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended, together
with the rules and regulations promulgated thereunder.
"Commitment" shall mean the US Commitment and the Canadian Commitment.
"Commitment Increase Period" shall mean the period from the Closing Date
to the date that is thirty (30) days prior to the last day of the Commitment
Period.
"Commitment Period" shall mean the period from the Closing Date to June 2,
2010, or such earlier date on which the Commitment shall have been terminated
pursuant to Article VIII hereof.
"Companies" shall mean all Borrowers and Subsidiaries.
"Company" shall mean a Borrower or Subsidiary.
"Compliance Certificate" shall mean a certificate, substantially in the
form of the attached Exhibit E.
"Confidential Information" shall mean all confidential or proprietary
information about the Companies that has been furnished by any Company to Agent
or any Lender, whether furnished before or after the Closing Date and regardless
of the manner in which it is furnished, but does not include any such
information that (a) is or becomes generally available to the public other than
as a result of a disclosure by Agent or such Lender not permitted by this
Agreement, (b) was available to Agent or such Lender on a nonconfidential basis
prior to its disclosure to Agent or such Lender or (c) becomes available to
Agent or such Lender on a nonconfidential basis from a Person other than any
Company that is not, to the best knowledge of Agent or such Lender, acting in
violation of a confidentiality agreement with a Company or is not otherwise
prohibited from disclosing the information to Agent or such Lender.
"Consideration" shall mean, in connection with an Acquisition (or a
Disposition), the aggregate consideration paid, including borrowed funds, cash,
the issuance of securities or notes, the assumption or incurring of liabilities
(direct or contingent), the payment of consulting fees or fees for a covenant
not to compete and any other consideration paid for such Acquisition (or
Disposition).
"Consolidated" shall mean the resultant consolidation of the financial
statements of US Borrower and its Subsidiaries in accordance with GAAP,
including principles of consolidation consistent with those applied in
preparation of the consolidated financial statements referred to in Section 6.13
hereof.
7
"Consolidated Depreciation and Amortization Charges" shall mean, for any
period, the aggregate of all depreciation and amortization charges for fixed
assets, leasehold improvements and general intangibles (specifically including
goodwill) of US Borrower for such period, as determined on a Consolidated basis
and in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, as determined on a
Consolidated basis and in accordance with GAAP, Consolidated Net Earnings for
such period plus the aggregate amounts deducted in determining such Consolidated
Net Earnings in respect of (a) Consolidated Interest Expense, (b) Consolidated
Income Tax Expense, (c) Consolidated Depreciation and Amortization Charges, (d)
to the extent that US Borrower expenses such charges, Consolidated stock option
expenses up to an aggregate amount of Five Million Dollars ($5,000,000) per
fiscal year of US Borrower, and (e) (i) extraordinary or non-recurring charges,
minus (ii) extraordinary or non-recurring cash gains.
"Consolidated Income Tax Expense" shall mean, for any period, all
provisions for taxes based on the gross or net income of US Borrower (including,
without limitation, any additions to such taxes, and any penalties and interest
with respect thereto), and all franchise taxes of US Borrower, as determined on
a Consolidated basis and in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, the interest
expense of US Borrower for such period, as determined on a Consolidated basis
and in accordance with GAAP.
"Consolidated Net Earnings" shall mean, for any period, without
duplication, an amount equal to (a) the net income (loss) of US Borrower for
such period, plus (b) upon the consummation of an Acquisition (with
Consideration in excess of Two Million Five Hundred Thousand Dollars
($2,500,000)) permitted under Section 5.13 hereof, trailing twelve months pro
forma historical net income (loss), less (c) upon the consummation of a
Disposition (with Consideration in excess of Two Million Five Hundred Thousand
Dollars ($2,500,000)), trailing twelve months pro forma historical net income
(loss), all as determined on a Consolidated basis and in accordance with GAAP.
"Consolidated Net Worth" shall mean, at any date, the stockholders' equity
of US Borrower, determined as of such date on a Consolidated basis and in
accordance with GAAP.
"Consolidated Total Assets" shall mean, at any date, an amount equal to
the total assets of US Borrower, as determined on a Consolidated basis and in
accordance with GAAP.
"Consolidated Total Liabilities" shall mean, at any date, the Total
Liabilities of US Borrower, as determined on a Consolidated basis and in
accordance with GAAP.
"Controlled Group" shall mean a Company and each Person required to be
aggregated with a Company under Code Section 414(b), (c), (m) or (o).
"Credit Event" shall mean the making by the Lenders of a Loan, the
conversion by the Lenders of a Base Rate Loan or a CAD Base Rate Loan to a Fixed
Rate Loan, the continuation
8
by the Lenders of a Fixed Rate Loan after the end of the applicable Interest
Period, the making by the Swing Line Lender of a Swing Loan, or the issuance by
the Fronting Lender of a Letter of Credit.
"Credit Party" shall mean a Borrower, and any Subsidiary or other
Affiliate that is a Guarantor of Payment.
"Default" shall mean an event or condition that constitutes, or with the
lapse of any applicable grace period or the giving of notice or both would
constitute, an Event of Default, and that has not been waived by the Required
Lenders (or, if applicable, all of the Lenders) in writing.
"Default Rate" shall mean (a) with respect to any Loan, a rate per annum
equal to two percent (2%) in excess of the rate otherwise applicable thereto,
and (b) with respect to any other amount, if no rate is specified or available,
a rate per annum equal to two percent (2%) in excess of the Base Rate from time
to time in effect.
"Derived CAD Fixed Rate" shall mean a rate per annum equal to the sum of
the Applicable Margin (from time to time in effect) plus the CAD Fixed Rate.
"Derived Eurodollar Rate" shall mean a rate per annum equal to the sum of
the Applicable Margin (from time to time in effect) plus the Eurodollar Rate.
"Derived Swing Loan Rate" shall mean a rate per annum equal to (a) Agent's
cost of funds as quoted to US Borrower by Agent and agreed to by US Borrower,
plus (b) the Applicable Margin (from time to time in effect).
"Designated Lending Office" shall mean the office of Agent, c/o JPMorgan
Canada, Royal Bank Tower, South Plaza, Suite 1800, Toronto, Ontario M5J2J2
Attention: Indrani Lazarus, or such other office and address in Canada as Agent
may from time to time designate.
"Disposition" shall mean any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in the transfer or
other disposition of (a) in excess of fifty percent (50%) of the stock (or other
equity interest) or (b) all or substantially all of the assets of any Company,
or any business unit or division of any Company.
"Dollar" or the sign $ shall mean lawful money of the United States of
America.
"Dollar Equivalent" shall mean (a) with respect to a CAD Revolving Loan,
the Dollar equivalent of the amount of such CAD Revolving Loan, determined by
Agent on the basis of its spot rate at approximately 11:00 A.M. (London time) on
the date two Business Days before the date of such CAD Revolving Loan, for the
purchase of Canadian Dollars with Dollars for delivery on the date of such CAD
Revolving Loan, and (b) with respect to any other amount, if such amount is
denominated in Dollars, then such amount in Dollars and, otherwise the Dollar
equivalent of such amount, determined by Agent on the basis of its spot rate at
approximately 11:00 A.M. (London time) on the date for which the Dollar
equivalent amount of such amount is
9
being determined, for the purchase of Canadian Dollars with Dollars for delivery
on such date; provided, however, that, in calculating the Dollar Equivalent for
purposes of determining (i) any Borrower's obligation to prepay Loans pursuant
to Section 2.12 hereof, or (ii) any Borrower's ability to request additional
Loans pursuant to the Commitment, Agent may, in its discretion, on any Business
Day selected by Agent (prior to payment in full of the Obligations), calculate
the Dollar Equivalent of each such Loan. Agent shall notify US Borrower of the
Dollar Equivalent of the CAD Revolving Loans or any other amount, at the time
that such Dollar Equivalent shall have been determined pursuant to this
definition.
"Domestic Guarantor of Payment" shall mean each of the Companies
designated a "Domestic Guarantor of Payment" on Schedule 3 hereto, each of which
is executing and delivering a Guaranty of Payment on the Closing Date, and any
other Domestic Subsidiary that shall deliver a Guaranty of Payment to Agent
subsequent to the Closing Date.
"Domestic Subsidiary" shall mean a Subsidiary that is not a Foreign
Subsidiary.
"Dormant Subsidiary" shall mean a Company that (a) is not a Credit Party,
(b) has aggregate assets of less than One Million Dollars ($1,000,000) and
aggregate investments by the Companies of less than One Million Dollars
($1,000,000), and (c) has no direct or indirect Subsidiaries with aggregate
assets for all such Subsidiaries of more than One Million Dollars ($1,000,000).
"Eligible Transferee" shall mean a commercial bank, financial institution
or other "accredited investor" (as defined in SEC Regulation D), or, for the
purposes of the Canadian Commitment, as defined in Ontario Securities Commission
Rule 45-501), that is not a Borrower, a Subsidiary or an Affiliate.
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States of America by any state or municipality thereof or any
foreign jurisdiction, or by any court, agency, instrumentality, regulatory
authority or commission of any of the foregoing concerning health, safety and
protection of, or regulation of the discharge of substances into, the
environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated pursuant thereto.
"ERISA Event" shall mean (a) the existence of a condition or event with
respect to an ERISA Plan that presents a significant risk of the imposition of
an excise tax in a material amount or any other material liability on a Company
or of the imposition of a Lien on the assets of a Company; (b) the engagement by
a Controlled Group member in a non-exempt "prohibited transaction" (as defined
under ERISA Section 406 or Code Section 4975) or a breach of a fiduciary duty
under ERISA that, in either case, could result in a material liability to a
Company; (c) the application by a Controlled Group member for a waiver from the
minimum funding requirements of Code Section 412 or ERISA Section 302 or a
Controlled Group member is required to provide security under Code Section
401(a)(29) or ERISA Section 307; (d) the
10
occurrence of a Reportable Event with respect to any Pension Plan as to which
30-day notice is required to be provided to the PBGC; (e) the withdrawal by a
Controlled Group member from a Multiemployer Plan in a "complete withdrawal" or
a "partial withdrawal" (as such terms are defined in ERISA Sections 4203 and
4205, respectively) which results or is likely to result in a material liability
to a Company; (f) the involvement of, or occurrence or existence of any event or
condition that makes likely the involvement of, a Multiemployer Plan in any
reorganization under ERISA Section 4241; (g) the failure of an ERISA Plan (and
any related trust) that is intended to be qualified under Code Sections 401 and
501 to be so qualified or the failure of any "cash or deferred arrangement"
under any such ERISA Plan to meet the requirements of Code Section 401(k),
provided, in any such case, that the failure exposes or is likely to expose a
Company to material liability; (h) the taking by the PBGC of any steps to
terminate a Pension Plan or appoint a trustee to administer a Pension Plan, or
the taking by a Controlled Group member of any steps to terminate a Pension
Plan; (i) the failure by a Controlled Group member or an ERISA Plan to satisfy
any requirements of law applicable to an ERISA Plan, provided, in any such case,
that the failure exposes or is likely to expose a Company to material liability;
(j) the commencement, existence or threatening of a claim, action, suit, audit
or investigation with respect to an ERISA Plan, other than a routine claim for
benefits, and such action or suit could reasonably be expected to have a
Material Adverse Effect; or (k) any incurrence by or any expectation of the
incurrence by a Controlled Group member of any liability for post-retirement
medical benefits under any Welfare Plan, other than as required by ERISA Section
601, et. seq. or Code Section 4980B, except for limited benefits in connection
with a severance arrangement or benefits for retired senior executives or
directors of a Company.
"ERISA Plan" shall mean an "employee benefit plan" (within the meaning of
ERISA Section 3(3)) that a Controlled Group member at any time sponsors or
maintains, or to which a Controlled Group member contributes, has liability or
has a contribution obligation.
"Eurocurrency Liabilities" shall have the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar" shall mean a Dollar denominated deposit in a bank or branch
outside of the United States.
"Eurodollar Loan" shall mean a Loan described in Section 2.2(a) hereof on
which US Borrower shall pay interest at a rate based upon the Derived Eurodollar
Rate.
"Eurodollar Rate" shall mean, with respect to a Eurodollar Loan, for any
Interest Period, a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the nearest 1/16th of 1%) by dividing (a) the rate of
interest, determined by Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of approximately
11:00 A.M. (London time) three Business Days prior to the beginning of such
Interest Period pertaining to such Eurodollar Loan, as listed on British Bankers
Association Interest Rate LIBOR 01 or 02 as provided by Reuters (or, if for any
reason such rate is unavailable from Reuters, from any other similar company or
service that provides rate quotations comparable to those currently provided by
Reuters) as the rate in the London interbank market for Dollar deposits in
immediately available funds with a maturity comparable
11
to such Interest Period, provided that, in the event that such rate quotation is
not available for any reason, then the Eurodollar Rate shall be the average
(rounded upward to the nearest 1/16th of 1%) of the per annum rates at which
deposits in immediately available funds in Dollars for the relevant Interest
Period and in the amount of the Eurodollar Loan to be disbursed or to remain
outstanding during such Interest Period, as the case may be, are offered to
Agent (or an affiliate of Agent, in Agent's discretion) by prime banks in any
Eurodollar market reasonably selected by Agent, determined as of 11:00 A.M.
(London time) (or as soon thereafter as practicable), three Business Days prior
to the beginning of the relevant Interest Period pertaining to such Eurodollar
Loan hereunder; by (b) 1.00 minus the Reserve Percentage.
"Event of Default" shall mean an event or condition that shall constitute
an event of default as defined in Article VII hereof.
"Excluded Taxes" shall mean net income taxes (and franchise taxes imposed
in lieu of net income taxes) imposed on Agent or a Lender by the Governmental
Authority located in the jurisdiction where Agent or such Lender is organized
(other than any such taxes arising solely from Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document).
"Existing Letter of Credit" shall have the meaning given to such term in
Section 2.2(b)(vii) hereof.
"Federal Funds Effective Rate" shall mean, for any day, the rate per annum
(rounded upward to the nearest one one-hundredth of one percent (1/100 of 1%))
announced by the Federal Reserve Bank of New York (or any successor) on such day
as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds Effective
Rate" as of the Closing Date.
"Financial Officer" shall mean any of the following officers: chief
executive officer, president, any vice president, chief financial officer,
treasurer, assistant treasurer, controller or assistant controller. Unless
otherwise qualified, all references to a Financial Officer in this Agreement
shall refer to a Financial Officer of US Borrower.
"Fixed Rate Loan" shall mean a Eurodollar Loan or a CAD Fixed Rate Loan.
"Foreign Subsidiary" shall mean a Subsidiary that is organized outside of
the United States.
"Fronting Lender" shall mean, (a) as to any Letter of Credit transaction
hereunder, Agent as issuer of the Letter of Credit, or, in the event that Agent
either shall be unable to issue or shall agree, with the consent of US Borrower,
that another US Lender may issue, a Letter of Credit, such other US Lender as
shall agree to issue the Letter of Credit in its own name, but on behalf
12
of the Lenders hereunder, or (b) as to any Existing Letter of Credit, KeyBank
National Association.
"Funded Indebtedness" shall mean, without duplication, the sum of (a) all
Indebtedness for borrowed money, (b) all Capitalized Lease Obligations and (c)
all Indebtedness pursuant to letters of credit, synthetic lease and asset
securitizations.
"GAAP" shall mean generally accepted accounting principles in the United
States as then in effect, which shall include the official interpretations
thereof by the Financial Accounting Standards Board, applied on a basis
consistent with the past accounting practices and procedures of US Borrower.
"Governmental Authority" shall mean any nation or government, any state,
province or territory or other political subdivision thereof, any governmental
agency, authority, instrumentality, regulatory body, court, central bank or
other governmental entity exercising executive, legislative, judicial, taxing,
regulatory or administrative functions of or pertaining to government, any
securities exchange and any self-regulatory organization.
"Guarantor" shall mean a Person that shall have pledged its credit or
property in any manner for the payment or other performance of the indebtedness,
contract or other obligation of another and includes (without limitation) any
guarantor (whether of payment or of collection), surety, co-maker, endorser or
Person that shall have agreed conditionally or otherwise to make any purchase,
loan or investment in order thereby to enable another to prevent or correct a
default of any kind.
"Guarantor of Payment" shall mean US Borrower, a Domestic Guarantor of
Payment or a Canadian Guarantor of Payment.
"Guaranty of Payment" shall mean the Parent Guaranty of Payment and each
Guaranty of Payment executed and delivered on or after the Closing Date in
connection with this Agreement by the Guarantors of Payment, as the same may
from time to time be amended, restated or otherwise modified.
"Hedge Agreement" shall mean any (a) hedge agreement, interest rate swap,
basis swap agreement, cap, collar or floor agreement, or other interest rate
management device entered into by a Company with any Person in connection with
any Indebtedness of such Company, or (b) currency swap agreement, forward
currency purchase agreement or similar arrangement or agreement designed to
protect against fluctuations in currency exchange rates entered into by a
Company with any Person.
"Indebtedness" shall mean, for any Company (excluding in all cases trade
payables payable in the ordinary course of business by such Company), without
duplication, (a) all obligations to repay borrowed money, direct or indirect,
incurred, assumed, or guaranteed, (b) all obligations for the deferred purchase
price of capital assets, (c) all obligations under conditional sales or other
title retention agreements, (d) the fair value (as disclosed on US Borrower's
quarterly financial statements, prepared on a quarterly basis and reported to
the SEC in 10-Q and
13
10-K reports) of all obligations (contingent or otherwise) under any letter of
credit, banker's acceptance, currency swap agreement, interest rate swap, cap,
collar or floor agreement or other interest rate management or hedging device,
(e) all synthetic leases, (f) all lease obligations that have been or should be
capitalized on the books of such Company in accordance with GAAP, (g) all
obligations of such Company with respect to asset securitization financing
programs to the extent that there is recourse against such Company or such
Company is liable (contingent or otherwise) under any such program, (h) all
obligations to advance funds to, or to purchase assets, property or services
from, any other Person in order to maintain the financial condition of such
Person, and (i) any other transaction (including forward sale or purchase
agreements) having the commercial effect of a borrowing of money entered into by
such Company to finance its operations or capital requirements.
"Interest Adjustment Date" shall mean the last day of each Interest
Period.
"Interest Coverage Ratio" shall mean, as determined for the most recently
completed four fiscal quarters of US Borrower, on a Consolidated basis and in
accordance with GAAP, the ratio of (a) Consolidated EBITDA to (b) Consolidated
Interest Expense.
"Interest Period" shall mean:
(a) with respect to a Eurodollar Loan, the period commencing on the
date such Eurodollar Loan is made and ending on the last day of such
period, as selected by US Borrower pursuant to the provisions hereof, and,
thereafter (unless such Eurodollar Loan is converted to a Base Rate Loan),
each subsequent period commencing on the day after the last day of the
immediately preceding Interest Period and ending on the last day of such
period, as selected by US Borrower pursuant to the provisions hereof. The
duration of each Interest Period for a Eurodollar Loan shall be one month,
two months, three months or six months, in each case as US Borrower may
select upon notice, as set forth in Section 2.6 hereof; provided that (i)
if US Borrower shall fail to so select the duration of any Interest Period
at least three Business Days prior to the Interest Adjustment Date
applicable to such Eurodollar Loan, US Borrower shall be deemed to have
converted such Eurodollar Loan to a Base Rate Loan at the end of the then
current Interest Period; and (ii) US Borrower may not select any Interest
Period for a Eurodollar Loan that ends after any date when principal is
due on such Eurodollar Loan; and
(b) with respect to a CAD Fixed Rate Loan, the period commencing on
the date such CAD Fixed Rate Loan is made and ending on the last day of
such period, as selected by Canadian Borrowers pursuant to the provisions
hereof, and, thereafter (unless such CAD Fixed Rate Loan is converted to a
CAD Base Rate Loan), each subsequent period commencing on the day after
the last day of the immediately preceding Interest Period and ending on
the last day of such period, as selected by Canadian Borrowers pursuant to
the provisions hereof. The duration of each Interest Period for a CAD
Fixed Rate Loan shall be one month, two months, three months or six
months, in each case as Canadian Borrowers may select upon notice, as set
forth in Section 2.6 hereof; provided that (i) if Canadian Borrowers shall
fail to so select the duration of any Interest Period at least three
Business Days prior to the Interest Adjustment Date applicable to such
Loan,
14
Canadian Borrowers shall be deemed to have converted such CAD Fixed Rate
Loan to a CAD Base Rate Loan at the end of the then current Interest
Period; and (ii) Canadian Borrowers may not select any Interest Period for
a CAD Fixed Rate Loan that ends after any date when principal is due on
such CAD Fixed Rate Loan.
"JPMorgan Canada" shall mean JP Morgan Chase Bank, N.A., Toronto Branch,
and its successors and assigns.
"Lender Agreement" shall mean that certain Lender Agreement, dated as of
the Closing Date, among Agent, on behalf of the US Lenders, and the Canadian
Lenders, as the same may from time to time be amended, restated or otherwise
modified.
"Letter of Credit" shall mean a commercial documentary letter of credit or
standby letter of credit that shall be issued by the Fronting Lender for the
account of US Borrower or a Domestic Guarantor of Payment, including amendments
thereto, if any, and shall have an expiration date no later than the earlier of
(a) one year after its date of issuance or (b) thirty (30) days prior to the
last day of the Commitment Period.
"Letter of Credit Commitment" shall mean the commitment of the Fronting
Lender, on behalf of the Lenders, to issue Letters of Credit in an aggregate
face amount of up to Twenty-Five Million Dollars ($25,000,000).
"Letter of Credit Exposure" shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all issued and outstanding Letters of Credit, and
(b) the aggregate of the draws made on Letters of Credit that have not been
reimbursed by US Borrower or converted to a Revolving Loan pursuant to Section
2.2(b) hereof.
"Leverage Ratio" shall mean, at any time, on a Consolidated basis and in
accordance with GAAP, the ratio of (a) Net Indebtedness (for the most recently
completed fiscal quarter of US Borrower) to (b) Consolidated EBITDA (for the
most recently completed four fiscal quarters of US Borrower).
"Lien" shall mean any mortgage, security interest, lien (statutory or
other), charge, assignment, hypothecation, encumbrance on, pledge or deposit of,
or conditional sale, leasing (other than operating leases), sale with a right of
redemption or other title retention agreement and any capitalized lease with
respect to any property (real or personal) or asset.
"Loan" shall mean a Revolving Loan or a Swing Loan granted to US Borrower
or Canadian Borrowers by the Lenders in accordance with Section 2.2(a), 2.2(c)
or 2.3 hereof.
"Loan Documents" shall mean, collectively, this Agreement, each Note, each
Guaranty of Payment, all documentation relating to each Letter of Credit, the
Agent Fee Letter and the Closing Fee Letter, as any of the foregoing may from
time to time be amended, restated or otherwise modified or replaced, and any
other document delivered pursuant thereto.
15
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of US Borrower or (b) the business, operations, property, condition (financial
or otherwise) or prospects of the Companies taken as a whole.
"Material Indebtedness Agreement" shall mean any debt instrument, lease
(capital, operating or otherwise), guaranty, contract, commitment, agreement or
other arrangement evidencing or entered into in connection with Funded
Indebtedness of any Company or the Companies equal to or in excess of the amount
of Twenty Million Dollars ($20,000,000).
"Maximum Amount" shall mean, for each Lender, the amount set forth
opposite such Lender's name under the column headed "Maximum Amount" as set
forth on Schedule 1 hereto, subject to decreases determined pursuant to Section
2.10(a) hereof, increases pursuant to Section 2.10(b) hereof and assignments of
interests pursuant to Section 10.10 hereof; provided, however, that the Maximum
Amount for the Swing Line Lender shall exclude the Swing Line Commitment.
"Maximum CAD Revolving Amount" shall mean Twenty-Five Million Dollars
($25,000,000), as such amount may be reduced pursuant to Section 2.10(a) hereof.
"Maximum Commitment Amount" shall mean the Dollar Equivalent of One
Hundred Twenty-Five Million Dollars ($125,000,000).
"Maximum US Revolving Amount" shall mean Seventy-Five Million Dollars
($75,000,000), as such amount may be reduced pursuant to Section 2.10(a) hereof
or increased pursuant to Section 2.10(b) hereof.
"Moody's" shall mean Moody's Investors Service, Inc., or any successor to
such company.
"Multiemployer Plan" shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.
"Net Indebtedness" shall mean, at any time, the excess, if any, of (a)
Indebtedness of the Companies as of such date, over (b) the Unrestricted
Domestic Cash Amount as of such date; provided, however, that, notwithstanding
the actual amount of the Unrestricted Domestic Cash Amount, no more than Eighty
Million Dollars ($80,000,000) of the Unrestricted Domestic Cash Amount may be
used to calculate Net Indebtedness.
"Note" shall mean a Revolving Credit Note or the Swing Line Note, or any
other promissory note delivered pursuant to this Agreement.
"Note Purchase Agreement" shall mean, collectively, the (a) the Private
Shelf Agreement dated as of November 27, 1996, between US Borrower and each of
the Purchasers (as defined therein), as amended through the date of this
Agreement, (b) the Note Purchase Agreement, dated as of November 15, 2000, among
US Borrower, Applied Nova Scotia Company and each
16
of the Purchasers (as defined therein), relating to $20,000,000 of 7.98% Senior
Notes due November 15, 2010, (c) the Note Purchase Agreement, dated as of
November 15, 2000, among US Borrower and each of the Purchasers (as defined
therein), relating to $5,000,000 of 7.98% Senior Notes due November 15, 2010,
and (d) any other similar public or private debt instrument or agreement that
meets the definition of Material Indebtedness Agreement; as each of the
foregoing may from time to time be further amended, restated or otherwise
modified or replaced.
"Notice of Loan" shall mean a Notice of Loan in the form of the attached
Exhibit D.
"Obligations" shall mean, collectively, all Indebtedness and other
obligations incurred by any Borrower or Guarantor of Payment to Agent, the
Fronting Lender, the Swing Line Lender, or any Lender (or any affiliate thereof)
pursuant to this Agreement and includes the principal of and interest on all
Loans and all obligations pursuant to the Letters of Credit, and each extension,
renewal or refinancing thereof in whole or in part, the facility, prepayment and
other fees and amounts payable hereunder, and all fees and charges in connection
with the Letters of Credit.
"Organizational Documents" shall mean, with respect to any Person (other
than an individual), such Person's Articles (Certificate) of Incorporation,
operating agreement or equivalent formation documents, and Regulations (Bylaws),
or equivalent governing documents, and any amendments to any of the foregoing.
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, goods and services
taxes, harmonized sales taxes and other sales taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement, the Lender
Agreement or any other Loan Document.
"Overall Commitment Percentage" shall mean a Lender's percentage of the
Total Commitment Amount based upon such Lender's Maximum Amount of the Total
Commitment Amount.
"Parent Guaranty of Payment" shall mean the Guaranty of Payment, executed
and delivered by US Borrower with respect to the Canadian Borrowers, as the same
may from time to time be amended, restated or otherwise modified.
"Participant" shall mean that term as defined in Section 10.11 hereof.
"Patriot Act" shall mean Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, USA
Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001, as
amended from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or its
successor.
"Pension Plan" shall mean an ERISA Plan that is a "pension plan" (within
the meaning of ERISA Section 3(2)).
17
"Permitted Foreign Subsidiary Loans and Investments" shall mean:
(a) any loans made prior to the Closing Date by a Credit Party or a
Domestic Subsidiary to a Foreign Subsidiary;
(b) any investments made prior to the Closing Date by a Credit Party
or a Domestic Subsidiary in a Foreign Subsidiary; and
(c) any loans by a Company to, investments by a Company in,
guaranties by a Company of Indebtedness of, and Letters of Credit issued
to or for the benefit of, a Foreign Subsidiary that is not a Credit Party,
made on or after the Closing Date, up to the aggregate amount, for all
such Foreign Subsidiaries, equal to the lesser of (i) Thirty Million
Dollars ($30,000,000) per fiscal year of US Borrower, or (ii) twenty
percent (20%) of Consolidated Net Worth during the Commitment Period;
provided that, if any loan, investment, guaranty or letter of credit is
made for the benefit of a Foreign Subsidiary that becomes a Credit Party
after the Closing Date, the amount attributable to such loan, investment,
guaranty or letter of credit shall be excluded from the foregoing
calculation.
"Permitted Investment" shall mean an investment of a Company in the stock
(or other debt or equity instruments) of a Person (other than a Company), so
long as the aggregate amount of all such investments of all Companies does not
exceed, at any time, an aggregate amount equal to twenty percent (20%) of
Consolidated Net Worth, based upon the financial statements of the Companies for
the most recently completed fiscal quarter; provided that, at such time as a
Permitted Investment results in an Acquisition and the acquired Person becomes a
Guarantor of Payment, the amount of such investment shall be excluded from the
aforesaid calculation.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, unincorporated organization, corporation, limited liability
company, unlimited liability company, institution, trust, estate, government or
other agency or political subdivision thereof or any other entity.
"Prime Rate" shall mean the interest rate established from time to time by
Agent as Agent's prime rate, whether or not such rate shall be publicly
announced; the Prime Rate may not be the lowest interest rate charged by Agent
for commercial or other extensions of credit. Each change in the Prime Rate
shall be effective immediately from and after such change.
"Regularly Scheduled Payment Date" shall mean the last day of each March,
June, September and December of each year.
"Related Writing" shall mean each Loan Document and any other assignment,
mortgage, security agreement, guaranty agreement, subordination agreement,
financial statement, audit report or other writing furnished by any Credit
Party, or any of its officers, to Agent or the Lenders pursuant to or otherwise
in connection with this Agreement.
18
"Reportable Event" shall mean a reportable event as that term is defined
in Title IV of ERISA, except actions of general applicability by the Secretary
of Labor under Section 110 of such Act.
"Request for Extension" shall mean a notice, substantially in the form of
the attached Exhibit G.
"Required Lenders" shall mean (a) (i) the holders of at least fifty-one
percent (51%) of the Total Commitment Amount, or, if there shall be any
borrowing hereunder, the holders of at least fifty-one percent (51%) of the
aggregate amount of the Revolving Credit Exposure (excluding the Swing Line
Exposure), and (ii) at least three of the Lenders; or (b) (A) the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the Total Commitment Amount,
or, if there shall be any borrowing hereunder, the holders of at least sixty-six
and two-thirds percent (66-2/3%) of the aggregate amount of the Revolving Credit
Exposure (excluding the Swing Line Exposure), and (B) at least two of the
Lenders.
"Requirement of Law" shall mean, as to any Person, any law, treaty, rule
or regulation or determination or policy statement or interpretation 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.
"Reserve Percentage" shall mean for any day that percentage (expressed as
a decimal) that is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements) for
a member bank of the Federal Reserve System in Cleveland, Ohio, in respect of
Eurocurrency Liabilities. The Derived Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Percentage.
"Revolving Credit Commitment" shall mean the US Revolving Credit
Commitment and the CAD Revolving Credit Commitment.
"Revolving Credit Exposure" shall mean, at any time, the sum of (a) the US
Revolving Exposure, and (b) the CAD Revolving Exposure.
"Revolving Credit Note" shall mean a US Revolving Credit Note or a CAD
Revolving Credit Note.
"Revolving Loan" shall mean a US Revolving Loan or a CAD Revolving Loan.
"SEC" shall mean the United States Securities and Exchange Commission, or
any governmental body or agency succeeding to any of its principal functions.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a division
of McGraw-Hill, Inc., or any successor to such company.
19
"Subordinated" shall mean, as applied to Indebtedness, Indebtedness that
shall have been subordinated (by written terms or written agreement being, in
either case, in form and substance satisfactory to Agent and the Required
Lenders) in favor of the prior payment in full of the Obligations.
"Subsidiary" of a Company shall mean (a) a corporation more than fifty
percent (50%) of the Voting Power of which is owned, directly or indirectly, by
such Company or by one or more other subsidiaries of such Company or by such
Company and one or more subsidiaries of such Company, (b) a partnership, limited
liability company or unlimited liability company of which such Company, one or
more other subsidiaries of such Company or such Company and one or more
subsidiaries of such Company, directly or indirectly, is a general partner or
managing member, as the case may be, or otherwise has an ownership interest
greater than fifty percent (50%) of all of the ownership interests in such
partnership, limited liability company or unlimited liability company, or (c)
any other Person (other than a corporation, partnership, limited liability
company or unlimited liability company) in which such Company, one or more other
subsidiaries of such Company or such Company and one or more subsidiaries of
such Company, directly or indirectly, has at least a majority interest in the
Voting Power or the power to elect or direct the election of a majority of
directors or other governing body of such Person.
"Swing Line Commitment" shall mean the commitment of the Swing Line Lender
to make Swing Loans to US Borrower up to the aggregate amount at any time
outstanding of Twenty-Five Million Dollars ($25,000,000).
"Swing Line Exposure" shall mean, at any time, the aggregate principal
amount of all Swing Loans outstanding.
"Swing Line Lender" shall mean KeyBank National Association, as holder of
the Swing Line Commitment.
"Swing Line Note" shall mean the Swing Line Note executed and delivered
pursuant to Section 2.5(b) hereof.
"Swing Loan" shall mean a loan that shall be denominated in Dollars
granted to US Borrower by the Swing Line Lender under the Swing Line Commitment.
"Swing Loan Maturity Date" shall mean, with respect to any Swing Loan, the
earlier of (a) the date agreed to by US Borrower and the Swing Line Lender,
which shall be no more than thirty (30) days after the date such Swing Loan is
made, or (b) the last day of the Commitment Period.
"Taxes" shall mean any present or future taxes, levies, imposts, duties,
charges, fees, deductions or withholdings now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority (together with any
interest, penalties or similar liabilities with respect thereto) other than
Excluded Taxes.
20
"Total Commitment Amount" shall mean the Closing Commitment Amount, as
such amount may be increased up to the Maximum Commitment Amount pursuant to
Section 2.10(b) hereof, or decreased pursuant to Section 2.10(a) hereof.
"Total Liabilities" shall mean, at any date, the total of all items of
Indebtedness or liability that, in accordance with GAAP, would be included in
determining total liabilities on the liability side of the balance sheet.
"Unrestricted Domestic Cash Amount" shall mean, at any date, that portion
of US Borrower's or a Domestic Subsidiary's aggregate cash and cash equivalents
in excess of Ten Million Dollars ($10,000,000) that is on deposit with one or
more Lenders and that is not encumbered by or subject to any Lien (including,
without limitation, any Lien permitted hereunder), setoff (other than ordinary
course setoff rights of a depository bank arising under a bank depository
agreement for customary fees, charges and other account-related expenses due to
such depository bank thereunder), counterclaim, recoupment, defense or other
right in favor of any Person.
"US Borrower Investment Policy" shall mean the investment policy of US
Borrower attached hereto as Exhibit H, as the same may be amended from time to
time with prior written notice to Agent and the Lenders.
"US Commitment" shall mean the obligation hereunder of the US Lenders,
during the Commitment Period, to make Loans and issue Letters of Credit pursuant
to the US Revolving Credit Commitments, up to the Maximum US Revolving Amount.
"US Lender" shall mean each Lender that is designated as a US Lender on
Schedule 1 hereto.
"US Revolving Credit Commitment" shall mean the obligation hereunder,
during the Commitment Period, of (a) each US Lender to make US Revolving Loans
up to the Maximum Amount for such US Lender, (b) the Fronting Lender to issue
and each US Lender to participate in Letters of Credit pursuant to the Letter of
Credit Commitment, and (c) the Swing Line Lender to make and each US Lender to
participate in Swing Loans pursuant to the Swing Line Commitment.
"US Revolving Credit Note" shall mean a US Revolving Credit Note executed
and delivered pursuant to Section 2.5(a) hereof.
"US Revolving Exposure" shall mean the sum of (a) the aggregate principal
amount of all US Revolving Loans outstanding, (b) the Swing Line Exposure, and
(c) the Letter of Credit Exposure.
"US Revolving Loan" shall mean a Base Rate Loan or a Eurodollar Loan
granted to US Borrower in accordance with Section 2.2(a) hereof.
21
"Voting Power" shall mean, with respect to any Person, the exclusive
ability to control, through the ownership of shares of capital stock,
partnership interests, membership interests or otherwise, the election of
members of the board of directors or other similar governing body of such
Person. The holding of a designated percentage of Voting Power of a Person means
the ownership of shares of capital stock, partnership interests, membership
interests or other interests of such Person sufficient to control exclusively
the election of that percentage of the members of the board of directors or
similar governing body of such Person.
"Welfare Plan" shall mean an ERISA Plan that is a "welfare plan" within
the meaning of ERISA Section 3(l).
Section 1.2. Accounting Terms. Any accounting term not specifically
defined in this Article I shall have the meaning ascribed thereto by GAAP.
Section 1.3. Terms Generally. The foregoing definitions shall be
applicable to the singular and plurals of the foregoing defined terms.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
Section 2.1. Amount and Nature of Credit.
(a) Subject to the terms and conditions of this Agreement, the Lenders,
during the Commitment Period and to the extent hereinafter provided, shall make
Loans to Borrowers, participate in Swing Loans made by the Swing Line Lender to
US Borrower, and issue or participate in Letters of Credit at the request of US
Borrower, in such aggregate amount as Borrowers shall request pursuant to the
Commitment; provided, however, that in no event shall the Revolving Credit
Exposure be in excess of the Total Commitment Amount.
(b) Each US Lender, for itself and not one for any other, agrees to make
US Revolving Loans, make or participate in Swing Loans, and issue or participate
in Letters of Credit, during the Commitment Period, on such basis that,
immediately after the completion of any borrowing by US Borrower or the issuance
of a Letter of Credit, (i) the aggregate outstanding principal amount of US
Revolving Loans made by such US Lender, when combined with such US Lender's pro
rata share of the Letter of Credit Exposure and the Swing Line Exposure, shall
not be in excess of the Maximum Amount for such US Lender, and (ii) the
aggregate outstanding principal amount of US Revolving Loans made by such US
Lender shall represent that percentage of the aggregate principal amount then
outstanding on all US Revolving Loans that shall be such US Lender's Applicable
Commitment Percentage. Each borrowing (other than Swing Loans) from the US
Lenders hereunder shall be made pro rata according to the respective Applicable
Commitment Percentages of the US Lenders.
(c) Each Canadian Lender, for itself and not one for any other, agrees to
make CAD Revolving Loans, during the Commitment Period, on such basis that,
immediately after the completion of any borrowing by Canadian Borrowers, (i) the
Dollar Equivalent of the aggregate outstanding principal amount of CAD Revolving
Loans made by such Canadian Lender shall not
22
be in excess of the Maximum Amount for such Canadian Lender, and (ii) the
aggregate outstanding principal amount of the CAD Revolving Loans made by such
Canadian Lender shall represent that percentage of the aggregate principal
amount then outstanding on all CAD Revolving Loans that shall be such Canadian
Lender's Applicable Commitment Percentage. Each borrowing from the Canadian
Lenders hereunder shall be made pro rata according to the respective Applicable
Commitment Percentages of the Canadian Lenders.
(d) The Loans may be made as US Revolving Loans as described in Section
2.2(a) hereof, CAD Revolving Loans as described in Section 2.3 hereof and Swing
Loans as described in Section 2.2(c) hereof, and Letters of Credit may be issued
in accordance with Section 2.2(b) hereof.
Section 2.2. US Revolving Credit.
(a) US Revolving Loans. Subject to the terms and conditions of this
Agreement, during the Commitment Period, the US Lenders shall make a US
Revolving Loan or US Revolving Loans to US Borrower in such amount or amounts as
US Borrower may from time to time request, but not exceeding in aggregate
principal amount at any time outstanding hereunder the Maximum US Revolving
Amount, when such US Revolving Loans are combined with the Letter of Credit
Exposure and the Swing Line Exposure. US Borrower shall have the option, subject
to the terms and conditions set forth herein, to borrow US Revolving Loans,
maturing on the last day of the Commitment Period, by means of any combination
of Base Rate Loans or Eurodollar Loans. Subject to the provisions of this
Agreement, US Borrower shall be entitled under this Section 2.2(a) to borrow
funds, repay the same in whole or in part and re-borrow hereunder at any time
and from time to time during the Commitment Period.
(b) Letters of Credit.
(i) Generally. Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Fronting Lender shall, in its
own name, on behalf of the US Lenders, issue such Letters of Credit for
the account of US Borrower or a Domestic Guarantor of Payment, as US
Borrower may from time to time request. US Borrower shall not request any
Letter of Credit (and the Fronting Lender shall not be obligated to issue
any Letter of Credit) if, after giving effect thereto, (A) the Letter of
Credit Exposure would exceed the Letter of Credit Commitment or (B) the US
Revolving Exposure would exceed the Maximum US Revolving Amount. The
issuance of each Letter of Credit shall confer upon each US Lender the
benefits and liabilities of a participation consisting of an undivided pro
rata interest in the Letter of Credit to the extent of such US Lender's
Applicable Commitment Percentage.
(ii) Request for Letter of Credit. Each request for a Letter of
Credit shall be delivered to Agent (and to the Fronting Lender, if the
Fronting Lender is a Lender other than Agent) by an Authorized Officer not
later than 11:00 A.M. (Eastern time) three Business Days prior to the day
upon which the Letter of Credit is to be issued. Each such request shall
be in a form acceptable to Agent (and the Fronting Lender, if the Fronting
Lender is a Lender other than Agent) and specify the face amount thereof,
whether such
23
Letter of Credit shall be a commercial documentary or standby Letter of
Credit, the account party, the beneficiary, the intended date of issuance,
the expiry date thereof, and the nature of the transaction to be supported
thereby. Concurrently with each such request, US Borrower, and any other
Credit Party for whose account the Letter of Credit is to be issued, shall
execute and deliver to the Fronting Lender an appropriate application and
agreement, being in the standard form of the Fronting Lender for such
letters of credit, as amended to conform to the provisions of this
Agreement if required by Agent. Agent shall give the Fronting Lender and
each US Lender notice of each such request for a Letter of Credit.
(iii) Commercial Documentary Letters of Credit. With respect to each
Letter of Credit that shall be a commercial documentary letter of credit
and the drafts thereunder, whether issued for the account of US Borrower
or any other Credit Party, US Borrower agrees to (A) pay to Agent, for the
pro rata benefit of the US Lenders, a non-refundable commission based upon
the face amount of such Letter of Credit, which shall be paid quarterly in
arrears, on each Regularly Scheduled Payment Date, at a rate per annum
equal to the Applicable Margin for Eurodollar Loans (in effect on the date
such payment is to be made) times the face amount of such Letter of
Credit; (B) pay to Agent, for the sole benefit of the Fronting Lender, an
additional Letter of Credit fee, which shall be paid on the date that any
draw shall be made on such Letter of Credit, at the rate of one-eighth
percent (1/8%) of the amount drawn under such Letter of Credit; and (C)
pay to Agent, for the sole benefit of the Fronting Lender, such other
issuance, amendment, negotiation, draw, acceptance, telex, courier,
postage and similar transactional fees as are generally charged by the
Fronting Lender under its fee schedule as in effect from time to time.
(iv) Standby Letters of Credit. With respect to each Letter of
Credit that shall be a standby letter of credit and the drafts thereunder,
if any, whether issued for the account of US Borrower or any other Credit
Party, US Borrower agrees to (A) pay to Agent, for the pro rata benefit of
the US Lenders, a non-refundable commission based upon the face amount of
such Letter of Credit, which shall be paid quarterly in arrears, on each
Regularly Scheduled Payment Date, at a rate per annum equal to the
Applicable Margin for Eurodollar Loans (in effect on the date such payment
is to be made) times the undrawn face amount of such Letter of Credit; (B)
pay to Agent, for the sole benefit of the Fronting Lender, an additional
Letter of Credit fee, which shall be paid on each date that such Letter of
Credit shall be issued, amended or renewed at the rate of one-eighth
percent (1/8%) of the face amount of such Letter of Credit; and (C) pay to
Agent, for the sole benefit of the Fronting Lender, such other issuance,
amendment, negotiation, draw, acceptance, telex, courier, postage and
similar transactional fees as are generally charged by the Fronting Lender
under its fee schedule as in effect from time to time.
(v) Refunding of Letters of Credit with Revolving Loans. Whenever a
Letter of Credit shall be drawn, US Borrower shall immediately reimburse
the Fronting Lender for the amount drawn. In the event that the amount
drawn shall not have been reimbursed by US Borrower within one Business
Day of the drawing of such Letter of Credit, at the sole option of Agent
(and the Fronting Lender, if the Fronting Lender is a
24
Lender other than Agent), US Borrower shall be deemed to have requested a
US Revolving Loan, subject to the provisions of Sections 2.2(a) and 2.6
hereof (other than the requirement set forth in Section 2.6(d) hereof), in
the amount drawn. Such US Revolving Loan shall be evidenced by the US
Revolving Credit Notes (or, if a US Lender has not requested a US
Revolving Credit Note, by the records of Agent and such US Lender). Each
US Lender agrees to make a US Revolving Loan on the date of such notice,
subject to no conditions precedent whatsoever. Each US Lender acknowledges
and agrees that its obligation to make a US Revolving Loan pursuant to
Section 2.2(a) hereof when required by this subsection (v) shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance
of a Default or Event of Default, and that its payment to Agent, for the
account of the Fronting Lender, of the proceeds of such US Revolving Loan
shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever and whether or not such US Lender's US
Revolving Credit Commitment shall have been reduced or terminated. US
Borrower irrevocably authorizes and instructs Agent to apply the proceeds
of any borrowing pursuant to this subsection (v) to reimburse, in full,
the Fronting Lender for the amount drawn on such Letter of Credit. Each
such US Revolving Loan shall be deemed to be a Base Rate Loan unless
otherwise requested by and available to US Borrower hereunder. Each US
Lender is hereby authorized to record on its records relating to its US
Revolving Credit Note (or, if such US Lender has not requested a US
Revolving Credit Note, its records relating to US Revolving Loans) such US
Lender's pro rata share of the amounts paid and not reimbursed on the
Letters of Credit.
(vi) Participation in Letters of Credit. If, for any reason, Agent
(or the Fronting Lender if the Fronting Lender shall be a Lender other
than Agent) shall be unable to or, in the opinion of Agent, it shall be
impracticable to, convert any Letter of Credit to a US Revolving Loan
pursuant to the preceding subsection (v), Agent (or the Fronting Lender if
the Fronting Lender is a Lender other than Agent) shall have the right to
request that each US Lender purchase a participation in the amount due
with respect to such Letter of Credit, and Agent shall promptly notify
each US Lender thereof (by facsimile or telephone, confirmed in writing).
Upon such notice, but without further action, the Fronting Lender hereby
agrees to grant to each US Lender, and each US Lender hereby agrees to
acquire from the Fronting Lender, an undivided participation interest in
the amount due with respect to such Letter of Credit in an amount equal to
such US Lender's Applicable Commitment Percentage of the principal amount
due with respect to such Letter of Credit. In consideration and in
furtherance of the foregoing, each US Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay
to Agent, for the account of the Fronting Lender, such US Lender's ratable
share of the amount due with respect to such Letter of Credit (determined
in accordance with such US Lender's Applicable Commitment Percentage).
Each US Lender acknowledges and agrees that its obligation to acquire
participations in the amount due under any Letter of Credit that is drawn
but not reimbursed by US Borrower pursuant to this subsection (vi) shall
be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that each such payment
25
shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever and whether or not such US Lender's US
Revolving Credit Commitment shall have been reduced or terminated. Each US
Lender shall comply with its obligation under this subsection (vi) by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.6 hereof with respect to US Revolving Loans. Each US Lender is
hereby authorized to record on its records such US Lender's pro rata share
of the amounts paid and not reimbursed on the Letters of Credit. In
addition, each US Lender agrees to risk participate in the Existing
Letters of Credit as provided in subsection (vii) below.
(vii) Existing Letters of Credit. Schedule 2.2 hereto contains a
description of all letters of credit outstanding on, and to continue in
effect after, the Closing Date. Each such letter of credit issued by a
bank that is or becomes a US Lender under this Agreement on the Closing
Date (each, an "Existing Letter of Credit") shall constitute a "Letter of
Credit" for all purposes of this Agreement, issued, for purposes of
subsection (vi) above, on the Closing Date. US Borrower, Agent and the US
Lenders hereby agree that, from and after such date, the terms of this
Agreement shall apply to the Existing Letters of Credit, superseding any
other agreement theretofore applicable to them to the extent inconsistent
with the terms hereof. Notwithstanding anything to the contrary in any
reimbursement or other agreement applicable to the Existing Letters of
Credit, the fees payable in connection with each Existing Letter of Credit
to be shared with the US Lenders, or paid to the Fronting Lender for its
own account, shall accrue from the Closing Date at the rate provided in
this Section 2.2(b).
(c) Swing Loans.
(i) Generally. Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Swing Line Lender shall make
a Swing Loan or Swing Loans to US Borrower in such amount or amounts as US
Borrower, through an Authorized Officer, may from time to time request;
provided that US Borrower shall not request any Swing Loan if, after
giving effect thereto, (A) the US Revolving Exposure would exceed the
Maximum US Revolving Amount, or (B) the Swing Line Exposure would exceed
the Swing Line Commitment. Each Swing Loan shall be due and payable on the
Swing Loan Maturity Date applicable thereto. US Borrower shall not request
that more than two Swing Loans be outstanding at any time. Each Swing Loan
shall be made in Dollars.
(ii) Refunding of Swing Loans. If the Swing Line Lender so elects,
by giving notice to US Borrower and the US Lenders, US Borrower agrees
that the Swing Line Lender shall have the right, in its sole discretion,
to require that any Swing Loan be refinanced as a US Revolving Loan. Such
US Revolving Loan shall be a Base Rate Loan unless otherwise requested by
and available to US Borrower hereunder. Upon receipt of such notice by US
Borrower and the US Lenders, US Borrower shall be deemed, on such day, to
have requested a US Revolving Loan in the principal amount of the Swing
Loan in accordance with Sections 2.2(a) and 2.6 hereof (other than the
requirement set forth in Section 2.6(d) hereof). Each US Lender agrees to
make a US Revolving Loan on the date
26
of such notice, subject to no conditions precedent whatsoever. Such US
Revolving Loan shall be evidenced by the US Revolving Credit Notes (or, if
a US Lender has not requested a US Revolving Credit Note, by the records
of Agent and such US Lender). Each US Lender acknowledges and agrees that
such US Lender's obligation to make a US Revolving Loan pursuant to
Section 2.2(a) hereof when required by this subsection (ii) is absolute
and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance
of a Default or Event of Default, and that its payment to Agent, for the
account of the Swing Line Lender, of the proceeds of such US Revolving
Loan shall be made without any offset, abatement, recoupment,
counterclaim, withholding or reduction whatsoever and whether or not such
US Lender's US Revolving Credit Commitment shall have been reduced or
terminated. US Borrower irrevocably authorizes and instructs Agent to
apply the proceeds of any borrowing pursuant to this subsection (ii) to
repay in full such Swing Loan.
(iii) Participation in Swing Loans. If, for any reason, Agent is
unable to or, in the opinion of Agent, it is impracticable to, convert any
Swing Loan to a US Revolving Loan pursuant to the preceding subsection
(ii), then on any day that a Swing Loan is outstanding (whether before or
after the maturity thereof), Agent shall have the right to request that
each US Lender purchase a participation in such Swing Loan, and Agent
shall promptly notify each US Lender thereof (by facsimile or telephone,
confirmed in writing). Upon such notice, but without further action, the
Swing Line Lender hereby agrees to grant to each US Lender, and each US
Lender hereby agrees to acquire from the Swing Line Lender, an undivided
participation interest in such Swing Loan in an amount equal to such US
Lender's Applicable Commitment Percentage of the principal amount of such
Swing Loan. In consideration and in furtherance of the foregoing, each US
Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to Agent, for the benefit of the Swing
Line Lender, such US Lender's ratable share of such Swing Loan (determined
in accordance with such US Lender's Applicable Commitment Percentage).
Each US Lender acknowledges and agrees that its obligation to acquire
participations in Swing Loans pursuant to this subsection (iii) is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance
of a Default or an Event of Default, and that each such payment shall be
made without any offset, abatement, recoupment, counterclaim, withholding
or reduction whatsoever and whether or not such US Lender's US Revolving
Credit Commitment shall have been reduced or terminated. Each US Lender
shall comply with its obligation under this subsection (iii) by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.6 hereof with respect to US Revolving Loans to be made by such
US Lender.
Section 2.3. CAD Revolving Loans. Subject to the terms and conditions of
this Agreement, during the Commitment Period, the Canadian Lenders shall make a
CAD Revolving Loan or CAD Revolving Loans to Canadian Borrowers in such amount
or amounts as Canadian Borrowers may from time to time request, but not
exceeding in aggregate principal amount at any time outstanding hereunder the
Maximum CAD Revolving Amount. Canadian Borrowers shall have the option, subject
to the terms and conditions set forth herein, to borrow CAD
27
Revolving Loans, maturing no later than the last day of the Commitment Period,
by means of any combination of CAD Base Rate Loans or CAD Fixed Rate Loans.
Subject to the provisions of this Agreement, Canadian Borrowers shall be
entitled under this Section 2.3 to borrow funds, repay the same in whole or in
part and re-borrow hereunder at any time and from time to time during the
Commitment Period.
Section 2.4. Interest.
(a) US Revolving Loans.
(i) Base Rate Loan. US Borrower shall pay interest on the unpaid
principal amount of a Base Rate Loan outstanding from time to time from
the date thereof until paid at the Base Rate from time to time in effect.
Interest on such Base Rate Loan shall be payable, commencing June 30,
2005, and on each Regularly Scheduled Payment Date thereafter and at the
maturity thereof.
(ii) Eurodollar Loans. US Borrower shall pay interest on the unpaid
principal amount of each Eurodollar Loan outstanding from time to time,
fixed in advance on the first day of the Interest Period applicable
thereto through the last day of the Interest Period applicable thereto
(but subject to changes in the Applicable Margin), at the Derived
Eurodollar Rate. Interest on such Eurodollar Loan shall be payable on each
Interest Adjustment Date with respect to an Interest Period (provided that
if an Interest Period shall exceed three months, the interest must be paid
every three months, commencing three months from the beginning of such
Interest Period).
(b) Swing Loans. US Borrower shall pay interest to Agent, for the sole
benefit of the Swing Line Lender (and any US Lender that shall have purchased a
participation in such Swing Loan), on the unpaid principal amount of each Swing
Loan outstanding from time to time from the date thereof until paid at the
Derived Swing Loan Rate applicable to such Swing Loan. Interest on each Swing
Loan shall be payable on the Swing Loan Maturity Date applicable thereto. Each
Swing Loan shall bear interest for a minimum of one day.
(c) CAD Revolving Loans.
(i) CAD Base Rate Loan. Canadian Borrowers shall pay interest on the
unpaid principal amount of a CAD Base Rate Loan outstanding from time to
time from the date thereof until paid at the CAD Base Rate from time to
time in effect. Interest on such CAD Base Rate Loan shall be payable,
commencing June 30, 2005, and on each Regularly Scheduled Payment Date
thereafter and at the maturity thereof.
(ii) CAD Fixed Rate Loans. Canadian Borrowers shall pay interest on
the unpaid principal amount of each CAD Fixed Rate Loan outstanding from
time to time, fixed in advance on the first day of the Interest Period
applicable thereto through the last day of the Interest Period applicable
thereto (but subject to changes in the Applicable Margin), at the Derived
CAD Fixed Rate. Interest on such CAD Fixed Rate Loan shall be payable on
each Interest Adjustment Date with respect to an Interest Period (provided
28
that if an Interest Period shall exceed ninety (90) days, the interest
must be paid every ninety (90) days, commencing ninety (90) days from the
beginning of such Interest Period).
(d) Default Rate. Anything herein to the contrary notwithstanding, if an
Event of Default shall occur, upon the election of the Required Lenders, (i) the
principal of each Loan and the unpaid interest thereon shall bear interest,
until paid, at the Default Rate, (ii) the fee for the aggregate undrawn face
amount of all issued and outstanding Letters of Credit shall be increased by two
percent (2%) in excess of the rate otherwise applicable thereto, and (iii) in
the case of any other amount then due and owing from Borrowers hereunder or
under any other Loan Document, such amount shall bear interest at the Default
Rate until paid; provided that, during an Event of Default under Section 7.11
hereof, the applicable Default Rate shall apply without any election or action
on the part of Agent or any Lender.
(e) Limitation on Interest.
(i) General. In no event shall the rate of interest hereunder exceed
the maximum rate allowable by law.
(ii) Canadian Interest. If any provision of this Agreement or any
other Loan Document would obligate any Canadian Borrower to make any
payment of interest or other amount payable to (including for the account
of) any Canadian Lender in an amount, or calculated at a rate, that would
be prohibited by law or would result in a receipt by such Canadian Lender
of interest at a criminal rate (as such terms are construed under the
Criminal Code (Canada)) then, notwithstanding such provision, such amount
or rate shall be deemed to have been adjusted with retroactive effect to
the maximum amount or rate of interest, as the case may be, as would not
be so prohibited by law or so result in a receipt by such Canadian Lender
of interest at a criminal rate, such adjustment to be effected, to the
extent necessary, as follows: (A) first, by reducing the amount or rate of
interest required to be paid to such Canadian Lender under this Article
II; and (B) thereafter, by reducing any fees, commissions, premiums and
other amounts required to be paid to such Canadian Lender that would
constitute interest for purposes of Section 347 of the Criminal Code
(Canada). Notwithstanding the foregoing, and after giving effect to all
adjustments contemplated thereby, if a Canadian Lender shall have received
an amount in excess of the maximum amount permitted by that section of the
Criminal Code (Canada), then Canadian Borrowers shall be entitled, by
notice in writing to such Canadian Lender, to obtain reimbursement from
such Canadian Lender in an amount equal to such excess, and pending such
reimbursement, such amount shall be deemed to be an amount payable by such
Canadian Lender to Canadian Borrowers. Any amount or rate of interest
referred to in this Article II with respect to the Canadian Commitment
shall be determined in accordance with generally accepted actuarial
practices and principles as an effective annual rate of interest over the
term that the Canadian Commitment remains outstanding on the assumption
that any charges, fees or expenses that fall within the meaning of
"interest" (as defined in the Criminal Code (Canada)) shall, if they
relate to a specific period of time, be pro-rated over that period of time
and otherwise be pro-rated over the Commitment Period and, in the event of
a
29
dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by Agent shall be conclusive for the purposes of such
determination.
Section 2.5. Evidence of Indebtedness.
(a) US Revolving Loans. Upon the request of a US Lender, to evidence the
obligation of US Borrower to repay the Base Rate Loans and Eurodollar Loans made
by such US Lender and to pay interest thereon, US Borrower shall execute a US
Revolving Credit Note in the form of the attached Exhibit A, payable to the
order of such US Lender in the principal amount of its US Revolving Credit
Commitment or, if less, the aggregate unpaid principal amount of US Revolving
Loans made by such US Lender; provided, however, that failure of a US Lender to
request a Revolving Credit Note shall in no way detract from US Borrower's
obligations to such US Lender hereunder.
(b) Swing Loan. The obligation of US Borrower to repay the Swing Loans and
to pay interest thereon shall be evidenced by a Swing Line Note of US Borrower
in the form of the attached Exhibit B, and payable to the order of the Swing
Line Lender in the principal amount of the Swing Line Commitment, or, if less,
the aggregate unpaid principal amount of Swing Loans made by the Swing Line
Lender.
(c) CAD Revolving Loans. Upon the request of a Canadian Lender, to
evidence the obligation of Canadian Borrowers to repay the CAD Base Rate Loans
and the CAD Fixed Rate Loans made by such Canadian Lender and to pay interest
thereon, Canadian Borrowers shall execute a CAD Revolving Credit Note in the
form of the attached Exhibit C, payable to the order of such Canadian Lender in
the principal amount of its CAD Revolving Credit Commitment or, if less, the
aggregate unpaid principal amount of CAD Revolving Loans made by such Canadian
Lender; provided, however, that failure of a Canadian Lender to request a CAD
Revolving Credit Note shall in no way detract from Canadian Borrowers'
obligations to such Canadian Lender hereunder.
Section 2.6. Notice of Credit Event; Funding of Loans.
(a) Notice of Credit Event. US Borrower, through an Authorized Officer,
shall provide to Agent a Notice of Loan prior to (i) 11:00 A.M. (Eastern time)
on the proposed date of borrowing or conversion of any Base Rate Loan, (ii)
11:00 A.M. (Eastern time) three Business Days prior to the proposed date of
borrowing, conversion or continuation of any Eurodollar Loan, (iii) 11:00 A.M.
(Eastern time) on the proposed date of borrowing of any Swing Loan, (iv) 11:00
A.M. (Eastern time) on the proposed date of borrowing or conversion of any CAD
Base Rate Loan, and (v) 11:00 A.M. (Eastern time) three Business Days prior to
the proposed date of borrowing, conversion or continuation of any CAD Fixed Rate
Loan. US Borrower shall comply with the notice provisions set forth in Section
2.2(b) hereof with respect to Letters of Credit.
(b) Funding of Loans. Agent shall notify the Applicable Lenders of the
date, amount and Interest Period (if applicable) promptly upon the receipt of a
Notice of Loan, and, in any event, by 2:00 P.M. (Eastern time) on the date such
Notice of Loan is received. On the date that the Credit Event set forth in such
Notice of Loan is to occur, each such Applicable Lender shall
30
provide to Agent at the Designated Lending Office, not later than 3:00 P.M.
(Eastern time), the amount in Dollars, or, with respect to the Canadian
Commitment, in Canadian Dollars, in federal or other immediately available
funds, required of it. If Agent (or the Designated Lending Office) shall elect
to advance the proceeds of such Loan prior to receiving funds from such Lender,
Agent (or the Designated Lending Office, as appropriate) shall have the right,
upon prior notice to the appropriate Borrower, to debit any account of the
appropriate Borrower or otherwise receive such amount from the appropriate
Borrower, on demand, in the event that such Lender shall fail to reimburse Agent
(or the Designated Lending Office, as appropriate) in accordance with this
subsection. Agent (or the Designated Lending Office, as appropriate) shall also
have the right to receive interest from such Lender at the Federal Funds
Effective Rate (or cost of funds with respect to the Designated Lending Office)
in the event that such Lender shall fail to provide its portion of the Loan on
the date requested and Agent (or the Designated Lending Office, as appropriate)
shall elect to provide such funds.
(c) Conversion of Loans. At the request of US Borrower to Agent, subject
to the notice and other provisions of this Section 2.6, the US Lenders shall
convert a Base Rate Loan to one or more Eurodollar Loans at any time and shall
convert a Eurodollar Loan to a Base Rate Loan on any Interest Adjustment Date
applicable thereto. Swing Loans may be converted by the Swing Line Lender to US
Revolving Loans in accordance with Section 2.2(c)(ii) hereof. At the request of
Canadian Borrowers to Agent, subject to the notice and other provisions of this
Section 2.6, the Canadian Lenders shall convert a CAD Base Rate Loan to one or
more CAD Fixed Rate Loans at any time and shall convert a CAD Fixed Rate Loan to
a CAD Base Rate Loan on any Interest Adjustment Date applicable thereto.
(d) Minimum Amount. Each request for:
(i) a Base Rate Loan shall be in an amount of not less than One
Million Dollars ($1,000,000), increased by increments of Five Hundred
Thousand Dollars ($500,000);
(ii) a Eurodollar Loan shall be in an amount of not less than Five
Million Dollars ($5,000,000), increased by increments of One Million
Dollars ($1,000,000);
(iii) a Swing Loan shall be in an amount of not less than Five
Hundred Thousand Dollars ($500,000);
(iv) a CAD Base Rate Loan shall be in an amount of not less than One
Million Canadian Dollars (CAD 1,000,000), increased by increments of Five
Hundred Thousand Canadian Dollars (CAD 500,000); and
(v) a CAD Fixed Rate Loan shall be in an amount of not less than
Five Million Canadian Dollars (CAD 5,000,000), increased by increments of
One Million Canadian Dollars (CAD 1,000,000).
(e) Interest Periods. At no time shall US Borrower request that Eurodollar
Loans be outstanding for more than six different Interest Periods, and, if a
Base Rate Loan is outstanding,
31
then Eurodollar Loans shall be limited to five different Interest Periods at any
time. At no time shall Canadian Borrowers request that CAD Fixed Rate Loans be
outstanding for more than six different Interest Periods, and, if a CAD Base
Rate Loan is outstanding, then CAD Fixed Rate Loans shall be limited to five
different Interest Periods at any time.
Section 2.7. Payment on Loans and Other Obligations.
(a) Payments Generally. Each payment made hereunder by a Credit Party
shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever.
(b) Payments in Canadian Dollars. With respect to any CAD Revolving Loan,
all payments (including prepayments) to the Canadian Lenders of the principal of
or interest on such CAD Revolving Loan or other payment, including but not
limited to principal, interest, fees or any other amount owed by Canadian
Borrowers under this Agreement, shall be made in Canadian Dollars. All such
payments shall be remitted by Canadian Borrowers to Agent at the Designated
Lending Office, for the account of the Canadian Lenders, not later than 1:00
P.M. (Eastern time) on the due date thereof in same day funds. Any payments
received by the Designated Lending Office after 1:00 P.M. (Eastern time) shall
be deemed to have been made and received on the next Business Day.
(c) Payments in Dollars. With respect to any Loan (other than a CAD
Revolving Loan), all payments (including prepayments) to Agent of the principal
of or interest on such Loan or other payment, including but not limited to
principal, interest, fees or any other amount owed by US Borrower under this
Agreement, shall be made in Dollars. All payments described in this subsection
(c) shall be remitted to Agent at the address of Agent for notices referred to
in Section 10.4 hereof for the account of the US Lenders (or the Fronting Lender
or the Swing Line Lender, as appropriate) not later than 11:00 A.M. (Eastern
time) on the due date thereof in immediately available funds. Any such payments
received by Agent after 11:00 A.M. (Eastern time) shall be deemed to have been
made and received on the next Business Day.
(d) Payments to Lenders. Upon Agent's receipt of payments hereunder, Agent
shall immediately distribute to the Applicable Lenders (except with respect to
Swing Loans, which shall be paid to the Swing Line Lender or, with respect to
Letters of Credit, certain of which payments shall be paid to the Fronting
Lender, as appropriate) their respective ratable shares, if any, of the amount
of principal, interest, and facility and other fees received by Agent for the
account of such Lender. Payments received by Agent in Dollars shall be delivered
to the US Lenders in Dollars in immediately available funds and payments
received at the Designated Lending Office in Canadian Dollars shall be delivered
to the Canadian Lenders in Canadian Dollars in same day funds; provided that, if
Agent receives a payment in a currency other than the currency in which the
underlying obligation was made, Agent shall have the right, in its sole
discretion, to convert such currency into its CAD Equivalent or Dollar
Equivalent, as applicable. Each Lender shall record, as appropriate, any
principal, interest or other payment, the principal amounts of Base Rate Loans,
Eurodollar Loans, CAD Base Rate Loans and CAD Fixed Rate Loans, the type of
currency for each Loan, all prepayments and the applicable dates, including
Interest Periods, with respect to the Loans made, and payments received by such
Lender, by such
32
method as such Lender may generally employ; provided, however, that failure to
make any such entry shall in no way detract from the obligations of Borrowers
under this Agreement or any Note. The aggregate unpaid amount of Loans, types of
Loans, Interest Periods and similar information with respect to the Loans and
Letters of Credit set forth on the records of Agent shall be rebuttably
presumptive evidence with respect to such information, including the amounts of
principal, interest and fees owing to each Lender.
(e) Timing of Payments. Whenever any payment to be made hereunder,
including, without limitation, any payment to be made on any Loan, shall be
stated to be due on a day that is not a Business Day, such payment shall be made
on the next Business Day and such extension of time shall in each case be
included in the computation of the interest payable on such Loan; provided,
however, that, with respect to any Eurodollar Loan, if the next Business Day
shall fall in the succeeding calendar month, such payment shall be made on the
preceding Business Day and the relevant Interest Period shall be adjusted
accordingly.
Section 2.8. Prepayment.
(a) Right to Prepay. Borrowers shall have the right at any time or from
time to time to prepay, on a pro rata basis for all of the Applicable Lenders
(except with respect to Swing Loans, which shall be paid to the Swing Line
Lender), all or any part of the principal amount of the Loans then outstanding
to such Lenders from such Borrowers, as designated by Borrowers. Such payment
shall include interest accrued on the amount so prepaid to the date of such
prepayment and any amount payable under Article III hereof with respect to the
amount being prepaid. Prepayments of Base Rate Loans and CAD Base Rate Loans
shall be without any premium or penalty, other than any prepayment fees,
penalties or other charges that may be contained in any Hedge Agreement.
(b) Notice of Prepayment. US Borrower shall give Agent notice of
prepayment of any Base Rate Loan or Swing Loan not later than 11:00 A.M.
(Eastern time) on the Business Day such prepayment is to be made and written
notice of the prepayment of any Eurodollar Loan not later than 1:00 P.M.
(Eastern time) three Business Days before the Business Day on which such
prepayment is to be made. Canadian Borrowers shall give Agent notice of
prepayment of any CAD Base Rate Loan not later than 11:00 A.M. (Eastern time) on
the Business Day such prepayment is to be made and written notice of the
prepayment of any CAD Fixed Rate Loan not later than 1:00 P.M. (Eastern time)
three Business Days before the Business Day on which such prepayment is to be
made.
(c) Minimum Amount. Other than in the case of a mandatory payment pursuant
to Section 2.12 or Article III hereof, each prepayment of (i) a Eurodollar Loan
shall be in the principal amount of not less than Three Million Dollars
($3,000,000), and (ii) a CAD Fixed Rate Loan shall be in the principal amount of
not less than Three Million Canadian Dollars (CAD 3,000,000).
33
Section 2.9. Facility and Other Fees.
(a) Facility Fee.
(i) US Commitment. US Borrower shall pay to Agent, for the ratable
account of the US Lenders, as a consideration for the US Commitment, a
facility fee from the Closing Date to and including the last day of the
Commitment Period, payable quarterly, at a rate per annum equal to (A) the
Applicable Facility Fee Rate in effect on the payment date, times (B) the
average daily Maximum US Revolving Amount in effect during such quarter.
The facility fee shall be payable in arrears, on June 30, 2005 and on each
Regularly Scheduled Payment Date thereafter, and on the last day of the
Commitment Period.
(ii) Canadian Commitment. Canadian Borrowers shall pay to Agent at
the Designated Lending Office, for the ratable account of the Canadian
Lenders, as a consideration for the Canadian Commitment, a facility fee
from the Closing Date to and including the last day of the Commitment
Period, payable quarterly, at a rate per annum equal to (A) the Applicable
Facility Fee Rate in effect on the payment date, times (B) the average
daily Maximum CAD Revolving Amount in effect during such quarter. The
facility fee shall be payable in arrears, on June 30, 2005 and on each
Regularly Scheduled Payment Date thereafter, and on the last day of the
Commitment Period.
(b) Agent Fee. US Borrower shall pay to Agent, for its sole benefit, the
fees set forth in the Agent Fee Letter.
Section 2.10. Modifications to Commitment.
(a) Optional Reduction of Commitment.
(i) US Commitment. US Borrower may at any time and from time to time
permanently reduce in whole or ratably in part the US Commitment of the US
Lenders hereunder to an amount not less than the then existing US
Revolving Credit Exposure, by giving Agent not fewer than three Business
Days notice of such reduction, provided that any such partial reduction
shall be in an aggregate amount, for all of the US Lenders, of not less
than Five Million Dollars ($5,000,000), increased by increments of One
Million Dollars ($1,000,000). Agent shall promptly notify each US Lender
of the date of each such reduction and such US Lender's proportionate
share thereof. After each such reduction, the facility fees payable
hereunder shall be calculated upon the Maximum US Revolving Amount as so
reduced.
(ii) Canadian Commitment. Canadian Borrowers may at any time and
from time to time permanently reduce in whole or ratably in part the
Canadian Commitment of the Canadian Lenders hereunder to an amount not
less than the then existing CAD Revolving Exposure, by giving Agent not
fewer than three Business Days notice of such reduction, provided that any
such partial reduction shall be in an aggregate amount, for all of the
Canadian Lenders, of not less than Five Million Canadian Dollars (CAD
34
5,000,000), increased by increments of One Million Canadian Dollars (CAD
1,000,000). Agent shall promptly notify each Canadian Lender of the date
of each such reduction and such Canadian Lender's proportionate share
thereof. After each such reduction, the facility fees payable hereunder
shall be calculated upon the Maximum CAD Revolving Amount as so reduced.
(iii) Generally. If Borrowers reduce in whole the Commitment of the
Lenders, on the effective date of such reduction (the appropriate
Borrowers having prepaid in full the unpaid principal balance, if any, of
the Loans, together with all interest and facility and other fees accrued
and unpaid, and provided that no Letter of Credit Exposure or Swing Line
Exposure shall exist), all of the Notes, if Notes have been issued, shall
be delivered to Agent marked "Canceled" and Agent shall redeliver such
Notes to Borrowers. Any partial reduction in the Total Commitment Amount
shall be effective during the remainder of the Commitment Period. The US
Commitment may not, at any time, be reduced to an amount less than the
then existing amount of the Canadian Commitment.
(b) Increase in Commitment. At any time during the Commitment Increase
Period, US Borrower may increase the Total Commitment Amount from the Closing
Commitment Amount up to the Maximum Commitment Amount (with a corresponding
increase in the Maximum US Revolving Amount) by either (i) increasing, for one
or more US Lenders, with their prior written consent (and with the prior written
consent of Agent), their respective US Revolving Credit Commitments, or (ii)
including one or more Additional Lenders, with the prior written consent of
Agent (which shall not be unreasonably withheld), each with a new US Revolving
Credit Commitment, as a party to this Agreement (collectively, the "Additional
Commitment"). During the Commitment Increase Period, the Lenders agree that
Agent, in its sole discretion, may permit one or more Additional Commitments
upon satisfaction of the following requirements: (A) each Additional Lender, if
any, shall execute an Additional Lender Assumption Agreement, (B) Agent shall
provide to each Lender a revised Schedule 1 to this Agreement, including revised
Applicable Commitment Percentages for each of the Lenders, if appropriate, at
least three Business Days prior to the date of the effectiveness of such
Additional Commitments (each an "Additional Lender Assumption Effective Date"),
(C) each Additional Lender's US Revolving Credit Commitment shall be for an
amount of no less than Ten Million Dollars ($10,000,000), and (D) US Borrower
shall execute and deliver to Agent and the US Lenders such replacement or
additional US Revolving Credit Notes as shall be required by Agent (to the
extent Notes have been requested by the affected Lenders). The Lenders hereby
authorize Agent to execute each Additional Lender Assumption Agreement on behalf
of the Lenders. On each Additional Lender Assumption Effective Date, the US
Lenders shall make adjustments among themselves with respect to the US Revolving
Loans then outstanding and amounts of principal, interest and facility fees and
other amounts paid or payable with respect thereto as shall be necessary, in the
opinion of Agent, in order to reallocate among such US Lenders such outstanding
amounts, based on the revised Applicable Commitment Percentages and to otherwise
carry out fully the intent and terms of this Section 2.10(b). In connection
therewith, it is understood and agreed that the Maximum Amount of any Lender
will not be increased (or decreased except pursuant to Section 2.10(a) hereof)
without the prior written consent of such Lender. US Borrower shall not increase
the Total Commitment Amount pursuant to this Section
35
2.10(b) if a Default or an Event of Default shall then exist, or immediately
after giving effect to any such increase would exist.
Section 2.11. Computation of Interest and Fees.
(a) Generally. With the exception of Base Rate Loans, CAD Base Rate Loans
and CAD Fixed Rate Loans, interest on Loans and facility and other fees and
charges hereunder shall be computed on the basis of a year having three hundred
sixty (360) days and calculated for the actual number of days elapsed. With
respect to Base Rate Loans, CAD Base Rate Loans and CAD Fixed Rate Loans,
interest shall be computed on the basis of a year having three hundred
sixty-five (365) days or three hundred sixty-six (366) days, as the case may be,
and calculated for the actual number of days elapsed.
(b) Interest Act (Canada). For purposes of disclosure pursuant to the
Interest Act (Canada), the annual rates of interest or fees to which the rates
of interest or fees provided in this Agreement and the other Loan Documents (and
stated herein and therein, as applicable, to be computed on the basis of a year
having three hundred sixty (360) days, three hundred sixty-five (365) days or
any other period of time less than a calendar year) are equivalent to the rates
so determined when multiplied by the actual number of days in the applicable
calendar year and divided by three hundred sixty (360), three hundred sixty-five
(365) days or such other period of time, respectively.
Section 2.12. Mandatory Payment.
(a) US Revolving Credit Commitment. If, at any time, the US Revolving
Credit Exposure shall exceed the Maximum US Revolving Amount as then in effect,
US Borrower shall, as promptly as practicable, but in no event later than the
next Business Day, prepay an aggregate principal amount of the US Revolving
Loans sufficient to bring the US Revolving Credit Exposure within the Maximum US
Revolving Amount.
(b) Swing Line Commitment. If, at any time, the Swing Line Exposure shall
exceed the Swing Line Commitment, US Borrower shall, as promptly as practicable,
but in no event later than the next Business Day, prepay an aggregate principal
amount of the Swing Loans sufficient to bring the Swing Line Exposure within the
Swing Line Commitment.
(c) CAD Revolving Credit Commitment. If, at any time, the CAD Revolving
Exposure shall exceed the Maximum CAD Revolving Amount as then in effect,
Canadian Borrowers shall, as promptly as practicable, but in no event later than
the next Business Day, prepay an aggregate principal amount of the CAD Revolving
Loans sufficient to bring the CAD Revolving Exposure within the Maximum CAD
Revolving Amount.
(d) Total Commitment Amount. If, at any time, the Revolving Credit
Exposure shall exceed the Total Commitment Amount as then in effect, Borrowers
shall, as promptly as practicable, but in no event later than the next Business
Day, prepay an aggregate principal amount of the Loans sufficient to bring the
Revolving Credit Exposure within the Total Commitment Amount.
36
(e) Generally. Unless otherwise designated by Borrowers, each prepayment
pursuant to this Section 2.12 shall be applied in the following order (i) first,
on a pro rata basis among all of the outstanding Base Rate Loans or CAD Base
Rate Loans, as applicable, and (ii) second, on a pro rata basis among all of the
outstanding Eurodollar Loans and CAD Fixed Rate Loans, as applicable, provided
that, if the outstanding principal amount of any Eurodollar Loan or CAD Fixed
Rate Loan shall be reduced to an amount less than the minimum amount set forth
in Section 2.6 hereof as a result of such prepayment, then such Eurodollar Loan
or CAD Fixed Rate Loan, as the case may be, shall be converted into a Base Rate
Loan or CAD Base Rate Loan, as appropriate, on the date of such prepayment. Any
prepayment of a Eurodollar Loan, Swing Loan or CAD Fixed Rate Loan pursuant to
this Section 2.12 shall be subject to the prepayment provisions set forth in
Article III hereof.
Section 2.13. Canadian Borrowers.
(a) Joint and Several Liability of Canadian Borrowers. Each request by a
Canadian Borrower for the making, conversion or continuation of a CAD Revolving
Loan shall be deemed to be a joint and several request by all Canadian
Borrowers. Each Canadian Borrower hereby authorizes any other Canadian Borrower
to request that US Borrower submit a Notice of Loan for a CAD Revolving Loan on
behalf of Canadian Borrowers. Each Canadian Borrower acknowledges and agrees
that Agent and the Canadian Lenders are entering into this Agreement at the
request of each Canadian Borrower and with the understanding that each Canadian
Borrower is and shall remain fully liable, jointly and severally, for payment in
full of the Applicable Debt; provided that, anything in this Agreement to the
contrary notwithstanding, no Canadian Borrower will at any time be liable for
the Indebtedness of US Borrower. Each Canadian Borrower agrees that it is
receiving or will receive a direct pecuniary benefit for each CAD Revolving Loan
made hereunder.
(b) Maximum Liability of Each Canadian Borrower. Anything in this
Agreement or any other Loan Document to the contrary notwithstanding, in no
event shall the maximum liability of any Canadian Borrower exceed the maximum
amount that (after giving effect to the incurring of the obligations hereunder
and to any rights to contribution of such Canadian Borrower from other
Affiliates of such Canadian Borrower) would not render the rights to payment of
Agent and the Canadian Lenders hereunder void, voidable or avoidable under any
applicable fraudulent transfer law.
(c) Appointment of US Borrower as Canadian Borrower's Agent. Each Canadian
Borrower hereby irrevocably appoints US Borrower as the borrowing agent and
attorney-in-fact for all Canadian Borrowers, which appointment shall remain in
full force and effect unless and until Agent shall have received prior written
notice signed by each Canadian Borrower that such appointment has been revoked.
Each Canadian Borrower hereby irrevocably appoints and authorizes US Borrower
(i) to provide Agent with all notices with respect to CAD Revolving Loans
obtained for the benefit of any Canadian Borrower and all other notices and
instructions under this Agreement, and (ii) to take such action as US Borrower
deems appropriate on its behalf to obtain CAD Revolving Loans and to exercise
such other powers as are reasonably incidental thereto to carry out the purposes
of this Agreement.
37
Section 2.14. Waivers of Borrowers. In the event that any obligation of
any Borrower under this Agreement is deemed to be an agreement by such Borrower
to answer for the debt or default of another Credit Party, each Borrower
represents and warrants that (a) no representation has been made to such
Borrower as to the creditworthiness of such other Credit Party, and (b) such
Borrower has established adequate means of obtaining from such other Credit
Party on a continuing basis, financial or other information pertaining to such
other Credit Party's financial condition. Each Borrower expressly waives, except
as expressly required under this Agreement, diligence, demand, presentment,
protest and notice of every kind and nature whatsoever, and consents that Agent,
the Lenders and any other Credit Party may deal with each other in connection
with such obligations or otherwise, or alter any contracts now or hereafter
existing between them, in any manner whatsoever, including without limitation
the renewal, extension, acceleration or changes in time for payment of any such
obligations or in the terms or conditions of any security held. Agent and the
Lenders are hereby expressly given the right, at their option, to proceed in the
enforcement of any of the Obligations independently of any other remedy or
security they may at any time hold in connection with such obligations secured
and it shall not be necessary for Agent and the Lenders to proceed upon or
against or exhaust any other security or remedy before proceeding to enforce
their rights against such Borrower. Each Borrower further subordinates any right
of subrogation, reimbursement, exoneration, contribution, indemnification,
setoff or other recourse in respect of sums paid to Agent and the Lenders by any
other Credit Party.
Section 2.15. Extension of Commitment. Contemporaneously with the delivery
of the financial statements required pursuant to Section 5.3(b) hereof
(beginning with the financial statements for the fiscal year of US Borrower
ending June 30, 2005), US Borrower may deliver a Request for Extension,
requesting that the Lenders extend the maturity of the Commitment for an
additional year. Each such extension shall require the unanimous written consent
of all of the Lenders and shall be upon such terms and conditions as may be
agreed to by Agent, Borrowers and the Lenders. US Borrower shall pay any
reasonable and properly documented attorneys' fees or other expenses of Agent in
connection with the documentation of any such extension, as well as such other
fees as may be agreed upon between Borrowers and Agent.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO FIXED RATE
LOANS; INCREASED CAPITAL; TAXES
Section 3.1. Requirements of Law.
(a) If, after the Closing Date, (i) the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or (ii) the
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority:
(A) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit or any Fixed Rate Loan
made by it, or change the
38
basis of taxation of payments to such Lender in respect thereof (except
for Taxes and Excluded Taxes which are governed by Section 3.2 hereof);
(B) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate or the CAD Fixed Rate; or
(C) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender of
making, converting into, continuing or maintaining Fixed Rate Loans or issuing
or participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, US Borrower (and any
Canadian Borrower to which such Loan was made) shall pay to such Lender,
promptly after receipt of a written request therefor, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection (a), such Lender shall promptly notify US Borrower
(with a copy to Agent) of the event by reason of which it has become so
entitled.
(b) If any Lender shall have determined that, after the Closing Date, the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by such Lender or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority shall have the effect of reducing the rate of return on such Lender's
or such corporation's capital as a consequence of its obligations hereunder, or
under or in respect of any Letter of Credit, to a level below that which such
Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration the policies of such Lender or corporation
with respect to capital adequacy), then from time to time, upon submission by
such Lender to US Borrower (with a copy to Agent) of a written request therefor
(which shall include the method for calculating such amount and reasonable
detail with respect to the calculation), the appropriate Borrowers shall
promptly pay or cause to be paid to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) A certificate as to any additional amounts payable pursuant to this
Section 3.1 together with a reasonably detailed calculation and description of
such amounts contemplated by this Section 3.1, submitted by any Lender to US
Borrower (with a copy to Agent) shall be rebuttably presumptive evidence of the
amounts so payable. In determining any such additional amounts, such Lender may
use any method of averaging and attribution that it (in its good faith,
reasonable credit judgment) shall deem applicable. The obligations of Borrowers
pursuant to this Section 3.1 shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
39
Section 3.2. Taxes.
(a) All payments made by any Credit Party under any Loan Document shall be
made free and clear of, and without deduction or withholding for or on account
of any Taxes or Other Taxes. If any Taxes or Other Taxes are required to be
withheld from any amounts payable to Agent or any Lender hereunder, the amounts
so payable to Agent or such Lender shall be increased to the extent necessary to
yield to Agent or such Lender (after payment of all Taxes and Other Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in the Loan Documents.
(b) In addition, the Credit Parties shall pay Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Whenever any Taxes or Other Taxes are required to be withheld and paid
by a Credit Party, such Credit Party shall timely withhold and pay such taxes to
the relevant Governmental Authorities. As promptly as possible thereafter, such
Credit Party shall send to Agent for its own account or for the account of the
relevant Lender, as the case may be, a certified copy of an original official
receipt received by such Credit Party showing payment thereof. If such Credit
Party shall fail to pay any Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to Agent the required receipts or other
required documentary evidence, such Credit Party shall indemnify Agent and the
appropriate Lenders on demand for any incremental taxes, interest or penalties
that may become payable by Agent or such Lender as a result of any such failure.
(d) If any Lender shall be so indemnified by a Credit Party, such Lender
shall use reasonable efforts to obtain the benefits of any refund, deduction or
credit for any taxes or other amounts with respect to the amount paid by such
Credit Party and shall reimburse such Credit Party to the extent, but only to
the extent, that such Lender shall receive a refund with respect to the amount
paid by such Credit Party or an effective net reduction in taxes or other
governmental charges (including any taxes imposed on or measured by the total
net income of such Lender) of the United States or any state or subdivision or
any other Governmental Authority thereof by virtue of any such deduction or
credit, after first giving effect to all other deductions and credits otherwise
available to such Lender. If, at the time any audit of such Lender's income tax
return is completed, such Lender determines, based on such audit, that it shall
not have been entitled to the full amount of any refund reimbursed to such
Credit Party as aforesaid or that its net income taxes shall not have been
reduced by a credit or deduction for the full amount reimbursed to such Credit
Party as aforesaid, such Credit Party, upon request of such Lender, shall
promptly pay to such Lender the amount so refunded to which such Lender shall
not have been so entitled, or the amount by which the net income taxes of such
Lender shall not have been so reduced, as the case may be.
(e) Each Lender that is not (i) a citizen or resident of the United States
of America, (ii) a corporation, partnership or other entity created or organized
in or under the laws of the United States of America (or any jurisdiction
thereof), or (iii) an estate or trust that is subject to U.S. federal income
taxation regardless of the source of its income (any such Person, a "Non-U.S.
Lender") shall deliver to US Borrower and Agent two copies of either U.S.
Internal
40
Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender
claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a statement
with respect to such interest and a Form W-8BEN, or any subsequent versions
thereof or successors thereto, properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S.
federal withholding tax on all payments by Credit Parties under this Agreement
and the other Loan Documents. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement or such other
Loan Document. In addition, each Non-U.S. Lender shall deliver such forms or
appropriate replacements promptly upon the obsolescence or invalidity of any
form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify US Borrower at any time it determines that such Lender is no
longer in a position to provide any previously delivered certificate to US
Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
subsection (e), a Non-U.S. Lender shall not be required to deliver any form
pursuant to this subsection (e) that such Non-U.S. Lender is not legally able to
deliver.
(f) The agreements in this Section 3.2 shall survive the termination of
the Loan Documents and the payment of the Loans and all other amounts payable
hereunder.
Section 3.3. Funding Losses. US Borrower, and any appropriate Canadian
Borrower to the extent such activity involves a CAD Fixed Rate Loan made to such
Canadian Borrower, agree to indemnify each Lender, promptly after receipt of a
written request therefor, and to hold each Lender harmless from, any properly
documented loss or expense that such Lender may sustain or incur as a
consequence of (a) default by a Borrower in making a borrowing of, conversion
into or continuation of Fixed Rate Loans after such Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by a Borrower in making any prepayment of or conversion from Fixed Rate
Loans after such Borrower has given a notice thereof in accordance with the
provisions of this Agreement, (c) the making of a prepayment of a Fixed Rate
Loan on a day that is not the last day of an Interest Period applicable thereto,
(d) the making of a prepayment of a Swing Loan on a day that is not the Swing
Loan Maturity Date applicable thereto, or (e) any conversion of a Fixed Rate
Loan to a Base Rate Loan or CAD Base Rate Loan pursuant to Section 3.4 hereof on
a day that is not the last day of an Interest Period applicable thereto. Such
indemnification shall be in an amount equal to the excess, if any, of (i) the
amount of interest that would have accrued on the amounts so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) or the applicable Swing Loan Maturity Date in each case at the
applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount of
interest (as reasonably determined by such Lender) that would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the appropriate London interbank market (or
Canadian market, if applicable), along with any administration fee charged by
such Lender. A certificate as to any amounts payable pursuant to this Section
3.3 submitted to US Borrower (with a copy to Agent) by any Lender, together with
a reasonably detailed
41
calculation and description of such amounts shall be rebuttably presumptive
evidence of the amounts so payable. The obligations of Borrowers pursuant to
this Section 3.3 shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
Section 3.4. Eurodollar Rate or CAD Fixed Rate Lending Unlawful; Inability
to Determine Rate.
(a) If any Lender shall determine (which determination shall, upon notice
thereof to US Borrower and Agent, be conclusive and binding on Borrowers) that,
after the Closing Date, (i) the introduction of or any change in or in the
interpretation of any law makes it unlawful, or (ii) any Governmental Authority
asserts that it is unlawful, for such Lender to make or continue any Loan as, or
to convert (if permitted pursuant to this Agreement) any Loan into, a Fixed Rate
Loan, the obligations of such Lender to make, continue or convert any such Fixed
Rate Loan shall, upon such determination, be suspended until such Lender shall
notify Agent that the circumstances causing such suspension no longer exist, and
all outstanding Fixed Rate Loans payable to such Lender shall automatically
convert (if conversion is permitted under this Agreement) into a Base Rate Loan
or CAD Base Rate Loan, as the case may be, or be repaid (if no conversion is
permitted) at the end of the then current Interest Periods with respect thereto
or sooner, if required by law or such assertion.
(b) If Agent or the Required Lenders determine that for any reason
adequate and reasonable means do not exist for determining the Eurodollar Rate
or CAD Fixed Rate for any requested Interest Period with respect to a proposed
Fixed Rate Loan, or that the Eurodollar Rate or CAD Fixed Rate for any requested
Interest Period with respect to a proposed Fixed Rate Loan does not adequately
and fairly reflect the cost to the applicable Lenders of funding such Loan,
Agent will promptly so notify US Borrower and each applicable Lender.
Thereafter, the obligation of the applicable Lenders to make or maintain such
Fixed Rate Loan shall be suspended until Agent (upon the instruction of the
Required Lenders) revokes such notice. Upon receipt of such notice, US Borrower
may revoke any pending request for a borrowing of, conversion to or continuation
of such Fixed Rate Loan or, failing that, will be deemed to have converted such
request into a request for a borrowing of a Base Rate Loan or CAD Base Rate
Loan, as the case may be, in the amount specified therein.
ARTICLE IV. CONDITIONS PRECEDENT
Section 4.1. Conditions to Each Credit Event. The obligation of the
Lenders, the Fronting Lender and the Swing Line Lender to participate in any
Credit Event shall be conditioned, in the case of each Credit Event, upon the
following:
(a) all conditions precedent as listed in Section 4.2 hereof required to
be satisfied prior to the first Credit Event shall have been satisfied prior to
or as of the first Credit Event;
42
(b) US Borrower shall have submitted a Notice of Loan (or with respect to
a Letter of Credit, complied with the provisions of Section 2.2(b) hereof) and
otherwise complied with Section 2.6 hereof;
(c) no Default or Event of Default shall then exist or immediately after
the Credit Event would exist; and
(d) each of the representations and warranties contained in Article VI
hereof shall be true in all material respects as if made on and as of the date
of the Credit Event, except to the extent that any thereof expressly relate to
an earlier date.
Each request by US Borrower or a Canadian Borrower for a Credit Event shall be
deemed to be a representation and warranty by Borrowers, to the best of each
such Borrower's knowledge, as of the date of such request as to the satisfaction
of the conditions precedent specified in subsections (c) and (d) above.
Section 4.2. Conditions to the First Credit Event. Borrowers shall cause
the following conditions to be satisfied on or prior to the Closing Date. The
obligation of the Lenders, the Fronting Lender and the Swing Line Lender to
participate in the first Credit Event is subject to Borrowers satisfying each of
the following conditions prior to or concurrently with such Credit Event:
(a) Notes. US Borrower shall have executed and delivered to each US Lender
requesting a US Revolving Credit Note its US Revolving Credit Note and shall
have executed and delivered to Swing Line Lender the Swing Line Note. Each
Canadian Borrower shall have executed and delivered to each Canadian Lender
requesting a CAD Revolving Credit Note its CAD Revolving Credit Note.
(b) Guaranties of Payment. Each Guarantor of Payment shall have executed
and delivered to Agent a Guaranty of Payment.
(c) Officer's Certificate, Resolutions, Organizational Documents.
Borrowers shall have delivered to Agent an officer's certificate (or comparable
domestic or foreign documents) certifying the names of the officers of each
Credit Party signing any of the Loan Documents, together with the true
signatures of such officers and certified copies of (i) the resolutions of the
board of directors (or comparable domestic or foreign documents) of such Credit
Party evidencing approval of the execution and delivery of the Loan Documents
and the execution of other Related Writings to which such Credit Party is a
party, and (ii) the Organizational Documents of such Credit Party.
(d) Legal Opinions. Borrowers shall have delivered to Agent opinions of
counsel, in form and substance satisfactory to Agent and the Lenders, for each
Credit Party.
(e) US Borrower Investment Policy. Borrowers shall have delivered to Agent
a copy of the US Borrower Investment Policy as in effect on the Closing Date.
43
(f) Good Standing and Full Force and Effect Certificates. Borrowers shall
have delivered to Agent a good standing certificate or full force and effect
certificate (or comparable domestic or foreign document), for each Credit Party,
issued on or about the Closing Date by the Secretary of State in the state where
such Credit Party is incorporated or formed (or appropriate foreign official).
(g) Closing and Legal Fees; Agent Fee Letter. Borrowers shall have (i)
executed and delivered to Agent, the Agent Fee Letter and paid to Agent, for its
sole account, the fees stated therein to be paid on or prior to the Closing
Date, (ii) executed and delivered to Agent the Closing Fee Letter and paid to
Agent, for the account of the Lenders, the fees stated therein to be paid on or
prior to the Closing Date, and (iii) paid all reasonable and properly documented
legal fees and expenses of Agent in connection with the preparation and
negotiation of the Loan Documents.
(h) Letter of Direction. US Borrower shall have delivered to Agent a
letter of direction authorizing Agent, on behalf of the Lenders, to disburse the
proceeds of the Loans, which includes the transfer of funds under this Agreement
and wire instructions setting forth the locations to which such funds shall be
sent.
(i) Long Term Debt Instruments. US Borrower shall have provided to Agent
copies of all long term debt instruments, certified by a Financial Officer as
complete, of the Companies.
(j) Existing Credit Agreement. Borrowers shall have terminated the Credit
Agreement between Borrowers and KeyBank National Association, as agent, dated as
of October 31, 2003, which termination shall be deemed to have occurred upon
payment in full of all of the Indebtedness outstanding thereunder and the
execution of this Agreement.
(k) No Material Adverse Change. No material adverse change, in the opinion
of Agent, shall have occurred in the financial condition, operations or
prospects of the Companies since March 31, 2005.
(l) Miscellaneous. Borrowers shall have provided to Agent and the Lenders
such other items and shall have satisfied such other conditions as may be
reasonably required by Agent or the Lenders.
ARTICLE V. COVENANTS
Section 5.1. Insurance. The Companies shall (a) maintain insurance to such
extent and against such hazards and liabilities as is commonly maintained by
Persons similarly situated; and (b) within ten days of any Lender's written
request, furnish to such Lender such information about the Companies' insurance
as that Lender may from time to time reasonably request.
Section 5.2. Money Obligations. Each Company shall pay in full (a) prior
in each case to the date when penalties would attach, all material taxes,
assessments and governmental charges and levies (except only those so long as
and to the extent that the same shall be contested
44
in good faith by appropriate and timely proceedings and for which adequate
provisions have been established in accordance with GAAP) for which it may be or
become liable or to which any or all of its properties may be or become subject;
(b) all material wage obligations to its employees in compliance with the Fair
Labor Standards Act (29 U.S.C. Sections 206-207) or any comparable provisions;
and (c) all of its other obligations calling for the payment of money (except
only those so long as and to the extent that nonpayment would not cause a
Material Adverse Effect) before such payment becomes overdue.
Section 5.3. Financial Statements and Information.
(a) Quarterly Financials. Borrowers shall furnish to Agent and the
Lenders, within fifty (50) days after the end of each of the first three
quarter-annual periods of each fiscal year of US Borrower, balance sheets of the
Companies as of the end of such period and statements of income (loss),
stockholders' equity and cash flow for the quarter and fiscal year to date
periods, all prepared on a Consolidated basis, in accordance with GAAP, and in
form and detail satisfactory to Agent and the Lenders and certified by a
Financial Officer of US Borrower; provided, however, that delivery pursuant to
paragraph (d) below of copies of the Quarterly Report on Form 10-Q of the
Companies for such quarterly period filed with the SEC shall be deemed to
satisfy the requirements of this subsection (a).
(b) Annual Audit Report. Borrowers shall furnish to Agent and the Lenders,
within one hundred (100) days after the end of each fiscal year of US Borrower,
an annual audit report of the Companies for that year prepared on a Consolidated
basis, in accordance with GAAP, and in form and detail satisfactory to Agent and
the Lenders and certified by an independent public accountant satisfactory to
Agent, which report shall include balance sheets and statements of income
(loss), stockholders' equity and cash-flow for that period; provided, however,
that delivery pursuant to paragraph (d) below of copies of the Annual Report on
Form 10-K of the Companies for such period filed with the SEC shall be deemed to
satisfy the requirements of this paragraph (b).
(c) Compliance Certificate. Borrowers shall furnish to Agent and the
Lenders, concurrently with the delivery of the financial statements set forth in
subsections (a) and (b) above, a Compliance Certificate.
(d) Public Financial Information. Borrowers shall furnish to Agent and the
Lenders, as soon as available, (i) copies of Form 10-Q quarterly reports, Form
10-K annual reports, and Form 8-K current reports, (ii) notice of (and, upon the
request of Agent, copies of) any other filings made by US Borrower with the SEC,
and (iii) notice of (and, upon the request of Agent, copies of) any other
information that is provided by US Borrower to its shareholders generally,
provided that if any such materials are available electronically as a filing
with the SEC, Borrowers shall give Agent prompt notice of such filing and the
giving of such notice shall satisfy Borrowers' obligation to provide Agent and
the Lenders copies of such publicly filed materials.
(e) Financial Information of Companies. Borrowers shall furnish to Agent
and the Lenders, promptly upon the written request of Agent or any Lender, such
other information
45
about the material financial condition, properties and operations of the
Companies as Agent or such Lender may from time to time reasonably request,
which information shall be submitted in form and detail reasonably satisfactory
to Agent or such Lender and certified by a Financial Officer of the Company or
Companies in question.
Section 5.4. Financial Records. The Companies shall at all times maintain
true and complete, in all material respects, records and books of account, all
in accordance with GAAP, and at all reasonable times (during normal business
hours and upon notice to such Company) permit Agent or any Lender, or any
representative thereof, to examine such Company's books and records and to make
excerpts therefrom and transcripts thereof.
Section 5.5. Franchises; Change in Business.
(a) Each Company shall preserve and maintain at all times its existence
(except as otherwise permitted under Section 5.12 hereof) and its material
rights and franchises.
(b) No Company shall engage in any business if, as a result thereof, the
general nature of the business of the Companies taken as a whole would be
substantially changed from the general nature of the business the Companies are
engaged in on the Closing Date.
Section 5.6. ERISA Compliance. No Company shall incur any material
accumulated funding deficiency within the meaning of ERISA, or any material
liability to the PBGC, established thereunder in connection with any ERISA Plan.
Borrowers shall furnish to the Lenders (a) as soon as possible and in any event
within thirty (30) days after any Company knows or has reason to know that any
material Reportable Event with respect to any ERISA Plan has occurred, a
statement of a Financial Officer of such Company, setting forth details as to
such Reportable Event and the action that such Company proposes to take with
respect thereto, together with a copy of the notice of such Reportable Event
given to the PBGC if a copy of such notice is available to such Company, and (b)
promptly after receipt thereof a copy of any material notice such Company, or
any member of the Controlled Group may receive from the PBGC or the Internal
Revenue Service with respect to any ERISA Plan administered by such Company;
provided that this latter clause shall not apply to notices of general
application promulgated by the PBGC or the Internal Revenue Service or to
letters or notices (such as favorable Determination Letter) with respect to an
ERISA Plan, which do not threaten a material liability to the Companies.
Borrowers shall promptly notify the Lenders of any material taxes assessed,
proposed to be assessed or that Borrowers have reason to believe may be assessed
against a Company by the Internal Revenue Service with respect to any ERISA
Plan. As used in this Section 5.6 and in Section 6.10 hereof, "material" means
the measure of a matter of significance that shall be determined as being an
amount equal to five percent (5%) of Consolidated Net Worth. As soon as
practicable, and in any event within twenty (20) days, after any Company shall
become aware that a material ERISA Event shall have occurred, such Company shall
provide Agent with notice of such ERISA Event with a certificate by a Financial
Officer of such Company setting forth the details of the event and the action
such Company or another Controlled Group member proposes to take with respect
thereto. Borrowers shall, at the request of Agent or any Lender, deliver or
cause to be delivered to Agent or such Lender, as the
46
case may be, true and correct copies of any documents relating to the ERISA Plan
of any Company.
Section 5.7. Financial Covenants.
(a) Leverage Ratio. US Borrower shall not suffer or permit at any time the
Leverage Ratio to exceed 3.00 to 1.00.
(b) Interest Coverage Ratio. US Borrower shall not suffer or permit at any
time the Interest Coverage Ratio to be less than 3.00 to 1.00.
Section 5.8. Borrowing. No Company shall create, incur or have outstanding
any Indebtedness of any kind; provided that this Section 5.8 shall not apply to
the following:
(a) the Loans, the Letters of Credit and any other Indebtedness under this
Agreement;
(b) asset securitizations up to the maximum aggregate amount, for all
Companies, of Fifty Million Dollars ($50,000,000);
(c) secured Indebtedness (including Capitalized Lease Obligations) so long
as the aggregate amount of all such Indebtedness (exclusive of asset
securitizations) outstanding at any time for all Companies does not exceed an
amount equal to ten percent (10%) of Consolidated Total Assets, based upon the
financial statements of US Borrower for the most recently completed fiscal
quarter; and
(d) unsecured Indebtedness.
Section 5.9. Liens. No Company shall create, assume or suffer to exist
(upon the happening of a contingency or otherwise) any Lien upon any of its
property or assets, whether now owned or hereafter acquired; provided that this
Section 5.9 shall not apply to the following:
(a) (i) Liens for taxes, assessments or governmental charges or levies on
such Company's property or assets if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being actively
contested in good faith by appropriate and timely proceedings and for which
adequate reserves shall have been established in accordance with GAAP, and (ii)
Liens arising in the ordinary course of business out of pledges or deposits
under workers' compensation laws, unemployment insurance, old age pensions, or
social security, retirement benefits or similar legislation;
(b) other statutory Liens incidental to the conduct of its business or the
ownership of its property and assets that (i) were not incurred in connection
with the borrowing of money or the obtaining of advances or credit, and (ii) do
not in the aggregate materially detract from the value of its property or assets
or materially impair the use thereof in the operation of its business;
(c) Liens on property or assets of a Domestic Subsidiary to secure
obligations of such Domestic Subsidiary to US Borrower or a Domestic Guarantor
of Payment;
47
(d) Liens on property or assets of a Foreign Subsidiary to secure
obligations of such Foreign Subsidiary to a Canadian Borrower or a Canadian
Guarantor of Payment;
(e) easements or other minor defects or irregularities in title of real
property not interfering in any material respect with the use of such property
in the business of any Company;
(f) Liens relating to ledger balances, consignments and other similar
arrangements;
(g) asset securitizations permitted pursuant to Section 5.12(i) hereof; or
(h) any other Liens (including all Liens existing on the Closing Date as
set forth in Schedule 5.9 hereto), so long as the aggregate amount of
Indebtedness secured by all such Liens (exclusive of asset securitizations) does
not exceed for all Companies at any time an aggregate amount equal to ten
percent (10%) of Consolidated Total Assets, based upon the financial statements
of US Borrower for the most recently completed fiscal quarter.
Section 5.10. Regulations U and X. No Company shall take any action that
would result in any non-compliance of the Loans or Letters of Credit with
Regulations U or X, or any other applicable regulation, of the Board of
Governors of the Federal Reserve System.
Section 5.11. Investments, Loans and Guaranties. No Company shall, without
the prior written consent of Agent and the Required Lenders, (a) create, acquire
or hold any Subsidiary, (b) make or hold any investment in any stocks, bonds or
securities of any kind, (c) be or become a party to any joint venture or other
partnership, (d) make or keep outstanding any advance or loan to any Person, or
(e) be or become a Guarantor of any kind; provided that this Section 5.11 shall
not apply to the following:
(i) any endorsement of a check or other medium of payment for
deposit or collection through normal banking channels or similar
transaction in the normal course of business;
(ii) any investment in direct obligations of the United States of
America or in certificates of deposit issued by a member bank (having
capital resources in excess of One Hundred Million Dollars ($100,000,000))
of the Federal Reserve System;
(iii) any investment in commercial paper or securities that at the
time of such investment is assigned a AAA rating (or its equivalent) in
accordance with the rating systems employed by either Moody's or Standard
& Poor's;
(iv) the holding of each of the Subsidiaries listed on Schedule 6.1
hereto, and the creation, acquisition and holding of any new Subsidiary
after the Closing Date so long as such new Subsidiary shall have been
created, acquired or held in accordance with the terms and conditions of
this Agreement;
48
(v) loans to a Credit Party or Domestic Subsidiary from a Company
that are not prohibited under Section 5.8 hereof;
(vi) any guaranty by a Company of Indebtedness of another Company so
long as such Indebtedness is permitted pursuant to Section 5.8 hereof;
(vii) the holding of any stock or equity interest that remains
following the sale or other disposition of a Company (or a majority
interest therein) permitted by Section 5.12 hereof;
(viii) any advance or loan to an officer, employee, agent or similar
Person of or consultant to a Company as an advance on commissions, travel,
relocation expenses and other items in the ordinary course of business, so
long as all such advances and loans from all Companies aggregate not more
than the maximum principal sum of Five Million Dollars ($5,000,000) at any
time outstanding;
(ix) Permitted Investments;
(x) Permitted Foreign Subsidiary Loans and Investments;
(xi) the holding of any stock or equity interest that has been
acquired pursuant to an Acquisition permitted by Section 5.13 hereof,
subject to the restriction in subsection (x) above;
(xii) the creation, acquisition or holding of any Domestic
Subsidiary so long as such Domestic Subsidiary, if required pursuant to
Section 5.19 hereof, becomes a Guarantor of Payment in accordance with
Section 5.19 hereof, and, subject to the restriction in subsection (x)
above, the creation, acquisition or holding of any Foreign Subsidiary; or
(xiii) any investments may be made pursuant to the US Borrower
Investment Policy.
Section 5.12. Merger and Sale of Assets. No Company shall merge or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of all or a substantial part of its assets to any Person, except that,
if no Default or Event of Default shall then exist or immediately thereafter
shall begin to exist:
(a) any Domestic Subsidiary may merge with US Borrower (provided that US
Borrower shall be the continuing or surviving Person) or any one or more
Domestic Guarantors of Payment;
(b) any Domestic Subsidiary may sell, lease, transfer or otherwise dispose
of any of its assets to (i) US Borrower or (ii) any Domestic Guarantor of
Payment;
49
(c) any Domestic Subsidiary (other than a Credit Party) may merge with or
sell, lease, transfer or otherwise dispose of any of its assets to any other
Domestic Subsidiary;
(d) any Foreign Subsidiary may merge or amalgamate with a Canadian
Borrower (provided that such Canadian Borrower shall be the continuing or
surviving Person) or one or more Canadian Guarantors of Payment (provided that
such Canadian Guarantor of Payment shall be the continuing or surviving Person);
(e) any Foreign Subsidiary may sell, lease, transfer or otherwise dispose
of any of its assets to a Canadian Borrower or a Canadian Guarantor of Payment;
(f) any Foreign Subsidiary other than a Credit Party may merge or
amalgamate with or sell, lease, transfer or otherwise dispose of any of its
assets to any other Foreign Subsidiary;
(g) any Company may sell, lease, transfer or otherwise dispose of any of
its assets to any Person (in addition to any such sale, lease, transfer or
disposal to US Borrower or a Domestic Guarantor of Payment) so long as the
aggregate amount of all such assets sold, leased, transferred or otherwise
disposed of by all Companies in any fiscal year of US Borrower does not exceed
an amount equal to five percent (5%) of the rolling two-year average of
Consolidated Total Assets;
(h) Acquisitions may be effected in accordance with the provisions of
Section 5.13 hereof; and
(i) any Company may enter into (or have existing on the Closing Date)
asset securitization financing programs, up to an aggregate amount, for all such
programs of all Companies (including existing asset securitization programs),
not to exceed Fifty Million Dollars ($50,000,000) during the Commitment Period.
Section 5.13. Acquisitions. No Company shall effect an Acquisition;
provided, however, that a Credit Party may effect an Acquisition so long as:
(a) in the case of a merger, amalgamation or other combination with a
Borrower, such Borrower shall be the surviving entity, and in each case, US
Borrower shall be a surviving entity;
(b) in the case of a merger, amalgamation or other combination with a
Credit Party (other than a Borrower), a Credit Party shall be the surviving
entity;
(c) the Companies shall be in full compliance with the Loan Documents both
prior to and subsequent to the transaction;
(d) no Default or Event of Default shall exist prior to or after giving
effect to such Acquisition; and
50
(e) Borrowers shall have provided to Agent and the Lenders, at least ten
days prior to such Acquisition with respect to which the Consideration is in
excess of the Dollar Equivalent of Fifty Million Dollars ($50,000,000), (i)
written notice of such proposed Acquisition, (ii) historical financial
statements of the target entity, and (iii) a pro forma financial statement of
the Companies accompanied by a certificate of a Financial Officer of US Borrower
showing pro forma compliance with Section 5.7 hereof, both before and after
giving effect to the proposed Acquisition.
Section 5.14. Notice. Each Borrower shall cause a Financial Officer of
such Borrower to promptly notify Agent and the Lenders whenever any Default or
Event of Default may occur hereunder or any representation or warranty made in
Article VI hereof or elsewhere in this Agreement or in any Related Writing may
for any reason cease in any material respect to be true and complete.
Section 5.15. Environmental Compliance. Each Company shall comply in all
material respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which such Company owns
or operates a facility or site, arranges for disposal or treatment of hazardous
substances, solid waste or other wastes, accepts for transport any hazardous
substances, solid waste or other wastes or holds any interest in real property
or otherwise. Borrowers shall furnish to the Lenders, promptly after receipt
thereof, a copy of any notice such Company may receive from any Governmental
Authority or private Person or otherwise, that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company. No
Company shall allow the release or disposal of hazardous waste, solid waste or
other wastes on, under or to any real property in which any Company holds any
interest or performs any of its operations, in violation of any material
provision of Environmental Law. As used in this Section 5.15, "litigation or
proceeding" means any demand, claim, notice, suit, suit in equity action,
administrative action, investigation or inquiry whether brought by any
Governmental Authority or private Person or otherwise. Borrowers shall defend,
indemnify and hold Agent and the Lenders harmless against all properly
documented costs, expenses, claims, damages, penalties and liabilities of every
kind or nature whatsoever (including attorneys' fees) arising out of or
resulting from the noncompliance of any Company with any Environmental Law. Such
indemnification shall survive any termination of this Agreement.
Section 5.16. Affiliate Transactions. No Company 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 any Affiliate (other than a Company that is a
Credit Party) on terms that shall be less favorable to such Company than those
that might be obtained at the time in a transaction with a non-Affiliate;
provided, however, that the foregoing shall not prohibit (a) the payment of
customary and reasonable directors' fees to directors who are not employees of a
Company or an Affiliate; (b) any transaction between a Company (if a Credit
Party) and an Affiliate (if a Credit Party, a Foreign Subsidiary (other than
with respect to loans and investments) or iSource Performance Materials L.L.C.)
which US Borrower reasonably determines in good faith is beneficial to the
Companies as a whole and which is not entered into for the purpose of hindering
the exercise by Agent or the Lenders of
51
their rights or remedies under this Agreement; (c) any employment agreement,
employee benefit plan, stock option plan, officer and director indemnification
agreement or any similar arrangement entered into by a Company in the ordinary
course of business; (d) loans to employees or officers to the extent permitted
under this Agreement; or (e) loans and investments in Foreign Subsidiaries
permitted under Section 5.11 hereof.
Section 5.17. Use of Proceeds. US Borrower's use of the proceeds of the US
Revolving Loans shall be for working capital and other general corporate
purposes (including, without limitation, share repurchases) of the Companies,
for refinancing of existing credit facilities and for Acquisitions. Canadian
Borrowers' use of the proceeds of the CAD Revolving Loans shall be for working
capital and other general corporate purposes (including, without limitation,
share repurchases) of the Canadian Borrowers, for refinancing of existing credit
facilities and for Acquisitions.
Section 5.18. Corporate Names. No Borrower shall change its corporate name
and no Credit Party shall change its state or jurisdiction of organization,
unless, in each case, US Borrower shall have provided Agent and the Lenders with
prompt written notice thereof.
Section 5.19. Subsidiary Guaranties. Each Domestic Subsidiary and any
other Subsidiary that shall be organized under the laws of Canada or a Province
of Canada created, acquired or held subsequent to the Closing Date, shall,
within ten days after such Subsidiary is created or acquired, execute and
deliver to Agent a Guaranty of Payment of all of the Applicable Debt, such
agreement to be in form and substance acceptable to Agent and the Required
Lenders, along with such corporate governance and authorization documents and an
opinion of counsel as may be deemed necessary or advisable by Agent and the
Required Lenders; provided, however, that:
(a) a Subsidiary shall not be required to execute such Guaranty of Payment
so long as (i) the total assets of such Subsidiary shall be less than Ten
Million Dollars ($10,000,000), and (ii) the aggregate of the total assets of all
such Subsidiaries with total asset values of less than Ten Million Dollars
($10,000,000) and which have not executed a Guaranty of Payment does not exceed
the aggregate amount of Twenty Million Dollars ($20,000,000). In the event that
the total assets of any Subsidiary that shall not be a Guarantor of Payment
shall be at any time equal to or greater than Ten Million Dollars ($10,000,000)
(or the foregoing Twenty Million Dollars ($20,000,000) shall be exceeded),
Borrowers shall provide Agent and the Lenders with prompt written notice of such
asset value;
(b) with respect to a Subsidiary required to execute a Guaranty of Payment
pursuant to this Section 5.19, if (i) the total assets of such Subsidiary shall
be less than Fifteen Million Dollars ($15,000,000), and (ii) the aggregate of
the total assets of all such Subsidiaries shall be less than Thirty Million
Dollars ($30,000,000), then such Subsidiary may delay the delivery to Agent of
such Guaranty of Payment and ancillary documentation until the first quarterly
financial reporting date of US Borrower with respect to the quarterly period in
which such Subsidiary was created, acquired or experienced an increase in amount
of assets;
52
(c) a Foreign Subsidiary (other than a Subsidiary organized under the laws
of Canada or a Province of Canada) shall not be required to execute such
Guaranty of Payment;
(d) a Foreign Subsidiary organized under the laws of Canada or a Province
of Canada is not required to execute a Guaranty of Payment so long as the total
assets of all such Foreign Subsidiaries not executing a Guaranty of Payment, and
not becoming a Canadian Borrower pursuant to the following subsection (e)
hereof, does not aggregate in excess of ten percent (10%) of Consolidated Total
Assets;
(e) a Foreign Subsidiary organized under the laws of Canada or a Province
of Canada that is required to execute a Guaranty of Payment pursuant to this
Section 5.19 may, at Borrowers' option, in lieu of executing a Guaranty of
Payment, be joined as a Canadian Borrower pursuant to documentation in form and
substance acceptable to Agent, in its sole discretion; and
(f) notwithstanding anything in this Section 5.19 to the contrary, (i) any
Company that is a Guarantor of the obligations under any Material Indebtedness
Agreement of any Borrower, and (ii) subject to Sections 5.19(a) and (b) hereof,
any Domestic Subsidiary that is the parent of a Foreign Subsidiary, shall also
be required to execute a Guaranty of Payment pursuant to this Section 5.19,
unless otherwise agreed to in writing by Agent.
Section 5.20. Other Covenants. In the event that any Company shall enter
into, or shall have entered into, any Material Indebtedness Agreement, wherein
the covenants contained therein shall be more restrictive than the covenants set
forth herein, then the Companies shall be bound hereunder by such more
restrictive covenants with the same force and effect as if such covenants were
written herein.
Section 5.21. Guaranties Under the Note Purchase Agreement. No Company
shall be or become a Guarantor of any Indebtedness incurred pursuant to the Note
Purchase Agreement unless such Company is also a Guarantor of Payment under this
Agreement.
Section 5.22. Pari Passu Ranking. The Obligations shall, and Borrowers
shall take all necessary action to ensure that the Obligations shall, at all
times, rank at least pari passu in right of payment with any Indebtedness under
the Note Purchase Agreement and all other senior unsecured Indebtedness of each
Borrower.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification.
(a) Each Company is duly organized, validly existing and in good standing
under the laws of its state or jurisdiction of incorporation or organization,
and is duly qualified and authorized to do business and is in good standing as a
foreign entity in each jurisdiction where the character of its property or its
business activities makes such qualification necessary, except
53
where the failure to so qualify could not reasonably be expected to cause or
result in a Material Adverse Effect.
(b) As of the Closing Date, Schedule 6.1 hereto sets forth (i) each
Company, (ii) each Company's state or jurisdiction of organization, and (iii)
each Person that owns the stock or other equity interest of each Company (other
than US Borrower).
Section 6.2. Corporate Authority. Each Credit Party has the right and
power and is duly authorized and empowered to enter into, execute and deliver
the Loan Documents to which it is a party and to perform and observe the
provisions of the Loan Documents. The Loan Documents to which each Credit Party
is a party have been duly authorized and approved by such Credit Party's board
of directors or other governing body, as applicable, and are the valid and
binding obligations of such Credit Party, enforceable against such Credit Party
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by equitable principles (regardless of whether
enforcement is sought in equity or at law). The execution, delivery and
performance of the Loan Documents will not conflict with nor result in any
breach in any of the provisions of, or constitute a default under, or result in
the creation of any Lien (other than Liens permitted under Section 5.9 hereof)
upon any assets or property of any Company under the provisions of, such
Company's Organizational Documents or any agreement.
Section 6.3. Compliance with Laws and Contracts. Each Company:
(a) holds all material permits, certificates, licenses, orders,
registrations, franchises, authorizations, and other approvals from any
Governmental Authority necessary for the conduct of its business and is in
compliance in all material respects with all applicable laws relating thereto;
(b) is in compliance in all material respects with all federal, state,
local, or foreign applicable statutes, rules, regulations, and orders including,
without limitation, those relating to environmental protection, occupational
safety and health, and equal employment practices on the Closing Date and,
except where the failure to be in compliance could not reasonably be expected to
have or result in a Material Adverse Effect, after the Closing Date; and
(c) is not in material violation of or in default under any agreement to
which it is a party or by which its assets are subject or bound on the Closing
Date and, except with respect to any violation or default that could not
reasonably be expected to have or result in a Material Adverse Effect, after the
Closing Date.
Section 6.4. Litigation and Administrative Proceedings. Except as
disclosed on Schedule 6.4 hereto, there are (a) no lawsuits, actions,
investigations, or other proceedings pending or threatened against any Company,
or in respect of which any Company may have any liability, in any court or
before any Governmental Authority, arbitration board, or other tribunal, (b) no
orders, writs, injunctions, judgments, or decrees of any court or government
agency or instrumentality to which any Company is a party or by which the
property or assets of any Company are bound, and (c) no grievances, disputes, or
controversies outstanding with any
54
union or other organization of the employees of any Company, or threats of work
stoppage, strike, or pending demands for collective bargaining, that, as to (a)
through (c) above, could reasonably be expected to have a Material Adverse
Effect.
Section 6.5. Title to Assets. Each Credit Party has good title to and
ownership of all property it purports to own, which property is free and clear
of all Liens, except those permitted under Section 5.9 hereof.
Section 6.6. Liens and Security Interests. On and after the Closing Date,
except for Liens permitted pursuant to Section 5.9 hereof, (a) there is no
financing statement or similar notice of Lien outstanding covering any personal
property of any Company; (b) there is no mortgage or charge outstanding covering
any real property of any Company; and (c) no real or personal property of any
Company is subject to any security interest or Lien of any kind.
Section 6.7. Tax Returns. All federal, state, provincial and local tax
returns and other reports required by law to be filed in respect of the income,
business, properties and employees of each Company have been filed and all
taxes, assessments, fees and other governmental charges that are due and payable
have been paid, except as otherwise permitted herein or where the failure to do
so could not reasonably be expected to cause or result in a Material Adverse
Effect. The provision for taxes on the books of each Company is adequate, in all
material respects, for all years not closed by applicable statutes and for the
current fiscal year.
Section 6.8. Environmental Laws. Each Company is in compliance, in all
material respects, with all Environmental Laws, including, without limitation,
all Environmental Laws in all jurisdictions in which any Company owns or
operates, or has owned or operated, a facility or site, arranges or has arranged
for disposal or treatment of hazardous substances, solid waste or other wastes,
accepts or has accepted for transport any hazardous substances, solid waste or
other wastes or holds or has held any interest in real property or otherwise. No
litigation or proceeding arising under, relating to or in connection with any
Environmental Law is pending or, to the best knowledge of each Company,
threatened, against any Company, any real property in which any Company holds or
has held an interest or any past or present operation of any Company that is
likely to have a Material Adverse Effect. No release, threatened release or
disposal of hazardous waste, solid waste or other wastes is occurring, or has
occurred (other than those that are currently being cleaned up in accordance
with Environmental Laws), on, under or to any real property in which any Company
holds any interest or performs any of its operations, in violation of any
Environmental Law that is likely to have a Material Adverse Effect. As used in
this Section 6.8, "litigation or proceeding" means any demand, claim, notice,
suit, suit in equity, action, administrative action, investigation or inquiry
whether brought by any Governmental Authority or private Person, or otherwise.
Section 6.9. Continued Business. There exists no actual, pending, or, to
each Borrower's knowledge, any threatened termination, cancellation or
limitation of, or any modification or change in the business relationship of any
Company and any customer or supplier, or any group of customers or suppliers,
whose purchases or supplies, individually or in the aggregate, are material to
the business of any Company, and there exists no present condition or state of
facts or circumstances that could reasonably be expected to have a Material
Adverse Effect or prevent a
55
Company from conducting such business or the transactions contemplated by this
Agreement in substantially the same manner in which it was previously conducted.
Section 6.10. Employee Benefits Plans. Schedule 6.10 hereto identifies
each ERISA Plan. No ERISA Event has occurred or is expected to occur with
respect to an ERISA Plan. Full payment has been made of all amounts that a
Controlled Group member is required, under applicable law or under the governing
documents, to have paid as a contribution to or a benefit under each ERISA Plan.
The liability of each Controlled Group member with respect to each ERISA Plan
has been fully funded based upon reasonable and proper actuarial assumptions,
has been fully insured, or has been fully reserved for on its financial
statements. No changes have occurred or are expected to occur that would cause a
material increase in the cost of providing benefits under the ERISA Plan. With
respect to each ERISA Plan that is intended to be qualified under Code Section
401(a), (a) the ERISA Plan and any associated trust operationally comply with
the applicable requirements of Code Section 401(a); (b) the ERISA Plan and any
associated trust have been amended to comply in all material respects with all
such requirements as currently in effect, other than those requirements for
which a retroactive amendment can be made within the "remedial amendment period"
available under Code Section 401(b) (as extended under Treasury Regulations and
other Treasury pronouncements upon which taxpayers may rely); (c) the ERISA Plan
and any associated trust have received a favorable determination letter from the
Internal Revenue Service stating that the ERISA Plan qualifies under Code
Section 401(a), that the associated trust qualifies under Code Section 501(a)
and, if applicable, that any cash or deferred arrangement under the ERISA Plan
qualifies under Code Section 401(k), unless the ERISA Plan was first adopted at
a time for which the above-described "remedial amendment period" has not yet
expired; (d) the ERISA Plan currently satisfies the requirements of Code Section
410(b), without regard to any retroactive amendment that may be made within the
above-described "remedial amendment period"; and (e) no contribution made to the
ERISA Plan is subject to an excise tax under Code Section 4972. With respect to
any Pension Plan (other than with respect to the Detroit Ball Bearing Company
Union Employees' Retirement Plan), the "accumulated benefit obligation" of
Controlled Group members with respect to the Pension Plan (as determined in
accordance with Statement of Accounting Standards No. 87, "Employers' Accounting
for Pensions") does not exceed the fair market value of Pension Plan assets.
Section 6.11. Consents or Approvals. No consent, approval or authorization
of, or filing, registration or qualification with, any Governmental Authority or
any other Person is required to be obtained or completed by any Company in
connection with the execution, delivery or performance of any of the Loan
Documents, that has not already been obtained or completed.
Section 6.12. Solvency.
(a) US Borrower. US Borrower has received consideration that is the
reasonable equivalent value of the obligations and liabilities that US Borrower
has incurred to Agent and the Lenders. US Borrower is not insolvent as defined
in any applicable state, federal or relevant foreign statute, nor will US
Borrower be rendered insolvent by the execution and delivery of the Loan
Documents to Agent and the Lenders. US Borrower is not engaged or about to
engage in any business or transaction for which the assets retained by it are or
will be an unreasonably
56
small amount of capital, taking into consideration the obligations to Agent and
the Lenders incurred hereunder. US Borrower does not intend to, nor does it
believe that it will, incur debts beyond its ability to pay such debts as they
mature.
(b) Canadian Borrowers. Each Canadian Borrower has received consideration
that is the reasonable equivalent value of the obligations and liabilities that
such Canadian Borrower has incurred to Agent and the Canadian Lenders. No
Canadian Borrower is insolvent as defined in any applicable state, federal or
relevant foreign statute, nor will any Canadian Borrower be rendered insolvent
by the execution and delivery of the Loan Documents to Agent and the Canadian
Lenders. No Canadian Borrower is engaged or about to engage in any business or
transaction for which the assets retained by it are or will be an unreasonably
small amount of capital, taking into consideration the obligations to Agent and
the Canadian Lenders incurred hereunder. No Canadian Borrower intends to, nor
does it believe that it will, incur debts beyond its ability to pay such debts
as they mature.
Section 6.13. Financial Statements. The audited Consolidated financial
statements of Borrowers for the fiscal year ended June 30, 2004 furnished to
Agent and the Lenders, are true and complete, have been prepared in accordance
with GAAP, and fairly present, in all material respects, the financial condition
of the Companies as of the dates of such financial statements and the results of
their operations for the periods then ending. Since the dates of such
statements, there has been no material adverse change in any Company's financial
condition, properties or business or any change in any Company's accounting
procedures.
Section 6.14. Regulations. No Company is engaged principally or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System of the United States of
America). Neither the granting of any Loan (or any conversion thereof) or Letter
of Credit nor the use of the proceeds of any Loan or Letter of Credit will
violate, or be inconsistent with, the provisions of Regulation T, U or X or any
other Regulation of such Board of Governors.
Section 6.15. Material Agreements. Except as disclosed on Schedule 6.15
hereto, no Company is a party to any (a) debt instrument (excluding the Loan
Documents); (b) lease (capital, operating or otherwise), whether as lessee or
lessor thereunder; or (c) collective bargaining agreement that, as to
subsections (a) through (c) above, if violated, breached, or terminated for any
reason, would have or would be reasonably expected to have a Material Adverse
Effect.
Section 6.16. Intellectual Property. Each Company owns, possesses, or has
the right to use all of the patents, patent applications, industrial designs,
trademarks, service marks, copyrights, licenses, and rights with respect to the
foregoing necessary for the conduct of its business without any known material
conflict with the rights of others.
Section 6.17. Insurance. The Companies maintain with financially sound and
reputable insurers insurance with coverage and limits as required by law and as
is customary with Persons engaged in the same businesses as the Companies.
57
Section 6.18. Accurate and Complete Statements. Neither the Loan Documents
nor any written statement made by any Company in connection with any of the Loan
Documents contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained therein or in the Loan Documents
not misleading. After due inquiry by Borrowers, there is no known fact that any
Company has not disclosed to Agent and the Lenders that has or is likely to have
a Material Adverse Effect.
Section 6.19. Note Purchase Agreement. (a) No Default or Event of Default
(as each term (or similar term, if any) is defined in the Note Purchase
Agreement) exists, nor will any such Default or Event of Default exist
immediately after the granting of any loan under this Agreement or the Note
Purchase Agreement, or any agreement executed in connection therewith; (b) no
Company has incurred any "Debt" (as defined, or as a similar term is defined, in
each Note Purchase Agreement) in violation of the provisions of any Note
Purchase Agreement; and (c) the Obligations (as defined herein) constitutes
"Debt" (as defined or, as a similar term is defined, in each Note Purchase
Agreement) permitted pursuant to the provisions of the Note Purchase Agreements.
No Subsidiary is a Guarantor under any Note Purchase Agreement or any other
Material Indebtedness Agreement that is not also a Guarantor of Payment
hereunder.
Section 6.20. Defaults. No Default or Event of Default exists hereunder,
nor will any begin to exist immediately after the execution and delivery hereof.
ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default hereunder:
Section 7.1. Payments. If (a) the interest on any Loan or any facility or
other fee shall not be paid in full when due and payable or within three
Business Days thereafter, or (b) the principal of any Loan or any obligation
under any Letter of Credit shall not be paid in full when due and payable.
Section 7.2. Special Covenants. If any Company shall fail or omit to
perform and observe Section 5.7, 5.8, 5.9, 5.11, 5.12 or 5.13 hereof.
Section 7.3. Other Covenants. If any Company shall fail or omit to perform
and observe any agreement or other provision (other than those referred to in
Section 7.1 or 7.2 hereof) contained or referred to in this Agreement or any
Related Writing that is on such Company's part to be complied with, and that
Default shall not have been fully corrected within thirty (30) days after the
giving of written notice thereof to a Borrower by Agent or any Lender that the
specified Default is to be remedied.
Section 7.4. Representations and Warranties. If any representation,
warranty or statement made in or pursuant to this Agreement or any Related
Writing or any other material information furnished by any Company to the
Lenders or any thereof or any other holder of any Note, shall be false or
erroneous in any material respect.
58
Section 7.5. Cross Default. If any Company shall default in the payment of
principal or interest due and owing upon any other obligation for borrowed money
in excess of the aggregate, for all such obligations of all such Companies, of
the Dollar Equivalent of Twenty Million Dollars ($20,000,000) beyond any period
of grace provided with respect thereto or in the performance or observance of
any other agreement, term or condition contained in any agreement under which
such obligation is created, if the effect of such default is to allow the
acceleration of the maturity of such Indebtedness or to permit the holder
thereof to cause such Indebtedness to become due prior to its stated maturity.
Section 7.6. ERISA Default. The occurrence of one or more ERISA Events
that (a) the Required Lenders determine could reasonably be expected to have a
Material Adverse Effect, or (b) results in a Lien on any of the assets of any
Company, in the aggregate for all such Liens for all Companies, in excess of One
Million Dollars ($1,000,000).
Section 7.7. Change in Control. If any Change in Control shall occur.
Section 7.8. Money Judgment. A final judgment or order for the payment of
money shall be rendered against any Company by a court of competent
jurisdiction, that remains unpaid or unstayed and undischarged for a period
(during which execution shall not be effectively stayed) of thirty (30) days
after the date on which the right to appeal has expired, provided that the
aggregate of all such judgments, for all such Companies, shall exceed the Dollar
Equivalent of Ten Million Dollars ($10,000,000) (less any amount that will be
covered by the proceeds of insurance and is not subject to dispute by the
insurance provider).
Section 7.9. Validity of Loan Documents. (a) Any material provision, in
the reasonable opinion of Agent, of any Loan Document shall at any time for any
reason cease to be valid, binding and enforceable against any Credit Party; (b)
the validity, binding effect or enforceability of any Loan Document against any
Credit Party shall be contested by any Credit Party; (c) any Credit Party shall
deny that it has any or further liability or obligation thereunder; or (d) any
Loan Document shall be terminated, invalidated or set aside, or be declared
ineffective or inoperative or in any way cease to give or provide to Agent and
the Lenders the benefits purported to be created thereby. In addition to any
other material Loan Documents, this Agreement, each Note and each Guaranty of
Payment shall be deemed to be "material".
Section 7.10. Note Purchase Agreement. If (a) any event of default (as
each term or similar term is defined in any Note Purchase Agreement) shall occur
under any Note Purchase Agreement or any agreement executed in connection
therewith, or (b) the Indebtedness incurred in connection with any Note Purchase
Agreement shall be accelerated for any reason.
Section 7.11. Solvency. If any Borrower or other Company (other than a
Foreign Subsidiary with aggregate assets of less than Two Million Dollars
($2,000,000) or a Dormant Subsidiary) shall (i) except as permitted in Section
5.12 hereof, discontinue business, (ii) generally not pay its debts as such
debts become due, (iii) make a general assignment for the benefit of creditors,
(iv) apply for or consent to the appointment of an interim receiver, a receiver
and manager, an administrator, sequestrator, monitor, a custodian, a trustee, an
interim trustee or
59
liquidator of all or a substantial part of its assets or of such Company (or
Companies), (v) be adjudicated a debtor or insolvent or have entered against it
an order for relief under Title 11 of the United States Code, or under any other
bankruptcy insolvency, liquidation, winding-up, corporate or similar statute or
law, foreign, federal, state or provincial, in any applicable jurisdiction, now
or hereafter existing, as any of the foregoing may be amended from time to time,
(vi) file a voluntary petition in bankruptcy, or file a proposal or notice of
intention to file a proposal or have an involuntary proceeding filed against it
and the same shall continue undismissed for a period of thirty (30) days from
commencement of such proceeding or case, or file a petition or an answer or an
application or a proposal seeking reorganization or an arrangement with
creditors or seeking to take advantage of any other law (whether federal,
provincial or state, or, if applicable, other jurisdiction) relating to relief
of debtors, or admit (by answer, by default or otherwise) the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency or other proceeding (whether federal, provincial or state, or, if
applicable, other jurisdiction) relating to relief of debtors, (vii) suffer or
permit to continue unstayed and in effect for thirty (30) consecutive days any
judgment, decree or order entered by a court of competent jurisdiction, that
approves a petition or an application or a proposal seeking its reorganization
or appoints an interim receiver, a receiver and manager, an administrator,
custodian, trustee, interim trustee or liquidator of all or a substantial part
of its assets, or of such Company (or Companies), or (viii) take, or omit to
take, any action in order thereby to effect any of the foregoing.
ARTICLE VIII. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or elsewhere:
Section 8.1. Optional Defaults. If any Event of Default referred to in
Section 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.10 hereof shall occur,
Agent may, with the consent of the Required Lenders, and shall, at the written
request of the Required Lenders, give written notice to Borrowers to:
(a) terminate the Commitment, if not previously terminated, and,
immediately upon such election, the obligations of the Lenders, and each
thereof, to make any further Loan, and the obligation of the Fronting Lender to
issue any Letter of Credit, immediately shall be terminated; and/or
(b) accelerate the maturity of all of the Obligations (if the Obligations
are not already due and payable), whereupon all of the Obligations shall become
and thereafter be immediately due and payable in full without any presentment or
demand and without any further or other notice of any kind, all of which are
hereby waived by each Borrower.
60
Section 8.2. Automatic Defaults. If any Event of Default referred to in
Section 7.11 hereof shall occur:
(a) all of the Commitment shall automatically and immediately terminate,
if not previously terminated, and no Lender thereafter shall be under any
obligation to grant any further Loan, nor shall the Fronting Lender be obligated
to issue any Letter of Credit; and
(b) the principal of and interest then outstanding on all of the Loans,
and all of the other Obligations, shall thereupon become and thereafter be
immediately due and payable in full (if the Obligations are not already due and
payable), all without any presentment, demand or notice of any kind, which are
hereby waived by each Borrower.
Section 8.3. Letters of Credit. If the maturity of the Obligations shall
be accelerated pursuant to Section 8.1 or 8.2 hereof, US Borrower shall
immediately deposit with Agent, as security for the obligations of US Borrower
and any other Credit Party to reimburse Agent and the Lenders for any then
outstanding Letters of Credit, cash equal to the sum of the aggregate undrawn
balance of any then outstanding Letters of Credit. Agent and the Lenders are
hereby authorized, at their option, to deduct any and all such amounts from any
deposit balances then owing by any Lender (or any affiliate of such Lender) to
or for the credit or account of any Company, as security for the obligations of
US Borrower and any other Credit Party to reimburse Agent and the Lenders for
any then outstanding Letters of Credit.
Section 8.4. Offsets. If there shall occur or exist any Event of Default
referred to in Section 7.11 hereof or if the maturity of the Obligations is
accelerated pursuant to Section 8.1 or 8.2 hereof, each Lender shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all of the Obligations then owing by a Borrower to such
Lender (including, without limitation, any participation purchased or to be
purchased pursuant to Section 2.2(b), 2.2(c) or 8.5 hereof), whether or not the
same shall then have matured, any and all deposit (general or special) balances
and all other indebtedness then held or owing by such Lender (including, without
limitation, by branches and agencies or any affiliate of such Lender, wherever
located) to or for the credit or account of such Borrower, all without notice to
or demand upon any Borrower or any other Person, all such notices and demands
being hereby expressly waived by each Borrower.
Section 8.5. Equalization Provision.
(a) Equalization. Each US Lender agrees with the other US Lenders that if
it, at any time, shall obtain any Advantage over the other US Lenders, or any
thereof, in respect of the Applicable Debt (except as to Swing Loans and amounts
under Article III hereof), such US Lender shall purchase from the other US
Lenders, for cash and at par, such additional participation in the Applicable
Debt as shall be necessary to nullify the Advantage. Each Canadian Lender agrees
with the other Canadian Lenders that if it, at any time, shall obtain any
Advantage over the other Canadian Lenders, or any thereof, in respect of the
Applicable Debt (except as to amounts under Article III hereof), such Canadian
Lender shall purchase from the other Canadian Lenders, for cash and at par, such
additional participation in the Applicable Debt as shall be necessary to nullify
the Advantage.
61
(b) Recovery of Advantage. If any such Advantage resulting in the purchase
of an additional participation as aforesaid shall be recovered in whole or in
part from the Lender receiving the Advantage, each such purchase shall be
rescinded, and the purchase price restored (but without interest unless such
Lender receiving the Advantage is required to pay interest on the Advantage to
the Person recovering the Advantage from such Lender) ratably to the extent of
the recovery.
(c) Application and Sharing of Set-Off Amounts. Each Lender further agrees
with the other Lenders that if it at any time shall receive any payment for or
on behalf of a Credit Party on any Indebtedness owing by such Credit Party to
such Lender by reason of offset of any deposit or other Indebtedness, it shall
apply such payment first to any and all Indebtedness owing by such Credit Party
to such Lender pursuant to this Agreement (including, without limitation, any
participation purchased or to be purchased pursuant to this Section or any other
Section of this Agreement). Each Credit Party agrees that any Lender so
purchasing a participation from the other Lenders, or any thereof, pursuant to
this Section may exercise all of its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were a
direct creditor of such Credit Party in the amount of such participation.
Section 8.6. Other Remedies. The remedies in this Article VIII are in
addition to, not in limitation of, any other right, power, privilege, or remedy,
either in law, in equity, or otherwise, to which the Lenders may be entitled.
Agent shall exercise the rights under this Article VIII and all other collection
efforts on behalf of the Lenders and no Lender shall act independently with
respect thereto, except as otherwise specifically set forth in this Agreement.
ARTICLE IX. THE AGENT
The Lenders authorize KeyBank National Association and KeyBank National
Association hereby agrees to act as agent for the Lenders in respect of this
Agreement upon the terms and conditions set forth elsewhere in this Agreement,
and upon the following terms and conditions:
Section 9.1. Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers hereunder as are delegated to Agent by the terms hereof,
together with such powers as are reasonably incidental thereto, including,
without limitation, to execute and deliver the Lender Agreement on behalf of the
Lenders. Neither Agent nor any of its affiliates, directors, officers, attorneys
or employees shall (a) be liable for any action taken or omitted to be taken by
it or them hereunder or in connection herewith, except for its or their own
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction), or be responsible in any manner to any of the Lenders for the
effectiveness, enforceability, genuineness, validity or due execution of this
Agreement or any other Loan Documents, (b) be under any obligation to any Lender
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions hereof or thereof on the part of Borrowers or any
other Company, or the financial condition of Borrowers or any other Company, or
(c) be liable to any of the Companies for
62
consequential damages resulting from any breach of contract, tort or other wrong
in connection with the negotiation, documentation, administration or collection
of the Loans or Letters of Credit or any of the Loan Documents. Each Lender, by
becoming a party to this Agreement, agrees to be bound by and subject to the
terms and conditions of the Lender Agreement as if it were an original party
thereto.
Section 9.2. Note Holders. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with
Agent, signed by such payee and in form satisfactory to Agent.
Section 9.3. Consultation With Counsel. Agent may consult with legal
counsel selected by Agent and shall not be liable for any action taken or
suffered in good faith by Agent in accordance with the opinion of such counsel.
Section 9.4. Documents. Agent shall not be under any duty to examine into
or pass upon the validity, effectiveness, genuineness or value of any Loan
Document or any other Related Writing furnished pursuant hereto or in connection
herewith or the value of any collateral obtained hereunder, and Agent shall be
entitled to assume that the same are valid, effective and genuine and what they
purport to be.
Section 9.5. Agent and Affiliates. Agent and its affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Companies and
Affiliates as though Agent were not Agent hereunder and without notice to or
consent of any Lender. Each Lender acknowledges that, pursuant to such
activities, Agent or its affiliates may receive information regarding any
Company or any Affiliate (including information that may be subject to
confidentiality obligations in favor of such Company or such Affiliate) and
acknowledge that Agent shall be under no obligation to provide such information
to other Lenders. With respect to Loans and Letters of Credit (if any), Agent
and its affiliates shall have the same rights and powers under this Agreement as
any other Lender and may exercise the same as though Agent was not Agent, and
the terms "Lender" and "Lenders" include Agent and its affiliates, to the extent
applicable, in their individual capacities.
Section 9.6. Knowledge of Default. It is expressly understood and agreed
that Agent shall be entitled to assume that no Default or Event of Default has
occurred, unless Agent has been notified by a Lender in writing that such Lender
believes that a Default or Event of Default has occurred and is continuing and
specifying the nature thereof or has been notified by a Borrower pursuant to
Section 5.14 hereof.
Section 9.7. Action by Agent. Subject to the other terms and conditions
hereof, so long as Agent shall be entitled, pursuant to Section 9.6 hereof, to
assume that no Default or Event of Default shall have occurred and be
continuing, Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights that may be vested in it by,
or with respect to taking or refraining from taking any action or actions that
it may be able to take under or in respect of, this Agreement. Agent shall incur
no liability under or in respect of this Agreement by acting upon any notice,
certificate, warranty or other paper or instrument believed
63
by it to be genuine or authentic or to be signed by the proper party or parties,
or with respect to anything that it may do or refrain from doing in the
reasonable exercise of its judgment, or that may seem to it to be necessary or
desirable in the premises.
Section 9.8. Release of Guarantor of Payment. In the event of a transfer
of assets permitted by Section 5.12 hereof (or otherwise permitted pursuant to
this Agreement) where the proceeds of such transfer are applied in accordance
with the terms of this Agreement to the extent required to be so applied, Agent,
at the request and expense of Borrowers, is hereby authorized by the Lenders to
release a Guarantor of Payment in connection with such permitted transfer.
Section 9.9. Notice of Default. In the event that Agent shall have
acquired actual knowledge of any Default or Event of Default, Agent shall
promptly notify the Lenders and shall take such action and assert such rights
under this Agreement as the Required Lenders shall direct and Agent shall inform
the other Lenders in writing of the action taken. Agent may take such action and
assert such rights as it deems to be advisable, in its discretion, for the
protection of the interests of the holders of the Obligations.
Section 9.10. Delegation of Duties. Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct, as determined by a court of competent jurisdiction.
Section 9.11. Indemnification of Agent. The Lenders agree to indemnify
Agent (to the extent not reimbursed by Borrowers) ratably, according to their
respective Overall Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys' fees) or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against Agent
in its capacity as agent in any way relating to or arising out of this
Agreement, the Lender Agreement or any Loan Document or any action taken or
omitted by Agent with respect to this Agreement, the Lender Agreement or any
Loan Document, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys' fees) or disbursements resulting from
Agent's gross negligence or willful misconduct as determined by a court of
competent jurisdiction, or from any action taken or omitted by Agent in any
capacity other than as agent under this Agreement, the Lender Agreement or any
other Loan Document. No action taken in accordance with the directions of the
Required Lenders shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section 9.11. The undertaking in this Section
9.11 shall survive repayment of the Loans, cancellation of the Notes, expiration
or termination of the Letters of Credit, and the resignation or replacement of
Agent.
Section 9.12. Successor Agent. Agent may resign as agent hereunder by
giving not fewer than thirty (30) days prior written notice to Borrowers and the
Lenders. If Agent shall resign under this Agreement, then either (a) the
Required Lenders shall appoint from among the
64
Lenders a successor agent for the Lenders (with the consent of US Borrower so
long as an Event of Default has not occurred and which consent shall not be
unreasonably withheld), or (b) if a successor agent shall not be so appointed
and approved within the thirty (30) day period following Agent's notice to the
Lenders of its resignation, then Agent shall appoint a successor agent that
shall serve as agent until such time as the Required Lenders appoint a successor
agent. Upon its appointment, such successor agent shall succeed to the rights,
powers and duties as agent, and the term "Agent" shall mean such successor
effective upon its appointment, and the former agent's rights, powers and duties
as agent shall be terminated without any other or further act or deed on the
part of such former agent or any of the parties to this Agreement.
Section 9.13. Other Agents. As used in this Agreement, the term "Agent"
shall only include Agent. The Syndication Agent shall not have any rights,
obligations or responsibilities hereunder in such capacity.
Section 9.14. Designated Lending Office. The Lender that acts as the
Designated Lending Office of Agent from time to time shall be entitled to the
same indemnifications with respect to Borrowers and the other Lenders that Agent
would have were it performing the administrative duties that the Designated
Lending Office performs from time to time.
ARTICLE X. MISCELLANEOUS
Section 10.1. Lenders' Independent Investigation. Each Lender, by its
signature to this Agreement, acknowledges and agrees that Agent has made no
representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between
Agent and such Lender. Each Lender represents that it has made and shall
continue to make its own independent investigation of the creditworthiness,
financial condition and affairs of the Companies in connection with the
extension of credit hereunder, and agrees that Agent has no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto (other than such
notices as may be expressly required to be given by Agent to the Lenders
hereunder), whether coming into its possession before the first Credit Event
hereunder or at any time or times thereafter. Each Lender further represents
that it has reviewed each of the Loan Documents, including, but not limited to,
the Lender Agreement.
Section 10.2. No Waiver; Cumulative Remedies. No omission or course of
dealing on the part of Agent, any Lender or the holder of any Note in exercising
any right, power or remedy hereunder or under any of the Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or under any of the
Loan Documents. The remedies herein provided are cumulative and in addition to
any other rights, powers or privileges held by operation of law, by contract or
otherwise.
65
Section 10.3. Amendments, Consents.
(a) General Rule. No amendment, modification, termination, or waiver of
any provision of any Loan Document nor consent to any variance therefrom, shall
be effective unless the same shall be in writing and signed by the Required
Lenders and Borrowers and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) Exceptions to General Rule. Anything herein to the contrary
notwithstanding, unanimous consent of the Lenders shall be required with respect
to (i) any increase in the Commitment hereunder (except as specified in Section
2.10(b) hereof), (ii) the extension of maturity of the Loans, the payment date
of interest or scheduled principal hereunder, or the payment of facility or
other fees or amounts payable hereunder, (iii) any reduction in the rate of
interest on the Loans (provided that the institution of the Default Rate and a
subsequent removal of the Default Rate shall not constitute a decrease in
interest rate of this Section 10.3), or in any amount of scheduled principal or
interest due on any Loan, or the payment of facility or other fees hereunder or
any change in the manner of pro rata application of any payments made by
Borrowers to the Lenders hereunder, (iv) any change in any percentage voting
requirement, voting rights, or the Required Lenders definition in this
Agreement, (v) the release of any Borrower or Guarantor of Payment except as
permitted by Section 9.8 hereof, or (vi) any amendment to this Section 10.3 or
Section 8.5 hereof. Each Lender or other holder of a Note shall be bound by any
amendment, waiver or consent obtained as authorized by this Section 10.3,
regardless of its failure to agree thereto.
(c) Generally. Notice of amendments or consents ratified by the Lenders
hereunder shall be forwarded by Agent to all of the Lenders. Each Lender or
other holder of a Note (or interest in any Loan) shall be bound by any
amendment, waiver or consent obtained as authorized by this Section, regardless
of its failure to agree thereto.
Section 10.4. Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to a Borrower,
mailed or delivered to it, addressed to it at the address specified on the
signature pages of this Agreement, if to a Lender, mailed or delivered to it,
addressed to the address of such Lender specified on the signature pages of this
Agreement, or, as to each party, at such other address as shall be designated by
such party in a written notice to each of the other parties. All notices,
statements, requests, demands and other communications provided for hereunder
shall be given by overnight delivery or first class mail with postage prepaid by
registered or certified mail, addressed as aforesaid, or sent by facsimile or
e-mail (with telephonic confirmation of receipt of such facsimile or e-mail,
except that telephonic confirmation is not required when notice is being
provided under Section 5.3(d) hereof); provided that all notices hereunder shall
not be effective until received.
Section 10.5. Costs, Expenses and Taxes. US Borrower and, to the extent
relating to the Canadian Commitment, Canadian Borrowers agree to pay on demand
all reasonable and properly documented costs and expenses of Agent, including
but not limited to, (a) syndication, administration, travel and out-of-pocket
expenses, including but not limited to attorneys' fees and expenses, of Agent in
connection with the preparation, negotiation and closing of the Lender
66
Agreement and the Loan Documents, the administration of the Lender Agreement and
the Loan Documents, and the collection and disbursement of all funds hereunder
and the other instruments and documents to be delivered hereunder, (b)
extraordinary expenses of Agent in connection with the administration of the
Lender Agreement and the Loan Documents and the other instruments and documents
to be delivered hereunder, and (c) the reasonable fees and out-of-pocket
expenses of special counsel for Agent, with respect to the foregoing, and of
local counsel, if any, who may be retained by said special counsel with respect
thereto. US Borrower and, to the extent relating to the Canadian Commitment,
Canadian Borrowers also agree to pay, on demand, all properly documented costs
and expenses of Agent and the Lenders, including reasonable attorneys' fees, in
connection with the restructuring or enforcement of the Obligations, this
Agreement, the Lender Agreement or any Related Writing. In addition, US Borrower
and, to the extent relating to the Canadian Commitment, Canadian Borrowers shall
pay any and all properly documented stamp and other taxes and fees payable or
determined to be payable in connection with the execution and delivery of the
Loan Documents, and the other instruments and documents to be delivered
hereunder, and agree to hold Agent and each Lender harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes or fees other than those liabilities resulting from
the gross negligence or willful misconduct (as determined by a court of
competent jurisdiction) of Agent, or, with respect to amounts owing to a Lender,
such Lender, in each case.
Section 10.6. Indemnification.
(a) US Borrower. US Borrower agrees to defend, indemnify and hold harmless
Agent and the Lenders (and their respective affiliates, officers, directors,
attorneys, agents and employees) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees) or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against Agent or any
Lender in connection with any investigative, administrative or judicial
proceeding (whether or not such Lender or Agent shall be designated a party
thereto) or any other claim by any Person relating to or arising out of the
Lender Agreement and any Loan Document or any actual or proposed use of proceeds
of the Loans or any of the Obligations, or any activities of any Company or its
Affiliates.
(b) Canadian Borrowers. Each Canadian Borrower agrees to defend, indemnify
and hold harmless Agent and the Canadian Lenders (and their respective
affiliates, officers, directors, attorneys, agents and employees) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees) or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against Agent or any Canadian Lender in connection with any
investigative, administrative or judicial proceeding (whether or not such
Canadian Lender or Agent shall be designated a party thereto) or any other claim
by any Person relating to or arising out of the Lender Agreement and any Loan
Document executed by a Canadian Borrower or any actual or proposed use of
proceeds of the CAD Revolving Loans or any of the Applicable Debt, or any
activities of any Company or its Affiliates.
67
(c) Generally. None of Agent or any Lender shall have the right to be
indemnified under this Section 10.6 for its own gross negligence or willful
misconduct, as determined by a court of competent jurisdiction. All obligations
provided for in this Section 10.6 shall survive any termination of this
Agreement.
Section 10.7. Obligations Several; No Fiduciary Obligations. The
obligations of the Lenders hereunder are several and not joint. Nothing
contained in this Agreement and no action taken by Agent or the Lenders pursuant
hereto shall be deemed to constitute Agent or the Lenders a partnership,
association, joint venture or other entity. No default by any Lender hereunder
shall excuse the other Lenders from any obligation under this Agreement; but no
Lender shall have or acquire any additional obligation of any kind by reason of
such default. The relationship between Borrowers and the Lenders with respect to
the Loan Documents and the Related Writings is and shall be solely that of
debtors and creditors, respectively, and neither Agent nor any Lender shall have
any fiduciary obligation toward any Credit Party with respect to any such
documents or the transactions contemplated thereby.
Section 10.8. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, and by facsimile signature, each of which counterparts when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
Section 10.9. Binding Effect; Borrowers' Assignment. This Agreement shall
become effective when it shall have been executed by each Borrower, Agent and
each Lender and thereafter shall be binding upon and inure to the benefit of
each Borrower, Agent and each of the Lenders and their respective successors and
assigns, except that no Borrower shall have the right to assign its rights
hereunder or any interest herein without the prior written consent of Agent and
all of the Lenders.
Section 10.10. Lender Assignments.
(a) Assignments of Commitments. Each Lender shall have the right at any
time or times to assign to an Eligible Transferee (other than to a Lender that
shall not be in compliance with this Agreement), without recourse, all or a
percentage of all of the following: (i) such Lender's Commitment, (ii) all Loans
made by that Lender, (iii) such Lender's Notes, and (iv) such Lender's interest
in any Letter of Credit or Swing Loan, and any participation purchased pursuant
to Section 2.2(b), 2.2(c) or 8.5 hereof.
(b) Prior Consent. No assignment may be consummated pursuant to this
Section 10.10 without the prior written consent of US Borrower and Agent (other
than an assignment by any Lender to another Lender or to any affiliate of such
Lender which affiliate is an Eligible Transferee and either wholly-owned by a
Lender or is wholly-owned by a Person that wholly owns, either directly or
indirectly, such Lender), which consent of US Borrower and Agent shall not be
unreasonably withheld (a failure of US Borrower to approve a distressed debt
fund or vulture fund shall not be deemed to be unreasonable so long as the
Leverage Ratio for the most recently completed four fiscal quarters of US
Borrower shall be less than 3.00 to 1.00); provided, however, that US Borrower's
consent shall not be required if, at the time of the proposed
68
assignment, any Default or Event of Default shall then exist. Anything herein to
the contrary notwithstanding, any Lender may at any time make a collateral
assignment of all or any portion of its rights under the Loan Documents to a
Federal Reserve Bank, and no such assignment shall release such assigning Lender
from its obligations hereunder.
(c) Minimum Amount. Each such assignment shall be in a minimum amount of
the lesser of Five Million Dollars ($5,000,000) of the assignor's Commitment and
interest herein, or the entire amount of the assignor's Commitment and interest
herein.
(d) Assignment Fee. Unless the assignment shall be to an affiliate of the
assignor or the assignment shall be due to merger of the assignor or for
regulatory purposes, either the assignor or the assignee shall remit to Agent,
for its own account, an administrative fee of Three Thousand Five Hundred
Dollars ($3,500).
(e) Assignment Agreement. Unless the assignment shall be due to merger of
the assignor or a collateral assignment for regulatory purposes, the assignor
shall (i) cause the assignee to execute and deliver to US Borrower and Agent an
Assignment Agreement, and (ii) execute and deliver, or cause the assignee to
execute and deliver, as the case may be, to Agent such additional amendments,
assurances and other writings as Agent may reasonably require.
(f) Non-U.S. Assignee. If the assignment is to be made to an assignee that
is organized under the laws of any jurisdiction other than the United States or
any state thereof, the assignor Lender shall cause such assignee, at least five
Business Days prior to the effective date of such assignment, (i) to represent
to the assignor Lender (for the benefit of the assignor Lender, Agent and
Borrowers) that under applicable law and treaties no taxes will be required to
be withheld by Agent, Borrowers or the assignor with respect to any payments to
be made to such assignee in respect of the Loans hereunder, (ii) to furnish to
the assignor Lender (and, in the case of any assignee registered in the Register
(as defined below), Agent and US Borrower) either U.S. Internal Revenue Service
Form W-8ECI or U.S. Internal Revenue Service Form W-8BEN, as applicable (wherein
such assignee claims entitlement to complete exemption from U.S. federal
withholding tax on all payments hereunder), and (iii) to agree (for the benefit
of the assignor, Agent and Borrowers) to provide to the assignor Lender (and, in
the case of any assignee registered in the Register, to Agent and US Borrower) a
new Form W-8ECI or Form W-8BEN, as applicable, upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such assignee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption. Notwithstanding any other provisions hereof, a Canadian Lender may
not make any assignment to an Eligible Assignee that is a non-resident of Canada
for purposes of the Income Tax Act of Canada (with respect to which payments to
such non-resident of principal, interest, fees and other amounts by the Canadian
Borrowers would be subject to Canadian withholding tax) at a rate higher than
that then applicable to the assignor.
(g) Deliveries by Borrowers. Upon satisfaction of all applicable
requirements specified in subsections (a) through (f) above, Borrowers shall
execute and deliver (i) to Agent, the assignor and the assignee, any consent or
release (of all or a portion of the obligations of the
69
assignor) required to be delivered by Borrowers in connection with the
Assignment Agreement, and (ii) to the assignee and the assignor, if applicable,
an appropriate Note or Notes. After delivery of the new Note or Notes, the
assignor's Note or Notes being replaced shall be returned to US Borrower marked
"replaced".
(h) Effect of Assignment. Upon satisfaction of all applicable requirements
set forth in subsections (a) through (g) above, and any other condition
contained in this Section 10.10, (i) the assignee shall become and thereafter be
deemed to be a "Lender" for the purposes of this Agreement, (ii) the assignor
shall be released from its obligations hereunder to the extent that its interest
has been assigned, (iii) in the event that the assignor's entire interest has
been assigned, the assignor shall cease to be and thereafter shall no longer be
deemed to be a "Lender" and (iv) the signature pages hereto and Schedule 1
hereto shall be automatically amended, without further action, to reflect the
result of any such assignment.
(i) Agent to Maintain Register. Agent shall maintain at the address for
notices referred to in Section 10.4 hereof a copy of each Assignment Agreement
delivered to it and a register (the "Register") for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and Borrowers, Agent and the
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
Section 10.11. Sale of Participations. Any Lender may, in the ordinary
course of its commercial banking business and in accordance with applicable law,
at any time sell participations to one or more commercial banks or other Persons
other than a Company or an Affiliate of a Company (each a "Participant") in all
or a portion of its rights or obligations under this Agreement and the other
Loan Documents (including, without limitation, all or a portion of the
Commitment and the Loans and participations owing to it and the Note held by
it); provided that:
(a) any such Lender's obligations under this Agreement and the other Loan
Documents shall remain unchanged;
(b) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations;
(c) the parties hereto shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and each of the other Loan Documents;
(d) such Participant shall be bound by the provisions of Section 8.5
hereof, and the Lender selling such participation shall obtain from such
Participant a written confirmation of its agreement to be so bound; and
70
(e) no Participant (unless such Participant is itself a Lender) shall be
entitled to require such Lender to take or refrain from taking action under this
Agreement or under any other Loan Document, except that such Lender may agree
with such Participant that such Lender will not, without such Participant's
consent, take action of the type described as follows:
(i) increase the portion of the participation amount of any
Participant over the amount thereof then in effect, or extend the
Commitment Period, without the written consent of each Participant
affected thereby; or
(ii) reduce the principal amount of or extend the time for any
payment of principal of any Loan, or reduce the rate of interest or extend
the time for payment of interest on any Loan, or reduce the commitment
fee, without the written consent of each Participant affected thereby.
Borrowers agree that any Lender that sells participations pursuant to this
Section 10.11 shall still be entitled to the benefits of Article III hereof,
notwithstanding any such transfer; provided, however, that the obligations of
Borrowers shall not increase as a result of such transfer and Borrowers shall
have no obligation to any Participant.
Section 10.12. Patriot Act Notice. Each Lender and Agent (for itself and
not on behalf of any other party) hereby notifies the Credit Parties that,
pursuant to the requirements of the Patriot Act, such Lender and Agent are
required to obtain, verify and record information that identifies the Credit
Parties, which information includes the name and address of the Credit Parties
and other information that will allow such Lender or Agent, as applicable, to
identify the Credit Parties in accordance with the Patriot Act. US Borrower
shall provide, to the extent commercially reasonable, such information and take
such actions as are reasonably requested by Agent or a Lender in order to assist
Agent or such Lender in maintaining compliance with the Patriot Act.
Section 10.13. Severability of Provisions; Captions; Attachments. Any
provision of this Agreement that shall be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. The several captions to sections and subsections
herein are inserted for convenience only and shall be ignored in interpreting
the provisions of this Agreement. Each schedule or exhibit attached to this
Agreement shall be incorporated herein and shall be deemed to be a part hereof.
Section 10.14. Investment Purpose. Each of the Lenders represents and
warrants to Borrowers that it is entering into this Agreement with the present
intention of acquiring any Note issued pursuant hereto for investment purposes
only and not for the purpose of distribution or resale, it being understood,
however, that each Lender shall at all times retain full control over the
disposition of its assets.
Section 10.15. Confidentiality. Agent and each Lender shall hold all
Confidential Information in accordance with the customary procedures of Agent or
such Lender for handling
71
confidential information of this nature, and in accordance with safe and sound
banking practices. Notwithstanding the foregoing, Agent or any Lender may in any
event make disclosures of, and furnish copies of Confidential Information (a) to
another agent under this Agreement or another Lender; (b) when reasonably
required by any bona fide transferee or participant in connection with the
contemplated transfer of any Loans or Commitment or participation therein
(provided that each such prospective transferee or participant shall execute an
agreement for the benefit of Borrowers with such prospective transferor Lender
or participant containing provisions substantially identical to those contained
in this Section 10.15); (c) to the parent corporation or other affiliates of
Agent or such Lender, and to their respective auditors and attorneys; and (d) as
required or requested by any governmental agency or representative thereof, or
pursuant to legal process, provided, that, unless specifically prohibited by
applicable law or court order, Agent or such Lender, as applicable, shall notify
the chief financial officer of US Borrower of any request by any governmental
agency or representative thereof (other than any such request in connection with
an examination of the financial condition of Agent or such Lender by such
governmental agency), and of any other request pursuant to legal process, for
disclosure of any such non-public information prior to disclosure of such
Confidential Information. In no event shall Agent or any Lender be obligated or
required to return any materials furnished by or on behalf of any Company. Each
Borrower hereby agrees that the failure of Agent or any Lender to comply with
the provisions of this Section 10.15 shall not relieve any Borrower of any of
the obligations to Agent and the Lenders under this Agreement and the other Loan
Documents.
Section 10.16. Entire Agreement. This Agreement, any Note and any other
Loan Document or other agreement, document or instrument attached hereto or
executed on or as of the Closing Date integrate all of the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.
Section 10.17. Legal Representation of Parties. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.
Section 10.18. Currency.
(a) Currency Equivalent Generally. For the purposes of making valuations
or computations under this Agreement (but not for the purposes of the
preparation of any financial statements delivered pursuant hereto), unless
expressly provided otherwise, where a reference is made to a dollar amount the
amount is to be considered as the amount in Dollars and, therefor, each other
currency shall be converted into the Dollar Equivalent.
(b) Payment Currency. All payments by a Credit Party shall be made in the
manner, at the place and in the currency (the "Payment Currency") required by
the Loan Documents; provided, however, that, if the Payment Currency is other
than Dollars, such Credit Party may, at its option (or, if for any reason
whatsoever such Credit Party is unable to effect payments in the foregoing
manner, such Credit Party shall be obligated to) pay to Agent, for the benefit
of the
72
Lenders, the equivalent amount in Dollars computed at the selling rate of Agent
or a selling rate chosen by Agent, most recently in effect on or prior to the
date such payment was due. In any case in which a Credit Party makes or is
obligated to make a payment in Dollars, such Credit Party shall hold Agent and
the Lenders harmless from any loss incurred by Agent and the Lenders arising
from any change in the value of Dollars in relation to the Payment Currency
between the date such payment is due and the date Agent is actually able to
apply such Payment Currency to such payment.
Section 10.19. Governing Law; Submission to Jurisdiction. This Agreement,
each of the Notes and any Related Writing shall be governed by and construed in
accordance with the laws of the State of Ohio and the respective rights and
obligations of Borrowers, Agent, and the Lenders shall be governed by Ohio law,
without regard to principles of conflicts of laws. Each Borrower hereby
irrevocably submits to the non-exclusive jurisdiction of any Ohio state or
federal court sitting in Cleveland, Ohio, over any action or proceeding arising
out of or relating to this Agreement, the Obligations or any Related Writing,
and each Borrower hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such Ohio state or federal
court. Each Borrower, on behalf of itself and its Subsidiaries, hereby
irrevocably waives, to the fullest extent permitted by law, any objection it may
now or hereafter have to the laying of venue in any action or proceeding in any
such court as well as any right it may now or hereafter have to remove such
action or proceeding, once commenced, to another court on the grounds of FORUM
NON CONVENIENS or otherwise. Each Borrower agrees that a final, nonappealable
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
[Remainder of page left intentionally blank]
73
Section 10.20. JURY TRIAL WAIVER. TO THE EXTENT PERMITTED BY LAW, EACH
BORROWER, AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
BORROWERS, AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO.
IN WITNESS WHEREOF, the parties have executed and delivered this Credit
Agreement in Cleveland, Ohio as of the date first set forth above.
Address: One Applied Plaza APPLIED INDUSTRIAL TECHNOLOGIES,
Cleveland, Ohio 44115 INC.
Attn: Chief Financial Officer
By: /s/ Mark O. Eisele
----------------------------------
Mark O. Eisele
Vice President - Chief Financial
Officer & Treasurer
By: /s/ Fred D. Bauer
----------------------------------
Fred D. Bauer
Vice President - General Counsel &
Secretary
E-1
Address: One Applied Plaza AIT LIMITED PARTNERSHIP
Cleveland, Ohio 44115 by: Applied Nova Scotia Company, its
Attn: Chief Financial Officer general partner
By: /s/ Mark O. Eisele
-----------------------------------
Mark O. Eisele
Vice President - Chief Financial
Officer & Treasurer
By: /s/ Fred D. Bauer
-----------------------------------
Fred D. Bauer
Vice President - General Counsel &
Secretary
Address: One Applied Plaza APPLIED INDUSTRIAL TECHNOLOGIES,
Cleveland, Ohio 44115 LTD.
Attn: Chief Financial Officer
By: /s/ Mark O. Eisele
-----------------------------------
Mark O. Eisele
Vice President - Chief Financial
Officer & Treasurer
By: /s/ Fred D. Bauer
-----------------------------------
Fred D. Bauer
Vice President - General Counsel &
Secretary
E-2
Address: One Applied Plaza APPLIED NOVA SCOTIA COMPANY
Cleveland, Ohio 44115
Attn: Chief Financial Officer By: /s/ Mark O. Eisele
-----------------------------------
Mark O. Eisele
Vice President - Chief Financial
Officer & Treasurer
By: /s/ Fred D. Bauer
-----------------------------------
Fred D. Bauer
Vice President - General Counsel &
Secretary
Address: One Applied Plaza DYNAVEST NOVA SCOTIA COMPANY
Cleveland, Ohio 44115
Attn: Chief Financial Officer By: /s/ Mark O. Eisele
-----------------------------------
Mark O. Eisele
Vice President - Chief Financial
Officer & Treasurer
By: /s/ Fred D. Bauer
-----------------------------------
Fred D. Bauer
Vice President - General Counsel &
Secretary
Address: 127 Public Square KEYBANK NATIONAL ASSOCIATION
Cleveland, Ohio 44114-1306 as Agent and as a Lender
Attn: Institutional Banking
By: /s/ Marianne T. Meil
-----------------------------------
Marianne T. Meil
Vice President
E-3
Address: 1350 Euclid Avenue, 11th Floor U.S. BANK NATIONAL ASSOCIATION,
Cleveland, Ohio 44115 as Syndication Agent and as a Lender
Attn: Christine C. Gencer
By: /s/ Christine C. Gencer
-----------------------------------
Christine C. Gencer
Vice President
Address: 600 Superior Avenue, East FIFTH THIRD BANK
Cleveland, Ohio 44114
Attn: Martin H. McGinty By: /s/ Martin H. McGinty
-----------------------------------
Martin H. McGinty
Vice President
Address: 1375 East Ninth Street, PNC BANK, NATIONAL ASSOCIATION
Suite 2430 Cleveland,
Ohio 44114
Attn: Joseph G. Moran By: /s/ Joseph G. Moran
-----------------------------------
Joseph G. Moran
Managing Director
Address: Royal Bank Tower, South Plaza JPMORGAN CHASE BANK, N.A.,
Floor 1800 TORONTO BRANCH
Toronto, Ontario M5J2J2
Attn: Dana E. Jurgens By: /s/ Dana E. Jurgens
-----------------------------------
Dana E. Jurgens
Vice President
E-4