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CREDIT AGREEMENT
among
MMH HOLDINGS, INC.,
MORRIS MATERIAL HANDLING, INC.,
MATERIAL HANDLING, LLC,
MORRIS MATERIAL HANDLING, LTD.,
MONDEL ULC,
KAVERIT STEEL AND CRANE ULC
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent,
CREDIT AGRICOLE INDOSUEZ,
as Syndication Agent,
BANKBOSTON, N.A.,
as Documentation Agent,
and
THE LENDING INSTITUTIONS LISTED HEREIN
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Dated as of March 30, 1998
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$155,000,000
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TABLE OF CONTENTS
Page
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SECTION 1. Amount and Terms of Credit......................................2
1.01. Commitments...................................................2
1.02. Minimum Amount of Each Borrowing; Maximum Number
of Borrowings............................................7
1.03. Notice of Borrowings..........................................8
1.04. Disbursement of Funds........................................11
1.05. Notes........................................................12
1.06. Continuations and Conversions................................16
1.07. Pro Rata Borrowings..........................................17
1.08. Interest.....................................................18
1.09. Interest Periods.............................................19
1.10. Special Provisions Governing Reserve Adjusted
Eurodollar Loans and Acceptances........................20
1.11. Capital Requirements.........................................25
1.12. Total Loan Commitments; Limitations on
Outstanding Loan Amounts................................27
1.13. Letters of Credit............................................27
1.14. Computation of Dollar Equivalent Amount of Pounds
Sterling and Canadian Dollars...........................38
1.15. European Monetary Union......................................38
1.16. Acceptances Provisions.......................................39
1.17. Replacement of Banks.........................................40
SECTION 2. Commitments....................................................41
2.01. Voluntary Reduction of Commitments...........................41
2.02. Mandatory Adjustments of Commitments, etc....................41
2.03. Commitment Commission........................................42
2.04. Currency Equivalents Generally...............................43
2.05. Principle of Deemed Reinvestment.............................43
2.06. Maximum Rate of Return.......................................43
SECTION 3. Payments.......................................................44
3.01. Voluntary Prepayments........................................44
3.02. Mandatory Prepayments........................................45
3.03. Method and Place of Payment..................................50
3.04. Net Payments.................................................52
3.05. Currency Exchange Fluctuations...............................56
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3.06. Authorizations...............................................57
SECTION 4. Conditions Precedent...........................................57
4.01. Conditions Precedent to Initial Loans........................57
4.02. Conditions Precedent to All Loans............................68
4.03. Additional Conditions Precedent to Acquisition
Term Loans..............................................70
4.04. Conditions Precedent to All Letters of Credit................74
SECTION 5. Representations, Warranties and Agreements.....................75
5.01. Status.......................................................75
5.02. Corporate Power and Authority; Business......................75
5.03. No Violation.................................................76
5.04. Litigation...................................................76
5.05. Use of Proceeds..............................................77
5.06. Governmental Approvals, etc..................................77
5.07. Investment Company Act.......................................78
5.08. Public Utility Holding Company Act...........................78
5.09. True and Complete Disclosure.................................78
5.10. Transaction..................................................79
5.11. Financial Condition; Financial Statements;
Projections.............................................79
5.12. Security Interests...........................................82
5.13. Tax Returns and Payments.....................................82
5.14. ERISA........................................................83
5.15. Subsidiaries.................................................83
5.16. Patents, etc.................................................83
5.17. Compliance with Laws, etc....................................84
5.18. Properties...................................................84
5.19. Securities...................................................85
5.20. Collective Bargaining Agreements.............................85
5.21. Indebtedness Outstanding; Prior Liens........................85
5.22. Environmental Protection.....................................86
5.23. Environmental Investigations.................................88
5.24. Representations and Warranties in the
Recapitalization Agreement..............................88
SECTION 6. Affirmative Covenants.........................................88
6.01. Information Covenants........................................88
6.02. Books, Records and Inspections...............................94
6.03. Maintenance of Property; Insurance...........................94
6.04. Payment of Taxes.............................................95
6.05. Corporate Franchises.........................................95
6.06. Compliance with Statutes, etc................................96
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6.07. ERISA........................................................96
6.08. Performance of Obligations...................................96
6.09. End of Fiscal Years; Fiscal Quarters.........................96
6.10. Use of Proceeds..............................................97
6.11. Landlord Lien Waivers........................................97
6.12. Equal Security for Loans and Notes; No Further
Negative Pledges........................................97
6.13. Bank Meeting.................................................98
6.14. Pledge of Additional Collateral..............................98
6.15. Security Interests...........................................99
6.16. Subsidiary Guarantees........................................99
6.17. Environmental Events........................................100
6.18. Use of Cash on Hand to Effect Designated
Acquisition............................................100
6.19. Year 2000...................................................101
6.20. Certain Post-Closing Matters................................101
SECTION 7. Negative Covenants............................................102
7.01. Conduct of Business.........................................102
7.02. Amendments or Waivers of Certain Documents..................102
7.03. Liens.......................................................102
7.04. Indebtedness................................................106
7.05. Capital Expenditures........................................107
7.06. Advances, Investments and Loans.............................108
7.07. Prepayments of Indebtedness, etc............................110
7.08. Dividends, etc..............................................111
7.09. Transaction with Affiliates.................................112
7.10. Total Interest Coverage Ratio...............................113
7.11. Fixed Charge Coverage Ratio.................................114
7.12. Leverage Ratio..............................................115
7.13. Minimum Consolidated EBITDA.................................116
7.14. Holdings Equity Sales and Net Financing Proceeds............117
7.15. Sale or Discount of Receivables.............................117
7.16. Issuance of Subsidiary Stock................................118
7.17. Disposition of Assets.......................................118
7.18. Contingent Obligations......................................120
7.19. Merger and Consolidations...................................121
7.20. Sale and Lease-Backs........................................122
SECTION 8. Events of Default............................................122
8.01. Payments....................................................122
8.02. Representations, etc........................................122
8.03. Covenants...................................................122
8.04. Default Under Other Agreements..............................123
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8.05. Bankruptcy, etc.............................................123
8.06. ERISA.......................................................124
8.07. Security Documents..........................................124
8.08. Guarantees..................................................124
8.09. Judgments...................................................125
8.10. Ownership...................................................125
SECTION 9. Definitions...................................................126
SECTION 10. The Agents...................................................173
10.01. Appointment................................................173
10.02. Delegation of Duties.......................................174
10.03. Exculpatory Provisions.....................................174
10.04. Reliance by the Agents.....................................175
10.05. Notice of Default..........................................175
10.06. Non-Reliance on Agents and Other Banks.....................176
10.07. Indemnification............................................176
10.08. The Agents in Its Individual Capacity......................177
10.09. Successor Administrative Agent.............................177
10.10. Resignation by Administrative Agent........................177
10.11. Syndication Agent and Documentation Agent..................178
SECTION 11. Miscellaneous................................................178
11.01. Payment of Expenses, etc...................................178
11.02. Right of Setoff............................................179
11.03. Notices....................................................180
11.04. Benefit of Agreement.......................................181
11.05. No Waiver; Remedies Cumulative.............................183
11.06. Payments Pro Rata..........................................184
11.07. Calculations; Computations.................................184
11.08. Governing Law; Submission to Jurisdiction; Venue...........185
11.09. Counterparts...............................................185
11.10. Effectiveness..............................................186
11.11. Headings Descriptive.......................................186
11.12. Amendment or Waiver........................................186
11.13. Survival...................................................187
11.14. Domicile of Loans..........................................187
11.15. Waiver of Jury Trial.......................................187
11.16. Independence of Covenants..................................187
11.17. Currency Indemnity.........................................187
Annex I - List of Banks
Annex II - Bank Addresses
Annex III - Agreement relating to U.K. Swingline Loans
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Schedule 1.08(b) - Calculation of MLA Cost
Schedule 1.16 - Acceptances Provisions
Schedule 4.01(u)(i) - List of Mortgaged Real Property
Schedule 5.04 - Litigation
Schedule 5.06 - Governmental Approvals
Schedule 5.13 - Tax Returns
Schedule 5.15 - Subsidiaries
Schedule 5.19 - Securities
Schedule 5.20 - Schedule of Collective Bargaining Agreements
Schedule 5.21(a) - Schedule of Existing Debt
Schedule 5.21(b) - Prior Liens
Schedule 5.22 - Environmental
Schedule 6.01(i) - Summary of Corporate Insurance Policies
Schedule 7.06(j) - Joint Venture Commitments
Schedule 7.18(viii) - Schedule of Existing Guarantees and Letters of
Credit
Exhibit A-1 - Form of A Term Note
Exhibit A-2 - Form of B Term Note
Exhibit A-3 - Form of Acquisition Term Note
Exhibit B-1 - Form of Revolving Note
Exhibit B-2 - Form of U.S. Swingline Note
Exhibit B-3 - Form of U.K. Swingline Note
Exhibit B-4 - Form of Canadian Swingline Note
Exhibit C-1 - Form of Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Exhibit C-2 - Form of Opinion of Linklater & Paines
Exhibit C-3(a) - Form of Opinion of McCarthy Tetrault
Exhibit C-3(b) - Form of Opinion of Patterson, Palmer, Hunt, Murphy
Exhibit C-4 - Form of Local Counsel Opinions
Exhibit D - Form of Mortgage
Exhibit E-1 - Form of Holdings Guarantee
Exhibit E-2 - Form of U.S. Subsidiary Guarantee
Exhibit E-3 - Form of Canadian Guarantee
Exhibit F-1 - Form of U.S. Security Agreement
Exhibit G-1 - Form of U.K. Security Document and Guarantee
Exhibit G-2 - Form of Canadian Security Agreement
Exhibit G-3 - Form of Scotland Instrument of Change and Guarantee
Exhibit H-1 - Form of Canadian Securities Pledge Agreement
Exhibit H-2 - Form of Mexican Stock Pledge Agreement
Exhibit H-3 - Form of U.K. Deed of Pledge
Exhibit I-1 - Form of Notice of Assignment
Exhibit I-2 - Form of Assignment and Assumption Agreement
Exhibit J - Form of Notice of Borrowing
Exhibit K - Form of Notice of Continuation/Conversion
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Exhibit L - Form of Borrowing Base Certificate
Exhibit M - Form of Officers' Certificate Regarding Environmental Review
Exhibit N - Form of Officers' Solvency Certificate
Exhibit O - Form of Officers' Certificate Regarding Satisfaction of
Conditions Precedent
Exhibit P - Form of Section 3.04 Certificate
Exhibit Q - Form of Intercreditor Agreement
CREDIT AGREEMENT, dated as of March 30, 1998, among MMH HOLDINGS,
INC., a Delaware corporation ("Holdings"), MORRIS MATERIAL HANDLING, INC., a
Delaware corporation (the "Company") as a U.S. Borrower, MATERIAL HANDLING, LLC,
a Delaware limited liability company ("Material Handling") as a U.S. Borrower,
MORRIS MATERIAL HANDLING, LTD., a company organized under the laws of England
and Wales ("MHE-U.K.") as the U.K. Borrower, MONDEL ULC, an unlimited liability
company organized under the laws of Nova Scotia ("Mondel") as a Canadian
Borrower, and KAVERIT STEEL AND CRANE ULC, an unlimited liability company
organized under the laws of Nova Scotia ("Kaverit") as a Canadian Borrower, the
lending institutions listed in Annex I (each, a "Bank" and, collectively, the
"Banks") and the New York branch of CREDIT AGRICOLE INDOSUEZ ("Indosuez"), as
syndication agent for the Banks (in such capacity, the "Syndication Agent"),
BANKBOSTON, N.A., as documentation agent for the Banks (in such capacity, the
"Documentation Agent"), and CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"), as
administrative agent and as collateral agent for the Banks (in such capacities,
the "Administrative Agent" and, together with the Syndication Agent and the
Documentation Agent, the "Agents"). Unless otherwise defined herein, all
capitalized terms used herein and defined in Section 9 are used herein as so
defined.
W I T N E S S E T H :
WHEREAS, pursuant to a Recapitalization Agreement dated as of
January 28, 1998, as amended on March 4, 1998 and March 23, 1998 (the
"Recapitalization Agreement"), among Harnischfeger Corporation ("HarnCo"), the
sellers named therein and MHE Investments, Inc., the Company will acquire the
outstanding interests and capital stock of certain subsidiaries of HarnCo
related to the MHE Business (the "Recapitalization");
WHEREAS, (i) the Company desires to incur Initial Loans from the
Banks, the proceeds of which will be applied, to the extent necessary, to
finance the Recapitalization, to retire certain Indebtedness, to redeem a
portion of its Common Stock owned by Holdings and to pay certain fees and
expenses incurred in connection with the Transaction, and (ii) the Borrowers
desire to incur further Loans from the Banks, the proceeds of which will be used
(a) to provide working capital to the Borrowers and their Subsidiaries and for
general corporate purposes of the Borrowers after the Transaction and (b) with
respect to the Acquisition Term Loans, to provide financing for
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acquisitions and to pay related fees and expenses, subject to the conditions set
forth herein;
WHEREAS, the Guarantors, in accordance with the terms and conditions
hereinafter set forth, have agreed to guarantee the obligations of the Borrowers
hereunder; and
WHEREAS, the Banks are willing to make available the credit
facilities provided for herein.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01. Commitments. Subject to and upon the terms and conditions
herein set forth, each Bank having a Commitment under the relevant Portion
severally agrees (i) in the case of any Borrowing under the A Term Loan Facility
or the B Term Loan Facility, in each case, on the Closing Date, (ii) in the case
of any Borrowing under the Acquisition Portion after the Closing Date and prior
to the Acquisition Term Loan Commitment Termination Date in connection with
Designated Acquisitions, (iii) in the case of any Borrowing under the Revolving
Portion, at any time and from time to time on or after the Closing Date and
prior to the Revolving Loan Commitment Termination Date, and (iv) in the case of
any Borrowing of Swingline Loans, at any time and from time to time on or after
the Closing Date and prior to the Swingline Expiry Date, to make a Loan or Loans
to the Applicable Borrower, which Loans shall be drawn under the Loan Facility
(including the Term Portion, the Acquisition Portion and Revolving Portion
thereof or which shall be made as Swingline Loans), as set forth below.
(a) Loans under the Term Portion of the Loan Facility (each, a "Term
Loan" and, collectively, the "Term Loans") may be made under the A Term
Loan Facility (each, an "A Term Loan" and, collectively, the "A Term
Loans") and the B Term Loan Facility (each, a "B Term Loan" and,
collectively, the "B Term Loans") to the Company. Once repaid, Term Loans
may not be reborrowed.
(i) Each A Term Loan under the A Term Loan Facility (A) shall be
made as a single drawing on the Closing Date in an amount not to exceed
the Total A Term Loan Commitment, (B) except as hereinafter provided,
shall initially be made as a Base Rate Loan and thereafter shall, at the
Company's option and subject to the terms hereof, be a Base Rate Loan or a
Reserve Adjusted Eurodollar Loan; pro-
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vided that all Term Loans made by all Banks having an A Term Loan
Commitment pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, consist entirely of Loans of the same Type
(provided that partial conversions are permitted in accordance with
Section 1.06) and (C) shall not exceed for any Bank at any time
outstanding that aggregate principal amount which equals the A Term Loan
Commitment of such Bank.
(ii) Each B Term Loan under the B Term Loan Facility (A) shall be
made as a single drawing on the Closing Date in an amount not to exceed
the Total B Term Loan Commitment, (B) except as hereinafter provided,
shall initially be made as a Base Rate Loan and thereafter shall, at the
Company's option and subject to the terms hereof, be a Base Rate Loan or a
Reserve Adjusted Eurodollar Loan; provided that all Term Loans made by all
Banks having a B Term Loan Commitment pursuant to the same Borrowing
shall, unless otherwise specifically provided herein, consist entirely of
Loans of the same Type (provided that partial conversions are permitted in
accordance with Section 1.06) and (C) shall not exceed for any Bank at any
time outstanding that aggregate principal amount which equals the B Term
Loan Commitment of such Bank.
(b) Loans under the Acquisition Portion of the Loan Facility (each
an "Acquisition Term Loan") (i) shall be made to a U.S. Borrower after the
Closing Date and prior to the Acquisition Term Loan Commitment Termination
Date (the date of such Borrowing of an Acquisition Term Loan, the
"Acquisition Term Loan Closing Date") to effect Designated Acquisitions,
(ii) shall, at the option of the Applicable Borrower, be Base Rate Loans
or Reserve Adjusted Eurodollar Loans; provided that all Acquisition Term
Loans made by all Banks having an Acquisition Term Loan Commitment
pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, consist entirely of Loans of the same Type (provided that
partial conversions are permitted in accordance with Section 1.06), (iii)
shall not exceed for any Bank at any time outstanding the Acquisition Term
Loan Commitment of such Bank at such time, and (iv) shall not be made
pursuant to a particular Notice of Borrowing if the aggregate principal
amount of Acquisition Term Loans then outstanding, after giving effect to
the Acquisition Term Loan requested by such Notice of Borrowing, would
exceed the Total Acquisition Term Loan Commitment. Once repaid,
Acquisition Term Loans may not be reborrowed.
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(c) Loans under the Revolving Portion of the Loan Facility (each, a
"Revolving Loan" and, collectively, the "Revolving Loans") (i) shall be
made at any time and from time to time to the U.S. Borrowers after the
Closing Date and prior to the Revolving Loan Commitment Termination Date
in Dollars, (ii) except as hereinafter provided, shall initially be made
as a Base Rate Loan and thereafter shall, at the Applicable Borrower's
option and subject to the terms hereof, be a Base Rate Loan or a Reserve
Adjusted Eurodollar Loan; provided that all Revolving Loans made by all
Banks pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, consist entirely of Loans of the same Type (provided that
partial conversions are permitted in accordance with Section 1.06), (iii)
may be repaid and reborrowed in accordance with the provisions hereof,
(iv) shall not exceed for any Bank at any time outstanding the Revolving
Loan Commitment of such Bank at such time and (v) shall not in any case be
made if the aggregate Dollar Equivalent amount of Revolving Loans and
Swingline Loans then outstanding, after giving effect to the Revolving
Loan requested by the relevant Notice of Borrowing and any Swingline Loans
subject to outstanding Notices of Borrowing, plus the Dollar Equivalent
amount of Letter of Credit Usage, after giving effect to the issuance of
all Letters of Credit subject to outstanding requests for issuance, would
exceed the lesser of (y) the Total Revolving Loan Commitment or (z) the
Borrowing Base as shown in the Borrowing Base Certificate that was last
delivered pursuant to Section 6.01; provided such Borrowing Base
Certificate was required to be delivered pursuant to and was in compliance
with Section 6.01 or was delivered after the Borrowing Base Certificate
last required to be delivered pursuant to Section 6.01.
(d) Swingline Loans (each, a "Swingline Loan" and, collectively, the
"Swingline Loans") (i) shall be made at any time and from time to time on
and after the Closing Date and prior to the Swingline Expiry Date (x) to
the U.S. Borrowers by the U.S. Swingline Banks in Dollars; (y) to each
Canadian Borrower by the Canadian Swingline Banks in Canadian Dollars; and
(z) to the U.K. Borrower by the U.K. Swingline Banks in Pounds Sterling,
(ii) shall be made (x) to the U.S. Borrowers as Base Rate Loans; (y) to
each Canadian Borrower, at its option and subject to the terms hereof, in
the form of an Acceptance (on the terms and conditions provided for herein
and in Schedule 1.16) or a Prime Rate Loan; provided that all Canadian
Swingline Loans made by all Canadian Swingline Banks pursuant to the
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same Borrowing shall, unless otherwise specifically provided for herein,
consist entirely of Loans of the same Type; and (z) to the U.K. Borrower,
at its option and subject to the terms hereof, as U.K. Base Rate Loans or
Reserve Adjusted Eurodollar Loans, (iii) may be repaid and reborrowed in
accordance with the provisions hereof, (iv) shall not exceed the
applicable Maximum Swingline Amount or the Total Revolving Loan
Commitment, (v) shall not in any case be made if the aggregate Dollar
Equivalent amount of Revolving Loans and Swingline Loans then outstanding,
after giving effect to the Dollar Equivalent amount of Swingline Loans
being requested and any Revolving Loans subject to outstanding Notices of
Borrowing, plus the Dollar Equivalent amount of Letter of Credit Usage,
after giving effect to the issuance of all Letters of Credit subject to
outstanding requests for issuance, would exceed the lesser of (y) the
Total Revolving Loan Commitment or (z) the Borrowing Base as shown in the
Borrowing Base Certificate that was last delivered pursuant to Section
6.01; provided such Borrowing Base Certificate was required to be
delivered pursuant to and in compliance with Section 6.01 or was delivered
after the Borrowing Base Certificate last required to be delivered
pursuant to Section 6.01, and (vi) in the case of U.S. Swingline Loans
shall constitute the joint and several obligations of the U.S. Borrowers.
No Swingline Bank shall be obligated to make any Swingline Loans at a time
when a Bank Default exists unless such Swingline Bank has entered into
arrangements satisfactory to it to eliminate such Swingline Bank's risk
with respect to the Defaulting Bank's or Banks' participation in such
Swingline Loans, including by cash collateralizing such Defaulting Bank's
or Banks' Dollar Percentage of the outstanding Swingline Loans.
Notwithstanding anything to the contrary contained in this Section
1.01(d), no Swingline Bank shall make any Swingline Loan after it has
received written notice from any Borrower, the Administrative Agent or the
Required Banks stating that a Default or an Event of Default exists and is
continuing until such time as such Swingline Bank shall have received
written notice (i) of rescission of all such notices from the party or
parties originally delivering such notice, (ii) of the waiver of such
Default or Event of Default by the Required Banks or (iii) that the
Administrative Agent, in good faith, believes such Default or Event of
Default has ceased to exist. The Canadian Swingline Loans shall be deemed
to include the face amount of all issued but unmatured Acceptances in
connection with the amount of the utilization thereof by the Canadian
Bor-
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rowers, but the Canadian Swingline Loans shall not include the face amount
of all issued but unmatured Acceptances in determining the principal
amount of such Loans on which the Canadian Borrowers shall pay interest.
(e) Notice to the Administrative Agent (which shall give notice to
all Revolving Facility Banks) (i) may be given on any Business Day, in the
sole discretion of the U.S. Swingline Bank with respect to the U.S.
Swingline Loans, (ii) may be given by any Swingline Bank upon the
occurrence of an Event of Default under Section 8.01, and (iii) shall be
deemed to be automatically given by each Swingline Bank with respect to
all Swingline Loans upon the occurrence of an Event of Default under
Section 8.05 (with respect to Holdings or the Company or any of its
Significant Subsidiaries) or upon the exercise of any of the remedies
provided in the last paragraph of Section 8, that the Dollar Equivalent of
such Swingline Bank's outstanding Swingline Loans to the Applicable
Borrower shall be funded with a Borrowing in Dollars of Revolving Loans.
In such case, Revolving Loans in Dollars, for the benefit of the U.S.
Borrowers, constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by
all Revolving Facility Banks (without giving effect to any reductions
thereto pursuant to the last paragraph of Section 8) pro rata based on
each Bank's Dollar Percentage and the proceeds thereof shall be applied
directly to the Applicable Swingline Bank to repay such Swingline Bank for
such outstanding Swingline Loans. Each Revolving Facility Bank hereby
irrevocably agrees to make Revolving Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the date specified in writing
by the Applicable Swingline Bank notwithstanding (i) that the amount of
any Mandatory Borrowing may not comply with the Minimum Borrowing Amount
otherwise required hereunder, (ii) whether any conditions specified in
Section 4 are then satisfied, (iii) whether a Default or an Event of
Default then exists, (iv) the date of such Mandatory Borrowing and (v) the
amount of the Total Revolving Loan Commitment at such time. In the event
that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code with respect to
any of the Borrowers), then each such Revolving Facility Bank hereby
agrees that it shall forthwith purchase (as of the date the Mandatory
Borrowing
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would otherwise have occurred, but adjusted for the Dollar Equivalent of
any payments received from the Applicable Borrower (or Borrowers) on or
after such date and prior to such purchase) from the Swingline Bank such
participations in the outstanding Swingline Loans as shall be necessary to
cause such Revolving Facility Banks to share in the Dollar Equivalent of
such Swingline Loans ratably based upon their Dollar Percentage; provided
that (x) all interest payable on the Swingline Loans shall be for the
account of the applicable Swingline Bank until the date as of which the
respective participation is required to be purchased and, to the extent
attributable to the purchased participation, shall be payable to the
participant from and after such date and (y) at the time any purchase of
participations pursuant to this sentence is actually made, the purchasing
Revolving Facility Bank shall be required to pay the applicable Swingline
Bank interest on the principal amount of the participation purchased for
each day from and including the day upon which the Mandatory Borrowing
would otherwise have occurred to but excluding the date of payment for
such participation, and at the rate otherwise applicable to Revolving
Loans maintained as Base Rate Loans hereunder.
1.02. Minimum Amount of Each Borrowing; Maximum Number of
Borrowings. (a) The minimum aggregate principal amount of a Borrowing of Term
Loans consisting of Reserve Adjusted Eurodollar Loans or Base Rate Loans shall
be the Minimum Borrowing Amount and, if greater, shall be in integral multiples
of $100,000; provided, however, that the Borrowing of the A Term Portion and the
B Term Portion of the Initial Loans shall be in an aggregate principal amount of
$20,000,000 and $35,000,000, respectively.
(b) The minimum aggregate principal amount of a Borrowing of
Acquisition Term Loans consisting of Reserve Adjusted Eurodollar Loans or Base
Rate Loans shall be the Minimum Borrowing Amount and, if greater, shall be in
integral multiples of $100,000; provided, however, that the Banks' Acquisition
Term Loan Commitment shall terminate, on a pro rata basis, with respect to any
portion of the Total Acquisition Term Loan Commitments not utilized by the U.S.
Borrowers prior to the Acquisition Term Loan Commitment Termination Date.
(c) The minimum aggregate principal amount of a Borrowing of
Revolving Loans consisting of Reserve Adjusted Eurodollar Loans or Base Rate
Loans shall be the Minimum Borrowing Amount (other than a Borrowing of Base Rate
Loans such that the
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total amount of Revolving Loans to be outstanding after giving effect to such
Borrowing shall be equal to the Total Revolving Loan Commitment) and, if
greater, shall be in integral multiples of $100,000.
(d) More than one Borrowing may be incurred on any date; provided
that at no time shall there be outstanding more than twenty-four Borrowings of
Dollar Reserve Adjusted Eurodollar Loans or such higher number of Borrowings as
the Administrative Agent may agree.
(e) The minimum aggregate principal amount of a Borrowing of
Swingline Loans shall be the Borrowing Amount for Acceptances or the applicable
currency equivalent (determined in accordance with Section 2.04) of amounts as
agreed between the Applicable Borrower and the applicable Swingline Bank. More
than one Borrowing may be incurred on any date; provided that at no time shall
there be outstanding more than the number of Borrowings of U.K. Swingline Loans
as agreed between the U.K. Borrower and the U.K. Swingline Bank or the number of
outstanding Acceptances as agreed between the Canadian Borrowers and the
Canadian Swingline Banks.
1.03. Notice of Borrowings. (a) Each notice to be given pursuant to
this Section 1.03, which shall be substantially in the form of Exhibit J hereto
(each, a "Notice of Borrowing"), shall be irrevocable, shall be deemed a
representation by the Applicable Borrower that all conditions precedent to such
Borrowing set forth in Section 4.02 and, in the case of a Loan under the
Acquisition Portion, that all additional conditions under Section 4.03 have been
satisfied and shall specify (i) whether such Borrowing is a Swingline Loan or is
to be made from the A Term Loan Facility, the B Term Loan Facility, the
Acquisition Portion or the Revolving Portion, (ii) the aggregate principal
amount in Dollars, Canadian Dollars or Pounds Sterling of the Loans to be made
pursuant to such Borrowing, all of which shall be specified in such manner as is
necessary to comply with all limitations on Swingline Loans, Term Loans,
Acquisition Loans and Revolving Loans, as the case may be, outstanding
hereunder, including without limitation, availability under the Borrowing Base
and the applicable Maximum Swingline Amount limitations, (iii) the date of
Borrowing (which shall be a Business Day) and (iv) for notices delivered after
the Closing Date, whether the respective Borrowing shall consist of Base Rate
Loans, U.K. Base Rate Loans, Prime Rate Loans or Reserve Adjusted Eurodollar
Loans (or Acceptances) and, if Reserve Adjusted Eurodollar Loans, whether such
Reserve Adjusted Eurodollar Loans are U.S. Dollar Loans or Pounds Sterling
-9-
Loans, the Interest Period to be initially applicable thereto and, if
Acceptances, the term applicable thereto. The Administrative Agent shall as
promptly as practicable give each Bank written notice (or telephonic notice
promptly confirmed in writing) of each proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters covered by the Notice of
Borrowing.
(b) The provisions of this Section 1.03(b) shall not apply to any
Borrowings of Swingline Loans. Whenever the Company desires that the Banks make
the Initial Loans, an Authorized Officer of the Company shall give the
Administrative Agent at the Administrative Agent's Office prior to Noon (New
York time) at least one Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) of such Borrowing. Whenever a U.S.
Borrower desires that the Banks make U.S. Dollar Loans which are Reserve
Adjusted Eurodollar Loans under the Loan Facility after the Closing Date, an
Authorized Officer of the Applicable Borrower shall give the Administrative
Agent at the Administrative Agent's Office prior to Noon (New York time) at
least three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each such Borrowing of Reserve Adjusted Eurodollar
Loans. Whenever a U.S. Borrower desires that the Banks make Base Rate Loans
(other than Swingline Loans or Borrowings of Revolving Loans incurred pursuant
to a Mandatory Borrowing) under the Loan Facility after the Closing Date, which
shall only be made in U.S. Dollars, an Authorized Officer of the Applicable
Borrower shall give the Administrative Agent at the Administrative Agent's
Office prior to 11:00 A.M. (New York time) on the date of the requested
Borrowing prior written notice (or telephonic notice promptly confirmed in
writing) of each such Borrowing of Base Rate Loans.
(c) Whenever a U.S. Borrower desires to incur U.S. Swingline Loans
hereunder, it shall give the Administrative Agent at the Administrative Agent's
Office and the U.S. Swingline Bank at the office designated by the U.S.
Swingline Bank not later than the time agreed between the U.S. Borrowers and the
U.S. Swingline Banks on the date that a U.S. Swingline Loan is to be incurred,
written notice or telephonic notice promptly confirmed in writing of each
Swingline Loan to be incurred hereunder.
(d) Whenever the U.K. Borrower desires to incur U.K. Swingline Loans
hereunder, it shall give the Administrative Agent at the Administrative Agent's
Office and the U.K. Swingline Bank at the office designated by the U.K.
Swingline Bank
-10-
not later than 1:00 P.M. (London time) in the case of U.K. Base Rate Loans and
10:00 A.M. (London time) in the case of Reserve Adjusted Eurodollar Loans on the
date that a U.K. Swingline Loan is to be incurred written notice (or telephonic
notice promptly confirmed in writing) of each such Borrowing of U.K. Swingline
Loans.
(e) Whenever a Canadian Borrower desires that the Canadian Swingline
Banks make Canadian Swingline Loans which are in the form of Acceptances after
the Closing Date, an Authorized Officer of such Canadian Borrower shall give the
Administrative Agent at the Administrative Agent's Office prior notice (or
telephonic notice promptly confirmed in writing) at such time as the
Administrative Agent may designate from time to time of each such Borrowing in
the form of Acceptances and shall otherwise comply with Schedule 1.16. Whenever
a Canadian Borrower desires that the Canadian Swingline Banks make Canadian
Swingline Loans which are Prime Rate Loans after the Closing Date, an Authorized
Officer of such Canadian Borrower shall give the Administrative Agent at the
Administrative Agent's Office and the Canadian Swingline Banks at the office
designated by the Canadian Swingline Banks prior written notice (or telephonic
notice promptly confirmed in writing) at such time as the Administrative Agent
may designate from time to time of each such Borrowing of Prime Rate Loans.
(f) The Dollar Equivalent amount of any Borrowing of Swingline Loans
in an Applicable Currency will be determined by the Administrative Agent for
such Borrowing on the Computation Date therefor in accordance with Section 1.14.
(g) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(e), with each U.S. Borrower irrevocably agreeing to the making of
the Mandatory Borrowings by it as set forth in Section 1.01(e).
(h) Without in any way limiting the obligation of any Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent or any Swingline Bank may act without liability upon the
basis of such telephonic notice, believed by the Administrative Agent or such
Swingline Bank in good faith to be from an Authorized Officer of such Borrower
prior to receipt of written confirmation. In each such case, each Borrower
hereby waives the right to dispute the Administrative Agent's or such Swingline
Bank's record of the terms of such telephonic notice.
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1.04. Disbursement of Funds. (a) No later than 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing of Loans (other than
U.S. Swingline Loans) in U.S. Dollars (or in the case of Mandatory Borrowings,
not later than Noon (New York time) on the date specified in Section 1.01(e)),
each Bank will make available its pro rata portion of each Borrowing requested
to be made on such date in the manner provided below (x) with respect to Loans
denominated in Dollars, to the Administrative Agent at the Administrative
Agent's Office, (y) with respect to Loans denominated in Pounds Sterling, as
agreed between the U.K. Swingline Bank and the U.K. Borrower, and (z) with
respect to Prime Rate Loans denominated in Canadian Dollars, or Acceptances, in
accordance with Schedule 1.16, in each case as agreed between the Canadian
Swingline Banks and the Canadian Borrowers. The proceeds of such Borrowings of
Dollar Loans will be made available, as provided in Section 1.04(b), to the
Applicable Borrower in the amounts made available to the Administrative Agent
and in like funds received by the Administrative Agent by 2:00 P.M. (New York
time) on the date specified in the Notice of Borrowing. The proceeds of other
Loans will be made available to the Applicable Borrower as agreed with the
applicable Swingline Bank.
(b) Each Bank shall make available all amounts it is to fund under
any Borrowing of Term Loans, Acquisition Term Loans or Revolving Loans on or
after the Closing Date in immediately available funds to the Administrative
Agent to the account specified therefor by the Administrative Agent or if no
account is so specified at the Administrative Agent's Office and the
Administrative Agent will make such funds available to the Applicable Borrower
by depositing to the account specified therefor by the Applicable Borrower or if
no account is so specified to its account at the Administrative Agent's Office
the aggregate of the amounts so made available in the type of funds received.
Unless the Administrative Agent shall have been notified by any Bank prior to
the date of any such Borrowing that such Bank does not intend to make available
to the Administrative Agent its portion of the Borrowing or Borrowings to be
made on such date, the Administrative Agent may assume that such Bank has made
such amount available to the Administrative Agent on such date of Borrowing, and
the Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Applicable
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Bank and the Administrative
Agent has made such corresponding amount available to the Applicable Borrower,
the Administrative Agent shall be entitled to recover
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such amount from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the Administrative
Agent shall promptly notify the Applicable Borrower, and the Applicable Borrower
shall immediately pay such corresponding amount to the Administrative Agent (it
being understood that if the Applicable Borrower makes a request for a Revolving
Loan to reimburse the Administrative Agent, such Revolving Loan, if made, shall
be an immediate repayment). The Administrative Agent shall also be entitled to
recover from such Bank or the Applicable Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Applicable Borrower to the date such amount is recovered by the Administrative
Agent, at a rate per annum equal to (x) if paid by such Bank, the Federal Funds
Rate for payments in U.S. Dollars, or (y) if paid by the Applicable Borrower
(and/or one or more other Credit Parties), the then applicable rate of interest,
calculated in accordance with Section 1.08, for the respective Loans. The
Administrative Agent shall also be entitled to recover from any Bank an amount
equal to any other losses incurred by the Administrative Agent as a result of
the failure of such Bank to provide such amount as provided in this Agreement.
(c) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its Commitment hereunder or to prejudice any rights which
any Borrower or any other Credit Party may have against any Bank as a result of
any default by such Bank hereunder.
1.05. Notes. (a) Each Borrower's obligation to pay the principal of
and interest on all the Loans made to it by each Bank shall be evidenced: (i) if
A Term Loans, by a promissory note (each, an "A Term Note" and, collectively,
the "A Term Notes") duly executed and delivered by the U.S. Borrowers,
substantially in the form of Exhibit A-1 hereto, each with blanks appropriately
completed in conformity herewith; (ii) if B Term Loans, by a promissory note
(each, a "B Term Note" and, collectively, the "B Term Notes") duly executed and
delivered by the U.S. Borrowers, substantially in the form of Exhibit A-2
hereto, each with blanks appropriately completed in conformity herewith; (iii)
if Acquisition Term Loans, by a promissory note (each, an "Acquisition Term
Note" and, collectively, the "Acquisition Term Notes") duly executed and
delivered by the U.S. Borrowers, substantially in the form of Exhibit A-3
hereto, each with blanks appropriately completed in conformity herewith; (iv) if
Revolving Loans, by a promissory note (each,
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a "Revolving Note" and, collectively, the "Revolving Notes") duly executed and
delivered by the U.S. Borrowers substantially in the form of Exhibit B-1 hereto,
with blanks appropriately completed in conformity herewith; (v) if U.S.
Swingline Loans, by a promissory note (each, a "U.S. Swingline Note" and,
collectively, the "U.S. Swingline Notes") duly executed and delivered by the
U.S. Borrowers substantially in the form of Exhibit B-2 hereto, with blanks
appropriately completed in conformity herewith; (vi) if U.K. Swingline Loans, by
a promissory note (each, a "U.K. Swingline Note" and, collectively, the "U.K.
Swingline Notes") duly executed and delivered by the U.K. Borrower substantially
in the form of Exhibit B-3 hereto, with blanks appropriately completed in
conformity herewith; and (vii) if Canadian Swingline Loans, by a promissory note
(each, a "Canadian Swingline Note" and, collectively, the "Canadian Swingline
Notes") duly executed and delivered by each Canadian Borrower substantially in
the form of Exhibit B-4 hereto, with blanks appropriately completed in
conformity herewith.
(b) The A Term Note of the U.S. Borrowers issued to each Bank with
an A Term Loan Commitment shall (i) be executed by the U.S. Borrowers (and shall
constitute the joint and several obligations of the U.S. Borrowers), (ii) be
payable to the order of such Bank and be dated the Effective Date, (iii) be in a
stated principal amount equal to the A Term Loan Commitment of such Bank and be
payable in Dollars in the aggregate principal amount of the A Term Loans
evidenced thereby, (iv) mature, with respect to each Loan evidenced thereby, on
the Final A Term Loan Maturity Date, (v) be subject to mandatory prepayment as
provided in Section 3.02, (vi) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans and Reserve Adjusted
Eurodollar Loans, as the case may be, evidenced thereby and (vii) be entitled to
the benefits of this Agreement and the other applicable Credit Documents.
(c) The B Term Note of the U.S. Borrowers issued to each Bank with a
B Term Loan Commitment shall (i) be executed by the U.S. Borrowers (and shall
constitute the joint and several obligations of the U.S. Borrowers), (ii) be
payable to the order of such Bank and be dated the Effective Date, (iii) be in a
stated principal amount equal to the B Term Loan Commitment of such Bank and be
payable in Dollars in the aggregate principal amount of the B Term Loans
evidenced thereby, (iv) mature, with respect to each Loan evidenced thereby, on
the Final B Term Loan Maturity Date, (v) be subject to mandatory prepayment as
provided in Section 3.02, (vi) bear interest as provided in the appropriate
clause of Section 1.08 in respect of
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the Base Rate Loans and Reserve Adjusted Eurodollar Loans, as the case may be,
evidenced thereby and (vii) be entitled to the benefits of this Agreement and
the other applicable Credit Documents.
(d) The Acquisition Term Note of the U.S. Borrowers issued to each
Bank with an Acquisition Term Loan Commitment shall (i) be executed by the U.S.
Borrowers (and shall constitute the joint and several obligations of the U.S.
Borrowers), (ii) be payable to the order of such Bank and be dated the Closing
Date, (iii) be in a stated principal amount equal to the Acquisition Term Loan
Commitment of such Bank and be payable in Dollars in the aggregate principal
amount of the Acquisition Term Loan evidenced thereby, (iv) mature, with respect
to each Loan evidenced thereby, on the Final Acquisition Term Loan Maturity
Date, (v) be subject to mandatory prepayment as provided in Section 3.02, (vi)
bear interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and Reserve Adjusted Eurodollar Loans, as the case may
be, evidenced thereby and (vii) be entitled to the benefits of this Agreement
and the other applicable Credit Documents.
(e) The Revolving Note of the U.S. Borrowers issued to each Bank
with a Revolving Loan Commitment shall (i) be executed by the U.S. Borrowers
(and shall constitute the joint and several obligations of the U.S. Borrowers),
(ii) be payable in Dollars to the order of such Bank and be dated the Effective
Date, (iii) be in a stated principal amount equal to the Revolving Loan
Commitment of such Bank and be payable in Dollars in the aggregate principal
amount of the Revolving Loans evidenced thereby, (iv) mature, with respect to
each Loan evidenced thereby, on the Revolving Maturity Date, (v) be subject to
mandatory prepayment as provided in Section 3.02, (vi) bear interest as provided
in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Reserve Adjusted Eurodollar Loans, as the case may be, evidenced thereby and
(vii) be entitled to the benefits of this Agreement and the other applicable
Credit Documents.
(f) The U.S. Swingline Note of the U.S. Borrowers issued to each
U.S. Swingline Bank shall (i) be executed by the U.S. Borrowers (and shall
constitute the joint and several obligations of the U.S. Borrowers), (ii) be
payable to the order of such U.S. Swingline Bank and be dated the Effective
Date, (iii) be in a stated principal amount equal to the U.S. Swingline Loan
Commitment of such Bank and be payable in Dollars in the principal amount of the
outstanding U.S. Swingline Loans evidenced thereby, (iv) mature, with respect to
each U.S. Swin-
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gline Loan evidenced thereby, on the Swingline Expiry Date, (v) be subject to
mandatory prepayment as provided in Section 3.02, (vi) bear interest as provided
in the appropriate clause of Section 1.08 in respect of the Base Rate Loans
evidenced thereby and (vii) be entitled to the benefits of this Agreement and
the other applicable Credit Documents.
(g) The U.K. Swingline Note of the U.K. Borrower issued to each U.K.
Swingline Bank shall (i) be executed by the U.K. Borrower, (ii) be payable to
the order of such U.K. Swing-line Bank and be dated the Effective Date, (iii) be
in a stated principal amount equal to the U.K. Swingline Loan Commitment of such
Bank (expressed in Dollars) and be payable in Pounds Sterling in the principal
amount of the outstanding U.K. Swingline Loans evidenced thereby, (iv) mature,
with respect to each U.K. Swingline Loan evidenced thereby, on the Swingline
Expiry Date, (v) be subject to mandatory prepayment as provided in Section 3.02,
(vi) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the U.K. Base Rate and Reserve Adjusted Eurodollar Loans evidenced
thereby and (vii) be entitled to the benefits of this Agreement and the other
applicable Credit Documents.
(h) The Canadian Swingline Note of each Canadian Borrower issued to
each Canadian Swingline Bank shall (i) be executed by such Canadian Borrower,
(ii) be payable to the order of such Canadian Swingline Bank and be dated the
Effective Date, (iii) be in a stated principal amount equal to the Canadian
Swingline Loan Commitment of such Bank expressed in U.S. Dollars and be payable
in Canadian Dollars in the aggregate principal amount of the Canadian Swingline
Loans evidenced thereby, (iv) mature, with respect to each Loan evidenced
thereby, on the Swingline Expiry Date, (v) be subject to mandatory prepayment as
provided in Section 3.02, (vi) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Prime Rate Loans evidenced thereby and
(vii) be entitled to the benefits of this Agreement and the other applicable
Credit Documents.
(i) Each Borrower hereby authorizes each Bank to note on its
internal records the date and amount of each Loan made by it, the date and
amount of each payment in respect thereof, the interest rates payable by the
Applicable Borrower in respect of each Loan and any Interest Period applicable
thereto, Acceptances issued under the Canadian Swingline Loan facility and the
amount of the Obligations which remain payable to such Bank in respect of such
Loan and will, prior to any transfer of any of its Notes, endorse on the reverse
side
-16-
thereof the outstanding principal amount of Loans evidenced thereby. Failure to
make any such notation shall not affect any Borrower's or any Credit Party's
obligations hereunder or under the other applicable Credit Documents in respect
of such Loans. All amounts and other information so recorded shall be prima
facie evidence thereof and binding on the Borrowers in the absence of manifest
error.
(j) Notwithstanding anything to the contrary contained above or
elsewhere in this Agreement, A Term Notes, B Term Notes, Acquisition Term Notes,
Revolving Notes and Swingline Notes shall only be delivered to Banks with Loans
of the respective kind which at any time specifically request the delivery of
such Notes. No failure of any Bank to request or obtain a Note evidencing its
Loans of any kind or to any Borrower shall affect or in any manner impair the
obligations of the respective Borrower or Borrowers to pay the Loans (and all
related Obligations) which would otherwise be evidenced thereby in accordance
with the requirements of this Agreement, and shall not in any way affect the
security or guarantees therefor provided pursuant to the various Credit
Documents. Any Bank which does not have a Note evidencing its outstanding Loans
shall in no event be required to make the notations on a Note otherwise
described in the preceding clause (i) but shall make notations on its internal
records. At any time when any Bank requests the delivery of a Note to evidence
its Loans of any kind, the respective Borrower or Borrowers shall promptly
execute and deliver to the respective Bank the requested Note or Notes in the
appropriate amount or amounts to evidence such Loans.
1.06. Continuations and Conversions. The provisions of this Section
1.06 shall not apply to (i) any continuations or conversions of Canadian
Swingline Loans and (ii) U.S. Swingline Loans, which at all times shall be
maintained as Base Rate Loans. The Applicable Borrower shall have the option to
convert on any Business Day all or a portion (which portion shall not be less
than the Minimum Borrowing Amount) of the outstanding principal amount of the
Loans owing by the Applicable Borrower pursuant to a single Portion of the Loan
Facility into a Borrowing or Borrowings pursuant to such Portion of another Type
of Loan; provided that (i) except as otherwise provided in Section 1.10(b),
Reserve Adjusted Eurodollar Loans may be converted into Base Rate Loans or U.K.
Base Rate Loans, as the case may be, or continued as Reserve Adjusted Eurodollar
Loans only on the last day of an Interest Period applicable thereto, (ii) no
such partial conversion of Reserve Adjusted Eurodollar Loans shall reduce the
outstanding principal amount
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of Reserve Adjusted Eurodollar Loans under the Loan Facility (or Portion
thereof) made pursuant to a single Borrowing to less than the Minimum Borrowing
Amount and (iii) Revolving Loans and U.K. Swingline Loans may only be continued
as or converted into Reserve Adjusted Eurodollar Loans if no Default or Event of
Default is in existence on the date of the conversion and (iv) U.K. Swingline
Loans may only be continued as U.K. Swingline Loans and shall otherwise be
subject to the provisions of Section 1.01(e). Each such conversion (or
continuation) of Revolving Loans shall be effected by the Applicable Borrower by
giving the Administrative Agent at the Administrative Agent's Office prior to
Noon (New York time) at least three Business Days' (or the same Business Day in
the case of a conversion into Base Rate Loans) prior written notice (or
telephonic notice promptly confirmed in writing) (each, a "Notice of
Continuance/Conversion"), substantially in the form of Exhibit K hereto,
specifying the Loans to be so converted or continued, the Type of Loans to be
converted into and, if to be converted into or continued as Reserve Adjusted
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Bank notice as promptly as practicable of
any such proposed conversion affecting any of its Loans. Each such continuation
of U.K. Swingline Loans shall be effected by giving the Administrative Agent at
the Administrative Agent's Office, and the U.K. Swingline Bank at the U.K.
Swingline Bank's Agent's Office prior to 10:00 A.M. (London time), a Notice of
Continuation/Conversion on the Business Day thereof specifying the Loans to be
continued and the Interest Period applicable thereto. If no Notice of
Continuance/Conversion has been duly delivered (i) on or before the third
Business Day prior to the last day of the Interest Period applicable thereto
with respect to a Reserve Adjusted Eurodollar Loan denominated in Dollars, such
Dollar Reserve Adjusted Eurodollar Loan shall be automatically converted into a
Base Rate Loan, and (ii) on the Business Day on which the Interest Period
applicable thereto with respect to a U.K. Swingline Loan, such U.K. Swingline
Loan shall be automatically converted into a U.K. Base Rate Loan.
1.07. Pro Rata Borrowings. All Borrowings under this Agreement
(including Mandatory Borrowings) shall be loaned by the Banks pro rata on the
basis of their A Term Loan Commitments, B Term Loan Commitments, Acquisition
Term Loan Commitments, Swingline Loan Commitments (except for Acceptances, which
may be rounded to multiples of $100,000 at the discretion of the Administrative
Agent) or Revolving Loan Commitments, as the case may be. No Bank shall be
responsible for any default by any other Bank in its obligation to make Loans
hereunder and
-18-
each Bank shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
1.08. Interest. (a) Subject to Section 1.08(d) hereof, the unpaid
principal amount of each Base Rate Loan (for Dollar Loans) or U.K. Base Rate
Loan (for Pound Sterling Loans), as the case may be, shall bear interest from
the date of the Borrowing thereof until maturity (whether by acceleration or
otherwise) (or unless sooner converted into a Reserve Adjusted Eurodollar Loan)
at a rate per annum which shall at all times be equal to the sum of (i) the Base
Rate or U.K. Base Rate, as the case may be, in effect from time to time and (ii)
the applicable Interest Margin.
(b) Subject to Section 1.08(d) hereof, the unpaid principal amount
of each Reserve Adjusted Eurodollar Loan shall bear interest from the date of
the Borrowing thereof until maturity (whether by acceleration or otherwise) (or
unless sooner converted to a Base Rate Loan) at a rate per annum which shall at
all times be equal to the sum of (i) the relevant Eurodollar Rate, (ii) the
applicable Interest Margin and (iii) in the case of Loans made in Pounds
Sterling, the MLA Cost.
(c) Subject to Section 1.08(d) hereof, the unpaid principal amount
of each Prime Rate Loan shall bear interest from the date of the Borrowing
thereof until maturity (whether by acceleration or otherwise) or until repaid at
a rate per annum which shall at all times be equal to the sum of (i) the Prime
Rate in effect from time to time and (ii) the applicable Interest Margin. With
respect to Acceptances, stamping fees shall be payable in connection therewith
as provided in clause 1.04 of Schedule 1.16. Until maturity of the respective
Acceptances, interest shall not otherwise be payable with respect thereto.
(d) The unpaid principal amount of each Loan, upon the occurrence
and during the continuance of a Default, overdue principal and, to the extent
permitted by law, overdue interest in respect of each Loan shall bear interest
at a rate per annum equal to 2% plus the rate (including any applicable Interest
Margin) in effect from time to time, both before and after demand, maturity and
judgment.
(e) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, U.K. Base Rate Loan or Prime Rate
Loan, quarterly in
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arrears on the last Business Day of each March, June, September and December
beginning June 30, 1998; (ii) in respect of each Reserve Adjusted Eurodollar
Loan, in arrears on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three-month intervals after the first date of such Interest Period;
and (iii) in respect of each Reserve Adjusted Eurodollar Loan, on any prepayment
(on the amount prepaid), at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand. Notwithstanding the foregoing, interest payable
at the rate provided in Section 1.08(d) shall be payable on demand.
(f) All computations of interest hereunder shall be made in
accordance with Section 11.07(b).
(g) The Administrative Agent, upon determining the interest rate for
any Borrowing of Dollar Reserve Adjusted Eurodollar Loans for any Interest
Period, shall promptly notify the Applicable Borrower and the Banks thereof.
Such determination shall, absent manifest error, be final, conclusive and
binding upon all parties hereto.
(h) The U.K. Swingline Bank, upon determining the interest rate for
any Borrowing of Pounds Sterling Reserve Adjusted Eurodollar Loan for any
Interest Period, shall promptly notify the U.K. Borrower and the Administrative
Agent thereof. Such determination shall, absent manifest error, be final,
conclusive and binding upon all parties thereto.
1.09. Interest Periods. At the time the Applicable Borrower gives a
Notice of Borrowing or Notice of Continuance/Conversion in respect of the making
of, continuance of, or conversion into, a Borrowing of Reserve Adjusted
Eurodollar Loans, it shall have the right to elect, by giving the Administrative
Agent (and, in the case of U.K. Swingline Loans, the U.K. Swingline Bank)
written notice (or telephonic notice promptly confirmed in writing), the
Interest Period for Reserve Adjusted Eurodollar Loans applicable to such
Borrowing, which Interest Period shall, at the option of the Applicable
Borrower, be a one, two, three, six or, if available by all the Banks and only
with respect to Dollar Loans, twelve month period. Notwithstanding anything to
the contrary contained above:
(a) the initial Interest Period for any Borrowing of Reserve
Adjusted Eurodollar Loans shall commence on the date of such Borrowing
(including the date of any conver-
-20-
sion from a Borrowing of Base Rate Loans or U.K. Base Rate Loans, as
applicable) and each Interest Period occurring thereafter in respect of
such Borrowing shall commence on the date on which the next preceding
Interest Period expires;
(b) if any Interest Period relating to a Borrowing of Reserve
Adjusted Eurodollar Loans begins on a date for which there is no
numerically corresponding date in the calendar month in which such
Interest Period ends, such Interest Period shall end on the last Business
Day of such calendar month;
(c) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that if any Interest Period in respect
of a Reserve Adjusted Eurodollar Loan would otherwise expire on a day
which is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(d) no Interest Period shall extend with respect to A Term Loans,
beyond the Final A Term Loan Maturity Date, with respect to B Term Loans,
beyond the Final B Term Loan Maturity Date, with respect to Acquisition
Term Loans, beyond the Final Acquisition Term Loan Maturity Date, with
respect to Revolving Loans, beyond the Revolving Loan Maturity Date and
with respect to U.K. Swingline Loans, beyond the Swingline Expiry Date;
and
(e) no Interest Period with respect to any Borrowing of Dollar
Reserve Adjusted Eurodollar Loans shall extend beyond any date upon which
a U.S. Borrower is required to make a scheduled payment of principal with
respect to the Term Loans or Acquisition Term Loans if, after giving
effect to the selection of such Interest Period, the aggregate principal
amount of Term Loans or Acquisition Term Loans maintained as Reserve
Adjusted Eurodollar Loans with Interest Periods ending after such date of
scheduled payment of principal would exceed the amount of Term Loans or
Acquisition Term Loans permitted to be outstanding after such scheduled
payment of principal.
1.10. Special Provisions Governing Reserve Adjusted Eurodollar Loans
and Acceptances. Notwithstanding any other provision of this Agreement, the
following provisions shall
-21-
govern with respect to Reserve Adjusted Eurodollar Loans and Acceptances as to
the matters covered:
(a) On an Interest Rate Determination Date, the Administrative Agent
(or the U.K. Swingline Bank, with respect to U.K. Swingline Loans) shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties hereto) the interest rate which
shall apply to the Reserve Adjusted Eurodollar Loans for which an interest
rate is then being determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in
writing) to the Applicable Borrower and to each Bank.
(b) In the event that (x) in the case of clause (i) below, the
Administrative Agent, (y) in the case of clause (ii) below, the U.K.
Swingline Bank, or (z) in the case of clause (iii) or (iv) below, any
Bank, shall have determined (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising on or after
the Effective Date affecting the interbank eurodollar market,
adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of
Eurodollar Rate;
(ii) on any date for determining the Sterling Eurodollar Rate
for any Interest Period that, by reason of any changes arising on or
after the Effective Date affecting the interbank eurodollar market,
adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of
Sterling Eurodollar Rate;
(iii) at any time that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Reserve Adjusted Eurodollar Loans or its obligation
to make Reserve Adjusted Eurodollar Loans because of (x) any change
since the Effective Date (including changes proposed or published
prior to the Effective Date but taking effect thereafter) in any
applicable law, governmental rule, regulation, guideline or order,
whether or not having the force of law, or in the interpretation or
administration thereof by any court
-22-
or governmental or monetary authority charged with the
interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline or order such as, for example, but not limited to: (A) a
change in the basis of taxation of payments to any Bank of the
principal of or interest on the Notes or any other amounts payable
hereunder (except for changes in the rate of tax on the net income
or profits of such Bank or any tax on or measured by the capital of
a Bank or any franchise tax based on the net income or net profits
of such Bank, in any case pursuant to the laws of the jurisdiction
in which its principal office or applicable lending office is
located) or (B) a change in official reserve requirements, but, in
all events, excluding reserves required under Regulation D to the
extent included in the computation of the Eurodollar Rate and/or (y)
other circumstances affecting such Bank, the interbank eurodollar
market, or the position of such Bank in either such market; or
(iv) at any time that the making or continuance of any Reserve
Adjusted Eurodollar Loan has become unlawful by compliance by such
Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental
rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful);
then, and in any such event, the Administrative Agent in the case of
clause (i) above, the U.K. Swingline Bank in the case of clause (ii)
above, or such Bank in the case of clause (iii) or (iv) above shall on
such date give notice (by telephone confirmed in writing) to the
Applicable Borrower and, in the case of clause (iii) or (iv), to the
Administrative Agent, of such determination (which notice the
Administrative Agent shall promptly transmit to each of the other Banks).
Thereafter (x) in the case of clauses (i) and (ii) above, Reserve Adjusted
Eurodollar Loans shall no longer be available until such time as the
Administrative Agent or the U.K. Swingline Bank, as the case may be,
notifies the Applicable Borrower and the Banks that the circumstances
giving rise to such notice by the Administrative Agent or the U.K.
Swingline Bank, as the case may be, no longer exist, and any Notice of
Borrowing or Notice of Continuance/Conversion given by the
-23-
Applicable Borrower with respect to the borrowing of or conversion into
(including continuance of) Reserve Adjusted Eurodollar Loans which have
not yet been incurred shall be deemed rescinded by the Applicable
Borrower, (y) in the case of clause (iii) above, the Applicable Borrower
shall pay to such Bank, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Bank in its reasonable
discretion shall determine) as shall be required to compensate such Bank
for such increased costs or reductions in amounts receivable hereunder (a
written notice as to the additional amounts owed to such Bank, showing the
basis for the calculation thereof, submitted to the Applicable Borrower
shall, absent manifest error, be final, conclusive and binding upon all
parties hereto) and (z) in the case of clause (iv) above, the Applicable
Borrower shall take one of the actions specified in Section 1.10(c) as
promptly as possible and, in any event, within the time period required by
law. Each Bank shall notify the Applicable Borrower of any event occurring
after the date hereof entitling such Bank to compensation under this
Section 1.10(b) as promptly as practicable, but in any event within 90
days, after such Bank obtains actual knowledge thereof; provided that if
any Bank fails to give such notice within 90 days after it obtains actual
knowledge of such an event, such Bank shall, with respect to compensation
payable pursuant to this Section 1.10(b) in respect of any costs or other
amounts resulting from or relating to such event, only be entitled to
payment under this Section 1.10(b) for such costs or other amounts from
and after the date 90 days prior to the date that such Bank does give such
notice.
(c) At any time that any Reserve Adjusted Eurodollar Loan is
affected by the circumstances described in Section 1.10(b)(iii) or (iv),
the Applicable Borrower may (and in the case of a Loan affected pursuant
to Section 1.10(b)(iv) shall) either (i) if a Notice of Borrowing or
Notice of Continuance/Conversion has been given with respect to the
affected Loan cancel said Notice of Borrowing or Notice of
Continuance/Conversion by giving the Administrative Agent or the U.K.
Swingline Bank, as applicable, telephonic notice (confirmed promptly in
writing) thereof on the same date that Applicable Borrower was notified by
a Bank pursuant to Section 1.10(b)(iii) or (iv), or (ii) if the affected
Reserve Adjusted Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to
-24-
the Administrative Agent or the U.K. Swingline Bank, as the case may be,
require the affected Bank to convert each such Reserve Adjusted Eurodollar
Loan into a Base Rate Loan or U.K. Base Rate Loan, as the case may be;
provided that if more than one Bank is affected at any time, then all
affected Banks must be treated the same pursuant to this Section 1.10(c);
and provided, further, that the Applicable Borrower shall compensate any
such affected Banks as set forth in Section 1.10(f).
(d) Anything herein to the contrary notwithstanding, if on any
Interest Rate Determination Date no Eurodollar Rate is available by reason
of the inability of the Administrative Agent or U.K. Swingline Bank, as
the case may be, to determine such interest rate in accordance with the
definition thereof, the Administrative Agent or U.K. Swingline Bank, as
the case may be, shall give the Applicable Borrower and each Bank prompt
notice thereof and the Loans requested to be made as Reserve Adjusted
Eurodollar Loans shall, subject to the applicable notice requirements, be
made as Base Rate Loans or U.K. Base Rate Loans, as the case may be.
(e) Each Bank agrees that, as promptly as practicable after it
becomes aware of the occurrence of any event or the existence of a
condition that would cause it to be an affected Bank under Section
1.10(b)(iii) or (iv), it will, to the extent not inconsistent with such
Bank's internal policies, use reasonable efforts to make, fund or maintain
the affected Reserve Adjusted Eurodollar Loans of such Bank through
another lending office of such Bank if as a result thereof the additional
moneys which would otherwise be required to be paid in respect of such
Loans pursuant to Section 1.10(b)(iii) would be materially reduced or the
illegality or other adverse circumstances which would otherwise require
prepayment of such Loans pursuant to Section 1.10(b)(iv) would cease to
exist, and if, as determined by such Bank, in its reasonable discretion,
the making, funding or maintaining of such Loans through such other
lending office would not otherwise adversely affect such Loans or such
Bank. The Applicable Borrower hereby agrees to pay all reasonable expenses
incurred by any Bank in transferring the Loans to another lending office
of such Bank pursuant to this Section 1.10(e).
(f) The Applicable Borrower shall compensate each Bank, upon written
request by that Bank, for all reason-
-25-
able losses, expenses and liabilities (including, without limitation, such
factors as any interest paid by that Bank to Banks of funds borrowed by it
to make or carry its Reserve Adjusted Eurodollar Loans and any loss
sustained by that Bank in connection with re-employment of such funds
(based upon the difference between the amount earned in connection with
re-employment of such funds and the amount payable by the Applicable
Borrower if such funds had been borrowed or remained outstanding) which
that Bank may sustain with respect to the Applicable Borrower's Reserve
Adjusted Eurodollar Loans: (i) if for any reason (other than a default or
error by that Bank) a Borrowing of any such Reserve Adjusted Eurodollar
Loan does not occur on a date specified therefor in a Notice of Borrowing
or Notice of Continuance/Conversion or in a telephonic request for
borrowing or conversion, or a successive Interest Period in respect of any
such Reserve Adjusted Eurodollar Loan does not commence after notice
therefor is given pursuant to Section 1.06, (ii) if any prepayment (as
required by Sections 3.01 and 3.02, by acceleration or otherwise) or
conversion of any of such Bank's Reserve Adjusted Eurodollar Loans to the
Applicable Borrower occurs on a date which is not the last day of the
Interest Period applicable to that Loan, (iii) if any prepayment of any
such Bank's Reserve Adjusted Eurodollar Loans to the Applicable Borrower
is not made on any date specified in a notice of prepayment given by the
Applicable Borrower, or (iv) as a consequence of any other failure by the
Applicable Borrower to repay such Bank's Reserve Adjusted Eurodollar Loans
to the Applicable Borrower when required by the terms of this Agreement.
(g) If at any time prior to the acceptance of Acceptances by the
Canadian Swingline Bank, such Bank shall have determined in good faith
(which determination shall be conclusive) that, by reason of circumstances
affecting the market for bankers' acceptances, adequate and fair means do
not exist for determining discount rates on bankers' acceptances, neither
Canadian Borrower shall have the right to obtain a Credit Extension by
means of Acceptances.
1.11. Capital Requirements. If any Bank shall have determined that
the adoption or effectiveness after the Effective Date of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
-26-
interpretation or administration thereof, or compliance by such Bank or such
Bank's parent with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency (including in each case any such change proposed or published
prior to the date hereof but taking effect thereafter), has or would have the
effect of reducing the rate of return on such Bank's or such Bank's parent's
capital or assets as a consequence of such Bank's obligations hereunder to a
level below that which such Bank or such Bank's parent could have achieved but
for such adoption, effectiveness or change or as a consequence of an increase in
the amount of capital required to be maintained by such Bank (including in each
case, without limitation, with respect to any Bank's Commitment or any Loan),
then from time to time, within 15 days after demand by such Bank (with a copy to
the Administrative Agent), the Applicable Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank or such Bank's parent,
as the case may be, for such reduction. Each Bank, upon determining in good
faith that any additional amounts will be payable pursuant to this Section 1.11,
will give written notice thereof to the Applicable Borrower, which notice shall
set forth in reasonable detail the basis of the calculation of such additional
amounts. Each Bank shall notify the Applicable Borrower of any event occurring
after the date hereof entitling such Bank to compensation under this Section
1.11 as promptly as practicable, but in any event within 90 days, after such
Bank obtains actual knowledge thereof; provided that if any Bank fails to give
such notice within 90 days after it obtains actual knowledge of such an event,
such Bank shall, with respect to compensation payable pursuant to this Section
1.11 in respect of any costs or other amounts resulting from or relating to such
event, only be entitled to payment under this Section 1.11 for such costs or
other amounts from and after the date 90 days prior to the date that such Bank
does give such notice.
Each Bank agrees that, as promptly as practicable after it becomes
aware of the occurrence of any event or the existence of a condition that would
cause it to be an affected Bank under this Section 1.11, it will, to the extent
not inconsistent with such Bank's internal policies, use reasonable efforts to
make, fund or maintain the affected Loans of such Bank through another lending
office of such Bank if, as a result thereof, the additional moneys which would
otherwise be required to be paid in respect of such Loans pursuant to this
Section 1.11 would be materially reduced and if, as determined by such Bank, in
its reasonable discretion, the making, funding or maintaining of such Loans
through such other lending office
-27-
would not otherwise materially adversely affect such Loans or such Bank. The
Applicable Borrower hereby agrees to pay all reasonable expenses incurred by any
Bank in transferring the Loans to another lending office of such Bank pursuant
to this Section 1.11.
1.12. Total Loan Commitments; Limitations on Outstanding Loan
Amounts. The original amount of the (i) Total Commitments is $155,000,000, (ii)
Total A Term Loan Commitment is $20,000,000, (iii) Total B Term Loan Commitment
is $35,000,000, (iv) Total Acquisition Term Loan Commitment is $30,000,000, (v)
Total Revolving Loan Commitment is $70,000,000, including up to $20,000,000 of
Letters of Credit, (vi) Total U.S. Swingline Commitment is $10,000,000, (vii)
Total U.K. Swingline Commitment is $15,000,000 and (viii) Total Canadian
Swingline Commitment is $5,000,000. Anything contained in this Agreement to the
contrary notwithstanding, (a) in no event shall the sum of the aggregate
principal amount of all Term Loans, Acquisition Term Loans and Revolving Loans
of any Bank at any time exceed such Bank's portion of the Total Commitments, (b)
in no event shall the sum of the aggregate principal amount of all Term Loans,
Acquisition Term Loans, Revolving Loans and the Dollar Equivalent of Swingline
Loans from all Banks at any time exceed the Total Commitments, (c) in no event
shall the aggregate principal amount of all Acquisition Term Loans exceed the
Total Acquisition Term Loan Commitment, (d) in no event shall the Revolving
Loans, the Dollar Equivalent of Swingline Loans and the Dollar Equivalent of
Letter of Credit Usage, after giving effect to all Revolving Loans, Swingline
Loans and Letters of Credit then requested, exceed the Total Revolving Loan
Commitments, (e) in no event shall the aggregate principal amount of all
Revolving Loans, the Dollar Equivalent of Swingline Loans and the Dollar
Equivalent of Letter of Credit Usage, after giving effect to all Revolving
Loans, Swingline Loans and Letters of Credit then requested, exceed the
Borrowing Base and (f) in no event shall the aggregate principal Dollar
Equivalent of Swingline Loans exceed the applicable Maximum Swingline Amount.
1.13. Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrowers set forth herein and in the other Credit Documents, in addition to
requesting that the Banks make Revolving Loans pursuant to Section 1.03, the
U.S. Borrowers may request, in accordance with the provisions of this Section
1.13, that one or more Issuing Banks issue Letters
-28-
of Credit for the account of the Borrowers; provided that (i) no Borrower shall
request that any Bank issue any Letter of Credit and a Bank shall not issue any
Letter of Credit, if after giving effect to such issuance the sum of (A) the
Dollar Equivalent amount of Letter of Credit Usage on the date of such issuance,
after giving effect to the issuance of all Letters of Credit subject to
outstanding requests for issuance, plus (B) the Dollar Equivalent amount of
Revolving Loans and Swingline Loans then outstanding, after giving effect to the
making of all Revolving Loans and Swingline Loans then requested by all
outstanding but unfunded Notices of Borrowing, would exceed the Total Revolving
Loan Commitment then in effect, (ii) no Borrower shall request that any Bank
issue any Letter of Credit and a Bank shall not issue any Letter of Credit if
after giving effect to such issuance, the sum of the amounts described in clause
(i) above would exceed the Borrowing Base as would be shown in the Borrowing
Base Certificate that was last delivered pursuant to Section 6.01; provided such
Borrowing Base Certificate was required to be delivered pursuant to and was in
compliance with Section 6.01 or was delivered after the Borrowing Base
Certificate last required to be delivered pursuant to Section 6.01, (iii) in no
event shall any Issuing Bank issue (A) any Letter of Credit having an expiration
date later than thirty (30) Business Days prior to the Revolving Maturity Date,
as applicable, after giving effect to any possible renewal of such Letter of
Credit pursuant to the proviso to the following clause (iii)(B), (B) subject to
the foregoing clause (iii)(A), any Letter of Credit having an expiration date
more than one year after its date of issuance; provided that, subject to the
foregoing clause (iii)(A), this clause (B) shall not prevent any Issuing Bank
from issuing a Letter of Credit containing a provision to the effect that such
Letter of Credit will automatically be renewed annually for a period not to
exceed one year, so long as such renewable Letter of Credit provides that it
shall not at any time be renewed for an additional year if (I) the Applicable
Borrower notifies the Issuing Bank in writing at least one Business Day prior to
the applicable renewal date that the Applicable Borrower elects to allow the
Letter of Credit to expire without being renewed, or (II) the Issuing Bank or
the Required Banks notify the Applicable Borrower in writing, prior to the date
set forth in such Letter of Credit as the date by which the beneficiary thereof
is to be notified whether such Letter of Credit is to be renewed, that such
Letter of Credit shall not be so renewed, in which case such Letter of Credit
shall not be so renewed, or (C) any Letter of Credit the initial stated amount
of which is less than $10,000 or the Dollar Equivalent thereof and (iv) the U.S.
Borrowers shall not request that any Issuing Bank issue and no Issuing
-29-
Bank shall issue any Letter of Credit if, after giving effect to such issuance
and the issuance of all other requested Letters of Credit, the then outstanding
Letter of Credit Usage in respect of the Dollar Equivalent of all Letters of
Credit would exceed $20,000,000.
The issuance of any Letter of Credit in accordance with the
provisions of this Section 1.13 shall be given effect in the calculation of the
aggregate principal amount of Revolving Loans outstanding and the Dollar
Equivalent of Letter of Credit Usage (except as provided in the definition of
Letter of Credit Usage) and shall require the satisfaction of each condition set
forth in Section 4.04.
Immediately upon the issuance of each Letter of Credit, each Bank
with a Revolving Loan Commitment other than the Issuing Bank or Banks shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Bank a participation (such participation of each Bank in each Letter of Credit
being hereinafter referred to as its "Letter of Credit Participation") in the
Dollar Equivalent of such Letter of Credit and each drawing thereunder in an
amount equal to such Bank's pro rata share (determined on the basis of such
Bank's Revolving Loan Commitment) of the maximum amount which is or at any time
may become available to be drawn thereunder.
Each Letter of Credit may provide that the Issuing Bank may (but
shall not be required to) pay the beneficiary thereof upon the occurrence of an
Event of Default and the acceleration of the maturity of the Revolving Loans or,
if payment is not then due to the beneficiary, provide for the deposit of funds
in an account to secure payment to the beneficiary and that any funds so
deposited shall be paid to the beneficiary of the Letter of Credit if conditions
to such payment are satisfied or returned to the Issuing Bank for distribution
to the Banks (or, if all Obligations shall have been paid in full, to the
Applicable Borrower) if no payment to the beneficiary has been made and the
final date available for drawings under the Letter of Credit has passed. Each
payment or deposit of funds by an Issuing Bank as provided in this paragraph
shall be treated for all purposes of this Agreement as a drawing duly honored by
such Issuing Bank under the related Letter of Credit.
(b) Request for Issuance. Whenever a U.S. Borrower desires the
issuance of a Letter of Credit, it shall deliver to the Administrative Agent a
request for issuance of a Letter of Credit no later than Noon (New York time) at
least three Busi-
-30-
ness Days, or such shorter period as may be agreed to by any Issuing Bank in
any particular instance, in advance of the proposed date of issuance; provided
that a Letter of Credit denominated in a currency other than U.S. Dollars,
Canadian Dollars or Pounds Sterling will be issued as soon as available, which
may be more than three Business Days after the request therefor. The request for
issuance with respect to any Letter of Credit shall specify (i) the proposed
date of issuance (which shall be a business day under the laws of the
jurisdiction of the Issuing Bank) of such Letter of Credit, (ii) the face amount
and currency of such Letter of Credit, (iii) the expiration date of such Letter
of Credit and (iv) the name and address of the beneficiary of such Letter of
Credit. As soon as practicable after delivery of such request for issuance of a
Letter of Credit, the Issuing Bank for such Letter of Credit shall be determined
as provided in Section 1.13(c). Prior to the date of issuance, the Applicable
Borrower shall specify a precise description of the documents and the verbatim
text of any certificate to be presented by the beneficiary of such Letter of
Credit which, if presented by such beneficiary prior to the expiration date of
the Letter of Credit, would require the Issuing Bank to make payment under the
Letter of Credit; provided that the Issuing Bank, in its sole judgment, may
require changes in any such documents and certificates; and provided, further,
that no Letter of Credit shall require payment against a conforming draft to be
made thereunder earlier than Noon in the time zone of the Issuing Bank on the
Business Day (which shall be a business day under the laws of the jurisdiction
of the Issuing Bank) next succeeding the Business Day (which shall be a Business
Day under the laws of the jurisdiction of the Issuing Bank) that such draft is
presented. In determining whether to pay under any Letter of Credit, the Issuing
Bank shall be responsible only to determine that the documents and certificates
required to be delivered under that Letter of Credit have been delivered and
that they comply on their face with the requirements of that Letter of Credit.
Promptly after receipt of a request for issuance of a Letter of Credit and the
determination of the Issuing Bank thereof, the Administrative Agent shall notify
each Bank having a Revolving Loan Commitment of the proposed issuance, the
identity of the Issuing Bank and the amount of each other Bank's respective
participation therein, determined in accordance with Section 1.13(a).
(c) Determination of Issuing Bank.
(1) Upon receipt by the Administrative Agent of a request for
issuance pursuant to Section 1.13(b) with respect to a Letter of Credit, in the
event the Administrative Agent
-31-
elects to issue such Letter of Credit, the Administrative Agent shall so notify
the Applicable Borrower, and the Administrative Agent shall be the Issuing Bank
with respect thereto. In the event that the Administrative Agent, in its sole
discretion, elects not to issue such Letter of Credit, the Administrative Agent
shall promptly so notify the Applicable Borrower, and the Applicable Borrower
may request any other Bank having a Revolving Loan Commitment to issue such
Letter of Credit. Each such Bank so requested to issue such Letter of Credit
shall promptly notify the Applicable Borrower and the Administrative Agent
whether or not, in its sole discretion, it has elected to issue such Letter of
Credit, and any such Bank that so elects to issue such Letter of Credit shall be
the Issuing Bank with respect thereto. In the event that each other Bank elects
not to issue such Letter of Credit, the Administrative Agent agrees to issue
such Letter of Credit and to be the Issuing Bank with respect thereto.
(2) Each Issuing Bank that elects to issue a Letter of Credit shall
promptly give written notice to the Administrative Agent and each other Bank of
the information required under Section 1.13(b)(i)-(iv) relating to the Letter of
Credit.
(d) Payment of Amounts Drawn Under Letters of Credit. In the event
of any request for drawing under any Letter of Credit by the beneficiary
thereof, the Issuing Bank shall notify the Applicable Borrower and the
Administrative Agent on or before the date on which such Issuing Bank intends to
honor such drawing, and the Applicable Borrower shall reimburse such Issuing
Bank on the day on which such drawing is honored in an amount in same day funds
equal to the amount of and in the same currency as such drawing; provided that,
anything contained in this Agreement to the contrary notwithstanding, (i) unless
the Applicable Borrower shall have notified the Administrative Agent and such
Issuing Bank prior to Noon (New York time) on the Business Day of the date of
such drawing that the Applicable Borrower intends to reimburse such Issuing Bank
for the amount of such drawing with funds other than the proceeds of Revolving
Loans, the Applicable Borrower shall be deemed to have timely given a Notice of
Borrowing to the Administrative Agent requesting the Banks having Revolving Loan
Commitments to make Revolving Loans that are Base Rate Loans on the Business Day
following the date on which such drawing is honored in an amount equal to the
Dollar Equivalent amount of such drawing, and (ii) the Banks shall, on the date
of such drawing, make Revolving Loans that are Base Rate Loans in the amount of
such drawing, the proceeds of which shall be applied directly by the
Administrative Agent to reimburse such Issuing
-32-
Bank for the Dollar Equivalent amount of such drawing; and further provided that
if, for any reason, proceeds of Revolving Loans are not received by such Issuing
Bank on such date in an amount equal to the amount of such drawing, such Issuing
Bank shall be entitled to reimbursement in accordance with Section 1.04, on the
Business Day (which shall be a business day under the laws of the jurisdiction
of such Issuing Bank) immediately following the date of such drawing, in an
amount in same day funds equal to the excess of the amount of such drawing over
the amount of such Revolving Loans, if any, that are so received, plus accrued
interest on such amount at the rate set forth in Section 1.13(f)(1)(i).
(e) Payment by Banks. In the event that the Applicable Borrower
shall fail to reimburse an Issuing Bank as provided in Section 1.13(d) in an
amount equal to the Dollar Equivalent amount of any drawing honored by such
Issuing Bank under a Letter of Credit issued by it, such Issuing Bank shall
promptly notify each Bank having a Revolving Loan Commitment of the unreimbursed
Dollar Equivalent amount of such drawing and of such Bank's respective
participation therein. Each Bank having a Revolving Loan Commitment shall make
available to such Issuing Bank an amount equal to the Dollar Equivalent amount
of its respective participation in same day funds at the office of such Issuing
Bank specified in such notice, not later than 1:00 P.M. (New York time) on the
Business Day (which shall be a business day under the laws of the jurisdiction
of such Issuing Bank) after the date notified by such Issuing Bank. In the event
that any Bank having a Revolving Loan Commitment fails to make available to such
Issuing Bank the Dollar Equivalent amount of such Bank's participation in such
Letter of Credit as provided in this Section 1.13(e), such Issuing Bank shall be
entitled to recover such amount on demand from such Bank together with interest
at the customary rate set by the Administrative Agent for the correction of
errors among banks for three Business Days and thereafter at the Base Rate. Each
Issuing Bank shall distribute to each other Bank having a Revolving Loan
Commitment which has paid all amounts payable by it under this Section 1.13(e)
with respect to any Letter of Credit issued by such Issuing Bank such other
Bank's pro rata share of all payments received by such Issuing Bank from the
Applicable Borrower in reimbursement of drawings honored by such Issuing Bank
under such Letter of Credit when such payments are received. Nothing in this
Section 1.13(e) shall be deemed to relieve any Bank from its obligation to pay
all amounts payable by it under this Section 1.13(e) with respect to any Letter
of Credit issued by an Issuing Bank or to prejudice any rights
-33-
that the Applicable Borrower or any other Bank may have against a Bank as a
result of any default by such Bank hereunder.
(f) Compensation.
(1) The Applicable Borrower agrees to pay the following amounts with
respect to all Letters of Credit:
(i) with respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by such Issuing Bank in
respect of each such drawing from and including the date of the drawing
through the date such amount is reimbursed by the Applicable Borrower
(including any such reimbursement out of the proceeds of Revolving Loans
pursuant to Section 1.13(d)) at a rate which is equal to the interest rate
then applicable to Base Rate Loans for the period from the date of such
drawing to and including the first Business Day after the date of such
drawing and thereafter at a rate equal to 2% per annum in excess of the
rate of interest otherwise payable under this Agreement for Base Rate
Loans during such period; provided that amounts reimbursed after 2:00 p.m.
(New York time) on any date shall be deemed to be reimbursed on the next
succeeding Business Day;
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder, documentary and
processing charges (it being understood that such charges are without
duplication of the fees set forth in clause (3) below) in accordance with
such Issuing Bank's standard schedule for such charges in effect at the
time of such amendment, transfer or drawing, as the case may be.
(2) The Applicable Borrower agrees to pay to the Administrative
Agent for distribution to each Bank having a Revolving Loan Commitment in
respect of each Letter of Credit outstanding such Bank's pro rata share of a
commission equal to 2.25% per annum of the maximum amount available from time to
time to be drawn under such outstanding Letters of Credit, payable in arrears on
and through the last day of each fiscal quarter of the Applicable Borrower and
calculated on the basis of a 360-day year and the actual number of days elapsed.
Upon the happening and during the continuance of an Event of Default described
in Section 8.01, the commission referred to in the preceding sentence shall be
4.25% per annum.
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(3) The Applicable Borrower agrees to pay to each Issuing Bank in
respect of each Letter of Credit a commission equal to .125% per annum of the
maximum amount available at any time to be drawn under such Letter of Credit
issued by such Issuing Bank, payable in arrears on and through the last day of
each fiscal quarter of the Applicable Borrower and calculated on the basis of a
360-day year and the actual number of days elapsed or, if the maximum amount
available to be drawn under such Letter of Credit is the Dollar Equivalent of
$40,000 or less, $500 per annum, payable in arrears on the last day of each
fiscal quarter.
Amounts payable under clauses (1)(i) and (2) of this Section 1.13(f)
shall be paid to the Administrative Agent on behalf of the Banks having a
Revolving Loan Commitment. The Administrative Agent shall distribute promptly to
each Bank having a Revolving Loan Commitment its pro rata share of such amount.
Amounts payable under clauses (1)(ii) and (3) of this Section 1.13(f) shall be
paid directly to the Issuing Bank.
(g) Obligations Absolute. The obligation of the Applicable Borrower
to reimburse each Issuing Bank for drawings made under the Letters of Credit
issued by it and the obligations of the Banks under Section 1.13(e) shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including, without limitation,
the following circumstances:
(1) any lack of validity or enforceability of any Letter of Credit;
(2) the existence of any claim, setoff, defense or other right that
the Applicable Borrower or any Affiliate of the Applicable Borrower or any
other Person may have at any time against a beneficiary or any transferee
of any Letter of Credit (or any persons or entities for whom any such
beneficiary or transferee may be acting), such Issuing Bank, any Bank or
any other Person, whether in connection with this Agreement, the
Transaction contemplated herein or any unrelated transaction;
(3) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
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(4) payment by such Issuing Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document that does
not comply with the terms of such Letter of Credit;
(5) any other circumstance or happening whatsoever that is similar
to any of the foregoing; or
(6) the fact that a Default or Event of Default shall have occurred
and be continuing;
provided, in each case, that payment by the applicable Issuing Bank under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Bank under the circumstances in question (as
determined by a court of competent jurisdiction).
(h) Additional Payments. If by reason of (a) any change after the
Effective Date in applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by any judicial
or regulatory authority of any law, regulation, rule, decree or regulatory
requirement or (b) compliance by any Issuing Bank or any Bank with any
direction, request or requirement (whether or not having the force of law) of
any governmental or monetary authority including, without limitation, Regulation
D:
(i) such Issuing Bank or any Bank shall be subject to any tax, levy,
charge or withholding of any nature or to any variation thereof (except
for changes in the rate of tax imposed on the net income or net profits of
such Bank or any tax on or measured by the capital of a Bank or any
franchise tax based on the net income or net profits of such Bank, in any
case pursuant to the laws of the jurisdiction in which its principal
office or applicable lending office is located) or to any penalty with
respect to the maintenance or fulfillment of its obligations under this
Section 1.13, whether directly or by such being imposed on or suffered by
such Issuing Bank or any Bank;
(ii) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit issued
by such Issuing Bank or participations therein purchased by any Bank; or
(iii) there shall be imposed on such Issuing Bank or any Bank any
other condition regarding this Section 1.13, any Letter of Credit or any
participation therein;
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and the result of the foregoing is to directly or indirectly increase the cost
to such Issuing Bank or any Bank of issuing, making or maintaining any Letter of
Credit or of purchasing or maintaining any participation therein, or to reduce
the amount receivable in respect thereof by such Issuing Bank or any Bank, then
and in any such case such Issuing Bank or such Bank shall, as promptly as
practical, but in any event within 90 days, after such Bank obtains actual
knowledge that the additional cost is incurred or the amount received is
reduced, notify the Applicable Borrower and the Applicable Borrower shall pay on
demand such amounts as such Issuing Bank or such Bank may specify to be
necessary to compensate such Issuing Bank or such Bank for such additional cost
or reduced receipt, together with interest on such amount from the date demanded
until payment in full thereof at a rate per annum equal at all times to the rate
applicable to Base Rate Loans then in effect; provided, however, that if any
Bank fails to give such notice within 90 days after it obtains actual knowledge
of such an event, such Bank shall, with respect to compensation payable pursuant
to this Section 1.13(h), only be entitled to payment under this Section 1.13(h)
for such costs or other amounts from and after the date 90 days prior to the
date that such Bank does give such notice. A certificate in reasonable detail as
to the amount of such increased cost or reduced receipt, submitted to the
Applicable Borrower and the Administrative Agent by that Issuing Bank or any
Bank, as the case may be, shall, absent manifest error, be final, conclusive and
binding for all purposes.
(i) Indemnification; Nature of Issuing Bank's Duties. In addition to
amounts payable as elsewhere provided in this Section 1.13, without duplication,
the U.S. Borrowers hereby agree, jointly and severally, to protect, indemnify,
pay and save each Issuing Bank (and if the other Banks have been requested to
participate pursuant to Section 1.13(e), the Banks) harmless from and against
any and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees and allocated costs of internal
counsel) which such Bank may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of the Letters of Credit or (ii) the failure of
such Issuing Bank to honor a drawing under any Letter of Credit as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority (all such acts or
omissions herein called "Government Acts").
As between the U.S. Borrowers and each Issuing Bank, the U.S.
Borrowers assume all risks of the acts and omissions
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of, or misuse of the Letters of Credit issued by such Issuing Bank at any U.S.
Borrower's request by, the respective beneficiaries of such Letters of Credit.
In furtherance and not in limitation of the foregoing, such Issuing Bank shall
not be responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of such Letters of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of any such Letter of Credit to comply
fully with conditions required in order to draw upon such Letter of Credit; (iv)
for errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not they
are in cipher; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in order
to make a drawing under any such Letter of Credit or of the proceeds thereof;
(vii) for the misapplication by the beneficiary of any such Letter of Credit of
the proceeds of any drawing under such Letter of Credit; and (viii) for any
consequences arising from causes beyond the control of such Issuing Bank,
including, without limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of any of such Issuing Bank's rights or
powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Issuing
Bank in connection with the Letters of Credit issued by it or the related
certificates, if taken or omitted in good faith, shall not put such Issuing Bank
under any resulting liability to the Borrowers.
Notwithstanding anything to the contrary contained in this Section
1.13, the U.S. Borrowers shall have no obligation to indemnify any Issuing Bank
in respect of any liability incurred by such Issuing Bank arising solely out of
and to the extent of the gross negligence or willful misconduct of such Issuing
Bank or out of the wrongful dishonor by such Issuing Bank of a proper demand for
payment under the Letters of Credit issued by it.
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1.14. Computation of Dollar Equivalent Amount of Pounds Sterling and
Canadian Dollars. The Administrative Agent (or, with respect to Pounds Sterling
loans referred to in paragraph (a), the U.K. Swingline Bank) will determine the
Dollar Equivalent amount with respect to:
(a) any Borrowing comprised of U.K. Swingline Loans or Canadian
Swingline Loans, the day of the requested Borrowing with respect to Pounds
Sterling Reserve Adjusted Eurodollar Loans and U.K. Base Rate Loans, one
Business Day prior to the requested date of Borrowing with respect to
Acceptances, and the date of the requested Borrowing with respect to Prime
Rate Loans,
(b) any issuance of a Letter of Credit in a currency other than
Dollars as of the requested date of issuance thereof,
(c) all outstanding U.K. Swingline Loans and Canadian Swingline
Loans, plus the Letter of Credit Usage under Letters of Credit issued in a
currency other than Dollars as of the last Business Day of each month and
as of any other date selected by the Administrative Agent,
(d) the aggregate sum of the amount of all U.K. Swingline Loans and
Canadian Swingline Loans, plus all Letter of Credit Usage, immediately
prior to and after giving effect to any Revolving Loan made under Section
1.13(d) as of the proposed date of the making of any such Revolving Loan,
(e) all outstanding U.K. Swingline Loans or Canadian Swingline Loans
on the date notice (or deemed notice) is given of a Mandatory Borrowing as
provided in Section 1.01(e), and
(f) all U.K. Swingline Loans and Canadian Swingline Loans, plus all
Letter of Credit Usage on any date on which the Total Revolving
Commitments are reduced pursuant to Section 2.01 or 2.02.
1.15. European Monetary Union. (a) If, as a result of the
implementation of European monetary union, (i) Pounds Sterling cease to be
lawful currency of the United Kingdom and are replaced by a European single
currency or (ii) Pounds Sterling and a European single currency are at the same
time recognized by the central bank or comparable authority of the United
Kingdom as lawful currency of such nation and the U.K. Swin-
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gline Bank shall so request in a notice delivered to the U.K. Borrower, then any
amount payable hereunder by the U.K. Swingline Bank to the U.K. Borrower, or by
the U.K. Borrower to the U.K. Swingline Bank, in such currency shall instead be
payable in the European single currency and the amount so payable shall be
determined by translating the amount payable in such currency to such European
single currency at the exchange rate recognized by the European Central Bank for
the purpose of implementing European monetary union.
(b) The U.K. Borrower agrees, at the request of the U.K. Swingline
Bank, to compensate such U.K. Swingline Bank for any reasonable loss, cost,
expense or reduction in return that shall be incurred or sustained by such U.K.
Swingline Bank (other than as a result of such U.K. Swingline Bank's gross
negligence or willful misconduct) as a result of the implementation of European
monetary union, that would not have been incurred or sustained but for the
transactions provided for herein and that, to the extent that such loss, cost,
expense or reduction is of a type generally applicable to extensions of credit
similar to the extensions of credit hereunder, is generally being requested from
borrowers subject to similar provisions. A certificate of the U.K. Swingline
Bank (x) setting forth the amount or amounts necessary to compensate such U.K.
Swingline Bank, (y) describing the nature of the loss or expense sustained or
incurred by such U.K. Swingline Bank as a consequence thereof and (z) setting
forth a reasonably detailed explanation of the calculation thereof shall be
delivered to the U.K. Borrower and shall be conclusive absent manifest error.
The U.K. Borrower shall pay to such U.K. Swingline Bank the amount shown as due
on any such certificate within 10 days after receipt thereof.
(c) The U.K. Borrower agrees, at the request of the U.K. Swingline
Bank or the Required Revolving Banks, at the time of or at any time following
the implementation of European monetary union, to enter into an agreement
amending this Agreement (subject to obtaining the approval of the U.K. Swingline
Bank and the Required Banks) in such manner as the U.K. Swingline Bank and the
Required Revolving Banks shall specify in order to reflect the implementation of
such monetary union to place the parties hereto in the position they would have
been in had such monetary union not been implemented.
1.16. Acceptances Provisions. The parties hereto agree that the
provisions of Schedule 1.16 shall apply to all Acceptances created hereunder,
and that the provisions of Schedule 1.16 shall be deemed incorporated by
reference into
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this Agreement as if such provisions were set forth in their entirety herein.
1.17. Replacement of Banks. (a) If at any time the Obligations of
the Borrowers shall have increased, or will increase, as the result of
occurrences, as to any one or more Banks, as described in Sections 1.10 (other
than Section 1.10(f)), 1.11, 1.13(h) or 3.04 and such increase can be avoided or
minimized if such Banks were no longer Banks hereunder, the Company shall have
the right to replace such Banks with another Person; provided that (a) no Event
of Default shall have occurred and be continuing; (b) such increased costs shall
not be generally charged by the other Banks hereunder; (c) such new Person is of
one of the types discussed in Section 11.04(b)(A) (other than the requirement
therein that consents be given) and such new Person shall execute an Assignment
and Assumption Agreement substantially in the form of Exhibit I-2; and (d)
neither the Administrative Agent nor any Bank shall have any obligation to find
such other Person.
(b) If at any time the U.K. Swingline Bank notifies the U.K.
Borrower that the Swingline Expiry Date for the U.K. Swingline Loans will not be
extended (as provided in the definition of Swingline Expiry Date), the Company
and the U.K. Borrower shall have the right to replace the U.K. Swingline Bank
with another Person; provided that (a) no Event of Default shall have occurred
and be continuing; (b) such new Person is of one of the types discussed in
Section 11.04(b)(A) (other than the requirement therein that consents be given)
and such new Person shall execute an Assignment and Assumption Agreement
substantially in the form of Exhibit I-2; and (c) neither the Administrative
Agent nor any Bank shall have any obligation to find such other Person.
(c) Each Bank agrees to its replacement at the option of the Company
pursuant to Section 1.17(a) or (b), as the case may be, and in accordance with
Section 11.04(b)(A) (except to the extent inconsistent with this Section 1.17);
provided that the successor Bank shall purchase without recourse (except as to
matters of title) such replaced Bank's interest in the Obligations of the
Borrowers and shall assume such replaced Bank's Commitments hereunder for cash
in an aggregate amount equal to the aggregate unpaid principal of such
Obligations, all unpaid interest accrued thereon, all unpaid commitment and
other fees accrued for the account of such replaced Bank, any breakage costs
incurred by the replaced Bank because of the repayment of Reserve Adjusted
Eurodollar Loans and all other
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amounts then owing to such replaced Bank under this Agreement or any other
Credit Document.
SECTION 2. Commitments.
2.01. Voluntary Reduction of Commitments. Upon at least one Business
Day's prior written notice (or telephonic notice promptly confirmed in writing)
to the Administrative Agent at the Administrative Agent's Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks), the
Applicable Borrower or Borrowers shall have the right, without premium or
penalty, to terminate in whole or in part the unutilized portion of any or all
of (i) the Total Revolving Loan Commitments and (ii) the Total Acquisition Term
Loan Commitments, in each case, in part or in whole; provided that (x) any such
termination shall proportionately and permanently reduce the Revolving Loan
Commitment or Acquisition Term Loan Commitment, as applicable, of each of the
Banks and (y) any partial reduction of the Total Revolving Loan Commitments or
the Total Acquisition Term Loan Commitments pursuant to this Section 2.01 shall,
in each case, be in the amount of at least $100,000 and integral multiples of
$100,000 in excess of that amount; provided, further, that (A) the Total
Revolving Loan Commitments shall not be reduced to an amount less than the
aggregate Revolving Loans and the Dollar Equivalent amount of Swingline Loans
and Letter of Credit Usage then outstanding and (B) the Total Acquisition Term
Loan Commitments shall not be reduced to an amount less than the aggregate
Acquisition Term Loans then outstanding. The Applicable Borrower or Borrowers
shall have the right, without premium or penalty, to terminate the unutilized
portion, in whole or in part, of the U.S. Swingline Commitment, the U.K.
Swingline Commitment or the Canadian Swingline Commitment.
2.02. Mandatory Adjustments of Commitments, etc. (a) The Total
Revolving Loan Commitment shall terminate on the Revolving Loan Commitment
Termination Date.
(b) The Total A Term Loan Commitment shall be reduced (i) on the
Closing Date to the amount of A Term Loans then outstanding and (ii) on the date
on which any payments of principal on the A Term Loans are made (other than
pursuant to Section 3.02(A)(a)) in an aggregate amount equal to such payments.
(c) The Total B Term Loan Commitment shall be reduced (i) on the
Closing Date to the amount of B Term Loans then outstanding and (ii) on the date
on which any payments of
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principal on the B Term Loans are made (other than pursuant to Section
3.02(A)(a)) in an aggregate amount equal to such payments.
(d) The Total Acquisition Term Loan Commitment shall be reduced (i)
on the Acquisition Term Loan Commitment Termination Date to the amount of
Acquisition Term Loans then outstanding and (ii) on the date on which any
payments of principal on the Acquisition Term Loans are made (other then
pursuant to Section 3.02(A)(a)) in an aggregate amount equal to such payment.
(e) The Total Revolving Loan Commitment and the Maximum Swingline
Amount shall be permanently reduced, in each case, in the amount and at the time
of any payment on the Loans required to be applied to the Revolving Loans,
Swingline Loans, Revolving Loan Commitments or Maximum Swingline Amount or to
cash collateralize Letters of Credit or Acceptances pursuant to Section
3.02(B)(a).
(f) Each reduction or termination of the A Term Loan Commitment, the
B Term Loan Commitment, Acquisition Term Loan Commitment or the Total Revolving
Loan Commitment pursuant to this Section 2.02 shall apply proportionately to the
A Term Loan Commitment, the B Term Loan Commitment, Acquisition Term Loan
Commitment or the Revolving Loan Commitment, as the case may be, of each Bank.
2.03. Commitment Commission. (a) The Company agrees to pay the
Administrative Agent a commitment commission ("Commitment Commission") for the
account of each Bank for the period from and including the Closing Date to but
not including the date the Total Commitments have been terminated, computed at a
rate equal to 1/2% per annum on the daily average Unutilized Commitment of such
Bank. Accrued Commitment Commission shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December,
commencing with June 30, 1998 and on the Revolving Loan Commitment Termination
Date, based on the actual number of days elapsed over a year of 360 days.
(b) The Company agrees to pay ABN AMRO Bank N.V., Chicago Branch,
the commitment and other fees at the times required by, and pursuant to, the
letter agreement between the Company and ABN AMRO Bank N.V., Chicago Branch,
dated March 30, 1998, in respect of the U.K. Swingline Loan.
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2.04. Currency Equivalents Generally. For all purposes of any Loan
or other Credit Extension pursuant to this Agreement (but not for purposes of
the preparation of any financial statements delivered pursuant hereto), the
equivalent in Pounds Sterling or Canadian Dollars of an amount in U.S. Dollars,
and the equivalent in U.S. Dollars of an amount in Pounds Sterling or Canadian
Dollars, shall be determined at the Spot Rate. For purposes of determining
compliance with any restriction limited to a Dollar Equivalent amount in this
Agreement, the Dollar Equivalent amount of any transaction occurring prior to
the date of determination shall be calculated based on the Spot Rate on the date
of determination; provided, however, that if such Dollar Equivalent amount shall
be exceeded, such restriction shall nonetheless be deemed not violated if such
Dollar Equivalent amount of such transaction was calculated based on the
relevant currency exchange rate in effect on the date of each such transaction;
provided, further, that the Borrowers shall comply with Section 3.02(A).
2.05. Principle of Deemed Reinvestment. Except to the extent
permitted under applicable law, all calculations of interest and fees hereunder
are to be made on the basis of the nominal interest rate set forth herein and
not using the effective rate method of calculation or on any basis which gives
effect to the principle of deemed reinvestment. For the purposes of disclosure
under the Interest Act (Canada), if and to the extent applicable, whenever
interest is to be paid hereunder and such interest is to be calculated on the
basis of a period of less than a calendar year, the yearly rate of interest to
which the rate determined pursuant to such calculation is equivalent is the rate
so determined multiplied by the actual number of days in the calendar year in
which the same is to be ascertained and divided by the number of days in such
period.
2.06. Maximum Rate of Return. Notwithstanding any provision to the
contrary contained in this Agreement, in no event shall the aggregate "interest"
(as defined in section 347 of the Criminal Code, Revised Statutes of Canada,
1985, c. 46 as the same may be amended, replaced or re-enacted from time to
time) payable under this Agreement by either Canadian Borrower or the Credit
Documents to which such Canadian Borrower is a party exceed the effective annual
rate of interest on the "credit advanced" (as defined in that section) to such
Canadian Borrower under this Agreement lawfully permitted under that section
and, if any payment, collection or demand pursuant to this Agreement or any
other Credit Document relating to such Canadian Borrower in respect of
"interest" (as defined in that section) is determined to be contrary to the
provisions of that
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section, such payment, collection or demand shall be deemed to have been made by
mutual mistake of such Canadian Borrower and the Banks and the amount of such
payment or collection shall be refunded to such Canadian Borrower. For purposes
of this Agreement the effective annual rate of interest shall be determined in
accordance with generally accepted actuarial practices and principles over the
term of the Canadian Swingline Loan facility on the basis of annual compounding
of the lawfully permitted rate of interest and, in the event of dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries appointed by the
Administrative Agent will be conclusive for the purposes of such determination.
If it is not determinable which particular payment or collection is contrary to
the provisions of the section of the Criminal Code referred to hereinabove, the
Canadian Swingline Banks will, in consultation with the applicable Canadian
Borrower, determine the payments or collections to be refunded.
SECTION 3. Payments.
3.01. Voluntary Prepayments. Each Borrower shall have the right to
prepay Term Loans, Acquisition Term Loans, Swingline Loans and Revolving Loans
incurred by it in whole or in part from time to time, without premium or penalty
(except for breakage costs, if any) on the following terms and conditions: (i)
the Applicable Borrower shall give the Administrative Agent at the
Administrative Agent's Office (with respect to U.K. Swingline Loans, notice
shall also be given to the U.K. Swingline Bank) written notice (or telephonic
notice promptly confirmed in writing) of its intent to prepay the Loans, the
amount of such prepayment and the Types of Loans and the specific Borrowing or
Borrowings which are to be prepaid, which notice shall be given by the
Applicable Borrower at least one Business Day prior to the date of such
prepayment (or in the case of a Swingline Loan, the date of such prepayment) and
which notice shall promptly be transmitted by the Administrative Agent to each
of the Banks; (ii) each partial prepayment of any Borrowing (other than
Borrowings of Swingline Loans) shall be in an aggregate principal amount of the
Borrowing Amount or at least $100,000 and integral multiples of $100,000 in
excess of that amount (or the Dollar Equivalent); provided that no partial
prepayment of Reserve Adjusted Eurodollar Loans made pursuant to a single
Borrowing under the Loan Facility (or Portion thereof) shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount or Borrowing Amount, as the case may be; provided,
further, that the minimum prepayment amount for a Swingline Loan shall be an
amount as agreed between the Applicable
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Borrower and the applicable Swingline Bank; (iii) Reserve Adjusted Eurodollar
Loans may only be prepaid pursuant to this Section 3.01 on the last day of an
Interest Period applicable thereto unless any breakage costs set forth in
Section 1.10(f) accompany such prepayment; and (iv) each prepayment in respect
of any Term Loans made pursuant to a Borrowing shall be applied pro rata to the
A Term Loans, B Term Loans and Acquisition Term Loans then outstanding.
Voluntary prepayments of Term Loans or Acquisition Term Loans shall be applied
to the prepayment of the outstanding principal amount of Loans relating to such
Portion pro rata such that each principal payment then remaining with respect to
such Portion shall be reduced by an amount equal to the product of (A) such
payment and (B) a fraction of which the numerator is equal to the amount of such
principal payments then remaining with respect to such Portion and the
denominator is equal to the amount of all principal payments remaining with
respect to such Portion. In the absence of a designation by the Borrowers, the
Administrative Agent shall apply such prepayments first to Base Rate Loans and
thereafter to Reserve Adjusted Eurodollar Loans.
3.02. Mandatory Prepayments.
(A) Requirements:
(a) Subject to Section 3.05(b), the Applicable Borrowers shall
prepay the outstanding principal amount of the A Term Loans, the B Term
Loans, the Acquisition Term Loans, the Revolving Loans or Swingline Loans
made to them on any date on which the aggregate outstanding principal
amount of such Loans (after giving effect to any other repayments or
prepayments on such day and together with the outstanding principal amount
of Letter of Credit Usage) exceeds the Total A Term Loan Commitment, the
Total B Term Loan Commitment, the Total Acquisition Term Loan Commitment,
the Total Revolving Loan Commitments or the applicable Maximum Swingline
Amount, as the case may be, in the amount of such excess, the Applicable
Borrowers to determine among themselves the amount of such excess to be
prepaid by each.
(b) Subject to Section 3.05(b), if the aggregate principal amount of
outstanding Revolving Loans, and the Dollar Equivalent amount of Swingline
Loans and Letter of Credit Usage exceeds the lesser of (i) the Total
Revolving Loan Commitment and (ii) the Borrowing Base as set forth in the
most recent Borrowing Base Certificate last delivered pursuant to Section
6.01 (provided such Borrowing
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Base Certificate was required to be delivered pursuant to and was in
compliance with Section 6.01 or was delivered after the Borrowing Base
Certificate last required to be delivered pursuant to Section 6.01 of this
Agreement), then the Applicable Borrowers shall prepay Revolving Loans or
Swingline Loans made to them in a principal amount equal to such excess no
later than two (2) Business Days after the determination of such excess,
the Applicable Borrowers to determine among themselves the amount to be
prepaid by each; provided they comply with the limits set forth herein.
(c) The U.S. Borrowers shall cause to be paid Scheduled A Term Loans
Principal Payments on the A Term Loans until the A Term Loans are paid in
full in the amounts and at the times specified in the definition of
Scheduled A Term Loans Principal Payments to the extent that prepayments
have not previously been applied to such Scheduled A Term Loans Principal
Payments (and such Scheduled A Term Loans Principal Payments have not
otherwise been reduced) pursuant to the terms hereof.
(d) The U.S. Borrowers shall cause to be paid each Scheduled B Term
Loans Principal Payment on the B Term Loans until all B Term Loans are
paid in full in the amounts and at the times specified in the definition
of Scheduled B Term Loans Principal Payments to the extent that
prepayments have not previously been applied to such Scheduled B Term
Loans Principal Payments (and such Scheduled B Term Loans Principal
Payments have not otherwise been reduced) pursuant to the terms hereof.
(e) The U.S. Borrowers shall cause to be paid Scheduled Acquisition
Term Loans Principal Payments on the Acquisition Term Loans until the
Acquisition Term Loans are paid in full in the amounts and at the times
specified in the definition of Scheduled Acquisition Term Loans Principal
Payments to the extent that prepayments have not previously been applied
to such Scheduled Acquisition Term Loans Principal Payments (and such
Scheduled Acquisition Term Loans Principal Payments have not otherwise
been reduced) pursuant to the terms hereof.
(f) After the Closing Date, on the Business Day after the date of
receipt thereof by the Company and/or any of its Subsidiaries of Net Cash
Proceeds (after giving effect to the ability to reinvest any such Net Cash
Proceeds pursuant to Section 7.17) or Net Financing Proceeds
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(including the receipt of Net Financing Proceeds by Holdings, the proceeds
of which are required to be contributed to the Company in accordance with
the provisions of Section 7.14) (without duplication of prepayments
required by clause (h) of this Section 3.02(A) and other than the proceeds
of Indebtedness permitted by Section 7.04), the Company shall apply or
cause to be applied an amount equal to 100% of such Net Cash Proceeds or
Net Financing Proceeds as provided in Section 3.02(B)(a).
(g) On the date which is 90 days after the last day of the Company's
fiscal year, commencing with the fiscal year ending October 31, 1999, the
Company shall apply or cause to be applied an amount equal to 75% of the
Company's Excess Cash Flow for such fiscal year as provided in Section
3.02(B)(a); provided that (i) such amount shall be 50% with respect to the
fiscal year ending October 31, 1999 and (ii) such amount shall be 50% for
subsequent years if the ratio of Indebtedness for borrowed money of the
Company and its Subsidiaries on the last day of such fiscal year to
Consolidated EBITDA of the Company for the Test Period ending at the end
of such fiscal year, on a pro forma basis after giving effect to any
Designated Acquisitions made during such year, shall be less than 3.5:1.0;
provided further that any funds used for any Designated Acquisition made
subsequent to the end of such fiscal year and prior to the date of payment
shall reduce Excess Cash Flow (before applying the prepayment percentage)
for purposes of this Section 3.02(A)(g) except to the extent funded with
Acquisition Term Loans or from the $12,500,000 Revolving Loan basket set
forth in Section 6.18.
(h) On the Business Day after the date of the receipt thereof by the
Company and/or any of its Subsidiaries, the Company shall apply or cause
to be applied an amount equal to 100% of the proceeds received by such
Person (net of underwriting discounts and commissions and other reasonably
incurred costs and expenses directly associated therewith) of the sale
after the Closing Date of equity (including the sale of equity by
Holdings, the proceeds of which are required to be contributed to the
Company in accordance with the provisions of Section 7.14 but excluding
sales to directors constituting directors qualifying shares, where
required by law) as provided in Section 3.02(B)(a).
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(i) At the Administrative Agent's discretion, on the Business Day
after the date of receipt thereof by the Company and/or any of its
Subsidiaries, the Company shall apply or cause to be applied an amount
equal to (x) 100% of any insurance proceeds other than Net Proceeds or
insurance proceeds of the type referred to in clause (y) below (less
reasonably incurred costs to recover) received less any portion of such
proceeds not in excess of $10,000,000 attributable to a casualty, so long
as there exists no Event of Default, that is applied or committed to be
applied within a reasonable period of time to repair or replace the
damaged property; provided that any insurance proceeds received in respect
of an inventory loss shall not be counted towards the $10,000,000 limit
and shall not be required to be applied as a mandatory prepayment pursuant
to this Section 3.02(A)(i), and (y) 100% of any business interruption
insurance proceeds (less reasonably incurred costs to recover) over
$5,000,000 attributable to a casualty, in each case as provided in Section
3.02(B)(a).
(j) If any of the Mortgaged Real Property is the subject of a Taking
or Destruction and either the Company or its applicable Subsidiary has
elected not to effect a Restoration or neither the Collateral Agent nor
the Company or its applicable Subsidiary, as the case may be, has elected
to effect a Restoration, in each case, in accordance with the provisions
of the applicable Mortgage, then on the first Business Day following the
last day the Company or its applicable Subsidiary can elect to effect a
Restoration (in the event that the Company or its applicable Subsidiary
has the right to make such an election) or, in the event that the Net
Award or Net Proceeds, as the case may be, are in excess of $10,000,000
and the Company or its applicable Subsidiary does not otherwise have the
right to make an election to effect a Restoration, the day the Collateral
Agent has notified the Company or its applicable Subsidiary that a
Restoration will not be required in the case of any of the Mortgaged Real
Property being the subject of a Taking or Destruction, the Company shall
apply or cause to be applied an amount equal to the applicable Net Award
or Net Proceeds, as the case may be, as a result of such Taking or
Destruction, as provided in Section 3.02(B)(a).
(k) On the date of the receipt thereof by the Company and/or any of
its Subsidiaries, the Company shall apply or cause to be applied an amount
equal to 75% of any
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surplus assets of any Pension Plan returned to the Company or such
Subsidiary as provided in Section 3.02(B)(a).
(l) Notwithstanding anything to the contrary contained herein, no
Acceptance may be prepaid prior to the maturity date thereof.
(B) Application:
(a) Prepayments to be applied pursuant to this Section 3.02(B)(a)
shall be applied as follows: (i) first, on a pro rata basis among the A
Term Loans, the B Term Loans and any outstanding Acquisition Term Loans,
in each case, in inverse order of maturity with respect to the remaining
Scheduled A Term Loans Principal Payments, the remaining Scheduled B Term
Loans Principal Payments and the remaining Scheduled Acquisition Term Loan
Principal Payments; provided that each holder of B Term Loans may, upon
reasonable notice to the Borrowers and the Administrative Agent, decline
such prepayment, in which case such prepayment shall be applied to
Scheduled A Term Loans Principal Payments and Scheduled Acquisition Term
Loan Principal Payments as aforesaid; (ii) second, to permanently reduce
the Revolving Loan Commitment (and (y) to the extent such Total Revolving
Loan Commitment exceeds the Maximum Swingline Amount, the Maximum
Swingline Amount on a pro rata basis and (z) if required as a result of
such reduction, to prepay Swingline Loans or Revolving Loans, or, if no
such Loans are outstanding, to cash collateralize Letters of Credit and
Acceptances on a pro rata basis in a manner reasonably satisfactory to the
Administrative Agent); and (iii) third, the Acquisition Term Loan
Commitment, if any, will be permanently reduced in an amount equal to the
amount otherwise required to be prepaid. Amounts applied pursuant to this
Section 3.02(B)(a) may not be reborrowed; and
(b) With respect to each prepayment of Loans required by Section
3.02(A), the Borrowers shall give the Administrative Agent two Business
Days notice and may designate the Types of Loans and the specific
Borrowing or Borrowings which are to be prepaid; provided that (i)(x)
Reserve Adjusted Eurodollar Loans may be designated for prepayment
pursuant to this Section 3.02 only on the last day of an Interest Period
applicable thereto unless all Reserve Adjusted Eurodollar Loans with
Interest Periods ending on such date of required prepayment and all Base
Rate Loans and Prime Rate Loans have been or are con-
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currently being paid in full and (y) if any prepayment of Reserve Adjusted
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount less than
the Minimum Borrowing Amount, such Borrowing shall immediately be
converted into Base Rate Loans; and (ii) in the case a Reserve Adjusted
Eurodollar Loan is required to be prepaid pursuant to this Section 3.02
prior to the last day of the Interest Period applicable thereto, the
Borrowers may in order to avoid paying any amount pursuant to Section
1.10(f) deposit such prepayment in escrow with the Administrative Agent
(or U.K. Swingline Bank in the case of Pounds Sterling Reserve Adjusted
Eurodollar Loans), which escrow shall be satisfactory to the
Administrative Agent (or U.K. Swingline Bank in the case of Pounds
Sterling Reserve Adjusted Eurodollar Loans), and which amount in escrow
shall be applied as of the last day of the applicable Interest Period to
the repayment of the applicable Loan. In the absence of a designation by
the Borrowers, the Administrative Agent shall, subject to the above, apply
prepayments first to Base Rate Loans and thereafter to Reserve Adjusted
Eurodollar Loans. All prepayments shall include payment of accrued
interest on the principal amount so prepaid, shall be applied to the
payment of interest before application to principal and shall include
amounts payable, if any, under Section 1.10(f).
(c) Any proceeds received by the Company or any of its Subsidiaries
as discussed in Section 3.02(A)(i) or (j) shall be deposited, on the date
of receipt thereof by the Company or any such Subsidiary, with the
Administrative Agent in escrow (or pursuant to other arrangements
satisfactory to the Administrative Agent) until such funds are used in
accordance with either such Section.
3.03. Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments under this Agreement shall be made to
the Administrative Agent (or U.K. Swingline Bank in the case of Pounds Sterling
Reserve Adjusted Eurodollar Loans), for the ratable account of the Banks
entitled thereto, not later than 2:00 P.M. (New York time) in the case of Loans
in U.S. Dollars or Canadian Dollars and no later than the time specified by the
U.K. Swingline Bank in the case of Loans in Pounds Sterling on the date when due
and shall be made in immediately available funds (i) with respect to principal
of, interest on, and any other amount relating to any U.K. Swingline Loan, shall
be made in Pounds Sterling, (ii) with respect to principal of, interest on and
any other amount relat-
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ing to any Canadian Swingline Loan, shall be made in Canadian Dollars and (iii)
with respect to all other amounts payable hereunder, shall be made in U.S.
Dollars to the account specified therefor by the Administrative Agent or if no
account has been so specified at the Administrative Agent's Office, it being
understood that written notice by the Borrowers to the Administrative Agent or
U.K. Swingline Bank, as the case may be, to make a payment from the funds in the
Borrowers' account at the Administrative Agent's Office or the office designated
by the U.K. Swingline Bank, as the case may be, shall constitute the making of
such payment to the extent of such funds held in such account. The
Administrative Agent or U.K. Swingline Bank, as the case may be, will thereafter
cause to be distributed on the same day (if payment is actually received by the
Administrative Agent in New York prior to 2:00 P.M. (New York time) or by the
U.K. Swingline Bank in London prior to 2:00 P.M. (London time), as the case may
be, on such day) funds relating to the payment of principal or interest or fees
ratably to the Banks entitled to receive any such payment in accordance with the
terms of this Agreement. If and to the extent that any such distribution shall
not be so made by the Administrative Agent or U.K. Swingline Bank, as the case
may be, in full on the same day (if payment is actually received by the
Administrative Agent prior to 2:00 P.M. (New York time) or by the U.K. Swingline
Bank prior to 2:00 P.M. (London time) in the case of Loans in Pounds Sterling on
such day), the Administrative Agent or U.K. Swingline Bank, as the case may be,
shall pay to each Bank its ratable amount thereof and each such Bank shall be
entitled to receive from the Administrative Agent or U.K. Swingline Bank, as the
case may be, upon demand, interest on such amount at (i) the Federal Funds Rate
(according to the U.S. Council on International Banking Interbank Compensation
Rules) in the case of a payment in U.S. Dollars, (ii) the Canadian Federal Funds
Rate in the case of a payment in Canadian Dollars and (iii) the Overnight Rate
in the case of a payment in Pounds Sterling for each day from the date such
amount is paid to the Administrative Agent or U.K. Swingline Bank, as the case
may be, until the date the Administrative Agent or U.K. Swingline Bank, as the
case may be, pays such amount to such Bank.
(b) Any payments under this Agreement which are made by the
Borrowers on the date required but later than 2:00 P.M. (New York time) (or 2:00
P.M. (London time) in the case of Loans in Pounds Sterling) shall, solely for
purposes of the calculation of interest and not for purposes of Section 8.01, be
deemed to have been made on the next succeeding Business Day. Whenever any
payment to be made hereunder shall be stated to be due on a day which is not a
Business Day, the due date
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thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension, except that with
respect to Reserve Adjusted Eurodollar Loans, if such next succeeding applicable
Business Day is not in the same month as the date on which such payment would
otherwise be due hereunder or under any Note, the due date with respect thereto
shall be the next preceding applicable Business Day.
3.04. Net Payments. (a) All payments by each Borrower under this
Agreement and/or under any Credit Document shall be made without setoff or
counterclaim and in such amounts as may be necessary in order that all such
payments (after deduction or withholding for or on account of any present or
future taxes, levies, imposts, duties or other charges of whatsoever nature
imposed by any Governmental Authority, other than any tax (including any
franchise tax) imposed on or measured by the net income or net profits of a
Bank, or any tax on or measured by the capital of a Bank, pursuant to the income
tax laws of the jurisdictions where such Bank's principal or applicable lending
office is located (collectively, "Taxes")) shall not be less than the amounts
otherwise specified to be paid under this Agreement and/or under any Credit
Document. If any Borrower is required by law to make any deduction or
withholding on account of Taxes from any payment due hereunder or under the
Notes, then (a) such Borrower shall timely remit such Taxes to the Governmental
Authority imposing the same and (b) the amount payable hereunder or under the
Notes will be increased to such amount which, after deduction from such
increased amount of all amounts required to be deducted or withheld therefrom,
will not be less than the amount otherwise due and payable hereunder. Without
prejudice to the foregoing, if any Bank or any Agent is required to make any
payment on account of Taxes, the Applicable Borrower will, upon notification by
the Bank or the Agent promptly indemnify such person against such Taxes,
together with any interest, penalties and expenses payable or incurred in
connection therewith. Each Borrower shall also reimburse each Bank, upon the
written request of such Bank, for taxes imposed on or measured by the net income
or net profits of such Bank pursuant to the laws of the jurisdiction in which
the principal office or applicable lending office of such Bank is located or
under the laws of any political subdivision or taxing authority of any such
jurisdiction as such Bank shall determine are payable by such Bank in respect of
Taxes paid to or on behalf of such Bank pursuant to this Section 3.04. For
purposes of this Section, the term "Taxes" includes interest, penalties and
expenses payable or incurred
-53-
in connection therewith. A certificate as to any additional amounts payable to a
Bank under this Section 3.04 submitted to the Borrower by such Bank shall,
absent manifest error, be final, conclusive and binding for all purposes upon
all parties hereto. With respect to each deduction or withholding for or on
account of any Taxes, the Borrowers shall promptly furnish to each Bank such
certificates, receipts and other documents as may be required (in the judgment
of such Bank) to establish any tax credit to which such Bank may be entitled.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) that makes a Loan to a U.S. Borrower
agrees to deliver to the U.S. Borrowers and the Administrative Agent on or prior
to the Closing Date, or in the case of a Bank that is an assignee or transferee
of an interest under this Agreement pursuant to Section 11.04 (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Bank, (i) two accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001 (or successor or additional forms) certifying to such
Bank's entitlement to a complete exemption from United States withholding tax
with respect to payments to be made under this Agreement and under any Note or
other Credit Document, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit P (any such certificate, a "Section 3.04
Certificate") and (y) two accurate and complete original signed copies of
Internal Revenue Service Form W-8 (or successor or additional forms) certifying
to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note or other Credit Document. In addition, each Bank agrees that from
time to time after the Closing Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or inaccurate in any
material respect, it will deliver to the U.S. Borrowers and the Administrative
Agent two new accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001, or Form W-8 and a Section 3.04 Certificate, as the
case may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Bank to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Agreement and any Note, or it shall immediately notify the U.S. Borrowers and
the Administrative Agent of its inability to deliver any such Form or
Certificate, in which case such Bank
-54-
shall not be required to deliver any such form or certificate pursuant to this
Section 3.04(b). Notwithstanding anything to the contrary contained in Section
3.04(a), but subject to Section 11.04(b) and Section 3.04(c), (x) the Borrowers
shall be entitled, to the extent they are required to do so by law, to deduct or
withhold income or similar taxes imposed by the United States (or any political
subdivision or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Bank which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes to the extent that such Bank has not provided
to the Borrowers U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrowers shall not be
obligated pursuant to Section 3.04(a) hereof to gross up payments to be made to
a Bank in respect of income or similar taxes imposed by the United States if (I)
such Bank has not provided to the Borrowers the Internal Revenue Service Forms
required to be provided to Borrower pursuant to this Section 3.04(b) or (II) in
the case of a payment, other than interest, to a Bank described in clause (ii)
above, to the extent that such Forms do not establish a complete exemption from
withholding of such taxes.
(c) Notwithstanding anything to the contrary contained elsewhere in
this Section 3.04, the Borrowers, jointly and severally, agree to pay additional
amounts and to indemnify each Bank in the manner set forth in Section 3.04(a)
(without regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as described
in the last sentence of Section 3.04(b) as a result of any changes after the
Closing Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deduction
or withholding of income or similar Taxes.
(d) Each Bank which is resident for tax purposes in the United
Kingdom and which is making a loan to a U.K. Borrower or which is making a loan
to a U.K. Borrower through a U.K. branch hereby represents that it is a "bank"
within the meaning of section 840A Income and Corporation Taxes Act 1988, and
that it is beneficially entitled to the interest payable to it under this
Agreement, undertakes to notify the U.K. Borrower and the Administrative Agent
if either representation ceases to be correct, and further agrees to ensure that
such interest is brought within the charge to United Kingdom corporation tax by
the person beneficially entitled to the interest.
-55-
(e) Each Bank which is not resident for tax purposes in the United
Kingdom and which is making a loan to a U.K. Borrower through a branch located
outside the United Kingdom agrees to furnish to the tax authorities of the
country in which such Bank is resident for tax purposes on or prior to the
Closing Date (or if such Bank becomes a Bank after the Closing Date, at or prior
to the time the Bank becomes a Bank), for certification and forwarding by such
tax authorities to the United Kingdom Inland Revenue, the form specified by the
United Kingdom Inland Revenue for such purposes. For the avoidance of doubt, a
Bank shall be entitled to receive additional amounts pursuant to Section 3.04(a)
which are attributable to the withholding or deduction imposed during the period
that the form is being processed by the United Kingdom Inland Revenue.
(f) In addition, the Applicable Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made by or to it
hereunder or under its Note or from the execution and delivery by it or
registration of, or otherwise with respect to, its participation in this
Agreement or the Notes (hereinafter referred to as "Other Taxes").
(g) If Holdings or any Credit Party pays any additional amount under
this Section 3.04 to a Bank and such Bank determines in its sole discretion that
it has actually received or realized in connection therewith any refund or any
reduction of, or credit against, its tax liabilities in or with respect to the
taxable year in which the additional amount is paid (a "Tax Benefit"), such Bank
shall pay to such Person an amount that the Bank shall, in its sole discretion,
determine is equal to the net benefit, after tax, which was obtained by the Bank
in such year as a consequence of such Tax Benefit; provided, however, that (i)
such Bank shall not be required to make any payment under this paragraph of this
Section 3.04 if an Event of Default shall have occurred and be continuing; (ii)
any taxes that are imposed on a Bank as a result of a disallowance or reduction
(including through the expiration of any tax credit carryover or carryback of
such Bank that otherwise would not have expired) of any Tax Benefit with respect
to which such Bank has made a payment to Holdings or any Credit Party pursuant
to this paragraph of this Section 3.04 shall be treated as a tax for which
Holdings or such Credit Party is obligated to indemnify such Bank pursuant to
this Section 3.04 without any exclusions or defenses; (iii) such Bank shall not
be required to make any payment under this paragraph of this Section 3.04 in
excess of such additional amounts received by such Bank; and
-56-
(iv) nothing in this paragraph of this Section 3.04 shall require the Bank to
disclose to any obligor any information determined by such Bank in its sole
discretion to be confidential (including its tax returns).
3.05. Currency Exchange Fluctuations (a) The Company and its
Subsidiaries will implement and maintain internal controls to monitor the
borrowings and repayments of Loans by the Borrowers and the issuance of and
drawings under Letters of Credit, with the object of preventing any request for
a Credit Extension that would result in (i) the aggregate outstanding Revolving
Loans and the Dollar Equivalent amount of the Swingline Loans and Letter of
Credit Usage being in excess of the lesser of (y) the Total Revolving Loan
Commitments available pursuant to Section 1.01(d) and (z) the Borrowing Base as
shown in the Borrowing Base Certificate that was last delivered pursuant to
Section 6.01; provided such Borrowing Base Certificate was required to be
delivered pursuant to and was in compliance with Section 6.01 or was delivered
after the Borrowing Base Certificate last required to be delivered pursuant to
Section 6.01, or (ii) the aggregate amount of U.K. Swingline Loans or Canadian
Swingline Loans exceeding the applicable Maximum Swingline Amount and of
promptly identifying and remedying any circumstance where, by reason of changes
in exchange rates, such limits have been exceeded.
(b) Subject to Section 1.10(f), if on any Computation Date the
Administrative Agent shall have determined that (i) the aggregate outstanding
Revolving Loans and the Dollar Equivalent amount of the Swingline Loans and
Letter of Credit Usage exceed the lesser of (y) the Total Revolving Loan
Commitment and (z) the Borrowing Base as shown in the Borrowing Base Certificate
that was last delivered pursuant to Section 6.01, provided such Borrowing Base
Certificate was required to be delivered pursuant to and was in compliance with
Section 6.01 or was delivered after the Borrowing Base Certificate last required
to be delivered pursuant to Section 6.01, by more than the Dollar Equivalent
amount of U.S. $750,000, (ii) the aggregate outstanding U.K. Swingline Loans
exceed the applicable Maximum Swingline Amount by more than the Dollar
Equivalent amount of U.S. $750,000 or (iii) the aggregate outstanding Canadian
Swingline Loans exceed the applicable Maximum Swingline Amount by more than the
Dollar Equivalent amount of U.S. $250,000, in each such case due to a change in
applicable rates of exchange between U.S. Dollars, on the one hand, and Pounds
Sterling or Canadian Dollars, on the other hand, then the Administrative Agent
shall give notice to the Applicable Borrowers that a prepayment of Revolving
Loans (or, if no Revolving
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Loans are outstanding, payment of unreimbursed drawings under Letters of Credit
or, if none thereof, Cash collateralization of outstanding Letters of Credit),
U.K. Swingline Loans or Canadian Swingline Loans, as the case may be, is
required under this subsection, and the Applicable Borrowers agree if such
excess shall not have been prepaid within five Business Days of such notice or
during five Business Days such excess has not been eliminated by changes in
currency exchange rates thereupon to make prepayments (by such repayment of
Loans, payment of unreimbursed drawings or Cash collateralization) such that,
after giving effect to such prepayment (or payment or Cash collateralization and
changes in currency exchange rates), (i) the aggregate outstanding Revolving
Loans and the Dollar Equivalent amount of the Swingline Loans and Letter of
Credit Usage do not exceed the lesser of (y) the Total Revolving Loan
Commitments then available pursuant to Section 1.01(d) or (z) the Borrowing Base
as shown in the Borrowing Base Certificate that was last delivered pursuant to
Section 6.01; provided such Borrowing Base Certificate was required to be
delivered pursuant to and was in compliance with Section 6.01 or was delivered
after the Borrowing Base Certificate last required to be delivered pursuant to
Section 6.01, and (ii) the aggregate outstanding U.K. Swingline Loans and
Canadian Swingline Loans do not exceed the applicable Maximum Swingline Amount.
3.06. Authorizations. Without prejudice to the obligations to prepay
as set out in this Section 3, any Applicable Borrower proposing to make any
prepayment under this Section 3 will, prior to making any such prepayment, take
all steps required of it to obtain any consents, authorizations or other
approvals or take any other action which may at any relevant time be required of
it in respect of any such prepayment to be made by it (including taking all
requisite steps under Chapter VI of the Companies Act 1985 of Great Britain).
SECTION 4. Conditions Precedent.
4.01. Conditions Precedent to Initial Loans. The obligations of the
Banks to make the Initial Loans to the Borrowers hereunder are subject, at the
time of the making of each such Initial Loans (except as otherwise hereinafter
indicated), to the substantially contemporaneous satisfaction of the following
conditions:
(a) Officers' Certificate. On the Closing Date, the Agents shall
have received certificates dated such date signed by appropriate officers
of Holdings and each of the Borrowers, stating that all of the applicable
conditions
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set forth in Sections 4.01, 4.02 and, if applicable, 4.03 and 4.04 (in
each case disregarding any reference therein that such condition be deemed
satisfactory by the Agents and/or the Required Banks) have been satisfied
or waived as of such date.
(b) Opinions of Counsel. On the Closing Date, the Agents shall have
received an opinion or opinions addressed to each of the Banks and dated
the Closing Date, each in form and substance satisfactory to the Agents,
from (i) Akin, Gump, Strauss, Hauer & Feld, L.L.P., New York counsel to
each Credit Party, which opinion shall be in the form of Exhibit C-1
hereto, (ii) Linklaters & Paines, United Kingdom counsel to each United
Kingdom Credit Party, which opinion shall be in the form of Exhibit C-2
hereto, (iii) McCarthy Tetrault, Canadian counsel to each Canadian Credit
Party, and Patterson, Palmer, Hunt, Murphy, Canadian counsel to each
Canadian Credit Party, which opinions shall be in the form of Exhibit
C-3(a) and (b) hereto, respectively, (iv) local counsel to the Borrowers
in each jurisdiction in which Collateral is located, which opinions shall
be in the form of Exhibit C-4 hereto, (v) foreign local counsel opinions,
satisfactory in form and substance to the Agents, and (vi) a reliance
letter from Kirkland & Ellis, counsel to HarnCo, entitling the Banks to
rely upon its opinion delivered pursuant to the Recapitalization
Agreement.
(c) Corporate Proceedings. All corporate and legal proceedings in
connection with the Transaction contemplated by the Documents shall be
satisfactory in form and substance to the Agents, and the Agents shall
have received all information and copies of all certificates, documents
and papers, including records of corporate proceedings and governmental
approvals, if any, which the Agents reasonably may have requested from any
Credit Party or any Affiliate of either thereof in connection therewith,
such documents and papers where appropriate to be certified by proper
corporate or governmental authorities. Without limiting the foregoing, the
Agent shall have received (i) evidence satisfactory to them that the
Boards of Directors or Board of Managers or the foreign equivalent, as the
case may be, of each Credit Party, shall have approved the Transaction
contemplated by the Documents, (ii) resolutions of the Boards of Directors
or Board of Managers or the foreign equivalent, as the case may be, of
each Credit Party, approving and authorizing such documents and actions as
are contemplated hereby in form and
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substance reasonably satisfactory to the Agents including without
limitation the execution and delivery of all Documents to be executed by
such Person, certified by its corporate secretary or an assistant
secretary as being in full force and effect without modification or
amendment, and (iii) signature and incumbency certificates of officers of
each Credit Party executing instruments, documents or agreements required
to be executed in connection with the Transaction contemplated by the
Documents.
(d) Transaction Documents; Transaction.
(i) Full, complete and accurate copies of the Transaction Documents
shall have been provided to the Agents. The Transaction Documents and any
amendments thereto shall be in form and substance reasonably satisfactory
to the Agents, and each of the Transaction Documents required to be
executed and delivered on or prior to the Closing Date shall have been
duly authorized, executed and delivered by each of the parties thereto and
shall be in full force and effect. No term or provision of the Transaction
Documents shall have been modified, and no condition to the consummation
of the Transaction shall have been waived, in either case in a manner
detrimental (provided the Agents may waive non-material changes in their
reasonable discretion) to any Credit Party, by any of the parties thereto.
Each Credit Party and any of their Affiliates shall have in all material
respects done and performed such acts and observed such covenants which
each is required to do or perform under the Transaction Documents and in
order to consummate the Transaction on or prior to the Effective Date.
(ii) Each Credit Party shall have provided evidence satisfactory in
form and substance to the Agents that the Transaction is being consummated
contemporaneously.
(e) Additional Financing.
(i) Holdings shall have received gross proceeds (before deducting
the initial purchasers' discount) of at least $60.0 million from the
issuance of the Series A Preferred Units and MHE Investments shall have
received gross cash proceeds of $54 million from the issuance of equity
securities, and the terms and conditions of such Preferred Units, equity
investment and such capital contribution shall be satisfactory to the
Agents.
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(ii) Holdings shall have issued the Series B Preferred Units to
HarnCo.
(iii) The Company shall have received gross proceeds (before
deducting the initial purchasers' discount) of $200 million from the
issuance of Public Notes, and the terms and conditions of such Public
Notes shall be satisfactory to the Agents.
(f) Organizational Documentation, etc. On or prior to the Closing
Date, the Banks shall have received copies of true and complete certified
copies of the following documents of each Credit Party, the provisions of
which shall be reasonably satisfactory to the Agents:
(i) Each such Person's respective Certificate or Articles of
Incorporation or Certificate of Formation or the foreign equivalent,
which shall be certified and be accompanied by a good standing
certificate or the foreign equivalent, if any, from the jurisdiction
of its organization and good standing certificates, if any, from the
jurisdictions in which it is qualified to do business as a foreign
corporation, each to be dated a recent date prior to the Closing
Date; and
(ii) Each such Person's respective By-laws or operating
agreement or the foreign equivalent, certified as of the Closing
Date by its corporate secretary.
(g) Credit Documents. Each of this Agreement and each other Credit
Document shall (i) be in form and substance satisfactory to the Agents and
(ii) have been, on or prior to the Closing Date, duly authorized, executed
and delivered by each of the parties signatory thereto.
(h) Notes. There shall have been delivered to the Administrative
Agent for the account of each of the Banks which has so requested the Term
Notes, the Acquisition Term Notes, the Revolving Notes and the Swingline
Notes executed by the applicable Borrower in the amounts and maturities
and as otherwise provided herein.
(i) Certain Fees.
(i) All costs, fees and expenses (including, without limitation,
legal fees and expenses) payable to CIBC and
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Indosuez pursuant to the letter agreement between Chartwell and Indosuez
dated March 4, 1998 shall have been paid in full.
(ii) The Borrowers shall have paid or have caused to be paid the
commitment and other fees and expenses (including, without limitation,
reasonable legal fees and expenses) contemplated hereby and/or in
connection with the other Documents.
(j) Financial Statements, etc.
(i) Prior to the Closing Date, the Agents shall have received
combined financial statements audited by Price Waterhouse LLP, including a
balance sheet as of October 31, 1996 and October 31, 1997 and statements
of income and cash flows of the MHE Business for the fiscal years ended
October 31, 1995, October 31, 1996 and October 31, 1997 and unaudited
financial statements for the thirteen-week period ended January 31, 1998,
and the pro forma balance sheet of the Company as of January 31, 1998,
after giving effect to the Transaction and the Borrowings under this
Agreement. The Company shall have delivered to the Agents five-year
financial projections, accompanied by a statement by the Company that such
projections are based on assumptions believed by it in good faith to be
reasonable as to the future financial performance of the Company at the
time made, reasonably satisfactory to the Agents, it being recognized by
the Banks that such projections as to future events are not to be viewed
as facts and that actual results during the period or periods covered by
any such projections may differ from the projected results.
(ii) Prior to the Closing Date, the Agents shall have received an
accounting review prepared by Coopers & Lybrand LLP in form and substance
reasonably satisfactory to the Agents.
(k) Insurance.
(i) Set forth on Schedule 6.01(i) is a summary of all insurance
policies maintained by the Company and its Subsidiaries, and the insurance
coverage provided for the Company and its Subsidiaries by such insurance
policies shall be reasonably satisfactory to the Agents.
(ii) Prior to the Closing Date, the Agents shall have received an
insurance review prepared by J.H. Marsh &
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McLennan in form and substance reasonably satisfactory to the Agents.
(iii) On the Closing Date, the Agents shall have received the
insurance certificates in respect of the Collateral required by the
Security Documents.
(l) Performance Bonds; Surety Lines.
(i) On the Closing Date, the Agents shall be reasonably satisfied
that the Borrowers will be able to service and maintain any performance
bonds that may be required in the ordinary course of business on
reasonable terms and conditions.
(ii) Prior to the Closing Date, the Company and its Subsidiaries
shall have established independent surety lines on terms satisfactory to
the Banks.
(m) Indebtedness, etc. On or prior to the Closing Date and except as
set forth on Schedule 5.21(a) (which shall only cover balance sheet
categories), the Credit Parties and their respective Subsidiaries shall
have repaid or defeased all existing Indebtedness of the categories
specified in clauses (i), (iii), (iv), (v) and (vii) of the definition of
Indebtedness in a manner satisfactory to the Agents.
(n) Security Documents and Guarantees. The Security Documents and
the Guarantees shall have been duly executed and delivered by the
respective parties thereto and there shall have been delivered to the
Collateral Agent (i) certificates representing all Pledged Securities (if
certificated), together with executed and undated stock powers and/or
assignments in blank, (ii) evidence of the filing or making of arrangement
for filing of appropriate financing statements or comparable documents
under the provisions of the UCC and applicable domestic, foreign or local
laws, rules or regulations in each of the offices (including, without
limitation, the United States Patent and Trademark Office and the United
States Copyright Office) where such filing is necessary or appropriate to
grant to the Collateral Agent a perfected first priority Lien in such
Collateral superior to and prior to the rights of all third persons other
than the holders of Prior Liens and subject to no other Liens except Liens
expressly permitted by the applicable Security Document, (iii) tax lien
and judgment searches, to the extent avail-
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able, and certified copies of Requests for Information (Form UCC-11 or the
equivalent) or equivalent reports or lien search reports in the United
States, the United Kingdom and Canada listing all effective financing
statements or comparable documents which name any Credit Party or any of
its Subsidiaries (prior to and after giving effect to the Transaction) as
debtor and which are filed in those jurisdictions in which any of the
Collateral is located and the jurisdictions in which any Credit Party or
any of its Subsidiaries maintains its chief executive office, none of
which shall encumber the Collateral covered or intended or purported to be
covered by the Security Documents except Prior Liens and other Liens
expressly permitted by the applicable Security Document and (iv) evidence
of the completion of all recordings and filings of each Security Document
and delivery of such other security and other documents as may be
necessary (which, in respect of the U.K., will be provided reasonably
contemporaneously with the execution and delivery of the Security
Documents and the Guarantees) or, in the opinion of the Collateral Agent,
desirable to perfect the Liens created, or purported or intended to be
created, by the Security Documents.
(o) No Material Adverse Change. From October 31, 1997 to and
including the Closing Date, there shall have been no material adverse
change in the business, assets, properties, condition (financial or
otherwise) or prospects of the MHE Business or the Company and its
Subsidiaries, taken as a whole, or in the industries in which they
compete, other than the Transaction and the obligations incurred under the
Credit Documents.
(p) Consents, etc. All material governmental and third party
approvals and consents (including, without limitation, all material
approvals and consents required in connection with any environmental
statutes, rules or regulations), if any, in connection with the
Transaction, the transactions contemplated by the Credit Documents and the
Transaction Documents, and in either case otherwise referred to herein or
therein to be completed on or before the Closing Date shall have been
obtained and remain in effect, and all applicable waiting periods shall
have expired without any action being taken by any competent authority
which restrains, prevents or imposes, in the judgment of the Agents,
materially adverse conditions upon the consummation of the Transaction.
There shall not exist any judgment, order, injunction or other restraint
is-
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sued or filed with respect to the making of the Loans hereunder or the
consummation of the Transaction.
(q) Environmental Review. Prior to the Closing Date, there shall
have been delivered to the Agents for each of the Banks an Officers'
Certificate of the Company in substantially the form of Exhibit M hereto
and environmental reviews in form and substance satisfactory to the Agents
from Collier, Shannon, Rill & Scott with respect to the assets of the
Company and its Subsidiaries.
(r) Borrowing Base Certificate. Prior to the initial Revolving Loan,
the Agents and the Banks shall have received and the Agents shall be
satisfied (both as to form and substance) with a Borrowing Base
Certificate which shall be prepared as of a date prior to the Closing Date
that is satisfactory to the Agents which Borrowing Base Certificate shall
indicate that the Borrowing Base as of February 28, 1998 will exceed the
Revolving Loan Borrowing to be incurred on the Closing Date by at least
$1,000,000.
(s) Leases. All material Capital Leases of the Credit Parties or
their respective Subsidiaries and all material Operating Leases of the
Credit Parties or their respective Subsidiaries outstanding immediately
prior to the Transaction shall remain in force after giving effect to the
Transaction.
(t) Solvency. On the Closing Date, the Banks shall have received an
opinion from Valuation Research Corporation and an Officers' Solvency
Certificate in the form of Exhibit N hereto, in each case supporting the
conclusions that, before and after giving effect to the Transaction, the
contemplated borrowings of the full amounts which will be available under
the Total Term Loan Commitments and the Total Revolving Loan Commitments,
the execution of the Guarantees and the Security Documents, none of the
Credit Parties will be insolvent, will be rendered insolvent by the
indebtedness incurred in connection therewith, will be left with
unreasonably small capital with which to engage in its business or will
have incurred debts, including Contingent Obligations, beyond its ability
to pay such debts as they mature.
(u) Conditions Relating to Mortgaged Real Property and Real
Property. On or prior to the Closing Date, the Company shall have caused
to be delivered to the Collat-
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eral Agent, on behalf of the Banks, the following documents and
instruments:
(i) Mortgages encumbering each Mortgaged Real Property set
forth on Schedule 4.01(u)(i) in favor of the Collateral Agent, for
the benefit of the Banks, duly executed and acknowledged by the
Applicable Borrower, and otherwise in form for recording in the
recording office where each such Mortgaged Real Property is
situated, together with such certificates, affidavits,
questionnaires or returns as shall be required in connection with
the recording or filing thereof to create a lien under applicable
law, and such UCC-1 financing statements and other similar
statements as are contemplated by the counsel opinions described in
Section 4.01(b)(iv) in respect of such Mortgage, all of which shall
be in form and substance satisfactory to the Collateral Agent, and
any other instruments necessary to grant a mortgage lien under the
laws of any applicable jurisdiction, which Mortgage and financing
statements and other instruments shall when recorded be effective to
create a first priority Lien on such Mortgaged Real Property subject
to no Liens other than Prior Liens and other Liens expressly
permitted by such Mortgage;
(ii) with respect to each Mortgaged Real Property, (x) such
consents, approvals, amendments, supplements and (y) except in
respect of such property in the United Kingdom, estoppels and tenant
subordination agreements or other instruments as necessary or
required to consummate the Transaction contemplated hereby or as
shall reasonably be deemed necessary by the Collateral Agent in
order for the owner or holder of the fee or leasehold interest
constituting such Mortgaged Real Property to grant the Lien
contemplated by the Mortgage with respect to such Mortgaged Real
Property;
(iii) with respect to each Mortgage of real property located in
the United States, a policy (or commitment to issue a policy) of
title insurance insuring (or committing to insure) the Lien of such
Mortgage as a valid first mortgage Lien on the real property and
fixtures described therein in an amount not less than 115% of the
fair market value thereof, which policies (or commitments) shall (w)
be issued by the Title Company, (x) include such reinsurance
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arrangements (with provisions for direct access) as shall be
reasonably acceptable to the Collateral Agent, (y) contain a
"tie-in" or "cluster" endorsement (if available under applicable
law) (i.e., policies which insure against losses regardless of
location or allocated value of the insured property up to a stated
maximum coverage amount) and have been supplemented by such
endorsements (or where such endorsements are not available, opinions
of special counsel, architects or other professionals reasonably
acceptable to the Collateral Agent to the extent that such opinions
can be obtained at a cost which is reasonable with respect to the
value of the real property subject to such Mortgage) as shall be
reasonably requested by the Collateral Agent (including, without
limitation, endorsements on matters relating to usury, first loss,
last dollar, zoning, contiguity, revolving credit, doing business
and so-called comprehensive coverage over covenants and
restrictions) and (z) contain only such exceptions to title as shall
be Prior Liens or are otherwise agreed to by the Collateral Agent on
or prior to the Closing Date with respect to such Mortgaged Real
Property;
(iv) with respect to each Mortgage of Real Property in Canada,
a legal opinion of counsel to the applicable Credit Party as to
title, encumbrances, priorities and other matters in form and
substance reasonably satisfactory to the Administrative Agent;
(v) with respect to each Mortgaged Real Property, policies or
certificates of insurance as required by the Mortgage relating
thereto, which policies or certificates shall comply with the
insurance requirements contained in such Mortgage;
(vi) with respect to each Mortgaged Real Property, a survey;
(vii) with respect to each Mortgaged Real Property (other than
Mortgaged Real Property in the United Kingdom), UCC, judgment and
tax lien searches (or foreign jurisdiction equivalents, to the
extent available) confirming that the personal property comprising a
part of such Real Property or Mortgaged Real Property is subject to
no Liens other than Prior Liens;
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(viii) with respect to each Mortgaged Real Property (other
than Mortgaged Real Property in the United Kingdom), such
affidavits, certificates, information (including financial data) and
instruments of indemnification (including, without limitation, a
so-called "gap" indemnification) as shall be required to induce the
Title Company to issue the policy or policies (or commitment) and
endorsements contemplated in subparagraph (iii) above;
(ix) evidence acceptable to the Collateral Agent of payment
(should it be required to be made on or prior to the Closing Date)
by the appropriate Credit Party or Subsidiary thereof of all
applicable title insurance premiums (if applicable), search and
examination charges, survey costs and related charges, mortgage
recording taxes, fees, charges, costs and expenses required for the
recording of the Mortgages and issuance of the title insurance
policies (if applicable) referred to in subparagraph (iii) above;
(x) with respect to each Real Property or Mortgaged Real
Property, copies of all Leases, leases in which a Credit Party or
Subsidiary thereof holds the tenant's interest or other agreements
relating to possessory interests. To the extent any of the foregoing
affect any Mortgaged Real Property, the interest of any tenant of a
Credit Party created by such agreement shall be subordinate to the
Mortgage to be recorded against such Mortgaged Real Property (other
than Mortgaged Real Property in the United Kingdom) and otherwise
acceptable to the Collateral Agent; and
(xi) with respect to each Mortgaged Real Property (other than
Mortgaged Real Property in the United Kingdom), an Officers'
Certificate or other evidence satisfactory to the Collateral Agent
that as of the date thereof there (x) has been issued and is in
effect a valid and proper certificate of occupancy or other local
equivalent, if any, for the use then being made of such Mortgaged
Real Property and that there is not outstanding any citation,
violation or similar notice indicating that such Mortgaged Real
Property contains conditions which are not in compliance with local
codes or ordinances relating to building or fire safety or
structural soundness, (y) has not occurred any Taking or Destruction
of any Mortgaged Real Property or Real Property and (z) are
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no disputes regarding boundary lines, location, encroachment or
possession of any Real Property or Mortgaged Real Property and no
state of facts existing which could give rise to any such claim
which could reasonably be expected to have a material adverse effect
on the value or utility of such Real Property or Mortgaged Real
Property.
(v) Labor Matters. There shall be no labor disputes, strikes or work
stoppages, pending or threatened, involving any Credit Party or any of
their Subsidiaries that could reasonably be expected to adversely affect
the consummation of the Transaction or that could reasonably be expected
to have a Material Adverse Effect.
(w) Recapitalization Documents, etc. There shall be no litigation by
any Person pending, or to any Borrower's knowledge threatened, with
respect to the Recapitalization documents that, in the Agents' good faith
judgment, could reasonably be expected to have a Material Adverse Effect
after giving effect to the Recapitalization, and the Agents shall be
reasonably satisfied with the capital, organizational and management
structure of Holdings and the Borrowers and each of their Subsidiaries.
The acceptance of the proceeds of each Borrowing of Initial Loans
shall constitute a representation and warranty by each Borrower to each of the
Banks that all of the applicable conditions specified above have been satisfied
or waived as of that time and that, at the time of a Borrowing of such Initial
Loan (or substantially contemporaneous therewith), the conditions specified in
Section 4.02 have been satisfied, in all material respects, or waived. All of
the certificates, legal opinions and other documents and papers referred to in
this Section 4.01, unless otherwise specified, shall be delivered to each Agent
at the Administrative Agent's Office (or such other location as may be specified
by the Agents) for the account of each of the Banks and in sufficient
counterparts for each of the Banks and shall be satisfactory in form and
substance to the Agents.
4.02. Conditions Precedent to All Loans. The obligation of the Banks
to make all Loans (which term shall not include a conversion or continuation of
a Loan), including the Initial Loans, is subject, at the time of each such Loan,
to the satisfaction of the following conditions:
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(a) Effectiveness. This Agreement shall have become effective as
provided in Section 11.10.
(b) No Default; Representations and Warranties. At the time of the
making of each Loan and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Credit Documents in effect at
such time shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and
as of the date of the making of such Loan, unless such representation and
warranty expressly indicates that it is being made as of any other
specific date in which case on and as of such other date.
(c) Adverse Change, etc. (i) Since October 31, 1997, nothing shall
have occurred or become known which the Required Banks or the
Administrative Agent shall have determined could reasonably be expected to
have a Material Adverse Effect.
(ii) All material governmental and third party approvals and consents
(including, without limitation, all material approvals and consents
required in connection with any environmental statutes, rules or
regulations), if any, in connection with the conduct of the business of
the Company and its Subsidiaries, taken as a whole, shall have been
obtained and remain in effect.
(iii) There shall not exist any judgment, order, injunction or other
restraint issued or filed with respect to the making of any Loan hereunder
in accordance with the terms of this Agreement.
(d) Documentation and Opinions of Counsel. The Administrative Agent
shall have received such documentation and opinion or opinions, addressed
to each of the Banks, from counsel to each Credit Party as may be
reasonably required, with reasonable notice under the circumstances, by
and shall be reasonably satisfactory to the Administrative Agent from (i)
such counsel to each Credit Party and (ii) appropriate local counsel,
which opinions shall cover such matters as reasonably requested by, and be
in form and substance satisfactory to, the Administrative Agent.
(e) Margin Rules. On the date of each Borrowing of Loans, neither
the making of any Loan nor the use of the
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proceeds thereof will violate the provisions of Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System.
(f) Borrowing Base Certificate. The Administrative Agent and the
Required Banks shall have received and shall be reasonably satisfied (both
as to form and substance) with the Borrowing Base Certificate last
delivered to the Banks.
(g) Real Property Disclosure. Each Credit Party shall have made all
notifications, registrations, and filings in accordance with all State,
Local and Foreign Disclosure Requirements applicable to the Real Property,
including the use of forms provided by state or local agencies, where such
forms exist, whether to the Borrowers or to or with the state or local
agency to the extent failure to make such filings could reasonably be
expected to have a Material Adverse Effect.
The acceptance of the proceeds of each Borrowing of Loans shall
constitute a representation and warranty by each Borrower to each of the Banks
that all of the applicable conditions specified in Section 4.02 have been
satisfied or waived.
All of the certificates, legal opinions and other documents and
papers referred to in this Section 4.02, unless otherwise specified, shall be
delivered to the Administrative Agent at the Administrative Agent's Office (or
such other location as may be specified by the Administrative Agent) for the
account of each of the Banks and in sufficient counterparts for each of the
Banks and shall be satisfactory in form and substance to the Administrative
Agent.
4.03. Additional Conditions Precedent to Acquisition Term Loans. The
obligations of the Banks to make the Acquisition Term Loans (which shall not
include a conversion or continuation of any such Loan), including any
Acquisition Term Loan made on the Closing Date, are subject to the satisfaction
of the following additional conditions:
(a) Each Acquisition Term Loan shall be made solely to effect a
Designated Acquisition and costs and expenses incurred therewith, or to
repay Indebtedness incurred pursuant to Section 7.04(i);
(b) No later than ten Business Days (or four Business Days with
respect to a Designated Acquisition for
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which the consent of the Required Banks is not required) prior to the
Acquisition Term Loan Closing Date (except to the extent the
Administrative Agent agrees to a shorter period), the Administrative Agent
shall have received each of the following with respect to the consummation
of the Designated Acquisition to be financed with the proceeds of such
Acquisition Term Loan; provided that if the Designated Acquisition
involves a total acquisition price of $5,000,000 or less the information
specified in (y) clause (i) below need not be audited or reviewed and
shall only be provided if available from the Designated Acquisition or can
be prepared without undue expense and (z) clause (iii) below need not be
furnished:
(i) (A) audited financial statements, prepared in accordance
with GAAP, including a balance sheet and statements of income and
cash flows of the entity listed as the Designated Acquisition for
the most recent full fiscal year or years that would be required to
be included in any filing made with the SEC; provided that if such
audited financial statements are not available, then a detailed
accounting review similar to those undertaken and completed in
transactions previously consummated by the Company and its
Subsidiaries shall be performed by a "Big Five" accounting firm (or
other firm reasonably satisfactory to the Administrative Agent) and
(B) unaudited financial statements, prepared in accordance with
GAAP, including a balance sheet and statements of income and cash
flows of the entity listed as the Designated Acquisition for each of
the interim periods subsequent to the audited financial statements
referred to in clause (A) above;
(ii) a pro forma Borrowing Base Certificate and a pro forma
balance sheet and pro forma consolidated statements of income and
cash flows of the Company and its Subsidiaries, after giving effect
to the consummation of the Designated Acquisition, as at the end of
the most recent month for which financial statements are available;
(iii) projections for the Designated Acquisition, substantially
in the form of the projections provided pursuant to Section 4.01(j)
or otherwise in a form acceptable to the Administrative Agent, for
the Designated Acquisition's then current calendar year or the
Company's then current fiscal year and the next
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four succeeding calendar years of the Designated Acquisition or
fiscal years of the Company, prepared in accordance with the
Designated Acquisition's normal accounting procedures (and which
will represent management's reasonable estimate of the projected
performance of the Designated Acquisition and its Subsidiaries
during such periods) applied on a consistent basis, including,
without limitation (i) forecasted consolidated balance sheets,
consolidated statements of operations, of stockholders' equity and
of cash flows of the Designated Acquisition and its Subsidiaries on
a consolidated basis for such periods, (ii) the amount of forecasted
capital expenditures for the Designated Acquisition for such
periods, and (iii) an appropriate discussion of the principal
assumptions on which such projections are based; provided, however,
that if any such forecast indicates that the Company may not be in
compliance with any provision of this Agreement at some future date,
such forecast shall not constitute a Default or Event of Default or
anticipatory or other breach hereof,
(iv) an Officers' Certificate of the Company with respect to
the Designated Acquisition,
(x) certifying to the preparation of the pro forma
financial statements referenced in subclauses (ii) and (iii),
if required, and certifying that, both before and after giving
effect to such Designated Acquisition, no Default or Event of
Default shall exist, and that, on a pro forma basis, the
Company and its Subsidiaries (including any direct or indirect
Subsidiary of the Company to be acquired in the contemplated
Designated Acquisition) will be in compliance with the
covenants set forth herein (based on the latest twelve months
results of operations), and setting forth the calculations
required to establish such pro forma compliance;
(y) certifying that from the date of the financial
statements delivered pursuant to Section 4.03(b)(i)(A) to and
including the Acquisition Term Loan Closing Date, there shall
have been no material adverse change in the business, assets,
properties, condition (financial or otherwise) or prospects of
the Company and its Sub-
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sidiaries, taken as a whole, or the Designated Acquisition
entity; and
(z) certifying that the conditions set forth in each of
Sections 4.02 and 4.03 (other than the completion of filings
and recordings to be performed upon the Acquisition Term Loan
Closing Date) have been satisfied with respect to such
proposed Acquisition Term Loan Borrowing;
(c) If the Designated Acquisition involves a Borrowing of
Acquisition Term Loans or the use of proceeds of other Indebtedness of
$10,000,000 or more or a total acquisition price of $15,000,000 or more,
the consent of the Required Banks;
(d) The Company and its Subsidiaries shall have complied, in all
material respects, with the provisions of Sections 6.14, 6.15 (including a
Phase I (or a review similar in scope for foreign Designated Acquisitions)
environmental review of the Designated Acquisition entity or an additional
review at the request of the Administrative Agent from an environmental
assessment firm of national standing, in a form satisfactory to the
Administrative Agent) and 6.16 as to any property acquired or to be
acquired in connection with such Designated Acquisition, except for any
such provisions with which compliance is waived by the Administrative
Agent in its sole discretion, including, without limitation and to the
extent required by the referenced Sections, that the Company and its
Subsidiaries (including any Subsidiary so acquired) shall execute and
deliver to the Administrative Agent any additional Security Documents (or
Guarantees) required to provide the Administrative Agent for the benefit
of the Banks with a valid, perfected Lien in any Collateral to be acquired
in such Designated Acquisition;
(e) The Administrative Agent shall be reasonably satisfied that the
Company and its Subsidiaries shall have completed their appropriate and
customary due diligence with respect to the Designated Acquisition entity,
including but not limited to environmental, legal, accounting and
operational reviews similar to those undertaken and completed in
transactions previously consummated by the Company;
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(f) There shall be delivered to the Administrative Agent upon
consummation of the Designated Acquisition, a complete set of the
documents effecting such acquisition, together with all schedules and
exhibits (including, without limitation the acquisition agreement);
(g) Any fees or expenses of any Agent or the Banks which are then
due and payable, whether due in connection with such Acquisition Term Loan
Borrowing or otherwise, shall have been paid in full prior to, or
simultaneously with, the Acquisition Term Loan Closing; and
(h) From the date of the financial statements delivered pursuant to
Section 4.03(b)(i)(A) to and including the date of the Acquisition Term
Loan Borrowing, there shall have been no material adverse change in the
business, assets, properties, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole, or the
Designated Acquisition entity.
4.04. Conditions Precedent to All Letters of Credit. The right of
any Borrower to obtain the issuance of any Letter of Credit that the relevant
Issuing Bank determines to issue in its sole discretion hereunder is subject to
prior or concurrent satisfaction of all of the following conditions:
(A) Required Documentation. On or prior to the date of issuance of a
Letter of Credit, the Administrative Agent shall have received, in
accordance with the provisions of Section 1.13, a request for issuance
with respect to such Letter of Credit (the furnishing by such Borrower of
each such request for issuance shall be deemed to constitute a
representation and warranty of the Borrower to the effect that the
conditions set forth in Sections 4.01 (to the extent Letters of Credit are
issued on the date the Initial Loans are made) and 4.02 are satisfied as
of the date of delivery and will be satisfied on the relevant date of
issuance), all other information specified in Section 1.13, and such other
documents as the Issuing Bank may reasonably require in connection with
the issuance of such Letter of Credit.
(B) Conditions. On the date of issuance of each such Letter of
Credit, all conditions precedent described in Sections 4.01 (to the extent
Letters of Credit are issued on the date the Initial Loans are made) and
4.02 shall be satisfied to the same extent as though the issu-
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ance of such Letter of Credit were the making of a Revolving Loan.
SECTION 5. Representations, Warranties and Agreements. In order to
induce the Agents and the Banks to enter into this Agreement and to make the
Loans provided for herein, the Borrowers, jointly and severally, make the
following representations and warranties to, and agreements with, the Agents and
the Banks, all of which shall survive the execution and delivery of this
Agreement and the making of the Loans (with the execution and delivery of this
Agreement and the making of each Loan thereafter being deemed to constitute a
representation and warranty that the matters specified in this Section 5 are
true and correct in all material respects both before and after giving effect to
the Transaction and the related transactions and as of the date of each such
Loan unless such representation and warranty expressly indicates that it is
being made as of any specific date):
5.01. Status. (a) The Company and each of the Company's Subsidiaries
(i) is a duly organized and validly existing corporation, limited liability
company or other entity in good standing under the laws of the jurisdiction of
its organization; (ii) has the requisite corporate or other organizational power
and authority and has obtained all requisite governmental licenses,
authorizations, consents and approvals to own and operate its property and
assets and to transact the business in which it is engaged and presently
proposes to engage, except for those governmental licenses, authorizations,
consents or approvals the failure of which to be so obtained would not have a
Material Adverse Effect and (iii) is duly qualified, or as of the Closing Date
has taken appropriate steps to qualify, and is authorized to do business, or as
of the Closing Date has taken appropriate steps to be authorized to do business,
and is in good standing in all jurisdictions where it is required to be so
qualified and where the failure to be so qualified would have a Material Adverse
Effect.
(b) The Company was incorporated on March 4, 1998. Prior to the
Closing Date, the Company has not engaged in any business or incurred any
liabilities except for activities, expenses and liabilities incident to its
organization and to the carrying out of the Transaction or the Transaction
Documents.
5.02. Corporate Power and Authority; Business. Each Credit Party and
each of its respective Subsidiaries has the requisite corporate or other
organizational power and authority to execute, deliver and carry out the terms
and provisions of
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the Documents to which it is a party and has taken all necessary corporate or
other organizational action to authorize the execution, delivery and performance
of the Documents to which it is a party. Each Credit Party and each of its
respective Subsidiaries has duly executed and delivered each Document to which
it is a party and each such Document constitutes the legal, valid and binding
obligation of such Person enforceable in accordance with its terms except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5.03. No Violation. Neither the execution, delivery and performance
by any Credit Party or its respective Subsidiaries of this Agreement or the
other Documents to which it is a party nor compliance with the terms and
provisions hereof and thereof, nor the consummation of the Transaction
contemplated herein and therein (i) will contravene any applicable provision of
any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents, the Surety Arrangement or trustee liens under the Indenture)
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of any Credit Party or its
respective Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, agreement or other instrument to which any Credit Party or its
respective Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will violate any
provision of the charter or by-laws or the certificate of formation or operating
agreement, or the foreign equivalent of such documents, as applicable, of any
Credit Party or its respective Subsidiaries, except, in each case, where such
contravention, conflict, inconsistency, breach, default, creation, imposition,
obligation or violation would not have a Material Adverse Effect.
5.04. Litigation. Schedule 5.04 lists all outstanding litigation of
the Company and its Subsidiaries. There are no actions, judgments, suits or
proceedings pending or, to any Borrower's knowledge, threatened with respect to
(i) the transactions contemplated by the Documents or (ii) any Credit Party or
its respective Subsidiaries which could reasonably be expected to have a
Material Adverse Effect.
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5.05. Use of Proceeds. (a) The proceeds of all A Term Loans and B
Term Loans to be made to the Company hereunder shall be utilized by the Company
to finance the Recapitalization and to pay related fees and expenses.
(b) Proceeds the Revolving Loans and proceeds of the Swingline Loans
shall be utilized for working capital and other general corporate purposes;
provided that on and after the earlier to occur of (x) the Acquisition Term Loan
Commitment Termination Date or (y) after the Acquisition Term Loans have been
fully borrowed, if the applicable borrowing conditions have been met, up to
$12,500,000 aggregate principal amount at any time outstanding of Revolving
Loans (plus at any time an amount, determined in accordance with Section 6.18,
of Cash that is used to pay or replace Revolving Loans that may be reborrowed to
finance Designated Acquisitions) may be used to finance Designated Acquisitions
if, on a pro forma basis after giving effect to the Designated Acquisition, the
ratio of Indebtedness for borrowed money of the Company and its Subsidiaries,
after giving effect to the Revolving Loans to be made, on the last day of the
fiscal quarter immediately preceding the date of calculation to Consolidated
EBITDA of the Company for the Test Period ending at the end of such fiscal
quarter is less than 4.75 to 1.00 on a pro forma basis after giving effect to
any Designated Acquisitions made during the Test Period and there would be at
least $10,000,000 of Revolving Loans available to be borrowed, after giving
effect to the Borrowing for the Designated Acquisition.
(c) All the proceeds of each of the Acquisition Term Loans to be
made hereunder shall be utilized to provide the financing required to consummate
Designated Acquisitions, to pay related fees and expenses and to pay
Indebtedness permitted by Section 7.04(i).
(d) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
5.06. Governmental Approvals, etc. Except as set forth on Schedule
5.06, no order, consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any third party or any
foreign or domestic governmental or public body or authority, or by any
subdivision thereof (other than those orders, consents, approvals, licenses,
authorizations or validations which, if not obtained or made, would not
reasonably be expected to have a Ma-
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terial Adverse Effect or which have previously been obtained or made, or filings
to perfect security interests granted pursuant to the Security Documents, which
will be accomplished on or prior to the Closing Date), is required to authorize
or is required in connection with (i) the execution, delivery and performance of
any Document or the Transaction contemplated therein or (ii) the legality,
validity, binding effect or enforceability of any Document. At the time of the
making of the Initial Loans, there does not exist any judgment, order,
injunction or other restraint issued or filed with respect to the consummation
of the Transaction or the making of Loans or the performance by the Credit
Parties or their respective Subsidiaries of their respective obligations under
the Documents.
5.07. Investment Company Act. No Credit Party or any of its
respective Subsidiaries is, or will be after giving effect to the transactions
contemplated hereby, an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended, or subject to any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money borrowed or guarantee such
indebtedness as contemplated hereby or by any other Credit Document.
5.08. Public Utility Holding Company Act. No Credit Party or any of
its respective Subsidiaries is, or will be after giving effect to the
transactions contemplated hereby, a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.09. True and Complete Disclosure. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of the
Credit Parties in writing to any Bank (including, without limitation, all
information contained in the Credit Documents) pursuant to this Agreement is (or
was, on the date of making the Initial Loans), and all other such factual
information (taken as a whole) hereafter furnished by any such Person in writing
to any Bank pursuant to this Agreement will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information not misleading at such time in light of the circumstances under
which such information was provided. The projections and pro forma financial
information contained in such materials are based on good faith estimates and
assumptions believed by such Persons to be reasonable
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at the time made, it being recognized by the Banks that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected
results. There is no fact known to any Credit Party which materially and
adversely affects the business, operations, property, assets, nature of assets,
liabilities, condition (financial or otherwise) or prospects of the Credit
Parties, taken as a whole, which has not been disclosed herein or in such other
documents, certificates and written statements furnished to the Banks.
5.10. Transaction. At the time of making the Initial Loans, all
necessary governmental and third-party approvals in connection with the
Transaction have been or, prior to the time when required, will have been,
obtained and remain in effect, and all applicable waiting periods have or, prior
to the time when required, will have, expired without, in all such cases, any
action being taken by any competent authority which is reasonably likely to have
a Material Adverse Effect on the Transaction.
5.11. Financial Condition; Financial Statements; Projections. (a) No
Credit Party is entering into the arrangements contemplated hereby and by the
other Credit Documents, or intends to make any transfer or incur any obligations
hereunder or thereunder with actual intent to hinder, delay or defraud either
present or future creditors. On and as of the Closing Date, on a pro forma basis
after giving effect to the Transaction and to all Indebtedness incurred and
Liens and Guarantees created, or to be created, by each Credit Party or its
respective Subsidiaries in connection with the Transaction, (w) none of the
Borrowers expects that final judgments against any Credit Party or its
respective Subsidiaries in actions for money damages with respect to pending or,
to its knowledge, threatened litigation will be rendered at a time when, or in
an amount such that, such Credit Party will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into account the
maximum reasonable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered and the cash available
to each Credit Party or its respective Subsidiaries, after taking into account
all other anticipated uses of the cash of such Credit Party or its respective
Subsidiaries (including the payments on or in respect of debts and insurance
proceeds (including their Contingent Obligations)); (x) no Credit Party or its
respective Subsidiaries will have incurred or intends to, or believes that it
will, incur debts beyond its ability to pay such debts as such debts mature
(taking into account the
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timing and amounts of cash to be received by such Credit Party or its respective
Subsidiaries from any source, and of amounts to be payable on or in respect of
debts of such Credit Party or its respective Subsidiaries and the amounts
referred to in the preceding clause (w)); (y) each Credit Party or its
respective Subsidiaries, after taking into account all other anticipated uses of
the cash of such Credit Party or its respective Subsidiaries, anticipates being
able to pay all amounts on or in respect of debts of such Credit Party or its
respective Subsidiaries when such amounts are required to be paid; and (z) each
Credit Party and its respective Subsidiaries will have sufficient capital with
which to conduct its present and presently proposed business and the property of
such Credit Party and its respective Subsidiaries does not constitute
unreasonably small capital with which to conduct its present or proposed
business, taking into account the particular capital requirements of the
business conducted by such Credit Party, the projected capital requirements
thereof and the capital availability thereof. For purposes of this Section 5.11,
"debt" means any liability on a claim, and "claim" means a (i) right to payment
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured; or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured. On the date of each
Borrowing and the issuance of each Letter of Credit (and after giving effect to
all Borrowings and Letters of Credit as of such date), the representations set
forth in this Section 5.11(a) shall be true and correct with respect to such
Borrower on such date and any Credit Party which is a guarantor with respect to
any or all of such Borrowings or Letters of Credit.
(b) The Company has heretofore delivered to the Banks combined
financial statements audited by Price Waterhouse LLP including a balance sheet
as of the years ended October 31, 1996 and October 31, 1997 and statements of
income and of cash flows of the MHE Business for the fiscal years ended October
31, 1995, October 31, 1996 and October 31, 1997 and unaudited financial
statements for the thirteen-week period ended January 31, 1998. Except as
otherwise noted therein, the financial statements referred to in the preceding
sentence were prepared in accordance with GAAP consistently applied and fairly
present the financial position and results of operations of the MHE Business for
the periods covered thereby. There has also been delivered the pro forma (after
giving effect to the Transac-
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tion) balance sheet of the Company and its Subsidiaries as of January 31, 1998,
which presents a good faith estimate of the consolidated pro forma financial
position of the Company and its Subsidiaries for such periods.
The assumptions made in preparing such pro forma balance sheet are
reasonable as of the date of such statements and as of the Closing Date and all
material assumptions are set forth therein. Except as contemplated hereby, since
October 31, 1997 (on a pro forma basis after giving effect to the Transaction)
no event or events have occurred that could reasonably be expected to have a
Material Adverse Effect.
(c) There have heretofore been delivered to the Banks pro forma
consolidated income projections for the Company and its Subsidiaries, pro forma
consolidated balance sheet projections for the Company and its Subsidiaries and
pro forma consolidated cash flow projections for the Company and its
Subsidiaries, all for the fiscal years ending October 31, 1998 through October
31, 2002, inclusive (the "Projected Financial Statements"), which give effect to
the Transaction and all Indebtedness incurred or created in connection with the
Transaction. The assumptions made in preparing the Projected Financial
Statements are reasonable as of the date of such projections and as of the
Closing Date and all material assumptions with respect to the Projected
Financial Statements are set forth therein, it being recognized by the Banks
that such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results.
(d) As of the Closing Date, except as fully reflected or reserved
against in the financial statements and the notes thereto described in Section
5.11(b), to the knowledge of the Borrowers there were no liabilities or
obligations with respect to the Company or its Subsidiaries of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due) which, either individually or in aggregate, would reasonably be
expected to result in a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole. As of the Closing Date, no Borrower knows of any
basis for the assertion against the Company or its Subsidiaries of any liability
or obligation of any nature whatsoever that is not fully reflected in the
financial statements described in Section 5.11(b) or (c), except as incurred by
the Company or its Subsidiaries in connection with the Transaction, which,
either individually or in the aggregate, could reasonably be expected
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to be material to the Company and its Subsidiaries, taken as a whole.
5.12. Security Interests. The Security Documents, taken as a whole,
if a filing will perfect a Lien, when filed and/or recorded, will create, in
favor of the Collateral Agent for the benefit of the Banks, as security for the
obligations purported to be secured thereby, a valid and enforceable perfected
first priority security interest in and Lien upon all of the Collateral,
superior to and prior to the rights of all third persons other than holders of
Prior Liens and subject to no other Liens except Liens expressly permitted by
the applicable Security Document. The mortgagor under each Mortgage has good and
marketable (or indefeasible) title to the Mortgaged Real Property owned by such
Credit Party free and clear of all Liens other than Prior Liens. The respective
Pledgor or assignor, as the case may be, has (or on and after the time it
executes the respective Security Document, will have) good and marketable title
(subject to securities laws affecting such transferability) to all items of
Collateral (other than real property subject to a Mortgage and except as set
forth on Schedule 5.21(b) hereto) owned by such Credit Party covered by such
Security Document free and clear of all Liens except Prior Liens and other Liens
expressly permitted by the applicable Security Document. No filings or
recordings are required in order to perfect the security interests created under
any Security Document except for filings or recordings required in connection
with any such Security Document which shall have been made prior to or
reasonably contemporaneously with the execution and delivery thereof.
5.13. Tax Returns and Payments. Each of the Credit Parties and each
of its respective Subsidiaries has timely filed all material federal, state,
provincial and other material returns, statements, forms and reports for taxes
(the "Returns") required to be filed by it with respect to its income,
properties or operations and has paid all material taxes (including, without
limitation, taxes based on net income or net profits) and assessments payable by
it which have become due, other than those not yet delinquent and except for
those contested in good faith and for which adequate reserves have been
established. Each of the Credit Parties and each of its respective Subsidiaries
has paid, or has provided adequate reserves (in accordance with GAAP) for the
payment of, all federal, state, local and foreign income taxes (including,
without limitation, franchise taxes based upon income or profits) applicable for
all prior fiscal years and for the current fiscal year to the date hereof other
than as set forth on Schedule
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5.13. No Borrower knows of any proposed tax assessment against any Credit Party
or any of its respective Subsidiaries that could reasonably be expected to have
a Material Adverse Effect which is not being actively contested in good faith by
such Person to the extent affected thereby in good faith and by appropriate
proceedings; provided that such reserves or other appropriate provisions, if
any, as shall be required in conformity with GAAP shall have been made or
provided therefor. The pro forma financial statements delivered pursuant to
Section 5.11(b) reflected all taxes reasonably believed at the time of delivery
thereof to result from the transactions contemplated by the Transaction.
5.14. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations of all underfunded Pension Plans (based on the assumptions
used for purposes of Statement of Financial Accounting Standards No. 87) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $250,000 the fair market value of the assets of all
such underfunded Pension Plans. Each ERISA Entity is in compliance in all
material respects with the presently applicable provisions of ERISA and the Code
with respect to each Employee Benefit Plan. Each ERISA Entity and each of the
Foreign Plans are in compliance in all material respects with all applicable
laws and regulations with respect to the Foreign Plans and the terms of the
Foreign Plans, and all required contributions have been made to the Foreign
Plans.
5.15. Subsidiaries. After giving effect to the Transaction, all of
the outstanding units or common stock, as the case may be, of each Credit Party
shall be validly issued, fully paid and nonassessable and shall be owned
beneficially and of record by each Credit Party as set forth as Schedule 5.15
hereto, subject to no Liens other than Liens in favor of the Collateral Agent.
Other than as set forth on Schedule 5.19, after giving effect to the
Transaction, there shall be no preemptive rights on the part of any holder of
any class of securities of any Credit Party or other rights, such as warrants or
options, to acquire any class of securities of any Credit Party.
5.16. Patents, etc. Each Credit Party or its respective Subsidiaries
owns or possesses adequate licenses or other rights to use all material patents,
patent applications,
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trademark registrations, trademark applications, servicemark registrations,
servicemark applications, trade names, copyright registrations, trade secrets
and know how (collectively, the "Intellectual Property") that are necessary for
the operation of its respective businesses as presently conducted and as
currently proposed to be conducted. No claim is pending or, to the knowledge of
each Credit Party and its respective Subsidiaries, threatened to the effect that
any Credit Party or its respective Subsidiaries infringes upon or conflicts with
the asserted rights of any other person under any Intellectual Property, and, to
the knowledge of each Borrower, there is no basis for any such claim (whether or
not pending or threatened), except for such claims that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect. No
claim is pending or, to the knowledge of each Borrower, threatened to the effect
that any such Intellectual Property owned or licensed by any Credit Party or its
respective Subsidiaries or which any Credit Party or its respective Subsidiaries
otherwise has the right to use, is invalid or unenforceable by such Credit Party
or its respective Subsidiaries, and, to the knowledge of each Borrower, there is
no basis for any such claim (whether or not pending or threatened).
5.17. Compliance with Laws, etc. Each Credit Party and its
respective Subsidiaries is in material compliance with all laws and regulations
in all jurisdictions in which it is presently doing business, and each Credit
Party and its respective Subsidiaries will comply with all such laws and
regulations which may be imposed in the future in jurisdictions in which it or
such Subsidiary may then be doing business, except to the extent the
non-compliance with such laws and regulations would not reasonably be expected
to have a Material Adverse Effect. To the knowledge of each Borrower, no Credit
Party is currently under investigation for the violation of any crime the
conviction for which would reasonably be expected to have a Material Adverse
Effect.
5.18. Properties. Each Credit Party or its respective Subsidiaries
has good and marketable (or indefeasible) title to and beneficial ownership of
all material properties owned by it, including after giving effect to the
Transaction all property reflected in the pro forma balance sheet referred to in
Section 5.11(b) (except as sold or otherwise disposed of since the date of such
balance sheet in the ordinary course of business or as permitted by this
Agreement or the Security Documents), free and clear of all Liens, other than,
in the case of property not constituting Collateral, Permitted Encumbrances and,
in the case of property constituting Collateral,
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Prior Liens and other Liens expressly permitted by the applicable Security
Document. Each Credit Party or its respective Subsidiaries holds all licenses,
certificates of occupancy or operation and similar certificates and clearances
of municipal and other authorities necessary to own and operate its properties
in the manner and for the purposes currently operated by such party except where
the failure to hold such licenses, certificates or clearances would not
reasonably be expected to have a Material Adverse Effect. Each Real Property and
each Mortgaged Real Property is suitable for its intended purposes and is served
by such utilities as are necessary for the operation thereof. Except as
disclosed to the Administrative Agent in writing, there are no actual,
threatened or alleged defaults of a material nature with respect to any material
Leases of Real Property under which any Credit Party or any of its respective
Subsidiaries is lessor or lessee.
5.19. Securities. Except as set forth on Schedule 5.19 hereto, there
are not, as of the Closing Date, any existing options, warrants, calls,
subscriptions, convertible or exchangeable securities, rights, agreements,
commitments or arrangements for any Person to acquire any equity security of any
Credit Party or any other securities convertible into, exchangeable for or
evidencing the right to subscribe for any such equity security.
5.20. Collective Bargaining Agreements. Set forth on Schedule 5.20
hereto is a list and description (including dates of termination) of all
collective bargaining or similar agreements between or applicable to any Credit
Party or its respective Subsidiaries as of the date hereof and any union, labor
organization or other bargaining agent in respect of the employees of any Credit
Party or its respective Subsidiaries on the date indicated in Schedule 5.20
hereto.
5.21. Indebtedness Outstanding; Prior Liens. (a) Set forth on
Schedule 5.21(a) hereto is a list and description of (i) all Indebtedness of the
types specified in clauses (i), (iii), (iv), (v) and (vii) of the definition of
Indebtedness of the Credit Parties and their respective Subsidiaries (other than
the Loans) that shall be outstanding immediately after the Closing Date and (ii)
all Indebtedness of the Credit Parties and their respective Subsidiaries that
was repaid, defeased, transferred or otherwise terminated on or prior to the
Closing Date in connection with the Transaction.
(b) Schedule 5.21(b) hereto sets forth a true list, with respect to
assets in the United States, United Kingdom and
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Canada and, to the Company's knowledge, other jurisdictions, of all Liens other
than Permitted Encumbrances as described in Sections 7.03(a)-(n) on the property
of the Credit Parties immediately following the Closing Date.
5.22. Environmental Protection. Except as set forth on Schedule 5.22
hereto and except as would not be reasonably expected to have a Material Adverse
Effect,
(a) Each Credit Party and its respective Subsidiaries has obtained
all permits, licenses and other authorizations (hereinafter collectively
referred to as "Authorizations") which are required with respect to the
operation of the business and assets, and use, ownership and operation of
Real Property of the Company and its Subsidiaries, in each case taken as a
whole, under any Environmental Law and each such authorization is in full
force and effect.
(b) Each Credit Party and its respective Subsidiaries is in
compliance with all terms and conditions of the permits, licenses and
authorizations specified in subsection 5.22(a) above, and is also in
compliance with, and not subject to liability under, any Environmental
Laws applicable to it and its business, assets, operations and Real
Property (including, without limitation, compliance with standards,
schedules and timetables therein).
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the
knowledge of any Borrower, threatened against any Credit Party or any of
its respective Subsidiaries under any Environmental Law.
(d) None of the Credit Parties nor any of its respective
Subsidiaries has received written notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (CERCLA) or
any comparable state or foreign law nor has any Credit Party or any of its
respective Subsidiaries received any written notification that any
Hazardous Materials that it, or any of its Subsidiaries, or any of their
respective predecessors in interest has used, generated, stored, treated,
handled, transported or disposed of, or arranged for disposal or treatment
of, or arranged with a transporter for transport for disposal or treatment
of, have been found at
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any site at which any governmental agency or private party is conducting
or plans to conduct a remedial investigation or other action pursuant to
any Environmental Law.
(e) There have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping) of
Hazardous Materials by any Credit Party or any of its respective
Subsidiaries or their respective predecessors in interest on, at, upon,
under, into or from any of the Real Properties. To the knowledge of each
Borrower after due inquiry there have been no such releases on, at, upon,
under, from or into any real property in the vicinity of any of the Real
Properties that, through soil, air, surface water or groundwater migration
or contamination, may have migrated to or under such Real Properties.
(f) No asbestos is present in, on, or at any Real Properties or any
facility or equipment of any Credit Party or any of its respective
Subsidiaries.
(g) No Real Properties of any Credit Party or any of its respective
Subsidiaries or, to the knowledge of each Credit Party, any of their
respective predecessors in interest are (i) listed or proposed for listing
on the National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability Information
System List promulgated pursuant to CERCLA or (iii) included on any
comparable lists maintained by any governmental authority.
(h) There are no past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere
with or prevent compliance with any Environmental Law, or which may give
rise to any liability under any Environmental Law, including, without
limitation, liability under CERCLA or similar state, local or foreign
laws, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing or notice of violation, notice of potential liability
or investigation, based on or related to the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport,
shipping or handling, or the emission, discharge, release or threatened
release into the environment, of any Hazardous Materials.
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(i) No Lien has been recorded under any Environmental Law with
respect to any assets, facility, inventory or Real Property owned,
operated, leased or controlled by any Credit Party or any of its
respective Subsidiaries.
(j) No Credit Party has assumed by contract, agreement or otherwise
any liability or obligation under any Environmental Law.
5.23. Environmental Investigations. To the knowledge of senior
management of the Company, all environmental investigations, studies, audits,
assessments or reviews in the possession, custody or control of any Credit Party
which relates to the current or prior business or assets of any Credit Party or
any of its respective Subsidiaries or any Real Property, assets or facility now
or previously owned, operated, leased, used or controlled by any Credit Party or
any of its respective Subsidiaries have been delivered to the Administrative
Agent.
5.24. Representations and Warranties in the Recapitalization
Agreement. To each Borrower's knowledge, all representations and warranties set
forth in the Recapitalization Agreement were true and correct as of the time as
of which such representations and warranties were made, except as disclosed in
supplemental schedules thereto, and shall be true and correct as of the Closing
Date as if such representations and warranties were made on and as of such date
(unless such representation or warranty is given as of a specific date).
SECTION 6. Affirmative Covenants. Each Borrower, jointly and
severally, covenants and agrees that on the Effective Date and thereafter for so
long as this Agreement is in effect and until the Commitments have terminated
and the Loans together with interest and fees are paid in full and all other
Obligations incurred hereunder, to the extent due and payable, are paid in full:
6.01. Information Covenants. The Company will furnish or cause to be
furnished to each Bank:
(a) As soon as available and in any event within 90 days after the
close of each fiscal year of the Company, the consolidated balance sheets
of the Company and its Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income, of stockholders' equity and
of cash flows for such fiscal year, setting forth comparative consolidated
figures for the preceding
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fiscal year and a report on such consolidated balance sheets and financial
statements by independent certified public accountants of recognized
national standing (which shall be one of the "Big Five" accounting firms),
which report shall not be qualified as to the scope of audit or as to the
status of the Company and its Subsidiaries as a going concern and shall
state that such consolidated financial statements present fairly the
consolidated financial position of the Company and its Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except for such changes with which the
independent certified public accountants concur) and the examination by
such accountants was conducted in accordance with generally accepted
auditing standards.
(b) As soon as practicable and in any event (x) within 30 days after
the end of the each month ending after the Closing Date, (i) the
consolidated balance sheet of the Company and its Subsidiaries as at the
end of such period and (ii) the related statements of income and cash
flows of the Company and its Subsidiaries, in each case for such fiscal
month and for the period from the beginning of the then current fiscal
year to the end of such fiscal month, setting forth in comparative form
the corresponding periods of the prior fiscal year commencing with fiscal
year 1999, the corresponding periods of the current fiscal year's budget,
and (y) within 45 days after the end of each of the Company's first three
fiscal quarters in each fiscal year and within 90 days after the end of
each of the Company's fiscal years, a Management's Discussion and Analysis
for such financial statements covering the quarter then ended and the year
to date.
(c) Together with each delivery of financial statements of the
Company and its Subsidiaries pursuant to subsection (a) above, a written
statement by the independent public accountants giving the report thereon
(i) stating that their audit examination has included a review of the
terms of Sections 6, 7, 8 and 9 of this Agreement as they relate to
accounting matters but without having conducted any special auditing
procedures in connection therewith, (ii) stating whether, in connection
with their audit examination, any condition or event which constitutes a
Default or Event of Default has come to their attention, and if such a
condition or event has come to their attention, specifying the nature and
period of existence thereof;
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provided that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event of Default that
would not be disclosed in the course of their audit examination, and (iii)
stating that based on their audit examination nothing has come to their
attention which causes them to believe that as of the end of such fiscal
year of the Company there existed a Default or an Event of Default related
to the breach of any covenant set forth in Section 6 or 7 as they relate
to accounting matters and if such a condition or event has come to their
attention, specifying the nature and period of existence thereof and what
action the Company has taken, is taking and propose to take with respect
thereto.
(d) At the time of the delivery of the financial statements provided
for in Sections 6.01(a) and (b), (y) a certificate of the chief financial
officer or other Authorized Officer of the Company to the effect that no
Default or Event of Default exists, or, if any Default or Event of Default
does exist, specifying the nature and extent thereof and what actions have
been or will be taken in respect thereof, which certificate shall be
accompanied on a quarterly basis (i.e., within 45 days after the end of
each of the Company's first three fiscal quarters in each fiscal year and
within 90 days after the end of the Company's fiscal year) by a Compliance
Certificate in a form reasonably acceptable to the Administrative Agent
setting forth the calculations required to establish whether the Company
was in compliance with the covenants in this Agreement (including without
limitation the covenants set forth in Sections 7.05 and 7.10 through 7.13
inclusive) as at the end of such fiscal period or year, as the case may
be, and (z) a comparison of the current year to date financial results
against the plan/budget required to be submitted pursuant to subsection
(k) shall be presented.
(e) Promptly upon receipt thereof, a copy, if any, of each annual
"management letter" submitted to the Company by its independent
accountants in connection with any annual audit made by them of the books
of the Company or any of its Subsidiaries.
(f) Promptly upon their becoming available, copies of all
consolidating and consolidated financial statements, reports, notices and
proxy statements sent or made available generally by the Company or any
Subsidiary of the Company to its security holders in their capacity as
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such (other than to the Company or another Subsidiary) of all regular and
periodic reports and all registration statements and prospectuses, if any,
filed by the Company or any of its Subsidiaries with any securities
exchange or with the SEC and of all press releases and other statements
made available generally by the Company or any Subsidiary of the Company
to the public concerning material developments in the business of the
Company and its Subsidiaries.
(g) Promptly upon any senior officer of any Borrower obtaining
knowledge (w) of any condition or event which constitutes a Default or
Event of Default, or becoming aware that any Bank has given any written
notice or taken any other action with respect to a claimed Default or
Event of Default under this Agreement, (x) that any Person has given any
written notice to any Borrower or taken any other action with respect to a
claimed default or event or condition of the type referred to in Section
8.04, or (y) of a material adverse change in the business, operations,
properties, assets, nature of assets, condition (financial or otherwise)
or prospects of the Company and its Subsidiaries, taken as a whole, an
Officers' Certificate specifying the nature and period of existence of any
such condition or event, or specifying the notice given or action taken by
such holder or Person and the nature of such claimed Default, Event of
Default, event or condition, or material adverse change, and what action
the Company has taken, is taking and propose to take with respect thereto.
(h) (w) Promptly upon any senior officer of any Borrower obtaining
knowledge of the institution of, or written threat of, any action, suit,
proceeding, governmental investigation or arbitration against or affecting
any Credit Party or its respective Subsidiaries or any property of any
Credit Party or its respective Subsidiaries not previously disclosed to
the Banks, which action, suit, proceeding, governmental investigation or
arbitration seeks (or in the case of multiple actions, suits, proceedings,
governmental investigations or arbitrations arising out of the same
general allegations or circumstances which seek) recovery from any Credit
Party or its respective Subsidiaries aggregating $5,000,000 or more
(exclusive of claims covered by insurance policies unless the insurers of
such claims have disclaimed coverage or reserved the right to disclaim
coverage on such claims), the Company shall give notice thereof to the
Banks and provide such
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other information as may be reasonably available to enable the Banks and
their counsel to evaluate such matters; (x) as soon as practicable and in
any event within 45 days after the end of each fiscal quarter, the Company
shall provide a quarterly report to the Banks covering the institution of,
or written threat of, any action, suit, proceeding, governmental
investigation or arbitration (not previously reported) against or
affecting any Credit Party or its respective Subsidiaries or any property
of any Credit Party or its respective Subsidiaries not previously
disclosed to the Banks, which action, suit, proceedings, governmental
investigation or arbitration seeks (or in the case of multiple actions,
suits, proceedings, governmental investigations or arbitrations arising
out of the same general allegations or circumstances which seek) recovery
from any Credit Party or its respective Subsidiaries aggregating
$5,000,000 or more (exclusive of claims covered by insurance policies
unless the insurers of such claims have disclaimed coverage or reserved
the right to disclaim coverage on such claims), and shall provide such
other information at such time as may be reasonably available to enable
the Banks and their counsel to evaluate such matters; (y) in addition to
the requirements set forth in clauses (w) and (x) of this Section 6.01(h),
the Company upon the written request of the Administrative Agent shall
promptly give notice of the status of any action, suit, proceeding,
governmental investigation or arbitration covered by a report delivered to
the Banks pursuant to clause (w) or (x) above to the Banks and provide
such other information as may be reasonably available to them to enable
the Banks and their counsel to evaluate such matters and (z) promptly upon
any senior officer of any Borrower obtaining knowledge of any dispute in
respect of or the institution of, or written threat of, any action, suit,
proceeding, governmental investigation or arbitration in respect of any
material contract of any Credit Party or its respective Subsidiaries, the
Company shall give notice thereof to the Banks and shall provide such
other information as may be reasonably available to enable the Banks and
their counsel to evaluate such matters.
(i) Within 15 days of any material changes to the terms of any
material insurance policy as in effect on the Effective Date and described
on Schedule 6.01(i) or any cancellation of any such material policy
without replacement with a substantially similar policy, a report in form
and substance reasonably satisfactory to the Administra-
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tive Agent outlining such changes or the terms of the replacement policy,
as the case may be.
(j) To the extent reasonably requested by the Administrative Agent,
as soon as practicable and in any event within ten days of the later of
such request and the making of any such amendment or waiver, copies of
amendments or waivers with respect to Indebtedness of any Credit Party or
its respective Subsidiaries.
(k) On or prior to November 1, 1998 and each November 1 thereafter,
a consolidated plan/budget for each month in the succeeding fiscal year,
prepared in accordance with the Company's normal accounting procedures,
including, without limitation, (i) forecasted consolidated balance sheets,
consolidated statements of operations and of cash flows of the Company and
its Subsidiaries on a consolidated basis for such periods, (ii) the amount
of forecasted capital expenditures for such fiscal periods, (iii)
forecasted compliance with Sections 7.05 and 7.10-7.13 and (iv) an
appropriate discussion of the principal assumptions on which such
plan/budget is based; provided that if any such forecast indicates that
the Company may not be in compliance with any provision of this Agreement
at some future date, such forecast shall not constitute a Default or an
Event of Default or anticipatory or other breach hereof.
(l) Within ten (10) Business Days after the last Business Day of
each month and, at the Company's option, on any other day, a borrowing
base certificate in the form of Exhibit L hereto (the "Borrowing Base
Certificate") detailing Eligible Accounts Receivable and Eligible
Inventory as of the last day of such month (or as of the day specified in
any optional Borrowing Base Certificate), certified as complete and
correct on behalf of the Company by the chief financial officer or other
Authorized Officer of the Company. In addition, each Borrowing Base
Certificate shall have attached to it such additional schedules and/or
other information as the Administrative Agent may reasonably request. If
the Company fails to deliver any such required Borrowing Base Certificate
within twenty-five (25) days after the end of any such month, then the
Borrowing Base shall be deemed to be $0 until such time as the Company
shall deliver such required Borrowing Base Certificate.
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(m) With reasonable promptness, such other information and data with
respect to any Credit Party or its respective Subsidiaries or any other
similar entity in which the Company has an investment, as from time to
time may be reasonably requested by the Administrative Agent; provided
that no information or data shall be required to be delivered hereunder or
under any other provision of this Agreement to the extent it is
determined, after consultation with the Administrative Agent, that
providing such information would constitute a waiver of an attorney-client
privilege.
6.02. Books, Records and Inspections. The Company will, and will
cause each of its Subsidiaries to, keep true books of records and accounts in
which full and correct entries will be made of all of its business transactions,
and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP. The Company will, and
will cause each of its Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or any Bank to visit and inspect any
of the properties or assets of the Company or any of its Subsidiaries in
whosesoever possession, and to examine the books of account of the Company or
any of its Subsidiaries and discuss the affairs, finances and accounts of the
Company or any of its Subsidiaries with, and be advised as to the same by, its
and their officers and independent accountants (in the presence of such
officers), all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or any Bank may reasonably request.
6.03. Maintenance of Property; Insurance. (a) The Company and its
Subsidiaries will exercise commercially reasonable efforts to maintain or cause
to be maintained in good repair, working order and condition (subject to normal
wear and tear) all properties used in its businesses and from time to time will
make or cause to be made all appropriate repairs, renewals and replacements
thereof and will maintain and renew as necessary all licenses, permits and other
clearances necessary to use and occupy such properties.
(b) Subject to the provisions of subsections 6.03(c) and (d) below,
the Company and its Subsidiaries will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or similar
businesses and similarly situated, of such types and
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in such amounts as are customarily carried under similar circumstances by such
other corporations to the extent that such types and such amounts of insurance
are available at commercially reasonable rates. The Company will, and will cause
each of its Subsidiaries to, furnish to each Bank, upon reasonable request,
information as to the insurance carried, and will not cancel, without
replacement with a substantially similar policy, any such material insurance
without the reasonable consent of the Required Banks.
(c) The Company will, and will cause each of its Subsidiaries to,
maintain in full force the insurance coverages in respect of the Collateral as
set forth in the Security Documents.
(d) Where the lease under which any Real Property is held provides
that insurance is to be effected by the landlord and/or that insurance may not
be effected by the tenant, Section 6.03(b) shall be interpreted as requiring the
Company and its Subsidiaries to use all reasonable endeavors to ensure that the
landlord complies with its obligations (if any) to effect such insurance.
6.04. Payment of Taxes. The Company will, and will cause each of its
Subsidiaries to, pay and discharge all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien or charge upon any properties of the Company or any of its Subsidiaries or
cause a failure or forfeiture of title thereto; provided that neither the
Company nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings promptly instituted and diligently conducted, which
proceedings have the effect of preventing the forfeiture or sale of the property
or asset that may become subject to such Lien, if it has maintained adequate
reserves with respect thereto in accordance with and to the extent required
under GAAP.
6.05. Corporate Franchises. The Company will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights and authority, and its
Intellectual Property, except where such failure to keep in full force and
effect such rights and authority would not have a Material Adverse Effect.
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6.06. Compliance with Statutes, etc. The Company will, and will
cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls) other than non-compliance which could not reasonably be expected to
have a Material Adverse Effect.
6.07. ERISA. The Company will furnish to each of the Banks:
(a) promptly, upon the occurrence of any ERISA Event that, alone or
together with any other ERISA Events that have occurred, could reasonably
be expected to result in liability of the Credit Parties in an aggregate
amount exceeding $150,000, a written notice specifying the nature thereof,
what action the Credit Parties or members of their ERISA Group have taken,
are taking or propose to take with respect thereto, and, when known, any
action taken or threatened by the Internal Revenue Service, Department of
Labor, PBGC or Multiemployer Plan sponsor with respect thereto; and
(b) upon request by the Administrative Agent, copies of: (i) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by an ERISA Entity with the Internal Revenue Service with respect to
each Pension Plan; (ii) the most recent actuarial valuation report for
each Pension Plan; (iii) all notices received by an ERISA Entity from a
Multiemployer Plan sponsor or any governmental agency concerning an ERISA
Event; and (iv) such other documents or governmental reports or filings
relating to any Employee Benefit Plan as the Administrative Agent shall
reasonably request.
6.08. Performance of Obligations. The Company will, and will cause
each of its Subsidiaries to, perform in all material respects all of their
respective obligations under the terms of each mortgage, indenture, security
agreement, other debt instrument and material contract by which they are bound
or to which they are a party, except where such nonperformance would not have a
Material Adverse Effect.
6.09. End of Fiscal Years; Fiscal Quarters. Each Credit Party will,
for financial reporting purposes, and will
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cause each of its Subsidiaries to, have its (i) fiscal years end on October 31,
and (ii) fiscal quarters end on or about January 31, April 30, July 31, and
October 31.
6.10. Use of Proceeds. All proceeds of the Loans shall be used as
provided in Section 5.05.
6.11. Landlord Lien Waivers. The Company shall, and shall cause each
of its applicable Subsidiaries to, use commercial best efforts to obtain within
60 days after the Closing Date agreements from the respective landlords of such
of the Real Property in the United States and Canada, as applicable, that is
being leased by such Credit Party and on which inventory or equipment of such
Credit Party is maintained confirming that such landlords have subordinated
their landlord liens on such Credit Party's personal property to the security
interests held by the Collateral Agent pursuant to the applicable Security
Documents and that such landlords will provide the Collateral Agent with
reasonable access to such facilities to exercise the Collateral Agent's remedies
pursuant to such applicable Security Documents.
6.12. Equal Security for Loans and Notes; No Further Negative
Pledges. (a) If the Company or any of its Subsidiaries shall create or assume
any Lien upon any of its property or assets, whether now owned or hereafter
acquired and whether or not such property or assets constitute Collateral, other
than Liens permitted to exist with respect to such property or assets pursuant
to Section 7.03 hereof or other than Prior Liens or Liens otherwise permitted to
exist pursuant to the Security Documents (unless prior written consent to the
creation or assumption thereof shall have been obtained from the Administrative
Agent and the Required Banks), the Company shall, and shall cause any applicable
Subsidiary to, make or cause to be made effective provisions whereby the
Obligations will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured as long as any such Indebtedness shall be
secured; provided that this covenant shall not be construed as consent by the
Administrative Agent and the Required Banks to any violation by the Company of
the provisions of Section 7.03.
(b) Except (i) with respect to prohibitions against other
encumbrances on specific property encumbered to secure payment of particular
Indebtedness permitted hereunder, (ii) the restriction on Liens set forth in the
indenture governing the Public Notes and (iii) restrictions on Liens that may be
contained in the Indebtedness permitted by Sections
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7.04(f) and (g), neither the Company nor any of its Subsidiaries shall enter
into any agreement prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
6.13. Bank Meeting. The Company will participate in a meeting of the
Banks once during each fiscal year (with the first meeting to be held within
twelve months of the Closing Date) relating to the financial statements of the
previous fiscal year to be held at a location and a time selected by the Company
and reasonably acceptable to the Administrative Agent.
6.14. Pledge of Additional Collateral. Subject to Section 6.12(b),
and in any event within 30 days after the acquisition by the Company or any of
its Subsidiaries of (i) Real Property in the United States or the United
Kingdom, (ii) assets (other than the Real Property) of the type that would have
constituted Collateral (pursuant to the appropriate Security Document on the
Closing Date or Effective Date, as applicable, executed by such Person) at the
Closing Date or the Effective Date or (iii) capital stock or other equity
interest of any Subsidiary (other than a Subsidiary of a Non-Guarantor
Subsidiary), which shall be limited to 65% of the capital stock or other equity
interest in the case of a Foreign Subsidiary that is not a pass-through entity
and where the pledge would have the effects set forth in clause (a)(i) or (ii)
of the definition of Non-Guarantor Subsidiary (whether by capital contribution
or acquisition) (collectively, (i), (ii), (iii) and the assets of any Subsidiary
described in (iii), the "Additional Collateral"), the Company will, and will
cause each of its Subsidiaries to, take all necessary action, including the
filing of appropriate financing statements under the provisions of the UCC,
applicable foreign, domestic or local laws, rules or regulations in each of the
offices where such filing is necessary or appropriate, entering into or amending
Security Documents or, in the case the Company or any of its Subsidiaries
creates or acquires a Subsidiary, entering into such additional pledge
agreements and security agreements in form and substance satisfactory to the
Collateral Agent (and, in the case of the acquisition of Real Property in the
United States or the United Kingdom, satisfaction of the conditions set forth in
Sections 4.01(b)(iv), 4.01(q) and 4.01(u) and, in the case of the acquisition of
personal property, satisfaction of the conditions set forth in Sections
4.01(b)(iv) and 4.01(n)), to grant to the Collateral Agent a perfected first
priority Lien in such Collateral subject to no other Liens other than Prior
Liens and other Liens expressly permitted by the applicable Security Document
pursuant to and to the full extent required by
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the Security Documents and this Agreement. Notwithstanding the foregoing, (i)
Non-Guarantor Subsidiaries, (ii) to the extent that such Additional Collateral
consisting of inventory and receivables is not permitted to be pledged to the
Banks by Indebtedness incurred pursuant to Section 7.04(f), Foreign Subsidiaries
acquired pursuant to a Designated Acquisition and (iii) the Company's
Subsidiaries in Mexico, Singapore and South Africa shall not be required to
comply with the provisions of the foregoing sentence and no Liens will be
required if prohibited by a prohibition on Liens permitted to exist by Section
6.12(b). The Borrowers shall use their reasonable best efforts to limit the
collateral that Foreign Subsidiaries acquired pursuant to a Designated
Acquisition or otherwise shall provide to lenders providing the facilities
permitted by Sections 7.04(f) and 7.04(g). All actions taken by the parties in
connection with the pledge of Additional Collateral, including, without
limitation, costs of counsel for the Agents or the Collateral Agent, shall be
for the account of the Borrowers, which shall pay all sums due on demand.
6.15. Security Interests. The Company will, and will cause its
Subsidiaries to, perform any and all acts and execute any and all documents
(including, without limitation, the execution, amendment or supplementation of
any financing statement and continuation statement) for filing in any
appropriate jurisdiction under the provisions of the UCC, local law or any
statute, rule or regulation of any applicable jurisdiction which are necessary
in order to maintain or confirm in favor of the Collateral Agent for the benefit
of the Banks a valid and perfected Lien on the Collateral and any Additional
Collateral, subject to no Liens except for Prior Liens and other Liens expressly
permitted by the applicable Security Document. The Company shall, as promptly as
practicable after the filing of any financing statements, deliver or cause to be
delivered to the Administrative Agent acknowledgment copies of, or copies of
lien search reports confirming the filing of, financing statements duly filed
under the UCC of all jurisdictions as may be necessary or, in the reasonable
judgment of the Administrative Agent, desirable to perfect the Lien created, or
purported or intended to be created, by each Security Document.
6.16. Subsidiary Guarantees. In the event the Company or any of its
Subsidiaries creates or acquires a Subsidiary (other than a Non-Guarantor
Subsidiary), the Company will cause such Subsidiary to execute and deliver to
the Collateral Agent for the benefit of the Banks a subsidiary guarantee, in
form and substance satisfactory to the Collateral Agent, guaranteeing the
Obligations.
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6.17. Environmental Events. (a) The Company will promptly give
notice to the Administrative Agent upon becoming aware thereof (i) of any
violation of any Environmental Law, (ii) of any inquiry, proceeding,
investigation or other action, including a request for information or a notice
of potential liability under any Environmental Law from any Person or (iii) of
the discovery of the release or threatened release of any Hazardous Material at,
on, upon, under or from any of the Real Properties or any facility or equipment
thereat in excess of reportable quantities or allowable standards or levels
under any Environmental Law, or in a manner and/or amount which could reasonably
be expected to result in liability under any Environmental Law, in each case
which would have a Material Adverse Effect.
(b) In the event of the presence of any Hazardous Material on, at,
upon or under any of the Real Properties which is in violation of, or which
could reasonably be expected to result in liability under, any Environmental
Law, in each case which would have a Material Adverse Effect, the Company or any
of its Subsidiaries, upon discovery thereof, shall take all necessary steps to
initiate and expeditiously complete all response, corrective and other action
required under any Environmental Law to mitigate and eliminate any such adverse
effect.
(c) The Company shall as promptly as practicable notify the
Administrative Agent of the occurrence of any event specified in Section 6.17(b)
and shall thereafter keep the Administrative Agent informed on a periodic basis
of any actions taken in response to such event and the results of such actions.
(d) The Company shall provide the Administrative Agent with copies
of any notice, submittal or documentation provided by the Company or any of its
Subsidiaries to any governmental authority or third party under any
Environmental Law if the matter which is the subject of the notice, submittal or
other documentation could reasonably be expected to result in a materially
Adverse Effect. Such notice, submittal or documentation shall be provided to the
Administrative Agent promptly and, in any event, within 5 Business Days after
such material is provided to the governmental authority or third party.
6.18. Use of Cash on Hand to Effect Designated Acquisition. The
Company may use (i) Cash on hand (including Borrowings under the Revolving Loans
to the extent Cash on hand calculated pursuant to this clause (i) was used to
prepay Revolving Loans and to the extent of clause (iii) below) in an
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amount not to exceed the Company's Excess Cash Flow for the preceding six months
(plus an amount equal to the cumulative amounts calculated hereunder for prior
periods which have not been used to make a Designated Acquisition), determined
semi-annually as of each October 31 and April 30, commencing October 31, 1998;
provided that such Cash on hand need not be used in the six-month period or the
fiscal year in which generated but shall be available in future years, together
with any additional Cash available in such future years as calculated hereunder;
provided, further, that this clause (i) shall not be deemed to prevent payments
otherwise due under and in accordance with Section 3.02(A)(g) but such Section
3.02(A)(g) calculation will be made after taking into account the expenditure of
funds for such Designated Acquisitions in accordance with such Section
3.02(A)(g) and the definition of Excess Cash Flow, plus (ii) up to $12,500,000
of Revolving Loans at any time outstanding as provided in Section 5.05(b), plus
(iii) $15,000,000 to effect Designated Acquisitions.
6.19. Year 2000. The Company and its Subsidiaries will take all
action necessary to assure that their computer-based systems are able to
effectively process data, including dates on or after January 1, 2000. At the
request of the Administrative Agent or any Bank, the Borrowers shall provide the
Administrative Agent or such Bank, as the case may be, with assurance reasonably
acceptable to the Administrative Agent or such Bank, as the case may be, of the
year 2000 capability of the Company and its Subsidiaries.
6.20. Certain Post-Closing Matters. (a) Notwithstanding the
provisions of Section 4.01(u) hereof, the Company shall and shall cause its
applicable Subsidiaries to use all commercially reasonable efforts to enable the
applicable Canadian Credit Party to deliver the documents required under Section
4.01(u) with respect to the Real Property located in Edmonton, Canada within 90
days of the date hereof and if such documents cannot be delivered within such 90
day period, the Company shall discuss alternative actions that may be taken with
the Administrative Agent and take such actions as may be agreed.
(b) The Company shall and shall cause its applicable Subsidiaries to
take all actions reasonably necessary to obtain within 120 days of the date
hereof from the trustee or other holder of the industrial revenue bonds relating
to the property of Birmingham Crane & Hoist, Inc. in Birmingham, Alabama any
waiver or consent necessary to permit Birmingham Crane & Hoist, Inc. to
guarantee and pledge its assets to secure the Obliga-
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tions pursuant to the applicable Security Documents; provided, that in the event
that such trustee or holder does not deliver such waiver or consent within such
120 day period, the Company and its applicable Subsidiaries shall deliver the
guarantee and pledge contemplated above.
(c) The Company shall, and shall cause its South African Subsidiary
to, use all commercially reasonable efforts to obtain the necessary governmental
or regulatory authority required to enable the South African Subsidiary to
execute a Subsidiary Guarantee.
SECTION 7. Negative Covenants. The Company and the Borrowers,
jointly and severally, hereby covenant and agree that as of the Closing Date and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated and the Loans together with interest and fees are paid in full
and all other Obligations incurred hereunder, to the extent due and payable, are
paid in full:
7.01. Conduct of Business. The Company will not, and will not permit
any of its Subsidiaries to, engage in any business other than the business
conducted by the Company and its Subsidiaries prior to the Closing Date, the MHE
Business and any businesses or activities similar or reasonably related thereto.
Holdings will not engage in any business other than holding the capital stock of
its Subsidiaries; provided that Holdings may hold the capital stock of
Subsidiaries which may engage in other businesses so long as (i) management of
the Company and its Subsidiaries continues to devote substantially all of its
time to the affairs of the Company and its Subsidiaries, (ii) no resources of
the Company and its Subsidiaries are utilized in any such business, except for
Dividends permitted by Section 7.08 and (iii) Holdings may not provide credit
support for any such Subsidiary except for a limited guarantee to the extent of
the value of the shares of such Subsidiary and supported solely by a pledge of
the shares of such Subsidiary.
7.02. Amendments or Waivers of Certain Documents. After the Closing
Date, no Credit Party or its respective Subsidiaries will amend or otherwise
change the terms of the Transaction Documents in a manner adverse to the Banks
without the prior written consent of the Required Banks.
7.03. Liens. The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or permit or
suffer to exist any Lien upon or with respect to any item constituting
Collateral, whether
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now owned or hereafter acquired, or sell any such Collateral subject to an
understanding or agreement, contingent or otherwise, to repurchase such
Collateral or assign any right to receive income, or file or permit the filing
of any financing statement under the UCC (other than notice filings in respect
of true leases) or any other similar notice of Lien under any similar recording
or notice statute, except for the Lien of the Security Document relating
thereto, Prior Liens applicable thereto and other Liens expressly permitted by
such Security Document. The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of the Company or any Subsidiary which does
not constitute Collateral whether now owned or hereafter acquired, or sell any
Collateral, property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets or assign any
right to receive income, or file or permit the filing of any financing statement
under the UCC (other than notice filings in respect of true leases) or any other
similar notice of Lien under any similar recording or notice statute, except the
following, which are herein collectively referred to as "Permitted
Encumbrances":
(a) Liens for taxes, assessments or governmental charges or claims
not yet delinquent or Liens for taxes, assessments or governmental charges
or claims being contested in good faith and by appropriate proceedings for
which adequate reserves, as may be required by GAAP, have been
established;
(b) Liens in respect of property or assets of the Company and its
Subsidiaries imposed by law (i) which were incurred in the ordinary course
of business, such as carriers', warehousemen's, supplier's, materialman's,
repairman's and mechanics' Liens and other similar Liens arising in the
ordinary course of business, and (x) which do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Company and
its Subsidiaries, taken as a whole, or (y) which are being contested in
good faith by appropriate proceedings, which proceedings have the effect
of preventing the forfeiture or sale of the property or asset subject to
such Lien or (ii) which do not relate to material liabilities of the
Company or any of its Subsidiaries and do not in the aggregate materially
detract from the value of the property and assets of the Company and its
Subsidiaries taken as a whole;
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(c) Liens in connection with any attachment or judgment (including
judgment or appeal bonds) not in excess of $5,000,000 in the aggregate for
the Company and its Subsidiaries (exclusive of any amount adequately
covered by insurance as to which the insurance company has acknowledged
coverage) unless the judgment it secures shall, within 60 days after the
entry thereof, not have been discharged or execution thereof not stayed
pending appeal, or shall not have been discharged within 30 days after the
expiration of any such stay;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, including any Lien securing letters of credit issued in the
ordinary course of business in connection therewith, or to secure the
performance of tenders, statutory or regulatory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds, warranty requirements and other similar obligations
incurred in the ordinary course of business (exclusive of obligations in
respect of the payment for borrowed money or the equivalent);
(e) Subject to the provisions of Section 7.20 and, with respect to
any Mortgaged Real Property, to the provisions of any applicable Mortgage,
Leases with respect to the assets or properties of the Company or its
Subsidiaries entered into in the ordinary course of the Company's or such
Subsidiary's business and subordinate in all respects to the Liens granted
and evidenced by the Security Documents;
(f) Easements, rights of way, zoning restrictions, other
restrictions, minor defects or irregularities in title or equivalent
rights and restrictions under the laws of foreign jurisdictions not
interfering in any material respect with the business of the Company or
its Subsidiaries, in each case incurred in the ordinary course of business
and which do not materially impair for its intended purposes the use or
value of the Real Property to which it relates;
(g) Liens (whether incurred in connection with such acquisition or
existing prior to and acquired in connection with such acquisition) upon
real or tangible personal property acquired by the Company or its
Subsidiaries or
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Persons that became Subsidiaries of the Company after the Closing Date;
provided that (i) any such Lien is created solely for the purpose of
securing Indebtedness representing, or incurred to finance, the cost of
the item of property subject thereto, (ii) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of the fair value
(plus reasonable costs and expenses) (as determined in good faith by the
board of directors or members of the appropriate entity) of the respective
property at the time it was so acquired, (iii) such Lien does not extend
to or cover any other property other than such item of property and any
additions or accessions thereto permitted hereunder and proceeds thereof
and (iv) the incurrence of such Indebtedness secured by such Lien is
permitted by Section 7.04;
(h) Any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(i) Liens contemplated by the Intercreditor Agreement and other
Surety Arrangements subject to an Intercreditor Arrangement;
(j) Liens securing reimbursement obligations with respect to
Commercial Letters of Credit permitted hereunder which encumber documents
and other property relating to such letters of credit and products and
proceeds thereof;
(k) Liens securing Indebtedness permitted by Section 7.04(f) and
(g);
(l) Liens in favor of the trustee under the indenture governing the
Public Notes;
(m) In respect of the Canadian Borrowers or any Canadian Subsidiary,
reservations and exceptions contained in, or implied by statute in, the
original grant or disposition of real property from the Crown of Canada or
a Province thereof;
(n) Any rights of expropriation, access or use, or any other similar
rights conferred or reserved by or in any statute of Canada or any
province thereof;
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(o) Existing Liens as set forth on Schedule 5.21(b); and
(p) Liens not otherwise permitted by the foregoing clauses (a)
through (o) as long as such Liens are not on the assets constituting
Collateral on the Closing Date and the sum of the principal amount of
Indebtedness secured by such Liens does not exceed, in the aggregate at
any one time outstanding, $12,500,000.
The Company and the Borrowers shall use their commercially
reasonable best efforts to obtain the waiver of any Lien referred to in clause
(b)(i) above on or in respect of any Equipment or Inventory.
7.04. Indebtedness. The Company will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to the Credit Documents; provided
that the aggregate principal amount of Indebtedness incurred pursuant to
this Agreement shall in no event exceed the Total Commitments subject to
the provisions of Section 3.05;
(b) Indebtedness of the Company and the Subsidiaries represented by
the Public Notes;
(c) Surety Obligations and Surety Arrangements;
(d) Existing Debt and any refinancing thereof; provided that any
such refinancing of Existing Debt shall be on terms which, both taken as a
whole and specifically as such terms relate to the identity of the
obligors (provided the Company may refinance Indebtedness of a
Wholly-Owned Subsidiary), repayments of principal, covenants, events of
default and security in property of the debtor, are in each event no more
favorable to the creditor than the correlative terms of the Existing Debt;
(e) (x) $5,000,000 of Indebtedness in the aggregate principal amount
outstanding at any time for the Company and its Subsidiaries incurred to
finance the cost of the acquisition of real or tangible personal property
(including Capital Leases) and (y) $10,000,000 of Indebtedness in the
aggregate principal amount outstanding at any one time to finance the cost
of the acquisition of computer hardware and software and related tangible
per-
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sonal property (including Capital Leases) in connection with the Company's
(or its Subsidiaries') management information systems; provided in each
case of (x) and (y), that at the time of incurrence such Indebtedness
shall not exceed 100% of the fair value of such property (plus reasonable
costs and expenses); and provided, further, that such Indebtedness is not
secured by any Lien other than a Lien referred to in clause (g) of Section
7.03;
(f) Indebtedness of Foreign Subsidiaries incurred to provide working
capital for Designated Acquisitions in an amount not to exceed $15,000,000
aggregate principal amount at any one time outstanding until January 31,
2000 and $20,000,000 aggregate principal amount at any one time
outstanding thereafter;
(g) up to $11,000,000 aggregate principal amount of Indebtedness at
any one time outstanding of the Company's Subsidiaries, the jurisdiction
of incorporation, organization or formation of which is located in Mexico,
Singapore or South Africa; provided that the amount of Indebtedness in
each such country shall not exceed the following: (i) $2,000,000 aggregate
principal amount at any one time outstanding in Mexico; (ii) $4,000,000
aggregate principal amount at any one time outstanding in Singapore; or
(iii) $5,000,000 aggregate principal amount at any one time outstanding in
South Africa;
(h) Contingent Obligations permitted by Section 7.18;
(i) Indebtedness to sellers in connection with a Designated
Acquisition in an amount not to exceed $5,000,000 aggregate principal
amount at any time outstanding; provided that such Indebtedness is
unsecured and contains subordination and other terms satisfactory to the
Administrative Agent; and provided, further, that the Company is in pro
forma compliance with its covenants, after giving effect to the issuance
of such notes;
(j) Intercompany Advances; and
(k) other Indebtedness not exceeding $12,500,000 aggregate principal
amount for the Company and its Subsidiaries at any time outstanding.
7.05. Capital Expenditures. The Company will not, and will not
permit any of its Subsidiaries to, make Consoli-
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dated Capital Expenditures for any purpose in excess of the amounts set forth
below for the fiscal year end set forth on the date listed below; provided that
Consolidated Capital Expenditures for the period ended October 31, 1998 shall be
for the period beginning on the Closing Date and ending on October 31, 1998:
Amount
Period in $ Millions
------ -------------
October 31, 1998...................... $7.5
October 31, 1999...................... 9.0
October 31, 2000...................... 9.0
October 31, 2001...................... 9.0
October 31, 2002...................... 9.0
October 31, 2003...................... 9.0
October 31, 2004...................... 9.0
In addition, the amount of Consolidated Capital Expenditures
permitted by this Section 7.05 for any fiscal year shall be increased by an
amount equal to 75% of the excess of (x) the permitted Consolidated Capital
Expenditures for the immediately preceding fiscal year (without giving effect to
this sentence) over (y) the amount of Consolidated Capital Expenditures actually
made in such immediately preceding fiscal year; provided that after the
consummation of any Designated Acquisition, the amount set forth in the table
above for any period ending after such Designated Acquisition shall be increased
by an amount equal to 20% of the Consolidated EBITDA of the acquired entity
included in the pro forma consolidated statement of income for the then current
twelve-month period delivered to the Administrative Agent pursuant to Section
4.03(b)(ii) and for years following the year of acquisition the greater of 20%
of projected Consolidated EBITDA for the Designated Acquisition (as set forth in
the data provided to the Banks pursuant to Section 6.01) and 20% of the actual
Consolidated EBITDA for the Designated Acquisition for the last fiscal year.
7.06. Advances, Investments and Loans. The Company will not, and
will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to any
Person, except:
(a) investments in Cash and Cash Equivalents;
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(b) receivables owing to them and advances (including deposits) to
customers and suppliers, in each case if created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance
with customary trade terms;
(c) investments (including debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business or upon
foreclosure of any Lien in favor of the Company or its Subsidiaries;
(d) Intercompany Advances;
(e) the acceptance of a form of consideration other than Cash or
Cash Equivalents in connection with the sale or disposition of assets to
the extent provided in Section 7.17;
(f) guarantees by Subsidiary Guarantors of the Company's obligations
under the Public Notes;
(g) investments in Holdings permitted by Section 7.08 and
investments permitted by Section 7.09;
(h) Contingent Obligations permitted by Section 7.18;
(i) investments contemplated by the Transaction Documents;
(j) investments which the Company and its Subsidiaries are
contractually committed to make pursuant to contracts existing on the
Closing Date as set forth on Schedule 7.06(j), plus an amount not to
exceed $2,000,000 in the aggregate;
(k) investments held by a Person prior to its becoming a Subsidiary
of the Company; provided that such investment was not incurred in
contemplation of such acquisition;
(l) advances to officers and employees of the Company and its
Subsidiaries in the ordinary course of business not to exceed $500,000
outstanding at any time;
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(m) additional loans, advances and/or investments of a nature not
contemplated by the foregoing clauses (a) through (l) and (n) through (p);
provided that all loans, advances and investments made pursuant to this
clause (m) shall not exceed $3,000,000 in the aggregate at any time
outstanding in any fiscal year and $15,000,000 in the aggregate at any
time outstanding during the term of this Agreement for the Company and its
Subsidiaries;
(n) prepaid expenses and workers' compensation, utility, lease and
similar deposits in the ordinary course of business;
(o) Designated Acquisitions; and
(p) loans or advances to officers and employees of the Company and
its Subsidiaries on or within 30 days after the Closing Date which amounts
are used to acquire Management Stock; provided such loans or advances are
repaid within one year of the Closing Date.
7.07. Prepayments of Indebtedness, etc. The Company will not, and
will not permit any of its Subsidiaries to: (a) after the issuance thereof,
amend or modify (or permit the amendment or modification of) any of the terms or
provisions, to the extent any such amendment or modification would be adverse to
the issuer thereof or to the interests of the Banks, of any of the Indebtedness
(or any agreement relating thereto) of the type described in Section 7.04(b),
(c), (d) (other than the Industrial Revenue Bonds of Birmingham Crane & Hoist,
Inc.) or (i); (b) make (or give any notice in respect of) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with any trustee with
respect thereto money or securities before such Indebtedness is due for the
purpose of paying such Indebtedness when due) or exchange of any such
Indebtedness, except that Indebtedness of the type described in Section 7.04(i)
may be prepaid with Acquisition Term Loans in accordance with Section 4.03 and
the Industrial Revenue Bonds of Birmingham Crane & Hoist, Inc. permitted under
Section 7.04(d); and/or (c) amend, modify or change any of its respective
Certificate of Incorporation or operating agreement, or any agreement entered
into by the Company or its Subsidiaries with respect to its equity securities,
or enter into any new agreement with respect to the equity securities of the
Company or any Subsidiary the result of which is reasonably likely to be adverse
to the interests of the Banks (in their capacity as such) hereunder.
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7.08. Dividends, etc. The Company will not, and will not permit any
of its Subsidiaries to, declare or pay any dividends or return any capital to,
its shareholders or members or authorize or make any other distribution, payment
or delivery of property or cash to its shareholders or members as such, or
redeem, retire, purchase or otherwise acquire, directly or indirectly, for any
consideration, any of its equity interest now or hereafter outstanding (or any
warrants for or options or stock appreciation rights in respect of any of such
equity interests), or set aside any funds for any of the foregoing purposes, or
permit any of its Subsidiaries to purchase or otherwise acquire for
consideration any equity interest of the Company or any other Subsidiary, as the
case may be, now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by such Person with respect to its equity interest)
(all of the foregoing, "Dividends"), except that (i) any Subsidiary of a
Borrower may pay Dividends to its parent corporation (and pro rata to its other
shareholders if such Subsidiary is not wholly-owned) if such parent corporation
is (x) a Borrower or (y) a Subsidiary of a Borrower; (ii) the payment to
Holdings or any other Person in respect of which Holdings is a member of its
consolidated tax group, for so long as Holdings owns such amount of the capital
stock of the Company as will permit it or a member of the consolidated tax group
of Holdings to be entitled to file consolidated federal tax returns with the
Company, for income taxes pursuant to the Tax Allocation Agreement or for the
purpose of enabling Holdings or any such members to pay taxes other than income
taxes, to the extent actually owed and attributable to the operations of the
Company and its Subsidiaries or to Holdings' ownership thereof; (iii) payments
to Holdings, for so long as it owns no less than a majority of the outstanding
common stock of the Company, in amounts sufficient to pay the ordinary operating
and administrative expenses of Holdings (including all reasonable professional
fees and expenses), including in connection with its complying with its
reporting obligations (including filings with the SEC and any exchange on which
Holdings' securities are traded) and obligations to prepare and distribute
business records in the ordinary course of business and Holdings' costs and
expenses relating to taxes, other than those referred to in clause (ii) (which
taxes are attributable to the operations of the Company and its Subsidiaries or
to Holdings' ownership thereof); provided that the aggregate payments paid in
each fiscal year pursuant to this clause (iii) will not exceed 0.20% of the
consolidated net sales of the Company and its Subsidiaries for such fiscal year;
(iv) as long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, the Company may purchase, or may pay
Dividends
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to Holdings to enable Holdings to purchase, Management Stock and Vested Options
from the members of management of Holdings and its Subsidiaries, in an amount
not to exceed $500,000 in any fiscal year and $2,500,000 in the aggregate;
provided that such payments may only be made in connection with purchases of
Management Stock and Vested Options upon the termination of employment, death or
disability of the person to whom such shares of Management Stock or Vested
Options were initially issued; (v) payments in respect of the Transaction; and
(vi) from and after the fifth anniversary of the Closing Date, the Company may
pay Dividends to Holdings in order to permit Holdings to pay cash dividends on
the Preferred Stock if the ratio of Indebtedness for borrowed money of the
Company and its Subsidiaries on the last day of the fiscal quarter immediately
preceding the date of calculation to Consolidated EBITDA of the Company for the
Test Period ending at the end of the fiscal quarter immediately preceding the
date of calculation, on a pro forma basis after giving effect to any Designated
Acquisitions made during such Test Period, is less than 3.5 to 1.0.
7.09. Transaction with Affiliates. The Company will not, and will
not permit any of its Subsidiaries to, enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any holder
of 5% or more of the equity securities of the Company or with any Affiliate of
the Company other than on terms and conditions substantially as favorable to the
Company or any Subsidiary as would be obtainable by the Company or such
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than a holder of 5% or more of the equity securities of the Company or an
Affiliate of the Company; provided that the foregoing restrictions shall not
apply to (i) transactions between or among any Borrower and its Subsidiaries
(provided that for purpose of this clause (i), the definition of Subsidiary
shall be deemed to require 66 2/3% instead of 50% ownership) and Intercompany
Advances; (ii) transactions with HarnCo and its Affiliates set forth in the
Transaction Documents; (iii) payments permitted by Section 7.08(ii), (iii), (iv)
and (v); (iv) the payment of fees to the Agents and their Affiliates for
financial services, such fees not to exceed Agents' usual and customary fees for
similar services; (v) payments to Chartwell (x) pursuant to the Chartwell
Financial Advisory Agreement on the Closing Date and (y) for management services
pursuant to the Chartwell Management Consulting Agreement not to exceed
$1,000,000 in any fiscal year, plus expenses; provided, in the case of (y), that
any such fees may accrue but shall not be paid by the Company at any time after
the occurrence and during the continuance of an Event of Default pursuant to
Section 8.01 until such Event of
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Default is cured, whereupon such accrued and unpaid fees may be paid in addition
to other permitted fees; (vi) reasonable fees and compensation paid to and
indemnity provided on behalf of officers, directors or employees of the Company
or any Subsidiary of the Company as determined in good faith by the Company's
Board of Directors or senior management; (vii) loans or advances to employees
and officers of the Company or any of its Subsidiaries in the ordinary course of
business to provide for the payment of reasonable expenses incurred by such
persons in the performance of their responsibilities to Holdings or such
Subsidiary or in connection with any relocation, not to exceed $500,000 at any
time outstanding; and (viii) loans or advances to employees and officers of the
Company or its Subsidiaries on or within 30 days after the Closing Date the
proceeds of which are used to acquire Management Stock and which loans or
advances are repaid within one year of the Closing Date.
7.10. Total Interest Coverage Ratio. The ratio of (i) Consolidated
EBITDA to (ii) Consolidated Interest Expense for the Company and its
Subsidiaries set forth below for the Test Period ending on each date listed
below shall not be less than the ratio set forth opposite such date below:
Test Period Ratio
----------- -----
July 31, 1998 ............................... 1.35 to 1.0
October 31, 1998 ............................ 1.35 to 1.0
January 31, 1999 ............................ 1.35 to 1.0
April 30, 1999 .............................. 1.35 to 1.0
July 31, 1999 ............................... 1.35 to 1.0
October 31, 1999 ............................ 1.40 to 1.0
January 31, 2000 ............................ 1.40 to 1.0
April 30, 2000 .............................. 1.40 to 1.0
July 31, 2000 ............................... 1.40 to 1.0
October 31, 2000 ............................ 1.50 to 1.0
January 31, 2001 ............................ 1.50 to 1.0
April 30, 2001 .............................. 1.50 to 1.0
July 31, 2001 ............................... 1.50 to 1.0
October 31, 2001 ............................ 1.75 to 1.0
January 31, 2002 ............................ 1.75 to 1.0
April 30, 2002 .............................. 1.75 to 1.0
July 31, 2002 ............................... 1.75 to 1.0
October 31, 2002 ............................ 2.00 to 1.0
January 31, 2003 ............................ 2.00 to 1.0
April 30, 2003 .............................. 2.00 to 1.0
July 31, 2003 ............................... 2.00 to 1.0
October 31, 2003 ............................ 2.00 to 1.0
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January 31, 2004 ............................ 2.00 to 1.0
April 30, 2004 .............................. 2.00 to 1.0
July 31, 2004 ............................... 2.00 to 1.0
October 31, 2004 ............................ 2.00 to 1.0
January 31, 2005 ............................ 2.00 to 1.0
7.11. Fixed Charge Coverage Ratio. The Company will not permit the
ratio of (i) Consolidated EBITDAC of the Company and its Subsidiaries minus
Consolidated Cash Taxes to (ii) the Consolidated Interest Expense of the Company
and its Subsidiaries plus the amount of scheduled mandatory payments on account
of principal of Indebtedness of the Company and its Subsidiaries (excluding
payments required to be made pursuant to Section 3.02(A)(f), (g), (h), (i), (j),
(k) and (l)) for the Test Period ending on each date listed below, to be less
than the ratio set forth opposite such date below:
Test Period Ratio
----------- -----
July 31, 1998 ............................... 1.05 to 1.0
October 31, 1998 ............................ 1.05 to 1.0
January 31, 1999 ............................ 1.05 to 1.0
April 30, 1999 .............................. 1.05 to 1.0
July 31, 1999 ............................... 1.05 to 1.0
October 31, 1999 ............................ 1.05 to 1.0
January 31, 2000 ............................ 1.10 to 1.0
April 30, 2000 .............................. 1.10 to 1.0
July 31, 2000 ............................... 1.10 to 1.0
October 31, 2000 ............................ 1.10 to 1.0
January 31, 2001 ............................ 1.10 to 1.0
April 30, 2001 .............................. 1.10 to 1.0
July 31, 2001 ............................... 1.10 to 1.0
October 31, 2001 ............................ 1.10 to 1.0
January 31, 2002 ............................ 1.10 to 1.0
April 30, 2002 .............................. 1.10 to 1.0
July 31, 2002 ............................... 1.10 to 1.0
October 31, 2002 ............................ 1.10 to 1.0
January 31, 2003 ............................ 1.10 to 1.0
April 30, 2003 .............................. 1.10 to 1.0
July 31, 2003 ............................... 1.10 to 1.0
October 31, 2003 ............................ 1.10 to 1.0
January 31, 2004 ............................ 1.10 to 1.0
April 30, 2004 .............................. 1.10 to 1.0
July 31, 2004 ............................... 1.10 to 1.0
October 31, 2004 ............................ 1.10 to 1.0
January 31, 2005 ............................ 1.10 to 1.0
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7.12. (a) Total Leverage Ratio. The Company will not permit the
ratio of (i) Indebtedness for borrowed money of the Company and its Subsidiaries
on each date listed below to (ii) Consolidated EBITDA of the Company and its
Subsidiaries for the Test Period ending on each date listed below to be more
than the ratio set forth below:
Test Period Ratio
----------- -----
October 31, 1998 ............................ 6.75 to 1.0
January 31, 1999 ............................ 6.70 to 1.0
April 30, 1999 .............................. 6.65 to 1.0
July 31, 1999 ............................... 6.60 to 1.0
October 31, 1999 ............................ 6.50 to 1.0
January 31, 2000 ............................ 6.50 to 1.0
April 30, 2000 .............................. 6.30 to 1.0
July 31, 2000 ............................... 6.10 to 1.0
October 31, 2000 ............................ 5.75 to 1.0
January 31, 2001 ............................ 5.75 to 1.0
April 30, 2001 .............................. 5.50 to 1.0
July 31, 2001 ............................... 5.35 to 1.0
October 31, 2001 ............................ 5.00 to 1.0
January 31, 2002 ............................ 4.90 to 1.0
April 30, 2002 .............................. 4.75 to 1.0
July 31, 2002 ............................... 4.60 to 1.0
October 31, 2002 ............................ 4.40 to 1.0
January 31, 2003 ............................ 4.20 to 1.0
April 30, 2003 .............................. 4.00 to 1.0
July 31, 2003 ............................... 4.00 to 1.0
October 31, 2003 ............................ 4.00 to 1.0
January 31, 2004 ............................ 4.00 to 1.0
April 30, 2004 .............................. 4.00 to 1.0
July 31, 2004 ............................... 4.00 to 1.0
October 31, 2004 ............................ 4.00 to 1.0
January 31, 2005 ............................ 4.00 to 1.0
(b) Credit Agreement Leverage Ratio. The Company will not permit the
ratio of (i) Indebtedness for borrowed money under this Agreement of the Company
and its Subsidiaries on each date listed below to (ii) Consolidated EBITDA of
the Company and its Subsidiaries for the Test Period ending on each date listed
below to be more than the ratio set forth below:
Test Period Ratio
----------- -----
July 31, 1998 ............................... 2.50 to 1.0
October 31, 1998 ............................ 2.50 to 1.0
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January 31, 1999 ............................ 2.50 to 1.0
April 30, 1999 .............................. 2.50 to 1.0
July 31, 1999 ............................... 2.50 to 1.0
October 31, 1999 ............................ 2.50 to 1.0
January 31, 2000 ............................ 2.50 to 1.0
April 30, 2000 .............................. 2.50 to 1.0
July 31, 2000 ............................... 2.50 to 1.0
October 31, 2000 ............................ 2.25 to 1.0
January 31, 2001 ............................ 2.25 to 1.0
April 30, 2001 .............................. 2.25 to 1.0
July 31, 2001 ............................... 2.25 to 1.0
October 31, 2001 ............................ 2.25 to 1.0
January 31, 2002 ............................ 2.25 to 1.0
April 30, 2002 .............................. 2.25 to 1.0
July 31, 2002 ............................... 2.25 to 1.0
October 31, 2002 ............................ 2.00 to 1.0
January 31, 2003 ............................ 2.00 to 1.0
April 30, 2003 .............................. 2.00 to 1.0
July 31, 2003 ............................... 2.00 to 1.0
October 31, 2003 ............................ 2.00 to 1.0
January 31, 2004 ............................ 2.00 to 1.0
April 30, 2004 .............................. 2.00 to 1.0
July 31, 2004 ............................... 2.00 to 1.0
October 31, 2004 ............................ 2.00 to 1.0
January 31, 2005 ............................ 2.00 to 1.0
7.13. Minimum Consolidated EBITDA. The Company will maintain a
Consolidated EBITDA of at least the amount set forth below for the Test Period
ending on each date listed below:
Minimum EBITDA
Test Period ($ Millions)
----------- -------------
October 31, 1998 ............................ 39.5
January 31, 1999 ............................ 39.5
April 30, 1999 .............................. 40.1
July 31, 1999 ............................... 40.1
October 31, 1999 ............................ 41.5
January 31, 2000 ............................ 41.5
April 30, 2000 .............................. 44.0
July 31, 2000 ............................... 44.0
October 31, 2000 ............................ 47.5
January 31, 2001 ............................ 47.5
April 30, 2001 .............................. 50.4
July 31, 2001 ............................... 50.4
October 31, 2001 ............................ 54.6
January 31, 2002 ............................ 54.6
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Minimum EBITDA
Test Period ($ Millions)
----------- -------------
April 30, 2002 .............................. 57.2
July 31, 2002 ............................... 57.2
October 31, 2002 ............................ 61.0
January 31, 2003 ............................ 61.0
April 30, 2003 .............................. 61.0
July 31, 2003 ............................... 61.0
October 31, 2003............................. 61.0
January 31, 2004 ............................ 61.0
April 30, 2004 .............................. 61.0
July 31, 2004 ............................... 61.0
October 31, 2004 ............................ 61.0
January 31, 2005 ............................ 61.0
7.14. Holdings Equity Sales and Net Financing Proceeds. Holdings
shall (i) upon the sale of any of the equity of itself or of the Company (except
sales to Holdings, the Company or one of its Subsidiaries), contribute an amount
equal to 100% of the net proceeds thereof received by Holdings to the Company in
the form of Cash or Cash Equivalents and (ii) on the date of receipt by Holdings
of any Net Financing Proceeds, contribute an amount equal to 100% of such Net
Financing Proceeds to the Company in the form of Cash or Cash Equivalents;
provided that Holdings need not contribute to the Company (i) amounts received
for its equity in connection with the Transaction or with respect to the
refinancing of its Preferred Stock with the proceeds of the sale of new equity
securities consummated substantially concurrently with such refinancing, (ii)
amounts received in respect of Management Stock and Vested Options, (iii) unless
from an underwritten public offering, amounts received by Holdings from the sale
of its equity securities (x) in an amount of $5,000,000 in the aggregate and (y)
in contemplation of a particular acquisition transaction which are applied to
such transactions within 45 days of receipt thereof by Holdings.
7.15. Sale or Discount of Receivables. The Company will not, and
will not permit its Subsidiaries to, sell, with or without recourse, or discount
(other than in connection with trade discounts in the ordinary course of
business consistent with past practice) or otherwise sell for less than the face
value thereof, notes or accounts receivable, other than receivables that have
been written-off or are otherwise determined in good faith to be uncollectible;
provided that the Company and its Subsidiaries may sell or discount accounts
receivable in an aggregate face value of $3.0 million in any fiscal year.
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7.16. Issuance of Subsidiary Stock. The Company will not, and will
not permit any of its Subsidiaries, directly or indirectly, to issue, sell,
assign, pledge or otherwise encumber or dispose of any shares of any
Subsidiaries' capital stock or other securities or equity interests (or
warrants, rights or options to acquire capital stock or convertible securities
or other equity securities) of such Subsidiary, other than (i) pursuant to the
Security Documents, (ii) as contemplated by the Transaction, (iii) transfers of
assets to the Company or to Subsidiary Guarantors permitted by this Agreement
(including as an Intercompany Advance), (iv) the issuance of directors'
qualifying shares, (v) sales of 100% of the capital stock of the Company's
Subsidiaries in accordance with Section 7.17 and (vi) sales of capital stock to
the Company or to one of its Subsidiaries to the extent permitted by Section
7.06.
7.17. Disposition of Assets. (a) The Company will not, and will not
permit any of its Subsidiaries to, make any Asset Sale, except that the Company
and its Subsidiaries may make Asset Sales so long as (i) such Asset Sales are
for at least the fair market value of such assets and (ii) the Company complies
with the mandatory prepayment and commitment reduction provisions of this
Agreement and, in the case of Collateral, so long as the conditions to the
release of Collateral described herein and in the applicable Security Documents
are met; provided that the Company need not comply with such mandatory
prepayment and commitment reduction provisions if the Company reinvests such
proceeds in substantially similar lines of business within 270 days of the
receipt of such proceeds; and provided, further, the Company need not comply
with such mandatory prepayment and commitment reduction provisions until the
aggregate amount of such Asset Sales is (A) $3.0 million or greater in any
fiscal year or (B) $15.0 million in the aggregate and then only in the amount of
such excess. For the purposes of clarification, the amount of proceeds received
and reinvested pursuant to the first proviso of this Section shall count towards
the amounts set forth in clauses (A) and (B) of this Section.
The consideration received by the Company or its Subsidiaries from
each Asset Sale permitted above shall be received in whole at the time of sale
and at least 85% of the consideration from each sale shall consist of Cash or
Cash Equivalents or Replacement Assets; provided that the amount of any
liabilities (as shown on the Company's or such Subsidiary's most recent balance
sheet) of the Company or any Subsidiary (other than contingent liabilities,
liabilities subordinated in right of payment to the Loans or non-recourse
Indebtedness)
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that are assumed or forgiven by the transferee of any such assets will be deemed
to be Cash if the Company or such Subsidiary is released from any liability for
such liabilities. Any non-cash proceeds received from the sale of Collateral
shall be pledged to the Collateral Agent pursuant to and in accordance with the
applicable Security Documents and shall constitute Collateral.
(b) Upon compliance with the conditions in subsection (a) of this
Section 7.17, the Release Conditions and the Partial Release Conditions (each as
hereinafter defined), the Company shall be entitled to receive from the
Collateral Agent an instrument in form and substance reasonably satisfactory to
the Borrower (each, a "Release") releasing the Lien of the Mortgage with respect
to all or any portion of a Mortgaged Real Property (each, a "Released Real
Property"). The Company shall exercise its rights under this Section by
delivering to the Collateral Agent a notice (each, a "Release Notice"), which
shall refer to this Section, describe with particularity the proposed Released
Real Property and be accompanied by (i) four counterparts of the Release fully
executed and acknowledged by all necessary parties other than Collateral Agent,
(ii) executed counterparts of UCC or other applicable termination statements
necessary to terminate the Lien of the applicable Mortgage and (iii) an
Officers' Certificate certifying that no Default or Event of Default shall have
occurred and the parties executing any and all documents in connection with the
Release (other than the Collateral Agent) were duly authorized to do so
(collectively, the "Release Conditions"). In the event the proposed Released
Real Property consists of less than all of the Mortgaged Real Property subject
to a single Mortgage, the Partial Release Conditions must be satisfied in order
for the Company to receive the Release.
(c) The Collateral Agent's obligation to deliver a Release in
respect of less than all of the Mortgaged Real Property subject to a single
Mortgage shall be contingent upon the satisfaction of the conditions in
subsection (a) of this Section 7.17 and the Release Conditions as well as the
following conditions (collectively, the "Partial Release Conditions"):
(i) following the sale, transfer or other disposition of and release
of the Lien of the applicable Mortgage with respect to the proposed
Released Real Property, the remaining Mortgaged Real Property shall have
utility services and access to public roads, rail spurs and other
transportation structures sufficient and necessary for the
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continued use of such Mortgaged Real Property in the manner utilized prior
to the Release;
(ii) following the sale, transfer or other disposition of the
proposed Released Real Property, the remaining Mortgaged Real Property
shall comply in all respects with applicable laws, rules, regulations and
ordinances relating to environmental protection, zoning, land use,
configuration and building and workplace safety;
(iii) the Title Company shall have issued an endorsement to the Banks'
title insurance policy relating to the Mortgaged Real Property confirming
that after the proposed release, the Lien of the applicable Mortgage
continues unimpaired as a first priority Lien upon the remaining Mortgaged
Real Property subject only to Prior Liens; and
(iv) the Company shall cause to have been delivered to the Collateral
Agent an Officers' Certificate certifying that the conditions set forth in
subsections (i) through (iii) have been satisfied.
(d) The Collateral Agent shall execute, acknowledge (if applicable)
and deliver to the Company counterparts of the documents described in
subsections (b)(i) and (ii) within 10 Business Days after receipt by the
Collateral Agent of a Release Notice provided that the Release Conditions and
the Partial Release Conditions (if applicable) have been satisfied. The Company
shall (i) execute, deliver, obtain and record such instruments as the Collateral
Agent may require, including, without limitation, amendments to the Security
Documents or this Agreement and (ii) deliver to the Collateral Agent such
evidence of the satisfaction of the Release Conditions and the Partial Release
Conditions as the Collateral Agent may require. The Borrower shall reimburse the
Collateral Agent, Administrative Agent and the Banks upon demand for all costs
or expenses incurred in connection with any actions taken pursuant to this
Section 7.17.
7.18. Contingent Obligations. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, create or become or
be liable with respect to any Contingent Obligation except:
(i) guarantees resulting from endorsement of negotiable instruments
for collection in the ordinary course of business;
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(ii) Interest Rate Agreements and Currency Protection Agreements;
(iii) Contingent Obligations arising under the Surety Obligations
and the Surety Arrangement;
(iv) Contingent Obligations arising as a direct consequence of the
Transaction or in connection with Designated Acquisitions;
(v) guarantees of the Company's obligations under the Public Notes
by its Subsidiaries;
(vi) contingent reimbursement obligations under letters of credit
(including Letters of Credit) permitted hereunder;
(vii) other Contingent Obligations not to exceed $500,000 in the
aggregate for the Company and its Subsidiaries outstanding at any one
time;
(viii) existing guarantees and letters of credit set forth on
Schedule 7.18(viii);
(ix) reserves for adjustment in respect of the sales price in
connection with any Asset Sale established in accordance with GAAP;
(x) guarantees by the Company of obligations of its Subsidiaries not
constituting Indebtedness; and
(xi) customary indemnification and liquidated damage obligations in
connection with sales of assets in the ordinary course of business.
7.19. Merger and Consolidations. No Credit Party will merge,
consolidate or amalgamate with or into any other entity; provided that (x) any
Borrower (other than the Company) may be merged, consolidated or amalgamated
with or into any other Borrower and (y) any Subsidiary (other than any Borrower)
of the Company may be merged, consolidated or amalgamated with or into (i) a
Borrower, if the Applicable Borrower is the continuing or surviving entity, (ii)
any other such Subsidiary, if the continuing or surviving entity is a
Wholly-Owned Subsidiary of a Borrower and, if such Credit Party is a Subsidiary
Guarantor, the continuing or surviving entity shall become a Subsidiary
Guarantor, or (iii) a Person that is not an Affiliate if
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the Subsidiary is not a Borrower and such merger or consolidation complies with
Section 7.17.
7.20. Sale and Lease-Backs. Unless constituting a permitted
disposition of assets under Section 7.17 hereof, the Company will not, and will
not permit its Subsidiaries to, directly or indirectly, become or thereafter
remain liable as lessee or as guarantor or other surety with respect to the
lessee's obligations under any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real or personal or mixed) whether now owned or
hereafter acquired (i) which the Company or its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than in
connection with the Transaction) or (ii) which the Company or its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by the Company or its Subsidiaries to
any Person in connection with such lease, if in the case of clause (i) or (ii)
above, such sale and such lease are part of the same transaction or a series of
related transactions or such sale and such lease occur within one year of each
other or are with the same other Person.
SECTION 8. Events of Default. Upon the occurrence and during the
continuance of any of the following specified events (each, an "Event of
Default"):
8.01. Payments. Any Borrower shall (i) default in the payment when
due of any principal of the Loans, (ii) default, and such default shall continue
for two or more Business Days, in the payment when due of any interest on the
Loans or under any other Credit Document or (iii) fail to pay any other amounts
owing hereunder for five days after receiving notice from the Administrative
Agent of such default; or
8.02. Representations, etc. Any representation, warranty or
statement made or deemed made by any Credit Party or its respective Subsidiaries
herein or in any other Credit Document or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed made;
or
8.03. Covenants. Holdings or any Credit Party or its respective
Subsidiaries shall (a) default in the due performance or observance by it of any
term, covenant or agreement contained in Section 6.11, 6.12, 6.14, 6.15 or
Section 7 hereof or Section 1.1 of any Mortgage of Real Property in the United
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States or (b) default in the due performance or observance by it of any other
term, covenant or agreement contained in this Agreement or any Security Document
(other than those referred to in Section 8.01, 8.02 or 8.03(a)) and such default
shall continue unremedied for a period of at least thirty days after the date of
such default; or
8.04. Default Under Other Agreements. (a) Any Credit Party or its
respective Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than Obligations) having a principal amount in excess of
$5,000,000 in the aggregate for all Credit Parties and their Subsidiaries,
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created or (ii) default in the observance or
performance of any agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness to become due prior to its stated
maturity; or (b) any such Indebtedness of any Credit Party or any of its
respective Subsidiaries shall be declared to be due and payable, or required to
be prepaid other than by a regularly scheduled required prepayment (excluding
offers to acquire the Public Notes pursuant to the disposition of assets
covenant applicable thereto; provided that no other Event of Default under the
Public Notes has occurred and is continuing and such offer does not constitute a
default under Section 8.03 hereof), prior to the stated maturity thereof; or
8.05. Bankruptcy, etc. Holdings or any Credit Party or its
respective Subsidiaries shall commence a voluntary case concerning itself under
Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary case
is commenced against Holdings or any Credit Party or any of its respective
Subsidiaries and the petition is not controverted within 10 days, or is not
dismissed within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of Holdings or any Credit Party or any of its
respective Subsidiaries; or Holdings or any Credit Party or any of its
respective Subsidiaries commences any other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
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whether now or hereafter in effect, including without limitation, the Bankruptcy
and Insolvency Act (Canada) and the Companies' Creditors Arrangement Act
(Canada), relating to Holdings or any Credit Party or any of its respective
Subsidiaries; or there is commenced against Holdings or any Credit Party or any
of its respective Subsidiaries any such proceeding which remains undismissed for
a period of 60 days; or a receiver, receiver and manager, administrator,
liquidator, trustee or other person or officer with like powers shall be
appointed, either by private appointment or by order of a court of competent
jurisdiction, with respect to, or an encumbrancer shall take possession of,
assets of Holdings or any Credit Party or any of its Subsidiaries; or any person
presents a petition for the winding-up or the administration of Holdings or any
Credit Party or any of its Subsidiaries and such petition remains undismissed
for a period of 60 days; or Holdings or any Credit Party or any of its
respective Subsidiaries is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or
Holdings or any Credit Party or any of its respective Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or
Holdings or any Credit Party or any of its respective Subsidiaries makes a
general assignment for the benefit of creditors; or any corporate action is
taken by Holdings or any Credit Party or any of its respective Subsidiaries for
the purpose of discussing or effecting any of the foregoing; or
8.06. ERISA. An ERISA Event or noncompliance with respect to Foreign
Plans shall have occurred that, in the opinion of the Required Banks, when taken
together with all other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Credit Parties in an aggregate amount
exceeding $1,000,000; or
8.07. Security Documents. Any Security Document shall cease to be
in full force and effect, or shall cease to give the Collateral Agent the Liens,
rights, powers and privileges purported to be created thereby, in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons other
than holders of Prior Liens and subject to no other Liens other than Liens
expressly permitted by the applicable Security Document; or
8.08. Guarantees. Any Guarantee (except with respect to any
Guarantor individually or together with other Guarantors which do not have total
assets of $2,500,000 or
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more) or any provisions thereof shall cease to be in full force or effect in all
material respects (except in accordance with its terms or as permitted under
this Agreement), or the Guarantor thereunder or Person acting by or on behalf of
such Guarantor shall deny or disaffirm such Guarantor's obligations under such
Guarantee or the Guarantor shall default in the due performance or observance of
any term, covenant or agreement on its part to be performed or observed pursuant
to any Guarantee; or
8.09. Judgments. One or more judgments or decrees shall be entered
against any Credit Party or any of its respective Subsidiaries involving a
liability of $2,000,000 or more in the case of any one such judgment or decree
and $5,000,000 or more in the aggregate for all such judgments and decrees for
all Credit Parties and their respective Subsidiaries (in either case in excess
of the amount covered by insurance as to which the insurance company has
acknowledged coverage) and (i) any such judgments or decrees shall not have been
vacated, discharged, bonded or enforcement thereof stayed pending appeal within
30 days from the entry thereof or (ii) any enforcement proceeding therefor shall
have been commenced; or
8.10. Ownership. (i) Chartwell, together with any other Person
controlled by or under common control with Chartwell, shall cease to
beneficially own (as defined in Rule 13d-3 or any successor rule or regulation
promulgated under the Securities Exchange Act of 1934) (x) at least 30% (on a
fully diluted basis) of the issued and outstanding Voting Stock of Holdings or
(y) a higher percentage of such Voting Stock of Holdings than any other Person;
or (ii) individuals who constituted the board of directors of Holdings on the
Closing Date (together with any new directors whose proposal for election by
Holdings was approved by a vote of 51% of the directors of Holdings then still
in office who either were directors on the Closing Date or whose election or
nomination for election was previously so approved) shall cease for any reason
to constitute a majority of the members of the board of directors of Holdings
still in office; or (iii) Holdings shall cease to own, directly or indirectly,
100% of the issued and outstanding shares of capital stock of the Company (each,
a "Change in Control").
Then, and in any such event, and at any time thereafter, if any
Event of Default shall then be continuing, the Administrative Agent shall, upon
the written request of the Required Banks, by written notice to the Borrowers,
take any or all of the following actions, without prejudice to the rights
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of the Administrative Agent or any Bank to enforce its claims against the
Borrowers, except as otherwise specifically provided for in this Agreement
(provided that, if an Event of Default specified in Section 8.05 shall occur,
with respect to Holdings or the Company or any of its Significant Subsidiaries,
the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitments terminated, whereupon the Commitment of each Bank shall forthwith
terminate immediately and any accrued and unpaid Commitment Commission shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and accrued interest in respect of all Loans and all
Obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by each Credit Party; and/or
(iii) enforce, as Collateral Agent (or direct the Collateral Agent to enforce),
any or all of the remedies created pursuant to the Security Documents. If an
Event of Default is cured or waived in accordance with the terms of the
Agreement, it ceases (and, if waived, pursuant to the terms, and to the extent,
of such waiver).
SECTION 9. Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"A Term Loan" has the meaning provided in Section 1.01(a).
"A Term Loan Commitment" means, with respect to each Bank, the
amount set forth below such Bank's name on the signature pages hereto directly
across from the entry entitled "A Term Loan Commitment," as the same may be
reduced from time to time pursuant to Sections 2.02, 3.02 and/or 8.
"A Term Loan Facility" means the Loan Facility evidenced by the
Total A Term Loan Commitment.
"A Term Note" has the meaning provided in Section 1.05(a).
"A Term Portion" means, at any time, the portion of the Loan
Facility evidenced by the Total A Term Loan Commitment.
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"Acceptance" means a bill of exchange drawn by a Canadian Borrower
and accepted by a Bank having a Canadian Swingline Loan Commitment and payable
in Canada.
"Acceptance Discount Proceeds" means with respect to any Acceptance,
an amount (rounded to the nearest full cent) calculated on the applicable date
of borrowing which is equal to the face amount of such Acceptance divided by the
sum of one plus the product of (i) the BA Discount Rate applicable to such
Acceptance multiplied by (ii) a fraction, the numerator of which is the term of
such Acceptance and the denominator of which is 365.
"Account" means all of the "accounts" (as that term is defined in
Section 9-106 of the Uniform Commercial Code as in effect in the State of New
York) of the Company and its Subsidiaries whether or not such Account has been
earned by performance, whether now existing or existing in the future,
including, without limitation, all (i) accounts receivable, including, without
limitation, all accounts created by or arising from all of the Company's and its
Subsidiaries' sales of goods or rendering of services or licensing or subleasing
of any of the Company's and its Subsidiaries' Intellectual Property and
including accounts for goods shipped or goods subject to a progress, percentage
of completion or similar accounting or payment method, which accounts are
unbilled; provided the invoice for such goods is sent within 15 days of the date
the goods were shipped; (ii) unpaid seller's rights (including rescission,
replevin, reclamation and stopping in transit) relating to the foregoing or
arising therefrom; (iii) rights to any goods represented by any of the
foregoing, including returned or repossessed goods; (iv) reserves and credit
balances held by the Company and its Subsidiaries with respect to any such
accounts receivable or any account debtor; (v) guarantees or collateral for any
of the foregoing; and (vi) insurance policies or rights relating to any of the
foregoing.
"Acquisition Portion" means, at any time, the portion of the Loan
Facility evidenced by the Total Acquisition Term Loan Commitment.
"Acquisition Term Loan" has the meaning provided in Section 1.01(b).
"Acquisition Term Loan Closing Date" has the meaning provided in
Section 1.01(b).
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"Acquisition Term Loan Commitment" means, with respect to each Bank,
the amount set forth below such Bank's name on the signature pages hereto beside
the column entitled "Acquisition Term Loan Commitment", as same may be reduced
from time to time pursuant to Sections 2.01, 2.02, 3.02 and/or 8.
"Acquisition Term Loan Commitment Termination Date" means (i) the
earlier of the date on which the Acquisition Term Loan Commitments are reduced
to zero and (ii) the last Business Day of March 2001.
"Acquisition Term Note" has the meaning provided in Section
1.05(a)(ii).
"Additional Collateral" has the meaning provided in Section 6.14.
"Administrative Agent's Office" or "Agent's Office" means (i) the
office of the Administrative Agent located at 425 Lexington Avenue, New York,
New York 10017, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto or (ii) with respect to
U.K. Swingline Loans, such office as the U.K. Swingline Bank shall from time to
time designate in writing, as such to the other parties hereto.
"Affiliate" means with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors,
managers and executive officers of such Person), controlled by, or under direct
or indirect common control with, such Person. A Person shall be deemed to
control a corporation or a limited liability company for the purposes of this
definition if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or managers of such corporation or limited liability company or
(ii) to direct or cause the direction of the management and policies of such
corporation or limited liability company, whether through the ownership of
voting securities, by contract or otherwise. For purposes of this Agreement,
CIBC and Indosuez and their Affiliates shall not be deemed Affiliates of
Holdings and its Affiliates.
"Agent" or "Agents" has the meaning provided in the first paragraph
of this Agreement and shall include any successor or successors thereto
appointed in accordance herewith.
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"Agreement" means this Credit Agreement, as the same may after its
execution be amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"Applicable Borrower" means, with respect to any Loan, either U.S.
Borrower, the Canadian Borrower or the U.K. Borrower, as applicable, which is
the Borrower to whom such Loan was, or is to be, made.
"Applicable Currency" means, as to any particular payment or
Loan, U.S. Dollars, Canadian Dollars or Pounds Sterling.
"Approved Fund" means, with respect to any Bank that is a fund that
invests in bank loans, any other fund that invests in bank loans and is advised
or managed by the same investment advisor as such Bank or by an Affiliate of
such investment advisor.
"Asset Sale" means the sale, transfer or other disposition, to the
extent consummated after the Closing Date, by the Company or any of its
Subsidiaries of any asset of the Company or its Subsidiaries to any Person
(other than (i) transactions included in the definition of Net Financing
Proceeds, (ii) the Exempt Sale-Leaseback Transaction, (iii) any sale, transfer
or other disposition of assets the gross proceeds of which (exclusive of
indemnities) do not exceed $100,000, (iv) sales, transfers or other dispositions
of inventory in the ordinary course of business, (v) sales of accounts
receivable permitted by Section 7.15, (vi) any sales, leases, conveyances,
transfers or other dispositions of property or equipment that has become worn
out, obsolete or damaged or otherwise unsuitable for use in connection with the
business of the Company or any of its Subsidiaries, as the case may be, (vii)
the incurrence of any Permitted Encumbrances and Prior Liens, (viii) transfers
of cash and sales of Cash Equivalents, (ix) Intercompany Advances and (x)
Dividends permitted by Section 7.08).
"Authorizations" has the meaning provided in Section 5.22(a).
"Authorized Officer" means any senior officer of a Borrower
designated as such in writing to the Administrative Agent by such Borrower, to
the extent acceptable to the Administrative Agent.
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"B Term Loan" has the meaning provided in Section 1.01(a).
"B Term Loan Commitment" means, with respect to each Bank, the
amount set forth below such Bank's name on the signature pages hereto directly
across from the entry entitled "B Term Loan Commitment," as the same may be
reduced from time to time pursuant to Sections 2.02, 3.02 and/or 8.
"B Term Loan Facility" means the Loan Facility evidenced by the
Total B Term Loan Commitment.
"B Term Note" has the meaning provided in Section 1.05(a).
"B Term Portion" means, at any time, the portion of the Loan
Facility evidenced by the Total B Term Loan Commitment.
"BA Discount Rate" means the BA Schedule I Discount Rate or the BA
Schedule II Discount Rate, as the case may be.
"BA Equivalent Note" means a non-interest-bearing promissory note of
each Canadian Borrower in favor of a Non-Acceptance Bank in the principal amount
of a loan made by such Bank pursuant to Section 1.10 of Schedule 1.16 hereof,
having the same maturity date as the Acceptances issued contemporaneously
therewith, stating that it is given pursuant to, and is subject to, the terms of
this Agreement and otherwise being in form and substance satisfactory to the
Non-Acceptance Bank acting reasonably.
"BA Schedule I Discount Rate" means, with respect to an issue of
Acceptances with the same maturity date to be accepted by a Schedule I Bank, the
CDOR for bankers' acceptances having a comparable face value and identical
maturity date to the face value and maturity date of such issue of Acceptances.
"BA Schedule II Discount Rate" means, with respect to an issue of
Acceptances with the same maturity date to be accepted by a Schedule II Bank,
the lesser of:
(i) the annual rate determined by the Administrative Agent as being
the arithmetic average (rounded upwards to the nearest multiple of 0.01%)
of the discount rates of the Schedule II Reference Banks determined in
accordance with their normal practices at or about 10:00 a.m. on the date
of issue and acceptance of such Acceptances, for
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bankers' acceptances having a comparable face value and an identical
maturity date to the face value and maturity date of such Acceptances; and
(ii) the CDOR at or about 10:00 a.m. on the date of issue and
acceptance of such Acceptances for bankers' acceptances having a
comparable face value and an identical maturity date to the face value and
maturity date of such Acceptances plus 0.10% per annum.
"Bank" has the meaning provided in the first paragraph of this
Agreement and in Section 11.04.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) or the failure of a Bank to make available its portion of any
Borrowing (including any Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 1.13(e) or (ii) a Bank having notified in
writing any Borrower and/or the Administrative Agent that such Bank does not
intend to comply with its obligations under Section 1.01 or 1.13.
"Bankruptcy Code" has the meaning provided in Section 8.05.
"Base Rate" means the higher of (x) 1/2% per annum in excess of the
Federal Funds Rate and (y) the rate which the Administrative Agent announces
from time to time as its prime lending rate, as in effect from time to time. The
rate the Administrative Agent announces as its prime lending rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. The Administrative Agent may make commercial loans or other
loans at rates of interest at, above or below the rate it announces as its prime
lending rate.
"Base Rate Loan" means each Loan bearing interest at the rate
provided in Section 1.08(a). Base Rate Loans may only be made in U.S. Dollars.
"Borrowers" means the Canadian Borrowers, the U.K. Borrower and the
U.S. Borrowers.
"Borrowing" means the incurrence pursuant to a Notice of Borrowing
and to the Loan Facility of one Type of Loan by a Borrower from all of the Banks
on a pro rata basis on a given date (or resulting from conversions on a given
date), having in
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the case of Reserve Adjusted Eurodollar Loans the same Interest Periods.
"Borrowing Amount" means, in the case of an Acceptance, a minimum
aggregate amount of Cdn.$1,000,000 plus any whole multiple of Cdn.$100,000.
"Borrowing Base" means an amount equal to the sum of (i) 85% of the
Eligible Accounts Receivable; provided that the rate shall be 50% for the
additional $10,000,000 of Eligible Accounts Receivable specified in clause (e)
of the definition thereof, and (ii) 50% of the Eligible Inventory.
"Borrowing Base Certificate" has the meaning assigned to that term
in Section 6.01.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in London, England or New York, New York (and in
the case of disbursements and payments in Canadian Dollars, in Toronto, Canada)
and (i) with respect to disbursements and payments in U.S. Dollars relating to
Reserve Adjusted Eurodollar Loans, a day on which dealings are carried on in the
applicable offshore U.S. Dollar interbank market, and (ii) with respect to
disbursements and payments in and calculations pertaining to Pounds Sterling, a
day on which commercial banks are open for foreign exchange business in London,
England, and on which dealings in Pounds Sterling are carried on in the
applicable foreign exchange interbank market in which disbursement of or payment
in Pounds Sterling will be made or received hereunder.
"Canadian Borrower" means each of Mondel ULC, an unlimited liability
company organized under the laws of Nova Scotia, and Kaverit Steel and Crane
ULC, an unlimited liability company organized under the laws of Nova Scotia, and
in each case its respective successors.
"Canadian Dollars" and "Cdn. $" each mean lawful money of Canada.
"Canadian Federal Funds Rate" means the overnight rate (expressed as
an annual rate) established by the Administrative Agent based on its customary
practice.
"Canadian Pledge Agreement" means each Securities Pledge Agreement
executed by the Canadian Subsidiaries of the Company substantially in the form
of Exhibit H-1 hereto, except for such changes as shall have been approved by
the Agents, as
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the same may after its execution be amended, supplemented or otherwise modified
from time to time in accordance with its terms and the terms hereof.
"Canadian Security Agreements" means each Security Agreement
executed by the Canadian Subsidiaries of the Company substantially in the form
of Exhibit G-2 hereto, except for such changes as shall have been approved by
the Agents, as the same may after its execution be amended, supplemented or
otherwise modified from time to time in accordance with its terms and the terms
hereof.
"Canadian Subsidiary" means any Subsidiary of the Company organized
under the laws of Canada or any Province thereof.
"Canadian Subsidiary Guarantee" means each guarantee executed by the
Canadian Subsidiaries of the Company substantially in the form of Exhibit E-3
hereto, except for such changes as shall have been approved by the Agents, as
the same may after its execution be amended, supplemented or otherwise modified
from time to time in accordance with its terms and the terms hereof.
"Canadian Swingline Bank" means each Bank with a Canadian Swingline
Loan Commitment.
"Canadian Swingline Loan" means any Swingline Loan made by the
Canadian Swingline Bank to a Canadian Borrower.
"Canadian Swingline Loan Commitment" means, with respect to each
Bank, the amount set forth below such Bank's name on the signature pages hereto
directly across from the entry entitled "Canadian Swingline Loan Commitment," as
such amount may be reduced from time to time pursuant to Sections 2.01, 2.02,
3.02 and/or 8.
"Canadian Swingline Note" has the meaning provided in Section
1.05(a).
"Capital Lease" of any Person means any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of that Person, together with any renewals of such leases (or
entry into new leases) on substantially similar terms.
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"Capitalized Lease Obligations" of any Person means all obligations
under Capital Leases of such Person or any of its Subsidiaries in each case
taken at the amount thereof accounted for as liabilities in accordance with
GAAP.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means (i) marketable direct obligations issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities of
not more than one year from the date of acquisition, (ii) marketable direct
obligations issued by any State of the United States of America, any foreign
country recognized by the United States of America, or any local government or
other political subdivision thereof rated (at the time of acquisition of such
security) at least AA by Standard & Poor's Ratings Group ("S&P") or the
equivalent thereof by Moody's Investors Service, Inc. ("Moody's") having
maturities of not more than one year from the date of acquisition, (iii) time
deposit accounts, deposit accounts, certificates of deposit and bankers'
acceptances of (x) any Bank, (y) any domestic commercial bank of recognized
standing having capital and surplus in excess of $250,000,000 or (z) any bank
organized under the laws of any jurisdiction recognized by the United States of
America and in which the Borrowers or their Subsidiaries actively conduct
business whose short-term commercial paper rating (at the time of acquisition of
such security) by S&P is at least A-1 or the equivalent thereof or by Moody's is
at least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), in
each case with maturities of not more than six months from the date of
acquisition, (iv) commercial paper and variable or fixed rate notes issued by
any Bank or Approved Bank or by the parent company of any Bank or Approved Bank
and commercial paper and variable rate notes issued by, or guaranteed by, any
industrial or financial company with a short-term commercial paper rating (at
the time of acquisition of such security) of at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody's, or
guaranteed by any industrial company with a long-term unsecured debt rating (at
the time of acquisition of such security) of at least AA or the equivalent
thereof by S&P or the equivalent thereof by Moody's and in each case maturing
within one year after the date of acquisition, (v) repurchase agreements with
any Bank or any primary dealer maturing within 30 days from the date of
acquisition that are fully collateralized by investment instruments that would
oth-
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erwise be Cash Equivalents; provided that the terms of such repurchase
agreements comply with the guidelines set forth in the Federal Financial
Institutions Examination Council Supervisory Policy -- Repurchase Agreements of
Depository Institutions With Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985, (vi) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above, and (vii) foreign bank
deposits and cash equivalents in jurisdictions where the Company or its
Subsidiaries are then actively conducting business; provided that (a) all such
deposits are required to be made in the ordinary course of business, (b) such
deposits do not exceed $1,000,000 in the aggregate and (c) the funds so
deposited do not remain in such bank for more than ten days.
"CDOR" means, for any day and relative to Acceptances (or BA
Equivalent Notes) having any specified term, the average of the annual rates
(calculated on the basis of a year of 365 days) for Canadian Dollar bankers'
acceptances, having such specified term (or a term as closely as possible
comparable to such specified term) of the Schedule I chartered banks of Canada
that appears on the Reuters Screen CDOR Page as at 10:00 a.m. on such day (or,
if such day is not a Business Day, as at 10:00 a.m. on the immediately preceding
Business Day); provided that if such rate does not appear on the Reuters Screen
CDOR page at such time on such date, the rate for such date will be the discount
rate quoted by the Administrative Agent, having such specified term (or a term
as closely as possible comparable to such specified term) for bankers'
acceptances at such time and on such date.
"CERCLA" has the meaning provided in Section 5.22(d).
"Change in Control" has the meaning provided in Section 8.10.
"Chartwell" means Chartwell Investments Inc. and its Affiliates.
"Chartwell Financial Advisory Agreement" means the Financial
Advisory Fee Letter dated March 30, 1998 between the Company and Chartwell, as
in effect on the Closing Date.
"Chartwell Management Consulting Agreement" means the Management
Consulting Agreement dated March 30, 1998 between the Company and Chartwell, as
in effect on the Closing Date.
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"CIBC" has the meaning provided in the first paragraph of this
Agreement.
"Closing Date" means March 30, 1998.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means all of the Pledged Collateral, Pledged Securities
and Mortgaged Real Property.
"Collateral Agent" means CIBC in its capacity as collateral agent
for the Banks.
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the account of the Applicable Borrower for the purpose of
providing the primary payment mechanism in connection with the purchase of any
materials, goods or services by a Borrower or any of its Subsidiaries in the
ordinary course of business of the Company or its Subsidiaries.
"Commitment" means, with respect to each Bank, such Bank's Term Loan
Commitment, Acquisition Term Loan Commitment, Swingline Loan Commitment and
Revolving Loan Commitment.
"Commitment Commission" has the meaning provided in Section 2.03.
"Company" means Morris Material Handling, Inc., a Delaware
corporation.
"Compliance Certificate" means a certificate issued pursuant to
Section 6.01(d) signed by a chief financial officer, controller, chief
accounting officer or other Authorized Officer of the Company.
"Computation Date" means any date on which the Administrative Agent
or the U.K. Swingline Bank, as the case may be, determines the Dollar Equivalent
amount of any Pounds Sterling Loans or Canadian Dollar Loans pursuant to Section
1.14 or Section 3.05(b).
"Consolidated Amortization Expense" for any Person means, for any
period, the consolidated amortization expense of such Person for such period,
determined on a consolidated basis for such Person and its Subsidiaries in
conformity with GAAP.
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"Consolidated Capital Expenditures" of any Person means, for any
period, the amount required to be included in capital assets on the consolidated
balance sheet of such Person in conformity with GAAP, but excluding expenditures
made in connection with the replacement, substitution or restoration of assets
(i) to the extent financed from insurance proceeds paid on account of the loss
of or damage to the assets being replaced or restored, (ii) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced, (iii) with regard to equipment that is purchased
simultaneously with the trade-in of existing equipment, fixed assets or
improvements, the credit granted by the seller of such equipment for the
trade-in of such equipment, fixed assets or improvements or (iv) assets
purchased with Net Cash Proceeds in accordance with Section 7.17 or with
proceeds from sales covered by clause (iii) of the definition of Asset Sale;
provided that Consolidated Capital Expenditures shall (other than with respect
to Designated Acquisitions) in any event include the purchase price paid in
connection with the acquisition of any other Person (including through the
purchase of all of the capital stock or other ownership interests of such Person
or through merger or consolidation).
"Consolidated Cash Taxes" of any Person means, for any period, the
amount of cash taxes actually paid in such period by such Person or the
consolidated tax group of which such Person is a member based on the income of
such Person or group.
"Consolidated Depreciation Expense" for any Person means, for any
period, the consolidated depreciation expense of such Person for such period,
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP.
"Consolidated EBITDA" means, for any Person, for any period, an
amount equal to (a) the sum of (i) Consolidated Net Income for such period, plus
(ii) the provision for taxes for such period based on income or profits to the
extent such income or profits were included in computing Consolidated Net Income
(minus any provision for taxes utilized in computing net loss under clause (i)
hereof to the extent such provision reduced the net loss), plus (iii)
Consolidated Interest Expense for such period, plus (iv) Consolidated
Depreciation Expense for such period to the extent reducing Consolidated Net
Income, plus (v) Consolidated Amortization Expense for such period to the extent
reducing consolidated net income, plus (vi) without duplication of clause (v),
amortization of original issue discount to the extent it arises from the
issuance of capital
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stock of the Company, plus (vii) any charge related to any premium or penalty
paid in connection with redeeming or retiring any Indebtedness prior to its
stated maturity to the extent reducing Consolidated Net Income, plus (viii) any
other non-cash items reducing Consolidated Net Income for such period, minus (b)
all non-cash items increasing Consolidated Net Income for such period, minus (c)
all cash payments during such period relating to non-cash charges that were
added back in determining Consolidated EBITDA in any prior period (provided that
payment of such cash amounts did not reduce Consolidated Net Income), all for
such Person and its Subsidiaries determined in accordance with GAAP. For
purposes of computations made pursuant to Sections 7.10-7.13, Consolidated
EBITDA for a given Test Period (x) shall mean Consolidated EBITDA for such Test
Period and (y) shall also include the EBITDA (with appropriate adjustments set
forth in financials delivered pursuant to Section 4.03(b)(ii)) derived from and
pro forma for any Designated Acquisition consummated during such Test Period and
which is consolidated with the Company and its Subsidiaries as of the last day
of such Test Period, for the portion of such Test Period before the business was
so acquired.
"Consolidated EBITDAC" for any Person means, for any period,
Consolidated EBITDA minus Consolidated Capital Expenditures of such Person and
its Consolidated Subsidiaries determined in conformity with GAAP.
"Consolidated Interest Expense" means, with respect to any Person,
for any period, without duplication, (i) the aggregate amount of interest
charges (excluding fees and expenses incurred in connection with the
Transaction), whether expensed or capitalized, incurred or accrued by such
Person and its Subsidiaries, determined on a consolidated basis in conformity
with GAAP for such period, plus (ii) to the extent not included in clause (i)
above, an amount equal to the sum of: (A) imputed interest included in
Capitalized Lease Obligations, (B) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (C) the net costs associated with Interest Rate Agreements, Currency
Protection Agreements and other hedging obligations, (D) the interest portion of
any deferred payment obligations, (E) [intentionally omitted], (F) all
capitalized interest and all accrued interest, (G) all interest incurred or paid
under any guarantee of Indebtedness (including a guarantee of principal,
interest or any combination thereof) of any Person, and (H) all dividends or
distributions on preferred capital stock if payable to a Person other than the
Company or a Subsidiary (other than dividends paid or payable in shares of
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capital stock of the Company) declared and payable in cash, minus (iii) to the
extent included in clause (i) or (ii) above, amortization or write-off of
deferred financing costs (and original issue discount to the extent it arises
from the issuance of capital stock of the Company) during such period and,
without duplication, any charge related to any premium or penalty paid in
connection with redeeming or retiring any Indebtedness of the Company or its
Subsidiaries prior to the stated maturity thereof.
"Consolidated Net Income" means with respect to any Person, for any
period, the aggregate of the net income (loss) of such Person and its
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided, however, that (a) the net income (loss) of any Person that
is not a Subsidiary, (b) the net income of any Subsidiary of the Person in
question that is subject to any restriction or limitation on the payment of
dividends or the making of other distributions (other than pursuant to this
Agreement, the Public Notes, the indenture related to the Public Notes or any
other Indebtedness of any Subsidiary of the Company containing, in the good
faith judgment of the Board of Directors of the Company, substantially the same
or less restrictive limitations on the payment of dividends or the making of
other distributions than those contained in this Agreement, the Public Notes or
the indenture related to the Public Notes) shall be excluded to the extent of
such restriction or limitation (regardless of any waiver thereof), (c)(i) the
net income (loss) of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition and (ii) any net after-tax
gain (but not loss) resulting from an Asset Sale by the Person in question or
any of its Subsidiaries other than in the ordinary course of business shall be
excluded, (d) non-cash gains and losses due solely to fluctuations in currency
values shall be excluded, (e) in the case of a successor to the referent Person
by consolidation or merger or as a transferee of the referent Person's assets,
any earnings (or losses) of the successor corporation prior to such
consolidation, merger or transfer of assets shall be excluded, and (f) all items
classified as extraordinary, unusual or nonrecurring, including all items
relating to the Transaction and the preclosing events relating thereto shall be
excluded (including the fees and expenses incurred at or prior to the closing of
the Transaction and write-offs or other costs associated or arising in
connection with the Transaction).
"Consolidated Tangible Assets" of any Person means the consolidated
tangible assets of such Person and its Sub-
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sidiaries determined on a consolidated basis in accordance with GAAP.
"Contingent Obligations" means, as to any Person, without
duplication, any obligation of such Person guaranteeing or intended to guarantee
any Indebtedness, leases, dividends or other obligations ("primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business and amounts that are included in Section 7.18. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the maximum
amount that such Person may be obligated to expend pursuant to the terms of such
Contingent Obligation or, if such Contingent Obligation is not so limited, the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" means (i) this Agreement, (ii) each Note, (iii)
each Guarantee and (iv) each Security Document.
"Credit Extension" means the making of any Loan, the issuance of
Acceptances or the issuance of any Letter of Credit hereunder.
"Credit Party" means at all times the Borrowers and each Subsidiary
thereof that pledges any stock, grants any Lien or issues any guarantee pursuant
to any Credit Document.
"Currency Protection Agreement" shall mean any foreign exchange
contract, currency swap agreement, or other fi-
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nancial agreements or arrangements designed to protect any Borrower against
fluctuations in currency values.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Designated Acquisition" means such acquisition as shall be effected
by the U.S. Borrowers in compliance with Section 4.03 and Section 6.18; provided
that the Designated Acquisition entity engages in the MHE Business, and
businesses or activities similar or reasonably related thereto.
"Destruction" has the meaning assigned to that term in each
Mortgage.
"Dividends" has the meaning provided in Section 7.08.
"Documents" means each Credit Document and each Transaction
Document.
"Dollar Equivalent" means, at any time, (a) as to any amount
denominated in U.S. Dollars, the amount thereof at such time, and (b) as to any
amount denominated in Canadian Dollars or Pounds Sterling, the equivalent amount
in U.S. Dollars as determined by the Administrative Agent at such time on the
basis of the Spot Rate for the purchase of U.S. Dollars with such Canadian
Dollars or Pounds Sterling on the most recent Computation Date provided for in
Section 1.14(a) or such other date as is specified herein; provided that the
U.K. Swingline Bank shall determine the Spot Rate with respect to any Borrowings
of U.K. Swingline Loans.
"Dollar Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the Total
Revolving Loan Commitment. Notwithstanding anything to the contrary contained
above, if the Dollar Percentage of any Bank is to be determined after the Total
Revolving Loan Commitment has been terminated,
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then the Dollar Percentages of the Banks shall be determined immediately prior
(and without giving effect) to such termination.
"Dollars" or "$" means United States Dollars.
"Effective Date" has the meaning provided in Section 11.10.
"Effective Time" has the meaning provided in Section 11.10.
"Eligible Accounts Receivable" means, as at any applicable date of
determination, the aggregate face amount of the Accounts of the Credit Parties
included in clause (i) of the definition of Account hereunder (excluding any
Accounts set forth in clauses (ii) through (vi) of such definition), without
duplication, in each case less (without duplication) the aggregate amount of all
reserves, limits and deductions with respect to such Accounts set forth below
and less the aggregate amount of all returns, discounts, claims, rebates,
offsets, credits, charges (including warehouseman's charges) and allowances of
any nature with respect to such Accounts (whether issued, owing, granted or
outstanding). Unless otherwise approved in writing by the Administrative Agent
in its sole discretion, no individual Account shall be deemed to be an Eligible
Account Receivable if:
(a) a Credit Party does not have legal and valid title to the
Account; or
(b) the Account is not the valid, binding and legally enforceable
obligation of the account debtor subject, as to enforceability, only to
(i) applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws at the time in effect affecting the enforceability of
creditors' rights generally and (ii) judicial discretion in connection
with the remedy of specific performance and other equitable remedies; or
(c) the Account arises out of a sale made by a Credit Party to an
Affiliate of such Credit Party other than sales to Harnco or Joint
Ventures in the ordinary course of business; or
(d) the Account or any portion thereof is unpaid more than
90 days after the original invoice date; or
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(e) such Account, when aggregated with all other Accounts of the
same account debtor (or any Affiliate thereof), exceeds the greater of $10
million or ten percent in face value of all Accounts of the Credit Parties
then outstanding, to the extent of such excess, unless such excess is
supported by a letter of credit satisfactory to the Administrative Agent
(as to form, substance and issuer); provided that up to an additional
$10,000,000 of Accounts, which would otherwise be ineligible under this
clause (e), shall be Eligible Accounts Receivable at the reduced advance
rate set forth in the definition of Borrowing Base; or
(f) (i) the account debtor for such Account is also a creditor of a
Credit Party, to the extent of the amount owed by such Credit Party to the
account debtor and the account debtor has not entered into an agreement
with respect to the waiver of the rights of setoff, (ii) the Account is
subject to any claim on the part of the account debtor disputing liability
under such Account in whole or in part, to the extent of the amount of
such dispute or (iii) the Account otherwise is or is reasonably likely to
become subject to any right of setoff or any counterclaim, claim or
defense by the account debtor, to the extent of the amount of such setoff
or counterclaim, claim or defense; or
(g) the account debtor for such Account has commenced a voluntary
case or proceeding under applicable bankruptcy or insolvency laws, as now
constituted or hereafter amended, or made an assignment for the benefit of
creditors or if a decree or order for relief has been entered by a court
having jurisdiction in the premises in respect of the account debtor in an
involuntary case or proceeding under applicable bankruptcy or insolvency
laws, as now constituted or hereafter amended, or if any other petition or
other application for relief under applicable bankruptcy or insolvency
laws has been filed by or against the account debtor, or if the account
debtor has failed, suspended business, ceased to be solvent, or consented
to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or
affairs; or
(h) the Administrative Agent does not have a valid and perfected
first priority security interest in such Account except with respect to
Accounts securing Surety Arrangements subject to an Intercreditor
Agreement, the face
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amount of which do not exceed the lesser of $5,000,000 and 10% of the
total face amount of all Eligible Accounts Receivable; or
(i) the sale to the account debtor for such Account is on a
consignment, sale on approval, guaranteed sale or sale-and-return basis or
pursuant to any written agreement requiring repurchase or return; or
(j) such Account is from an account debtor (or any Affiliate
thereof) and fifty percent (50%) or more, in face amount, of other
Accounts from such account debtor are due or unpaid for more than 90 days
after the original invoice date; or
(k) fifty percent (50%) or more, in face amount, of other Accounts
from the same account debtor for such Account are not deemed Eligible
Accounts Receivable hereunder, other than pursuant to clause (a), (e), (h)
or (i) hereunder; or
(l) such Account is an Account a security interest in which would be
subject to the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. ss. 3727 et seq.) or the Financial Administration Act (Canada) or
foreign equivalent, unless the Credit Party has assigned the Account to
the Agent in compliance with the provisions of such Act; or
(m) the Administrative Agent determines in good faith that (i)
collection of the account is insecure or (ii) such Account may not be paid
by reason of the account debtor's financial inability to pay; provided,
however, that any Account referred to in this clause (m) shall not become
ineligible until the Administrative Agent shall have given the Credit
Party three Business Days' advance notice of such determination; or
(n) except with respect to Accounts generated from projects on which
a progress, percentage of completion or similar accounting or payment
method is used, the goods giving rise to such Account have not been
shipped or the services giving rise to such Account have not been
performed by a Credit Party or the Account otherwise does not represent a
final sale; or
(o) such Account does not comply in all material respects with all
applicable legal requirements, including,
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where applicable, the Federal Consumer Credit Protection Act, the Federal
Truth in Lending Act and Regulation Z of the Board of Governors of the
Federal Reserve System, in each case as amended.
In addition to the foregoing, Eligible Accounts Receivable includes
such Accounts as a Credit Party requests and that the Administrative Agent
approves in advance, in writing and in its sole discretion (or if the aggregate
face amount to be approved exceeds $1,000,000 at any one time, the approval of
the Required Banks has been obtained in writing).
"Eligible Inventory" means (A) the gross amount of Inventory of the
Credit Parties, valued at the lower of cost (on a FIFO basis) or market, which
(i) is owned solely by a Credit Party and with respect to which such Credit
Party has good, valid and marketable (or indefeasible) title; (ii) is stored on
property leased by a Credit Party or that is either (a) owned or leased by a
Credit Party or (b) owned or leased by a warehouseman that has contracted with a
Credit Party to store Inventory on such warehouseman's property (provided that
with respect to Inventory stored on property located in the United States or
Canada leased by a Credit Party or owned or leased by a warehouseman, such
Credit Party has delivered to the Administrative Agent an agreement of the type
described in Section 6.11 hereof satisfactory to the Administrative Agent
executed by such lessor or warehouseman); (iii) is subject to a valid,
enforceable and first priority Lien in favor of the Administrative Agent except
with respect to Inventory securing Surety Arrangements subject to an
Intercreditor Agreement, the value (at the lower of cost (on a FIFO basis) or
market) of which does not exceed the lesser of $5,000,000 or 10% of the total
value of all Eligible Inventory; and (iv) is not obsolete or slow moving in
relation to customary industry practice, and which otherwise conforms to the
requirements for eligibility contained herein; less (B) the amount of any goods
returned or rejected by the Credit Parties' customers and goods in transit to
third parties (other than to the Credit Parties' agents or warehousemen that
comply with clause (A)(ii)(b) above which are not resaleable); less (C) the
amount of any reserves. In addition to the foregoing, Eligible Inventory shall
include such items of the Credit Parties' Inventory as the Company shall request
and that the Administrative Agent approves in advance, in writing and in its
sole discretion (or if the aggregate amount to be approved exceeds $500,000 at
any one time, the approval of the Required Banks has been obtained).
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"Employee Benefit Plan" shall mean an employee benefit plan (as
defined in Section 3(3) of ERISA) that is maintained or contributed to by any
ERISA Entity or with respect to which a Credit Party could incur liability.
"Environmental Laws" means the common law and all federal, state,
provincial, local and foreign laws or regulations, codes, orders, decrees,
judgments or injunctions issued, promulgated, approved or entered thereunder,
now or hereafter in effect, relating to pollution or protection of public or
employee health and safety or the environment, including, without limitation,
laws relating to (i) emissions, discharges, releases or threatened releases of
Hazardous Materials, into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
(ii) the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of Hazardous Materials, and (iii)
underground and aboveground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Entity" shall mean any member of an ERISA Group.
"ERISA Event" shall mean (a) any "reportable event," as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Pension Plan (other than an event for which the 30-day notice period is waived);
(b) the existence with respect to any Pension Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived, the failure to make by its due date a required
installment under Section 412(m) of the Code with respect to any Pension Plan or
the failure to make any required contribution to a Multiemployer Plan; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Pension Plan; (d) the incurrence by any ERISA Entity of any liability under
Title IV of ERISA with respect to the termination of any Pension Plan; (e) the
receipt by any ERISA Entity from the PBGC or a plan administrator of any notice
relating to an intention to terminate any Pension Plan or to appoint a trustee
to administer any Pension Plan, or the occurrence of any event or condition
which could reasonably be expected to constitute grounds under ERISA for the
termination of or the appointment of a trustee to adminis-
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ter, any Pension Plan; (f) the incurrence by any ERISA Entity of any liability
with respect to the withdrawal or partial withdrawal from any Pension Plan or
Multiemployer Plan; (g) the receipt by an ERISA Entity of any notice, or the
receipt by any Multiemployer Plan from any ERISA Entity of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the failure to make any payment or
contribution to any Pension Plan or the making of any amendment to any Pension
Plan which could result in the imposition of a lien or the posting of a bond or
other security; or (i) the occurrence of a nonexempt prohibited transaction
(within the meaning of Section 4975 of the Code or Section 406 of ERISA) which
could result in liability to a Credit Party.
"ERISA Group" shall mean each Credit Party and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with a Credit Party, are
treated as a single employer under Section 414 of the Code.
"Eurodollar Rate" means the rate per annum that appears on page 3750
of the Dow Jones Telerate Screen or any successor page for Dollar deposits with
maturities comparable to the Interest Period applicable to the Reserve Adjusted
Eurodollar Loans subject to the respective Borrowing commencing two Business
Days thereafter as of 11:00 a.m. (London time) on the date which is two Business
Days prior to the commencement of the respective Interest Period; provided that,
to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the rate to be used for purposes of
this definition shall be the interest rate per annum determined by the
Administrative Agent to be the rate per annum at which deposits in Dollars are
offered for such relevant Interest Period to major banks in the London interbank
market in London, England by the Administrative Agent at approximately 11:00
A.M. (London time) on the date which is two Business Days prior to the beginning
of such Interest Period, divided (and rounded, if necessary, upward to the
nearest whole multiple of 1/16 of 1%).
"Event of Default" has the meaning provided in Section 8.
"Excess Cash Flow" means, for any period, the amount by which
Consolidated EBITDAC of the Company and its Subsidiaries exceeds the sum of (a)
cash payments of Consolidated Inter-
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est Expense of the Company and its Subsidiaries for such period, plus (b)
principal payments made on the Indebtedness of the Company and its Subsidiaries
in such period (excluding repayments of Revolving Loans not made as a result of
a reduction in the Total Commitment), plus (c) Consolidated Cash Taxes paid in
such period, plus (d) voluntary prepayments on the Term Loans and Acquisition
Term Loans and voluntary prepayments on Revolving Loans resulting in a permanent
commitment reduction made in such period (other than any prepayment required to
be made pursuant to Section 3.02(A)(a)or(b)), plus (e) for the period from
November 1, 1998 through October 31, 2001, 100%, and for periods thereafter, a
percentage equal to 100% minus the applicable percentage to be paid to the Banks
pursuant to Section 3.02(A)(g), of the funds used on or prior to the date
payments are due under Section 3.02(A)(g), for the applicable period to make
Designated Acquisitions (other than to the extent Acquisition Term Loans or the
$12,500,000 Revolving Loan basket is used).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exempt Sale and Lease-Back Transaction" means the sale for less
than $1,000,000 of approximately five acres of undeveloped real property at the
Oak Creek, Wisconsin facility and the leasing back of such real property and a
building to be constructed thereon.
"Existing Debt" means the Indebtedness of the Credit Parties set
forth on Schedule 5.21(a).
"Federal Funds Rate" means on any one day the weighted average of
the rate on overnight Federal funds Transaction with members of the Federal
Reserve System only arranged by Federal funds brokers as published as of such
day by the Federal Reserve Bank of New York, or if not so published, the rate
then used by first class banks in extending overnight loans to other first class
banks.
"Final A Term Loan Maturity Date" means the last Business Day of
March 2003.
"Final Acquisition Term Loan Maturity Date" means the last Business
Day of March 2005.
"Final B Term Loan Maturity Date" means the last Business Day of
March 2005.
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"Financing Proceeds" for any Person means the cash (other than Net
Cash Proceeds) received by such Person and/or any of its Subsidiaries, directly
or indirectly, from any financing transaction of whatever kind or nature,
including without limitation from any incurrence of Indebtedness, any mortgage
or pledge of an asset or interest therein (including a transaction which is the
substantial equivalent of a mortgage or pledge but excluding an Asset Sale),
from the sale of tax benefits, or from a lease to a third party and a pledge of
the lease payments due thereunder to secure Indebtedness. Proceeds from the
issuance and sale of the Public Notes and equity securities of Holdings in
connection with the Transaction (and refinancings of such equity securities with
the proceeds of a substantially concurrent sale of equity securities of
Holdings), from the Exempt Sale and Lease-Back Transaction, from the sale of
director's qualifying shares of any Subsidiary, from the sales of equity of the
Company's Subsidiaries and from transactions covered by Section 7.14 where
Holdings is permitted to keep the proceeds shall not be Financing Proceeds.
"Foreign Plan" shall mean any employee benefit plan, program,
policy, arrangement or agreement maintained or contributed to by, or entered
into with, a Credit Party with respect to employees employed outside the United
States.
"Foreign Subsidiary" of any specified Person means any Subsidiary
the jurisdiction of incorporation, organization or formation of which is outside
of the United States, Canada, the United Kingdom and South Africa.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, it being understood and agreed
that determinations in accordance with GAAP for purposes of Section 7, including
defined terms as used therein, are subject (to the extent provided therein) to
Section 11.07(a).
"Government Acts" shall have the meaning provided in Section
1.13(i).
"Governmental Authority" shall mean any federal, state, provincial,
local, foreign or other governmental or administrative body, instrumentality,
department or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or body.
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"Guarantees" means and includes, once executed and delivered, the
Holdings Guarantee, the Canadian Subsidiary Guarantees, the U.K. Subsidiary
Guarantee and the Subsidiary Guarantee, and any subsidiary guarantee delivered
pursuant to Section 6.17.
"Guarantors" for purposes of this Agreement means Holdings, each
Subsidiary of the Company delivering a Guarantee on the Closing Date and any
subsidiary that delivers a guarantee pursuant to Section 6.16, in each case
other than any Non-Guarantor Subsidiary of the Company.
"Hazardous Materials" means any pollutant, contaminant, chemical or
industrial, toxic or hazardous substance, constituent or waste, or any other
constituent, compound, waste, substance or material, including without
limitation, petroleum including crude oil or any fraction thereof, or any
petroleum product, subject to regulation under any Environmental Law.
"Hercules" means Hercules S.A. de C.V., a corporation under the laws
of the Republic of Mexico.
"Holdings Guarantee" means the guarantee executed by Holdings
substantially in the form of Exhibit E-1 hereto, except for such changes as
shall have been approved by the Agents, as the same may after its execution be
amended, supplemented or otherwise modified from time to time in accordance with
its terms and the terms hereof.
"Indebtedness" of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all unreimbursed drafts drawn thereunder, (iv) all Indebtedness of
a second Person secured by any Lien on any property owned by such first Person,
whether or not such Indebtedness has been assumed by such first Person, (v) all
Capitalized Lease Obligations of such Person, (vi) all obligations of such
Person to pay a specified purchase price for goods or services whether or not
delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all net
obligations of such Person under Interest Rate Agreements or Currency Protection
Agreements and (viii) all net Contingent Obligations of such Person; provided
that Indebtedness shall not include trade payables, liabilities arising from
advance payments or customer
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deposits for goods and services sold by the Company and its Subsidiaries in the
ordinary course of business, accrued expenses and liabilities, accrued
dividends, stock redemption payments, royalty payments, accrued retirees or
employees benefits, deferred taxes and accrued income taxes, in each case
arising in the ordinary course of business. For purposes of clause (iv) above
(where the relevant Indebtedness has not been assumed by such first Person), the
amount of Indebtedness is equal to the lesser of the amount of Indebtedness
secured or the fair market value of the property subject to the Lien.
"Indosuez" has the meaning provided in the first paragraph of this
Agreement.
"Initial Bank" means a Bank that was an original signatory to this
Agreement.
"Initial Loans" means the initial Loans made under this Agreement on
the Closing Date.
"Intellectual Property" has the meaning provided in Section 5.16.
"Intercompany Advances" means the incurrence of Indebtedness, the
purchase or acquisition of stock, obligations or securities of, or any other
interest in, or capital contributions between the Company and its respective
Subsidiaries (including the de minimis initial investment by which a Person
becomes a Subsidiary) or between Subsidiaries of the Company; provided that the
aggregate amount of Intercompany Advances made to a Foreign Subsidiary of the
Company which is a Non-Guarantor Subsidiary shall not exceed an amount at any
time outstanding equal to the amount of Intercompany Advances outstanding on the
Closing Date plus $15,000,000; and provided further that (i) trade receivables
arising in the ordinary course of business between the Company and its
Subsidiaries or between Subsidiaries or (ii) investments made in connection with
Designated Acquisitions, shall not be subject to the limitations set forth in
the preceding proviso.
"Intercreditor Agreement" means the Intercreditor Agreement among
Reliance Surety Company, Reliance Insurance Company, United Pacific Insurance
Company and Reliance National Indemnity Company, as sureties, and Canadian
Imperial Bank of Commerce, as Collateral Agent, as the same may be amended,
modified, renewed, replaced or restated from time to time with the consent of
the Collateral Agent and any such other intercreditor agreement entered into
with the Collateral Agent.
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"Interest Margin" shall mean, in respect of (i) Base Rate Loans that
are (a) A Term Loans, 0.75%, (b) B Term Loans, 1.25%, (c) Acquisition Term
Loans, 1.25% and (d) Revolving Loans, 0.75%; and (ii) Reserve Adjusted
Eurodollar Loans that are (a) A Term Loans, 2.25%, (b) B Term Loans, 2.75%, (c)
Acquisition Term Loans, 2.75% and (d) Revolving Loans, 2.25%. The Interest
Margin in respect of Swingline Loans shall be that margin agreed among the
Applicable Borrower, the applicable Swingline Bank and the Administrative Agent.
"Interest Period" means, with respect to any Reserve Adjusted
Eurodollar Loan, the interest period applicable thereto, as determined pursuant
to Section 1.09.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
futures contract, interest rate option contract or other similar agreement or
arrangement to which the Borrower is a party, designed to protect the Borrower
or any of its Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means each date for calculating
the Eurodollar Rate for purposes of determining the interest rate in respect of
an Interest Period. The Interest Rate Determination Date shall be the second
Business Day prior to the first day of the related Interest Period for a Reserve
Adjusted Eurodollar Loan.
"Inventory" means all of the inventory of the Company and its
Subsidiaries (on a consolidated basis) including without limitation: (i) all raw
materials, work in process, parts, components, assemblies, supplies and
materials used or consumed in the business of the Company and its Subsidiaries;
(ii) all goods, wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service; and
(iii) all goods returned or repossessed by the Company or any of its
Subsidiaries.
"Issuing Bank" means the Bank that agrees to issue a Letter of
Credit, determined as provided in Section 1.13(c).
"Joint Venture" of any specified Person means any corporation,
partnership, joint venture, limited liability company, association or other
business entity, whether now existing or hereafter organized or acquired, and
(a) which is engaged in a similar line of business as the Company at the date of
determination and (b)(i) in the case of a corporation, of
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which not more than 50% of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by the Company or any
Subsidiary, or (ii) in the case of a partnership, joint venture, limited
liability company, association or other business entity, with respect to which
the Company or any Subsidiary has not more than 50% of the ownership and voting
power relating to the policies, management and affairs thereof.
"Lease" means any lease, sublease, franchise agreement, license,
occupancy or concession agreement.
"Letter of Credit" or "Letters of Credit" means (i) Standby Letter
or Letters of Credit and (ii) Commercial Letter or Letters of Credit, in each
case, issued or to be issued by Issuing Banks for the account of the Applicable
Borrower pursuant to Section 1.13.
"Letter of Credit Participation" has the meaning assigned to
that term in Section 1.13(a).
"Letter of Credit Usage" means, as at any date of determination, the
sum of (i) the maximum aggregate amount that is or at any time thereafter may
become available under all Letters of Credit then outstanding; provided that (y)
there shall be excluded from this clause (i) undrawn Letters of Credit providing
credit support for bonds issued pursuant to the Surety Arrangement or other
Surety Obligations in an aggregate amount not to exceed $15 million and (z) this
proviso shall not increase the Revolving Loan Commitment of any Bank or the
Total Revolving Loan Commitment, plus (ii) the aggregate amount of all drawings
under Letters of Credit honored by all Issuing Banks and not theretofore
reimbursed by the Applicable Borrower.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, claim, hypothecation, assignment for security, statutory deemed trust,
diligence or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"Loan" means each and every Term Loan, Acquisition Term Loan,
Revolving Loan or Swingline Loan.
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"Loan Facility" means the credit facility evidenced by the Total
Term Loan Commitment, the Total Acquisition Term Loan Commitment and the Total
Revolving Loan Commitment.
"Management Stock" means common stock or equivalent interests of
Holdings or any parent entity of Holdings held by members of the board of
directors and management and employees of Holdings and the Company and its
Subsidiaries.
"Mandatory Borrowing" has the meaning set forth in Section 1.01(e).
"Material Adverse Effect" means (i) any materially adverse effect
(both before (excluding the effects of the Transaction) and after giving effect
to the Transaction and the financing thereof and the other transactions
contemplated hereby and by the other Documents) with respect to the operations,
business, properties, assets, nature of assets, liabilities (contingent or
otherwise), financial condition or prospects of the Company and its
Subsidiaries, taken as a whole, (ii) any fact or circumstance (whether or not
the result thereof would be covered by insurance) as to which singly or in the
aggregate there is a reasonable likelihood of (w) a materially adverse change
described in clause (i) with respect to the Company and its Subsidiaries, taken
as a whole, (x) the inability of any Credit Party to perform in any material
respect its Obligations hereunder or under any of the other Documents or the
inability of the Banks to enforce in any material respect their rights purported
to be granted hereunder or under any of the other Documents or the Obligations
(including realizing on the Collateral), or (y) a materially adverse effect on
the ability to effect (including hindering or unduly delaying) the Transaction
and the other transactions contemplated hereby and by the Credit Documents on
the terms contemplated hereby and thereby or (iii) any fact or circumstance
relating to any Credit Party as to which singly or in the aggregate there is a
reasonable likelihood of any significant liability on the part of the Banks or
the Administrative Agent.
"Maximum Swingline Amount" shall mean (x) with respect to U.S.
Swingline Loans, the Total U.S. Swingline Loan Commitment; (y) with respect to
Canadian Swingline Loans, the Total Canadian Swingline Loan Commitment and (z)
with respect to U.K. Swingline Loans, the Total U.K. Swingline Loan Commitment.
"Mexican Pledge Agreement" means the Stock Pledge Agreement executed
and delivered by the Company and PHMH Hold-
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ing Company substantially in the form of Exhibit H-2 hereto, except for such
changes as shall have been approved by the Agents, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms and the terms hereof.
"MHE Business" means (i) the original equipment business for
industrial cranes, hoists, winches, and other related types of industrial
"through-the-air" material handling equipment, (ii) aftermarket products, parts
and services for the products described in clause (i), including inspection,
repair, modernization and maintenance, and (iii) other service activities
conducted at or through distribution service center locations.
"MHE U.K." means Morris Material Handling, Ltd., a company organized
under the laws of England and Wales and a wholly-owned subsidiary of the
Company.
"Minimum Borrowing Amount" means $100,000.
"MLA Cost" means the cost imputed to a Bank making a Loan in Pounds
Sterling of compliance with the Mandatory Liquid Assets requirements of the Bank
of England during the Interest Period of that Loan determined in accordance with
Schedule 1.08(b).
"Mortgage" means a term loan and revolving credit mortgage or deed
of trust, assignment of rents, security agreement and fixture filing, debenture
creating and evidencing a Lien, legal charge or other document creating and
evidencing a Lien on each Mortgaged Real Property, which shall be substantially
in the form of Exhibit D hereto (or such other form for foreign jurisdictions,
as the Administrative Agent may approve), in each such case containing such
schedules and including such additional provisions and other deviations from
such Exhibit as shall be necessary to conform such document to applicable or
local law or as shall be customary under local law and made and which shall be
dated the date of delivery thereof and made by the owner of the Mortgaged Real
Property described therein for the benefit of the Collateral Agent, as
mortgagee, assignee and secured party, as the same may at any time be amended or
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Mortgaged Real Property" means each Real Property designated on
Schedule 4.01(u)(i) and all other Mortgaged Property under each Mortgage.
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"Multiemployer Plan" shall mean a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA (i) to which any ERISA Entity is then
making or accruing an obligation to make contributions (ii) to which any ERISA
Entity has within the preceding five plan years made contributions, including
for these purposes any Person which ceased to be an ERISA Entity during such
five year period, or (iii) with respect to which a Credit Party could incur
liability.
"Net Award" has the meaning assigned to that term in each Mortgage.
"Net Cash Proceeds" means the aggregate cash payments received by
the Company and/or any of its Subsidiaries, as the case may be, from any Asset
Sale (other than amounts due to minority shareholders of a Subsidiary of the
Company), net of all commissions, brokerage fees and other reasonably incurred
direct expenses of sale; provided that (i) with respect to taxes, expenses shall
only include taxes to the extent that taxes are payable in cash in the current
year or in the next succeeding year with respect to the current year as a result
of such Asset Sale; (ii) Net Cash Proceeds shall not include any amounts or
items included in the definition of Financing Proceeds or Net Financing Proceeds
(including in any proviso appearing therein or exclusion therefrom); and (iii)
Net Cash Proceeds shall not include appropriate amounts to be provided by the
Company or a Subsidiary as a reserve, in accordance with GAAP, against any
liabilities associated with the assets sold or disposed of in such Asset Sale
and retained by the Company or a Subsidiary after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with the assets sold or disposed of in such Asset Sale,
provided, however, that at such time as such amounts are no longer reserved or
such reserve is no longer necessary (but in no event longer than 18 months from
the receipt of such proceeds), any remaining amounts shall become Net Cash
Proceeds to be allocated in accordance with Section 3.02(A)(f).
"Net Financing Proceeds" means Financing Proceeds, net of all
commissions, brokerage fees and other reasonably incurred direct expenses of the
transaction and net of taxes (including income taxes) paid or payable in cash as
a result thereof in the current year or in the next succeeding year with respect
to the current year as a result of the transaction generating Net Financing
Proceeds.
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"Net Proceeds" has the meaning assigned to that term in each
Mortgage.
"Non-Acceptance Bank" means a Bank having a Canadian Swingline Loan
Commitment that is not a Canadian chartered bank.
"Non-Guarantor Subsidiary" means (a) any Foreign Subsidiaries of the
Company for so long as the issuance of a guarantee by such Foreign Subsidiary
would (i) result in a material increase in the aggregate amount of income tax in
respect of such Foreign Subsidiary or (ii) be illegal under the laws of the
jurisdiction in which such Foreign Subsidiary is organized, provided that, in
either case, the Company shall have delivered to the Administrative Agent an
Officers' Certificate and an opinion of counsel so stating on the date of such
acquisition or creation, (b) any Subsidiary of the Company existing on the
Closing Date and any other newly acquired or created Foreign Subsidiary after
the Closing Date which is not a One Percent Subsidiary, but only for so long as
it is not a One Percent Subsidiary, provided that the Company shall have
delivered to the Administrative Agent an Officers' Certificate to such effect on
the Closing Date, with respect to existing One Percent Subsidiaries, and on the
date of such acquisition or creation for newly acquired or created One Percent
Subsidiaries and (c) Hercules and its Subsidiaries, at such time as the Board of
Directors of the Company shall determine; provided that (i) all Intercompany
Advances to Hercules or its Subsidiaries made by the Company or any of its
Subsidiaries, in excess of amounts outstanding as of the Closing Date, shall be
deemed made as of such date of determination and (ii) the Company shall have
delivered to the Administrative Agent an Officers' Certificate to such effect on
the date of such determination. Notwithstanding the foregoing, no Subsidiary
shall be permitted to be a Non-Guarantor Subsidiary if any of its Subsidiaries
are Guarantors.
"Notes" means any Revolving Note, Swingline Note, Acquisition
Term Note, Term Note or BA Equivalent Note.
"Notice of Borrowing" has the meaning provided in Section 1.03.
"Notice of Continuance/Conversion" has the meaning provided in
Section 1.06.
"Obligations" means all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Agents or any Bank pursuant to
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the terms of this Agreement or any other Credit Document or secured by any of
the Security Documents.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the Board
(if an officer), Chief Executive Officer, Chief Operating Officer or its
President or one of its Vice Presidents and by its Chief Financial Officer or
its Treasurer or any Assistant Treasurer and, as to any entity that is not a
corporation, Persons holding comparable positions; provided that every Officers'
Certificate with respect to compliance with a condition precedent to the making
of any Loan hereunder shall include, on behalf of the Borrower, (i) a statement
that the officers making or giving such Officers' Certificate have read such
condition and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the signers, they
have made or have caused to be made such examination or investigation as is
necessary to enable them to express an informed opinion as to whether or not
such condition has been complied with, and (iii) a statement as to whether, in
the opinion of the signers, such condition has been complied with.
"Officers' Solvency Certificate" means the Officers' Solvency
Certificate in the form set forth as Exhibit N hereto.
"One Percent Subsidiary" means, at any date of determination, any
Subsidiary that, together with its Subsidiaries, (i) for the most recent fiscal
year of the Company accounted for more than 1.0% of the consolidated revenues of
the Company and the Subsidiaries or (ii) as of the end of such fiscal year owned
more than 1.0% of the Consolidated Tangible Assets of the Company and its
Subsidiaries, all as set forth on the consolidated financial statements of the
Company and its Subsidiaries for such year prepared in conformity with GAAP. For
purposes of this definition, any Subsidiary which, when aggregated with all
other Subsidiaries that are not otherwise One Percent Subsidiaries, would
constitute a One Percent Subsidiary shall be deemed to a be a One Percent
Subsidiary.
"Operating Lease" of any Person, shall mean any lease (including,
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) by such Person as Lessee which is
not a Capital Lease.
"Overnight Rate" means for any day, the rate of interest per annum
at which overnight deposits in the Applicable
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Currency, in an amount approximately equal to the amount with respect to which
such rate is being determined, would be offered for such day by the
Administrative Agent's London Branch to major banks in the London or other
applicable offshore interbank market. The Overnight Rate for any day which is
not a Business Day shall be the Overnight Rate for the preceding Business Day.
"PBGC" shall mean the United States Pension Benefit Guaranty
Corporation or any successor thereto.
"Pension Plan" shall mean an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Code or Section 302 of
ERISA and is maintained or contributed to by an ERISA or with respect to which a
Credit Party could incur liability.
"Permitted Encumbrances" has the meaning provided in Section 7.03.
"Person" means any individual, partnership, limited liability
company, joint venture, firm, corporation, association, trust, fund or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.
"Pledge Agreements" means and includes the Canadian Pledge
Agreement, the U.K. Pledge Agreement, the Mexican Pledge Agreement and any
securities pledge agreements delivered pursuant to Section 6.14 or 6.15.
"Pledged Collateral" means all the Pledged Collateral as defined in
the Security Agreements.
"Pledged Securities" means all Pledged Securities under the U.S.
Security Agreement, the U.K. Security Agreement and the Canadian Pledge
Agreement.
"Portion" means the Term Portion, the Acquisition Term Portion or
the Revolving Portion.
"Pounds Sterling" means the lawful money of the United Kingdom.
"Preferred Stock" means the preferred stock comprising part of the
Preferred Units.
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"Preferred Units" means the Series A Preferred Units, the Series B
Preferred Units and the Series C Preferred Units.
"Prime Rate" means, on any day and with respect to all Prime Rate
Loans, the greater of:
(a) the variable rate of interest expressed as a percentage per annum
(calculated on the basis of a year of 365 days) which CIBC
establishes as the reference rate of interest in order to determine
interest rates it will charge on that day for demand loans in
Canadian Dollars to its Canadian customers and which it refers to as
its "prime lending rate" or "prime rate"; and
(b) 0.75% above CDOR for 30 day bankers' acceptance;
Changes in the rate of interest on that portion of any Loans
maintained as Prime Rate Loans will take effect simultaneously with each change
in the Prime Rate. The Administrative Agent shall give notice to each Canadian
Borrower and each Bank of the Prime Rate from time to time quoted by CIBC and
such notice shall be conclusive and binding for all purposes absent error.
"Prime Rate Loan" means a Canadian Swingline Loan that bears
interest based on the Prime Rate.
"Prior Liens" means Liens which, to the extent permitted by the
provisions of any Security Document, are or may be superior to the Lien of such
Security Document.
"Projected Financial Statements" has the meaning provided in Section
5.11(c).
"Public Notes" means the 9 1/2% Senior Notes due 2008 of the Company
in an aggregate principal amount of $200,000,000, which term shall include
unsecured guarantees by Subsidiaries of the Company and obligations owing under
the indenture governing such notes.
"Real Property" means all right, title and interest of any Credit
Party or its respective Subsidiaries (including, without limitation, any
leasehold estate) in and to a parcel of real property acquired by any Credit
Party together with, in each case, all improvements and appurtenant fixtures and
equipment, easements and other property and rights incidental to the ownership,
lease or operation thereof.
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"Recapitalization" has the meaning set forth in the WHEREAS clauses
hereto.
"Recapitalization Agreement" has the meaning set forth in the
preamble hereto.
"Reference Banks" means CIBC and Indosuez.
"Register" has the meaning provided in Section 11.04(b)(A) of this
Agreement.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"Replacement Assets" means (x) properties or assets (other than Cash
or Cash Equivalents or any capital stock or other security) that will be used in
a business of the Company and its Subsidiaries conducted on the date of
determination or in a business similar or reasonably related thereto or (y)
capital stock of any Person engaged in a business of the type referred to in
clause (x) that will become on the date of acquisition thereof a Guarantor as a
result of such acquisition.
"Required Banks" shall mean at any time one or more Banks holding at
least 51% of the Total Commitments held by
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Banks (or, if the Total Commitments shall have been terminated, Banks holding at
least 51% of the outstanding Loans); provided that for the purposes of Section
4, the requirement that any document, agreement, certificate or other writing is
to be satisfactory to the Required Banks shall be satisfied if (x) such
document, agreement, certificate or other writing was delivered in its final
form to the Banks prior to the Effective Date (or if amended or modified
thereafter, the Administrative Agent has reasonably determined such amendment or
modification not to be material), (y) such document, agreement, certificate or
other writing is satisfactory to the Administrative Agent and (z) Banks holding
more than 33-1/3% of the Total Commitments held by Banks have not objected in
writing to such document, agreement, certificate or other writing to the Agent
prior to the Closing Date.
"Required Revolving Banks" means at any time Banks holding at least
51% of the Total Revolving Loan Commitments held by Banks (or, if the Total
Revolving Loan Commitments shall have been terminated, Banks holding at least
51% of the outstanding Revolving Loans).
"Reserve Adjusted Eurodollar Loan" means each Loan bearing interest
based on the Eurodollar Rate or, with respect to Pounds Sterling Loans, the
Sterling Eurodollar Rate as provided in Section 1.08(b).
"Restoration" has the meaning assigned to that term in each
Mortgage.
"Revolving Facility Banks" means any Bank which has a Revolving Loan
Commitment.
"Revolving Loan Commitment" means, with respect to each Bank, the
amount set forth below such Bank's name on the signature pages hereto directly
across from the entry entitled "Revolving Loan Commitment," as such amount may
be reduced from time to time pursuant to Sections 2.01, 2.02, 3.02 and/or 8.
"Revolving Loan Commitment Termination Date" means the
Business Day immediately preceding the Revolving Maturity Date.
"Revolving Loans" has the meaning provided in Section 1.01(c).
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"Revolving Maturity Date" means the last Business day of March, 2003
or such earlier date on which all Revolving Loan Commitments have been
terminated.
"Revolving Note" has the meaning provided in Section 1.05(a).
"Revolving Portion" means, at any time, the Portion of the Loan
Facility evidenced by the Total Revolving Loan Commitments.
"Schedule I Bank" means, at any time, a Bank having a Canadian
Swingline Loan Commitment that is listed in Schedule I to the Bank Act (Canada)
at such time.
"Schedule II Bank" means, at any time, a Bank having a Canadian
Swingline Loan Commitment that is listed in Schedule II to the Bank Act (Canada)
at such time.
"Schedule II Reference Banks" means, if there is only one Schedule
II Bank, such Schedule II Bank and if there is more than one Schedule II Bank, a
reference group of up to three Schedule II Banks, the composition of which shall
be acceptable to the Administrative Agent and the Canadian Borrowers, all acting
reasonably.
"Scheduled A Term Loans Principal Payments" means, with respect to
the principal payments on the A Term Loans on the last Business Day of each
month set forth below, the U.S. dollar amount set forth opposite thereto:
Scheduled A Term Loan
Date Principal Payment
---- ---------------------
June 1998 $250,000
September 1998 250,000
December 1998 250,000
March 1999 250,000
June 1999 625,000
September 1999 625,000
December 1999 625,000
March 2000 625,000
June 2000 1,000,000
September 2000 1,000,000
December 2000 1,000,000
March 2001 1,000,000
June 2001 1,375,000
September 2001 1,375,000
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Scheduled A Term Loan
Date Principal Payment
---- ---------------------
December 2001 1,375,000
March 2002 1,375,000
June 2002 1,750,000
September 2002 1,750,000
December 2002 1,750,000
March 2003 1,750,000
"Scheduled Acquisition Term Loan Principal Payments" means, with
respect to the principal payments on the Acquisition Term Loan to be made on the
last Business Day of each calendar quarter specified in the table below, in each
case, for each such date, in the Dollar amount which is the product of (x) the
total outstanding principal amount of the Acquisition Term Loan as of the close
of business on the Acquisition Term Loan Commitment Termination Date (after
giving effect to any Borrowings of the Acquisition Term Loan on such date) and
(y) the percentage for the applicable assumed outstanding principal amount
specified opposite such date in such table:
Percentage to Obtain
Acquisition Term Loan
Period Principal Payment
------ ----------------------
Commencing with the calendar
quarter ending three months
following the Acquisition
Term Loan Termination Date
to and including March 31,
2003 0.25%
and with respect to the principal payments on the Acquisition Term
Loan to be made on the last Business Day of each calendar quarter specified in
the table below, in each case, for each such date, in the Dollar amount which is
the product of (x) the total outstanding principal amount of the Acquisition
Term Loan as of the close of business on April 1, 2003 and (y) the percentage
for the applicable assumed outstanding principal amount specified opposite such
date in such table:
Percentage to Obtain
Acquisition Term Loan
Period Principal Payment
------ ----------------------
Commencing June 30,
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2003 to and including
March 31, 2005 12.5%
"Scheduled B Term Loans Principal Payments" means with respect to
the principal payments on the B Term Loans on the last Business Day of each
month set forth below, the U.S. Dollar amount set forth opposite thereto:
Total B Term Loans
Date Principal Payments
---- ------------------
June 1998 $ 87,500
September 1998 87,500
December 1998 87,500
March 1999 87,500
June 1999 87,500
September 1999 87,500
December 1999 87,500
March 2000 87,500
June 2000 87,500
September 2000 87,500
December 2000 87,500
March 2001 87,500
June 2001 87,500
September 2001 87,500
December 2001 87,500
March 2002 87,500
June 2002 87,500
September 2002 87,500
December 2002 87,500
March 2003 87,500
June 2003 4,156,250
September 2003 4,156,250
December 2003 4,156,250
March 2004 4,156,250
June 2004 4,156,250
September 2004 4,156,250
December 2004 4,156,250
March 2005 4,156,250
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreements" means and includes the U.S. Security
Agreement, the U.K. Security Agreements, the Canadian
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Security Agreements and any other security agreements delivered pursuant to
Section 6.14 or 6.15.
"Security Documents" means each of the Security Agreements, the
Mortgages, the Pledge Agreements, the Intercreditor Agreement and any other
documents utilized to grant a security interest as Collateral for the
Obligations in respect of any property or assets of whatever kind or nature.
"Series A Preferred Units" means the units consisting of the 12%
Series A Exchangeable Preferred Stock and Common Stock of Holdings.
"Series B Preferred Units" means the units consisting of the Series
B Junior Exchangeable Preferred Stock and Common Stock of Holdings.
"Series C Preferred Units" means the units consisting of the Series
C Junior Voting Exchangeable Voting Preferred Stock and Common Stock of
Holdings.
"Significant Subsidiary" has the meaning set forth in Rule 1-02 of
Regulation S-X under the Securities Act and Exchange Act.
"South African Subsidiary" means Morris Mechanical Handling (Pty)
Limited.
"Spot Rate" means with respect to any Applicable Currency, at any
date of determination thereof, the spot rate of exchange with respect to U.S.
Dollars for such date in London that appears on the display page applicable to
such Applicable Currency on the Telerate System Incorporated Service (or such
other page as may replace such page on such service for the purpose of
displaying the spot rate of exchange in London); provided, however, that if
there shall at any time no longer exist such a page or a relevant spot rate is
not shown on such service, the spot rate of exchange shall be determined by
reference to another similar rate publishing service selected by the
Administrative Agent and if no such similar rate publishing service is available
by reference to the published rate of the Administrative Agent in effect at such
date for similar commercial Transaction.
"Standby Letter of Credit" means any letter of credit other than a
Commercial Letter of Credit.
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"State, Local and Foreign Real Property Disclosure Requirements"
means any state or local laws requiring notification of the buyer of real
property, or notification, registration, or filing to or with any state or local
agency, prior to the sale of any real property or transfer of control of an
establishment, of the actual or threatened presence or release into the
environment, or the use, disposal, or handling of Hazardous Materials on, at,
under, or near the real property to be sold or the establishment for which
control is to be transferred.
"Sterling Eurodollar Rate" means (i) the rate per annum that appears
on page 3750 of the Dow Jones Telerate Screen (or any successor page) for Pounds
Sterling deposits with maturities comparable to the Interest Period applicable
to the U.K. Swingline Loans subject to the respective Borrowing as of 11:00 A.M.
(London time) on the date of Borrowing or, (ii) if such a rate does not appear
on page 3750 of the Dow Jones Telerate Screen (or any successor page), the
offered quotation to first-class banks in the London interbank Eurodollar market
by the U.K. Swingline Bank for Pounds Sterling deposits of amounts in
immediately available funds comparable to the outstanding principal amount of
the U.K. Swingline Loan of the U.K. Swingline Bank with maturities comparable to
the Interest Period applicable to such U.K. Swingline Loan as of 11:00 A.M.
(London time) on the date of Borrowing.
"Subsidiary" of any Person means and includes (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(excluding stock of any class or classes of such corporation that might have
voting power solely by reason of the happening of any contingency) is at the
time owned by such Person directly or indirectly through Subsidiaries and (ii)
any partnership, limited liability company, unlimited liability company,
association, joint venture or other entity in which such Person directly or
indirectly through Subsidiaries has more than a 50% equity interest at the time.
"Subsidiary Guarantee" means each subsidiary guarantee executed by
the U.S. subsidiaries of the Company, Hercules and, at the time and to the
extent provided in Section 6.20, the South African Subsidiary, substantially in
the form of Exhibit E-2 hereto, except for such changes as shall have been
approved by the Agents, as the same may after its execution be amended,
supplemented or otherwise modified from time to time in accordance with its
terms and the terms hereof.
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"Subsidiary Guarantor" means each Subsidiary of the Company which
delivers a Guarantee.
"Surety Arrangement" means one or more surety arrangements
providing, inter alia, for the issuance of Surety Obligations, between the
Company or its Subsidiaries and one or more providers, provided to the Company
or its Subsidiaries including, in each case, any related notes, guarantees,
collateral documents (including the Intercreditor Agreement), instruments and
agreements executed in connection therewith.
"Surety Obligations" means any bonds, including bid bonds, advance
bonds, or performance bonds, letters of credit, warranties, and similar
arrangements between the Company or its Subsidiaries and one or more surety
providers, for the benefit of the Company's or its Subsidiaries' suppliers,
vendors, insurers, or customers including, in each case, any related notes,
guarantees, collateral documents (including the Intercreditor Agreement),
instruments and agreements executed in connection therewith.
"Survey" means a survey of any Mortgaged Real Property (and all
improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in the sate where such Mortgaged Real Property is located, (ii)
dated (or redated) not earlier than six months prior to the date of delivery
thereof unless there shall have occurred within six months prior to such date of
delivery any exterior construction on the site of such Mortgaged Real Property,
in which event such survey shall be dated (or redated) after the completion of
such construction or if such construction shall not have been completed as of
such date of delivery, not earlier than 20 days prior to such date of delivery,
(iii) certified by the surveyor (in a manner reasonably acceptable to the
Agents) to the Agents and the Title Company and (iv) complying in all respects
with the minimum detail requirements of the American Land Title Association as
such requirements are in effect on the date of preparation of such survey.
"Swingline Bank" means any U.S. Swingline Bank, U.K. Swingline
Bank or Canadian Swingline Bank.
"Swingline Expiry Date" means, with respect to each of the U.S.
Swingline Loans and the Canadian Swingline Loans, the date five Business Days
prior to the Revolving Maturity Date and, with respect to the U.K. Swingline
Loans, 364 days after the Closing Date; provided that the U.K. Swingline Bank
shall give the U.K. Borrower notice 90 days in advance of the
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then current Swingline Expiry Date of whether the U.K. Swingline Bank will enter
into a new agreement, substantially in the form of Annex III, with respect to
new U.K. Swingline Loans on the same terms and conditions as this Agreement for
a further period of 364 days (or such longer or shorter period as the U.K.
Borrower and the U.K. Swingline Bank may agree) but not to expire later than the
date five Business Days prior to the Revolving Maturity Date.
"Swingline Loan Commitment" means, with respect to each Bank, such
Bank's Canadian Swingline Loan Commitment, U.K. Swingline Loan Commitment or
U.S. Swingline Loan Commitment.
"Swingline Loans" has the meaning set forth in Section 1.01(d).
"Swingline Notes" means the U.S. Swingline Notes, the U.K. Swingline
Notes and the U.S. Swingline Notes.
"Taking" has the meaning assigned to that term in each Mortgage.
"Tax Allocation Agreement" means the Tax Sharing Agreement among MHE
Investments, Holdings and certain of Holdings' Subsidiaries dated March 30,
1998, as in effect on the Closing Date.
"Taxes" has the meaning provided in Section 3.04.
"Term Loans" has the meaning provided in Section 1.01(a).
"Term Note" means an A Term Note or B Term Note.
"Term Portion" means, at any time, the portion of the Loan Facility
evidenced by the Total Term Loan Commitment.
"Test Period" means the four consecutive complete fiscal quarters of
the Company or its predecessors then last ended.
"Title Company" means First American Title Insurance Company or such
other title insurance or abstract company as shall be designated by the Agent.
"Total A Term Loan Commitment" means the sum of the A Term Loan
Commitments of each of the Banks.
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"Total Acquisition Term Loan Commitment" means the sum of the
Acquisition Term Loan Commitments of each of the Banks.
"Total B Term Loan Commitment" means the sum of the B Term Loan
Commitments of each of the Banks.
"Total Canadian Swingline Loan Commitment" means the sum of the
Canadian Swingline Loan Commitments of each Bank.
"Total Commitment" means the sum of the Total Term Loan Commitments,
the Total Acquisition Term Loan Commitment and the Total Revolving Loan
Commitments.
"Total Revolving Loan Commitment" means the sum of the Revolving
Loan Commitments of each of the Banks.
"Total Term Loan Commitment" means the sum of the A Term Loan
Commitments and B Term Loan Commitments of each of the Banks.
"Total U.K. Swingline Loan Commitment" means the sum of the U.K.
Swingline Loan Commitments of each Bank.
"Total U.S. Swingline Loan Commitment" means the sum of the U.S.
Swingline Loan Commitments of each of the Banks.
"Transaction" means the transactions contemplated by the Transaction
Documents.
"Transaction Documents" means the Recapitalization Agreement, the
documents related to the issuance and sale of the Public Notes, the documents
related to the issuance and sale of the Preferred Units and all exhibits
thereto.
"Type" means (i) a Base Rate Loan or Reserve Adjusted Eurodollar
Loan with respect to Loans which are Loans denominated in Dollars, (ii) a U.K.
Base Rate Loan or Reserve Adjusted Eurodollar Loan with respect to Loans which
are denominated in Pounds Sterling and (iii) a Prime Rate Loan or Acceptance
with respect to Loans which are denominated in Canadian Dollars.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York.
"U.K. Base Rate" means the rate which the U.K. Swingline Bank
announces from time to time as its prime lending
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rate, as in effect from time to time. The rate the U.K. Swingline Bank announces
as its prime lending rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer. The U.K. Swingline
Bank may make commercial loans or other loans at rates of interest at, above or
below the rate it announces as its prime lending rate.
"U.K. Base Rate Loan" means each U.K. Swingline Loan bearing
interest at the rate provided in Section 1.08(a). U.K. Base Rate Loans may only
be made in Pounds Sterling.
"U.K. Borrower" means Morris Material Handling, Ltd., a company
organized under the laws of England and Wales, and its successors.
"U.K. Pledge Agreement" means each Deed of Pledge executed and
delivered by each applicable UK Subsidiary that is a Guarantor substantially in
the form of Exhibit H-3 hereto, except for such changes as shall have been
approved by the Agents, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms and the terms hereof.
"U.K. Security Agreement" means each Security Document and Guarantee
or Instrument of Charge and Guarantee executed and delivered by each applicable
UK Subsidiary that is a Guarantor substantially in the form of Exhibit G-1 or
Exhibit G-3 hereto, except for such changes as shall have been approved by the
Agents, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms and the terms hereof.
"U.K. Subsidiary Guarantees" means the guarantees contained in each
U.K. Security Agreement.
"U.K. Swingline Bank" means any Bank with a U.K. Swingline Loan
Commitment.
"U.K. Swingline Loan" means any Swingline Loan by a U.K. Swingline
Bank to a U.K. Borrower.
"U.K. Swingline Loan Commitment" means, with respect to each Bank,
the amount set forth below such Bank's name on the signature pages hereto
directly across from the entry entitled "U.K. Swingline Loan Commitment," as
such amount may be reduced from time to time pursuant to Sections 2.01, 2.02,
3.02 and/or 8.
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"U.K. Swingline Note" has the meaning provided in Section 1.05(a).
"Unutilized Commitment" for any Bank at any time means, on and after
the Closing Date, the unutilized Revolving Loan Commitment of such Bank, after
taking into effect the Letter of Credit Usage, plus, for purposes of Section
2.03 only, an amount not covered by Letter of Credit Usage representing the
amount of undrawn Letters of Credit excluded by the proviso in the definition
thereof, and the unutilized Acquisition Term Loan Commitment of such Bank.
"U.S. Borrowers" means the Company and Material Handling.
"U.S. Dollar" or "U.S. $" each mean lawful money of the United
States.
"U.S. Security Agreement" means the Security Agreement executed and
delivered by Holdings, the U.S. Borrowers and each U.S. Subsidiary substantially
in the form of Exhibit F-1 hereto, except for such changes as shall have been
approved by the Agents, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms and the terms hereof.
"U.S. Swingline Bank" means any Bank with a U.S. Swingline Loan
Commitment.
"U.S. Swingline Loan" means any Swingline Loan by a U.S. Swingline
Bank to any U.S. Borrower.
"U.S. Swingline Loan Commitment" means, with respect to each Bank,
the amount set forth below such Bank's name on the signature pages hereto
directly across from the entry entitled "U.S. Swingline Loan Commitment," as
such amount may be reduced from time to time pursuant to Sections 2.01, 2.02,
3.02 and/or 8.
"U.S. Swingline Note" has the meaning provided in Section 1.05(a).
"Vested Options" means exercisable options to purchase common stock
or equivalent interests of Holdings or any parent entity of Holdings granted to
any member of the board of directors or management or employee of Holdings
pursuant to a stock option plan or any similar plan approved by its Board of
Directors.
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"Voting Stock" of any Person means the capital stock or equivalent
interests of such person which ordinarily has voting power for the election of
directors (or persons performing similar functions) of such Person, whether at
all times or only so long as no senior class of securities has such voting power
by reason of any contingency.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary of such
Person to the extent all of the capital stock or other ownership interests in
such Subsidiary, other than directors' or nominees' qualifying shares, are owned
directly or indirectly by such Person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.
"Written" or "in writing" means any form of written communication or
a communication by means of telex, telecopier device, telegraph or cable.
SECTION 10. The Agents.
10.01. Appointment. Each Bank hereby irrevocably designates and
appoints CIBC as Administrative Agent (such term to include the Administrative
Agent acting as Collateral Agent or in any other representative capacity under
any other Credit Document), Indosuez as Syndication Agent and BankBoston, N.A.
as Documentation Agent, of such Bank to act as specified herein and in the other
Credit Documents and each such Bank hereby irrevocably authorizes the Agents to
take such action on its behalf under the provisions of this Agreement and the
other Credit Documents and to exercise such powers and perform such duties as
are expressly delegated to the Agents by the terms of this Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Agents agree to act as such upon the express conditions
contained in this Section 10. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agents shall not have any duties or
responsibilities, except those expressly set forth herein or in the other Credit
Documents, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Agents. The
provisions of this Section 10 are solely for the benefit of the Agents and the
Banks, and no Credit Party shall have any rights as a third party beneficiary of
any of
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the provisions hereof. In performing its functions and duties under this
Agreement, the Agents shall act solely as agent of the Banks and do not assume
and shall not be deemed to have assumed any obligation or relationship of agency
or trust with or for any Credit Party. The Borrowers, jointly and severally,
hereby agree to pay the Administrative Agent an annual agency fee as previously
agreed with the Administrative Agent.
10.02. Delegation of Duties. The Agents may execute any of their
respective duties under this Agreement or any other Credit Document by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Agent shall be responsible
for the negligence or misconduct of any agents or attorneys- in-fact selected by
it with reasonable care except to the extent otherwise required by Section
10.03.
10.03. Exculpatory Provisions. None of the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties by the Company, any Subsidiary of the Company or
any of their respective officers contained in this Agreement, any other Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by such Agent under or in connection with, this
Agreement or any other Document or for any failure of the Company or any
Subsidiary of the Company or any of their respective officers to perform its
obligations hereunder or thereunder. No Agent shall be under any obligation to
any Bank to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement, or to inspect
the properties, books or records of the Company or any Subsidiary of the
Company. No Agent shall be responsible to any Bank for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Credit Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by such Agent to the Banks or by or on behalf of any Borrower
to such Agent or any Bank or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or
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agreements contained herein or therein or as to the use of the proceeds of the
Loans or of the existence or possible existence of any Default or Event of
Default.
10.04. Reliance by the Agents. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Credit Parties), independent accountants and
other experts selected by such Agent. Each Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. Each
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Credit Documents in accordance with a
request of the Required Banks (or to the extent specifically provided in Section
11.12, all the Banks), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks.
10.05. Notice of Default. No Agent shall be deemed to have knowledge
of the occurrence of any Default or Event of Default unless it has received
notice in writing from a Bank or Holdings or any Credit Party referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to the Banks. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Banks; provided that, unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Banks (except to the extent that this Agreement expressly
requires that such action be taken, or not be taken, only with the consent of
the Required Banks as required hereunder).
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10.06. Non-Reliance on Agents and Other Banks. Each Bank expressly
acknowledges that neither of the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of Holdings or any Subsidiary of
Holdings, shall be deemed to constitute any representation or warranty by such
Agent to any Bank. Each Bank represents to each Agent that it has, independently
and without reliance upon such Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, assets, operations, property, financial
and other conditions, prospects and creditworthiness of Holdings and its
Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement and the other agreements contemplated hereby. Each Bank also
represents that it will, independently and without reliance upon any Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of Holdings and its Subsidiaries. Except for notices, reports
and other documents expressly required to be furnished to the Banks by the
Administrative Agent hereunder, no Agent shall have any duty or responsibility
to provide any Bank with any credit or other information concerning the
business, operations, assets, property, financial and other conditions,
prospects or creditworthiness of Holdings or any of its Subsidiaries which may
come into the possession of such Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates. None of the Agents nor any
Bank shall be deemed to be a fiduciary or have any fiduciary duty to any other
Bank, Holdings or Credit Party.
10.07. Indemnification. The Banks agree to indemnify each Agent in
its capacity as such or in any other representative capacity under any other
Credit Document ratably according to their aggregate Commitments, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, reasonable expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against such Agent in its capacity as such in any way relating to or
arising out of this Agreement or any other Credit Docu-
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ment, or any documents contemplated by or referred to herein or the Transaction
contemplated hereby or any action taken or omitted to be taken by such Agent
under or in connection with any of the foregoing, but only to the extent that
any of the foregoing is not paid by Holdings or any of its Subsidiaries;
provided that no Bank shall be liable to any Agent for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent resulting from
such Agent's gross negligence or willful misconduct. If any indemnity furnished
to any Agent for any purpose shall, in the opinion of such Agent, be
insufficient or become impaired, such Agent may call for additional indemnity
and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished. The agreements in this Section 10.07 shall
survive the payment of all Obligations.
10.08. The Agents in Its Individual Capacity. The Agents and their
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with Holdings, its Subsidiaries and other
Affiliates of Holdings as though such Agent were not an Agent hereunder. With
respect to the Loans made by it and all Obligations owing to it, each Agent
shall have the same rights and powers under this Agreement as any Bank and may
exercise the same as though it were not an Agent, and the terms "Bank" and
"Banks" shall include each Agent in its individual capacity.
10.09. Successor Administrative Agent. Upon the acceptance of any
appointment as Administrative Agent and Collateral Agent hereunder by a
successor Agent, the term "Administrative Agent" shall include such successor
administrative agent effective upon its appointment, and the resigning
Administrative Agent's rights, powers and duties as Administrative 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. After the retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement.
10.10. Resignation by Administrative Agent. (a) The Administrative
Agent may resign from the performance of all its functions and duties hereunder
at any time by giving 15 Business Days' prior written notice to the Borrowers
and the Banks. Such resignation shall take effect upon the acceptance
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by a successor Administrative Agent of appointment pursuant to subsections
(b)and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation of the Administrative Agent,
the Required Banks shall appoint a successor Administrative Agent acceptable to
the Company and which shall be an incorporated bank or trust company or other
qualified financial institution with operations in the United States and Canada
and total assets of at least $1 billion.
(c) If a successor Administrative Agent shall not have been so
appointed within said 15 Business Day period, the resigning Administrative Agent
with the consent of the Company shall then appoint a successor Administrative
Agent (which shall be an incorporated bank or trust company or other qualified
financial institution with operations in the United States and Canada and total
assets of at least $1 billion) who shall serve as Administrative Agent until
such time, if any, as the Required Banks appoint a successor Administrative
Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to subsection (b) or (c) by the 20th Business Day after the date such notice of
resignation was given by the resigning Administrative Agent, such Administrative
Agent's resignation shall become effective and the Required Banks shall
thereafter perform all the duties of Administrative Agent hereunder until such
time, if any, as the Required Banks with the consent of Borrower appoint a
successor Administrative Agent as provided above.
10.11. Syndication Agent and Documentation Agent. Notwithstanding
anything to the contrary in this Agreement, the Syndication Agent and
Documentation Agent, in such capacities, shall have no obligations, duties or
responsibilities, and shall incur no liabilities, under this Agreement or any
other Document.
SECTION 11. Miscellaneous.
11.01. Payment of Expenses, etc. The Borrowers agree to: (i) whether
or not the Transaction herein contemplated are consummated, pay all
out-of-pocket costs and expenses (x) of the Agents in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of Cahill
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Gordon & Reindel and local counsel to the Banks) with prior notice to the
Borrowers of the engagement of any counsel and (y) of each of the Banks in
connection with the enforcement of the Credit Documents (including in connection
with any "work-out" or other restructuring of the Borrowers' Obligations or in
connection with any bankruptcy, reorganization or similar proceeding with
respect to any Credit Party or its Subsidiaries) and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and disbursements of counsel for each of the Banks) with prior notice to
the Borrowers of the engagement of any counsel and the reasonable fees and
expenses of any appraisers or any consultants or other advisors engaged with
prior notice to the Borrowers of any such engagement with respect to
environmental or other matters; (ii) pay all out-of-pocket costs and expenses
(including reasonable attorneys' fees) of the Agents or in connection with the
assignment or attempted assignment to any other Person of all or any portion of
the Agents' interest under this Agreement pursuant to Section 11.04 incurred
prior to 120 days following the Closing Date; (iii) pay and hold each of the
Banks harmless from and against any and all present and future stamp and other
similar taxes with respect to the foregoing matters and save each of the Banks
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such Bank)
to pay such taxes; and (iv) indemnify each Bank, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses (including,
without limitation, any and all losses, liabilities, claims, damages or expenses
arising under Environmental Laws) incurred by any of them as a result of, or
arising out of, or in any way related to the entering into and/or performance of
any Document or the use of the proceeds of any Loans hereunder or the
Transaction or the consummation of any other transaction contemplated in any
Credit Document, including, without limitation, the documented reasonable fees
and disbursements of counsel incurred by any of them (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
11.02. Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such no-
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tice being hereby expressly waived, to set off and to appropriate and apply any
and all deposits (general or special) and any other Indebtedness at any time
held or owing by such Bank (including, without limitation, by branches and
agencies of such Bank wherever located) to or for the credit or the account of
any Credit Party against and on account of the Obligations and liabilities of
such Credit Party to such Bank under this Agreement or under any of the other
Credit Documents, including, without limitation, all interests in Obligations of
such Credit Party purchased by such Bank pursuant to Section 11.06(b), and all
other claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured.
11.03. Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(which may include telecopier communication) and couriered for delivery of the
next Business Day, and shall be sent, if to Holdings or any Credit Party, to:
Morris Material Handling, Inc.
315 West Forest Hill Avenue
Oak Creek, Wisconsin 53154
Telecopy No. 414-764-8596
Attention: Vice President - Finance
with copies to:
Morris Material Handling, Inc.
315 West Forest Hill Avenue
Oak Creek, Wisconsin 53154
Telecopy No. 414-764-8594
Attention: General Counsel
and
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, D.C. 20036
Telecopy No. 202-887-4288
Attention: Russell W. Parks, Jr.
if to any Bank, at its address specified for such Bank on Annex II
hereto; or, at such other address as shall be
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designated by any party in a written notice to the other parties hereto. All
such notices and communications shall, when telecopied or sent by overnight
courier, be effective when sent by telecopier or delivered to the overnight
courier, as the case may be, except that notices and communications to the
Administrative Agent shall not be effective until received by the Administrative
Agent.
11.04. Benefit of Agreement. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto, all
future holders of the Notes, and their respective successors and assigns;
provided that no Credit Party may assign or transfer any of its interests
hereunder without the prior written consent of all of the Banks in their sole
discretion; and provided, further, that the rights of each Bank to transfer,
assign or grant participations in its rights and/or obligations hereunder shall
be limited as set forth below in this Section 11.04; provided that nothing in
this Section 11.04 shall prevent or prohibit any Bank, without the consent of
the Administrative Agent or the Company, from (i) pledging its Loans hereunder
to a Federal Reserve Bank in support of borrowings made by such Bank from such
Federal Reserve Bank or, with respect to any bank that is a fund that invests in
bank loans, pledging all or any portion of its interests, rights and obligations
under this Agreement (including all or a portion of the Loans owing to it) to
any trustee or any other representative of holders of obligations owed or
securities issued by such fund as security for such obligations or securities,
and (ii) subject to Section 11.04(b)(B), granting participations in or
assignments of all or a portion of such Bank's Loans, Notes and/or Commitments
hereunder (y) to its parent company and/or to any Affiliate of such Bank that is
at least 50% owned by such Bank or its parent company or to an Approved Fund of
any Bank (z) to an entity managed by a Person referred to in Section
11.04(a)(ii)(y).
(b) Each Bank shall have the right to transfer, assign or grant
participations in all or any part of its remaining Loans, Notes and/or
Commitments hereunder on the basis set forth below in this clause (b). Each Bank
may furnish any information concerning the Borrower in the possession of such
Bank from time to time to assignees and participants (including prospective
assignees and participants).
(A) Assignments. Each Bank, with the written consent of the
Administrative Agent and the Company, which consent shall not be
unreasonably withheld or delayed, which shall be evidenced on the notice
in the form of Ex-
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hibit I-1 hereto, may assign pursuant to an Assignment and Assumption
Agreement substantially in the form of Exhibit I-2 hereto all or a portion
of its Loans, Notes and/or Commitments hereunder pursuant to this clause
(b)(A) to (x) one or more Banks or (y) one or more commercial banks, funds
or other financial or lending institutions; provided that any such
assignment pursuant to this clause (y) shall be in an amount equal to at
least $5,000,000 or such Bank's remaining Loans, Notes or Commitments. Any
assignment pursuant to this clause (b)(A) will become effective no later
than five Business Days after the Agent's receipt of (i) a written notice
in the form of Exhibit I-1 hereto from the assigning Bank and the assignee
Bank and (ii) a processing and recordation fee of $3,500 from the
assigning Bank in connection with the Agent's recording of such sale,
assignment, transfer or negotiation; provided that such fee shall only be
payable if the assignment is between a Bank and a party that is not a
Bank, a Bank's parent or its Affiliate prior to the assignment. The
Borrowers shall issue new Notes to the assignee in conformity with Section
1.05 and the assignor shall return the old Notes to the Borrowers. Upon
the effectiveness of any assignment in accordance with this clause (b)(A),
the assignee will become a "Bank" for all purposes of this Agreement and
the other Credit Documents and, to the extent of such assignment, the
assigning Bank shall be relieved of its obligations hereunder with respect
to the Loans, Notes or Commitments being assigned. The Administrative
Agent shall maintain at its address specified in Annex II hereto a copy of
each Assignment Agreement delivered to and accepted by it and a register
in which it shall record the names and addresses of the Banks and the
Commitment of, and principal amount of the Loans owing to, each Bank from
time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent demonstrable error, and
the Borrower, the Administrative Agent and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection
by the Borrower, the Administrative Agent or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
(B) Participations. Each Bank may transfer, grant or assign
participations in all or any part of such Bank's Loans, Notes and/or
Commitments hereunder pursuant to this clause (b)(B) to any Person;
provided that (i) such Bank
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shall remain a "Bank" for all purposes of this Agreement and the
transferee of such participation shall not constitute a Bank hereunder and
(ii) no participant under any such participation shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (x) extend
the scheduled final maturity date of any of the Loans, Notes or
Commitments in which such participant is participating or (y) reduce the
principal amount, interest rate or fees applicable to any of the Loans,
Notes or Commitments in which such participant is participating or
postpone the payment of any interest or fees or (z) release all or
substantially all of the Collateral (except as expressly permitted by the
Credit Documents). In the case of any such participation, the participant
shall not have any rights under this Agreement or any of the other Credit
Documents (the participant's rights against the granting Bank in respect
of such participation to be those set forth in the agreement with such
Bank creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Bank had not sold such
participation; provided that such participant shall be considered to be a
"Bank" for purposes of Sections 11.02 and 11.06(b).
(C) Canadian Borrower. Notwithstanding anything else contained in
this Agreement including Section 3.04, neither Canadian Borrower will be
responsible for withholding tax resulting from interest payments on the
Canadian Swingline Loan made by it to a Bank that is a non-resident of
Canada.
11.05. No Waiver; Remedies Cumulative. No failure or delay on the
part of the Administrative Agent or any Bank in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between any Credit Party and the Administrative Agent or any Bank shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power, or privilege hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies herein expressly
provided are cumulative and not exclusive of any rights or remedies which the
Agents or any Bank would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver
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of the rights of the Agents or the Banks to any other or further action in any
circumstances without notice or demand.
11.06. Payments Pro Rata. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of Holdings or any
Credit Party in respect of any Obligations of Holdings or such Credit Party, it
shall distribute such payment to the Banks pro rata based upon their respective
shares, if any, of the Obligations with respect to which such payment was
received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, of a sum which with respect to any related sum or sums that are
received by other Banks is proportionately greater as measured (immediately
prior to receipt of all related amounts) relative to the total of such
Obligations then owed and due to such Bank to the total of such Obligations then
owed and due to all of the Banks, then such Bank receiving such excess amount
shall promptly purchase for cash without recourse or warranty from the other
Banks an interest in the Obligations of the respective Credit Party to such
Banks in such amount as shall result in a proportional participation by all of
the Banks in such excess amount pro rata in accordance with their respective
shares of the Obligations with respect to which such amount was received;
provided that if all or any portion of such excess amount is thereafter
recovered from such Bank, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
11.07. Calculations; Computations. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by Borrower to the Banks); provided that, except as otherwise specifically
provided herein, all computations determining compliance with Section 7 and all
definitions used herein for any purpose shall utilize accounting principles and
policies in effect at the Closing Date.
(b) All computations of interest and fees hereunder shall be made on
the actual number of days elapsed over a year of 365 days; provided, however,
that all computations of inter-
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est on Reserve Adjusted Eurodollar Loans that are Dollar Loans, Letter of Credit
commissions and Commitment Commission shall be made on the actual number of days
elapsed over a year of 360 days.
11.08. Governing Law; Submission to Jurisdiction; Venue. (a) This
Agreement and the rights and obligations of the parties hereunder shall be
construed and enforced in accordance with and be governed by the laws of the
State of New York applicable to contracts made and to be performed wholly
therein. Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, Holdings and each Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Each
Credit Party and its respective Subsidiaries further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to Lexis Document Services, Inc., 150 East 58th Street, 25th
Floor, New York, New York 10155, its agent for service of process, such service
to become effective 30 days after such mailing. Holdings and each Borrower and
its respective Subsidiaries hereby irrevocably appoints Lexis Document Services,
Inc., 150 East 58th Street, 25th Floor, New York, New York 10155, to serve as
its agent for service of process in respect of any such action or proceeding.
Nothing herein shall affect the right of the Administrative Agent or any Bank to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Holdings or any Credit Party or its
respective Subsidiaries in any other jurisdiction.
(b) Holdings and each Borrower hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
11.09. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed
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and delivered shall be an original, but all of which shall together constitute
one and the same instrument. A set of counterparts executed by all the parties
hereto shall be lodged with the Borrowers and the Administrative Agent.
11.10. Effectiveness. This Agreement shall become effective on the
date (the "Effective Date") and at the time (the "Effective Time") on which
Holdings, the Borrowers and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Administrative Agent at the Administrative Agent's Office or, in the case of the
Banks, shall have given to the Administrative Agent telephonic (confirmed in
writing), written, telex or telecopy notice (actually received) at such office
that the same has been signed and mailed to it. The Administrative Agent will
give Holdings, the Borrowers and each Bank prompt written notice of the
occurrence of the Effective Date.
11.11. Headings Descriptive. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
11.12. Amendment or Waiver. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated (other than pursuant to the terms hereof) unless such
change, waiver, discharge or termination is in writing signed by the Required
Banks; provided that no such change, waiver, discharge or termination shall,
without the consent of each affected Bank and the Agent, (i) extend the
scheduled final maturity date of any Loan, or any portion thereof, or reduce the
rate or extend the time of payment of interest thereon or fees or reduce the
principal amount thereof, or increase the Commitments of any Bank or the Total
Commitments, in each case over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default shall not constitute
a change in the terms of any Commitment of any Bank), (ii) release all or
substantially all of the Collateral or Guarantees (except as expressly permitted
by the Credit Documents), (iii) amend, modify or waive any provision of Section
1.10, 1.11, 3.04, 8.01, 8.05, 10.07, 11.01, 11.02, 11.04, 11.06, 11.07(b) or
11.12, (iv) reduce any percentage specified in, or otherwise modify, the
definition of Required Banks, (v) modify the definition of Scheduled A Term
Loans Principal Payments, Scheduled B Term Loans Principal Payments or Scheduled
Acquisition Term Loan Principal Payments (or otherwise modify the date upon
which any scheduled amortization payment is due) or (vi) consent to the
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assignment or transfer by any Credit Party of any of its rights and obligations
under this Agreement. No provision of Section 10 may be amended without the
consent of the Administrative Agent and no provision of Section 10.11 may be
amended without the written consent of the Syndication Agent and the
Documentation Agent. No provision relating to the U.K. Swingline Loan or the
Canadian Swingline Loan may be amended without the written consent of Banks
holding at least 51% of the U.K. Swingline Loan Commitments or Canadian
Swingline Commitments, respectively (or, if U.K. Swingline Loan Commitments or
Canadian Swingline Loan Commitments have been terminated, Banks holding at least
51% of the outstanding U.K. Swingline Loans or Canadian Swingline Loans,
respectively).
11.13. Survival. All indemnities set forth herein including, without
limitation, in Section 1.11, 1.13, 3.04, 10.07, 11.01 or 11.17 shall survive the
execution and delivery of this Agreement and the making of the Loans, the
repayment of the Obligations and the termination of the Total Commitments.
11.14. Domicile of Loans. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, Subsidiary or Affiliate of such
Bank.
11.15. Waiver of Jury Trial. Each of the parties to this Agreement
hereby irrevocably waives all right to a trial by jury in any action, proceeding
or counterclaim arising out of or relating to this Agreement, the Credit
Documents or the Transaction contemplated hereby or thereby.
11.16. Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
11.17. Currency Indemnity. If, for the purposes of obtaining
judgment in any court in any jurisdiction with respect to this Agreement or any
other Credit Document, it becomes necessary to convert into the currency of such
jurisdiction (the "Judgment Currency") any amount due under this Agreement or
under any other Credit Document in any currency other than the Judgment Currency
(the "Currency Due"), then conversion shall be made at the rate of exchange
prevailing on the Business Day before the day on which judgment is given. For
this purpose "rate of exchange" means the rate at which the Ad-
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ministrative Agent is able, on the relevant date, to purchase the Currency Due
with the Judgement Currency in accordance with its normal practice at its Main
Branch in Toronto, Ontario. In the event that there is a change in the rate of
exchange prevailing between the Business Day before the day on which the
judgment is given and the date of payment of the amount due, the Applicable
Borrower will, on the date of payment, pay such additional amounts, if any, as
may be necessary to ensure that the amount paid on such date is the amount in
the Judgment Currency which when converted at the rate of exchange prevailing on
the date of payment is the amount then due under this Agreement or such other
Credit Document in the Currency Due. If the amount of the Currency Due which the
Administrative Agent is so able to purchase is less than the amount of the
Currency Due originally due to it, the Applicable Borrower shall indemnify and
save the Banks harmless from and against loss or damage arising as a result of
such deficiency. This indemnity shall constitute an obligation separate and
independent from the other obligations contained in this Agreement and the other
Credit Documents, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by the Banks from time to
time and shall continue in full force and effect notwithstanding any judgment or
order for a liquidated sum in respect of an amount due under this Agreement or
any other Credit Document or under any judgment or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
MMH HOLDINGS, INC.
By: /s/ Michael Erwin
------------------------------
Name: Michael Erwin
Title: President
MORRIS MATERIAL HANDLING, INC.
By: /s/ Michael Erwin
------------------------------
Name: Michael Erwin
Title: President
MATERIAL HANDLING, LLC
By: /s/ David Smith
------------------------------
Name: David Smith
Title: Vice President
MORRIS MATERIAL HANDLING LTD.
By: /s/ Martin Ditkof
------------------------------
Name: Martin Ditkof
Title: Director
MONDEL ULC
By: /s/ Martin Ditkof
------------------------------
Name: Martin Ditkof
Title: Secretary
KAVERIT STEEL AND CRANE ULC
By: /s/ Martin Ditkof
------------------------------
Name: Martin Ditkof
Title: Secretary
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
CREDIT AGRICOLE INDOSUEZ,
as Syndication Agent and
as a Bank
By: /s/ Kenneth J. Kencel
------------------------------
Name: Kenneth J. Kencel
Title: First Vice President
By: /s/ [Illegible]
------------------------------
Name:
Title:
A Term Loan Commitment: $1,833,333.33
B Term Loan Commitment: $4,000,000.00
Acquisition Term Loan Commitment: $2,750,000.00
Revolving Loan Commitment: $6,416,666,.67
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
CANADIAN IMPERIAL BANK OF
COMMERCE, as Administrative
Agent and Collateral Agent
and as a Bank
By: /s/ Timothy E. Doyle
------------------------------
Name: Timothy E. Doyle
Title: Managing Director
CIBC Oppenheimer Corp., As Agent
A Term Loan Commitment: $0
B Term Loan Commitment: $0
Acquisition Term Loan Commitment: $0
Revolving Loan Commitment: $0
Canadian Swingline Commitment: $5,000,000.00
U.K. Swingline Commitment: $0
U.S. Swingline Commitment: $0
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
CIBC Inc., as a Bank
By: /s/ Timothy E. Doyle
------------------------------
Name: Timothy E. Doyle
Title: Managing Director
CIBC Oppenheimer Corp., As Agent
A Term Loan Commitment: $2,500,000.00
B Term Loan Commitment: $19,000,000.00
Acquisition Term Loan Commitment: $3,750,000.00
Revolving Loan Commitment: $8,750,000.00
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
BANKBOSTON, N.A.
as Documentation Agent and
as a Bank
By: /s/ Gregory R. D. Clark
------------------------------
Name: Gregory R. D. Clark
Title: Managing Director
By: /s/ Gregory R. D. Clark
------------------------------
Name: Gregory R. D. Clark
Title: Managing Director
A Term Loan Commitment: $2,000,000.00
B Term Loan Commitment: $0.00
Acquisition Term Loan Commitment: $3,000,000.00
Revolving Loan Commitment: $7,000,000.00
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
ABN-AMRO BANK N.V., as a Bank
By: /s/ Joann L. Holman
------------------------------
Name: Joann L. Holman
Title: Vice President
By: /s/ Thomas F. Comfort
------------------------------
Name: Thomas F. Comfort
Title: Vice President
A Term Loan Commitment: $1,500,000.00
B Term Loan Commitment: $0.00
Acquisition Term Loan Commitment: $2,250,000.00
Revolving Loan Commitment: $5,250,000.00
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $15,000,000.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
CREDITANSTALT CORPORATE FINANCE Inc.,
as a Bank
By: /s/ Jack R. Bertges
------------------------------
Name: Jack R. Bertges
Title: Senior Vice President
By: /s/ Patrick J. Rounds
------------------------------
Name: Patrick J. Rounds
Title: Vice President
A Term Loan Commitment: $1,833,333.34
B Term Loan Commitment: $0.00
Acquisition Term Loan Commitment: $2,750,000.00
Revolving Loan Commitment: $6,416,666.66
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
ARCHIMEDES FUNDING, L.L.C.
By: ING Capital Advisors, Inc., as
Collateral Manager
By: /s/ Michael D. Hatley
------------------------------
Name: Michael D. Hatley
Title: Vice President & Portfolio
Manager
A Term Loan Commitment: $0.00
B Term Loan Commitment: $5,000,000.00
Acquisition Term Loan Commitment: $0.00
Revolving Loan Commitment: $0.00
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
THE FIRST NATIONAL BANK OF CHICAGO,
as a Bank
By: /s/ Suzanne Ergastolo
------------------------------
Name: Suzanne Ergastolo
Title: Underwriter
A Term Loan Commitment: $1,500,000.00
B Term Loan Commitment: $0.00
Acquisition Term Loan Commitment: $2,250,000.00
Revolving Loan Commitment: $5,250,000.00
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $10,000,000.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
FIRST UNION NATIONAL BANK, as a Bank
By: /s/ Jorge Gonzalez
------------------------------
Name: Jorge Gonzalez
Title: Senior Vice President
A Term Loan Commitment: $1,833,333.34
B Term Loan Commitment: $0.00
Acquisition Term Loan Commitment: $2,750,000.00
Revolving Loan Commitment: $6,416,666.66
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
FLEET NATIONAL BANK, as a Bank
By: /s/ James T. Andersen
------------------------------
Name: James T. Andersen
Title: Managing Director
A Term Loan Commitment: $1,833,333.00
B Term Loan Commitment: $0.00
Acquisition Term Loan Commitment: $2,750,000.00
Revolving Loan Commitment: $6,416,667.00
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
SANWA BUSINESS CREDIT CORPORATION, as a Bank
By: /s/ John J. McKenna
------------------------------
Name: John J. McKenna
Title: First Vice President
A Term Loan Commitment: $1,500,000.00
B Term Loan Commitment: $0.00
Acquisition Term Loan Commitment: $2,250,000.00
Revolving Loan Commitment: $5,250,000.00
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
CRESCENT/MACH I PARTNERS, L.P.
by: TCW Asset Management
Company, Its Investment Manager
By: /s/ Justin L. Driscoll
------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
A Term Loan Commitment: $0.00
B Term Loan Commitment: $7,000,000.00
Acquisition Term Loan Commitment: $0.00
Revolving Loan Commitment: $0.00
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
RIGGS BANK N.A., as a Bank
By: /s/ Ana G. Tejblum
------------------------------
Name: Ana G. Tejblum
Title: Vice President
A Term Loan Commitment: $1,833,333.00
B Term Loan Commitment: $0.00
Acquisition Term Loan Commitment: $2,750,000.00
Revolving Loan Commitment: $6,416,667.00
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00
Credit Agreement among Morris Material Handling, Inc., MMH Holdings,
Inc., Material Handling, LLC, Morris Material Handling, Ltd., Mondel ULC,
Kaverit Steel and Crane ULC and Canadian Imperial Bank of Commerce, as
Administrative Agent, the other Agents listed herein, and the Banks listed
herein.
WELLS FARGO BANK, N.A., as a Bank
By: /s/ Dana D. Cagle
------------------------------
Name: Dana D. Cagle
Title: Vice President
A Term Loan Commitment: $1,833,333.33
B Term Loan Commitment: $0.00
Acquisition Term Loan Commitment: $2,750,000.00
Revolving Loan Commitment: $6,416,666.67
Canadian Swingline Commitment: $0.00
U.K. Swingline Commitment: $0.00
U.S. Swingline Commitment: $0.00