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AMENDED AND RESTATED
CREDIT AGREEMENT
among
ELGAR HOLDINGS, INC.,
ELGAR ELECTRONICS CORPORATION,
VARIOUS BANKS
and
BANKERS TRUST COMPANY,
as AGENT
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Dated as of February 3, 1998
and
Amended and Restated as of May 29, 1998
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TABLE OF CONTENTS
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SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing. . . . . . . . . . . . . . . . . 4
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . 4
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . 5
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . 7
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . 8
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . 9
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . .11
1.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . .12
1.13 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . .12
SECTION 2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . .13
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . .13
2.02 Maximum Letter of Credit Outstandings; Final Maturities . . . . .14
2.03 Letter of Credit Requests; Minimum Stated Amount. . . . . . . . .14
2.04 Letter of Credit Participations . . . . . . . . . . . . . . . . .15
2.05 Agreement to Repay Letter of Credit Drawings. . . . . . . . . . .17
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 3. Commitment Commission; Fees; Reductions of Commitment. . . . . .18
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.02 Voluntary Termination of Unutilized Revolving Loan Commitments. .19
3.03 Mandatory Reduction of Commitments. . . . . . . . . . . . . . . .20
SECTION 4. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . . .20
4.01 Voluntary Prepayments.. . . . . . . . . . . . . . . . . . . . . .20
4.02 Mandatory Repayments. . . . . . . . . . . . . . . . . . . . . . .21
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . .25
4.04 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . .25
SECTION 5. Conditions Precedent to the Restatement Effective Date . . . . .27
5.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . . .27
5.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . .28
5.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . .28
(i)
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5.04 Corporate Documents; Proceedings; etc.. . . . . . . . . . . . . .28
5.05 Plans; Shareholders' Agreements; Management Agreements;
Employment Agreements; Non-Compete Agreements; Collective
Bargaining Agreements; Tax Sharing Agreements; Existing
Indebtedness Agreements . . . . . . . . . . . . . . . . . . . .28
5.06 Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.07 Existing Credit Agreement . . . . . . . . . . . . . . . . . . . .30
5.08 Adverse Change, etc.. . . . . . . . . . . . . . . . . . . . . . .30
5.09 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . .31
5.10 Pledge Agreement. . . . . . . . . . . . . . . . . . . . . . . . .31
5.11 Security Agreement. . . . . . . . . . . . . . . . . . . . . . . .31
5.12 Subsidiaries Guaranty . . . . . . . . . . . . . . . . . . . . . .32
5.13 Capital Call Agreement. . . . . . . . . . . . . . . . . . . . . .32
5.14 Landlord Waivers. . . . . . . . . . . . . . . . . . . . . . . . .32
5.15 Financial Statements; Pro Forma Financial Statements,
Projections . . . . . . . . . . . . . . . . . . . . . . . . . .32
5.16 Solvency Certificate; Insurance Certificates. . . . . . . . . . .32
5.17 Initial Borrowing Base Certificate. . . . . . . . . . . . . . . .32
5.18 Fees, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 6. Conditions Precedent to All Credit Events. . . . . . . . . . . .32
6.01 Restatement Effective Date. . . . . . . . . . . . . . . . . . . .33
6.02 No Default; Representations and Warranties. . . . . . . . . . . .33
6.03 Notice of Borrowing; Letter of Credit Request . . . . . . . . . .33
SECTION 7. Representations, Warranties and Agreements . . . . . . . . . . .33
7.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . .34
7.02 Corporate and Other Power and Authority . . . . . . . . . . . . .34
7.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . .34
7.04 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc.. . . . . . . . . . . . . . . . .35
7.06 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . .36
7.07 True and Complete Disclosure. . . . . . . . . . . . . . . . . . .36
7.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . .37
7.09 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . .37
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . .37
7.11 The Security Documents. . . . . . . . . . . . . . . . . . . . . .38
7.12 Representations and Warranties in the Documents . . . . . . . . .39
7.13 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . .39
7.14 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . .39
7.15 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . .40
7.16 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . .40
7.17 Investment Company Act. . . . . . . . . . . . . . . . . . . . . .40
7.18 Public Utility Holding Company Act. . . . . . . . . . . . . . . .40
7.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . .41
7.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . .41
(ii)
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7.21 Patents, Licenses, Franchises and Formulas. . . . . . . . . . . .42
7.22 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . .42
7.23 Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . .42
7.24 Special Purpose Corporation.. . . . . . . . . . . . . . . . . . .42
7.25 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
SECTION 8. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . .43
8.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . .43
(a) Monthly Reports . . . . . . . . . . . . . . . . . . . . . . .43
(b) Quarterly Financial Statements. . . . . . . . . . . . . . . .43
(c) Annual Financial Statements.. . . . . . . . . . . . . . . . .43
(d) Management Letters. . . . . . . . . . . . . . . . . . . . . .44
(e) Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . .44
(f) Officer's Certificates. . . . . . . . . . . . . . . . . . . .44
(g) Notice of Default or Litigation . . . . . . . . . . . . . . .44
(h) Other Reports and Filings . . . . . . . . . . . . . . . . . .44
(i) Environmental Matters . . . . . . . . . . . . . . . . . . . .44
(j) Borrowing Base Certificate. . . . . . . . . . . . . . . . . .45
(k) Other Information . . . . . . . . . . . . . . . . . . . . . .46
8.02 Books, Records, Inspections, Audits and Annual Meetings . . . . .46
8.03 Maintenance of Property; Insurance. . . . . . . . . . . . . . . .46
8.04 Corporate Franchises. . . . . . . . . . . . . . . . . . . . . . .47
8.05 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . .47
8.06 Compliance with Environmental Laws. . . . . . . . . . . . . . . .47
8.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
8.08 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . .49
8.09 Performance of Obligations. . . . . . . . . . . . . . . . . . . .49
8.10 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . .49
8.11 Additional Security; Further Assurances . . . . . . . . . . . . .50
8.12 Contributions . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.13 Preferred Stock Dividends . . . . . . . . . . . . . . . . . . . .51
8.14 Interest Rate Protection. . . . . . . . . . . . . . . . . . . . .51
SECTION 9. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . .51
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . . .54
9.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
9.04 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . .58
9.05 Advances, Investments and Loans . . . . . . . . . . . . . . . . .59
9.06 Transactions with Affiliates. . . . . . . . . . . . . . . . . . .61
9.07 Consolidated Fixed Charge Coverage Ratio. . . . . . . . . . . . .62
9.09 Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . .63
9.10 Limitation on Payments of Certain Indebtedness; Modifications
of Certain Indebtedness; Modifications of Certificate of
Incorporation, By-Laws and Certain Other Agreements; etc. . . .64
(iii)
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9.11 Limitation on Certain Restrictions on Subsidiaries. . . . . . . .64
9.12 Limitation on Issuance of Capital Stock . . . . . . . . . . . . .65
9.13 Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
9.14 Limitation on Creation of Subsidiaries. . . . . . . . . . . . . .66
9.15 Additional Restriction on the Incurrence of Certain
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . .66
SECTION 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . .67
10.01 Payments.. . . . . . . . . . . . . . . . . . . . . . . . . . . .67
10.02 Representations, etc.. . . . . . . . . . . . . . . . . . . . . .67
10.03 Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . .67
10.04 Default Under Other Agreements . . . . . . . . . . . . . . . . .67
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . .68
10.06 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
10.07 Security Documents . . . . . . . . . . . . . . . . . . . . . . .69
10.08 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . .69
10.09 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . .69
10.10 Change of Control. . . . . . . . . . . . . . . . . . . . . . . .69
10.11 Capital Call Agreement . . . . . . . . . . . . . . . . . . . . .69
SECTION 11. Definitions and Accounting Terms. . . . . . . . . . . . . . . .70
11.01 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . .70
SECTION 12. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . .93
12.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . .93
12.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . .93
12.03 Lack of Reliance on the Agent. . . . . . . . . . . . . . . . . .94
12.04 Certain Rights of the Agent. . . . . . . . . . . . . . . . . . .94
12.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . .94
12.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .94
12.07 The Agent in its Individual Capacity . . . . . . . . . . . . . .95
12.08 Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
12.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . .95
SECTION 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . .96
13.01 Payment of Expenses, etc.. . . . . . . . . . . . . . . . . . . .96
13.02 Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . .97
13.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .98
13.04 Benefit of Agreement; Assignments; Participations. . . . . . . .98
13.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . .99
13.06 Payments Pro Rata. . . . . . . . . . . . . . . . . . . . . . . 100
13.07 Calculations; Computations; Accounting Terms . . . . . . . . . 100
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . 101
13.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 102
(iv)
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13.10 Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . 102
13.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . 102
13.12 Amendment or Waiver; etc.. . . . . . . . . . . . . . . . . . . 102
13.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
13.14 Domicile of Loans. . . . . . . . . . . . . . . . . . . . . . . 104
13.15 Register . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
13.16 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 105
13.17 Holdings Merger. . . . . . . . . . . . . . . . . . . . . . . . 105
SECTION 14. Holdings Guaranty . . . . . . . . . . . . . . . . . . . . . . 106
14.01 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
14.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . 106
14.03 Nature of Liability. . . . . . . . . . . . . . . . . . . . . . 106
14.04 Independent Obligation . . . . . . . . . . . . . . . . . . . . 107
14.05 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . 107
14.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
14.07 Subordination. . . . . . . . . . . . . . . . . . . . . . . . . 108
14.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
14.09 Nature of Liability. . . . . . . . . . . . . . . . . . . . . . 110
(v)
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Properties
SCHEDULE IV Plans
SCHEDULE V Subsidiaries
SCHEDULE VI Existing Indebtedness
SCHEDULE VII Insurance
SCHEDULE VIII Existing Liens
SCHEDULE IX Existing Investments
SCHEDULE X Certain Tax Matters
SCHEDULE XI Existing Letters of Credit
SCHEDULE XII Certain Affiliate Transactions
SCHEDULE XIII Litigation
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Term Note
EXHIBIT B-2 Form of Revolving Note
EXHIBIT B-3 Form of Swingline Note
EXHIBIT C Form of Letter of Credit Request
EXHIBIT D Form of Section 4.04(b)(ii) Certificate
EXHIBIT E Form of Opinion of Gibson, Dunn & Crutcher LLP,
Special Counsel to the Credit Parties
EXHIBIT F Form of Officers' Certificate
EXHIBIT G Form of Pledge Agreement
EXHIBIT H Form of Security Agreement
EXHIBIT I Form of Subsidiaries Guaranty
EXHIBIT J Form of Capital Call Agreement
EXHIBIT K Form of Solvency Certificate
EXHIBIT L Form of Borrowing Base Certificate
EXHIBIT M Form of Assignment and Assumption Agreement
EXHIBIT N Form of Intercompany Note
(vi)
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 3, 1998
and amended and restated as of May 29, 1998, among ELGAR HOLDINGS, INC., a
Delaware corporation ("Holdings"), ELGAR ELECTRONICS CORPORATION, a California
corporation (the "Borrower"), the Banks party hereto from time to time, and
BANKERS TRUST COMPANY, as Agent (all capitalized terms used herein and defined
in Section 11 are used herein as therein defined).
W I T N E S S E T H :
WHEREAS, Holdings, the Borrower, the Existing Banks and Bankers Trust
Company, as Agent, are party to a Credit Agreement, dated as of February 3, 1998
(as the same has been amended, modified or supplemented to, but not including,
the Restatement Effective Date, the "Existing Credit Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the Existing
Credit Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree that the Existing Credit
Agreement shall be and is hereby amended and restated in its entirety as
follows:
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 THE COMMITMENTS. (a) Subject to and upon the terms and
conditions set forth herein, each Bank with a Term Loan Commitment severally
agrees to make a term loan (each a "Term Loan" and, collectively, the "Term
Loans") to the Borrower, which Term Loans (i) shall be incurred by the Borrower
on the Restatement Effective Date, (ii) shall, at the option of the Borrower, be
incurred and maintained as, and/or converted into, Base Rate Loans or Eurodollar
Loans, PROVIDED THAT, (A) except as otherwise specifically provided in Section
1.10(b), all Term Loans comprising the same Borrowing shall at all times be of
the same Type and (B) unless the Agent has determined (and has notified the
Borrower) that the Syndication Date has occurred (at which time this clause (B)
shall no longer be applicable), no more than three Borrowings of Term Loans to
be maintained as Eurodollar Loans may be incurred prior to the 90th day after
the Restatement Effective Date (each of which Borrowings of Eurodollar Loans may
only have an Interest Period of one month, and the first of which Borrowings may
only be made on the Restatement Effective Date or on or prior to the sixth
Business Day after the Restatement Effective Date, the second of which
Borrowings may only be made on the last day of the Interest Period of the first
such Borrowing and the third of which Borrowings may only be made on the last
day of the Interest Period of the second such Borrowing) and (iii) shall be made
by each such Bank in that aggregate principal amount which does not exceed the
Term Loan Commitment of such Bank on the Restatement Effective Date (before
giving effect to the termination thereof on such date pursuant to Section
3.03(b)). Once repaid, Term Loans incurred hereunder may not be reborrowed.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a Revolving Loan Commitment severally agrees (I) to convert, on
the Restatement Effective Date, Existing Revolving Loans made by such Bank to
the Borrower pursuant to the Existing Credit Agreement and outstanding on the
Restatement Effective Date into a Borrowing of Revolving Loans hereunder and
(II) at any time and from time to time on and after the Restatement Effective
Date and prior to the Final Maturity Date, to make one or more additional
Revolving Loans to the Borrower, all of which Revolving Loans (i) shall, at the
option of the Borrower, be incurred and maintained as, and/or converted into,
Base Rate Loans or Eurodollar Loans, PROVIDED that (A) except as otherwise
specifically provided in Section 1.10(b), all Revolving Loans comprising the
same Borrowing shall at all times be of the same Type and (B) unless the Agent
has determined (and has notified the Borrower) that the Syndication Date has
occurred (at which time this clause (B) shall no longer be applicable), no more
than three Borrowings of Revolving Loans to be maintained as Eurodollar Loans
may be incurred prior to the 90th day after the Restatement Effective Date (each
of which Borrowings of Eurodollar Loans may only have an Interest Period of one
month, and the first of which Borrowings may only be made on the same day as the
first day of the first Interest Period of the Term Loans that are maintained as
Eurodollar Loans, the second of which Borrowings may only be made on the last
day of the Interest Period of the first such Borrowing and the third of which
Borrowings may only be made on the last day of the Interest Period of the second
such Borrowing), (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed for any such Bank at any time
outstanding that aggregate principal amount which, when added to the product of
(x) such Bank's RL Percentage and (y) the sum of (I) the aggregate amount of all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid
with the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time and (II) the aggregate principal
amount of all Swingline Loans (exclusive of Swingline Loans which are repaid
with the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) then outstanding, equals the Available Revolving
Loan Commitment of such Bank at such time and (iv) shall not exceed for all such
Banks at any time outstanding that aggregate principal amount which, when added
to the sum of (I) the aggregate amount of all Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of Revolving
Loans) at such time and (II) the aggregate principal amount of all Swingline
Loans (exclusive of Swingline Loans which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of Revolving
Loans) then outstanding, equals the lesser of (A) the Borrowing Base at such
time (based on the Borrowing Base Certificate last delivered) and (B) the Total
Available Revolving Loan Commitment at such time.
(c) Subject to and upon the terms and conditions set forth herein,
the Swingline Bank agrees to make, at any time and from time to time on and
after the Restatement Effective Date and prior to the Swingline Expiry Date, a
revolving loan or revolving loans (each a "Swingline Loan" and, collectively,
the "Swingline Loans") to the Borrower, which Swingline Loans (i) shall be made
and maintained as Base Rate Loans, (ii) may be repaid and reborrowed in
accordance with the provisions hereof, (iii) shall not exceed in aggregate
principal amount at any time outstanding, when combined with the aggregate
principal amount of all Revolving Loans then outstanding and the aggregate
amount of all Letter of Credit Outstandings at such time, an
-2-
amount equal to the lesser of (A) the Borrowing Base at such time (based on
the Borrowing Base Certificate last delivered) and (B) the Total Available
Revolving Loan Commitment at such time, and (iv) shall not exceed in
aggregate principal amount at any time outstanding the Maximum Swingline
Amount. Notwithstanding anything to the contrary contained in this Section
1.01(c), (x) the Swingline Bank shall not be obligated to make any Swingline
Loans at a time when a Bank Default exists unless the Swingline Bank has
entered into arrangements satisfactory to it and the Borrower to eliminate
the 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' RL Percentage of the outstanding Swingline Loans
and (y) the Swingline Bank shall not make any Swingline Loan after it has
received written notice from the Borrower, any other Credit Party or the
Required Banks stating that a Default or an Event of Default exists and is
continuing until such time as the Swingline Bank shall have received written
notice (I) of rescission of all such notices from the party or parties
originally delivering such notice or (II) of the waiver of such Default or
Event of Default by the Required Banks.
(d) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the Banks with a Revolving Loan Commitment that the
Swingline Bank's outstanding Swingline Loans shall be funded with one or more
Borrowings of Revolving Loans (PROVIDED that such notice shall be deemed to have
been automatically given upon the occurrence of a Default or an Event of Default
under Section 10.05 or upon the exercise of any of the remedies provided in the
last paragraph of Section 10), in which case one or more Borrowings of Revolving
Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all such
Banks PRO RATA based on each such Bank's RL Percentage (determined before giving
effect to any termination of the Revolving Loan Commitments pursuant to the last
paragraph of Section 10) and the proceeds thereof shall be applied directly by
the Swingline Bank to repay the Swingline Bank for such outstanding Swingline
Loans. Each such 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 Swingline Bank notwithstanding (i) the amount of the Mandatory
Borrowing may not comply with the Minimum Borrowing Amount otherwise required
hereunder, (ii) whether any conditions specified in Section 6 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 Borrowing Base or the
Total Available 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 the Borrower), then each
such Bank hereby agrees that it shall forthwith purchase (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted for any payments
received from the Borrower 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 Banks to share in such Swingline Loans
ratably based upon their respective RL Percentages (determined before giving
effect to any termination of the Revolving Loan Commitments pursuant to the last
paragraph of Section 10), PROVIDED that (x) all interest payable on the
Swingline Loans shall be for the account of the 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
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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 Bank shall be required to pay the Swingline Bank interest on the
principal amount of 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, at the overnight
Federal Funds Rate for the first three days and at the rate otherwise
applicable to Base Rate Loans hereunder for each day thereafter.
1.02 MINIMUM AMOUNT OF EACH BORROWING. The aggregate principal
amount of each Borrowing of Loans under a respective Tranche shall not be less
than the Minimum Borrowing Amount applicable to such Tranche. More than one
Borrowing may occur on the same date, but at no time shall there be outstanding
more than eight Borrowings of Eurodollar Loans.
1.03 NOTICE OF BORROWING. (a) Whenever the Borrower desires to
incur (x) Eurodollar Loans hereunder, the Borrower shall give the Agent at the
Notice Office at least three Business Days' prior notice of each Eurodollar Loan
to be incurred hereunder and (y) Base Rate Loans hereunder (excluding Swingline
Loans and Revolving Loans made pursuant to a Mandatory Borrowing), the Borrower
shall give the Agent at the Notice Office at least one Business Day's prior
notice of each Base Rate Loan to be incurred hereunder, PROVIDED that (in each
case) any such notice shall be deemed to have been given on a certain day only
if given before 12:00 Noon (New York time) on such day. Each such notice (each
a "Notice of Borrowing"), except as otherwise expressly provided in Section
1.10, shall be irrevocable and shall be given by the Borrower in writing, or by
telephone promptly confirmed in writing, in the form of Exhibit A, appropriately
completed to specify the aggregate principal amount of the Loans to be incurred
pursuant to such Borrowing, the date of such Borrowing (which shall be a
Business Day), whether the Loans being incurred pursuant to such Borrowing shall
constitute Term Loans or Revolving Loans, whether the Loans being incurred
pursuant to such Borrowing are to be initially maintained as Base Rate Loans or,
to the extent permitted hereunder, Eurodollar Loans and, if Eurodollar Loans,
the initial Interest Period to be applicable thereto. The Agent shall promptly
give each Bank which is required to make Loans of the Tranche specified in the
respective Notice of Borrowing, notice of such proposed Borrowing, of such
Bank's proportionate share thereof and of the other matters required by the
immediately preceding sentence to be specified in the Notice of Borrowing.
(b)(i) Whenever the Borrower desires to incur Swingline Loans
hereunder, the Borrower shall give the Swingline Bank no later than 1:00 P.M.
(New York time) on the date that a Swingline Loan is to be incurred, written
notice or telephonic notice promptly confirmed in writing of each Swingline Loan
to be incurred hereunder. Each such notice shall be irrevocable and specify in
each case (A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be incurred pursuant to
such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(d), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 1.01(d).
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(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any Borrowing or prepayment of
Loans, the Agent or the Swingline Bank, as the case may be, may act without
liability upon the basis of telephonic notice of such Borrowing or prepayment,
as the case may be, believed by the Agent or the Swingline Bank, as the case may
be, in good faith to be from the Chairman of the Board, the President, the Chief
Financial Officer, the Treasurer or any Assistant Treasurer of the Borrower, or
from any other authorized officer of the Borrower designated in writing by the
Borrower to the Agent as being authorized to give such notices, prior to receipt
of written confirmation. In each such case, the Borrower hereby waives the
right to dispute the Agent's or Swingline Bank's record of the terms of such
telephonic notice of such Borrowing or prepayment of Loans, as the case may be,
absent manifest error.
1.04 DISBURSEMENT OF FUNDS. No later than 12:00 Noon (New York time)
on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, no later than 3:00 P.M. (New York time) on the date specified
pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, no
later than 1:00 P.M. (New York time) on the date specified in Section 1.01(d)),
each Bank with a Commitment of the respective Tranche will make available its
PRO RATA portion (determined in accordance with Section 1.07) of each such
Borrowing requested to be made on such date (or in the case of Swingline Loans,
the Swingline Bank will make available the full amount thereof). All such
amounts will be made available in Dollars and in immediately available funds at
the Payment Office, and, except for Revolving Loans made pursuant to a Mandatory
Borrowing, the Agent will make available to the Borrower at the Payment Office
the aggregate of the amounts so made available by the Banks. Unless the Agent
shall have been notified by any Bank prior to the date of Borrowing that such
Bank does not intend to make available to the Agent such Bank's portion of any
Borrowing to be made on such date, the Agent may assume that such Bank has made
such amount available to the Agent on such date of Borrowing and the Agent may
(but shall not be obligated to), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Bank, the Agent shall be
entitled to recover such corresponding amount on demand from such Bank. If such
Bank does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrower and the Borrower shall
immediately pay such corresponding amount to the Agent. The Agent also shall be
entitled to recover on demand from such Bank or the 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 Agent to the Borrower until
the date such corresponding amount is recovered by the Agent, at a rate per
annum equal to (i) if recovered from such Bank, at the overnight Federal Funds
Rate and (ii) if recovered from the Borrower, the rate of interest applicable to
the respective Borrowing, as determined pursuant to Section 1.08. Nothing in
this Section 1.04 shall be deemed to relieve any Bank from its obligation to
make Loans hereunder or to prejudice any rights which the Borrower may have
against any Bank as a result of any failure by such Bank to make Loans
hereunder.
1.05 NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made by each Bank shall be evidenced (i) if Term
Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-1, with blanks appropriately completed in
conformity herewith (each a "Term Note" and, collectively, the "Term
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Notes"), (ii) if Revolving Loans, by a promissory note duly executed and
delivered by the Borrower substantially in the form of Exhibit B-2, with
blanks appropriately completed in conformity herewith (each a "Revolving
Note" and, collectively, the "Revolving Notes") and (iii) if Swingline Loans,
by a promissory note duly executed and delivered by the Borrower
substantially in the form Exhibit B-3, with blanks appropriately completed in
conformity herewith (the "Swingline Note").
(b) The Term Note issued to each Bank that has a Term Loan Commitment
or outstanding Term Loans shall (i) be executed by the Borrower, (ii) be payable
to such Bank or its registered assigns and be dated the Restatement Effective
Date (or, if issued after the Restatement Effective Date, be dated the date of
the issuance thereof), (iii) be in a stated principal amount equal to the Term
Loans made by such Bank on the Restatement Effective Date (or, if issued after
the Restatement Effective Date, be in a stated principal amount equal to the
outstanding principal amount of Term Loans of such Bank at such time) and be
payable in the outstanding principal amount of Term Loans evidenced thereby,
(iv) mature on the Final Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02, and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(c) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the Restatement Effective Date (or, if issued after the Restatement
Effective Date, be dated the date of the issuance thereof), (iii) be in a stated
principal amount equal to the Revolving Loan Commitment of such Bank (or, if
issued after the termination thereof, be in a stated principal amount equal to
the outstanding Revolving Loans of such Bank at such time) and be payable in the
outstanding principal amount of the Revolving Loans evidenced thereby, (iv)
mature on the Final Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02, and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(d) The Swingline Note issued to the Swingline Bank shall (i) be
executed by the Borrower, (ii) be payable to the Swingline Bank or its
registered assigns and be dated the Restatement Effective Date, (iii) be in a
stated principal amount equal to the Maximum Swingline Amount and be payable in
the outstanding principal amount of the Swingline Loans evidenced thereby from
time to time, (iv) mature on the Swingline Expiry Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base Rate
Loans evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01, and mandatory repayment as provided in Section 4.02, and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to
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make any such notation or any error in such notation shall not affect the
Borrower's obligations in respect of such Loans.
1.06 CONVERSIONS. The Borrower shall have the option to convert, on
any Business Day occurring after the Restatement Effective Date, all or a
portion equal to at least the Minimum Borrowing Amount of the outstanding
principal amount of Loans (other than Swingline Loans which may not be converted
pursuant to this Section 1.06) made pursuant to one or more Borrowings (so long
as of the same Tranche) of one or more Types of Loans into a Borrowing (of the
same Tranche) of another Type of Loan, PROVIDED that, (i) except as otherwise
provided in Section 1.10(b), Eurodollar Loans may be converted into Base Rate
Loans only on the last day of an Interest Period applicable to the Loans being
converted and no such partial conversion of Eurodollar Loans shall reduce the
outstanding principal amount of such Eurodollar Loans made pursuant to a single
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii)
Base Rate Loans may only be converted into Eurodollar Loans if no Default or
Event of Default is in existence on the date of the conversion, (iii) unless the
Agent has determined (and has notified the Borrower) that the Syndication Date
has occurred (at which time this clause (iii) shall no longer be applicable),
prior to the 90th day after the Restatement Effective Date, conversions of Base
Rate Loans into Eurodollar Loans may only be made if any such conversion is
effective on the first day of the first, second or third Interest Period
referred to in clause (B) of each of Sections 1.01(a)(ii) and 1.01(b)(i) and so
long as such conversion does not result in a greater number of Borrowings of
Eurodollar Loans prior to the 90th day after the Restatement Effective Date as
are permitted under such Sections, and (iv) no conversion pursuant to this
Section 1.06 shall result in a greater number of Borrowings of Eurodollar Loans
than is permitted under Section 1.02. Each such conversion shall be effected by
the Borrower by giving the Agent at the Notice Office prior to 12:00 Noon (New
York time) at least three Business Days' prior notice (each a "Notice of
Conversion") specifying the Loans to be so converted, the Borrowing or
Borrowings pursuant to which such Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Agent shall give each Bank prompt notice of any such proposed conversion
affecting any of its Loans. Upon any such conversion the proceeds thereof will
be deemed to be applied directly on the day of such conversion to prepay the
outstanding principal amount of the Loans being converted. Swingline Loans may
not be converted pursuant to this Section 1.06.
1.07 PRO RATA BORROWINGS. All Borrowings of Term Loans and Revolving
Loans under this Agreement shall be incurred from the Banks PRO RATA on the
basis of their Term Loan Commitments and Revolving Loan Commitments. It is
understood that no Bank shall be responsible for any default by any other Bank
of its obligation to make Loans hereunder and that 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 make its Loans hereunder.
1.08 INTEREST. (a) The Borrower agrees to pay interest in respect
of the unpaid principal amount of each Base Rate Loan from the date of Borrowing
thereof until the earlier of (i) the maturity thereof (whether by acceleration
or otherwise) and (ii) the conversion of such Base Rate Loan to a Eurodollar
Loan pursuant to Section 1.06, at a rate per annum which shall be equal to the
sum of the Applicable Base Rate Margin plus the Base Rate in effect from time to
time.
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(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date of Borrowing thereof
until the earlier of (i) the maturity thereof (whether by acceleration or
otherwise) and (ii) the conversion of such Eurodollar Loan to a Base Rate Loan
pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum which
shall, during each Interest Period applicable thereto, be equal to the sum of
the Applicable Eurodollar Rate Margin plus the Eurodollar Rate for such Interest
Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) the rate which is 2% in excess of the rate then borne by such Loans and (y)
the rate which is 2% in excess of the rate otherwise applicable to Base Rate
Loans of the respective Tranche from time to time. Interest which accrues under
this Section 1.08(c) shall be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, (ii) in respect of each Eurodollar Loan, 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
day of such Interest Period and (iii) in respect of each Loan, on any repayment
or prepayment (on the amount repaid or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Agent shall determine
the Eurodollar Rate for each Interest Period applicable to Eurodollar Loans and
shall promptly notify the Borrower and the Banks thereof. Each such
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto.
1.09 INTEREST PERIODS. At the time the Borrower gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third Business Day prior to the expiration of an Interest
Period applicable to such Eurodollar Loan (in the case of any subsequent
Interest Period), the Borrower shall have the right to elect, by giving the
Agent notice thereof, the interest period (each an "Interest Period") applicable
to such Eurodollar Loan, which Interest Period shall, at the option of the
Borrower (but otherwise subject to the limitation set forth in clause (B) of the
proviso in each of Sections 1.01(a)(ii) and 1.01(b)(i)), be a one, two, three or
six-month period, PROVIDED that:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Base Rate Loan) and each Interest
Period occurring thereafter in respect of such Eurodollar Loan shall
commence on the day on which the next preceding Interest Period applicable
thereto expires;
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(iii) if any Interest Period for a Eurodollar Loan begins on a day
for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period, such Interest Period shall end on the
last Business Day of such calendar month;
(iv) if any Interest Period for a Eurodollar Loan would otherwise
expire on a day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day, PROVIDED, HOWEVER, that if any
Interest Period for a 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;
(v) no Interest Period may be selected at any time when a Default
or an Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of Eurodollar
Loans shall be selected which extends beyond the Final Maturity Date; and
(vii) no Interest Period in respect of any Borrowing of Term Loans
shall be selected which extends beyond any date upon which a mandatory
repayment of Term Loans will be required to be made under Section 4.02(b),
if the aggregate principal amount of Term Loans which have Interest Periods
which will expire after such date will be in excess of the aggregate
principal amount of Term Loans then outstanding less the aggregate amount
of such required repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that any
Bank shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement 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; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental rule, regulation, order,
guideline or request (whether or not having the force of law) or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or request,
such as, for example, but not limited to: (A) a change in the basis of
taxation of payment to any Bank of the principal of
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or interest on the Notes or any other amounts payable hereunder (except
for changes in the rate of tax on, or determined by reference to, the
net income or profits of such Bank pursuant to the laws of the
jurisdiction in which such Bank is organized or in which such Bank's
principal office or applicable lending office is located or any
subdivision thereof or therein), but, in any event, without duplication
of any amounts payable to such Bank under Section 4.04 (although no such
Bank shall be entitled to any amounts under this Section 1.10(a)(ii) in
respect of any Taxes to the extent that such Bank fails to provide the
forms or certification required to be provided by it under Section
4.04(b)) 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 occurring since the date of this Agreement affecting such
Bank, the interbank Eurodollar market or the position of such Bank in
such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Agent, in the case of clause (i)
above) shall promptly give notice (by telephone promptly confirmed in writing)
to the Borrower and, except in the case of clause (i) above, to the Agent of
such determination (which notice the Agent shall promptly transmit to each of
the other Banks). Thereafter (x) in the case of clause (i) above, Eurodollar
Loans shall no longer be available until such time as the Agent notifies the
Borrower and the Banks that the circumstances giving rise to such notice by the
Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given
by the Borrower with respect to Eurodollar Loans which have not yet been
incurred (including by way of conversion) shall be deemed rescinded by the
Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such
Bank, within 30 days after such Bank's written request 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 received or receivable hereunder (a written
notice as to the additional amounts owed to such Bank, showing in reasonable
detail the basis for the calculation thereof, submitted to the Borrower by such
Bank shall, absent manifest error, be final and conclusive and binding on all
the parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel such Borrowing by
giving the Agent telephonic notice (confirmed in writing) on the same date that
the Borrower was notified by the affected Bank or the Agent pursuant to Section
1.10(a)(ii) or (iii) or (y) if the affected Eurodollar Loan is then outstanding,
upon at least three Business Days' written notice to
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the Agent, require the affected Bank to convert such Eurodollar Loan into a
Base Rate Loan, 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(b).
(c) If any Bank determines that after the date of this Agreement the
introduction of or any change in any applicable law or governmental rule,
regulation, order, guideline, directive or request (whether or not having the
force of law) concerning capital adequacy, or any change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency, will have the effect of increasing the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
based on the existence of such Bank's Commitments hereunder or its obligations
hereunder, then the Borrower shall pay to such Bank, within 30 days after its
written demand therefor, such additional amounts as shall be required to
compensate such Bank or such other corporation for the increased cost to such
Bank or such other corporation or the reduction in the rate of return to such
Bank or such other corporation as a result of such increase of capital. In
determining such additional amounts, each Bank will act reasonably and in good
faith and will use averaging and attribution methods which are reasonable,
PROVIDED that such Bank's determination of compensation owing under this Section
1.10(c) shall, absent manifest error, be final and conclusive and binding on all
the parties hereto. Each Bank, upon determining that any additional amounts
will be payable pursuant to this Section 1.10(c), will give prompt written
notice thereof to the Borrower, which notice shall show in reasonable detail the
basis for calculation of such additional amounts.
(d) Notwithstanding anything to the contrary contained in this
Section 1.10, unless a Bank gives notice to the Borrower that the Borrower is
obligated to pay any amount under this Section 1.10 within 180 days after the
later of (x) the date such Bank incurs the respective increased costs or
reduction in return the rate of return or (y) the date such Bank has actual
knowledge of its incurrence of the respective increased costs or reduction in
the rate of return, then such Bank shall only be entitled to be compensated for
such amount by the Borrower pursuant to this Section 1.10 to the extent the
respective increased costs or reduction in the rate of return are incurred or
suffered on or after the date which occurs 180 days prior to such Bank giving
notice to the Borrower that the Borrower is obligated to pay the respective
amounts pursuant to this Section 1.10.
1.11 COMPENSATION. The Borrower shall compensate each Bank, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Bank to fund its Eurodollar Loans but excluding loss of
anticipated profits) which such Bank may sustain: (i) if for any reason (other
than a default by such Bank or the Agent) a Borrowing of, or conversion from or
into, Eurodollar Loans does not occur on a date specified therefor in a Notice
of Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower
or deemed withdrawn pursuant to Section 1.10(a)); (ii) if any repayment
(including any repayment made pursuant to Section 4.01, Section 4.02 or as a
result of an acceleration of the Loans pursuant to Section 10) or conversion of
any of its Eurodollar Loans occurs on a date which is not the last day of an
Interest Period with respect thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of
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prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default by the Borrower to repay its Loans when required by the terms of this
Agreement or any Note held by such Bank or (y) any election made pursuant to
Section 1.10(b).
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit affected by such event, PROVIDED that such
designation is made on such terms that such Bank and its lending office suffer
no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing
in this Section 1.12 shall affect or postpone any of the obligations of the
Borrower or the right of any Bank provided in Sections 1.10, 2.06 and 4.04.
1.13 REPLACEMENT OF BANKS. (x) If any Bank becomes a Defaulting
Bank or otherwise defaults in its obligations to make Loans, (y) upon the
occurrence of an event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to any Bank
which results in such Bank charging to the Borrower increased costs in excess of
those being generally charged by the other Banks or (z) in the case of a refusal
by a Bank to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as (and to the extent) provided in Section 13.12(b), the Borrower
shall have the right, if no Default or Event of Default then exists (or, in the
case of preceding clause (z), no Default or Event of Default will exist
immediately after giving effect to such replacement), to replace such Bank (the
"Replaced Bank") with one or more other Eligible Transferees, none of whom shall
constitute a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank") and each of whom shall be required to be reasonably
acceptable to the Agent, PROVIDED that (i) at the time of any replacement
pursuant to this Section 1.13, the Replacement Bank shall enter into one or more
Assignment and Assumption Agreements pursuant to Section 13.04(b) (and with all
fees payable pursuant to said Section 13.04(b) to be paid by the Replacement
Bank) pursuant to which the Replacement Bank shall acquire all of the
Commitments and outstanding Loans of, and in each case participations in Letters
of Credit by, the Replaced Bank and, in connection therewith, shall pay to (x)
the Replaced Bank in respect thereof an amount equal to the sum of (I) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
the Replaced Bank, (II) an amount equal to all Unpaid Drawings that have been
funded by (and not reimbursed to) such Replaced Bank, together with all then
unpaid interest with respect thereto at such time and (III) an amount equal to
all accrued, but theretofore unpaid, Fees owing to the Replaced Bank pursuant to
Section 3.01, (y) the Issuing Bank an amount equal to such Replaced Bank's RL
Percentage of any Unpaid Drawing (which at such time remains an Unpaid Drawing)
to the extent such amount was not theretofore funded by such Replaced Bank to
such Issuing Bank and (z) the Swingline Bank an amount equal to such Replaced
Bank's RL Percentage of any Mandatory Borrowing to the extent such amount was
not theretofore funded by such Replaced Bank to the Swingline Bank and (ii) all
obligations of the Borrower due and owing to the Replaced Bank at such time
(other than those specifically described in clause (i) above in respect of which
the assignment purchase price has been, or is concurrently being, paid) shall be
paid in full to such Replaced Bank concurrently with such replacement. Upon the
execution of the respective
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Assignment and Assumption Agreement, the payment of amounts referred to in
clauses (i) and (ii) above and, if so requested by the Replacement Bank,
delivery to the Replacement Bank of the appropriate Note or Notes executed by
the Borrower, the Replacement Bank shall become a Bank hereunder and the
Replaced Bank shall cease to constitute a Bank hereunder, except with respect
to indemnification provisions under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01), which shall
survive as to such Replaced Bank.
SECTION 2. LETTERS OF CREDIT.
2.01 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request that the Issuing Bank
issue, at any time and from time to time on and after the Restatement Effective
Date and prior to the 30th day prior to the Final Maturity Date, (x) for the
account of the Borrower and for the benefit of any holder (or any trustee, agent
or other similar representative for any such holders) of L/C Supportable
Obligations of the Borrower or any of its Subsidiaries, an irrevocable standby
letter of credit, in a form customarily used by the Issuing Bank or in such
other form as has been approved by the Issuing Bank (each such standby letter of
credit, a "Standby Letter of Credit"), in support of such L/C Supportable
Obligations and (y) for the account of the Borrower, an irrevocable sight
commercial letter of credit in a form customarily used by the Issuing Bank or in
such other form as has been approved by the Issuing Bank (each such commercial
letter of credit, a "Trade Letter of Credit", and each such Trade Letter of
Credit and each Standby Letter of Credit, a "Letter of Credit"), in support of
customary commercial transactions of the Borrower and its Subsidiaries. All
Letters of Credit shall be denominated in Dollars and shall be issued on a sight
basis only.
(b) Subject to and upon the terms and conditions set forth herein,
the Issuing Bank agrees that it will, at any time and from time to time on and
after the Restatement Effective Date and prior to the 30th day prior to the
Final Maturity Date, following its receipt of the respective Letter of Credit
Request, issue for the account of the Borrower, one or more Letters of Credit
(x) in the case of Standby Letters of Credit, in support of such L/C Supportable
Obligations of the Borrower or any of its Subsidiaries as are permitted to
remain outstanding without giving rise to a Default or an Event of Default,
hereunder and (y) in the case of Trade Letters of Credit, in support of
customary commercial transactions of the Borrower or any of its Subsidiaries,
PROVIDED that the Issuing Bank shall be under no obligation to issue any Letter
of Credit of the types described above if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing
Bank from issuing such Letter of Credit or any requirement of law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction or reserve or capital requirement
(for which the Issuing Bank is not otherwise compensated under Section 2.06
or otherwise) not in effect on the date hereof, or any unreimbursed loss,
cost or expense which was not applicable or in effect with respect to the
Issuing Bank as of the
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date hereof and which the Issuing Bank reasonably and in good faith deems
material to it; or
(ii) the Issuing Bank shall have received notice from the Borrower,
any other Credit Party or the Required Banks prior to the issuance of such
Letter of Credit of the type described in the second sentence of Section
2.03(b).
(c) Schedule XI contains a description of all letters of credit
issued by the Issuing Bank pursuant to the Existing Credit Agreement and which
are to remain outstanding on the Restatement Effective Date. Each such letter
of credit, including any extension thereof (each an "Existing Letter of Credit")
shall constitute a "Letter of Credit" for all purposes of this Agreement. Each
Existing Letter of Credit shall be deemed issued for purposes of Sections
2.01(a), 2.01(b), 2.04(a), 3.01(b) and 3.01(c) on the Restatement Effective Date
2.02 MAXIMUM LETTER OF CREDIT OUTSTANDINGS; FINAL MATURITIES.
Notwithstanding anything to the contrary contained in this Agreement, (i) no
Letter of Credit shall be issued the Stated Amount of which, when added to the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid on
the date of, and prior to the issuance of, the respective Letter of Credit) at
such time would exceed either (x) $1,000,000 or (y) when added to the aggregate
principal amount of all Revolving Loans then outstanding and the aggregate
principal amount of all Swingline Loans then outstanding, an amount equal to the
lesser of (A) the Borrowing Base at such time (based on the Borrowing Base
Certificate last delivered) and (B) the Total Available Revolving Loan
Commitment at such time and (ii) each Letter of Credit shall by its terms
terminate on or before the earlier of (x) (A) in the case of Standby Letters of
Credit, the date which occurs 12 months after the date of the issuance thereof
(although any such Standby Letter of Credit may be extendable for successive
periods of up to 12 months, but not beyond the third Business Day prior to the
Final Maturity Date, on terms acceptable to the Issuing Bank) and (B) in the
case of Trade Letters of Credit, the date which occurs 180 days after the date
of issuance thereof and (y) three Business Days prior to the Final Maturity
Date.
2.03 LETTER OF CREDIT REQUESTS; MINIMUM STATED AMOUNT. (a) Whenever
the Borrower desires that a Letter of Credit be issued for its account, the
Borrower shall give the Agent and the Issuing Bank at least five Business Days'
(or such shorter period as is acceptable to the Issuing Bank) written notice
thereof. Each notice shall be in the form of Exhibit C appropriately completed
(each a "Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.02. Unless the Issuing Bank has received notice from the Borrower, any other
Credit Party or the Required Banks before it issues a Letter of Credit that one
or more of the conditions specified in Section 5 or 6 are not then satisfied, or
that the issuance of such Letter of Credit would violate Section 2.02, then the
Issuing Bank shall, subject to the terms and conditions of this Agreement, issue
the requested Letter of Credit for the account of the Borrower in accordance
with the Issuing Bank's usual and customary practices. Upon its issuance of or
amendment or modification to any Standby Letter of Credit, the Issuing Bank
shall promptly notify the Borrower and the Agent of such issuance,
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amendment or modification and such notification shall be accompanied by a
copy of the issued Letter of Credit or amendment or modification.
Notwithstanding anything to the contrary contained in this Agreement, in the
event that a Bank Default exists, the Issuing Bank shall not be required to
issue any Letter of Credit unless the Issuing Bank has entered into an
arrangement satisfactory to it and the Borrower to eliminate the Issuing
Bank's risk with respect to the participation in Letters of Credit by the
Defaulting Bank or Banks, including by cash collateralizing such Defaulting
Bank's or Banks' RL Percentage of the Letter of Credit Outstandings.
(c) The initial Stated Amount of each Letter of Credit shall not be
less than $10,000 or such lesser amount as is reasonably acceptable to the
Issuing Bank.
2.04 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by the Issuing Bank of any Letter of Credit, the Issuing Bank shall be
deemed to have sold and transferred to each Bank with a Revolving Loan
Commitment, other than the Issuing Bank (each such Bank, in its capacity under
this Section 2.04, a "Participant"), and each such Participant shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such Participant's RL Percentage, in such Letter of Credit, each
drawing or payment made thereunder and the obligations of the Borrower under
this Agreement with respect thereto, and any security therefor or guaranty
pertaining thereto. Upon any change in the Revolving Loan Commitments or RL
Percentages of the Banks pursuant to Section 1.13 or 13.04, it is hereby agreed
that, with respect to all outstanding Letters of Credit and Unpaid Drawings,
there shall be an automatic adjustment to the participations pursuant to this
Section 2.04 to reflect the new RL Percentages of the assignor and assignee
Bank, as the case may be.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Bank shall not have an obligation relative to the other Banks other than
to confirm that any documents required to be delivered under such Letter of
Credit appear to have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by the Issuing Bank under or in connection with any
Letter of Credit if taken or omitted in the absence of gross negligence or
willful misconduct (as finally determined by a court of competent jurisdiction),
shall not create for the Issuing Bank any resulting liability to the Borrower,
any other Credit Party, any Bank or any other Person.
(c) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to the Issuing Bank pursuant to Section 2.05(a), the Issuing Bank shall promptly
notify the Agent, which shall promptly notify each Participant of such failure,
and each Participant shall promptly and unconditionally pay to the Issuing Bank
the amount of such Participant's RL Percentage of such unreimbursed payment in
Dollars and in same day funds. If the Agent so notifies, prior to 11:00 A.M.
(New York time) on any Business Day, any Participant required to fund a payment
under a Letter of Credit, such Participant shall make available to the Issuing
Bank in Dollars such Participant's RL Percentage of the amount of such payment
on such Business Day in same day funds. If and to the extent such Participant
shall not have so made its RL Percentage of the amount of such payment available
to the Issuing Bank, such Participant agrees to pay to the Issuing Bank,
forthwith on demand such amount, together with interest thereon, for each day
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from such date until the date such amount is paid to the Issuing Bank at the
overnight Federal Funds Rate for the first three days and at the interest rate
applicable to Revolving Loans maintained as Base Rate Loans for each day
thereafter. The failure of any Participant to make available to the Issuing
Bank its RL Percentage of any payment under any Letter of Credit shall not
relieve any other Participant of its obligation hereunder to make available to
the Issuing Bank its RL Percentage of any Letter of Credit on the date required,
as specified above, but no Participant shall be responsible for the failure of
any other Participant to make available to the Issuing Bank such other
Participant's RL Percentage of any such payment.
(d) Whenever the Issuing Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Participants
pursuant to clause (c) above, the Issuing Bank shall pay to each Participant
which has paid its RL Percentage thereof, in Dollars and in same day funds, an
amount equal to such Participant's share (based upon the proportionate aggregate
amount originally funded by such Participant to the aggregate amount funded by
all Participants) of the principal amount of such reimbursement obligation and
interest thereon accruing after the purchase of the respective participations.
(e) Upon the request of any Participant, the Issuing Bank shall
furnish to such Participant copies of any Letter of Credit issued by it and such
other documentation as may reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to the
Issuing Bank with respect to Letters of Credit issued by it shall be irrevocable
and not subject to any qualification or exception whatsoever and shall be made
in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any of its Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, any Participant, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transaction between
the Borrower or any Subsidiary of the Borrower and the beneficiary named in
any such Letter of Credit);
(iii) any draft, 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;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
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(v) the occurrence of any Default or Event of Default.
2.05 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
agrees to reimburse the Issuing Bank, by making payment to the Agent in
immediately available funds at the Payment Office, for any payment or
disbursement made by the Issuing Bank under any Letter of Credit (each such
amount, so paid until reimbursed, an "Unpaid Drawing"), not later than one
Business Day following receipt by the Borrower of notice of such payment or
disbursement (provided that no such notice shall be required to be given if a
Default or an Event of Default under Section 10.05 shall have occurred and be
continuing, in which case the Unpaid Drawing shall be due and payable
immediately without presentment, demand, protest or notice of any kind (all of
which are hereby waived by the Borrower)), with interest on the amount so paid
or disbursed by the Issuing Bank, to the extent not reimbursed prior to 1:00
P.M. (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but excluding the date the Issuing Bank
was reimbursed by the Borrower therefor at a rate per annum which shall be the
Base Rate plus the Applicable Base Rate Margin, each as in effect from time to
time; PROVIDED, HOWEVER, to the extent such amounts are not reimbursed prior to
1:00 P.M. (New York time) on the third Business Day following the receipt by the
Borrower of notice of such payment or disbursement or following the occurrence
of a Default or an Event of Default under Section 10.05, interest shall
thereafter accrue on the amounts so paid or disbursed by the Issuing Bank (and
until reimbursed by the Borrower) at a rate per annum which shall be the Base
Rate in effect from time to time plus the Applicable Base Rate Margin for
Revolving Loans plus 2%, in each such case, with interest to be payable on
demand. The Issuing Bank shall give the Borrower prompt written notice of each
Drawing under any Letter of Credit, PROVIDED that the failure to give any such
notice shall in no way affect, impair or diminish the Borrower's obligations
hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the Issuing Bank with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against any Bank (including in its
capacity as issuer of the Letter of Credit or as Participant), including,
without limitation, any defense based upon the failure of any drawing under a
Letter of Credit (each a "Drawing") to conform to the terms of the Letter of
Credit or any nonapplication or misapplication by the beneficiary of the
proceeds of such Drawing; PROVIDED, HOWEVER, that the Borrower shall not be
obligated to reimburse the Issuing Bank for any wrongful payment made by the
Issuing Bank under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of the Issuing
Bank (as finally determined by a court of competent jurisdiction).
2.06 INCREASED COSTS. (a) If at any time after the date of this
Agreement, the introduction of or any change in any applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by the Issuing Bank or
any Participant with any request or directive by any such authority (whether or
not having the force of law), shall either (i) impose, modify or make applicable
any reserve, deposit, capital adequacy or similar requirement against letters of
credit issued by the Issuing Bank or participated in by any
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Participant, or (ii) impose on the Issuing Bank or any Participant any other
conditions relating, directly or indirectly, to this Agreement; and the
result of any of the foregoing is to increase the cost to the Issuing Bank or
any Participant of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount of any sum received or receivable by the Issuing
Bank or any Participant hereunder or reduce the rate of return on its capital
with respect to Letters of Credit (except for changes in the rate of tax on,
or determined by reference to, the net income or profits of the Issuing Bank
or such Participant pursuant to the laws of the jurisdiction in which it is
organized or in which its principal office or applicable lending office is
located or any subdivision thereof or therein), then, within 30 days after
the delivery of the certificate referred to below to the Borrower by the
Issuing Bank or any Participant (a copy of which certificate shall be sent by
the Issuing Bank or such Participant to the Agent), the Borrower shall pay to
the Issuing Bank or such Participant such additional amount or amounts as
will compensate such Bank for such increased cost or reduction in the amount
receivable or reduction on the rate of return on its capital. The Issuing
Bank or any Participant, upon determining that any additional amounts will be
payable pursuant to this Section 2.06, will give prompt written notice
thereof to the Borrower, which notice shall include a certificate submitted
to the Borrower by the Issuing Bank or such Participant (a copy of which
certificate shall be sent by the Issuing Bank or such Participant to the
Agent), setting forth in reasonable detail the basis for the calculation of
such additional amount or amounts necessary to compensate the Issuing Bank or
such Participant. The certificate required to be delivered pursuant to this
Section 2.06 shall, absent manifest error, be final and conclusive and
binding on the Borrower.
(b) Notwithstanding anything to the contrary contained in this
Section 2.06, unless the Issuing Bank or a Participant gives notice to the
Borrower that the Borrower is obligated to pay any amount under this Section
2.06 within 180 days after the later of (x) the date the Issuing Bank or such
Participant incurs the respective increased costs or reduction in return the
rate of return or (y) the date the Issuing Bank or such Participant has actual
knowledge of its incurrence of the respective increased costs or reduction in
the rate of return, then the Issuing Bank or such Participant shall only be
entitled to be compensated for such amount by the Borrower pursuant to this
Section 2.06 to the extent the respective increased costs or reduction in the
rate of return are incurred or suffered on or after the date which occurs 180
days prior to the Issuing Bank or such Participant giving notice to the Borrower
that the Borrower is obligated to pay the respective amounts pursuant to this
Section 2.06.
SECTION 3. COMMITMENT COMMISSION; FEES; REDUCTIONS OF COMMITMENT.
3.01 FEES. (a) The Borrower agrees to pay to the Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment, a
commitment commission (the "Commitment Commission") for the period from and
including the Restatement Effective Date to but excluding the Final Maturity
Date (or such earlier date on which the Total Revolving Loan Commitment shall
have been terminated), computed at a rate for each day equal to the Applicable
Commitment Commission Percentage on the daily average Unutilized Revolving Loan
Commitment of such Non-Defaulting Bank. Accrued Commitment Commission shall be
due and payable quarterly in arrears on each Quarterly Payment Date and on the
Final Maturity Date (or such earlier date on which the Total Revolving Loan
Commitment shall have been terminated).
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(b) The Borrower agrees to pay to the Agent for distribution to each
Bank with a Revolving Loan Commitment (based on each such Bank's respective RL
Percentage) a fee in respect of each Letter of Credit issued hereunder (the
"Letter of Credit Fee") for the period from and including the date of issuance
of such Letter of Credit to and including the date of termination or expiration
of such Letter of Credit, computed at a rate per annum equal to the Applicable
Eurodollar Rate Margin then in effect on the daily Stated Amount of such Letter
of Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and on the first day after the
termination of the Total Revolving Loan Commitment upon which no Letters of
Credit remain outstanding.
(c) The Borrower agrees to pay to the Issuing Bank, for its own
account, a facing fee in respect of each Letter of Credit issued hereunder (the
"Facing Fee") for the period from and including the date of issuance of such
Letter of Credit to and including the date of the termination of such Letter of
Credit, computed at a rate per annum equal to 1/4 of 1% on the daily Stated
Amount of such Letter of Credit, provided that in any event the minimum amount
of the Facing Fee payable in any 12 month period for each Letter of Credit shall
be $500; it being agreed that, on the date of issuance of any Letter of Credit
and on each anniversary thereof prior to the termination of such Letter of
Credit, if $500 will exceed the amount of Facing Fees that will accrue with
respect to such Letter of Credit for the immediately succeeding 12 month period,
the full $500 shall be payable on the date of issuance of such Letter of Credit
and on each such anniversary thereof. Except as otherwise provided in the
proviso to the immediately preceding sentence, accrued Facing Fees shall be due
and payable quarterly in arrears on each Quarterly Payment Date and upon the
first day after the termination of the Total Revolving Loan Commitment upon
which no Letters of Credit remain outstanding.
(d) The Borrower agrees to pay to the Issuing Bank, for its own
account, upon each payment under, issuance of, or amendment to, any Letter of
Credit, such amount as shall at the time of such event be the administrative
charge and the reasonable expenses which the Issuing Bank is generally imposing
in connection with such occurrence with respect to letters of credit.
(e) The Borrower agrees to pay to the Agent, for its own account,
such other fees as have been agreed to in writing by the Borrower and the Agent.
3.02 VOLUNTARY TERMINATION OF UNUTILIZED REVOLVING LOAN COMMITMENTS.
(a) Upon at least one Business Day's prior written notice to the Agent at the
Notice Office (which notice the Agent shall promptly transmit to each of the
Banks), the Borrower shall have the right, at any time or from time to time,
without premium or penalty, to terminate the Total Unutilized Revolving Loan
Commitment, in whole or in part, pursuant to this Section 3.02(a), in an
integral multiple of $100,000, in the case of partial reductions to the Total
Unutilized Revolving Loan Commitment, PROVIDED that each such reduction shall
apply proportionately to permanently reduce the Revolving Loan Commitment of
each Bank with such a Commitment.
(b) In the event of a refusal by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, subject to its compliance with
the requirements of Section 13.12(b), upon five Business Days'
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prior written notice to the Agent at the Notice Office (which notice the
Agent shall promptly transmit to each of the Banks) terminate all of the
Commitments of such Bank, so long as all Loans, together with accrued and
unpaid interest, Fees and all other amounts, owing to such Bank are repaid
concurrently with the effectiveness of such termination pursuant to Section
4.01(b) (at which time Schedule I shall be deemed modified to reflect such
changed amounts), and at such time, such Bank shall no longer constitute a
"Bank" for purposes of this Agreement, except with respect to
indemnifications under this Agreement (including, without limitation,
Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01), which shall survive as to
such repaid Bank.
3.03 MANDATORY REDUCTION OF COMMITMENTS. (a) The Total Commitment
(and each of the Commitments of each Bank) shall terminate in its entirety on
June 15, 1998 unless the Restatement Effective Date has occurred on or before
such date and in the event of such termination this Agreement shall cease to be
of any force or effect and the Existing Credit Agreement shall continue to be
effective, as the same may have been, or may thereafter be, amended, modified or
supplemented from time to time.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Term Loan Commitment (and the Term Loan
Commitment of each Bank) shall terminate in its entirety on the Restatement
Effective Date (after giving effect to the incurrence of the Term Loans on such
date).
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate in its entirety on the earlier of
(i) the date on which a Change of Control occurs and (ii) the Final Maturity
Date.
(d) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, on each date after the Restatement Effective Date upon
which a mandatory repayment of Term Loans pursuant to any of Sections 4.02(d),
4.02(e) and/or 4.02(g) is required (and exceeds in amount the aggregate
principal amount of Term Loans then outstanding) or would be required if Term
Loans were then outstanding, the Total Revolving Loan Commitment shall be
permanently reduced by the amount, if any, by which the amount required to be
applied pursuant to said Sections (determined as if an unlimited amount of Term
Loans were actually outstanding) exceeds the aggregate principal amount of Term
Loans then outstanding. Each reduction to the Total Revolving Loan Commitment
pursuant to this Section 3.03(d) shall be applied proportionately to permanently
reduce the Revolving Loan Commitment of each Bank with such a Commitment.
SECTION 4. PREPAYMENTS; PAYMENTS; TAXES.
4.01 VOLUNTARY PREPAYMENTS. (a) The Borrower shall have the right
to prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions: (i) the Borrower
shall give the Agent prior to 1:00 P.M. (New York time) at the Notice Office (x)
at least one Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Base Rate Loans (or same day
notice in the case of a prepayment of Swingline Loans) and (y) at least three
Business Days' prior
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written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay Eurodollar Loans, whether Term Loans, Revolving Loans or
Swingline Loans shall be prepaid, the amount of such prepayment and the Types
of Loans to be prepaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings pursuant to which made, which notice the Agent shall,
except in the case of Swingline Loans, promptly transmit to each of the
Banks; (ii) (x) each partial prepayment of Term Loans pursuant to this
Section 4.01(a) shall be in an aggregate principal amount of at least
$250,000 and in integral multiples of $50,000 in excess thereof, (y) each
partial prepayment of Revolving Loans pursuant to this Section 4.01(a) shall
be in an aggregate principal amount of at least $250,000 and in integral
multiples of $50,000 in excess thereof, and (z) each partial prepayment of
Swingline Loans pursuant to this Section 4.01(a) shall be in an aggregate
principal amount of at least $50,000 and in integral multiples of $50,000 in
excess thereof, PROVIDED that if any partial prepayment of Eurodollar Loans
made pursuant to any Borrowing shall reduce the outstanding principal amount
of Eurodollar Loans made pursuant to such Borrowing to an amount less than
the Minimum Borrowing Amount applicable thereto, then such Borrowing may not
be continued as a Borrowing of Eurodollar Loans and any election of an
Interest Period with respect thereto given by the Borrower shall have no
force or effect; (iii) each prepayment pursuant to this Section 4.01(a) in
respect of any Loans made pursuant to a Borrowing shall be applied PRO RATA
among such Loans, PROVIDED that at the Borrower's election in connection with
any prepayment of Revolving Loans pursuant to this Section 4.01(a), such
prepayment shall not, so long no Default or Event of Default then exists, be
applied to any Revolving Loan of a Defaulting Bank; and (iv) each voluntary
prepayment of Term Loans pursuant to this Section 4.01(a) shall be applied to
reduce the then remaining Scheduled Repayments of Term Loans on a PRO RATA
basis (based upon the then remaining unpaid principal amounts of such
Scheduled Repayments after giving effect to all prior reductions thereto).
(b) In the event of a refusal by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, upon five Business Days' prior
written notice to the Agent at the Notice Office (which notice the Agent shall
promptly transmit to each of the Banks) repay all Loans of, together with
accrued and unpaid interest, Fees and other amounts owing to, such Bank in
accordance with, and subject to the requirements of, said Section 13.12(b) so
long as (A) all of the Commitments of such Bank are terminated concurrently with
such repayment pursuant to Section 3.02(b) (at which time Schedule I shall be
deemed modified to reflect the changed Revolving Loan Commitments) and (B) the
consents, if any, required under Section 13.12(b) in connection with the
repayment pursuant to this clause (b) have been obtained.
4.02 MANDATORY REPAYMENTS. (a) On any day on which the sum of the
aggregate outstanding principal amount of the Revolving Loans, Swingline Loans
and the Letter of Credit Outstandings exceeds either (A) the Borrowing Base at
such time (based on the Borrowing Base Certificate last delivered) or (B) the
Total Available Revolving Loan Commitment as then in effect, the Borrower shall
prepay on such day the principal of Swingline Loans and, after all Swingline
Loans have been repaid in full (if no Swingline Loans are outstanding),
Revolving Loans in an amount equal to such excess. If, after giving effect to
the prepayment of all outstanding Swingline Loans and Revolving Loans, the
aggregate amount of the Letter of Credit
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Outstandings exceeds either (A) the Borrowing Base at such time (based on the
Borrowing Base Certificate last delivered) or (B) the Total Available
Revolving Loan Commitment as then in effect, the Borrower shall pay to the
Agent at the Payment Office on such day an amount of cash and/or Cash
Equivalents equal to the amount of such excess (up to a maximum amount equal
to the Letter of Credit Outstandings at such time), such cash and/or Cash
Equivalents to be held as security for all obligations of the Borrower to the
Issuing Bank and the Banks hereunder in a cash collateral account to be
established by the Agent.
(b) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each date set forth below, the Borrower shall be required to
repay that principal amount of Term Loans, to the extent then outstanding, as is
set forth opposite such date below (each such repayment, as the same may be
reduced as provided in Sections 4.01(a) and 4.02(h), a "Scheduled Repayment"):
SCHEDULE REPAYMENT DATE AMOUNT
----------------------- ------
September 30, 1998 $500,000
December 31, 1998 $500,000
March 31, 1999 $500,000
June 30, 1999 $500,000
September 30, 1999 $625,000
December 31, 1999 $625,000
March 31, 2000 $625,000
June 30, 2000 $625,000
September 30, 2000 $875,000
December 31, 2000 $875,000
March 31, 2001 $875,000
June 30, 2001 $875,000
September 30, 2001 $1,000,000
December 31, 2001 $1,000,000
March 31, 2002 $1,000,000
June 30, 2002 $1,000,000
September 30, 2002 $1,000,000
December 31, 2002 $1,000,000
Final Maturity Date $1,000,000
(c) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each date on or after the Restatement Effective Date upon which
Holdings or any of its Subsidiaries receives any cash proceeds from any capital
contribution or any sale or issuance of its equity (other than cash proceeds
received (i) as part of the Equity Financing, (ii) from the issuance by Holdings
of shares of its common stock (including as a result of the exercise of any
options
-22-
with regard thereto), or options to purchase to shares of its common stock,
to officers, directors and employees of Holdings or any of its Subsidiaries,
(iii) from equity contributions made to Holdings in an aggregate amount not
to exceed $5,000,000 to the extent made by any Person that is a shareholder
of Holdings on the Restatement Effective Date or (iv) from equity
contributions to any Subsidiary of Holdings to the extent made by Holdings or
another Subsidiary of Holdings), an amount equal to 100% of the Net Equity
Proceeds of such capital contribution or sale or issuance of equity shall be
applied as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Sections 4.02(h) and (i) (it being
understood and agreed that, in any event and notwithstanding anything to the
contrary contained above in this Section 4.02(c), 100% of the amount of any
capital contribution made to Holdings pursuant to the Capital Call Agreement
shall be applied as provided in Sections 4.02(h) and (i)).
(d) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each date on or after the Restatement Effective Date upon which
Holdings or any of its Subsidiaries receives any cash proceeds from any
incurrence by Holdings or any of its Subsidiaries of Indebtedness for borrowed
money (other than Indebtedness for borrowed money permitted to be incurred
pursuant to Section 9.04 as such Section is in effect on the Restatement
Effective Date), an amount equal to 100% of the Net Debt Proceeds of the
respective incurrence of Indebtedness shall be applied as a mandatory repayment
of principal of outstanding Term Loans in accordance with the requirements of
Sections 4.02(h) and (i).
(e) In addition to any other mandatory repayments pursuant to this
Section 4.02, within five Business Days after each date on or after the
Restatement Effective Date upon which Holdings or any of its Subsidiaries
receives any cash proceeds from any Asset Sale, an amount equal to 100% of the
Net Sale Proceeds from such Asset Sale shall be applied as a mandatory repayment
of principal of outstanding Term Loans in accordance with the requirements of
Sections 4.02(h) and (i); PROVIDED that with respect to no more than $1,000,000
in the aggregate of cash proceeds from Asset Sales in any fiscal year of
Holdings, such Net Sale Proceeds shall not be required to be so applied on such
date to the extent that no Default or Event of Default then exists and Holdings
has delivered a certificate to the Agent on or prior to such date stating that
such Net Sale Proceeds shall be used to purchase assets that replace the assets
that were the subject of such Asset Sale or assets that will be used in the
business of the Borrower or its Subsidiaries (collectively, "Replacement
Assets") within 350 days following the date of such Asset Sale (which
certificate shall set forth the estimates of the proceeds to be so expended);
PROVIDED FURTHER that, if all or any portion of such Net Sale Proceeds not
required to be applied to the repayment of outstanding Term Loans are not so
reinvested in Replacement Assets within such 350 day period, such remaining
portion shall be applied on the last day of such period as a mandatory repayment
of principal of outstanding Term Loans as provided above in this Section 4.02(e)
without regard to the immediately preceding proviso.
(f) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each Excess Cash Payment Date, an amount equal to the
Applicable Excess Cash Flow Percentage of the Excess Cash Flow for the relevant
Excess Cash Payment Period shall be applied as a mandatory repayment of
principal of outstanding Term Loans in accordance with the requirements of
Sections 4.02(h) and (i).
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(g) In addition to any other mandatory repayments pursuant to this
Section 4.02, within 10 days following each date on or after the Restatement
Effective Date upon which Holdings or any of its Subsidiaries receives any cash
proceeds from any Recovery Event, an amount equal to 100% of the Net Insurance
Proceeds from such Recovery Event shall be applied as a mandatory repayment of
principal of outstanding Term Loans in accordance with the requirements of
Sections 4.02(h) and (i), PROVIDED that so long as no Default or Event of
Default then exists and such Net Insurance Proceeds do not exceed $5,000,000,
such Net Insurance Proceeds shall not be required to be so applied on such date
to the extent that Holdings has delivered a certificate to the Agent on or prior
to such date stating that such Net Insurance Proceeds shall be used to replace
or restore any properties or assets in respect of which such Net Insurance
Proceeds were paid within 350 days following the date of the receipt of such Net
Insurance Proceeds (which certificate shall set forth the estimates of the
proceeds to be so expended), and PROVIDED FURTHER, that (i) if the amount of
such Net Insurance Proceeds exceeds $5,000,000, then the entire amount of such
Net Insurance Proceeds, and not just the portion of such Net Insurance Proceeds
in excess of $5,000,000, shall be applied as a mandatory repayment of Term Loans
as provided above in this Section 4.02(g) without regard to the immediately
preceding proviso and (ii) if all or any portion of such Net Insurance Proceeds
not required to be applied to the repayment of outstanding Term Loans pursuant
to the immediately preceding proviso are not so used within 350 days after the
date of the receipt of such Net Insurance Proceeds, such remaining portion shall
be applied on the last day of such period as a mandatory repayment of principal
of outstanding Term Loans as provided above in this Section 4.02(g) without
regard to the immediately preceding proviso.
(h) Each amount required to be applied to repay outstanding Term
Loans pursuant to Sections 4.02(c) through (g), inclusive, shall be applied to
reduce the then remaining Scheduled Repayments on a PRO RATA basis (based upon
the then remaining unpaid principal amounts of such Scheduled Repayments after
giving effect to all prior reductions thereto).
(i) With respect to each repayment of Loans required by this Section
4.02 (including repayments resulting from the reduction of the Total Revolving
Loan Commitment pursuant to Section 3.03(d)), the Borrower may designate the
Types of Loans of the respective Tranche which are to be repaid and, in the case
of Eurodollar Loans, the specific Borrowing or Borrowings of the respective
Tranche pursuant to which made, PROVIDED that: (i) repayments of Eurodollar
Loans pursuant to this Section 4.02 may only be made on the last day of an
Interest Period applicable thereto unless all Eurodollar Loans of the respective
Tranche with Interest Periods ending on such date of required repayment and all
Base Rate Loans of the respective Tranche have been paid in full; (ii) if any
repayment of Eurodollar Loans made pursuant to a single Borrowing shall reduce
the outstanding Eurodollar Loans made pursuant to such Borrowing to an amount
less than the Minimum Borrowing Amount applicable thereto, such Borrowing shall
be converted at the end of the then current Interest Period into a Borrowing of
Base Rate Loans; and (iii) each repayment of any Loans made pursuant to a
Borrowing shall be applied PRO RATA among such Loans. In the absence of a
designation by the Borrower as described in the preceding sentence, the Agent
shall, subject to the above, make such designation in its sole discretion.
Notwithstanding the foregoing provisions of this Section 4.02, if at any time
the mandatory prepayment of Term Loans pursuant to Sections 4.02(c) through (g)
above would result, after giving effect to the procedures set forth above, in
the Borrower incurring breakage costs under Section 1.11
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as a result of Eurodollar Loans being prepaid other than on the last day of
an Interest Period applicable thereto (the "Affected Eurodollar Loans"),
then, so long as no Default or Event of Default then exists, the Borrower may
in its sole discretion initially deposit a portion (up to 100%) of the
amounts that otherwise would have been paid in respect of the Affected
Eurodollar Loans with the Agent (which deposit must be equal in amount to the
amount of Affected Eurodollar Loans not immediately prepaid) to be held as
security for the obligations of the Borrower hereunder pursuant to a cash
collateral agreement (which shall permit investments in Cash Equivalents
satisfactory to the Agent) to be entered into in form and substance
reasonably satisfactory to the Agent, with such cash collateral to be
directly applied upon the first occurrence (or occurrences) thereafter of the
last day of an Interest Period applicable to the relevant Term Loans that are
Eurodollar Loans (or such earlier date or dates as shall be requested by the
Borrower), to repay an aggregate principal amount of such Term Loans equal to
the Affected Eurodollar Loans not initially repaid pursuant to this sentence.
Notwithstanding anything to the contrary contained in the immediately
preceding sentence, all amounts deposited as cash collateral pursuant to the
immediately preceding sentence shall be held for the benefit of the Banks
whose Term Loans would otherwise have been immediately repaid with the
amounts deposited and upon the taking of any action by the Agent or the Banks
pursuant to the remedial provisions of Section 10, any amounts held as cash
collateral pursuant to this Section 4.02(i) shall, subject to the
requirements of applicable law, be immediately applied first to the relevant
Term Loans.
(j) Notwithstanding anything to the contrary contained in this
Agreement or in any other Credit Document, (i) all then outstanding Loans shall
be repaid in full on the Final Maturity Date, (ii) all then outstanding Loans
shall be repaid in full on the date on which a Change of Control occurs and
(iii) all then outstanding Swingline Loans shall be repaid in full on the
Swingline Expiry Date.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement or under any Note shall be
made to the Agent for the account of the Bank or Banks entitled thereto not
later than 1:00 P.M. (New York time) on the date when due and shall be made in
Dollars in immediately available funds at the Payment Office. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.
4.04 NET PAYMENTS. (a) All payments made by the Borrower hereunder
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or profits of a Bank pursuant to the laws of
the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located or, in
each case, any subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect to such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred
-25-
to collectively as "Taxes"). If any Taxes are so levied or imposed, the
Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under
this Agreement or under any Note, after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein or
in such Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Bank, upon the
written request of such Bank, for taxes imposed on or measured by the net
income or profits of such Bank pursuant to the laws of the jurisdiction in
which such Bank is organized or in which the principal office or applicable
lending office of such Bank is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which such Bank
is organized or in which the principal office or applicable lending office of
such Bank is located and for any withholding of taxes as such Bank shall
determine are payable by, or withheld from, such Bank, in respect of such
amounts so paid to or on behalf of such Bank pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Bank
pursuant to this sentence. The Borrower will furnish to the Agent within 45
days after the date the payment of any Taxes is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by the Borrower.
The Borrower agrees to indemnify and hold harmless each Bank, and reimburse
such Bank upon its written request, for the amount of any Taxes so levied or
imposed and paid by such Bank.
(b) Each Bank that 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
agrees to deliver to the Borrower and the Agent on or prior to the Restatement
Effective Date, or in the case of a Bank that is an assignee or transferee of an
interest under this Agreement pursuant to Section 1.13 or 13.04 (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 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 (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 (or
successor forms) pursuant to clause (i) above, (x) a certificate substantially
in the form of Exhibit D (any such certificate, a "Section 4.04(b)(ii)
Certificate") and (y) two accurate and complete original signed copies of
Internal Revenue Service Form W-8 (or successor form) certifying to such Bank's
entitlement to a complete exemption from United States withholding tax with
respect to payments of interest to be made under this Agreement and under any
Note. In addition, each Bank agrees that from time to time after the
Restatement Effective Date, when a lapse in time or change in circumstances
renders the previous certification obsolete or inaccurate in any material
respect, such Bank will deliver to the Borrower and the Agent two new accurate
and complete original signed copies of Internal Revenue Service Form 4224 or
1001 (or successor forms), or Form W-8 (or successor form) and a Section
4.04(b)(ii) 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 such Bank shall
immediately notify the Borrower and the Agent of its inability to deliver any
such Form or Section 4.04(b)(ii) Certificate, in which case such Bank shall not
be required to deliver any such Form or Section 4.04(b)(ii) Certificate pursuant
to this
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Section 4.04(b). Notwithstanding anything to the contrary contained in
Section 4.04(a), but subject to the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is 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 Borrower U.S. Internal Revenue Service
Forms that establish a complete exemption from such deduction or withholding
and (y) the Borrower shall not be obligated pursuant to Section 4.04(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 Borrower the Internal Revenue Service Forms or the Section 4.04(b)(ii)
Certificate required to be provided to the Borrower pursuant to this Section
4.04(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.
Notwithstanding anything to the contrary contained in the preceding sentence
or elsewhere in this Section 4.04, the Borrower agrees to pay any additional
amounts and to indemnify each Bank in the manner set forth in Section 4.04(a)
(without regard to the identity of the jurisdiction requiring the deduction
or withholding) in respect of any Taxes deducted or withheld by it as
described in the immediately preceding sentence solely as a result of any
changes after the Restatement Effective Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of such Taxes.
(c) If the Borrower pays any additional amounts under this Section
4.04 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 the Borrower an amount that such Bank shall, in its sole
discretion, determine is equal to the net benefit, after tax, which was obtained
by such Bank in such year as a consequence of such Tax Benefit; PROVIDED,
HOWEVER, that (i) any Bank may determine, in its sole discretion, whether to
seek a Tax Benefit, (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 the
Borrower pursuant to this Section 4.04(c) shall be treated as a Tax for which
the Borrower is obligated to indemnify such Bank pursuant to this Section 4.04
without any exclusions or defenses and (iii) nothing in this Section 4.04(c)
shall require any Bank to disclose any confidential information to the Borrower
(including, without limitation, its tax returns).
SECTION 5. CONDITIONS PRECEDENT TO THE RESTATEMENT EFFECTIVE DATE.
The occurrence of the Restatement Effective Date pursuant to Section 13.10 and
the obligation of each Bank to make Loans, and the obligation of the Issuing
Bank to issue Letters of Credit, on the Restatement Effective Date, is subject
to the satisfaction of the following conditions:
5.01 EXECUTION OF AGREEMENT; NOTES. On or prior to the Restatement
Effective Date, (i) this Agreement shall have been executed and delivered as
provided in Section 13.10 and (ii) there shall have been delivered to the Agent
for the account of each of the Banks the
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appropriate Term Note and/or Revolving Note executed by the Borrower and to
the Swingline Bank, the Swingline Note executed by the Borrower, in each
case, in the amount, maturity and as otherwise provided herein.
5.02 OFFICER'S CERTIFICATE. On the Restatement Effective Date, the
Agent shall have received a certificate from each of Holdings and the Borrower,
dated the Restatement Effective Date and signed on behalf of each such Credit
Party by the Chairman of the Board, the President or any Vice President of such
Credit Party, stating on behalf of such Credit Party that all of the conditions
in Sections 5.06, 5.07, 5.08, 5.09 and 6.02 have been satisfied on such date.
5.03 OPINIONS OF COUNSEL. On the Restatement Effective Date, the
Agent shall have received from Gibson, Dunn & Crutcher LLP, special counsel to
the Credit Parties, (i) an opinion addressed to the Agent, the Collateral Agent
and each of the Banks and dated the Restatement Effective Date covering the
matters set forth in Exhibit E and (ii) a reliance letter addressed to the
Agent, the Collateral Agent and each of the Banks and dated the Restatement
Effective Date entitling such Persons to rely on their opinion delivered as part
of the Acquisition.
5.04 CORPORATE DOCUMENTS; PROCEEDINGS; ETC. (a) On the Restatement
Effective Date, the Agent shall have received a certificate from each Credit
Party, dated the Restatement Effective Date, signed by the Chairman of the
Board, the President or any Vice President of such Credit Party, and attested to
by the Secretary or any Assistant Secretary of such Credit Party, in the form of
Exhibit F with appropriate insertions, together with copies of the certificate
of incorporation (or equivalent organizational document) and by-laws of such
Credit Party and the resolutions of such Credit Party referred to in such
certificate, and the foregoing shall be in form and substance reasonably
acceptable to the Agent.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the other Documents shall be reasonably satisfactory in form and substance
to the Agent and the Required Banks, and the Agent shall have received all
information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams or facsimiles, if any, which the Agent reasonably may have
requested in connection therewith, such documents and papers where appropriate
to be certified by proper corporate or governmental authorities.
5.05 PLANS; SHAREHOLDERS' AGREEMENTS; MANAGEMENT AGREEMENTS;
EMPLOYMENT AGREEMENTS; NON-COMPETE AGREEMENTS; COLLECTIVE BARGAINING AGREEMENTS;
TAX SHARING AGREEMENTS; EXISTING INDEBTEDNESS AGREEMENTS. On or prior to the
Restatement Effective Date, there shall have been delivered or made available to
the Agent true and correct copies of the following documents (in each case to
the extent entered into after February 3, 1998 or relating to Power Ten or any
of its Subsidiaries):
(i) all Plans (and for each Plan that is required to file an annual
report on Internal Revenue Service Form 5500-series, a copy of the most
recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and
-28-
for each Plan that is a "single-employer plan," as defined in Section
4001(a)(15) of ERISA, the most recently prepared actuarial valuation
therefor) and any other "employee benefit plans," as defined in Section
3(3) of ERISA, and any other material agreements, plans or arrangements,
with or for the benefit of current or former employees of Holdings or
any of its Subsidiaries or any ERISA Affiliate (provided that the
foregoing shall apply in the case of any multiemployer plan, as defined
in 4001(a)(3) of ERISA, only to the extent that any document described
therein is in the possession of Holdings or any Subsidiary of Holdings
or any ERISA Affiliate or reasonably available thereto from the sponsor
or trustee of any such plan);
(ii) all collective bargaining agreements applying or relating to any
employee of Holdings or any of its Subsidiaries (collectively, the
"Collective Bargaining Agreements");
(iii) all agreements entered into by Holdings or any of its
Subsidiaries governing the terms and relative rights of its capital stock
and any agreements entered into by shareholders relating to any such entity
with respect to its capital stock (collectively, the "Shareholders'
Agreements");
(iv) all material agreements with members of, or with respect to, the
management of Holdings or any of its Subsidiaries (collectively, the
"Management Agreements");
(v) all material employment agreements entered into by Holdings or
any of its Subsidiaries (collectively, the "Employment Agreements");
(vi) any non-compete agreement entered into by Holdings or any of its
Subsidiaries (collectively, the "Non-Compete Agreements");
(vii) all tax sharing, tax allocation and other similar agreements
entered into by Holdings or any of its Subsidiaries (collectively, the "Tax
Sharing Agreements"); and
(viii) all agreements evidencing or relating to Indebtedness of
Holdings or any of its Subsidiaries which is to remain outstanding after
giving effect to the Restatement Effective Date (collectively, the
"Existing Indebtedness Agreements");
all of which Plans, Collective Bargaining Agreements, Shareholders' Agreements,
Management Agreements, Employment Agreements, Non-Compete Agreements, Tax
Sharing Agreement and Existing Indebtedness Agreements shall be in form and
substance reasonably satisfactory to the Agent and the Required Banks and shall
be in full force and effect on the Restatement Effective Date.
5.06 TRANSACTION. (a) On or prior to the Restatement Effective
Date, Holdings shall have received gross cash proceeds of at least $4,000,000
from the Equity Financing and shall have contributed the full amount thereof to
the Borrower.
(b) On the Restatement Effective Date, all conditions precedent to
the consummation of the Acquisition as set forth in the Acquisition Documents
shall have been
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satisfied, and not waived unless consented to by the Agent and the Required
Banks (which consent shall not be unreasonably withheld or delayed), to the
reasonable satisfaction of the Agent and the Required Banks. The Acquisition
shall have been consummated in all material respects in accordance with the
Acquisition Documents and all applicable laws. At the time of the
consummation of the Acquisition, all Liens, if any, on the capital stock and
assets of Power Ten and its Subsidiaries shall have been released and
terminated and all commitments in respect of any Indebtedness for borrowed
money of Power Ten and its Subsidiaries shall have been terminated and all
amounts owing thereunder shall have been repaid in full.
(c) On or prior to the Restatement Effective Date, there shall have
been delivered to the Agent true and correct copies of all Acquisition Documents
and Equity Financing Documents, and all of the terms and conditions of such
Documents shall be in form and substance reasonably satisfactory to the Agent
and the Required Banks.
(d) The Agent shall have received evidence, in form and substance
satisfactory to it, that the matters set forth in clauses (a) and (b) of this
Section 5.06 have been satisfied as of the Restatement Effective Date.
5.07 EXISTING CREDIT AGREEMENT. On the Restatement Effective Date,
(i) each Existing Bank shall have surrendered to the Agent for cancellation the
promissory notes issued to it pursuant to the Existing Credit Agreement in
respect of its Existing Revolving Loans and (ii) the Borrower shall have paid
all interest and fees (including commitment fees) owing under the Existing
Credit Agreement through the Restatement Effective Date (whether or not due and
payable at such time under the Existing Credit Agreement).
5.08 ADVERSE CHANGE, ETC. (a) Since March 28, 1998 (or, in the case
of Power Ten and its Subsidiaries, since September 30, 1997) and except as (and
to the extent) disclosed in writing to the Agent and the Banks prior to the
Restatement Effective Date, nothing shall have occurred (and neither the Agent
nor the Banks shall have become aware of any facts or conditions not previously
known) which the Agent or the Required Banks shall reasonably determine (a) has
had, or could reasonably be expected to have, a material adverse effect on the
rights or remedies of the Banks or the Agent, or on the ability of any Credit
Party to perform its obligations to them hereunder or under any other Credit
Document or (b) has had, or could reasonably be expected to have, a material
adverse effect on the Transaction or on the business, operations, property,
assets, liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole or Power Ten and its Subsidiaries taken as a
whole.
(b) On or prior to the Restatement Effective Date, all necessary
governmental (domestic and foreign) and third party approvals and/or consents in
connection with the Transaction and the other transactions contemplated by the
Documents and otherwise referred to herein or therein shall have been obtained
and remain in effect, and all applicable waiting periods with respect thereto
shall have expired without any action being taken by any competent authority
which restrains, prevents or imposes materially adverse conditions upon, the
consummation of the Transaction or the other transactions contemplated by the
Documents or otherwise referred to herein or therein. Additionally, there shall
not exist any judgment, order, injunction or other restraint issued or filed or
a hearing seeking injunctive relief or other restraint pending or notified
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prohibiting or imposing materially adverse conditions upon, or materially
delaying, or making economically unfeasible, the consummation of the Transaction
or the other transactions contemplated by the Documents or otherwise required to
herein or therein.
5.09 LITIGATION. On the Restatement Effective Date, there shall be
no actions, suits or proceedings pending or threatened (i) with respect to the
Transaction, this Agreement or any other Document or (ii) except as disclosed on
Schedule XIII, which the Agent or the Required Banks shall reasonably determine
could reasonably be expected to have a material adverse effect on (a) the
Transaction or on the business, operations, property, assets, liabilities or
condition (financial or otherwise) of Holdings and its Subsidiaries taken as a
whole or Power Ten and its Subsidiaries taken as a whole, (b) the rights or
remedies of the Banks or the Agent hereunder or under any other Credit Document
or (c) the ability of any Credit Party to perform its respective obligations to
the Banks or the Agent hereunder or under any other Credit Document.
5.10 PLEDGE AGREEMENT. On the Restatement Effective Date, each
Credit Party shall have duly authorized, executed and delivered the Amended and
Restated Pledge Agreement in the form of Exhibit G (as amended, modified or
supplemented from time to time, the "Pledge Agreement") and shall have delivered
to the Collateral Agent, as pledgee thereunder, all of the Pledged Securities,
if any, referred to therein and owned by such Credit Party, (x) endorsed in
blank in the case of promissory notes constituting Pledged Securities and (y)
together with executed and undated stock powers in the case of capital stock
constituting Pledged Securities.
5.11 SECURITY AGREEMENT. On the Restatement Effective Date, each
Credit Party shall have duly authorized, executed and delivered the Amended and
Restated Security Agreement in the form of Exhibit H (as modified, supplemented
or amended from time to time, the "Security Agreement") covering all of such
Credit Party's present and future Security Agreement Collateral, together with:
(i) proper Financing Statements (Form UCC-1 or the equivalent) fully
executed for filing under the UCC or other appropriate filing offices of
each jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported to
be created by the Security Agreement;
(ii) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, listing all effective financing statements
that name Power Ten or any of its Subsidiaries as debtor and that are filed
in the jurisdictions referred to in clause (i) above, together with copies
of such other financing statements that name Power Ten or any of its
Subsidiaries as debtor (none of which shall cover the Collateral except to
the extent evidencing Permitted Liens or in respect of which the Collateral
Agent shall have received termination statements (Form UCC-3 or the
equivalent) as shall be required by local law fully executed for filing);
(iii) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary to
perfect the security interests intended to be created by the Security
Agreement; and
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(iv) evidence that all other actions necessary to perfect and
protect the security interests purported to be created by the Security
Agreement have been taken.
5.12 SUBSIDIARIES GUARANTY. On the Restatement Effective Date,
each Subsidiary Guarantor, if any, shall have duly authorized, executed and
delivered the Amended and Restated Subsidiaries Guaranty in the form of
Exhibit I (as amended, modified or supplemented from time to time, the
"Subsidiaries Guaranty").
5.13 CAPITAL CALL AGREEMENT. On the Restatement Effective Date,
JFLEI, Holdings and the Borrower shall have duly authorized, executed and
delivered the Capital Call Agreement in the form of Exhibit J (as amended,
modified or supplemented from time to time, the "Capital Call Agreement").
5.14 LANDLORD WAIVERS. On the Restatement Effective Date, the
Collateral Agent shall have received landlord waivers with respect to the
Leaseholds of Power Ten and its Subsidiaries, which landlord waivers shall be
in form and substance reasonably satisfactory to the Agent.
5.15 FINANCIAL STATEMENTS; PRO FORMA FINANCIAL STATEMENTS,
PROJECTIONS. On or prior to the Restatement Effective Date, the Agent shall
have received true and correct copies of the historical financial statements,
the PRO FORMA financial statements and the Projections referred to in
Sections 7.05(a) and (d).
5.16 SOLVENCY CERTIFICATE; INSURANCE CERTIFICATES. On or prior to
the Restatement Effective Date, the Agent shall have received:
(i) a solvency certificate from an authorized officer of Holdings
in the form of Exhibit K; and
(ii) certificates of insurance complying with the requirements of
Section 8.03 for the business and properties of Holdings and its
Subsidiaries, in form and substance reasonably satisfactory to the Agent
and naming the Collateral Agent as an additional insured and as loss payee,
and stating that such insurance shall not be cancelled without at least 30
days prior written notice by the insurer to the Collateral Agent (or such
shorter period of time as a particular insurance company generally
provides).
5.17 INITIAL BORROWING BASE CERTIFICATE. On the Restatement
Effective Date, the Agent shall have received the initial Borrowing Base
Certificate meeting the requirements of Section 8.01(j).
5.18 FEES, ETC. On the Restatement Effective Date, the Borrower
shall have paid to the Agent all costs, fees and expenses (including, without
limitation, legal fees and expenses) payable to the Agent to the extent then
due.
SECTION 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The
obligation of each Bank to make Loans (including any Loans made on the
Restatement Effective Date), and the
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obligation of the Issuing Bank to issue Letters of Credit, is subject, at the
time of each such Credit Event (except as hereinafter indicated), to the
satisfaction of the following conditions:
6.01 RESTATEMENT EFFECTIVE DATE. The Restatement Effective Date
shall have occurred.
6.02 NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of
each such Credit Event and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein and in the other Credit Documents shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on the date of such Credit Event
(it being understood and agreed that any representation or warranty which by
its terms is made as of a specified date shall be required to be true and
correct in all material respects only as of such specified date).
6.03 NOTICE OF BORROWING; LETTER OF CREDIT REQUEST. (a) Prior to
the making of each Loan (other than a Revolving Loan made pursuant to a
Mandatory Borrowing), the Agent shall have received a Notice of Borrowing
meeting the requirements of Section 1.03(a). Prior to the making of each
Swingline Loan, the Swingline Bank shall have received the notice referred to
in Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the Agent and
the Issuing Bank shall have received a Letter of Credit Request meeting the
requirements of Section 2.03.
The occurrence of the Restatement Effective Date and the acceptance
of the benefits of each Credit Event shall constitute a representation and
warranty by Holdings and the Borrower to the Agent and each of the Banks that
all the conditions specified in Section 5 (with respect to the occurrence of
the Restatement Effective Date and Credit Events on the Restatement Effective
Date) and in this Section 6 (with respect to the occurrence of the
Restatement Effective Date and Credit Events on or after the Restatement
Effective Date) and applicable to such Credit Event exist as of that time.
All of the Notes, certificates, legal opinions and other documents and papers
referred to in Section 5 and in this Section 6, unless otherwise specified,
shall be delivered to the Agent at the Notice Office for the account of each
of the Banks and, except for the Notes, in sufficient counterparts or copies
for each of the Banks and shall be in form and substance reasonably
satisfactory to the Agent and the Required Banks.
SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order
to induce the Banks to enter into this Agreement and to make the Loans, and
issue (or participate in) the Letters of Credit as provided herein, each of
Holdings and the Borrower makes the following representations, warranties and
agreements, in each case after giving effect to the Transaction, all of which
shall survive the execution and delivery of this Agreement and the Notes and
the making of the Loans and issuance of the Letters of Credit, and with the
occurrence of the Restatement Effective Date and each other Credit Event on
or after the Restatement Effective Date being deemed to constitute a
representation and warranty that the matters specified in this Section 7 are
true and correct in all material respects on and as of the Restatement
Effective Date and on the date of each such other Credit Event (it being
understood and agreed that any representation or
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warranty which by its terms is made as of a specified date shall be required
to be true and correct in all material respects only as of such specified
date).
7.01 CORPORATE STATUS. Each Credit Party and each of its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization, (ii) has the
corporate power and authority to own its property and assets and to transact
the business in which it is engaged and presently proposes to engage and
(iii) is duly qualified and is authorized to do business and is in good
standing in each jurisdiction where the ownership, leasing or operation of
its property or the conduct of its business requires such qualifications
except for failures to be so qualified which, individually or in the
aggregate, could not reasonably be expected to have a material adverse effect
on the business, operations, property, assets, liabilities or condition
(financial or otherwise) of Holdings and its Subsidiaries taken as a whole.
7.02 CORPORATE AND OTHER POWER AND AUTHORITY. Each Credit Party
has the corporate power and authority to execute, deliver and perform the
terms and provisions of each of the Documents to which it is party and has
taken all necessary corporate action to authorize the execution, delivery and
performance by it of each of such Documents. Each Credit Party has duly
executed and delivered each of the Documents to which it is party, and each
of such Documents constitutes its legal, valid and binding obligation
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
7.03 NO VIOLATION. Neither the execution, delivery or performance
by any Credit Party of the Documents to which it is a party, nor compliance
by it with the terms and provisions thereof, (i) will contravene any
provision of any law, statute, rule or regulation or any order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
(except pursuant to the Security Documents) upon any of the property or
assets of Holdings or any of its Subsidiaries pursuant to the terms of any
indenture (including without limitation, the Senior Note Indenture),
mortgage, deed of trust, credit agreement or loan agreement, or any other
material agreement, contract or instrument, to which Holdings or any of its
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 certificate of incorporation or by-laws (or equivalent organizational
documents) of Holdings or any of its Subsidiaries.
7.04 APPROVALS. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except for those that have otherwise been obtained or made on or prior to
the Restatement Effective Date and which remain in full force and effect on
the Restatement Effective Date), or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or
is required in connection with, (i) the execution, delivery and performance
of any Document or (ii) the legality, validity, binding effect or
enforceability of any such Document.
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7.05 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED
LIABILITIES; PROJECTIONS; ETC. (a) The consolidated balance sheets of
Holdings and its Subsidiaries for the fiscal years ended on March 29, 1997
and March 28, 1998, respectively, and the related consolidated statements of
income, cash flows and shareholders' equity of Holdings and its Subsidiaries
for the fiscal years ended on such dates, copies of which have been furnished
to the Banks prior to the Restatement Effective Date, present fairly in all
material respects the consolidated financial position of Holdings and its
Subsidiaries at the date of such balance sheets and the consolidated results
of the operations of Holdings and its Subsidiaries for the periods covered
thereby. The balance sheets of Power Ten for the fiscal year and six-month
period ended on September 30, 1997 and April 4, 1998, respectively, and the
related statements of income, cash flows and shareholders' equity of Power
Ten for the fiscal year or six-month period, as the case may be, ended on
such dates, copies of which have been furnished to the Banks prior to the
Restatement Effective Date, present fairly in all material respects the
financial position of Power Ten at the date of such balance sheets and the
results of the operations of Power Ten for the periods covered thereby. All
of the foregoing historical financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
except as disclosed in the notes thereto. The PRO FORMA consolidated
financial statements of Holdings and its Subsidiaries as of March 28, 1998
(or April 4, 1998, to the extent relating to Power Ten), in each case after
giving effect to the Transaction and the financing therefor, copies of which
have been furnished to the Banks prior to the Restatement Effective Date,
present fairly in all material respects the PRO FORMA consolidated financial
position of Holdings and its Subsidiaries as of such date and the PRO FORMA
consolidated results of operations of Holdings and its Subsidiaries for the
period ended on such date. After giving effect to the Transaction (but for
this purpose assuming that the Transaction and the related financing had
occurred prior to March 28, 1998), since March 28, 1998 and except as (and to
the extent) disclosed in writing to the Agent and the Banks prior to the
Restatement Effective Date, nothing shall have occurred that has had, or
could reasonably be expected to have, a material adverse effect on the
business, operations, property, assets, liabilities or condition (financial
or otherwise) of Holdings and its Subsidiaries taken as a whole.
(b) On and as of the Restatement Effective Date and after giving
effect to the Transaction and to all Indebtedness (including any Loans) being
incurred or assumed and Liens created by the Credit Parties in connection
therewith (a) the sum of the assets, at a fair valuation, of each of the
Borrower on a stand-alone basis and of Holdings and its Subsidiaries taken as
a whole will exceed its debts; (b) each of the Borrower on a stand-alone
basis and Holdings and its Subsidiaries taken as a whole has not incurred and
does not intend to incur, and does not believe that it will incur, debts
beyond its ability to pay such debts as such debts mature; and (c) each of
the Borrower on a stand alone basis and Holdings and its Subsidiaries taken
as a whole will have sufficient capital with which to conduct its business.
For purposes of this Section 7.05(b), "debt" means any liability on a claim,
and "claim" means (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. The amount of contingent liabilities at
any time shall be computed as the
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amount that, in the light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an
actual or matured liability.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 7.05(a), there were as of the Restatement
Effective Date no liabilities or obligations with respect to Holdings or any
of its Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or
in aggregate, could reasonably be expected to be material to Holdings and its
Subsidiaries taken as a whole. As of the Restatement Effective Date, neither
Holdings nor the Borrower knows of any basis for the assertion against it or
any of its Subsidiaries of any liability or obligation of any nature
whatsoever that is not fully disclosed in the financial statements delivered
pursuant to Section 7.05(a) which, either individually or in the aggregate,
could reasonably be expected to be material to Holdings and its Subsidiaries
taken as a whole.
(d) On and as of the Restatement Effective Date, the Projections
delivered to the Agent and the Banks prior to the Restatement Effective Date
have been prepared in good faith and are based on reasonable assumptions, and
there are no statements or conclusions in the Projections which are based
upon or include information known to Holdings or the Borrower to be
misleading in any material respect or which fail to take into account
material information known to Holdings or the Borrower regarding the matters
reported therein. On the Restatement Effective Date, Holdings and the
Borrower believe that the Projections are reasonable, it being recognized by
the Banks, however, that projections as to future events are not to be viewed
as facts and that the actual results during the period or periods covered by
the Projections may differ from the projected results and that the
differences may be material.
7.06 LITIGATION. There are no actions, suits or proceedings
pending or, to the best knowledge of Holdings and the Borrower, threatened
(i) with respect to the Transaction or any Document, (ii) with respect to any
material Indebtedness of Holdings or any of its Subsidiaries or (iii) except
as disclosed on Schedule XIII (but only so long as no adverse judgment is
rendered against Holdings or any of its Subsidiaries in an amount of
$2,500,000 or more and the Required Banks shall have reasonably determined
that the Borrower is not likely to receive any indemnification payments in
respect thereof under the Acquisition Agreement (or that the sellers of Power
Ten do not have the financial resources to make such indemnity payments),
that are reasonably likely to materially and adversely affect the business,
operations, property, assets, liabilities or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole.
7.07 TRUE AND COMPLETE DISCLOSURE. All factual information (taken
as a whole) furnished by or on behalf of any Credit Party in writing to the
Agent or any Bank (including, without limitation, all information contained
in the Documents) for purposes of or in connection with this Agreement, the
other Credit Documents or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished
by or on behalf of any Credit Party in writing to the Agent or any Bank 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
fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which
such information was provided.
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7.08 USE OF PROCEEDS; MARGIN REGULATIONS. (a) All proceeds of
Revolving Loans shall be used for the working capital and general corporate
purposes of the Borrower and its Subsidiaries and not to finance the
Transaction (it being understood, however, that up to $500,000 of the
proceeds of the Revolving Loans may be used to fund any purchase price
adjustment required to be paid by the Borrower pursuant to the Acquisition
Agreement).
(b) All proceeds of Term Loans shall be utilized solely to
finance the Acquisition and to pay fees and expenses relating thereto.
(c) No part of any Credit Event (or the proceeds thereof) will
be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither the making of
any Loan nor the use of the proceeds thereof nor the occurrence of any other
Credit Event will violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
7.09 TAX RETURNS AND PAYMENTS. Each of Holdings and each of its
Subsidiaries has filed all federal and state income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and
has paid all federal and state income taxes and all other material taxes and
assessments payable by it which have become due, except for those contested
in good faith and fully provided for on the financial statements of Holdings
and its Subsidiaries in accordance with generally accepted accounting
principles. Holdings and each of its Subsidiaries have at all times paid, or
have provided adequate reserves (in the good faith judgment of the management
of Holdings) for the payment of, all federal, state and material local and
foreign income taxes applicable for all prior fiscal years and for the
current fiscal year to date. Except as disclosed on Schedule X, there is no
material action, suit, proceeding, investigation, audit or claim now pending
or, to the best knowledge of Holdings and the Borrower threatened, by any
authority regarding any taxes relating to Holdings or any of its
Subsidiaries. As of the Restatement Effective Date, neither Holdings nor any
of its Subsidiaries has entered into an agreement or waiver or been requested
to enter into an agreement or waiver extending any statute of limitations
relating to the payment or collection of taxes of Holdings or any of its
Subsidiaries, or is aware of any circumstances that would cause the taxable
years or other taxable periods of Holdings or any of its Subsidiaries not to
be subject to the normally applicable statute of limitations.
7.10 COMPLIANCE WITH ERISA. Schedule IV sets forth, as of the
Restatement Effective Date, each Plan; each Plan (and each related trust,
insurance contract or fund) is in substantial compliance with its terms and
with all applicable laws, including, without limitation, ERISA and the Code;
each Plan (and each related trust, if any) which is intended to be qualified
under Section 401(a) of the Code has received a determination letter from the
Internal Revenue Service to the effect that it meets the requirements of
Sections 401(a) and 501(a) of the Code or application for such determination
has been made; no Reportable Event has occurred; no Plan which is a
multiemployer plan (as defined in Section 4001(a)(3) of ERISA) is insolvent
or in reorganization; no Plan has an Unfunded Current Liability; no Plan
which is subject to Section 412 of the Code or Section 302 of ERISA has an
accumulated funding deficiency, within the meaning of such sections of the
Code or ERISA, or has applied for or received a waiver of an accumulated
funding deficiency or an extension of any amortization period, within the
meaning of
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Section 412 of the Code or Section 303 or 304 of ERISA; all contributions
required to be made with respect to a Plan have been timely made except as
would not result in any material liability; neither Holdings nor any
Subsidiary of Holdings nor any ERISA Affiliate has incurred any material
liability (including any indirect, contingent or secondary liability) to or
on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or
4975 of the Code or expects to incur any such material liability under any of
the foregoing sections with respect to any Plan; no condition exists which
presents a material risk to Holdings or any Subsidiary of Holdings or any
ERISA Affiliate of incurring a material liability to or on account of a Plan
pursuant to the foregoing provisions of ERISA and the Code; no proceedings
have been instituted to terminate or appoint a trustee to administer any Plan
which is subject to Title IV of ERISA; no action, suit, proceeding, hearing,
audit or investigation with respect to the administration, operation or the
investment of assets of any Plan (other than routine claims for benefits) is
pending, or to the knowledge of Holdings and its Subsidiaries, expected or
threatened; using actuarial assumptions and computation methods consistent
with Part 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of
Holdings and its Subsidiaries and its ERISA Affiliates to all Plans which are
multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event
of a complete withdrawal therefrom, as of the close of the most recent fiscal
year of each such Plan ended prior to the date of the most recent Credit
Event, would not exceed $50,000; each group health plan (as defined in
Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or
has covered employees or former employees of Holdings, any Subsidiary of
Holdings or any ERISA Affiliate has at all times been operated in material
compliance with the provisions of Part 6 of subtitle B of Title I of ERISA
and Section 4980B of the Code; no lien imposed under the Code or ERISA on the
assets of Holdings or any Subsidiary of Holdings or any ERISA Affiliate
exists or is likely to arise on account of any Plan; and Holdings and its
Subsidiaries may cease contributions to or terminate any employee benefit
plan maintained by any of them without incurring any material liability.
7.11 THE SECURITY DOCUMENTS. (a) The provisions of the Security
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the Credit Parties in the
Security Agreement Collateral described therein to the extent that a security
interest can be created therein under the UCC, and the Collateral Agent, for
the benefit of the Secured Creditors, has a fully perfected first lien on,
and security interest in, all right, title and interest of the Credit Parties
in all of the Security Agreement Collateral described therein (to the extent
such security interest can be perfected by filing a UCC-1 financing statement
or, to the extent required by the Security Agreement, by taking possession of
the respective Security Agreement Collateral), subject to no other Liens
other than Permitted Liens. In addition, the recordation of the Grant of
Security Interest in U.S. Patents and Trademarks in the form attached to the
Security Agreement in the United States Patent and Trademark Office, together
with filings on Form UCC-1 made pursuant to the Security Agreement, will
create, as may be perfected by such filing and recordation, a perfected
security interest in the United States trademarks and patents covered by the
Security Agreement and specifically identified in such Grant and the
recordation of the Grant of Security Interest in U.S. Copyrights in the form
attached to the Security Agreement with the United States Copyright Office,
together with filings on Form UCC-1 made pursuant to the Security Agreement,
will create, as may be perfected by such filing and recordation, a perfected
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security interest in the United States copyrights covered by the Security
Agreement and specifically identified in such Grant.
(b) The security interests created in favor of the Collateral
Agent, as pledgee, for the benefit of the Secured Creditors, under the Pledge
Agreement constitute first priority perfected security interests in the
Pledge Agreement Collateral described therein (other than with respect to
certain Pledged Securities constituting promissory notes to the extent not
required to be delivered pursuant to the Pledge Agreement), subject to no
security interests of any other Person. No filings or recordings are
required to perfect (or maintain the perfection or priority of) the security
interests created in the Pledge Agreement Collateral.
(c) After the execution and delivery thereof pursuant to Section
8.11, the Mortgages create, for the obligations purported to be secured
thereby, a valid and enforceable perfected security interest in and mortgage
lien on all of the Mortgaged Properties in favor of the Collateral Agent (or
such other trustee as may be required or desired under local law) for the
benefit of the Secured Creditors, superior to and prior to the rights of all
third persons (except that the security interest and mortgage lien created in
the Mortgaged Properties may be subject to the Permitted Encumbrances related
thereto and other Permitted Liens) and subject to no other Liens (other than
Permitted Liens). Schedule III contains a true and complete list of each
parcel of Real Property owned or leased by Holdings and its Subsidiaries on
the Restatement Effective Date, and the type of interest therein held by
Holdings or such Subsidiary. Holdings and each of its Subsidiaries have good
and marketable title to all fee-owned Real Property and valid leasehold title
to all Leaseholds, in each case free and clear of all Liens except those
described in the first sentence of this subsection (c).
7.12 REPRESENTATIONS AND WARRANTIES IN THE DOCUMENTS. Except to
the extent waived by the Required Banks in accordance with Section 5.06(b),
all representations and warranties set forth in the other Documents were true
and correct in all material respects at the time as of which such
representations and warranties were made (or deemed made) and shall be true
and correct in all material respects as of the Restatement Effective Date as
if such representations and warranties were made on and as of such date,
unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date.
7.13 PROPERTIES. Holdings and each of its Subsidiaries have good
and marketable title to all material properties owned by them, including all
property reflected in the balance sheets referred to in Section 7.05(a)
(except as sold or otherwise disposed of since the date of such balance sheet
in the ordinary course of business or as permitted by the terms of this
Agreement), free and clear of all Liens, other than Permitted Liens.
7.14 CAPITALIZATION. (a) On the Restatement Effective Date and
after giving effect to the Transaction and the other transactions
contemplated hereby, the authorized capital stock of Holdings shall consist
of (i) 5,000,000 shares of common stock, $.01 par value per share, of which
approximately 2,300,000 shares shall be issued and outstanding and
approximately 353,744 shares shall be reserved for issuance upon the exercise
of outstanding warrants and (ii) 50,000 shares of preferred stock, $.01 par
value per share, of which (x)10,000 shares shall be issued and
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outstanding in the form of the Series A Preferred Stock and (y) ______ shares
shall be issued and outstanding as Series B Preferred Stock. All outstanding
shares of capital stock of Holdings have been duly and validly issued and are
fully paid and non-assessable. Holdings does not have outstanding any
securities convertible into or exchangeable for its capital stock or
outstanding any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreement providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating
to, its capital stock other than (i) options, rights or warrants that may be
issued from time to time to purchase shares of common stock of Holdings, (ii)
options, rights or warrants as set forth in the Shareholders' Agreements
delivered pursuant to, or referred to in, Section 5.05 of the Existing Credit
Agreement and (iii) Qualified Preferred Stock of Holdings that is convertible
into shares of common stock of Holdings.
(b) On the Restatement Effective Date and after giving effect to
the Transaction and the other transactions contemplated hereby, the
authorized capital stock of the Borrower shall consist of 200 shares of
common stock, $.01 par value per share, all of which shall be issued and
outstanding and owned by Holdings. All outstanding shares of capital stock
of the Borrower have been duly and validly issued, are fully paid and
nonassessable. The Borrower does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any
rights to subscribe for or to purchase, or any options for the purchase of,
or any agreement providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital
stock.
7.15 SUBSIDIARIES. As of the Restatement Effective Date, Holdings
has no Subsidiaries other than the Borrower and its Subsidiaries and the
Borrower has no Subsidiaries other than those Subsidiaries listed on Schedule
V. Schedule V correctly sets forth, as of the Restatement Effective Date, the
percentage ownership (direct or indirect) of Holdings in each class of
capital stock or other equity of each of its Subsidiaries and also identifies
the direct owner thereof.
7.16 COMPLIANCE WITH STATUTES, ETC. Each of Holdings and each of
its Subsidiaries is in compliance 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),
except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole.
7.17 INVESTMENT COMPANY ACT. Neither Holdings nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
7.18 PUBLIC UTILITY HOLDING COMPANY ACT. Neither Holdings nor any
of its Subsidiaries is 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.
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7.19 ENVIRONMENTAL MATTERS. (a) Holdings and each of its
Subsidiaries have complied with, and on the date of each Credit Event are in
compliance with, all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws. There are no pending or,
to the knowledge of Holdings and the Borrower, threatened Environmental
Claims against Holdings or any of its Subsidiaries (including any such claim
arising out of the ownership, lease or operation by Holdings or any of its
Subsidiaries of any Real Property no longer owned, leased or operated by
Holdings or any of its Subsidiaries) or any Real Property owned, leased or
operated by Holdings or any of its Subsidiaries. There are no facts,
circumstances, conditions or occurrences with respect to the business or
operations of Holdings or any of its Subsidiaries, or any Real Property
owned, leased or operated by Holdings or any of its Subsidiaries (including
any Real Property formerly owned, leased or operated by Holdings or any of
its Subsidiaries but no longer owned, leased or operated by Holdings or any
of its Subsidiaries) or, to the knowledge of Holdings or the Borrower, any
property adjoining or adjacent to any such Real Property, that could
reasonably be expected (i) to form the basis of an Environmental Claim
against Holdings or any of its Subsidiaries or any Real Property owned,
leased or operated by Holdings or any of its Subsidiaries or (ii) to cause
any Real Property owned, leased or operated by Holdings or any of its
Subsidiaries to be subject to any restrictions on the ownership, occupancy or
transferability of such Real Property by Holdings or any of its Subsidiaries
under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned,
leased or operated by Holdings or any of its Subsidiaries where such
generation, use, treatment or storage has violated or has given rise to an
Environmental Claim under, or could reasonably be expected to violate or give
rise to an Environmental Claim under, any Environmental Law. Hazardous
Materials have not at any time been Released or disposed of on or from any
Real Property owned, leased or operated by Holdings or any of its
Subsidiaries where such Release or disposal has violated or given rise to an
Environmental Claim under, or could reasonably be expected to violate or give
rise to an Environmental Claim under, any applicable Environmental Law.
(c) Notwithstanding anything to the contrary in this Section 7.19,
the representations and warranties made in this Section 7.19 shall not be
untrue unless the effect of any or all violations, claims, restrictions,
failures and noncompliances of the types described above in this Section 7.19
could reasonably be expected to, either individually or in the aggregate,
have a material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole.
7.20 LABOR RELATIONS. Neither Holdings nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on Holdings and its Subsidiaries
taken as a whole. There is (i) no unfair labor practice complaint pending
against Holdings or any of its Subsidiaries or, to the knowledge of Holdings
or the Borrower, threatened against any of them, before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against Holdings or
any of its Subsidiaries or, to the knowledge of Holdings and the Borrower,
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Holdings or any of its Subsidiaries or, to the
knowledge of Holdings and the
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Borrower, threatened against Holdings or any of its Subsidiaries and (iii) no
union representation question exists with respect to the employees of
Holdings or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities or
condition (financial or otherwise) of Holdings and its Subsidiaries taken as
a whole.
7.21 PATENTS, LICENSES, FRANCHISES AND FORMULAS. Each of Holdings
and each of its Subsidiaries owns or has the right to use all the patents,
trademarks, permits, service marks, trade names, copyrights, licenses,
franchises, proprietary information (including but not limited to rights in
computer programs and databases) and formulas, or rights with respect to the
foregoing, and has obtained assignments of all leases and other rights of
whatever nature, necessary for the present conduct of its business, without
any known conflict with the rights of others which, or the failure to obtain
which, as the case may be, could reasonably be expected to result in a
material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole.
7.22 INDEBTEDNESS. Schedule VI sets forth a true and complete
list of all Indebtedness (including Contingent Obligations) of Holdings and
its Subsidiaries as of the Restatement Effective Date and which is to remain
outstanding after giving effect to the Transaction (excluding the Loans, the
Letters of Credit and the Senior Notes, the "Existing Indebtedness"), in each
case showing the aggregate principal amount thereof and the name of the
respective borrower and any Credit Party or any of its Subsidiaries which
directly or indirectly guarantees such debt.
7.23 TRANSACTION. At the time of consummation thereof, the
Transaction shall have been consummated in all material respects in
accordance with the terms of the applicable Documents and all applicable
laws. At the time of consummation of the Transaction, all third party
approvals and all consents and approvals of, and filings and registrations
with, and all other actions in respect of, all governmental agencies,
authorities or instrumentalities required in order to make or consummate the
Transaction will have been obtained, given, filed or taken and are or will be
in full force and effect (or effective judicial relief with respect thereto
has been obtained). All applicable waiting periods with respect thereto 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 restrains,
prevents, or imposes material adverse conditions upon the Transaction.
Additionally, there does not exist any judgment, order or injunction
prohibiting the Transaction or the performance by Holdings or any of its
Subsidiaries of their respective obligations under the Documents. All
actions taken by Holdings or any of its Subsidiaries pursuant to or in
furtherance of the Transaction have been taken in all material respects in
compliance with the Documents and all applicable laws.
7.24 SPECIAL PURPOSE CORPORATION. (a) Holdings has no
significant assets (other than the capital stock of the Borrower) or material
liabilities (other than those liabilities under this Agreement, the other
Documents to which it is a party and as otherwise permitted by Section
9.13(b)).
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(b) Elgar FSC has no significant assets or material liabilities
(other than those liabilities permitted by Section 9.13(c)).
7.25 INSURANCE. Schedule VII sets forth a true and complete
listing of all insurance maintained by Holdings and its Subsidiaries as of
the Restatement Effective Date, and with the amounts insured (and any
deductibles) set forth therein.
SECTION 8. AFFIRMATIVE COVENANTS. Each of Holdings and the
Borrower hereby covenants and agrees that on and after the Restatement
Effective Date and until the Total Commitment and all Letters of Credit have
terminated and the Loans, Notes and Unpaid Drawings, together with interest,
Fees and all other Obligations (other than indemnities described in Section
13.13 which are not then due and payable) incurred hereunder and thereunder,
are paid in full:
8.01 INFORMATION COVENANTS. Holdings will furnish to each Bank:
(a) MONTHLY REPORTS. Within 30 days after the end of each fiscal
month of the Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal month and the related consolidated
statements of income, shareholders' equity and statement of cash flows for
such fiscal month and for the elapsed portion of the fiscal year ended with
the last day of such fiscal month, in each case setting forth comparative
figures for the corresponding fiscal month in the prior fiscal year and
comparable budgeted figures for such fiscal month.
(b) QUARTERLY FINANCIAL STATEMENTS. Within 45 days after the
close of the first three quarterly accounting periods in each fiscal year of
Holdings, the consolidated balance sheet of Holdings and its Subsidiaries as
at the end of such quarterly accounting period and the related consolidated
statements of income, shareholders' equity and statement of cash flows for
such quarterly accounting period and for the elapsed portion of the fiscal
year ended with the last day of such quarterly accounting period, in each
case setting forth comparative figures for the related periods in the prior
fiscal year, all of which shall be certified by the Chief Financial Officer
of the Borrower, subject to normal year-end audit adjustments and the absence
of footnotes.
(c) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close
of each fiscal year of Holdings, (i) the consolidated balance sheet of
Holdings and its Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income, shareholders' equity and statement
of cash flows for such fiscal year setting forth comparative figures for the
preceding fiscal year and certified by Arthur Andersen LLP or such other
independent certified public accountants of recognized national standing
reasonably acceptable to the Agent, together with a report of such accounting
firm stating that in the course of its regular audit of the financial
statements of Holdings and its Subsidiaries, which audit was conducted in
accordance with generally accepted auditing standards, such accounting firm
obtained no knowledge of any Default or an Event of Default relating to
accounting matters which has occurred and is continuing or, if in the opinion
of such accounting firm such a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and (ii) management's
discussion and analysis of the material operational and financial
developments during such fiscal year (it being understood
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that, to the extent such management's discussion and analysis is included in
any report on Form 10-K that is filed with the SEC in respect of such fiscal
year and such report is delivered to the Banks pursuant to this Agreement, no
separate management discussion and analysis shall be required to be delivered
in respect of such fiscal year).
(d) MANAGEMENT LETTERS. Promptly after Holdings' or any of its
Subsidiaries' receipt thereof, a copy of any "management letter" received
from its certified public accountants and management's response thereto.
(e) BUDGETS. No later than 30 days following the first day of
each fiscal year of Holdings, a budget in form reasonably satisfactory to the
Agent (including budgeted statements of income and sources and uses of cash
and balance sheets) prepared by Holdings (i) for each of the twelve months of
such fiscal year prepared in substantially the same detail as the Projections
and (ii) for each of the immediately three succeeding fiscal years prepared
in summary form, in each case setting forth, with appropriate discussion, the
principal assumptions upon which such budgets are based.
(f) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in Sections 8.01(b) and (c), a certificate
of the Chief Financial Officer of the Borrower to the effect that, to the
best of such officer's knowledge, no Default or Event of Default has occurred
and is continuing or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which certificate shall
set forth in reasonable detail the calculations required to establish whether
Holdings and its Subsidiaries were in compliance with the provisions of
Sections 4.02(e), 4.02(g), 9.04 and 9.07 through 9.09, inclusive, at the end
of such fiscal quarter or year, as the case may be.
(g) NOTICE OF DEFAULT OR LITIGATION. Promptly upon, and in any
event within five Business Days after, any senior or executive officer of any
Credit Party obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or an Event of Default and (ii) any
litigation or governmental investigation or proceeding pending (x) against
Holdings or any of its Subsidiaries which could reasonably be expected to
materially and adversely affect the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole, (y) with respect to any material Indebtedness
of Holdings or any of its Subsidiaries or (z) with respect to the Transaction
or any Document.
(h) OTHER REPORTS AND FILINGS. Promptly after the filing or
delivery thereof, copies of all financial information, proxy materials and
reports, if any, which Holdings or any of its Subsidiaries shall publicly
file with the Securities and Exchange Commission or any successor thereto
(the "SEC") or deliver to holders of its material Indebtedness pursuant to
the terms of the documentation governing such Indebtedness (or any trustee,
agent or other representative therefor).
(i) ENVIRONMENTAL MATTERS. Promptly after any senior or executive
officer of any Credit Party obtains knowledge thereof, notice of one or more
of the following environmental matters, unless such environmental matters
could not, individually or when aggregated with all
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other such environmental matters, be reasonably expected to materially and
adversely affect the business, operations, property, assets, liabilities or
condition (financial or otherwise) of Holdings and its Subsidiaries taken as
a whole:
(i) any pending or threatened Environmental Claim against Holdings
or any of its Subsidiaries or any Real Property owned, leased or operated
by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned, leased or operated by Holdings or any of its Subsidiaries
that (a) results in noncompliance by Holdings or any of its Subsidiaries
with any applicable Environmental Law or (b) could reasonably be expected
to form the basis of an Environmental Claim against Holdings or any of its
Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned, leased
or operated by Holdings or any of its Subsidiaries that could reasonably be
expected to cause such Real Property to be subject to any restrictions on
the ownership, occupancy, use or transferability by Holdings or any of its
Subsidiaries of such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to
the actual or alleged presence of any Hazardous Material on any Real
Property owned, leased or operated by Holdings or any of its Subsidiaries
as required by any Environmental Law or any governmental or other
administrative agency; PROVIDED, that in any event Holdings shall deliver
to each Bank all notices received by Holdings or any of its Subsidiaries
from any government or governmental agency under, or pursuant to, CERCLA
which identify Holdings or any of its Subsidiaries as potentially
responsible parties for remediation costs or which otherwise notify
Holdings or any of its Subsidiaries of potential liability under CERCLA.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and
Holdings' or such Subsidiary's response thereto.
(j) BORROWING BASE CERTIFICATE. (x) On the Restatement Effective
Date, (y) not later than 3:00 P.M. (New York time) on the fifteenth day of
each fiscal month of Holdings thereafter, and (z) prior to, or at the time
of, the consummation of any Permitted Acquisition, a borrowing base
certificate in the form of Exhibit L (each, a "Borrowing Base Certificate"),
which shall be prepared (A) as of April 30, 1998 (or May 2, 1998 to the
extent applicable to Power Ten) (giving PRO FORMA effect to the Acquisition)
in the case of the initial Borrowing Base Certificate, (B) as of the last
Business Day of the preceding fiscal month in the case of each subsequent
monthly Borrowing Base Certificates and (C) as of the last Business Day of
the most recently ended fiscal month for which information is available for
each Credit Party (including any Person (or assets) acquired as part of such
Permitted Acquisition) in the case of each Borrowing Base Certificate
delivered in connection with a Permitted Acquisition, in each case certified
by the Chief Financial Officer of the Borrower.
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(k) OTHER INFORMATION. From time to time, such other information
or documents (financial or otherwise) with respect to Holdings or any of its
Subsidiaries as the Agent or any Bank may reasonably request.
8.02 BOOKS, RECORDS, INSPECTIONS, AUDITS AND ANNUAL MEETINGS. (a)
Holdings will, and will cause each of its Subsidiaries to, keep proper books
of record and accounts in which full, true and correct entries in conformity
with generally accepted accounting principles and all requirements of law
shall be made of all dealings and transactions in relation to its business
and activities. Holdings will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of the Agent or any Bank to
visit and inspect, under guidance of officers of Holdings or such Subsidiary,
any of the properties of Holdings or such Subsidiary, and to examine the
books of account of Holdings or such Subsidiary and discuss the affairs,
finances and accounts of Holdings or such Subsidiary with, and be advised as
to the same by, its and their officers and independent accountants, all upon
reasonable prior notice and at such reasonable times and intervals and to
such reasonable extent as the Agent or such Bank may reasonably request. In
addition, Holdings will, and will cause each of its Subsidiaries to, permit
upon reasonable prior notice to Holdings or the Borrower the Agent to
conduct, at Holdings' and the Borrower's expense, an audit of the inventories
and accounts receivable of the Borrower and its Subsidiaries at such times
(but no more frequently than once a year unless an Event of Default shall
have occurred and be continuing) as the Agent shall reasonably require.
(b) At a date to be mutually agreed upon between the Agent and
Holdings occurring on or prior to the 120th day after the close of each
fiscal year of Holdings, Holdings shall, at the request of the Agent, hold a
meeting with all of the Banks at which meeting shall be reviewed the
financial results of Holdings and its Subsidiaries for the previous fiscal
year and the budgets presented for the current fiscal year of Holdings.
8.03 MAINTENANCE OF PROPERTY; INSURANCE. (a) Holdings will, and
will cause each of its Subsidiaries to, (i) keep all property necessary to
the business of Holdings and its Subsidiaries in reasonably good working
order and condition, ordinary wear and tear excepted, (ii) maintain insurance
on all such property in at least such amounts and against at least such risks
as is consistent and in accordance with industry practice for companies
similarly situated owning similar properties in the same general areas in
which Holdings or any of its Subsidiaries operates, PROVIDED that Holdings
and its Subsidiaries may implement programs of self insurance (other than
with respect to casualty insurance) in the ordinary course of business and in
accordance with the industry standards for similarly situated companies so
long as reserves are maintained in accordance with generally accepted
accounting principles for the liabilities associated therewith, and (iii)
furnish to the Agent, upon written request, full information as to the
insurance carried.
(b) Holdings will, and will cause each of its Subsidiaries (other
than Elgar FSC so long as Elgar FSC is not a Subsidiary Guarantor) to, at all
times keep its property insured in favor of the Collateral Agent, and all
policies or certificates (or certified copies thereof) with respect to such
insurance (and any other insurance maintained by Holdings and/or such
Subsidiaries) (i) shall name the Collateral Agent as loss payee as to
casualty insurance and as an additional insured in the case of casualty and
liability insurance, (ii) shall state that such insurance policies shall not
be cancelled without at least 30 days' prior written notice thereof by the
respective insurer to the
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Collateral Agent (or such shorter period of time as a particular insurance
company policy generally provides), (iii) shall provide that the respective
insurers irrevocably waive any and all rights of subrogation with respect to
the Collateral Agent and the Secured Creditors, (iv) shall contain the
standard non-contributing mortgage clause endorsement in favor of the
Collateral Agent with respect to hazard or liability insurance, (v) shall,
except in the case of public liability insurance, provide that any losses
shall be payable notwithstanding any neglect act of Holdings or any of its
Subsidiaries and (vi) shall be deposited with the Collateral Agent.
(c) If Holdings or any of its Subsidiaries shall fail to insure
its property in accordance with this Section 8.03, or if Holdings or any of
its Subsidiaries shall fail to so name and deposit all policies or
certificates with respect thereto, the Collateral Agent shall have the right
(but shall be under no obligation), upon 10 days prior notice to the Borrower
(although no such notice shall be required to the extent same is not
permitted to be given under applicable law), to procure such insurance and
Holdings and the Borrower agree to reimburse the Collateral Agent for all
reasonable costs and expenses of procuring such insurance.
8.04 CORPORATE FRANCHISES. Holdings 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 and its material rights,
franchises, licenses and patents; PROVIDED, HOWEVER, that nothing in this
Section 8.04 shall prevent (i) sales of assets and other transactions by
Holdings or any of its Subsidiaries in accordance with Section 9.02, (ii) the
withdrawal by Holdings or any of its Subsidiaries of its qualification as a
foreign corporation in any jurisdiction where such withdrawal could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities or
condition (financial or otherwise) of Holdings and its Subsidiaries taken as
a whole or (iii) any termination of any such rights, franchises, licenses or
patents that is determined by any senior officer or the Board of Directors of
the Borrower to be in the best interest of the Credit Parties and not
otherwise disadvantageous in any material respect to either the business of
the Credit Parties or the interests of the Banks.
8.05 COMPLIANCE WITH STATUTES, ETC. Holdings 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),
except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole.
8.06 COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) Holdings will
comply, and will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership or use of its Real Property
now or hereafter owned, leased or operated by Holdings or any of its
Subsidiaries, except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities or condition (financial
or otherwise) of Holdings and its Subsidiaries taken as a whole, and will
promptly pay or cause to be paid all costs and expenses incurred in
connection with such compliance, and will keep or cause to be kept all such
Real Property free and clear of
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any Liens imposed pursuant to such Environmental Laws. Neither Holdings nor
any of its Subsidiaries will generate, use, treat, store, Release or dispose
of, or permit the generation, use, treatment, storage, Release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
operated by Holdings or any of its Subsidiaries, or transport or permit the
transportation of Hazardous Materials to or from any such Real Property,
except for Hazardous Materials generated, used, treated, stored, Released or
disposed of at any such Real Properties in compliance in all material
respects with all applicable Environmental Laws and reasonably required in
connection with the operation, use and maintenance of the business or
operations of Holdings or any of its Subsidiaries.
(b) At any time that any Credit Party gives notice to the Banks
pursuant to Section 8.01(i) or upon the exercise of any of the remedies
pursuant to the last paragraph of Section 10, then at the reasonable written
request of the Agent or the Required Banks, Holdings and the Borrower will
provide, at the sole expense of Holdings and the Borrower, an environmental
site assessment report concerning any Real Property owned, leased or operated
by Holdings or any of its Subsidiaries, prepared by an environmental
consulting firm reasonably approved by the Agent, indicating the presence or
absence of Hazardous Materials and the potential cost of any removal or
remedial action in connection with such Hazardous Materials on such Real
Property. If Holdings or the Borrower fails to provide the same within 90
days after such request was made, the Agent may order the same, the cost of
which shall be borne by Holdings and the Borrower, and Holdings and the
Borrower shall grant and hereby grant to the Agent and the Banks and their
agents access to such Real Property and specifically grants the Agent and the
Banks an irrevocable non-exclusive license, subject to the rights of tenants,
to undertake such an assessment at any reasonable time upon reasonable notice
to Holdings, all at the sole and reasonable expense of Holdings and the
Borrower.
8.07 ERISA. As soon as possible and, in any event, within ten
(10) days after Holdings, any Subsidiary of Holdings or any ERISA Affiliate
knows or has reason to know of the occurrence of any of the following,
Holdings will deliver to each of the Banks a certificate of the Chief
Financial Officer of Holdings or the Borrower setting forth the full details
as to such occurrence and the action, if any, that Holdings, such Subsidiary
or such ERISA Affiliate is required or proposes to take, together with any
notices required or proposed to be given to or filed with or by Holdings, any
Subsidiary, any ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred
(except to the extent that Holdings has previously delivered to the Banks a
certificate and notices (if any) concerning such event pursuant to the next
clause hereof); that a contributing sponsor (as defined in Section
4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to
the advance reporting requirement of PBGC Regulation Section 4043.61 (without
regard to subparagraph (b)(1) thereof), and an event described in subsection
.62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is
reasonably expected to occur with respect to such Plan within the following
30 days; that an accumulated funding deficiency, within the meaning of
Section 412 of the Code or Section 302 of ERISA, has been incurred or an
application may be or has been made for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA with respect to a Plan; that any contribution required to
be made with respect to a Plan has not been timely made; that a Plan has been
or may be
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terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current Liability; that proceedings may be
or have been instituted to terminate or appoint a trustee to administer a
Plan which is subject to Title IV of ERISA; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Plan; that Holdings, any Subsidiary of Holdings or any
ERISA Affiliate will or may incur any liability (including any indirect,
contingent, or secondary liability) to or on account of the termination of or
withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or
4212 of ERISA or with respect to a Plan under Section 401(a)(29), 4971, 4975
or 4980 of the Code or Section 409, 502(i) or 502(l) of ERISA or with respect
to a group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) under Section 4980B of the Code; or that Holdings or
any Subsidiary of Holdings may incur any material liability pursuant to any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than
as required by Section 601 of ERISA) or any Plan. Holdings will deliver or
make available to each of the Banks (i) a complete copy of the annual report
(on Internal Revenue Service Form 5500-series) of each Plan (including, to
the extent required, the related financial and actuarial statements and
opinions and other supporting statements, certifications, schedules and
information) required to be filed with the Internal Revenue Service and (ii)
copies of any records, documents or other information that must be furnished
to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA. In
addition to any certificates or notices delivered to the Banks pursuant to
the first sentence hereof, copies of annual reports and any records,
documents or other information required to be furnished to the PBGC, and any
material notices received by Holdings, any Subsidiary of Holdings or any
ERISA Affiliate with respect to any Plan shall be delivered or made available
to the Banks no later than ten (10) days after the date such annual report
has been filed with the Internal Revenue Service or such records, documents
and/or information has been furnished to the PBGC or such notice has been
received by Holdings, any Subsidiary or any ERISA Affiliate, as applicable.
8.08 END OF FISCAL YEARS; FISCAL QUARTERS. Holdings will cause
(i) each of its, and each of its Subsidiaries', fiscal years to end on the
Saturday closest to March 31 of each year and (ii) each of its, and each of
its Subsidiaries', fiscal quarters to end on the Saturday 13, or occasionally
14, weeks after the fiscal year or the immediately preceding fiscal quarter,
as appropriate, PROVIDED, HOWEVER, that Holdings and its Subsidiaries may
adopt a fiscal year that ends on December 31 of each year with the prior
approval of the Agent, which approval shall not be unreasonably withheld.
8.09 PERFORMANCE OF OBLIGATIONS. Holdings will, and will cause
each of its Subsidiaries to, perform all of its obligations under the terms
of each mortgage, indenture, security agreement, loan agreement or credit
agreement and each other material agreement, contract or instrument by which
it is bound, except such non-performances as could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities or condition
(financial or otherwise) of Holdings and its Subsidiaries taken as a whole.
8.10 PAYMENT OF TAXES. Holdings will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all federal, state and
other material taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any
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properties belonging to it, prior to the date on which penalties attach
thereto, and all material lawful claims for sums that have become due and
payable which, if unpaid, might become a Lien not otherwise permitted under
Section 9.01(i); PROVIDED, that neither Holdings nor any of its Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim
which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance with
generally accepted accounting principles.
8.11 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) Holdings will,
and will cause each of its Subsidiaries to, within five days after the
acquisition by Holdings or any such Subsidiary of any Real Property with a
fair market value (net of the principal amount of any Indebtedness secured by
such Real Property) of $2,000,000 or more (each a "Mortgaged Property"), give
notice thereof to the Agent and thereafter deliver to the Collateral Agent a
mortgage or deed of trust (each, a "Mortgage") securing the Obligations of
Holdings or such Subsidiary, as the case may be, in form and substance
reasonably satisfactory to the Agent, each of which Mortgages shall
constitute valid and enforceable Mortgages on the respective Mortgaged
Properties subject to no other Liens except for Permitted Liens. Each
Mortgage or instruments related thereto shall have been duly recorded or
filed in such manner and in such places as are required by law to establish,
perfect, preserve and protect the Liens in favor of the Collateral Agent
pursuant to such Mortgage and all taxes, fees and other charges payable in
connection therewith shall have been paid in full.
(b) Holdings will, and will cause each of its Subsidiaries to, at
the expense of Holdings and the Borrower, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time
such confirmatory or additional conveyances, financing statements, real
property surveys and environmental reports on new Mortgaged Properties as the
Collateral Agent may reasonably require. Furthermore, Holdings and the
Borrower will cause to be delivered to the Collateral Agent such opinions of
counsel, title insurance and other related documents as may be reasonably
requested by the Agent to assure itself that this Section 8.11 has been
complied with.
(c) If the Agent or the Required Banks reasonably determine that
they are required by law or regulation to have appraisals prepared in respect
of new Mortgaged Properties, the Borrower will provide, at its own expense,
to the Agent appraisals which satisfy the applicable requirements of the Real
Estate Appraisal Reform Amendments of the Financial Institution Reform,
Recovery and Enforcement Act of 1989, as amended, and which otherwise shall
be in form and substance reasonably satisfactory to the Agent.
(d) Holdings and the Borrower agree that each action required
above by this Section 8.11 (other than the giving of the notice referred to
in clause (a) above) shall be completed no later than 90 days after such
action is either requested to be taken by the Agent or required to be taken
by Holdings and/or its Subsidiaries pursuant to the terms of this Section
8.11; PROVIDED that, in no event will Holdings or any of its Subsidiaries be
required to take any action, other than using commercially reasonable
efforts, to obtain consents from third parties with respect to its compliance
with this Section 8.11.
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8.12 CONTRIBUTIONS. Holdings will contribute as a common equity
contribution to the capital of the Borrower upon its receipt thereof, any
cash proceeds received by Holdings on or after the Restatement Effective Date
from any asset sale, any incurrence of Indebtedness, any Recovery Event, any
sale or issuance of its equity, any cash capital contributions received by
Holdings or any tax refunds received by Holdings.
8.13 PREFERRED STOCK DIVIDENDS. Except to the extent permitted by
Section 9.03(iii), Holdings will pay all dividends on the Series A Preferred
Stock, the Series B Preferred Stock and all other Qualified Preferred Stock
of Holdings through the issuance of additional shares of Series A Preferred
Stock, Series B Preferred Stock or other Qualified Preferred Stock, as the
case may be, rather than in cash.
8.14 INTEREST RATE PROTECTION. No later than 90 days following
the Restatement Effective Date, the Borrower will enter into, and shall for
two years thereafter (or, if earlier, until at least 50% of the initial
aggregate principal amount of Term Loans have been repaid or prepaid)
maintain, Interest Rate Protection Agreements acceptable to the Agent
establishing a fixed or maximum interest rate acceptable to the Agent for an
aggregate amount equal to at least 50% of the aggregate principal amount of
all Term Loans then outstanding.
SECTION 9. NEGATIVE COVENANTS. Each of Holdings and the Borrower
hereby covenants and agrees that on and after the Restatement Effective Date
and until the Total Commitment and all Letters of Credit have terminated and
the Loans, Notes and Unpaid Drawings, together with interest, Fees and all
other Obligations (other than any indemnities described in Section 13.13
which are not then due and payable) incurred hereunder and thereunder, are
paid in full:
9.01 LIENS. Holdings 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 (real or personal, tangible or
intangible) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable with recourse to
Holdings or any of its Subsidiaries), or assign any right to receive income
or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute;
PROVIDED that the provisions of this Section 9.01 shall not prevent the
creation, incurrence, assumption or existence of the following (Liens
described below are herein referred to as "Permitted Liens"):
(i) Liens for taxes, assessments or governmental charges or levies
not yet due or Liens for taxes, assessments or governmental charges or
levies being contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance with generally
accepted accounting principles;
(ii) Liens in respect of property or assets of the Borrower or any
of its Subsidiaries imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness for borrowed money, such
as carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course
-51-
of business, and (x) which do not in the aggregate materially detract
from the value of the Borrower's or such Subsidiary's property or assets
or materially impair the use thereof in the operation of the business
of the Borrower or such Subsidiary or (y) which are not yet due or 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 assets subject to any such Lien;
(iii) Liens in existence on the Restatement Effective Date which are
listed, and the property subject thereto described, in Schedule VIII, but
only to the respective date, if any, set forth in such Schedule VIII for
the removal, replacement and termination of any such Liens, plus renewals,
replacements, refinancings and extensions of such Liens to the extent set
forth on Schedule VIII, PROVIDED that (x) the aggregate principal amount of
the Indebtedness, if any, secured by such Liens does not increase from that
amount outstanding at the time of any such renewal, replacement,
refinancing or extension and (y) any such renewal, replacement, refinancing
or extension does not encumber any additional assets or properties of
Holdings or any of its Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of Holdings or any of its
Subsidiaries;
(vii) Liens upon assets of the Borrower or any of its Subsidiaries
subject to Capitalized Lease Obligations to the extent such Capitalized
Lease Obligations are permitted by Section 9.04(iv), PROVIDED that (x) such
Liens only serve to secure the payment of Indebtedness arising under such
Capitalized Lease Obligation or any extension, renewal, refinancing or
replacement thereof for the same or a lesser amount to the extent then
permitted by Section 9.04(iv) and (y) the Lien encumbering the asset giving
rise to the Capitalized Lease Obligation does not encumber any other asset
of the Borrower or any Subsidiary of the Borrower;
(viii) Liens placed upon equipment, machinery and/or Real Property
(including any improvements, accessions, proceeds, products and ancillary
property relating to any of the foregoing property) acquired after the
Restatement Effective Date and used in the ordinary course of business of
the Borrower or any of its Subsidiaries at the time of the acquisition
thereof by the Borrower or any such Subsidiary or within 90 days thereafter
to secure Indebtedness incurred to pay all or a portion of the purchase
price, construction costs or improvements costs thereof or to secure
Indebtedness incurred solely for the purpose of financing (or, to the
extent permitted above, refinancing) the acquisition, construction or
improvement of any such equipment, machinery and/or Real Property or
extensions, renewals, refinancings or replacements of any of the foregoing
for the same or a lesser amount, PROVIDED that (x) the aggregate
outstanding principal amount of all Indebtedness secured by Liens permitted
by this clause (viii) shall not at any time exceed that amount permitted by
Section 9.04(iv) and (y) in all events, the Lien encumbering the
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equipment, machinery and/or Real Property so acquired, constructed or
improved (and any such related property (including any such ancillary
property)) does not encumber any other asset of the Borrower or such
Subsidiary;
(ix) easements, rights-of-way, restrictions (including building,
zoning and similar restrictions), utility agreements, covenants,
reservations, encroachments and other similar charges or encumbrances, and
minor title deficiencies, in each case not securing Indebtedness and not
materially interfering with the conduct of the business of Holdings or any
of its Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings regarding operating leases or with respect to any inventory held on
consignment in the ordinary course of business;
(xi) Liens arising out of the existence of judgments or awards not
giving rise to an Event of Default under Section 10.09;
(xii) statutory and common law landlords' liens under leases to
which Holdings or any of its Subsidiaries is a party;
(xiii) Liens (other than Liens imposed under ERISA) incurred in the
ordinary course of business in connection with workers compensation claims,
unemployment insurance and social security benefits and Liens securing the
performance of bids, tenders, leases and contracts in the ordinary course
of business, statutory obligations, surety bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of
business (exclusive of obligations in respect of the payment for borrowed
money);
(xiv) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the Borrower in
existence at the time such Subsidiary is acquired pursuant to a Permitted
Acquisition, PROVIDED that (x) any Indebtedness that is secured by such
Liens is permitted to exist under Section 9.04(vii), and (y) such Liens are
not incurred in connection with, or in contemplation or anticipation of,
such Permitted Acquisition and do not attach to any other asset of the
Borrower or any of its Subsidiaries; and
(xv) other Liens incidental to the conduct of the business or the
ownership of the assets of the Borrower or any Subsidiary that (a) were not
incurred in connection with borrowed money, (b) do not encumber any
Collateral and do not in the aggregate materially detract from the value of
the assets subject thereto or materially impair the use thereof in the
operation of such business and (c) do not secure obligations in excess of
$100,000 in the aggregate for all such Liens.
In connection with the granting of Liens of the type described in clauses (vii)
and (viii) of this Section 9.01 by the Borrower or any of its Subsidiaries, the
Agent and the Collateral Agent shall be authorized to take any actions deemed
appropriate by it in connection therewith (including, without limitation, by
executing appropriate lien releases or lien subordination agreements in favor
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of the holder or holders of such Liens, in either case solely with respect to
the item or items of equipment or other assets subject to such Liens).
9.02 CONSOLIDATION, MERGER, PURCHASE OR SALE OF ASSETS, ETC.
Holdings will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of all or any part of
its property or assets, or enter into any sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) all
or any part of the property or assets (other than purchases or other
acquisitions of inventory, materials, supplies and equipment in the ordinary
course of business) of any Person (or agree to do any of the foregoing at any
future time), except that the following transactions (and agreements related
thereto) shall be permitted:
(i) Capital Expenditures by the Borrower and its Subsidiaries
shall be permitted (although any Capital Expenditures constituting a
Permitted Acquisition shall be governed by clause (xii) of this Section
9.02);
(ii) each of the Borrower and its Subsidiaries may make sales of
inventory in the ordinary course of business;
(iii) each of the Borrower and its Subsidiaries may sell uneconomic,
obsolete or worn-out equipment, materials or other assets in the ordinary
course of business, provided that the aggregate amount of the proceeds
received from all assets sold pursuant to this clause (iii) shall not
exceed $500,000 in any fiscal year of the Borrower;
(iv) each of the Borrower and its Subsidiaries may sell assets
(other than the capital stock of any Subsidiary Guarantor unless all of the
capital stock of such Subsidiary Guarantor is sold), so long as (u) no
Default or Event of Default then exists or would result therefrom, (w) each
such sale is in an arm's-length transaction and the Borrower or the
respective Subsidiary receives at least fair market value (as determined in
good faith by the Borrower or such Subsidiary, as the case may be), (x) the
total consideration received by the Borrower or such Subsidiary is at least
80% cash, which cash is paid at the time of the closing of such sale,
PROVIDED that the amount of any liabilities (as shown on the Borrower's or
such Subsidiary's most recent balance sheet) of the Borrower or any
Subsidiary (other than liabilities that are by their terms subordinated to
the Obligations) that are assumed by the transferee of any such assets
shall be deemed to be cash for purposes of this clause (x), (y) the Net
Sale Proceeds therefrom are applied and/or reinvested as (and to the
extent) required by Section 4.02(e) and (z) the aggregate amount of the
proceeds received from all assets sold pursuant to this clause
(iv) (including, for this purpose, the amount of any assumed liabilities
referred to in clause (x) above) shall not exceed $1,000,000 in any fiscal
year of the Borrower;
(v) Investments may be made to the extent permitted by Section
9.05;
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(vi) each of the Borrower and its Subsidiaries may lease (as
lessee) real or personal property (so long as any such lease does not
create a Capitalized Lease Obligation except to the extent permitted by
Section 9.04(iv);
(vii) each of the Borrower and its Subsidiaries may sell or
discount, in each case without recourse and in the ordinary course of
business, accounts receivable arising in the ordinary course of business,
but only in connection with the compromise or collection thereof;
(viii) the Acquisition and all payments required to be made by the
Acquisition Documents (as in effect on the Restatement Effective Date)
shall be permitted in accordance with the terms of the Acquisition
Documents;
(ix) each of the Borrower and its Subsidiaries may grant leases or
subleases to other Persons not materially interfering with the conduct of
the business of the Borrower or any of its Subsidiaries;
(x) any Subsidiary of the Borrower (x) may be merged, consolidated
or liquidated with or into the Borrower so long as the Borrower is the
surviving corporation of such merger, consolidation or liquidation and (y)
may transfer all or any portion of its assets to the Borrower;
(xi) any Subsidiary of the Borrower (x) may be merged, consolidated
or liquidated with or into any other Subsidiary of the Borrower so long as
(i) in the case of any such merger, consolidation or liquidation involving
a Subsidiary Guarantor, the Subsidiary Guarantor is the surviving
corporation of such merger, consolidation or liquidation and (ii) in
addition to the requirements or preceding clause (i), in the case of any
such merger, consolidation or liquidation involving a Wholly-Owned
Subsidiary of the Borrower, the Wholly-Owned Subsidiary is the surviving
corporation of such merger, consolidation or liquidation, and (y) may
transfer all or any portion of its assets to any Subsidiary Guarantor;
(xii) each of the Borrower and the Subsidiary Guarantors may acquire
all or substantially all of the assets of any Person (or all or
substantially all of the assets of a product line or division of any
Person) or 100% of the capital stock of any Person (any such acquisition
permitted by this clause (xii), a "Permitted Acquisition"), so long as (i)
no Default or Event of Default then exists or would result therefrom, (ii)
each of the representations and warranties contained in Section 7 shall be
true and correct in all material respects both before and after giving
effect to such Permitted Acquisition, (iii) any Liens or Indebtedness
assumed or issued in connection with such acquisition are otherwise
permitted under Section 9.01 or 9.04, as the case may be, (iv) the only
consideration paid by the Borrower or any Subsidiary Guarantor in
connection with any Permitted Acquisition consists solely of cash, common
stock of Holdings and/or Qualified Preferred Stock of Holdings, (v) at
least 10 Business Days prior to the consummation of any Permitted
Acquisition, the Borrower shall have delivered to the Agent and each of the
Banks a certificate of the Borrower's Chief Financial Officer certifying
(and showing the
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calculations therefor in reasonable detail) that Holding's
and its Subsidiaries would have been in compliance with the financial
covenants set forth in Sections 9.07, 9.08 and 9.09 for the Test Period
then most recently ended prior to the date of the consummation of such
Permitted Acquisition, in each case with such financial covenants to be
determined on a PRO FORMA basis as if such Permitted Acquisition had been
consummated on the first day of such Test Period (and assuming that any
Indebtedness incurred, issued or assumed in connection therewith had been
incurred, issued or assumed on the first day of, and had remained
outstanding throughout, such Test Period), (vi) the sum of the aggregate
consideration paid in connection with all Permitted Acquisitions effected
after the Restatement Effective Date (including, without limitation, any
earn-out, non-compete or deferred compensation arrangements (in each case
as determined in good faith by the Board of Directors of Holdings), the
aggregate principal amount of any Indebtedness assumed or issued in
connection therewith and the fair market value of any capital stock of
Holdings issued in connection therewith (as determined in good faith by the
Board of Directors of Holdings)) does not exceed $5,000,000 and (vii) the
Total Unutilized Available Revolving Loan Commitment after giving effect to
any Permitted Acquisition is at least $5,000,000 and the Borrowing Base at
such time, giving pro forma effect to such Permitted Acquisition (based on
the Borrowing Base Certificate then being delivered), would permit the
Borrower to incur at least $5,000,000 of additional Revolving Loans;
(xiii) each of the Borrower and its Subsidiaries may, in the ordinary
course of business, license, as licensor or licensee, patents, trademarks,
copyrights and know-how to third Persons and to one another, so long as any
such license by the Borrower or its Subsidiaries in its capacity as
licensor does not prohibit the granting of a Lien by the Borrower or any of
its Subsidiaries pursuant to the Security Agreement in such license or in
the intellectual property covered thereby;
(xiv) each of Holdings and its Subsidiaries may sell Cash
Equivalents permitted to be held by them pursuant to Section 9.05(ii) so
long as each such sale is for cash and at fair market value (as determined
in good faith by Holdings or such Subsidiary, as the case may be);
(xv) each of Holdings and its Subsidiaries may pay Dividends to the
extent permitted by Section 9.03;
(xvi) Recovery Events shall be permitted;
(xvii) each of the Borrower and its Subsidiaries may enter into sale
and leaseback transactions with respect to their equipment and Real
Property acquired after the Restatement Effective Date, so long as (u) no
Default or Event of Default then exists or would result therefrom, (v) each
such sale and leaseback transaction is in an arm's-length transaction and
the Borrower or the respective Subsidiary receives at least fair market
value (as determined in good faith by the Borrower or such Subsidiary, as
the case may be), (w) the total consideration received by the Borrower or
such Subsidiary is cash and is paid at the time of the closing of such
sale, (x) the Net Sale Proceeds therefrom are applied and/or reinvested as
(and to the extent) required by Section 3.03(c), (y)
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the aggregate amount of proceeds received from all sale and leaseback
transactions pursuant to this clause (xvii) shall not exceed $500,000
in any fiscal year of the Borrower and (z) to the extent that any such
sale and leaseback transaction results in a Capitalized Lease Obligation,
such Capitalized Lease Obligation is permitted under Section 9.04(iv); and
(xviii) so long as no Default or Event of Default then exists or
would result therefrom, the Holdings Merger shall be permitted pursuant to
documentation in form and substance reasonably satisfactory to the Agent
and the Borrower will give the Agent prompt written notice and evidence of
the occurrence thereof.
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Section 9.02 (other than to Holdings or a Subsidiary thereof), such
Collateral shall be sold free and clear of the Liens created by the Security
Documents, and the Agent and the Collateral Agent shall be authorized to take
any actions deemed appropriate in order to effect the release of such Collateral
from the Liens created by the Security Documents.
9.03 DIVIDENDS. Holdings will not, and will not permit any of its
Subsidiaries to, authorize, declare or pay any Dividends with respect to
Holdings or any of its Subsidiaries, except that:
(i) any Subsidiary of Holdings may pay cash Dividends to Holdings
or to any Wholly-Owned Subsidiary of Holdings;
(ii) so long as no Default or Event of Default then exists or would
result therefrom, Holdings may repurchase outstanding shares of its common
stock (or options to purchase such common stock) following the death,
disability or termination of employment of directors, officers or employees
of Holdings or any of its Subsidiaries, provided that the aggregate amount
of Dividends paid by Holdings pursuant to this clause (ii) in any fiscal
year of Holdings shall not exceed the sum of (1) $250,000, (2) the cash
proceeds received by Holdings after the Restatement Effective Date from
the sale of its common stock or options to purchase such common stock in
each case to directors, officers or employees of Holdings and its
Subsidiaries that occurs in such fiscal year and (3) amounts referred to
in preceding clauses (1) and (2) that remain unused from the immediately
preceding fiscal year; and
(iii) Holdings may pay dividends on the Series A Preferred Stock,
the Series B Preferred Stock and any other Qualified Preferred Stock of
Holdings, in each case solely through the issuance of additional shares of
the respective class of such Preferred Stock in accordance with the terms
of the respective certificates of designation therefor as in effect on the
Restatement Effective Date (in the case of the Series A Preferred Stock and
the Series B Preferred Stock) or on the date of issuance of any other
Qualified Preferred Stock (although nothing in this Section 9.03(iii) shall
prevent Holdings from accruing (as opposed to declaring and paying)
dividends on the Series B Preferred Stock in accordance with the terms of
the certificate of designation therefor as in effect on the Restatement
Effective Date), PROVIDED, HOWEVER, from and after April 30, 2001, Holdings
may pay
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regular quarterly cash dividends on the Series A Preferred Stock
only (in the amount no greater than that provided for in the certificate of
designation for the Series A Preferred Stock as in effect on the
Restatement Effective Date), out of funds legally available therefor, but
only in respect of those shares of Series A Preferred Stock issued and
outstanding on February 3, 1998 and on any shares of Series A Preferred
Stock issued in payment of dividends made or subsequently issued in payment
of dividends thereon in respect of such shares of Series A Preferred Stock
outstanding on February 3, 1998, in each case so long as no Default or
Event of Default then exists or would result therefrom and the payment of
such cash dividend is permitted at such time pursuant to clause 5(ii) of
the second paragraph of Section 4.10 of the Senior Note Indenture (as in
effect on the Restatement Effective Date).
9.04 INDEBTEDNESS. Holdings will not, and will not permit any of its
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Existing Indebtedness outstanding on the Restatement Effective
Date and listed on Schedule VI, without giving effect to any subsequent
extension, renewal or refinancing thereof except to the extent set forth on
Schedule VI, provided that the aggregate principal amount of the
Indebtedness to be extended, renewed or refinanced does not increase from
that amount outstanding at the time of any such extension, renewal or
refinancing;
(iii) Indebtedness under Interest Rate Protection Agreements entered
into with respect to other Indebtedness permitted under this Section 9.04;
(iv) Indebtedness of the Borrower and its Subsidiaries subject to
Liens permitted under Section 9.01(viii) or evidenced by Capitalized Lease
Obligations or any extension, renewal, refinancing or replacement thereof
for the same or a lesser amount, PROVIDED that in no event shall the sum of
the aggregate principal amount of all Capitalized Lease Obligations plus
the aggregate principal amount of all Indebtedness secured by Liens
permitted by Section 9.01(viii) (including any such extensions, renewals,
refinancings or replacements of the foregoing) exceed at any time
outstanding the sum of (I) $5,000,000 plus (II) an amount, not to exceed
$1,500,000, to the extent that such amount has been incurred under clause
(xii) of this Section 9.04;
(v) intercompany Indebtedness among Holdings and its Subsidiaries
to the extent permitted by Section 9.05(ix);
(vi) Indebtedness of Holdings, the Borrower and the Subsidiary
Guarantors under the Senior Notes and the other Senior Note Documents in an
aggregate principal amount not to exceed $90,000,000 (as reduced by any
repayments of principal amount thereof);
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(vii) Indebtedness of a Subsidiary of the Borrower acquired pursuant
to a Permitted Acquisition (or Indebtedness assumed at the time of a
Permitted Acquisition of an asset securing such Indebtedness) or any
extension, renewal, refinancing or replacement thereof for the same or
lesser amount, provided that (x) such Indebtedness was not incurred in
connection with, or in anticipation or contemplation of, such Permitted
Acquisition, (y) such Indebtedness does not constitute debt for borrowed
money (other than debt for borrowed money incurred in connection with
industrial revenue or industrial development or similar bond financings),
it being understood and agreed that Capitalized Lease Obligations and
purchase money Indebtedness shall not constitute debt for borrowed money
for purposes of this clause (y), and (z) at the time of such Permitted
Acquisition, such Indebtedness does not exceed 10% of the total value of
the assets of the Subsidiary so acquired, or of the asset so acquired, as
the case may be;
(viii) guaranties by the Borrower and the Subsidiary Guarantors of
each other's Indebtedness to the extent that such Indebtedness is otherwise
permitted under this Section 9.04;
(ix) Indebtedness of the Borrower and its Subsidiaries consisting
of any guarantees, indemnities or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets;
(x) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business so long as such Indebtedness is
extinguished within two Business Days of the incurrence thereof;
(xi) Indebtedness in respect of Other Hedging Agreements to the
extent permitted by Section 9.05(xii); and
(xii) additional Indebtedness incurred by Holdings and its
Subsidiaries in an aggregate principal amount not to exceed $6,500,000 at
any one time outstanding, of which no more than $1,500,000 may be
outstanding at any time as additional secured Indebtedness under clause
(iv) of this Section 9.04 and with all other Indebtedness incurred under
this clause (xii) to be unsecured.
9.05 ADVANCES, INVESTMENTS AND LOANS. Holdings will not, and will
not permit any of its Subsidiaries to, directly or indirectly, 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 other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents (each of the foregoing an "Investment" and,
collectively, "Investments"), except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold
accounts receivables owing to any of them, if created or acquired in the
ordinary course of business
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and payable or dischargeable in accordance with customary trade terms of
the Borrower or such Subsidiary;
(ii) Holdings and its Subsidiaries may acquire and hold cash and
Cash Equivalents, provided that Holdings shall not be permitted to hold
more than $500,000 of cash and/or Cash Equivalents in the aggregate for
more than ten consecutive Business Days;
(iii) Holdings and its Subsidiaries may hold the Investments held by
them on the Restatement Effective Date and described on Schedule IX,
provided that any additional Investments made with respect thereto shall be
permitted only if independently justified under the other provisions of
this Section 9.05;
(iv) the Borrower and its Subsidiaries may acquire and own
Investments (including, without limitation, debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and customers
and in good faith settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business;
(v) the Borrower and its Subsidiaries may (A) make loans and
advances in the ordinary course of business to their respective officers
and employees so long as the aggregate principal amount thereof at any time
outstanding (determined without regard to any write-downs or write-offs of
such loans and advances) shall not exceed $250,000 and (B) make advances to
their employees for moving, relocation and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business so
long as any such advances made pursuant to this clause (B) are ultimately
expected to be treated as an expense which reduces Consolidated Net Income
in accordance with generally accepted accounting principles;
(vi) Holdings may acquire and hold obligations of one or more
officers or other employees of Holdings or any of its Subsidiaries in
connection with such officers' or employees' acquisition of shares of
common stock of Holdings so long as no cash is paid by Holdings or any of
its Subsidiaries to such officers or employees in connection with the
acquisition of any such obligations;
(vii) the Borrower may enter into Interest Protection Agreements to
the extent permitted by Section 9.04(iii);
(viii) (x) Holdings may make cash common equity contributions to the
capital of the Borrower and (y) the Borrower and the Subsidiary Guarantors
may make cash common equity contributions to the capital of their
respective Subsidiaries which are Subsidiary Guarantors;
(ix) Holdings, the Borrower and the Subsidiary Guarantors may make
intercompany loans and advances between or among one another (collectively,
"Intercompany Loans"), so long as no such Intercompany Loan shall be
evidenced by a
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promissory note or other instrument except an Intercompany Note that is
pledged to the Collateral Agent pursuant to the Pledge Agreement;
(x) the Borrower and its Subsidiaries may acquire and hold
non-cash consideration issued by the purchaser of assets in connection with
a sale of such assets to the extent permitted by Section 9.02(iv);
(xi) Permitted Acquisitions shall be permitted in accordance with
Section 9.02(xii);
(xii) the Borrower and its Subsidiaries may enter into Other Hedging
Agreements in the ordinary course of business providing protection against
fluctuations in currency values in connection with the Borrower's or any of
its Subsidiaries' operations so long as management of the Borrower or such
Subsidiary, as the case may be, has determined in good faith that the
entering into of such Other Hedging Agreements are bona fide hedging
activities and are not for speculative purposes;
(xiii) the Acquisition shall be permitted; and
(xiv) the Borrower and its Subsidiaries may make investments not
otherwise permitted by clauses (i) through (xiii) of this Section 9.05 in
an aggregate amount not to exceed $1,000,000.
9.06 TRANSACTIONS WITH AFFILIATES. Holdings will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of Holdings or any of its Subsidiaries, other than on terms and
conditions substantially as favorable to Holdings or such Subsidiary as would
reasonably be obtained by Holdings or such Subsidiary at that time in a
comparable arm's-length transaction with a Person other than an Affiliate,
except that the following in any event shall be permitted:
(i) Dividends may be paid to the extent provided in Section 9.03;
(ii) loans may be made and other transactions may be entered into
by Holdings and its Subsidiaries to the extent permitted by Sections 9.02,
9.03, 9.04 and 9.05;
(iii) customary fees may be paid to directors of Holdings and its
Subsidiaries;
(iv) so long as no Default or Event of Default then exists or would
result therefrom, Holdings or the Borrower may pay management fees to
Lehman and its Affiliates semi-annually in advance pursuant to, and in
accordance with, the terms of the Lehman Management Agreement (as in effect
on the Restatement Effective Date) in an aggregate amount for all such
Persons not to exceed $250,000 in any semi-annual period;
(v) Holdings or the Borrower may reimburse Lehman and its
Affiliates for their reasonable out-of-pocket expenses incurred in
connection with their performing management services to Holding and its
Subsidiaries pursuant to, and in accordance with,
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the terms of the Lehman Management Agreement (as in effect on the
Restatement Effective Date);
(vi) Holdings or the Borrower may pay a transaction fee to Lehman
and its Affiliates on the Restatement Effective Date in the amount of
$425,000 plus their reasonable out-of-pocket expenses incurred in
connection with the Transaction;
(vii) Holdings and its Subsidiaries may enter into, and may make
payments under, employment agreements, employee benefit plans,
indemnification provisions and other similar compensatory arrangements with
officers and directors of Holdings and its Subsidiaries in the ordinary
course of business;
(viii) the Borrower and the Subsidiary Guarantors may engage in any
transaction among themselves to the extent otherwise expressly permitted
under this Agreement; and
(ix) Holdings and its Subsidiaries may enter into those agreements
listed on Schedule XII (and any amendment or modification thereof otherwise
permitted by Section 9.10) and perform their obligations thereunder to the
extent such performance is otherwise permitted under this Agreement.
9.07 CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Holdings will not
permit the Consolidated Fixed Charge Coverage Ratio for any Test Period ending
on the last day of a fiscal quarter set forth below to be less than the ratio
set forth opposite such fiscal quarter below:
Fiscal Quarter
Ending Closest To Ratio
----------------- -----
June 30, 1998 1.25:1.00
September 30, 1998 1.25:1.00
December 31, 1998 1.25:1.00
March 31, 1999 1.40:1.00
June 30, 1999 1.40:1.00
September 30, 1999 1.40:1.00
December 31, 1999 1.40:1.00
March 31, 2000 1.50:1.00
June 30, 2000 1.50:1.00
September 30, 2000 1.50:1.00
December 31, 2000 1.50:1.00
March 31, 2001 1.70:1.00
June 30, 2001 1.70:1.00
September 30, 2001 1.70:1.00
December 31, 2001 1.70:1.00
March 31, 2002
and the last
day of each
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fiscal quarter thereafter 1.75:1.00
9.08 MAXIMUM LEVERAGE RATIO. Holdings will not permit the Leverage
Ratio at any time during a period set forth below to be greater than the ratio
set forth opposite such period below:
Period Ratio
------ -----
Restatement Effective Date through
and including the day immediately
preceding the last day of Holdings'
fiscal quarter ending closest to June 30, 1999 7.00:1.00
The last day of Holdings' fiscal quarter
ending closest to June 30, 1999 through
and including the date immediately
preceding the last day of Holdings' fiscal
quarter ending closest to September 30, 1999 6.75:1.00
The last day of Holdings' fiscal quarter
ending closest to September 30, 1999
through and including the day immediately
preceding the last day of Holdings' fiscal
quarter ending closest to December 31, 1999 6.00:1.00
The last day of Holdings' fiscal quarter
ending closest to December 31, 1999 through
and including the day immediately preceding
the last day of Holdings' fiscal quarter
ending closest to March 31, 2000 5.50:1.00
The last day of Holdings' fiscal quarter
ending closest to March 31, 2000 through
and including the day immediately preceding
the last day of Holdings' fiscal quarter
ending closest to June 30, 2000 5.25:1.00
The last day of Holdings' fiscal quarter
ending closest to June 30, 2000 through
and including the day immediately preceding
the last day of Holdings' fiscal quarter
ending closest to June 30, 2001 5.00:1.00
Thereafter 4.50:1.00
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9.09 MINIMUM CONSOLIDATED EBITDA. Holdings will not permit
Consolidated EBITDA for any Test Period ending on the last day of a fiscal
quarter set forth below to be less than the amount set forth opposite such
fiscal quarter below:
Fiscal Quarter
Ending Closest To Amount
----------------- ------
June 30, 1998 $15,000,000
September 30, 1998 $14,800,000
December 31, 1998 $14,800,000
March 31, 1999 $14,800,000
June 30, 1999 $15,200,000
September 30, 1999 $17,000,000
December 31, 1999 $18,500,000
March 31, 2000 $19,000,000
June 30, 2000 $19,500,000
September 30, 2000 $19,500,000
December 31, 2000 $20,000,000
March 31, 2001 $20,000,000
June 30, 2001 $21,000,000
September 30, 2001 $22,000,000
December 31, 2001 $23,000,000
March 31, 2002 $23,000,000
June 30, 2002 $23,000,000
September 30, 2002 $23,000,000
December 31, 2002 $23,000,000
9.10 LIMITATION ON PAYMENTS OF CERTAIN INDEBTEDNESS; MODIFICATIONS
OF CERTAIN INDEBTEDNESS; MODIFICATIONS OF CERTIFICATE OF INCORPORATION,
BY-LAWS AND CERTAIN OTHER AGREEMENTS; ETC. Holdings will not, and will not
permit any of its Subsidiaries to, (i) make (or give any notice in respect
of) any voluntary or optional payment or prepayment on or redemption or
acquisition for value of, or any prepayment or redemption as a result of any
asset sale, change of control or similar event of (including in each case,
without limitation, by way of depositing with the trustee with respect
thereto or any other Person money or securities before due for the purpose of
paying when due) the Senior Notes, (ii) amend or modify, or permit the
amendment or modification of, any provision of the Senior Note Documents,
(iii) amend, modify or change its certificate of incorporation (including,
without limitation, by the filing or modification of any certificate of
designation) or by-laws (or the equivalent organizational documents) or any
agreement entered into by it with respect to its capital stock (including any
Shareholders' Agreement), or enter into any new agreement with respect to its
capital stock, unless such amendment, modification, change or other action
contemplated by this clause (iii) would not violate the terms of this
Agreement and could not reasonably be expected to be adverse to the interests
of the Banks in any material respect, or (iv) amend, modify or change any
provision of (x) the Lehman Management Agreement other than any amendments,
modifications or changes which could not reasonably be expected to be adverse
to the interests of the Banks in any material respect (it being understood
and agreed, however, that no amendments, modifications or changes
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may be made to the monetary terms of the Lehman Management Agreement) or (y)
any Tax Sharing Agreement or enter into any new Tax Sharing Agreement without
the prior written consent of the Agent in the case of this clause (y).
9.11 LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. Holdings
will not, and will not permit the Borrower or any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any such Subsidiary
to (a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits owned by the Borrower or any
Subsidiary of the Borrower, or pay any Indebtedness owed to the Borrower or any
Subsidiary of the Borrower, (b) make loans or advances to the Borrower or any
Subsidiary of the Borrower or (c) transfer any of its properties or assets to
the Borrower or any Subsidiary of the Borrower, except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) the Senior Note Documents, (iv)
customary provisions restricting subletting or assignment of any lease or
sublease governing a leasehold interest of the Borrower or any Subsidiary of the
Borrower, (v) customary provisions restricting assignment of any licensing
agreement or other contract entered into by the Borrower or any Subsidiary of
the Borrower in the ordinary course of business, (vi) restrictions on the
transfer of any asset subject to a Lien permitted by Sections 9.01(iii), (iv),
(vi), (vii), (viii), (x), (xiii), (xiv) and (xv) and (vii) restrictions under
any contracts for the sale of (or the granting of an option to buy) assets,
including, without limitation, any restriction with respect to a Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition of all
or substantially all of the capital stock or assets of such Subsidiary, pending
the closing of such sale or disposition, PROVIDED that any such restriction
relates solely to the assets that are the subject of such contract (or such
option) and such sale (or the granting of such option assuming same is
exercised) is otherwise permitted under Section 9.02.
9.12 LIMITATION ON ISSUANCE OF CAPITAL STOCK. (a) Holdings will
not, and will not permit any of its Subsidiaries to, issue (i) any preferred
stock other than the Series A Preferred and other Qualified Preferred Stock of
Holdings or (ii) any redeemable common stock (other than common stock that is
redeemable at the sole option of Holdings or such Subsidiary).
(b) Holdings will not permit any of its Subsidiaries to issue any
capital stock (including by way of sales of treasury stock) or any options or
warrants to purchase, or securities convertible into, capital stock, except (i)
for transfers and replacements of then outstanding shares of capital stock, (ii)
for stock splits, stock dividends and issuances which do not decrease the
percentage ownership of Holdings or any of its Subsidiaries in any class of the
capital stock of such Subsidiary, (iii) to qualify directors to the extent
required by applicable law or (iv) for issuances by newly created or acquired
Subsidiaries in accordance with the terms of this Agreement.
9.13 BUSINESS. (a) Holdings and its Subsidiaries will not engage in
any business other than the businesses engaged in by the Borrower and its
Subsidiaries as of the Restatement Effective Date and businesses similar,
reasonably related or complementary thereto.
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(b) Notwithstanding the foregoing, Holdings will not engage in any
business and will not own any significant assets or have any material
liabilities (other than Indebtedness permitted to be incurred by it under
Section 9.04) other than its ownership of the capital stock of the Borrower, and
having those liabilities which it is responsible for under this Agreement and
the other Documents to which it is a party, PROVIDED that Holdings may engage in
those activities that are incidental to (w) the maintenance of its corporate
existence in compliance with applicable law, (x) legal, tax and accounting
matters in connection with any of the foregoing activities, (y) the entering
into, and performing its obligations under, this Agreement and the other
Documents to which it is a party, other agreements and instruments in effect on
the Restatement Effective Date to which it is a party or any amendments or other
modifications thereof not otherwise prohibited hereby so long as any such
amendments or other modifications do not increase, in any material respect, the
obligations or liabilities of Holdings or (z) the raising of capital in the form
of equity (including any initial public offering) or Indebtedness.
(c) Notwithstanding the foregoing, Elgar FSC will not engage in any
business and will not own any significant assets or have any material
liabilities other than in connection with its engaging as a foreign sales
corporation for the Borrower's business, PROVIDED that Elgar FSC also may engage
in those activities that are incidental to (x) the maintenance of its corporate
existence in compliance with applicable law, (y) legal, tax and accounting
matters in connection with any of the foregoing activities or (z) the entering
into, and performing its obligations under, any agreements and instruments in
effect on the Restatement Effective Date to which it is a party or any
amendments or other modifications thereof or any new similar agreements that are
not otherwise prohibited by this Section so long as any such amendments,
modifications or new agreements do not increase, in any material respect, the
obligations or liabilities of Elgar FSC.
9.14 LIMITATION ON CREATION OF SUBSIDIARIES. Notwithstanding
anything to the contrary contained in this Agreement, Holdings will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Restatement Effective Date any Subsidiary, PROVIDED that the Borrower and
its Wholly-Owned Subsidiaries shall be permitted to establish, create or, to the
extent permitted by this Agreement, acquire Wholly-Owned Subsidiaries so long as
(i) the capital stock or other equity interests of each such new Wholly-Owned
Subsidiary is pledged pursuant to, and to the extent required by, the Pledge
Agreement and the certificates representing such stock or other equity
interests, together with stock or other powers duly executed in blank, are
delivered to the Collateral Agent for the benefit of the Secured Creditors, (ii)
each such new Wholly-Owned Subsidiary executes and delivers to the Agent a
counterpart of the Subsidiaries Guaranty, the Pledge Agreement and the Security
Agreement, and (iii) each such new Wholly-Owned Subsidiary takes all actions
required pursuant to Section 8.11. In addition, each new Wholly-Owned
Subsidiary shall execute and deliver, or cause to be executed and delivered, to
the Agent all other relevant documentation of the type described in Sections
5.03, 5.04, 5.05, 5.10, 5.11, 5.12 and 5.14 as such new Wholly-Owned Subsidiary
would have had to deliver if such new Wholly-Owned Subsidiary were a Credit
Party on the Restatement Effective Date.
9.15 ADDITIONAL RESTRICTION ON THE INCURRENCE OF CERTAIN
INDEBTEDNESS. Notwithstanding anything to the contrary contained in this
Agreement (including in Section 9.04), so long as any Senior Notes remain
outstanding, neither Holdings nor any of its Subsidiaries shall incur any
Indebtedness either (x) under clause (xii) of Section 9.04 or (y) in reliance
on the basket
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provided under clause (xiv) of the definition of "Permitted Indebtedness" under
(and as defined in) the Senior Note Indenture other than Indebtedness incurred
under this Agreement and the other Credit Documents; PROVIDED, HOWEVER, at such
time as the sum of all outstanding Term Loans and the Total Revolving Loan
Commitment as then in effect (or, if the Total Revolving Loan Commitment has
been terminated, the sum of all outstanding Revolving Loans, Swingline Loans and
Letter of Credit Outstandings) is less than the sum of (i) $25,000,000 plus (ii)
to the extent that the certificate described below is delivered, the amount of
Indebtedness in excess of $15,000,000 which the Borrower would be permitted to
incur solely in reliance on sub-clause (y) of clause (ii) of the definition of
"Permitted Indebtedness" in Senior Note Indenture (and with the amount such
excess Indebtedness to be determined based upon a certificate of the Borrower's
Chief Financial Officer (which certificate shall be updated as provided in the
definition of Initial Blocked Amount and on each date on which the Borrower
desires to incur any other Indebtedness either under Section 9.04(xii) of this
Agreement or in reliance on clause (xiv) of the definition of "Permitted
Indebtedness" under (and as defined in) the Senior Note Indenture, Indebtedness
in an aggregate amount not to exceed such deficiency may be incurred under
Section 9.04(xii) of this Agreement and in reliance on clause (xiv) of such
definition of "Permitted Indebtedness".
SECTION 10. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
10.01 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of any Loan or any Note or (ii) default, and such default
shall continue unremedied for three or more Business Days, in the payment when
due of any interest on any Loan or Note, any Unpaid Drawing or any Fees or any
other amounts owing hereunder or thereunder; or
10.02 REPRESENTATIONS, ETC. Any representation, warranty or
statement made (or deemed made) by any Credit Party herein or in any other
Credit Document or in any certificate delivered to the Agent or any Bank
pursuant hereto or thereto shall prove to be untrue in any material respect on
the date as of which made or deemed made; or
10.03 COVENANTS. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(g)(i), 8.08, 8.13 or Section 9 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement or any other Credit Document (other than those set
forth in Sections 10.01 and 10.02) and such default shall continue unremedied
for a period of 30 days after written notice thereof to the defaulting party by
the Agent or the Required Banks; or
10.04 DEFAULT UNDER OTHER AGREEMENTS. (i) Holdings or any of its
Subsidiaries shall (x) default in any payment of any Indebtedness (other than
the Obligations) beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or (y) default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations) 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 (determined
without regard to whether any notice is required), any such Indebtedness to
become
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due prior to its stated maturity, or (ii) any Indebtedness (other than the
Obligations) of Holdings or any of its Subsidiaries shall be declared to be
(or shall become) due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment (or as a result of any sale of an
asset securing such Indebtedness in accordance with the terms thereof), prior
to the stated maturity thereof, PROVIDED that it shall not be a Default or an
Event of Default under this Section 10.04 unless the aggregate principal
amount of all Indebtedness as described in preceding clauses (i) and (ii) is
at least $3,000,000; or
10.05 BANKRUPTCY, ETC. Holdings or any of its 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 of its 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 of its
Subsidiaries, or Holdings or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Holdings or any of
its Subsidiaries, or there is commenced against Holdings or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days, or Holdings or any of its 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 of its 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 of its Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by Holdings or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days, any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan which is subject to Title IV of
ERISA is, shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan has not
been timely made, Holdings or any Subsidiary of Holdings or any ERISA Affiliate
has incurred or is likely to incur any liability to or on account of a Plan
under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or
4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or on account of a
group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2)
of the Code) under Section 4980B of the Code, or Holdings or any Subsidiary of
Holdings has incurred or is likely to incur liabilities pursuant to one or more
employee welfare
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benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to
retired employees or other former employees (other than as required by
Section 601 of ERISA) or Plans; (b) there shall result from any such event or
events the imposition of a lien, the granting of a security interest, or a
liability or a material risk of incurring a liability; and (c) such lien,
security interest or liability, individually, and/or in the aggregate, in the
reasonable opinion of the Required Banks, has had, or could reasonably be
expected to have, a material adverse effect on the business, operations,
properties, assets, liabilities or condition (financial or otherwise) of
Holdings and its Subsidiaries taken as a whole; or
10.07 SECURITY DOCUMENTS. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, to the extent required thereby,
a perfected security interest in, and Lien on, all of the Collateral (other than
an immaterial portion of the Security Agreement Collateral), in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons
(except as permitted by Section 9.01), and subject to no other Liens (except as
permitted by Section 9.01); or
10.08 GUARANTIES. At any time after the execution and delivery
thereof, any Guaranty or any provision thereof shall cease to be in full force
or effect as to any Guarantor, or any Guarantor or any Person acting by or on
behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations
under its Guaranty or any 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 its Guaranty, PROVIDED that if the default constitutes a
failure to perform or comply with any provision, covenant or agreement contained
in Section 8 of this Agreement (other than Section 8.01(g)(i) or 8.08), such
default shall continue unremedied for a period of at least 30 days after notice
to the defaulting Guarantor by the Agent or the Required Banks; or
10.09 JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings or any Subsidiary of Holdings involving in the aggregate for
Holdings and its Subsidiaries a liability (not paid or fully covered by a
reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 30 consecutive days, and the
aggregate amount of all such judgments equals or exceeds $2,500,000 or any order
or writ of attachment or similar process shall have been issued with respect to
property of Holdings or any of its Subsidiaries with a value of a $2,500,000 or
more in the aggregate for Holdings and its Subsidiaries; or
10.10 CHANGE OF CONTROL. A Change of Control shall occur; or
10.11 CAPITAL CALL AGREEMENT. (a) The Capital Call Agreement or
any provision thereof shall cease to be in full force and effect, or JFLEI,
any Credit Party or any Person acting by or on behalf of JFLEI or any such
Credit Party shall deny or disaffirm its obligations under the Capital Call
Agreement or JFLEI, any Credit Party or any Person acting on or behalf of
JFLEI or any such Credit Party shall default in the due performance or
observance of any term, covenant or
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agreement on its part to be performed or observed pursuant to the Capital
Call Agreement or a Capital Call Event of Default under, and as defined in,
the Capital Call Agreement shall occur; or
(b) Any representation, warranty or statement made (or deemed
made) by JFLEI in the Capital Call Agreement shall prove to be untrue in any
material respect on the date as of which made or deemed made;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent, upon the written request of the Required
Banks, shall by written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of any Agent, any Bank or the holder of
any Note to enforce its claims against any Credit Party (PROVIDED, that, if an
Event of Default specified in Section 10.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Agent as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Commitment
terminated, whereupon all Commitments of each Bank shall forthwith terminate
immediately and any Commitment Commission shall forthwith become due and payable
without any other notice of any kind; (ii) declare the principal of and any
accrued interest in respect of all Loans and the Notes 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; (iii) terminate any Letter
of Credit which may be terminated in accordance with its terms; (iv) direct the
Borrower to pay (and the Borrower agrees that upon receipt of such notice, or
upon the occurrence of an Event of Default specified in Section 10.05 with
respect to the Borrower, it will pay) to the Collateral Agent at the Payment
Office such additional amount of cash or Cash Equivalents, to be held as
security by the Collateral Agent, as is equal to the aggregate Stated Amount of
all Letters of Credit issued for the account of the Borrower and then
outstanding; (v) enforce, as Collateral Agent, all of the Liens and security
interests created pursuant to the Security Documents; and (vi) apply any cash
collateral held by the Agent pursuant to Section 4.02 to the repayment of the
Obligations.
SECTION 11. DEFINITIONS AND ACCOUNTING TERMS.
11.01 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquisition" shall mean the acquisition by the Borrower of all of the
outstanding capital stock of Power Ten pursuant to the Acquisition Agreement.
"Acquisition Agreement" shall mean the Stock Purchase Agreement, dated
as of May 5, 1998, among Joseph A. Varroza, Jr., Vincent S. Mutascio and the
Borrower.
"Acquisition Documents" shall mean the Acquisition Agreement and all
other agreements and documents relating to the Acquisition.
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"Adjusted Consolidated Working Capital" shall mean, at any time,
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities at such time.
"Affected Eurodollar Loans" shall have the meaning provided in Section
4.02(i).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power (i) to vote 5% or
more of the securities having ordinary voting power for the election of
directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" shall mean BTCo, in its capacity as Agent for the Banks
hereunder, and shall include any successor to the Agent appointed pursuant to
Section 12.09.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
hereof), extended, renewed, refinanced or replaced from time to time.
"Applicable Base Rate Margin" shall mean from and after any Start Date
to and including the corresponding End Date, the respective percentage per annum
set forth in clause (A) or (B) below if, but only if, as of the Test Date for
such Start Date the applicable condition set forth in clause (A) or (B), as the
case may be, is met:
(A) 1.75% if, but only if, as of the Test Date, for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be greater
than or equal to 6.00:1.00; and
(B) 1.50% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be less
than 6.00:1.00.
Notwithstanding anything to the contrary above in this definition, (x) the
Applicable Base Rate Margin shall be 1.75% for the period from and including the
Restatement Effective Date through but not including the first Start Date after
the Restatement Effective Date and (i) the Applicable Base Rate Margin shall be
1.75% at all times when a Default or an Event of Default shall exist.
"Applicable Commitment Commission Percentage" shall mean .500%.
"Applicable Eurodollar Rate Margin" shall mean from and after any
Start Date to and including the corresponding End Date, the respective
percentage per annum set forth in clause (A) or (B) below if, but only if, as of
the Test Date for such Start Date the applicable condition set forth in clause
(A) or (B) below, as the case may be, is met:
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(A) 2.75% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be greater
than or equal to 6.00:1.00; and
(B) 2.50% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be less
than 6.00:1.00.
Notwithstanding anything to the contrary above in this definition, (x) the
Applicable Eurodollar Rate Margin shall be 2.75% for the period from and
including the Restatement Effective Date through but not including the first
Start Date after the Restatement Effective Date and (i) the Applicable
Eurodollar Rate Margin shall be 2.75% at all times when a Default or an Event of
Default shall exist.
"Applicable Excess Cash Flow Percentage" shall mean (i) in respect of
each Excess Cash Payment Period occurring prior to the repayment of $7,500,000
in aggregate principal amount of Term Loans, 75% and (ii) in respect of each
Excess Cash Payment Period occurring thereafter, 50%.
"Applicable Margin Period" shall mean each period which shall commence
on a date on which the financial statements are delivered pursuant to Section
8.01(b) or (c), as the case may be, and which shall end on the earlier of (i)
the date of the actual delivery of the next financial statements pursuant to
Section 8.01(b) or (c), as the case may be, and (ii) the latest date on which
the next financial statements are required to be delivered pursuant to Section
8.01(b) or (c), as the case may be, provided that the first Applicable Margin
Period shall commence with the delivery of Holdings' financial statements for
the Test Period ending closest to June 30, 1999.
"Asset Sale" shall mean any sale, transfer or other disposition by
Holdings or any of its Subsidiaries to any Person (including by-way-of
redemption by such Person) other than to Holdings or a Wholly-Owned Subsidiary
of Holdings of any asset (including, without limitation, any capital stock or
other securities of, or equity interests in, another Person) other than sales of
assets pursuant to Sections 9.02 (ii), (iii), (vii), (ix), (x), (xi), (xiii),
(xiv), (xv) and (xvi).
"Assignment and Assumption Agreement" shall mean an Assignment and
Assumption Agreement substantially in the form of Exhibit M (appropriately
completed).
"Available Revolving Loan Commitment" for any Bank shall mean, at any
time, such Bank's Revolving Loan Commitment as then in effect less such Banks'
RL Percentage of the amount of the Blocked Commitment, if any, at such time.
"Bank" shall mean each financial institution listed on Schedule I, as
well as any Person which becomes a "Bank" hereunder pursuant to Section 1.13 or
13.04(b).
"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 2.04(d) or (ii) a Bank having notified in
writing the Borrower and/or the Agent that such Bank does not intend to comply
with its obligations under Section 1.01(a), 1.01(b), 1.01(d) or 2, in the case
of either
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clause (i) or (ii) as a result of any takeover or control (including, without
limitation, as a result of the occurrence of any event of the type described
in Section 10.05 with respect to such Bank) of such Bank by any regulatory
authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" shall mean, at any time, the higher of (i) the Prime
Lending Rate and (ii) 1/2 of 1% in excess of the Federal Funds Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii) each
other Loan designated or deemed designated as such by the Borrower at the time
of the incurrence thereof or conversion thereto.
"Blocked Commitment" shall mean (i) for the period from and including
the Restatement Effective Date and until such time as the sum of (I) the
aggregate outstanding principal amount of all Term Loans plus (II) the Total
Revolving Loan Commitment as then in effect is less than $25,000,000, an amount
equal to the Initial Blocked Amount at such time and (ii) for the period
thereafter, an amount equal to the remainder of (x) the Initial Blocked Amount
at such time less (y) the sum of (I) the aggregate principal amount of all Term
Loans repaid during such period plus (II) the aggregate amount of reductions to
the Total Revolving Loan Commitment effected during such period pursuant to
Section 3.02(a); provided that the Blocked Commitment shall be reduced to 0 at
such time as all Senior Notes have been repaid in full.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments of the respective Tranche (or from
the Swingline Bank in the case of Swingline Loans) on a given date (or resulting
from a conversion or conversions on such date) having in the case of Eurodollar
Loans the same Interest Period, PROVIDED that Base Rate Loans incurred pursuant
to Section 1.10(b) shall be considered part of the related Borrowing of
Eurodollar Loans.
"Borrowing Base" shall mean, as at any date on which the amount
thereof is being determined, an amount equal to the sum of 85% of Eligible
Receivables and 60% of Eligible Inventory, each as determined from the Borrowing
Base Certificate most recently delivered pursuant to Section 8.01(j).
"Borrowing Base Certificate" shall have the meaning provided in
Section 8.01(j).
"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City, New York, a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close and (ii) with respect to all notices and determinations in
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connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (i) above and which is
also a day for trading by and between banks in the New York interbank
Eurodollar market.
"Capital Call Agreement" shall have the meaning provided in Section
5.13.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles and, without duplication, the amount of
Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" shall mean, with respect to any
Person, all rental obligations of such Person which, under generally accepted
accounting principles, are or will be required to be capitalized on the books of
such Person, in each case taken at the amount thereof accounted for as
indebtedness in accordance with such principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (PROVIDED that the full faith and credit of the
United States 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 or any political subdivision of any such state
or any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Ratings Services
("S&P") or Moody's Investors Service, Inc. ("Moody's"), (iii) commercial paper
maturing no more than one year from the date of creation thereof and, at the
time of acquisition, having a rating of at least A-1 from S&P or at least P-1
from Moody's, (iv) certificates of deposit, Euro-dollar deposits or bankers'
acceptance maturing within one year from the date of acquisition thereof issued
by any bank organized under the laws of the United States or any state thereof
or the District of Columbia or any U.S. branch of a foreign bank or any foreign
branch of a U.S. bank, in each case having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000, (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above and (vi) investments in money
market funds with assets at least equal to $500,000,000.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Section 9601 ET SEQ.
"Change of Control" shall mean (i) Lehman, JFLEI, the other members of
JFL-EEC on the Restatement Effective Date and their respective Affiliates shall
cease to own, collectively, on a fully diluted basis in the aggregate at least
51% of the economic and voting interest in Holdings' capital stock (or, from and
after the consummation of the Holdings Merger, the Borrower's capital stock),
(ii) prior to the consummation of the Holdings Merger, Holdings shall cease to
own 100% of the economic and voting interest in the Borrower's capital stock or
(iii) a "change of control" or similar event shall occur under, and as defined
in, the Senior Note
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Documents, the Series A Preferred Stock, the Series B Preferred Stock or any
other issue of Qualified Preferred Stock.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, the Mortgaged
Properties and all cash and Cash Equivalents delivered as collateral pursuant to
Section 4.02 or 10.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Secured Creditors pursuant to the Security Documents.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.05.
"Commitment" shall mean any of the commitments of any Bank, I.E.,
whether the Term Loan Commitment or the Revolving Loan Commitment.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Consolidated Current Assets" shall mean, at any time, the
consolidated current assets of Holdings and its Subsidiaries at such time.
"Consolidated Current Liabilities" shall mean, at any time, the
consolidated current liabilities of Holdings and its Subsidiaries at such time,
but excluding the current portion of any Indebtedness under this Agreement and
the current portion of any other long-term Indebtedness which would otherwise be
included therein.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income for such period before consolidated interest expense of Holdings and its
Subsidiaries and provision for taxes for such period.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT
for such period, adjusted by (x) adding thereto (i) the amount of all
amortization, depreciation and other non-cash expenses or non-cash charges that
were deducted in arriving at Consolidated EBIT for such period (including
amortization of goodwill, the non-cash costs of agreements evidencing Interest
Rate Protection Agreements, Other Hedging Agreements, license agreements and
non-competition agreements, and the non-cash amortization of Capitalized Lease
Obligations, management fees and organization costs), but excluding, however,
any non-cash expenses or non-cash charges associated with any asset write-downs,
and (ii) unrealized non-cash gains and losses from hedging, foreign currency or
commodities translations and transactions that were deducted in arriving at
Consolidated EBIT for such period and (y) subtracting therefrom any cash
expenses,
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cash charges or cash payments arising from any non-cash expenses, non-cash
charges or unrealized non-cash gains or losses that were deducted in arriving
at Consolidated EBIT in a previous period. In addition to the foregoing, for
purposes of determining compliance with Section 9.08 for Test Periods on or
after the Test Period ending closest to March 31, 1999, Consolidated EBITDA
for the fiscal quarter ending closest to March 31, 1999 shall be adjusted by
adding thereto the amount of any capital contributions made to Holdings
pursuant to the Capital Call Agreement in an aggregate amount not to exceed
$4,000,000.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period,
the ratio of (x) the remainder of (I) Consolidated EBITDA for such period minus
(II) the amount of all Capital Expenditures made by Holdings and its
Subsidiaries for such period (other than Capital Expenditures (i) financed with
Asset Sale proceeds, equity proceeds, insurance proceeds or Indebtedness
(excluding any Revolving Loans or Swingline Loans) and (ii) constituting
Permitted Acquisitions) to (y) Consolidated Interest Expense for such period.
"Consolidated Indebtedness" shall mean, at any time, the principal
amount of all Indebtedness of Holdings and its Subsidiaries at such time as
determined on a consolidated basis.
"Consolidated Interest Expense" shall mean, for any period, the sum of
(i) the total consolidated interest expense of Holdings and its Subsidiaries for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, that portion of Capitalized Lease
Obligations of Holdings and its Subsidiaries representing the interest factor
for such period plus (ii) the product of (A) the amount of all cash dividend
payments made on the Series A Preferred Stock or any other class of Qualified
Preferred Stock during such period and (B) a fraction, the numerator of which is
one and the denominator of which is one minus the current effective consolidated
federal, state and local income tax rate of Holdings expressed as a decimal (it
being understood that, for purposes of determining whether a cash dividend may
be paid on the Series A Preferred Stock pursuant to Section 9.03(iii), the
amount of such cash dividend shall be treated as having been paid on the first
day of the respective period to the extent that such cash dividend is not
otherwise included in determining Consolidated Interest Expense for such
period), PROVIDED that (x) the amortization or write-off of debt issuance costs,
commissions, fees and expenses and (y) the amortization of original issue
discount shall (in each case) be excluded from Consolidated Interest Expense to
the extent same would otherwise have been included therein.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss) of Holdings and its Subsidiaries for such period, determined on a
consolidated basis (after any deduction for minority interests), PROVIDED that
in determining Consolidated Net Income, (i) the net income of any other Person
which is not a Subsidiary of Holdings or is accounted for by Holdings by the
equity method of accounting shall be included only to the extent of the payment
of cash dividends or distributions by such other Person to Holdings or a
Subsidiary thereof during such period, (ii) the net income (or loss) of any
other Person acquired by such specified Person or a Subsidiary of such Person in
a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iii) gains or losses from Asset Sales or other
sales of assets (in each case) outside the ordinary course of business or
abandonment or reserves relating thereto shall be excluded, (iv) items
classified as extraordinary gains or extraordinary losses shall be
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excluded, (v) the net income of any Subsidiary of the Borrower shall be
excluded to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of its income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument or law applicable to such Subsidiary, (vi) the fees, expenses and
other costs incurred in connection with the Recapitalization, the Acquisition
and the related financing transactions in such period shall be excluded and
(vii) there shall be added back to Consolidated Net Income in such period, to
the extent that same reduced Consolidated Net Income in such period, any
dividends paid on the Series A Preferred Stock and the Series B Preferred
Stock; PROVIDED, HOWEVER, that Consolidated Net Income shall be deemed to
include any increase during such period to consolidated shareholder's equity
of Holdings attributable to tax benefits from net operating losses and the
exercise of stock options that are not otherwise included in Consolidated Net
Income for such period.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person as a result of such Person being a general partner of the other
Person, unless the underlying obligation is expressly made non-recourse as to
such general partner, and 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, (i) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of any such primary
obligation or (y) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) 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 (iv) otherwise
to assure or hold harmless the holder 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. The amount of any Contingent Obligation shall be
deemed to be an amount equal to 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" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, each Note, the
Subsidiaries Guaranty, each Security Document and the Capital Call Agreement.
"Credit Event" shall mean (i) the occurrence of the Restatement
Effective Date and (ii) the making of any Loan or the issuance of any Letter of
Credit.
"Credit Party" shall mean Holdings, the Borrower and each Subsidiary
Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
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"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividend" shall mean, with respect to any Person, that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or other equity holders or authorized or made any other
distribution, payment or delivery of property (other than common stock of such
Person) or cash to its stockholders or other equity holders in their capacity as
stockholders or as other equity holders, or redeemed, retired, purchased or
otherwise acquired, directly or indirectly, for a consideration any shares of
any class of its capital stock or any other equity interests outstanding on or
after the Restatement Effective Date (or any options or warrants issued by such
Person with respect to its capital stock or other equity interests), or set
aside any funds for any of the foregoing purposes, or shall have permitted any
of its Subsidiaries to purchase or otherwise acquire for a consideration any
shares of any class of the capital stock or any other equity interests of such
Person outstanding on or after the Restatement Effective Date (or any options or
warrants issued by such Person with respect to its capital stock or other equity
interests). Without limiting the foregoing, "Dividends" with respect to any
Person shall also include all cash payments made or required to be made by such
Person with respect to any stock appreciation rights, plans, equity incentive or
achievement plans or any similar plans or setting aside of any funds for the
foregoing purposes.
"Documents" shall mean and include (i) the Credit Documents, (ii) the
Acquisition Documents, (iii) the Equity Financing Documents and (iv) the Senior
Note Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Drawing" shall have the meaning provided in Section 2.05(b).
"Elgar FSC" shall mean Elgar FSC Corporation, a business incorporated
under the Companies Act of Barbados.
"Eligible Inventory" shall mean the gross dollar value (valued at the
lower of cost or market value) of the inventory of the Borrower and the
Subsidiary Guarantors which conforms to the representations and warranties
contained in the Security Agreement (including by the Collateral Agent having a
first priority perfected security interest therein subject only to Permitted
Liens) and which at all times continue to be acceptable to the Collateral Agent
in its reasonable judgment, less (i) any supplies (other than raw materials),
spare parts, goods returned or rejected (except to the extent that such returned
or rejected goods continue to conform to the representations and warranties
contained in the Security Agreement and continue to be acceptable to the
Collateral Agent in its reasonable judgment) by customers and goods to be
returned to suppliers, (ii) any advance payments made by customers with respect
to inventory of the Borrower and the Subsidiary Guarantors, (iii) reserves
required by the Collateral Agent in its reasonable judgment and (iv) any
inventory held on consignment.
"Eligible Receivables" shall mean the total face amount of the
receivables of the Borrower and the Subsidiary Guarantors which conform to the
representations and warranties
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contained in the Security Agreement (including by the Collateral Agent having
a first priority perfected security interest therein subject only to
Permitted Liens) and at all times continue to be acceptable to the Collateral
Agent in its reasonable judgment, less any returns, discounts, claims, credit
and allowances of any nature (whether issued, owing, granted or outstanding)
and less reserves booked or made by the Borrower or any Subsidiary Guarantor
for any other matter affecting the creditworthiness of account debtors owing
the receivables and excluding (i) bill and hold (deferred shipment)
transactions, (ii) contracts or sales to any Affiliate of Holdings or any of
its Subsidiaries, (iii) all receivables to the extent that same have not been
paid in full within 60 days of the due date thereof or which have been
disputed by the account debtor and (iv) governmental sales, provided that
governmental sales shall be included (x) to the extent that the Borrower or
the respective Subsidiary Guarantor has taken all action required to be taken
by the Federal Assignment of Claims Act to grant to the Collateral Agent a
valid, enforceable and perfected security interest in the respective
receivable and (y) to the extent not already included pursuant to preceding
(x), in an amount not to exceed $1,500,000 at any one time.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution, any fund that invests in loans or any other "accredited
investor" (as defined in Regulation D of the Securities Act).
"Employment Agreements" shall have the meaning provided in Section
5.05.
"End Date" shall mean, for any Applicable Margin Period, the last day
of such Applicable Margin Period.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy
and rule of common law now or hereafter in effect and in each case as
amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
the environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 ET SEQ.; the Toxic Substances Control
Act, 15 U.S.C. Section 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Section
7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 3803 ET SEQ.;
the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ.; the Emergency
Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. Section
11001 ET SEQ.; the Hazardous Material Transportation Act, 49 U.S.C. Section
1801 ET SEQ. and
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the Occupational Safety and Health Act, 29 U.S.C. Section 651 ET SEQ.; and
any state and local or foreign counterparts or equivalents, in each case as
amended from time to time.
"Equity Financing" shall mean the issuance by Holdings of shares of
Qualified Preferred Stock to JFL-EEC and other shareholders and warrantholders
of Holdings pursuant to the Equity Financing Documents and as part of the
Transaction.
"Equity Financing Documents" shall mean each of the documents and
agreements entered into in connection with the consummation of the Equity
Financing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings or a Subsidiary of Holdings would be
deemed to be a "single employer" (i) within the meaning of Section 414(b), (c),
(m) or (o) of the Code or (ii) as a result of Holdings or a Subsidiary of
Holdings being or having been a general partner of such person.
"Eurodollar Loan" shall mean each Loan (other than a Swingline Loan)
designated as such by the Borrower at the time of the incurrence thereof or
conversion thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to first-class
banks in the New York interbank Eurodollar market by BTCo for Dollar deposits of
amounts in immediately available funds comparable to the outstanding principal
amount of the Eurodollar Loan of BTCo with maturities comparable to the Interest
Period applicable to such Eurodollar Loan commencing two Business Days
thereafter as of 11:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period, divided (and rounded
upward to the nearest 1/16 of 1%) by (b) a percentage equal to 100% minus the
then stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves
required by applicable law) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (a)
the sum of (i) Consolidated Net Income for such period, (ii) to the extent
deducted in determining Consolidated Net Income for such period, (A)
depreciation and amortization, (B) deferred taxes, and (C) other non-cash
charges (exclusive of items reflected in Adjusted Consolidated Working Capital)
and (iii) the decrease, if any, in Adjusted Consolidated Working Capital from
the first day to the last day of such period, minus (b) the sum of (i) the
amount of all Capital Expenditures made by Holdings and its Subsidiaries during
such period (other than Capital Expenditures to the extent financed with Asset
Sale proceeds, equity proceeds, insurance proceeds or Indebtedness (other
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than with Revolving Loans or Swingline Loans)), (ii) the aggregate amount of
permanent principal payments of Indebtedness for borrowed money of Holdings
and its Subsidiaries during such period (other than repayments of Loans,
PROVIDED that repayments of Loans shall be deducted in determining Excess
Cash Flow if such repayments were (x) required as a result of a Scheduled
Repayment under Section 4.02(b) or (y) made as a voluntary prepayment with
internally generated funds (but in the case of a voluntary prepayment of
Revolving Loans or Swingline Loans, only to the extent accompanied by a
voluntary reduction to the Total Revolving Loan Commitment)), (iii) the
increase, if any, in Adjusted Consolidated Working Capital from the first day
to the last day of such period, (iv) to the extent included in determining
Consolidated Net Income for such period, non-cash gains (exclusive of items
reflected in Adjusted Consolidated Working Capital) during such period, (v)
the amount of cash actually paid by Holding or its Subsidiaries in connection
with losses or costs referred to in clauses (iii), (iv) and (vi) of the
definition of "Consolidated Net Income" during such period, (vii) the amount
of all cash expenditures paid in connection with Permitted Acquisitions
consummated during such period (other than expenditures to the extent
financed with equity proceeds (including capital contributions), Asset Sale
proceeds or Indebtedness (excluding Revolving Loans), and (viii) the amount
of any cash dividends paid on the Series A Preferred Stock during such
period, but only to the extent permitted to be paid pursuant to Section
9.03(iii).
"Excess Cash Payment Date" shall mean the date occurring 90 days after
the last day of each fiscal year of Holdings (beginning with its fiscal year
ending April 3, 1999).
"Excess Cash Payment Period" shall mean, with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of Holdings (or, in the case of Holdings' fiscal year ending closest to March
31, 1999, the period from June 29, 1998 through and including the end of such
fiscal year).
"Existing Banks" shall mean each of the lenders party to the Existing
Credit Agreement on the Restatement Effective Date (and immediately prior
thereto).
"Existing Credit Agreement" shall have the meaning provided in the
first WHEREAS clause of this Agreement.
"Existing Indebtedness" shall have the meaning provided in Section
7.22.
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.05.
"Existing Letter of Credit" shall have the meaning provided in section
2.01(c)
"Existing Revolving Loan" shall mean each "Revolving Loan" under, and
as defined in, the Existing Credit Agreement.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds
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transactions with members of the Federal Reserve System arranged by Federal
Funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions received
by the Agent from three Federal Funds brokers of recognized standing selected
by the Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Final Maturity Date" shall mean February 3, 2003.
"Guaranteed Creditors" shall mean and include each of the Agent, the
Collateral Agent, the Issuing Bank, the Banks and each party (other than any
Credit Party) party to an Interest Rate Protection Agreement or Other Hedging
Agreement to the extent such party constitutes a Secured Creditor under the
Security Documents.
"Guaranteed Obligations" shall mean (i) the full and prompt payment
when due (whether at the stated maturity, by acceleration or otherwise) of the
principal and interest on each Note issued by, and Loans made to, the Borrower
under this Agreement and all reimbursement obligations and Unpaid Drawings with
respect to Letters of Credit, together with all the other obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of the Borrower to the
Banks, the Agent, the Issuing Bank and the Collateral Agent now existing or
hereafter incurred under, arising out of or in connection with this Agreement or
any other Credit Document and the due performance and compliance by the Borrower
with all the terms, conditions and agreements contained in the Credit Documents
and (ii) the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) of the Borrower owing under any Interest Rate Protection Agreement
or Other Hedging Agreement entered into by the Borrower with any Bank or any
affiliate thereof (even if such Bank subsequently ceases to be a Bank under this
Agreement for any reason) so long as such Bank or affiliate participates in such
Interest Rate Protection Agreement or Other Hedging Agreement, and their
subsequent assigns, if any, whether now in existence or hereafter arising, and
the due performance and compliance with all terms, conditions and agreements
contained therein.
"Guarantor" shall mean Holdings and each Subsidiary Guarantor.
"Guaranty" shall mean the Holdings Guaranty and the Subsidiaries
Guaranty.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental
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Law; and (c) any other chemical, material or substance, the Release of which
is prohibited, limited or regulated by any governmental authority.
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
"Holdings Guaranty" shall mean the guaranty of Holdings pursuant to
Section 14.
"Holdings Merger" shall mean the merger of Holdings with and into the
Borrower, with the Borrower being the surviving corporation of such merger.
"Indebtedness" shall mean, as to any Person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of
such Person for borrowed money or for the deferred purchase price of property
or services, (ii) the maximum amount available to be drawn under all letters
of credit issued for the account of such Person and all unpaid drawings in
respect of such letters of credit, (iii) all Indebtedness of the types
described in clause (i), (ii), (iv), (v), (vi) or (vii) of this definition
secured by any Lien on any property owned by such Person, whether or not such
Indebtedness has been assumed by such Person (PROVIDED, that, if the Person
has not assumed or otherwise become liable in respect of such Indebtedness,
such Indebtedness shall be deemed to be in an amount equal to the fair market
value of the property to which such Lien relates as determined in good faith
by such Person), (iv) the aggregate amount required to be capitalized under
leases under which such Person is the lessee, (v) 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, (vi)
all Contingent Obligations of such Person and (vii) all obligations under any
Interest Rate Protection Agreement, any Other Hedging Agreement or under any
similar type of agreement. Notwithstanding the foregoing, Indebtedness shall
not include trade payables and accrued expenses incurred by any Person in
accordance with customary practices and in the ordinary course of business of
such Person.
"Initial Blocked Amount" shall mean, at any time, the lesser of (x)
$5,000,000 and (y) the difference between $5,000,000 and that amount in excess
of $15,000,000 which the Borrower would be permitted to incur under this
Agreement at such time solely in reliance on sub-clause (y) of clause (ii) of
the definition of "Permitted Indebtedness" in the Senior Note Indenture,
provided that preceding clause (y) shall only be available to be used by the
Borrower to the extent that the Borrower has delivered a certificate of its
Chief Financial Officer (which certificate shall be updated upon the occurrence
of each Credit Event) certifying (and demonstrating in reasonable detail) the
amount of the "Borrowing Base" at such time calculated in accordance with the
terms of the Senior Note Indenture.
"Intercompany Loan" shall have the meaning provided in Section
9.05(ix).
"Intercompany Note" shall mean a promissory note, in the form of
Exhibit N, evidencing Intercompany Loans.
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"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement or other similar agreement or arrangement.
"Investments" shall have the meaning provided in Section 9.05.
"Issuing Bank" shall mean BTCo.
"JFL-EEC" shall mean JFL-EEC LLC, a Delaware limited liability company
and an Affiliate of Lehman.
"JFLEI" shall mean J.F. Lehman Equity Investors L.P, a Delaware
limited partnership and an Affiliate of Lehman.
"L/C Supportable Obligations" shall mean (i) obligations of the
Borrower or any of its Subsidiaries with respect to workers compensation, surety
bonds and other similar statutory obligations, (ii) obligations that may be
classified as "accounts payable" in accordance with generally accepted
accounting principles and (iii) such other obligations of the Borrower or any of
its Subsidiaries as are reasonably acceptable to the Issuing Bank and otherwise
permitted to exist pursuant to the terms of this Agreement.
"Leaseholds" of any Person shall mean all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lehman" shall mean J.F. Lehman & Company, Inc., a private investment
firm.
"Lehman Management Agreement" shall mean the Management Agreement,
dated as of February 3, 1998, among Holdings, the Borrower and Lehman.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
"Leverage Ratio" shall mean, at any time, the ratio of Consolidated
Indebtedness at such time to Consolidated EBITDA for the Test Period then most
recently ended.
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"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Term Loan, each Revolving Loan and each
Swingline Loan.
"Management Agreements" shall have the meaning provided in Section
5.05.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(d).
"Margin Stock" shall have the meaning provided in Regulation U.
"Maximum Swingline Amount" shall mean $1,000,000.
"Minimum Borrowing Amount" shall mean (i) for Term Loans, $1,000,000,
(ii) for Revolving Loans, $500,000 and (iii) for Swingline Loans, $100,000.
"Moody's" shall have the meaning provided in the definition of "Cash
Equivalents".
"Mortgage" shall have the meaning provided in Section 8.11.
"Mortgaged Property" shall have the meaning provided in Section 8.11.
"Net Debt Proceeds" shall mean, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith)
received by the respective Person from the respective incurrence of such
Indebtedness for borrowed money.
"Net Equity Proceeds" shall mean, with respect to each issuance or
sale of any equity by any Person or any capital contribution to such Person, the
cash proceeds (net of underwriting discounts and commissions and other
reasonable costs associated therewith) received by such Person from the
respective sale or issuance of its equity or from the respective capital
contribution.
"Net Insurance Proceeds" shall mean, with respect to any Recovery
Event, the cash proceeds (net of reasonable costs and taxes incurred in
connection with such Recovery Event) received by the respective Person in
connection with the respective Recovery Event.
"Net Sale Proceeds" shall mean, for any Asset Sale, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from such sale of assets, net of the reasonable costs of such sale
(including fees and commissions, payments of unassumed
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liabilities relating to the assets sold and required payments of any
Indebtedness (other than Indebtedness secured pursuant to the Security
Documents) which is secured by the respective assets which were sold), and
the incremental taxes paid or payable as a result of such Asset Sale and any
reasonable reserves established in connection therewith as determined in good
faith by the Borrower.
"Non-Compete Agreements" shall have the meaning provided in Section
5.05.
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Note" shall mean each Term Note, each Revolving Note and the
Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006, Attention:
Shannon Farrell or such other office as the Agent may hereafter designate in
writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Agent, the
Collateral Agent, the Issuing Bank or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Other Hedging Agreement" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006, or such other
office as the Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning provided in Section
9.02(xii).
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the mortgage policy
delivered with respect thereto, all of which exceptions must be reasonably
acceptable to the Agent in its reasonable discretion.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
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"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) Holdings or a Subsidiary of Holdings or an ERISA
Affiliate, and each such plan for the five year period immediately following the
latest date on which the Holdings, or a Subsidiary of Holdings or an ERISA
Affiliate maintained, contributed to or had an obligation to contribute to such
plan.
"Pledge Agreement" shall have the meaning provided in Section 5.10.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in the Pledge Agreement.
"Pledged Securities" shall mean all "Pledged Securities" as defined in
the Pledge Agreement.
"Power Ten" shall mean Power Ten, a California corporation.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Projections" shall mean the projections prepared by the Borrower in
connection with the Transaction, dated May 20, 1998 and furnished to the Banks
prior to the Restatement Effective Date.
"Qualified Preferred Stock" shall mean (x) the shares of Series A
Preferred Stock issued on February 3, 1998 and any in-kind dividends paid
thereon after February 3, 1998 in accordance with the terms of this
Agreement, (y) the shares of Series B Preferred Stock issued on May 29, 1998
and any in-kind dividends paid thereon after May 29, 1998 in accordance with
the terms of this Agreement and (z) any other class of preferred stock of
Holdings so long as the terms of any such preferred stock (i) do not contain
any mandatory put, redemption, repayment, sinking fund or other similar
provision occurring before May 29, 2004 (other than as a result of a change
of control provision that is at least as favorable to Holdings and the Banks
as the change of control provision contained in the Series A Preferred
Stock), (ii) do not require the cash payment of dividends to the extent that
same would not otherwise be permitted under this Agreement, (iii) do not
contain any covenants (other than covenants of the type (but no more
restrictive in any material respect) as those covenants set forth in the
Series A Preferred Stock), (iv) do not grant the holders thereof any voting
rights except for (x) voting rights required to be granted to such holders
under applicable law and (y) limited customary voting rights on fundamental
matters such as mergers, consolidations, sales of all or substantially all of
the assets of Holdings, or liquidations involving Holdings, and (v) are
otherwise reasonably satisfactory to the Agent.
"Quarterly Payment Date" shall mean the last Business Day of each
September, December, March and June occurring after the Restatement Effective
Date.
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"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recapitalization" shall have the meaning provided in the Existing
Credit Agreement (I.E., the initial recapitalization of Holdings by affiliates
of Lehman).
"Recovery Event" shall mean the receipt by Holdings or any of its
Subsidiaries of any cash insurance proceeds or condemnation awards payable (i)
by reason of theft, loss, physical destruction, damage, taking or any other
similar event with respect to any property or assets of Holdings or any of its
Subsidiaries and (ii) under any policy of insurance required to be maintained
under Section 8.03.
"Register" shall have the meaning provided in Section 13.15.
"Regulation D" shall mean 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 T" shall mean 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.
"Regulation U" shall mean 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.
"Regulation X" shall mean 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.
"Release" shall mean the disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring or
migrating, into or upon any land or water or air, or otherwise entering into the
environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Assets" shall have the meaning provided in Section
4.02(e).
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
"Required Banks" shall mean Non-Defaulting Banks the sum of whose
outstanding Term Loans and Revolving Loan Commitments (or after the termination
thereof, outstanding
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Revolving Loans and RL Percentages of outstanding Swingline Loans and Letter
of Credit Outstandings) represent an amount greater than 50% of the sum of
all outstanding Term Loans of Non-Defaulting Banks and the Total Revolving
Loan Commitment less the Revolving Loan Commitments of all Defaulting Banks
(or after the termination thereof, the sum of the then total outstanding
Revolving Loans of Non-Defaulting Banks and the aggregate RL Percentages of
all Non-Defaulting Banks of the total outstanding Swingline Loans and Letter
of Credit Outstandings Swingline Loans at such time).
"Restatement Effective Date" shall have the meaning provided in
Section 13.10.
"Revolving Loan" shall mean each revolving loan converted pursuant to
Section 1.01(b)(I) and each revolving loan made pursuant to Section 1.01(b)(II).
"Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I directly below the column entitled
"Revolving Loan Commitment," as same may be (x) reduced from time to time
pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time to time as a
result of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"RL 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 at such time, PROVIDED that if the RL Percentage of
any Bank is to be determined after the Total Revolving Loan Commitment has been
terminated, then the RL Percentages of the Banks shall be determined immediately
prior (and without giving effect) to such termination.
"S&P" shall have the meaning provided in the definition of "Cash
Equivalents".
"Scheduled Repayment" shall have the meaning provided in Section
4.02(b).
"SEC" shall have the meaning provided in Section 8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning assigned that term in the
respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section 5.11.
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"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Document" shall mean and include each of the Security
Agreement, the Pledge Agreement and, after the execution and delivery
thereof, each Mortgage.
"Senior Note Documents" shall mean the Senior Note Indenture, the
Senior Notes and each other document or agreement relating to the issuance of
the Senior Notes.
"Senior Note Indenture" shall mean the Indenture, dated as of
February 3, 1998 between Holdings and United States Trust Company, as Trustee.
"Senior Note Offering Memorandum" shall mean the Offering
Memorandum, dated January 30, 1998, prepared in connection with the issuance
of the Senior Notes.
"Senior Notes" shall mean Holdings' 9-7/8% Senior Notes due 2008.
"Series A Preferred Stock" shall mean Holdings' Series A 10%
Cumulative Redeemable Preferred Stock as constituted on February 3, 1998.
"Series B Preferred Stock" shall mean Holdings' Series B 6%
Cumulative Convertible Preferred Stock as constituted on May 29, 1998.
"Shareholders' Agreements" shall have the meaning provided in
Section 5.05.
"Standby Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Start Date" shall mean, with respect to any Applicable Margin
Period, the first day of such Applicable Margin Period.
"Stated Amount" of each Letter of Credit shall mean, at any time,
the maximum amount available to be drawn thereunder (in each case determined
without regard to whether any conditions to drawing could then be met).
"Subsidiaries Guaranty" shall have the meaning provided in Section
5.12.
"Subsidiary" shall mean, as to any Person, (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 (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any partnership,
limited liability company, association, joint venture or other entity in
which such Person and/or one or more Subsidiaries of such Person has more
than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Subsidiary of the Borrower
other than Elgar FSC so long as Elgar FSC complies with Section 9.13(c).
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"Supermajority Banks" shall mean those Non-Defaulting Banks which
would constitute the Required Banks under, and as defined in, this Agreement,
if (x) all outstanding Obligations in respect of the Revolving Loan
Commitment were repaid in full and the Total Revolving Loan Commitment were
terminated and (y) the percentage "50%" contained therein were changed to "66
2/3%".
"Swingline Bank" shall mean BTCo.
"Swingline Expiry Date" shall mean that date which is five Business
Days prior to the Final Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(c).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Date" shall mean that date upon which the Agent
determines (and notifies the Borrower) that the primary syndication (and
resultant addition of Persons as Banks pursuant to Section 13.04(b)) has been
completed.
"Tax Benefit" shall have the meaning provided in Section 4.04(c).
"Tax Sharing Agreements" shall have the meaning provided in Section
5.05.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loan" shall have the meaning provided in Section 1.01(a).
"Term Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I directly below the column
entitled "Term Loan Commitment," as same may be terminated pursuant to
Sections 3.03 and/or 10.
"Term Note" shall have the meaning provided in Section 1.05(a).
"Test Date" shall mean, with respect to any Start Date, the last
day of the most recent fiscal quarter of Holdings ended immediately prior to
such Start Date.
"Test Period" shall mean, each period of four consecutive fiscal
quarters of Holdings then last ended (in each case taken as one accounting
period). For purposes of determining compliance with Sections 9.07, 9.08 and
9.09 for any portion of a Test Period ended prior to the Restatement
Effective Date, the following shall apply:
(i) Consolidated EBITDA, Consolidated Interest Expense and Capital
Expenditures of Holdings and its Subsidiaries for Holdings'
fiscal quarter ended closest to June 30, 1997 shall be
$3,463,000, $2,540,000 and $350,000, respectively;
(ii) Consolidated EBITDA, Consolidated Interest Expense and Capital
Expenditures of Holdings and its Subsidiaries for Holdings'
fiscal
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quarter ended closest to September 30, 1997 shall be $4,865,000,
$2,540,000 and $350,000, respectively;
(iii) Consolidated EBITDA, Consolidated Interest Expense and
Capital Expenditures of Holdings and its Subsidiaries for
Holdings' fiscal quarter ended closest to December 31, 1997
shall be $5,306,000, $2,540,000 and $350,000, respectively;
(iv) Consolidated EBITDA, Consolidated Interest Expense and Capital
Expenditures of Holdings and its Subsidiaries for Holdings'
fiscal quarter ended closest to March 31, 1998 shall be
$3,643,000, $2,540,00 and $350,000, respectively; and
(v) Consolidated EBITDA, Consolidated Interest and Capital
Expenditures of Holdings and its Subsidiaries for the period
from March 29, 1998 through, but not including, the Restatement
Effective Date, shall be determined on a PRO FORMA basis as if
the Acquisition and the related financing had occurred on
March 29, 1998.
The respective amounts set forth in clauses (i), (ii) and (iii)
above represent the PRO FORMA numbers as if the Recapitalization, the
Acquisition and the related financing transactions had occurred on the first
day of Holdings' fiscal quarter ended closest to June 30, 1997.
"Total Available Revolving Loan Commitment" shall mean, at any
time, the Total Revolving Loan Commitment less the Blocked Commitment, if
any, at such time.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the sum
of the Revolving Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean, at any time, the sum of
the Term Loan Commitments of each of the Banks.
"Total Unutilized Available Revolving Loan Commitment" shall mean,
at any time, an amount equal to the remainder of (x) the Total Unutilized
Revolving Loan Commitment at such time less (y) the Blocked Commitment, if
any, at such time.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the Total Revolving Loan
Commitment then in effect less (y) the sum of the aggregate principal amount
of all Revolving Loans and Swingline Loans then outstanding plus the then
aggregate amount of all Letter of Credit Outstandings.
"Trade Letter of Credit" shall have the meaning provided in Section
2.01(a).
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"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being three separate Tranches,
I.E., Term Loans, Revolving Loans and Swingline Loans.
"Transaction" shall mean, collectively, (i) the consummation of the
Acquisition and the other transactions contemplated by the Acquisition
Documents, (ii) the consummation of the Equity Financing, (iii) the entering
into of the Credit Documents and (iv) the payment of fees and expenses in
connection with the foregoing.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, I.E., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time
in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits
under the Plan as of the close of its most recent plan year, determined in
accordance with actuarial assumptions at such time consistent with Statement
of Financial Accounting Standards No. 87, exceeds the market value of the
assets allocable thereto.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unutilized Revolving Loan Commitment" shall mean, with respect to
any Bank at any time, such Bank's Revolving Loan Commitment at such time less
the sum of (i) the aggregate outstanding principal amount of all Revolving
Loans made by such Bank at such time and (ii) such Bank's RL Percentage of
the Letter of Credit Outstandings at such time.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
SECTION 12. THE AGENT.
12.01 APPOINTMENT. The Banks hereby irrevocably designate BTCo as
Agent (for purposes of this Section 12, the term "Agent" also shall include
BTCo in its capacity as Collateral Agent pursuant to the Security Documents)
to act as specified herein and in the other Credit Documents. Each Bank
hereby irrevocably authorizes, and each holder of any Note by the acceptance
of such Note shall be deemed irrevocably to authorize, the Agent to take such
action on their behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements referred to herein
or therein and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of the Agent by
the terms hereof and thereof and such other powers as are reasonably
incidental thereto.
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The Agent may perform any of its duties hereunder by or through its officers,
directors, agents, employees or affiliates.
12.02 NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and in
the other Credit Documents. Neither the Agent nor any of its officers,
directors, agents, employees or affiliates shall be liable for any action
taken or omitted by them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason
of this Agreement or any other Credit Document a fiduciary relationship in
respect of any Bank or the holder of any Note; and nothing in this Agreement
or any other Credit Document, expressed or implied, is intended to or shall
be so construed as to impose upon the Agent any obligations in respect of
this Agreement or any other Credit Document except as expressly set forth
herein or therein.
12.03 LACK OF RELIANCE ON THE AGENT. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent
it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of Holdings
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the creditworthiness of Holdings and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent
shall not have any duty or responsibility, either initially or on a
continuing basis, to provide any Bank or the holder of any Note with any
credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times thereafter.
The Agent shall not be responsible to any Bank or the holder of any Note for
any recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectability, priority or sufficiency of this
Agreement or any other Credit Document or the financial condition of Holdings
or any of its Subsidiaries or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any other Credit Document, or the financial
condition of Holdings or any of its Subsidiaries or the existence or possible
existence of any Default or Event of Default.
12.04 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other
Credit Document, the Agent shall be entitled to refrain from such act or
taking such action unless and until the Agent shall have received
instructions from the Required Banks; and the Agent shall not incur liability
to any Bank by reason of so refraining. Without limiting the foregoing, no
Bank or the holder of any Note shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting
hereunder or under any other Credit Document in accordance with the
instructions of the Required Banks.
12.05 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed,
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sent or made by any Person that the Agent believed to be the proper Person,
and, with respect to all legal matters pertaining to this Agreement and any
other Credit Document and its duties hereunder and thereunder, upon advice of
counsel selected by the Agent.
12.06 INDEMNIFICATION. To the extent the Agent is not reimbursed
and indemnified by the Credit Parties, the Banks will reimburse and indemnify
the Agent in proportion to their respective "percentage" as used in
determining the Required Banks (determined as if there were no Defaulting
Banks) for and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, costs, expenses or disbursements of
whatsoever kind or nature which may be imposed on, asserted against or
incurred by the Agent in performing its duties hereunder or under any other
Credit Document or in any way relating to or arising out of this Agreement or
any other Credit Document; PROVIDED that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from the Agent's gross negligence or willful misconduct (as finally
determined by a court of competent jurisdiction.
12.07 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to make Loans, or issue or participate in Letters of Credit, under
this Agreement, the Agent shall have the rights and powers specified herein
for a "Bank" and may exercise the same rights and powers as though it were
not performing the duties specified herein; and the term "Banks," "Required
Banks," "Supermajority Banks", "holders of Notes" or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent in its
respective individual capacities. The Agent and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of banking,
investment banking, trust or other business with, or provide debt financing,
equity capital or other services (including financial advisory services) to,
any Credit Party or any Affiliate of any Credit Party (or any Person engaged
in a similar business with any Credit Party or any Affiliate thereof) as if
they were not performing the duties specified herein, and may accept fees and
other consideration from any Credit Party or any Affiliate of any Credit
Party for services in connection with this Agreement and otherwise without
having to account for the same to the Banks.
12.08 HOLDERS. The Agent may deem and treat the payee of any Note
as the owner thereof for all purposes hereof unless and until a written
notice of the assignment, transfer or endorsement thereof, as the case may
be, shall have been filed with the Agent. Any request, authority or consent
of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
12.09 RESIGNATION BY THE AGENT. (a) The Agent may resign from the
performance of all its respective functions and duties hereunder and/or under
the other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Borrower and the Banks. Such resignation shall take
effect upon the appointment of a successor Agent pursuant to clauses (b) and
(c) below or as otherwise provided below.
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(b) Upon any such notice of resignation by the Agent, the Required
Banks shall appoint a successor Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent with the consent of the Borrower (which
consent shall not be unreasonably withheld or delayed), shall then appoint a
successor Agent who shall serve as Agent hereunder or thereunder until such
time, if any, as the Required Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Required
Banks appoint a successor Agent as provided above.
SECTION 13. MISCELLANEOUS.
13.01 PAYMENT OF EXPENSES, ETC. The Borrower shall: (i) whether
or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agent (including, without
limitation, the reasonable fees and disbursements of White & Case LLP and of
the Agent's local counsel and consultants) in connection with the
preparation, execution and delivery of this Agreement and the other Credit
Documents and the documents and instruments referred to herein and therein
and any amendment, waiver or consent relating hereto or thereto, of the Agent
in connection with its syndication efforts with respect to this Agreement and
of the Agent and, after the occurrence of an Event of Default, each of the
Banks in connection with the enforcement of this Agreement and the other
Credit Documents and the documents and instruments referred to herein and
therein or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings (including, without
limitation, in each case the reasonable fees and disbursements of counsel for
the Agent and, after the occurrence of an Event of Default, for each of the
Banks); (ii) pay and hold each of the Banks harmless from and against any and
all present and future stamp, excise and other similar documentary 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 (iii) indemnify the Agent and each Bank, and each of their
respective officers, directors, employees, representatives and agents from
and hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of,
or in any way related to, or by reason of, (a) any investigation, litigation
or other proceeding (whether or not the Agent or any Bank is a party thereto
and whether or not such investigation, litigation or other proceeding is
brought by or on behalf of any Credit Party) related to the entering into
and/or performance of this Agreement or any other Credit Document or the use
of any Letter of Credit or the proceeds of any Loans hereunder or the
consummation of the
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Transaction or any other transactions contemplated herein or in any other
Credit Document or the exercise of any of their rights or remedies provided
herein or in the other Credit Documents, or (b) the actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or
on the surface or subsurface of any Real Property owned or at any time
operated by Holdings or any of its Subsidiaries, the generation, storage,
transportation, handling or disposal of Hazardous Materials by Holdings or
any of its Subsidiaries at any location, whether or not owned or operated by
Holdings or any of its Subsidiaries, the non-compliance of any Real Property
with any Environmental Law (including applicable permits thereunder)
applicable to any Real Property, or any Environmental Claim asserted against
Holdings, any of its Subsidiaries or any Real Property owned or at any time
operated by Holdings or any of its Subsidiaries, including, in each case,
without limitation, the reasonable fees and disbursements of counsel and
other consultants incurred in connection with any such investigation,
litigation or other proceeding (but excluding, in each case, any 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
(as finally determined by a court of competent jurisdiction). To the extent
that the undertaking to indemnify, pay or hold harmless the Agent or any Bank
set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
13.02 RIGHT OF SETOFF. (a) 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, the Agent and 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
notice 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 the Agent or 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 the Credit Parties to the Agent or such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations purchased by such Bank pursuant to
Section 13.06(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 the Agent or such Bank shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any
of them, shall be contingent or unmatured.
(b) NOTWITHSTANDING THE FOREGOING SUBSECTION (a), AT ANY TIME THAT
THE LOANS OR ANY OTHER OBLIGATION SHALL BE SECURED BY REAL PROPERTY LOCATED
IN CALIFORNIA, NO BANK SHALL EXERCISE A RIGHT OF SETOFF, BANKER'S LIEN OR
COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY
PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY NOTE THAT IS NOT
TAKEN BY THE REQUIRED BANKS OR APPROVED IN WRITING BY THE AGENT OR THE
REQUIRED BANKS IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT
(PURSUANT TO SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF
CIVIL PROCEDURE OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF
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APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE VALIDITY, PRIORITY OR
ENFORCEABILITY OF THE LIENS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THE
SECURITY DOCUMENTS OR THE ENFORCEABILITY OF THE NOTES AND OTHER OBLIGATIONS
HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY BANK OF ANY SUCH RIGHT WITHOUT
OBTAINING SUCH CONSENT OF THE REQUIRED BANKS SHALL BE NULL AND VOID. THIS
SUBSECTION (b) SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE BANKS HEREUNDER
AND MAY BE AMENDED, MODIFIED OR WAIVED IN ANY RESPECT BY THE REQUIRED BANKS
WITHOUT THE REQUIREMENT OF PRIOR NOTICE TO OR CONSENT BY ANY CREDIT PARTY AND
DOES NOT CONSTITUTE A WAIVER OF ANY RIGHTS AGAINST ANY CREDIT PARTY OR
AGAINST ANY COLLATERAL.
13.03 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to any Credit
Party, at the address specified opposite its signature below or in the other
relevant Credit Documents; if to the Bank, at its address specified on
Schedule II; and if to the Agent, at the Notice Office; or, as to any Credit
Party or the Agent, at such other address as shall be designated by such
party in a written notice to the other parties hereto and, as to each Bank,
at such other address as shall be designated by such Bank in a written notice
to the Borrower and the Agent. All such notices and communications shall,
when mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier, except that notices and communications to the Agent and
the Borrower shall not be effective until received by the Agent or the
Borrower, as the case may be.
13.04 BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS. (a)
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto;
PROVIDED, HOWEVER, the Borrower may not assign or transfer any of its rights,
obligations or interest hereunder without the prior written consent of the
Banks and, PROVIDED FURTHER, that, although any Bank may transfer, assign or
grant participations in its rights hereunder, such Bank shall remain a "Bank"
for all purposes hereunder (and may not transfer or assign all or any portion
of its Commitments hereunder except as provided in Sections 1.13 and
13.04(b)) and the transferee, assignee or participant, as the case may be,
shall not constitute a "Bank" hereunder and, PROVIDED FURTHER, that no Bank
shall transfer or grant any participation under which the participant 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 (i)
extend the final scheduled maturity of any Loan, Note or Letter of Credit
(unless such Letter of Credit is not extended beyond the Final Maturity Date)
in which such participant is participating, or reduce the rate or extend the
time of payment of interest or Fees thereon (except in connection with a
waiver of applicability of any post-default increase in interest rates) (it
being understood that any amendment or modification to the financial
definitions in this Agreement or to Section 13.07(a) shall not constitute a
reduction in the rate of interest or Fees for the purposes of this clause
(i)) or reduce the principal amount thereof, or increase the amount of the
participant's participation over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment, shall not
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constitute a change in the terms of such participation, and that an increase
in any Commitment or Loan shall be permitted without the consent of any
participant if the participant's participation is not increased as a result
thereof), (ii) consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement or (iii) release all or
substantially all of the Collateral under all of the Security Documents
(except as expressly provided in the Credit Documents) supporting the Loans
hereunder in which such participant is participating. 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 such Bank in respect of such participation to be those set forth in
the agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall be
determined as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its
Commitments and related outstanding Obligations (or, if the Commitments with
respect to the relevant Tranche have terminated, outstanding Obligations)
hereunder to (i) its parent company and/or any affiliate of such Bank which
is at least 50% owned by such Bank or its parent company or to one or more
Banks or (ii) in the case of any Bank that is a fund that invests in loans,
any other fund that invests in loans and is managed or advised by the same
investment advisor of such Bank or by an Affiliate of such investment advisor
or (y) assign all, or if less than all, a portion equal to at least
$5,000,000 in the aggregate for the assigning Bank or assigning Banks, of
such Commitments and related outstanding Obligations (or, if the Commitments
with respect to the relevant Tranche have terminated, outstanding
Obligations) hereunder to one or more Eligible Transferees (treating any fund
that invests in loans and any other fund that invests in loans and is managed
by the same investment advisor of such fund or by an Affiliate of such
investment advisor as a single Eligible Transferee), each of which assignees
shall become a party to this Agreement as a Bank by execution of an
Assignment and Assumption Agreement, PROVIDED that, (i) at such time Schedule
I shall be deemed modified to reflect the Commitments and/or outstanding
Loans, as the case may be, of such new Bank and of the existing Banks, (ii)
upon the surrender of the relevant Notes by the assigning Bank (or, upon such
assigning Bank's indemnifying the Borrower for any lost Note pursuant to a
customary indemnification agreement) new Notes will be issued, at the
Borrower's expense, to such new Bank and to the assigning Bank upon the
request of such new Bank or assigning Bank, such new Notes to be in
conformity with the requirements of Section 1.05 (with appropriate
modifications) to the extent needed to reflect the revised Commitments and/or
outstanding Loans, as the case may be, (iii) the consent of the Agent shall
be required in connection with any assignment to an Eligible Transferee
pursuant to clause (y) above (which consent shall not be unreasonably
withheld or delayed), (iv) the Agent shall receive at the time of each such
assignment, from the assigning or assignee Bank, the payment of a
non-refundable assignment fee of $3,500 and (v) no such transfer or
assignment will be effective until recorded by the Agent on the Register
pursuant to Section 13.15. To the extent of any assignment pursuant to this
Section 13.04(b), the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Commitments and outstanding Loans.
(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank and, with the
consent of the Agent, any Bank which is a
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fund may pledge all or any portion of its Loans and Notes to its trustee in
support of its obligations to its trustee. No pledge pursuant to this clause
(c) shall release the transferor Bank from any of its obligations hereunder.
13.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent, the Collateral Agent, the Issuing Bank or any Bank in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit
Party and the Agent, the Collateral Agent, the Issuing Bank 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, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the
Agent, the Collateral Agent, the Issuing Bank 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 of the rights of the Agent, the
Collateral Agent, the Issuing Bank or any Bank to any other or further action
in any circumstances without notice or demand.
13.06 PAYMENTS PRO RATA. (a) Except as otherwise provided in
this Agreement, the Agent agrees that promptly after its receipt of each
payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its PRO RATA share of any such
payment) 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, Unpaid Drawings, Commitment Commission or Letter of
Credit Fees, of a sum which with respect to the related sum or sums received
by other Banks is in a greater proportion than the total of such Obligation
then owed and due to such Bank bears to the total of such Obligation then
owed and due to all of the Banks immediately prior to such receipt, then such
Bank receiving such excess payment shall 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 the Banks in such amount; 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.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
13.07 CALCULATIONS; COMPUTATIONS; ACCOUNTING TERMS. (a) The
financial statements to be furnished to the Banks pursuant hereto shall be
made and prepared in accordance
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with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in
the notes thereto or as otherwise disclosed in writing by the Borrower to the
Banks); PROVIDED that, except as otherwise specifically provided herein, all
computations of Excess Cash Flow, the Applicable Base Rate Margin and the
Applicable Eurodollar Margin, and all computations and all definitions used
in determining compliance with Sections 9.07 through 9.09, inclusive, shall
utilize accounting principles and policies in conformity with those used to
prepare the historical financial statements of the Borrower referred to in
Section 7.05(a).
(b) All computations of interest, Commitment Commission and other
Fees hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last day;
except that in the case of Letter of Credit Fees, the last day shall be
included) occurring in the period for which such interest, Commitment
Commission or Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT
AS OTHERWISE PROVIDED IN THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 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 OR ANY OTHER CREDIT DOCUMENT, EACH OF HOLDINGS AND THE BORROWER
HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
EACH OF HOLDINGS AND THE BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM
THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH CREDIT PARTY, AND
AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENTS BROUGHT IN ANY OF THE
AFOREMENTIONED COURTS, THAT SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH
CREDIT PARTY. EACH OF HOLDINGS AND THE BORROWER 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 SUCH CREDIT PARTY AT ITS ADDRESS SET
FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED
HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN
ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
AGENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN
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ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST HOLDINGS OR THE BORROWER IN ANY OTHER JURISDICTION.
(b) EACH OF HOLDINGS AND THE 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, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, 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.
(c) 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 OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 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 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
Borrower and the Agent.
13.10 EFFECTIVENESS. This Agreement shall become effective on the
date (the "Restatement Effective Date") on which (i) Holdings, the Borrower,
the Agent and each of the Banks shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered the
same to the Agent at the Notice Office or, in the case of the Banks, shall
have given to the Agent telephonic (confirmed in writing), written or telex
notice (actually received) at such office that the same has been signed and
mailed to it and (ii) the conditions contained in Section 5 are met to the
satisfaction of the Agent and the Required Banks. Unless the Agent has
received actual notice from any Bank that the conditions described in clause
(ii) of the preceding sentence have not been met to its satisfaction, upon
the satisfaction of the condition described in clause (i) of the immediately
preceding sentence and upon the Agent's good faith determination that the
conditions described in clause (ii) of the immediately preceding sentence
have been met, then the Restatement Effective Date shall have deemed to have
occurred, regardless of any subsequent determination that one or more of the
conditions thereto had not been met (although the occurrence of the
Restatement Effective Date shall not release the Borrower or any other Credit
Party from any liability for failure to satisfy one or more of the applicable
conditions contained in Section 5). The Agent will give Holdings, the
Borrower and each Bank prompt written notice of the occurrence of the
Restatement Effective Date.
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13.11 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.
13.12 AMENDMENT OR WAIVER; ETC. (a) Neither this Agreement nor
any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party
thereto and the Required Banks, PROVIDED that no such change, waiver,
discharge or termination shall, without the consent of each Bank (other than
a Defaulting Bank) (with Obligations being directly affected in the case of
following clause (i)), (i) extend the final scheduled maturity of any Loan or
Note or extend the stated expiration date of any Letter of Credit beyond the
Final Maturity Date, or reduce the rate or extend the time of payment of
interest or Fees thereon or reduce the principal amount thereof (except to
the extent repaid in cash) (it being understood that any amendment or
modification to the financial definitions in this Agreement or to Section
13.07(a) shall not constitute a reduction in the rate of interest or Fees for
the purposes of this clause (i)), (ii) release all or substantially all of
the Collateral (except as expressly provided in the Credit Documents) under
all the Security Documents, (iii) amend, modify or waive any provision of
this Section 13.12 to the extent that any such amendment or modification
would alter any of the voting provisions set forth in the other provisions of
this Section 13.12, (iv) reduce the percentage specified in the definition of
Required Banks (it being understood that, with the consent of the Required
Banks, additional extensions of credit pursuant to this Agreement may be
included in the determination of the Required Banks on substantially the same
basis as the extensions of Term Loan Commitments and Revolving Loan
Commitments are included on the Restatement Effective Date) or (v) consent to
the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement; PROVIDED FURTHER, that no such change,
waiver, discharge or termination shall (u) increase the Commitments of any
Bank over the amount thereof then in effect without the consent of such Bank
(it being understood that waivers or modifications of conditions precedent,
covenants, Defaults or Events of Default or of a mandatory reduction in the
Total Commitment shall not constitute an increase of the Commitment of any
Bank, and that an increase in the available portion of the Commitment of any
Bank shall not constitute an increase of the Commitment of such Bank), (v)
without the consent of the Issuing Bank, amend, modify or waive any provision
of Section 2 or alter its rights or obligations with respect to Letters of
Credit, (w) without the consent of the Swingline Bank, alter the Swingline
Bank's rights or obligations with respect to Swingline Loans, (x) without the
consent of the Agent, amend, modify or waive any provision of Section 12 or
any other provision as same relates to the rights or obligations of the
Agent, (y) without the consent of the Collateral Agent, amend, modify or
waive any provision relating to the rights or obligations of the Collateral
Agent or (z) without the consent of the Supermajority Banks, reduce the
amount of, or extend the date of, any Scheduled Repayment, or amend the
definition of Supermajority Banks (it being understood that, with the consent
of the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Supermajority Banks on
substantially the same basis as the extensions of Term Loan Commitments and
Revolving Loan Commitments are included on the Restatement Effective Date).
(b) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of
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the first proviso to Section 13.12(a), the consent of the Required Banks is
obtained but the consent of one or more of such other Banks whose consent is
required is not obtained, then the Borrower shall have the right, so long as
all non-consenting Banks whose individual consent is required are treated as
described in either clauses (A) or (B) below, to either (A) replace each such
non-consenting Bank or Banks with one or more Replacement Banks pursuant to
Section 1.13 so long as at the time of such replacement, each such
Replacement Bank consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Bank's Commitments and/or
repay each Tranche of outstanding Loans of such Bank in accordance with
Sections 3.02(b) and/or 4.01(b), PROVIDED that, unless the Commitments that
are terminated, and Loans repaid, pursuant to preceding clause (B) are
immediately replaced in full at such time through the addition of new Banks
or the increase of the Commitments and/or outstanding Loans of existing Banks
(who in each case must specifically consent thereto), then in the case of any
action pursuant to preceding clause (B) the Required Banks (determined before
giving effect to the proposed action) shall specifically consent thereto,
PROVIDED FURTHER, that in any event the Borrower shall not have the right to
replace a Bank, terminate its Commitments or repay its Loans solely as a
result of the exercise of such Bank's rights (and the withholding of any
required consent by such Bank) pursuant to the second proviso to Section
13.12(a).
13.13 SURVIVAL. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01 shall
survive the execution, delivery and termination of this Agreement and the
Notes and the making and repayment of the Obligations.
13.14 DOMICILE OF LOANS. Each Bank may transfer and carry its
Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Bank. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 13.14 would, at the
time of such transfer, result in increased costs under Section 1.10, 2.06 or
4.04 from those being charged by the respective Bank prior to such transfer,
then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of the
respective transfer).
13.15 REGISTER. The Borrower hereby designates the Agent to serve
as the Borrower's agent, solely for purposes of this Section 13.15, to
maintain a register (the "Register") on which it will record the Commitments
from time to time of each of the Banks, the Loans made by each of the Banks
and each repayment in respect of the principal amount of the Loans of each
Bank. Failure to make any such recordation, or any error in such recordation
shall not affect the Borrower's obligations in respect of such Loans. With
respect to any Bank, the transfer of the Commitments of such Bank and the
rights to the principal of, and interest on, any Loan made pursuant to such
Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Agent with respect to ownership of such
Commitments and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
any Commitments and Loans shall be recorded by the Agent on the Register only
upon the acceptance by the Agent of a properly executed and delivered
Assignment and Assumption Agreement pursuant to Section 13.04(b). Coincident
with the delivery of such an Assignment and Assumption Agreement to the Agent
for acceptance and registration of
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assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same
aggregate principal amount shall be issued to the assigning or transferor
Bank and/or the new Bank. The Borrower agrees to indemnify the Agent from
and against any and all losses, claims, damages and liabilities of whatsoever
nature which may be imposed on, asserted against or incurred by the Agent in
performing its duties under this Section 13.15.
13.16 CONFIDENTIALITY. (a) Subject to the provisions of clause
(b) of this Section 13.16, the Agent, the Collateral Agent and each Bank
agrees that it will use its reasonable efforts not to disclose without the
prior consent of the Borrower (other than to its employees, auditors,
advisors or counsel or to another Bank if the Bank or such Bank's holding or
parent company in its sole discretion determines that any such party should
have access to such information, provided such Persons shall be subject to
the provisions of this Section 13.16 to the same extent as such Bank) any
information with respect to Holdings or any of its Subsidiaries which is now
or in the future furnished pursuant to this Agreement or any other Credit
Document and which is designated by the Borrower to the Agent, the Collateral
Agent and the Banks in writing as confidential, PROVIDED that the Agent, the
Collateral Agent and any Bank may disclose any such information (i) as has
become generally available to the public other than by virtue of a breach of
this Section 13.16(a) by the Agent, the Collateral Agent or respective Bank,
(ii) as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over the Agent, the Collateral Agent or such
Bank or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or similar organizations (whether in the United States or
elsewhere) or their successors, (iii) as may be required or appropriate in
respect to any summons or subpoena or in connection with any litigation, (iv)
in order to comply with any law, order, regulation or ruling applicable to
the Agent, the Collateral Agent or such Bank, (v) in the case of any Bank, to
the Agent or the Collateral Agent and (vi) to any prospective or actual
transferee or participant in connection with any contemplated transfer or
participation of any of the Notes or Commitments or any interest therein by
such Bank, PROVIDED that such prospective transferee agrees to be bound by
the confidentiality provisions contained in this Section 13.16.
(b) Each of Holdings and the Borrower hereby acknowledges and
agrees that the Agent and each Bank may share with any of its affiliates any
information related to Holdings or any of its Subsidiaries (including,
without limitation, any nonpublic customer information regarding the
creditworthiness of Holdings and its Subsidiaries), provided such Persons
shall be subject to the provisions of this Section 13.16 to the same extent
as such Bank).
13.17 HOLDINGS MERGER. From and after the consummation of the
Holdings Merger, the following provisions shall be applicable:
(i) all references in this Agreement or in any other Credit
Document to "Holdings and its Subsidiaries", "Holdings or any of its
Subsidiaries", "Holdings or any Subsidiary of Holdings" and similar
references shall instead be references to "the Borrower and its
Subsidiaries", "the Borrower or any of its Subsidiaries", "the Borrower or
any Subsidiary of the Borrower" and similar references, as to the context may
require;
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(ii) all references to "Holdings will", "Holding will not",
"Holdings may" and similar references shall instead be references to "the
Borrower will", "the Borrower will not", the Borrower may" and similar
references, as the context may require;
(iii) all financial reporting required to be made by Holdings
shall instead be prepared and delivered by the comparable officer of the
Borrower;
(iv) all fiscal periods of Holdings shall instead relate to the
respective fiscal periods of the Borrower; and
(v) Sections 7.24(a), 8.12 and 9.13(b) and the proviso to Section
9.05(ii) shall no longer be applicable.
SECTION 14. HOLDINGS GUARANTY.
14.01 GUARANTY. In order to induce the Agent, the Collateral
Agent, the Issuing Bank and the Banks to enter into this Agreement and to
extend credit hereunder, and to induce the other Guaranteed Creditors to
enter into Interest Rate Protection Agreements or Other Hedging Agreements,
and in recognition of the direct benefits to be received by Holdings from the
proceeds of the Loans, the issuance of the Letters of Credit and the entering
into of such Interest Rate Protection Agreements or Other Hedging Agreements,
Holdings hereby agrees with the Guaranteed Creditors as follows: Holdings
hereby unconditionally and irrevocably guarantees as primary obligor and not
merely as surety the full and prompt payment when due, whether upon maturity,
acceleration or otherwise, of any and all of the Guaranteed Obligations of
the Borrower to the Guaranteed Creditors. If any or all of the Guaranteed
Obligations of the Borrower to the Guaranteed Creditors becomes due and
payable hereunder, Holdings unconditionally and irrevocably promises to pay
such indebtedness to the Agent and/or the other Guaranteed Creditors, or
order, on demand, together with any and all expenses which may be incurred by
the Agent or the other Guaranteed Creditors in collecting any of the
Guaranteed Obligations. If claim is ever made upon any Guaranteed Creditor
for repayment or recovery of any amount or amounts received in payment or on
account of any of the Guaranteed Obligations and any of the aforesaid payees
repays all or part of said amount by reason of (i) any judgment, decree or
order of any court or administrative body having jurisdiction over such payee
or any of its property or (ii) any settlement or compromise of any such claim
effected by such payee with any such claimant (including the Borrower), then
and in such event Holdings agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon Holdings, notwithstanding any
revocation of this Guaranty or other instrument evidencing any liability of
the Borrower, and Holdings shall be and remain liable to the aforesaid payees
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by any such payee.
14.02 BANKRUPTCY. Additionally, Holdings unconditionally and
irrevocably guarantees the payment of any and all of the Guaranteed
Obligations of the Borrower to the Guaranteed Creditors whether or not due or
payable by the Borrower upon the occurrence of any of the events specified in
Section 10.05, and irrevocably and unconditionally promises to pay such
indebtedness to the Guaranteed Creditors, or order, on demand, in lawful
money of the United States.
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14.03 NATURE OF LIABILITY. The liability of Holdings hereunder is
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrower whether executed by Holdings, any
other guarantor or by any other party, and the liability of Holdings
hereunder is not affected or impaired by (a) any direction as to application
of payment by the Borrower or by any other party, or (b) any other continuing
or other guaranty, undertaking or maximum liability of a guarantor or of any
other party as to the Guaranteed Obligations of the Borrower, or (c) any
payment on or in reduction of any such other guaranty or undertaking, or (d)
any dissolution, termination or increase, decrease or change in personnel by
the Borrower, or (e) any payment made to any Guaranteed Creditor on the
Guaranteed Obligations which any such Guaranteed Creditor repays to the
Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and Holdings
waives any right to the deferral or modification of its obligations hereunder
by reason of any such proceeding.
14.04 INDEPENDENT OBLIGATION. The obligations of Holdings
hereunder are independent of the obligations of any other guarantor, any
other party or the Borrower, and a separate action or actions may be brought
and prosecuted against Holdings whether or not action is brought against any
other guarantor, any other party or the Borrower and whether or not any other
guarantor, any other party or the Borrower be joined in any such action or
actions. Holdings waives, to the fullest extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or
the enforcement thereof. Any payment by the Borrower or other circumstance
which operates to toll any statute of limitations as to the Borrower shall
operate to toll the statute of limitations as to Holdings.
14.05 AUTHORIZATION. Holdings authorizes the Guaranteed Creditors
without notice or demand (except as shall be required by applicable statute
and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter, any
of the Guaranteed Obligations (including any increase or decrease in the rate
of interest or fees thereon), any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the Guaranty herein
made shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, impair, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever
at any time pledged or mortgaged to secure, or howsoever securing, the
Guaranteed Obligations or any liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and/or any
offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower, any other Credit Party or others or otherwise act or refrain from
acting;
(d) release or substitute any one or more endorsers, guarantors,
the Borrower, other Credit Parties or other obligors;
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(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to its creditors other than
the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Guaranteed Creditors regardless
of what liability or liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement, any other Credit Document or any of the
instruments or agreements referred to herein or therein, or otherwise amend,
modify or supplement this Agreement, any other Credit Document or any of such
other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
Holdings from its liabilities under this Guaranty.
14.06 RELIANCE. It is not necessary for any Guaranteed Creditor
to inquire into the capacity or powers of Holdings or any of its Subsidiaries
or the officers, directors, partners or agents acting or purporting to act on
their behalf, and any Guaranteed Obligations made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder.
14.07 SUBORDINATION. Any indebtedness of the Borrower now or
hereafter owing to Holdings is hereby subordinated to the Guaranteed
Obligations of the Borrower owing to the Guaranteed Creditors; and if the
Agent so requests at a time when an Event of Default exists, all such
indebtedness of the Borrower to Holdings shall be collected, enforced and
received by Holdings for the benefit of the Guaranteed Creditors and be paid
over to the Agent on behalf of the Guaranteed Creditors on account of the
Guaranteed Obligations of the Borrower to the Guaranteed Creditors, but
without affecting or impairing in any manner the liability of Holdings under
the other provisions of this Guaranty. Nothing herein shall prevent the
Borrower from making any payment with respect to any such indebtedness to
Holdings unless an Event of Default then exists. Prior to the transfer by
Holdings of any note or negotiable instrument evidencing any such
indebtedness of the Borrower to Holdings, Holdings shall mark such note or
negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, Holdings
hereby agrees with the Guaranteed Creditors that it will not exercise any
right of subrogation which it may at any time otherwise have as a result of
this Guaranty (whether contractual, under Section 509 of the Bankruptcy Code
or otherwise) until all Guaranteed Obligations have been irrevocably paid in
full in cash.
14.08 WAIVER. (a) Holdings waives any right (except as shall be
required by applicable statute and cannot be waived) to require any
Guaranteed Creditor to (i) proceed against the Borrower, any other guarantor
or any other party, (ii) proceed against or exhaust any security held from
the Borrower, any other guarantor or any other party or (iii) pursue any
other remedy in any Guaranteed Creditor's power whatsoever. Holdings waives
any defense based on or arising out of any defense of the Borrower, any other
guarantor or any other party, other than
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payment of the Guaranteed Obligations to the extent of such payment, based on
or arising out of the disability of the Borrower, any other guarantor or any
other party, or the validity, legality or unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any
cause of the liability of the Borrower other than payment of the Guaranteed
Obligations to the extent of such payment. The Guaranteed Creditors may, at
their election, foreclose on any security held by the Agent, the Collateral
Agent or any other Guaranteed Creditor by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or
exercise any other right or remedy the Guaranteed Creditors may have against
the Borrower or any other party, or any security, without affecting or
impairing in any way the liability of Holdings hereunder except to the extent
the Guaranteed Obligations have been paid. Holdings waives any defense
arising out of any such election by the Guaranteed Creditors, even though
such election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of Holdings against the Borrower or any
other party or any security.
(b) Holdings waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this
Guaranty, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. Holdings assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks
which Holdings assumes and incurs hereunder, and agrees that the Agent and
the Banks shall have no duty to advise Holdings of information known to them
regarding such circumstances or risks.
(c) Holdings hereby acknowledges and affirms that it understands
that to the extent the Guaranteed Obligations are secured by Real Property
located in California, Holdings shall be liable for the full amount of the
liability hereunder notwithstanding the foreclosure on such Real Property by
trustee sale or any other reason impairing Holdings' or any Guaranteed
Creditor's right to proceed against the Borrower or any other guarantor of
the Guaranteed Obligations. In accordance with Section 2856 of the
California Civil Code, Holdings hereby waives:
(i) all rights of subrogation, reimbursement, indemnification, and
contribution and any other rights and defenses that are or may become
available to Holdings by reason of Sections 2787 to 2855, inclusive, 2899
and 3433 of the California Civil Code;
(ii) all rights and defenses that Holdings may have because the
Guaranteed Obligations are secured by Real Property located in California.
This means, among other things: (A) the Guaranteed Creditors may collect
from Holdings without first foreclosing on any real or personal property
collateral pledged by the Borrower or any other Credit Party; and (B) if
the Guaranteed Creditors foreclose on any Real Property collateral pledged
by the Borrower or any other Credit Party, (1) the amount of the Guaranteed
Obligations may be reduced only by the price for which that collateral is
sold at the foreclosure sale, even if the collateral is worth more than the
sale price, and (2) the Guaranteed Creditors may collect from Holdings even
if the Guaranteed Creditors, by
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foreclosing on the Real Property collateral, have destroyed any right
Holdings may have to collect from the Borrower. This is an unconditional
and irrevocable waiver of any rights and defenses Holdings may have
because the Guaranteed Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or
defenses based upon Section 580a, 580b, 580d or 726 of the California
Code of Civil Procedure; and
(iii) all rights and defenses arising out of an election of
remedies by the Guaranteed Creditors, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for
the Guaranteed Obligations, has destroyed Holdings' rights of subrogation
and reimbursement against the Borrower by the operation of Section 580d of
the Code of Civil Procedure or otherwise.
Holdings warrants and agrees that each of the waivers set forth above is made
with full knowledge of its significance and consequences and that if any of such
waivers are determined to be contrary to any applicable law or public policy,
such waivers shall be effective only to the maximum extent permitted by law.
14.09 NATURE OF LIABILITY. It is the desire and intent of
Holdings and the Guaranteed Creditors that this Guaranty shall be enforced
against Holdings to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought. If,
however, and to the extent that, the obligations of Holdings under this
Guaranty shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal
law relating to fraudulent conveyances or transfers), then the amount of
Holdings obligations under this Guaranty shall be deemed to be reduced and
Holdings shall pay the maximum amount of the Guaranteed Obligations which
would be permissible under applicable law.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
ADDRESS:
c/o J.F. Lehman & Company, Inc. ELGAR HOLDINGS, INC.
450 Park Avenue, Sixth Floor
New York, New York 10022
Attn:Donald Glickman By /s/ KEITH OSTER
Telephone No.: (212) 634-0100 ------------------
Telecopier No.: (212) 634-1155 Title:
and
9250 Brown Deer Road
San Diego, California 92121
Attn: Chris Kelford
Telephone No.: (619) 458-0204
Telecopier No.: (619) 458-0257
9250 Brown Deer Road ELGAR ELECTRONICS CORPORATION
San Diego, California 92121
Attn: Chris Kelford
Telephone No.: (619) 458-0204 By /s/ KEITH OSTER
Telecopier No.: (619) 458-0257 ------------------
Title:
and
c/o J.F. Lehman & Company, Inc.
450 Park Avenue, Sixth Floor
New York, New York 10022
Attn: Donald Glickman
Telephone No.: (212) 634-0100
Telecopier No.: (212) 634-1155
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ ANDREW KEITH
--------------------
Title:
SCHEDULE 1
COMMITMENTS
Term Loan Revolving Loan
Bank Commitment Commitment
- ---- ---------- ----------
Bankers Trust
Company $15,000,000 $15,000,000
----------- -----------
TOTAL: $15,000,000 $15,000,000