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EXHIBIT 4.1
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(CHASE LOGO)
CREDIT AGREEMENT
dated as of
March 20, 2008
among
TECUMSEH PRODUCTS COMPANY
The Lenders Party Hereto
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
----------
J.P. MORGAN SECURITIES INC.,
as Sole Bookrunner and Sole Lead Arranger
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CHASE BUSINESS CREDIT
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TABLE OF CONTENTS
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Page
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ARTICLE I
Definitions
SECTION 1.01. Defined
Terms........................................... 2
SECTION 1.02. Classification of Loans and
Borrowings.................. 25
SECTION 1.03. Terms Generally
........................................ 25
SECTION 1.04. Accounting Terms;
GAAP.................................. 26
ARTICLE II
The Credits
SECTION 2.01.
Commitments............................................. 26
SECTION 2.02. Loans and
Borrowings.................................... 26
SECTION 2.03. Requests for Revolving
Borrowings....................... 27
SECTION 2.04. Protective
Advances..................................... 27
SECTION 2.05. Swingline Loans and
Overadvances........................ 28
SECTION 2.06. Letters of
Credit....................................... 30
SECTION 2.07. Fundings of
Borrowings.................................. 33
SECTION 2.08. Interest
Elections...................................... 33
SECTION 2.09. Termination and Reduction of
Commitments................ 34
SECTION 2.10. Repayment of Loans; Evidence of
Debt.................... 35
SECTION 2.11. Prepayment of
Loans..................................... 36
SECTION 2.12.
Fees.................................................... 37
SECTION 2.13.
Interest................................................ 38
SECTION 2.14. Alternative Rate of
Interest............................ 39
SECTION 2.15. Increased
Costs......................................... 39
SECTION 2.16. Break Funding
Payments.................................. 40
SECTION 2.17 Taxes
Payments.......................................... 40
SECTION 2.18 Payments Generally; Allocation of Proceeds; Sharing
of
Set-Offs 41
SECTION 2.19 Mitigation Obligations; Replacement of
Lenders.......... 43
SECTION 2.20 Returned
Payments....................................... 44
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization;
Powers.................................... 44
SECTION 3.02. Authorization;
Enforceability........................... 45
SECTION 3.03. Governmental Approvals; No
Conflicts.................... 45
SECTION 3.04. Financial Condition; No Material Adverse
Change......... 45
SECTION 3.05.
Properties.............................................. 45
SECTION 3.06. Litigation and Environmental
Matters.................... 45
SECTION 3.07. Compliance with Laws and
Agreements..................... 46
SECTION 3.08. Investment Company
Status............................... 46
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 3.09.
Taxes................................................... 46
SECTION 3.10.
ERISA................................................... 46
SECTION 3.11.
Disclosure.............................................. 46
SECTION 3.12 Material
Agreements..................................... 47
SECTION 3.13
Solvency................................................ 47
SECTION 3.14
Insurance............................................... 47
SECTION 3.15 Capitalization and
Subsidiaries......................... 47
SECTION 3.16 Security Interest in
Collateral......................... 47
SECTION 3.17 Employment
Matters...................................... 48
SECTION 3.18 Common
Enterprise....................................... 48
SECTION 3.19 Brazilian
Subsidiaries.................................. 48
ARTICLE IV
Conditions
SECTION 4.01. Effective
Date.......................................... 48
SECTION 4.02. Each Credit
Event....................................... 51
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements Borrowing Base and Other
Information............. 52
SECTION 5.02. Notices of Material
Events.............................. 55
SECTION 5.03. Existence; Conduct of
Business.......................... 56
SECTION 5.04 Payment of
Obligations.................................. 56
SECTION 5.05. Maintenance of
Properties............................... 56
SECTION 5.06. Books and Records; Inspection
Rights.................... 56
SECTION 5.07. Compliance with
Laws.................................... 56
SECTION 5.08. Use of Proceeds
........................................ 56
SECTION 5.09
Insurance............................................... 56
SECTION 5.10 Casualty and
Condemnation............................... 57
SECTION 5.11
Appraisals.............................................. 57
SECTION 5.12 Depository
Banks........................................ 57
SECTION 5.13 Additional Collateral; Further
Assurances............... 57
ARTICLE VI
Negative Covenants
SECTION 6.01.
Indebtedness............................................ 58
SECTION 6.02.
Liens................................................... 59
SECTION 6.03. Fundamental
Changes..................................... 60
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions......................................... 61
SECTION 6.05. Asset
Sales............................................. 62
SECTION 6.06. Sale and Leaseback
Transactions......................... 63
SECTION 6.07. Swap
Agreements......................................... 63
SECTION 6.08. Restricted Payments; Certain Payments of
Indebtedness... 63
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 6.09 Transactions with
Affiliates............................ 64
SECTION 6.10 Restrictive
Agreements.................................. 64
SECTION 6.11 Amendment of Material
Documents......................... 64
ARTICLE VII
Events of Default....................................... 65
ARTICLE VIII
The Administrative Agent................................ 67
ARTICLE IX
Miscellaneous
SECTION 9.01.
Notices................................................. 69
SECTION 9.02. Waivers;
Amendments..................................... 70
SECTION 9.03. Expenses; Indemnity; Damage
Waiver...................... 72
SECTION 9.04. Successors and
Assigns.................................. 74
SECTION 9.05.
Survival................................................ 76
SECTION 9.06. Counterparts; Integration;
Effectiveness............... 77
SECTION 9.07.
Severability............................................ 77
SECTION 9.08. Right of
Setoff......................................... 77
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service
of
Process.............................................. 77
SECTION 9.10. WAIVER OF JURY
TRIAL.................................... 78
SECTION 9.11.
Headings................................................ 78
SECTION 9.12.
Confidentiality......................................... 78
SECTION 9.13. Several Obligations; Nonreliance; Violation of
Law...... 79
SECTION 9.14. USA PATRIOT
Act......................................... 79
SECTION 9.15
Disclosure.............................................. 79
SECTION 9.16 Appointment for
Perfection.............................. 79
SECTION 9.17 Interest Rate
Limitation................................ 80
ARTICLE X
Loan Guaranty
SECTION 10.01.
Guaranty................................................ 80
SECTION 10.02. Guaranty of
Payment..................................... 80
SECTION 10.03. No Discharge or Diminishment of Loan
Guaranty........... 80
SECTION 10.04. Defenses
Waived......................................... 81
SECTION 10.05. Rights of
Subrogation................................... 81
SECTION 10.06. Reinstatement; Stay of
Acceleration..................... 82
</TABLE>
iii
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<TABLE>
<S> <C> <C>
SECTION 10.07.
Information............................................. 82
SECTION 10.08.
Termination............................................. 82
SECTION 10.09.
Taxes................................................... 82
SECTION 10.10. Maximum
Liability....................................... 82
SECTION 10.11.
Contribution............................................ 83
SECTION 10.12. Liability
Cumulative.................................... 83
</TABLE>
SCHEDULES:
Commitment Schedule
Schedule 1.01 - Other Permitted Investments
Schedule 3.05 -- Properties
Schedule 3.06 -- Disclosed Matters
Schedule 3.14 -- Insurance
Schedule 3.15 - Capitalization and Subsidiaries
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04-1 -- Existing Investments
Schedule 6.04-2 - TMT Transactions
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Assignment and Assumption
Exhibit B -- Form of Opinion of Borrower's Counsel
Exhibit C -- Form of Borrowing Base Certificate
Exhibit D -- Form of Compliance Certificate
Exhibit E -- Joinder Agreement
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CREDIT AGREEMENT dated as of March 20, 2008 (as it may be
amended or
modified from time to time, this "Agreement"), among, TECUMSEH
PRODUCTS
COMPANY, the Lenders party hereto, and JPMORGAN CHASE BANK,
N.A., as
Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to
whether such Loan, or the Loans comprising such Borrowing, are
bearing interest
at a rate determined by reference to the Alternate Base
Rate.
"Account" has the meaning assigned to such term in the
Security
Agreement.
"Account Debtor" means any Person obligated on an Account.
"Acquisition" means any transaction or series of related
transactions
for the purpose of or resulting, directly or indirectly, in (i)
the acquisition
of all or substantially all of the assets of any Person, or any
business or
division of any Person, (ii) the acquisition or ownership of in
excess of 50% of
the Equity Interest of any Person, or (iii) the acquisition of
another Person by
a merger, consolidation, amalgamation or any other combination
with such Person.
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing
for any Interest Period, an interest rate per annum (rounded
upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate
for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Chase, in its capacity as
administrative
agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person
that directly, or indirectly through one or more intermediaries,
Controls or is
Controlled by or is under common Control with the Person
specified.
"Aggregate Commitment" means, at any time, the aggregate amount
of the
Commitments of all the Lenders. The initial Aggregate Commitment
is $50,000,000.
"Aggregate Credit Exposure" means, at any time, the aggregate
Credit
Exposure of all the Lenders.
"Alternate Base Rate" means, for any day, a rate per annum equal
to
the greater of (a) the Prime Rate in effect on such day and (b)
the Federal
Funds Effective Rate in effect on such day plus 1%.
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Any change in the Alternate Base Rate due to a change in the
Prime Rate or the
Federal Funds Effective Rate shall be effective from and
including the effective
date of such change in the Prime Rate or the Federal Funds
Effective Rate,
respectively.
"Applicable Percentage" means, with respect to any Lender,
with
respect to Revolving Loans, LC Exposure, Swingline Loans,
Protective Advances or
Overadvances, a percentage equal to a fraction the numerator of
which is such
Lender's Commitment and the denominator of which is the
Aggregate Commitment (if
the Commitments have terminated or expired, the Applicable
Percentages shall be
determined based upon such Lender's share of the Aggregate
Credit Exposure at
that time).
"Applicable Rate" means, for any day, with respect to any ABR
Loan or
Eurodollar Loan, as the case may be, 0.75% in the case of ABR
Loans and 1.75% in
the case of Eurodollar Loans for the period from the Closing
Date through the
date three months after the Closing Date, and thereafter shall
mean the
applicable per annum rate set forth below:
<TABLE>
<CAPTION>
EURODOLLAR LOAN ABR LOAN
APPLICABLE APPLICABLE
AVERAGE AVAILABILITY RATE RATE
-------------------- --------------- ----------
<S> <C> <C>
=> $30,000,000 1.50% 0.50%
> $20,000,000 1.75% 0.75%
<= $20,000,000 2.00% 1.00%
</TABLE>
For purposes of the foregoing, the Applicable Rate shall be
determined by
reference to the Average Availability for the most recent fiscal
quarter end.
Adjustments, if any, to the Applicable Rate shall be made on a
quarterly basis
and shall be effective five Business Days after the date the
applicable
Compliance Certificate is scheduled to be delivered. If the
Borrower fails to
deliver the Borrowing Base Certificate to the Administrative
Agent at the time
required or any other Event of Default has occurred and is
continuing, then the
Applicable Rate shall be the highest Applicable Rate set forth
in the foregoing
table until five days after such Borrowing Base Certificate is
so delivered or
other Event of Default is waived.
"Approved Fund" has the meaning assigned to such term in Section
9.04.
"Assignment and Assumption" means an assignment and assumption
entered
into by a Lender and an assignee (with the consent of any party
whose consent is
required by Section 9.04), and accepted by the Administrative
Agent, in the form
of Exhibit A or any other form approved by the Administrative
Agent.
"Availability" means, at any time, an amount equal to (a) the
lesser
of the Aggregate Commitment and the Borrowing Base minus (b) the
Aggregate
Credit Exposure.
"Availability Period" means the period from and including
the
Effective Date to but excluding the earlier of the Maturity Date
and the date of
termination of the Commitments.
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"Available Commitment" of any Lender means, at any time, the
Commitment of such Lender then in effect minus the Credit
Exposure (excluding
such Lender's Applicable Percentage of the aggregate principal
amount of
Swingline Loans) of such Lenders at such time.
"Average Availability" means, with respect to any fiscal
quarter, an
amount equal to the amount of Availability for each day in such
fiscal quarter
divided by the number of days in such fiscal quarter.
"Banking Services" means each and any of the following bank
services
provided to any Loan Party by Chase or any of its Affiliates:
(a) commercial
credit cards, (b) stored value cards and (c) treasury management
services
(including, without limitation, controlled disbursement,
automated clearinghouse
transactions, return items, overdrafts and interstate depository
network
services).
"Banking Services Obligations" of the Loan Parties means any and
all
obligations of the Loan Parties, whether absolute or contingent
and howsoever
and whensoever created, arising, evidenced or acquired
(including all renewals,
extensions and modifications thereof and substitutions therefor)
in connection
with Banking Services.
"Banking Services Reserves" means all Reserves which the
Administrative Agent from time to time establishes in its
Permitted Discretion
for Banking Services then provided or outstanding.
"Board" means the Board of Governors of the Federal Reserve
System of
the United States of America.
"Borrower" means Tecumseh Products Company, a Michigan
corporation.
"Borrowing" means (a) Revolving Loans of the same Type,
made,
converted or continued on the same date and, in the case of
Eurodollar Loans, as
to which a single Interest Period is in effect, (b) a Swingline
Loan, (c) a
Protective Advance and (d) an Overadvance.
"Borrowing Base" means, at any time, the sum of:
(a) 85% of Eligible Accounts at such time, plus
(b) the lesser of (i) 70% of Eligible Inventory, valued at
the
lower of cost or market value, determined on a
first-in-first-out basis, at such
time and (ii) 85% multiplied by the Net Orderly Liquidation
Value percentage
identified in the most recent inventory appraisal ordered by the
Administrative
Agent multiplied by Eligible Inventory, valued at the lower of
cost or market
value, determined on a first-in-first-out basis, at such time,
plus
(c) the PP&E Component, minus
(d) Reserves.
The Agent may, in its Permitted Discretion, reduce the advance
rates set
forth above or reduce one or more of the other elements used in
computing the
Borrowing Base.
"Borrowing Base Certificate" means a certificate, signed and
certified
as accurate and complete by a Financial Officer of the Borrower,
in
substantially the form of Exhibit C or another form which is
acceptable to the
Administrative Agent in its sole discretion.
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"Borrowing Request" means a request by the Borrower for a
Revolving
Borrowing in accordance with Section 2.02.
"Brazilian Subsidiaries" means any Subsidiary of the
Borrower
organized under the laws of Brazil other than TMT.
"Business Day" means any day that is not a Saturday, Sunday or
other
day on which commercial banks in Chicago, Detroit or New York
City are
authorized or required by law to remain closed; provided that,
when used in
connection with a Eurodollar Loan, the term "Business Day" shall
also exclude
any day on which banks are not open for dealings in U.S. Dollar
deposits in the
London interbank market.
"Canadian Dollar" and "C$" means the lawful currency of
Canada.
"Canadian Subsidiary" means any Subsidiary organized under the
laws of
Canada or any province, territory or other political subdivision
thereof.
"Capital Expenditures" means, without duplication, any
expenditure or
commitment to expend money for any purchase or other acquisition
of any asset
which would be classified as a fixed or capital asset on a
consolidated balance
sheet of the Borrower and its Subsidiaries prepared in
accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations
of
such Person to pay rent or other amounts under any lease of (or
other
arrangement conveying the right to use) real or personal
property, or a
combination thereof, which obligations are required to be
classified and
accounted for as capital leases on a balance sheet of such
Person under GAAP,
and the amount of such obligations shall be the capitalized
amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition on or after
the
Effective Date of ownership, directly or indirectly,
beneficially or of record,
by any Person or group (within the meaning of the Securities
Exchange Act of
1934 and the rules of the SEC thereunder as in effect on the
date hereof, but
excluding the Borrower) of Equity Interests representing more
than 35% of the
aggregate ordinary voting power represented by the issued and
outstanding Equity
Interests of the Borrower; or (b) occupation of a majority of
the seats (other
than vacant seats) on the board of directors of the Borrower by
Persons who were
neither (i) nominated by the board of directors of the Borrower
nor (ii)
appointed by directors so nominated.
"Change in Law" means (a) the adoption of any law, rule or
regulation
after the date of this Agreement, (b) any change in any law,
rule or regulation
or in the interpretation or application thereof by any
Governmental Authority
after the date of this Agreement or (c) compliance by any Lender
or the Issuing
Bank (or, for purposes of Section 2.15(b), by any lending office
of such Lender
or by such Lender's or the Issuing Bank's holding company, if
any) with any
request, guideline or directive (whether or not having the force
of law) of any
Governmental Authority made or issued after the date of this
Agreement.
"Chase" means JPMorgan Chase Bank, N.A., a national banking
association, in its individual capacity, and its successors.
"Class", when used in reference to any Loan or Borrowing, refers
to
whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans,
Swingline Loans or Protective Advances or Overadvances.
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"Code" means the Internal Revenue Code of 1986, as amended from
time
to time.
"Collateral" means any and all property owned, leased or
operated by a
Person covered by the Collateral Documents and any and all other
property of any
Loan Party, now existing or hereafter acquired, that may at any
time be or
become subject to a security interest or Lien in favor of the
Administrative
Agent, on behalf of itself and the Lenders, to secure the
Secured Obligations.
"Collateral Access Agreement" has the meaning assigned to such
term in
the Security Agreement.
"Collateral Documents" means, collectively, the Security
Agreement,
the Mortgages and any other documents granting a Lien upon the
Collateral as
security for payment of the Secured Obligations.
"Collection Account" has the meaning assigned to such term in
the
Security Agreement.
"Commitment" means, with respect to each Lender, the commitment,
if
any, of such Lender to make Revolving Loans and to acquire
participations in
Letters of Credit, Overadvances, Protective Advances and
Swingline Loans
hereunder, expressed as an amount representing the maximum
possible aggregate
amount of such Lender's Credit Exposure hereunder, as such
commitment may be (a)
reduced from time to time pursuant to Section 2.09 and (b)
reduced or increased
from time to time pursuant to assignments by or to such Lender
pursuant to
Section 9.04. The initial amount of each Lender's Commitment is
set forth on the
Commitment Schedule, or in the Assignment and Assumption
pursuant to which such
Lender shall have assumed its Commitment, as applicable.
"Commitment Schedule" means the Schedule attached hereto
identified as
such.
"Control" means the possession, directly or indirectly, of the
power
to direct or cause the direction of the management or policies
of a Person,
whether through the ability to exercise voting power, by
contract or otherwise.
"Controlling" and "Controlled" have meanings correlative
thereto.
"Controlled Disbursement Account" means any accounts of the
Borrower
maintained with the Administrative Agent as a zero balance, cash
management
account pursuant to and under any agreement between the Borrower
and the
Administrative Agent, as modified and amended from time to time,
and through
which all disbursements of the Borrower, any Loan Party and any
designated
Subsidiary of the Borrower are made and settled on a daily basis
with no
uninvested balance remaining overnight.
"Credit Exposure" means, as to any Lender at any time, the sum
of (a)
the outstanding principal amount of such Lender's Revolving
Loans and its LC
Exposure, (b) an amount equal to its Applicable Percentage of
the aggregate
principal amount of Swingline Loans at such time, plus (c) an
amount equal to
its Applicable Percentage of the aggregate principal amount of
Overadvances
outstanding at such time, plus (d) an amount equal to its
Applicable Percentage,
if any, of the aggregate principal amount of Protective Advances
outstanding at
such time.
"Default" means any event or condition which constitutes an
Event of
Default or which upon notice, lapse of time or both would,
unless cured or
waived, become an Event of Default.
"Defaulting Lender" means any Lender that fails to make
available to
the Administrative Agent such Lender's Loans required to be made
hereunder or
shall have not made a payment required to
6
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be made to the Administrative Agent or Issuing Bank hereunder.
Once a Lender
becomes a Defaulting Lender, such Lender shall continue as a
Defaulting Lender
until such time as such Defaulting Lender makes available to the
Administrative
Agent the amount of such Defaulting Lender's Loans and all other
amounts
required to be paid to the Administrative Agent and to the
Issuing Bank pursuant
to this Agreement.
"Disqualified Stock" means any Equity Interest that, by its
terms (or
by the terms of any security into which it is convertible or for
which it is
exchangeable), or upon the happening of any event or at the
option of the holder
thereof, matures or is mandatorily redeemable, pursuant to a
sinking fund
obligation or otherwise, in whole or in part, or has any other
mandatory payment
due thereon, provided that any Equity Interest shall not be
classified as
Disqualified Stock if any such mandatory maturity, redemption or
other payment
thereon shall not be required if it is prohibited by this
Agreement or any
replacement or refinancing hereof without any adverse impact on
the issuer of
such Equity Interest or any of its Subsidiaries.
"Disclosed Matters" means the actions, suits and proceedings and
the
environmental matters disclosed in Schedule 3.06.
"Document" has the meaning assigned to such term in the
Security
Agreement.
"Dollars" or "$" refers to lawful money of the United States
of
America.
"Dollar Equivalent" of any amount means, at the time of
determination
thereof, (a) if such amount is expressed in Dollars, such
amount, or (b) if such
amount is expressed in a currency other than Dollars, the
equivalent of such
amount in Dollars determined by using the spot exchange rate
determined by the
Administrative Agent at 11:00 a.m. (New York time) on the date
of determination
(or, if such date is not a Business Day, the last Business Day
prior thereto)
available to it for the spot purchase in the New York foreign
exchange market of
such amount of Dollars with such currency or, if such rate of
exchange is not
available, such other rate as the Administrative Agent, in its
reasonable
discretion, deems appropriate.
"Domestic Subsidiary" means any Subsidiary organized under the
laws of
the United States of America, any State thereof, or the District
of Columbia.
"EBITDA" means, for any period, Net Income for such period plus
(a)
without duplication and to the extent deducted in determining
Net Income for
such period, the sum of (i) Interest Expense for such period,
(ii) income tax
expense for such period, net of tax refunds, (iii) all amounts
attributable to
depreciation and amortization expense for such period, (iv) any
extraordinary
non-cash charges for such period and (v) any other non-cash
charges for such
period, including any non-cash charge that relates to the
write-down or
write-off of inventory resulting from restructuring actions or
discontinued
operations (but excluding any non-cash charge in respect of an
item that was
included in Net Income in a prior period and any non-cash charge
that relates to
the write-down or write-off of inventory to the extent such
write-down or
write-off of inventory results from recurring inventory
valuation adjustments,
including adjustments to conform inventory valuations to the
lower of cost or
market value), minus (b) without duplication and to the extent
included in Net
Income, (i) any cash payments made during such period in respect
of non-cash
charges described in clause (a)(v) taken in a prior period, (ii)
any
extraordinary gains and any non-cash items of income (other than
pension
credits) for such period and (iii) interest and other investment
income, all
calculated for the Borrower and its Subsidiaries on a
consolidated basis in
accordance with GAAP, provided that, notwithstanding the
foregoing, when EBITDA
is determined for any period ending on or before December 31,
2008, interest and
other investment income shall not be deducted from EBITDA,
provided, further,
when EBITDA is determined
7
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for any period ending after December 31, 2008, interest and
other investment
income (including interest and other investment income during
the period prior
to December 31, 2008) shall be deducted from EBITDA.
"Effective Date" means the date on which the conditions
specified in
Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"Eligible Accounts" means, at any time, the Accounts of any Loan
Party
which the Administrative Agent determines in its Permitted
Discretion are
eligible as the basis for the extension of Revolving Loans,
Swingline Loans and
the issuance of Letters of Credit hereunder. Without limiting
the Administrative
Agent's discretion provided herein, Eligible Accounts shall not
include any
Account:
(a) which is not subject to a first priority perfected
security
interest in favor of the Administrative Agent;
(b) which is subject to any Lien other than (i) a Lien in
favor
of the Administrative Agent and (ii) a Permitted Encumbrance
which does not
have priority over the Lien in favor of the Administrative
Agent;
(c) such Account is more than 60 days past due according to
the
original terms of sale or (ii) 90 days past the original invoice
date
thereof (or 120 days past the original invoice date in respect
of Account
Debtors subject to seasonal invoicing systems in the normal
course of the
business of such Loan Party);
(d) which is owing by an Account Debtor for which more than
50%
of the Accounts owing from such Account Debtor and its
Affiliates are
ineligible hereunder;
(e) the total Accounts of such Account Debtor to the Loan
Party
represent more than 10% of all Eligible Accounts at such time
(except for
Accounts from Carrier Corporation, Whirlpool and Electrolux AB,
to the
extent each such Account Debtor does not represent more than
20%, of all
Eligible Accounts at such time), but only to the extent of such
excess; or
(f) with respect to which any covenant, representation, or
warranty contained in this Agreement or in the Security
Agreement has been
breached or is not true;
(g) which (i) does not arise from the sale of goods or
performance of services in the ordinary course of business, (ii)
is not
evidenced by an invoice or other documentation satisfactory to
the
Administrative Agent which has been sent to the Account Debtor,
(iii)
represents a progress billing, (iv) is contingent upon any Loan
Party's
completion of any further performance, (v) represents a sale on
a
bill-and-hold, guaranteed sale, sale-and-return, sale on
approval,
consignment, cash-on-delivery or any other repurchase or return
basis or
(vi) relates to payments of interest;
(h) for which the goods giving rise to such Account have not
been
shipped to the Account Debtor or for which the services giving
rise to such
Account have not been performed by any Loan Party or if such
Account was
invoiced more than once;
(i) with respect to which any check or other instrument of
payment has been returned uncollected for any reason;
8
<PAGE>
(j) which is owed by an Account Debtor which has (i) applied
for,
suffered, or consented to the appointment of any receiver,
custodian,
trustee, or liquidator of its assets, (ii) has had possession of
all or a
material part of its property taken by any receiver, custodian,
trustee or
liquidator, (iii) filed, or had filed against it, any request or
petition
for liquidation, reorganization, arrangement, adjustment of
debts,
adjudication as bankrupt, winding-up, or voluntary or
involuntary case
under any state or federal bankruptcy laws (other than
post-petition
accounts payable of an Account Debtor that is a
debtor-in-possession under
the Bankruptcy Code and reasonably acceptable to the
Administrative Agent),
(iv) has admitted in writing its inability, or is generally
unable to, pay
its debts as they become due, (v) become insolvent, or (vi)
ceased
operation of its business;
(k) which is owed by any Account Debtor which has sold all or
a
substantially all of its assets;
(l) which is owed by an Account Debtor which (i) does not
maintain its chief executive office in the U.S. or Canada or
(ii) is not
organized under applicable law of the U.S., any state of the
U.S., Canada,
or any province of Canada unless, in either case, such Account
is backed by
a Letter of Credit acceptable to the Administrative Agent which
is in the
possession of, has been assigned to and is directly drawable by
the
Administrative Agent;
(m) which is owed in any currency other than U.S. Dollars or
Canadian Dollars;
(n) which is owed by (i) the government (or any department,
agency, public corporation, or instrumentality thereof) of any
country
other than the U.S. unless such Account is backed by a Letter of
Credit
acceptable to the Administrative Agent which is in the
possession of the
Administrative Agent, or (ii) the government of the U.S., or
any
department, agency, public corporation, or instrumentality
thereof, unless
the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. Section
3727 et seq. and 41 U.S.C. Section 15 et seq.), and any other
steps
necessary to perfect the Lien of the Administrative Agent in
such Account
have been complied with to the Administrative Agent's
satisfaction;
(o) which is owed by any Affiliate, employee, officer,
director,
agent or stockholder of any Loan Party;
(p) which, for any Account Debtor, exceeds a credit limit
determined by the Administrative Agent in its Permitted
Discretion, to the
extent of such excess;
(q) which is owed by an Account Debtor or any Affiliate of
such
Account Debtor to which any Loan Party is indebted, but only to
the extent
of such indebtedness or is subject to any security, deposit,
progress
payment, retainage or other similar advance made by or for the
benefit of
an Account Debtor, in each case to the extent thereof;
(r) which is subject to any counterclaim, deduction,
defense,
setoff or dispute but only to the extent of any such
counterclaim,
deduction, defense, setoff or dispute;
(s) which is evidenced by any promissory note, chattel paper,
or
instrument, unless the original thereof has been delivered to
the
Administrative Agent with any endorsements thereto requested by
the
Administrative Agent;
9
<PAGE>
(t) which is owed by an Account Debtor located in any
jurisdiction which requires filing of a "Notice of Business
Activities
Report" or other similar report in order to permit the relevant
Loan Party
to seek judicial enforcement in such jurisdiction of payment of
such
Account, unless such Loan Party has filed such report or
qualified to do
business in such jurisdiction;
(u) with respect to which any Loan Party has made any
agreement
with the Account Debtor for any reduction thereof, other than
discounts and
adjustments given in the ordinary course of business, or any
Account which
was partially paid and any Loan Party created a new receivable
for the
unpaid portion of such Account;
(v) which does not comply in all material respects with the
requirements of all applicable laws and regulations, whether
Federal, state
or local, including without limitation the Federal Consumer
Credit
Protection Act, the Federal Truth in Lending Act and Regulation
Z of the
Board;
(w) which is for goods that have been sold under a purchase
order
or pursuant to the terms of a contract or other agreement or
understanding
(written or oral) that indicates or purports that any Person
other than any
Loan Party has or has had an ownership interest in such goods,
or which
indicates any party other than any Loan Party as payee or
remittance party;
(x) which was created on cash on delivery terms; or
(y) which the Administrative Agent determines may not be paid
by
reason of the Account Debtor's inability to pay or which the
Administrative
Agent otherwise determines is unacceptable for any reason
whatsoever.
In the event that an Account which was previously an Eligible
Account
ceases to be an Eligible Account hereunder, the Borrower shall
notify the
Administrative Agent thereof on and at the time of submission to
the
Administrative Agent of the next Borrowing Base Certificate. In
determining the
amount of an Eligible Account, the face amount of an Account
may, in the
Administrative Agent's Permitted Discretion, be reduced by,
without duplication,
to the extent not reflected in such face amount, (i) the amount
of all accrued
and actual discounts, claims, credits or credits pending,
promotional program
allowances, price adjustments, finance charges or other
allowances (including
any amount that any Loan Party may be obligated to rebate to an
Account Debtor
pursuant to the terms of any agreement or understanding (written
or oral)) and
(ii) the aggregate amount of all cash received in respect of
such Account but
not yet applied by any Loan Party to reduce the amount of such
Account.
"Eligible Equipment" means the Equipment owned by any Loan Party
and
meeting each of the following requirements:
(a) a Loan Party has good title to such Equipment;
(b) the relevant Loan Party has the right to subject such
Equipment to a Lien in favor of the Administrative Agent; such
Equipment is
subject to a first priority perfected Lien in favor of the
Administrative
Agent and is free and clear of all other Liens of any nature
whatsoever
(except for Permitted Encumbrances which do not have priority
over the Lien
in favor of the Administrative Agent);
10
<PAGE>
(c) the full purchase price for such Equipment has been paid by
a
Loan Party;
(d) such Equipment is located on premises (i) owned by a
Loan
Party, which premises are subject to a first priority perfected
Lien in
favor of the Administrative Agent, or (ii) leased by a Loan
Party where (x)
the lessor has delivered to the Administrative Agent a
Collateral Access
Agreement or (y) a Reserve for rent, charges, and other amounts
due or to
become due with respect to such facility has been established by
the
Administrative Agent in its Permitted Discretion;
(e) such Equipment is in good working order and condition
(ordinary wear and tear excepted) and is used or held for use by
a Loan
Party in the ordinary course of business of such Loan Party;
(f) such Equipment is not subject to any agreement which
restricts the ability of any Loan Party to use, sell, transport
or dispose
of such Equipment or which restricts the Administrative Agent's
ability to
take possession of, sell or otherwise dispose of such Equipment;
and
(g) such Equipment does not constitute "fixtures" under the
applicable laws of the jurisdiction in which such Equipment is
located.
"Eligible Inventory" means, at any time, the Inventory of any
Loan
Party which the Administrative Agent determines in its Permitted
Discretion is
eligible as the basis for the extension of Revolving Loans,
Swingline Loans and
the issuance of Letters of Credit hereunder. Without limiting
the Administrative
Agent's discretion provided herein, Eligible Inventory shall not
include any
Inventory:
(a) which is not subject to a first priority perfected Lien
in
favor of the Administrative Agent;
(b) which is subject to any Lien other than (i) a Lien in
favor
of the Administrative Agent and (ii) a Permitted Encumbrance
which does not
have priority over the Lien in favor of the Administrative
Agent;
(c) which is, in the Administrative Agent's opinion, slow
moving,
obsolete, unmerchantable, defective, used, unfit for sale, not
salable at
prices approximating at least the cost of such Inventory in the
ordinary
course of business or unacceptable due to age, type, category
and/or
quantity;
(d) with respect to which any covenant, representation, or
warranty contained in this Agreement or the Security Agreement
has been
breached or is not true and which does not conform to all
standards imposed
by any Governmental Authority;
(e) in which any Person other than any Loan Party shall (i)
have
any direct or indirect ownership, interest or title to such
Inventory or
(ii) be indicated on any purchase order or invoice with respect
to such
Inventory as having or purporting to have an interest
therein;
(f) which constitutes spare or replacement parts, packaging
and
shipping material, manufacturing supplies, samples, prototypes,
displays or
display items, bill-and-hold goods, goods that are returned or
marked for
return, repossessed goods, defective or damaged
11
<PAGE>
goods, goods held on consignment, or goods which are not of a
type held for
sale in the ordinary course of business;
(g) which is not located in the U.S. or Canada or which is
in
transit (except for goods in transit from and to manufacturing
facilities
located in the U.S. or Canada);
(h) which is located in any location leased by a Loan Party
unless (i) the lessor has delivered to the Administrative Agent
a
Collateral Access Agreement or (ii) a Reserve for rent, charges,
and other
amounts due or to become due with respect to such facility has
been
established by the Administrative Agent in its Permitted
Discretion;
(i) which is located in any third party warehouse or is in
the
possession of a bailee (other than a third party processor) and
is not
evidenced by a Document (other than bills of lading to the
extent permitted
pursuant to clause (g) above), unless (i) such warehouseman or
bailee has
delivered to the Administrative Agent a Collateral Access
Agreement and
such other documentation as the Administrative Agent may require
or (ii) an
appropriate Reserve has been established by the Administrative
Agent in its
Permitted Discretion;
(j) which is being processed offsite at a third party location
or
outside processor, or is in-transit to or from said third party
location or
outside processor;
(k) which is a discontinued product or component thereof;
(l) which is the subject of a consignment by any Loan Party
as
consignor;
(m) which is perishable;
(n) which contains or bears any intellectual property rights
licensed to any Loan Party unless the Administrative Agent is
satisfied
that it may sell or otherwise dispose of such Inventory without
(i)
infringing the rights of such licensor, (ii) violating any
contract with
such licensor, or (iii) incurring any liability with respect to
payment of
royalties other than royalties incurred pursuant to sale of such
Inventory
under the current licensing agreement;
(o) which is not reflected in a current perpetual inventory
report of the Loan Parties (unless such Inventory is reflected
in a report
to the Administrative Agent as "in transit" Inventory);
(p) for which reclamation rights have been asserted by the
seller; or
(q) which the Administrative Agent otherwise determines is
unacceptable for any reason whatsoever.
In the event that Inventory which was previously Eligible
Inventory
ceases to be Eligible Inventory hereunder, the Borrower shall
notify the
Administrative Agent thereof on and at the time of submission to
the
Administrative Agent of the next Borrowing Base Certificate.
"Eligible Real Property" means real property acquired by a Loan
Party
after the date hereof (i) that is acceptable in the sole
discretion of the
Administrative Agent for inclusion in the Borrowing Base, (ii)
in respect of
which an appraisal report has been delivered to the
Administrative Agent in
form, scope and substance reasonably satisfactory to the
Administrative Agent,
(iii) in respect of which the Administrative Agent is satisfied
that all actions
necessary or desirable in order to create
12
<PAGE>
perfected first priority Lien on such real property have been
taken, including,
the filing and recording of Mortgages, (iv) in respect of which
environmental
assessment reports have been completed and delivered to the
Administrative Agent
in form and substance satisfactory to the Lenders and which does
not indicate
any pending, threatened or existing Environmental Liability, or
non compliance
with any Environmental Law, (v) which is adequately protected by
fully-paid
valid title insurance with endorsements and in amounts
acceptable to the
Administrative Agent, insuring that the Administrative Agent,
for the benefit of
the Secured Creditors, shall have a perfected first priority
Lien on such real
property, evidence of which shall have been provided in form and
substance
satisfactory to the Administrative Agent, and (vi) if required
by the
Administrative Agent: (A) an ALTA survey has been delivered for
which all
necessary fees have been paid and which is dated no more than 30
days prior to
the date on which the applicable Mortgage is recorded, certified
to
Administrative Agent and the issuer of the title insurance
policy in a manner
satisfactory to the Administrative Agent by a land surveyor duly
registered and
licensed in the state in which such Eligible Real Property is
located and
acceptable to the Administrative Agent, and shows all buildings
and other
improvements, any offsite improvements, the location of any
easements, parking
spaces, rights of way, building setback lines and other
dimensional regulations
and the absence of encroachments, either by such improvements or
on to such
property, and other defects, other than encroachments and other
defects
acceptable to the Administrative Agent; (B) in respect of which
local counsel
for the Agreement in states in which the Eligible Real Property
is located have
delivered a letter of opinion with respect to the enforceability
and perfection
of the Mortgages and any related fixture filings in form and
substance
satisfactory to the Administrative Agent; and (C) in respect of
which the
relevant Loan Party shall have used its reasonable best efforts
to obtain
estoppel certificates executed by all tenants of such Eligible
Real Property and
such other consents, agreements and confirmations of lessors and
third parties
have been delivered as the Administrative Agent may deem
necessary or desirable,
together with evidence that all other actions that the
Administrative Agent may
deem necessary or desirable in order to create perfected first
priority Liens on
the property described in the Mortgages have been taken.
"Environmental Laws" means all laws, rules, regulations,
codes,
ordinances, orders, decrees, judgments, injunctions, notices or
binding
agreements issued, promulgated or entered into by any
Governmental Authority,
relating in any way to the environment, preservation or
reclamation of natural
resources, the management, release or threatened release of any
Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise
(including any liability for damages, costs of environmental
remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary
directly or
indirectly resulting from or based upon (a) violation of any
Environmental Law,
(b) the generation, use, handling, transportation, storage,
treatment or
disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials
into the
environment or (e) any contract, agreement or other consensual
arrangement
pursuant to which liability is assumed or imposed with respect
to any of the
foregoing.
"Equipment" has the meaning assigned to such term in the
Security
Agreement.
"Equity Interests " means shares of capital stock,
partnership
interests, membership interests in a limited liability company,
beneficial
interests in a trust or other equity ownership interests in a
Person, and any
warrants, options or other rights entitling the holder thereof
to purchase or
acquire any such equity interest.
"ERISA" means the Employee Retirement Income Security Act of
1974, as
amended from time to time.
13
<PAGE>
"ERISA Affiliate" means any trade or business (whether or
not
incorporated) that, together with the Borrower, is treated as a
single employer
under Section 414(b) or (c) of the Code or, solely for purposes
of Section 302
of ERISA and Section 412 of the Code, is treated as a single
employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section
4043 of ERISA or the regulations issued thereunder with respect
to a Plan (other
than an event for which the 30-day notice period is waived); (b)
the existence
with respect to any Plan of an "accumulated funding deficiency"
(as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an
application for a waiver of the minimum funding standard with
respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any
liability under Title IV of ERISA with respect to the
termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the
PBGC or a plan
administrator of any notice relating to an intention to
terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the
incurrence by the
Borrower or any of its ERISA Affiliates of any liability with
respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or
the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate
of any notice,
concerning the imposition of Withdrawal Liability or a
determination that a
Multiemployer Plan is, or is expected to be, insolvent or in
reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers
to whether such Loan, or the Loans comprising such Borrowing,
are bearing
interest at a rate determined by reference to the Adjusted LIBO
Rate.
"Event of Default" has the meaning assigned to such term in
Article
VII.
"Excluded Taxes" means, with respect to the Administrative
Agent, any
Lender, the Issuing Bank or any other recipient of any payment
to be made by or
on account of any obligation of the Borrower hereunder, (a)
income or franchise
taxes imposed on (or measured by) its net income by the United
States of
America, or by the jurisdiction under the laws of which such
recipient is
organized or in which its principal office is located or, in the
case of any
Lender, in which its applicable lending office is located, (b)
any branch
profits taxes imposed by the United States of America or any
similar tax imposed
by any other jurisdiction in which the Borrower is located and
(c) in the case
of a Foreign Lender (other than an assignee pursuant to a
request by the
Borrower under Section 2.19(b)), any withholding tax that is
imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender
becomes a party
to this Agreement (or designates a new lending office) or is
attributable to
such Foreign Lender's failure to comply with Section 2.17(e),
except to the
extent that such Foreign Lender (or its assignor, if any) was
entitled, at the
time of designation of a new lending office (or assignment), to
receive
additional amounts from the Borrower with respect to such
withholding tax
pursuant to Section 2.17(a).
"Existing Letter of Credit" means a letter of credit issued
and
outstanding under the Existing Credit Agreement and listed on
Schedule 2.06
hereto.
"Federal Funds Effective Rate" means, for any day, the
weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%)
of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System
arranged by Federal funds brokers, as published on the next
succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is
not so
published for any day that is a Business Day, the average
(rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such
day for such
transactions received by the Administrative Agent from three
Federal funds
brokers of recognized standing selected by it.
14
<PAGE>
"Financial Officer" means the chief financial officer,
principal
accounting officer, treasurer, assistant treasurer, or
controller of the
Borrower.
"Fixed Charge Coverage Ratio" means, the ratio, determined as of
the
end of each of fiscal quarter of the Borrower for the
most-recently ended four
fiscal quarters, of (a) EBITDA minus the unfinanced portion of
Capital
Expenditures to (b) Fixed Charges, all calculated for the
Borrower and its
Subsidiaries on a consolidated basis in accordance with
GAAP.
"Fixed Charges" means, with reference to any period, without
duplication, Interest Expense paid in cash, plus Rentals, plus
prepayments and
scheduled principal payments on Indebtedness made during such
period (other than
in respect of any revolving credit facility (including the
revolving facility
hereunder) to the extent there is not an equivalent permanent
reduction in
commitments thereunder), plus expense for taxes paid in cash,
plus Restricted
Payments paid in cash, plus Capital Lease Obligation payments,
plus cash
contributions to any Plan, all calculated for the Borrower and
its Subsidiaries
on a consolidated basis.
"Foreign Lender" means any Lender that is organized under the
laws of
a jurisdiction other than that in which the Borrower is located.
For purposes of
this definition, the United States of America, each State
thereof and the
District of Columbia shall be deemed to constitute a single
jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is not a
Domestic
Subsidiary or a Canadian Subsidiary.
"Funding Account" has the meaning assigned to such term in
Section
4.01(h).
"GAAP" means generally accepted accounting principles in the
United
States of America.
"Governmental Authority" means the government of the United
States of
America, any other nation or any political subdivision thereof,
whether state or
local, and any agency, authority, instrumentality, regulatory
body, court,
central bank or other entity exercising executive, legislative,
judicial,
taxing, regulatory or administrative powers or functions of or
pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor
guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other
obligation of any
other Person (the "primary obligor") in any manner, whether
directly or
indirectly, and including any obligation of the guarantor,
direct or indirect,
(a) to purchase or pay (or advance or supply funds for the
purchase or payment
of) such Indebtedness or other obligation or to purchase (or to
advance or
supply funds for the purchase of) any security for the payment
thereof, (b) to
purchase or lease property, securities or services for the
purpose of assuring
the owner of such Indebtedness or other obligation of the
payment thereof, (c)
to maintain working capital, equity capital or any other
financial statement
condition or liquidity of the primary obligor so as to enable
the primary
obligor to pay such Indebtedness or other obligation or (d) as
an account party
in respect of any letter of credit or letter of guaranty issued
to support such
Indebtedness or obligation; provided, that the term Guarantee
shall not include
endorsements for collection or deposit in the ordinary course of
business.
"Guaranteed Obligations" has the meaning assigned to such term
in
Section 10.01.
"Hazardous Materials" means all explosive or radioactive
substances or
wastes and all
15
<PAGE>
hazardous or toxic substances, wastes or other pollutants,
including petroleum
or petroleum distillates, asbestos or asbestos containing
materials,
polychlorinated biphenyls, radon gas, infectious or medical
wastes and all other
substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Indebtedness" of any Person means, without duplication, (a)
all
obligations of such Person for borrowed money or with respect to
deposits or
advances of any kind, (b) all obligations of such Person
evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of
such Person
upon which interest charges are customarily paid, (d) all
obligations of such
Person under conditional sale or other title retention
agreements relating to
property acquired by such Person, (e) all obligations of such
Person in respect
of the deferred purchase price of property or services
(excluding current
accounts payable incurred in the ordinary course of business),
(f) all
Indebtedness of others secured by (or for which the holder of
such Indebtedness
has an existing right, contingent or otherwise, to be secured
by) any Lien on
property owned or acquired by such Person, whether or not the
Indebtedness
secured thereby has been assumed, (g) all Guarantees by such
Person, (h) all
Capital Lease Obligations of such Person, (i) all obligations,
contingent or
otherwise, of such Person as an account party in respect of
letters of credit
and letters of guaranty, (j) all obligations, contingent or
otherwise, of such
Person in respect of bankers' acceptances, (k) obligations under
any liquidated
earn-out, (l) obligations under any Disqualified Stock and (m)
all other
Off-Balance Sheet Liabilities. The Indebtedness of any Person
shall include the
Indebtedness of any other entity (including any partnership in
which such Person
is a general partner) to the extent such Person is liable
therefor as a result
of such Person's ownership interest in or other relationship
with such entity,
except to the extent the terms of such Indebtedness provide that
such Person is
not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Election Request" means a request by the Borrower to
convert
or continue a Revolving Borrowing in accordance with Section
2.07.
"Interest Expense" means, with reference to any period, total
interest
expense (including that attributable to Capital Lease
Obligations) of the
Borrower and its Subsidiaries for such period with respect to
all outstanding
Indebtedness of the Borrower and its Subsidiaries (including all
commissions,
discounts and other fees and charges owed with respect to
letters of credit and
bankers' acceptance financing and net costs under Swap
Agreements in respect of
interest rates to the extent such net costs are allocable to
such period in
accordance with GAAP), calculated on a consolidated basis for
the Borrower and
its Subsidiaries for such period in accordance with GAAP.
"Interest Payment Date" means (a) with respect to any ABR Loan
(other
than a Swingline Loan), the first Business Day of each calendar
month and the
Maturity Date, (b) with respect to any Eurodollar Loan, the last
day of the
Interest Period applicable to the Borrowing of which such Loan
is a part and, in
the case of a Eurodollar Borrowing with an Interest Period of
more than three
months' duration, each day prior to the last day of such
Interest Period that
occurs at intervals of three months' duration after the first
day of such
Interest Period and the Maturity Date, and (c) with respect to
any Swingline
Loan, the day that such Loan is required to be repaid and the
Maturity Date.
"Interest Period" means with respect to any Eurodollar
Borrowing, the
period commencing on the date of such Borrowing and ending on
the numerically
corresponding day in the calendar month that is one, two, three
or six months
thereafter, as the Borrower may elect; provided, that (i) if any
Interest Period
would end on a day other than a Business Day, such Interest
Period shall be
extended to the next succeeding Business Day unless, in the case
of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in
the next
calendar month, in which case such Interest Period shall end on
the next
preceding Business Day and (ii) any Interest Period pertaining
to a Eurodollar
16
<PAGE>
Borrowing that commences on the last Business Day of a calendar
month (or on a
day for which there is no numerically corresponding day in the
last calendar
month of such Interest Period) shall end on the last Business
Day of the last
calendar month of such Interest Period. For purposes hereof, the
date of a
Borrowing initially shall be the date on which such Borrowing is
made and, in
the case of a Revolving Borrowing, thereafter shall be the
effective date of the
most recent conversion or continuation of such Borrowing.
"Inventory" has the meaning assigned to such term in the
Security
Agreement.
"Investment" of any Person means the acquisition by such Person
of any
Equity Interests, evidences of indebtedness or other securities
(including any
option, warrant or other right to acquire any of the foregoing)
of, or any loan
or advance to, or Guarantee of any obligations of, or any other
investment or
acquisition of any other interest in, any other Person, which in
all cases is
not an Acquisition.
"Issuing Bank" means Chase, in its capacity as the issuer of
Letters
of Credit hereunder, and its successors in such capacity as
provided in Section
2.06(i). The Issuing Bank may, in its discretion, arrange for
one or more
Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case
the term "Issuing Bank" shall include any such Affiliate with
respect to Letters
of Credit issued by such Affiliate.
"Joinder Agreement" has the meaning assigned to such term in
Section
5.13.
"LC Collateral Account" has the meaning assigned to such term
in
Section 2.06(j).
"LC Disbursement" means a payment made by the Issuing Bank
pursuant to
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn
amount of all outstanding Letters of Credit at such time plus
(b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed
by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at
any time shall be
its Applicable Percentage of the total LC Exposure at such
time.
"Lenders" means the Persons listed on the Commitment Schedule
and any
other Person that shall have become a party hereto pursuant to
an Assignment and
Assumption, other than any such Person that ceases to be a party
hereto pursuant
to an Assignment and Assumption. Unless the context otherwise
requires, the term
"Lenders" includes the Swingline Lender.
"Letter of Credit" means any letter of credit issued pursuant to
this
Agreement.
"Level 1 Liquidity" means any time that Liquidity is equal to
or
greater than $50,000,000 and no Loans (excluding Swingline Loans
in an aggregate
outstanding principal amount not in excess of $5,000,000) are
outstanding.
"Level 2 Liquidity" means any time that Liquidity is equal to
or
greater than $25,000,000 but is not equal to or greater than
$50,000,000.
"Level 3 Liquidity" means any time that Liquidity is less
than
$25,000,000.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for
any
Interest Period, the rate appearing on Reuters Screen Page
LIBOR01 (or on any
successor or substitute page of Reuters,
17
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or any successor to or substitute for Reuters, providing rate
quotations
comparable to those currently provided on such page of Reuters,
as determined by
the Administrative Agent from time to time for purposes of
providing quotations
of interest rates applicable to U.S. Dollar deposits in the
London interbank
market) at approximately 11:00 a.m., London time, two Business
Days prior to the
commencement of such Interest Period, as the rate for U.S.
Dollar deposits with
a maturity comparable to such Interest Period. In the event that
such rate is
not available at such time for any reason, then the "LIBO Rate"
with respect to
such Eurodollar Borrowing for such Interest Period shall be the
rate (rounded
upwards, if necessary, to the nearest 1/16 of 1%) at which U.S.
Dollar deposits
of $5,000,000 and for a maturity comparable to such Interest
Period are offered
by the principal London office of the Administrative Agent in
immediately
available funds in the London interbank market at approximately
11:00 a.m.,
London time, two Business Days prior to the commencement of such
Interest
Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed
of
trust, lien, pledge, hypothecation, encumbrance, charge or
security interest in,
on or of such asset, (b) the interest of a vendor or a lessor
under any
conditional sale agreement, capital lease or title retention
agreement (or any
financing lease having substantially the same economic effect as
any of the
foregoing) relating to such asset and (c) in the case of
securities, any
purchase option, call or similar right of a third party with
respect to such
securities.
"Liquidity" means, at any time, the sum of the amount of
Availability
at such time, plus 100% of the unrestricted cash of the Loan
Parties at such
time on deposit with the Administrative Agent or its Affiliates
in the U.S. or
Canada, plus a percentage, reasonably determined by the
Administrative Agent but
in any event not less than 75%, of the Permitted Investments of
the Loan Parties
at such time on deposit with the Administrative Agent or its
Affiliates in the
U.S. or Canada.
"Loan Documents" means this Agreement, any promissory notes
issued
pursuant to the Agreement, any Letter of Credit applications,
the Collateral
Documents, the Loan Guaranty and all other agreements,
instruments, documents
and certificates identified in Section 4.01 executed and
delivered to, or in
favor of, the Administrative Agent or any Lenders and including
all other
pledges, powers of attorney, consents, assignments, contracts,
notices, letter
of credit agreements and all other written matter whether
heretofore, now or
hereafter executed by or on behalf of any Loan Party, or any
employee of any
Loan Party, and delivered to the Administrative Agent or any
Lender in
connection with the Agreement or the transactions contemplated
thereby. Any
reference in the Agreement or any other Loan Document to a Loan
Document shall
include all appendices, exhibits or schedules thereto, and all
amendments,
restatements, supplements or other modifications thereto, and
shall refer to the
Agreement or such Loan Document as the same may be in effect at
any and all
times such reference becomes operative.
"Loan Guarantor" means each present and future Domestic
Subsidiary and
Canadian Subsidiary of the Borrower and their successors and
assigns, and any
other Person executing a Guaranty at any time; provided that (i)
Hayton Property
Company, LLC, a Wisconsin limited liability company, shall not
be required to be
a Guarantor so long as it has no assets other than the existing
real estate in
Wisconsin owned as of the date hereof as described by the
Borrower and has no
business or material net worth, and (ii) each of The Lauson
Company, a Wisconsin
corporation, Power Products Company, Inc., a Wisconsin
corporation, and
Providence Controls Company, a Rhode Island corporation, shall
not be required
to be a Guarantor so long as the aggregate fair market value of
all of their
assets does not exceed $250,000.
"Loan Guaranty" means Article X of this Agreement and each
separate
Guarantee, in form and substance satisfactory to the
Administrative Agent,
delivered by each Loan Guarantor that is a Foreign Subsidiary
(which Guarantee
shall be governed by the laws of the country in which such
Foreign Subsidiary is
located), as it may be amended or modified and in effect from
time to time.
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<PAGE>
"Loan Parties" means the Borrower, each Loan Guarantor and any
other
Person who becomes a party to this Agreement pursuant to a
Joinder Agreement and
their successors and assigns.
"Loans" means the loans and advances made by the Lenders
pursuant to
this Agreement, including Swingline Loans, Overadvances and
Protective Advances.
"Material Adverse Effect" means a material adverse effect on (a)
the
business, assets, operations, prospects or condition, financial
or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the
ability of any Loan
Party to perform any of its obligations under the Loan Documents
to which it is
a party, (c) the Collateral, or the Administrative Agent's Liens
(on behalf of
itself and the Lenders) on the Collateral or the priority of
such Liens, or (d)
the rights of or benefits available to the Administrative Agent,
the Issuing
Bank or the Lenders thereunder.
"Material Foreign Subsidiary" means any Foreign Subsidiary
that,
together with its Subsidiaries, satisfies one of the following
conditions: (i)
the portion of consolidated total assets of the Borrower and its
Subsidiaries
attributable to such Foreign Subsidiary is at least 5% of the
consolidated total
assets of the Borrower and its Subsidiaries at such time or (ii)
the portion of
EBITDA attributable to such Foreign Subsidiary (x) is at least
$1,000,000 and
(y) constitutes at least 5% of EBITDA for the applicable period,
in each case
above, as would be shown in the financial statements for the
most recent four
fiscal quarters ending prior to the fiscal quarter in which such
determination
is made.
"Material Indebtedness" means Indebtedness (other than the Loans
and
Letters of Credit), or obligations in respect of one or more
Swap Agreements, of
any one or more of the Borrower and its Subsidiaries in an
aggregate principal
amount exceeding $1,000,000. For purposes of determining
Material Indebtedness,
the "obligations" of the Borrower or any Subsidiary in respect
of any Swap
Agreement at any time shall be the maximum aggregate amount
(giving effect to
any netting agreements) that the Borrower or such Subsidiary
would be required
to pay if such Swap Agreement were terminated at such time.
"Maturity Date" means the date five years after the date of
this
Agreement or any earlier date on which the Commitments are
reduced to zero or
otherwise terminated pursuant to the terms hereof.
"Maximum Liability" has the meaning assigned to such term in
Section
10.10.
"Moody's" means Moody's Investors Service, Inc.
"Mortgages" means any mortgage, deed of trust or other agreement
which
conveys or evidences a Lien in favor of the Administrative
Agent, for the
benefit of the Secured Creditors, on real property of a Loan
Party, including
any amendment, modification or supplement thereto.
"Multiemployer Plan" means a multiemployer plan as defined in
Section
4001(a)(3) of ERISA.
"Net Income" means, for any period, the consolidated net income
(or
loss) from continuing operations of the Borrower and its
Subsidiaries as shown
on the Borrower's financial statements, determined on a
consolidated basis in
accordance with GAAP; provided that there shall be excluded (a)
the income (or
deficit) of any Person accrued prior to the date it becomes a
Subsidiary or is
merged into or consolidated with the Borrower or any of its
Subsidiaries, (b)
the income (or deficit) of any Person (other than a Subsidiary)
in which the
Borrower or any of its Subsidiaries has an ownership interest,
except to the
extent that any such income is actually received by the Borrower
or such
Subsidiary
19
<PAGE>
in the form of dividends or similar distributions and (c) the
undistributed
earnings of any Subsidiary to the extent that the declaration or
payment of
dividends or similar distributions by such Subsidiary is not at
the time
permitted by the terms of any contractual obligation (other than
under any Loan
Document) or Requirement of Law applicable to such
Subsidiary.
"Net Orderly Liquidation Value" means, with respect to Inventory
or
Equipment of any Person, the orderly liquidation value thereof
as determined in
a manner acceptable to the Administrative Agent by an appraiser
acceptable to
the Administrative Agent, net of all costs of liquidation
thereof.
"Net Proceeds" means, with respect to any event, (a) the cash
proceeds
received in respect of such event including (i) any cash
received in respect of
any non-cash proceeds (including any cash payments received by
way of deferred
payment of principal pursuant to a note or installment
receivable or purchase
price adjustment receivable or otherwise, but excluding any
interest payments),
but only as and when received, (ii) in the case of a casualty,
insurance
proceeds and (iii) in the case of a condemnation or similar
event, condemnation
awards and similar payments, net of (b) the sum of (i) all
reasonable fees and
out-of-pocket expenses paid to third parties (other than
Affiliates) in
connection with such event, (ii) in the case of a sale, transfer
or other
disposition of an asset (including pursuant to a sale and
leaseback transaction
or a casualty or a condemnation or similar proceeding), the
amount of all
payments required to be made as a result of such event to repay
Indebtedness
(other than Loans) secured by such asset or otherwise subject to
mandatory
prepayment as a result of such event and (iii) the amount of all
taxes paid (or
reasonably estimated to be payable) and the amount of any
reserves established
to fund contingent liabilities reasonably estimated to be
payable, in each case
during the year that such event occurred or the next succeeding
year and that
are directly attributable to such event (as determined
reasonably and in good
faith by a Financial Officer).
"Non-Consenting Lender" has the meaning assigned to such term
in
Section 9.02(d).
"Non-Paying Guarantor" has the meaning assigned to such term
in
Section 10.11.
"Obligated Party" has the meaning assigned to such term in
Section
10.02.
"Obligations" means all unpaid principal of and accrued and
unpaid
interest on the Loans, all LC Exposure, all accrued and unpaid
fees and all
expenses, reimbursements, indemnities and other obligations of
the Loan Parties
to the Lenders or to any Lender, the Administrative Agent, the
Issuing Bank or
any indemnified party arising under the Loan Documents.
"Off-Balance Sheet Liability" of a Person means (a) any
repurchase
obligation or liability of such Person with respect to accounts
or notes
receivable sold by such Person, (b) any indebtedness, liability
or obligation
under any so-called "synthetic lease" transaction entered into
by such Person,
or (c) any indebtedness, liability or obligation arising with
respect to any
other transaction which is the functional equivalent of or takes
the place of
borrowing but which does not constitute a liability on the
balance sheets of
such Person, other than (i) operating leases and (ii) the sale
of Accounts by
Foreign Subsidiaries to the extent there is no recourse to, or
other liability
of, any Loan Party in connection therewith.
"Other Taxes" means any and all present or future stamp or
documentary
taxes or any other excise or property taxes, charges or similar
levies arising
from any payment made hereunder or from the execution, delivery
or enforcement
of, or otherwise with respect to, this Agreement.
"Overadvance" has the meaning assigned to such term in
Section
2.05(c).
20
<PAGE>
"Participant" has the meaning set forth in Section 9.04.
"Paying Guarantor" has the meaning assigned to such term in
Section
10.11.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and
defined in ERISA and any successor entity performing similar
functions.
"Permitted Acquisition" means an Acquisition by any Loan Party
in a
transaction that satisfies each of the following
requirements:
(a) such Acquisition is not a hostile or contested
acquisition;
(b) the business acquired in connection with such Acquisition
is
not engaged, directly or indirectly, in any line of business
other than the
businesses in which the Loan Parties are engaged on the
Effective Date and
any business activities that are substantially similar, related,
or
incidental thereto;
(c) both before and after giving effect to such Acquisition
and
the Loans (if any) requested to be made in connection therewith,
each of
the representations and warranties in the Loan Documents is true
and
correct and no Default or Event of Default exists or would be
caused
thereby;
(d) as soon as available, but not less than thirty days prior
to
such Acquisition, the Borrower have provided the Lenders (i)
notice of such
Acquisition and (ii) a copy of all business and financial
information
reasonably requested by the Agent including pro forma financial
statements,
statements of cash flow, and Availability projections;
(e) if the Accounts and Inventory acquired in connection
with
such Acquisition are proposed to be included in the
determination of the
Borrowing Base, the Agent shall have conducted an audit and
field
examination of such Accounts and Inventory to its
satisfaction;
(f) the total consideration (whether in cash, by the
incurrence
or assumption of any Indebtedness, by any deferred payments or
by the
payment or transfer of any other consideration) paid or payable
(i) in
connection with any single Acquisition shall not exceed (x)
$100,000,000 if
Level 1 Liquidity exists, (y) $50,000,000 if Level 2 Liquidity
exists or
(z) $10,000,000 if Level 3 Liquidity, in each case after giving
effect to
such Acquisition, and (ii) for all Acquisitions made during the
term of
this Agreement shall not exceed (x) $150,000,000 if Level 1
Liquidity
exists, (y) $100,000,000 if Level 2 Liquidity exists or (z)
$40,000,0000 if
Level 3 Liquidity exists, in each case after giving effect to
such
Acquisition;
(g) if such Acquisition is an acquisition of Equity
Interests,
such Acquisition will not result in any violation of Regulation
U;
(h) no Loan Party shall, as a result of or in connection with
any
such Acquisition, assume or incur any direct or contingent
liabilities
(whether relating to environmental, tax, litigation, or other
matters) that
could reasonably be expected to have a Material Adverse
Effect;
(i) the Fixed Charge Coverage Ratio, determined for the then
most
recently ended period of four consecutive fiscal quarters on a
pro forma
basis acceptable to the
21
<PAGE>
Administration Agent and assuming such Acquisition was made
during such
four consecutive fiscal quarters and after giving effect to the
completion
of such Acquisition on a pro forma basis, was not less than 1.1
to 1.0; and
(j) the Borrower shall certify (and provide the Agent with a
pro
forma calculation in form and substance reasonably satisfactory
to the
Agent) to the Agent and the Lenders that, after giving effect to
the
completion of such Acquisition, Liquidity will be Level 2
Liquidity or
higher on a pro forma basis which includes all consideration
given in
connection with such Acquisition.
"Permitted Discretion" means a determination made in good faith
and in
the exercise of reasonable (from the perspective of a secured
asset-based
lender) business judgment.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's
and other like Liens imposed by law, arising in the ordinary
course of
business and securing obligations that are not overdue by more
than 30 days
or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business
in
compliance with workers' compensation, unemployment insurance
and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts,
leases, statutory obligations, surety and appeal bonds,
performance bonds
and other obligations of a like nature, in each case in the
ordinary course
of business;
(e) judgment liens in respect of judgments that do not
constitute an
Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and
similar
encumbrances on real property imposed by law or arising in the
ordinary
course of business that do not secure any monetary obligations
and do not
materially detract from the value of the affected property or
interfere
with the ordinary conduct of business of the Borrower or any
Subsidiary;
provided that the term "Permitted Encumbrances" shall not
include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of
and
interest on which are unconditionally guaranteed by, the United
States of
America (or by any agency thereof to the extent such obligations
are backed
by the full faith and credit of the United States of America),
in each case
maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the
date of acquisition thereof and having, at such date of
acquisition, the
highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's acceptances
and
time deposits maturing
22
<PAGE>
within 180 days from the date of acquisition thereof issued or
guaranteed
by or placed with, and money market deposit accounts issued or
offered by,
any domestic office of any commercial bank organized under the
laws of the
United States of America or any State thereof which has a
combined capital
and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a term of
not more
than 30 days for securities described in clause (a) above and
entered into
with a financial institution satisfying the criteria described
in clause
(c) above;
(e) money market funds that (i) comply with the criteria set
forth in
SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are
rated AAA
by S&P and Aaa by Moody's and (iii) have portfolio assets of
at least
$5,000,000,000; and
(f) investments listed on Schedule 1.01.
"Person" means any natural person, corporation, limited
liability
company, trust, joint venture, association, company,
partnership, Governmental
Authority or other entity.
"PP&E Component" means, at the time of any determination, an
amount
equal to the least of (i) 50% of the fair market value of any
Loan Party's
Eligible Real Property as determined by an appraisal
satisfactory to the
Administrative Agent, plus 80% of the Net Orderly Liquidation
Value of any Loan
Party's Eligible Equipment as determined by an appraisal
satisfactory to the
Administrative Agent prior to the Effective Date, less reserves
established by
the Agent in its Permitted Discretion, (ii) 25% of the amount of
the Aggregate
Commitment or (iii) $10,000,000; provided that, (a) the Eligible
Equipment
included in the PP&E Component shall reduce five percent
(5%) per quarter,
commencing on the date three months after the first anniversary
of the date
hereof and (b) the Eligible Real Property included in the
PP&E Component shall
reduce five percent (5%) per quarter, commencing on the date
three months after
the first anniversary of the date such Eligible Real Property
was included in
the PP&E Component.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which
the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would
under Section
4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of
ERISA.
"Prime Rate" means the rate of interest per annum publicly
announced
from time to time by Chase as its prime rate; each change in the
Prime Rate
shall be effective from and including the date such change is
publicly announced
as being effective.
"Projections" has the meaning assigned to such term in
Section
5.01(e).
"Protective Advance" has the meaning assigned to such term in
Section
2.04.
"Register" has the meaning set forth in Section 9.04.
"Related Parties" means, with respect to any specified Person,
such
Person's Affiliates and the respective directors, officers,
employees, agents
and advisors of such Person and such Person's Affiliates.
"Rentals" means, with reference to any period, the aggregate
fixed
amounts payable by the Borrower and its Subsidiaries under any
operating leases
with an original term of more than one year, calculated on a
consolidated basis
for the Borrower and its Subsidiaries for such period in
accordance
23
<PAGE>
with GAAP.
"Report" means reports prepared by the Administrative Agent or
another
Person showing the results of appraisals, field examinations or
audits
pertaining to the Borrower's assets from information furnished
by or on behalf
of the Borrower, after the Administrative Agent has exercised
its rights of
inspection pursuant to this Agreement, which Reports may be
distributed to the
Lenders by the Administrative Agent.
"Required Lenders" means, at any time, Lenders having Credit
Exposure
and unused Commitments representing more than 50% of the sum of
the Aggregate
Credit Exposure and unused Aggregate Commitment at such time;
provided that, as
long as there are only two Lenders, Required Lenders shall mean
both Lenders.
"Requirement of Law" means, as to any Person, the Certificate
of
Incorporation and By-Laws or other organizational or governing
documents of such
Person, and any law, treaty, rule or regulation or determination
of an
arbitrator or a court or other Governmental Authority, in each
case applicable
to or binding upon such Person or any of its property or to
which such Person or
any of its property is subject.
"Reserves" means any and all reserves which the Administrative
Agent
deems necessary, in its Permitted Discretion, to maintain
(including, without
limitation, an availability reserve, reserves for accrued and
unpaid interest on
the Secured Obligations, Banking Services Reserves, reserves for
rent at
locations leased by any Loan Party and for consignee's,
warehousemen's and
bailee's charges, reserves for dilution of Accounts, reserves
for Inventory
shrinkage, reserves for customs charges and shipping charges
related to any
Inventory in transit, reserves for Swap Obligations, reserves
for contingent
liabilities of any Loan Party, reserves for uninsured losses of
any Loan Party,
reserves for uninsured, underinsured, un-indemnified or
under-indemnified
liabilities or potential liabilities with respect to any
litigation and reserves
for taxes, fees, assessments, and other governmental charges)
with respect to
the Collateral or any Loan Party.
"Restricted Payment" means any dividend or other distribution
(whether
in cash, securities or other property) with respect to any
Equity Interests in
the Borrower or any Subsidiary, or any payment (whether in cash,
securities or
other property), including any sinking fund or similar deposit,
on account of
the purchase, redemption, retirement, acquisition, cancellation
or termination
of any such Equity Interests in the Borrower or any option,
warrant or other
right to acquire any such Equity Interests in the Borrower.
"Restructuring Entities" means Tecumseh Italy, TMT and TPIL.
"Revolving Loan" means a Loan made pursuant to Section
2.01(a).
"S&P" means Standard & Poor's Ratings Services, a
division of The
McGraw Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission or any
Governmental
Authority succeeding to any or all of the functions of said
Commission.
"Secured Obligations" means all Obligations, together with all
(i)
Banking Services Obligations and (ii) Swap Obligations of any
Loan Party or its
Subsidiaries owing to one or more Lenders or their respective
Affiliates;
provided that at or prior to the time that any transaction
relating to such Swap
Obligation is executed, the Lender or its Affiliate party
thereto (other than
Chase) shall have
24
<PAGE>
delivered written notice to the Administrative Agent that such a
transaction has
been entered into and that it constitutes a Secured Obligation
entitled to the
benefits of the Collateral Documents.
"Security Agreement" means that certain Pledge and Security
Agreement,
dated as of the date hereof, between the Loan Parties and the
Administrative
Agent, for the benefit of the Secured Creditors, and any other
pledge or
security agreement entered into, after the date of this
Agreement by any other
Loan Party (as required by this Agreement or any other Loan
Document), or any
other Person, as the same may be amended, restated or otherwise
modified from
time to time.
"Secured Creditors" means the Administrative Agent, the Lenders
and
their respective Affiliates to which Secured Obligations are
owed by any of the
Loan Parties or their Subsidiaries.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal),
the numerator of which is the number one and the denominator of
which is the
number one minus the aggregate of the maximum reserve
percentages (including any
marginal, special, emergency or supplemental reserves) expressed
as a decimal
established by the Board to which the Administrative Agent is
subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding
(currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board).
Such reserve
percentages shall include those imposed pursuant to such
Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be
subject to such reserve requirements without benefit of or
credit for proration,
exemptions or offsets that may be available from time to time to
any Lender
under such Regulation D or any comparable regulation. The
Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date
of any change in
any reserve percentage.
"Subordinated Indebtedness" of a Person means any Indebtedness
of such
Person the payment of which is subordinated to payment of the
Secured
Obligations to the written satisfaction of the Administrative
Agent.
"subsidiary" means, with respect to any Person (the "parent") at
any
date, any corporation, limited liability company, partnership,
association or
other entity the accounts of which would be consolidated with
those of the
parent in the parent's consolidated financial statements if such
financial
statements were prepared in accordance with GAAP as of such
date, as well as any
other corporation, limited liability company, partnership,
association or other
entity (a) of which securities or other ownership interests
representing more
than 50% of the equity or more than 50% of the ordinary voting
power or, in the
case of a partnership, more than 50% of the general partnership
interests are,
as of such date, owned, controlled or held or (b) that is, as of
such date,
otherwise Controlled by the parent or one or more subsidiaries
of the parent.
"Subsidiary" means any direct or indirect subsidiary of the
Borrower
or a Loan Party, as applicable, but excluding the Restructuring
Entities.
"Substantial Portion" means, with respect to the assets of
the
Borrower and its Subsidiaries, assets which (a) represents more
than 10% of the
consolidated assets of the Borrower and its Subsidiaries as
would be shown in
the consolidated financial statements of the Borrower and its
Subsidiaries as at
the beginning of the twelve-month period ending with the month
in which such
determination is made, (b) is responsible for more than 10% of
the consolidated
net sales or of the consolidated net income of the Borrower and
its Subsidiaries
as reflected in the financial statements referred to in clause
(a) above, (c)
represents more than 25% of the consolidated assets of the
Borrower and its
Subsidiaries as would be shown in the consolidated financial
statements of the
Borrower and its Subsidiaries as of the Effective Date or (d) is
responsible for
more than 25% of the consolidated net sales or of the
consolidated net income of
the Borrower and its Subsidiaries as reflected in the financial
statements
referred to in clause (c) above.
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"Supermajority Lenders" means, at any time, Lenders having
Credit
Exposure and unused Commitments representing more than 66% of
the sum of the
Aggregate Credit Exposure and unused Aggregate Commitment at
such time.
"Swap Agreement" means any agreement with respect to any
swap,
forward, future or derivative transaction or option or similar
agreement
involving, or settled by reference to, one or more rates,
currencies,
commodities, equity or debt instruments or securities, or
economic, financial or
pricing indices or measures of economic, financial or pricing
risk or value or
any similar transaction or any combination of these
transactions; provided that
no phantom stock or similar plan providing for payments only on
account of
services provided by current or former directors, officers,
employees or
consultants of the Borrower or the Subsidiaries shall be a Swap
Agreement.
"Swap Obligations" of a Person means any and all obligations of
such
Person, whether absolute or contingent and howsoever and
whensoever created,
arising, evidenced or acquired (including all renewals,
extensions and
modifications thereof and substitutions therefor), under (a) any
and all Swap
Agreements, and (b) any and all cancellations, buy backs,
reversals,
terminations or assignments of any Swap Agreement
transaction.
"Swingline Lender" means Chase, in its capacity as lender of
Swingline
Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.05.
"Taxes" means any and all present or future taxes, levies,
imposts,
duties, deductions, charges or withholdings imposed by any
Governmental
Authority.
"Tecumseh Italy" means, collectively, Tecumseh Europa S.p.A and
its
Subsidiaries.
"TMT" means TMT-Motoco do Brasil Ltda.
"TPIL" means Tecumseh Power International Limited, a company
incorporated in the United Kingdom.
"Transactions" means the execution, delivery and performance by
the
Borrower of this Agreement, the borrowing of Loans and other
credit extensions,
the use of the proceeds thereof and the issuance of Letters of
Credit hereunder.
"Type", when used in reference to any Loan or Borrowing, refers
to
whether the rate of interest on such Loan, or on the Loans
comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate,
the Alternate
Base Rate.
"UCC" means the Uniform Commercial Code as in effect from time
to time
in the State of Michigan or any other state the laws of which
are required to be
applied in connection with the issue of perfection of security
interests.
"Unliquidated Obligations" means, at any time, any Secured
Obligations
(or portion thereof) that are contingent in nature or
unliquidated at such time,
including any Secured Obligation that is: (i) an obligation to
reimburse a bank
for drawings not yet made under a letter of credit issued by it;
(ii) any other
obligation (including any guarantee) that is contingent in
nature at such time;
or (iii) an obligation to provide collateral to secure any of
the foregoing
types of obligations.
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"U.S. Dollars" and "$" means dollars in lawful currency of the
United
States of America.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a
result of a complete or partial withdrawal from such
Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of
ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of
this Agreement, Loans may be classified and referred to by Class
(e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by
Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be
classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type
(e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a
"Eurodollar Revolving
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein
shall
apply equally to the singular and plural forms of the terms
defined. Whenever
the context may require, any pronoun shall include the
corresponding masculine,
feminine and neuter forms. The words "include", "includes" and
"including" shall
be deemed to be followed by the phrase "without limitation". The
word "will"
shall be construed to have the same meaning and effect as the
word "shall".
Unless the context requires otherwise (a) any definition of or
reference to any
agreement, instrument or other document herein shall be
construed as referring
to such agreement, instrument or other document as from time to
time amended,
supplemented or otherwise modified (subject to any restrictions
on such
amendments, supplements or modifications set forth herein), (b)
any reference
herein to any Person shall be construed to include such Person's
successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and
words of similar
import, shall be construed to refer to this Agreement in its
entirety and not to
any particular provision hereof, (d) all references herein to
Articles,
Sections, Exhibits and Schedules shall be construed to refer to
Articles and
Sections of, and Exhibits and Schedules to, this Agreement and
(e) the words
"asset" and "property" shall be construed to have the same
meaning and effect
and to refer to any and all tangible and intangible assets and
properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
expressly
provided herein, all terms of an accounting or financial nature
shall be
construed in accordance with GAAP, as in effect from time to
time; provided
that, if the Borrower notifies the Administrative Agent that the
Borrower
requests an amendment to any provision hereof to eliminate the
effect of any
change occurring after the date hereof in GAAP or in the
application thereof on
the operation of such provision (or if the Administrative Agent
notifies the
Borrower that the Required Lenders request an amendment to any
provision hereof
for such purpose), regardless of whether any such notice is
given before or
after such change in GAAP or in the application thereof, then
such provision
shall be interpreted on the basis of GAAP as in effect and
applied immediately
before such change shall have become effective until such notice
shall have been
withdrawn or such provision amended in accordance herewith. In
the event that
historical accounting practices, systems or reserves relating to
the components
of the Borrowing Base are modified in a manner that is adverse
to the Lenders in
any material respect, the Borrower will agree to maintain such
additional
reserves (for purposes of computing the Borrowing Base) in
respect to the
components of the Borrowing Base and make such other adjustments
(which may
include maintaining additional reserves, modifying the advance
rates or
modifying the eligibility criteria for the components of the
Borrowing Base).
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions
set
forth herein, each Lender agrees to make Revolving Loans to the
Borrower from
time to time during the Availability
27
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Period in an aggregate principal amount that will not result in
(a) such
Lender's Credit Exposure exceeding such Lender's Commitment or
(b) the Aggregate
Credit Exposure exceeding the lesser of (i) the Aggregate
Commitment or (ii) the
Borrowing Base, subject to the Administrative Agent's authority,
in its sole
discretion, to make Protective Advances and Overadvances
pursuant to the terms
of Section 2.04 and 2.05. Within the foregoing limits and
subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay
and reborrow
Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than
a
Swingline Loan) shall be made as part of a Borrowing consisting
of Loans of the
same Class and Type made by the Lenders ratably in accordance
with their
respective Commitments of the applicable Class. Any Protective
Advance, any
Overadvance and any Swingline Loan shall be made in accordance
with the
procedures set forth in Section 2.04 and 2.05.
(b) Subject to Section 2.14, each Revolving Borrowing shall
be
comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request
in accordance herewith, provided that all Borrowings made on the
Effective Date
must be made as ABR Borrowings but may be converted into
Eurodollar Borrowings
in accordance with Section 2.08. Each Swingline Loan shall be an
ABR Loan. Each
Lender at its option may make any Eurodollar Loan by causing any
domestic or
foreign branch or Affiliate of such Lender to make such Loan;
provided that any
exercise of such option shall not affect the obligation of the
Borrower to repay
such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate
amount that is an
integral multiple of $1,000,000 and not less than $1,000,000. At
the time that
each ABR Revolving Borrowing is made, such Borrowing shall be in
an aggregate
amount that is an integral multiple of $500,000 and not less
than $500,000;
provided that an ABR Revolving Borrowing may be in an aggregate
amount that is
equal to the entire unused balance of the Aggregate Commitment
or that is
required to finance the reimbursement of an LC Disbursement as
contemplated by
Section 2.06(e). Each Swingline Loan shall be in an amount
acceptable to the
Administrative Agent, provided that any Swingline Loan in a
minimum amount of
$100,000 and increments thereof shall be deemed acceptable to
the Administrative
Agent. Borrowings of more than one Type and Class may be
outstanding at the same
time; provided that there shall not at any time be more than a
total of five
Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement,
the
Borrower shall not be entitled to request, or to elect to
convert or continue,
any Borrowing if the Interest Period requested with respect
thereto would end
after the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. To request
a
Revolving Borrowing, the Borrower shall notify the
Administrative Agent of such
request either in writing (delivered by hand or facsimile) in a
form approved by
the Administrative Agent and signed by the Borrower or by
telephone (a) in the
case of a Eurodollar Borrowing, not later than 10:00 a.m.,
Chicago time, three
Business Days before the date of the proposed Borrowing or (b)
in the case of an
ABR Borrowing, not later than noon, Chicago time, on the date of
the proposed
Borrowing; provided that any such notice of an ABR Revolving
Borrowing to
finance the reimbursement of an LC Disbursement as contemplated
by Section
2.06(e) may be given not later than 9:00 a.m., Chicago time, on
the date of the
proposed Borrowing. Each such telephonic Borrowing Request shall
be irrevocable
and shall be confirmed promptly by hand delivery or facsimile to
the
Administrative Agent of a written Borrowing Request in a form
approved by the
Administrative Agent and signed by the Borrower. Each such
telephonic and
written Borrowing Request shall specify the following
information in compliance
with Section 2.01:
28
<PAGE>
(i) the aggregate amount of the requested Borrowing and a
breakdown of
the separate wires comprising such Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar
Borrowing; and
(iv) in the case of a Eurodollar Borrowing, the initial
Interest
Period to be applicable thereto, which shall be a period
contemplated
by the definition of the term "Interest Period."
If no election as to the Type of Revolving Borrowing is
specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no
Interest Period
is specified with respect to any requested Eurodollar Revolving
Borrowing, then
the Borrower shall be deemed to have selected an Interest Period
of one month's
duration. Promptly following receipt of a Borrowing Request in
accordance with
this Section, the Administrative Agent shall advise each Lender
of the details
thereof and of the amount of such Lender's Loan to be made as
part of the
requested Borrowing.
SECTION 2.04. Protective Advances. (a) Subject to the
limitations set
forth below, the Administrative Agent is authorized by the
Borrower and the
Lenders, from time to time in the Administrative Agent's sole
discretion (but
shall have absolutely no obligation to), to make Loans to the
Borrower, on
behalf of all Lenders, which the Administrative Agent, in its
Permitted
Discretion, deems necessary or desirable (i) to preserve or
protect the
Collateral, or any portion thereof, (ii) to enhance the
likelihood of, or
maximize the amount of, repayment of the Loans and other
Obligations, or (iii)
to pay any other amount chargeable to or required to be paid by
the Borrower
pursuant to the terms of this Agreement, including payments of
reimbursable
expenses (including costs, fees, and expenses as described in
Section 9.03) and
other sums payable under the Loan Documents (any of such Loans
are herein
referred to as "Protective Advances"); provided that, the
aggregate amount of
Protective Advances outstanding at any time shall not at any
time exceed
$5,000,000; provided further that, the aggregate amount of
outstanding
Protective Advances plus the Aggregate Credit Exposure shall not
exceed the
aggregate unused Commitments. Protective Advances may be made
even if the
conditions precedent set forth in Section 4.02 have not been
satisfied. The
Protective Advances shall be secured by the Liens in favor of
the Administrative
Agent in and to the Collateral and shall constitute Obligations
hereunder. All
Protective Advances shall be ABR Borrowings. The Administrative
Agent's
authorization to make Protective Advances may be revoked at any
time by 100% of
the Lenders. Any such revocation must be in writing and shall
become effective
prospectively upon the Administrative Agent's receipt thereof.
At any time that
there is sufficient Availability and the conditions precedent
set forth in
Section 4.02 have been satisfied, the Administrative Agent may
request the
Lenders to make a Revolving Loan to repay a Protective Advance.
At any other
time the Administrative Agent may require the Lenders to fund
their risk
participations described in Section 2.04(b).
(b) Upon the making of a Protective Advance by the
Administrative
Agent (whether before or after the occurrence of a Default),
each Lender shall
be deemed, without further action by any party hereto, to have
unconditionally
and irrevocably purchased from the Administrative Agent without
recourse or
warranty, an undivided interest and participation in such
Protective Advance in
proportion to its Applicable Percentage. From and after the
date, if any, on
which any Lender is required to fund its participation in any
Protective Advance
purchased hereunder, the Administrative Agent shall promptly
distribute to such
Lender, such Lender's Applicable Percentage of all payments of
principal and
interest and all proceeds of Collateral received by the
Administrative Agent in
respect of such Protective Advance.
29
<PAGE>
SECTION 2.05. Swingline Loans and Overadvances. (a) Subject to
the
terms and conditions set forth herein, the Swingline Lender
agrees to make
Swingline Loans to the Borrower from time to time during the
Availability
Period, in an aggregate principal amount at any time outstanding
that will not
result in (i) the aggregate principal amount of outstanding
Swingline Loans
exceeding $15,000,000 or (ii) the Aggregate Credit Exposure
exceeding the lesser
of the Aggregate Commitment and the Borrowing Base; provided
that the Swingline
Lender shall not be required to make a Swingline Loan to
refinance an
outstanding Swingline Loan. Within the foregoing limits and
subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay
and reborrow
Swingline Loans. To request a Swingline Loan, the Borrower shall
notify the
Administrative Agent of such request by telephone (confirmed by
facsimile), not
later than noon, Chicago time, on the day of a proposed
Swingline Loan. Each
such notice shall be irrevocable and shall specify the requested
date (which
shall be a Business Day) and amount of the requested Swingline
Loan. The
Administrative Agent will promptly advise the Swingline Lender
of any such
notice received from the Borrower. The Swingline Lender shall
make each
Swingline Loan available to the Borrower by means of a credit to
the Funding
Account (or, in the case of a Swingline Loan made to finance the
reimbursement
of an LC Disbursement as provided in Section 2.06(e), by
remittance to the
Issuing Bank, and in the case of repayment of another Loan or
fees or expenses
as provided by Section 2.18(c), by remittance to the
Administrative Agent to be
distributed to the Lenders) by 2:00 p.m., Chicago time, on the
requested date of
such Swingline Loan. In addition, the Borrower hereby authorizes
the Swingline
Lender to, and the Swingline Lender shall, subject to the terms
and conditions
set forth herein (but without any further written notice
required), not later
than 1:00 p.m., Chicago time, on each Business Day, make
available to the
Borrower by means of a credit to the Funding Account, the
proceeds of a
Swingline Loan to the extent necessary to pay items to be drawn
on any
Controlled Disbursement Account that day (as determined based on
notice from the
Administrative Agent).
(b) The Swingline Lender may by written notice given to the
Administrative Agent not later than noon, Chicago time, on any
Business Day
require the Lenders to acquire participations on such Business
Day in all or a
portion of the Swingline Loans outstanding. Such notice shall
specify the
aggregate amount of Swingline Loans in which Lenders will
participate. Promptly
upon receipt of such notice, the Administrative Agent will give
notice thereof
to each Lender, specifying in such notice such Lender's
Applicable Percentage of
such Swingline Loan or Loans. Each Lender hereby absolutely and
unconditionally
agrees, upon receipt of notice as provided above, to pay to the
Administrative
Agent, for the account of the Swingline Lender, such Lender's
Applicable
Percentage of such Swingline Loan or Loans. Each Lender
acknowledges and agrees
that its obligation to acquire participations in Swingline Loans
pursuant to
this paragraph is absolute and unconditional and shall not be
affected by any
circumstance whatsoever, including the occurrence and
continuance of a Default
or reduction or termination of the Commitments, and that each
such payment shall
be made without any offset, abatement, withholding or reduction
whatsoever. Each
Lender shall comply with its obligation under this paragraph by
wire transfer of
immediately available funds, in the same manner as provided in
Section 2.07 with
respect to Loans made by such Lender (and Section 2.07 shall
apply, mutatis
mutandis, to the payment obligations of the Lenders), and the
Administrative
Agent shall promptly pay to the Swingline Lender the amounts so
received by it
from the Lenders. The Administrative Agent shall notify the
Borrower of any
participations in any Swingline Loan acquired pursuant to this
paragraph, and
thereafter payments in respect of such Swingline Loan shall be
made to the
Administrative Agent and not to the Swingline Lender. Any
amounts received by
the Swingline Lender from the Borrower (or other party on behalf
of the
Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender
of the proceeds of a sale of participations therein shall be
promptly remitted
to the Administrative Agent; any such amounts received by the
Administrative
Agent shall be promptly remitted by the Administrative Agent to
the Lenders that
shall have made their payments pursuant to this paragraph and to
the Swingline
Lender, as their interests may appear; provided that any such
payment so
remitted shall be repaid to the Swingline Lender or to the
Administrative Agent,
as applicable, if and to the extent such payment is
30
<PAGE>
required to be refunded to the Borrower for any reason. The
purchase of
participations in a Swingline Loan pursuant to this paragraph
shall not relieve
the Borrower of any default in the payment thereof.
(c) Any provision of this Agreement to the contrary
notwithstanding,
at the request of the Borrower, the Administrative Agent may in
its sole
discretion (but with absolutely no obligation), make Revolving
Loans to the
Borrower, on behalf of the Lenders, in amounts that exceed
Availability (any
such excess Revolving Loans are herein referred to collectively
as
"Overadvances"); provided that, no Overadvance shall result in a
Default due to
Borrower's failure to comply with Section 2.01 for so long as
such Overadvance
remains outstanding in accordance with the terms of this
paragraph, but solely
with respect to the amount of such Overadvance. In addition,
Overadvances may be
made even if the condition precedent set forth in Section
4.02(c) has not been
satisfied. All Overadvances shall constitute ABR Borrowings. The
authority of
the Administrative Agent to make Overadvances is limited to an
aggregate amount
not to exceed $5,000,000 at any time, no Overadvance may remain
outstanding for
more than thirty days and no Overadvance shall cause any
Lender's Credit
Exposure to exceed its Commitment; provided that, the Required
Lenders may at
any time revoke the Administrative Agent's authorization to make
Overadvances.
Any such revocation must be in writing and shall become
effective prospectively
upon the Administrative Agent's receipt thereof.
(d) Upon the making of an Overadvance by the Administrative
Agent,
each Lender shall be deemed, without further action by any party
hereto, to have
unconditionally and irrevocably purchased from the
Administrative Agent without
recourse or warranty, an undivided interest and participation in
such
Overadvance in proportion to its Applicable Percentage of the
Commitment. The
Administrative Agent may, at any time, require the Lenders to
fund their
participations. From and after the date, if any, on which any
Lender is required
to fund its participation in any Overadvance purchased
hereunder, the
Administrative Agent shall promptly distribute to such Lender,
such Lender's
Applicable Percentage of all payments of principal and interest
and all proceeds
of Collateral received by the Administrative Agent in respect of
such Loan.
SECTION 2.06. Letters of Credit. (a) General. Subject to the
terms and
conditions set forth herein, the Borrower may request the
issuance of Letters of
Credit for its own account, in a form reasonably acceptable to
the
Administrative Agent and the Issuing Bank, at any time and from
time to time
during the Availability Period. In the event of any
inconsistency between the
terms and conditions of this Agreement and the terms and
conditions of any form
of letter of credit application or other agreement submitted by
the Borrower to,
or entered into by the Borrower with, the Issuing Bank relating
to any Letter of
Credit, the terms and conditions of this Agreement shall
control. Upon the
effectiveness of this Agreement, each Existing Letter of Credit
shall, without
any further action by any party, be deemed to have been issued
as a Letter of
Credit hereunder on the Effective Date and shall for all
purposes hereof be
treated as a Letter of Credit under this Agreement and any cash
collateral for
such Existing Letter of Credit existing as of the Effective Date
shall be
released.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain
Conditions. To request the issuance of a Letter of Credit (or
the amendment,
renewal or extension of an outstanding Letter of Credit), the
Borrower shall
hand deliver or facsimile (or transmit by electronic
communication, if
arrangements for doing so have been approved by the Issuing
Bank) to the Issuing
Bank and the Administrative Agent (prior to 9:00 am, Chicago
time, at least
three Business Days prior to the requested date of issuance,
amendment, renewal
or extension) a notice requesting the issuance of a Letter of
Credit, or
identifying the Letter of Credit to be amended, renewed or
extended, and
specifying the date of issuance, amendment, renewal or extension
(which shall be
a Business Day), the date on which such Letter of Credit is to
expire (which
shall comply with paragraph (c) of this Section), the amount of
such Letter of
Credit, the name and address of the beneficiary thereof and such
other
information as shall be necessary to prepare, amend, renew or
extend such Letter
of Credit. If requested by the Issuing Bank, the
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<PAGE>
Borrower also shall submit a letter of credit application on the
Issuing Bank's
standard form in connection with any request for a Letter of
Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if
(and upon issuance,
amendment, renewal or extension of each Letter of Credit the
Borrower shall be
deemed to represent and warrant that), after giving effect to
such issuance,
amendment, renewal or extension (i) the LC Exposure shall not
exceed $10,000,000
and (ii) the Aggregate Credit Exposure shall not exceed the
lesser of the
Aggregate Commitment and the Borrowing Base.
(c) Expiration Date. Each Letter of Credit shall expire at or
prior to
the close of business on the earlier of (i) the date one year
after the date of
the issuance of such Letter of Credit (or, in the case of any
renewal or
extension thereof, one year after such renewal or extension) and
(ii) the date
that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or
an
amendment to a Letter of Credit increasing the amount thereof)
and without any
further action on the part of the Issuing Bank or the Lenders,
the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires
from the Issuing
Bank, a participation in such Letter of Credit equal to such
Lender's Applicable
Percentage of the aggregate amount available to be drawn under
such Letter of
Credit. In consideration and in furtherance of the foregoing,
each Lender hereby
absolutely and unconditionally agrees to pay to the
Administrative Agent, for
the account of the Issuing Bank, such Lender's Applicable
Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the
Borrower on the
date due as provided in paragraph (e) of this Section, or of any
reimbursement
payment required to be refunded to the Borrower for any reason.
Each Lender
acknowledges and agrees that its obligation to acquire
participations pursuant
to this paragraph in respect of Letters of Credit is absolute
and unconditional
and shall not be affected by any circumstance whatsoever,
including any
amendment, renewal or extension of any Letter of Credit or the
occurrence and
continuance of a Default or reduction or termination of the
Commitments, and
that each such payment shall be made without any offset,
abatement, withholding
or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement
in respect of a Letter of Credit, the Borrower shall reimburse
such LC
Disbursement by paying to the Administrative Agent an amount
equal to such LC
Disbursement not later than 11:00 a.m., Chicago time, on the
date that such LC
Disbursement is made, if the Borrower shall have received notice
of such LC
Disbursement prior to 9:00 a.m., Chicago time, on such date, or,
if such notice
has not been received by the Borrower prior to such time on such
date, then not
later than 11:00 a.m., Chicago time, on (i) the Business Day
that the Borrower
receives such notice, if such notice is received prior to 9:00
a.m., Chicago
time, on the day of receipt, or (ii) the Business Day
immediately following the
day that the Borrower receives such notice, if such notice is
not received prior
to such time on the day of receipt; provided that the Borrower
may, subject to
the conditions to borrowing set forth herein, request in
accordance with Section
2.03 or 2.05 that such payment be financed with an ABR Revolving
Borrowing or
Swingline Loan in an equivalent amount and, to the extent so
financed, the
Borrower's obligation to make such payment shall be discharged
and replaced by
the resulting ABR Revolving Borrowing or Swingline Loan. If the
Borrower fails
to make such payment when due, the Administrative Agent shall
notify each Lender
of the applicable LC Disbursement, the payment then due from the
Borrower in
respect thereof and such Lender's Applicable Percentage thereof.
Promptly
following receipt of such notice, each Lender shall pay to the
Administrative
Agent its Applicable Percentage of the payment then due from the
Borrower, in
the same manner as provided in Section 2.07 with respect to
Loans made by such
Lender (and Section 2.07 shall apply, mutatis mutandis, to the
payment
obligations of the Lenders), and the Administrative Agent shall
promptly pay to
the Issuing Bank the amounts so received by it from the Lenders.
Promptly
following receipt by the Administrative Agent of any payment
from the Borrower
pursuant to this paragraph, the Administrative Agent shall
distribute such
payment to the Issuing Bank or, to the extent that Lenders have
made payments
pursuant to this paragraph to reimburse the Issuing Bank, then
to such
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Lenders and the Issuing Bank as their interests may appear. Any
payment made by
a Lender pursuant to this paragraph to reimburse the Issuing
Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a
Swingline Loan
as contemplated above) shall not constitute a Loan and shall not
relieve the
Borrower of its obligation to reimburse such LC
Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse
LC
Disbursements as provided in paragraph (e) of this Section shall
be absolute,
unconditional and irrevocable, and shall be performed strictly
in accordance
with the terms of this Agreement under any and all circumstances
whatsoever and
irrespective of (i) any lack of validity or enforceability of
any Letter of
Credit or this Agreement, or any term or provision therein, (ii)
any draft or
other document presented under a Letter of Credit proving to be
forged,
fraudulent or invalid in any respect or any statement therein
being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank
under a Letter of
Credit against presentation of a draft or other document that
does not comply
with the terms of such Letter of Credit, or (iv) any other event
or circumstance
whatsoever, whether or not similar to any of the foregoing, that
might, but for
the provisions of this Section, constitute a legal or equitable
discharge of, or
provide a right of setoff against, the Borrower's obligations
hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor
any of their
Related Parties, shall have any liability or responsibility by
reason of or in
connection with the issuance or transfer of any Letter of Credit
or any payment
or failure to make any payment thereunder (irrespective of any
of the
circumstances referred to in the preceding sentence), or any
error, omission,
interruption, loss or delay in transmission or delivery of any
draft, notice or
other communication under or relating to any Letter of Credit
(including any
document required to make a drawing thereunder), any error in
interpretation of
technical terms or any consequence arising from causes beyond
the control of the
Issuing Bank; provided that the foregoing shall not be construed
to excuse the
Issuing Bank from liability to the Borrower to the extent of any
direct damages
(as opposed to consequential damages, claims in respect of which
are hereby
waived by the Borrower to the extent permitted by applicable
law) suffered by
the Borrower that are caused by the Issuing Bank's failure to
exercise care when
determining whether drafts and other documents presented under a
Letter of
Credit comply with the terms thereof. The parties hereto
expressly agree that,
in the absence of gross negligence or wilful misconduct on the
part of the
Issuing Bank (as finally determined by a court of competent
jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such
determination.
In furtherance of the foregoing and without limiting the
generality thereof, the
parties agree that, with respect to documents presented which
appear on their
face to be in substantial compliance with the terms of a Letter
of Credit, the
Issuing Bank may, in its sole discretion, either accept and make
payment upon
such documents without responsibility for further investigation,
regardless of
any notice or information to the contrary, or refuse to accept
and make payment
upon such documents if such documents are not in strict
compliance with the
terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall,
promptly
following its receipt thereof, examine all documents purporting
to represent a
demand for payment under a Letter of Credit. The Issuing Bank
shall promptly
notify the Administrative Agent and the Borrower by telephone
(confirmed by
facsimile) of such demand for payment and whether the Issuing
Bank has made or
will make an LC Disbursement thereunder; provided that any
failure to give or
delay in giving such notice shall not relieve the Borrower of
its obligation to
reimburse the Issuing Bank and the Lenders with respect to any
such LC
Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC
Disbursement in
full on the date such LC Disbursement is made, the unpaid amount
thereof shall
bear interest, for each day from and including the date such LC
Disbursement is
made to but excluding the date that the Borrower reimburses such
LC
Disbursement, at the rate per annum then applicable to ABR
Revolving Loans;
provided that, if the Borrower fails to reimburse such LC
Disbursement when due
pursuant to paragraph (e) of this Section, then Section
2.13(d)
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shall apply. Interest accrued pursuant to this paragraph shall
be for the
account of the Issuing Bank, except that interest accrued on and
after the date
of payment by any Lender pursuant to paragraph (e) of this
Section to reimburse
the Issuing Bank shall be for the account of such Lender to the
extent of such
payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced
at any time by written agreement among the Borrower, the
Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The
Administrative
Agent shall notify the Lenders of any such replacement of the
Issuing Bank. At
the time any such replacement shall become effective, the
Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to
Section 2.12(b). From and after the effective date of any such
replacement, (i)
the successor Issuing Bank shall have all the rights and
obligations of the
Issuing Bank under this Agreement with respect to Letters of
Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank"
shall be deemed
to refer to such successor or to any previous Issuing Bank, or
to such successor
and all previous Issuing Banks, as the context shall require.
After the
replacement of an Issuing Bank hereunder, the replaced Issuing
Bank shall remain
a party hereto and shall continue to have all the rights and
obligations of an
Issuing Bank under this Agreement with respect to Letters of
Credit issued by it
prior to such replacement, but shall not be required to issue
additional Letters
of Credit.
(j) Cash Collateralization. If any Event of Default shall occur
and be
continuing, on the Business Day that the Borrower receives
notice from the
Administrative Agent or the Required Lenders demanding the
deposit of cash
collateral pursuant to this paragraph, the Borrower shall
deposit in an account
with the Administrative Agent, in the name of the Administrative
Agent and for
the benefit of the Secured Creditors (the "LC Collateral
Account"), an amount in
cash equal to 105% of the LC Exposure as of such date plus
accrued and unpaid
interest thereon; provided that the obligation to deposit such
cash collateral
shall become effective immediately, and such deposit shall
become immediately
due and payable, without demand or other notice of any kind,
upon the occurrence
of any Event of Default with respect to the Borrower described
in clause (h) or
(i) of Article VII. Such deposit shall be held by the
Administrative Agent as
collateral for the payment and performance of the Secured
Obligations. The
Administrative Agent shall have exclusive dominion and control,
including the
exclusive right of withdrawal, over such account and the
Borrower hereby grants
the Administrative Agent a security interest in the LC
Collateral Account. Other
than any interest earned on the investment of such deposits,
which investments
shall be made at the option and sole discretion of the
Administrative Agent and
at the Borrower's risk and expense, such deposits shall not bear
interest.
Interest or profits, if any, on such investments shall
accumulate in such
account. Moneys in such account shall be applied by the
Administrative Agent to
reimburse the Issuing Bank for LC Disbursements for which it has
not been
reimbursed and, to the extent not so applied, shall be held for
the satisfaction
of the reimbursement obligations of the Borrower for the LC
Exposure at such
time or, if the maturity of the Loans has been accelerated be
applied to satisfy
other Secured Obligations. If the Borrower is required to
provide an amount of
cash collateral hereunder as a result of the occurrence of an
Event of Default,
such amount (to the extent not applied as aforesaid) shall be
returned to the
Borrower within three Business Days after all such Defaults have
been cured or
waived.
SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make
each
Loan to be made by it hereunder on the proposed date thereof by
wire transfer of
immediately available funds by 1:00 p.m., Chicago time, to the
account of the
Administrative Agent most recently designated by it for such
purpose by notice
to the Lenders in an amount equal to such Lender's Applicable
Percentage;
provided that, Swingline Loans shall be made as provided in
Section 2.05. The
Administrative Agent will make such Loans available to the
Borrower by promptly
crediting the amounts so received, in like funds, to the Funding
Account;
provided that ABR Revolving Loans made to finance the
reimbursement of (i) an LC
Disbursement as provided in Section 2.06(e) shall be remitted by
the
Administrative Agent to the
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<PAGE>
Issuing Bank and (ii) a Protective Advance or an Overadvance
shall be retained
by the Administrative Agent.
(b) Unless the Administrative Agent shall have received notice
from a
Lender prior to the proposed date of any Borrowing that such
Lender will not
make available to the Administrative Agent such Lender's share
of such
Borrowing, the Administrative Agent may assume that such Lender
has made such
share available on such date in accordance with paragraph (a) of
this Section
and may, in reliance upon such assumption, make available to the
Borrower a
corresponding amount. In such event, if a Lender has not in fact
made its share
of the applicable Borrowing available to the Administrative
Agent, then the
applicable Lender and the Borrower severally agree to pay to the
Administrative
Agent forthwith on demand such corresponding amount with
interest thereon, for
each day from and including the date such amount is made
available to the
Borrower to but excluding the date of payment to the
Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds
Effective Rate
and a rate determined by the Administrative Agent in accordance
with banking
industry rules on interbank compensation or (ii) in the case of
the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays
such amount to
the Administrative Agent, then such amount shall constitute such
Lender's Loan
included in such Borrowing.
SECTION 2.08. Interest Elections. (a) Each Revolving
Borrowing
initially shall be of the Type specified in the applicable
Borrowing Request
and, in the case of a Eurodollar Revolving Borrowing, shall have
an initial
Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to
continue such
Borrowing and, in the case of a Eurodollar Revolving Borrowing,
may elect
Interest Periods therefor, all as provided in this Section. The
Borrower may
elect different options with respect to different portions of
the affected
Borrowing, in which case each such portion shall be allocated
ratably among the
Lenders holding the Loans comprising such Borrowing, and the
Loans comprising
each such portion shall be considered a separate Borrowing. This
Section shall
not apply to Swingline Borrowings, Overadvances or Protective
Advances, which
may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower
shall
notify the Administrative Agent of such election by telephone by
the time that a
Borrowing Request would be required under Section 2.03 if the
Borrower were
requesting a Revolving Borrowing of the Type resulting from such
election to be
made on the effective date of such election. Each such
telephonic Interest
Election Request shall be irrevocable and shall be confirmed
promptly by hand
delivery or facsimile to the Administrative Agent of a written
Interest Election
Request in a form approved by the Administrative Agent and
signed by the
Borrower.
(c) Each telephonic and written Interest Election Request
shall
specify the following information in compliance with Section
2.02:
(i) the Borrowing to which such Interest Election Request
applies and,
if different options are being elected with respect to different
portions
thereof, the portions thereof to be allocated to each resulting
Borrowing
(in which case the information to be specified pursuant to
clauses (iii)
and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a
Eurodollar Borrowing; and
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<PAGE>
(iv) if the resulting Borrowing is a Eurodollar Borrowing,
the
Interest Period to be applicable thereto after giving effect to
such
election, which shall be a period contemplated by the definition
of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar
Borrowing but does
not specify an Interest Period, then the Borrower shall be
deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request,
the
Administrative Agent shall advise each Lender of the details
thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election
Request with respect to a Eurodollar Revolving Borrowing prior
to the end of the
Interest Period applicable thereto, then, unless such Borrowing
is repaid as
provided herein, at the end of such Interest Period such
Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary
provision hereof, if
an Event of Default has occurred and is continuing and the
Administrative Agent,
at the request of the Required Lenders, so notifies the
Borrower, then, so long
as an Event of Default is continuing (i) no outstanding
Revolving Borrowing may
be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid,
each Eurodollar Revolving Borrowing shall be converted to an ABR
Borrowing at
the end of the Interest Period applicable thereto.
SECTION 2.09. Termination and Reduction of Commitments. (a)
Unless
previously terminated, all other Commitments shall terminate on
the Maturity
Date.
(b) The Borrower may at any time terminate the Commitments upon
(i)
the payment in full of all outstanding Loans, together with
accrued and unpaid
interest thereon and on any Letters of Credit, (ii) the
cancellation and return
of all outstanding Letters of Credit (or alternatively, with
respect to each
such Letter of Credit, the furnishing to the Administrative
Agent of a cash
deposit (or at the discretion of the Administrative Agent a back
up standby
letter of credit satisfactory to the Administrative Agent) equal
to 105% of the
LC Exposure as of such date), (iii) the payment in full of the
accrued and
unpaid fees, and (iv) the payment in full of all reimbursable
expenses and other
Obligations together with accrued and unpaid interest
thereon.
(c) The Borrower may from time to time reduce the
Commitments;
provided that (i) each reduction of the Commitments shall be in
an amount that
is an integral multiple of $1,000,000 and not less than
$5,000,000 and (ii) the
Borrower shall not reduce the Commitments if, after giving
effect to any
concurrent prepayment of the Revolving Loans in accordance with
Section 2.10,
the Aggregate Credit Exposure would exceed the lesser of the
Aggregate
Commitment and the Borrowing Base.
(d) The Borrower shall notify the Administrative Agent of any
election
to terminate or reduce the Commitments under paragraph (b) or
(c) of this
Section at least three Business Days prior to the effective date
of such
termination or reduction, specifying such election and the
effective date
thereof. Promptly following receipt of any notice, the
Administrative Agent
shall advise the Lenders of the contents thereof. Each notice
delivered by the
Borrower pursuant to this Section shall be irrevocable; provided
that a notice
of termination of the Commitments delivered by the Borrower may
state that such
notice is conditioned upon the effectiveness of other credit
facilities, in
which case such notice may be revoked by the Borrower (by notice
to the
Administrative Agent on or prior to the specified effective
date) if such
condition is not satisfied. Any termination or reduction of the
Commitments
shall be permanent. Each reduction of the Commitments shall be
made ratably
among the Lenders in accordance with their respective
Commitments.
SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) The
Borrower
hereby
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<PAGE>
unconditionally promises to pay (i) to the Administrative Agent
for the account
of each Lender the then unpaid principal amount of each
Revolving Loan on the
Maturity Date, (ii) to the Administrative Agent the then unpaid
amount of each
Protective Advance on the earlier of the Maturity Date and
demand by the
Administrative Agent, (iii) to the Swingline Lender the then
unpaid principal
amount of each Swingline Loan on the earlier of the Maturity
Date and demand by
the Swingline Lender, and (iv) to the Administrative Agent the
then unpaid
principal amount of each Overadvance on the earlier of the
Maturity Date and
demand by the Administrative Agent.
(b) At all times that full cash dominion is in effect pursuant
to
Section 7.3 of the Security Agreement, on each Business Day, the
Administrative
Agent shall apply all funds credited to the Collection Account
the previous
Business Day (whether or not immediately available) first to
prepay any
Protective Advances and Overadvances that may be outstanding,
pro rata, and
second to prepay the Revolving Loans (including Swing Line
Loans) and to cash
collateralize outstanding LC Exposure.
(c) Each Lender shall maintain in accordance with its usual
practice
an account or accounts evidencing the indebtedness of the
Borrower to such
Lender resulting from each Loan made by such Lender, including
the amounts of
principal and interest payable and paid to such Lender from time
to time
hereunder.
(d) The Administrative Agent shall maintain accounts in which it
shall
record (i) the amount of each Loan made hereunder, the Class and
Type thereof
and the Interest Period applicable thereto, (ii) the amount of
any principal or
interest due and payable or to become due and payable from the
Borrower to each
Lender hereunder and (iii) the amount of any sum received by the
Administrative
Agent hereunder for the account of the Lenders and each Lender's
share thereof.
(e) The entries made in the accounts maintained pursuant to
paragraph
(c) or (d) of this Section shall be prima facie evidence of the
existence and
amounts of the obligations recorded therein; provided that the
failure of any
Lender or the Administrative Agent to maintain such accounts or
any error
therein shall not in any manner affect the obligation of the
Borrower to repay
the Loans in accordance with the terms of this Agreement.
(f) Any Lender may request that Loans made by it be evidenced by
a
promissory note. In such event, the Borrower shall prepare,
execute and deliver
to such Lender a promissory note payable to the order of such
Lender (or, if
requested by such Lender, to such Lender and its registered
assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans
evidenced by
such promissory note and interest thereon shall at all times
(including after
assignment pursuant to Section 9.04) be represented by one or
more promissory
notes in such form payable to the order of the payee named
therein (or, if such
promissory note is a registered note, to such payee and its
registered assigns).
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have
the
right at any time and from time to time to prepay any Borrowing
in whole or in
part, subject to prior notice in accordance with paragraph (f)
of this Section
Each partial prepayment of a Eurodollar Loan shall be in an
aggregate principal
amount of at least $1,000,000 (or, if less, the full amount of
such Borrowing),
or an integral multiple of $1,000,000 in excess thereof. Any
prepayment made
pursuant to this Section 2.11 shall be accompanied by any
amounts payable in
respect thereof under Section 2.16.
(b) Except for Overadvances permitted under Section 2.05, in the
event
and on such occasion that the Aggregate Credit Exposure exceeds
the lesser of
(A) the Aggregate Commitment or (B) the Borrowing Base, the
Borrower shall
prepay the Aggregate Credit Exposure in an aggregate amount
equal to such
excess. All such amounts shall be applied, first to prepay any
Protective
Advances and Overadvances that may be outstanding, pro rata, and
second to
prepay the Revolving Loans (including
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<PAGE>
Swing Line Loans) without a corresponding reduction in the
Commitment and to
cash collateralize outstanding LC Exposure.
(c) The Borrower shall notify the Administrative Agent (and, in
the
case of prepayment of a Swingline Loan, the Swingline Lender) by
telephone
(confirmed by facsimile) of any prepayment hereunder (i) in the
case of
prepayment of a Eurodollar Revolving Borrowing, not later than
10:00 a.m.,
Chicago time, three Business Days before the date of prepayment,
(ii) in the
case of prepayment of an ABR Revolving Borrowing, not later than
10:00 a.m.,
Chicago time, on the date of prepayment or (iii) in the case of
prepayment of a
Swingline Loan, not later than 11:00 a.m., Chicago time, on the
date of
prepayment. Each such notice shall be irrevocable and shall
specify the
prepayment date and the principal amount of each Borrowing or
portion thereof to
be prepaid; provided that, if a notice of prepayment is given in
connection with
a conditional notice of termination of the Commitments as
contemplated by
Section 2.09, then such notice of prepayment may be revoked if
such notice of
termination is revoked in accordance with Section 2.09. Promptly
following
receipt of any such notice relating to a Revolving Borrowing,
the Administrative
Agent shall advise the Lenders of the contents thereof. Each
partial prepayment
of any Revolving Borrowing shall be in an amount tha
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