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EXHIBIT 10.35
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CREDIT AGREEMENT
BY AND AMONG
TB WOOD'S CORPORATION.
AS PARENT,
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
WELLS FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF APRIL 5, 2007
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CREDIT AGREEMENT
THIS CREDIT
AGREEMENT (this "Agreement"), is entered into as of April
5, 2007, by and among the lenders identified on the signature pages
hereof (such
lenders, together with their respective successors and permitted
assigns, are
referred to hereinafter each individually as a "Lender" and
collectively as the
"Lenders"), and WELLS FARGO FOOTHILL, INC., a California
corporation, as the
arranger and administrative agent for the Lenders (in such
capacity, together
with its successors and assigns in such capacity, "Agent"), and TB
WOOD'S
CORPORATION, a Delaware corporation ("Parent"), and each of
Parent's
Subsidiaries identified on the signature pages hereof (Parent and
such
Subsidiaries are referred to hereinafter each individually as a
"Borrower", and
individually and collectively, jointly and severally, as the
"Borrowers").
RECITALS
WHEREAS, on
February 17, 2007, Altra Holdings, Inc. ("Altra Holdings")
and its wholly owned subsidiary Forest Acquisition Corporation
("FAC"), entered
into an Agreement and Plan of Merger (the "Merger Agreement") with
Parent,
pursuant to which FAC agreed to purchase shares of common stock of
Parent for
$24.80 per share;
WHEREAS, in
the Merger Agreement, FAC agreed to make a cash tender
offer of $24.80 per share for all outstanding shares of TB Wood's
common stock;
WHEREAS, FAC
commenced the tender offer (the "Tender Offer") on March
5, 2007;
WHEREAS, FAC
will acquire greater than 90% of the outstanding shares
of Parent's common stock in the Tender Offer, and FAC and Parent
will, after the
execution of this Agreement, effect a statutory "short-form" merger
pursuant to
which FAC will be merged with and into Parent (the "Merger") and
Parent will
become a wholly-owned subsidiary of Altra Industrial Motion, Inc.
("Altra
Industrial"), which is a wholly owned subsidiary of Altra
Holdings;
WHEREAS,
Altra Industrial will issue $105,000,000 aggregate principal
amount of 9% Senior Secured Notes due 2011 (the "Additional Notes")
under a
supplement (the "Indenture Supplement") to the Indenture dated as
of November
30, 2004 (the "Indenture"), by and among Altra Industrial, the
subsidiaries of
Altra Industrial party thereto and the Trustee, pursuant to which
Altra
Industrial has previously issued $165,000,000 aggregate principal
amount of
senior secured notes;
WHEREAS,
Altra Holdings and Altra Industrial will fund the purchase
price of the acquisition of the common stock of Parent through the
net proceeds
of the issuance of the Additional Notes, together with cash on hand
and
borrowings under the Altra Senior Credit Agreement; and
WHEREAS,
this Agreement is being entered into in connection with the
refinancing of the indebtedness incurred under that certain Loan
and Security
Agreement dated as of January 7, 2005, by and among the Borrowers,
TB Wood's
Canada Ltd., Manufacturers and Traders Trust Company, as collateral
agent and
funding agent, PNC Bank, National Association, as administrative
agent, and the
lenders party thereto, as amended, restated or otherwise modified
to date (the
"M&T Facility").
The parties
agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. Capitalized terms used in
this Agreement shall have the
meanings specified therefor on Schedule 1.1.
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1.2 ACCOUNTING TERMS. All accounting terms
not specifically defined herein
shall be construed in accordance with GAAP. In the event of any
change in GAAP
that occurs after the date of this Agreement that would affect the
calculation
or application of the financial or other covenants contained
herein, Agent and
Borrowers agree to negotiate to amend such financial or other
covenants (or the
definitions used therein) to eliminate the effect of such change
and no Event of
Default shall be deemed to exist solely as a result of such change
in GAAP
during the period prior to the effectiveness of such amendment;
provided,. that
such financial or other covenants shall continue to be calculated
in the manner
provided immediately prior to such change until such amendment has
been executed
by Borrowers and the Required Lenders. When used herein, the term
"financial
statements" shall include the notes and schedules thereto, if any.
Whenever the
term "Borrowers" or the term "Parent" is used in respect of a
financial covenant
or a related definition, it shall be understood to mean Borrowers
and their
Subsidiaries or Parent and its Subsidiaries, as applicable, on a
consolidated
basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement
that are defined in the Code
shall be construed and defined as set forth in the Code unless
otherwise defined
herein, provided, however, that to the extent that the Code is used
to define
any term herein and such term is defined differently in different
Articles of
the Code, the definition of such term contained in Article 9 shall
govern.
1.4 CONSTRUCTION. Unless the context of
this Agreement or any other Loan
Document clearly requires otherwise, references to the plural
include the
singular, references to the singular include the plural, and the
terms
"includes" and "including" are not limiting. The words "hereof,"
"herein,"
"hereby," "hereunder," and similar terms in this Agreement or any
other Loan
Document refer to this Agreement or such other Loan Document, as
the case may
be, as a whole and not to any particular provision of this
Agreement or such
other Loan Document, as the case may be. Section, subsection,
clause, schedule,
and exhibit references herein are to this Agreement unless
otherwise specified.
Any reference in this Agreement or in the other Loan Documents to
any agreement,
instrument, or document shall include all alterations, amendments,
changes,
extensions, modifications, renewals, replacements, substitutions,
joinders, and
supplements, thereto and thereof, as applicable (subject to any
restrictions on
such alterations, amendments, changes, extensions, modifications,
renewals,
replacements, substitutions, joinders, and supplements set forth
herein). Any
reference herein to the satisfaction, payment or repayment in full
of the
Obligations shall mean the repayment in full in cash (or cash
collateralization
or the provision of other security in accordance with the terms
hereof) of all
Obligations other than contingent indemnification Obligations. Any
reference
herein to any Person shall be construed to include such Person's
successors and
assigns. Any requirement of a writing contained herein or in the
other Loan
Documents shall be satisfied by the transmission of a Record.
1.5 SCHEDULES AND EXHIBITS. All of the
schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by
reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 INTENTIONALLY OMITTED.
2.2 TERM LOANS
(a) TERM
LOAN A. Subject to the terms and conditions of this
Agreement, on the Closing Date each Lender with a Commitment agrees
(severally,
not jointly or jointly and severally) to make term loans
(collectively, "Term
Loan A") to Borrowers in an amount equal to such Lender's Pro Rata
Share of the
Term Loan A Amount. The principal of the Term Loan A shall be
repaid in monthly
installments of $125,000, payable on the first day of each month
(or, if such
first day is not a Business Day, the next succeeding Business Day)
commencing on
May 1, 2007 through the date of determination as provided in the
immediately
succeeding sentence. The outstanding unpaid principal balance and
all accrued
and unpaid interest on the Term Loan A shall be due and payable on
the earliest
of (i) the Maturity Date, (ii) the date of
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the acceleration of the Term Loan A in accordance with the terms
hereof, and
(iii) the date of termination of this Agreement pursuant to Section
8.1(c). All
principal of, interest on, and other amounts payable in respect of
the Term Loan
A shall constitute Obligations. Once any portion of the Term Loan A
has been
paid or prepaid, it may not be reborrowed.
(b) TERM
LOAN B. Subject to the terms and conditions of this
Agreement, on the Closing Date each Lender with a Commitment agrees
(severally,
not jointly or jointly and severally) to make term loans
(collectively, "Term
Loan B", and together with Term Loan A, the "Term Loans") to
Borrowers in an
amount equal to such Lender's Pro Rata Share of the Term Loan B
Amount. The
outstanding unpaid principal balance and all accrued and unpaid
interest on the
Term Loan B shall be due and payable on the earliest of (i) the
Maturity Date,
(ii) the date of the acceleration of the Term Loan B in accordance
with the
terms hereof, and (iii) the date of termination of this Agreement
pursuant to
Section 8.1(c). All principal of, interest on, and other amounts
payable in
respect of the Term Loan B shall constitute Obligations. Once any
portion of the
Term Loan B has been paid or prepaid, it may not be reborrowed.
2.3 BORROWING PROCEDURES. The Term Loans
shall be made by an irrevocable
request by an Authorized Person delivered to Agent no later than
7:00 a.m.
(California time) on the Closing Date. Each Lender shall make the
amount of such
Lender's Pro Rata Share of the Term Loans available to Agent in
immediately
available funds, to Agent's Account, not later than 10:00 a.m.
(California time)
on the Closing Date. After Agent's receipt of the proceeds of the
Term Loans,
Agent shall make the proceeds thereof available to Administrative
Borrower on
the Closing Date by transferring immediately available funds equal
to such
proceeds received by Agent to the Designated Account; provided,
however, that
Agent shall not request any Lender to make, and no Lender shall
have the
obligation to make, the Term Loans if Agent shall have actual
knowledge that one
or more of the applicable conditions precedent set forth in Section
3.1 will not
be satisfied on the Closing Date unless such condition has been
waived.
2.4 PAYMENTS.
(a)
PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein, all payments
by Borrowers shall be made to Agent's Account for the account of
the Lender
Group and shall be made in immediately available funds, no later
than 11:00 a.m.
(California time) on the date specified herein. Any payment
received by Agent
later than 11:00 a.m. (California time), shall be deemed to have
been received
on the following Business Day and any applicable interest or fee
shall continue
to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative Borrower
prior to the date on which any payment is due to the Lenders that
Borrowers will
not make such payment in full as and when required, Agent may
assume that
Borrowers have made (or will make) such payment in full to Agent on
such date in
immediately available funds and Agent may (but shall not be so
required), in
reliance upon such assumption, distribute to each Lender on such
due date an
amount equal to the amount then due such Lender. If and to the
extent Borrowers
do not make such payment in full to Agent on the date when due,
each Lender
severally shall repay to Agent on demand such amount distributed to
such Lender,
together with interest thereon at the Defaulting Lender Rate for
each day from
the date such amount is distributed to such Lender until the date
repaid.
(b)
APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided in the Loan Documents
(including
agreements between Agent and individual Lenders), aggregate
principal and
interest payments shall be apportioned ratably among the Lenders
(according to
the unpaid principal balance of the Obligations to which such
payments relate
held by each Lender) and payments of fees and expenses (other than
fees or
expenses that are for Agent's separate account, after giving effect
to any
agreements between Agent and individual Lenders) shall
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be apportioned ratably among the Lenders having a Pro Rata Share of
the
Obligation to which a particular fee relates. Except as provided in
Section
2.4(b)(iii), all payments shall be remitted to Agent and all such
payments, and
all proceeds of Collateral received by Agent, shall be applied as
follows:
(A) first, ratably to pay any Lender Group Expenses then due
to Agent or any of the Lenders under the Loan Documents until paid
in full,
(B) second, ratably to pay any fees or premiums then due to
Agent (for its separate account, after giving effect to any
agreements between
Agent and individual Lenders) or any of the Lenders under the Loan
Documents
until paid in full,
(C) third, ratably to pay interest due in respect of the LC
Obligations and the Term Loans until paid in full,
(D) fourth, ratably to pay all principal amounts then due
and payable (other than as a result of an acceleration thereof)
with respect to
the LC Obligations and the Term Loans until paid in full,
(E) fifth, if an Event of Default has occurred and is
continuing, ratably to pay the outstanding principal balance of the
LC
Obligations and the Term Loans until paid in full,
(F) sixth, if an Event of Default has occurred and is
continuing, ratably to pay any other Obligations, and
(G) seventh, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable
law.
(ii) Agent promptly shall distribute to each Lender, pursuant
to
the applicable wire instructions received from each Lender in
writing, such
funds as it may be entitled to receive.
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, this Section 2.4(b) shall not apply to
any payment
made by Borrowers to Agent and specified by Borrowers to be for the
payment of
specific Obligations then due and payable (or prepayable) under any
provision of
this Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment
of all amounts owing under the Loan Documents according to the
terms thereof,
including loan fees, service fees, professional fees, interest (and
specifically
including interest accrued after the commencement of any Insolvency
Proceeding),
default interest, interest on interest, and expense reimbursements,
whether or
not any of the foregoing would be or is allowed or disallowed in
whole or in
part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in
any other Loan
Document, it is the intention of the parties hereto that such
priority
provisions in such documents shall be read together and construed,
to the
fullest extent possible, to be in concert with each other. In the
event of any
actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms
and provisions of this Section 2.4 shall control and govern.
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(c)
VOLUNTARY PREPAYMENTS. Borrowers have the option, at any time,
upon not less than 10 days prior written notice to Agent, to prepay
all or any
portion of the LC Obligations and the Term Loans, subject to the
payment of the
Applicable Prepayment Premium if any such voluntary prepayment
results in a
termination of this Agreement pursuant to Section 3.5.
(d)
MANDATORY PREPAYMENTS.
(i) If, as of the last day of any month, (A) the sum of (x) the
aggregate outstanding principal balance of the Term Loans on such
date, plus (y)
the aggregate outstanding principal balance of the LC Obligations
on such date,
plus (z) the Letter of Credit Usage on such date exceeds (B) the
Borrowing Base
(such excess being referred to as the "Limiter Excess"), then
Borrowers shall,
within 3 Business Days thereafter, prepay, without penalty or
premium, the
outstanding principal amount of the Obligations in accordance with
Section
2.4(e) in an aggregate amount equal to the Limiter Excess.
(ii) Immediately upon the receipt by any Loan Party of the
proceeds of any voluntary or involuntary sale or disposition by any
Loan Party
of property or assets constituting Collateral (including casualty
losses or
condemnations but excluding sales or dispositions which qualify as
Permitted
Dispositions (other than clause (l) of the definition of
Permitted
Dispositions)), Borrowers shall prepay the outstanding principal
amount of the
Obligations in accordance with Section 2.4(e) in an amount equal to
100% of the
Net Cash Proceeds (including condemnation awards and payments in
lieu thereof)
received by such Person in connection with such sales or
dispositions; provided
that, so long as (A) no Default or Event of Default shall have
occurred and is
continuing, (B) Administrative Borrower shall have given Agent
prior written
notice of Borrowers' intention to apply such monies to the costs of
replacement
of the properties or assets that are the subject of such sale or
disposition or
the cost of purchase or construction of other assets useful in the
business of
Loan Parties, (C) the monies are held in a cash collateral account
in which
Agent has a perfected first-priority security interest, and (D) the
applicable
Loan Party completes such replacement, purchase, or construction
within 180 days
after the initial receipt of such monies, Loan Parties shall have
the option to
apply such monies to the costs of replacement of the property or
assets that are
the subject of such sale or disposition or the costs of purchase or
construction
of other assets useful in the business of Loan Parties unless and
to the extent
that such applicable period shall have expired without such
replacement,
purchase or construction being made or completed, in which case,
any amounts
remaining in the cash collateral account shall be paid to Agent and
applied in
accordance with Section 2.4(e). Nothing contained in this Section
2.4(d)(ii)
shall permit Loan Parties to sell or otherwise dispose of any
property or assets
other than in accordance with Section 6.4.
(iii) Immediately upon the receipt by any Loan Party of any
Extraordinary Receipts with respect to Collateral, Borrowers shall
prepay the
outstanding principal amount of the Obligations in accordance with
Section
2.4(e) in an amount equal to 100% of such Extraordinary Receipts,
net of any
reasonable expenses incurred in collecting such Extraordinary
Receipts.
(iv) Immediately upon the issuance or incurrence by any Loan
Party of any Indebtedness (other than Indebtedness permitted under
Section 6.1)
or the issuance by any Loan Party of any shares of Loan Parties'
Stock (other
than in the event that any Loan Party forms a Subsidiary in
accordance with the
terms hereof, the issuance by such Subsidiary of Stock to any such
Loan Party),
Borrowers shall prepay the outstanding principal amount of the
Obligations in
accordance with Section 2.4(e) in an amount equal to 100% of the
Net Cash
Proceeds received by such Person in connection with such issuance
or incurrence.
The provisions of this Section 2.4(d)(iv) shall not be deemed to be
implied
consent to any such issuance or incurrence otherwise prohibited by
the terms and
conditions of this Agreement.
(e)
APPLICATION OF PAYMENTS. Each prepayment pursuant to Section
2.4(d) shall be applied ratably to the outstanding principal amount
of the LC
Obligations and the Term Loans until paid in full. Each such
prepayment of Term
Loan A shall be applied against the remaining installments of
principal of Term
Loan A in the inverse order of maturity.
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2.5 INTENTIONALLY OMITTED.
2.6 INTEREST RATES AND LETTER OF CREDIT
FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST
RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been
charged to the
Loan Account pursuant to the terms hereof shall bear interest on
the Daily
Balance thereof as follows: (i) if the relevant Obligation is a
LIBOR Rate Loan,
at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate
Margin, and (ii)
otherwise, at a per annum rate equal to the Base Rate plus the Base
Rate Margin.
The
foregoing notwithstanding, at no time shall any portion of the
Obligations bear interest on the Daily Balance thereof at a per
annum rate less
than 3.75%. To the extent that interest accrued hereunder at the
rate set forth
herein would be less than the foregoing minimum daily rate, the
interest rate
chargeable hereunder for such day automatically shall be deemed
increased to the
minimum rate.
(b) LETTER
OF CREDIT FEE. Borrowers shall pay Agent (for the ratable
benefit of the Lenders, subject to any agreements between Agent and
individual
Lenders), a Letter of Credit fee (in addition to the charges,
commissions, fees,
and costs set forth in Section 2.12(e)) which shall accrue at a
rate equal to
1.50% per annum times the Daily Balance of the undrawn amount of
all outstanding
Letters of Credit.
(c) DEFAULT
RATE. Upon the occurrence and during the continuation of
an Event of Default, but solely at the election of Agent or the
Required
Lenders,
(i) all Obligations (except for undrawn Letters of Credit) that
have been charged to the Loan Account pursuant to the terms hereof
shall bear
interest on the Daily Balance thereof at a per annum rate equal to
2 percentage
points above the per annum rate otherwise applicable hereunder,
and
(ii) the Letter of Credit fee provided for above shall be
increased to 2 percentage points above the per annum rate otherwise
applicable
hereunder.
(d) PAYMENT.
Except as provided to the contrary in Section 2.11 or
Section 2.13(a), interest, Letter of Credit fees, and all other
fees payable
hereunder shall be due and payable, in arrears, on the first day of
each month
(or, if such first day is not a Business Day, the next succeeding
Business Day)
during the term hereof. Borrowers hereby authorize Agent, from time
to time,
without prior notice to Borrowers (except as otherwise specifically
provided in
any Loan Document), to charge all interest and fees (when due and
payable), all
Lender Group Expenses (as and when incurred), all charges,
commissions, fees,
and costs provided for in Section 2.12(e) (as and when accrued or
incurred), all
fees and costs provided for in Section 2.11 (as and when accrued or
incurred),
and all other payments as and when due and payable under any Loan
Document to
Borrowers' Loan Account, which amounts thereafter shall constitute
Obligations
hereunder and shall accrue interest at the rate then applicable to
Base Rate
Loans hereunder. Any interest not paid when due shall be compounded
by being
charged to the Loan Account and shall thereafter constitute
Obligations
hereunder and shall accrue interest at the rate then applicable to
Base Rate
Loans hereunder.
(e)
COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the
actual number
of days elapsed. In the event the Base Rate is changed from time to
time
hereafter, the rates of interest hereunder based upon the Base
Rate
automatically and immediately shall be increased or decreased by an
amount equal
to such change in the Base Rate.
(f) INTENT
TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event shall
the interest rate or rates payable under this Agreement, plus any
other amounts
paid in connection herewith, exceed the highest rate permissible
under any law
that a court of competent jurisdiction shall, in a final
determination, deem
applicable. Borrowers and the Lender Group, in executing and
delivering this
Agreement, intend legally to agree upon the rate or rates of
interest and manner
of payment stated within it; provided, however, that,
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anything contained herein to the contrary notwithstanding, if said
rate or rates
of interest or manner of payment exceeds the maximum allowable
under applicable
law, then, ipso facto, as of the date of this Agreement, Borrowers
are and shall
be liable only for the payment of such maximum as allowed by law,
and payment
received from Borrowers in excess of such legal maximum, whenever
received,
shall be applied to reduce the principal balance of the Obligations
to the
extent of such excess.
2.7 CASH MANAGEMENT.
(a) Subject
to Section 3.6(b), Borrowers shall and shall cause each of
their Restricted Subsidiaries to (i) establish and maintain cash
management
services of a type and on terms reasonably satisfactory to Agent at
one or more
of the banks set forth on Schedule 2.7(a) (each a "Cash Management
Bank"), and
shall request in writing and otherwise take such reasonable steps
to ensure that
all of their and their Restricted Subsidiaries' Account Debtors
forward payment
of the amounts owed by them directly to such Cash Management Bank,
and (ii)
deposit or cause to be deposited promptly, and in any event no
later than the
first Business Day after the date of receipt thereof, all of their
Collections
(including those sent directly by their Account Debtors to
Borrowers or their
Restricted Subsidiaries) into a bank account in Agent's name (a
"Cash Management
Account") at one of the Cash Management Banks.
(b) Each
Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and
substance reasonably
acceptable to Agent. Each such Cash Management Agreement shall
provide, among
other things, that (i) the Cash Management Bank will comply with
any
instructions (each, a "Cash Disposition Instruction"), originated
by Agent
directing the disposition of the funds in such Cash Management
Account without
further consent by a Borrower or its Restricted Subsidiary, as
applicable, (ii)
the Cash Management Bank has no rights of setoff or recoupment or
any other
claim against the applicable Cash Management Account, other than
for payment of
its service fees and other charges directly related to the
administration of
such Cash Management Account and for returned checks or other items
of payment,
(iii) at any time after which the Agent so instructs such Cash
Management Bank
(a "Cash Sweep Instruction"), it immediately will forward by daily
sweep all
amounts in the applicable Cash Management Account to the Agent's
Account until
such time (if any) as Agent notifies it that the Cash Sweep
Instruction is
terminated pursuant to the last sentence of this Section 2.7(b);
and (iv) if
clause (iii) is not applicable, then Agent shall direct the Cash
Management bank
to immediately transfer all such amounts to Borrowers' Designated
Account. Agent
may issue a Cash Sweep Instruction or Cash Disposition Instruction
only on or
after any date that: an Event of Default shall have occurred and be
continuing.
(c) So long
as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend Schedule 2.7(a) to
add or replace
a Cash Management Bank or Cash Management Account; provided,
however, that (i)
such prospective Cash Management Bank shall be reasonably
satisfactory to Agent,
and (ii) prior to the time of the opening of such Cash Management
Account, a
Borrower or its Restricted Subsidiary, as applicable, and such
prospective Cash
Management Bank shall have executed and delivered to Agent a Cash
Management
Agreement. Borrowers (or their Restricted Subsidiaries, as
applicable) shall
close any of their Cash Management Accounts (and establish
replacement cash
management accounts in accordance with the foregoing sentence)
promptly and in
any event within 45 days of notice from Agent that the
creditworthiness of any
Cash Management Bank is no longer acceptable in Agent's reasonable
judgment, or
as promptly as practicable and in any event within 75 days of
notice from Agent
that the operating performance, funds transfer, or availability
procedures or
performance of the Cash Management Bank with respect to Cash
Management Accounts
or Agent's liability under any Cash Management Agreement with such
Cash
Management Bank is no longer acceptable in Agent's reasonable
judgment.
(d) Subject
to Section 3.6(b), the Cash Management Accounts shall be
cash collateral accounts subject to Control Agreements.
(e)
Notwithstanding anything to the contrary contained herein,
Agent
acknowledges that the Cash Management Accounts may contain from
time to time
Trust Funds (as defined below), which, by law,
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Borrowers and their Subsidiaries are required to collect and remit
from time to
time but which, pending such remittance, shall be contained or held
in the Cash
Management Accounts. Upon Agent's delivery of a Cash Sweep
Instruction, Cash
Disposition Instruction or any other exercise of control by Agent
under a
Control Agreement or a Cash Management Agreement, Agent agrees to
notify
Borrowers and their Subsidiaries of such exercise (which notice may
be by
delivery of a copy of such Cash Sweep Instruction, if any). Upon
receipt of such
notice, Borrowers and their Subsidiaries shall send written notice
to Agent
certifying the type and amount of any Trust Funds contained or held
in the Cash
Management Accounts. Within 3 Business Days after receipt of such
notice by
Agent, Agent shall remit the amount of the Trust Funds to Borrowers
and their
Subsidiaries for payment to the appropriate Person; provided, that,
during such
3 Business Day period, Agent shall have the right to ask for
further
clarification, verification or other supporting documentation with
respect to
any such type or amount certified by Borrowers or their
Subsidiaries as
constituting Trust Funds and Agent shall not be required to remit
the amount of
such Trust Funds so certified unless and until Agent is reasonably
satisfied as
to such clarification, verification or other supporting
documentation. For the
purposes of this Agreement, "Trust Funds" means all funds held by
Borrowers and
their Subsidiaries, as a fiduciary, all taxes required to be
collected or
withheld (including, without limitation, federal and state
withholding taxes
(including the employer's share thereof), taxes owing to any
governmental unit
thereof, sales, use and excise taxes, customs duties, import duties
and
independent customs brokers' charges), other taxes for which
Borrowers and their
Subsidiaries may become liable, and accrued and unpaid employee
compensation
(including salaries, wages, benefits and expense
reimbursements).
2.8 CREDITING PAYMENTS. The receipt of any
payment item by Agent (whether
from transfers to Agent by the Cash Management Banks pursuant to
the Cash
Management Agreements or otherwise) shall not be considered a
payment on account
unless such payment item is a wire transfer of immediately
available federal
funds made to the Agent's Account or unless and until such payment
item is
honored when presented for payment. Should any payment item not be
honored when
presented for payment, then Borrowers shall be deemed not to have
made such
payment and interest shall be calculated accordingly. Anything to
the contrary
contained herein notwithstanding, any payment item shall be deemed
received by
Agent only if it is received into the Agent's Account on a Business
Day on or
before 11:00 a.m. (California time). If any payment item is
received into the
Agent's Account on a non-Business Day or after 11:00 a.m.
(California time) on a
Business Day, it shall be deemed to have been received by Agent as
of the
opening of business on the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Administrative
Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank
for the purpose
of receiving the proceeds of the Term Loans.
2.10 MAINTENANCE OF LOAN ACCOUNT;
STATEMENTS OF OBLIGATIONS. Agent shall
maintain an account on its books in the name of Borrowers (the
"Loan Account")
on which Borrowers will be charged with the LC Obligations and the
Term Loans
made by Agent to Borrowers or for Borrowers' account, and with all
other payment
Obligations hereunder or under the other Loan Documents, including,
accrued
interest, fees and expenses, and Lender Group Expenses. In
accordance with
Section 2.8, the Loan Account will be credited with all payments
received by
Agent from Borrowers or for Borrowers' account, including all
amounts received
in the Agent's Account from any Cash Management Bank. In accordance
with Section
2.6(d), Agent shall render statements regarding the Loan Account
to
Administrative Borrower, including principal, interest, fees, and
including an
itemization of all charges and expenses constituting Lender Group
Expenses
owing, and such statements, absent manifest error, shall be
conclusively
presumed to be correct and accurate and constitute an account
stated between
Borrowers and the Lender Group unless, within 30 days after receipt
thereof by
Administrative Borrower, Administrative Borrower shall deliver to
Agent written
objection thereto describing the error or errors contained in any
such
statements.
2.11 FEES. Borrowers shall pay to Agent,
as and when due and payable under
the terms of the Fee Letter, the fees set forth in the Fee
Letter.
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2.12 LETTERS OF CREDIT.
(a) Subject
to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of
Borrowers (each, an
"L/C") or to purchase participations or execute indemnities or
reimbursement
obligations (each such undertaking, an "L/C Undertaking") solely
with respect to
the Existing Letters of Credit. Notwithstanding anything to the
contrary
contained herein, in no event shall Issuing Lender or any other
Lender be
required to issue any L/C or L/C Undertaking (or otherwise advance
any credit in
respect thereof) after the Closing Date other than with respect to
the Existing
Letters of Credit, and once any portion of the LC Obligations has
been paid or
prepaid it may not be reborrowed. If Issuing Lender is obligated to
advance
funds under a Letter of Credit, Borrowers immediately shall
reimburse such L/C
Disbursement to Issuing Lender upon receiving written or telephonic
notice of
such L/C Disbursement by paying to Agent an amount equal to such
L/C
Disbursement not later than 11:00 a.m., California time, on the
date that such
L/C Disbursement is made, provided, that Administrative Borrower
has received
written or telephonic notice of such L/C Disbursement prior to
10:00 a.m.,
California time, on such date, or, if such notice has not been
received by
Administrative Borrower prior to such time on such date, then not
later than
11:00 a.m., California time, on the Business Day immediately
following the day
that Administrative Borrower receives such notice, pursuant to the
foregoing,
and, in the absence of such reimbursement, the L/C Disbursement
immediately and
automatically shall be deemed to be an Obligation hereunder (an "LC
Obligation"
and, collectively, the "LC Obligations") and, thereafter, shall
bear interest at
the rate then applicable to Base Rate Loans under Section 2.6
(subject to
conversion to LIBOR Rate Loans in accordance with Section 2.13). To
the extent
an L/C Disbursement is deemed to be an LC Obligation hereunder,
Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged
and replaced
by the resulting LC Obligation. Promptly following receipt by Agent
of any
payment from Borrowers pursuant to this paragraph, Agent shall
distribute such
payment to the Issuing Lender or, to the extent that Lenders have
made payments
pursuant to Section 2.12(c) to reimburse the Issuing Lender, then
to such
Lenders and the Issuing Lender as their interests may appear.
(b) Promptly
following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender agrees to fund its Pro
Rata Share of
any LC Obligation deemed made pursuant to the foregoing subsection
on the same
terms and conditions as if Borrowers had requested such LC
Obligation and Agent
shall promptly pay to Issuing Lender the amounts so received by it
from the
Lenders. 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 Lender or the Lenders, the Issuing Lender shall be
deemed to have
granted to each Lender, and each Lender shall be deemed to have
purchased, a
participation in each Letter of Credit, in an amount equal to its
Pro Rata Share
of the Risk Participation Liability of such Letter of Credit, and
each such
Lender agrees to pay to Agent, for the account of the Issuing
Lender, such
Lender's Pro Rata Share of any payments made by the Issuing Lender
under such
Letter of Credit. In consideration and in furtherance of the
foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to
Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of each
L/C
Disbursement made by the Issuing Lender and not reimbursed by
Borrowers on the
date due as provided in clause (a) of this Section, or of any
reimbursement
payment required to be refunded to Borrowers for any reason. Each
Lender
acknowledges and agrees that its obligation to deliver to Agent,
for the account
of the Issuing Lender, an amount equal to its respective Pro Rata
Share of each
L/C Disbursement made by the Issuing Lender pursuant to this
Section 2.12(b)
shall be absolute and unconditional and such remittance shall be
made
notwithstanding the occurrence or continuation of an Event of
Default or Default
or the failure to satisfy any condition set forth in Section 3
hereof. If any
such Lender fails to make available to Agent the amount of such
Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender in
respect of
such Letter of Credit as provided in this Section, such Lender
shall be deemed
to be a Defaulting Lender and Agent (for the account of the Issuing
Lender)
shall be entitled to recover such amount on demand from such Lender
together
with interest thereon at the Defaulting Lender Rate until paid in
full.
(c) Each
Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or
liability, and
reasonable attorneys fees incurred by the Lender Group
9
<PAGE>
arising out of or in connection with any Letter of Credit;
provided, however,
that no Borrower shall be obligated hereunder to indemnify for any
loss, cost,
expense, or liability to the extent that it is caused by the gross
negligence or
willful misconduct of the Issuing Lender or any other member of the
Lender
Group. Each Borrower agrees to be bound by the Underlying Issuer's
regulations
and interpretations of any Underlying Letter of Credit or by
Issuing Lender's
interpretations of any L/C issued by Issuing Lender to or for such
Borrower's
account, even though this interpretation may be different from such
Borrower's
own, and each Borrower understands and agrees that the Lender Group
shall not be
liable for any error, negligence, or mistake, whether of omission
or commission,
in following Borrowers' instructions or those contained in the
Letter of Credit
or any modifications, amendments, or supplements thereto. Each
Borrower
understands that the L/C Undertakings may require Issuing Lender to
indemnify
the Underlying Issuer for certain costs or liabilities arising out
of claims by
Borrowers against such Underlying Issuer. Each Borrower hereby
agrees to
indemnify, save, defend, and hold the Lender Group harmless with
respect to any
loss, cost, expense (including reasonable attorneys fees), or
liability incurred
by the Lender Group under any L/C Undertaking as a result of the
Lender Group's
indemnification of any Underlying Issuer; provided, however, that
no Borrower
shall be obligated hereunder to indemnify for any loss, cost,
expense, or
liability to the extent that it is caused by the gross negligence
or willful
misconduct of the Issuing Lender or any other member of the Lender
Group. Each
Borrower hereby acknowledges and agrees that neither the Lender
Group nor the
Issuing Lender shall be responsible for delays, errors, or
omissions resulting
from the malfunction of equipment in connection with any Letter of
Credit.
(d) Each
Borrower hereby authorizes and directs any Underlying Issuer
to deliver to the Issuing Lender all instruments, documents, and
other writings
and property received by such Underlying Issuer pursuant to such
Underlying
Letter of Credit and to accept and rely upon the Issuing Lender's
instructions
with respect to all matters arising in connection with such
Underlying Letter of
Credit and the related application.
(e) Any and
all issuance charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of
Credit shall be
Lender Group Expenses for purposes of this Agreement and
immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing
Lender; it
being acknowledged and agreed by each Borrower that, as of the
Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is
.825% per annum
times the face amount of each Underlying Letter of Credit, that
such issuance
charge may be changed from time to time, and that the Underlying
Issuer also
imposes a schedule of charges for amendments, extensions, drawings,
and
renewals.
(f) If by
reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the
interpretation
or application thereof by any Governmental Authority, or (ii)
compliance by the
Underlying Issuer or the Lender Group with any direction, request,
or
requirement (irrespective of whether having the force of law) of
any
Governmental Authority or monetary authority including, Regulation
D of the
Federal Reserve Board as from time to time in effect (and any
successor
thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii)
there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or
any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or
indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or
maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by
the Lender
Group, then, and in any such case, Agent may, at any time within a
reasonable
period after the additional cost is incurred or the amount received
is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand
such amounts
as Agent may specify to be necessary to compensate the Lender Group
for such
additional cost or reduced receipt, together with interest on such
amount from
the date of such demand until payment in full thereof at the rate
then
applicable to Base Rate Loans hereunder. The determination by
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<PAGE>
Agent of any amount due pursuant to this Section, as set forth in a
certificate
setting forth the calculation thereof in reasonable detail, shall,
in the
absence of manifest or demonstrable error, be final and conclusive
and binding
on all of the parties hereto.
2.13 LIBOR OPTION.
(a) INTEREST
AND INTEREST PAYMENT DATES. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have
the option
(the "LIBOR Option") to have interest on all or a portion of the
Term Loans or
LC Obligations be charged at a rate of interest based upon the
LIBOR Rate.
Interest on LIBOR Rate Loans shall be payable on the earliest of
(i) the last
day of the Interest Period applicable thereto (provided, however,
that, subject
to the following clauses (ii) and (iii), in the case of any
Interest Period
greater than 3 months in duration, interest shall be payable at 3
month
intervals after the commencement of the applicable Interest Period
and on the
last day of such Interest Period), (ii) the occurrence of an Event
of Default in
consequence of which the Required Lenders or Agent on behalf
thereof have
elected to accelerate the maturity of all or any portion of the
Obligations, or
(iii) termination of this Agreement pursuant to the terms hereof.
On the last
day of each applicable Interest Period, unless Administrative
Borrower properly
has exercised the LIBOR Option with respect thereto, the interest
rate
applicable to such LIBOR Rate Loan automatically shall convert to
the rate of
interest then applicable to Base Rate Loans of the same type
hereunder. At any
time that an Event of Default has occurred and is continuing,
Borrowers no
longer shall have the option to request that Obligations bear
interest at a rate
based upon the LIBOR Rate and Agent shall have the right to convert
the interest
rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base
Rate Loans hereunder.
(b) LIBOR
ELECTION.
(i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is
continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 11:00 a.m.
(California
time) at least 3 Business Days prior to the commencement of the
proposed
Interest Period (the "LIBOR Deadline"). Notice of Administrative
Borrower's
election of the LIBOR Option for a permitted portion of the
Obligations and an
Interest Period pursuant to this Section shall be made by delivery
to Agent of a
LIBOR Notice received by Agent before the LIBOR Deadline, or by
telephonic
notice received by Agent before the LIBOR Deadline (to be confirmed
by delivery
to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m.
(California
time) on the same day). Promptly upon its receipt of each such
LIBOR Notice,
Agent shall provide a copy thereof to each of the Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower
shall
indemnify, defend, and hold Agent and the Lenders harmless against
any loss,
cost, or expense incurred by Agent or any Lender as a result of (A)
the payment
of any principal of any LIBOR Rate Loan other than on the last day
of an
Interest Period applicable thereto (including as a result of an
Event of
Default), (B) the conversion of any LIBOR Rate Loan other than on
the last day
of the Interest Period applicable thereto, or (C) the failure to
borrow,
convert, continue or prepay any LIBOR Rate Loan on the date
specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, and
expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect
to Agent or
any Lender, be deemed to equal the amount determined by Agent or
such Lender to
be the excess, if any, of (1) the amount of interest that would
have accrued on
the principal amount of such LIBOR Rate Loan had such event not
occurred, at the
LIBOR Rate that would have been applicable thereto, for the period
from the date
of such event to the last day of the then current Interest Period
therefor (or,
in the case of a failure to borrow, convert or continue, for the
period that
would have been the Interest Period therefor), minus (2) the amount
of interest
that would accrue on such principal amount for such period at the
interest rate
which Agent or such Lender would be offered were it to be offered,
at the
commencement of such period, Dollar deposits of a comparable amount
and period
in the London interbank market. A certificate of Agent or a Lender
delivered to
Administrative Borrower setting forth any amount or amounts that
Agent or such
Lender is entitled to receive pursuant to this Section 2.13 shall
be conclusive
absent manifest error unless the Administrative
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<PAGE>
Borrower shall object in writing within seven (7) Business Days of
receipt
thereof, specifying the basis for such objection in detail.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR
Option for LIBOR
Rate Loans of at least $1,000,000 and integral multiples of
$500,000 in excess
thereof.
(c)
PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans or convert
such
Loans to Base Rate Loans at any time; provided, however, that in
the event that
LIBOR Rate Loans are so prepaid or converted on any date that is
not the last
day of the Interest Period applicable thereto, including as a
result of any
automatic prepayment through the required application by Agent of
proceeds of
Borrowers' and their respective Restricted Subsidiaries'
Collections in
accordance with Section 2.4(b) or for any other reason, including
early
termination of the term of this Agreement or acceleration of all or
any portion
of the Obligations pursuant to the terms hereof, each Borrower
shall indemnify,
defend, and hold Agent and the Lenders and their Participants
harmless against
any and all Funding Losses in accordance with clause (b)(ii)
above.
(d) SPECIAL
PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with respect to any
Lender on a prospective basis to take into account any additional
or increased
costs to such Lender of maintaining or obtaining any eurodollar
deposits or
increased costs, in each case, due to changes in applicable law
occurring
subsequent to the commencement of the then applicable Interest
Period, including
changes in tax laws (except changes of general applicability in tax
laws
relating to taxes based on income, profits, receipts or capital)
and changes in
the reserve requirements imposed by the Board of Governors of the
Federal
Reserve System (or any successor), excluding the Reserve
Percentage, which
additional or increased costs would increase the cost of funding
loans bearing
interest at the LIBOR Rate. In any such event, the affected Lender
shall give
Administrative Borrower and Agent notice of such a determination
and adjustment
and Agent promptly shall transmit the notice to each other Lender
and, upon its
receipt of the notice from the affected Lender, Administrative
Borrower may, by
notice to such affected Lender (y) require such Lender to furnish
to
Administrative Borrower a statement setting forth the basis for
adjusting such
LIBOR Rate and the method for determining the amount of such
adjustment
accompanied by a certificate of such Lender stating that it is
charging such
similar increased costs to similarly situated borrowers, or (z)
repay the LIBOR
Rate Loans with respect to which such adjustment is made (together
with any
amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in
the
interpretation of application thereof, shall at any time after the
date hereof,
in the reasonable opinion of any Lender, make it unlawful or
impractical for
such Lender to fund or maintain LIBOR Rate Loans or to continue
such funding or
maintaining, or to determine or charge interest rates at the LIBOR
Rate, such
Lender shall give notice of such changed circumstances to Agent
and
Administrative Borrower and Agent promptly shall transmit the
notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such
Lender that are
outstanding, the date specified in such Lender's notice shall be
deemed to be
the last day of the Interest Period of such LIBOR Rate Loans, and
interest upon
the LIBOR Rate Loans of such Lender thereafter shall accrue
interest at the rate
then applicable to Base Rate Loans, and (z) Borrowers shall not be
entitled to
elect the LIBOR Option until such Lender determines that it would
no longer be
unlawful or impractical to do so.
(e) NO
REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender,
nor any of
their Participants, is required actually to acquire eurodollar
deposits to fund
or otherwise match fund any Obligation as to which interest accrues
at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender
or its
Participants had match funded any Obligation as to which interest
is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the
amount of the LIBOR Rate Loans.
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<PAGE>
2.14 CAPITAL REQUIREMENTS. If, after the
date hereof, either (i) the
adoption of or change in any law, rule, regulation or guideline
regarding
capital requirements for banks or bank holding companies, or any
change in the
interpretation or application thereof by any Governmental Authority
charged with
the administration thereof, or (ii) compliance by any Lender or its
parent bank
holding company with any guideline, request or directive of any
such entity
regarding capital adequacy (whether or not having the force of
law), has the
effect of reducing the return on such Lender's or such holding
company's capital
as a consequence of such Lender's Commitments hereunder to a level
below that
which such Lender or such holding company could have achieved but
for such
adoption, change, or compliance (taking into consideration such
Lender's or such
holding company's then existing policies with respect to capital
adequacy and
assuming the full utilization of such entity's capital) by any
amount deemed in
good faith by such Lender to be material and the result is an
increase in the
cost to any Lender of funding or maintaining any LC Obligations or
Term Loans to
Borrowers, then such Lender may notify Administrative Borrower and
Agent
thereof. Following receipt of such notice, Borrowers agree to pay
such Lender on
demand the amount of such reduction of return of capital as and
when such
reduction is determined, payable within 90 days after presentation
by such
Lender of a statement in the amount and setting forth in reasonable
detail such
Lender's calculation thereof and the assumptions upon which such
calculation was
based (which statement shall be deemed true and correct absent
manifest error).
In determining such amount, such Lender may use any reasonable
averaging and
attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF
BORROWERS.
(a) Each
Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the
financial
accommodations to be provided by the Lender Group under this
Agreement, for the
mutual benefit, directly and indirectly, of each Borrower and in
consideration
of the undertakings of the other Borrowers to accept joint and
several liability
for the Obligations.
(b) Each
Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a
co-debtor, joint
and several liability with the other Borrowers, with respect to the
payment and
performance of all of the Obligations (including, without
limitation, any
Obligations arising under this Section 2.15), it being the
intention of the
parties hereto that all the Obligations shall be the joint and
several
obligations of each Borrower without preferences or distinction
among them.
(c) If and
to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due or
to perform any
of the Obligations in accordance with the terms thereof, then in
each such event
the other Borrowers will make such payment with respect to, or
perform, such
Obligation.
(d) The
Obligations of each Borrower under the provisions of this
Section 2.15 constitute the absolute and unconditional, full
recourse
Obligations of each Borrower enforceable against each Borrower to
the full
extent of its properties and assets, irrespective of the validity,
regularity or
enforceability of this Agreement or any other circumstances
whatsoever.
(e) Except
as otherwise expressly provided in this Agreement, each
Borrower hereby waives notice of acceptance of its joint and
several liability,
notice of any advances made under or pursuant to this Agreement,
notice of the
occurrence of any Default, Event of Default, or of any demand for
any payment
under this Agreement, notice of any action at any time taken or
omitted by Agent
or Lenders under or in respect of any of the Obligations, any
requirement of
diligence or to mitigate damages and, generally, to the extent
permitted by
applicable law, all demands, notices and other formalities of every
kind in
connection with this Agreement (except as otherwise provided in
this Agreement).
Each Borrower hereby assents to, and waives notice of, any
extension or
postponement of the time for the payment of any of the Obligations,
the
acceptance of any payment of any of the Obligations, the acceptance
of any
partial payment thereon, any waiver, consent or other action or
acquiescence by
Agent or Lenders at any time or times in respect of any default by
any Borrower
in the performance or satisfaction of any term, covenant, condition
or provision
of
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<PAGE>
this Agreement, and the taking, addition, substitution or release,
in whole or
in part, at any time or times, of any security for any of the
Obligations or the
addition, substitution or release, in whole or in part, of any
Borrower. Without
limiting the generality of the foregoing, each Borrower assents to
any other
action or delay in acting or failure to act on the part of any
Agent or Lender
with respect to the failure by any Borrower to comply with any of
its respective
Obligations, including, without limitation, any failure strictly or
diligently
to assert any right or to pursue any remedy or to comply fully with
applicable
laws or regulations thereunder, which might, but for the provisions
of this
Section 2.15 afford grounds for terminating, discharging or
relieving any
Borrower, in whole or in part, from any of its Obligations under
this Section
2.15, it being the intention of each Borrower that, so long as any
of the
Obligations hereunder remain unsatisfied, the Obligations of each
Borrower under
this Section 2.15 shall not be discharged except by performance and
then only to
the extent of such performance. The Obligations of each Borrower
under this
Section 2.15 shall not be diminished or rendered unenforceable by
any winding
up, reorganization, arrangement, liquidation, reconstruction or
similar
proceeding with respect to any Borrower or any Agent or Lender.
(f) Each
Borrower represents and warrants to Agent and Lenders that
such Borrower is currently informed of the financial condition of
Borrowers and
of all other circumstances which a diligent inquiry would reveal
and which bear
upon the risk of nonpayment of the Obligations. Each Borrower
further represents
and warrants to Agent and Lenders that such Borrower has read and
understands
the terms and conditions of the Loan Documents. Each Borrower
hereby covenants
that such Borrower will continue to keep informed of Borrowers'
financial
condition, the financial condition of other guarantors, if any, and
of all other
circumstances which bear upon the risk of nonpayment or
nonperformance of the
Obligations.
(g) Each
Borrower waives all rights and defenses arising out of an
election of remedies by Agent or any Lender, even though that
election of
remedies, such as a nonjudicial foreclosure with respect to
security for a
guaranteed obligation, has destroyed Agent's or such Lender's
rights of
subrogation and reimbursement against such Borrower by the
operation of Section
580(d) of the California Code of Civil Procedure or otherwise.
(h) Each
Borrower waives all rights and defenses that such Borrower
may have because the Obligations are secured by Real Property. This
means, among
other things:
(i) Agent
and Lenders may collect from such Borrower without first
foreclosing on any Collateral pledged by Borrowers.
(ii) If Agent or any Lender forecloses on any Real Property
Collateral pledged by Borrowers:
(A) The amount of the Obligations may be reduced only by the
price for which that collateral is sold at the foreclosure sale,
even if the
collateral is worth more than the sale price.
(B) Agent and Lenders may collect from such Borrower even if
Agent or Lenders, by foreclosing on the Real Property Collateral,
has destroyed
any right such Borrower may have to collect from the other
Borrowers.
This is an unconditional and irrevocable waiver of any rights and
defenses such
Borrower may have because the Obligations are secured by Real
Property. These
rights and defenses include, but are not limited to, any rights or
defenses
based upon Section 580a, 580b, 580d or 726 of the California Code
of Civil
Procedure.
(i) The
provisions of this Section 2.15 are made for the benefit of
Agent, Lenders and their respective successors and assigns, and may
be enforced
by it or them from time to time against any or all Borrowers as
often as
occasion therefor may arise and without requirement on the part of
any such
Agent, Lender, successor or assign first to marshal any of its or
their claims
or to exercise any of its or their rights against any Borrower or
to exhaust any
remedies available to it or them against any Borrower or to resort
to
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any other source or means of obtaining payment of any of the
Obligations
hereunder or to elect any other remedy. The provisions of this
Section 2.15
shall remain in effect until all of the Obligations shall have been
paid in full
or otherwise fully satisfied. If at any time, any payment, or any
part thereof,
made in respect of any of the Obligations, is rescinded or must
otherwise be
restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of
this Section
2.15 will forthwith be reinstated in effect, as though such payment
had not been
made.
(j) Each
Borrower hereby agrees that it will not enforce any of its
rights of contribution or subrogation against any other Borrower
with respect to
any liability incurred by it hereunder or under any of the other
Loan Documents,
any payments made by it to Agent or Lenders with respect to any of
the
Obligations or any collateral security therefor until such time as
all of the
Obligations have been paid in full in cash. Any claim which any
Borrower may
have against any other Borrower with respect to any payments to any
Agent or
Lender hereunder or under any other Loan Documents are hereby
expressly made
subordinate and junior in right of payment, without limitation as
to any
increases in the Obligations arising hereunder or thereunder, to
the prior
payment in full in cash of the Obligations and, in the event of any
insolvency,
bankruptcy, receivership, liquidation, reorganization or other
similar
proceeding under the laws of any jurisdiction relating to any
Borrower, its
debts or its assets, whether voluntary or involuntary, all such
Obligations
shall be paid in full in cash before any payment or distribution of
any
character, whether in cash, securities or other property, shall be
made to any
other Borrower therefor.
(k) Each
Borrower hereby agrees that, after the occurrence and during
the continuance of any Default or Event of Default, the payment of
any amounts
due with respect to the indebtedness owing by any Borrower to any
other Borrower
is hereby subordinated to the prior payment in full in cash of the
Obligations.
Each Borrower hereby agrees that after the occurrence and during
the continuance
of any Default or Event of Default, such Borrower will not demand,
sue for or
otherwise attempt to collect any indebtedness of any other Borrower
owing to
such Borrower until the Obligations shall have been paid in full in
cash. If,
notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or
receive any amounts in respect of such indebtedness, such amounts
shall be
collected, enforced and received by such Borrower as trustee for
Agent, and such
Borrower shall deliver any such amounts to Agent for application to
the
Obligations in accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL
EXTENSION OF CREDIT. The obligation
of each Lender to make its initial extension of credit provided for
hereunder,
is subject to the fulfillment, to the satisfaction of Agent and
each Lender of
each of the conditions precedent set forth on Schedule 3.1 (the
making of such
initial extension of credit by a Lender being conclusively deemed
to be its
satisfaction or waiver of the conditions precedent).
3.2 INTENTIONALLY OMITTED.
3.3 TERM. This Agreement shall continue in
full force and effect for a term
ending on November 30, 2010 (the "Maturity Date"). The
foregoing
notwithstanding, the Lender Group, upon the election of the
Required Lenders,
shall have the right to terminate its obligations under this
Agreement
immediately and without notice upon the occurrence and during the
continuation
of an Event of Default.
3.4 EFFECT OF TERMINATION. On the date of
termination of this Agreement,
all Obligations (including contingent reimbursement obligations of
Borrowers
with respect to outstanding Letters of Credit) immediately shall
become due and
payable without notice or demand and Borrowers agree to either (i)
provide cash
collateral to be held by Agent for the benefit of those Lenders in
an amount
equal to 105% of the Letter of Credit Usage, or (ii) cause the
original Letters
of Credit to be returned to the Issuing Lender). No termination of
this
Agreement, however, shall relieve or discharge Borrowers or their
respective
Restricted Subsidiaries of their duties, Obligations, or covenants
hereunder or
under any other Loan Document and the Agent's Liens in
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the Collateral shall remain in effect until all Obligations have
been paid in
full and the Lender Group's obligations to provide additional
credit hereunder
have been terminated. When this Agreement has been terminated and
all of the
Obligations have been paid in full and the Lender Group's
obligations to provide
additional credit under the Loan Documents have been terminated
irrevocably,
Agent will, at Borrowers' sole expense, execute and deliver any
termination
statements, lien releases, mortgage releases, re-assignments of
trademarks,
discharges of security interests, and other similar discharge or
release
documents (and, if applicable, in recordable form) as are
reasonably necessary
to release, as of record, the Agent's Liens and all notices of
security
interests and liens previously filed by Agent with respect to the
Obligations.
3.5 EARLY TERMINATION BY BORROWERS.
Borrowers have the option, at any time
upon 30 days prior written notice by Administrative Borrower to
Agent, to
terminate this Agreement by paying to Agent, in cash, the
Obligations (including
either (i) providing cash collateral to be held by Agent for the
benefit of
those Lenders in an amount equal to 105% of the Letter of Credit
Usage, or (ii)
causing the original Letters of Credit to be returned to the
Issuing Lender), in
full, together with any Applicable Prepayment Premium. If
Administrative
Borrower has sent a notice of termination pursuant to the
provisions of this
Section, then, absent an agreement to the contrary contained in any
Loan
Document, the Commitments shall terminate and Borrowers shall be
obligated to
repay the Obligations (including either (i) providing cash
collateral to be held
by Agent for the benefit of those Lenders in an amount equal to
105% of the
Letter of Credit Usage, or (ii) causing the original Letters of
Credit to be
returned to the Issuing Lender), in full, together with any
Applicable
Prepayment Premium, on the date set forth as the date of
termination of this
Agreement in such notice.
3.6 CONDITIONS SUBSEQUENT TO THE INITIAL
EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue
to maintain
the LC Obligations and the Term Loans (or otherwise extend credit
hereunder) is
subject to the fulfillment, on or before the date applicable
thereto, of each of
the conditions subsequent set forth below (the failure by Borrowers
to so
perform or cause to be performed constituting an Event of
Default):
(a) within
30 days after the Closing Date (or such longer period as
agreed to by Agent in its sole discretion), Borrowers shall have
delivered to
Agent certified copies of the policies of insurance, together with
the
endorsements thereto, as are required by Section 5.8, the form and
substance of
which shall be reasonably satisfactory to Agent and its
counsel;
(b) within
60 days after the Closing Date (or such longer period as
agreed to by Agent in its sole discretion), Borrowers shall deliver
to Agent
Cash Management Agreements and Control Agreements, in form and
substance
reasonably satisfactory to Agent;
(c) within
90 days after the Closing Date (or such longer period as
agreed to by Agent in its sole discretion), Borrowers shall use
their
commercially reasonable efforts to deliver to Agent Collateral
Access Agreements
with respect to any leased location at which books and records are
located or
Collateral in excess of $500,000 is located;
(d) within
10 Business Days after the Closing Date (or such longer
period as agreed to by Agent in its sole discretion), Borrowers
shall deliver to
Agent (i) any certificates representing shares of Stock pledged
under the
Security Agreement, as well as Stock powers with respect thereto
endorsed in
blank, to the extent not delivered prior to the Closing Date, (ii)
the original
notes issued under the M&T Facility, marked cancelled: and
(iii) an affidavit of
lost indemnity in form and substance reasonably satisfactory to
Agent with
respect to any certificates representing shares of Stock pledged
under the
Security Agreement but not delivered to Agent on the Closing Date
or pursuant to
clause (i) above;
(e) on or
prior to April 15, 2007 (or such longer period as agreed to
by Agent in its sole discretion), Agent shall have received a
certificate of
insurance, together with the endorsements thereto, as are required
by Section
5.8, the form and substance of which shall be satisfactory to
Agent;
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<PAGE>
(f) within
90 days after the Closing Date, the following conditions
shall have been satisfied with respect to all Real Property
Collateral (other
than the Real Property Collateral located in the State of New
York): (a) Agent
shall have been granted a first priority Mortgage on such Real
Property
Collateral; (b) Agent shall have received mortgagee title insurance
policies (or
marked commitments to issue the same) for such Real Property
Collateral issued
by a title insurance company reasonably satisfactory to Agent in an
amount
reasonably satisfactory to Agent assuring Agent that the Mortgage
on such Real
Property Collateral is a valid and enforceable first priority
mortgage Lien on
such Real Property Collateral free and clear of all defects and
encumbrances
except Permitted Liens, and such mortgagee title insurance policies
(or marked
commitments to issue the same) otherwise shall be in form and
substance
reasonably satisfactory to Agent; (c) Borrowers and their
Subsidiaries shall
have paid to said title insurance company all expenses and premiums
of said
title insurance company in connection with the issuance of such
mortgagee title
insurance policies (or marked commitments to issue the same) and in
addition
shall, to the extent required, have paid all recording costs, stamp
taxes,
mortgage taxes, intangibles taxes and other fees and costs
(including reasonable
attorneys fees and expenses) incurred in connection therewith; and
(d) Agent
shall have received such other documentation and opinions of
counsel, in form
and substance reasonably satisfactory to Agent, in connection with
the grant of
such Mortgage as Agent shall request in its Permitted Discretion,
including,
without limitation, surveys (or existing surveys and survey
affidavits that are
(x) sufficient to have the "matters that would be shown on a
survey" exception
deleted from the mortgagee policy of title insurance and (y)
reasonably
satisfactory to Agent), financing statements and fixture filings;
and
(g) within
10 days after the Closing Date (or such longer period as
agreed to by Agent in its sole discretion), Borrowers shall deliver
to Agent the
Governing Documents, as amended, modified, or supplemented to the
Closing Date,
for TB Wood's Incorporated certified by the Secretary of State of
the
jurisdiction of organization of such Person, which certificate
shall indicate
that such Person is in good standing in such jurisdiction.
4. REPRESENTATIONS AND WARRANTIES.
In order to
induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the
Lender Group
which shall be true, correct, and complete, in all material
respects, as of the
date hereof, and shall be true, correct, and complete, in all
material respects,
as of the Closing Date (except to the extent that such
representations and
warranties relate solely to an earlier date) and such
representations and
warranties shall survive the execution and delivery of this
Agreement:
4.1 NO ENCUMBRANCES. Borrowers and their
respective Restricted Subsidiaries
have good and indefeasible title to, or a valid leasehold interest
in, their
material personal property assets and good and marketable title to,
or a valid
leasehold interest in, their Real Property, in each case, free and
clear of
Liens except for Permitted Liens.
4.2 ELIGIBLE ACCOUNTS. As to each Account
that is identified by a Borrower
as an Eligible Account in a borrowing base report submitted to
Agent, such
Account is (a) a bona fide existing payment obligation of the
applicable Account
Debtors created by the sale and delivery of Inventory or the
rendition of
services to such Account Debtors in the ordinary course of
Borrowers' business,
(b) owed to Borrowers without any known defenses, disputes,
offsets,
counterclaims, or rights of cancellation, and (c) not excluded as
ineligible by
virtue of one or more of the excluding criteria set forth in the
definition of
Eligible Accounts.
4.3 ELIGIBLE INVENTORY.
(a) As to
each item of Inventory that is identified by a Borrower as
Eligible Raw Materials Inventory in a borrowing base report
submitted to Agent,
such Inventory is not excluded as ineligible by virtue of one or
more of the
excluding criteria set forth in the definition of Eligible Raw
Materials
Inventory.
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<PAGE>
(b) As to
each item of Inventory that is identified by a Borrower as
Finished Goods Inventory in a borrowing base report submitted to
Agent, such
Inventory is (a) to such Borrower's knowledge, of good and
merchantable quality,
free from known defects, and (b) not excluded as ineligible by
virtue of one or
more of the excluding criteria set forth in the definition of
Eligible Finished
Goods Inventory.
4.4 EQUIPMENT. Each material item of
Equipment of Borrowers and their
respective Restricted Subsidiaries is used or held for use in their
business
and, to such owner's knowledge, is in good working order, ordinary
wear and tear
and damage by casualty excepted.
4.5 LOCATION OF INVENTORY AND EQUIPMENT.
The Inventory and Equipment (other
than (i) vehicles, (ii) Equipment out for repair, (iii) Equipment
and Inventory
in transit between locations identified on Schedule 4.5(b), (iv)
dies, tools,
patterns, molds and similar items maintained with customers in the
ordinary
course of business, and (v) items of de minimus value) of Borrowers
and their
respective Restricted Subsidiaries are not stored with a bailee,
warehouseman,
or similar party (except as identified on Schedule 4.5(a), as such
Schedule
shall be required to be updated pursuant to the immediately
succeeding sentence)
and are located only at the locations identified on Schedule 4.5(b)
(as such
Schedule shall be required to be updated pursuant to the
immediately succeeding
sentence). Administrative Borrower shall be required to update
Schedules 4.5(a)
and Schedule 4.5(b) simultaneously with the delivery of quarterly
financial
statements required pursuant to Section 5.3; provided, that such
Schedules shall
be required to be updated only with respect to Equipment or
Inventory having an
aggregate value of $250,000 or greater.
4.6 INVENTORY RECORDS. Each Borrower keeps
correct and accurate records
itemizing and describing the type, quality, and quantity of its and
its
Restricted Subsidiaries' Inventory and the book value thereof.
4.7 STATE OF INCORPORATION; LOCATION OF
CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.
(a) The
jurisdiction of organization of Borrowers and each of their
respective Restricted Subsidiaries is set forth on Schedule
4.7(a).
(b) The
chief executive office of Borrowers and each of their
respective Restricted Subsidiaries is located at the address
indicated on
Schedule 4.7(b) (as such Schedule may be updated pursuant to
Section 5.9).
(c)
Borrowers' and each of their respective Restricted
Subsidiaries'
organizational identification numbers, if any, are identified on
Schedule
4.7(c).
(d) As of
the Closing Date, Borrowers and their respective Restricted
Subsidiaries do not hold any commercial tort claims, except as set
forth on
Schedule 4.7(d).
4.8 DUE ORGANIZATION AND QUALIFICATION;
RESTRICTED SUBSIDIARIES.
(a) Each
Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of their organization and
qualified to do
business in any state where the failure to be so qualified
reasonably could be
expected to result in a Material Adverse Change.
(b) Set
forth on Schedule 4.8(b) is a complete and accurate
description of the authorized capital Stock of each Borrower and
their
respective Restricted Subsidiaries, by class, and, as of the
Closing Date, a
description of the number of shares of each such class that are
issued and
outstanding. Other than as described on Schedule 4.8(b), as of the
Closing Date,
there are no subscriptions, options, warrants, or calls relating to
any shares
of each Borrower's or any of their respective Restricted
Subsidiaries' capital
Stock, including any right of conversion or exchange under any
outstanding
security or other instrument. None of
18
<PAGE>
Borrowers or any of their respective Restricted Subsidiaries is
subject to any
obligation (contingent or otherwise) to repurchase or otherwise
acquire or
retire any shares of its capital Stock or any security convertible
into or
exchangeable for any of its capital Stock.
(c) Set
forth on Schedule 4.8(c) is a complete and accurate list of
each Borrower's direct and indirect Restricted Subsidiaries,
showing, as of the
Closing Date, the number and the percentage of the outstanding
shares of each
class of common and preferred Stock authorized for each of such
Restricted
Subsidiaries owned directly or indirectly by the applicable
Borrower. All of the
outstanding capital Stock of each such Restricted Subsidiary has
been validly
issued and is fully paid and non-assessable.
4.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The
execution, delivery, and performance by each Borrower of this
Agreement, the other Loan Documents and the Acquisition Documents
to which each
is a party have been duly authorized by all necessary action on the
part of such
Borrower.
(b) (i) The
execution, delivery, and performance by each Borrower of
this Agreement and the other Loan Documents to which it is a party
do not (A)
violate any material provision of federal, state, or local law or
regulation
applicable to any Borrower, the Governing Documents of any
Borrower, or any
material order, judgment, or decree of any court or other
Governmental Authority
binding on any Borrower, (B) conflict with, result in a breach of,
or constitute
(with due notice or lapse of time or both) a default under any
material
contractual obligation of any Borrower, (C) result in or require
the creation or
imposition of any Lien of any nature whatsoever upon any properties
or assets of
any Borrower, other than Permitted Liens, or (D) require any
approval or consent
of any Person under any material contractual obligation of any
Borrower, other
than consents or approvals that have been obtained and that are
still in force
and effect; and (ii) the execution, delivery, and performance by
each Borrower
of the Acquisition Documents to which it is a party do not (A)
violate any
provision of federal, state, or local law or regulation applicable
to any
Borrower, the Governing Documents of any Borrower, or any order,
judgment, or
decree of any court or other Governmental Authority binding on any
Borrower, (B)
conflict with, result in a breach of, or constitute (with due
notice or lapse of
time or both) a default under any contractual obligation of any
Borrower, (C)
result in or require the creation or imposition of any Lien of any
nature
whatsoever upon any properties or assets of any Borrower, other
than Permitted
Liens, or (D) require any approval or consent of any Person under
any
contractual obligation of any Borrower, other than consents or
approvals that
have been obtained and that are still in force and effect, which,
in each of
cases (A), (B), (C) and (D) of this clause (ii), could reasonably
be expected to
result in a Material Adverse Change.
(c) (i)
Other than the filing of financing statements, and the
recordation of the Mortgages, the execution, delivery, and
performance by each
Borrower of this Agreement and the other Loan Documents to which it
is a party
do not require any registration with, consent, or approval of, or
notice to, or
other action with or by, any Governmental Authority, other than
consents or
approvals that have been obtained and that are still in force and
effect; and
(ii) other than the filing of financing statements, and the
recordation of the
Mortgages, the execution, delivery, and performance by each
Borrower of the
Acquisition Documents to which it is a party do not require any
registration
with, consent, or approval of, or notice to, or other action with
or by, any
Governmental Authority, other than consents or approvals that have
been obtained
and that are still in force and effect and other than those items
which could
not reasonably be expected to result in a Material Adverse
Change.
(d) (i) This
Agreement and the other Loan Documents to which each
Borrower is a party, and all other documents contemplated hereby
and thereby,
when executed and delivered by such Borrower will be the legally
valid and
binding obligations of such Borrower, enforceable against such
Borrower in
accordance with their respective terms, except as enforcement may
be limited by
equitable principles or by bankruptcy, insolvency, reorganization,
moratorium,
or similar laws relating to or limiting creditors' rights
generally; and (ii)
the Acquisition Documents to which each Borrower is a party, and
all other
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<PAGE>
documents contemplated hereby and thereby, when executed and
delivered by such
Borrower will be the legally valid and binding obligations of such
Borrower,
enforceable against such Borrower in accordance with their
respective terms,
except as enforcement may be limited by equitable principles or by
bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to
or limiting
creditors' rights generally and except to the extent that the lack
of such
enforceability could not reasonably be expected to result in a
Material Adverse
Change.
(e) The
Agent's Liens in the Collateral are validly created,
perfected, and first priority Liens to the extent provided for in
the other Loan
Documents, subject only to Permitted Liens.
(f) The
execution, delivery, and performance by each Guarantor of the
Loan Documents to which it is a party have been duly authorized by
all necessary
action on the part of such Guarantor.
(g) The
execution, delivery, and performance by each Guarantor of the
Loan Documents to which it is a party do not (i) violate any
material provision
of federal, state, or local law or regulation applicable to such
Guarantor, the
Governing Documents of such Guarantor, or any material order,
judgment, or
decree of any court or other Governmental Authority binding on such
Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due
notice or
lapse of time or both) a default under any material contractual
obligation of
such Guarantor, (iii) result in or require the creation or
imposition of any
Lien of any nature whatsoever upon any properties or assets of such
Guarantor,
other than Permitted Liens, or (iv) require any approval or consent
of any
Person under any material contractual obligation of such Guarantor,
other than
consents or approvals that have been obtained and that are still in
force and
effect.
(h) Other
than the filing of financing statements and the recordation
of the Mortgages, the execution, delivery, and performance by each
Guarantor of
the Loan Documents to which such Guarantor is a party do not
require any
registration with, consent, or approval of, or notice to, or other
action with
or by, any Governmental Authority, other than consents or approvals
that have
been obtained and that are still in force and effect.
(i) The Loan
Documents to which each Guarantor is a party, and all
other documents contemplated hereby and thereby, when executed and
delivered by
such Guarantor will be the legally valid and binding obligations of
such
Guarantor, enforceable against such Guarantor in accordance with
their
respective terms, except as enforcement may be limited by equitable
principles
or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws
relating to or limiting creditors' rights generally.
4.10 LITIGATION. Other than those matters
disclosed on Schedule 4.10, there
are no actions, suits, or proceedings pending or, to the knowledge
of each
Borrower, threatened against any Borrower or any of its Restricted
Subsidiaries
that (a) if adversely determined, could result in a Material
Adverse Change or
(b) relate to this Agreement or any other Loan Documents or any
transaction
contemplated hereby or thereby.
4.11 NO MATERIAL ADVERSE CHANGE. All
financial statements relating to
Borrowers and their respective Restricted Subsidiaries that have
been delivered
by Borrowers to the Lender Group have been prepared in accordance
with GAAP
(except, in the case of unaudited financial statements, for the
lack of
footnotes and being subject to year-end audit adjustments) and
present fairly in
all material respects, Borrowers' and their respective Restricted
Subsidiaries'
financial condition as of the date thereof and results of
operations for the
period then ended. There has not been a Material Adverse Change
with respect to
Borrowers and their respective Restricted Subsidiaries since
December 31, 2006.
4.12 FRAUDULENT TRANSFER.
(a)
Borrowers, together with their Restricted Subsidiaries, taken as
a
whole, are Solvent.
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(b) No
transfer of property is being made by any Borrower or any of
its Restricted Subsidiaries and no obligation is being incurred by
any Borrower
or any of its Restricted Subsidiaries in connection with the
transactions
contemplated by this Agreement or the other Loan Documents with the
intent to
hinder, delay, or defraud either present or future creditors of
Borrowers or any
of their respective Restricted Subsidiaries.
4.13 EMPLOYEE COMPLIANCE.
(a) Set
forth on Schedule 4.13(a) is a complete and accurate list of
all Plans that meet the definition of an "employee pension benefit
plan" under
Section 3(2) of ERISA and that are currently maintained or
contributed to by any
Borrower, any of their respective Restricted Subsidiaries or any of
their
respective ERISA Affiliates as of the Closing Date.
(b) each
Borrower, their respective Restricted Subsidiaries, and their
respective ERISA Affiliates are in compliance in all material
respects with all
applicable provisions and requirements of ERISA and the regulations
and
published interpretations thereunder with respect to each Plan, and
have
performed all their obligations in all material respects under each
Plan.
(c) No ERISA
Event has occurred or is reasonably expected to occur.
(d) All
liabilities under each Plan are (i) funded to at least the
minimum level required by law or, if higher, to the level required
by the terms
governing the Plans, (ii) insured with a reputable insurance
company, (iii)
provided for or recognized in the financial statements most
recently delivered
to Agent pursuant to Section 5.3 hereof to the extent required by
GAAP or (iv)
estimated in the formal notes to the financial statements most
recently
delivered to Agent pursuant to Section 5.3 hereof to the extent
required by
GAAP.
(e) To the
best knowledge of each Borrower, there are no circumstances
which may give rise to a material liability in relation to any Plan
which is not
funded, insured, provided for, recognized or estimated in the
manner described
in subsection (d) above.
4.14 ENVIRONMENTAL CONDITION. Except as
set forth on Schedule 4.14 or
disclosed in the Phase I Environmental Site Assessment prepared by
URS, and
except for matters that would not reasonably be expected to result
in the
Borrowers or any of their respective Restricted Subsidiaries
incurring material
liability, (a) to Borrowers' knowledge, none of Borrowers' or their
respective
Restricted Subsidiaries' properties or assets has ever been used by
Borrowers,
any of their respective Restricted Subsidiaries, or by previous
owners or
operators in the disposal of, or to produce, store, handle, treat,
release, or
transport, any Hazardous Materials, where such use, production,
storage,
handling, treatment, release or transport was in violation, in any
material
respect, of any applicable Environmental Law, (b) to Borrowers'
knowledge, none
of Borrowers' nor any of their respective Restricted Subsidiaries'
properties is
or has ever been designated or identified pursuant to any
environmental
protection statute as a site requiring investigation or remediation
due to the
disposal or release of Hazardous Materials, (c) none of Borrowers
nor any of
their respective Restricted Subsidiaries have received notice that
a Lien
arising under any Environmental Law has attached to any revenues of
any Borrower
or any of its Restricted Subsidiaries or to any Real Property owned
or operated
by Borrowers or any of their respective Restricted Subsidiaries,
and (d) none of
Borrowers nor any of their respective Restricted Subsidiaries have
received a
summons, citation, notice, or directive from the United States
Environmental
Protection Agency or any other federal or state governmental
agency
("Environmental Claim") concerning any action or omission by any
Borrower or any
of its Restricted Subsidiaries resulting in the releasing or
disposing of
Hazardous Materials into the environment other than Environmental
Claims that
would not reasonably be expected to result in a Material Adverse
Change, and
there are no material Environmental Claims currently pending
against Borrowers
or any of their respective Restricted Subsidiaries.
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4.15 INTELLECTUAL PROPERTY. Except for the
matters which could not
reasonably be expected to result in a Material Adverse Change, each
Borrower and
each of their respective Restricted Subsidiaries owns, or holds
licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and
licenses that
are necessary to the conduct of its business as currently
conducted.
4.16 LEASES. Except for the matters which
could not reasonably be expected
to result in a Material Adverse Change, Borrowers and their
respective
Restricted Subsidiaries enjoy peaceful and undisturbed possession
under all
leases material to their business and to which they are parties or
under which
they are operating and all of such material leases are valid and
subsisting and
no material default by Borrowers or their respective Restricted
Subsidiaries
exists under any of them except for payments which are the subject
of a
Permitted Protest.
4.17 DEPOSIT ACCOUNTS AND SECURITIES
ACCOUNTS. As of the Closing Date, set
forth on Schedule 4.17 is a listing of all of Borrowers' and their
respective
Restricted Subsidiaries' Deposit Accounts and Securities Accounts,
including,
with respect to each bank or securities intermediary (a) the name
and address of
such Person, and (b) the account numbers of the Deposit Accounts or
Securities
Accounts maintained with such Person.
4.18 COMPLETE DISCLOSURE. All factual
information furnished by or on behalf
of Borrowers or their respective Restricted Subsidiaries with
respect to
Borrowers or such Restricted Subsidiaries in writing to Agent or
any Lender for
purposes of or in connection with this Agreement and the other Loan
Documents
is, when taken as a whole with all other furnished information,
true and
accurate in all material respects on the date as of which such
information is
dated or certified and not incomplete by omitting to state any fact
necessary to
make such information (when taken as a whole with all other
furnished
information) not misleading in any material respect at such time in
light of the
circumstances under which such information was provided. On the
Closing Date,
the Projections received by Agent pursuant to clause (t) of
Schedule 3.1
represent, and as of the date on which any other Projections are
delivered to
Agent, such additional Projections represent Borrowers' good faith
estimate of
their and their respective Restricted Subsidiaries' future
performance for the
periods covered thereby (it being understood that the Projections
are subject to
significant uncertainties and contingencies, many of which are
beyond control
and that no assurance is or can be given that the Projections will
be realized
and that actual results may vary from such Projections and such
variances may be
material).
4.19 INDEBTEDNESS. Set forth on Schedule
4.19 is a true and complete list
of all Indebtedness of each Borrower and each of their respective
Restricted
Subsidiaries outstanding immediately prior to the Closing Date that
is to remain
outstanding after the Closing Date and such Schedule accurately
reflects the
aggregate principal amount of such Indebtedness and describes the
principal
terms thereof.
4.20 MATERIAL CONTRACTS. Except for
matters which, either individually or
in the aggregate, could not reasonably be expected to result in a
Material
Adverse Change, each Material Contract (a) is in full force and
effect and is
binding upon and enforceable against each Person that is a party
thereto in
accordance with its terms, (b) has not been otherwise amended or
modified
(except as not otherwise prohibited hereby), and (c) is not in
default due to
the action of any Borrower or any of its Restricted
Subsidiaries.
5. AFFIRMATIVE COVENANTS.
Each
Borrower covenants and agrees that, until termination of all of
the Commitments and payment in full of the Obligations, Borrowers
shall and
shall cause each of their respective Restricted Subsidiaries to do
all of the
following:
5.1 ACCOUNTING SYSTEM. Maintain a system
of accounting that enables
Borrowers to produce financial statements in accordance with GAAP
and maintain
records pertaining to the Collateral that contain
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information as from time to time reasonably may be requested by
Agent. Borrowers
also shall keep a reporting system that shows all additions, sales,
claims,
returns, and allowances with respect to their and their respective
Restricted
Subsidiaries' sales.
5.2 COLLATERAL REPORTING. Provide Agent
with each of the reports set forth
on Schedule 5.2 at the times specified therein. In addition, each
Borrower
agrees to cooperate fully with Agent to facilitate and implement,
where
appropriate, a system of electronic collateral reporting in order
to provide
electronic reporting of each of the items set forth above.
5.3 FINANCIAL STATEMENTS, REPORTS,
CERTIFICATES. Deliver to Agent each of
the financial statements, reports, or other items set forth on
Schedule 5.3 at
the time specified herein. In addition, Parent agrees that no
Restricted
Subsidiary of Parent will have a fiscal year different from that of
Parent.
5.4 INTENTIONALLY OMITTED.
5.5 INSPECTION. Subject to any specific
limitations set forth in any other
Loan Document, permit Agent and each of its duly authorized
representatives or
agents to visit any of its properties and inspect any of its assets
or books and
records, to examine and make copies of its books and records, and
to discuss its
affairs, finances, and accounts with, and to be advised as to the
same by, its
officers and employees at such reasonable times and intervals as
Agent may
designate and, so long as no Default or Event of Default exists,
with reasonable
prior notice to Administrative Borrower.
5.6 MAINTENANCE OF PROPERTIES. Maintain
and preserve all of their
properties which are necessary or useful in the proper conduct to
their business
in good working order and condition, ordinary wear, tear, and
casualty excepted
(and except where the failure to do so could not be expected to
result in a
Material Adverse Change), and comply at all times with the
provisions of all
material leases to which it is a party as lessee (except where the
failure to do
so could not reasonably be expected to result in a Material Adverse
Change), so
as to prevent any loss or forfeiture thereof or thereunder.
5.7 TAXES. Cause all material assessments
and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or
assessed
against Borrowers, their respective Restricted Subsidiaries, or any
of their
respective assets to be paid in full, before delinquency or before
the
expiration of any extension period, except to the extent that the
validity of
such assessment or tax shall be the subject of a Permitted Protest.
Borrowers
will and will cause their respective Restricted Subsidiaries to
make timely
payment or deposit of all tax payments and withholding taxes
required of them by
applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state
disability, and local, state, and federal income taxes, and will,
upon request,
furnish Agent with proof reasonably satisfactory to Agent
indicating that the
applicable Borrower or applicable Restricted Subsidiary has made
such payments
or deposits (except to the extent the subject of a Permitted
Protest).
5.8 INSURANCE.
(a) At
Borrowers' expense, maintain insurance respecting their and
their respective Restricted Subsidiaries' assets wherever located,
covering loss
or damage by fire, theft, explosion, and all other hazards and
risks as
ordinarily are insured against by other Persons engaged in the same
or similar
businesses and in the same geographic area. Borrowers also shall
maintain
business interruption, public liability, and product liability
insurance, as
well as insurance against larceny, embezzlement, and criminal
misappropriation.
All such policies of insurance shall be in such amounts and with
such insurance
companies as are reasonably satisfactory to Agent. Borrowers shall
deliver
copies of all such policies (other than directors and officers
policies) to
Agent with an endorsement naming Agent as the sole loss payee
(under a
reasonably satisfactory lender's loss payable endorsement) or
additional
insured, as appropriate. Each policy of insurance or
23
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endorsement shall contain a clause requiring the insurer to give
not less than
30 days prior written notice to Agent in the event of cancellation
of the policy
for any reason whatsoever.
(b)
Administrative Borrower shall give Agent prompt notice of any
loss
exceeding $500,000 covered by such insurance. So long as no Event
of Default has
occurred and is continuing, Borrowers shall have the exclusive
right to adjust
any losses payable under any such insurance policies which are less
than
$500,000. Following the occurrence and during the continuation of
an Event of
Default, or in the case of any losses payable under such insurance
exceeding
$500,000, Agent shall have the exclusive right to adjust any losses
payable
under any such insurance policies, without any liability to
Borrowers whatsoever
in respect of such adjustments. Any monies received as payment for
any loss
under any insurance policy mentioned above (other than liability
insurance
policies) or as payment of any award or compensation for
condemnation or taking
by eminent domain, shall be paid over to Agent to be applied in
accordance with
Section 2.4(d).
(c)
Borrowers will not, and will not suffer or permit their
respective
Restricted Subsidiaries to, take out separate insurance concurrent
in form or
contributing in the event of loss with that required to be
maintained under this
Section 5.8, unless Agent is included thereon as an additional
insured or loss
payee under a lender's loss payable endorsement. Administrative
Borrower
promptly shall notify Agent whenever such separate insurance is
taken out,
specifying the insurer thereunder and full particulars as to the
policies
evidencing the same, and copies of such policies promptly shall be
provided to
Agent.
5.9 LOCATION OF INVENTORY AND EQUIPMENT.
Keep Borrowers' and their
respective Restricted Subsidiaries' Inventory and Equipment (other
than (i)
vehicles, (ii) Equipment out for repair, (iii) Equipment and
Inventory in
transit between locations identified on Schedule 4.5(b), (iv) items
stored with
a bailee, warehouseman, or similar party to the extent disclosed on
Schedule
4.5(a), (v) dies, tools, patterns, molds and similar items
maintained with
customers in the ordinary course of business, (vi) Inventory that
has been
consigned in an aggregate amount not to exceed $500,000 at any
time, and (vii)
items of de minimus value) only at the locations identified on
Schedule 4.5(b)
and their chief executive offices only at the locations identified
on Schedule
4.7(b); provided, however, that Administrative Borrower may amend
Schedule
4.5(b) or Schedule 4.7(b) so long as (A) with respect to Schedule
4.5(b), such
amendment occurs by written notice to Agent in accordance with the
last sentence
of Section 4.5, and with respect to Schedule 4.7(b), such amendment
occurs by
written notice to Agent not less than 30 days prior to the date on
which such
chief executive office is relocated, (B) such new location is
within the
continental United States, and (C) at the time of such written
notification, the
applicable Borrower or Restricted Subsidiary (x) with respect to
any location at
which books and records (other than prior years' historical
records) are
maintained or Inventory and/or Equipment having an aggregate value
of $2,000,000
or greater is maintained, obtains a Collateral Access Agreement
with respect
thereto and (y) with respect to any other location, uses its
commercially
reasonable efforts to provide Agent a Collateral Access Agreement
with respect
thereto.
5.10 COMPLIANCE WITH LAWS. Comply with the
requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority,
other than
laws, rules, regulations, and orders the non-compliance with which,
individually
or in the aggregate, could not reasonably be expected to result in
a Material
Adverse Change.
5.11 LEASES. Except for matters which
could not reasonably be expected to
result in a Material Adverse Change, pay when due all rents and
other amounts
payable under any material leases to which any Borrower or any of
its Restricted
Subsidiaries is a party or by which any Borrower's or any of their
respective
Restricted Subsidiaries' properties and assets are bound, unless
such payments
are the subject of a Permitted Protest.
5.12 EXISTENCE. Except as permitted by
Section 6.3 and Section 6.4, at all
times preserve and keep in full force and effect each Borrower's
and each of
their respective Restricted Subsidiaries' valid existence and,
except to the
extent failure to do so could not reasonably be expected to result
in a Material
Adverse
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Change, good standing and any rights, franchises, permits,
licenses,
authorizations, approvals, entitlements and accreditations material
to their
businesses.
5.13 ENVIRONMENTAL.
(a) Keep any
property either owned or operated by any Borrower or any
of its Restricted Subsidiaries free of any Environmental Liens or
post bonds or
other financial assurances sufficient to satisfy the obligations or
liability
evidenced by such Environmental Liens, (b) comply, in all material
respects,
with Environmental Laws and provide to Agent reasonable
documentation of such
compliance which Agent reasonably requests, provided that, so long
as no Default
or Event of Default shall have occurred and be continuing, Agent
shall not make
such a request more than once per any consecutive 12-month period,
(c) promptly
notify Agent of any release of a Hazardous Material in any
reportable quantity
from or onto property owned or operated by any Borrower or any of
its Restricted
Subsidiaries and take any Remedial Actions required to abate said
release or
otherwise to come into material compliance with applicable
Environmental Law,
and (d) promptly, but in any event within 10 Business Days of its
receipt
thereof, provide Agent with written notice of any of the following:
(i) notice
that an Environmental Lien has been filed against any of the real
or personal
property of any Borrower or any of its Restricted Subsidiaries,
(ii)
commencement of any Environmental Action or notice that an
Environmental Action
will be filed against any Borrower or any of its Restricted
Subsidiaries which
Environmental Action could reasonably be expected to result in any
Borrower or
any of its Restricted Subsidiaries incurring material liability
under
Environmental Laws, and (iii) notice of a violation, citation, or
other
administrative order which reasonably could be expected to result
in a Material
Adverse Change.
5.14 INTENTIONALLY OMITTED.
5.15 CONTROL AGREEMENTS. Subject to
Section 3.6(b), take all reasonable
steps in order for Agent to obtain control in accordance with
Sections 8-106,
9-104, 9-105, 9-106, and 9-107 of the Code with respect to (subject
to the
proviso contained in Section 6.12) all of its Securities Accounts,
Deposit
Accounts, electronic chattel paper, investment property, and letter
of credit
rights.
5.16 FORMATION OF SUBSIDIARIES. At the
time that any Borrower or any
Guarantor forms any direct or indirect Subsidiary or acquires any
direct or
indirect Subsidiary after the Closing Date and such Subsidiary is a
Restricted
Subsidiary, such Borrower or such Guarantor shall (a) cause such
new Restricted
Subsidiary to provide to Agent a joinder to this Agreement or the
Guaranty, as
applicable, and the Security Agreement, together with such other
security
documents (including Mortgages with respect to any Real Property of
such new
Restricted Subsidiary, subject to Section 5.17), as well as
appropriate
financing statements (and with respect to all property subject to a
Mortgage,
fixture filings), all in form and substance reasonably satisfactory
to Agent
(including being sufficient to grant Agent a first priority Lien
(subject to
Permitted Liens) in and to the assets of such newly formed or
acquired
Restricted Subsidiary), (b) provide to Agent a pledge agreement and
appropriate
certificates and powers or financing statements, hypothecating all
of the direct
or beneficial ownership interest in such new Restricted Subsidiary,
in form and
substance reasonably satisfactory to Agent, and (c) provide to
Agent all other
documentation, including one or more opinions of counsel reasonably
satisfactory
to Agent, which in its opinion is appropriate with respect to the
execution and
delivery of the applicable documentation referred to above
(including policies
of title insurance or other documentation with respect to all
property subject
to a Mortgage). Notwithstanding the foregoing, if a Subsidiary that
is so formed
or acquired is a Controlled Foreign Corporation, then clause (a) of
the
immediately preceding sentence shall not be applicable and, with
respect to
clause (b) of the immediately preceding sentence, such pledge shall
be limited
to 65% of the voting power of all classes of capital Stock of such
Subsidiary
entitled to vote. Any document, agreement, or instrument executed
or issued
pursuant to this Section 5.16 shall be a Loan Document.
Notwithstanding the
foregoing, Agent and Lenders shall not be obligated to consent to
any such
formation or acquisition of a Subsidiary unless such formation or
acquisition is
otherwise expressly permitted hereunder.
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5.17 REAL PROPERTY. Upon the acquisition
of any fee interest in Real
Property with a purchase price or Fair Market Value in excess of
$500,000 (other
than Real Property located in the State of New York or in any other
state having
substantially similar real estate mortgage taxes), promptly notify
Agent of the
acquisition of such Real Property and within 60 days (or such
longer time as
Agent, in its reasonable discretion, may agree) thereafter: (a)
grant Agent a
first priority Mortgage on such Real Property; (b) deliver
mortgagee title
insurance policies (or marked commitments to issue the same) for
such Real
Property issued by a title insurance company reasonably
satisfactory to Agent in
an amount reasonably satisfactory to Agent assuring Agent that the
Mortgage on
such Real Property Collateral is a valid and enforceable first
priority mortgage
Lien on such Real Property Collateral free and clear of all defects
and
encumbrances except Permitted Liens, and such mortgagee title
insurance policies
(or marked commitments to issue the same) otherwise shall be in
form and
substance reasonably satisfactory to Agent; (c) Borrowers and their
Subsidiaries
shall pay to said title insurance company all expenses and premiums
of said
title insurance company in connection with the issuance of such
mortgagee title
insurance policies (or marked commitments to issue the same) and in
addition
shall, to the extent required, pay all recording costs, stamp
taxes, mortgage
taxes, intangibles taxes and other fees and costs (including
reasonable
attorneys fees and expenses) incurred in connection therewith; and
(d) execute
and/or deliver to Agent such other documentation and opinions of
counsel, in
form and substance reasonably satisfactory to Agent, in connection
with the
grant of such Mortgage as Agent shall request in its Permitted
Discretion,
including, without limitation, surveys (or existing surveys and
survey
affidavits that are (x) sufficient to have the "matters that would
be shown on a
survey" exception deleted from the mortgagee policy of title
insurance and (y)
reasonably satisfactory to Agent), financing statements and fixture
filings.
5.18 ERISA COMPLIANCE
(a) Each
Borrower shall do, and shall cause each of their respective
Restricted Subsidiaries and ERISA Affiliates to do, each of the
following: (i)
maintain each Plan in compliance in all material respects with the
applicable
provisions of ERISA, the IRC and each other applicable federal or
state law;
(ii) cause each Qualified Plan to maintain its qualified status
under Section
401(a) of the IRC; (iii) make all required contributions to each
Plan; (iv)
ensure that all liabilities under each Plan are (A) funded to at
least the
minimum level required by law or, if higher, to the level required
by the terms
governing such Plan; (B) insured with a reputable insurance
company; or (C)
provided for or recognized in the financial statements most
recently delivered
to Agent under Section 5.3 (to the extent required by GAAP); and
(v) ensure that
the contributions or premium payments to or in respect of each Plan
are and
continue to be promptly paid at no less than the rates required
under the rules
of such Plan and in accordance with the most recent actuarial
advice received in
relation to such Plan and applicable law.
(b) Deliver
to Agent such certifications or other evidence of
compliance with the provisions of Section 4.13 as Agent may from
time to time
reasonably request.
(c) Promptly
notify Agent of each of the following ERISA events
affecting any Borrower, any of their respective Restricted
Subsidiaries or any
ERISA Affiliates (but in no event more than ten (10) days after
such event),
together with a copy of each notice with respect to such event that
may be
required to be filed with a Governmental Authority and each notice
delivered by
a Governmental Authority to any Borrower, any of their respective
Restricted
Subsidiaries or any ERISA Affiliates with respect to such
event:
(i) an ERISA Event;
(ii) the adoption of any new Pension Plan by any Borrower, any
of
their respective Restricted Subsidiaries or any ERISA Affiliates;
or
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(iii) except as required under the terms of any collective
bargaining agreement, the adoption of any amendment to a Pension
Plan, if such
amendment will result in a material increase in benefits or
unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA).
(d) Promptly
deliver to Agent, upon request, copies of (i) each
Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed
by any Borrower, any of their respective Restricted Subsidiaries or
any ERISA
Affiliates with the Internal Revenue Service with respect to each
Pension Plan;
(ii) all notices received by any Borrower, any of their respective
Restricted
Subsidiaries or any of their respective ERISA Affiliates from a
Multiemployer
Plan sponsor concerning an ERISA Event; and (iii) such other
documents or
governmental reports or filings relating to any Plan as Agent shall
reasonably
request.
5.19 PAYMENT OF SENIOR SUBORDINATED NOTES
Upon issuance of the Additional
Notes, Borrowers shall use a portion of the proceeds thereof to
prepay all of
the outstanding senior subordinated notes issued pursuant to that
certain
Securities Purchase Agreement dated as of October 20, 2005, among
Parent and the
other parties thereto.
6. NEGATIVE COVENANTS.
Borrowers
covenant and agree that, until termination of all of the
Commitments and payment in full of the Obligations, Borrowers will
not and will
not permit any of their respective Restricted Subsidiaries to do
any of the
following:
6.1 INDEBTEDNESS. Create, incur, assume,
suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with
respect to any
Indebtedness, except:
(a)
Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers
with respect to
Underlying Letters of Credit,
(b)
Indebtedness set forth on Schedule 4.19,
(c)
Permitted Purchase Money Indebtedness,
(d)
refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) and (c) of this Section 6.1 (and continuance or
renewal of any
Permitted Liens associated therewith) so long as: (i) such
refinancings,
renewals, or extensions do not result in an increase in the
principal amount of
the Indebtedness so refinanced, renewed, or extended, (ii) such
refinancings,
renewals, or extensions do not result in a shortening of the
average weighted
maturity of the Indebtedness so refinanced, renewed, or extended,
nor are they
on terms or conditions, that, taken as a whole, are materially more
burdensome
or restrictive to the applicable Borrower, (iii) if the
Indebtedness that is
refinanced, renewed, or extended was subordinated in right of
payment to the
Obligations, then the terms and conditions of the refinancing,
renewal, or
extension Indebtedness must include subordination terms and
conditions that are
at least as favorable to the Lender Group, taken as a whole, as
those that were
applicable to the refinanced, renewed, or extended Indebtedness,
and (iv) the
Indebtedness that is refinanced, renewed, or extended is not
recourse to any
Person that is liable on account of the Obligations other than
those Persons
which were obligated with respect to the Indebtedness that was
refinanced,
renewed, or extended or as otherwise permitted pursuant to Section
6.1,
(e)
endorsement of instruments or other payment items for deposit,
(f)
Indebtedness consisting of Permitted Investments,
(g)
Guarantees by a Loan Party of the obligations under the Altra
Senior Credit Agreement, the Indenture Documents and the Unsecured
Note
Documents,
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(h) Hedge
Agreements entered into in the ordinary course of business
and not for speculative purposes;
(i)
Indebtedness of a Loan Party to another Loan Party and any
Refinancing Indebtedness in respect thereof (whether in whole or in
part) so
long as such Indebtedness is subject to the Intercompany
Subordination
Agreement;
(j)
Guarantees by a Loan Party of Indebtedness incurred by another
Loan Party so long as the incurrence of such Indebtedness is
otherwise permitted
by the terms hereof;
(k)
intentionally omitted;
(l)
Indebtedness (other than for borrowed money) solely to the
extent
subject to Permitted Liens;
(m)
intentionally omitted;
(n)
Indebtedness consisting of promissory notes issued by any
Borrower
or any Restricted Subsidiary to current or former directors,
officers, employees
and consultants, their respective estates, spouses or former
spouses to finance
the purchase or redemption of Stock permitted hereby;
(o)
Indebtedness consisting of obligations of any Borrower or any
Restricted Subsidiary under deferred compensation, adjustment of
purchase price,
earn outs, indemnification or other similar arrangements incurred
by such Person
in connection with the Acquisition Transactions and Permitted
Dispositions;
(p) cash
management obligations and other Indebtedness in respect of
netting services, overdraft protections and similar arrangements,
in each case
in connection with cash management and Deposit Accounts and
incurred in the
ordinary course of business; and
(q)
additional Indebtedness of Borrowers and their Restricted
Subsidiaries in an aggregate principal amount not to exceed
$5,000,000 at any
time outstanding solely to the extent that such Indebtedness
consists of either
(i) Purchase Money Indebtedness or (ii) Indebtedness that is
subordinated to the
Obligations on terms reasonably satisfactory to Agent.
6.2 LIENS. Create, incur, assume, or
suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of
any kind,
whether now owned or hereafter acquired, or any income or profits
therefrom,
except for Permitted Liens (including Liens that are replacements
of Permitted
Liens to the extent that the original Indebtedness is refinanced,
renewed, or
extended under Section 6.1 and so long as the replacement Liens
only encumber
those assets that secured the refinanced, renewed, or extended
Indebtedness and
proceeds thereof or additions or accessions thereto).
6.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
Enter into any merger,
consolidation, reorganization, or recapitalization, or liquidate,
wind up, or
dissolve itself (or suffer any liquidation or dissolution), except
that:
(a) any
Borrower or any Restricted Subsidiary may merge with (i) any
Borrower (including a merger, the purpose of which is to reorganize
such
Borrower into a new jurisdiction), or (ii) any one or more other
Restricted
Subsidiaries; provided that a Borrower shall be the continuing or
surviving
Person or the continuing or surviving Person shall expressly assume
the
obligations of such Borrower in a manner reasonably acceptable to
Agent;
28
<PAGE>
(b) any
Borrower or Restricted Subsidiary may liquidate or dissolve or
change its legal form so long as its assets are transferred to (i)
in the case
of a Borrower, to another Borrower and (ii) in the case of a
Restricted
Subsidiary, to a Loan Party or any other Restricted Subsidiary;
(c) so long
as no Default or Event of Default has occurred and is
continuing or would result therefrom, any Borrower or Restricted
Subsidiary may
merge with any other Person in order to effect an Investment
permitted pursuant
to Section 6.12; provided that the continuing or surviving Person
shall be a
Restricted Subsidiary, which together with each of its Restricted
Subsidiaries,
shall have complied with the requirements of Section 5.16;
(d) the
Borrowers and the Restricted Subsidiaries may consummate the
Acquisition Transactions; and
(e) so long
as no Event of Default exists or would result therefrom, a
merger, consolidation, reorganization, recapitalization,
liquidation, windup or
dissolution, the sole purpose of which is to effect a Disposition
permitted
pursuant to Section 6.4.
6.4 DISPOSAL OF ASSETS. Other than
Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of
(collectively, a
"Disposition") any of the assets of any Borrower or any of its
Restricted
Subsidiaries.
6.5 CHANGE NAME. Change any Borrower's or
any of their respective
Restricted Subsidiaries' name, organizational identification
number,
jurisdiction of organization, or organizational identity; provided,
however,
that any Borrower or any of its Restricted Subsidiaries may change
its name upon
at least 10 days prior written notice by Parent or Administrative
Borrower to
Agent of such change so long as, (a) at the time of such written
notification,
such Borrower or such Restricted Subsidiary provides any financing
statements
necessary to perfect and continue perfected the Agent's Liens and
(b)
immediately after such name change, Administrative Borrower
provides Agent with
evidence of such name change (including copies of any related
public filings).
6.6 NATURE OF BUSINESS. Engage in any
material line of business
substantially different from those lines of business conducted by
Borrowers and
the Restricted Subsidiaries on the Closing Date other than any
businesses
reasonably related or ancillary thereto.
6.7 PREPAYMENTS AND AMENDMENTS. Except in
connection with a refinancing
permitted by Section 6.1,
(a)
optionally prepay, redeem, defease, purchase, or otherwise
acquire
any Indebtedness of any Borrower or any Restricted Subsidiary of a
Borrower,
except (i) Purchase Money Indebtedness and (ii) the Obligations in
accordance
with this Agreement;
(b) make any
payment on account of Indebtedness that has been
contractually subordinated in right of payment if such payment is
not permitted
at such time under the subordination terms and conditions, or
(c) directly
or indirectly, amend, modify, alter, increase, or change
any of the terms or conditions of any agreement, instrument,
document,
indenture, or other writing evidencing or concerning the Senior
Notes or the
Altra Senior Credit Agreement in a manner materially adverse to the
interests of
the Lender Group other than to consummate a Refinancing
Indebtedness in respect
thereof.
6.8 INTENTIONALLY OMITTED.
6.9 INTENTIONALLY OMITTED.
29
<PAGE>
6.10 INTENTIONALLY OMITTED.
6.11 FISCAL YEAR. Modify or change its
fiscal year.
6.12 INVESTMENTS. Except for Permitted
Investments, directly or indirectly,
make or acquire any Investment, or incur any liabilities (including
contingent
obligations) for or in connection with any Investment; provided,
however, that
Borrowers and their respective Restricted Subsidiaries shall not
have Permitted
Investments (other than in the Cash Management Accounts) in Deposit
Accounts or
Securities Accounts in an aggregate amount in excess of $50,000
(exclusive of
Trust Funds) at any one time unless the applicable Borrower or the
applicable
Restricted Subsidiary, and the applicable securities intermediary
or bank have
entered into Control Agreements governing such Permitted
Investments in order to
perfect (and further establish) the Agent's Liens in such Permitted
Investments.
Subject to the foregoing proviso, Borrowers shall not and shall not
permit their
respective Restricted Subsidiaries to establish or maintain any
Deposit Account
or Securities Account unless Agent shall have received a Control
Agreement in
respect of such Deposit Account or Securities Account.
6.13 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower
except for
transactions that (a) are in the ordinary course of Borrowers'
business, (b) are
upon fair and reasonable terms and (c) are no less favorable to
Borrowers or
their respective Restricted Subsidiaries, as applicable, than would
be obtained
in an arm's length transaction with a non-Affiliate; provided,
however, that if
any such transaction involves aggregate payments or other property
with a Fair
Market Value in excess of $2,500,000, it shall be approved by a
majority of the
members of the Board of Directors of Parent (including a majority
of the
disinterested members thereof), such approval to be evidenced by
board
resolutions stating that the Parent's Board of Directors has
determined that
such transactions comply with the foregoing provisions, and if any
such
transaction involves an aggregate Fair Market Value of more than
$5,000,000,
Parent will, prior to the consummation thereof, obtain a favorable
opinion as to
the fairness of the financial terms of such transactions or series
of related
transactions to the applicable Loan Party, from an Independent
Financial Advisor
and file the same with Agent; provided, further, however, that such
restrictions
shall not apply to:
(a)
transactions exclusively between or among Parent and its
Subsidiaries permitted hereby;
(b)
reasonable fees and compensation paid to, and indemnity
provided
for directors, officers, employees and consultants to Parent and
its
Subsidiaries;
(c)
intentionally omitted;
(d)
transactions otherwise expressly permitted by this Agreement;
(e) any
Investment permitted pursuant to Section 6.12;
(f) any sale
of the Stock of any Loan Party in exchange for equity
contributions from Parent;
(g) any
merger or other transaction with an Affiliate solely for the
purpose of reincorporating a Loan Party in another jurisdiction or
creating a
holding company, to the extent otherwise permitted by this
Agreement;
(h) any
employment, stock option, stock repurchase, employee benefit
compensation, business expense reimbursement, severance,
termination or other
employment-related agreements, arrangements or plans entered into
in good faith
by a Loan Party in the ordinary course of business;
30
<PAGE>
(i) sales or
purchases of inventory, other products or services to or
from any Affiliate of the Borrowers entered into in the ordinary
course of
business on terms no less favorable to the Borrowers and its
Subsidiaries than
those that could be obtained at the time of such sale or purchase
in
arm's-length dealings with a Person who is not an Affiliate;
and
(j) any
agreement in effect as of the Closing Date or any transaction
contemplated thereby and any amendment thereto so long as any such
amendment or
replacement agreement is not more disadvantageous to Borrowers or
the Restricted
Subsidiaries in any material respect than the original agreement as
in effect on
the Closing Date.
6.14 USE OF PROCEEDS. Use the proceeds of
the Term Loans for any purpose
other than (a) on the Closing Date, to refinance the M&T
Facility, and to pay
transactional fees, costs, and expenses incurred in connection with
this
Agreement, the other Loan Documents, and the transactions
contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and
conditions
hereof, to finance ongoing working capital, capital expenditure,
and general
corporate needs of Borrowers, and for its lawful and permitted
purposes.
6.15 INTENTIONALLY OMITTED.
6.16 FINANCIAL COVENANTS.
(a) FIXED
CHARGE COVERAGE RATIO. Fail to maintain or achieve a Fixed
Charge Coverage Ratio, measured on a fiscal quarter-end basis, of
at least the
required amount set forth in the following table for the
"Applicable Period" set
forth opposite thereto:
<TABLE>
<CAPTION>
Applicable
Ratio
Applicable Period
----------------
-------------------------------------
<S>
<C>
1.00:1.00
For the 4 quarter period
ending March 31, 2007
1.00:1.00
For the 4 quarter period
ending each fiscal quarter thereafter
</TABLE>
(b) CAPITAL
EXPENDITURES. Make Capital Expenditures in any fiscal year
in excess of the amount set forth in the following table for the
applicable
period:
<TABLE>
<CAPTION>
Applicable
Amount
Applicable Period
-----------------
------------------------------------------------
<S>
<C>
$9,750,000
fiscal year 2007
$5,625,000
fiscal year 2008
$6,000,000
fiscal year 2009
$6,375,000 fiscal
year 2010 and each fiscal year thereafter
</TABLE>
provided, however, that up to 75% of the difference between the
amount of
Capital Expenditure that may be made in any fiscal year and the
amount of
Capital Expenditures actually made in such fiscal year, may be made
in the
immediately succeeding fiscal year.
31
<PAGE>
6.17 ACQUISITION DOCUMENTS. Amend, modify
or waive in any way materially
adverse to the Lender Group, any term or provision of the
Acquisition Documents.
6.18 INTENTIONALLY OMITTED.
6.19 GOVERNING DOCUMENTS. Amend, modify or
waive in any way materially
adverse to the Lender Group, any term or provision of any Governing
Document of
any Borrower or Guarantor.
6.20 REAL PROPERTY COLLATERAL. Without in
any manner limiting Section 6.2,
execute and deliver a mortgage with respect to any Real Property
located in the
State of New York or any other Real Property for which Borrowers
and their
Restricted Subsidiaries are not required to grant a Mortgage
pursuant to Section
5.17, except (a) in favor of Agent or (b) if the Agent has been, or
will
simultaneously be, granted a first priority mortgage with respect
thereto, in
favor of (i) Wells Fargo Foothill, Inc., in its capacity as agent
under the
Altra Senior Credit Agreement, as a second priority mortgage to the
extent
permitted by the Intercreditor Agreement and (ii) the Trustee as a
third
priority mortgage to the extent permitted by the Intercreditor
Agreement.
7. EVENTS OF DEFAULT.
Any one or
more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
7.1 If Borrowers fail to pay when due and
payable, or when declared due and
payable, (a) all or any portion of the Obligations consisting of
interest, fees,
or charges due the Lender Group, reimbursement of Lender Group
Expenses, or
other amounts (other than any portion thereof constituting
principal)
constituting Obligations (including any portion thereof that
accrues after the
commencement of an Insolvency Proceeding, regardless of whether
allowed or
allowable in whole or in part as a claim in any such Insolvency
Proceeding), and
such failure continues for a period of 3 Business Days, or (b) all
or any
portion of the principal of the Obligations);
7.2 If any Borrower or any of its
Restricted Subsidiaries
(a) fails to
perform or observe any covenant or other agreement
contained in any of Sections 5.5, 5.8, 5.12 (as to existence), and
6.1 through
6.20 of this Agreement or Section 6 of the Security Agreement;
(b) fails to
perform or observe any covenant or other agreement
contained in any of Sections 2.7, 5.2, and 5.3 of this Agreement
and such
failure continues for a period of 3 Business Days after written
notice thereof
is given to Administrative Borrower by Agent;
(c) fails to
perform or observe any covenant or other agreement
contained in any of Sections 5.6, 5.7, 5.9, 5.15, 5.16, and 5.17 of
this
Agreement and such failure continues for a period of 10 Business
Days after
written notice thereof is given to Administrative Borrower by
Agent; or
(d) fails to
perform or observe any covenant or other agreement
contained in this Agreement, or in any of the other Loan Documents;
in each
case, other than any such covenant or agreement that is the subject
of another
provision of this Section 7 (in which event such other provision of
this Section
7 shall govern), and such failure continues for a period of 20
Business Days
after written notice thereof is given to Administrative Borrower by
Agent;
7.3 If any of any Borrower's or any of its
Restricted Subsidiaries' assets
with an individual fair market value of $750,000 or more or assets
with an
aggregate fair market value of $2,000,000 or more is
32
<PAGE>
attached, seized, subjected to a writ or distress warrant, or is
levied upon, or
comes into the possession of any third Person and the same is not
discharged
before the earlier of 30 days after the date it first arises or 5
days prior to
the date on which such property or asset is subject to forfeiture
by such
Borrower or the applicable Restricted Subsidiary;
7.4 If an Insolvency Proceeding is
commenced by any Borrower or any of its
Restricted Subsidiaries;
7.5 If an Insolvency Proceeding is
commenced against any Borrower or any of
its Restricted Subsidiaries, and any of the following events occur:
(a) the
applicable Borrower or Restricted Subsidiary consents to the
institution of such
Insolvency Proceeding against it, (b) the petition commencing the
Insolvency
Proceeding is not timely controverted, (c) the petition commencing
the
Insolvency Proceeding is not dismissed within 60 calendar days of
the date of
the filing thereof, (d) an interim trustee is appointed to take
possession of
all or any substantial portion of the properties or assets of, or
to operate all
or any substantial portion of the business of, any Borrower or any
such
Restricted Subsidiary, or (e) an order for relief shall have been
issued or
entered therein;
7.6 If any Borrower or any of its
Restricted Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing
to conduct
all or any material part of its business affairs;
7.7 If one or more judgments, orders, or
awards involving an individual
amount of $750,000 or more or an aggregate amount of $2,000,000, or
more (except
to the extent fully covered by insurance pursuant to which the
insurer has
accepted liability therefor in writing) shall be entered or filed
against any
Borrower or any of its Restricted Subsidiaries or with respect to
any of their
respective assets, and the same is not released, discharged, bonded
against, or
stayed pending appeal before 30 days after the date it first
arises;
7.8 If there is a default in one or more
agreements to which any Borrower
or any of its Restricted Subsidiaries is a party with one or more
third Persons
relative to Indebtedness of any Borrower or any of its Restricted
Subsidiaries
involving an aggregate amount of $2,000,000 or more, and (a) such
default (i)
occurs at the final maturity of the obligations thereunder, or (ii)
results in a
right by such third Person(s), irrespective of whether exercised,
to accelerate
the maturity of the applicable Borrower's or Restricted
Subsidiary's obligations
thereunder, or (b) or any such Indebtedness obligations shall be
required to be
prepaid or redeemed (other than by a regularly scheduled required
prepayment or
redemption), prior to the stated maturity thereof;
7.9 If any warranty, representation,
statement, or Record made herein or in
any other Loan Document or delivered to Agent or any Lender in
connection with
this Agreement or any other Loan Document proves to be untrue in
any material
respect as of the date of issuance or making or deemed making
thereof;
7.10 If the obligation of any Guarantor
under the Guaranty is limited or
terminated by operation of law or by such Guarantor or any such
Guarantor
becomes the subject of an Insolvency Proceeding;
7.11 If the Security Agreement or any
other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a
valid and
perfected and, except to the extent permitted by the terms hereof
or thereof,
first priority Lien on or security interest in the Collateral
covered hereby or
thereby, except as permitted under this Agreement;
7.12 Any provision of any Loan Document
shall at any time for any reason be
declared to be null and void, or the validity or enforceability
thereof shall be
contested by any Borrower or any of its Restricted Subsidiaries, or
a proceeding
shall be commenced by any Borrower or any of its Restricted
Subsidiaries, or by
any Governmental Authority having jurisdiction over any Borrower or
any of its
Restricted Subsidiaries,
33
<PAGE>
seeking to establish the invalidity or unenforceability thereof, or
any Borrower
or any of its Restricted Subsidiaries shall deny that it has any
liability or
obligation purported to be created under any Loan Document;
7.13 If any Change of Control shall have
occurred;
7.14 If (a) there shall occur and be
continuing any "Event of Default" (or
any comparable term) under, and as defined in any Indenture
Document or under
the Altra Senior Credit Agreement, (b) any of the Obligations for
any reason
shall cease to be "TB Wood's Credit Agreement Secured Obligations"
(or any
comparable terms) under, and as defined in the Intercreditor
Agreement, (c) any
Indebtedness other than the Obligations shall constitute "TB Wood's
Credit
Agreement Senior Obligations" (or any comparable term) under, and
as defined in,
any Intercreditor Agreement or any other document evidencing or
governing any
Indebtedness that has been contractually subordinated in right of
payment to the
Obligations, except as expressly permitted by this Agreement, (d)
any holder of
any Senior Note shall fail to perform or comply with any of the
subordination
provisions of the documents evidencing or governing such
Indebtedness, or (e)
the subordination provisions of the Intercreditor Agreement shall,
in whole or
in part, terminate, cease to be effective or cease to be legally
valid, binding
and enforceable against any holder of such Indebtedness; or
7.15 If there occurs one or more ERISA
Events which results in or otherwise
is associated with liability of any Borrower, any of its
Restricted
Subsidiaries, or any of their respective ERISA Affiliates in excess
of
$2,000,000 in the aggregate during the term of this Agreement.
8. THE LENDER GROUP'S RIGHTS AND REMEDIES.
8.1 RIGHTS AND REMEDIES. Upon the
occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but
without
notice of their election and without demand) may authorize and
instruct Agent to
do any one or more of the following on behalf of the Lender Group
(and Agent,
acting upon the instructions of the Required Lenders, shall do the
same on
behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare
all or any portion of the Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or
otherwise, immediately
due and payable;
(b) Cease or
restrict advancing money or extending credit to or for
the benefit of Borrowers under this Agreement, under any of the
Loan Documents,
or under any other agreement between Borrowers and the Lender
Group;
(c)
Terminate this Agreement and any of the other Loan Documents as
to
any future liability or obligation of the Lender Group, but without
affecting
any of the Agent's Liens in the Collateral and without affecting
the
Obligations; and
(d) The
Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan
Document.
The foregoing to the contrary notwithstanding, upon the occurrence
of any Event
of Default described in Section 7.4 or Section 7.5, in addition to
the remedies
set forth above, without any notice to Borrowers or any other
Person or any act
by the Lender Group, the Commitments shall automatically terminate
and the
Obligations then outstanding, together with all accrued and unpaid
interest
thereon and all fees and all other amounts due under this Agreement
and the
other Loan Documents, shall automatically and immediately become
due and
payable, without presentment, demand, protest, or notice of any
kind, all of
which are expressly waived by Borrowers.
8.2 REMEDIES CUMULATIVE. The rights and
remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements
shall be
cumulative. The Lender Group shall have all
34
<PAGE>
other rights and remedies not inconsistent herewith as provided
under the Code,
by law, or in equity. No exercise by the Lender Group of one right
or remedy
shall be deemed an election, and no waiver by the Lender Group of
any Event of
Default shall be deemed a continuing waiver. No delay by the Lender
Group shall
constitute a waiver, election, or acquiescence by it.
9. TAXES AND EXPENSES.
If any
Borrower or any of its Restricted Subsidiaries fails to pay any
monies (whether taxes, assessments, insurance premiums, or, in the
case of
leased properties or assets, rents or other amounts payable under
such leases)
due to third Persons, or fails to make any deposits or furnish any
required
proof of payment or deposit, all as required under the terms of
this Agreement,
then, Agent, in its sole discretion and without prior notice to
such Person, may
do any or all of the following: (a) except for payments which are
the subject of
a Permitted Protest, make payment of the same or any part thereof,
or (b) in the
case of the failure to comply with Section 5.8 hereof, obtain and
maintain
insurance policies of the type described in Section 5.8 and take
any action with
respect to such policies as Agent deems prudent in its Permitted
Discretion. Any
such amounts paid by Agent shall constitute Lender Group Expenses
and any such
payments shall not constitute an agreement by the Lender Group to
make similar
payments in the future or a waiver by the Lender Group of any Event
of Default
under this Agreement. Except in connection with payments made by
Agent pursuant
to clause (a) above, Agent need not inquire as to, or contest the
validity of,
any such expense, tax, or Lien and the receipt of the usual
official notice for
the payment thereof shall be conclusive evidence that the same was
validly due
and owing.
10. WAIVERS; INDEMNIFICATION.
10.1 DEMAND; PROTEST; ETC. Each Borrower
waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and
nonpayment,
nonpayment at maturity, release, compromise, settlement, extension,
or renewal
of documents, instruments, chattel paper, and guarantees at any
time held by the
Lender Group on which any Borrower may in any way be liable.
10.2 THE LENDER GROUP'S LIABILITY FOR
COLLATERAL. Each Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if
any, under
the Code, the Lender Group shall not in any way or manner be liable
or
responsible for: (i) the safekeeping of the Collateral, (ii) any
loss or damage
thereto occurring or arising in any manner or fashion from any
cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any
carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b)
all risk of
loss, damage, or destruction of the Collateral shall be borne by
Borrowers.
10.3 INDEMNIFICATION. Each Borrower shall
pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons, and each
Participant
(each, an "Indemnified Person") harmless (to the fullest extent
permitted by
law) from and against any and all claims, demands, suits,
actions,
investigations, proceedings, liabilities, fines, costs, penalties
and damages,
and all reasonable fees and disbursements of attorneys, experts and
consultants
and other costs and expenses actually incurred in connection
therewith or in
connection with the enforcement of this indemnification (as and
when they are
incurred and irrespective of whether suit is brought), at any time
asserted
against, imposed upon, or incurred by any of them (a) in connection
with or as a
result of or related to the execution, delivery, enforcement,
performance, or
administration (including any restructuring or workout with respect
hereto) of
this Agreement, any of the other Loan Documents, or the
transactions
contemplated hereby or thereby or the monitoring of Borrowers' and
their
respective Restricted Subsidiaries' compliance with the terms of
the Loan
Documents, (b) with respect to any investigation, litigation, or
proceeding
related to this Agreement, any other Loan Document, or the use of
the proceeds
of the credit provided hereunder (irrespective of whether any
Indemnified Person
is a party thereto), or any act, omission, event, or circumstance
in any manner
related thereto, and (c) in connection with or arising out of any
presence or
release of Hazardous Materials at, on, under, to or from any assets
or
properties owned, leased or operated by any Borrower or any of its
Subsidiaries
or any Environmental Actions, Environmental Liabilities and Costs
or Remedial
Actions related in any way to any such assets or properties of
35
<PAGE>
any Borrower or any of its Subsidiaries (all the foregoing,
collectively, the
"Indemnified Liabilities") provided, however, that any claim with
respect to
taxes should be governed solely by Section 15.11. The foregoing to
the contrary
notwithstanding, Borrowers shall have no obligation to any
Indemnified Person
under this Section 10.3 with respect to any Indemnified Liability
that a court
of competent jurisdiction finally determines to have resulted from
the gross
negligence or willful misconduct of such Indemnified Person. This
provision
shall survive the termination of this Agreement and the repayment
of the
Obligations. If any Indemnified Person makes any payment to any
other
Indemnified Person with respect to an Indemnified Liability as to
which
Borrowers were required to indemnify the Indemnified Person
receiving such
payment, the Indemnified Person making such payment is entitled to
be
indemnified and reimbursed by Borrowers with respect thereto.
WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED
PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE
CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED
PERSON OR OF ANY
OTHER PERSON.
11. NOTICES.
Unless
otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any
other Loan
Document shall be in writing and (except for financial statements
and other
informational documents which may be sent by first-class mail,
postage prepaid)
shall be personally delivered or sent by registered or certified
mail (postage
prepaid, return receipt requested), overnight courier, electronic
mail (at such
email addresses as Parent, Administrative Borrower or Agent, as
applicable, may
designate to each other in accordance herewith), or telefacsimile
to Borrowers
in care of Administrative Borrower or to Agent, as the case may be,
at its
address set forth below:
If to Parent
or Administrative TB WOOD'S CORPORATION.
Borrower:
440 North Fifth Street
Chambersburg, PA 17201
Attn: Joseph C. Horvath
Fax No.: 717-264-6420
with copies
to:
GENSTAR
CAPITAL, L.P.
Four Embarcadero Center
Suite 1900
San Francisco, CA 94111
Attn: Darren
J. Gold
Fax No.: (415) 834-2383
and
WEIL, GOTSHAL & MANGES LLP
200 Crescent Court, Suite 300
Dallas, Texas 75201
Attn: Angela L. Fontana, Esq.
Fax No.: (214) 746-7777
36
<PAGE>
If to
Agent:
WELLS FARGO FOOTHILL, INC.
One Boston Place
Boston, Massachusetts 02108
Attn:
Business Finance Manager
Fax No.: (617) 523-5839
with copies
to:
MOSES & SINGER LLP
The Chrysler Building
405
Lexington Avenue
New York, New York 10174-1299
Attn: Howard L. Siegel, Esq.
Fax No.: (212) 554-7700
Agent and
Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing
manner given to
the other party. All notices or demands sent in accordance with
this Section 11,
other than notices by Agent in connection with enforcement rights
against the
Collateral under the provisions of the Code, shall be deemed
received on the
earlier of the date of actual receipt or 3 Business Days after the
deposit
thereof in the mail or, where permitted by law, transmitted by
telefacsimile or
any other method set forth above.
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE
VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT
IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
BE TRIED AND
LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW
YORK, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL
OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER
PROPERTY MAY BE FOUND. EACH BORROWER AND EACH MEMBER OF THE LENDER
GROUP WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT
THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(B).
(c) EACH
BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH BORROWER
AND EACH
MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION
WITH
37
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LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT
MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
13.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any
Lender may assign and delegate to one or more assignees (each
an "Assignee") that are Eligible Transferees all, or any ratable
part of all, of
the Obligations, the Commitments and the other rights and
obligations of such
Lender hereunder and under the other Loan Documents, in a minimum
amount of
$5,000,000; provided, however, that Borrowers and Agent may
continue to deal
solely and directly with such Lender in connection with the
interest so assigned
to an Assignee until (i) written notice of such assignment,
together with
payment instructions, addresses, and related information with
respect to the
Assignee, have been given to Administrative Borrower and Agent by
such Lender
and the Assignee,
(
