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THERMADYNE INDUSTRIES, INC., | THERMAL DYNAMICS CORPORATION, | TWECO PRODUCTS, INC., | VICTOR EQUIPMENT COMPANY, | C & G SYSTEMS, INC., | STOODY COMPANY, | THERMADYNE INTERNATIONAL CORP., | GENERAL ELECTRIC CAPITAL CORPORATION, | GECC CAPITAL MARKETS GROUP, INC.,. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 4.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 22, 2004
among
THERMADYNE INDUSTRIES, INC., THERMAL DYNAMICS CORPORATION, TWECO PRODUCTS, INC., VICTOR EQUIPMENT COMPANY, C & G SYSTEMS, INC., STOODY COMPANY, THERMAL ARC, INC., PROTIP CORPORATION and THERMADYNE INTERNATIONAL CORP.,
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
and
GECC CAPITAL MARKETS GROUP, INC.,
as Lead Arranger
TABLE OF CONTENTS
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INDEX OF APPENDICES
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This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “ Agreement ”), dated as of November 22, 2004 among THERMADYNE INDUSTRIES, INC., a Delaware corporation (“ Industries ”), THERMAL DYNAMICS CORPORATION, a Delaware corporation (“ Dynamics ”), TWECO PRODUCTS, INC., a Delaware corporation (“ Tweco ”), VICTOR EQUIPMENT COMPANY, a Delaware corporation (“ Victor ”), C & G SYSTEMS, INC., an Illinois corporation (“ C & G ”), STOODY COMPANY, a Delaware corporation (“ Stoody ”), THERMAL ARC, INC., a Delaware corporation (“ Thermal Arc ”), PROTIP CORPORATION, a Missouri corporation (‘ ProTip ”), THERMADYNE INTERNATIONAL CORP., a Delaware corporation (“ International ”) (International, ProTip, Thermal Arc, Stoody, C & G, Victor, Tweco, Dynamics and Industries are sometimes collectively referred to herein as the “ Borrowers ” and individually as a “ Borrower ”); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, “ GE Capital ”), for itself, as Lender, and as Agent for Lenders, and the other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, on February 23, 2004, Agent and Lenders entered into an Amended and Restated Credit Agreement (the “ Prior Credit Agreement ”) with the Borrowers providing for Revolving Loans of up to $50,000,000, a Term Loan in the aggregate original principal amount of $20,000,000 and Borrowers have certain Loans and Letters of Credit outstanding thereunder (collectively with the Prior Revolving Loan and Prior Term Loan, the “ Prior Loans ”);
WHEREAS, Borrowers, Agent and Lenders desire to further amend and restate the Prior Credit Agreement to, among other things, (i) convert the Term Loan under the Prior Credit Agreement with an outstanding principal balance of $20,000,000 into the Term Loan A hereunder in the principal amount of $9,250,000 and convert the balance into a portion of the Revolving Loan, (ii) provide for a Delayed Draw Term Loan in the aggregate principal amount of up to $2,050,000, (iii) increase the Revolving Loan Commitments from $50,000,000 to $80,000,000, (iv) increase the Letter of Credit sub-facility from $20,000,000 to $25,000,000; and (v) add each of the Australian Collateral Party, the Canadian Collateral Party and the UK Collateral Party as Credit Parties;
WHEREAS, Borrowers desire that the terms governing the Prior Loans be amended and restated in accordance herewith; and
WHEREAS, Borrowers have advised the Agent that Thermadyne Receivables, Inc., a Delaware corporation, a Guarantor and Credit Party under the Prior Credit Agreement has been dissolved;
WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in Annex A shall govern. All Annexes, Disclosure Schedules, Exhibits and other attachments (collectively, “ Appendices ”) hereto, or expressly identified to this Agreement, are incorporated herein by reference, and taken together with this Agreement, shall constitute but a single agreement. These Recitals shall be construed as part of this Agreement.
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NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows:
1.1 Credit Facilities .
(a) Revolving Credit Facility .(i) Subject to the terms and conditions hereof, each Revolving Lender agrees to make available to Borrowers from time to time until the Commitment Termination Date its Pro Rata Share of advances (each, a “ Revolving Credit Advance ”). The Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at any time exceed its separate Revolving Loan Commitment. The obligations of each Revolving Lender hereunder shall be several and not joint. Until the Commitment Termination Date, Borrowers may borrow, repay and reborrow under this Section 1.1(a) ; provided that the amount of any Revolving Credit Advance to be made at any time shall not exceed Borrowing Availability at such time; provided , further , that notwithstanding anything to the contrary contained in this Agreement the Revolving Loan plus the outstanding principal amount of the Term Loans shall in no circumstance exceed $75,000,000 until such time as all obligations under the Second Lien Credit Agreement (and all related documents) have been paid in full and satisfactory evidence thereof has been provided to Agent. Borrowing Availability may be reduced by Reserves imposed by Agent in its reasonable credit judgment. Each Revolving Credit Advance shall be made on notice by Borrower Representative on behalf of Borrowers to one of the representatives of Agent identified in Schedule 1.1 at the address specified therein. Any such notice must be given no later than (1) 12:00 noon (New York time) on the Business Day of the proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (2) 12:00 noon (New York time) on the date which is three (3) Business Days prior to the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a “ Notice of Revolving Credit Advance ”) must be given in writing (by telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i) , and shall include the information required in such Exhibit and such other information as may be reasonably required by Agent. If Borrowers desire to have the Revolving Credit Advances bear interest by reference to a LIBOR Rate, Borrower Representative must comply with Section 1.5(e) .(ii) Except as provided in Section 1.12 , Borrowers shall execute and deliver to each Revolving Lender a note to evidence the Revolving Loan Commitment of that Revolving Lender. Each note shall be in the principal amount of the Revolving Loan Commitment of the applicable Revolving Lender, dated the Closing Date and substantially in the form of Exhibit 1.1(a)(ii) (each a “ Revolving Note ” and, collectively, the “ Revolving Notes ”). Each Revolving Note shall represent the obligation of Borrowers to pay the amount of the applicable Revolving Lender’s Revolving Loan Commitment or, if less, such Revolving Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Revolving Credit Advances to Borrowers together with interest thereon as prescribed in Section 1.5 . The entire unpaid balance of the aggregate Revolving Loan and all other non-contingent Obligations shall
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be immediately due and payable in full in immediately available funds on the Commitment Termination Date. (iii) Anything in this Agreement to the contrary notwithstanding, at the request of Borrower Representative, in its discretion Agent may (but shall have absolutely no obligation to), make Revolving Credit Advances to Borrowers on behalf of Revolving Lenders in amounts that cause the outstanding balance of the aggregate Revolving Loan to exceed the Borrowing Base (less the Swing Line Loan) (any such excess Revolving Credit Advances are herein referred to collectively as “ Overadvances ”); provided that (A) no such event or occurrence shall cause or constitute a waiver of Agent’s, Swing Line Lender’s or Revolving Lenders’ right to refuse to make any further Overadvances, Swing Line Advances or Revolving Credit Advances, or incur any Letter of Credit Obligations, as the case may be, at any time that an Overadvance exists, and (B) no Overadvance shall result in an Event of Default based on Borrowers’ failure to comply with Section 1.3(b) for so long as Agent permits such Overadvance to be outstanding, but solely with respect to the amount of such Overadvance. In addition, Overadvances may be made even if the conditions to lending set forth in Section 2 have not been met. All Overadvances shall constitute Index Rate Loans, shall bear interest at the Default Rate and shall be payable on the earlier of demand or the Commitment Termination Date. Except as otherwise provided in Section 1.9(b) , the authority of Agent to make Overadvances is limited to an aggregate amount not to exceed $1,000,000 at any time, shall not cause the aggregate Revolving Loan to exceed the Maximum Amount, and may be revoked prospectively by a written notice to Agent signed by Revolving Lenders holding more than 50% of the Revolving Loan Commitments.(b) Term Loan A . On the Closing Date, Borrowers shall repay the Term Loan under and as defined in the Prior Credit Agreement so that the outstanding principal balance after giving effect to such payment is $9,250,000 and each Term Lender agrees, severally and not jointly, to continue such term loan as the term loan hereunder (the “ Term Loan A ”). The Borrowers agree, jointly and severally, to repay the Term Loan A in equal quarterly installments of $330,357 on the last day of each Fiscal Quarter of each year commencing on December 31, 2004 (“ Scheduled Installments A ”).The final installment shall in all events equal the entire remaining principal balance of the Term Loan A. Notwithstanding the foregoing, the outstanding principal balance of the Term Loan A shall be due and payable in full on the Commitment Termination Date. Amounts borrowed under this Section 1.1(b) and repaid may not be reborrowed.
(c) Delayed Draw Term Loan . Each Term Lender agrees, severally and not jointly, to lend to Borrowers in one draw, subject to satisfaction of the conditions set forth in Section 2.2 and Section 2.3 below, its Pro Rata Share of up to $2,050,000 (the “ Delayed Draw Term Loan ”); provided , however, that Agent has sole discretion to determine the principal amount of the Delayed Draw Term Loan up to a maximum amount of $2,050,000. The Term Loan A and the Delayed Draw Term Loan will be referred to together as the “ Term Loans .” Borrower shall repay the Delayed Draw Term Loan in equal quarterly installments, based on a seven (7) year amortization (3.57% of the original principal balance per installment), on the last day of each Fiscal Quarter (“ Scheduled Installments B ”) commencing with the first Fiscal Quarter after the Delayed Draw Term Loan is funded and ending on the fifth anniversary of the
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Closing Date. The final installment shall in all events equal the entire remaining principal balance of the Delayed Draw Term Loan. Notwithstanding the foregoing, the outstanding principal balance of the Delayed Draw Term Loan shall be due and payable in full on the Commitment Termination Date. Amounts borrowed under this Section 1.1(c) and repaid may not be reborrowed. The Term Loans shall be evidenced by promissory notes substantially in the form of Exhibit 1.1(c) (as amended, modified, extended, substituted or replaced from time to time, each a “ Term Note ” and, collectively, the “ Term Notes ”), and Borrowers shall execute and deliver each Term Note to the applicable Term Lender. Each Term Note shall represent the obligation of Borrowers to pay the amount of the applicable Term Lender’s Term Loan Commitment, together with interest thereon.
(d) Swing Line Facility .(i) Agent shall notify the Swing Line Lender upon Agent’s receipt of any Notice of Revolving Credit Advance. Subject to the terms and conditions hereof, the Swing Line Lender may, in its discretion, make available from time to time until the Commitment Termination Date advances (each, a “ Swing Line Advance ”) in accordance with any such notice. The provisions of this Section 1.1(d) shall not relieve Revolving Lenders of their obligations to make Revolving Credit Advances under Section 1.1(a) ; provided that if the Swing Line Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line Advance shall be in lieu of any Revolving Credit Advance that otherwise may be made by Revolving Credit Lenders pursuant to such notice. The aggregate amount of Swing Line Advances outstanding shall not exceed at any time the lesser of (A) the Swing Line Commitment and (B) the lesser of the Maximum Amount and (except for Overadvances) the Borrowing Base, in each case, less the outstanding balance of the Revolving Loan at such time (“ Swing Line Availability ”). Until the Commitment Termination Date, Borrowers may from time to time borrow, repay and reborrow under this Section 1.1(d) . Each Swing Line Advance shall be made pursuant to a Notice of Revolving Credit Advance delivered to Agent by Borrower Representative on behalf of the Borrowers in accordance with Section 1.1(a) . Any such notice must be given no later than 12:00 noon (New York time) on the Business Day of the proposed Swing Line Advance. Unless the Swing Line Lender has received at least one Business Day’s prior written notice from Requisite Revolving Lenders instructing it not to make a Swing Line Advance, the Swing Line Lender shall, notwithstanding the failure of any condition precedent set forth in Sections 2.2 , be entitled to fund that Swing Line Advance, and to have each Revolving Lender make Revolving Credit Advances in accordance with Section 1.1(d)(iii) or purchase participating interests in accordance with Section 1.1(d)(iv) . Notwithstanding any other provision of this Agreement or the other Loan Documents, the Swing Line Loan shall constitute an Index Rate Loan. Borrowers shall repay the aggregate outstanding principal amount of the Swing Line Loan upon demand therefor by Agent.(ii) Borrowers shall execute and deliver to the Swing Line Lender a promissory note to evidence the Swing Line Commitment. Such note shall be in the principal amount of the Swing Line Commitment of the Swing Line Lender, dated the Closing Date and substantially in the form of Exhibit 1.1(d)(ii) (the “ Swing Line Note ”). Each Swing Line Note
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shall represent the obligation of Borrowers to pay the amount of the Swing Line Commitment or, if less, the aggregate unpaid principal amount of all Swing Line Advances together with interest thereon as prescribed in Section 1.5 . The entire unpaid balance of the Swing Line Loan and all other noncontingent Obligations shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date if not sooner paid in full. (iii) The Swing Line Lender, at any time and from time to time no less frequently than once weekly shall on behalf of Borrowers (and each Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request each Revolving Lender (including the Swing Line Lender) to make a Revolving Credit Advance to Borrowers (which shall be an Index Rate Loan) in an amount equal to that Revolving Lender’s Pro Rata Share of the principal amount of the applicable Borrower’s Swing Line Loan (the “ Refunded Swing Line Loan ”) outstanding on the date such notice is given. Unless any of the events described in Sections 8.1(h) or 8.1(i) has occurred (in which event the procedures of Section 1.1(d)(iv) shall apply) and regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Credit Advance are then satisfied, each Revolving Lender shall disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the Swing Line Lender prior to 3:00 p.m. (New York time) in immediately available funds on the Business Day next succeeding the date that notice is given. The proceeds of those Revolving Credit Advances shall be immediately paid to the Swing Line Lender and applied to repay the Refunded Swing Line Loan.(iv) If, prior to repaying a Swing Line Loan with a Revolving Credit Advance pursuant to Section 1.1(d)(iii) , one of the events described in Sections 8.1(h) or 8.1(i) has occurred, then, subject to the provisions of Section 1.1(d)(v) below, each Revolving Lender shall, on the date such Revolving Credit Advance was to have been made for the benefit of the Borrowers, purchase from the Swing Line Lender an undivided participation interest in the Swing Line Loan in an amount equal to its Pro Rata Share of such Swing Line Loan. Upon request, each Revolving Lender shall promptly transfer to the Swing Line Lender, in immediately available funds, the amount of its participation interest.(v) Each Revolving Lender’s obligation to make Revolving Credit Advances in accordance with Section 1.1(d)(iii) and to purchase participation interests in accordance with Section 1.1(d)(iv) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Revolving Lender may have against the Swing Line Lender, any Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of any Event of Default; (C) any inability of Borrowers to satisfy the conditions precedent to borrowing set forth in this Agreement at any time; or (D) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If any Revolving Lender does not make available to Agent or the Swing Line Lender, as applicable, the amount required pursuant to Sections 1.1(d (iii) or 1.1(d)(iv) , as the case may be, the Swing Line Lender shall be entitled to recover such amount on demand from such Revolving Lender, together with interest thereon for each day from the date of non-payment until such amount is paid in full at the Federal Funds Rate for the first two Business Days and at the Index Rate thereafter.
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(e) Reliance on Notices; Appointment of Borrower Representative . Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any Notice of Revolving Credit Advance, Notice of Conversion/Continuation or similar notice believed by Agent to be genuine. Agent may assume that each Person executing and delivering any notice in accordance herewith was duly authorized, unless the responsible individual acting thereon for Agent has actual knowledge to the contrary. Each Borrower hereby designates Holdings as its representative and agent on its behalf for the purposes of issuing Notices of Revolving Credit Advances and Notices of Conversion/Continuation, giving instructions with respect to the disbursement of the proceeds of the Revolving Credit Advances, selecting interest rate options, requesting Letters of Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan Documents. Borrower Representative hereby accepts such appointment. Agent and each Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower Representative on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.1.2 Letters of Credit . Subject to and in accordance with the terms and conditions contained herein and in Annex B , Borrower Representative, on behalf of the applicable Borrower, shall have the right to request, and Revolving Lenders agree to incur, or purchase participations in, Letter of Credit Obligations in respect of each Borrower.
1.3 Prepayments .
(a) Voluntary Prepayments; Reductions in Revolving Loan Commitments . Borrowers may at any time on at least five (5) days’ prior written notice by Borrower Representative to Agent (i) voluntarily prepay all or part of the Term Loans; provided that any such prepayments shall be in a minimum amount of $1,000,000 and integral multiples of $250,000 in excess of such amount; provided further that no such prepayment shall be made unless there is $15,000,000 of Borrowing Availability after giving effect to any such prepayment; and/or (ii) permanently reduce (but not terminate in whole) the Revolving Loan Commitment; provided that (A) any such prepayments or reductions shall be in a minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of such amount, (B) the Revolving Loan Commitment shall not be reduced to an amount less than $25,000,000, and (C) after giving effect to such reductions, Borrowers shall comply with Section 1.3(b)(i) . In addition, Borrowers may at any time on at least ten (10) days’ prior written notice by Borrower Representative to Agent terminate the Revolving Loan Commitment; provided that upon such termination, all Loans and other Obligations shall be immediately due and payable in full and all Letter of Credit Obligations shall be cash collateralized or otherwise satisfied in accordance with Annex B hereto. Any voluntary prepayment and any reduction or termination of the Revolving Loan Commitment must be accompanied by payment of the
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Fee required by Section 1.7(d) , if any, plus the payment of any LIBOR funding breakage costs in accordance with Section 1.11(b) . Upon any such reduction or termination of the Revolving Loan Commitment, each Borrower’s right to request Revolving Credit Advances, or request that Letter of Credit Obligations be incurred on its behalf, or request Swing Line Advances, shall simultaneously be permanently reduced or terminated, as the case may be; provided that a permanent reduction of the Revolving Loan Commitment shall require a corresponding pro rata reduction in the L/C Sublimit. Any voluntary prepayment of the Term Loans must be accompanied by payment of any LIBOR funding breakage costs in accordance with Section 1.11(b) . Each notice of partial prepayment shall designate the Loans or other Obligations to which such prepayment is to be applied; provided that any partial prepayments of the Term Loans made by or on behalf of any Borrower shall be applied to prepay the scheduled installments of such Borrower’s Term Loans in inverse order of maturity. Notwithstanding the foregoing, if at the time of any partial prepayment of the Term Loan made by or on behalf of any Borrower, the outstanding balance of the Revolving Loan is $0, then such voluntary prepayment shall be applied, pro rata, to all remaining scheduled installments of such Borrower’s Term Loan. (b) Mandatory Prepayments .(i) If at any time the aggregate outstanding balances of the Revolving Loan and the Swing Line Loan exceed the lesser of (A) the Maximum Amount and (B) the Borrowing Base, Borrowers shall immediately repay the aggregate outstanding Revolving Credit Advances to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding Revolving Credit Advances, Borrowers shall provide cash collateral for the Letter of Credit Obligations in the manner set forth in Annex B to the extent required to eliminate such excess. Notwithstanding the foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section 1.1(a)(iii) .(ii) Immediately upon receipt by any Credit Party of any cash proceeds of any asset disposition, Borrowers shall prepay the Loans in an amount equal to all such proceeds, net of (A) commissions and other reasonable and customary transaction costs, fees and expenses properly attributable to such transaction and payable by Borrowers in connection therewith (in each case, paid to non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior Liens on such asset (to the extent such Liens constitute Permitted Encumbrances hereunder), if any, and (D) an appropriate reserve for income taxes in accordance with GAAP in connection therewith. Any such prepayment shall be applied in accordance with Section 1.3(c) . Notwithstanding the foregoing, if the Credit Parties notify Agent of their intent to reinvest such proceeds in replacement fixed assets, Credit Parties shall apply such proceeds to the Revolving Loan pending the reinvestment thereof and shall only be obligated to make prepayments in accordance with Section 1.3(c) to the extent that such proceeds are not so reinvested. The following shall not be subject to mandatory prepayment under this clause (ii) : (1) proceeds of sales of Inventory in the ordinary course of business and (2) the proceeds of any asset disposition or series of asset dispositions otherwise permitted under Section 6.8 not in excess of $500,000.
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(iii) If Holdings or any Borrower issues Stock or any debt security in a public offering or in a private placement underwritten, placed or initially purchased by an investment bank (other than the High Yield Notes), no later than the Business Day following the date of receipt of the proceeds thereof, all Borrowers (in the case of an issuance by Holdings) or the issuing Borrower shall prepay the Loans in an amount equal to all such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses (including legal fees) paid to non-Affiliates in connection therewith; provided , that no such prepayment or commitment reduction shall be required with respect to an amount equal to such proceeds that are received (A) pursuant to any employee or stock option plan or (B) in connection with any refinancing of Indebtedness. Any such prepayment shall be applied in accordance with Section 1.3(c) .(c) With respect to the prepayments described in Sections 1.3(b)(ii) and (iii) and prepayments from insurance or condemnation proceeds in accordance with Section 5.4(b) , (i) such prepayments shall be applied first , to reimbursable Fees and expenses of Agent; second , to interest then due and payable on the Term Loans (ratably in proportion to the interest accrued as to each Term Loan A and Delayed Draw Term Loan); third , to the Scheduled Installments of the Term Loans pro rata in inverse order of maturity until the Term Loans have been prepaid in full; fourth , to interest then due and payable on the Swing Line Loan; fifth , to the principal balance of the Swing Line Loan until the same has been repaid in full; sixth , to interest then due and payable on Revolving Credit Advances; seventh , to the principal balance of Revolving Credit Advances until the same has been paid in full (without a permanent reduction in the Revolving Loan Commitment); eighth , to any Letter of Credit Obligations to provide cash collateral therefor in the manner set forth in Annex B , until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex B and ninth , to all other Obligations, including expenses of Lenders reimbursable under Section 11.3 . Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, the net cash proceeds from the exercise of those certain Class A, Class B and Class C Warrants issued pursuant to those certain Warrant Agreements entered into between Thermadyne Holdings Corporation and Equiserve Trust Company as of May 23, 2003 may be applied at the Borrowers’ discretion, first , to interest then due and payable on the Swing Line Loan; second , to the principal balance of the Swing Line Loan until the same has been repaid in full; third , to interest then due and payable on Revolving Credit Advances; fourth , to the principal balance of Revolving Credit Advances until the same has been paid in full; fifth , to any Letter of Credit Obligations to provide cash collateral therefor in the manner set forth in Annex B until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex B , and then to the Term Loans in the manner set forth above. Prepayments of the Revolving Credit Advances and Swing Line Loan as set forth above shall not result in a permanent reduction of the Revolving Loan Commitment.(d) No Implied Consent . Nothing in this Section 1.3 shall be construed to constitute Agent’s or any Lender’s consent to any transaction that is not permitted by other provisions of this Agreement or the other Loan Documents.1.4 Use of Proceeds . Borrowers shall utilize the proceeds of the Loans solely to provide (a) working capital financing for Borrowers and (b) funds for other general corporate purposes of Borrowers. Disclosure Schedule (1.4) contains a description of Borrowers’
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sources and uses of funds as of the Closing Date, including Revolving Credit Advances and Letter of Credit Obligations to be made or incurred on that date, and a funds flow memorandum detailing how funds from each source are to be transferred to particular uses.
1.5 Interest and Applicable Margins .
(a) Borrowers shall pay interest to Agent, for the ratable benefit of Lenders in accordance with the various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: (i) with respect to the Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index Margin per annum or, at the election of Borrower Representative, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based on the aggregate Revolving Credit Advances outstanding from time to time; (ii) with respect to such portion of the Term Loans designated as an Index Rate Loan, the Index Rate plus the Applicable Term Loan Index Margin per annum or, with respect to such portion of the Term Loans designated as a LIBOR Loan, the applicable LIBOR Rate plus the Applicable Term Loan LIBOR Margin per annum; and (iii) with respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin per annum.As of the Closing Date, the Applicable Margins are as follows:
The Applicable Margins may be adjusted by reference to the following grids :
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Applicable Margins
(b) Adjustments in the Applicable Margins commencing with the Fiscal Quarter ending December 31, 2004 shall be implemented quarterly on a prospective basis, for each calendar month commencing at least five (5) days after the date of delivery to Lenders of the quarterly unaudited or annual audited (as applicable) Financial Statements evidencing the need for an adjustment. Concurrently with the delivery of those Financial Statements, Borrower Representative shall deliver to Agent and Lenders a certificate, signed by its chief financial officer, setting forth in reasonable detail the basis for the continuance of, or any change in, the Applicable Margins. Failure to timely deliver such Financial Statements shall, in addition to any other remedy provided for in this Agreement, result in an increase in the Applicable Margins to the highest level set forth in the foregoing grid, until the first day of the first calendar month following the delivery of those Financial Statements demonstrating that such an increase is not required. If an Event of Default has occurred and is continuing at the time any reduction in the Applicable Margins is to be implemented, that reduction shall be deferred until the first day of the first calendar month following the date on which such Event of Default is waived or cured.(c) If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof will be extended to the next succeeding Business Day (except as set forth in the definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.(d) All computations of Fees calculated on a per annum basis and interest shall be made by Agent on the basis of a 360-day year, in each case for the actual number of days occurring in the period for which such interest and Fees are payable. The Index Rate is a floating rate determined for each day. Each determination by Agent of an interest rate and Fees hereunder shall be presumptive evidence of the correctness of such rates and Fees.
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(e) So long as an Event of Default has occurred and is continuing under Section 8.1(a), (h) or (i) or so long as any other Event of Default has occurred and is continuing and at the election of Agent (or upon the written request of Requisite Lenders) confirmed by written notice from Agent to Borrower Representative, the interest rates applicable to the Loans and the Letter of Credit Fees shall be increased by two percentage points (2%) per annum above the rates of interest or the Letter of Credit Fees otherwise applicable hereunder unless Agent or Requisite Lenders elect to impose a smaller increase (as finally determined, the “ Default Rate ”), and all such Obligations shall bear interest at the Default Rate applicable to such Obligations. Interest and Letter of Credit Fees at the Default Rate shall accrue from the initial date of such Event of Default until that Event of Default is cured or waived and shall be payable upon demand.(f) Subject to the conditions precedent set forth in Section 2.2 , Borrower Representative shall have the option to (i) request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of the outstanding Loans (other than the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in accordance with Section 1.11(b) if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan shall commence on the first day after the last day of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans having the same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $2,000,000 and integral multiples of $1,000,000 in excess of such amount. Any such election must be made by 12:00 noon (New York time) on the third Business Day prior to (1) the date of any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or (3) the date on which Borrower Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower Representative in such election. If no election is received with respect to a LIBOR Loan by 12:00 noon (New York time) on the third Business Day prior to the end of the LIBOR Period with respect thereto (or if a Default or an Event of Default has occurred and is continuing or if the additional conditions precedent set forth in Section 2.2 shall not have been satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period. Borrower Representative must make such election by notice to Agent in writing, by telecopy or overnight courier. In the case of any conversion or continuation, such election must be made pursuant to a written notice (a “ Notice of Conversion/Continuation ”) in the form of Exhibit 1.5(e) . No Loan shall be made as or converted into a LIBOR Loan until seven (7) days after the Closing Date.(g) Notwithstanding anything to the contrary set forth in this Section 1.5 , if a court of competent jurisdiction determines in a final order that the rate of interest payable hereunder exceeds the highest rate of interest permissible under law (the “ Maximum Lawful Rate ”), then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum Lawful Rate; provided , however, that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by Agent, on behalf of Lenders, is equal to the total interest that
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would have been received had the interest rate payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Closing Date as otherwise provided in this Agreement. In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount that such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate. 1.6 Cash Management Systems . On or prior to the Closing Date, Borrowers will establish and will maintain until the Termination Date, the cash management systems described in Annex C (the “ Cash Management Systems ”).
1.7 Fees .
(a) Borrowers shall pay to GE Capital, individually, the Fees specified in the GE Capital Fee Letters.(b) As additional compensation for the Revolving Lenders, Borrowers shall pay to Agent, for the ratable benefit of such Revolving Lenders, in arrears, on the first Business Day of each month prior to the Commitment Termination Date and on the Commitment Termination Date, a Fee for Borrowers’ non-use of available funds in an amount equal to the Applicable Unused Line Fee Margin per annum (calculated on the basis of a 360 day year for actual days elapsed) multiplied by the difference between (x) the Maximum Amount (as it may be reduced from time to time) and (y) the average for the period of the daily closing balances of the aggregate Revolving Loan and the Swing Line Loan outstanding during the period for which such Fee is due.(c) As additional compensation for the Term Lenders, Borrowers shall pay to Agent, for the ratable benefit of such Lenders, in arrears, on the first Business Day of each month prior to earlier of the Commitment Termination Date or the date on which the Delayed Draw Term Loan is advanced, a fee for Borrowers’ non-use of available funds in an amount equal to the Applicable Unused Line Fee Margin per annum multiplied by the maximum principal amount of the Delayed Draw Term Loan ($2,050,000) until such time that the Delayed Draw Term Loan is made in accordance with Section 1.1(c) .(d) If Borrowers prepay the Revolving Loan and reduce or terminate the Revolving Loan Commitment during the first two Loan Years following the Prior Credit Agreement Closing Date, whether voluntarily or involuntarily and whether before or after acceleration of the Obligations, or if the Revolving Loan Commitment is otherwise terminated, Borrowers shall pay to Agent, for the benefit of Lenders, as liquidated damages and compensation for the costs of being prepared to make funds available hereunder in an amount equal to the Applicable Percentage (as defined below) multiplied by the amount of the reduction of the Revolving Loan Commitment. As used herein, the term “ Applicable Percentage ” shall mean (x) two percent (2%), in the case of a prepayment and corresponding reduction or termination of the Revolving Loan Commitment during the first Loan Year following the Closing Date, (y) one percent (1%), in the case of a prepayment and corresponding reduction or termination of the Revolving Loan Commitment during the second Loan Year following the Closing Date and (z) zero for any reductions thereafter. The Credit Parties agree that the Applicable Percentages are a reasonable calculation of Lenders’ lost profits in view of the
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difficulties and impracticality of determining actual damages resulting from an early termination of the Commitments. Notwithstanding the foregoing, no prepayment fee shall be payable by Borrowers upon a mandatory prepayment made pursuant to Sections 1.3(b), 1.9, 1.14(c) or 5.4(b) ; provided that Borrowers do not permanently reduce or terminate the Revolving Loan Commitment upon any such prepayment. (e) Borrowers shall pay to Agent, for the ratable benefit of Revolving Lenders, the Letter of Credit Fee as provided in Annex B .1.8 Receipt of Payments . Borrowers shall make each payment under this Agreement not later than 2:00 p.m. (New York time) on the day when due in immediately available funds in Dollars to the Collection Account. For purposes of computing Fees and determining Borrowing Availability as of any date, all payments shall be deemed received on the Business Day on which immediately available funds therefor are received in the Collection Account prior to 2:00 p.m. (New York time). Payments received after 2:00 p.m. (New York time) on any Business Day or on a day that is not a Business Day shall be deemed to have been received on the following Business Day. Solely for purposes of calculating interest, all payments shall be deemed received on the first Business Day following the Business Day on which immediately available funds therefor are received in the Collection Account prior to 2 p.m. (New York time).
1.9 Application and Allocation of Payments .
(a) So long as no Event of Default has occurred and is continuing, (i) payments consisting of proceeds of Accounts received in the ordinary course of business shall be applied, first , to the Swing Line Loan and, second , the Revolving Loan; (ii) payments matching specific scheduled payments then due shall be applied to those scheduled payments; (iii) voluntary prepayments shall be applied in accordance with the provisions of Section 1.3(a) ; and (iv) mandatory prepayments shall be applied as set forth in Section 1.3(c) . All payments and prepayments applied to a particular Loan shall be applied ratably to the portion thereof held by each Lender as determined by its Pro Rata Share. As to any other unscheduled payment, and as to all payments made following the Commitment Termination Date, each Borrower hereby irrevocably waives the right to direct the application of any and all payments received from or on behalf of such Borrower, and each Borrower hereby irrevocably agrees that Agent shall have the continuing exclusive right to apply any and all such payments against the Obligations of Borrowers as Agent may deem advisable notwithstanding any previous entry by Agent in the Loan Account or any other books and records. In the absence of a specific determination by Agent with respect thereto, payments shall be applied to amounts then due and payable in the order set forth in Section 1.3(c) . (b) Agent is authorized to, and at its sole election may, charge to the Revolving Loan balance on behalf of each Borrower and cause to be paid all Fees, expenses, Charges, costs (including insurance premiums in accordance with Section 5.4(a) ) and interest, owing by Borrowers under this Agreement or any of the other Loan Documents if and to the extent Borrowers fail to pay promptly any such amounts as and when due. At Agent’s option and to the extent permitted by law, any charges so made shall constitute part of the Revolving Loan hereunder.
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1.10 Loan Account and Accounting . Agent, acting as agent for the Lenders and, solely for purposes of Treasury Regulation Section 5f.103-1(c), each Borrower, shall maintain a loan account (the “ Loan Account ”) on its books to record: all Advances, all Overadvances, all Letter of Credit Obligations, all participations in the Letter of Credit Obligations, the amount of the reimbursement obligations of the Borrower for each drawing made under a Letter of Credit, all payments made by Borrowers, and all other debits and credits as provided in this Agreement with respect to the Loans or any other Obligations, and each Borrower and Agent shall treat each Person whose name is entered in the Loan Account as a Lender or as an L/C Issuer, as the case may be, for all purposes hereunder. All entries in the Loan Account shall be made in accordance with Agent’s customary accounting practices as in effect from time to time. The balance in the Loan Account, as recorded on Agent’s most recent printout or other written statement, shall, absent manifest error, be presumptive evidence of the amounts due and owing to Agent and Lenders by each Borrower; provided that any failure to so record or any error in so recording shall not limit or otherwise affect any Borrower’s duty to pay the Obligations. Agent shall render to Borrower Representative a monthly accounting of transactions with respect to the Revolving Loan and Swing Line Loan setting forth the balance of the Loan Account for the immediately preceding month. Unless Borrower Representative notifies Agent in writing of any objection to any such accounting (specifically describing the basis for such objection), within thirty (30) days after the date thereof, each and every such accounting shall be presumptive evidence of all matters reflected therein. Only those items expressly objected to in such notice shall be deemed to be disputed by Borrowers. Notwithstanding any provision herein contained to the contrary, any Lender may elect (which election may be revoked) to dispense with the issuance of Notes to that Lender and may rely on the Loan Account as evidence of the amount of Obligations from time to time owing to it.
1.11 Indemnity .
(a) Each Credit Party that is a signatory hereto shall jointly and severally indemnify and hold harmless each of Agent, Lenders and their respective Affiliates, and each such Person’s respective officers, directors, employees, attorneys, agents and representatives (each, an “ Indemnified Person ”), from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal) that may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents and the administration of such credit, and in connection with or arising out of the transactions contemplated hereunder and thereunder and any actions or failures to act in connection therewith, including any and all Environmental Liabilities and legal costs and expenses arising out of or incurred in connection with disputes between or among any parties to any of the Loan Documents (collectively, “ Indemnified Liabilities ”); provided that (i) no such Credit Party shall be liable for any indemnification to an Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense results from that Indemnified Person’s gross negligence or willful misconduct and (ii) Indemnified Liabilities shall not include any taxes, levies, imposts, deductions, charges or withholdings imposed by any Governmental Authority, or any liabilities with respect thereto, that may be instituted or asserted or incurred as the result of credit having been extended, suspended or terminated, the indemnification for which shall be governed solely and exclusively by Section 1.13 . NO
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INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER. (b) To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to the last day of any applicable LIBOR Period (whether that repayment is made pursuant to any provision of this Agreement or any other Loan Document or occurs as a result of acceleration, by operation of law or otherwise); (ii) any Borrower shall default in payment when due of the principal amount of or interest on any LIBOR Loan; (iii) any Borrower shall refuse to accept any borrowing of, or shall request a termination of, any borrowing of, conversion into or continuation of, LIBOR Loans after Borrower Representative has given notice requesting the same in accordance herewith; or (iv) any Borrower shall fail to make any prepayment of a LIBOR Loan after Borrower Representative has given a notice thereof in accordance herewith, then Borrowers shall jointly and severally indemnify and hold harmless each Lender from and against all losses, costs and expenses resulting from or arising from any of the foregoing other than any loss, costs or expenses with respect to taxes, levies, imposts, deductions, charges or withholdings imposed by any Governmental Authority, or any liabilities with respect thereto, the indemnification for which shall be governed solely and exclusively by Section 1.13 ; provided , that notwithstanding clause (i) of this Section 1.11(b) , if at any time the mandatory prepayment of any Loan would result, after giving effect to the procedures set forth in this Agreement, in Borrowers incurring costs as a result of LIBOR Loans (“ Affected LIBOR Loans ”) being prepaid other than on the last day of a LIBOR Period applicable thereto, which costs are required to be paid hereunder, then Borrowers may, in their sole discretion, deposit amounts that otherwise would have been paid in respect of the Affected LIBOR Loans with Agent (which amount must be equal in amount to the amount of the Affected LIBOR Loans not immediately prepaid) to be held as a security for the obligations of Borrowers to make such mandatory prepayment pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Agent, with such cash collateral to be directly applied upon the first occurrence or occurrences thereafter of the last day of a LIBOR Period applicable to the relevant Loan that is a LIBOR Loan (or such earlier date or dates as shall be requested by Borrowers) to repay an aggregate principal amount of such Loan equal to the Affected LIBOR Loans not initially repaid pursuant to this sentence. Such indemnification shall include any loss (excluding loss of margin but including lost opportunity costs) or expense arising from the reemployment of funds obtained by it or from fees payable to terminate deposits from which such funds were obtained other than any loss or expense with respect to taxes, levies, imposts, deductions, charges or withholdings imposed by any Governmental Authority, or any liabilities with respect thereto, the indemnification for which shall be governed solely and exclusively by Section 1.13 . For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually funded its relevant LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a maturity comparable to the relevant LIBOR Period; provided that each Lender may fund each of its LIBOR Loans in any
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manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. As promptly as practicable under the circumstances, each Lender shall provide Borrower Representative with its written calculation of all amounts payable pursuant to this Section 1.11(b) , and such calculation shall be binding on the parties hereto unless Borrower Representative shall object in writing within ten (10) Business Days of receipt thereof, specifying the basis for such objection in detail. 1.12 Access . Each Credit Party that is a party hereto shall, during normal business hours, from time to time upon two (2) Business Days’ prior notice as frequently as Agent reasonably determines to be appropriate: (a) provide Agent and any of its officers, employees and agents access to its properties, facilities, advisors, officers and employees of each Credit Party and to the Collateral, (b) permit Agent, and any of its officers, employees and agents, to inspect, audit and make extracts from any Credit Party’s books and records, and (c) permit Agent, and its officers, employees and agents, to inspect, review, evaluate and make test verifications and counts of the Accounts, Inventory and other Collateral of any Credit Party. If an Event of Default has occurred and is continuing, each such Credit Party shall provide such access to Agent and to each Lender at all times and without advance notice. Furthermore, so long as any Event of Default has occurred and is continuing, Borrowers shall provide Agent and each Lender with access to their suppliers and customers. Each Credit Party shall make available to Agent and its counsel reasonably promptly originals or copies of all books and records that Agent may reasonably request. Each Credit Party shall deliver any document or instrument necessary for Agent, as it may from time to time reasonably request, to obtain records from any service bureau or other Person that maintains records for such Credit Party, and shall maintain duplicate records or supporting documentation on media, including computer tapes and discs owned by such Credit Party. Agent will give Lenders at least five (5) days’ prior written notice of regularly scheduled audits. Representatives of other Lenders may accompany Agent’s representatives on regularly scheduled audits at no charge to Borrowers.
1.13 Taxes .
(a) Except as provided in this Section 1.13 , any and all payments by each Borrower hereunder (including any payments made pursuant to Section 12 ) or under the Notes shall be made, in accordance with this Section 1.13 , free and clear of and without deduction for any and all present or future Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder (including any sum payable pursuant to Section 12 ) or under the Notes, (i) the sum payable shall be increased as much as shall be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 1.13 ) Agent, Lenders or L/C Issuers, as applicable, receive an amount equal to the sum they would have received had no such deductions been made, (ii) such Borrower shall make such deductions, and (iii) such Borrower shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. Within thirty (30) days after the date of any payment of Taxes, Borrower Representative shall furnish to Agent the original or a certified copy of a receipt evidencing payment thereof. In addition, each Borrower agrees to pay any Other Taxes.
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(b) Each Credit Party that is a signatory hereto shall jointly and severally indemnify and, within ten (10) days of written demand therefor, pay Agent, each Lender and each L/C Issuer for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 1.13 ) paid by Agent or such Lender or such L/C Issuer, as appropriate, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, provided such written demand sets forth in reasonable detail the basis and calculation of such amount.(c)(i) Each Lender, each L/C Issuer and each Agent that is not a United States person as defined in Section 7701(a)(30) of the IRC (each, a “ Foreign Lender ”) as to which payments to be made under this Agreement or under the Notes are fully exempt from United States withholding tax under an applicable statute or tax treaty shall provide prior to or on the Closing Date to Borrower Representative and Agent a properly completed and executed IRS Form W-8ECI or Form W-8BEN or other applicable form, certificate or document prescribed by the IRS or the United States certifying as to such Foreign Lender’s entitlement to such exemption (a “ Certificate of Exemption ”). Any Person that is not a United States person as defined in Section 7701(a)(30) of the IRC that seeks to become a Lender, an L/C Issuer or an Agent, as applicable, under this Agreement shall provide a Certificate of Exemption to Borrower Representative and Agent prior to becoming a Lender, an L/C Issuer or an Agent, as applicable, hereunder. No Person that is not a United States person as defined in Section 7701(a)(30) of the IRC may become a Lender, an L/C Issuer or an Agent, as applicable, hereunder if such Person fails to deliver a Certificate of Exemption in advance of becoming a Lender, an L/C Issuer or an Agent, as applicable.(ii) Each Lender, each L/C Issuer and each Agent that is a United States person as defined in Section 7701(a)(30) of the IRC (each a “ U.S. Lender ”) shall provide prior to or on the Closing Date (or on or prior to the date it becomes a party to this Agreement) to Borrower Representative and Agent a properly completed and executed IRS Form W-9 (certifying that such U.S. Lender is entitled to an exemption from United States backup withholding tax) or any successor form. Solely for purposes of this Section 1.13 , a U.S. Lender shall not include a Lender, an L/C Issuer or an Agent that may be treated as an exempt recipient based on the indicators described in Treasury Regulation Section 1.6049-4(c)(1)(ii).(iii) Each Lender, each L/C Issuer and Agent, from time to time after submitting the forms, certificates or documents referred to in this Section 1.13 , shall submit to the Borrower Representative and the Agent such additional duly completed and signed copies of one or the other such forms, certificates or documents (or such successor forms, certificates or other documents as shall be adopted from time to time by the IRS or relevant taxing authorities) (A) on or before the date that any such form, certificate, or document expires or becomes obsolete, (B) after the occurrence of any event requiring a change in the most recent form, certificate or document previously delivered by it to the Borrower Representative and Agent, (C) from time to time thereafter if reasonably requested by the Borrower Representative or Agent and (D) as may be appropriate under then current United States law or regulations to avoid United States withholding taxes on payments in respect of any amounts to be received by such Lender, such L/C Issuer or such Agent pursuant to this Agreement and/or the Notes.
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(iv) If Agent, any Lender or any L/C Issuer determines that it is unable to submit to the Borrower Representative or the Agent any form, certificate or document that such Agent, such Lender, or such L/C Issuer, as the case may be, is requested to submit pursuant to this Section 1.13 , or that it is required to withdraw or cancel any such form, certificate or document, or that any such form, certificate or document previously submitted has otherwise become ineffective or inaccurate, such Agent, such Lender or such L/C Issuer, as the case may be, shall promptly notify the Borrower Representative and Agent of such fact.(v) No Credit Party shall be required pursuant to this Section 1.13 to pay any additional amount to, or to indemnify, any Lender, any L/C Issuer or Agent, as the case may be, to the extent that (A) such Lender, such L/C Issuer or Agent becomes subject to Taxes subsequent to the Closing Date (or, if applicable, subsequent to the date such Person becomes a party to this Agreement) as a result of any change in the circumstances of such Lender, such L/C Issuer or Agent, as the case may be (other than a change in applicable law), including without limitation a change in the residence, place of incorporation, principal place of business or a change in the branch or lending office of such Lender, such L/C Issuer or Agent, as the case may be, or as a result of the sale by such Lender of participating interests in such Lender’s creditor position(s) hereunder; or (B) such Taxes would not have been incurred but for the failure of such Lender, such L/C Issuer or Agent, as the case may be, to provide to the Borrower Representative or Agent any form, certificate or document that it was required so to do pursuant to Section 1.13 other than any form, certificate or document required as a result of a change in law.(d) Each Lender and each L/C Issuer agrees that, upon the occurrence of any event giving rise to the operation of Section 1.13(a) or Section 1.13(b) with respect to such Lender or L/C Issuer, as the case may be, it will, if requested by a Credit Party, use reasonable commercial efforts (subject to such Lender’s or L/C Issuer’s overall internal policies of general application) to designate another lending office for any Loans or Letter of Credit Obligations affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the reasonable judgment of such Lender or such L/C Issuer, as the case may be, cause such Lender and its lending office(s) or such L/C Issuer and its lending office(s), as the case may be, to suffer no economic, legal or regulatory disadvantage, and provided , further , that nothing in this Section shall affect or postpone any of the obligations of any Credit Party or the rights of any Lender or any L/C Issuer pursuant to Section 1.13(a) or Section 1.13(b) .(e) Notwithstanding any provision contained herein to the contrary, any indemnity with respect to taxes, levies, imposts, deductions, charges or withholdings imposed by any Governmental Authority, or any liabilities with respect thereto, shall be governed solely and exclusively by this Section 1.13 .1.14 Capital Adequacy ; Increased Costs; Illegality .
(a) If any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or order regarding capital adequacy, reserve requirements or similar requirements or compliance by any Lender with any request or directive regarding capital adequacy, reserve requirements or similar requirements (whether or not having the force of law), in each case,
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adopted after the Closing Date, from any central bank or other Governmental Authority increases or would have the effect of increasing the amount of capital, reserves or other funds required to be maintained by such Lender and thereby reducing the rate of return on such Lender’s capital as a consequence of its obligations hereunder, then Borrowers shall from time to time upon demand by such Lender (with a copy of such demand to Agent) pay to Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction; provided , however, that Borrowers shall not have any obligation under this Section 1.14(a) to pay any additional amount with respect to taxes, levies, imposts, deductions, charges or withholdings imposed by any Governmental Authority, or any liabilities with respect thereto, indemnification for which shall be governed solely and exclusively by Section 1.13 . A certificate as to the amount of that reduction and showing the basis of the computation thereof submitted by such Lender to Borrower Representative and to Agent shall be presumptive evidence of the matters set forth therein. (b) If, due to either (i) the introduction of or any change in any law or regulation (or any change in the interpretation thereof) or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), in each case adopted after the Closing Date, there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan, then Borrowers shall from time to time, upon demand by such Lender (with a copy of such demand to Agent), pay to Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost; provided , however, that Borrowers shall not have any obligation under this Section 1.14(b) to pay any additional amount with respect to taxes, levies, imposts, deductions, charges or withholdings imposed by any Governmental Authority, or any liabilities with respect thereto, indemnification for which shall be governed solely and exclusively by Section 1.13 . A certificate as to the amount of such increased cost, submitted to Borrower Representative and to Agent by such Lender, shall be presumptive evidence of the matters set forth therein. Each Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred to above which would result in any such increased cost, the affected Lender shall, to the extent not inconsistent with such Lender’s internal policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrowers pursuant to this Section 1.14(b) .(c) Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law or regulation (or any change in the interpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to make or to continue to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at another branch or office of that Lender without, in that Lender’s reasonable opinion, materially adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower Representative through Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain LIBOR Loans shall terminate and (ii) each Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by such Borrower to such Lender, together with interest accrued thereon, unless Borrower Representative on behalf of such Borrower, within five (5) Business Days after the delivery of such notice and demand, converts all LIBOR Loans into Index Rate Loans.
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(d) Within thirty (30) days after receipt by Borrower Representative of written notice and demand from any Lender (an “ Affected Lender ”) for payment of additional amounts or increased costs as provided in Sections 1.13, 1.14(a) or 1.14(b) , Borrower Representative may, at its option, notify Agent and such Affected Lender of its intention to replace the Affected Lender. So long as no Event of Default has occurred and is continuing, Borrower Representative, with the consent of Agent, may obtain, at Borrowers’ expense, a replacement Lender (“ Replacement Lender ”) for the Affected Lender, which Replacement Lender must be reasonably satisfactory to Agent. If Borrowers obtain a Replacement Lender within ninety (90) days following notice of their intention to do so, the Affected Lender must sell and assign its Loans and Commitments to such Replacement Lender for an amount equal to the principal balance of all Loans held by the Affected Lender and all accrued interest and Fees with respect thereto through the date of such sale and such assignment shall not require the payment of an assignment fee to Agent; provided that Borrowers shall have reimbursed such Affected Lender for the additional amounts or increased costs that it is entitled to receive under this Agreement through the date of such sale and assignment. Notwithstanding the foregoing, Borrowers shall not have the right to obtain a Replacement Lender if the Affected Lender rescinds its demand for increased costs or additional amounts within 15 days following its receipt of Borrowers’ notice of intention to replace such Affected Lender. Furthermore, if Borrowers give a notice of intention to replace and do not so replace such Affected Lender within ninety (90) days thereafter, Borrowers’ rights under this Section 1.14(d) shall terminate with respect to such Affected Lender and Borrowers shall promptly pay all increased costs or additional amounts demanded by such Affected Lender pursuant to Sections 1.13 , 1.14(a) and 1.14(b) , as applicable.1.15 Single Loan . Subject to Article XIII , all Loans to Borrowers and all of the other Obligations of Borrowers arising under this Agreement and the other Loan Documents shall constitute one general obligation of Borrowers secured, until the Termination Date, by all of the Collateral.
1.16 Eligible Accounts . All of the Accounts owned by any Collateral Party and reflected in the most recent Borrowing Base Certificate delivered by Borrowers to Agent shall be “ Eligible Accounts ” for purposes of this Agreement, except any Account to which any of the exclusionary criteria set forth below applies. Agent shall have the right to establish, modify or eliminate Reserves against Eligible Accounts from time to time in its reasonable credit judgment. In addition, Agent reserves the right, at any time and from time to time after the Closing Date, to adjust any of the criteria set forth below and to establish new criteria, and to adjust advance rates with respect to Eligible Accounts, in its reasonable credit judgment, reflecting changes in the collectability or realization values of such Accounts arising or discovered by Agent after the Closing Date subject to the approval of Supermajority Revolving Lenders in the case of adjustments or new criteria or changes in advance rates which have the effect of making more credit available. Eligible Accounts shall not include any Account of any Collateral Party:
(a) that does not arise from the actual and bona fide sale and delivery of goods by such Collateral Party or the performance of services by such Collateral Party in the ordinary course of its business transactions and in accordance with the terms and conditions contained in any documents related thereto;
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(b) (i) upon which such Collateral Party’s right to receive payment is not absolute or is contingent upon the fulfillment of any condition whatsoever or; (ii) as to which such Collateral Party is not able to bring suit or otherwise enforce its remedies against the Account Debtor through judicial process or (iii) if the Account represents a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to such Collateral Party’s satisfactory completion of any further performance under such contract or is subject to the equitable lien of a surety bond issuer;(c) to the extent that any defense, counterclaim, setoff, recoupment or dispute is asserted or may arise from time to time in respect of such Account;(d) that is not a true and correct statement of bona fide indebtedness incurred in the amount of the Account for merchandise sold to or services rendered and accepted by the applicable Account Debtor;(e) with respect to which an invoice, reasonably acceptable to Agent in form and substance, has not been sent to the applicable Account Debtor;(f) that (i) is not owned by such Collateral Party or (ii) is subject to any Lien of any other Person, other than Liens in favor of Agent, on behalf of itself and Lenders;(g) that arises from a sale to any director, officer, other employee or Affiliate of any Credit Party, or to any entity that has any common officer or director with any Credit Party;(h) that is the obligation of an Account Debtor that is a foreign government, the United States government or a political subdivision thereof, or any state, county or municipality or department, agency or instrumentality thereof unless Agent, in its sole discretion, has agreed to the contrary in writing and such Collateral Party, if necessary or desirable, has complied with respect to such obligation with the Federal Assignment of Claims Act of 1940, the Financial Administration Act (Canada), or any similar law or applicable state, county or municipal law restricting assignment thereof or any equivalent law, rule or regulation in any other jurisdiction;(i) that is the obligation of an Account Debtor located outside of the United States or Canada unless payment thereof is assured by a letter of credit assigned and delivered to Agent, reasonably satisfactory to Agent as to form, amount and issuer; provided that Accounts owing to the Australian Collateral Party by Account Debtors located in Australia and New Zealand, Accounts owing to the UK Collateral Party by Account Debtors located in the United Kingdom and Accounts owing to the UK Collateral Party from European Account Debtors up to an aggregate maximum amount of $1,500,000 shall not be subject to this Section 1.16(i);(j) to the extent such Collateral Party or any Subsidiary thereof is liable for goods sold or services rendered by the applicable Account Debtor to such Collateral Party or any Subsidiary thereof but only to the extent of the potential offset;
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(k) that arises with respect to goods that are delivered on a bill-and-hold, cash-on-delivery, repurchase or return basis or placed on consignment, sale and return, approval, repurchase or return, guaranteed or installment sale or other terms by reason of which the payment by the Account Debtor is or may be conditional or contingent;(l) that is in default; provided , that, without limiting the generality of the foregoing, an Account shall be deemed in default upon the occurrence of any of the following:(i) the Account is not paid within the earlier of: sixty (60) days following its due date or ninety (90) days following its original invoice date;(ii) the Account Debtor obligated upon such Account suspends business, makes a general assignment for the benefit of creditors or is unable or admits its inability to pay its debts as they fall due or fails to pay its debts generally as they come due or by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness;(iii) the Account Debtor becomes an insolvent under administration or insolvent (each as defined in the Corporations Act 2001 (Cwlth)), or has a controller appointed, or is in receivership, in receivership and management, liquidation, in provisional liquidation, under administration, wound up, subject to any arrangement, deed of company arrangement, assignment or composition, protected from creditors under any statute, dissolved (other than to carry out a reconstruction while solvent) or is otherwise unable to pay debts when they fall due or has something similar happens;(iv) a petition is filed by or against any Account Debtor obligated upon such Account under any bankruptcy law or any other federal, state or foreign (including any provincial) receivership, insolvency relief or other law or laws for the relief of debtors (including without limitation, any bankruptcy, dissolution, liquidation, administration, receiverhip, winding-up, reorganization or similar proceedings in any jurisdiction); or(v) there are proceedings or actions which are threatened or pending against such Account Debtor which might result in any material adverse change in such Account Debtor’s financial condition (including, without limitation, receivership, any bankruptcy, dissolution, liquidation, administration, winding-up, reorganization or similar proceedings in any jurisdiction).(m) that is the obligation of an Account Debtor if fifty percent (50%) or more of the Dollar amount of all Accounts owing by that Account Debtor are ineligible under the other criteria set forth in this Section 1.16 ;(n) as to which Agent’s Lien thereon, on behalf of itself and Lenders, is not a first priority perfected Lien;(o) as to which any of the representations or warranties in the Loan Documents are untrue;
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(p) to the extent such Account is evidenced by a judgment, Instrument or Chattel Paper;(q) to the extent such Account exceeds any credit limit established by Agent, in its reasonable credit judgment, following prior notice of such limit by Agent to Borrower Representative;(r) to the extent that such Account, together with all other Accounts owing by such Account Debtor and its Affiliates as of any date of determination exceed ten percent (10%) of all Eligible Accounts; provided , however, that with respect to Accounts owing from Airgas, Inc., Praxair, Inc. and The BOC Group, such percentage shall be deemed to be fifteen percent (15%);(s) that is payable in any currency other than (i) in the case of the Borrowers, Dollars, (ii) in the case of the Australian Collateral Party, Australian Dollars, (iii) in the case of the Canadian Collateral Party, Canadian Dollars or (iv) in the case of the UK Collateral Party, British Pounds Sterling, U.S. Dollars or Euros;(t) that represents interest payments or service charges.1.17 Eligible Inventory . All of the Inventory owned by any Collateral Party and reflected in the most recent Borrowing Base Certificate delivered by Borrowers to Agent shall be “ Eligible Inventory ” for purposes of this Agreement, except any Inventory to which any of the exclusionary criteria set forth below applies. Agent shall have the right to establish, modify or eliminate Reserves against Eligible Inventory from time to time in its reasonable credit judgment. In addition, Agent reserves the right, at any time and from time to time after the Closing Date, to adjust any of the criteria set forth below and to establish new criteria and to adjust advance rates with respect to Eligible Inventory, in its reasonable credit judgment reflecting changes in the salability or realization values of Inventory arising or discovered by Agent after the Closing Date, subject to the approval of Supermajority Revolving Lenders in the case of adjustments or new criteria or changes in advance rates which have the effect of making more credit available. Eligible Inventory shall not include any Inventory of any Collateral Party (unless otherwise indicated below) that:
(a) is not owned by such Collateral Party free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure such Collateral Party’s performance with respect to that Inventory), except the Liens in favor of Agent, on behalf of itself and Lenders, and Permitted Encumbrances in favor of landlords and bailees to the extent permitted in Section 5.9 hereof (subject to Reserves established by Agent in accordance with Section 5.9 hereof);(b) (i) is not located on premises owned, leased or rented by such Collateral Party and set forth in Disclosure Schedule (3.2) , or (ii) is stored at a leased location, unless Agent has given its prior consent thereto and unless either (x) a reasonably satisfactory landlord waiver has been delivered to Agent, or (y) Reserves reasonably satisfactory to Agent have been established with respect thereto or (iii) is stored with a bailee or warehouseman unless a reasonably satisfactory, acknowledged bailee letter has been received by Agent and Reserves
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reasonably satisfactory to Agent have been established with respect thereto, or (iv) is located at an owned location subject to a mortgage in favor of a lender other than Agent unless a reasonably satisfactory mortgagee waiver has been delivered to Agent, or (v) is located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (c) is placed, purchased or sold on consignment (other than Eligible Consigned Inventory up to an aggregate maximum amount of $2,000,000) or is in transit, except for Inventory in transit between locations of Collateral Parties as to which Agent’s Liens have been perfected at origin and destination, and except for Eligible In-Transit Inventory up to an aggregate maximum amount of $5,000,000;(d) is covered by a negotiable document of title, unless such document has been delivered to Agent with all necessary endorsements, free and clear of all Liens except those in favor of Agent and Lenders;(e) is obsolete, slow moving (in excess of two year’s supply), unsalable, unrentable, shopworn, seconds, damaged, defective, unfit for sale, is being repaired, is not of good or merchantable quality or does not meet all standards imposed by any Governmental Authority having regulatory authority over such goods, their use, lease or sale;(f) consists of display items or packing or shipping materials, parts, manufacturing supplies, work-in-process Inventory, replacement parts, prototypes or consists of unfinished goods;(g) consists of goods which have been returned by the buyer;(h) is not of a type held for sale in the ordinary course of such Collateral Party’s business;(i) is not subject to a first priority lien in favor of Agent on behalf of itself and Lenders, subject to Permitted Encumbrances as set forth in clause (e) of the definition thereof (subject to reserves satisfactory to Agent);(j) breaches any of the representations or warranties pertaining to Inventory set forth in the Loan Documents;(k) consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available;(l) is not covered by casualty insurance reasonably acceptable to Agent;(m) is subject to any patent or trademark license requiring the payment of royalties or fees or requiring the consent of the licensor for a sale thereof by Agent;(n) includes any accumulated depreciation of such Inventory;(o) has been leased pursuant to the terms of any capital lease, lease with a bargain option, finance lease program or purchase lease or similar program;
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(p) in respect of which title is retained by the seller thereof or, in the case of the UK Collateral Party, which is subject to Romalpa provisions in favour of any Person;(q) in the case of the Australian Collateral Party, which does not meet all standards imposed by any Australian federal or state government authority, including relating to its production, acquisition or importation for inventory located in Australia or which does not consist of raw materials or finished good for inventory located in Australia.1.18 Conversion to Dollars . All valuations or computations of monetary amounts set forth in this Agreement shall include the Dollar Equivalent of amounts of currencies other than Dollars. In connection with all Dollar amounts set forth in this Agreement and the Loan Documents, amounts in currencies other than Dollars shall be converted to Dollars in accordance with prevailing exchange rates, as determined by Agent in its reasonable discretion, on the applicable date. Unless otherwise specifically set forth in this Agreement, all monetary amounts shall be in Dollars.
1.19 Judgment Currency ; Contractual Currency .
(a) If, for the purpose of obtaining or enforcing judgment against any Credit Party in any court in any jurisdiction, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 1.19 referred to as the “ Judgment Currency ”) an amount due under any Loan Document in any currency (the “ Obligation Currency ”) other than the Judgment Currency, the conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding (i) the date of actual payment of the amount due, in the case of any proceeding in the courts of any jurisdiction that will give effect to such conversion being made on such date, or (ii) the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the applicable date as of which such conversion is made pursuant to this Section 1.19 being hereinafter referred to as the “ Judgment Conversion Date ”);
(b) If, in the case of any proceeding in the court of any jurisdiction referred to in Section 1.19(a) , there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual receipt for value of the amount due, the applicable Credit Party shall pay such additional amount (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount actually received in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of the Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date. Any amount due from a Credit Party under this Section 1.19(b) shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of any of the Loan Documents;
(c) The term “rate of exchange” in this Section 1.19 means the rate of exchange at which Agent would, on the relevant date at or about noon (New York City time), be able to sell the Obligation Currency against the Judgment Currency to prime banks; and
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(d) Any amount received or recovered by Agent in respect of any sum expressed to be due to them (whether for itself or as trustee for any other person) from any Credit Party under this Agreement or under any of the other Loan Documents in a currency other than the currency (the “contractual currency”) in which such sum is so expressed to be due (whether as a result of, or from the enforcement of, any judgment or order of a court or tribunal of any jurisdiction, the winding-up of a Credit Party or otherwise) shall only constitute a discharge of such Credit Party to the extent of the amount of the contractual currency that Agent is able, in accordance with its usual practice, to purchase with the amount of the currency so received or recovered on the date of receipt or recovery (or, if later, the first date on which such purchase is practicable). If the amount of the contractual currency so purchased is less than the amount of the contractual currency so expressed to be due, such Credit Party shall indemnify Agent against any loss sustained by it as a result, including the cost of making any such purchase other than losses resulting from the gross negligence or willful misconduct of the Person seeking such indemnification.
2.1 Conditions to the Loans . This Agreement shall be effective on the date on which all of the following conditions have been satisfied or provided for in a manner reasonably satisfactory to Agent, or waived in writing by Agent:
(a) Credit Agreement; Loan Documents . This Agreement or counterparts hereof shall have been duly executed by, and delivered to, Borrowers, each other Credit Party, Agent and Lenders; and Agent shall have received such documents, instruments, agreements and legal opinions as Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including all those listed in the Closing Checklist attached hereto as Annex D , each in form and substance reasonably satisfactory to Agent.(b) Payment of Fees . Borrowers shall have paid the Fees required to be paid on the Closing Date in the respective amounts specified in Section 1.7 (including the Fees specified in the GE Capital Fee Letters), and shall have reimbursed Agent for all fees, costs and expenses of closing presented as of the Closing Date.(c) Opening Availability . Holdings and its Subsidiaries shall have Borrowing Availability as of the close of business on the Closing Date (as calculated on a pro forma basis with all trade payables being paid currently, expenses and liabilities being paid in the ordinary course of business and without acceleration of sales or deterioration of working capital), after giving effect to the consummation of the Related Transactions, of at least $20,000,000.(d) Pro Forma . Agent shall have received the Pro Forma reflecting, among other things, stockholders’ equity of at least $150,000,000.
(e) Total Indebtedness . Agent shall have received satisfactory evidence that Holdings and its Subsidiaries, on a consolidated basis, shall not have outstanding Indebtedness in excess of $278,300,000 on the Closing Date.
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(f) Environmental . Agent shall have received a confirmation, satisfactory in both form and substance to Agent, from the Borrowers stating that no material change has occurred with respect to any environmental liability of the Credit Parties since the Prior Credit Agreement Closing Date.
(g) Approvals . Agent shall have received (i) satisfactory evidence that the Credit Parties have obtained all required consents and approvals of all Persons, including, without limitation, all requisite Governmental Authorities, to the execution, delivery and performance of this Agreement and the other Loan Documents and the consummation of the Related Transactions or (ii) an officer’s certificate in form and substance reasonably satisfactory to Agent affirming that no such consents or approvals are required.
(h) Amendments to the Second Lien Credit Agreement . Agent shall have received satisfactory evidence that (i) the maturity of the indebtedness under the Second Lien Credit Agreement shall have been extended to July 22, 2005 or later, and (ii) the Second Lien Credit Agreement has been amended to provide that at the end of each corresponding Fiscal Quarter the maximum leverage ratio permitted in the Second Lien Credit Agreement is 0.50 greater than the maximum Leverage Ratio permitted in Annex G of this Agreement.
(i) Equitable Australian Mortgage . Agent shall have received an executed equitable mortgage from Quetala Pty Ltd., in form and substance reasonably acceptable to Agent, with respect to the Mortgaged Property. In addition, Agent shall have received a certificate of title with respect to the Mortgaged Property to be held in custody by the Agent or Agent’s designee.
2.2 Further Conditions to Each Loan and to the Release of Funds from the Australian Blocked Account and the UK Collection Accounts . Except as otherwise expressly provided herein, but without prejudice to the terms of the UK Debenture with regard to the UK Collection Accounts, no Lender shall be obligated to fund any Advance or make the Delayed Draw Term Loan, convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation or release funds from the Australian Blocked Account and/or the UK Collection Accounts, if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained herein or in any other Loan Document is untrue or incorrect in any material respect as of such date as determined by Agent or Requisite Lenders, except to the extent that such representation or warranty expressly relates to an earlier date and except for changes therein expressly permitted or expressly contemplated by this Agreement and Agent or Requisite Lenders have determined not to make such Advance, convert or continue any Loan as LIBOR Loan or incur such Letter of Credit Obligation or release funds from the Australian Blocked Account and/or the UK Collection Accounts as a result of the fact that such warranty or representation is untrue or incorrect in any material respect;(b) any Event of Default has occurred and is continuing or would result after giving effect to any Advance (or the incurrence of any Letter of Credit Obligation), and Agent or Requisite Lenders shall have determined not to make any Advance, convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation or release funds from the
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Australian Blocked Account and/or the UK Collection Accounts as a result of that Event of Default; (c) after giving effect to any Advance (or the incurrence of any Letter of Credit Obligations), the outstanding principal amount of the aggregate Revolving Loan would exceed the lesser of the Borrowing Base and the Maximum Amount, in each case, less the then outstanding principal amount of the Swing Line Loan.The request by any Borrower for an Advance, the issuance of any Letter of Credit Obligations or the conversion or continuation of any Loan into, or as, a LIBOR Loan, the release of funds from the Australian Blocked Account and/or the UK Collection Accounts or the incurrence of the Delayed Draw Term Loan shall be deemed to constitute, as of the date thereof, (i) a representation and warranty by Borrowers that the conditions in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty provisions set forth in Section 12 and of the granting and continuance of Agent’s Liens, on behalf of itself and Lenders, pursuant to the Collateral Documents. Each request for release of funds from the Australian Blocked Account or the UK Collection Accounts shall be made pursuant to a Notice of Cash Collateral Release delivered to Agent or Agent’s designee by the Australian Collateral Party or UK Collateral Party, as applicable, and agreed to and acknowledged by the Borrower Representative, substantially in the form of Exhibit 2.2 . In the case of the UK Collateral Party, any such notice must be given no later than 12:00 noon (Chicago time) on the Business Day immediately preceding the Business Day of the proposed release of funds. In the case of the Australian Collateral Party, any such notice must be given no later than 12:00 noon (Sydney, Australia time]) on the Business Day of the proposed release of funds.
2.3 Further Conditions to Delayed Draw Term Loan . In addition to the conditions provided Section 2. 2 above, the obligation of the Term Lenders to make the Delayed Draw Term Loan is subject to (a) the Agent’s reasonable determination that as to the Mortgaged Property no material Environmental Liabilities exist, and (b) the Australian Collateral Party having delivered to Agent an executed mortgage in recordable form, and otherwise in form and substance reasonably acceptable to Agent, with respect to the Mortgaged Property, and such other documents, instruments, certificates and agreements that Agent may reasonably request.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur the Letter of Credit Obligations, the Credit Parties executing this Agreement, jointly and severally, make the following representations and warranties to Agent and each Lender with respect to all Credit Parties, each and all of which shall survive the execution and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law; FEIN . Each Credit Party (a) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or organization and each Credit Party’s name as it appears in official filings in its state of incorporation or organization, organization type, organization number, if any, issued by its state incorporation or organization, and federal employer identification number are set forth in
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Disclosure Schedule (3.1) ; (b) is duly qualified to conduct business and is in good standing in each other jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect; (c) has the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease and to conduct its business as now conducted or proposed to be conducted; (d) subject to specific representations regarding Environmental Laws, has all licenses, permits, consents or approvals from or by, and has made all material filings with, and has given all notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; (e) is in compliance with its charter and bylaws or partnership or operating agreement, as applicable; and (f) subject to specific representations set forth herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance with all applicable provisions of law, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices , Collateral Locations . As of the Closing Date, the current location of each Credit Party’s chief executive office, warehouses and premises at which any Collateral with a fair market value in excess of $5,000 is located, and the United States and Canadian ports of entry and the names and address for all customs brokers for Eligible In-Transit Inventory are set forth in Disclosure Schedule (3.2) , none of such locations has changed within the one (1) month preceding the Closing Date and each Credit Party has only one jurisdiction of incorporation or organization.
3.3 Corporate Power , Authorization, Enforceable Obligations . The execution, delivery and performance by each Credit Party of the Loan Documents to which it is a party and the creation of all Liens provided for therein: (a) are within such Person’s power; (b) have been duly authorized by order of the Bankruptcy Court or all necessary corporate, limited liability company or limited partnership action, as applicable; (c) do not contravene any provision of such Person’s charter, bylaws or partnership or operating agreement, as applicable; (d) do not violate any law or regulation in its respective jurisdiction, or any order or decree of any court or Governmental Authority in its respective jurisdiction; (e) do not conflict with or result in the breach or termination of, constitute a default under or accelerate or permit the acceleration of any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such Person is a party or by which such Person or any of its property is bound; (f) do not result in the creation or imposition of any Lien upon any of the property of such Person, other than those in favor of Agent, on behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not require the consent or approval of any Governmental Authority or any other Person. Each of the Loan Documents shall be duly executed and delivered by each Credit Party that is a party thereto and each such Loan Document shall constitute a legal, valid and binding obligation of such Credit Party enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
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3.4 Financial Statements and Projections .
(a) Financial Statements . The Financial Statements referred to in paragraph (a) of Annex E to the Prior Credit Agreement for periods ending on or prior to December 31, 2003 have been delivered to Agent and have been prepared in accordance with GAAP consistently applied throughout the periods covered (except as disclosed therein and except, with respect to unaudited Financial Statements, for the absence of footnotes and normal year-end audit adjustments) and present fairly in all material respects the financial position of the Persons covered thereby as at the dates thereof and the results of their operations and cash flows for the periods then ended.(b) Pro Forma . The Pro Forma delivered on or prior to the date hereof and attached hereto as Disclosure Schedule (3.4(b)) was prepared by Holdings giving pro forma effect to the Related Transactions, was based on the unaudited consolidated and consolidating balance sheets of Holdings and its Subsidiaries dated as of August 31, 2004, and was prepared in good faith by the Credit Parties, reflecting items of recurring significance and which are factually supportable based on currently available information.(c) Projections . The Projections prepared by Holdings and attached to the Prior Credit Agreement as Disclosure Schedule 3.4(c) reflecting projections for the three year period beginning on January 1, 2003 on a month-by-month basis through December 31, 2003 (on a consolidated and consolidating basis), on a quarterly basis for 2004 (on a consolidated basis only) and on a year-by-year basis thereafter (on a consolidated basis only) are attached hereto as Disclosure Schedule (3.4(b)) .3.5 Material Adverse Effect . Between the Prior Credit Agreement Closing Date and the Closing Date: (a) no Credit Party has incurred any obligations, contingent or noncontingent liabilities, liabilities for Charges, long-term leases or unusual forward or long-term commitments that are not reflected in the Pro Forma and that, alone or in the aggregate, could reasonably be expected to have a Material Adverse Effect, (b) no material contract, lease or other agreement or instrument has been entered into by any Credit Party or has become binding upon any Credit Party’s assets and to Borrowers’ knowledge no law or regulation applicable to any Credit Party has been adopted that has had or could reasonably be expected to have a Material Adverse Effect, and (c) no Credit Party is in default and to the best of Borrowers’ knowledge no third party is in default under any material contract, lease or other agreement or instrument, that alone or in the aggregate could reasonably be expected to have a Material Adverse Effect. Since the Prior Credit Agreement Closing Date no event has occurred, that alone or together with other events, could reasonably be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens . As of the Closing Date, the real estate (“ Real Estate ”) listed in Disclosure Schedule (3.6) constitutes all of the real property owned, leased, subleased, or used by any Credit Party. Each Credit Party owns good and marketable fee simple title to all of its owned Real Estate, and valid and marketable leasehold interests in all of its leased Real Estate, all as described on Disclosure Schedule (3.6) , and, if requested by Agent, copies of all such leases or a summary of terms thereof reasonably
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satisfactory to Agent have been delivered to Agent. Disclosure Schedule (3.6) further describes any Real Estate with respect to which any Credit Party is a lessor, sublessor or assignor as of the Closing Date. Each Credit Party also has good and marketable title to, or valid leasehold interests in, all of its personal property and assets. As of the Closing Date, none of the properties and assets of any Credit Party are subject to any Liens other than Permitted Encumbrances and Liens in existence on the date hereof and summarized on Disclosure Schedule (6.7) , and there are no facts, circumstances or conditions known to any Credit Party that may result in any Liens (including Liens arising under Environmental Laws) other than Permitted Encumbrances. Each Credit Party has received all deeds, assignments, waivers, consents, nondisturbance and attornment or similar agreements, bills of sale and other documents, and has duly effected all recordings, filings and other actions necessary to establish, protect and perfect such Credit Party’s right, title and interest in and to all such Real Estate and other properties and assets. Disclosure Schedule (3.6) also describes any purchase options, rights of first refusal or other similar contractual rights pertaining to any Real Estate. As of the Closing Date, no portion of any Credit Party’s Real Estate has suffered any material damage by fire or other casualty loss that has not heretofore been repaired and restored in all material respects to its original condition or otherwise remedied. As of the Closing Date, all material permits required to have been issued or appropriate to enable the Real Estate to be lawfully occupied and used for all of the purposes for which it is currently occupied and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters . Except as set forth on Disclosure Schedule (3.7) , as of the Closing Date (a) no strikes or other material labor disputes against any Credit Party are pending or, to any Credit Party’s knowledge, threatened; (b) hours worked by and payment made to employees of each Credit Party materially comply with the Fair Labor Standards Act and each other federal, state, local or foreign law applicable to such matters; (c) all payments due from any Credit Party for employee health and welfare insurance have been paid or accrued as a liability on the books of such Credit Party; (d) no Credit Party is a party to or bound by any collective bargaining agreement, management agreement, consulting agreement, employment agreement, bonus, restricted stock, stock option, or stock appreciation plan or agreement or any similar plan, agreement or arrangement (and, if requested by Agent, true and complete copies of any agreements described on Disclosure Schedule (3.7) have been delivered to Agent); (e) there is no organizing activity involving any Credit Party pending or, to any Credit Party’s knowledge, threatened by any labor union or group of employees; (f) there are no representation proceedings pending or, to any Credit Party’s knowledge, threatened with the National Labor Relations Board (or any comparable body outside the United States of America), and no labor organization or group of employees of any Credit Party has made a pending demand for recognition; and (g) there are no material complaints or charges against any Credit Party pending or, to the knowledge of any Credit Party, threatened to be filed with any Governmental Authority in its respective jurisdiction or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by any Credit Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness . Except as set forth in Disclosure Schedule (3.8) , as of the Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint venture or partnership with any other Person, or is an Affiliate of any other Person. All of the issued and outstanding Stock of each Credit Party (other than Holdings) is owned by each of the Stockholders and in the amounts set
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forth in Disclosure Schedule (3.8) . Except as set forth in Disclosure Schedule (3.8) , there are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which any Credit Party may be required to issue, sell, repurchase or redeem any of its Stock or other equity securities or any Stock or other equity securities of its Subsidiaries. Set forth on Disclosure Schedule 3.8A is a corporate structure chart which shows in diagram form the ownership of each of the Credit Parties and their Subsidiaries. All outstanding Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for the Obligations) is described in Section 6.3 (including Disclosure Schedule (6.3) ).
3.9 Government Regulation . No Credit Party is an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940. No Credit Party is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or any other federal, state or foreign statute that restricts or limits its ability to incur Indebtedness or to perform its obligations hereunder. The making of the Loans by Lenders to Borrowers, the incurrence of the Letter of Credit Obligations on behalf of Borrowers, the application of the proceeds thereof and repayment thereof and the consummation of the Related Transactions will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission.
3.10 Margin Regulations . No Credit Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” as such terms are defined in Regulation U of the Federal Reserve Board as now and from time to time hereafter in effect (such securities being referred to herein as “ Margin Stock ”). No Credit Party owns any Margin Stock, and none of the proceeds of the Loans or other extensions of credit under this Agreement will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any Indebtedness that was originally incurred to purchase or carry any Margin Stock or for any other purpose that might cause any of the Loans or other extensions of credit under this Agreement to be considered a “purpose credit” within the meaning of Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or permit to be taken any action that might cause any Loan Document to violate any regulation of the Federal Reserve Board.
3.11 Tax es . All federal and other material tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by any Credit Party have been filed with the appropriate Governmental Authority, and all Charges have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof (excluding (i) Charges or other amounts being contested in accordance with Section 5.2(b) and (ii) any Charges discharged in the Chapter 11 Cases or payable over time in accordance with the Plan of Reorganization), unless the failure to so file or pay would not reasonably be expected to result in fines, penalties or interest in excess of $100,000 in the aggregate. Proper and accurate amounts have been withheld by each Credit Party from its respective employees for all periods in compliance in all material respects with all applicable federal, state, local and foreign laws and such withholdings have been timely paid to the respective Governmental Authorities (except to the extent discharged in the Chapter 11 Cases or payable over time in accordance with the Plan of Reorganization). Disclosure Schedule (3.11)
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sets forth as of the Closing Date those taxable years for which any Credit Party’s tax returns are currently being audited by the IRS or any other applicable Governmental Authority, and any assessments or threatened assessments in connection with such audit, or otherwise currently outstanding. Except as described in Disclosure Schedule (3.11) , as of the Closing Date, no Credit Party has executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges for any open periods. Except as set forth on Disclosure Schedule (3.11) , none of the Credit Parties and their respective predecessors are liable for any Charges: (a) under any agreement (including any tax sharing agreements) or (b) to each Credit Party’s knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed or been requested to make any adjustment under IRC Section 481(a), by reason of a change in accounting method or otherwise, which would reasonably be expected to have a Material Adverse Effect.
3.12 ERISA .
(a) Disclosure Schedule (3.12) lists, as of the Closing Date, (i) all ERISA Affiliates and (ii) all Plans, including Title IV Plans, Multiemployer Plans, and all Retiree Welfare Plans. Copies of all such listed Plans, if requested by Agent, together with a copy of the latest form IRS/DOL 5500-series, as applicable, for each such Plan, have been delivered to Agent. Except with respect to Multiemployer Plans, each Qualified Plan has been determined by the IRS to qualify under Section 401 of the IRC, the trusts created thereunder have been determined to be exempt from tax under the provisions of Section 501 of the IRC, and nothing has occurred that would cause the loss of such qualification or tax-exempt status. Each Plan is in compliance in all respects with the applicable provisions of ERISA, the IRC and its terms, including the timely filing of all reports required under the IRC or ERISA, except for non-compliance which would not have a Material Adverse Effect. Neither any Credit Party nor ERISA Affiliate has failed to make any material contribution or pay any material amount due as required by either Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan, except for non-compliance which would not have a Material Adverse Effect. No “prohibited transaction,” as defined in Section 406 of ERISA and Section 4975 of the IRC, has occurred with respect to any Plan, that would subject any Credit Party to a tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC, which would have a Material Adverse Effect. (b) Except as set forth in Disclosure Schedule (3.12) or in the Company’s Financial Statements provided to the Lenders from time to time or as would not have a Material Adverse Effect: (i) no Title IV Plan has any material Unfunded Pension Liability; (ii) no ERISA Event has occurred or is reasonably expected to occur; (iii) there are no pending, or to the knowledge of any Credit Party, threatened material claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan or any Credit Party or ERISA Affiliate as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to incur any material liability as a result of a complete or partial withdrawal from a Multiemployer Plan; (v) within the last five years no Title IV Plan of any Credit Party or ERISA Affiliate has been terminated, whether or not in a “standard termination” as that term is used in Section 4041 of ERISA, nor has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at any time within the last five years)
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with material Unfunded Pension Liabilities been transferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such time); and (iv) no Credit Party or ERISA Affiliate has any material liability with respect to post-retirement benefit obligations within the meaning of the FASB 106. 3.13 No Litigation . No action, claim, lawsuit, demand, investigation or proceeding is now pending or, to the knowledge of any Credit Party, threatened against any Credit Party, before any Governmental Authority or before any arbitrator or panel of arbitrators (collectively, “ Litigation ”), (a) that challenges any Credit Party’s right or power to enter into or perform any of its obligations under the Loan Documents to which it is a party, or the validity or enforceability of any Loan Document or any action taken thereunder, or (b) that has a reasonable risk of being determined adversely to any Credit Party and that, if so determined, could reasonably be expected to have a Material Adverse Effect. Except as set forth on Disclosure Schedule (3.13) , as of the Closing Date there is no Litigation pending or, to any Credit Party’s knowledge, threatened, that seeks damages in excess of $250,000 or injunctive relief against, or alleges criminal misconduct of, any Credit Party.
3.14 Brokers . Except as set forth on Disclosure Schedule (3.14) , no broker or finder brought about the obtaining, making or closing of the Loans or the Related Transactions, and no Credit Party or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.
3.15 Intellectual Property . As of the Closing Date, each Credit Party owns or has rights to use all Intellectual Property necessary to continue to conduct its business as now conducted by it or presently proposed to be conducted by it. Each Patent, Trademark, and registered Copyright existing as of the Closing Date and each material License in effect as of the Closing Date is listed, together with application or registration numbers, as applicable, in Disclosure Schedule (3.15 ). To its knowledge, each Credit Party conducts its business and affairs without infringement of or interference with any Intellectual Property of any other Person in any material respect. Except as set forth in Disclosure Schedule (3.15 ), no Credit Party is aware of any material infringement claim by any other Person with respect to any Intellectual Property.
3.16 Full Disclosure . No information contained in this Agreement, any of the other Loan Documents, Financial Statements or Collateral Reports or other written reports from time to time prepared by any Credit Party and delivered hereunder or any written statement (other than the Projections) prepared by any Credit Party and furnished by or on behalf of any Credit Party to Agent or any Lender pursuant to the terms of this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein, taken as a whole, not misleading in light of the circumstances under which they were made.
3.17 Environmental Matters .
(a) Except as set forth in Disclosure Schedule (3.17) , as of the Closing Date: (i) the Real Estate is free of contamination from any Hazardous Material except for such contamination that would not adversely impact the value or marketability of such Real Estate and
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that would not result in Environmental Liabilities that could reasonably be expected to exceed $100,000; (ii) no Credit Party has caused or suffered to occur any material Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate; (iii) the Credit Parties are and have been in compliance with all Environmental Laws, except for such noncompliance that would not result in Environmental Liabilities which could reasonably be expected to exceed $100,000; (iv) the Credit Parties have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Environmental Permits would not result in Environmental Liabilities that could reasonably be expected to exceed $100,000, and all such Environmental Permits are valid, uncontested and in good standing; (v) no Credit Party is involved in operations or knows of any facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely to result in any Environmental Liabilities of such Credit Party which could reasonably be expected to exceed $100,000; (vi) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or expenses in excess of $100,000 or injunctive relief against, or that alleges criminal misconduct by, any Credit Party; (vii) no notice has been received by any Credit Party identifying it as a “potentially responsible party” or requesting information under CERCLA or analogous state or foreign statutes, and to the knowledge of the Credit Parties, there are no facts, circumstances or conditions that may result in any Credit Party being identified as a “potentially responsible party” under CERCLA or analogous state or foreign statutes; and (viii) the Credit Parties have made available to Agent copies of all existing material environmental reports, reviews and audits and all written information pertaining to actual or potentially material Environmental Liabilities, in each case relating to any Credit Party. (b) Each Credit Party hereby acknowledges and agrees that Agent (i) is not now, and has not ever been, in control of any of the Real Estate or any Credit Party’s affairs, and (ii) does not have the capacity through the provisions of the Loan Documents or otherwise to influence any Credit Party’s conduct with respect to the ownership, operation or management of any of its Real Estate or compliance with Environmental Laws or Environmental Permits.3.18 Insurance . Disclosure Schedule (3.18) lists all insurance policies of any nature maintained, as of the Closing Date, for current occurrences by each Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts . Disclosure Schedule (3.19) lists all banks and other financial institutions at which any Credit Party maintains deposit or other accounts as of the Closing Date, including any Disbursement Accounts, and such Schedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor.
3.20 Government Contracts . Except as set forth in Disclosure Schedule (3.20) , as of the Closing Date, no Credit Party is a party to any contract or agreement with any Governmental Authority and no Credit Party’s Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any similar state, local or foreign law.
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3.21 Customer and Trade Relations . As of the Closing Date, there exists no actual or, to the knowledge of any Credit Party, threatened termination or cancellation of, or any material adverse modification or change in: the business relationship of any Credit Party with any customer or group of customers whose purchases during the preceding 12 months caused them to be ranked among the ten largest customers of such Credit Party; or the business relationship of any Credit Party with any supplier essential to its operations.
3.22 Bonding; Licenses . Except as set forth on Disclosure Schedule 3.22 , as of the Closing Date, no Credit Party is a party to or bound by any surety bond agreement or binding requirement with respect to products or services sold by it or any trademark or patent license agreement with respect to products sold by it.
3.23 Solvency . Before and after giving effect to (a) the Loans and Letter of Credit Obligations to be made or incurred on the Closing Date or such other date as Loans and Letter of Credit Obligations requested hereunder are made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to the instructions of Borrower Representative; (c) the consummation of the Related Transactions; and (d) the payment and accrual of all transaction costs in connection with the foregoing, each Credit Party is and will be Solvent.
3.24 Status of Holdings . Prior to the Closing Date, Holdings has not engaged in any trade or business.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices .
(a) Each Credit Party executing this Agreement hereby agrees that from and after the Closing Date and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, as required, the Financial Statements, notices, Projections and other information at the times, to the Persons and in the manner set forth in Annex E .(b) Each Credit Party executing this Agreement hereby agrees that, from and after the Closing Date and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, as required, the various Collateral Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(b) ) at the times, to the Persons and in the manner set forth in Annex F .4.2 Communication with Accountants . Each Credit Party executing this Agreement authorizes (a) Agent and (b) so long as an Event of Default has occurred and is continuing, each Lender, to communicate directly with its independent certified public accountants, including Ernst & Young, LLP, and authorizes those accountants and advisors to communicate to Agent and each Lender information relating to any Credit Party with respect to the business, results of operations and financial condition of any Credit Party.
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Each Credit Party executing this Credit Agreement jointly and severally agrees as to all Credit Parties that from and after the date hereof and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business . Each Credit Party shall: do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence in its jurisdiction of formation or organization, as applicable, and its material rights and franchises; continue to conduct its business substantially as now conducted or as otherwise permitted hereunder; at all times take all reasonable action to maintain, preserve and protect all of its assets and properties used or useful in the conduct of its business, and keep the same in good repair, working order and condition in all material respects (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, all necessary or appropriate repairs, replacements and improvements thereto consistent with industry practices; and transact business only in such corporate and trade names as are set forth in Disclosure Schedule (5.1) .
5.2 Payment of Charges .
(a) Subject to Section 5.2(b) , each Credit Party shall pay and discharge or cause to be paid and discharged promptly all Charges payable by it, including (i) Charges imposed upon it, its income and profits, or any of its property (real, personal or mixed) and all Charges with respect to tax, social security and unemployment withholding with respect to its employees, (ii) lawful claims for labor, materials, supplies and services or otherwise, and (iii) all storage or rental charges payable to warehousemen or bailees, in each case, before any thereof shall become past due, except in the case of clauses (ii) and (iii) where the failure to pay or discharge such Charges would not result in aggregate liabilities in excess of $200,000.(b) Each Credit Party may in good faith contest, by appropriate proceedings, the validity or amount of any Charges, Taxes or claims described in Section 5.2(a) ; provided that (i) adequate reserves with respect to such contest are maintained on the books of such Credit Party, in accordance with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges in excess of $1,000,000 (other than payments to warehousemen and/or bailees) that is superior to any of the Liens securing the Obligations and such contest is maintained and prosecuted continuously and with diligence and operates to suspend collection or enforcement of such Charges; (iii) none of the Collateral becomes subject to forfeiture or loss as a result of such contest; and (iv) such Credit Party shall promptly pay or discharge such contested Charges, Taxes or claims and all additional charges, interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptable to Agent of such compliance, payment or discharge, if such contest is terminated or discontinued adversely to such Credit Party or the conditions set forth in this Section 5.2(b) are no longer met.5.3 Books and Records . Each Credit Party shall keep adequate books and records with respect to its business activities in which proper entries, reflecting all financial transactions, are made in accordance with GAAP and on a basis consistent with the Financial Statements attached as Disclosure Schedule (3.4 ).
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5.4 Insurance; Damage to or Destruction of Collateral .
(a) The Credit Parties shall, at their sole cost and expense, maintain the policies of insurance described on Disclosure Schedule (3.18) as in effect on the date hereof or otherwise in form and amounts and with insurers reasonably acceptable to Agent. Such policies of insurance (or the loss payable and additional insured endorsements delivered to Agent) shall contain provisions pursuant to which the insurer agrees to provide thirty (30) days prior written notice to Agent in the event of any non-renewal, cancellation or amendment of any such insurance policy. If any Credit Party at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay all premiums relating thereto, Agent may at any time or times thereafter obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto that Agent deems advisable. Agent shall have no obligation to obtain insurance for any Credit Party or pay any premiums therefor. By doing so, Agent shall not be deemed to have waived any Event of Default arising from any Credit Party’s failure to maintain such insurance or pay any premiums therefor. All sums so disbursed, including reasonable attorneys’ fees, court costs and other charges related thereto, shall be payable on demand by Borrowers to Agent and shall be additional Obligations hereunder secured by the Collateral.(b) Each Credit Party shall deliver to Agent, in form and substance reasonably satisfactory to Agent, endorsements to (i) all “All Risk” and business interruption insurance naming Agent, on behalf of itself and Lenders, as loss payee, and (ii) all general liability and other liability policies naming Agent, on behalf of itself and Lenders, as additional insured. Each Credit Party irrevocably makes, constitutes and appoints Agent (and all officers, employees or agents designated by Agent), so long as any Event of Default has occurred and is continuing or the anticipated insurance proceeds exceed $1,000,000, as such Credit Party’s true and lawful agent and attorney-in-fact for the purpose of making, settling and adjusting claims under such “All Risk” policies of insurance, endorsing the name of such Credit Party on any check or other item of payment for the proceeds of such “All Risk” policies of insurance and for making all determinations and decisions with respect to such “All Risk” policies of insurance. Agent shall have no duty to exercise any rights or powers granted to it pursuant to the foregoing power-of-attorney. Borrower Representative shall promptly notify Agent of any loss, damage, or destruction to the Collateral in the amount of $1,000,000 or more, whether or not covered by insurance. After deducting from such proceeds (i) the expenses incurred by Agent in the collection or handling thereof, and (ii) amounts required to be paid to creditors (other than Lenders) having Permitted Encumbrances, Agent may, at its option, apply such proceeds to the reduction of the Obligations in accordance with Section 1.3(c) ; provided , that in the case of insurance proceeds pertaining to any Credit Party that is not a Borrower, such insurance proceeds shall be applied ratably to all of the Loans owing by the Borrowers, or permit or require the applicable Credit Party to use such money, or any part thereof, to replace, repair, restore or rebuild the Collateral in a diligent and expeditious manner with materials and workmanship of substantially the same quality as existed before the loss, damage or destruction. Notwithstanding the foregoing, if the casualty giving rise to such insurance proceeds could not reasonably be expected to have a Material Adverse Effect and such insurance proceeds do not exceed $1,000,000 in the aggregate, Agent shall permit the applicable Credit Party to replace, restore, repair or rebuild the property; provided that if such Credit Party shall not have completed or entered into binding agreements, within 180 days of such casualty, or in the case of real property,
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12 months of such casualty, to complete such replacement, restoration, repair or rebuilding within 180 days of such casualty, Agent may apply such insurance proceeds to the Obligations in accordance with Section 1.3(c) ; provided , further, that in the case of insurance proceeds pertaining to any Credit Party that is not a Borrower, such insurance proceeds shall applied ratably to all of the Loan owing by the Borrowers. All insurance proceeds that are to be made available to any Credit Party to replace, repair, restore or rebuild the Collateral shall be applied by Agent to reduce the outstanding principal balance of the Revolving Loan (which application shall not result in a permanent reduction of the Revolving Loan Commitment) and upon such application, Agent shall establish a Reserve against the Borrowing Base in an amount equal to the amount of such proceeds so applied. All insurance proceeds made available to any Credit Party that is not a Borrower to replace, repair, restore or rebuild Collateral shall be deposited in a cash collateral account. Thereafter, such funds shall be made available to that Credit Party to provide funds to replace, repair, restore or rebuild the Collateral as follows: (i) Borrower Representative shall request a Revolving Credit Advance or a release from the cash collateral account be made to such Credit Party in the amount requested to be released; (ii) so long as the conditions set forth in Section 2.2 have been met, Revolving Lenders shall make such Revolving Credit Advance; or Agent shall release funds from the cash collateral account; and (iii) in the case of insurance proceeds applied against the Revolving Loan, the Reserve established with respect to such insurance proceeds shall be reduced by the amount of such Revolving Credit Advance. To the extent not used to replace, repair, restore or rebuild the Collateral, such insurance proceeds shall be applied in accordance with Section 1.3(c) ; provided , that in the case of insurance proceeds pertaining to any Credit Party that is not a Borrower, such insurance proceeds shall be applied to the Loans. 5.5 Compliance with Laws . Each Credit Party shall comply with all federal, state, local and foreign laws and regulations applicable to it, including those relating to ERISA, labor laws, and Environmental Laws and Environmental Permits, except to the extent that the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
5.6 Supplemental Disclosure . From time to time as may be reasonably requested by Agent (which request will not be made more frequently than once each year absent the occurrence and continuance of an Event of Default) or at Credit Parties’ election, the Credit Parties shall supplement each Disclosure Schedule hereto, or any representation herein or in any other Loan Document, with respect to any matter hereafter arising that, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedule or as an exception to such representation or that is necessary to correct any information in such Disclosure Schedule or representation which has been rendered inaccurate thereby (and, in the case of any supplements to any Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to show the changes made therein); provided that (a) no such supplement to any such Disclosure Schedule or representation shall amend, supplement or otherwise modify any Disclosure Schedule or representation, or be or be deemed a waiver of any Event of Default resulting from the matters disclosed therein, except as consented to by Agent and Requisite Lenders in writing, and (b) no supplement shall be required or permitted as to representations and warranties that relate solely to the Closing Date.
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5.7 Intellectual Property . Each Credit Party will conduct its business and affairs without infringement of or interference with any Intellectual Property of any other Person in any material respect and shall comply in all material respects with the terms of its Licenses.
5.8 Environmental Matters . Each Credit Party shall and shall cause each Person within its control to: (a) conduct its operations and keep and maintain its Real Estate in compliance with all Environmental Laws and Environmental Permits other than noncompliance that could not reasonably be expected to have a Material Adverse Effect; (b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to maintain the value and marketability of the Real Estate or to otherwise comply with Environmental Laws and Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, under, above, to, from or about any of its Real Estate in all material respects; (c) notify Agent promptly after such Credit Party becomes aware of any violation of Environmental Laws or Environmental Permits or any Release on, at, in, under, above, to, from or about any Real Estate that is reasonably likely to result in Environmental Liabilities in excess of $250,000; and (d) promptly forward to Agent a copy of any order, notice, request for information or any communication or report received by such Credit Party in connection with any such violation or Release or any other matter relating to any Environmental Laws or Environmental Permits that could reasonably be expected to result in Environmental Liabilities in excess of $250,000, in each case whether or not the Environmental Protection Agency or any Governmental Authority has taken or threatened any action in connection with any such violation, Release or other matter. If Agent at any time has a reasonable basis to believe that there may be a violation of any Environmental Laws or Environmental Permits by any Credit Party or any Environmental Liability arising thereunder, or a Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, that, in each case, could reasonably be expected to have a Material Adverse Effect, then each Credit Party shall, upon Agent’s written request (i) cause the performance of such environmental audits including subsurface sampling of soil and groundwater, and preparation of such environmental reports, at Borrowers’ expense, as Agent may from time to time reasonably request, which shall be conducted by reputable environmental consulting firms reasonably acceptable to Agent and shall be in form and substance reasonably acceptable to Agent, and (ii) permit Agent or its representatives to have access to all Real Estate for the purpose of conducting such environmental audits and testing as Agent deems appropriate, including subsurface sampling of soil and groundwater. Borrowers shall reimburse Agent for the costs of such audits and tests and the same will constitute a part of the Obligations secured hereunder.
5.9 Landlords’ Agreements , Mortgagee Agreements, Bailee Letters and Real Estate Purchases . Each Credit Party shall use commercially reasonable efforts to obtain a landlord’s agreement, mortgagee agreement or bailee letter, as applicable, from the lessor of each leased property, mortgagee of owned property or bailee with respect to any warehouse or manufacturing, processor, converter or customs broker facility or other location where Collateral is stored or located that has an aggregate fair market value or purchase price (whichever is higher, as determined by Agent) in excess of $100,000 at any time from and after the date of this Agreement, which agreement or letter shall contain a waiver or subordination of all Liens or claims that the landlord, mortgagee or bailee may assert against the Collateral at that
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location, and shall otherwise be reasonably satisfactory in form and substance to Agent. With respect to such locations or warehouse space leased or owned as of the Closing Date and thereafter, if Agent has not received a landlord or mortgagee agreement or bailee letter as of the Closing Date (or, if later, as of the date such location is acquired or leased), any Borrower’s Eligible Inventory at that location shall, in Agent’s discretion, be excluded from the Borrowing Base or be subject to such Reserves as may be established by Agent in its reasonable credit judgment. After the Closing Date, no new real property or new warehouse space shall be leased by any Credit Party and no Inventory shall be shipped to a processor or converter under arrangements established after the Closing Date if the Collateral to be stored or located at such location (i) has an aggregate fair market value or purchase price (whichever is higher, as determined by Agent) in excess of $100,000 or (ii) has an aggregate fair market value or purchase price (whichever is higher, as determined by Agent) when aggregated with Collateral which has been stored at new real property or new warehouse spaces leased after the Closing Date or shipped to a processor or converter under arrangements established after the Closing Date in excess of $500,000, without the prior written consent of Agent (which consent, in Agent’s reasonable discretion, may be conditioned upon the establishment of Reserves acceptable to Agent) or, unless and until a reasonably satisfactory landlord agreement or bailee letter, as appropriate, shall first have been obtained with respect to such location. Each Credit Party shall timely and fully pay and perform its obligations in all material respects under all leases and other agreements with respect to each leased location or public warehouse where any Collateral is or may be located. In addition to the foregoing, each of Tweco and Victor may store, keep or otherwise maintain (i) Inventory in an amount not to exceed $12,000,000 in the aggregate, and (ii) other Collateral in an amount not to exceed $6,000,000 in the aggregate, at any warehouse or facility operated in Mexico by either Victor Equipment de Mexico S.A. de C.V. (“ Victor Mexico ”) or Tweco de Mexico, S.A. de C.V. (“ Tweco Mexico ”) so long as each of Victor Mexico and Tweco Mexico, as applicable, is a wholly owned direct Subsidiary of any Borrower. To the extent otherwise permitted hereunder, if any Credit Party proposes to acquire a fee ownership interest in Real Estate after the Closing Date, it shall first provide to Agent a mortgage or deed of trust granting Agent a first priority Lien on such Real Estate, together with environmental audits, mortgage title insurance commitment, real property survey, local counsel opinion(s), and, if required by Agent, supplemental casualty insurance and flood insurance, and such other documents, instruments or agreements reasonably requested by Agent, in each case, in form and substance reasonably satisfactory to Agent.
5.10 Inventory Reports . From time to time at the request of Agent, the Collateral Parties will obtain and deliver to Agent, in each case at Borrowers’ expense, an Inventory Appraisal in form and substance and from appraisers reasonably satisfactory to Agent, stating the then current fair market and Net Orderly Liquidation Values of all or any portion of the Inventory; provided , however , so long as no Default or Event of Default is continuing, Agent shall not obtain or request an appraisal as to any particular category of Inventory to be performed more than two times during any year at Borrowers’ expense.
5.11 Further Assurances . Each Credit Party executing this Agreement agrees that it shall and shall cause each other Credit Party to, at such Credit Party’s expense and upon the reasonable request of Agent, duly execute and deliver, or cause to be duly executed and delivered, to Agent such further instruments and do and cause to be done such further acts as
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may be necessary or proper (and in the case of the UK Security Documents preserve, establish or otherwise evidence the fixed nature of such security) in the reasonable opinion of Agent to carry out more effectively the provisions and purposes of this Agreement and each Loan Document.
The UK Collateral Party shall maintain its center of main interest within the United Kingdom for the purposes of Recital 13 of EC Regulation No 1346/2000 of 29 May 2000 on Insolvency Proceedings in the United Kingdom.
5.13 Refinancing of Second Lien Loan Obligations . Unless the Second Lien Loan Obligations are prepaid in accordance with Section 6.3(b)(vi) , no later than May 22, 2005, the Second Lien Loan Obligations shall be refinanced or the terms and provisions of the Second Lien Loan Documents shall be amended, in each case on terms and conditions satisfactory to Agent in its sole discretion, so that the Indebtedness refinancing the Second Lien Loan Obligations or the Indebtedness evidenced by the amended Second Lien Loan Documents, as the case may be, matures no earlier than 90 days after the fifth anniversary of the Closing Date, does not have the effect of increasing or decreasing the principal amount thereof and that is otherwise on terms and conditions no less favorable to Agent or any Lender than the terms of the existing Second Lien Loan Documents and Intercreditor Agreement.
Each Credit Party executing this Agreement jointly and severally agrees as to all Credit Parties that from and after the date hereof until the Termination Date:
6.1 Mergers, Subsidiaries , Etc. No Credit Party shall, by operation of law or otherwise, (a) form a new Subsidiary, unless otherwise permitted hereunder, or (b) merge or amalgamate with, consolidate with, acquire all or substantially all of the assets or Stock of, or otherwise combine with or acquire, any Person, except (i) any Borrower may merge, amalgamate or consolidate with, or acquire the assets or Stock of any other Borrower, (ii) any Subsidiary of Holdings that is not a Credit Party may merge, amalgamate or consolidate with, or acquire the assets or Stock of another Subsidiary of Holdings that is not a Credit Party, (iii) any Borrower may merge, amalgamate or consolidate with, or acquire the Stock or assets of any other Subsidiary of Holdings that is a Credit Party, (iv) any Credit Party that is not a Borrower may merge, amalgamate or consolidate with, or acquire the assets or Stock of any other Credit Party that is not a Borrower, and (v) for transactions otherwise permitted under Sections 6.2 or 6.8 ; provided , that in the case of clause (iii) above, the continuing or surviving Person, or the transferee, as the case may be, shall be a Borrower. 6.2 Investments; Loans and Advances . Except as otherwise expressly permitted by this Section 6 , no Credit Party shall, or shall cause or permit its Foreign Subsidiaries to, make or permit to exist any investment in, or make, accrue or permit to exist loans or advances of money to, any Person, through the direct or indirect lending of money, holding of securities or otherwise, except: (a) that Borrowers and Foreign Subsidiaries may hold investments comprised of notes payable issued by Account Debtors to any Borrower or any
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Foreign Subsidiary pursuant to negotiated agreements with respect to settlement of such Account Debtor’s Accounts in the ordinary course of business consistent with past practices; (b) each Credit Party and Foreign Subsidiary may maintain its existing investments in its Subsidiaries as of the Closing Date; (c) any Borrower may make investments in any other Borrower; (d) any Foreign Subsidiary may make investments in any other Foreign Subsidiaries; (e) any Borrower may make investments in any Credit Party (other than Holdings) that is not a Borrower; provided that such investments in Credit Parties shall not exceed $100,000 in the aggregate; (f) any Borrower may make investments in, or create, any wholly-owned domestic Subsidiary, provided that such Subsidiary becomes a Borrower, the Stock of such Subsidiary is pledged to Agent, and such Subsidiary grants Liens to Agent on all of its assets to secure the Obligations, subject only to Permitted Encumbrances; (g) the Credit Parties (other than Holdings) may make loans to Holdings, in lieu of distributions permitted under Section 6.14(d) , the proceeds of which shall be used by Holdings solely to pay out of pocket expenses for administrative, legal and accounting services provided by third parties that are reasonable and customary and incurred in the ordinary course of business for such professional services, or to pay franchise fees, costs and expenses associated with the issuance and maintenance of its capital stock and similar costs and expenses, in an annual aggregate amount not to exceed $3,000,000 per Fiscal Year after the Closing Date; (h) the Credit Parties (other than Holdings) may make loans to Holdings, in lieu of distributions permitted under Section 6.14(e) , the proceeds of which shall be used by Holdings solely to pay taxes as part of a consolidated, combined or unitary group, (i) any Borrower may make investments in, or create, any wholly-owned Foreign Subsidiary, such that the aggregate amount of all investments in such direct Foreign Subsidiaries funded after the Prior Credit Agreement Closing Date shall not exceed $5,000,000 (exclusive of investments permitted in clause (k) of this Section 6.2 ); provided that 65% of such stock of such direct Foreign Subsidiary (except that in the case of any Foreign Collateral Parties, 100% of such stock) shall be pledged to secure the Obligations; (j) any Credit Party or Foreign Subsidiary may maintain advances, loans and investments in any of their Foreign Subsidiaries that are in existence as of the date hereof, provided such advances, loans and investments are not increased; (k) any Credit Party or Foreign Subsidiary may make investments in any of its Foreign Subsidiaries consisting of the conversion of intercompany loans (but not intercompany accounts payable, except for $1,100,000 of intercompany accounts payable owed by South African Subsidiaries) outstanding as of the Closing Date into equity; (l) so long as no Event of Default has occurred and is continuing and there is no outstanding Revolving Loan balance, Borrowers may make investments, subject to Control Letters in favor of Agent for the benefit of Lenders or otherwise subject to a perfected security interest in favor of Agent for the benefit of Lenders, in (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having the highest rating obtainable from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (iii) certificates of deposit maturing no more than one year from the date of creation thereof issued by commercial banks incorporated under the laws of the United States of America, each having combined capital, surplus and undivided profits of not less than $300,000,000 and having a senior unsecured rating of “A” or better by a nationally recognized rating agency (an “ A Rated Bank ”), (iv) time deposits maturing no more than thirty (30) days from the date of creation thereof with A Rated Banks and (v) mutual funds that invest solely in one or more of the investments described in clauses (i) through (iv) above; (m) other investments by Credit Parties
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and Foreign Subsidiaries not exceeding $100,000 in the aggregate at any time outstanding; (n) other investments by Credit Parties and Foreign Subsidiaries not exceeding $2,000,000 in the aggregate at any time outstanding with Agent’s prior written approval; (o) transactions permitted pursuant to Section 6.4 ; (p) the Credit Parties may hold investments comprised of one or more promissory notes equal to all or a portion of the purchase price paid by the buyer in connection with the disposition of those certain assets set forth in the Asset Sale Side Letter as permitted pursuant to Section 6.8(g) ; (q) Capital Expenditures not prohibited by subsection (a) of Annex G and (r) the Credit Parties may make a one time investment, advance or loan in the aggregate amount of $1,500,000 to Thermadyne Victor, Ltd. within ninety (90) days of the Closing Date.
6.3 Indebtedness .
(a) No Credit Party shall, or shall cause or permit its Foreign Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, except (without duplication) (i) Indebtedness secured by purchase money security interests and Capital Leases permitted in Section 6.7(d) , (ii) the Loans and the other Obligations, (iii) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law, (iv) existing Indebtedness described in Disclosure Schedule (6.3) and refinancings thereof or amendments or modifications thereto that do not have the effect of increasing or decreasing the principal amount thereof or changing the amortization thereof (other than to extend the same) and that are otherwise on terms and conditions no less favorable to any Credit Party, Foreign Subsidiary, Agent or any Lender, as reasonably determined by Agent, than the terms of the Indebtedness being refinanced, amended or modified, (v) Indebtedness arising from investments, loans or advances among the Credit Parties and any other Subsidiary of Holdings that are permitted under Section 6.2 (including extensions of the maturity thereof), (vi) Indebtedness consisting of Guaranteed Indebtedness permitted pursuant to Section 6.6 , (vii) Indebtedness owed to Bank One, N.A. or any of its banking affiliates in respect of any liabilities arising from treasury, depository and cash management services or in connection with any automated clearing house transfers of funds not to exceed $500,000 in the aggregate at any time outstanding, (viii) Indebtedness consisting of hedging agreements providing protection against fluctuations in currency values or commodity prices in connection with any Borrower’s or any of its Subsidiaries’ operations, so long as management of such Borrower or such Subsidiary, as the case may be, has determined that the entering into of any such hedging agreement is a bona fide hedging activity (and is not for speculative purposes), (ix) Indebtedness of Foreign Subsidiaries (excluding Capital Lease Obligations) in an aggregate outstanding principal amount not to exceed $15,000,000, (x) Indebtedness consisting of intercompany loans and advances made by any Borrower to any other Borrower; provided that: (A) each Borrower shall record all intercompany transactions on its books and records in a manner reasonably satisfactory to Agent; (B) the obligations of each Borrower under any such intercompany loans and advances shall be subordinated in right of payment to the Obligations of such Borrower hereunder; (C) at the time any such intercompany loan or advance is made by any Borrower to any other Borrower and after giving effect thereto, each such Borrower shall be Solvent; and (D) no Event of Default would occur and be continuing after giving effect to any such proposed intercompany loan; (xi) Indebtedness consisting of intercompany loans and advances made by any Foreign Subsidiary to any other Foreign Subsidiary; (xii) obligations of any Credit Party under any interest rate swap, cap or collar agreement or similar agreement or arrangement related to exposure to interest rates with respect to not more than $50 million principal amount of Indebtedness in the aggregate for
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all Credit Parties; and (xiii) Indebtedness consisting of secured Second Lien Loan Obligations of Borrowers to Second Lien Lenders (as defined in the Intercreditor Agreement) under the Second Lien Credit Agreement in an aggregate principal amount not to exceed $20,000,000. (b) No Credit Party shall, directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Indebtedness prior to its scheduled amortization dates, other than (i) the Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if the asset securing such Indebtedness has been sold or otherwise disposed of in accordance with Sections 6.8(b) or (c) ; (iii) Indebtedness permitted by Section 6.3(a)(iv) upon any refinancing thereof in accordance with Section 6.3(a)(iv) ; (iv) prepayments of the High Yield Notes to the extent permitted under Section 1.3(c) hereof; (v) other prepayments of Indebtedness (excluding any Subordinated Debt) not in excess of $250,000 in the aggregate; and (vi) payment in full of the Second Lien Loan Obligations, as long as at the time of such payment in full (a) no Event of Default has occurred and is continuing, (b) Borrowing Availability shall not be less than $40,000,000 (with all trade payables being paid current other than those being contested in the ordinary course of business), at any time during the 60 day period immediately prior to such prepayment, and (c) Borrowers shall deliver to Agent projections evidencing that Borrowing Availability shall not be less than $20,000,000 (with all trade payables being paid current) at any time during the one-year period immediately after giving effect to such prepayment; provided , however, that condition (b) may be satisfied if on the day with the least amount of Borrowing Availability during such 60 pay period prior to such payment in full, (x) Borrowing Availability on such day, plus (y) without duplication, net cash proceeds arising out of the sale of any of Holdings’ Subsidiaries (with the prior written consent of Agent) occurring after the Closing Date and prior to May 22, 2004 exceeds $40,000,000 (for the avoidance of doubt, Borrowing Availability for this measurement will be considered on a pro forma basis net of any assets sold in such subsidiary sales).6.4 Employee Loans and Affiliate Transactions .
(a) No Borrower shall enter into or be a party to any transaction with any other Credit Party (other than other Borrowers) or any Affiliate thereof except in the ordinary course of and pursuant to the reasonable requirements of such Borrower’s business and upon fair and reasonable terms that are no less favorable to such Borrower than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate of such Borrower (except for transactions otherwise expressly permitted hereunder). In addition, if any such transaction or series of related transactions (other than purchases and sales of Inventory in the ordinary course of business) involves payments in excess of $500,000 in the aggregate, the terms of these transactions must be disclosed in advance to Agent and Lenders. All such transactions in excess of $500,000 existing as of the date hereof are described in Disclosure Schedule (6.4(a)) .(b) No Credit Party shall enter into any lending or borrowing transaction with any employees of any Credit Party, except loans to its respective employees in the ordinary course of business consistent with past practices for travel and entertainment expenses, relocation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||