SECOND LIEN CREDIT
AGREEMENT dated as of January 22, 2007, among TRUE TEMPER
CORPORATION, a Delaware corporation ( “ Holdings
”), TRUE TEMPER SPORTS, INC., a Delaware corporation (the
“ Borrower ”), the LENDERS from time to time
party hereto and CREDIT SUISSE, as administrative agent (in such
capacity, the “ Administrative Agent ”) and as
collateral agent (in such capacity, the “ Collateral
Agent ”).
The parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION
1.01. Defined Terms . As
used in this Agreement, the following terms shall have the meanings
specified below:
“ ABR
”, when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Alternate
Base Rate.
“
Adjusted LIBO Rate ” shall mean, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per
annum equal to the product of (a) the LIBO Rate in effect for
such Interest Period and (b) Statutory Reserves.
“
Administrative Agent ” shall have the meaning assigned
to such term in the preamble .
“
Administrative Questionnaire ” shall mean an
Administrative Questionnaire in the form of Exhibit A ,
or such other form as may be supplied from time to time by the
Administrative Agent.
“
Affiliate ” shall mean, when used with respect to a
specified person, another person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or
is under common Control with the person specified; provided
, however , that, for purposes of Section 6.07 ,
the term “ Affiliate ” shall also include any
person that directly or indirectly owns 10% or more of any class of
Equity Interests of the person specified or that is an officer or
director of the person specified.
“
Affiliate Subordination Agreement ” shall mean an
Affiliate Subordination Agreement in the form of
Exhibit B pursuant to which intercompany obligations
and advances owed by any Loan Party are subordinated to the
Obligations.
“
Agents ” shall have the meaning assigned to such term
in Article VIII .
“
Agreement ” means this Second Lien Credit Agreement,
as amended, supplemented, amended and restated or otherwise
modified from time to time.
“
Alternate Base Rate ” shall mean, for any day, a rate
per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the greater of (a) the Prime Rate in effect on such
day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. Any change in
the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on
the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
“
Applicable Margin ” shall mean, for any day, (a) with
respect to any Eurodollar Loan, 5.50% per annum and (b) with
respect to any ABR Loan, 4.50% per annum.
“
Arranger ” shall mean Credit Suisse Securities (USA)
LLC.
“ Asset
Sale ” shall mean the sale, lease, sale and leaseback,
assignment (other than for security purposes), conveyance,
transfer, issuance or other disposition (by way of merger,
casualty, condemnation or otherwise) (any of the foregoing, a
“ Disposition ”) by Holdings, the Borrower or
any of the Subsidiaries to any person other than the Borrower or
any Subsidiary Guarantor of (a) any Equity Interests of any of the
Subsidiaries (other than directors’ qualifying shares) or
(b) any other assets of Holdings, the Borrower or any of the
Subsidiaries, including Equity Interests of any person that is not
a Subsidiary (other than (i) inventory, obsolete or worn out
assets, assets that are no longer useful, scrap and Permitted
Investments, in each case Disposed of in the ordinary course of
business, (ii) the sale or discount by the Borrower or any
Subsidiary, in each case without recourse and in the ordinary
course of business, of overdue accounts receivable arising in the
ordinary course of business, but only in connection with the
compromise or collection thereof consistent with customary industry
practice (and not as part of any bulk sale or financing
transaction), (iii) the Disposition by any Subsidiary that is
not a Loan Party of its assets that do not constitute Collateral in
connection with a foreclosure by the applicable lenders with
respect to any Indebtedness of such Subsidiary to the extent that
such assets are collateral security for such Indebtedness,
(iv) the licensing of intellectual property in the ordinary
course of business, (v) the settlement, release or surrender
of tort or other litigation claims, (vi) Dispositions between
Subsidiaries that are not Subsidiary Guarantors,
(vii) Permitted Acquisitions or other Investments by the
Borrower or any Subsidiary that are expressly permitted by
Section 6.04 and that do not involve a Disposition of
any assets of Holdings, the Borrower or any of the Subsidiaries to
any person other than the Borrower or any Subsidiary Guarantor and
(viii) Permitted Asset Swaps); provided that any
Disposition or series of related Dispositions described in
clause (b ) above (but not excluded in
clauses (i ) through ( viii ) above) having a
value not in excess of $250,000 shall be deemed not to be an
“ Asset Sale ” for purposes of this
Agreement.
“
Assignment and Acceptance ” shall mean an assignment
and acceptance entered into by a Lender and an assignee (with the
consent of any person whose consent is required by
Section 9.04 ), and accepted by the Administrative
Agent, in the form of Exhibit C or such other form as
shall be approved by the Administrative Agent.
“ Benefit
Plan ” shall mean any employee pension benefit plan
(other than a Multiemployer Plan) subject to the provisions of
Title IV of ERISA or Section 412 of the Tax Code or
Section 307 of ERISA, and in respect of which the Borrower or any
ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.
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“
Board ” shall mean the Board of Governors of the
Federal Reserve System of the United States of America.
“
Borrower ” shall have the meaning assigned to such
term in the preamble .
“
Borrowing ” shall mean Loans of the same Type made,
converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in
effect.
“
Borrowing Request ” shall mean a request by the
Borrower in accordance with the terms of Section 2.03
and substantially in the form of Exhibit D , or such
other form as shall be approved by the Administrative
Agent.
“
Breakage Event ” shall have the meaning assigned to
such term in Section 2.16 .
“
Business Day ” shall mean any day other than a
Saturday, Sunday or day on which commercial banks in New York City
are authorized or required by law to close; provided ,
however , that when used in connection with a Eurodollar
Loan (including with respect to all notices and determinations in
connection therewith and any payments of principal, interest or
other amounts thereon), the term “ Business Day
” shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank
market.
“ Capital
Expenditures ” shall mean, for any period, with respect
to any person, (a) the additions to property, plant and
equipment and other capital expenditures of such person and its
consolidated subsidiaries that are (or should be) set forth in a
consolidated statement of cash flows of such person for such period
prepared in accordance with GAAP and (b) Capital Lease
Obligations incurred by such person and its consolidated
subsidiaries during such period, but excluding in each case any
such expenditure made (i) in accordance with the terms of this
Agreement to restore, replace or rebuild property to the condition
of such property immediately prior to any damage, loss, destruction
or condemnation of such property, to the extent such expenditure is
made with insurance proceeds, condemnation awards or damage
recovery proceeds relating to any such damage, loss, destruction or
condemnation, (ii) with the proceeds from the sale or other
disposition or trade-in or exchange of assets to the extent
utilized to purchase functionally equivalent assets,
(iii) with the proceeds of a substantially contemporaneous
equity contribution from Holdings (other than any Cure Securities)
and (iv) consisting of the Proposed Domestic
Acquisition.
“ Capital
Lease Obligations ” of any person shall mean the
obligations of such person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a
balance sheet of such person under GAAP, and the amount of such
obligations at any time shall be the capitalized amount thereof at
such time determined in accordance with GAAP.
“ Change
in Control ” shall mean (a) if at any time prior to
a Qualified IPO, the Permitted Holders shall fail to own directly
or indirectly, beneficially and of record, Equity Interests
representing more than 50% of the aggregate ordinary voting power
and aggregate equity value represented by the issued and
outstanding Equity Interests in Holdings; (b) if after a
Qualified IPO, any “person” or “group”
(within the meaning of Rule 13d-5 of the Securities Exchange
Act
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of 1934 as in
effect on the date hereof) other than the Permitted Holders shall
own directly or indirectly, beneficially or of record, Equity
Interests representing either (i) more than 30% of either the
aggregate ordinary voting power or the aggregate equity value
represented by the issued and outstanding Equity Interests in
Holdings or (ii) a greater percentage of either the aggregate
ordinary voting power or the aggregate equity value represented by
the issued and outstanding Equity Interests in Holdings then held,
directly or indirectly, beneficially and of record, by the
Permitted Holders; (c) if a majority of the seats (other than
vacant seats) on the board of directors of Holdings shall at any
time be occupied by persons who are not Continuing Directors;
(d) if Holdings shall at any time fail to own directly or
indirectly, beneficially and of record, 100% of each class of
issued and outstanding Equity Interests in the Borrower free and
clear of all Liens (other than Liens expressly permitted by
clauses (b) , (d) and (s) of
Section 6.02 ); or (e) if any change of control
(or similar event, however denominated) shall occur under the
Subordinated Note Documents.
“ Change
in Law ” shall mean (a) the adoption of any law,
rule or regulation after the Closing Date, (b) any change in
any law, rule or regulation or in the interpretation or application
thereof by any Governmental Authority after the date of this
Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.14 , by any lending office of such Lender or
by such Lender’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the Closing
Date.
“
Charges ” shall have the meaning assigned to such term
in Section 9.09 .
“ Closing
Date ” shall mean January 22, 2007.
“
Collateral ” shall mean all property and assets of the
Loan Parties, now owned or hereafter acquired, upon which a Lien is
purported to be created by any Security Document.
“
Collateral Agent ” shall have the meaning assigned to
such term in the preamble .
“
Commitment ” shall mean, with respect to any Lender,
the commitment of such Lender to make a Loan hereunder as set forth
on the Lender Addendum delivered by such Lender or as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to
which such Lender assumed its Commitment, as applicable, as the
same may be (a) reduced from time to time pursuant to Section 2.09
and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.
The initial aggregate amount of the Commitments is
$45,000,000.
“
Consolidated EBITDA ” shall mean, for any period,
Consolidated Net Income for such period plus (a) without
duplication and to the extent deducted in determining such
Consolidated Net Income, the sum of (i) Consolidated Interest
Expense for such period, (ii) consolidated income tax expense
for such period, (iii) all amounts attributable to
depreciation and amortization for such period, including any
increased expense or depreciation or amortization resulting from
purchase accounting adjustments or the write-up of inventory in
connection with acquisitions and amortization or write-off of debt
discount and debt issuance costs and commissions, discounts and
other fees and charges associated with Indebtedness, (iv) any
noncash charges (other than the write-down of accounts receivable
or inventory held for sale
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(other than in
connection with Permitted Acquisitions consummated after the
Closing Date)) for such period, (v) any restructuring costs
for such period that are incurred in connection with Permitted
Acquisitions consummated after the Closing Date, (vi) any
non-recurring or extraordinary fees, charges or other expenses for
such period, (vii) bonus and retention payments, including
earn-outs, stock appreciation rights, non-compete payments, phantom
stock plans and similar payments, made or incurred in connection
with Permitted Acquisitions consummated after the Closing Date and
the financing thereof, (viii) management fees paid during such
period, (ix) start-up and related costs associated with the
Chinese operations not to exceed the lesser of $1,000,000 and the
actual amount of such start-up and related costs in the fiscal
years ending December 31, 2004 and December 31, 2005 (
provided that to the extent that all or any portion of the
income of any person is excluded from Consolidated Net Income
pursuant to the definition thereof for all or any portion of such
period any amounts set forth in the preceding
clauses (i) through (ix) that are attributable
to such person shall not be included for purposes of this
definition for such period or portion thereof), (x) if and when
incurred, the amount of integration costs (not to exceed $3,000,000
in the aggregate) associated with the Proposed Domestic Acquisition
incurred 12 months prior to or after the closing of that
acquisition, (xi) for fiscal years 2006, 2007 and 2008, the amount
of start-up and transition costs (not to exceed $1,500,000 in any
single fiscal year or $3,000,000 in the aggregate for all such
fiscal years) associated with the Borrower’s establishment
and expansion of its foreign operations with respect to the Foreign
Target, (xii) for fiscal years 2006, 2007 and 2008, the amount of
transition and shut-down costs (including closure (in whole or in
part) of facilities, relocation of assets, severance costs and
related amounts) associated with the Borrower’s establishment
and expansion of its foreign operations with respect to the Foreign
Target, not to exceed $1,500,000 in any single fiscal year or
$3,000,000 in the aggregate for all such fiscal years and (xiii)
for purposes of determining compliance with the financial covenants
in Sections 6.11 , 6.12 and 6.13 , the Cure
Amount received by the Borrower for such period and permitted to be
included in Consolidated EBITDA pursuant to (and subject to the
provisions in) Section 7.01 , and minus (b) without
duplication, to the extent included in the statement of such
Consolidated Net Income for such period, (i) all cash payments
made during such period on account of reserves, restructuring
charges and other non-cash charges added to Consolidated Net Income
pursuant to clause (a)(iv) above in a previous period
and (ii) all non-cash items of income for such period, all
determined on a consolidated basis in accordance with GAAP;
provided that for purposes of calculating Consolidated
EBITDA (other than for purposes of the determination of Excess Cash
Flow) for any period (A) the Consolidated EBITDA of any Acquired
Entity acquired by the Borrower or any Subsidiary pursuant to a
Permitted Acquisition during such period shall be included on a
pro forma basis for such period (assuming the consummation
of such acquisition and the incurrence or assumption of any
Indebtedness in connection therewith occurred as of the first day
of such period) and (B) the Consolidated EBITDA of any person or
line of business Disposed of by the Borrower or any Subsidiary
during such period for shall be excluded for such period (assuming
the consummation of such sale or other disposition and the
repayment of any Indebtedness in connection therewith occurred as
of the first day of such period).
“
Consolidated Interest Expense ” shall mean, for any
period, the cash interest expense (including imputed interest
expense in respect of Capital Lease Obligations and Synthetic Lease
Obligations) of the Borrower and the Subsidiaries for such period
(including all commissions, discounts and other fees and charges
owed by the Borrower and the Subsidiaries with respect
to
5
letters of credit
and bankers’ acceptance financing), net of interest income,
in each case determined on a consolidated basis in accordance with
GAAP. For purposes of the foregoing, interest expense shall
be determined after giving effect to any net payments made or
received by the Borrower or any Subsidiary with respect to interest
rate Hedging Agreements (excluding (i) cash costs paid to unwind a
Hedging Agreement existing on the Closing Date and (ii) interest
expense attributable to up to $5,000,000 of outstanding
Indebtedness incurred by the Foreign Target from a lender that is
organized or doing business in a jurisdiction in which the Foreign
Target is located or a province thereof).
“
Consolidated Net Income ” shall mean, for any period,
the net income or loss of the Borrower and the Subsidiaries for
such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded (a) the income
of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions (including a distribution in
respect of intercompany Indebtedness) by such Subsidiary of that
income is not at the time permitted by operation of the terms of
its charter or any agreement, instrument, judgment, decree,
statute, rule or governmental regulation applicable to such
Subsidiary, (b) the income or loss of any person accrued prior to
the date it becomes a Subsidiary or is merged into or consolidated
with the Borrower or any Subsidiary or the date that such
person’s assets are acquired by the Borrower or any
Subsidiary, (c) the income of any person (other than a Subsidiary)
in which any other person (other than the Borrower or a Subsidiary
or any director holding qualifying shares in accordance with
applicable law) has an interest, except to the extent of the amount
of dividends or other distributions actually paid to the Borrower
or a Subsidiary by such person during such period, and (d) any
extraordinary gains or losses.
“
Continuing Directors ” shall mean, at any time of
determination, any member of the board of directors of Holdings who
(a) was a member of such board of directors on the Closing Date,
(b) was nominated for election or elected to such board of
directors with the approval of a majority of the Continuing
Directors who were members of such board of directors at the time
of such nomination or election, (c) prior to the consummation of a
Qualified IPO, was nominated by the Sponsors pursuant to the
Stockholders Agreement or (d) following the consummation of a
Qualified IPO, was nominated for election or elected to such board
of directors by the Sponsors at such time when the Permitted
Holders are the beneficial owners, directly or indirectly, of
Equity Interests representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding
Equity Interests in Holdings.
“
Control ” shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership
of voting securities, by contract or otherwise, and the terms
“ Controlling ” and “ Controlled
” shall have meanings correlative thereto.
“ Cure
Amount ” shall have the meaning assigned to such term in
Section 7.01 .
“ Cure
Right ” shall have the meaning assigned to such term in
Section 7.01 .
“ Cure
Securities ” shall mean equity securities of Holdings
(the net proceeds of which are contributed to the common equity of
the Borrower) having no mandatory redemption, repurchase, repayment
or similar requirements prior to the date which occurs six months
after the
6
Maturity Date, and
upon which all dividends or distributions shall be payable in
additional shares of such security only, and which are not
convertible or exchangeable into any other instrument (other than
common equity of Holdings) and are not guaranteed or
secured.
“ Current
Assets ” shall mean, at any time, the consolidated
current assets (other than cash and Permitted Investments) of the
Borrower and the Subsidiaries.
“ Current
Liabilities ” shall mean, at any time, the consolidated
current liabilities of the Borrower and the Subsidiaries at such
time, but excluding, without duplication, (a) the current portion
of any long-term Indebtedness and (b) outstanding Revolving Loans
and Swingline Loans (in each case under and as defined in the First
Lien Credit Agreeement) and other revolving debt.
“
Default ” shall mean any event or condition which
constitutes an Event of Default or which upon notice, lapse of time
or both would constitute an Event of Default.
“
Discharge of First Lien Obligations ” shall have the
meaning assigned to such term in the Intercreditor
Agreement.
“
Disposition ” shall have the meaning assigned to such
term in the definition of “Asset Sale” and the term
“ Dispose ” shall have a correlative
meaning.
“
dollars ” or “ $ ” shall mean
lawful money of the United States of America.
“
Domestic Subsidiaries ” shall mean all Subsidiaries
incorporated, formed or organized under the laws of the United
States of America, any State thereof or the District of
Columbia.
“
Engagement Letter ” shall mean the Engagement Letter
dated as of December 13, 2006, between the Borrower and Credit
Suisse Securities (USA) LLC.
“
Environmental Laws ” shall mean all former, current
and future Federal, state, local and foreign laws (including common
law), treaties, regulations, rules, ordinances, codes, decrees,
judgments, directives, orders (including consent orders), and
agreements in each case, relating to protection of the environment,
natural resources, human health and safety or the presence, Release
of, threatened Release, or exposure to, Hazardous Materials, or the
generation, manufacture, processing, distribution, use, treatment,
storage, transport, recycling or handling of, or the arrangement
for such activities with respect to, Hazardous
Materials.
“
Environmental Liability ” shall mean all liabilities,
obligations, damages, losses, claims, actions, suits, judgments,
orders, fines, penalties, fees, expenses and costs (including
administrative oversight costs, natural resource damages and
remediation costs), whether contingent or otherwise, arising out of
or relating to (a) compliance or non-compliance with any
Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials,
(d) the Release or threatened Release of any Hazardous
Materials or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
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“
Environmental Permit ” shall mean any Permit under
Environmental Law.
“ Equity
Interests ” shall mean shares of capital stock,
partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity interests
in any person, or any obligations convertible into or exchangeable
for, or giving any person a right, option or warrant to acquire,
such equity interests or such convertible or exchangeable
obligations.
“ Equity
Issuance ” shall mean any issuance or sale by Holdings or
the Borrower of any Equity Interests of Holdings or the Borrower,
as applicable, or the receipt by Holdings or the Borrower of any
capital contribution, as applicable, except in each case for (a) in
the case of the Borrower, any issuance or sale to, or any receipt
of any capital contribution from, Holdings, (b) any issuance
of directors’ qualifying shares, (c) sales or issuances of
common stock of Holdings to management or employees of Holdings,
the Borrower or any Subsidiary under any employee stock option or
stock purchase plan or employee benefit plan in existence from time
to time in the ordinary course of business, (d) any issuance or
sale by, or capital contribution in, Holdings or the Borrower in a
transaction not constituting a public offering so long as the Net
Cash Proceeds thereof are (i) on or before the date of receipt
thereof, designated by Holdings or the Borrower, as the case may
be, pursuant to a notice to the Administrative Agent (specifying
the amount and designated use thereof) for use to fund a Permitted
Acquisition in accordance with the terms hereof and (ii) within 30
days of the receipt thereof, applied to fund such Permitted
Acquisition in accordance with the terms hereof; provided
that in the case of any failure to satisfy the requirement in
clause (ii) such Net Cash Proceeds shall be deemed to have
been received for purposes of Section 2.13 when the
30-day period referred to therein expires and (e) Cure
Securities.
“
ERISA ” shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
“ ERISA
Affiliate ” shall mean any trade or business (whether or
not incorporated) that, together with the Borrower, is treated as a
single employer under Section 414(b) or (c) of the Tax Code, or
solely for purposes of Section 302 of ERISA and Section 412 of the
Tax Code, is treated as a single employer under Section 414 of the
Tax Code.
“ ERISA
Event ” shall mean (a) any “reportable
event”, as defined in Section 4043 of ERISA or the
regulations issued thereunder, with respect to a Benefit Plan
(other than an event for which the 30-day notice period is waived);
(b) the existence with respect to any Benefit Plan of an
“accumulated funding deficiency” (as defined in Section
412 of the Tax Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Tax Code
or Section 303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Benefit Plan; (d) the
incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination
of any Benefit Plan or the withdrawal or partial withdrawal of the
Borrower or any of its ERISA Affiliates from any Benefit Plan or
Multiemployer Plan; (e) the receipt by the Borrower or any of its
ERISA Affiliates from the PBGC or a plan administrator of any
notice relating to the intention to terminate any Benefit Plan or
Plans or to appoint a trustee to administer any Benefit Plan; (f)
the adoption of any amendment to a Benefit Plan that would require
the provision of security
8
pursuant to
Section 401(a)(29) of the Tax Code or Section 307 of ERISA; (g) the
receipt by the Borrower or any of its ERISA Affiliates of any
notice, or the receipt by any Multiemployer Plan from the Borrower
or any of its ERISA Affiliates of any notice, concerning the
imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the
occurrence of a “prohibited transaction” with respect
to which the Borrower or any of the Subsidiaries is a
“disqualified person” (within the meaning of Section
4975 of the Tax Code) or with respect to which the Borrower or any
such Subsidiary could otherwise be liable; or (i) any other event
or condition with respect to a Benefit Plan or Multiemployer Plan
that could result in liability of the Borrower or any
Subsidiary.
“
Eurodollar ”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.
“ Event
of Default ” shall have the meaning assigned to such term
in Article VII .
“ Excess
Cash Flow ” shall mean, for any fiscal year of the
Borrower, the excess of (a) the sum, without duplication, of
(i) Consolidated EBITDA for such fiscal year (calculated
without giving effect to the last proviso set forth in the
definition of Consolidated EBITDA) and (ii) the decrease, if
any, in Current Assets minus Current Liabilities (other than for
the Foreign Target) from the beginning to the end of such fiscal
year over (b) the sum, without duplication, of (i) the
amount of any Taxes payable in cash by Holdings and the
Subsidiaries with respect to such fiscal year,
(ii) Consolidated Interest Expense (including for Indebtedness
incurred in connection with the Proposed Domestic Acquisition and
the Proposed Foreign Acquisition) for such fiscal year payable in
cash, (iii) the aggregate amount paid in cash in respect of
Capital Expenditures (including in connection with the Proposed
Domestic Acquisition and for the Proposed Foreign Acquisition) and
Permitted Acquisitions in accordance with Sections 6.10
and 6.04 , respectively, during such fiscal year (and
including in such fiscal year, in the case of Capital Expenditures
with respect to which the obligation to make payment has accrued in
the last fiscal quarter of such fiscal year but such obligation is
not payable in cash until the immediately following fiscal quarter,
the amount to be paid in cash in such following fiscal quarter;
provided that such amount, when paid in such following
fiscal quarter, shall not be included in this
clause (iii) ), in each case, except to the extent
financed with the proceeds of Indebtedness, equity issuances,
casualty proceeds, condemnation proceeds or other proceeds that
would not be included in Consolidated EBITDA, (iv) permanent
repayments of Indebtedness (other than mandatory prepayments of
Loans under Section 2.13(b) of the First Lien Credit
Agreement and under Section 2.13 ) made by the Borrower
and the Subsidiaries during such fiscal year, but only to the
extent that such prepayments by their terms cannot be reborrowed or
redrawn and do not occur in connection with a refinancing of all or
any portion of such Indebtedness, (v) the increase, if any, in
Current Assets minus Current Liabilities (in each case, other than
for the Foreign Target) from the beginning to the end of such
fiscal year and (vi) the aggregate amount of Investments made by
the Borrower and Subsidiaries in the Foreign Target.
“
Excluded Foreign Subsidiaries ” shall mean, at any
time, any Foreign Subsidiary that is (or is treated as) for United
States federal income tax purposes either (a) a corporation or
(b) a
9
pass-through
entity owned directly or indirectly by another Foreign Subsidiary
that is (or is treated as) a corporation.
“
Excluded Taxes ” shall mean, with respect to the
Administrative Agent, any Lender or any other recipient of any
payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income as a result of a present or former
connection between such recipient and the jurisdiction imposing
such tax (or any political subdivision thereof), other than any
such connection arising solely from such recipient having executed,
delivered or performed its obligations or received a payment under,
or enforced, this Agreement or any other Loan Document and (b) in
the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.21(a) ), any
withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable
to such Foreign Lender’s failure to comply with
Section 2.20(d ), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time
of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such
withholding tax pursuant to Section 2.20(a)
.
“
Exempted Assets Sales ” means a Disposition of assets
(whether real or personal, and whether tangible or intangible),
within nine months (unless otherwise extended for no more than
three months by the Administrative Agent in its sole discretion)
following their acquisition by the Borrower or a Subsidiary in the
Proposed Domestic Acquisition or the acquisition of the assets of,
or Equity Interests of (resulting in a Subsidiary), a person in
connection with the Proposed Foreign Acquisition (but in each case
only as to assets actually acquired in the Proposed Domestic
Acquisition or such an acquisition in connection with the Proposed
Foreign Acquisition).
“
Facility ” shall mean the Commitments and the Loans
made thereunder.
“ Federal
Funds Effective Rate ” shall mean, for any day, the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day that is a Business Day, the average of
the quotations for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
“
Financial Officer ” of any person shall mean the chief
financial officer, principal accounting officer, treasurer or
controller of such person.
“ First
Lien Administrative Agent ” means the
“Administrative Agent” under and as defined in the
First Lien Credit Agreement.
“ First
Lien Collateral Agent ” means the “Collateral
Agent” under and as defined in the First Lien Credit
Agreement.
“ First
Lien Credit Agreement ” means the Amended and Restated
Credit Agreement dated as of March 27, 2006, as amended,
supplemented, amended and restated or otherwise modified from time
to time among Holdings, the Borrower, the lenders from time to time
party thereto and
10
Credit Suisse,
Cayman Islands Branch, as administrative agent, collateral agent,
swingline lender and issuing bank.
“ First
Lien Loan Documents ” means the “Loan
Documents” under and as defined in the First Lien Credit
Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time.
“ First
Lien Indebtedness ” means Indebtedness arising under the
First Lien Loan Documents.
“ Foreign
Lender ” shall mean any Lender that is organized under
the laws of a jurisdiction other than that in which the Borrower is
located. For purposes of this definition, the United States
of America, each State thereof and the District of Columbia shall
be deemed to constitute a single jurisdiction.
“ Foreign
Subsidiary ” shall mean any Subsidiary that is not a
Domestic Subsidiary.
“ Foreign
Target ” means, collectively, any direct or indirect
Subsidiaries of the Borrower that are organized or existing under
the laws of a foreign jurisdiction previously identified in writing
to the Administrative Agent or a province thereof or a majority of
the value (as determined in good faith by the Borrower) of whose
properties or assets are located in such jurisdiction or a province
thereof.
“ Foreign
Target Capital Expenditures ” shall mean, for any period,
(a) expenditures made with respect to the Foreign Target outside of
the ordinary course of business (including the acquisition of the
Equity Interests (resulting in a Subsidiary) of, all or
substantially all of the assets of, a line of business of, or a
business unit or division of, any person in connection with the
Proposed Foreign Acquisition, and the acquisition of any other
fixed or capital assets acquired outside of the ordinary course of
business from any person in connection with the Proposed Foreign
Acquisition) and (b) expenditures made in the ordinary course of
business to restore, replace or rebuild property of the Foreign
Target to the condition of such property immediately prior to any
damage, loss, destruction or condemnation of such
property.
“ Funded
Debt ” shall mean as of the last day of any fiscal
quarter, Total Debt at such time less the amount of cash and
Permitted Investments of the Borrower and the Subsidiary Guarantors
at such time in an aggregate amount not to exceed
$7,500,000.
“ Funded
Senior Debt ” shall mean, as of the last day of any
fiscal quarter, Funded Debt at such date, excluding the
Indebtedness represented by the Subordinated Notes.
“
GAAP ” shall mean generally accepted accounting
principles in the United States.
“
Governmental Authority ” shall mean the government of
the United States of America or any other nation, any political
subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining
to government.
11
“
Granting Lender ” shall have the meaning assigned to
such term in Section 9.04(i ).
“
Guarantee ” of or by any person (the “
guarantor ”) shall mean any obligation, contingent or
otherwise, of (a) the guarantor or (b) another person
(including any bank under a letter of credit) to induce the
creation of which the guarantor has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing
or having the economic effect of guaranteeing any Indebtedness or
other obligation of any other person (the “ primary
obligor ”) in any manner, whether directly or indirectly,
and including any obligation, contingent or otherwise, of the
guarantor, direct or indirect, (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness
or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment of such
Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the
owner of such Indebtedness or other obligation of the payment of
such Indebtedness or other obligation, (iii) to maintain working
capital, equity capital or any other financial statement condition
or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, (iv) as an
account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation or (v)
to otherwise assure or hold harmless the owner of such Indebtedness
or other obligation against loss in respect thereof;
provided , however , that the term
“Guarantee” shall not include endorsements for
collection or deposit in the ordinary course of
business.
“
Guarantee and Collateral Agreement ” shall mean the
Second Lien Guarantee and Collateral Agreement in the form of
Exhibit E , to be executed and delivered by Holdings, the
Borrower and each Subsidiary Guarantor.
“
Guarantors ” shall mean Holdings and the Subsidiary
Guarantors.
“
Hazardous Materials ” shall mean any petroleum
(including crude oil or fraction thereof) or petroleum products or
byproducts, or any pollutant, contaminant, chemical, compound,
constituent, or hazardous, toxic or other substances, materials or
wastes defined, or regulated as such by, or pursuant to, any
Environmental Law, or requires removal, remediation or reporting
under any Environmental Law, including asbestos, or asbestos
containing material, radon or other radioactive material,
polychlorinated biphenyls and urea formaldehyde
insulation.
“ Hedging
Agreement ” shall mean any agreement with respect to any
swap, forward, future or derivative transaction or option or
similar agreement involving, or settled by reference to, one or
more rates, currencies, fuel or other commodities, equity or debt
instruments or securities, or economic, financial or pricing
indices or measures of economic, financial or pricing risk or value
or any similar transaction or any combination of these
transactions; provided , however , that no phantom
stock or similar plan providing for payments and on account of
services provided by current or former directors, officers,
employees or consultants of Holdings, the Borrower or any
Subsidiary shall be a Hedging Agreement.
“
Holdings ” shall have the meaning assigned to such
term in the preamble .
“
Indebtedness ” of any person shall mean, without
duplication, (a) all obligations of such person for borrowed
money, (b) all obligations of such person evidenced by bonds,
debentures,
12
notes or similar
instruments, (c) all obligations of such person under
conditional sale or other title retention agreements relating to
property or assets acquired by such person, (d) all
obligations of such person in respect of the deferred purchase
price of property or services (other than current trade accounts
payable incurred in the ordinary course of business), (e) all
obligations of such person, contingent or otherwise, to purchase,
redeem, retire or otherwise acquire for value any Equity Interests
in such person, (f) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such
person of Indebtedness of others, (h) all Capital Lease
Obligations or Synthetic Lease Obligations of such person,
(i) all obligations, contingent or otherwise, of such person
as an account party in respect of letters of credit and letters of
guaranty and (j) all obligations, contingent or otherwise, of such
person in respect of bankers’ acceptances. The
Indebtedness of any person shall include the Indebtedness of any
other person (including any partnership in which such person is a
general partner) to the extent such person is liable therefor as a
result of such person’s ownership interest in, or other
relationship with, such other person, except to the extent the
terms of such Indebtedness provide (including by a non-recourse
nature) that such person is not liable therefor.
“
Indemnified Taxes ” shall mean Taxes other than
Excluded Taxes and Other Taxes.
“
Indemnitee ” shall have the meaning assigned to such
term in Section 9.05(b) .
“
Information ” shall have the meaning assigned to such
term in Section 9.16 .
“
Intellectual Property Collateral ” shall have the
meaning assigned to such term in the Guarantee and Collateral
Agreement.
“
Intellectual Property Security Agreement ” shall mean
all Intellectual Property Security Agreements to be executed and
delivered by the Loan Parties, each substantially in the applicable
form required by the Guarantee and Collateral Agreement.
“
Intercreditor Agreement ” shall mean the Intercreditor
Agreement dated as of the date hereof, in substantially the form of
Exhibit K , entered into by and among Holdings, the
Borrower, the Collateral Agent and Credit Suisse, Cayman Islands
Branch, as First Lien Collateral Agent.
“
Interest Payment Date ” shall mean (a) with respect to
any ABR Loan, the last Business Day of each March, June, September
and December and (b) with respect to any Eurodollar Loan, the last
day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with
an Interest Period of more than three months’ duration, each
day that would have been an Interest Payment Date had successive
Interest Periods of three months’ duration been applicable to
such Borrowing.
“
Interest Period ” shall mean, with respect to any
Eurodollar Borrowing, the period commencing on the date of such
Borrowing and ending on the numerically corresponding day in the
calendar month that is 1, 2, 3 or 6 months thereafter (or 9 or 12
months thereafter if, at the time of the relevant Borrowing, an
interest period of such duration is available to all Lenders
participating therein), as the Borrower may elect; provided
, however , that (a) if any Interest
13
Period would end
on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding
Business Day and (b) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. Interest shall accrue
from and including the first day of an Interest Period to but
excluding the last day of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such
Borrowing.
“
Investments ” shall have the meaning assigned to such
term in Section 6.04 .
“
Jineng ” shall mean Jineng Composite Materials and
Products (Guangzhou) Company Ltd., a Subsidiary organized under the
laws of China.
“ Lender
Addendum ” shall mean, with respect to any initial
Lender, a Lender Addendum in the form of Exhibit F , or such
other form as may be supplied by the Administrative Agent, to be
executed and delivered by such Lender on the Closing
Date.
“
Lenders ” shall mean (a) the persons that deliver a
Lender Addendum (other than any such person that has ceased to be a
party hereto pursuant to an Assignment and Acceptance) and (b) any
person that has become a party hereto pursuant to an Assignment and
Acceptance.
“
Leverage Ratio ” shall mean, on the last day of any
fiscal quarter, the ratio of (a) Funded Debt on such date to (b)
Consolidated EBITDA for the period of four consecutive fiscal
quarters most recently ended on or prior to such date, taken as one
accounting period.
“ LIBO
Rate ” shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, the rate per annum determined by
the Administrative Agent at approximately 11:00 a.m., London time,
on the date that is two Business Days prior to the commencement of
such Interest Period by reference to the British Bankers’
Association Interest Settlement Rates for deposits in dollars (as
set forth by the Bloomberg Information Service or any successor
thereto or any other service selected by the Administrative Agent
which has been nominated by the British Bankers’ Association
as an authorized information vendor for the purpose of displaying
such rates) for a period equal to such Interest Period;
provided that, to the extent that an interest rate is not
ascertainable pursuant to the foregoing provisions of this
definition, the “LIBO Rate” shall be the interest rate
per annum determined by the Administrative Agent to be the average
of the rates per annum at which deposits in dollars are offered for
such relevant Interest Period to major banks in the London
interbank market in London, England by the Administrative Agent at
approximately 11:00 a.m. (London time) on the date that is two
Business Days prior to the beginning of such Interest
Period.
“
Lien ” shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien (statutory or otherwise), pledge,
hypothecation, encumbrance, collateral assignment, charge or
security interest in, on or of such asset, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing
lease
14
having
substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with
respect to such securities.
“ Loan
Documents ” shall mean this Agreement and the Security
Documents.
“ Loan
Parties ” shall mean Holdings, the Borrower and each
Subsidiary (other than a Foreign Subsidiary) that is or becomes a
party to a Loan Document.
“
Loans ” shall mean the term loans made by the Lenders
pursuant to this Agreement.
“ Margin
Stock ” shall have the meaning assigned to such term in
Regulation U.
“
Material Adverse Effect ” shall mean a material
adverse condition or material adverse change in or materially
affecting (a) the business, assets, liabilities, operations or
condition (financial or otherwise) of Holdings, the Borrower and
the Subsidiaries, taken as a whole, or (b) the validity or
enforceability of any of the Loan Documents or the material rights
and remedies of the Arranger, the Administrative Agent, the
Collateral Agent or the Secured Parties thereunder.
“
Material Indebtedness ” shall mean Indebtedness (other
than the Loans), or obligations in respect of one or more Hedging
Agreements, of any one or more of Holdings, the Borrower and the
Subsidiaries in an aggregate principal amount exceeding
$6,000,000. For purposes of determining Material
Indebtedness, the “ principal amount ” of the
obligations of Holdings, the Borrower or any Subsidiary in respect
of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that Holdings, the
Borrower for such Subsidiary would be required to pay if such
Hedging Agreement were terminated at such time.
“
Maturity Date ” shall mean June 30, 2011.
“ Maximum
Rate ” shall have the meaning assigned to such term in
Section 9.09 .
“
Moody’s ” shall mean Moody’s Investors
Service, Inc.
“
Mortgaged Properties ” shall mean, initially, each
parcel of real property and the improvements thereto owned or
leased by a Loan Party and specified on Schedule 1.01(b) ,
and shall include each other parcel of real property and
improvements thereto with respect to which a Mortgage is granted
pursuant to Section 5.09 or 5.10 .
“
Mortgages ” shall mean the fee or leasehold mortgages
or deeds of trust, assignments of leases and rents and other
security documents granting a Lien on any Mortgaged Property to
secure the Obligations, if such Mortgaged Property is owned, in
form reasonably satisfactory to the Collateral Agent or, if such
Mortgaged Property is leased, in the form of Exhibit G , as
the case may be, with such changes as shall be advisable under the
law of the jurisdiction in which such Mortgage is to be recorded
and as are reasonably satisfactory to the Collateral Agent, as the
same may be amended, supplemented, replaced or otherwise modified
from time to time in accordance with this Agreement.
15
“
Multiemployer Plan ” shall mean a multiemployer plan
as defined in Section 4001(a)(3) of ERISA to which the Borrower or
any ERISA Affiliate may have any liability.
“ Net
Cash Proceeds ” shall mean (a) with respect to any Asset
Sale or Recovery Event, the proceeds thereof in the form of cash
and Permitted Investments (including any such proceeds subsequently
received (as and when received) in respect of noncash consideration
initially received), net of (i) selling expenses (including
reasonable and customary broker’s or investment
banker’s fees or commissions, legal fees, transfer and
similar taxes incurred by the Borrower and the Subsidiaries in
connection therewith and the Borrower’s good faith estimate
of income taxes paid or payable in connection with such sale, after
taking into account any available tax credits or deductions and any
tax sharing arrangements), (ii) amounts provided as a reserve, in
accordance with GAAP, against any liabilities under any
indemnification obligations or purchase price adjustment associated
with such Asset Sale ( provided that, to the extent and at
the time any such amounts are released from such reserve, such
amounts shall constitute Net Cash Proceeds) and (iii) the principal
amount, premium or penalty, if any, interest and other amounts on
any Indebtedness for borrowed money which is secured by the asset
sold in such Asset Sale and which is required to be repaid with
such proceeds (other than any such Indebtedness assumed by the
purchaser of such asset); provided , however , that,
if (x) the Borrower shall deliver a certificate of a Financial
Officer of the Borrower to the Administrative Agent within three
Business Days of the time of receipt thereof setting forth the
Borrower’s intent to reinvest such proceeds in assets of a
kind then used or usable in the business of the Borrower and the
Subsidiaries within 365 days of receipt of such proceeds and (y) no
Event of Default shall have occurred and be continuing at the time
of such certificate, such proceeds shall not constitute Net Cash
Proceeds except to the extent not so used at the end of such
365-day period, at which time such proceeds shall be deemed to be
Net Cash Proceeds; provided further , however
, that, if (A) such proceeds shall result from an Asset Sale
or Recovery Event to the extent involving assets, rights or other
property of a Subsidiary that is not a Loan Party, (B) the terms of
any Indebtedness of such Subsidiary require that such proceeds be
applied to repay such Indebtedness, (C) the Borrower shall deliver
a certificate of a Financial Officer to the Administrative Agent
within three Business Days of the time of receipt thereof setting
forth the Borrower’s intent to use such proceeds to repay
such Indebtedness of such Subsidiary to the extent required thereby
and, if such Indebtedness is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto, within 365
days of receipt of such proceeds and (D) no Event of Default shall
have occurred and be continuing at the time of such certificate,
such proceeds shall not constitute Net Cash Proceeds except to the
extent not so used at the end of such 365-day period, at which time
such proceeds shall be deemed to be Net Cash Proceeds; and (b) with
respect to any issuance or disposition of Indebtedness or any
Equity Issuance, the cash proceeds thereof, net of all taxes and
reasonable and customary fees (including legal fees), commissions,
underwriting discounts, costs and other expenses incurred by the
Borrower and the Subsidiaries in connection therewith.
“
Obligations ” shall mean all obligations defined as
“Obligations” in the Guarantee and Collateral Agreement
and the other Security Documents.
“ Other
Taxes ” shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or
similar levies (including interest, fines, penalties
16
and additions to
tax) arising from any payment made under any Loan Document or from
the execution, delivery or enforcement of, or otherwise with
respect to, any Loan Document.
“
PBGC ” shall mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA and any successor
entity performing similar functions.
“
Perfection Certificate ” shall mean the Pre-Closing
UCC Diligence Certificate substantially in the form of Exhibit
H or any other form approved by the Collateral
Agent.
“
Permits ” shall mean any and all material franchises,
licenses, leases, permits, approvals, notifications,
certifications, registrations, authorizations, exemptions,
qualifications, easements, rights of way, Liens and other rights,
privileges and approvals required under any Requirement of
Law.
“
Permitted Acquisition ” shall mean (a) the Proposed
Domestic Acquisition and the acquisition of the assets of, or
Equity Interests of (resulting in a Subsidiary), a person in
connection with the Proposed Foreign Acquisition and (b) any other
acquisition by the Borrower or any Subsidiary of all or
substantially all the assets of a person or line of business of
such person, or all of the Equity Interests of a person (referred
to herein as the “ Acquired Entity ”);
provided that (i) the Acquired Entity shall be a going
concern and shall be in a Permitted Business; (ii) at the time of
such transaction (A) both before and after giving effect thereto,
no Event of Default or Default shall have occurred and be
continuing; (B) if the aggregate consideration paid in connection
with such acquisition and any related acquisition (including any
Indebtedness of the Acquired Entity that is assumed by the Borrower
or any Subsidiary following such acquisition) is (x) $5,000,000 or
more, then the Senior Leverage Ratio would be at least 0.25 to 1.0
less than the maximum Senior Leverage Ratio permitted under
Section 6.12 at such time or (y) less than $5,000,000, then
the Borrower would be in compliance with the covenant set forth in
Section 6.12 , in each case described in this clause
(B) as of the most recently completed period ending prior to
such transaction for which the financial statements and
certificates required by Section 5.04(a) or 5.04(b)
were required to be delivered or for which comparable financial
statements have been filed with or furnished to the Securities and
Exchange Commission, after giving pro forma effect to such
transaction and to any other event occurring after such period as
to which pro forma recalculation is appropriate (including
any other transaction described in this definition occurring after
such period) as if such transaction (and the occurrence or
assumption of any Indebtedness in connection therewith) had
occurred as of the first day of such period; and (C) in the case of
other than the Proposed Foreign Acquisition, after giving effect to
such acquisition, there must be at least $5,000,000 of unused and
available Revolving Credit Commitments under and as defined in the
First Lien Credit Agreement; and (iii) the Borrower shall comply,
and shall cause the Acquired Entity to comply, with the applicable
provisions of Sections 5.09 and 5.10 and the Security
Documents.
“
Permitted Asset Swap ” shall mean any transfer of
properties or assets by the Borrower or any of the Subsidiaries in
which at least 90% of the consideration received by the transferor
consists of properties or assets (other than cash or Permitted
Investments) useful in the business of the Borrower or the
Subsidiaries; provided that (a) the aggregate fair market
value (as determined in good faith by the board of directors of the
Borrower) of the property or assets being transferred by the
Borrower or such Subsidiary is not greater than the aggregate
fair
17
market value (as
determined in good faith by the board of directors of the Borrower)
of the property or assets received by the Borrower or such
Subsidiary in such transfer and (b) the aggregate fair market value
(as determined in good faith by the board of directors of the
Borrower) of all property or assets transferred by the Borrower or
any of the Subsidiaries in such transfer, together with the
aggregate fair market value of all other property or assets
transferred in prior Permitted Asset Swaps in such fiscal year,
shall not exceed $3,000,000 in any fiscal year.
“
Permitted Business ” shall mean any business conducted
or proposed to be conducted by the Borrower and the Subsidiaries on
the date of this Agreement or any business that is similar,
reasonably related, incidental or ancillary thereto or to the
manufacture of sports equipment or metal or graphite
products.
“
Permitted Holders ” shall mean the Sponsor and the
Sponsor Related Parties.
“
Permitted Holdings Indebtedness ” shall mean
Indebtedness of Holdings which (a) does not require the payment of
cash interest, does not mature, and is not subject to mandatory
repurchase, redemption or amortization (other than pursuant to
customary asset sale or change of control provisions requiring
redemption or repurchase only if and to the extent permitted by
this Agreement), in each case, prior to the date that is six months
after the Maturity Date, (b) is not secured by any assets of
Holdings, the Borrower or any Subsidiary, (c) is not Guaranteed by
the Borrower or any Subsidiary, (d) is not exchangeable or
convertible into Indebtedness of Holdings (except other Permitted
Holdings Indebtedness), the Borrower or any Subsidiary or any
preferred stock or other Equity Interest (other than common equity
of Holdings, provided that any such exchange or conversion,
if effected, would not result in a Change in Control), (e) is
subordinated to the Obligations to the same degree (or to a greater
degree) as those obligations that are subject to the Subordinated
Notes and (f) if at the time of such incurrence the Senior Leverage
Ratio shall be greater than 3.50 to 1.00 as of the most recently
completed period ending prior to such transaction for which
financial statements and certificates required by
Section 5.04(a) or 5.04(b) were required to be
delivered or for which comparable financial statements have been
filed with or furnished to the Securities Exchange Commission,
after giving pro forma effect to such transaction and to any other
event occurring after such period which required a pro forma
calculation to be made hereunder as if such transaction had
occurred as of the first day of such period, the Net Cash Proceeds
of which are contributed as common equity to the Borrower and used
by the Borrower to permanently repay Term Loans under and as
defined in the First Lien Credit Agreement, repay and permanently
reduce commitments in respect of Revolving Loans under and as
defined in the First Lien Credit Agreement or permanently repay
Loans hereunder.
“
Permitted Investments ” shall mean:
(a)
direct
obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations
are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of
acquisition thereof;
18
(b)
investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or
from Moody’s;
(c)
investments in certificates of deposit, banker’s acceptances
and time deposits maturing within 270 days from the date of
acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, the
Administrative Agent or any domestic office of any commercial bank
organized under the laws of the United States of America or any
State thereof that has a combined capital and surplus and undivided
profits of not less than $500,000,000;
(d)
fully
collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria
of clause (c) above;
(e)
investments in “money market funds” within the meaning
of Rule 2a-7 of the Investment Company Act of 1940, as amended,
substantially all of whose assets are invested in investments of
the type described in clauses (a) through (d) above;
and
(f)
other short-term investments utilized by Foreign Subsidiaries in
accordance with normal investment practices for cash management in
investments of a type analogous to the foregoing.
“
Permitted Refinancing Indebtedness ” shall mean
Indebtedness issued or incurred (including by means of the
extension or renewal of existing Indebtedness) to refinance,
refund, extend, renew or replace existing Indebtedness (“
Refinanced Indebtedness ”); provided that
(a) the principal amount of such refinancing, refunding,
extending, renewing or replacing Indebtedness is not greater than
the principal amount of such Refinanced Indebtedness plus the
amount of any premiums or penalties and accrued and unpaid interest
paid thereon and reasonable fees and expenses, in each case
associated with such refinancing, refunding, extension, renewal or
replacement, (b) such refinancing, refunding, extending, renewing
or replacing Indebtedness has a final maturity that is no sooner
than, and a weighted average life to maturity that is no shorter
than, such Refinanced Indebtedness, (c) if such Refinanced
Indebtedness or any Guarantees thereof are subordinated to the
Obligations, such refinancing, refunding, extending, renewing or
replacing Indebtedness and any Guarantees thereof remain so
subordinated on terms no less favorable to the Lenders, (d) the
obligors in respect of such Refinanced Indebtedness immediately
prior to such refinancing, refunding, extending, renewing or
replacing are the only obligors on such refinancing, refunding
extending, renewing or replacing Indebtedness and (e) unless such
refinancing, refunding, extending, renewing or replacing shall
occur within 30 days of the final maturity of such Refinanced
Indebtedness, such refinancing, refunding, extending, renewing or
replacing Indebtedness contains covenants and events of default and
is benefited by Guarantees, if any, which, taken as a whole, are
determined in good faith by a Financial Officer of the Borrower to
be no less favorable to the Borrower or the applicable Subsidiary
and the Lenders in any material respect than the covenants and
events of default or Guarantees, if any, in respect of such
Refinanced Indebtedness; provided further ,
however , that any Indebtedness issued or incurred to
refinance, refund, extend, renew or replace
19
the Indebtedness
of Jineng that is set forth in Schedule 6.01 or the Foreign
Target shall not be subject to clause (b) or clause
(e) above.
“
person ” shall mean any natural person, corporation,
trust, business trust, joint venture, joint stock company,
association, company, limited liability company, partnership,
Governmental Authority or other entity.
“ Pledged
Collateral ” shall have the meaning assigned to such term
in the Guarantee and Collateral Agreement.
“ Prime
Rate ” shall mean the rate of interest per annum
announced from time to time by Credit Suisse as its prime rate in
effect at its principal office in New York City; each change in the
Prime Rate shall be effective as of the opening of business on the
date such change is announced as being effective. The Prime
Rate is a reference rate and does not necessarily represent the
lowest or best rate actually available.
“
Proposed Domestic Acquisition ” means the acquisition
by the Borrower of Royal Precision, Inc., which acquisition was
consummated prior to the Closing Date.
“
Proposed Foreign Acquisition ” means the
Borrower’s establishment or expansion of a Permitted Business
in a foreign jurisdiction previously identified in writing to the
Administrative Agent or any province thereof, including by way of
the acquisition of the assets of, or of the Equity Interests of
(resulting in a Subsidiary), a Person located in such jurisdiction
or a province thereof, or the making of Capital Expenditures
therein.
“
Qualified IPO ” shall mean an underwritten initial
public offering of common stock of (and by) Holdings pursuant to an
effective registration statement filed with the Securities and
Exchange Commission in accordance with the Securities Act of 1933,
as amended, which initial public offering results in gross cash
proceeds to Holdings of $50,000,000 or more.
“ Real
Property ” shall mean all Mortgaged Property and all
other real property owned or leased from time to time by Holdings,
the Borrower and the Subsidiaries.
“
Receivables Subsidiary ” shall mean a Subsidiary which
engages in no activities other than in connection with the
financing of accounts receivable or related assets (including
contract rights) and which is designated by the board of directors
of the Borrower (as provided below) as a Receivables Subsidiary (a)
no portion of the Indebtedness or any other obligations (contingent
or otherwise) of which (i) is guaranteed by Holdings, the Borrower
or any of the other Subsidiaries (but excluding customary
representations, warranties, covenants and indemnities entered into
in connection with a Securitization Transaction), (ii) is recourse
to or obligates Holdings, the Borrower or any of the other
Subsidiaries in any way other than pursuant to customary
representations, warranties, covenants and indemnities entered into
in connection with a Securitization Transaction or (iii) subjects
any property or asset (including contract rights) of Holdings, the
Borrower or any of the other Subsidiaries (other than accounts
receivable and related assets provided in the definition of
“Securitization Transaction”), directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than
pursuant to customary representations, warranties, covenants and
indemnities entered into in connection with a Securitization
Transaction, (b) with which none of Holdings, the Borrower or any
of the other
20
Subsidiaries has
any material contract, agreement, arrangement or understanding
other than on terms no less favorable to Holdings, the Borrower or
such other Subsidiary than those that might be obtained at the time
from persons who are not Affiliates of Holdings, other than
customary fees payable in connection with servicing accounts
receivable and (c) with which none of Holdings, the Borrower or any
of the other Subsidiaries has any obligation to maintain or
preserve such Subsidiary’s financial condition or cause such
Subsidiary to achieve certain levels of operating results.
Any such designation by the board of directors of the Borrower
shall be evidenced to the Administrative Agent by delivery to the
Administrative Agent of a certified copy of the resolution of the
board of directors of the Borrower giving effect to such
designation and a certificate of a Financial Officer of the
Borrower certifying that such designation complied with the
foregoing requirements.
“
Recovery Event ” shall mean any settlement of or
payment in respect of any property or casualty insurance claim or
any taking under power of eminent domain or by condemnation or
similar proceeding of or relating to any property or asset of
Holdings, the Borrower or any Subsidiary.
“
Reference Date ” shall mean March 15, 2004.
“
Register ” shall have the meaning assigned to such
term in Section 9.04(d) .
“
Regulation T ” shall mean Regulation T of the Board as
from time to time in effect and all official rulings and
interpretations thereunder or thereof.
“
Regulation U ” shall mean Regulation U of the Board as
from time to time in effect and all official rulings and
interpretations thereunder or thereof.
“
Regulation X ” shall mean Regulation X of the Board as
from time to time in effect and all official rulings and
interpretations thereunder or thereof.
“ Related
Fund ” shall mean, with respect to any Lender, any other
fund that invests in bank loans and is advised or managed by the
same investment advisor or manager as such Lender or by an
Affiliate of such investment advisor or manager.
“ Related
Parties ” shall mean, with respect to any specified
person, such person’s Affiliates and the respective
directors, officers, employees, agents and advisors of such person
and such person’s Affiliates.
“
Release ” shall mean any release, spill, seepage,
emission, leaking, pumping, injection, pouring, emptying, deposit,
disposal, discharge, dispersal, dumping, escaping, leaching, or
migration into, onto or through the environment or within or upon
any building, structure, facility or fixture.
“
Required Lenders ” shall mean, at any time, Lenders
having Loans and unused Commitments representing at least a
majority of the sum of all Loans outstanding and unused Commitments
at such time.
21
“
Required Prepayment Percentage ” shall mean (a) in the
case of any Asset Sale or Recovery Event, 100%; (b) in the case of
any Equity Issuance, if on the date of the applicable prepayment,
to the extent that the Leverage Ratio, after giving effect to any
repayment of Loans or loans under the First Lien Credit Agreement
or cash collateralization of letters of credit under the First Lien
Credit Agreement with the applicable Net Cash Proceeds, is greater
than or equal to 4.00 to 1.00, 50%, and to the extent that the
Leverage Ratio, after giving effect to any repayment of Loans or
loans under the First Lien Credit Agreement or cash
collateralization of letters of credit under the First Lien Credit
Agreement with the applicable Net Cash Proceeds, is less than 4.00
to 1.00, 25%; (c) in the case of any issuance or other incurrence
of Indebtedness, 100%; and (d) in the case of any Excess Cash Flow,
if on the last day of the applicable fiscal year, to the extent
that the Leverage Ratio, after giving effect to any repayment of
Loans or loans under the First Lien Credit Agreement or cash
collateralization of letters of credit under the First Lien Credit
Agreement with the applicable Net Cash Proceeds, is (i) greater
than or equal to 4.00 to 1.00, 75%, (ii) less than 4.00 to 1.00 but
greater than 3.00 to 1.00, 50%, (iii) less than or equal to 3.00 to
1.00 but greater than 2.00 to 1.00, 25% and (iv) less than or equal
to 2.00 to 1.00, 0%.
“
Requirement of Law ” shall mean as to any person, the
governing documents of such person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon
such person or any of its Real Property or personal property or to
which such person or any of its property of any nature is
subject.
“
Responsible Officer ” of any person shall mean any
executive officer or Financial Officer of such person and any other
officer or similar official thereof responsible for the
administration of the obligations of such person in respect of this
Agreement.
“
Restricted Indebtedness ” shall mean Indebtedness of
Holdings, the Borrower or any Subsidiary, the payment, prepayment,
repurchase or defeasance of which is restricted under Section
6.09(b) .
“
Restricted Payment ” shall mean any dividend or other
distribution (whether in cash, securities or other property) with
respect to any Equity Interests in Holdings, the Borrower or any
Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on
account of the purchase, redemption, defeasance, retirement,
acquisition, cancellation or termination of any Equity Interests in
Holdings, the Borrower or any Subsidiary or any option, warrant or
other right to acquire any such Equity Interests in Holdings, the
Borrower or any Subsidiary.
“
S&P ” shall mean Standard & Poor’s
Ratings Group, Inc.
“ Secured
Parties ” shall have the meaning assigned to such term in
the Guarantee and Collateral Agreement.
“
Securitization Transactions ” shall mean, with respect
to any person, any transfer by such person of accounts receivable
or interests therein (a) to a trust, partnership, corporation or
other entity that is a Receivables Subsidiary, which transfer is
funded in whole or in part, directly or indirectly, by the
incurrence or issuance by the transferee or any successor
transferee of
22
Indebtedness or
securities that are to receive payments from, or that represent
interests in, the cash flow derived from such accounts receivable
or interests, or (b) directly to one or more investors or other
purchasers. The amount of any Securitization Transaction
shall be deemed at any time to be the aggregate principal or stated
amount of the Indebtedness or securities referred to in the
preceding sentence or, if there shall be no such principal or
stated amount, the uncollected amount of the accounts receivable
transferred pursuant to such Securitization Transaction net of any
accounts receivable that have been written off as
uncollectible.
“
Security Documents ” shall mean the Guarantee and
Collateral Agreement, the Intercreditor Agreement, the Mortgages,
the Intellectual Property Security Agreements and each of the other
security agreements, pledges, mortgages, consents and other
instruments and documents executed and delivered pursuant to any of
the foregoing or pursuant to Section 5.09 or 5.10
.
“ Senior
Leverage Ratio ” shall mean, on the last day of any
fiscal quarter, the ratio of (a) Funded Senior Debt on such date to
(b) Consolidated EBITDA for the period of four consecutive fiscal
quarters most recently ended on and prior to such date, taken as
one accounting period.
“ SPC
” shall have the meaning assigned to such term in Section
9.04(i) .
“
Sponsor ” shall mean, collectively, Gilbert Global
Equity Partners, L.P., Gilbert Global Equity Partners (Bermuda),
L.P. and GGEP/SK Equity Partners, LLC.
“ Sponsor
Related Parties ” shall mean (a) any (i) controlling
stockholder, partner or member, (ii) majority-owned (or more)
subsidiary or (iii) spouse or immediate family member (in the case
of an individual), in each case, of the Sponsor or (b) any trust,
corporation, partnership, limited liability company or other
entity, the beneficiaries, stockholders, partners, members, owners
or persons beneficially holding (directly or through one or more
subsidiaries) a greater than 50% controlling interest of which
consist of the Sponsor and/or such persons referred to in the
immediately preceding clause (a) .
“
Statutory Reserves ” shall mean a fraction (expressed
as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic
or foreign, to which the Administrative Agent or any Lender
(including any branch, Affiliate or other fronting office making or
holding a Loan) is subject for eurocurrency funding (currently
referred to as “Eurocurrency Liabilities” in Regulation
D of the Board). Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation.
Statutory Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
“
Stockholders Agreement ” shall mean the Stockholders
Agreement dated as of the Reference Date among Holdings and its
stockholders party thereto.
23
“
Subordinated Note Documents ” shall mean the indenture
under which the Subordinated Notes are issued and all other
instruments, agreements and other documents evidencing or governing
the Subordinated Notes or providing for any Guarantee or other
right in respect thereof.
“
Subordinated Notes ” shall mean the Borrower’s
8-3/8% Senior Subordinated Notes due 2011, in an aggregate
principal amount of $125,000,000, including any notes issued by the
Borrower in full exchange for, and as contemplated by, the
Subordinated Notes with substantially identical terms as the
Subordinated Notes.
“
subsidiary ” shall mean, with respect to any person
(herein referred to as the “ parent ”), any
corporation, partnership, limited liability company, association or
other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the
ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned,
controlled or held, or (b) that is, at the time any determination
is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
“
Subsidiary ” shall mean any subsidiary of the
Borrower.
“
Subsidiary Guarantor ” shall mean, initially, each
Subsidiary specified on Schedule 1.01(c) and, at any time
thereafter, shall include each other Subsidiary that is not an
Excluded Foreign Subsidiary or a Receivables Subsidiary.
“
Synthetic Lease Obligations ” shall mean all monetary
obligations of a person under (a) a so-called synthetic,
off-balance sheet or tax retention lease (which is not a true
operating lease) or (b) an agreement for the use or possession of
any property (whether real, personal or mixed) creating obligations
which do not appear on the balance sheet of such person, but which,
upon the insolvency or bankruptcy of such person, would be
characterized as Indebtedness of such person (without regard to
accounting treatment).
“
Synthetic Purchase Agreement ” shall mean any swap,
derivative or other agreement or combination of agreements pursuant
to which Holdings, the Borrower or any Subsidiary is or may become
obligated to make (a) any payment in connection with a purchase by
any third party from a person other than Holdings, the Borrower or
any Subsidiary of any Equity Interest or Restricted Indebtedness or
(b) any payment (other than on account of a permitted purchase by
it of any Equity Interest or Restricted Indebtedness) the amount of
which is determined by reference to the price or value at any time
of any Equity Interest or Restricted Indebtedness; provided
that no phantom stock or similar plan providing for payments only
to current or former directors, officers or employees of Holdings,
the Borrower or the Subsidiaries (or to their heirs or estates)
shall be deemed to be a Synthetic Purchase Agreement.
“ Tax
Code ” shall mean the Internal Revenue Code of 1986, as
amended from time to time.
“
Taxes ” shall mean any and all present or future
taxes, levies, imposts, duties, deductions, charges, liabilities or
withholdings imposed by any Governmental Authority.
24
“ Tax
Sharing Agreement ” shall mean the tax sharing agreement
dated as of the Reference Date among Holdings, the Borrower and the
Subsidiaries party thereto.
“ Total
Debt ” shall mean, as of the last day of any fiscal
quarter, the aggregate amount of Indebtedness of the Borrower and
the Subsidiaries outstanding at such time, in the amount that would
be reflected on a balance sheet prepared at such time on a
consolidated basis in accordance with GAAP.
“
Transactions ” shall mean, collectively, (a) the
execution, delivery and performance by the Loan Parties of the Loan
Documents to which they are a party, (b) the borrowings hereunder
and the use of proceeds thereof, (c) the granting of Liens pursuant
to the Security Documents, (d) the payment of fees and expenses
incurred in connection with the foregoing and (e) any other
transactions related to or entered into in connection with any of
the foregoing.
“
Type ”, when used in respect of any Loan or Borrowing,
shall refer to the Rate by reference to which interest on such Loan
or on the Loans comprising such Borrowing is determined. For
purposes hereof, the term “ Rate ” shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
“ UCC
” shall mean the Uniform Commercial Code.
“ USA
PATRIOT Act ” shall mean The Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56
(signed into law October 26, 2001)).
“ wholly
owned subsidiary ” of any person shall mean a subsidiary
of such person of which securities (except for directors’
qualifying shares) or other ownership interests representing 100%
of the Equity Interests are, at the time any determination is being
made, owned, controlled or held by such person or one or more
wholly owned subsidiaries of such person or by such person and one
or more wholly owned subsidiaries of such person; a “
wholly owned Subsidiary ” shall mean any wholly owned
subsidiary of the Borrower.
“
Withdrawal Liability ” shall mean liability to a
Multiemployer Plan as a result of a complete or partial withdrawal
from such Multiemployer Plan, as such terms are defined in Part I
of Subtitle E of Title IV of ERISA.
SECTION
1.02. Terms Generally .
The definitions in Section 1.01 shall apply equally to both
the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and
“including”, and words of similar import, shall not be
limiting and shall be deemed to be followed by the phrase
“without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word
“shall”. The words “herein”,
“hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision of this Agreement
unless the context shall otherwise require. All references
herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, (a)
any definition of, or reference to, any Loan Document, including
this Agreement, or any other
25
agreement, instrument
or document in this Agreement shall mean such Loan Document or
other agreement, instrument or document as amended, restated,
supplemented or otherwise modified from time to time (subject to
any restrictions on such amendments, restatements, supplements or
modifications set forth herein) and (b) all terms of an accounting
or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided , however ,
that if the Borrower notifies the Administrative Agent that the
Borrower wishes to amend any covenant in Article VI or any
related definition to eliminate the effect of any change in GAAP
occurring after the date of this Agreement on the operation of such
covenant (or if the Administrative Agent notifies the Borrower that
the Required Lenders wish to amend Article VI or any related
definition for such purpose), then the Administrative Agent, the
Lenders and the Borrower shall negotiate in good faith to amend
(subject to the approval of the Required Lenders) such covenant to
preserve the original intent thereof in light of such change;
provided that until so amended the Borrower’s
compliance with such covenant shall be determined on the basis of
GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrower and
the Required Lenders.
SECTION
1.03. Classification of Loans and
Borrowings . For purposes of this Agreement, Loans may be
classified and referred to by Type ( e.g. , a
“Eurodollar Loan”). Borrowings also may be
classified and referred to by Type ( e.g. , a
“Eurodollar Borrowing”).
SECTION
1.04. Pro Forma Calculations
. All pro forma calculations permitted or required to
be made by the Borrower or any Subsidiary pursuant to this
Agreement shall include only those adjustments that would be
permitted or required by Regulation S-X under the Securities Act of
1933, as amended, together with those adjustments that (a) have
been certified by a Financial Officer of the Borrower as having
been prepared in good faith based upon reasonable assumptions and
(b) are based on reasonably detailed written assumptions reasonably
acceptable to the Administrative Agent.
ARTICLE II
THE CREDITS
SECTION
2.01. Commitments .
Subject to the terms and conditions hereof and relying upon the
representations and warranties set forth herein, each Lender
agrees, severally and not jointly, to make a Loan to the Borrower
on the Closing Date in a principal amount not to exceed its
Commitment. Amounts paid or prepaid in respect of Loans may
not be reborrowed.
SECTION 2.02.
Loans . (a) Each Loan shall be made as
part of a Borrowing consisting of Loans of the same Type made by
the Lenders ratably in accordance with their Commitments;
provided , however , that the failure of any Lender
to make any Loan required to be made by it shall not in itself
relieve any other Lender of its obligation to lend hereunder (it
being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be
made by such other Lender). The Loans comprising any
Borrowing shall be in an aggregate principal amount that is (i) an
integral multiple of $500,000 and not less than $2,000,000 or (ii)
equal to the remaining available balance of the applicable
Commitments.
26
(b)
Subject to Sections 2.08 and 2.15 , each Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request pursuant to Section 2.03 . Each
Lender may at its option make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement. Borrowings of
more than one Type may be outstanding at the same time;
provided , however , that the Borrower shall not be
entitled to request any Borrowing that, if made, would result in
more than ten Eurodollar Borrowings outstanding hereunder at any
time. For purposes of the foregoing, Borrowings having
different Interest Periods, regardless of whether they commence on
the same date, shall be considered separate Borrowings.
(c)
Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available
funds to such account in New York City as the Administrative Agent
may designate not later than 11:00 a.m., New York City time, and
the Administrative Agent shall promptly credit the amounts so
received to an account designated by the Borrower in the applicable
Borrowing Request or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have
been met, return the amounts so received to the respective
Lenders.
(d)
Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s
portion of such Borrowing, the Administrative Agent may assume that
such Lender has made such portion available to the Administrative
Agent on the date of such Borrowing in accordance with paragraph
(c) of this Section and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on
such date a corresponding amount. If the Administrative Agent
shall have so made funds available then, to the extent that such
Lender shall not have made such portion available to the
Administrative Agent, such Lender and the Borrower severally agree
to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower to but
excluding the date such amount is repaid to the Administrative
Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing or
(ii) in the case of such Lender, a rate determined by the
Administrative Agent to represent its cost of overnight or
short-term funds (which determination shall be conclusive absent
manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall
constitute such Lender’s Loan as part of such Borrowing for
purposes of this Agreement.
SECTION
2.03. Borrowing Procedure
. In order to request a Borrowing, the Borrower shall notify
the Administrative Agent by telephone (promptly confirmed by fax)
or shall hand deliver or fax to the Administrative Agent a duly
completed Borrowing Request (a) in the case of a Eurodollar
Borrowing, not later than 12:00 p.m. (noon), New York City time,
three Business Days before a proposed Borrowing and (b) in the case
of an ABR Borrowing, not later than 12:00 p.m. (noon), New
York City time, one Business Day before a proposed Borrowing.
Each Borrowing Request shall be irrevocable, shall be signed by or
on behalf of the Borrower and shall specify the following
information: (i) whether the Borrowing then being
requested is to be a Eurodollar Borrowing or an ABR Borrowing; (ii)
the date of such Borrowing (which shall be a Business Day); (iii)
the number and location of the account to which funds are to be
disbursed
27
(which shall be an
account that complies with the requirements of Section
2.02(c) ); (iv) the amount of such Borrowing; and (v) if such
Borrowing is to be a Eurodollar Borrowing, the initial Interest
Period with respect thereto; provided , however ,
that, notwithstanding any contrary specification in any Borrowing
Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02 . If no
election as to the Type of Borrowing is specified in any such
notice, then the requested Borrowing shall be an ABR
Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the
Borrower shall be deemed to have selected an Interest Period of one
month’s duration. The Administrative Agent shall
promptly advise the applicable Lenders of any notice given in
accordance with this Section 2.03 (and the contents
thereof), and of each Lender’s portion of the requested
Borrowing.
SECTION
2.04. Repayment of Loans; Evidence
of Debt . (a) The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each
Lender the principal amount of each Loan of such Lender on the
Maturity Date, together with accrued and unpaid interest on the
principal amount to be paid to but excluding the date of
payment.
(b)
Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender to the
Borrower from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under
this Agreement.
(c)
The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof
and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (iii) the amount of
the sum received by the Administrative Agent hereunder from the
Borrower or any Guarantor and each Lender’s share
thereof.
(d)
The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) of this Section shall be
prima facie evidence of the existence and amounts of the
obligations therein recorded; provided , however ,
that the failure of any Lender or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner
affect the obligations of the Borrower to repay the Loans made to
the Borrower in accordance with the terms of this
Agreement.
(e)
Any Lender may request that Loans made by it hereunder be evidenced
by a promissory note. In such event, the Borrower shall
execute and deliver to such Lender a promissory note payable to
such Lender and, if requested by such Lender, its registered
assigns, in the form of Exhibit I , or any other form
reasonably acceptable to the Administrative Agent.
Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive such a promissory note, the
interests represented by such note shall at all times (including
after any assignment of all or part of such interests pursuant to
Section 9.04 ) be represented by one or more promissory
notes payable to the payee named therein or its registered
assigns.
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SECTION 2.05.
Fees . (a) The Borrower agrees to pay to
the Administrative Agent, for its own account, the fees in the
amounts and at the times from time to time agreed to in writing by
the Borrower (or any Affiliate) and the Administrative Agent,
including pursuant to the Engagement Letter.
(b)
All fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders. Once paid, none of the fees
shall be refundable under any circumstances.
SECTION
2.06. Interest on Loans
. (a) Subject to the provisions of Section 2.07
, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a
year of 360 days at all other times, in each case calculated from
and including the date of such ABR Borrowing to but excluding the
date of repayment) at a rate per annum equal to the Alternate Base
Rate plus the Applicable Margin in effect from time to
time.
(b)
Subject to the provisions of Section 2.07 , the Loans
comprising each Eurodollar Borrowing shall bear interest (computed
on the basis of the actual number of days elapsed over a year of
360 days) at a rate per annum equal to the Adjusted LIBO Rate for
the Interest Period in effect for such Borrowing plus the
Applicable Margin in effect from time to time.
(c)
Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this
Agreement. The applicable Alternate Base Rate or Adjusted
LIBO Rate for each Interest Period or day within an Interest
Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive
absent manifest error.
SECTION
2.07. Default Interest .
If the Borrower shall default in the payment of the principal of or
interest on any Loan or any other amount becoming due hereunder or
under any other Loan Document, by acceleration or otherwise, the
Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount to but excluding
the date of actual payment (after as well as before judgment) (a)
in the case of overdue principal, at the rate otherwise applicable
to such Loan pursuant to Section 2.06 plus 2.00% per annum
and (b) in all other cases, at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to
the Prime Rate and over a year of 360 days at all other times)
equal to the rate that would be applicable to an ABR Loan plus
2.00%.
SECTION
2.08. Alternate Rate of
Interest . In the event, and on each occasion, that prior
to the commencement of any Interest Period for a Eurodollar
Borrowing (a) the Administrative Agent shall have determined that
adequate and reasonable means do not exist for determining the
Adjusted LIBO Rate for such Interest Period or (b) the
Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining
their Loans included in such Borrowing for such Interest Period,
the Administrative Agent shall, as soon as practicable thereafter,
give written or fax notice of such determination to the Borrower
and the
29
Lenders. In the
event of any such determination, until the Administrative Agent
shall have advised the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any
request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request
for an ABR Borrowing and (ii) any Interest Period election that
requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing shall be ineffective.
Each determination by the Administrative Agent under this
Section 2.08 shall be conclusive absent manifest
error.
SECTION
2.09. Termination and Reduction of
Commitments . (a) Unless previously terminated in
accordance with the terms hereof, the Commitments shall
automatically terminate at 5:00 p.m., New York City time, on the
Closing Date.
(b)
Upon at least three Business Days’ prior irrevocable written
or fax notice to the Administrative Agent, the Borrower may at any
time in whole permanently terminate, or from time to time in part
permanently reduce, the Commitments; provided ,
however , that each partial reduction of the Commitments
shall be in an integral multiple of $500,000 and in a minimum
amount of $2,000,000.
(c)
Each reduction in the Commitments hereunder shall be made ratably
among the Lenders in accordance with their respective
Commitments.
SECTION
2.10. Conversion and Continuation
of Borrowings . The Borrower shall have the right at any
time upon prior irrevocable notice to the Administrative Agent (a)
not later than 12:00 p.m. (noon), New York City time, one Business
Day prior to conversion, to convert any Eurodollar Borrowing of the
Borrower into an ABR Borrowing, (b) not later than 12:00 p.m.
(noon), New York City time, three Business Days prior to conversion
or continuation, to convert any ABR Borrowing of the Borrower into
a Eurodollar Borrowing or to continue any Eurodollar Borrowing of
the Borrower as a Eurodollar Borrowing for an additional Interest
Period and (c) not later than 12:00 p.m. (noon), New York City
time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing of the
Borrower to another permissible Interest Period, subject in each
case to the following:
(i)
each conversion or continuation shall be made pro
rata among the Lenders in accordance with the respective
principal amounts of the Loans comprising the converted or
continued Borrowing;
(ii)
if less than all the outstanding principal amount of any Borrowing
shall be converted or continued, then each resulting Borrowing
shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum
number of Borrowings of the relevant Type;
(iii)
each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender
the new Loan of such Lender resulting from such conversion and
reducing the Loan (or portion thereof) of such Lender being
converted by an equivalent principal amount; accrued interest on
any Eurodollar Loan (or portion thereof) being converted shall be
paid by the Borrower at the time of conversion;
30
(iv)
if any Eurodollar Borrowing is converted at a time other than the
end of the Interest Period applicable thereto, the Borrower shall
pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.16 ;
(v)
no Borrowing may be converted into or continued as a Eurodollar
Borrowing less than one month prior to the Maturity Date and no
Interest Period may be selected for a Eurodollar Borrowing that
would end after the Maturity Date;
(vi)
any portion of a Eurodollar Borrowing that cannot be converted into
or continued as a Eurodollar Borrowing by reason of the immediately
preceding clause shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Borrowing;
and
(vii)
upon notice to the Borrower from the Administrative Agent given at
the request of the Required Lenders, after the occurrence and
during the continuance of a Default or Event of Default, no
outstanding Loan may be converted into, or continued as, a
Eurodollar Loan.
Each notice
pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of
the Borrowing that the Borrower requests be converted or continued,
(ii) whether such Borrowing is to be converted to or continued as a
Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice
requests a conversion, the date of such conversion (which shall be
a Business Day) and (iv) if such Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any
such notice with respect to any conversion to or continuation as a
Eurodollar Borrowing, the Borrower shall be deemed to have selected
an Interest Period of one month’s duration. The
Administrative Agent shall advise the Lenders of any notice given
pursuant to this Section 2.10 and of each Lender’s
portion of any converted or continued Borrowing. If the
Borrower shall not have given notice in accordance with this
Section 2.10 to continue any Borrowing into a subsequent
Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such
Borrowing), such Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof),
automatically be converted or continued into an ABR
Borrowing.
SECTION
2.11. [Intentionally Omitted]
.
SECTION
2.12. Prepayment .
(a) Subject to any restrictions with respect thereto set
forth in the First Lien Credit Agreement or the Intercreditor
Agreement, the Borrower shall have the right at any time and from
time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days’ prior written or fax notice (or
telephone notice promptly confirmed by written or fax notice) in
the case of Eurodollar Loans, or written or fax notice (or
telephone notice promptly confirmed by written or fax notice) at
least one Business Day prior to the date of prepayment in the case
of ABR Loans, to the Administrative Agent before 12:00 p.m. (noon),
New York City time; provided , however , that each
partial prepayment shall be in an amount that is an integral
multiple of $500,000 and not less than $500,000.
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(b)
[Intentionally Omitted].
(c)
Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrower to
prepay such Borrowing by the amount stated therein on the date
stated therein. All prepayments under this Section
2.12 shall be subject to Section 2.16 , but otherwise
without premium or penalty (except as provided in Section
2.22). All prepayments under this Section 2.12 shall
be accompanied by accrued and unpaid interest on the principal
amount to be prepaid to but excluding the date of
payment.
SECTION
2.13. Mandatory Prepayments
. (a) [Intentionally Omitted].
(b)
Not later than the sixth Business Day following the completion of
any Asset Sale or the occurrence of any Recovery Event (subject in
each case to all applicable reinvestment and repayment rights to
the extent set forth in the definition of “ Net Cash
Proceeds ”), the Borrower shall, to the extent it is not
required to apply such Net Cash Proceeds to prepay or cash
collateralize obligations under the First Lien Credit Agreement,
apply the Required Prepayment Percentage of the Net Cash Proceeds
received with respect thereto to prepay outstanding Loans in
accordance with Section 2.13(f) and (g) .
(c)
In the event and on each occasion that an Equity Issuance occurs,
the Borrower shall, substantially simultaneously with (and in any
event not later than the sixth Business Day next following) the
occurrence of such Equity Issuance, to the extent it is not
required to apply such Net Cash Proceeds to prepay or cash
collateralize obligations under the First Lien Credit Agreement,
apply the Required Prepayment Percentage of the Net Cash Proceeds
therefrom to prepay outstanding Loans in accordance with Section
2.13(f) and (g) .
(d)
In the event that any Loan Party or any subsidiary of a Loan Party
shall receive Net Cash Proceeds from the issuance or other
incurrence of Indebtedness of any Loan Party or any subsidiary of a
Loan Party (other than Indebtedness permitted pursuant to
Section 6.01 (other than pursuant to clause (A)
of the proviso in Section 6.01(h) or Section 6.01(k)
)), the Borrower shall, substantially simultaneously with (and in
any event not later than the sixth Business Day next following) the
receipt of such Net Cash Proceeds by such Loan Party or such
subsidiary, to the extent it is not required to apply such Net Cash
Proceeds to prepay or cash collateralize obligations under the
First Lien Credit Agreement, apply an amount equal to the Required
Prepayment Percentage of such Net Cash Proceeds to prepay
outstanding Loans in accordance with Section 2.13(f) and (g)
.
(e)
No later than the earlier of (x) 95 days after the end of each
fiscal year of the Borrower and (y) the date on which the financial
statements with respect to such period are delivered pursuant to
Section 5.04(a) , the Borrower shall, to the extent it
is not required to apply such Excess Cash Flow to prepay or cash
collateralize obligations under the First Lien Credit Agreement,
prepay outstanding Loans in accordance with Section 2.13(f)
and (g) , in an aggregate principal amount equal to the
Required Prepayment Percentage of Excess Cash Flow for the fiscal
year then ended.
32
(f)
Mandatory prepayments of outstanding Loans under this Agreement
shall be applied to prepay outstanding Loans (and the corresponding
accrued and unpaid interest on the principal amount of Loans so
prepaid), subject to the provisions in this paragraph below and in
paragraph (g) below. Notwithstanding anything to the
contrary, any Lender may elect, by notice to the Administrative
Agent at or prior to the time and in the manner specified by the
Administrative Agent, prior to any prepayment of Loans required to
be made by the Borrower pursuant to this Section 2.13, to decline
all of any prepayment of its Loans pursuant to clauses (b), (c),
(d) or (e) of this Section 2.13, in which case the aggregate amount
of the prepayment that would have been applied to prepay such Loans
but was so declined shall be re-offered to those Lenders under this
Agreement who have initially accepted such prepayment (such
re-offer to be made to each Lender based on the percentage which
such Lender’s Loans represents of the aggregate Loans of all
such Lenders who have initially accepted such prepayment). In
the event of such a re-offer, the relevant Lenders may elect, by
notice to the Administrative Agent at or prior to the time and in
the manner specified by the Administrative Agent, to decline all of
the amount of such prepayment that is re-offered to them, in which
case the aggregate amount of the prepayment that would have been
applied to prepay such Loans pursuant to such re-offer but was so
declined shall be retained by the Borrower to be used for any other
purpose not prohibited by this Agreement.
(g)
In applying mandatory prepayments of Loans in accordance with
paragraph (f) above, such mandatory prepayments shall be applied on
a pro rata basis to the then outstanding Loans being prepaid
irrespective of whether such outstanding Loans are ABR Loans or
Eurodollar Loans; provided that if no Lenders exercise the
right to waive a given mandatory prepayment pursuant to paragraph
(f) above, then with respect to such mandatory prepayment, the
amount of such mandatory prepayment to be applied to Loans shall be
applied first to Loans that are ABR Loans to the full extent
thereof before application to Loans that are Eurodollar Loans in a
manner that minimizes the amount of any payments required to be
made by the Borrower pursuant to Section 2.16.
(h)
The Borrower shall deliver to the Administrative Agent, at the time
of each prepayment required under this Section 2.13 , (i) a
certificate signed by a Financial Officer of the Borrower setting
forth in reasonable detail the calculation of the amount and date
of such prepayment and (ii) to the extent practicable, at least
three days prior written notice of such prepayment. Each
notice of prepayment shall specify the prepayment date, the Type of
each Loan being prepaid and the principal amount of each Loan (or
portion thereof) to be prepaid. All prepayments of Borrowings
pursuant to this Section 2.13 shall be subject to Section
2.16 , but shall otherwise be without premium or
penalty.
(i)
Notwithstanding anything in this Section 2.13 to the
contrary, until the Discharge of First Lien Obligations solely in
respect of the Term Loan Facility (under and as defined in the
First Lien Credit Agreement) shall have occurred, no mandatory
prepayments of outstanding Loans that would otherwise be required
under this Section 2.13 shall be required to be made except
with respect to the portion (if any) of the proceeds of the event
giving rise to such mandatory prepayments as shall not be required
to prepay the Term Loans under and as defined in the First Lien
Credit Agreement as a result of an amendment, waiver or other
modification with respect to the provisions of Section 2.13
of the First Lien Credit Agreement in accordance with the
provisions of the First Lien Credit Agreement.
33
SECTION 2.14.
Reserve Requirements; Change in Circumstances .
(a) Notwithstanding any other provision of this Agreement, if
any Change in Law shall:
(i)
impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or the Administrative
Agent (except any such reserve requirement which is reflected in
the Adjusted LIBO Rate) or
(ii)
impose on any Lender or the Administrative Agent or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender,
and the result of any
of the foregoing shall be to increase the cost to such Lender of
maintaining any Eurodollar Loan or to reduce the amount of any sum
received or receivable by such Lender hereunder (whether of
principal, interest or otherwise) by an amount deemed by such
Lender or the Administrative Agent to be material, then the
Borrower will pay to such Lender or the Administrative Agent, as
the case may be, upon demand such additional amount or amounts as
will compensate such Lender for such additional costs incurred or
reduction suffered.
(b)
If any Lender or the Administrative Agent shall have determined
that any Change in Law regarding capital adequacy has or would have
the effect of reducing the rate of return on such Lender’s or
the Administrative Agent’s capital or on the capital of such
Lender’s or the Administrative Agent’s holding company,
if any, as a consequence of this Agreement or the Loans made by
such Lender to a level below that which such Lender or the
Administrative Agent or such Lender’s or the Administrative
Agent’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or the
Administrative Agent’s policies and the policies of such
Lender’s or the Administrative Agent’s holding company
with respect to capital adequacy) by an amount deemed by such
Lender or the Administrative Agent to be material, then from time
to time the Borrower shall pay to such Lender or the Administrative
Agent, as the case may be, such additional amount or amounts as
will compensate such Lender or the Administrative Agent or such
Lender’s or the Administrative Agent’s holding company
for any such reduction suffered.
(c)
A certificate of a Lender or the Admi
