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Exhibit 10.8
REVOLVING CREDIT AGREEMENT
AMONG
BANK OF AMERICA, N.A., AS AGENT AND A LENDER
CERTAIN LENDERS
SL INDUSTRIES, INC., AS PARENT BORROWER
AND
CEDAR CORPORATION
CONDOR D.C. POWER SUPPLIES, INC.
CONDOR HOLDINGS, INC.
RFL ELECTRONICS, INC.
SL AUBURN, INC.
SL DELAWARE, INC.
SL DELAWARE HOLDINGS, INC.
SL SURFACE TECHNOLOGIES, INC.
SL MONTEVIDEO TECHNOLOGY, INC.
SLW HOLDINGS, INC.
TEAL ELECTRONICS CORPORATION
WABER POWER LTD.
COLLECTIVELY, AS SUBSIDIARY BORROWERS
DATED
AUGUST 3, 2005
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ARTICLE 1 THE REVOLVING LOAN
FACILITY.................................... 2
Section 1.01
Commitment to
Lend...................................... 2
Section 1.02
Manner of
Borrowing..................................... 2
Section 1.03
Disbursements...........................................
2
Section 1.04
Letters of Credit and
Letter of Credit Fees............. 3
ARTICLE 2 PAYMENTS AND
PREPAYMENTS....................................... 5
Section 2.01
Reductions In
Commitment................................ 5
Section 2.02
Optional Prepayments
of Loans........................... 5
Section 2.03
Repayment of Loans In
Connection with Reductions of
Commitment..............................................
6
ARTICLE 3 INTEREST AND
FEES.............................................. 6
Section 3.01
Interest................................................
6
Section 3.02
Election of Interest
Rate............................... 7
Section 3.03
Interest Upon
Default................................... 7
Section 3.04
Fees....................................................
8
Section 3.05
Computation of
Interest and Related Fees................ 8
ARTICLE 4 GENERAL MATTERS CONCERNING
LOANS............................... 8
Section 4.01
Manner of Tendering
Payments by Borrowers............... 8
Section 4.02
The
Notes............................................... 9
Section 4.03
Loan
Account............................................ 10
Section 4.04
Additional Provisions
Concerning Certain Loans.......... 10
Section 4.05
Taxes...................................................
12
Section 4.06
Lenders' Obligations
Several............................ 14
Section 4.07
Permitted Assumptions
by Agent as to Lender Payments.... 14
ARTICLE 5 CONDITIONS
PRECEDENT........................................... 14
Section 5.01
Conditions Precedent
to Initial Loan.................... 14
5.01.1
Loan Documents..............................................
14
5.01.2 UCC
Collateral Documents....................................
15
5.01.3
Real Estate Collateral Documents............................
15
5.01.4
Financial Documents.........................................
15
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5.01.5
Consents, Certificates and Opinions.........................
16
5.01.6
Third Party Agreements......................................
16
5.01.7
Merger Documents............................................
17
Section 5.02
Payment of Fees
and Costs.............................. 17
Section 5.03
Conditions
Precedent to Each Loan...................... 17
Section 5.04
Method of
Satisfying Certain Conditions................ 18
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF
BORROWERS.................... 18
Section 6.01
Organization and
Qualification.......................... 18
Section 6.02
Capitalization and
Ownership of Subsidiary Borrowers.... 18
Section 6.03
Authorization and
Execution............................. 18
Section 6.04
Enforceability;
Consents................................ 19
Section 6.05
Security Interests in
Collateral........................ 19
Section 6.06
Real Property of
Borrowers.............................. 19
Section 6.07
Absence of Conflict
with other Agreements, Etc.......... 19
Section 6.08
Business................................................
20
Section 6.09
Condition of
Assets..................................... 20
Section 6.10
Use of
Proceeds......................................... 20
Section 6.11
Litigation..............................................
20
Section 6.12
Indebtedness............................................
20
Section 6.13
Financial
Statements.................................... 20
Section 6.14
Fiscal
Year............................................. 21
Section 6.15
Title to
Assets......................................... 21
Section 6.16
Patents, Trademarks,
Licenses and Franchises............ 21
Section 6.17
Compliance with
Law..................................... 21
Section 6.18
Compliance with
ERISA................................... 22
Section 6.19
Compliance with
Regulations U and X..................... 23
Section 6.20
Investment Company
Act.................................. 23
Section 6.21
Public Utility Holding
Company Act...................... 23
Section 6.22
Absence of
Default...................................... 23
Section 6.23
Agreements with
Affiliates and Management Agreements.... 23
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Section 6.24
No Burdensome
Agreements; Material Agreements........... 23
Section 6.25
Solvency................................................
24
Section 6.26
Taxes...................................................
24
Section 6.27
Environmental
Compliance................................ 24
Section 6.28
Labor Disputes and
Acts of God.......................... 25
ARTICLE 7 FINANCIAL
COVENANTS............................................ 25
Section 7.01
Financial
Covenants..................................... 25
Section 7.02
Calculations............................................
26
ARTICLE 8 COVENANTS CONCERNING REPORTING
REQUIREMENTS.................... 26
Section 8.01
Financial
Statements.................................... 26
Section 8.02
Officer's Compliance
Certificates....................... 27
Section 8.03
Auditors'
Reports....................................... 28
Section 8.04
Notice of
Default....................................... 28
Section 8.05 Notice Concerning Representations
and Warranties........ 28
Section 8.06
Notice of
Litigation.................................... 28
Section 8.07
SEC
Disclosure.......................................... 28
Section 8.08
Conditions Affecting
Collateral......................... 28
Section 8.09
ERISA
Notices........................................... 29
Section 8.10
Miscellaneous...........................................
29
Section 8.11
Authorization of Third
Parties to Deliver Information... 29
ARTICLE 9 BUSINESS
COVENANTS............................................. 30
Section 9.01
Indebtedness............................................
30
Section 9.02
Liens...................................................
30
Section 9.03
Investments and
Acquisitions............................ 32
Section 9.04
Restricted
Payments..................................... 34
Section 9.05
Affiliate
Transactions.................................. 34
Section 9.06
Disposition of
Assets................................... 35
Section 9.07
Liquidation or
Merger................................... 35
Section 9.08
Change in
Organizational Documents...................... 35
Section 9.09 Issuance of
Equity...................................... 36
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Section 9.10
Environmental
Violations................................ 36
Section 9.11
Preservation of
Existence, Etc.......................... 36
Section 9.12
Permitted
Businesses.................................... 36
Section 9.13
Compliance with
Law..................................... 36
Section 9.14
Payment of Taxes and
Claims............................. 37
Section 9.15
Tax
Consolidation....................................... 37
Section 9.16
Maintenance of
Properties............................... 37
Section 9.17
Insurance...............................................
37
Section 9.18
Compliance with
ERISA................................... 38
Section 9.19
Maintenance of
Records; Fiscal Year..................... 39
Section 9.20
Inspections and Field
Examinations...................... 39
Section 9.21
Exchange of
Notes....................................... 40
Section 9.22
Compliance with
Federal Reserve Regulations............. 40
Section 9.23
Limitations on Certain
Restrictive Provisions........... 40
Section 9.24
Corporate
Separateness.................................. 40
Section 9.25
Deposit
Accounts........................................ 41
Section 9.26
Collateral;
Lockbox..................................... 41
Section 9.27
Joinder of
Subsidiaries................................. 41
Section 9.28
Further
Assurances...................................... 43
ARTICLE 10
DEFAULT.......................................................
43
Section 10.01
Events of Default.......................................
43
Section 10.02
Remedies................................................
45
Section 10.03
Cash Collateral.........................................
46
ARTICLE 11
DEFINITIONS...................................................
46
Section 11.01
Defined Terms...........................................
46
Section 11.02
Accounting Terms........................................
65
Section 11.03
Other Definitional Provisions...........................
66
ARTICLE 12
AGENT.........................................................
66
Section 12.01
Authority...............................................
66
Section 12.02
Expenses................................................
66
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Section 12.03
Action by Agent.........................................
66
Section 12.04
Exculpatory Provisions..................................
67
Section 12.05
Investigation by Lenders................................
67
Section 12.06
Notice of Events of Default.............................
67
Section 12.07
Resignation; Termination................................
68
Section 12.08
Sharing.................................................
68
Section 12.09
Other Relationships.....................................
68
ARTICLE 13
MISCELLANEOUS.................................................
68
Section 13.01
Notices.................................................
68
Section 13.02
Duration; Survival......................................
69
Section 13.03
Borrower Representative.................................
69
Section 13.04 No
Implied Waiver; Rights Cumulative.................... 69
Section 13.05
Entire Agreement and Amendments.........................
70
Section 13.06
Successors and Assigns..................................
70
Section 13.07
Descriptive Headings....................................
72
Section 13.08
Governing Law...........................................
72
Section 13.09
Payments Due on Non-Business Days.......................
72
Section 13.10
Counterparts............................................
72
Section 13.11
Maximum Lawful Interest Rate............................
73
Section 13.12
Set-off of Bank Accounts................................
73
Section 13.13
Severability............................................
74
Section 13.14
Payment and Reimbursement of Costs and Expenses;
Indemnification.........................................
74
Section 13.15
Consent to Jurisdiction.................................
75
Section 13.16
Termination.............................................
75
Section 13.17
Waiver of Right to Jury Trial...........................
75
Section 13.18
Confidentiality.........................................
76
Section 13.19
USA Patriot Act.........................................
76
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EXHIBITS
EXHIBIT A Form of Revolving Loan Note
EXHIBIT B Form of Request for Advance
EXHIBIT C Form of Notice of Conversion
EXHIBIT D Form of Compliance Certificate
EXHIBIT E Form of Assignment and Acceptance Agreement
EXHIBIT F Form of Joinder Agreement
SCHEDULES
Schedule A
Commitments
Schedule 6.01 Jurisdictions Where each Borrower and Each of Foreign
Subsidiary
is Incorporated/Organized and Qualified
Schedule 6.02 Capital Stock of (or Other Equity or Ownership
Interests in) the
Borrowers and Foreign Subsidiaries
Schedule 6.05 Filing Locations for Financing Statements and
Mortgages
Schedule 6.06 Real Property Owned or Leased by Borrowers and
Subsidiaries
Schedule 6.11 Litigation
Schedule 6.12 Indebtedness of Borrowers and Subsidiaries
Schedule 6.16 List of Patents, Trademarks and Other Intangible
Rights
Schedule 6.18 ERISA Disclosure
Schedule 6.23 Agreements With Affiliates
Schedule 6.24 Material Agreements
Schedule 9.01 Existing Indebtedness
Schedule 9.02 Existing Liens
Schedule 9.03 XYZ Acquisition
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REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT (this "Agreement") made as of August 3,
2005, by
and among SL INDUSTRIES, INC., a New Jersey corporation ("Parent
Borrower"),
CEDAR CORPORATION, a Nevada corporation, CONDOR D.C. POWER
SUPPLIES, INC., a
California corporation, CONDOR HOLDINGS, INC., a Delaware
corporation, RFL
ELECTRONICS, INC., a Delaware corporation, SL AUBURN, INC., a New
York
corporation, SL DELAWARE, INC., a Delaware corporation, SL DELAWARE
HOLDINGS,
INC., a Delaware corporation, SL SURFACE TECHNOLOGIES, INC., a New
Jersey
corporation, SL MONTEVIDEO TECHNOLOGY, INC., a Minnesota
corporation, SLW
HOLDINGS, INC., a New Jersey corporation, TEAL ELECTRONICS
CORPORATION, a
California corporation, WABER POWER LTD., a Connecticut corporation
(each a
"Subsidiary Borrower", and collectively, "Subsidiary Borrowers",
and together
with Parent Borrower, each a "Borrower" and collectively, the
"Borrowers"), BANK
OF AMERICA, N.A. ("Bank"), individually, as Administrative Agent,
Issuer and a
Lender, and the OTHER FINANCIAL INSTITUTIONS listed on the
signature pages to
this agreement. Bank, the financial institutions listed on the
signature pages
to this Agreement and any other financial institutions which may
become parties
to this Agreement from time to time, are sometimes collectively
referred to as
the "Lenders" and individually as a "Lender". Bank, when acting in
its capacity
as agent for the Lenders and Issuer, or any successor or assign
that assumes
that position pursuant to the terms of this Agreement, is
hereinafter sometimes
referred to as the "Agent".
RECITALS:
WHEREAS, Borrowers desire that the Lenders extend a revolving loan
facility
(with a standby and commercial letter of credit sublimit), to
provide funds to
pay off and terminate that certain Loan and Security Agreement
dated effective
January 6, 2003 among LaSalle Business Credit LLC, Standard Federal
National
Association, Parent Borrower and SL Delaware, Inc. as borrowers,
and certain
subsidiary guarantors party thereto (the "Prior Facility"), and to
provide
credit for the possible acquisition of XYZ, Inc., working capital
purposes and
general business purposes of the Borrowers; and
WHEREAS, the Borrowers desire to borrow, and the Lenders are
willing to
extend credit from time to time on a revolving credit basis until
the Revolving
Credit Termination Date (as defined below), an aggregate principal
amount not to
exceed Thirty Million Dollars ($30,000,000) outstanding at any
time. The loans
and credit are to be secured by the assets of the Parent Borrower
and the assets
and stock of the Subsidiary Borrowers. Certain terms used herein
are defined in
Article 13 below.
NOW
THEREFORE, the Borrowers, jointly and severally, and Agent and
the
Lenders, severally but not jointly, intending to be legally bound,
agree as
follows:
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ARTICLE 1
THE REVOLVING LOAN FACILITY
Section 1.01 COMMITMENT TO LEND. The Lenders severally agree, upon
the
terms and conditions set forth below, from time to time until the
Revolving
Credit Termination Date, to make Revolving Credit Loans to the
Borrowers in such
amounts as the Borrowers may request, subject to the limitation
that: (a) at no
time shall Revolving Credit Outstandings exceed the amount of the
Commitment;
and (b) the amount and percentage of the Commitment which each
Lender is
obligated to lend shall not exceed at any time the amount or
percentages set
forth opposite the name of such Lender on SCHEDULE A hereto (as
supplemented and
amended by giving effect to the assignment contemplated in this
Agreement). The
amount of any single Base Rate Loan shall be fifty thousand dollars
($50,000) or
an integral multiple of ten thousand dollars ($10,000) in excess
thereof, and
the amount of any single LIBOR Loan shall be one hundred thousand
dollars
($100,000) or an integral multiple of ten thousand dollars
($10,000) in excess
thereof. Within such limitations and subject to the terms and
conditions set
forth below, the Borrowers may borrow, prepay and reborrow, from
time to time,
on a revolving basis. The Lenders shall have no obligation to make
any Revolving
Credit Loans at any time that a Default exists.
Section 1.02 MANNER OF BORROWING.
(a) To request a Revolving Credit Loan, the Borrowers shall,
prior to 12:00 noon on the desired date of a Base Rate Loan or at
least two (2)
Business Days prior to the desired date for a LIBOR Loan, (a)
deliver to the
Agent a Request for Advance or (b) give the Agent telephonic notice
of the
information specified in a Request for Advance followed immediately
by delivery
of such a Request for Advance, provided, however, that the
Borrowers' failure to
confirm any telephonic notice with a Request for Advance shall not
invalidate
any notice so given if acted upon by the Agent. Any notice given to
the Agent
pursuant to this Section shall be given prior to 11:00 a.m.
(Philadelphia time)
on the requisite Business Day and shall be irrevocable once
given.
(b) The Agent in turn shall give prompt written or telephonic
(promptly confirmed in writing) notice to each Lender of its pro
rata share of
the borrowing, the interest rate option selected and the scheduled
date of the
funding. After receipt of such notice, each Lender shall make such
arrangements
as are necessary to assure that its share of the funding shall be
immediately
available (in Dollars) to the Agent no later than 1:30 p.m.
(Philadelphia, PA
time), on the date on which the funding is to occur.
Section 1.03 DISBURSEMENTS. Prior to 2:00 p.m. (Philadelphia time)
on the
date of a Revolving Credit Loan, the Agent shall, subject to the
satisfaction of
the conditions set forth in Article 7 below, disburse the funds to
the Borrowers
(a) by wire transfer pursuant to the Borrowers' instructions, or
(b) in the
absence of such instructions, by crediting the account of the
Parent Borrower
maintained with the Agent.
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Section 1.04 ETTERS OF CREDIT AND LETTER OF CREDIT FEES.
(a) Letter of Credit. On the terms and subject to the
conditions
set forth herein, Issuer will prior to the Revolving Credit
Termination Date
issue standby or documentary Letters of Credit so long as:
(i) Issuer shall have received a Notice of LC Credit Event
at least two (2) Business Days before the relevant date of
issuance; and
(ii) After giving effect to such issuance (A) the aggregate
Letter of Credit Liabilities under all Letters of Credit do not
exceed
$5,000,000 and (B) the Revolving Credit Outstandings do not exceed
the amount of
the Commitment.
(b) Letter of Credit Fee. Borrowers shall pay to the Agent for
the account of the Lenders a letter of credit fee with respect to
the Letter of
Credit Liabilities for each Letter of Credit, computed for each day
from the
date of issuance of such Letter of Credit to the date that is the
last day a
drawing is available under such Letter of Credit, at a rate per
annum equal to
the Applicable Margin then applicable to LIBOR Loans. Such fee
shall be payable
in arrears on the first Business Day of each fiscal quarter prior
to the
Revolving Credit Termination Date and on such date. In addition,
the Issuer
shall receive a fronting fee equal to 0.125% of the face amount of
each
outstanding Letter of Credit ("Fronting Fee"), payable upon
issuance. The
Borrowers shall also pay to the Issuer all of the Issuer's standard
fees and
charges for the opening, amendment, modification, presentation or
cancellation
of a Letter of Credit and otherwise in respect of a Letter of
Credit and shall
execute all of the Issuer's standard agreements in connection with
the issuance
of the Letter of Credit.
(c) Reimbursement Obligations of Borrowers. If Issuer shall
make
a payment pursuant to a Letter of Credit, the Borrowers shall
promptly reimburse
Issuer, following notice from Issuer to Borrowers of the amount of
such payment,
for the amount of such payment and, to the extent that so doing
would not cause
the Revolving Credit Outstandings to exceed the amount of the
Commitment, and
there is no outstanding Default, Borrowers shall be deemed to have
requested a
Revolving Credit Loan, the proceeds of which will be used to
satisfy such
Reimbursement Obligations. To the extent that such Reimbursement
Obligations are
not so satisfied the Borrowers shall pay interest, on demand, on
all amounts so
paid by Issuer for each day until Borrowers reimburse Issuer
therefor at a rate
per annum equal to the sum of two percent (2%) plus the interest
rate applicable
to Revolving Credit Loans (which are Prime Rate Loans) for such
day. The
obligations of the Borrowers to the Issuer, the Agent and the
Lenders in respect
of Letters of Credit shall be guaranteed pursuant to the Loan
Documents and
shall be secured by the Collateral.
(d) Objections Absolute. The obligations of Borrowers under
this
Section 1.04 shall be absolute, unconditional and irrevocable, and
shall be
performed strictly in accordance with the terms of this Agreement,
under all
circumstances whatsoever, including the following:
(i) any lack of validity or enforceability of, or any
amendment or waiver of or any consent to departure from, any Letter
of Credit or
any related document;
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(ii) the existence of any claim, set-off, defense or other
right which Borrowers may have at any time against the beneficiary
of any Letter
of Credit, the Issuer, the Agent or any Lender (including any claim
for improper
payment), or any other Person, whether in connection with any Loan
Document or
any unrelated transaction, provided, that nothing herein shall
prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(iii) any statement or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient
in any respect or any statement therein being untrue or inaccurate
in any
respect whatsoever; or
(iv) to the extent permitted under applicable law, any other
circumstance or happening whatsoever, whether or not similar to any
of the
foregoing.
(e) Deposit Obligations of Borrowers. In the event any Letters
of
Credit are outstanding at the time that Borrowers prepay, or are
required to
repay, the Obligations or the Commitment is terminated, Borrowers
shall (i)
deposit with Issuer either cash or an irrevocable letter of credit
in form and
substance satisfactory to Issuer from a bank satisfactory to
Issuer, in either
case, in an amount equal to one hundred and two percent (102%) of
the aggregate
outstanding Letter of Credit Liability, to be available to Issuer
to reimburse
payments of drafts drawn under such Letters of Credit and pay any
fees and
expenses related thereto, and (ii) prepay the fee payable under
Section 1.04(b)
with respect to such Letters of Credit for the full remaining terms
of such
Letters of Credit. Upon termination of any such Letter of Credit,
the unearned
portion of such prepaid fee attributable to such Letter of Credit
shall be
refunded to Borrowers, together with the deposit described in the
preceding
clause (i) to the extent not previously applied by Issuer in the
manner
described herein.
(f) Participation by Lenders.
(i) Effective immediately upon the issuance of each Letter
of Credit and without further action on the part of the Issuer, the
Issuer shall
be deemed to have granted to each Lender, and each Lender shall be
deemed to
have irrevocably purchased and received from the Issuer, without
recourse or
warranty, an undivided interest and participation in such Letter of
Credit to
the extent of each Lender's percentage of the Revolving Credit
Limit. Further,
each Lender acknowledges and agrees that it shall be absolutely
liable, to the
extent of its percentage of the Revolving Credit Limit, to fund on
demand or
reimburse the Issuer on demand for the amount of each draft paid by
the Issuer
under each Letter of Credit to the extent that such amount is not
immediately
reimbursed by the Borrowers.
(ii) In furtherance of the provisions of the preceding
paragraph (a), the Issuer shall notify the Agent promptly upon
receipt of notice
of an intended draw under a Letter of Credit. The Agent shall give
written,
telecopied or telegraphic notice to each of the other Lenders of
its pro rata
share of such draw and the scheduled date thereof. After receipt of
such notice,
and whether or not an Event of Default or Default then exists, each
Lender shall
make available to the Agent such Lender's share of such draw in
immediately
available (in Dollars) to the Agent no later than noon
(Philadelphia, PA time),
on the date specified in the Agent's notice. The failure of the
Issuer or the
Agent to give timely notice pursuant to this
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Subsection 1.04(f) shall not affect the right of the Issuer to
reimbursement
from the Lenders. Any amount paid by Agent and Lenders pursuant to
a draw made
under a Letter of Credit shall constitute a Revolving Credit Loan
and shall be
repaid pursuant to the provisions respecting Revolving Credit
Loans, provided
that if an Event of Default or Default exists at the time of a
draw, the
Borrowers shall immediately reimburse the amount of such draw to
the Agent for
the benefit of the Lenders.
(g) Standard of Conduct. The Issuer shall be entitled to
administer each Letter of Credit in the ordinary course of business
and in
accordance with its usual practices, modified from time to time as
it deems
appropriate under the circumstances, and shall be entitled to use
its discretion
in taking or refraining from taking any action in connection
herewith as if it
were the sole party involved. Any action taken or omitted to be
taken by the
Issuer under or in connection with any Letter of Credit shall not
create for the
Issuer any resulting liability to any other Lender. The Issuer
shall be entitled
to rely, and shall be fully protected in relying upon, any Letter
of Credit,
draft, writing, resolution, notice, consent, certificate,
affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message,
statement, order or
other document believed by it to be genuine and correct and
believed by it to
have been signed, sent or made by the proper Person or Persons and
upon advice
and statements of legal counsel, independent accountants and other
experts
selected by the Issuer and the Agent.
ARTICLE 2
PAYMENTS AND PREPAYMENTS
Section 2.01 REDUCTIONS IN COMMITMENT. The Borrowers may, at any
time and
from time to time upon one (1) Business Day's prior irrevocable
written notice
to the Agent, reduce (on a pro rata basis among the Lenders) or
terminate the
Commitment without premium or penalty, provided, however, that each
partial
reduction shall be in an amount equal to One Million Dollars
($1,000,000) or an
integral multiple of One Hundred Thousand Dollars ($100,000) in
excess thereof
and provided further, that the Commitment shall not be reduced or
terminated at
any time that would require the prepayment of a LIBOR Loan on a day
other than
the last day of the relevant Interest Period, unless the reduction
notice is
accompanied by the breakage payments referred to in Section 4.04
(Additional
Provisions Concerning Certain Loans) below. Once so reduced, the
Commitment
shall not be increased and once so terminated, the Commitment shall
not be
reinstated.
Section 2.02 OPTIONAL PREPAYMENTS OF LOANS.
(a) Subject to the provisions of paragraph (c) below, the
Borrowers may, at any time and from time to time, without penalty,
prepay any or
all Base Rate Loans.
(b) Subject to the provisions of paragraph (c) below, the
Borrowers may, at any time and from time to time, prepay any or all
LIBOR Loans
upon giving three (3) Business Days irrevocable notice to the
Agent, but if any
such payment shall be made on a day other than the last day of the
applicable
Interest Period, such payment shall be accompanied by
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the breakage payments referred to in Section 4.04 (Additional
Provisions
Concerning Certain Loans) below.
(c) The foregoing prepayment rights are subject to the
following:
(i) any prepayment of less than all the outstanding Loans shall be
in an amount
equal to Fifty Thousand Dollars ($50,000) or an integral multiple
of ten
thousand dollars ($10,000) in excess thereof, (ii) no prepayment
may be made in
an amount that would cause the amount of any outstanding LIBOR Loan
to be less
than One Hundred Thousand Dollars ($100,000); and (iii) any
prepayment in full
of all outstanding Loans shall be accompanied by the payment of all
Obligations
accrued or payable as of the date of such prepayment.
Section 2.03 REPAYMENT OF LOANS IN CONNECTION WITH REDUCTIONS
OF
COMMITMENT. On or before the effective date of any reduction in the
Commitment
(whether scheduled, mandatory, voluntary or otherwise), the
Borrowers shall
repay such of the outstanding Loans, together with accrued interest
thereon,
and/or pay to the Agent for the benefit of the Lenders as cash
collateral an
amount equal to all Letter of Credit Liabilities, so as to reduce
the Revolving
Credit Outstandings to the Revolving Credit Limit, giving effect to
the amount
of the Commitment as so reduced, provided, however, any prepayment
of a LIBOR
Loan on a day that is not the last day of the relevant Interest
Period shall be
accompanied by the amounts provided for in Section 4.04 (Additional
Provisions
Concerning Certain Loans) below.
ARTICLE 3
INTEREST AND FEES
Section 3.01 INTEREST. Subject to the provisions of Sections 3.02
(Election
of Interest Rate) and 4.04 (Additional Provisions Concerning
Certain Loans)
below and to the conditions set forth in this Section, the Loans
shall bear
interest at the Borrowers' option, as follows:
(a) Base Rate Loans. The interest rate on each Base Rate Loan
shall equal the sum of the Base Rate plus the Applicable Margin for
Base Rate
Loans, as in effect from time to time. Changes in the rate of
interest resulting
from changes in the Base Rate shall take place immediately without
notice or
demand of any kind. Interest on Base Rate Loans is payable in
arrears on the
first day of each month and on the maturity of such Loans, whether
by
acceleration or otherwise.
(b) LIBOR Loans. During any period that a Loan is a LIBOR Loan,
Borrowers shall pay interest on such Loan at a rate equal to the
LIBOR Rate for
the applicable Interest Period plus the Applicable Margin for LIBOR
Loans, as in
effect from time to time. Interest on LIBOR Loans shall be payable
in arrears on
the last day of the applicable Interest Period relating to such
Loan, provided
that if the Interest Period is longer than 30 days, interest shall
be payable 30
days after the relevant Loan is made and on each 30-day anniversary
thereof, if
applicable, and on the last day of the Interest Period. All
payments are due on
or prior to the Revolving Credit Termination Date.
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Section 3.02 ELECTION OF INTEREST RATE. Subject to the provisions
of
Section 4.04 (Additional Provisions Concerning Certain Loans)
below, the
Borrowers may elect the interest rate applicable to each Revolving
Credit Loan
as follows:
(a) Rate in Absence of Election. Unless otherwise elected by
the
Borrowers, each Revolving Credit Loan shall bear interest at the
Base Rate plus
the Applicable Margin.
(b) Election of LIBOR Loans. The Borrowers may elect to request
an advance hereunder as a LIBOR Loan by so specifying the amount
and the desired
Interest Period on the Request for Advance delivered pursuant to
Section 1.02
(Manner of Borrowing) above.
(c) Conversion to Different Type of Loan. All or any part of
the
principal amount of Revolving Credit Loans of any Type may, on any
Business Day,
be converted into any other Type or Types of Revolving Credit
Loans, except that
(i) a LIBOR Loan may be converted only on the last day of the
applicable
Interest Period therefor and (ii) a Base Rate Loan may be converted
into a LIBOR
Loan only on a Business Day for LIBOR Loans.
(d) Notice of Election to Convert. The Borrowers shall give the
Agent notice (which shall be irrevocable) of each conversion of a
Base Rate Loan
into a LIBOR Loan or each conversion of a LIBOR Loan at the end of
the relevant
Interest Period into another LIBOR Loan, no later than 11:00 a.m.
(Philadelphia
time) three (3) Business Days prior to the requested date of such
conversion.
Each notice of conversion shall be (i) in writing in substantially
the form of
Exhibit C attached hereto or (ii) by telephone specifying the
information set
forth in Exhibit C attached hereto, followed immediately by
delivery of such
notice, provided, however, that the Borrowers' failure to confirm
any telephonic
notice in writing shall not invalidate any telephonic notice if
acted upon by
the Agent.
(e) Presumption
In Absence of Election to Convert. Base Rate
Loans shall continue as Base Rate Loans unless and until such
Revolving Credit
Loans are converted into Revolving Credit Loans of another Type
pursuant to the
preceding paragraph (d). LIBOR Loans of any Type shall continue as
Revolving
Credit Loans of such Type until the end of the then current
Interest Period
therefor, at which time they shall be automatically converted into
Base Rate
Loans unless the Borrowers shall have given the Agent notice in
accordance with
the preceding paragraph (d).
(f) Limitations on Election of LIBOR Loans. The Borrowers may
not
elect to borrow, continue or convert a Revolving Credit Loan to a
LIBOR Loan if
such election would (i) require the Agent to administer
concurrently more than
six (6) Types of Revolving Credit Loans or (ii) require the
Borrowers to make
any scheduled or required payment of principal prior to the last
day to the
Interest Period or Interest Periods selected as a result of a
reduction of the
Available Commitment, a mandatory repayment or otherwise
hereunder.
Section 3.03 INTEREST UPON DEFAULT. Anything in this Agreement to
the
contrary notwithstanding, upon the occurrence of an Event of
Default (whether or
not the Lenders have accelerated payment of the Notes), or after
maturity or
judgment has been rendered on the Notes,
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the Borrowers' right to select interest rate options shall cease
and the unpaid
principal of the Loans shall, at the option of the Agent, bear
interest at the
Base Rate plus the Applicable Margin plus two percent (2%) (the
"Default Rate").
Such interest shall be payable on the earlier of (i) demand or (ii)
the next
Payment Date. Interest at the Default Rate shall continue to accrue
(both before
and after judgment) until the earlier of (i) the waiver or cure of
the
applicable Event of Default or (ii) the payment in full of the
Obligations.
Furthermore, at the election of Agent or Majority Lenders during
any period in
which any Event of Default is continuing (x) as the Interest
Periods for LIBOR
Loans then in effect expire, such Loans shall be converted into
Base Rate Loans
and (y) the LIBOR election shall not be available to Borrowers.
Section 3.04 FEES.
(a) Commitment Fee. The Borrowers shall pay to the Agent for
the
account of the Lenders a commitment fee, such fee to be payable in
arrears on
every third Payment Date and on the Revolving Credit Termination
Date and equal
to the product of the Commitment Fee Margin times the average daily
unused
portion of the Commitment during the period commencing on the date
following the
preceding commitment fee payment date (or, if none, on the date
hereof) and
ending on such commitment fee payment date.
(b) Other Fees. The Borrowers shall pay the Agent, the Issuer
and/or the Lenders such other fees as the Borrowers have otherwise
agreed to pay
in writing.
(c) Letter of Credit and Fronting Fees. The Borrowers shall pay
to the Agent for the account of the Issuer and/or the Lenders, as
applicable,
such letter of credit fees as are described in Section 1.04.
Section 3.05 COMPUTATION OF INTEREST AND RELATED FEES. All interest
and
fees under each Loan Document shall be calculated on the basis of a
360-day year
for the actual number of days elapsed. The date of funding of a
Base Rate Loan
and the first day of an Interest Period with respect to a LIBOR
Loan shall be
included in the calculation of interest. The date of payment of a
Base Rate Loan
and the last day of an Interest Period with respect to a LIBOR Loan
shall be
excluded from the calculation of interest. If a Loan is repaid on
the same day
that it is made, one (1) day's interest shall be charged.
ARTICLE 4
GENERAL MATTERS CONCERNING LOANS
Section 4.01 MANNER OF TENDERING PAYMENTS BY BORROWERS.
(a) Time of Payments. Each payment (including any prepayment)
by
the Borrowers on account of the principal of, or interest on, the
Loans,
commitment fees and any other amount owed to the Agent on behalf of
the Lenders
under any Loan Document shall be made not later than 1:00 p.m.
(Philadelphia
time) on the date specified for payment under such Loan Document in
lawful money
of the United States of America in immediately available funds. Any
payment
received after 1:00 p.m. (Philadelphia time) shall be deemed
received on the
next Business Day. If any payment hereunder becomes due and payable
on a day
other than
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a Business Day, such payment shall be extended to the next
succeeding Business
Day and, with respect to payments of principal, interest thereon
shall be
payable at the then applicable rate during such extension.
(b) Location of Payments. All payments shall be made by the
Borrowers to the Agent at Bank of America, N.A., P.O. Box 660576,
Dallas, TX
75266-0576 or such other place as the Agent may from time to time
specify in
writing, except that all payments with respect to Letters of Credit
shall be
made by the Borrowers to such other place as the Agent and,
respectively, the
Issuer, may from time to time specify in writing. Any such payment
shall be made
in United States dollars in immediately available funds, without
counterclaim or
setoff and free and clear of, and without any deduction or
withholding for, any
taxes or other payments.
(c) Agent and Lenders Authorized to Take Action for Borrowers.
If
any payment is not made when due, the Borrowers authorize the Agent
and any
Lender to (i) deduct the amount of such payment from any deposit
account
maintained by any Borrower, and/or (ii) whether or not there is
then any unused
Commitment, cause the aforesaid payments to be made by drawing
under the loan
facility provided under this Agreement, any such Loan being subject
to interest
at the Default Rate; provided, however, that notwithstanding the
making by the
Agent and any Lender of any of the aforesaid payments as set forth
in this
sentence, the failure of the Borrowers to make any of the aforesaid
payments
when due shall constitute a Default or Event of Default, as the
case may be,
and, provided, further, the failure of the Agent and any Lender to
take any of
the aforesaid action shall not affect any of its rights hereunder
or under any
other Loan Document or under law.
(d) No Set-Off. The Borrowers agree to pay principal, interest,
fees, expenses, indemnities, reimbursements and all other amounts
due under any
Loan Document, without set-off or counterclaim or any deduction
whatsoever.
(e) Presumptions. Except as expressly set forth to the contrary
in this Agreement or by the Borrowers with respect to any payment,
all payments
shall be applied first to the payment of all fees, expenses and
other amounts
due to the Agent or the Lenders (excluding principal and interest),
then to
accrued interest, and the balance on account of outstanding
principal of Base
Rate Loans and then to principal of LIBOR Loans (and among such
LIBOR Loans,
first to those with the earliest expiring Interest Periods);
provided, however,
that after an Event of Default which is continuing, payments will
be applied to
the Obligations of Borrowers as Agent determines in its sole
discretion.
(f) Disbursements from Agent to Lenders. The Agent shall
promptly
remit to each Lender its pro rata share of payments received
pursuant to Section
4.01 in immediately available funds, except that all reimbursement
payments in
respect of losses, out-of-pocket expenses, funding losses or like
matters shall
be retained by the Agent or remitted to the Lenders according to
their
respective appropriate entitlement to such reimbursement.
Section 4.02 THE NOTES. The aggregate principal amount of each
Lender's
share of the Commitment and Loans shall be evidenced by a note to
be issued by
the Borrowers to each Lender in substantially the form attached
hereto as
EXHIBIT A (with appropriate completion of the name of the
applicable Lender).
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<PAGE>
Section 4.03 LOAN ACCOUNT. The Agent may open and maintain on its
books in
the name of the Borrowers a loan account with respect to the Loans
and interest
thereon. If the Agent opens such an account, it shall debit such
loan account
for the principal amount of each Loan made by it and accrued
interest thereon,
and, subject to Section 1.03 (Disbursements) above, shall credit
such loan
account for each payment on account of principal or interest. The
records of the
Agent with respect to the loan account maintained by it shall be
prima facie
evidence of the Loans and accrued interest thereon, but the failure
of the Agent
to make any such notations or any error or mistake in such
notations shall not
affect the Borrowers' repayment obligations with respect to such
Loans.
Section 4.04 ADDITIONAL PROVISIONS CONCERNING CERTAIN LOANS.
(a) Mandatory Suspension and Conversion of LIBOR Loans. The
Lenders' obligation to make, continue or convert into LIBOR Loans
of any Type
shall be suspended, all Lenders' outstanding Loans of such Type
shall be
converted into Base Rate Loans on the last day of their applicable
Interest
Periods (or, if earlier, in the case of clause (iii) below, on the
last day the
Lenders may lawfully continue to maintain Loans of such Type or, in
the case of
clause (iv) below, on the day determined by the Agent to be the
last Business
Day before the effective date of the applicable restriction) into,
and all
pending requests for the making or continuation of or conversion
into Loans of
such Type by the Agent shall be deemed requests for Base Rate
Loans, if:
(i) on or prior to the determination of an interest rate for
a LIBOR Loan for any Interest Period, the Agent reasonably
determines that for
any reason appropriate information is not available to it for
purposes of
determining the LIBOR Rate for such Interest Period;
(ii) on or prior to the first day of any Interest Period for
a LIBOR Loan of such Type, any of the Lenders reasonably determines
that the
LIBOR Rate as determined by such Lender for such Interest Period
would not
accurately reflect the cost to such Lender of making, continuing or
converting
into a LIBOR Loan of such Type for such Interest Period;
(iii) at any time any of the Lenders determines that any
Regulatory Change makes it unlawful or impracticable for such
Lender or its
applicable lending office to make, continue or convert into a LIBOR
Loan of such
Type, or to comply with its obligations hereunder in respect
thereof; or
(iv) any of the Lenders determines that, by reason of any
Regulatory Change, such Lender or its applicable lending office is
restricted,
directly or indirectly, in the amount that it may hold of (A) a
category of
liabilities that includes deposits by reference to which, or on the
basis of
which, the interest rate applicable to LIBOR Loans of such Type is
directly or
indirectly determined or (B) the category of assets that includes
LIBOR Loans of
such Type.
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<PAGE>
(b) Regulatory Changes. If in the determination of any of the
Lenders:
(i) any Regulatory Change shall directly or indirectly (A)
reduce the amount of any sum received or receivable by such Lender
with respect
to the Revolving Credit Facility, (B) impose a cost on such Lender
or any
Affiliate of such Lender that is attributable to the making
available or
maintaining of, or such Lender's commitment to make available, the
Revolving
Credit Facility, (C) require such Lender or any Affiliate of such
Lender to make
any payment on, or calculated by reference to, the gross amount of
any amount
received by such Lender under any Loan Document or (D) reduce, or
have the
effect of reducing, the rate of return on any capital of such
Lender or any
Affiliate of such Lender that such Lender or such Affiliate is
required to
maintain on account of the Revolving Credit Facility, or such
Lender's
Commitment and
(ii) such reduction, increased cost or payment shall not be
fully compensated for by an adjustment in the applicable rates of
interest
payable under the Loan Documents;
then the Borrowers shall pay to such Lender such additional amounts
as such
Lender reasonably determines will, together with any adjustment in
the
applicable rates of interest payable hereunder, fully compensate it
for such
reduction, increased cost or payment. Such additional amounts shall
be payable,
in the case of those applicable to prior periods, within 15
Business Days after
request by such Lender for such payment and, in the case of those
applicable to
future periods, on the date specified, or determined in accordance
with a method
specified, by such Lender. Such Lender will promptly notify the
Agent and the
Borrowers of any determination made by it referred to in clauses
(i) and (ii)
above and provide to Agent and Borrowers a reasonably detailed
calculation of
all amounts required to be paid by the Borrowers, but the failure
to give such
notice shall not affect such Lender's right to such
compensation.
(c) Capital Requirements. If, in the determination of any
Lender,
such Lender or any Affiliate of such Lender is required, as a
result of a
Regulatory Change, to maintain capital on account of the Revolving
Credit
Facility or such Lender's Commitment, then, upon request by such
Lender, the
Borrowers shall from time to time thereafter pay to such Lender
such additional
amounts as such Lender reasonably determines will fully compensate
it for any
reduction in the rate of return on the capital that such Lender or
such
Affiliate is so required to maintain on account of the Revolving
Credit Facility
or Commitment suffered as a result of such capital requirement.
Such additional
amounts shall be payable, in the case of those applicable to prior
periods,
within 15 Business Days after request by such Lender to the
Borrowers and in the
case of those relating to future periods, on the date specified, or
determined
in accordance with a method specified by such Lender. Such Lender
will promptly
notify the Agent and the Borrowers of any determination made by it
referred to
in this paragraph (c), but the failure to give such notice shall
not affect such
Lender's right to such compensation.
(d) Funding Losses. The Borrowers shall pay to the Agent on
behalf of the Lenders, from time to time, upon request, such amount
as the Agent
reasonably determines is necessary to compensate the Lenders for
any loss, cost
or expense, including, without limitation, loss of the Applicable
Margin
incurred by it as a result of (a) any payment, prepayment or
conversion of a
LIBOR Loan on a date other than the last day of an Interest
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<PAGE>
Period for such LIBOR Loan or (b) a LIBOR Loan for any reason not
being made or
converted, or any payment of principal thereof or interest thereof
not being
made, on the date therefor determined in accordance with the
applicable
provisions of this Agreement. At the election of the Agent, and
without limiting
the generality of the foregoing, but without duplication, such
compensation on
account of losses may include an amount equal to the excess of (i)
the interest
that would have been received from the Borrowers under this
Agreement including
the Applicable Margin on any amounts to be reemployed during an
Interest Period
or its remaining portion over (ii) the interest component of the
return that the
Agent determines the Lenders could have obtained had they placed
such amount on
deposit in the London Interbank Eurodollar Market selected by it
for a period
equal to such Interest Period or remaining portion.
(e) Determinations. In making the determinations contemplated
by
this Section, the Agent or the applicable Lender may make such
estimates,
assumptions, allocations and the like that the Agent or such Lender
in good
faith determines to be appropriate, and the Agent or specified
Lender selection
thereof in accordance with this Section, and the determinations
made by such
Lender on the basis thereof, shall be final, binding and conclusive
upon the
Borrowers. Notwithstanding any other provision of this Section,
such Lender
shall not apply the provisions of subsections (b) or (c) of this
Section with
respect to the Borrowers if it shall not at the time be the general
policy or
practice of the Agent or such Lender to apply provisions of
subsections (b) or
(c) of this Section to other borrowers in substantially similar
circumstances
under substantially comparable provisions of other credit
agreements.
(f) Rate Quotations. The Borrowers may call the Agent on or
before the date on which a Request for Advance or notice of
conversion is to be
delivered to receive an indication of the rates then in effect, but
it is
acknowledged that such projection shall not be binding on the Agent
nor affect
the rate of interest which thereafter is actually in effect when
the election is
made.
Section 4.05 TAXES.
(a) Payments Free and Clear.
(i) Any and all payments by the Borrowers hereunder or under
the Notes shall be made free and clear of and without deduction for
any and all
present or future taxes, levies, imposts, deductions, charges or
withholding,
and all liabilities with respect thereto excluding, in the case of
each Lender
and the Agent, (A) income and franchise taxes imposed by the
jurisdiction under
the laws of which such Lender or the Agent (as the case may be) is
organized or
is or should be qualified to do business or any political
subdivision thereof,
and (B) income and franchise taxes imposed by the jurisdiction of
each Lender's
lending office or any political subdivision thereof, and (C) United
States
federal income taxes imposed by reason of failure or the inability
of a Lender
to comply with Section 4.05(e) (unless such compliance is precluded
as a result
of a change in any law, rule, regulation or treaty or in the
administrative
interpretation or application thereof after the date hereof (or, in
the case of
a Participant or Assignee, the date on which such Participant or
Assignee
receives its interest in the Loans) (all such non-excluded taxes,
levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter
referred to as "Taxes").
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(ii) If the Borrowers shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any
Note, (A) the
sum payable shall be increased as may be necessary so that after
making all
required deductions (including deductions applicable to additional
sums payable
under this Section) each Lender or the Agent (as the case may be)
receives an
amount equal to the amount such party would have received had no
such deductions
been made, (B) the Borrowers shall make such deductions, (C) the
Borrowers shall
pay the full amount deducted to the relevant taxing authority or
other authority
in accordance with applicable law, and (D) the Borrowers shall
deliver to the
Agent evidence of such payment to the relevant taxing authority or
other
authority in the manner provided in Section 4.05(d).
(b) Stamp and Other Taxes. In addition, the Borrowers shall pay
any present or future stamp, registration, recordation or
documentary taxes or
any other similar fees or charges or excise or property taxes,
levies of the
United States or any state or political subdivision thereof or any
applicable
foreign jurisdiction which arise from any payment made hereunder or
from the
execution, delivery or registration of, or otherwise with respect
to, this
Agreement, the Loans, the other Loan Documents, or the perfection
of any rights
or security interest in respect thereto (hereinafter referred to as
"Other
Taxes").
(c) Indemnity. The Borrowers shall indemnify each Lender and
the
Agent for the full amount of Taxes and Other Taxes (including,
without
limitation, any Taxes and Other Taxes imposed by any jurisdiction
on amounts
payable under this Section) paid by such Lender or the Agent and
any liability
(including penalties, interest and expenses) arising therefrom or
with respect
thereto, whether or not such Taxes or Other Taxes were correctly or
legally
asserted. Such indemnification shall be made within thirty (30)
days from the
date such Lender or the Agent makes written demand therefor.
(d) Evidence of Payment. Within thirty (30) days after the date
of any payment of Taxes or Other Taxes, the Borrowers shall furnish
to the
Agent, at its address referred to in Section 12.01, the original or
a certified
copy of a receipt evidencing payment thereof or other evidence of
payment
satisfactory to the Agent.
(e) Non-U.S. Lender. On or prior to the date on which any
Participant or Assignee that is not a United States person as
defined in Section
7701(a)(30) of the Code (each a "Non-U.S. Lender") receives its
interest in the
Loans, each Non-U.S. Lender that is entitled at such time to an
exemption from
United States of America withholding tax, or that is subject to
such tax at a
reduced rate under an applicable tax treaty, shall provide Agent
and the
Borrowers with two duly completed copies of the appropriate United
States
Internal Revenue Service Form W-8, or other applicable successor
form prescribed
by the Internal Revenue Service of the United States, certifying
that such
Non-U.S. Lender is entitled to receive payments under this
Agreement without
deduction or withholding of any United States federal income taxes.
The
Borrowers shall have no obligation to pay any taxes with respect to
Loans made
to a Non-U.S. Lender pursuant to Section 4.05(a) or indemnify any
Non-U.S.
Lender under Section 4.05(c) if such Non-U.S. Lender is eligible to
comply with
the provisions of this Section 4.05(e) and has not done so.
Notwithstanding any
other provision of this Section 4.05(e), no Non-U.S. Lender shall
be required to
deliver any form pursuant to this Section 4.05(e) that such
Non-U.S. Lender is
not legally able or obligated to deliver and, for
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purposes of this Section 4.05, such non-delivery of a form shall
not be decreed
to be non-compliant with this Section 4.05(e).
(f) Survival. Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements and
obligations contained
in this Section shall survive the payment in full of the
Obligations and the
termination of the Commitment.
Section 4.06 LENDERS' OBLIGATIONS SEVERAL. Each Lender is severally
bound
by this Agreement, but there shall be no joint obligation of the
Lenders under
this Agreement. The failure of any Lender to make any share of the
Loans or
obligations respecting Letters of Credit to be made by it on the
date specified
for the Loans or such obligations shall not relieve any other
Lender of its
obligation to make its share of the Loans or other obligations on
such date, but
neither any Lender nor the Agent shall be responsible for the
failure of any
other Lender to make a share of the Loans or other obligations to
be made by
such other Lender.
Section 4.07 PERMITTED ASSUMPTIONS BY AGENT AS TO LENDER PAYMENTS.
Unless
the Agent shall have been notified by a Lender prior to noon on the
date on
which it is scheduled to fund to the Agent any amount payable by a
Lender under
this Agreement (such payment being the "Lender Required Payment")
that it does
not intend to make the Lender Required Payment to the Agent, the
Agent may
assume that the Lender Required Payment has been made and may, in
reliance upon
such assumption (but shall not be required to), make the amount
thereof
available to the Borrowers (or other appropriate party) on such
date. If such
Lender has not in fact made the Lender Required Payment to the
Agent, the
Borrowers (or other recipient) shall, on demand, repay to the Agent
the amount
so made available together with interest thereon in respect of each
day during
the period commencing on the date such amount was so made available
by the Agent
until the date the Agent recovers such amount at a rate equal to
the Base Rate.
The foregoing does not limit the obligation of any Lender to make a
Lender
Required Payment. Any Lender Required Payment made by the Agent in
reliance on
the assumption that the applicable Lender was funding the same, if
not returned
by the Borrowers (or other recipient), shall be paid, on demand, to
the Agent by
the applicable Lender, together with interest thereon accruing at
the Base Rate.
In addition, any Lender that fails to make a Lender Required
Payment upon
receipt of notice therefor, shall not be entitled to vote on any
matters that it
otherwise would be entitled to vote on under this Agreement until
it makes such
payment.
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.01 CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation
of the
Lenders to make the initial Loan is subject to the condition that
each of the
Lenders, or the Agent, as applicable, shall have received each of
the following,
in form and substance satisfactory to it:
5.01.1 Loan Documents.
(a) a duly executed Revolving Loan Note; and
(b) a duly executed Foreign Subsidiary Guaranty.
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5.01.2 UCC Collateral Documents.
(a) (i) a Security Agreement (also constituting a pledge
agreement), duly executed by each Borrower and each Foreign
Subsidiary, which
owns equity interests in another Foreign Subsidiary together with
such Uniform
Commercial Code financing statements as are necessary or, in the
opinion of the
Agent, desirable to perfect the security interests created by such
Security
Agreement, (ii) a landlord waiver to each leased facility of any
Borrower, and
(iii) the certificates, if any, representing the equity or other
ownership
interests of each Subsidiary Borrower and 66% of the equity or
other ownership
interests of each Foreign Subsidiary, together with duly executed,
undated stock
powers or similar assignments respecting such equity or other
ownership
interests;
(b) A perfection questionnaire duly completed by Borrowers,
such
questionnaire to be delivered to the Agent at least fifteen (15)
days prior to
the closing of the Initial Loan;
(c) insurance policies or certificates designating the Agent as
lender loss payee or mortgagee as its interests may appear, as
appropriate, as
required by Section 9.17 of this Agreement or as required by any
other Loan
Document;
(d) an IP Collateral Agreement executed by each Borrower, as
appropriate, as to all registered or pending patents, trademarks
and copyrights,
in appropriate form to file of record; and
(e) the results of tax, judgments and other lien searches in
form
and substance satisfactory to the Agent, and from such
jurisdictions as may be
satisfactory to the Agent, together with U.S. Patent and Trademark
Office and
Copyright Office searches of a recent date, in each case, with
respect to the
Parent Borrower and each Subsidiary Borrower, showing no Liens
except Permitted
Liens.
5.01.3 Real Estate Collateral Documents.
(a) Mortgages on all real property owned by each Borrower; and
(b) title insurance insuring the priority of the Mortgage
covering the property located in Boonton, New Jersey, and for each
other
property subject to a Mortgage (i) zoning certification, (ii) a
flood
certification, and (iii) a survey; in each case satisfactory to the
Agent.
5.01.4 Financial Documents.
(a) audited financial statements of Parent Borrower and its
Subsidiaries on a Consolidated basis for the fiscal year ended
December 31,
2004, together with projections of financial statements respecting
each fiscal
year through the fiscal year 2008, which projections shall be
approved by the
chief financial officer of Parent Borrower and based on reasonable
assumptions;
and
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(b) pro forma financial statements giving the effect to the
acquisition of 100% of the capital stock of XYZ, Inc. for
consideration paid
entirely in cash.
5.01.5 Consents, Certificates and Opinions.
(a) any required governmental consents or other required
consents
to the closing of this Agreement or to the execution, delivery and
performance
of this Agreement and the other Loan Documents, each of which shall
be in form
and substance satisfactory to the Agent;
(b) a certificate of each Loan Party to which is attached each
of
the following certified as such by a duly authorized officer of
such Loan Party:
(i) a certificate of incumbency with respect to each
Authorized Signatory thereof that signs any Loan Documents,
(ii) a copy of the charter or other organizational documents
of such Loan Party certified by the Secretary of State or similar
state official
of the jurisdiction of formation of such Loan Party,
(iii) a copy of the bylaws or other constituent documents of
such Loan Party,
(iv) a certificate of good standing or subsistence, as the
case may be, for such Loan Party issued as of a recent date by the
Secretary of
State or similar state official in the jurisdiction of its
organization and in
each state in which such Loan Party is qualified to do business as
set forth on
Schedule 6.01,
(v) a copy of the resolutions duly adopted by the Board of
Directors or other governing body of such Loan Party authorizing it
to execute,
deliver and perform each Loan Document to which it is, or is to be,
a party, and
(vi) a copy of any shareholders agreement or similar
agreement respecting such Loan Party, if any such agreement
exists;
(c) a legal opinion of Olshan Grundman Frome Rosenzweig &
Wolosky
LLP, counsel to each of the Loan Parties;
(d) a certificate of the chief financial officer or Treasurer
of
the Parent Borrower with respect to the solvency and adequacy of
capital of
Parent Borrower and each Subsidiary Borrower after giving effect to
the initial
Loan and the application of the proceeds thereof.
5.01.6 Third Party Agreements. Evidence that, prior to or
substantially simultaneously with the making of the initial Loan,
(i) all
Indebtedness under the Prior Facility shall have been repaid, (ii)
all
commitments to lend in respect of the Prior Facility shall have
been effectively
terminated and (iii) all UCC-3 termination statements and all other
documents
necessary in the determination of the Agent to effectively
terminate of record
all security
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interests related to the Prior Facility shall have been duly
executed by the
proper parties and shall have been delivered to the Agent, all
pledged
instruments shall have been returned to the proper parties, and
other
arrangements with respect thereto satisfactory to the Agent shall
have been
made;
5.01.7 Merger Documents. True and correct copies of drafts of
the
Merger Documents.
Section 5.02 PAYMENT OF FEES AND COSTS. In addition to the
conditions
specified in Section 5.01 (Conditions Precedent to Initial Loan)
above, prior to
making the initial Loan, the Agent shall receive payment of all
accrued costs
and fees and (if then ascertainable) expenses arising out of
reasonable
attorneys' fees for the preparation of the Loan Documents and
related services.
Section 5.03 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of
the
Lenders to make each Loan (including the initial Loan) or issue a
Letter of
Credit is subject to the fulfillment of each of the following
conditions:
(a) All of the representations and warranties of the Borrowers
in
this Agreement and all representations and warranties of each Loan
Party in each
other Loan Document shall be true and correct in all material
respects at such
time, both before and after giving effect to the application of the
proceeds of
such Loan;
(b) No Default or Event of Default hereunder shall then exist
or
be caused thereby;
(c) No Material Adverse Change shall have occurred and no event
shall have occurred which could reasonably be expected to result in
a Material
Adverse Change;
(d) The Agent shall have received a duly executed Request for
Advance, or, as to a Letter of Credit, a Notice of LC Credit Event;
and
(e) If after giving effect to the requested Loan or the
requested
issuance of a Letter of Credit, the Revolving Credit Outstandings
would exceed
$25 million, then either (i) Parent Borrower shall have acquired
100% of the
outstanding capital stock of XYZ, Inc. and the provisions of
Section 9.03(h) and
Section 9.27 shall have been fully satisfied with respect to XYZ,
Inc. and its
direct and indirect subsidiaries, or (ii) the Borrower shall have
delivered to
the Agent a letter of credit in the stated amount of $5 million in
form and
substance satisfactory to the Agent and from an issuing bank
satisfactory to the
Agent, upon which the Agent may draw upon the occurrence of an
Event of Default,
or, if the conditions of subsection (e)(i) above have not been
satisfied on or
before December 30, 2005, after that date and on or before January
15, 2006.
Section 5.04 METHOD OF SATISFYING CERTAIN CONDITIONS. The request
for, and
acceptance of, each Loan by the Borrowers shall be deemed a
representation and
warranty by the Borrowers that the conditions specified in subparts
(a), (b) and
(c) of Section 5.03 (Conditions Precedent to Each Loan) have been
satisfied.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BORROWERS
In
order to induce the Lenders to enter into this Agreement, the
Borrowers
jointly and severally make the following representations, covenants
and
warranties:
Section 6.01 ORGANIZATION AND QUALIFICATION. Each Borrower and each
of its
Foreign Subsidiaries are corporations or other entities, duly
organized, validly
existing and in good standing under the laws of their respective
jurisdictions
of organization. Each Borrower and each of its Foreign Subsidiaries
have the
lawful power to own or lease their respective properties and to
engage in the
respective business they presently conduct or propose to conduct.
Each Borrower
and each of its Foreign Subsidiaries are duly licensed or qualified
and in good
standing in each jurisdiction where property is owned or leased by
them, or the
nature of the business transacted by them, or both, makes such
licensing or
qualification necessary, except where the failure to be so
qualified could not
reasonably be expected to result in a Material Adverse Change.
SCHEDULE 6.01
hereto shows as of the date hereof each state or jurisdiction in
which each
Borrower and each of its Foreign Subsidiaries are qualified and
their respective
jurisdictions of incorporation or organization, as applicable.
Section 6.02 CAPITALIZATION AND OWNERSHIP OF SUBSIDIARY BORROWERS.
The name
of each Borrower and each of its Foreign Subsidiaries, their
authorized equity
or other ownership interests, the number of issued and outstanding
equity and
other ownership interests and the owners thereof as of the date
hereof are set
forth on SCHEDULE 6.02 attached hereto. All outstanding equity or
other
ownership interests of the Loan Parties are duly authorized,
validly issued,
fully paid and nonassessable and are owned free and clear by the
Borrowers
except as pledged pursuant to the Loan Documents and except for
Permitted Liens
to the extent arising by operation of law. As of the date hereof,
there are no
options, warrants or other rights outstanding to purchase any such
equity and
other ownership interests except as indicated on said SCHEDULE
6.02. Each
Borrower has the unrestricted right to vote the issued and
outstanding equity
and other ownership interests owned by it. Each Borrower's
ownership interest in
a Subsidiary represents a direct controlling interest of such
Subsidiary for
purposes of directing or causing the direction of the management
and policies of
such Subsidiary.
Section 6.03 AUTHORIZATION AND EXECUTION. The execution, delivery
and
performance of this Agreement, and each other Loan Document to
which any Loan
Party is, or will be, a party are within such Loan Party's power
and authority
and have been duly authorized by all necessary corporate or other
applicable
action. This Agreement has been, and each other Loan Document when
delivered
hereunder will be, duly executed by each Loan Party which is a
party hereto or
thereto, as the case may be.
Section 6.04 ENFORCEABILITY; CONSENTS. This Agreement is, and each
of the
other Loan Documents when delivered hereunder will be, a legal,
valid and
binding obligation of each of the Loan Parties which is, or will
then be, a
party hereto or thereto, as the case may be, enforceable against
each such Loan
Party in accordance with its terms. No recording, filing,
registration, notice,
consent (governmental or otherwise) or other similar action
including, without
limitation,
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any action involving any federal, state, local or other applicable
regulatory
body, is required in order to insure the legality, validity,
binding effect or
enforceability of this Agreement or the other Loan Documents as
against all
Persons, except the filing of UCC-1 financing statements and the
recording of
the Mortgages as contemplated by this Agreement.
Section 6.05 SECURITY INTERESTS IN COLLATERAL.
(a) As of the date hereof, upon the filing of the UCC-1
financing
statements in the jurisdictions listed on Schedule 6.05 attached
hereto and the
delivery of the stock certificates listed on Schedule 3.9(a) to the
Security
Agreement, no further action, including without limitation, any
filing or
recording of any document or the obtaining of any consent, is
necessary in order
to establish, perfect and maintain the Agent's first priority
security interests
in the Collateral being encumbered pursuant to the Security
Agreement, subject
to Permitted Liens to the extent taking priority by operation of
law, except for
the periodic filing of continuation statements with respect to such
UCC-1
financing statements. As of the date hereof, the perfection
questionnaire
previously delivered to the Agent by Borrowers is true and correct
and there
have been no changes thereto since the date of delivery.
(b) The Mortgages when duly filed in the offices listed on
Schedule 6.05 attached hereto, will create perfected Liens on the
real property
described in the Mortgages subject to no Liens of equal or greater
priority
except for Permitted Liens to the extent taking priority by
operation of law,
and no further action, including, without limitation, the filing or
recording of
any document, is necessary to maintain such perfected Liens.
Section 6.06 REAL PROPERTY OF BORROWERS. As of the date hereof,
SCHEDULE
6.06 attached hereto is a complete and correct list of all real
property owned
or leased by each Borrower, specifying, in each case, whether such
property is
owned or leased and specifying the owner/lessee thereof.
Section 6.07 ABSENCE OF CONFLICT WITH OTHER AGREEMENTS, ETC. The
execution,
delivery and performance by each Borrower of this Agreement and the
other Loan
Documents to which it is, or will be, a party do not and will not
(a) require
any consent or approval, governmental or otherwise, not already
obtained, (b)
violate any Applicable Law respecting such Borrower, (c) conflict
with, result
in a breach of, or constitute a default under, the organizational
and governing
documents of such Borrower or any of its Foreign Subsidiaries, or
under any
material indenture, agreement, license or other instrument to which
such
Borrower or any of its Foreign Subsidiaries are party to or by
which any of them
or their respective properties may be bound, or (d) result in, or
require the
creation or imposition of, any Lien upon or with respect to any
property now
owned or hereafter acquired by any Borrower or any of its Foreign
Subsidiaries
other than as contemplated hereby.
Section 6.08 BUSINESS. Each Borrower, together with each of its
Foreign
Subsidiaries, is currently engaged in the business of designing,
manufacturing
and marketing power electronics, power motion, power protection,
teleprotection
and specialized communication equipment that is used in a variety
of medical,
aerospace, computer, datacom, industrial, telecom, transportation,
and electric
power utility equipment applications.
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Section 6.09 CONDITION OF ASSETS. All of the material properties,
equipment
and systems of each Borrower and each of its Foreign Subsidiaries
are in good
repair, working order and condition for their intended use,
ordinary wear and
tear excepted, and are and will be in material compliance with all
standards or
rules imposed by any governmental agency or authority (including,
without
limitation, any federal or state or local governments or
instrumentalities) or
otherwise under Applicable Law.
Section 6.10 USE OF PROCEEDS. The proceeds of the Loans will be
used for
the Acquisition of XYZ, Inc. certain Permitted Acquisitions,
general corporate
purposes and working capital purposes. No proceeds of any Loan
shall be used for
any illegal purposes.
Section 6.11 LITIGATION. Except as described in SCHEDULE 6.11,
There is no
action, suit, proceeding or investigation pending against, or, to
the best of
the Borrowers' knowledge, threatened against or in any other manner
relating to,
any Borrower or any of its Foreign Subsidiaries or any of their
respective
properties, in any court or before any arbitrator of any kind or
before or by
any governmental body, which individually or in the aggregate,
could (if
adversely determined) reasonably be expected to result in a
Material Adverse
Change, nor is any Borrower or any of its Foreign Subsidiaries in
violation of
any order, writ, injunction or decree of any such governmental body
which could
reasonably be expected to result in a Material Adverse Change.
Section 6.12 INDEBTEDNESS. As of the date hereof, SCHEDULE 6.12
attached
hereto correctly describes all outstanding Indebtedness of each
Borrower and
each of its Foreign Subsidiaries, and any commitments of any such
Person to
incur additional Indebtedness (other than Indebtedness pursuant to
this
Agreement), and shows the Indebtedness to be paid off on the date
hereof.
Section 6.13 FINANCIAL STATEMENTS.
(a) The audited financial statements for Parent Borrower and
its
Subsidiaries on a Consolidated basis for the fiscal year ended
December 31,
2004, and the unaudited consolidated financial statements of Parent
Borrower and
its Subsidiaries on a Consolidated basis for the three months ended
March 31,
2005, together with any other financial statements furnished to the
Lenders, are
complete and correct in all material respects and present fairly in
accordance
with GAAP the financial position of Parent Borrower and its
Subsidiaries on a
Consolidated basis on and as at such dates and the results of
operations for the
periods then ended (subject, in the case of unaudited financial
statements, to
normal year-end adjustments). Neither Parent Borrower nor any of
its
Subsidiaries has any material liabilities, contingent or otherwise,
other than
as disclosed in the financial statements referred to in the
preceding sentence
and there are not now and not anticipated any material unrealized
losses of
Parent Borrower or any of its Subsidiaries.
(b) The projections delivered to the Lenders pursuant to
Section
5.01 (Conditions Precedent to Initial Loan) above and Section 8.01
(Financial
Statements) below are made in good faith, based on reasonable
assumptions by the
Parent Borrower.
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(c) Since December 31, 2004, there has been no Material Adverse
Change.
Section 6.14 FISCAL YEAR. The fiscal year of each Borrower ends on
December
31.
Section 6.15 TITLE TO ASSETS. Borrowers have good, legal and
marketable
title to, or a valid leasehold interest in, all of the assets
included on the
last balance sheet previously delivered to the Lenders except for
assets
disposed of in the ordinary course of business or as permitted
hereby. Each of
Borrowers' Subsidiaries has good, legal and marketable title to, or
a valid
leasehold interest in, all of its assets included on the last
balance sheet
previously delivered to the Lenders except for assets disposed of
in the
ordinary course of business. None of such properties or assets is
subject to any
Liens, except for Permitted Liens and liens to be released on the
Closing Date.
No financing statement under the Uniform Commercial Code as in
effect in any
jurisdiction and no other filing which names any Borrower or any of
its
Subsidiaries as debtor or which covers or purports to cover any of
the assets of
any Borrower or any of its Subsidiaries is currently effective and
on file in
any state or other jurisdiction, and neither any Borrower nor any
of its
Subsidiaries have signed any such financing statement or filing or
any security
agreement authorizing any secured party thereunder to file any such
financing
statement or filing except with respect to Permitted Liens and
Liens to be
released on the Closing Date.
Section 6.16 PATENTS, TRADEMARKS, LICENSES AND FRANCHISES. Each
Borrower
and each of its Foreign Subsidiaries hold or have the right to use
all patents,
trademarks, service marks, trade names, copyrights, franchises,
licenses and
authorizations, governmental or otherwise, necessary for the
conduct of their
business as now conducted, without any known material conflict with
the rights
of others which could reasonably be expected to result in a
Material Adverse
Change. As of the date hereof SCHEDULE 6.16 attached hereto
correctly lists all
patents, trademarks and copyrights registered to the Loan Parties
as well as all
material governmental licenses, authorizations and similar rights.
Each license
agreement necessary to any Borrower's or any of its Foreign
Subsidiaries'
business, and under which any Borrower or any of its Foreign
Subsidiaries are
the licensee is a valid and binding license agreement, enforceable
against the
licensee and, to Borrowers' knowledge, the licensor.
Section 6.17 COMPLIANCE WITH LAW. Each Borrower and each of its
Foreign
Subsidiaries are in material compliance with all Applicable
Law.
Section 6.18 COMPLIANCE WITH ERISA.
(a) Neither Borrowers, Borrowers' Subsidiaries, nor any ERISA
Affiliate thereof maintains or contributes to any Plan,
Multiemployer Plan or
other employee benefit plan, except as disclosed on Schedule 6.18
attached
hereto.
(b) Each Plan, which is intended to be qualified within the
meaning of Section 401(a) of the Code, is the subject of a
favorable
determination by the Internal Revenue Service with respect to all
plan document
qualification requirements for which the remedial amendment period
under Section
401(b) of the Code has closed, any plan document amendments
required by such
determination letter were made as and when required by such
determination
letter, and nothing has occurred, whether by action or failure to
act, since the
date of such letter
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which would prevent any such plan from remaining so qualified. Each
Borrower has
furnished to the Agent a copy of the most recent actuarial report
for each Plan
which is a defined benefit plan as defined in Section 3(35) of
ERISA and for any
Plan that is a funded employee welfare benefit plan, and each such
report is
accurate in all material respects.
(c) Each Borrower, each of its Subsidiaries and their
respective
ERISA Affiliates have operated each Plan in all material respects
in compliance
with the requirements of the Code and ERISA and the terms of each
Plan.
(d) Except as specifically disclosed on Schedule 6.18 attached
hereto, (1) no Plan has engaged in any transaction in connection
with which any
Borrower or any of its Subsidiaries or ERISA Affiliates could be
subject to
either a material civil penalty assessed pursuant to Section 502(i)
of ERISA or
a material tax penalty imposed pursuant to Section 4975 of the
Code, (2) there
is no Accumulated Funding Deficiency with respect to any Plan,
whether or not
waived, or an unfulfilled obligation to contribute to any
Multiemployer Plan or
withdrawal from any Multiemployer Plan, (3) no Plan has been
terminated under
conditions which resulted, or could result in any material
liability to the
PBGC, (4) no material liability to the PBGC has been or is expected
by any
Borrower to be incurred with respect to any Plan by any Borrower or
any of its
Subsidiaries or ERISA Affiliates except for required premium
payments to the
PBGC, (5) there has been no Reportable Event with respect to any
Plan, and no
event or condition exists which presents a material risk of
termination of any
Plan by the PBGC, (6) none of the Borrowers or any of their
Subsidiaries or any
ERISA Affiliate have incurred or anticipate incurring Withdrawal
Liability with
respect to any Multiemployer Plan, (7) no Multiemployer Plan is
in
Reorganization, and neither any Borrower, any of its Subsidiaries,
or any ERISA
Affiliate reasonably expects any Multiemployer Plan to be in
Reorganization, (8)
each Borrower and each of its Subsidiaries and ERISA Affiliates
have complied in
all material respects with the requirements of COBRA and HIPAA, and
no material
liability, and no circumstances exist pursuant to which any such
material
liability could reasonably be imposed on any Borrower, any of its
Subsidiaries
or any ERISA Affiliate under Sections 4980B, 4980D or 5000 of the
Code or
Sections 409 and 502(l) of ERISA, (9) there are no unfunded benefit
liabilities
(as defined in Section 4001(a)(18) of ERISA) in respect of any
Plan, (10) there
is no violation of the Code or ERISA with respect to the filing of
applicable
reports, documents and notices regarding any Plan with the
Secretary of Labor,
the Secretary of the Treasury, the PBGC or any other governmental
entity or the
furnishing of documents as required to participants and/or
beneficiaries, (11)
there is no Plan providing for retiree health and/or life insurance
or other
death benefits or any other "employee benefit welfare plan" (as
defined in
Section 3(1) of ERISA) having unfunded liabilities, and (12)
neither any
Borrower, any of its Subsidiaries nor any ERISA Affiliate are
subject to the
Early Warning Program of the PBGC (as described in PBGC Technical
Update 00-3)
or have been contacted by the PBGC in connection with the PBGC's
Early Warning
Program; except for any event described in the foregoing clauses
(1)-(12) which
could not reasonably be expected to have a Material Adverse
Effect.
(e) No liability (whether or not such liability is being
litigated) has been asserted against any Borrower, any of its
Subsidiaries or
any ERISA Affiliate in connection with any Plan or any
Multiemployer Plan by the
PBGC other than for required premium payments to the PBGC, by a
trustee
appointed pursuant to Section 4042(b) or (c) of ERISA, or by a
sponsor or an
agent of a sponsor of a Multiemployer Plan, and no Lien has been
attached
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and no Person has threatened to attach a Lien on any property of
any Borrower,
any of its Subsidiaries or ERISA Affiliates as a result of failure
to comply
with ERISA or as a result of the termination of any Plan.
Section 6.19 COMPLIANCE WITH REGULATIONS U AND X. Neither any
Borrower nor
any of its Foreign Subsidiaries are engaged principally or as one
of their
important activities in the business of using credit for the
purpose of
purchasing or carrying, any "margin security" or "margin stock" as
defined in
Regulations U and X of the Board of Governors of the Federal
Reserve System.
Section 6.20 INVESTMENT COMPANY ACT. Neither any Borrower nor any
of its
Foreign Subsidiaries are an "investment company" or a company
"controlled" by an
"investment company" within the meaning of the Investment Company
Act of 1940,
as amended.
Section 6.21 PUBLIC UTILITY HOLDING COMPANY ACT. Neither any
Borrower nor
any of its Foreign Subsidiaries are considered a "holding company",
or a
"subsidiary company" or "affiliate" of a "holding company", as such
terms are
defined in the Public Utility Holding Company Act of 1935, as
amended.
Section 6.22 ABSENCE OF DEFAULT. No event has occurred which
constitutes a
Default or an Event of Default.
Section 6.23 AGREEMENTS WITH AFFILIATES AND MANAGEMENT
AGREEMENTS;
MANAGEMENT COMPENSATION. Except for agreements or arrangements with
Affiliates
in which any Borrower or any of its Foreign Subsidiaries provides
services to
such Affiliates or vice versa for fair consideration and which are
set forth on
SCHEDULE 6.23 attached hereto, as of the date hereof neither any
Borrower nor
any of its Foreign Subsidiaries have any contracts or written
agreements or
binding arrangements of any kind with any Affiliate.
Section 6.24 NO BURDENSOME AGREEMENTS; MATERIAL AGREEMENTS. Neither
any
Borrower nor any of its Foreign Subsidiaries are parties to any
agreement or
instrument or subject to any corporate or other restrictions which,
assuming
compliance by such Persons with the terms of such agreements or
instruments
could result in a Material Adverse Change. SCHEDULE 6.24 hereto
lists all
material agreements as of the date hereof (the "Material
Agreements") of each
Borrower and each of its Foreign Subsidiaries. Neither any Borrower
nor any of
its Foreign Subsidiaries are in material default of any of the
Material
Agreements. Except where any Borrower or any of its Foreign
Subsidiaries have
allowed a Material Agreement to terminate because such termination
was in the
best interests of such Borrower or such Foreign Subsidiary, each of
the Material
Agreements remains in full force and effect.
Section 6.25 SOLVENCY. After giving effect to the transactions
contemplated
by the Loan Documents: (i) the property of each Borrower, at a fair
valuation,
will exceed its debt; (ii) the capital of each Borrower will not be
unreasonably
small to conduct its business; (iii) each Borrower will not have
incurred debts,
or have intended to incur debts, beyond its ability to pay such
debts as they
mature; and (iv) the present fair salable value of the assets of
each Borrower
will be materially greater than the amount that will be required to
pay its
probable liabilities (including debts) as they become absolute and
matured. The
representations set forth in the
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preceding sentence are equally true of the Loan Parties on a
Consolidated basis
and of each Subsidiary in a Consolidating basis. For purposes of
this Section,
"debt" means any liability on a claim, and "claim" means (i) the
right to
payment, whether or not such right is reduced to judgment,
liquidated,
unliquidated, fixed, contingent, matured, unmatured, undisputed,
legal,
equitable, secured or unsecured, or (ii) the right to an equitable
remedy for
breach of performance if such breach gives rise to a right to
payment, whether
or not such right to an equitable remedy is reduced to judgment,
fixed,
contingent, matured, unmatured, undisputed, secured or
unsecured.
Section 6.26 TAXES. All federal, state and other tax returns of
each
Borrower and each of its Foreign Subsidiaries required by law to be
filed have
been duly filed and all federal, state and other taxes, as
applicable,
including, without limitation, withholding taxes, assessments and
other
governmental charges or levies required to be paid by such Borrower
or Foreign
Subsidiary, which are due and payable, have been paid, provided
that there shall
not be deemed to be a violation of this representation if any such
tax is being
diligently contested in good faith by appropriate proceedings
promptly initiated
and diligently conducted and for which adequate reserves shall have
been set
aside on the appropriate books, but only if no foreclosure,
distraint, sale or
similar proceeding shall have been commenced. The charges, accruals
and reserves
on the books of each Borrower and each of its Foreign Subsidiaries
in respect of
taxes are adequate.
Section 6.27 ENVIRONMENTAL COMPLIANCE. Except as would not
reasonably be
expected to result in a Material Adverse Change or as scheduled in
SCHEDULE
6.27:
(a) None of the real property currently owned or occupied by
any
Borrower or any of its Foreign Subsidiaries has ever been used by
any Borrower
or any of its Foreign Subsidiaries during its or their ownership or
occupancy,
or, to the best of Borrowers' knowledge, by previous owners or
occupiers to
treat, produce, store, handle, transfer, process, transport,
dispose of or
otherwise release any Hazardous Substances in violation of any
Environmental
Law.
(b) There is no condition which exists on the real property
owned
or occupied by any Borrower or any of its Foreign Subsidiaries
which requires
Remedial Action and which was caused by any Borrower or any of its
Foreign
Subsidiaries or, to Borrowers' knowledge, any other Person.
(c) Neither any Borrower nor any of its Foreign Subsidiaries
have
been notified of, or have actual knowledge of any notification
having been filed
with regard to, a Release on or into any real property owned or
occupied by any
Borrower or any of its Foreign Subsidiaries.
(d) Neither any Borrower nor any of its Foreign Subsidiaries
have
received a summons, citation, notice of violation, administrative
order,
directive, letter or other communication, written or oral, from any
governmental
or quasi-governmental authority concerning any Release or need for
Remedial
Action.
(e) There are no "friable" (as that term is defined in
regulations under the Federal Clean Air Act) asbestos or
friable
asbestos-containing materials which have not been
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encapsulated as required by Environmental Laws in accordance with
accepted
guidelines promulgated by the United States Environmental
Protection Agency
existing in or on any real property owned and/or in the portion of
any other
property occupied by any Borrower or any of its Foreign
Subsidiaries.
(f) No equipment for which any Borrower or any of its Foreign
Subsidiaries are responsible containing polychlorinated biphenyls,
including
electrical transformers, is located on any real property owned or
occupied by
any Borrower or any of its Foreign Subsidiaries in levels which
exceed those
permitted by any and all governmental authorities with jurisdiction
over such
premises or which are not properly labeled in accordance with
requisite
standards.
(g) There are no tanks on any real property owned or occupied
by
any Borrower or any of its Foreign Subsidiaries that have been used
for the
storage of petroleum products or any other substance, nor, to the
knowledge of
the Borrowers, have any such tanks been located on such property at
any time.
Section 6.28 LABOR DISPUTES AND ACTS OF GOD. Neither the business
nor the
properties of any Borrower or any of its Foreign Subsidiaries are
affected by
any fire, explosion, accident, strike, lockout or other labor
dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public
enemy, or other
casualty (whether or not covered by insurance) which could
reasonably be
expected to result in a Material Adverse Change.
ARTICLE 7
FINANCIAL COVENANTS
Section 7.01 FINANCIAL COVENANTS. Each Borrower shall, and shall
cause each
of its Subsidiaries to, maintain compliance with the following
financial
covenants:
(a) Maximum Total Leverage Ratio. As of any fiscal quarter end,
the ratio of (a) Total Funded Indebtedness as of such date to (b)
EBITDA for the
period of four (4) consecutive fiscal quarters ending on or prior
to such date
shall not be greater than 3:25 to 1:00.
(b) Minimum Interest Coverage Ratio. As of any fiscal quarter
end, the ratio of (a) EBIT for the period of four (4) consecutive
fiscal
quarters ending on or immediately prior to such date to (b)
Interest Expense
(whether or not paid) payable during the period of four (4)
consecutive fiscal
quarters ending on or immediately prior to such date, shall not be
less than
2:50 to 1:00.
(c) Minimum Net Worth. As of any fiscal quarter end, the total
amount of stockholders' equity of Parent Borrower and its
Subsidiaries, on a
consolidated basis, shall be not less than the sum of
(i) Thirty-Three Million, Nine Hundred Eighteen Thousand and
Three Hundred Dollars ($33,918,300)
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plus
(ii) an amount equal to 50% of the cumulative amount of Net
Income (which shall not be reduced by the amount of any net loss
for any fiscal
quarter) of Parent Borrower and its Subsidiaries, on a consolidated
basis, for
the period commencing on April 1, 2005 and ending on the date of
determination
minus
(iii) the aggregate amount paid on or after April 1, 2005
for permitted stock purchases described in Section 9.04(a).
(d) Maximum Capital Expenditures. The aggregate amount of
Capital
Expenditures made during any period of twelve (12) calendar months
shall not
exceed Five Million Dollars ($5,000,000), without cumulation or
carryover, which
amount shall not include any amounts used for Permitted
Acquisitions.
Section 7.02 CALCULATIONS. Calculations made pursuant to Section
7.01 shall
give effect, on a pro forma basis, to all Acquisitions and
dispositions made
during the period to which the required compliance relates (the
"Applicable
Period"), as if such Acquisition or disposition had been
consummated on the
first day of the applicable period such that (a) the results of
operations of
the assets or entities acquired or disposed of are included or
excluded, as
applicable, and (b) any Indebtedness assumed or incurred or paid
off in
connection with such Acquisition or disposition is included or
excluded, as
applicable, on a pro forma basis from the first day of the
Applicable Period.
ARTICLE 8
COVENANTS CONCERNING REPORTING REQUIREMENTS
Section 8.01 FINANCIAL STATEMENTS. So long as any of the
Obligations is
unpaid or any Lender has any commitment to make Loans hereunder,
the Parent
Borrower shall, from time to time, furnish (or cause to be
furnished, as the
case may be) to the Lenders the following information:
(a) Annual Financial Statements. As soon as available and in
any
event within ninety (90) calendar days after the end of each of
each fiscal year
of the Parent Borrower, but no later than the date upon which the
Parent
Borrower's annual report on Form 10-K is to be filed with the
Securities and
Exchange Commission, the Parent Borrower shall deliver to the
Lenders audited
Consolidated financial statements, together with any notes thereto
of the Parent
Borrower and its Subsidiaries, consisting of a balance sheet as at
the end of
such fiscal year and related statements of income, cash flows, and
changes in
retained earnings for the fiscal year then ended, all in reasonable
detail and
setting forth in comparative form the respective consolidated
financial
statements as at the end of and for the preceding fiscal year,
prepared in
accordance with GAAP and Unqualifiedly Certified by independent
certified public
accountants of nationally recognized standing satisfactory to the
majority
Lenders. The Parent
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Borrower shall also deliver a letter signed by such accountants
stating that,
having conducted an ordinary and customary examination of the
affairs of the
Parent Borrower in connection with the preparation of the
respective
Consolidated financial statements, they are not aware of the
existence of any
condition or event which constitutes a Default or an Event of
Default hereunder,
and, promptly upon receipt, a copy of any management letter.
(b) Quarterly Financial Statements. As soon as available and in
any event within forty-five (45) calendar days after the end of
each of the
first three fiscal quarters in each fiscal year of the Parent
Borrower, the
Parent Borrower shall deliver to the Lenders Consolidated financial
statements
of the Parent Borrower and its Subsidiaries, consisting of a
balance sheet as at
the end of such fiscal quarter and related statements of income,
cash flows, and
changes in retained earnings for the fiscal quarter then ended and
the fiscal
year through that date, all in reasonable detail and setting forth
in
comparative form the respective Consolidated financial statements
of the
corresponding date and period in the previous fiscal year and
certified (subject
to normal year-end audit adjustments) by the President or chief
financial
officer of the Parent Borrower as (i) having been prepared in
accordance with
GAAP and (ii) presenting fairly the financial position of the
Parent Borrower
and its Subsidiaries as at the end of each fiscal quarter.
(c) Subsidiary Financial Statements. At the same time as the
financial statements delivered under subsections (a) and (b) above,
a balance
sheet, statement of income and statement of cash flows for each
Subsidiary of
the Parent Borrower in form reasonably satisfactory to the
Agent.
(d) Business Plan. As soon as available and in any event within
seventy-five (75) calendar days after the end of each fiscal year,
the Parent
Borrower shall deliver to the Lenders the annual budget for the
Parent Borrower
and its Subsidiaries, including forecasts of the income statement,
the balance
sheet, cash flow report and an EBITDA statement for such year on a
quarter by
quarter basis. Such Business Plan shall be accompanied by a
certification of the
President or Chief Financial Officer of the Parent Borrower that
such Business
Plan is reasonable, made in good faith, consistent with the Loan
Documents, and
represents the Parent Borrower's best judgment as to such
matters.
Section 8.02 OFFICER'S COMPLIANCE CERTIFICATES. As soon as
available and in
any event within forty-five (45) calendar days after the end of
each of the
first three fiscal quarters, and within ninety (90) calendar days
after the end
of each fiscal year, but no later than the date upon which the
Parent Borrower's
annual report on Form 10-K is to be filed with the Securities and
Exchange
Commission, the Parent Borrower shall deliver to the Lenders a
certificate of
the President or Chief Financial Officer of the Parent Borrower,
in
substantially the form of EXHIBIT D attached hereto, containing the
following
information:
(a) a statement that no Default or Event of Default exists and
is
continuing on the date of such certificate; and
(b) calculations in sufficient detail to demonstrate compliance
as of the date of the relevant financial statements with all of the
financial
covenants contained in Article 7 (Financial Covenants) hereof.
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Section 8.03 AUDITORS' REPORTS. Promptly upon receipt, the Parent
Borrower
shall deliver to the Lenders copies of all financial reports or
written
recommendations, if any, submitted to the Parent Borrower or any of
its
Subsidiaries by its auditors in connection with each annual or
interim auditor
examination of its books by such auditors.
Section 8.04 NOTICE OF DEFAULT. Promptly after any officer of any
Borrower
has learned of the occurrence of a Default or an Event of Default,
the Parent
Borrower shall deliver to the Agent, the Issuer and the Lenders a
notice of such
Default or Event of Default. Each such notice pursuant to this
Section shall set
forth details of the matter referred to therein and state what
action the Parent
Borrower or the affected Subsidiary has taken, is taking and
proposes to take,
with respect thereto, and shall be certified by the President or
Chief Financial
Officer of the Parent Borrower as true and correct in all material
respects.
Section 8.05 NOTICE CONCERNING REPRESENTATIONS AND WARRANTIES.
Each
Borrower shall give the Agent notice of any changes in facts or
circumstances on
which the representations and warranties set forth in this
Agreement are made
which makes such representations and warranties false or misleading
in any
material respect. Such notice shall be given promptly, but in any
event not
later than ten (10) days after any officer of any Borrower becomes
aware of its
occurrence. Except as set forth in the proviso to Section 5.03
(Conditions
Precedent to Each Loan), the delivery of such a notice shall not
imply any
waiver by the Lenders.
Section 8.06 NOTICE OF LITIGATION. Promptly after the commencement
thereof,
but in any event not later than ten (10) days after any officer or
director of
any Borrower becomes aware thereof, the Parent Borrower shall
deliver to the
Agent notice of any actions, suits, and proceedings before any
court or
governmental department, commission, board, bureau, agency, or
instrumentality,
domestic or foreign, affecting any Borrower or any of its
Subsidiaries in which
the amount involved is $250,000 or more or, which, if not solely
for monetary
damages, could result in a Material Adverse Change.
Section 8.07 SEC DISCLOSURE. Promptly after the sending or filing
thereof,
the Parent Borrower shall deliver to the Agent and the Lenders
copies of all
proxy statements, financial statements, and reports which the
Parent Borrower or
